FMO’s Annual Report 2021: Resilience During Times of Change
FMO recently released their 2021 Annual Report: Resilience During the Times of Change, which showcases the organization’s achievements for the 2021 period.
According to FMO CEO, Mr Michael Jongeneel, there are eight years left for the world to achieve the Sustainable Development Goals and FMO still has a long way to go. “The widely differing way in which countries have recovered from the pandemic has caused inequality to increase. And the global climate is still on course to breach the 1.5-2-degree limit of the Paris Agreement. More than ever, there is an urgent need for the private sector to work with governments and civil society to find, nurture and finance projects that will bring about change,” he said.
Despite travel restrictions, FMO continued to support its customers to deal with the pandemic. “And while we did not achieve our target on new investments, we exceeded our target on the mobilization of third-party funds and nearly achieved our target for public fund investments. Our impact numbers show the same diverse picture. We exceeded our target for new investments in reducing inequalities (€714 million in 2021, target was €596), but did not reach our target for new investments in green projects (€544 million in 2021, target was €592), while our outstanding portfolio supported an estimated 644,119 direct and indirect jobs (2020: 672,492)”, he added.
“FMO has made a substantial profit in 2021 of € 491 million. This is a significant improvement compared to the end of 2020 when we reported a loss of €205 million. There are three main drivers, which explain this development. First, economies have largely recovered after the initial COVID-19 shock, which has led to a significant upward revaluation of our Private Equity portfolio. Second, the appreciation of the US dollar has had a positive effect on the value of our assets. As our investment portfolio is largely denominated in US dollar, fluctuations in the exchange rate strongly affect our financial results. Third, despite the initial negative outlook, we were glad to see that most of our customers were able to meet their financial obligations, which has led to a net release in our impairment levels,” said Mr Jongeneel.
FMO’s capital buffers exceed the minimum required by the Dutch Central Bank and the higher requirements defined by its internal risk appetite. The total capital ratio decreased to 23.7% (2020: 24.9%). The CET–1 ratio amounted to 22.5% (2020: 23.3%).
“FMO’s diversification strategy, with exposures across sectors and countries, has proven effective during the pandemic as some economies and sectors have been affected less than others. FMO continues to receive an AAA-rating with a stable outlook from both Fitch and Standard & Poor’s,” he added.
“For me, 2021 was a year during which FMO took further steps to serve our customers and markets better in the future. Building on all the skills and knowledge of our diverse staff, I see a solid base for impact maximization and growth. As a regulated and accredited entity, FMO can be a key driver of change, mobilizing much needed funds to reach the SDGs. To be truly transformative in our impact, we will need to be bold, take risks, be innovative and try out different models – while transforming ourselves as well,” he concluded.