Transcript AfDB Group Financial Presentation

Highlights of Year 2005

Positive economic outlook and indicators for Africa

G8 adopts the Multilateral Debt Relief Initiative

Mr. Donald Kaberuka assumes office as the seventh elected
President of the Bank Group in September

Constitution of a Presidential Task Force on Institutional Reform

Bank policies and mix of products are amended to better address the
needs of member countries

Launch of first Botswana Pula denominated bond under the local
currency initiative
2
Table of Contents
1
African Economic Outlook
2
Bank Group’s Activities and Road Ahead
3
Bank Financial Profile
4
Capital Market Activities
3
1
African Economic Outlook
The combination of the positive economic outlook
and greater attention from the international
community should result in progress towards
achieving the Millennium Development Goals in
Africa
4
Africa’s 2005 real GDP growth rate exceeded 4.5%
for the third consecutive year
Real GDP Growth
6%
5.2%
4.9%
5%
4.6%
18 countries achieved GDP
growth rates
above 5 %
Average per region
5%
4%
Central Africa: 4.8%
North Africa:
4.8%
East Africa:
5.6%
Southern Africa: 5.0%
West Africa:
4.4%
4.0%
4%
3.5%
3%
2001
2002
2003
2004
2005
Drivers
Macroeconomic stability – Debt relief – Continued global expansion
5
Significant improvement in terms of trade and export growth lead to two consecutive
years of current account surplus for the first time in two decades.
13%
10%
Terms of Trade
7%
4%
1%
-2%
2001
2002
2003
2004
2005
-5%
2.5%
2.0%
Current account as a % of GDP
1.5%
1.0%
0.5%
0.0%
2001
2002
2003
2004
2005
-0.5%
-1.0%
-1.5%
-2.0%
6
Improved export performance and debt relief measures
have contributed to a steady decline in debt service
20%
60%
Debt Service Ratio
17.8%
53.3%
50%
14.9%
15%
52.9%
Debt / GDP
48.3%
13.8%
42.4%
40%
12.0%
35.7%
10.6%
10%
2001
30%
2002
2003
2004
2005
2001
2002
2003
2004
2005
7
Sound macroeconomic policies and strengthened economic management
are yielding result which will allow countries to pursue second-generation
reforms, such as privatization and public sector reforms.
Inflation
Fiscal balance as % of GDP
3%
12%
2%
11%
1%
10%
0%
9%
-1%
8%
-2%
-3%
2001
7%
2002
2003
2004
2005
2001
2002
2003
2004
2005
8
In 2005, the spotlight of world development agenda was firmly on Africa
G8 SUMMIT ON POVERTY
Millennium
Development Goals
1.
Eradicate extreme poverty
and hunger
2.
Achieve universal
primary education
3.
Promote gender equality
and empower women
4.
Reduce child mortality
5.
Improve maternal health
6.
Combat HIV/AIDS, malaria
and other diseases
7.
Ensure environmental
sustainability
8.
Develop a global
partnership for
development
Multilateral Debt
Relief Initiative
Fight against disease
and hunger:
Bono, Clinton & Gates
African Infrastructure
Consortium
Commission for
Africa
Still, only few African countries will achieve the MDGs by 2015
even if all existing commitments to increase aid are honoured.
9
2
Bank Group’s Activities and Road Ahead
In 2005, the Bank continued to build on its
achievements and to reposition itself for greater
effectiveness and efficiency in the delivery of its
mandate
10
Providing impetus to Africa’s development through
the three windows of the ADB Group
Bank Group Vision
“The African Development
Bank is the premier financial
development institution of
Africa dedicated to
combating poverty and
improving the lives of the
people of the continent and
engaged in the task of
mobilizing resources toward
the economic and social
 Access to ADB window
progress of its regional
 Access to ADF window
member countries”
 Access to ADB and ADF windows
11
The Bank Group’s coverage of regions and sectors is well diversified
North Africa
32.7%
West Africa
24.2%
Central Africa
11.9%
East Africa
14.8%
Multiregion
3.1%
Southern
Africa
13.3%
