External events affecting our investment process

Several external events affected our investment process. As a result of the ongoing war, our customers in Ukraine continued to face adversity. The impact on our financial results this year, however, was limited as impairment levels and valuations in 2022 proved adequate. Throughout the year, we continued to work with our customers to find suitable solutions, including loan restructuring.

After the devastating earthquakes in Turkey and Syria in February 2023, we reached out to all of our customers in Turkey. We have no exposure in Syria. Several customers have exposures in the wider area affected by the earthquake, but this did not result in any reclassification of our credit risk. 

Following the war in Gaza and rising tensions in the Middle East, we assessed the impact on our customers in the region. Although FMO’s direct exposure in the Palestinian territories is limited, we will continue to monitor the situation closely in 2024.

We continued to monitor the situation in Sri Lanka and Myanmar. Both countries experienced economic and political instability in 2021 and 2022, respectively. Since then, the situation has improved in Sri Lanka and all customers were able to meet their payment obligations. The situation in Myanmar remained unstable, and average impairment levels in 2023 increased to reflect increased likelihood of customers not being able to honor their debt obligations. Furthermore, we continued to manage portfolios in countries faced with (partial) sovereign defaults and convertibility issues, such as Pakistan, Ghana and Argentina. We monitor these portfolios intensely and will change the investment approach when needed.