Notes to the consolidated profit and loss account
20. Net interest income
Interest income
2021 | 2020 | |
Interest on loans measured at AC | 276,068 | 319,185 |
Interest on interest-bearing securities | 2,352 | 2,677 |
Total interest income from financial instruments measured at AC | 278,420 | 321,862 |
Interest on loans measured at FVPL | 35,854 | 43,503 |
Interest on short-term deposits | 328 | 4,910 |
Interest on derivatives related to asset portfolio | -48,039 | -46,642 |
Total interest income from financial instruments measured at FVPL | -11,857 | 1,771 |
Total interest income | 266,563 | 323,633 |
Included in the interest income on loans is €15,088k (2020: €25,694k) related to Stage 3 loans (adjusted on basis of net carrying amount).
Interest expense
2021 | 2020 | |
Interest on debentures and notes hedged | -53,012 | -52,846 |
Interest on debentures and notes not hedged | -49,063 | -64,161 |
Interest on short-term credits | -1 | -374 |
Interest expenses related to banks (assets)1 | -4,704 | -3,447 |
Total interest expense from financial instruments measured at AC | -106,780 | -120,828 |
Interest on derivatives related to funding portfolio | 71,084 | 38,351 |
Total interest expense from financial instruments measured at FVPL | 71,084 | 38,351 |
Interest on leases | -158 | -168 |
Total interest expense | -35,854 | -82,645 |
- 1 Interest expense is related to Cash and balances held at Central Bank. Overnight deposit rates at central banks are negative in the Eurozone, implying interest expense on assets.
In the derivatives related to funding FMO usually receives fixed EUR/USD/Other currency and pays floating USD Libor. As the USD Libor interest rate was much lower in 2021 compared with 2020 (average 2020: 1.13% and 2021: 0.23%), interest expense for these derivatives was significantly lower in 2021.
21. Dividend income
Dividend income relates to income from equity investments including associates.
2021 | 2020 | |
Dividend income direct investments | 16,311 | 27,698 |
Dividend income fund investments | 5,755 | 5,210 |
Total dividend income | 22,066 | 32,908 |
22. Results from equity investments
2021 | 2020 | |
Results from equity investments: | ||
Unrealized results from capital results | 174,616 | -84,290 |
Unrealized results from FX conversions - capital results | 8,209 | 98 |
Unrealized results from FX conversions - cost price | 99,076 | -118,447 |
Results from Fair value re-measurements | 281,901 | -202,639 |
Results from sales | ||
Realized results | 79,681 | 2,785 |
Release unrealized results | -66,047 | -10,990 |
Net results from sales | 13,634 | -8,205 |
Total results from equity investments | 295,535 | -210,844 |
23. Net fee and commission income
2021 | 2020 | |
Prepayment fees | 5,904 | 1,140 |
Fees for FVPL loans | 865 | -95 |
Administration fees | 1,949 | 3,550 |
Other fees (like arrangement, cancellation and waiver fees) | 2,850 | 2,798 |
Total fee and commission income | 11,568 | 7,393 |
Custodian fees and charges for the early repayment of debt securities | -521 | -976 |
Guarantee fees related to unfunded risk participants | -5,319 | -2,818 |
Other fee expenses | -31 | - |
Total fee and commission expense | -5,871 | -3,794 |
Net fee and commission income | 5,697 | 3,599 |
24. Results from financial transactions
2021 | 2020 | |
Gain/(losses) on remeasurement of on valuation of hedged items | 125,404 | -69,571 |
Gain/(losses) on remeasurement of hedging instruments | -124,252 | 72,346 |
Result on hedge accounting | 1,152 | 2,776 |
Result on sale and valuation of treasury derivatives not under hedge accounting | 6,700 | -12,606 |
Result on sale and valuation of derivatives related to asset portfolio | -11,729 | -1,607 |
Result on sale and valuation of loans at FVPL | -20,860 | -9,305 |
Result on financial instruments mandatory at FVPL | -25,889 | -23,518 |
Foreign exchange results loans at FVPL | 33,167 | -43,515 |
Foreign exchange results Derivatives | 45,876 | 48,250 |
Foreign exchange results on other financial assets/liabilities | -81,128 | 5,259 |
Foreign exchange results | -2,085 | 9,994 |
Other financial results | 403 | -59 |
Total result from financial transactions | -26,419 | -10,808 |
Lower average USD libor interest rates and devaluation of the USD against EUR are the main factors driving the results from financial transactions.
25. Remuneration for services rendered
2021 | 2020 | |
Funds and programs managed on behalf of the State: | ||
- MASSIF | 11,020 | 10,680 |
- Building Prospects | 8,930 | 9,095 |
- Access to Energy Fund | 3,253 | 2,988 |
- FOM OS | 100 | 100 |
- Syndication fees, remuneration from directorships and others | 8,954 | 7,073 |
Total remuneration for services rendered | 32,257 | 29,936 |
Remuneration for managing funds and programs is assessed for market conformity and expressed in gross amounts. Related management expenses are included in operating expenses.
