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

Exhibit VIII

Interim Management Statement

January–March 2019

(Unaudited)

Nordic Investment Bank Interim Management Statement January–March 2019

Table of Contents

Highlights	3
Key figures and ratios	3
Operating and financial review
Comprehensive income	4
Financial position	5
Financial statements
Statement of comprehensive income	8
Statement of financial position	9
Statement of changes in equity	10
Cash flow statement	11
Notes to the interim management statement
Note 1 - Net interest income	12
Note 2 - Net profit on financial operations	12
Note 3 - Net loan losses	12
Note 4 - Expected credit loss	13
Note 5 - Loans outstanding	14
Note 6 - Debts evidenced by certificates	14
Note 7 - Basis of preparation	14
Ratio definitions	14

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Nordic Investment Bank Interim Management Statement January–March 2019

Highlights

During the three-month period ending 31 March 2019, a total of EUR 605 million in new loans were agreed and EUR 547 million were disbursed. As anticipated, the disbursements in the first quarter were lower than the historically high level of 2018. The net profit for the period amounted to EUR 54 million, up from EUR 49 million for the corresponding period in 2018.

In January, NIB traded its first Nordic–Baltic Blue Bond. The five-year SEK 2 billion bond was launched under the NIB Environmental Bond Framework and will focus on investments within water resource management and protection.

Key figures and ratios

(in EUR million unless otherwise specified)	Jan-Mar 2019*			Jan-Mar 2018*			Jan-Dec 2018
Net interest income		54			56			223
Profit before net loan losses		51			49			167
Net profit		54			49			173
Loans disbursed		547			996			4,047
Loans agreed		605			1,063			4,330
Mandate fulfilment **		100	%		85	%		91	%
Loans outstanding		18,750			17,632			19,065
Total assets		31,235			29,586			31,710
New debt issues		1,416			3,378			6,620
Debts evidenced by certificates		25,240			23,588			25,651
Total equity		3,635			3,502			3,578
Equity/total assets ***		11.6	%		11.8	%		11.3	%
Profit/average equity ***		6.0	%		5.6	%		4.9	%
Cost/income***		17.4	%		17.5	%		20.6	%
Number of employees (average during the period)		198			194			197

* Unaudited figures, to be read in conjunction with NIB’s 2018 audited financial statements.

** See page 6 for mandate fulfilment explanation

*** See page 14 for ratio definitions

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Nordic Investment Bank Interim Management Statement January–March 2019

Operating and financial review

January–March 2019 compared to January–March 2018

Comprehensive Income

Net Profit

The net profit for the period January–March 2019 amounted to EUR 53.6 million, up from EUR 49.0 million in the same period last year. Total operating income increased from EUR 59.1 million to EUR 61.7 million. Total operating expenses decreased by EUR 0.4 million to EUR 10.7 million, resulting in profit before net loan losses increasing to EUR 51.0 million (January–March 2018: EUR 48.7 million).

Net interest income

Net interest income for the period amounted to EUR 53.6 million (January–March 2018: EUR 55.6 million). Net interest income on lending activities increased by EUR 1.0 million, due to higher loans outstanding. Interest income on treasury activities decreased by EUR 3.0 million due to the low yield environment.

Net commission income and fees

Net fee and commission income for the period January–March 2019 was EUR 1.3 million, compared to EUR 2.3 million in 2018, due to the lower volume of loans agreed and disbursed.

Net profit on financial operations

The net profit on financial operations for the period January–March 2019 totalled EUR 6.7 million, which was EUR 5.5 million higher than the same period in 2018. The result comprises realised losses of EUR 0.7 million and unrealised profits of EUR 7.4 million. The unrealised results are expected to reverse when the underlying transactions reach maturity.

Total operating expenses

Total operating expenses were EUR 0.4 million lower than in 2018. The Bank continues to focus on costs to ensure an efficient ratio of operating cost to income.