Since inception, over 3,100 approvals amounting to UA 38.6 billion (US$ 55.2 billion)
as at 31 December 2005
12
The Bank Group’s approvals reflect customized assistance
In UA
million
US$ 4.3
billion
US$ 3.0
billion
US$ 2.8
billion
US$ 3.3
billion
US$ 2.6
billion
24 out of 33 eligible African countries already benefit
from debt relief under enhanced HIPC initiative
13
The Bank’s Middle Income Countries Initiative in 2005 further
increased the attractiveness of the ADB window
COMPETITIVE PRICING
Commitment fees eliminated for new sovereign
guaranteed loans
Lending spread decreased from 0.5% to 0.4%
Market risk premium eliminated for fixed rate loans
TECHNICAL ASSISTANCE
MIC Trust Fund amount increased from UA 1 million
(US$ 1.43 million) to UA 16 million (US$ 22.87
million)
Ceiling per project raised to UA 600,000
(US$ 857,562) from UA 100,000 (US$ 142,927)
ENVIRONMENTAL IMPACT
Loan-processing procedures streamlined
14
Development of a vibrant and competitive private sector
across Africa is a strategic priority for the Bank
Product Type
Sector Distribution
Finance
55.20%
Mining
6.10%
Infrastructure
Funds
8.70%
Tourism
2.00%
Private &
QuasiEquity
0.8%
Infrastructure
12.20%
Oil & Gas
13.90%
Approvals in UA million
Private sector strategy focus on
 Creating a conducive business environment
 Strengthening financial systems
 Improving infrastructure through Public-Private
Partnerships
 Promoting development of trade and
small-and-medium scale enterprises
Lines of
Credit
53.6%
Equity
Funds 9.3%
Manufacturing
0.90%
Others
1.00%
Guarantee
0.7%
Loans
30.0%
Enclave
Projects
5.6%
Approvals in US$ million
350
306
300
250
200
270
255
241
192
199
257
206
180
164
150
100
50
0
2001
2002
2003
2004
2005
Cumulative approvals: UA 1.17 billion (US$ 1.67 billion)
15
ADF addresses the needs of low-income countries
Approvals
2005
Activities
Highlights
Policy
Update
•
UA 16.26 billion (US$ 23.24 billion) of assistance provided at end-2005
through ten replenishments of ADF
•
Total approvals Increased to UA 1.42 billion (US$ 2.03 billion) in 2005
from UA 1.26 billion US$ 1.96 billion) in 2004
•
Project lending prioritized agriculture and rural development, transport,
social sectors and multi-sector activities which account for 84.2% of
ADF loan approvals in 2005
•
2005 grant approvals benefited 18 countries and almost doubled to UA
415 million (US$ 593 million) from UA 214 million (US$ 332 million) in
2004
•
2005 grant operations focused on water and sanitation, agriculture and
rural development, the social sector and transportation
•
ADF borrowers offered the flexibility to select the currency of their
choice
16
Through co-financing and partnership, the Bank Group enhances
the resources and expertise mobilised for Africa
Sector Distribution in 2005
0.6%
9.5%
1.2%
18.6%
•
From 1967 to 2005, the Bank
participated in 852
co-financing operations,
amounting to UA 84.2 billion
(US$ 120.4 billion).
•
In 2005, 19 operations for UA
3.2 billion (US$ 4.6 billion)
were co-financed compared
to 31 operations for UA 2.9
billion (US$ 4.4 billion) in
2004.
15.7%
6.7%
47.7%
Multisector
Energy Sector
Environment
Finance
Transportation
Agricultural Sector
Social Sector
17
The Multilateral Debt Relief Initiative launched in 2005
aims to complement the HIPC debt relief process
•
HIPC debt relief is projected to substantially lower debt stocks
and debt ratios for most HIPC beneficiaries
•
14 countries had reached completion point at end - 2005, 11 are
at decision point and 7 are at pre-decision point
•
The G8 Summit in July 2005 proposed that the ADF, IDA and IMF provide
100% irrevocable debt stock cancellation for countries that reach the
completion point under the enhanced HIPC initiative
Debt Relief
•
33 of the 42 eligible countries are in Africa
Initiative
•
Underlying Principles: Irrevocability and additionality of debt relief as well as
