Notes to the consolidated profit and loss account

21. Net interest income

Interest income

 

2017

2016

Interest on loans valued at amortized cost

291,228

289,846

Interest on banks

-1,457

-805

Interest on short-term deposits

11,410

6,746

Interest on derivatives related to asset portfolio

-20,826

-19,286

Interest on available for sale interest-bearing securities

4,267

5,900

Total interest income

284,622

282,401

Included in the interest on loans is €9,112 (2016: €11,328) related to loans for which value adjustments have been recorded.

Out of the total interest income of €284,622 (2016: €282,401) the amount of interest income for financial assets that are not at fair value through profit or loss is €294,038 (2016: €294,941).

Interest expense

 

2017

2016

Interest on debentures and notes under hedge accounting

-46,061

-50,864

Interest on debentures and notes valued at amortized cost

-36,216

-17,794

Interest on derivatives

-2,386

2,813

Interest on short-term credits

-76

-16

Total interest expense

-84,739

-65,861

Out of the total interest expense of €84,739 (2016: €65,861) the amount of interest expense for financial liabilities that are not at fair value through profit or loss is €36,292 (2016: €17,810).

22. Net fee and commission income

 

2017

2016

Prepayment fees

1,824

1,798

Administration fees

2,231

2,053

Other fees (like arrangement, cancellation and waiver fees)

2,668

2,840

Total fee and commission income

6,723

6,691

Custodian fees and charges for the early repayment of debt securities

-712

-547

Total fee and commission expense

-712

-547

Net fee and commission income

6,011

6,144

23. Dividend income

 

2017

2016

Dividend income direct investments

32,624

11,629

Dividend income fund investments

3,968

5,190

Total results from equity investments

36,592

16,819

24. Results from equity investments

 

2017

2016

Result from the sale of equity investments at fair value

153,720

39,039

Result from the sale of associates

851

2

Total results from equity investments

154,571

39,041

The carrying amount of the equity investments valued at fair value at the time of sale was €282,652 (2016: €80,935). The release from the available for sale reserve at the time of the sale of equity investments at fair value was €151,091 (2016: €38,300); as a result the net result from sale of equity investments at fair value amounted to a gain of €2,629 (2016: gain of €739).

The significant increase in results from equity investments was predominantly driven by three private equity exits in Asia and Eastern Europe and contributed €109 million to our results in 2017.

25. Results from financial transactions

 

2017

2016

Result on valuation of hedged items

4,615

-10,702

Result on valuation of hedging instruments

-9,234

10,525

Subtotal

-4,619

-177

Result on sale and valuation of derivatives held for trading1) 

15,777

-21,624

Result on sale and valuation of embedded derivatives related to asset portfolio

1,763

10,175

Result on sale of interest-bearing securities

2,414

833

Foreign exchange results

-1,574

983

Other

2,342

1,031

Total results from financial transactions

16,103

-8,779

  • 1 Hedge accounting is not applied to these derivatives. These derivatives are used for hedging interest-rate and foreign-exchange risk for loans in emerging market currencies and funding in currencies other than euros and US dollars. FMO has no derivatives for trading purposes.

26. Remuneration for services rendered

  

2017

2016

Funds and programs managed on behalf of the State:

  

ˑ

MASSIF

12,410

13,247

ˑ

Infrastructure Development Fund

8,213

5,089

ˑ

Access to Energy Fund

1,836

2,117

ˑ

FOM OS

300

571

ˑ

Capacity Development Program

241

180

Syndication fees, remuneration from directorships and others

6,372

7,361

Total remuneration for services rendered

29,372

28,565

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. Other operating income

 

2017

2016

Other operating income

1,348

1,186

Total other operating income

1,348

1,186

Other operating income mainly consists of received payments on written-off loans.

28. Staff costs

The number of FTEs at December 31, 2017 amounted to 467 (2016: 419 FTEs). All FTE’s are employed in the Netherlands except for 2 FTE’s.

 

2017

2016

Salaries

-40,787

-35,933

Social security costs

-4,309

-4,075

Pension costs

-11,283

-10,104

Temporaries

-4,213

-2,773

Travel and subsistence allowances

-4,760

-4,124

Other personnel expenses

-6,207

-6,676

Total staff costs

-71,559

-63,685

29. Other administrative expenses

 

2017

2016

Other administrative expenses

-23,909

-19,357

These expenses consist of services from third parties and other operational expenses. The remuneration paid to the Supervisory Board is included in these expenses. At December 31, 2017 the Supervisory Board consisted of six members (2016: five). The members of the Supervisory Board were paid a total remuneration of €120 (2016: €94).

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 (2016: Ernst & Young Accountants LLP) to the company and its subsidiaries.

Fee charged by auditors

2017

2016

Statutory audit of annual accounts

-447

-235

Other assurance services

-269

-269

Total

-716

-504

30. Other operating expenses

 

2017

2016

Other operating expenses

-48

-75

The other operating expenses includes bank charges.

31. Income taxes

Income tax by type

 

2017

2016

Current income taxes

-37,653

-43,953

Deferred income taxes

372

984

Total income tax

-37,281

-42,969

The reconciliation of the statutory income tax rate to the effective income tax rate is as follows:

  

2017

2016

Profit before taxation

292,516

219,074

   

Income taxes at statutory rate of 25% (2016: 25%)

-73,129

-54,769

Increase/decrease resulting from:

  

ˑ

Settlement with local withholding taxes

4,274

4,937

ˑ

Non-taxable income and expense (participation exemption facility)

31,181

6,739

ˑ

Tax adjustments to prior periods

-93

40

ˑ

Other

486

84

Total income tax

-37,281

-42,969

Effective income tax rate

12.7%

19.6%

Current income tax

The company paid €61,545 (2016: €46,166) to tax authorities. The remaining current income tax receivable amount to €7,458 (2016: €16,434 liabilities). Per year end 2017 there were no unused tax losses and the unused tax credits amount to € 0 (2016: €687).

Deferred tax

FMO’s deferred income tax assets and liabilities are summarized as follows:

 

2017

2016

   

Deferred tax assets

  

Pension provision

3,464

3,092

Actuarial gains and losses on defined benefit plans

7,123

7,526

Total deferred tax assets

10,587

10,618

   

Deferred tax liabilities

  

Fair value movements equity investments

-8,785

-10,776

Fair value measurement of interest-bearing securities

-897

-2,912

Total deferred tax liabilities

-9,682

-13,688

Net balance at December 31

905

-3,070