Net loan losses

The total provision for expected credit losses on assets held at amortised cost amounted to EUR 119.2 million, which is similar to the position at 31 December 2018. This provision covers both loans outstanding and treasury assets held at amortised cost. There were no new non-performing loans during the period and no realised losses. The gain recognised in the income statement for net loan losses of EUR 2.6 million relates to recoveries on non-performing loans of EUR 1.2 million and EUR 1.4 million related to the improved credit quality of performing loans.

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Nordic Investment Bank Interim Management Statement January–March 2019

Other comprehensive income

The Bank separates the foreign currency basis spread from financial instruments used in fair value hedging, and this separated amount is recorded in “Other comprehensive income” (OCI). OCI related to cross currency basis spread amounted to EUR 3.4 million for the period (January–March 2018: EUR -0.3 million). The resulting total comprehensive income for the period amounted to EUR 57.0 million, compared to EUR 48.7 million in 2018.

Financial position

Loans outstanding

Total loans outstanding amounted to EUR 18,750 million, which is EUR 1,118 million higher than on 31 March 2018. Demand for NIB’s long-term financing remains strong. However, the disbursements in the first quarter were, as anticipated, lower than the historically high level in 2018. The total loans disbursed during the period amounted to EUR 547 million, which is EUR 449 million less than for the same period in 2018.

Development of loans outstanding during 2019

(in EUR million)

Total loans outstanding, excluding exchange rate and valuation effects, decreased from EUR 19,065 million at 31 December 2018 to EUR 18,613 million. The book value amounted to EUR 18,750 million due to foreign exchange, fair valuations and hedge accounting effects of EUR 100 million and EUR 37 million, respectively.

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Nordic Investment Bank Interim Management Statement January–March 2019

Lending highlights

in EUR millions, unless otherwise specified	Jan-Mar 2019*		2018		2017		2016		2015
Loans agreed excluding green bond investments		605		4,269		3,665		4,221		2,830
Green bond investments		—		61		147		143		—
Total disbursements		547		4,047		3,147		3,373		2,716
Total loans disbursed by business area:
Energy and water		62		840		737		1,154		483
Infrastructure, transport and telecom		352		1,192		818		791		907
Industries and services		96		1,339		932		836		932
Financial institutions and SMEs		37		675		660		593		394
Number of loans agreements		4		58		55		58		45
Number of green bond investments		0		3		9		8		—
Loans outstanding		18,750		19,065		17,232		16,640		15,627
Member countries		17,681		17,960		15,867		14,831		13,347
Non-member countries		1,185		1,222		1,504		1,948		2,396
Loan impairment provision		-116		-117		-139		-139		-116

* Unaudited figures, to be read in conjunction with NIB’s 2018 audited financial statements.

Mission fulfilment

Projects financed by NIB contribute to the Bank’s mission of improving productivity and the environment in the Nordic–Baltic countries. Before approval is given in each individual case, all eligible projects are evaluated and rated against the criteria developed based on the Bank’s mission. In the three-month period that ended on 31 March 2019, loans achieving a “good” or “excellent” mandate rating accounted for 100% of the total amount of loans agreed.

Mandate rating for agreed loans

(Excluding lending green bond purchases)

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Nordic Investment Bank Interim Management Statement January–March 2019

Funding

The Bank expects to fund between EUR 5.0 billion and EUR 6.0 billion during 2019. The strategy for 2019 is to complete one or two benchmark transactions in US dollars and euros, complemented by other public and private issues, to maintain a diversified portfolio of currencies and a global investor base. In addition, NIB’s aim is to continue issuing NIB Environmental Bonds. By the end of March, the Bank had raised EUR 1.4 billion (January–March 2018: EUR 3.4 billion) in new funding. The decrease in funding requirements is a result of lower loan disbursements and collateral requirements.

In January, NIB traded its first Nordic–Baltic Blue Bond. The five-year SEK 2 billion bond was launched under the NIB Environmental Bond Framework and will focus on investments within water resource management and protection.