preservation of the financial integrity of ADF and IDA
•
Based on debt outstanding and disbursed at December 31, 2004, as the cutoff date, and January 1, 2006, as the implementation date, the cost of
canceling the ADF debt of the 33 potential beneficiaries, after HIPC relief, is
estimated at UA 5.84 billion (US$9.06 billion) in nominal terms.
•
Donors will make new contributions to match, “dollar-for-dollar”,
foregone principal and service charge payments based on an agreed burden
sharing
Heavily Indebted
Poor Countries
Initiative
Multilateral
18
The Bank Group continues to champion vital initiatives on the continent
Bank selected in 2005 to host the Secretariat of the African Infrastructure Consortium for which
NEPAD is lead infrastructure agency.
Took part in all support missions in 2004 and 2005 to launch APRM in nine countries and the
actual peer review missions in Ghana, Rwanda and Kenya.
Post-Conflict
Country Facility
Conceived by the Bank to assist countries emerging from conflicts to clear their arrears,
re-engage with development partners and become fully reintegrated in the international
community. At end 2005, the arrears of Burundi and the Republic of Congo have been cleared
through this facility.
Global statistics initiative to meet the demand for reliable regular and comparable data, and to
strengthen statistical capacity in the continent leading to increased investor confidence and
private capital flows. In 2005, under the supervision of the Bank, 48 RMCs started monthly data
collection, providing the Bank with the monthly price data of available goods and services for
853 products.
Water Initiatives
Rural Water Supply and Sanitation Initiative: (RWSSI) was launched by the Bank in 2004 to
provide safe water and basic sanitation to 80% of the rural populations in Africa by 2015. It is a
USD 14.2 billion initiative to be financed by ADF, donors, government resources and
beneficiaries. At end 2005, 8 RWSSI programs and 2 studies were approved.
African Water Facility: This USD 600 million facility seeks to strengthen water resource
management in the continent. At end 2005, donor countries had pledged EUR 9.9 million in
financial support. The Bank has committed EUR 1.8 million over 3 years.
19
The Bank continues to build on the strong foundation laid by past
reforms to serve its regional members more effectively
Invest in Bank Staff and
improve business and
administration processes
Strengthen the
Bank’s operations
with renewed country
focus and greater
delegation to
regional offices
TASK FORCE
ON
INSTITUTIONAL
REFORM
Adapt the Bank’s
structure to enable it to
fulfill its mandate better
Deepen the Bank’s
research capacity
20
The Bank’s decentralization process is well under way
 25 Offices to be established before the end
of 2006
Offices
Logistically
Operational
Egypt
Ethiopia
 Countries covered would represent approx. 89% of
the Bank’s current portfolio
Gabon
Nigeria
Madagascar
 Strengthening institutional capabilities, ensuring
greater development and making the Bank more
client-responsive
Mali
Mozambique
Senegal
Tanzania
 Field offices expected to strengthen country
dialogue, country portfolio performance and project
implementation
Uganda
Offices
Planned/
Work-in Progress
Algeria
Angola
Burkina Faso
Cameroon
Chad
DRC
Ghana
Kenya
Malawi
Morocco
Rwanda
Sierra Leone
Sudan
Zambia
21
3
Bank Financial Profile
The Bank’s robust financial position bolsters its ability
to deliver on its development mandate
22
The Bank enjoys strong shareholder support
for its development mandate
Africa
60%
Algeria
Angola
Benin
Botswana
Burkina Faso
Burundi
Cameroon
Cape Verde
Central Afr. Rep.
Chad
Comoros
Congo
Côte d’Ivoire
D. R. Congo
Djibouti
Egypt
Equatorial
Guinea
Eritrea
Ethiopia
Gabon
Gambia
Ghana
Guinea
Guinea Bissau
Kenya
Lesotho
Libya
Madagascar
