The European Bank for Reconstruction and Development (EBRD) committed more money (€4.1bn) in more investments (129) than ever in 2004 as its increasing focus on the poorest countries in which it operates led to financing many smaller projects. Disbursements rose by more than 60% to €3.4bn, also a record.
While most investment (47%) was in southeastern Europe, the Caucasus and central Asia – reflecting the bank’s continuing efforts to extend its operations further east and south – business was also strong in Russia and central Europe.
New investments brought clean running water to Khujand, Tajikistan, improved energy efficiency at a Russian ammonia plant, helped finance an oil pipeline linking Azerbaijan with Turkey, prepared FYR Macedonia’s electricity company for privatisation, and financed new buses in Kaunas, Lithuania – one of the eight central European countries to join the European Union last year.
The EBRD attracted more commercial and official co-financing than ever before. Commercial lenders, export credit agencies and other international financial institutions invested €5.4bn alongside the EBRD, or double the previous year’s level. Net cumulative business volume – all committed loans, equity and other investments over the past 14 years – rose to €25.3bn from €22.7bn. Combined with funds from outside investors, the Bank has mobilised financing commitments with a total project value of €78.5bn.
The bank’s net profit after provisions was €297.7mn, compared with 2003’s record €378.2mn, following a lower profit on the sale of share investments and a rise in provisions against possible losses. Steven Kaempfer, vice-president, finance, says the bank’s business significantly exceeded operational and financial targets in 2004, reflecting the performance of staff as well as the strength of the region’s economic performance and financial markets. He said the bank’s pipeline of potential new projects is robust across the region, but noted that the bank’s plans to finance more projects in poorer countries will almost certainly entail greater risk.
Net profit on the sale of share investments, a naturally volatile figure, fell to €122.4mn from €155.9mn a year ago, while dividend income from the equity portfolio rose to €53.2mn from €52.2mn, contributing to a net profit from banking activities of €218mn (2003: €311.9mn). The net profit for treasury activities rose to €79.7mn from €66.3mn. Administrative expenditures were flat within a budget which has remained below zero real growth for 11 years, while provisions against possible losses rose to €84.9mn from €21.7mn a year earlier, in large part because high disbursements boosted the size of the bank’s operating assets.
The results include a €4.8mn credit (2003: €10.3mn credit) for non-qualifying hedges. The bank’s reserves increased from €989.6mn at the end of 2003 to €1.8bn at the end of 2004, primarily reflecting the net profit for the year and an increase in the fair value of the bank’s listed share investments. At December 31, 2004 the EBRD had authorised capital of €20bn and paid-in capital and reserves of €7bn.