Debt development during 2019

in EUR millions

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Nordic Investment Bank Interim Management Statement January–March 2019

Financial statements

Statement of comprehensive income

EUR 1,000	Note			Jan-Mar 2019*		Jan-Mar 2018*		Jan-Dec 2018
Interest income from financial assets measured at amortised cost					79,627		67,133		298,371
Interest income from financial assets measured at fair value					5,799		4,217		24,711
Interest expense					-31,826		-15,753		-99,590
Net interest income		(1	)		53,600		55,597		223,492
Commission income and fees received					2,051		3,059		13,271
Commission expense and fees paid					-706		-742		-2,546
Net fee and commission income					1,345		2,317		10,725
Net profit/loss on financial operations		(2	)		6,665		1,160		-23,776
Foreign exchange gains and losses					109		-9		-160
Total operating income					61,719		59,065		210,281
Expenses
General administrative expenses
Personnel expenses					-7,648		-7,071		-28,971
Other administrative expenses					-2,442		-2,833		-12,321
Depreciation					-649		-453		-1,937
Total operating expenses					-10,738		-10,358		-43,228
Profit before loan losses					50,981		48,707		167,053
Net loan losses		(3	)		2,636		330		5,957
Net profit for the period					53,617		49,037		173,009
Other comprehensive income
Items that will not be reclassified to income statement
Fair value hedges
Valuation of cross currency basis spread					3,432		-304		6,160
Total other comprehensive income					3,432		-304		6,160
Total comprehensive income					57,049		48,734		179,169

* Unaudited figures, to be read in conjunction with NIB’s audited financial statements for 2018.

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Nordic Investment Bank Interim Management Statement January–March 2019

Statement of financial position

EUR 1,000	Note			31 Mar 2019*		31 Mar 2018*		31 Dec 2018
ASSETS
Cash and cash equivalents					4,546,409		4,205,372		4,757,905
Financial placements
Placements with credit institutions					9,021		9,021		9,021
Debt securities					6,227,611		6,533,662		6,454,748
Other					15,746		16,395		15,761
					6,252,377		6,559,078		6,479,531
Loans outstanding		(5	)		18,750,390		17,632,368		19,065,056
Intangible assets					14,210		6,059		9,205
Tangible assets, property and equipment					31,532		30,105		30,771
Other assets
Derivatives					1,387,899		891,456		1,068,260
Other assets					12,170		33,457		4,520
					1,400,070		924,914		1,072,781
Accrued interest and fees receivable					239,680		228,572		294,421
TOTAL ASSETS					31,234,668		29,586,467		31,709,670
LIABILITIES AND EQUITY
Liabilities
Short-term amounts owed to credit institutions					778,718		395,995		575,394
Long-term amounts owed to credit institutions					9,486		14,427		9,486
					788,204		410,422		584,879
Repurchase agreements					—		254,629		—
Debts evidenced by certificates
Debt securities issued					25,162,255		23,523,011		25,574,911
Other debt					78,009		64,812		76,459
		(6	)		25,240,264		23,587,823		25,651,370
Other liabilities
Derivatives					1,317,284		1,653,536		1,649,158
Other liabilities					66,789		12,401		10,080
					1,384,073		1,665,937		1,659,238
Accrued interest and fees payable					187,523		165,537		236,629
Total liabilities					27,600,065		26,084,348		28,132,116
Equity					3,634,603		3,502,119		3,577,554
TOTAL LIABILITIES AND EQUITY					31,234,668		29,586,467		31,709,670

* Unaudited figures, to be read in conjunction with NIB’s audited financial statements for 2018.