Malawi
Mali
Mauritania
Mauritius
Morocco
Mozambique
Europe
21%
Namibia
Niger
Nigeria
Rwanda
S. Tome &
Principe
Senegal
Seychelles
Sierra Leone
Somalia
South Africa
Sudan
Swaziland
Tanzania
Togo
Tunisia
Uganda
Zambia
Zimbabwe
Austria
Belgium
Denmark
Finland
France
Germany
Italy
Americas
11%
Argentina
Brazil
Canada
USA
Asia
7.3%
Middle East
0.7%
Kuwait
Netherlands
Norway
Portugal
Spain
Sweden
Switzerland
UK
China
Korea
India
Japan
Saudi Arabia
23
The ADB’s strong financial condition protects its bondholders
Leverage
* Not restated. The Bank defines “usable capital” as the sum of paid-in capital, reserves, and callable
capital of countries rated double-A and above
24
Growing reserves and stable earnings enhance
the Bank’s risk bearing capacity…
Net Income
Total Reserves
2,266
2,187
In UA million
2005
Net income
US$ 316
million
1,508
1,465
1,266
Reserves
US$ 3,239
million
125
2001*
189
2002*
178
2003*
144
2004**
221
2005
* These figures have not been restated. Net income figures exclude the IAS 39 adjustment.
**The total amount transferred to reserves on 1 January 2005 due to the application
of the IFRS changes was UA 700.18 million.
25
… allowing the Bank to allocate significant amounts from income …
Income Allocation
In millions
* Subject to approval by Board of Governors
26
… to development initiatives.
Income Allocations in UA Millions
27
The Bank’s exceptional risk bearing capacity reinforces its ability to
operate in a challenging environment
2005 Risk capital
Paid-in capital:
US 3,018 million
Risk capital
5,000
Reserves: US$ 3,239
million
In UA million
4,000
494
3,000
1,266
491
469
1,465
1,507
2,187
Non-sovereign
portfolio
4%
Treasury
2%
2,266
Sovereign
portfolio
45%
2,000
1,000
Uses of risk capital
1,948
1,983
2001
2002
2,023
2,066
Unused risk
capital
49%
2,112
As of 31 December 2005
0
Paid-in capital
2003
Reserves
2004
2005
Loan loss provisions
Based on the effects of the revised IFRS, effective 1 January 2005, the nature of loan loss provisions has changed from
‘general’ to ‘specific’; accordingly, loan loss provisions represent a reduction in the exposure to the relevant country, not a source
of risk capital. Therefore, the main components of the Total Risk Capital are Paid-in Capital and Reserves.
28
In its peer group, the Bank’s risk bearing capacity is unsurpassed …
Capital Adequacy
Ratio
120%
101%
89%
100%
80%
50%
60%
44%
40%
20%
0%
AfDB
AsDB
IADB
IBRD
Usable capital / Risk assets
Source: Moody’s. Moody’s define usable capital as “all capital related payments plus reserves and unallocated net income.”
Risk assets are defined as loans to countries considered below investment grade by Moody’s.
All data is as of 31 December 2004, except for the IBRD’s, which is as of 30 June 2004.
29
… and the Bank’s concentration risk is the lowest
Concentration
Ratio
250%
191%
200%
165%
137%
150%
100%
86%
50%
0%
ADB
AsDB
IADB
IBRD
5 largest exposures to equity
Source: Fitch
All data is as of 31 December 2004, except for the IBRD’s, which is as of 30 June 2004.
30
AfDB’s financial
ratios compare
favourably with
those of peers
AfDB
ADB
Aaa/AAA
Aaa/AAA
EBRD
IBRD
IADB
Aaa/AAA AAA/Aaa Aaa/AAA
Gross debt / Adjusted
shareholders equity (%)
166
186
216
281
260
Operating income /
Average assets (%)
2.2
0.8
1.3
0.6
1.3
Provisions for losses +
adjusted shareholders equity +
AAA callable capital / Disbursed
loans, equity investments &
guarantees (%)
173
128
147
112
118
Liquid assets / Total assets (%)
45
27
38
13
20
Source: Standard & Poor’s
All data is as of 31 December 2004, except for the IBRD’s, which is as of FY 2005.
31
4
CAPITAL MARKET ACTIVITIES
The Bank is a flexible and responsive issuer in the
capital markets
32
The Bank’s borrowing strategy enables it to provide
cost-effective resources to African countries
Funding Strategy
Instruments and debt programs






