FMO ( NEDFIN ) INVESTOR PRESENTATION. THE DUTCH DEVELOPMENT BANK October 2016

Transcription

1 FMO ( NEDFIN ) INVESTOR PRESENTATION THE DUTCH DEVELOPMENT BANK October

2 CONTENTS I. About FMO 3 II. Strong Backing by the State 5 III. Investment Approach 9 IV. Financials & Risk Management 14 V. Liquidity Management & Funding 23 VI. Contact 28 VII. Appendix 30 Cookhouse wind farm, South Africa 2

3 I. ABOUT FMO 3

4 FMO AT A GLANCE The international development bank of the Netherlands - incorporated in 1970 Promoting sustainable private sector growth in developing markets focusing on green and inclusive development Strong backing by the State of the Netherlands AAA (Fitch), AAA (Standard & Poor s) credit ratings and industry leading sustainability ratings Licensed bank supervised by the Dutch Central Bank FMO is an eligible issuer under the Public-Sector Purchase Programme of the ECB WE EMPOWER ENTREPRENEURS TO BUILD A BETTER WORLD 4 4

5 II. STRONG BACKING BY THE STATE 5

6 DUTCH STATE IS MAIN PROVIDER OF CAPITAL Public Private Partnership The State owns 51% of the shares (A shares). Private sector entities own 49% of the shares (B shares) Voting rights for A shares and B shares are equal. A shares may only be issued to the State The State has an economic interest of more than 90% of shareholders equity Shareholders equity (in EUR mln, per June 30, 2016) Shareholders (per June 30, 2016) 628 7% 658 1,308 42% 51% Contractual Reserve Development Fund Share Capital, Share premium reserve and Other Components* Dutch State Dutch banks: ABN AMRO, ING, Rabobank Trade Unions, Employer's Federations, Companies, Individuals * Other components comprise of available for sale reserve, translation reserve, other reserves and undistributed profit, and minority interest. Differences may arise due to rounding 6

7 EXPLICIT DUTCH STATE SUPPORT Explicit support agreement* Documented in the bilateral Agreement State FMO of 16 November 1998 ** Art. 7: Maintenance Obligation: The Dutch State is committed to covering all losses from operations that cannot be covered by general or specific provisioning and reserves Art. 8: Financial Security Obligation: The Dutch State shall prevent situations arising in which FMO is unable to meet its commitments on time Valid for an indefinite period and may be cancelled subject to a twelve-year notice period *) **) This is a synopsis of the actual text. The State Agreement should be fully read for a complete understanding. A full copy of State Agreement available at 7

8 FMO MANAGES EUR 1,194 MLN IN GOVERNMENT FUNDS *) Off balance sheet funds for risk of the Dutch Government to finance high risk projects MASSIF: EUR 562 mln Resources for financial institutions to aid the development of Micro, Small and Medium-sized Enterprises (MSMEs) Infrastructure Development Fund: EUR 521 mln Long-term financing for infrastructure projects Access to Energy Fund : EUR 81 mln Private sector projects that create sustainable access to energy services * Committed per Dec. 31 st 2015; includes FOM-OS of EUR 30 mln 8

9 III. INVESTMENT APPROACH 9

10 FOCUS ON SECTORS WITH HIGHEST LONG-TERM IMPACT By supporting financial institutions, FMO paves the way for financing SMEs, microenterprises and individuals as well 31% 8% 38% Access to affordable energy is not just essential for everyday living it can also empower those who use it 23% Financial Institutions Energy Other Agribusiness Achieving long term sustainability in global agribusiness production requires large investments targeted at improving farming practices, increasing yields and reducing waste *Based on committed investment portfolio, excl. government funds, of EUR 7.7 bln per Jun 30 th, 2016 High-impact initiatives from other sectors can also benefit from FMO s services, expertise and global network 10

11 PROVIDING LONG TERM FINANCING Broad range of financing products Investment portfolio per currency* Third party financing through FMO Investment Management and syndicated loans 9% 13% Private equity: Fund investments, co-investments with funds and direct investments in focus sectors Typical holding period 5 10 years 78% Euro USD Local currency Investment portfolio per product* Private equity portfolio (per Jun 30 th 2016) Equity Loans Guarantees Mezzanine 3% 13% 55% 29% 38% 62% Private equity funds Direct investments * Based on committed investment portfolio, excl. government funds, of EUR 7.7 bln per Jun 30 th

12 INVESTMENT PROCESS Credit Advice Credit Advice Credit Advice Credit Advice Clearance in Principle Term Sheet Due Diligence Finance Proposal Contract Disbursement Annual Review Provisioning SO Fair Value Changes Front Office Decision CR Decision IC Decision IC Advice IRC / CR Decision CR Decision MB Decision 12

13 INTEGRATED ESG APPROACH sustainability as a value driver SUSTAINABLE INVESTMENTS Environmental Impact Social Impact Corporate Governance Economic Impact Resource efficiency Energy efficiency Biodiversity Emissions to air Global energy issues Water/chemical usage Diversity Human rights Health & safety Community relations Equal opportunity Respect for individuals Board structure and accountability Internal controls, audit and risk management Management of conflicts of interest and related party transactions Accounting and disclosure practices Independence of external auditors Consistent profitable growth Shareholder value Risk management Ho chi minh city, Vietnam 13

