Notes to the consolidated balance sheet: assets

1. Banks

 

2017

2016

Banks

71,763

58,178

Balance at December 31

71,763

58,178

The cash on bank accounts can be freely disposed of.

2. Short-term deposits

 

2017

2016

Collateral delivered (related to derivative financial instruments)

52,695

297,493

Commercial paper

606,335

652,318

Money market funds

174,687

76,640

Dutch central bank

689,991

85,688

Mandatory reserve deposit with Dutch central bank

410

420

Call Deposits

20,000

130,045

Balance at December 31

1,544,118

1,242,604

Mandatory reserve deposits are not available for use in FMO’s day-to-day operations

The increase of our balance at DNB is mainly due to liquidity inflow from collateral accounts and sales proceeds of our equity investment portfolio.

Fair value loss on short-term deposits recorded in the profit and loss amounts to €45 (2016: €30 gain). The amount attributable to change in credit risk is fairly limited.

3. Interest-bearing securities

This portfolio contains marketable bonds with fixed interest rates.

FMO has no impairment charged to interest-bearing securities.

 

2017

2016

Bonds (listed)

362,916

575,117

Balance at December 31

362,916

575,117

All interest-bearing securities are classified as available for sale assets. The movements can be summarized as follows:

 

2017

2016

Balance at January 1

575,117

611,570

Amortization premiums/discounts

7,059

-2,479

Purchases

142,692

74,235

Sale and redemption

-344,078

-112,507

Revaluation

-8,049

4,298

Exchange rate differences

-9,825

-

Balance at December 31

362,916

575,117

For the purpose of maintaining a satisfactory regulatory USD denominated liquidity coverage ratio, FMO attracted hiqh quality liquid assets in the form of USD denominated bonds in 2017. This has led to exchange rate differences in the movement table above.

4. Derivative financial instruments

FMO utilizes the following derivative instruments for both hedge accounting and non-hedge accounting purposes:

  • (Cross-currency) interest rate swaps are commitments to exchange one set of cash flows for another. Swaps result in an economic currency exchange or interest rate exposure (for example fixed rate or floating rate) or a combination of all these (i.e. cross-currency interest rate swaps).

  • Currency forwards represent commitments to purchase foreign and domestic currency, including undelivered spot transactions.

The following table summarizes the notional amounts and the fair values of the ‘derivatives other than hedging instruments’. These derivatives are held to reduce interest rate risks and currency risks but do not meet the specified criteria to apply hedge accounting at reporting period. The following table also includes derivatives related to the asset portfolio.

At December 31, 2017

Notional amounts

Fair value assets

Fair value liabilities

Derivatives other than hedging instruments:

   

ˑ

Currency swaps

61,214

165

-362

ˑ

Interest rate swaps

1,429,829

24,654

-1,632

ˑ

Cross-currency interest rate swaps

3,178,746

178,643

-140,518

Subtotal

4,669,789

203,462

-142,512

Embedded derivatives related to asset portfolio

-

3,910

-

Total derivative assets (/liabilities) other than hedging instruments

4,669,789

207,372

-142,512

The following table summarizes the notional amounts and the fair values of the derivatives designated as fair value hedges. These derivatives are held to hedge interest rate risks and currency risks.

At December 31, 2017

Notional amounts

Fair value assets

Fair value liabilities

Derivatives designated as fair value hedges:

   

ˑ

Interest rate swaps

2,480,693

52,030

-4,912

Total derivatives designated as fair value hedges

2,480,693

52,030

-4,912

Total derivative financial instruments assets (/liabilities)

7,150,482

259,402

-147,424

For the year ended December 31, 2017, FMO recognized an ineffectiveness of €4.6 million net loss on the fair value hedges (2016: €0.2 million net loss). The loss on the hedging instruments amounts to €9.2 million (2016: €10.5 million profit). The profit on hedged items attributable to the hedged risk amounts to €4.6 million (2016: €10.7 million loss).

The comparative figures for derivatives have been included in the following tables.

At December 31, 2016

Notional amounts

Fair value assets

Fair value liabilities

Derivatives other than hedging instruments:

   

ˑ

Currency swaps

184,275

4,028

-1,325

ˑ

Interest rate swaps

696,006

5,818

-2,429

ˑ

Cross-currency interest rate swaps

3,144,704

98,175

-417,366

Subtotal

4,024,985

108,021

-421,120

Embedded derivatives related to asset portfolio

-

5,653

-

Total derivative assets (/liabilities) other than hedging instruments

4,024,985

113,674

-421,120

At December 31, 2016

Notional amounts

Fair value assets

Fair value liabilities

Derivatives designated as fair value hedges:

   

ˑ

Interest rate swaps

3,160,896

72,836

-2,861

Total derivatives designated as fair value hedges

3,160,896

72,836

-2,861

Total derivative financial instruments assets (/liabilities)

7,185,881

186,510

-423,981

5. Loans to the private sector

These loans to the private sector in developing countries are for FMO’s account and risk. The movements of the loans to the private sector can be summarized as follows:

 

2017

2016

Balance at January 1

4,774,103

4,614,458

Disbursements

1,140,471

1,093,287

Reclassification to equity investments

-4,800

-3,841

Repayments

-1,006,703

-1,009,849

Write-offs

-88,822

-28,364

Changes in amortizable fees

2,760

684

Changes in fair value

-47

-64

Exchange rate differences

-512,377

107,792

Balance at December 31

4,304,585

4,774,103

Value adjustments

-204,160

-304,155

Net balance at December 31

4,100,425

4,469,948

The following table summarizes the loans segmented by sector.

