The EDB sums up the preliminary results of 2020
Moscow, 22 December 2020. The Eurasian Development Bank (EDB) summed up its preliminary results for 2020.
By the end of the year, the Bank’s current investment portfolio is expected to reach US $4.415 billion, an increase of 2.2% (US $93 million) compared to the end of 2019. The balance-sheet portfolio is expected to stand at US $2.929 billion, up 2.5% (US $73 million) year-on-year.
The year-end profit is expected to reach US $29 million.
It is noted however that the revaluation of national currency positions against the US dollar can significantly alter the final figures.
In 2020, 14 new investment project agreements were signed for a total of US $1.274 billion.
In terms of distribution by country, Russia (37.8%) and Kazakhstan (36.6%) account for the largest portions of the current investment portfolio, with Belarus having 22.9%, the Kyrgyz Republic 1.5%, and Armenia 1.2%.
The de-dollarisation process observed in most EDB countries has also influenced the Bank’s investment portfolio. The share of projects financed in roubles and tenge has increased by a factor of 1.6 over five years and is 51% in relation to projects financed in dollars and euros. The increase in lending in the national currencies has boosted demand for related transactions such as letters of credit, bank accounts (to service loan obligations, collateral accounts), cross-border transfers, and foreign exchange transactions.
The EDB’s financial sustainability has been confirmed by high ratings from rating agencies.
The ratings on the international scale are as follows:
- Moody’s: Baa1
- Fitch: BBB+
- Standard&Poor's: ВВВ
- ACRA: A
The ratings on the national scale are:
- Fitch: AAA (KAZ)
- ACRA: AAA (RU)
The Bank’s portfolio is of good quality, partly because the related risks had not been initially concentrated in the sectors that have been hardest hit by lockdowns and other forms of restrictions.
As at 30 November 2020, the proportion of loans with interest and principal payments overdue for 90 days or more (NPL 90+) in the Bank’s portfolio was 1.1% (compared to 1.2% as at 31 December 2019).
The share of the portfolio-related risk categorised as Stage 3 according to IFRS 9 (financial instruments for which there is some evidence of impairment) has also decreased markedly, to 4.8% as at 30 November 2020 from 8.8% as at 31 December 2019. This resulted from the full repayment of a major risk. The remaining stage 3 risk is covered by almost a half by a sovereign guarantee from one of the Bank’s member states.
Nevertheless, the EDB understands that the situation with the spread of COVID-19 is volatile and that there is considerable uncertainty as to how it will evolve. The Bank, therefore, conducts regular portfolio stress tests to assess the risks of each counterparty. The baseline scenarios for such stress tests suggest that the quality of the EDB portfolio should not change.
The EDB conducts settlement and clearing transactions for its clients. The most important feature of its clearing and settlement system is that it can be used for payments in the national currencies of the member states without conversion into third-country currencies.
As at 30 November 2020, the EDB maintained 155 customer accounts, including 107 current (settlement) accounts, four collateral accounts, and 44 savings (deposit) accounts for 61 companies. Account balances amounted to the equivalent of US $343 million.
As at the same date, the Bank maintained 205 LORO accounts for 61 customers, including 56 banks from all the six member countries and exchanges from the EAEU countries. LORO balances amounted to US $45 million.
The Bank’s platform can be used for other cross-border settlements without significant changes.
The EDB is stepping up efforts to diversify its funding sources. In 2020, the Bank raised the equivalent of US $537 million. In addition to raising funds through classic bond issues, it plans to increase the volume of tied financing, bilateral loans, and green and social bond transactions in 2021. In doing so, the Bank is focusing on expanding not only the list of instruments but also the geographical reach of investors. In 2021, the EDB will continue to borrow in local currencies (around RUB 10 billion and KZT 50 billion in debt instruments), as well as in global currencies (bilateral loans or bond issues).
On 30 June 2020, the Bank’s Council established the Eurasian Development Bank’s Digital Initiative Fund. The Fund has held a competition for the best digital solutions to counter the spread and overcome the negative consequences of the COVID-19 pandemic in Eurasia. The Bank received 163 entries from all its member states and selected four winners.
The Fund has also initiated the launch of the Travelling without COVID-19 mobile app. In coordination with the Russian Ministry of Culture, it is now developing a project titled Working in the EAEU to ensure that migrant workers receive government and commercial services through a mobile app.
“In the coming year, we intend to focus on end-to-end integration projects – those that will create enduring economic ties among our countries. The second area of our work in the next period will be to promote digital transformation in our countries with the help of the Digital Initiative Fund. We also intend to expand the range of our macro research products. All these plans will be included in our new strategy, which we expect to adopt by the summer of 2021,” said Nikolai Podguzov, Chairman of the EDB Management Board.
Additional Information:
The Eurasian Development Bank (EDB) is an international financial institution promoting integration and development in its member countries – Armenia, Belarus, Kazakhstan, the Kyrgyz Republic, Russia, and Tajikistan. The EDB's charter capital totals US $7 billion. The Bank was established in January 2006 by Russia and Kazakhstan and is headquartered in Almaty. Transport infrastructure, energy, chemical, mining, and mechanical engineering projects with a high integration effect account for the main part of the EDB’s portfolio.
The EDB Media Centre:
Alexander Savelyev +7 (985) 765 23 59 (Moscow)
Azima Sapargaliyeva +7 (777) 750 00 08 (Almaty)
Sergey Gorbachev +7 (916) 727 22 00 (Moscow)