NIB in 2021: Strong financials support increase of sustainable finance

In 2021, the disbursement of Nordic Investment Bank’s (NIB’s) long-term lending returned to a more normal level of EUR 2,440 million compared to EUR 4,853 million in 2020, when the Bank paid out a historically high amount in response to the COVID-19 crisis. The net profit for 2021 amounted to EUR 159 million compared to EUR 165 million in 2020. The NIB Board of Directors, which concluded a business strategy review in December 2021, is proposing to distribute EUR 40 million in dividends to the Bank’s Nordic and Baltic member countries.

“In 2021, the demand for our long-term financing was affected by the fiscal support from governments and recovery funds as well as by a subdued appetite for investments. We expect new lending volumes in 2022 to be moderately higher compared to 2021. This demand would mainly be driven by the impetus of sustainable finance creating new opportunities for responsible investments — in line with our mission — along with hopes that vaccination efforts would mean that the end of the COVID-19 pandemic is in sight,” says André Küüsvek, NIB President & CEO.

Strategy review

NIB’s mission is to finance projects that improve productivity and benefit the environment of the Nordic and Baltic countries. In December 2021, NIB’s Board of Directors completed a business strategy review to focus on opportunities to accelerate delivery of the mission, increase climate finance activities and focus on high-impact transitions in hard-to-abate sectors.

“One focus will be greening corporates, not just on individual projects and the use of a specific loan’s proceeds. NIB is therefore expanding its product offering, of which the newest addition is sustainability-linked loans that centre on our customers’ forward-looking commitments related to agreed key performance indicators,” Küüsvek says.

Among the highlights of 2021, is our first sustainability-linked loan with Electrolux Professional, and a loan — fully financed from NIB Environmental Bond issuance — for the construction of laboratories and test sites for vehicle battery development and electrified transport with Swedish Electric Transport Laboratory AB.

During 2021, projects achieving a “good” or “excellent” mandate rating accounted for 97% of the total amount of rated loans, exceeding a target of 90%. The share of environmental investments increased to 73% of total loans disbursed and rated, reflecting the will of NIB’s owner countries and a growing interest in sustainable finance.

“We aim to be our clients’ first choice in sustainable and long-term financing. To support our ambitions, we updated our Sustainability Policy in 2021, showing that we are very clearly moving away from financing fossil fuels,” says Küüsvek.

Strong financials

Following the record-high lending of 2020, driven by the Bank’s COVID-19 response loans, NIB’s lending volumes normalised in 2021. The net profit for 2021 amounted to EUR 159 million compared to EUR 165 million in 2020, partly due to unrealised valuation losses on financial instruments used for hedging purposes. The Bank has decreased the expected credit loss provision and, as a result, the Bank recorded a reversal of EUR 26 million in net loan losses. The credit quality in the loan portfolio is strong and there were no realised loan losses during the year.

“Although the low yield environment is putting continued pressure on earnings, our annual financial report shows that NIB has a strong financial position with solid capital and liquidity ratios. Sound finances give us firepower to fulfil our mission efficiently and to pay dividends to our owners. For 2021, our Board proposes a sum of 40 million euros to be distributed to NIB’ member countries from the 2021 net profit. This equates to a pay-out ratio of 25% of the Bank’s net profit,” says Kim Skov Jensen, NIB CFO and Head of Treasury & Finance.

During 2021, NIB raised new funding with a nominal value of EUR 6.9 billion through 71 issues in eleven currencies. NIB continued its strong presence in the sustainable bond market by issuing almost a total of EUR 900 million in NIB Environmental Bonds, consisting of a six-year EUR 500 million bond, a five-year SEK 3 billion bond and an inaugural NOK 1 billion bond. The debt issuance supported the disbursement of EUR 2,440 million in lending to the Bank’s customers in 2021.

In 2021, the Bank marked its 10th anniversary of issuing green and blue bonds under the NIB Environmental Bond framework. By the end of 2021, NIB had issued a total of EUR 5.8 billion in NIB Environmental Bonds and financed over 130 sustainable projects with the proceeds.

“NIB is supporting the development of capital markets in its member countries and bond issuances take place in global capital markets as well. Maintaining the highest AAA/Aaa credit rating will continue to be the cornerstone of NIB’s business model,” says Skov Jensen.

To learn more about NIB’s activities in 2021, please visit our Year in Brief.

Download the NIB Financial Report 2021

Key figures and ratios

NIB is an international financial institution owned by eight member countries: Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway and Sweden. The Bank finances private and public projects in and outside the member countries. NIB has the highest possible credit rating, AAA/Aaa, with the leading rating agencies Standard & Poor’s and Moody’s.

For further information, please contact

Mr Kim Skov Jensen, Chief Financial Officer, at +358 10 618 0209, kim.jensen@nib.int

Mr Jukka Ahonen, Head of Communications, at +358 10 618 0295, jukka.ahonen@nib.int

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