Notes to the consolidated profit and loss account

19. Net interest income

Interest income

Included in the interest on loans is €13,206 (2017: €9,112) related to Stage 3 loans (calculated on amount net of impairment) for which value adjustments have been recorded.

Interest expense

20. Net fee and commission income

21. Dividend income

22. Results from equity investments and associates

As a result of IFRS 9, in 2018 all results from equity investments measured at FVPL have been recorded under the results from equity investments. The unrealized results consist of FX results (€44,195) and capital gain (€626). Upon exit of equity investments, the cumulative result over the lifetime of the investments (€91,215) is realized with a corresponding reversal of the cumulative unrealized result recorded prior to the exit (€95,195), resulting in a net loss of €3,980 for the financial year 2018.

In 2017 under IAS 39, only realized results were recorded in the profit and loss (€154,571) and all the unrealized results were recorded in the AFS reserve (see Note 18). In comparison, the reversal of the cumulative unrealized results in the AFS for 2017 was €151,091 at the time of the exits, resulting in a net gain of €2,629.

23. Results from financial transactions

The 2018 results financial transactions are mainly driven by tightening of the EUR/USD cross currency basis spread, reducing the value of the hedges of FMO’s liabilities. Additionally, interest rates in frontier and emerging market currencies have moved up, reducing the value of the hedges of FMO’s local currency assets.

24. Remuneration for services rendered

Remuneration for managing funds and programs is assessed for market conformity and expressed in gross amounts. Related management expenses are included in operating expenses.

25. Other operating income

Other operating income mainly consists of received payments on written-off loans.

26. Staff costs

The number of FTEs at December 31, 2018 amounted to 508 (2017: 467 FTEs). All FTE’s are employed in the Netherlands except for 2 FTE’s.

The increase in costs is to a large extent explained by the autonomous increase in staff cost, regulatory expenses and additional staff and investments to support the execution of the strategy of higher impact, deeper relationships and higher productivity.

27. Other administrative expenses

These expenses consist of services from third parties and other operational expenses. The remuneration paid to the Supervisory Board is included in these expenses. At December 31, 2018, the Supervisory Board consisted of six members (2017: six). The members of the Supervisory Board were paid a total remuneration of €125 (2017: €120).

With reference to Section 2:382a(1) and (2) of the Netherlands Civil Code, the following fees for the financial year have been charged by Ernst & Young Accountants LLP (2017: Ernst & Young Accountants LLP) to the company and its subsidiaries.

28. Income taxes

Income tax by type

The reconciliation of the statutory income tax rate to the effective income tax rate is as follows:

Current income tax

The company paid €42,810 (2017: €61,545) to tax authorities. The remaining current income tax receivable amounts to €24,448 (2017: €7,458). Per year end 2018 there were no unused tax losses and the unused tax credits amount to €0 (2017: €0).

Deferred tax

FMO’s deferred income tax assets and liabilities are summarized as follows:

The Dutch government has announced a lower corporate tax rate which will be gradually implemented in the coming years. FMO has determined the timing of expected cash flow of underlying assets and liabilities and has changed the applicable tax rate accordingly.