EBRD invested record €13.1bn in 2023, expects return to profit

EBRD invested record €13.1bn in 2023, expects return to profit
The EBRD deployed a record of more than €2bn of financing for Ukraine in 2023. / bne IntelliNews
By bne IntelliNews January 11, 2024

The European Bank for Reconstruction and Development (EBRD) invested a record €13.1bn in 2023, the bank announced on December 11. 

EBRD president Odile Renaud-Basso told journalists in London that while the financial result for 2023 has not yet been released, a return to profitability is expected in 2023. 

That comes after in 2022, the bank reported a loss, mainly related to the impact on its investment portfolio from the Russian invasion of Ukraine. 

The hike in investment last year was partly driven by the EBRD’s commitment to supporting Ukraine, where it deployed a record of more than €2bn of financing, the statement said. 

The bank also stepped up funding for Turkey and Morocco in response to earthquakes in the two countries, and hiked its green economy financing to a record of over €6.5bn. During the year, it financed a historic high of 464 projects across its companies of operations. 

“With global challenges such as the climate crisis, macroeconomic uncertainties and geopolitical tension growing more and more acute, the EBRD is accelerating its support for its clients and countries of operations,” Odile Renaud-Basso said, according to a statement from the bank. 

Total mobilisation, namely the cumulative investment unlocked from all sources, reached €26.2bn in 2023. This figure included a direct mobilisation of €2.8bn and a preliminary figure of €23.4bn for indirect private mobilisation. 

Green economy financing accounted for 50% of the EBRD’s total investment, while projects specifically tagged with a gender component accounted for 44% of the overall portfolio.

Support for Ukraine 

Maintaining its status as Ukraine's largest institutional investor, the EBRD stepped up its support in the aftermath of the Russian invasion, concentrating efforts on energy security, critical infrastructure, food security, trade and the private sector.

"Of course we acknowledge that Ukraine, because of the situation, is a risky country; that’s why our approach since 2022 has been to continue to invest in the country and support the real economy,” Renaud-Basso told journalists.

The development bank has not put a figure on its investment plans for Ukraine this year, with Renaud-Basso stressing that it will depend on demand. 

“Our investment in 2023 was at a higher level than expected … Our target at the beginning of the year was €1.5bn, so we expect around €1.5bn this year, but it’s of course very contingent on the situation.

“The key sectors we are financing we expect to be quite similar to last year,” she added. 

Among the major investments made in 2023 were a €200mn loan, backed by Norway and the Netherlands, to help gas company Naftogaz build strategic gas reserves for the second winter heating season since the Russian invasion. 

A €150mn sovereign-backed loan was extended to Ukrenergo, Ukraine's electricity transmission company, with support from Norway and Italy, as part of a package to reinforce energy security.

Future evolution 

In 2023, EBRD governors authorised a resolution to increase the bank's paid-in capital by €4bn, raising its capital base to €34bn. This was intended to fortify ongoing support for Ukraine. 

Governors also approved a measured and gradual expansion of the development bank's operations into sub-Saharan Africa. The first investments are expected in 2025. 

Renaud-Basso commented: “2023 was a year of very important strategic decisions for the bank, which will pave the way for the future evolution of the bank.” 

During the year, the bank admitted Iraq as its newest member, increasing its total number of shareholders to 74. Applications by Benin and Cote d’Ivoire to join were approved.