Governing Board approves the Report of the Governor 2016
7 April 2017
Today, at its 216th meeting held in Paris, the Governing Board of the Council of Europe Development Bank (CEB) approved the Report of the Governor 2016 and the CEB’s financial statements for the year.
TThe CEB successfully achieved and even exceeded its business activity objectives in the third and final year of the Development Plan 2014-2016, reaching record highs. More specifically,
- approved projects rose by 50% to € 3.5 billion,
- the stock of projects increased by 20% to € 5.7 billion,
- loans outstanding grew by 5% to reach a record high of € 13.7 billion.
2016 was marked by a particularly strong demand for financing, with a total of 35 projects approved, many of them substantial in both size and scope. This exceptional development is the result of additional project requests by member states in Western and Northern Europe facing the challenges of the migrant and refugee crisis. CEB loans facilitate the long-term integration of migrants in these countries and help CEB member countries to cope with migration pressures, for example in Germany where the projects approved are worth over € 650 million. In France, more than € 500 million were approved in loans for social projects in the area of education and vocational training, and in Bulgaria € 200 million were approved for loans in education and vocational training as well as in the area of improving living conditions in urban rural areas. Overall, 67% of the projects approved benefited CEB target countries.
In 2016, the CEB reaffirmed its focus on its core activity of supporting refugees and displaced persons. Commenting on this, CEB Governor Rolf Wenzel stated: “The Migrant and Refugee Fund, which enjoys the full backing of CEB member states, continues to give its full support to countries receiving migrants and refugees. In a demonstration of true European solidarity, contributions from numerous donors to the Fund have made possible the approval of 14 grants for refugee projects so far. Meanwhile, the Bank also supports the social integration of migrants and refugees with its lending instruments.”
Furthermore, the Regional Housing Programme (RHP) saw in 2016 the delivery of almost 1000 housing solutions to families in the four partner countries: Bosnia and Herzegovina, Croatia, Montenegro and Serbia. This joint initiative, which is managed by the CEB, is helping to resettle thousands of families who continue to live in displacement more than twenty years after the war in the former Yugoslavia.
Investment in another one of the CEB’s key sectors, support to micro, small and medium-sized enterprises, amounted to € 1.2 billion in 2016, representing almost half of all loans approved last year. These loans contribute to job creation and preservation, which constitutes one of the CEB’s priorities in the current economic context. For example, projects approved in this sector in Poland totalled almost € 500 million.
Net profit reached € 104.9 million in 2016. The decrease of 17.4% compared with 2015 results from the decrease of € 21.5 million (-12.3%) in the net banking income owed to:
- the negative impact of € 6.1 million in the valuation of derivative financial instruments (IFRS volatility effects) in 2016 compared with a positive impact of € 8.7 million in 2015,
- the negative variation of € 6.8 million in the net interest margin due to the lower return on the fixed rate long-term portfolio of financial assets in the context of the low interest rate environment.
However, excluding IFRS volatility effects with no economic or financial impact on the CEB, core earnings for 2016 amounted to € 111.0 million, representing a decrease of only 6.2% compared with 2015. Net profit is allocated in full to the general reserves, thereby increasing the CEB’s equity by 4% to € 2.8 billion.
The CEB’s prudential framework ratios showed positive results throughout 2016, respecting all the limits set.
In 2016, by further intensifying its European and international cooperation, the CEB reinforced its operational capacity, boosted its expertise and enhanced its visibility. This is reflected, among other things, in the implementation of a new fiduciary account: the Slovak Inclusive Growth Account, which is aimed at financing technical assistance for projects with a high social added value.The CEB expects to maintain these excellent performance levels in 2017, as set out in the objectives of the new Development Plan 2017-2019.
Set up in 1956, the CEB (Council of Europe Development Bank) has 41 member states. Twenty-two Central, Eastern and South Eastern European countries, forming the Bank's target countries, are listed among the member states. As a major instrument of the policy of solidarity in Europe, the Bank finances social projects by making available resources raised in conditions reflecting the quality of its rating (Aa1 with Moody's, outlook stable, AA+ with Standard & Poor's, outlook stable and AA+ with Fitch Ratings, outlook stable). It thus grants loans to its member states, and to financial institutions and local authorities in its member states for the financing of projects in the social sector, in accordance with its Articles of Agreement.