Governing Board approves Report of the Governor 2017
5 April 2018
PARIS - Today, at its 219th meeting held in Paris, the Governing Board of the Council of Europe Development Bank (CEB) approved the Report of the Governor 2017 and the CEB’s financial statements for the year (for key figures see table below).
The CEB successfully achieved and even exceeded its business activity objectives for the first year of the Development Plan 2017-2019. More specifically,
- The volume of projects approved rose by 13% to € 3.9 billion allocated to 41 new projects, reflecting a strong financing demand in the area of social investments
- The stock of projects increased by 24% to € 7.0 billion
- Loans disbursed grew by 13% to reach an amount of € 2.3 billion
Guided by the Development Plan 2017-2019, the Bank has been working closely with member countries, including regional and local authorities as well as national governments, to help address their social infrastructure needs. The CEB’s current strategy focuses on three activity areas: supporting inclusive growth, the long-term integration of migrants and refugees, and climate change mitigation. The projects funded by the CEB place emphasis on vulnerable groups and on the reduction of inequality and poverty.
Promoting inclusive growth for cities through the financing of social infrastructure projects is one of the CEB’s priority areas. In this regard, the CEB’s social mandate makes the Bank an ideal financing partner for cities seeking to diversify their financing tools. A total of € 460 million, of which € 154 million through cross-sectoral loans, was approved in 2017 alone for cities and regions. Over the last ten years, the CEB has invested € 1.5 billion in municipal social infrastructure through loans directly granted to, and implemented by, cities.
Furthermore, the CEB recognises the potential of micro, small and medium-sized enterprises (MSMEs) as drivers of economic growth, net employment generators and promoters of social cohesion. The CEB also recognises the vital role that microfinance plays in fostering labour market integration for migrants. In response to MSMEs’ limited access to funding sources, the CEB has been providing them with medium- and long-term financing. In 2017, the CEB approved € 1.5 billion for MSME financing.
In the course of last year, the CEB developed co-financing and ex-ante financing of EU-funded investment activities, directly supporting current EU objectives and facilitating the absorption of EU funds in CEB priority sectors. The programmes financed by the Bank play an important role in the promotion of inclusive and sustainable growth and help to improve the living conditions of inhabitants at regional and local level.
The CEB also remains focused on active partnerships through its fiduciary activities. In 2017, further contributions were pledged to the Regional Housing Programme (RHP) – the CEB’s flagship grant-based project – and the Migrant and Refugee Fund (MRF), demonstrating strong support by the donor community. In addition, two further fiduciary accounts have been created recently: the Slovak Inclusive Growth Account, the purpose of which is to improve social inclusive growth across Europe, and the Turkey Refugee Account which, in cooperation with the European Union, assists Turkey in tackling the challenges related to the inflow of migrants and refugees.
As regards its funding activity in 2017, the CEB launched five issues for a total amount of € 3 billion at attractive financial conditions. Two issues were denominated in USD, two in GBP and one in EUR. The latter was the first social inclusion bond issued by the CEB, which demonstrated the Bank’s important role in the social bond market.
In terms of financial performance, net profit reached € 112.0 million in 2017, compared with € 104.9 million in 2016 (+6.8%), mainly as a result of a positive variation of € 8.5 million in the valuation of financial instruments (IFRS volatility effects). Excluding IFRS volatility effects, core earnings remained stable.
The CEB’s prudential ratios showed positive results throughout 2017, respecting their limits and underscoring the CEB’s financial soundness. In light of its solid overall performance, Standard & Poor’s upgraded the outlook for the CEB’s AA+ rating from ‘stable’ to ‘positive’.
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 positive 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.