- EBRD posts profit of €2.1 billion in 2023, in wake of record investment of €13.1 billion
- 2023 profit figure offsets 2022 losses following Russian invasion of Ukraine
- EBRD shareholders have approved €4 billion paid-in capital increase to support further investment in Ukraine
The European Bank for Reconstruction and Development (EBRD) recorded a profit of €2.1 billion last year, according to results for 2023 released today. The figure offsets €1.1 billion losses incurred in 2022 following the Russian invasion of Ukraine.
Soha El-Turky, EBRD Chief Financial Officer, said: “These financial results demonstrate the all-round stability of the balance sheet and the EBRD’s firm financial footing. With global challenges such as the climate crisis, macroeconomic uncertainties and geopolitical tensions growing more and more acute, the EBRD has the capacity to accelerate its support for clients and countries of operations.
“It has both the capital base and liquidity cushion to continue to support Ukraine and the other economies where we work, while being able to withstand financial shocks.”
The Bank’s strong results for last year – close to 2021’s record profits of €2.5 billion - were largely due to the performance of equity investments across its regions of operations.
The EBRD invests primarily in the private sector, with the aim of supporting the transition to market economies. Its equity investments recorded a gain of €1.0 billion last year, compared to a loss of €1.1 billion in 2022.
While equity markets in general were profitable in 2023, the Bank’s equity investments performed particularly well, exceeding benchmarks applicable to the regions in which the Bank invests.
Due to rising interest rates, the EBRD’s return on capital – the interest earned on assets funded by members’ equity – increased fivefold, to €0.5 billion in 2023 from €0.1 billion in 2022.
Loan investments provided a stable flow of interest income of €1.1 billion, compared with €1.2 billion in 2022. The proportion of non-performing loans was also stable, remaining at 7.9 per cent, while an additional gain of €0.1 billion came from a net release of impairment charges.
At the end of 2023, the EBRD had a capital base of €22.3 billion overall, up from €19.3 billion in 2022. At the same time, the EBRD continues to be rated triple-A with a stable outlook, a status reaffirmed by all three major credit ratings agencies over the course of the year. The Bank expects to remain strongly capitalised, despite the economic consequences of the war on Ukraine, and to deploy this capital to support the transition of its clients and countries of operations.
The start of the full-scale war on Ukraine had a significant impact on 2022’s financial performance, due to the EBRD’s large portfolio of investments and equity holdings in Ukraine in a year when the country’s GDP fell by 30 per cent. That negative impact diminished in 2023, while the Ukrainian economy grew by 5 per cent.
In December 2023, the Bank secured approval from its shareholders for a paid-in capital increase of €4 billion to provide significant and sustained investment for Ukraine, now in wartime and in the future for the reconstruction of the country, when sizeable resources will have to be deployed. Last year also marked important progress for the Bank as its Governors approved amendments enabling limited and incremental expansion of its operations to sub-Saharan Africa, which has growing economic links with the economies where the Bank currently operates, as well as potential for private-sector development, and Iraq.
The EBRD announced in January that its 2023 business volume had reached a record €13.1 billion. In 2023, private-sector investment rose to 80 per cent of annual business volume and green financing remained stable at 50 per cent, in line with the Bank’s commitment to making a majority of its annual investments green by 2025.