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Nordic Investment Bank Interim Management Statement January–March 2019

Statement of changes in equity

EUR 1,000	Paid-in capital		Statutory Reserve		General Credit Risk Fund		Special Credit Risk Fund PIL		Profit available for appropriation		Hedging Reserve		Total
Equity at 31 December 2017		418,602		686,325		1,697,461		445,919		210,981		-3,035		3,456,253
Adoption of IFRS 9		—		—		-2,867		—		—		—		-2,867
Equity at 1 January 2018		418,602		686,325		1,694,594		445,919		210,981		-3,035		3,453,386
Profit for the period		—		—		—		—		49,037		—		49,037
Other comprehensive income		—		—		—		—		—		-304		-304
Total comprehensive income		0		0		0		0		49,037		-304		48,734
Equity at 31 Mar 2018		418,602		686,325		1,694,594		445,919		260,018		-3,339		3,502,119
Profit for the period		—		—		—		—		123,972		—		123,972
Other comprehensive income		—		—		—		—		—		6,464		6,464
Total comprehensive income		0		0		0		0		123,972		6,464		130,436
Transactions with owners in their capacity as owners
Appropriate of profit		—		—		155,981		—		-155,981		—		0
Realisation of PIL losses		—		—		18,978		-18,978		—		—		0
Dividends		—		—		—		—		-55,000		—		-55,000
Equity at 31 December 2018		418,602		686,325		1,869,553		426,941		173,009		3,124		3,577,554
Profit for the period		—		—		—		—		53,617				53,617
Other comprehensive income		—		—		—		—		—		3,432		3,432
Total comprehensive income		0		0		0		0		53,617		3,432		57,049
Equity at 31 March 2019		418,602		686,325		1,869,553		426,941		226,626		6,556		3,634,603

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Nordic Investment Bank Interim Management Statement January–March 2019

Cash flow statement

EUR 1,000	Jan-Mar 2019*		Jan-Mar 2018*		Jan-Dec 2018
Cash flows from operating activities
Net profit for the period		53,617		49,037		173,009
Adjustments:
Unrealised gains/losses of financial assets held at fair value		428		-5,946		-14,275
ECL non-lending activities		42		-11		-20
Depreciation and write-down in value of tangible and intangible assets		649		453		1,937
Change in accrued interest and fees (assets)		54,741		43,472		-22,377
Change in accrued interest and fees (liabilities)		-49,105		-43,974		27,117
Net loan losses (ECL lending activities)		-2,636		-330		-5,957
Adjustment to hedge accounting		-6,465		5,147		37,523
Other adjustments to the period’s profit		-1,112		1,224		7,031
Adjustments, total		-3,457		36		30,979
Lending
Disbursements of loans		-546,956		-996,142		-4,046,710
Repayments of loans		1,001,878		402,302		2,113,670
Capitalisations, redenominations, index adjustments, etc.		643		189		897
Lending, total		455,565		-593,651		-1,932,143
Cash flows from operating activities, total		505,725		-544,577		-1,728,154
Cash flows from investing activities
Placements and debt securities
Purchase of debt securities		-538,330		-616,656		-1,891,112
Sold and matured debt securities		805,507		642,170		2,048,213
Placements with credit institutions		—		-250		-250
Other financial placements		15		0		218
Placements and debt securities, total		267,192		25,265		157,069
Other items
Acquisition of intangible assets		-717		-739		-3,885
Acquisition of tangible assets		-1,210		-272		-2,421
Change in other assets		-7,703		-5,964		23,680
Other items, total		-9,630		-6,975		17,373
Cash flows from investing activities, total		257,563		18,290		174,443
Cash flows from financing activities
Debts evidenced by certificates
Issues of new debt		1,415,746		3,378,441		6,619,670
Redemptions		-2,517,701		-3,127,556		-4,924,256
Debts evidenced by certificates, total		-1,101,955		250,884		1,695,415
Other items
Long-term placements from credit institutions		—		-2,900		-7,842
Change in swap receivables		-161,723		94,661		-60,891
Change in swap payables		-297,274		-78,419		34,237
Change in other liabilities		51,957		1,217		-2,206
Dividend paid		—		—		-55,000
Other items, total		-407,040		14,559		-91,702
Cash flows from financing activities, total		-1,508,995		265,443		1,603,713
CHANGE IN CASH AND CASH EQUIVALENTS, NET		-745,708		-260,844		50,002
Opening balance for cash and cash equivalents, net		4,182,512		4,073,797		4,073,797
Exchange rate adjustments		330,887		-258,204		58,714
Closing balance for cash and cash equivalents, net		3,767,691		3,554,748		4,182,512
Additional information to the statement of cash flows
Interest income received		140,167		114,822		300,706
Interest expense paid		-80,931		-59,727		-72,473

* Unaudited figures, to be read in conjunction with NIB’s audited financial statements for 2018.