 

2017

2016

Financial Institutions

1,749,018

1,899,788

Energy

1,140,456

1,285,647

Agribusiness

506,575

380,885

Multi-Sector Fund Investments

56,290

46,004

Infrastructure, Manufacturing and Services

648,086

857,624

Net balance at December 31

4,100,425

4,469,948

   
 

2017

2016

Gross amount of loans to companies in which FMO has equity investments

84,361

175,989

Gross amount of subordinated loans

303,263

365,113

Gross amount of non-performing loans

245,529

361,223

Non-Performing Loans (NPL) are defined as loans with a counterparty-specific value adjustment and/or loans with interest and/or principal payments that are past due 90 days or more.

6. Loans guaranteed by the State

These loans in developing countries are individually guaranteed by the Dutch State for 80% to 95%. Any losses will be compensated by the State up to the guaranteed percentage.

The loan portfolio guaranteed by the State comprises the loans issued under the FOM program. The movements can be summarized as follows:

 

2017

2016

Balance at January 1

58,626

62,437

Disbursements

6,570

9,890

Repayments

-23,124

-13,691

Write-offs

-1,227

-470

Changes in amortizable fees

269

-48

Exchange rate differences

-1,845

508

Balance at December 31

39,269

58,626

Value adjustments

-313

-1,858

Net balance at December 31

38,956

56,768

The following table summarizes the loans guaranteed by the State segmented by sector.

 

2017

2016

Agribusiness

20,902

31,826

Infrastructure, Manufacturing and Services

18,054

24,942

Net balance at December 31

38,956

56,768

   

Gross amount of subordinated loans

20,173

29,046

Gross amount of non-performing loans

2,446

6,819

7. Equity investments

These equity investments in developing countries are for FMO’s account and risk. The movements in net book value of the equity investments are summarized in the following table. All equity investments of FMO are valued at fair value.

 

2017

2016

Net balance at January 1

1,712,112

1,467,516

Purchases and contributions

192,326

282,504

Reclassification from loans

7,875

3,841

Sales

-195,730

-121,088

Value adjustments

-46,919

-43,996

Changes in fair value

-166,831

123,335

Net balance at December 31

1,502,833

1,712,112

The following table summarizes the equity investments segmented by sector.

 

2017

2016

Financial Institutions

353,528

458,978

Energy

206,820

260,656

Agribusiness

115,400

128,196

Multi-Sector Fund Investments

609,379

646,663

Infrastructure, Manufacturing and Services

217,706

217,619

Net balance at December 31

1,502,833

1,712,112

8. Investments in associates

The movements in net book value of the associates are summarized in the following table.

 

2017

2016

Net balance at January 1

116,060

32,752

Purchases and contributions

110,781

82,390

Reclassification to/ from loans

-2,735

-

Sales

-

-10,365

Share in net results

9,293

6,247

Exchange rate differences

-25,917

5,036

Net balance at December 31

207,482

116,060

All investments in associates from FMO at valued based on the equity accounting method.

On July 21, 2016 FMO signed an agreement to set up an investment vehicle, Arise B.V., together with Norfund and Rabobank. This investment vehicle intends to invest in African financial institutions. The commitment for FMO amounts to USD 211 million. In 2017 FMO distributed USD 86,9 million in cash and finalized the contribution of assets to Arise B.V. with an underlying value of USD 3,7 million. As of 31 December 2017 our outstanding commitment towards Arise B.V. amounts to USD 30 million.

Arise B.V. is a private limited liability company incorporated in the Netherlands whose statutory seat is registered at Croeselaan 18, 3521 CB Utrecht, the Netherlands and registered in the Dutch commercial register under number 64756394. FMO’s share and voting rights in Arise B.V. is 27%.

The following table summarizes the associates segmented by sector.

 

2017

2016

Financial Institutions

181,405

99,189

Multi-Sector Fund Investments

11,804

15,936

Infrastructure, Manufacturing and Services

1,397

935

Multi-Sector Fund Investments

12,876

-

Net balance at December 31

207,482

116,060

The following table summarizes FMO’s share in the total assets, liabilities, total income and total net profit/loss of the associates.

 

Arise B.V.

