Factors impacting our portfolio
Travel restrictions, economic uncertainties, and efforts to adjust operations to new regulations hampered our ability to pursue investment opportunities in 2020 and 2021 and to develop our pipeline. This affected our investment results in 2022. Once travel restrictions were lifted, we were able to resume physical customer and network meetings and engage with (potential) new customers, which led to opportunities in several areas. The investment climate, however, was affected by uncertainties caused by the war in Ukraine and surging inflation, especially with respect to energy and food prices. In general, we continued to see demand for financing, although the risk-return profile was under pressure.
In the Agribusiness, Food & Water (AFW) sector, we pursued several prospects in Latin America as well as opportunities to further grow our forestry portfolio. In the Financial Institutions (FI) sector, we observed that several customers returned to business-as-usual once COVID-19 restrictions were lifted and trade and tourism resumed. In addition, our focus on existing customers between 2020 until the end of 2022 (as a result of the pandemic) has led to a decline in the number of customers. However, the overall portfolio quality is good and we have been able to close several high volume deals with existing customers. Furthermore, we experienced more demand from markets surrounding Ukraine such as Georgia, Armenia and Moldova. As bond markets provided limited liquidity to these markets, organizations were looking to FMO for alternative sources of funding. Rising interest rates led to borrowers of financial intermediaries and agri-businesses to postpone making large capital investments.
Compared to 2021, our Energy (EN) portfolio grew, which comprises of a mix of small and large transactions. We rebuilt our activities in Latin America and the Caribbean, which accounted for 26 percent of new investments in 2022. In addition, we saw an uptick of small but impactful transactions, for example, in the commercial and industrial sector where we financed green energy solutions, such as the installation of solar panels on rooftops. With the rising interest rates, we are also observing a turning point in the renewable energy market, shifting away from particularly low margins and long tenors for these projects.
For the financial year ending 31 December 2022, FMO reported a net profit of €1 million compared to a net profit of €491 million for the 2021 financial year. Unfavorable world events impacted the 2022 results through increased impairments and downward investment valuations as a result of the war in Ukraine as well as the political instability in Sri Lanka and Myanmar. The widely observed increases in inflation and interest rates also applied pressure more broadly across the investment portfolio.
The conflict in Ukraine affected the performance of all of our existing customers in the country. FMO has a committed portfolio of €117 million in Ukraine. This excludes one large energy project that was written off in the first half of 2022. The exposure is mainly in the AFW and EN sector. While business operations have been significantly impacted, our customers have shown resilience by adjusting their operations. Due to the uncertainties brought on by the war, we took an average provisioning of more than 50 percent. FMO's private equity exposure in Ukraine incurred a €50 million fair value loss, while the loan portfolio's total value loss was €82 million in Ukraine.
The war in Ukraine as well as the economic and political crises in Sri Lanka and Myanmar negatively affected our portfolio. The situation in Ukraine and Sri Lanka caused the level of our non-performing loans ratio to increase from 9.5 percent at the end of 2021 to 11.9 percent at the end of 2022.