Public bond issues in the Global, Euro and
domestic markets
Private placements including structured
notes
Loans
Unlimited Global Debt Issuance Facility
Euro 1 billion Commercial Paper




Raise cost effective resources to on-lend to
clients
Flexible in order to address investor needs
Responsive to market trends
Develop and nurture a well diversified investor
base
Maintain a regular presence in the public
international markets
Currency distribution and structure of the outstanding portfolio
CHF 2.6%
ZAR 1.6%
Uridashi
21.9%
JPY 30.9%
Loans 2.3%
USD 44.2%
GBP 1.0%
AUD 2.9%
BWP 0.6%
SEK 0.0% EUR 5.0%
CAD 11.0%
HKD 0.1%
Private
Placements
24.4%
Public
Issues
51.5%
UA 5,940 million (US$ 8,490 million) as of 31 December 2005
33
The Bank maintains a constant presence in the global debt market
2003 – USD 1,000 million Global – 3.25% due 2008
2004 – USD 500 million Global – 3.75% due 2010
2005 – USD 500 million Global – 4.50% due 2009
Investors – by Geography
Investors – by Type
Fund
M anagers
27%
Banks 11%
M iddle East &
Africa 2%
Pension
Funds 5%
Asia 40%
Americas 43%
Insurance
Companies
8%
Corporates
1%
Central
Banks 48%
Europe 15%
34
Funding Strategy for 2006 leverages on the achievements of 2005
 Dollar global benchmark bond issue
2005
UA 545 million
(US$ 779 million)
raised through:
 Uridashi Issue (targeted at Japanese
investors)
 Botswana Pula Issue
 Private Placement

