FMO INVESTOR PRESENTATION FMO - THE DUTCH DEVELOPMENT BANK January 2019 www.fmo.nl Women-owned business, Cambodia
CONTENTS I. Funding Plan 2019 3 II. About FMO 5 III. FMO Strategy 7 IV. Relationship Dutch State 10 V. Portfolio 12 VI. Liquidity Management & Funding 17 VII. Contact 22 VIII. Appendix 24 Cookhouse wind farm, South Africa 2
I. FUNDING PLAN 2019 3
FUNDING PLAN 2019 Focus on USD funding Renewable energy projects Funding need of approximately USD 1.5 bln 1. USD funding (USD 1.0 bln) ― 5y USD 500 mln inaugural Green* Bond (Reg\S) ― Social** Bond (USD 100 mln) ― Short-term funding \ MTNs (USD 300 mln) 2. Local Currency (LCY) Frontier issuance: ― USD 250 mln Social projects aimed at reducing inequality ― Tenors: 2y-3y 3. Other funding in EUR, SEK, AUD or other hard currency ― USD 400 mln ― Long dated funding: 7y-12y *Contingency funding option: EUR Green Bond **Contingency funding option: EUR Social Bond or another currency 4
II. ABOUT FMO 5
FMO THE DUTCH DEVELOPMENT BANK (CLICK) COSTA RICA, WIND ENERGY CAMBODIA, MICRO ENTREPRENEUR TUNESIA, FOOD SUPPLY KEY SECTORS FOR DEVELOPMENT Agribusiness, food & water Investing across the agribusiness value chain Energy Promote the transition to a low-carbon system and safeguard energy security Financial Institutions Increasing access to finance and support financial inclusion 6
III. FMO STRATEGY 7
FMO STRATEGY VISION We believe in a world in which, in 2050, more than 9 billion people live well and within the means of the planet’s resources. OUR MARKETS OUR SDGs MISSION Agribusiness, Food & Water We empower entrepreneurs to build a better world. Energy STRATEGIC GOAL Financial Institutions Your preferred partner to invest in local prosperity. STRATEGY Dutch Business Higher Deeper Higher Impact Portfolio Relationships Productivity 8
FMO STRATEGY: invest in local prosperity H1 18 HIGHER IMPACT PORTFOLIO DEEPER RELATIONSHIPS • NN FMO Emerging Markets Loan fund: 1 st close $ 250 million €1.0 billion 175,000 jobs supported total new commitments • NASIRA risk sharing facility approved by European Commission ( € 75 million ) 24% • Climate Investor One investments contributing to reducing • Client Satisfaction inequalities (% of total) ( NPS score ) 414,000 35% HIGHER PRODUCTIVITY green investments avoided greenhouse gas emissions (% of total) (tCO2eq) • Business Process Optimization 9
IV. RELATIONSHIP DUTCH STATE 10
STRONG LINK TO DUTCH STATE FMO is the Strategic government vehicle for promoting • I. Ownership private-sector growth in developing countries Public private development bank The Ministry of Finance and the Ministry of Foreign • Dutch State Affairs jointly oversee FMO’s activity and accounts 7% The relationship with the Dutch State entails 3 pillars: • Dutch banks: ABN AMRO, Ownership, Support Agreement and Manager of State Funds ING, Rabobank 51% 42% Integral link with the Dutch State results in • Trade Unions, Employer's Federations, Companies, AAA ratings S&P and Fitch Individuals II. Explicit support agreement* III. State Funds FMO manages funds for €1.1 bln on behalf and for the risk Documented in the bilateral ▪ of the Dutch State to finance high risk projects “Agreement State – FMO of 16 November 1998 ”** Art. 7: Maintenance Obligation: 154 The Dutch State is committed to covering all losses from operations that cannot be covered by general or specific Access to Energy Fund 422 provisioning and reserves Infrastructure Art. 8: Financial Security Obligation: Development Fund The Dutch State shall prevent situations arising in which MASSIF FMO is unable to meet its commitments on time 513 Valid for an indefinite period and may be cancelled ▪ subject to a twelve-year notice period 11
V. PORTFOLIO 12
INVESTMENT PORTFOLIO Currency* (per Jun-18) Sector (per Jun-18) 8% 12% 9% Financial Institutions Euro Energy 35% 28% Other* USD Agribusiness Local currency 80% 28% • *FMO ceases new business in Other sectors since 31-Dec-17 Product * (per Jun-18) Private equity portfolio (per Jun-18) 5% Equity 4% Private equity Loans 31% 42% funds Guarantees Direct 58% Mezzanine investments 60% • • Provide LT financing Typical holding period of 5-10 years • • Fund management & syndication Focus on direct investments in focus sectors • • Diverse product portfolio Focus on exits * Based on committed investment portfolio, excl. government funds, of EUR 7.9 bln per Jun 2018 13
