FMO INVESTOR PRESENTATION FMO - THE DUTCH DEVELOPMENT BANK January 2020 www.fmo.nl Women-owned business, Cambodia
CONTENTS I. FMO Strategy 3 II. Relationship Dutch State 6 III. Funding Plan 2020 8 IV. Portfolio 11 V. Liquidity Management & Funding 16 VI. Sustainability Bonds Framework 20 VII. Contact 29 VIII. Appendix 30 Cookhouse wind farm, South Africa 2
I. FMO STRATEGY 3
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 CAMBODIA, MICRO ENTREPRENEUR COSTA RICA, WIND ENERGY TUNISIA, FOOD SUPPLY 4
IMPACT | Our Sustainable Development Goals In 2019 we contributed towards our three key Sustainable Development Goals (SDGs) Promote inclusive and sustainable economic growth, employment and 227,000 jobs supported decent work for all Reduce inequalities within 24% reducing inequalities and among countries investments (% of total) Investments in least developed countries and in inclusive business green investments (% of total ) Taking urgent action to tackle Investments that mitigate climate change but 33% also support biodiversity conservation, climate change and its impacts reduced water usage and sustainable forestry and agriculture practices 5
RELATIONSHIPS | PARTNERS AND CLIENTS Making Solar Bankable Power of Partnerships Future of Finance 6
II. RELATIONSHIP DUTCH STATE 7
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: 110 The Dutch State is committed to covering all losses from operations that cannot be covered by general or specific Access to Energy Fund 417 provisioning and reserves Building Prospects Art. 8: Financial Security Obligation: MASSIF The Dutch State shall prevent situations arising in which 549 FMO is unable to meet its commitments on time ▪ Valid for an indefinite period and may be cancelled subject to a twelve-year notice period 8
III. FUNDING PLAN 2020 9
FUNDING PLAN 2020 Renewable energy projects Funding need of approximately EUR 1.2 bln 1. USD funding (EUR 500 mln) – 5y USD 500 mln fixed rate (Reg\S) – Private placements (3y-12y) 2. EUR funding (EUR 300 mln) – 7y/10y EUR 300 mln Sustainability Bond 3. Local Currency (LCY) Frontier issuance: – EUR 200 mln Social projects aimed at reducing inequality – Tenors: 2y-5y 4. Other funding in EUR, GBP, SEK, AUD or other hard currency – EUR 200 mln – Long dated funding: 7y-12y 10
IV. PORTFOLIO 11
INVESTMENT PORTFOLIO Currency 1 (per Jun-19) Sector 1 (per Jun-19) 10% 13% 10% Financial Institutions Euro Energy 38% 24% USD Other* Agribusiness Local currency 77% 28% *FMO ceases new business in Other sectors since 31-Dec-17 Product 1 (per Jun-19) Private equity portfolio (per Jun-19) 6% Equity 5% Private equity Loans 30% 43% funds Guarantees 57% Direct Mezzanine investments 58% • • 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 1 Based on committed investment portfolio of EUR 8.4 bln per Dec2018 (excl. government funds) 12
ACTIVE WORLDWIDE in emerging markets €8.5 billion total committed portfolio (H1-2019) Top five countries 1. India Head office 2. Turkey The Hague, The Netherlands 3. Nigeria 4. Argentina 5. Georgia Country exposure Most exposure No exposure Excluding regional investments Local office Johannesburg, Committed portfolio per region South Africa Nairobi, Kenya Eastern Europe & Latin America Non-specific region Africa Asia Central Asia & The Caribbean €0.5 bln €2.8 bln €1.4 bln €1.7 bln €2 bln 13