14 IV. FINANCIALS & RISK MANAGEMENT 14

15 STEADY PORTFOLIO GROWTH Portfolio development 2005 Jun16 (in EUR mln) 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Jun Committed portfolio* 2,059 2,216 2,765 3,543 3,877 4,566 5,046 5,450 5,789 7,065 8,062 7,776 * Committed portfolio excludes government funds; CAGR: Compounded Annual Growth Rate 15

16 PROFITABLE THROUGHOUT THE CRISIS Income composition (in EUR mln) Jun-16 Income Value adjustments Net Profit

17 DIVERSIFIED BELOW INVESTMENT GRADE PORTFOLIO Portfolio breakdown per credit rating* 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 5% 4% 6% 43% 41% 40% 40% 41% 38% BBB- and higher BB-, BB, BB+ B-, B, B+ CCC+ and lower ratings 12% 13% 16% Dec-13 Dec-14 Dec-15 Per Dec 2015 approx. 600 counterparties with approx. EUR 15 mln average exposure **) Credit ratings reflect counterparty credit quality Internal credit ratings are mapped versus Moody s Collateral is acquired on 29% of the gross loan amount *) Gross loan portfolio excluding government funds (disbursed) **) Number of counterparties and exposure relate to the gross loan portfolio 17

18 RECENT GRADUAL INCREASE IN NPL S; LOW WRITE-OFFS Non-performing loans development 16% 14% 12% 13.6% 12.4% NPL % of portfolio 10% 8% 6% 4% 2% 0% 0.3% 1.1% 8.1% 8.0% 6.8% 6.9% 6.0% 5.8% 4.9% 4.2% 3.6% 3.8% 3.2% 2.3% 3.4% 3.5% 4.1% 0.4% 0.2% 0.6% 0.5% 0.1% 0.5% 0.6% 0.7% Jun-16 Principals with arrears > 90 days Write offs % of portfolio Recent increase in NPL s due to country and counterparty specific events Low write-downs as a result of active management and focus on recovery * NPL %: loans value adjusted and loans not value adjusted but past due more than 90 days as % of the gross loan portfolio excluding government funds (disbursed) 18

19 BACKED BY CONSERVATIVE PROVISIONING Loan provisioning 14.0% 12.0% 10.0% 8.0% 12.1% 12.5% 11.6% 11.0% 10.4% 9.2% 8.4% 7.8% 7.6% 6.0% 4.0% 2.0% 1.1% 3.6% 2.3% 3.4% 3.5% 4.1% 3.2% 3.8% 4.2% 0.0% Jun-16 Principals with arrears > 90 days Value adjustments Value adjustments on loans consist of: Counterparty-specific value adjustments Group-specific value adjustments * As % of the gross loan portfolio excluding government funds (disbursed) 19

20 WELL DIVERSIFIED GLOBALLY Portfolio breakdown per country and sector 8% 7% 6% 5% 4% 3% 2% 1% 0% Other Agribusiness Energy Financial Sector Exposure spread over more than 85 countries 10 largest country exposures represent approx. 1/3 of the total portfolio Country limits based on country ratings and FMO s capital base Sector limits capped at 50% of country limit * Based on committed investment portfolio of EUR 7.7 bln as per June 30 th, 2016 excl. government funds and loans guaranteed by the Dutch State 20

21 EUR 7.7 BLN OF INVESTMENTS AROUND THE WORLD *) (Dark) No requirement for a relation with Dutch businesses EASTERN EUROPE & CENTRAL ASIA 1.0 BLN ASIA 2.2 BLN NON SPECIFIC REGION 0.4 BLN LATIN AMERICA & THE CARIBBEAN 1.8 BLN AFRICA 2.2 BLN * Per Jun 30 th, Committed portfolio excl. government funds and loans guaranteed by the Dutch State 21

22 SOLID CAPITAL BASE Regulatory Capital Ratios 2011 Jun16 35% 30% 25% 29.4% 29.0% 26.7% 26.1% 27.7% 24.7% 21.3% 23.6% 24.9% 22.9% 23.8% 21.3% 20% 15% 10% 5% 0% Jun-16 BIS ratio Core Tier I ratio Shareholders' equity / Total assets Risk Weighted Assets (RWA) = EUR 10.2 bln. (Dec-15) Over 95% of net profit is retained The Regulatory Capital Ratio is based on a 99.9% confidence level (A level) 22

23 V. LIQUIDITY MANAGEMENT & FUNDING 23

24 LOW RISK LIQUIDITY PORTFOLIO To meet conservative liquidity requirements Short term investments Long term bond portfolio: Fair value of EUR 638 mln (Jun-16) Buy and hold ECB-eligible Liquidity Coverage Ratio (LCR) of 594% Positive and negative ESG screening Investments in green bonds 26% Bond portfolio by country (per Jun 30 th 2016) 7% 6% Netherlands 3% Supra 35% Germany 13% Belgium Finland UK 7% France EU 15% 13% Bond portfolio by rating* (per Jun 30 th 2016) 31% 69% AAA AA * The lower of Fitch and S&P is used 24

