Nordic Investment Bank 18-K Annual report (foreign governments)

Exhibit III

FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED DECEMBER 31, 2016

INTRODUCTION TO THE FINANCIAL STATEMENTS

The Bank’s financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”). The accounting principles applied in NIB’s financial statements differ in certain respects from the accounting principles generally accepted in the United States (“U.S. GAAP”). Such differences may be related to variance in the standards for recognition or measurement of amounts included in the financial statements or IFRS may lack of specific requirements or guidance that is available for U.S. GAAP in certain areas. In addition, presentation and disclosure requirements may differ between IFRS and U.S. GAAP.

The financial statements of the Bank for the financial years 2014, 2015 and 2016 have been audited by KPMG Oy Ab and KPMG AB, as indicated in their reports included in the Bank’s previous Form 18-K filings for the financial years ended December 31, 2014, December 31, 2015 and December 31, 2016 and incorporated by reference into the Bank’s Registration Statement under Schedule B of the Securities Act (No. 333-203363) and elsewhere herein, respectively.

The auditors were appointed by the Control Committee of the Bank. See Exhibit V to this Annual Report on Form 18-K, “Description of the Registrant – Governance”.

The Control Committee appointed as independent joint auditors for NIB Authorized Public Accountant Sixten Nyman, representing the accounting firm KPMG Oy Ab, Finland and Authorized Public Accountant Hans Åkervall, representing KPMG AB, Sweden as its independent joint auditors for the financial years 2014 and 2015. For the financial year 2016 NIB appointed Authorized Public Accountant Marcus Tötterman, representing the accounting firm KPMG Oy Ab, Finland and Authorized Public Accountant Hans Åkervall, representing KPMG AB, Sweden as its independent joint auditors. Following the resignation of Hans Åkerwall, Authorized Public Accountant Anders Tadge, replaced Mr. Åkerwall as of October 20, 2016. For the financial year 2017 NIB appointed Authorized Public Accountant Marcus Tötterman, representing the accounting firm KPMG Oy Ab, Finland and Authorized Public Accountant Anders Tadge, representing KPMG AB, Sweden as its independent joint auditors.

NORDIC INVESTMENT BANK

Statement of comprehensive income 1 January—31 December

EUR 1,000	Note*		Note**		2014		2015		2016
Interest income						328,760		338,781		311,856
Interest expense						-143,652		-92,005		-70,047
Net interest income		(1) (2) (21)		(3) (4)		239,108		246,776		241,809
Commission income and fees received		(3)		(5)		9,326		12,218		13,124
Commission expense and fees paid						-2,092		-2,212		-2,025
Net fee and commission income						7,234		10,006		11,099
Net profit/loss on financial operations		(4)		(6)		25,684		11,521		23,292
Foreign exchange gains and losses						187		82		22
Total operating income						272,211		268,385		276,222
Expenses
General administrative expenses		(5) (21)
Personnel expenses				(7)		-27,490		-29,925		-28,637
Other administrative expenses				(8)		-9,896		-11,815		-13,617
Depreciation		(9) (10)		(13)		-3,709		-8,737		-2,319
Total operating expenses						-41,095		-50,478		-44,573
Profit before loan losses						231,116		217,907		231,649
Net loan losses		(6) (8)		(9)		-20,905		-2,509		-19,839
Net Profit for the year						210,211		215,398		211,810
Other Comprehensive income
Items that will not be reclassified to income statement
Fair value hedges
Valuation of cross currency basis spread						—		—		-28,202
Total other comprehensive income						0		0		-28,202
Total Comprehensive income						210,211		215,398		183,608

* Refers to the corresponding Notes to the Financial Statements included in Exhibit IV to the Annual Report on Form 18-K for the fiscal year ended December 31, 2015.

** Refers to the corresponding Notes to the Financial Statements included in Exhibit IV to this Annual Report on Form 18-K.