DIVERSIFIED INVESTMENT PORTFOLIO Portfolio breakdown per country and sector Loan Portfolio concentrated in BB\B rating* Loans and Private Equity (per Jun-19) 50% 46% 46% 45% 44% 43% 45% 9% 39% 40% 8% 35% 7% Other 30% 6% Agribusiness 25% 5% Energy 4% 20% Financial 3% Sector 15% 12% 2% 10% 8% 7% 1% 4% 3% 5% 3% 0% 0% BBB- and BB-, BB, BB+ B-, B, B+ CCC+ and higher lower ratings Dec-17 Dec-18 Jun-19 • • Exposure spread over more than 65 countries Per Dec 2018 approx. 375 counterparties with approx. EUR 15 mln average exposure **) • 10 largest country exposures represent approx. 2/5 of the • Credit ratings reflect counterparty credit quality total portfolio • 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 About 10% of the loan portfolio is guaranteed *) Gross loan portfolio excluding government funds (disbursed) **) Number of counterparties and exposure relate to the gross loan portfolio 14
2012 – 2019 | Strong performance Portfolio development Financial indicators FMO Total (x € MLN) 9,000 Dec 31, Jun 30, Balance sheet (EUR bln) 2018 2019 8,000 Net loans 4.8 4.8 7,000 Equity investments portfolio 1.8 1.9 6,000 Total assets 8.5 9.3 Shareholders' equity 3.0 3.0 5,000 Debt securities and debentures/notes 5.1 5.8 4,000 3,000 Net profit* .151 .58 Ratios 2,000 Non Performing Loans** 8.1% 7.3% 1,000 Return on Equity 5.2% 3.8% 0 H1 2012 2013 2014 2015 2016 2017 2018 Common Equity Tier1 (CET1) 24.6% 24.0% 2019 Committed 5,450 5,789 7,065 8,062 8,539 7,933 8,450 8,509 portfolio* • *Net profit reported according to IFRS9. FV changes on PE portfolio recorded in P&L; more P&L volatility • Total FMO-A portfolio: targeting 8% growth per annum • **Non-performing loan % (NPL) as per Dec-18 is aligned with • Portfolio development includes EURUSD effect the regulatory definition • NPLs according to the old definition can be found in Annex 1 15
V. LIQUIDITY MANAGEMENT & FUNDING 16
LOW RISK LIQUIDITY PORTFOLIO • To meet conservative liquidity requirements Bond portfolio by country (per Jun-19) • Short term investments < 1Y 6% • 4% Bond portfolio in EUR and USD: 8% • Fair value of EUR 385 mln (Jun-19) Netherlands 30% Supra • Level 1 assets Germany Sweden • Buy and hold Finland • ECB-eligible France 30% 22% • Liquidity Coverage Ratio (LCR) of 1591% • Net Stable Funding Ratio (NSFR) of 115% Bond portfolio by rating* (per Jun-19) • Positive and negative ESG screening 25% • Investments in thematic bonds 51% AAA AA 75% * The lower of Fitch and S&P is used 17
ESTABLISHED SSA ISSUER IN THE CAPITAL MARKETS Funding Strategy Funding per Currency ( per Oct-19) • Funding need of EUR 1.0-2.0 bln p.a. 1% 7% • Funding secured though demonstrated market access as SSA borrower AUD EUR • Public markets and private placements LCY 31% 40% SEK • Focus on USD and EUR funding USD • Duration matching (3Y – 5Y) GBP ― Max. tenor 12 years 11% 10% • Sustainability Bonds to finance: Redemption profile ( per Oct-19) ― Green projects ( done ) 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 18
AND A PROVEN TRACK RECORD Bloomberg Ticker: NEDFIN Year Amount Tenor 2017 USD 500 mln, floater 20/01/2020 3 year 2018 USD 500 mln, floater 07/09/2021 3 year 2019 USD 500 mln, 2.75% 20/02/2024 (Green) 5 year 2019 USD 300 mln, 2.25% 21/10/2022 3.5 year 2019 USD 500 mln, 1.75% 12/12/2024 5.2 year 2015 EUR 500 mln, 0.125% 20/04/2022 ( Sustainability ) 7 year 2015 EUR 500 mln, 0.125% 04/11/2020 5 year 2017 EUR 500 mln, 0.125% 01/06/2023 ( Sustainability ) 6 year 2014 AUD 100 mln, 4.75% 11/09/2024 10.5 year 2014 AUD 70 mln, 5.00% 05/05/2026 12 year 2014 AUD 380 mln, 4.25% 08/07/2025 11 year 2017 AUD 15 mln, 3.50% 19/07/2027 10.5 year 2016-2018 SEK 2,700 mln, 0.75% 29/11/2023 (Sustainability) 7 year 2018 SEK 1,650 mln, 1.46% 17/05/2028 10 year 2019 SEK 2,000 mln 0.935% 22/11/2026 7 year 2019 GBP 18 mln, 1.45%, 18/03/2026 7 year 2019 GBP 15 mln, 1.30%, 08/04/2027 8 year 19
VI. SUSTAINABILITY BONDS FRAMEWORK 20
SUSTAINABILITY BONDS FRAMEWORK 2018 BONDS CATEGORIES ELIGIBILITY CRITERIA 21
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