INCREASED FOCUS ON LENDING TO NON-MEMBER COUNTRIES

 

The Nordic Investment Bank's activities in the first eight months of 2006 were influenced by ample liquidity on the market. This liquidity affected demand for credit in many of NIB's member countries. However, in many non-member countries demand was brisk. The Bank's operational results in terms of core earnings continued to develop steadily. But the increase in market interest rates exerted a negative influence on the value of the trading portfolio and hence on the Bank's profits. NIB celebrated its 30th anniversary and launched its revised strategy, emphasising the Bank's role in strengthening competitiveness and enhancing the environment.

 

In the Bank's member countries, the manufacturing and energy sectors were the largest recipients of loans. The total loan amount agreed upon in Iceland was high, but in Finland and Sweden the amount was lower than in previous years. In the member countries, the period was characterised by low demand for NIB's long-term loans in the beginning and gradually increasing activity towards the end. Demand for NIB's loans outside the member countries remained strong. Lending in non-member countries continued to be dominated by loans for infrastructure investments. The loans agreed during the period comprised, for example, the financing of an energy plant in Poland, public transportation in Chile and Turkey, port facilities in Morocco, mobile telecommunications in Brazil and Russia, and a paper mill in Jordan. The largest borrower regions outside the member countries were Asia and Central and Eastern Europe. Of NIB's total loans disbursed worldwide, 12% comprised environmental loans. Important environmental projects during the period comprised investments in geothermal energy, as well as investments in the pulp and paper industry and district heating.

 

In the first eight months of 2006, NIB carried out 42 borrowing transactions in 8 different currencies. The US dollar was NIB's most important borrowing currency.

 

NIB's core earnings, where the impact of gains and losses on items at fair value and changes in the market value of the trading portfolio are not reflected, increased to EUR 104 million (1-8/2005: 98). However, the development of the value of the trading portfolio meant that the profits declined to EUR 90 million (117). Net interest income was EUR 120 million (110). NIB's balance sheet total at the end of the period was EUR 18.0 billion, compared to EUR 18.2 billion at year-end 2005. This was mainly due to the weakening of the US dollar against the euro. During the period, NIB paid its owners a dividend of EUR 55 million for the year 2005.

 

Core earnings are expected to continue to develop at a steady pace during the remainder of the year and will for the year as a whole end up somewhat higher than in 2005. Overall profitability will depend on the development of market interest rates.

 

Key figures (in EUR million)*

	1-8/2006	1-8/2005	1-12/2005
Loans disbursed	807	1,378	2,092
New loan agreements	848	1,747	2,616
New debt issues	1,929	1,923	2,059
Core earnings**	104	98	150
Profit	90	117	165
Profit/average equity (%)	6.8	9.6	8.9
	31 Aug 2006	31 Aug 2005	31 Dec 2005
Loans outstanding	11,455	11,315	11,717
Total assets	17,970	18,526	18,178
Net liquidity	2,961	3,445	3,101
Equity/total assets (%)	11.0	10.3	10.7

 

* The figures have not been audited

** Core earnings = profits excluding credit losses, the impact of gains and losses on items at fair value, and changes in the market value of the trading portfolio

 

NIB is a multilateral financial institution owned by eight member countries: Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway and Sweden. The Bank finances private and public projects in and outside the member countries. NIB has the highest possible credit rating, AAA/Aaa, with the leading rating agencies Standard & Poor's and Moody's.

 

Fur further information, please contact:

Mr Johnny Åkerholm, President and CEO, +358 9 18001 or

Ms Jamima Löfström, Communications Manager, +358 9 180 0291 or +358 40 581 7208.

 

NIB's interim report can be found on: www.nib.int