The cash flow statement has been prepared using the indirect method and cash flow items cannot be directly concluded from the statements of financial positions.

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Nordic Investment Bank Interim Management Statement January–March 2019

Notes to the interim management statement

Note 1 - Net interest income

EUR 1,000	Jan-Mar 2019		Jan-Mar 2018		Jan-Dec 2018
Cash and cash equivalents		-2,682		-3,580		-6,686
Placements with credit institutions for more than 6 months		0		-19		-98
Debt securities		14,622		14,399		60,913
Loans outstanding		73,459		60,549		268,953
Other interest income		27		—		—
Total, interest income		85,426		71,350		323,082
of which interest income from financial assets measured at amortised cost		79,627		67,133		298,371
Short-term amounts owed to credit institutions		509		452		455
Long-term amounts owed to credit institutions		13		24		72
Short-term repurchase agreements		—		73		345
Debts evidenced by certificates		-140,999		-146,452		-578,171
Swap contracts and other interest expenses, net		108,651		130,149		477,708
Total, interest expense		-31,826		-15,753		-99,590
of which interest income from financial liabilities measured at amortised cost		-91,283		-52,597		-286,705
Net Interest Income		53,600		55,597		223,492

Note 2 - Net profit on financial operations

EUR 1,000	Jan-Mar 2019		Jan-Mar 2018		Jan-Dec 2018
Financial instruments held at fair value, realised gains and losses		-630		1,453		7,163
Financial instruments held at fair value, unrealised gains and losses		961		4,843		6,484
Financial instruments held at amortised cost, realised gains and losses		—		—		154
Adjustment to hedge accounting, unrealised gains and losses of fair value hedges		6,465		-5,147		-37,523
Repurchase of NIB bonds, other items		-130		11		-54
Net profit on financial operations		6,665		1,160		-23,776

Note 3 - Net loan losses

EUR 1,000	Jan-Mar 2019		Jan-Mar 2018		Jan-Dec 2018
Change in expected credit loss on performing loans		1,466		918		8,426
Change in expected credit loss on non-performing loans		1,170		-588		-2,469
Decrease of provision to cover realised loan losses		—		—		19,223
Realised loan losses		—		—		-19,223
Net loan losses		2,636		330		5,957

There were no realised losses for the periods Jan-Mar 2019 or Jan-Mar 2018. In the period Sep-Dec 2018, the Bank recorded realised losses of EUR 19,223 thousand comprising principle of EUR 18,978 and interest of EUR 245 thousand. See Note 4 for further disclosure on expected credit losses.

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Nordic Investment Bank Interim Management Statement January–March 2019

