news - FMO in 2020: Standing by our customers

Milestones in 2020 

• The launch of FMO’s Ventures Program to support pioneering technology-enabled business models. These innovative players are crucial to accelerate progress towards the SDGs. With 6 investments in 2020 (and 4 new or follow-on investments in Asia), FMO is now one of the most active Venture Capital investors in Africa. This program is launched with the support of the European Commission and the Dutch ministry of Foreign Affairs.
• The extension of the NASIRA risk sharing program to support COVID-19-affected entrepreneurs in Africa and the European Neighborhood together with the European Commission and the Dutch ministry of Foreign Affairs. The first guarantee with EU support was signed with SASFIN in South Africa.
• Throughout the year we intensified our collaboration with other development finance institutions, in particular the Europeans, to support our joint customers throughout the pandemic and economic crisis.
• We worked closely with the Dutch government on the establishment of Invest International.
• We issued a seven-year, €500 million sustainability bond.

Financial performance 2020

At the end of 2020, we noted a net loss of €205 million. Our first loss since 1991 is largely driven by a decrease of the fair value of FMO’s private equity portfolio. This decrease is seen across sectors and geographies and is the result of a global decline in emerging market equity valuations due to the COVID–19 pandemic. Furthermore, these assets are exposed to changes in currency rates as a large part of FMO's private equity portfolio is denominated in US dollars. The EUR/USD depreciation of 10% in 2020 had a downward effect on the financial performance of these assets.

Despite these negative factors, our net interest income grew due to lower interest rates during 2020, resulting in lower interest expenses.

Although we are reporting a net loss in 2020, FMO’s capital ratio remains well above the combined ratio of the SREP minimum requirement, set by the Dutch Central Bank. The CET–1 ratio increased by 1.5% to 23.3% (SREP minimum CET – 1 ratio: 13.3%). In the course of 2020, FMO raised additional funding through the issue of a sustainability bond and a private placement of a bond in Swedish crown. In addition, FMO issued a Tier 2 subordinated bond amounting to €250 million. FMO continues to receive an AAA rating with a stable outlook from both Fitch and Standard &Poor's. FMO’s diversification strategy, with exposures diversified across sectors and countries, has again proven effective during the pandemic as some economies and sectors have been affected less than others.

Outlook 2021

“Our motto for FMO’s anniversary celebration was The Challenge of the Decade, the Achievement of the Century. The challenge has only become bigger in the last year. The pandemic has caused rising inequality within and amongst countries. And although greenhouse gas emissions fell, fulfilling the promise of the Paris Agreement on climate change still requires strong efforts from people, industries, and governments.

In striving to fulfil our mission, cooperating with other development banks and partners has become key. Together, we are stronger. Joining forces creates efficiency and strengthens our ability to address the immediate COVID-19 recovery and long-term challenges like climate change. Equally significant are commercial partners who see the need and the gains of investing in sustainable development in emerging markets. Partners that are willing to build on our 50-year track record and experience, help us accelerate promising projects, grow green and inclusive business models and replicate best practices.”

 “We are very grateful for the trust we received from our stakeholders, customers and investees. And, above all, we would like to give a special, heartfelt thanks to the FMO staff, who kept being formidable, even under very difficult circumstances.’’

For more information, please see the full annual report