26. Gains and losses due to derecognition
Gains and losses due to derecognition arise from loans measured at amortized cost, when terms and conditions of a loan arrangement have been modified significantly.
2021 | 2020 | |
Gains and losses due to derecognition | 5,135 | 2,000 |
27. Other operating income
2021 | 2020 | |
Other operating income | 116 | 293 |
Total other operating income | 116 | 293 |
28. Staff costs
The number of FTE at December 31,2021 amounted to 579 (2020: 599 FTEs). All FTE are employed in the Netherlands except for 2 FTEs, which are employed in foreign offices.
Per October 1, 2021 the number of FTEs decreased by 19 FTE due to the transfer of the NL-Business team of FMO to Invest International B.V..
2021 | 2020 | |
Salaries | -58,045 | -57,267 |
Social security costs | -6,935 | -6,788 |
Pension costs | 1,193 | -17,532 |
Temporaries | -11,291 | -18,245 |
Travel and subsistence allowances | -300 | -924 |
Other personnel expenses | 2,257 | -437 |
Total staff costs | -73,121 | -101,193 |
The Pension costs line item includes an amount of €21,993k in the 2021 balance that relates to the curtailment of the defined benefit pension obligation. The details of the curtailment are included in the Pension schemes section within the Provisions note.
Other personnel expenses include reimbursements on staff costs amounting to €8,476k (2020: €5,300k) which relate to activities performed on behalf of various government agencies. These reimbursements are treated as government grants related to income and are presented as a reduction against staff costs.
29. Administrative expenses
2021 | 2020 | |
IT expenses | -7,783 | -7,214 |
Advisory costs | -9,008 | -12,186 |
Other operational expenses | -12,011 | -10,638 |
Total administrative expenses | -28,802 | -30,038 |
These expenses consist primarily of services from third parties and other operational expenses. The remuneration paid to the Supervisory Board is included in these expenses. At December 31, 2021, the Supervisory Board consisted of six members (2020: six). The members of the Supervisory Board were paid a total remuneration of €135k (2020: €127k).
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 (2020: Ernst & Young Accountants LLP) to the company and its subsidiaries. Other assurance services include assurance in respect of sustainability disclosures, regulatory reporting, specific financial reporting of government and EU funds and capital market transactions.
Fee charged by auditors | 2021 | 2020¹ |
Statutory audit of annual accounts | -711 | -693 |
Other assurance services | -788 | -763 |
Other assurance services - non-EY NL | - | -49 |
Total | -1,499 | -1,456 |
- 1 Compared to 2020, updates have been made to how fees are split between "statutory audit" and "other assurance services". This only impacts the split between categories and does not change the total fee.
30. Income taxes
Income tax by type
2021 | 2020 | |
Current income taxes | -34,222 | -5,406 |
Deferred income taxes | 954 | 1,015 |
Total income tax | -33,268 | -4,391 |
The reconciliation of the statutory income tax rate to the effective income tax rate is as follows:
2021 | 2020 | ||
Profit/(loss) before taxation | 523,914 | -200,875 | |
Income taxes at statutory rate of 25% (2020 25%) | -130,979 | 50,219 | |
Increase/decrease resulting from: | |||
ˑ | Settlement with local withholding taxes | 2,100 | 5,427 |
ˑ | Non-taxable income (participation exemption facility) | 92,426 | -59,799 |
ˑ | Tax adjustments to prior periods | 3,369 | -205 |
ˑ | Other | -184 | -33 |
Total income tax | -33,268 | -4,391 | |
Effective income tax rate | 6.3% | -2.2% |
Current income tax
FMO received €838k (2020: €44,941k received) from tax authorities. The remaining current income tax payable amounts to €36,929k (2020: €3,863k tax payable). Per year end 2021 there were no unused tax losses and the unused tax credits amount to €0 (2020: €0).
Deferred tax
FMO’s deferred income tax assets and liabilities are summarized as follows:
2021 | 2020 | |
Deferred tax assets | ||
Pension provision | 2,958 | 3,925 |
Actuarial gains and losses on defined benefit plans | 2,583 | 5,718 |
Tax depreciation fixed assets | - | 169 |
Operational leases | 48 | 35 |
Total deferred tax assets | 5,589 | 9,847 |
Deferred tax liabilities | ||
Fair value movements equity investments | -10,748 | -5,063 |
Total deferred tax liabilities | -10,748 | -5,063 |
Net balance at December 31 | -5,159 | 4,784 |
In 2021 the Dutch government announced a higher corporate tax rate which will be implemented in 2022. Therefore, FMO changed the applicable tax rate to 25.8% accordingly.