ACTIVE WORLDWIDE in emerging markets €7.9 billion total committed portfolio Head office The Hague, The Netherlands Top five countries 1. Turkey 2. India 3. Nigeria 4. Bangladesh 5. Georgia Most exposure No exposure Local office Johannesburg, Excluding regional investments South Africa Eastern Europe & Latin America Non-specific region Africa Asia Central Asia & The Caribbean €0.5 bln €2.6 bln €1.3 bln €1.7 bln €1.8 bln 14
DIVERSIFIED NON-INVESTMENT GRADE LOAN PORTFOLIO Portfolio breakdown per country and sector Portfolio concentrated in BB\B rating* 50% 46% 45% 43% 42% 41% 39% 40% 38% 7% 35% 6% 30% Other 5% 25% Agribusiness 4% 20% Energy 16% 3% 15% Financial 11% 10% Sector 2% 10% 5% 5% 1% 4% 5% 0% 0% BBB- and BB-, BB, BB+ B-, B, B+ CCC+ and higher lower ratings Dec-16 Dec-17 Jun-18 • • Per Jun 2018 approx. 570 counterparties with approx. Exposure spread over more than 85 countries EUR 15 mln average exposure **) • 10 largest country exposures represent approx. 1/3 of the • total portfolio Credit ratings reflect counterparty credit quality • Country limits based on country ratings and FMO’s capital • Internal credit ratings are mapped versus Moody’s • • Sector limits capped at 50% of country limit Collateral is acquired on 27% of the gross loan amount *) Gross loan portfolio excluding government funds (disbursed) **) Number of counterparties and exposure relate to the gross loan portfolio 15
2011 – 2018 | Strong performance Portfolio development Financial indicators FMO Total (x € MLN) 9,000 Jun 30, Dec 31, Jun 30, Balance sheet (EUR bln) 2018 2017 2017 8,000 Net loans 4.3 4.1 4.2 7,000 Equity investments portfolio 1.8 1.7 1.8 6,000 Total assets 8.3 8.3 8.4 Shareholders' equity 3.0 2.8 2.8 5,000 Debt securities and debentures/notes 4.9 5.1 5.3 4,000 3,000 Net profit* .124 .255 .156 Ratios 2,000 Non Performing Loans** 6.3% 6.9% 9.4% 1,000 Return on Equity 8.6% 9.1% 11.2% 0 Jun- 2011 2012 2013 2014 2015 2016 2017 Common Equity Tier1 (CET1) 25.8% 24.6% 23.7% 18 Committed 5,046 5,450 5,789 7,065 8,062 8,539 7,933 7,867 portfolio* • *Net profit per Jun-18 reported according to IFRS9, in previous years under IAS39 (see Annex1). FV changes on PE • Total FMO-A portfolio: targeting 4% growth per annum portfolio recorded in P&L; more P&L volatility • Portfolio development includes EURUSD effect • **Non-performing loan % (NPL) as per June 18 is aligned with the regulatory definition • NPLs according to the old definition can be found in Annex 1 16
VI. LIQUIDITY MANAGEMENT & FUNDING 17
LOW RISK LIQUIDITY PORTFOLIO • To meet conservative liquidity requirements Bond portfolio by country (per Jun-18) • Short term investments < 1Y 5% • Bond portfolio in EUR and USD: 3% • fair value of EUR 362 mln (Jun-18) Netherlands 25% 9% Supra • Level 1 assets Germany Sweden • Buy and hold Finland 18% • ECB-eligible France 40% • Liquidity Coverage Ratio (LCR) of 444% • Net Stable Funding Ratio (NSFR) of 124% Bond portfolio by rating* (per Jun-18) • Positive and negative ESG screening 15% • Investments in thematic bonds 38% AAA AA 85% * The lower of Fitch and S&P is used 18
ESTABLISHED SSA ISSUER IN THE CAPITAL MARKETS Funding Strategy Funding per Currency ( per Nov-18) • Funding need of EUR 1.0-2.0 bln p.a. 8% • Funding secured though demonstrated AUD market access as SSA borrower EUR 36% JPY • Public markets and private placements 39% LCY • Focus on USD and EUR funding NZD SEK • Duration matching (3Y – 5Y) USD 7% ― Max. tenor 12 years 1% 1% 8% • Sustainability Bonds to finance: Redemption profile ( per Nov-18) ― Green projects 1400 1200 ― Inclusive finance projects 1000 • FMO is an eligible issuer under the Public 800 Sector Purchase Programme of the ECB 600 400 200 0 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 19
WITH A LEADING ROLE IN THE SUSTAINABLE BOND MARKET Industry leading Sustainability Ratings • Sustainability Bond allocations in Sustainalytics ― EUR million (per Dec-17) Oekom Research ― Member of the Green Bond Principles (GBP) • Use of proceeds reporting via Sustainability Bond Newsletter ― 264 292 https://www.fmo.nl/susbonds Available funding IFI working group on Green Bond Impact reporting harmonization ― Disbursed, green Disbursed, inclusive Project disclosure on FMO world map: https://www.fmo.nl/map ― 1,219 External assurance to confirm alignment with GBP • Sustainalytics ’ 2nd opinion on FMO Sustainability Framework - Sustainalytics ’ review of eligible projects - EY: use of proceeds (financial perspective) - FMO awarded First Green Bond – Netherlands certificate • by Climate Bond Initiatives (partnership per Feb-16) 18
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