- NIB lending reaches all-time highs in 2008, financial crisis affects results

The year 2008 was challenging for the financial sector globally as well as for
the member countries of the Nordic Investment Bank (NIB). Towards the end of
the year, the financial distress escalated further. It started to increasingly
affect the real economy globally and was also felt in the Nordic-Baltic region. 

As a result, demand for NIB loans continued to be strong and the Bank
experienced the fastest expansion of its lending activities ever. Loans agreed
increased to EUR 2,707 million, compared to EUR 2,214 million during the
previous year. Of the total amount of new loan agreements during the year, 57%
were in the Bank's focus sectors: energy; the environment; transport, logistics
and communications; and innovation. 

“NIB increased its lending activities significantly last year. The crisis
highlighted the important role IFIs play in providing financing during
difficult times in accordance with their mandates when other sources become
restricted,” says Johnny Åkerholm, NIB President and CEO. 

The Bank's debt issuance amounted to EUR 4,681 million. Developments in the
financial markets increased funding costs in general, also for NIB and other
supranationals towards end of the year, but NIB maintained its good access to
the funding markets. 

Reflecting market developments, the lending margins increased during the year,
and net interest income for 2008 was therefore well above the outcome of 2007.
Core earnings* amounted to EUR 189 million, which was also significantly higher
than in the previous year. 

Despite high core earnings, NIB encountered a loss of EUR 281 million. For the
first time in many years, NIB made impairments towards the loan book, which
amounted to EUR 79 million. Many of these impairments were related to the
economic crisis in Iceland. 

However, the majority of the loss stems from unrealised valuation losses in
financial operations. NIB has a large liquidity buffer which is invested in
sovereigns, supranationals, financial institutions and asset-backed securities.
Of these, the financial institutions should be of good investment grade and the
asset-backed instruments should have an AAA-rating. 

The widening of credit spreads across the board negatively affected the fair
value of these instruments. Some of the instruments were downgraded and fell
outside the Bank's policies and were hence disposed of. This gave rise to
realised valuation losses of EUR 36 million. 

The Bank had some treasury exposures to the failed Lehman Brothers Holdings
Inc. and Icelandic banks. As the recovery rates are uncertain, these have been
heavily written off, and EUR 132 million of the fair value adjustments are
related to these assets. 

The unrealised valuation losses in 2008 totalled EUR 223 million. As NIB has
unrealised valuation losses also from 2007, the Bank expects to recover some
EUR 280 million in the next few years as the instruments reach maturity. 

“NIB has a long-term target to, in addition to the own capital, retain an
amount of liquidity which covers at least the expected net cash requirements
for one year. When the financial crisis escalated at the end of last year, the
market value of the Bank's marked-to-market assets suffered. In the first two
months of 2009, however, the valuations had a positive effect on NIB's
results,” Mr Åkerholm notes. 


Key figures
in EUR million unless otherwise noted

		
Net interest income                   212     187
Core earnings*                        189     161
Profit                               -281      69 
Loans disbursed                     2,486   2,390
Loan agreements                     2,707   2,214
   Member countries                 2,027   1,810
   Non-member countries               680     404
Loans outstanding                  13,081  12,316
   Member countries                10,160   9,898
   Non-member countries             2,920   2,417
Guarantee commitments                  17      25
New debt issues                     4,681   4,288
Debts evidenced by certificates    17,549  15,023
Net liquidity                       3,638   4,039
Total assets                       22,260  19,973
Equity/total assets                  7.6%   10.2%
Number of employees                   170     158

* Core earnings consist of the profit before adjustments to hedge accounting,
fair value adjustments made to the trading portfolio and credit losses and
reversals of these. 

 NIB is a multilateral financial institution owned by eight member countries:
Denmark (21.3% of the Bank's authorised capital), Estonia (0.7%), Finland
(18.5%), Iceland (0.9%), Latvia (1.1%), Lithuania (1.6%), Norway (19.1%) and
Sweden (36.7%). 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 Johnny Åkerholm, NIB President and CEO, at +358 10 618 001, 
Mr Lars Eibeholm, Vice President, Head of Treasury and CFO, at +358 10 618
0400, lars.eibeholm@nib.int 
Mr Jukka Ahonen, Director of Communications, at +358 10 618 0295,
jukka.ahonen@nib.int