Other associates

Total assets

166,932

43,083

Total liabilities

1,209

1,324

Total income

1,107

462

Total profit/loss

15,218

-5,925

9. Movement in value adjustments

Movement in value adjustments FMO portfolio in the consolidated balance sheet

 

Guarantees

Loans

Total

Balance at January 1, 2016

11,513

364,079

375,592

Additions

-

78,887

78,887

Reversals

-4,920

-116,306

-121,226

Exchange rate differences

-133

5,859

5,726

Write-offs

-

-28,364

-28,364

Balance at December 31, 2016

6,460

304,155

310,615

Additions

165

63,255

63,420

Reversals

-3,207

-45,145

-48,352

Exchange rate differences

-521

-29,283

-29,804

Write-offs

-

-88,822

-88,822

Balance at December 31, 2017

2,897

204,160

207,057

The value adjustments related to guarantees are included in other liabilities (see note 17).

Movement in value adjustments on FMO’s loan portfolio in the consolidated balance sheet

 

Group-specific value adjustments

Counterparty-specific value adjustments

Total

Balance at January 1, 2016

171,350

192,729

364,079

Additions

-

78,887

78,887

Reversals

-70,445

-45,861

-116,306

Exchange rate differences

2,392

3,467

5,859

Write-offs

-

-28,364

-28,364

Balance at December 31, 2016

103,297

200,858

304,155

Additions

-

63,255

63,255

Reversals

-30,596

-14,549

-45,145

Exchange rate differences

-9,416

-19,867

-29,283

Write-offs

-

-88,822

-88,822

Balance at December 31, 2017

63,285

140,875

204,160

Movement in value adjustments on FMO’s guarantee portfolio in the consolidated balance sheet

 

Group-specific value adjustments

Counterparty-specific value adjustments

Total

Balance at January 1, 2016

3,341

8,172

11,513

Additions

-

-

-

Reversals

-2,403

-2,517

-4,920

Exchange rate differences

13

-146

-133

Write-offs

-

-

-

Balance at December 31, 2016

951

5,509

6,460

Additions

-

165

165

Reversals

-221

-2,986

-3,207

Exchange rate differences

-160

-361

-521

Write-offs

-

-

-

Balance at December 31, 2017

570

2,327

2,897

Movement in value adjustments on loans guaranteed by the State in the consolidated balance sheet

 

2017

2016

Balance at January 1

1,858

5,657

Additions

-

112

Reversals

-318

-3,442

Exchange rate differences

-

1

Write-offs

-1,227

-470

Balance at December 31

313

1,858

FMO’s own risk participation with regard to FOM (5% to 20%) is not guaranteed. The guaranteed part is recorded under other receivables (see also note 12). In 2017 no amounts where claimed towards the guarantors which where recorded in the value adjustments (2016: €2,680).

Total value adjustments on loans in the consolidated profit and loss account

 

2017

2016

Additions and reversals loans FMO portfolio

-18,110

37,419

Additions and reversals loans guaranteed by the State

-318

3,330

Guaranteed part additions and reversals loans guaranteed by the State

318

-2,680

Balance at December 31

-18,110

38,069

10. Property, plant and equipment

 

Furniture

ICT equipment

Leasehold improvement

Total 2017

Total 2016

Historical cost price at January 1

9,631

13,771

265

23,667

19,560

Accumulated depreciation at January 1

-7,923

-6,512

-64

-14,499

-11,934

Balance at January 1

1,708

7,259

201

9,168

7,626

      

Investments

486

6,362

4

6,852

4,107

Depreciation

-591

-2,518

-45

-3,154

-2,565

Divestments historical cost price

     

Accumulated depreciation on divestments

     

Balance at December 31

1,603

11,103

160

12,866

9,168

      

Historical cost price at December 31

10,117

20,133

269

30,519

23,667

Accumulated depreciation at

-8,514

-9,030

-109

-17,653

-14,499

Balance at December 31

1,603

11,103

160

12,866

9,168

Software related assets are included in the ICT equipments and amount to €8,2 million (2016: €4,5 million).

11. Current accounts with State funds and other programs

 

2017

2016

Current account EIB

231

299

Current account Infrastructure Development Fund

4

1,028

Current account Access to Energy Fund

39

407

Current account FOM OS

-

41

Current account Capacity Development Program

-

126

Balance at December 31

274

1,901

12. Other receivables

 

2017

2016

Debtors related to equity investments

104,037

3,634

Taxes and social premiums

877

600

To be declared on State guaranteed loans

265

1,961

Accrued management fees State funds

-

5,301

Amortized fee receivables

15,534

10,257

Balance at December 31

120,713

21,753

Debtors related to equity investments reflects dividend receivables and sales proceeds of our private equity portfolio. The significantly increase is predominantly due to one large exit in December 2017 amounting to €98 million. This amount has been received in January 2018.

13. Accrued income

 

2017

2016

Accrued interest on loans

58,070

63,265

Accrued interest on swaps and other assets

25,066

28,763

Balance at December 31

83,136

92,028