Notes to the consolidated statement of profit or loss
21. Net interest income
Interest income
2022 | 2021 | |
Interest on loans measured at AC | 329,034 | 276,068 |
Interest on collateral delivered | 1,282 | 2 |
Interest income related to banks | 1,849 | - |
Interest on interest-bearing securities | 3,091 | 2,350 |
Total interest income from financial instruments measured at AC | 335,256 | 278,420 |
Interest on loans measured at FVPL | 43,488 | 35,854 |
Interest on short-term deposits at FVTPL | 8,646 | 328 |
Interest on derivatives related to asset portfolio | -36,306 | -48,039 |
Total interest income from financial instruments measured at FVPL | 15,828 | -11,857 |
Total interest income | 351,084 | 266,563 |
Included in the interest income on loans is €28,814k (2021: €15,088k) related to Stage 3 loans (adjusted on basis of net carrying amount).
Interest expense
2022 | 2021 | |
Interest on debentures and notes hedged | -67,235 | -53,012 |
Interest on debentures and notes not hedged | -59,437 | -49,063 |
Interest on short-term credits | -140 | -1 |
Interest expenses related to banks (assets)1 | -2,056 | -4,704 |
Total interest expense from financial instruments measured at AC | -128,868 | -106,780 |
Interest on derivatives related to funding portfolio | 12,707 | 71,084 |
Total interest expense from financial instruments measured at FVPL | 12,707 | 71,084 |
Interest on leases | -139 | -158 |
Total interest expense | -116,300 | -35,854 |
- 1 Interest expense is related to Cash and balances held at central banks. Overnight deposit rates at central banks were negative for part of the year 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 rate (e.g., USD SOFR). As the USD, EUR, SEK and AUD interest rates increased in 2022 compared with 2021 (due to the interest rate increase by central banks) interest expense for these derivatives was significantly higher in 2022.
22. Dividend income
Dividend income relates to income from equity investments.
2022 | 2021 | |
Dividend income direct investments | 33,666 | 16,311 |
Dividend income fund investments | 7,757 | 5,755 |
Total dividend income | 41,423 | 22,066 |
23. Results from equity investments
2022 | 2021 | |
Results from equity investments: | ||
Unrealized results from capital results | -32,816 | 174,616 |
Unrealized results from FX conversions - capital results | 9,269 | 8,209 |
Unrealized results from FX conversions - cost price | 73,356 | 99,076 |
Results from fair value re-measurements | 49,809 | 281,901 |
Results from sales | ||
Realized results | 6,124 | 79,681 |
Release unrealized results | -6,667 | -66,047 |
Net results from sales | -543 | 13,634 |
Total results from equity investments | 49,266 | 295,535 |
24. Net fee and commission income
2022 | 2021 | |
Prepayment fees | 4,774 | 5,904 |
Fees for FVPL loans | 170 | 865 |
Administration fees | 1,955 | 1,949 |
Other fees (for example: arrangement, cancellation and waiver fees) | 4,013 | 2,850 |
Total fee and commission income | 10,912 | 11,568 |
Custodian fees and charges for the early repayment of debt securities | -1,077 | -521 |
Guarantee fees related to unfunded risk participants | -11,644 | -5,319 |
Other fee expenses | -88 | -31 |
Total fee and commission expense | -12,809 | -5,871 |
Net fee and commission income | -1,897 | 5,697 |
25. Results from financial transactions
2022 | 2021 | |
Gains/(losses) on remeasurement of on valuation of hedged items | 341,896 | 125,404 |
Gains/(losses) on remeasurement of hedging instruments | -339,323 | -124,252 |
Result on hedge accounting | 2,573 | 1,152 |
Result on sale and valuation of treasury derivatives not under hedge accounting | 42,768 | 6,700 |
Result on sale and valuation of derivatives related to asset portfolio | -3,989 | -11,729 |
Result on sale and valuation of loans at FVPL | -32,706 | -20,860 |
Result on financial instruments mandatory at FVPL | 6,073 | -25,889 |
Foreign exchange results loans at FVPL | -29,522 | 33,167 |
Foreign exchange results derivatives | -165,603 | 45,876 |
Foreign exchange results on other financial assets/liabilities | 196,703 | -81,128 |
Foreign exchange results | 1,578 | -2,085 |
Other financial results | 159 | 403 |
Other changes¹ | -29,214 | - |
Total result from financial transactions | -18,831 | -26,419 |
- 1 Other changes on financial instruments designated at FVPL relates to the State Funds' share in FMO's Venture program (refer to section group accounting and consolidation; Other financial liabilities in the accounting policies chapter).