Note 4 - Expected credit loss

							Collective &
EUR 1,000	Stage 1		Stage 2		Stage 3		Individual		Total
Balance at 31 December 2017								138,842		138,842
Adoption of IFRS 9		25,224		23,291		93,194		-138,842		2,867
Balance at 1 January 2018		25,224		23,291		93,194		0		141,709
Transfer to Stage 1		137		-137		—		—		0
Transfer to Stage 2		-741		741		—		—		0
Transfer to Stage 3		—		—		—		—		0
New assets originated or purchased		1,854		36		—		—		1,889
Amortisations and repayments		-646		-991		—		—		-1,637
Impact of re-measurement on existing assets		2,535		-3,716		588		—		-593
Foreign exchange adjustments and other changes		—		—		-1,144		—		-1,144
Net change in period		3,138		-4,067		-557		0		-1,485
Balance at 31 March 2018		28,362		19,224		92,638		0		140,224
Transfer to Stage 1		4,739		-4,739		—		—		0
Transfer to Stage 2		-567		567		—		—		0
Transfer to Stage 3		—		—		—		—		0
New assets originated or purchased		6,422		102		—		—		6,524
Amortisations and repayments		-5,866		-2,753		—		—		-8,619
Impact of re-measurement on existing assets		-7,010		1,587		1,881		—		-3,541
Foreign exchange adjustments and other changes		0		0		4,800		—		4,800
Net change in period		-2,282		-5,236		6,682		0		-836
Realised losses		—		—		-19,223		—		-19,223
Balance at 31 December 2018		26,080		13,988		80,097		0		120,165
Transfer to Stage 1		356		-356		—		—		0
Transfer to Stage 2		—		—		—		—		0
Transfer to Stage 3		—		—		—		—		0
New assets originated or purchased		1,325		—		—		—		1,325
Amortisations and repayments		-1,434		-924		—		—		-2,358
Impact of re-measurement on existing assets		246		-636		-1,170		—		-1,560
Foreign exchange adjustments and other changes		—		—		1,591		—		1,591
Net change income statement		493		-1,915		420		0		-1,002
Balance at 31 March 2019		26,572		12,073		80,517		0		119,161

ECL - Statement of financial position
EUR 1,000	31 Mar 2019		31 Mar 2018		31 Dec 2018
Financial placements		323		291		281
Loans outstanding and commitments		118,838		139,933		119,883
Total		119,161		140,224		120,165
ECL - Statement of comprehensive income
EUR 1,000	Jan-Mar 2019		Apr-Dec 2018		Jan-Mar 2018
Net result on financial operations		-43		10		12
Net loan losses (Note 3)		2,636		5,627		330
Foreign exchange gains and losses		-1,591		-4,800		1,144
Total gain recognised in income statement		1,002		836		1,485

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Nordic Investment Bank Interim Management Statement January–March 2019

Note 5 - Loans outstanding

EUR 1,000	Jan–Mar 2019		Apr–Dec 2018		Jan–Mar 2018
Opening Balance		19,065,056		17,632,368		17,231,623
Disbursements		546,956		3,050,568		996,142
Amortisations		-328,078		-1,227,004		-309,987
Prepayments		-673,800		-484,364		-92,315
Changes in expected credit losses		2,568		5,768		454
Foreign exchange movements		100,489		80,019		-172,424
Valuation movements		37,841		8,409		-20,936
Other		-643		-708		-189
Closing balance		18,750,390		19,065,056		17,632,368

Note 6 - Debts evidenced by certificates

EUR 1,000	Jan–Mar 2019		Apr–Dec 2018		Jan–Mar 2018
Opening Balance		25,651,370		23,587,823		23,999,754
New debt issues		1,415,746		3,241,230		3,378,441
Amortisations		-2,103,102		-1,765,450		-2,956,893
Calls and buy backs		-414,147		-19,094		-166,007
Foreign exchange movements		454,354		452,537		-459,608
Valuation movements		236,495		166,479		-203,207
Other		-452		-12,155		-4,656
Closing balance		25,240,264		25,651,370		23,587,823

Note 7 - Basis of preparation

This unaudited Interim Management Statement is not presented in accordance with IAS 34 Interim Financial Reporting, as this statement excludes a number of disclosures. The accounting policies and methods of computation are largely the same as described in Note 1 of NIB’s Financial Report 2018, with the exception of IFRS 16, as described below.

IFRS 16 Leases substantially changed the accounting treatment by recognising more leases as liabilities with corresponding right of use assets on the balance sheet. The standard replaced IAS 17 Leases and is effective as of 1 January 2019. However, the Bank does not have significant leasing commitments and therefore the new standard had an immaterial impact.

Ratio definitions

Equity/total assets =	Total equity at reporting date Total assets at reporting date
Profit/average equity =	Annualised profit for the period Average equity for the period
Cost/income =	Total operating expenses for the period Total operating income for the period

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