Continue to expand the Bank’s global
investor base

Remain responsive and flexible in order
to address investor needs

Address strategic issues in domestic and
public markets

Sustain activity in private placements

Issue bonds denominated in African
currencies
2006 borrowing program
Has a ceiling of UA 850 million
(US$ 1.2 billion)
35
Building on success in African currencies
TANZANIAN
SHILLING ISSUE
BOTSWANA
PULA ISSUE
BWP 300 million
10% due 12 January 2007
IFR Comments


“ … the transaction … represented the first true
Eurobond in the currency….”
USD 10 million linked to TZS
11.8% due 20 February 2007
IFR Comments
 “The African Development Bank (AfDB) last
week opened the door to the Tanzanian
shilling market with a US$10m one-year
currency-linked bond …”
“… good demand from European institutions
with the paper quickly sold out, primarily on the
back of the chunky 10% coupon and the positive
economic story that has emerged from
Botswana since independence in 1966.”
EUROWEEK Comments
EUROWEEK Comments

“AfDB defies pessimists to launch clearable
pula Eurobond”

“AfDB introduces new market with synthetic
Tanzanian shilling bond”

“The African Development Bank … priced the
first Botswana pula Eurobond that will be fully
clearable in the currency.”

“The African Development Bank has become
the first supranational borrower to issue a
bond linked to the Tanzanian shilling”
The Bank is monitoring issuance possibilities in several other African currencies
36
The Bank enjoys the highest credit rating
Strong Support from Member
Countries
Healthy Capital Position
Franchise Value
Quality of Management
Excellent Liquidity
Preferred Creditor Status
Prudent Financial Management
37
APPENDIX
38
ADB: Summary financial information
In UA million
2001
2002
2003
2004
2005
Approvals
987
1,068
746
1,520
869
8,873
8,197
10,034
10,792
11,601
21,491
21,510
21,564
21,597
21,636
1,770
1,803
1,866
1,920
1,967
Reserves
1,266
1,465
1,508
2,187**
2,266
Net Income
125*
189*
178*
144
221
Assets
Subscribed Capital
Paid in Capital***
net of CEAS
* These figures have not been restated. Net income figures exclude the IAS 39 adjustment.
**The total amount transferred to reserves on 1 January 2005 due to the application of the IFRS changes was UA 700.18 million.
***Paid-in Capital excludes non-convertible currencies and non-negotiable notes
39
ADB: Statement of income and expenses (UA million)
YEARS ENDED 31 DECEMBER
2005
2004
2003
2002
2001
324.23
155.37
479.60
(217.12)
(30.77)
7.22
323.11
123.57
446.68
(197.08)
(7.70)
(10.35)
325.46
99.77
425.23
(219.59)
(81.65)
414.82
74.01
488.83
(258.69)
37.20
447.82
121.32
569.14
(349.45)
82.30
13.85
252.78
(53.86)
177.69
21.51
145.51
(3.49)
263.86
(53.80)
248.20
155.69
(114.02)
(41.67)
15.72
(7.10)
0.75
(0.74)
142.20
(104.59)
(37.61)
7.40
(6.42)
3.31
(0.84)
109.32
(77.55)
(45.14)
2.61
(5.57)
(1.68)
0.98
81.82
(59.50)
(32.27)
1.25
(5.51)
(0.06)
(1.20)
73.99
(52.19)
(30.35)
1.40
(5.88)
(5.62)
(0.09)
Translation gains and losses
Total other expenses, net
1.58
(31.46)
(34.16)
(48.80)
(37.79)
(40.54)
Net income
221.32
143.53
96.71
226.07
207.66
OPERATIONAL INCOME AND EXPENSES
Income from loans
Income from investments
Total operational income
Interest and amortized issuance costs
Unrealized loss/(gains) fair valued borrowings and related derivatives
Unrealized gain/(loss) derivatives on non fair valued borrowings
Provision for loan losses
Net operational income
OTHER EXPENSES, net
Administration expenses
Management fees
Administration expenses - net
Other income
Depreciation
Provision for equity investments
Loss/(gain) on exchange
2004 has been restated
40
ADB: Balance sheet highlights (UA million)
YEARS ENDED 31 DECEMBER
ASSETS
Due from banks
Demand obligations
Investments
Derivative asset
Non-negotiable instruments
Accounts receivable
Outstanding loans
Accumulated provision for loan losses
Equity participations, net
Other assets
LIABILITIES, CAPITAL & RESERVES
Accounts payable
Securities sold under agreements to repurchase and
payable for cash collateral received
Derivative liability
Borrowings and embedded derivatives
Capital
Cumulative exchange adjustment
on subscriptions
Reserves
Cumulative currency translation
adjustment reserve
2005
2004
2003
2002
2001
70.34
3.80
5,155.05
285.93
25.90
556.38
5,512.44
(194.61)
168.70
16.98
11,600.91
43.80
3.91
4,435.42
274.79
31.18
397.48
5,640.43
(213.59)
160.60
18.14
10,792.16
66.54
3.80
4,135.88
253.90
41.81
203.91
5,612.24
(469.09)
164.22
21.34
10,034.55
89.18
6.83
1,972.62
149.11
57.48
265.18
5,967.66
(491.66)
163.84
16.69
8,196.93
92.97
27.94
2,071.26
135.77
62.78
333.24
6,465.81
(494.17)
159.56
18.38
8,873.54
498.22
377.17
194.77
232.34
382.98
466.96
317.25
5,940.40
2,263.45
9.30
513.89
5,638.89
2,213.51
113.91
396.09
5,799.11
2,168.50
0.00
61.83
4,455.04
2,125.07
64.81
5,211.28
2,077.80
(151.76)
2,266.39
(147.20)
2,186.61
(145.33)
1,959.21
(141.99)
1,919.47
(129.61)
1,715.41
11,600.91
10,792.16
(451.71)
10,034.55
(454.83)
8,196.93
(449.13)
8,873.54
2004 has been restated
41
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Financial and Operational Analysis

Documentation for Debt Programs

Rating Agencies Reports

Financial Products for Borrowers

Exchange Rates

Annual Report
Financial Information in Japanese for investors is NOW available at
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42