Increased interest rates and appreciation of the USD against EUR are the main factors driving the results from financial transactions.
26. Remuneration for services rendered
2022 | 2021 | |
Funds and programs managed on behalf of the State: | ||
- MASSIF | 11,518 | 11,020 |
- Building Prospects | 9,332 | 8,930 |
- Access to Energy Fund | 3,933 | 3,253 |
- FOM OS | - | 100 |
Syndication fees, remuneration from directorships and others | 8,154 | 8,954 |
Total remuneration for services rendered | 32,937 | 32,257 |
Remuneration for managing funds and programs is assessed for market conformity and expressed in gross amounts. Related management expenses are included in operating expenses.
27. Gains and losses due to derecognition
Gains and losses due to derecognition arise from loans measured at amortized cost when sold to a third party or when terms and conditions of a loan arrangement have been modified significantly.
2022 | 2021 | |
Gains and losses due to derecognition | 299 | 5,135 |
28. Other operating income
2022 | 2021 | |
Other operating income | - | 116 |
Total other operating income | - | 116 |
29. Staff costs
The number of FTE at December 31, 2022, amounted to 661 (2021: 579 FTEs). All FTE are employed in the Netherlands except for 2 FTEs, which are employed in our South African and Costa Rican offices.
2022 | 2021 | |
Salaries | -61,885 | -58,045 |
Social security costs | -7,527 | -6,935 |
Pension costs | -13,652 | 1,193 |
Temporaries | -17,236 | -11,291 |
Travel and subsistence allowances | -3,889 | -300 |
Other personnel expenses | -4,204 | 2,257 |
Total staff costs | -108,393 | -73,121 |
The Pension costs line item 2022 includes an amount of €13,321k related to the defined contribution plan expenses. For 2021 €-21,993k relates to the curtailment of the defined benefit pension obligation.
Other personnel expenses include reimbursements on staff costs amounting to €4,904 (2021: €8,476k) 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.
30. Administrative expenses
2022 | 2021 | |
IT expenses | -8,920 | -7,783 |
Advisory costs | -8,060 | -9,008 |
Other operational expenses | -15,107 | -12,011 |
Total administrative expenses | -32,087 | -28,802 |
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, 2022, the Supervisory Board consisted of six members (2021: six). The members of the Supervisory Board were paid a total remuneration of €115k (2021: €134k).
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 (2021: 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. Ernst & Young Accountants LLP has not provided any non-assurance services to FMO.
Fee charged by auditors | 2022 | 2021 |
Statutory audit of annual accounts | -863 | -792 |
Other assurance services | -884 | -821 |
Total | -1,747 | -1,613 |
31. Income taxes
Income tax by type
2022 | 2021 | |
Current income taxes | 19,653 | -34,222 |
Deferred income taxes | -2,780 | 954 |
Total income tax | 16,873 | -33,268 |
The reconciliation of the statutory income tax rate to the effective income tax rate is as follows:
2022 | 2021 | ||
Profit/(loss) before taxation | -15,838 | 523,914 | |
Income taxes at statutory rate of 25.8% (2021 25%) | 4,086 | -130,979 | |
Increase/decrease resulting from: | |||
ˑ | Settlement with local withholding taxes | 2,186 | 2,100 |
ˑ | Non-taxable income (participation exemption facility) | 10,785 | 92,426 |
ˑ | Tax adjustments to prior periods | 83 | 3,369 |
ˑ | Other | -267 | -184 |
Total income tax | 16,873 | -33,268 | |
Effective income tax rate | 106.5% | 6.3% |
Current income tax
FMO paid €43,771 (2021: €838 received) to the tax authorities. The remaining current income tax receivable amounts to €20,942 (2021: €36,929 tax payable). Per year end 2022 unused tax losses amount to €0 (2021: €0) and unused tax credits amount to €0 (2021: €0)
Deferred tax
FMO’s deferred income tax assets and liabilities are summarized as follows:
2022 | 2021 | |
Deferred tax assets | ||
Pension provision | 2,573 | 2,958 |
Actuarial gains and losses on defined benefit plans | 2,272 | 2,583 |
Unused tax credits | 3,158 | - |
Operational leases | 55 | 48 |
Total deferred tax assets | 8,058 | 5,589 |
Deferred tax liabilities | ||
Fair value movements equity investments | -13,407 | -10,748 |
Total deferred tax liabilities | -13,407 | -10,748 |
Net balance at December 31 | -5,349 | -5,159 |