The ongoing war in Ukraine has dire consequences for its citizens and its businesses. It has worldwide effect on energy supply and price levels as well.
While pursuing our impact goals, international developments have an influence on our markets. The war in Ukraine means FMO had to adjust the value of its portfolio. The private equity portfolio consisting of investments in Ukraine and investees active in the region, has been valuated at approximately EUR 70 million less than before February 2022. In addition, FMO took impairments of approximately EUR 90 million on loans to customers in Ukraine. The adjustments reflect management’s updated expectations on the returns and recoveries on investments affected by the war in Ukraine.
FMO supports entrepreneurs in emerging markets to build a better world. In Ukraine we provided funding predominantly to agribusiness companies and to the renewable energy sector. Following the Russian invasion in Ukraine, FMO in its annual report published that the direct exposure to Ukraine was around EUR 200 million with 14 customers. This exposure is in debt products (56%), equity (37%) and guarantees (7%). FMO has also indirect exposure in Ukraine through debt funds amounting to EUR 14 million. FMO holds no direct exposure in the financial industry sector in Ukraine. FMO has no direct exposure and only limited indirect exposure to Russia. Furthermore, FMO has no cash or derivative contracts in Russian Ruble or Ukrainian Hryvnia. The exposure towards Belarus is around EUR 20 million, mostly in equity.
The valuation adjustments will affect FMO’s pre-tax profit over the first half year (H1) of 2022. Our CET1 ratio remains well above our appetite level. This statement includes unaudited figures. It does not replace the disclosure of our H1 2022 financial results which is scheduled for the end of August 2022. Nor will it create a precedent for future interim updates or disclosures.