DUSHANBE, February 17, 2011, Asia-Plus — The European Bank for reconstruction and Development (EBRD) significantly increased profits in 2010 as emerging Europe started to pull out of the worst recession in a generation and most countries in the region started to see economic growth again, the EBRD News Center reported on February 16.
The Bank recorded a net profit of €1.4 billion for 2010, on the back of a strong growth in investments and the value of the Bank’s equity holdings. As a result of the recovery the Bank also had lower loan loss provisions. The profit compared with a net loss of €746 million in 2009.
The net profit in 2010 will strengthen the EBRD’s capacity to bolster the recovery in its region with new investments in 2011, the first year of the Bank’s business strategy for the period until 2015. Backed with a strong pipeline of upcoming projects, investments will aim especially to address vulnerabilities such as lack of diversification of real economies, underdeveloped domestic capital markets and the need for a strong focus on energy efficiency.
The EBRD maintained its strong capital position during the year and continued to be able to borrow at favorable rates. It also maintains high levels of liquidity and enjoys the strong support of its shareholders, who last year approved a 50 per cent increase in the Bank’s authorized capital to €30 billion, to become effective during 2011.
2010 also saw significant growth in key strategic initiatives. Investments in the EBRD Early Transition Countries rose by 80 per cent to €920 million with 114 projects. Investments under the Sustainable Energy Initiative rose 64 per cent to €2.2 billion and accounted for nearly a quarter of total EBRD financing in 2010.
While continuing to provide strong support for the financial sector, the EBRD in 2010 shifted its focus more to financing the real economy, with direct investment in corporates accounting for over one quarter of total new commitments.
Responding to a resurgence of food price increases, the Bank also stepped up its investments in the agribusiness sector. The Bank achieved a new record in this sector, signing 63 new projects worth €836 million, an increase of 31 per cent from 2009. Record investments were also seen in the power and energy sector, where there was strong demand for funding renewable energy projects. As a result, investments in renewable energy nearly tripled in 2010 with the Bank investing €363 million in nine projects, while power and energy investments in total rose by roughly one third to over €1 billion.
The Bank expects the positive economic environment will further contribute to the Bank’s profitability in 2011, but the annual financial results remain vulnerable to changes in the financial markets and equity markets in particular.
In accordance with the macro economic development and needs in the region and the Bank’s medium term strategy, the EBRD expects to maintain a robust level of investments in 2011 of between €8 billion to €9 billion.
In Tajikistan, the EBRD is increasing the financial sector’s capitalization and enhancing its capacity for financial intermediation. The Bank is boosting the levels of financial intermediation in the country with an equity investment in local banks. Thus, the EBRD took a $900,000 stake in Eskhata Bank, a privately owned bank with headquarters in Khujand. Besides, the Bank acquired a stake of 25 percent + 1 share in Agroinvestbonk, the second largest commercial bank in Tajikistan, for up to 50 million somoni (equivalent to $12 million).
Under EBRD’s new strategy for Tajikistan launched in 2009, in its operations over the next three years the Bank focuses on: fostering private sector; strengthening the financial sector; and support for infrastructure development.