25 FUNDING STRATEGY: DEMONSTRATED MARKET ACCESS Funding need of EUR 1.0 to 2.0 bln p.a. Funding per Currency (per Sep-30 th 2016) Funding secured though demonstrated 0.9% 8% 1% AUD market access as SSA borrower Public markets and private placements Focus on USD and EUR funding Duration matching (3Y 5Y) Max. tenor 12 years 38% 1% 5% 0.2% 0.1% 45% CHF EUR JPY KGS NZD USD ZAR ZMW Sustainability Bonds to finance: Green projects Inclusive finance projects FMO is an eligible issuer under the Public Sector Purchase Programme of the ECB 1,250 1, Redemption profile (per Sep-30 th 2016)

26 KEY FEATURES SUSTAINABILITY BONDS Industry leading Sustainability Ratings Sustainalytics Oekom Research Sustainability Bond allocations in EUR million (per Jun 30 th 2016) Member of the Green Bond Principles (GBP) Use of proceeds reporting via Sustainability Bond Newsletter IFI working group on Green Bond Impact reporting harmonization Project disclosure on FMO world map: External assurance to confirm alignment with GBP - Sustainalytics 2nd opinion on FMO Sustainability Framework - Sustainalytics review of eligible projects Available funding Disbursed, green Disbursed, inclusive - KPMG: use of proceeds (financial perspective) FMO awarded First Green Bond Netherlands certificate by Climate Bond Initiatives (partnership per Feb-16) 26

27 BONDS OUTSTANDING Year Amount Tenor 2013 USD 500 mln, 1.50% 12/02/ year 2014 USD 500 mln, floater 12/06/ year 2014 USD 500 mln, floater 21/10/ year 2016 USD 500 mln, floater 18/04/ year 2013 EUR 500 mln, 1.25% 13/11/2018 (Sustainability) 5 year 2015 EUR 500 mln, 0.125% 20/04/2022 (Sustainability) 7 year 2015 EUR 500 mln, 0.125% 04/11/ year 2012 JPY 20 bln, 0.86% 02/03/ year 2010 CHF 100 mln, 1.755% 10/03/ year 2014 AUD 100 mln, 4.75% 11/09/ year 2014 AUD 70 mln, 5.00% 05/05/ year 2014 AUD 380 mln, 4.25% 08/07/ year 2014 NZD 100 mln, 4.75% 16/10/ year 27

28 VI. CONTACT 28

29 CONTACT INFORMATION Matthijs Pinxteren Director Treasury Direct Arthur Leijgraaff Senior Treasury Officer Direct Anna van Saksenlaan 71 P.O. Box AB The Hague The Netherlands BB ticker: NEDFIN Pim Arends Senior Treasury Officer Direct FMO s legal name is Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. FMO is also known as the Netherlands Development Finance Company 29

30 VII. APPENDIX 30

31 FINANCIAL OVERVIEW Balance sheet (EUR mln) Jun-16 Net loans 1,942 2,269 2,585 2,817 2,981 3,860 4,307 4,335 Equity investments portfolio ,149 1,500 1,560 Shareholders' equity 1,327 1,514 1,665 1,815 1,963 2,138 2,511 2,594 Debt securities and debentures/notes 2,180 2,365 2,679 3,292 3,610 4,197 5,348 5,702 Total assets 3,772 4,305 5,059 5,564 6,184 7,088 8,421 8,820 Committed investment portfolio 2 4,598 5,292 5,874 6,281 6,633 8,013 9,256 8,948 of which are government funds ,194 1,172 Profit and loss account (EUR mln) Income Net interest income Income from equity investments Other income including services Total income Expenses Operating expense Operating profit before value adjustments Value adjustments - to loans and guarantees to equity investments Total value adjustments Share in the results of subsidiaries & associates Profit before tax (including results from subs./ass.) Taxes Net profit ) Including associates. 2) Committed investment portfolio concerns both investment for FMO's account and for government funds managed by FMO. 3) The government funds include Massif, Infrastructure Development Fund, Access to Energy Fund and NIMF (until 2007). 31

32 CLICK TO EDIT MASTER TITLE STYLE Disclaimer The information used in this document is strictly confidential. By acceptance of this document, the recipient agrees to keep the information in this document confidential to such person. The information is neither to be disclosed to any other person, nor copied or reproduced in whole or in part, without the prior written consent of Nederlandse Financierings- Maatschappij voor Ontwikkelingslanden N.V. ( FMO ). The distribution of this document in certain jurisdictions may be restricted and accordingly persons into whose possession this document may come are required to have themselves informed of and to observe any such restrictions. This document is intended to present general information and does not constitute an offer for, or an invitation to subscribe to or acquire, any interests in one or more investment funds and does not constitute investment advice. 32