SOVEREIGN & SUPRANATIONAL
JANUARY 11, 2013
CREDIT ANALYSIS
IBRD (World Bank)
Supranational
Summary Rating Rationale
Table of Contents:
SUMMARY RATING RATIONALE
1
ORGANIZATION STRUCTURE AND
STRATEGY
2
ASSET/LIABILITY MANAGEMENT AND
LIQUIDITY
4
CAPITAL ADEQUACY
4
ASSET QUALITY
6
PROFITABILITY
8
RATING HISTORY
9
ANNUAL STATISTICS
10
MOODY’S RELATED RESEARCH
14
RELATED WEBSITES
14
Analyst Contacts:
NEW YORK
+1.212.553.1653
Steven A. Hess
Senior Vice President
[email protected]
+1.212.553.4741
Annette Swahla
+1.212.553.4037
Analyst
[email protected]
Bart Oosterveld
+1.212.553.7914
Managing Director-Sovereign Risk
[email protected]
Moody’s rates the International Bank for Reconstruction and Development (IBRD), more
commonly known as the World Bank 1, Aaa for long-term bond issues and Prime-1 for the
short-term discount note program; the outlook is Stable. The key factors supporting the
ratings are: (1) a strong capital base and support from its highly- rated shareholders; (2) its
proven status as a preferred creditor; and (3) its sound financial management. Prudent
financial policies—with the Bank having consistently remained well within its internal
borrowing and lending limitations—are reflected in the IBRD’s healthy capital adequacy and
liquidity ratios. As a result of its conservative practices and its preferred creditor status, the
Bank has weathered relatively smoothly periods of global financial uncertainty and has
maintained its fundamental strengths both in terms of its own historical record and in
comparison to many other financial institutions.
The biggest risk to the Bank’s financial position would come if more than one large borrower
were to enter into nonaccrual status. The Bank’s preferred creditor position provides
substantial protection against such an event, and Moody’s believes it remains unlikely that
there would be a significant number of large borrowers in nonaccrual at the same time. The
Bank’s strong liquidity position, the ability to reduce lending activity if necessary, and the
availability of other sources of funds, make a resort to a call on capital only the last line of
defense. This is a highly unlikely scenario, even in the event of a major increase in
nonaccruals. Still, in a worst case scenario, where a number of large borrowers are unable or
unwilling to make payments, bondholders are ultimately protected by the large amount of
callable capital available to the IBRD.
This Analysis provides an in-depth discussion
of credit rating(s) for IBRD (World Bank) and
should be read in conjunction with Moody’s
most recent Credit Opinion and rating
information available on Moody's website.
1
“IBRD”, the “World Bank” and the “Bank” are used interchangeably in this document.
SOVEREIGN & SUPRANATIONAL
The IBRD has never suffered any loss on principal in relation to loans made to borrowing countries
and it did not experience any increase in loan arrears as a result of the last emerging markets crisis.
This record was tested again during the global crisis but the Bank’s exceptional risk management
policies and practices ensured that no loans entered nonaccrual status despite the unprecedented
financial and economic turmoil during the FY2008-FY2010 period. Its preferred creditor status
ensures that the sovereign debt owed to it is excluded from all debt restructuring efforts undertaken by
official borrowers and that resources are made available to service the debt due to the Bank. As part
owners of the IBRD, the borrowing countries recognize the importance of maintaining the Bank’s
financial soundness and premier credit status in order to minimize its lending charges and to maximize
the benefits that they ultimately reap from the organization. The support from the shareholders of the
IBRD—be it in the form of timely loan repayment and/or capital contributions—confers tangible
benefits to all member countries, and protects the Aaa rating.
The ongoing and protracted European sovereign debt crisis is unlikely to impact the strong financial
standing of the IBRD. The top 11 shareholders, who as of June 30, 2012, subscribed 57.15% of total
capital, are geographically diverse relative to other multilateral development banks (MDBs). Among
them are only three euro area sovereigns (Germany, France, and Italy) and the rest includes the U.S.,
Canada, Japan, China, and Saudi Arabia. As such, recent sovereign downgrades in Europe have not
substantially reduced the strength of member support that Moody’s incorporates in the IBRD’s Aaa
rating.
In addition, the Bank’s lending activity is minimally exposed to Europe, with the top ten borrowing
countries including only two Eastern European countries -- Poland and Romania, at 4.1% and 2.6%
of the total portfolio, respectively. While there is a degree of concentration risk in the loan portfolio, it
remains geographically diverse relative to other MDBs. The World Bank Group (including the IFC) is
the only global MDB, the others having regionally-focused operations.
Lastly, the Bank’s financial strength, independent of member support, includes healthy capital and
liquidity buffers against longer- and shorter-term adverse developments. Funding risks are minimal, as
evidenced by the continued strong demand during 2012 for IBRD bonds as investors sought safety
amid the sovereign turmoil (the US debt ceiling and fiscal uncertainty and European sovereign debt
turmoil).
Organization Structure and Strategy
The IBRD is one part of the larger World Bank Group, which also includes: the International
Development Association (IDA), the group’s soft-loan window; the International Finance Corporation
(IFC), a vehicle for lending to or investing in private companies in emerging markets without the
benefit of host country government guarantees; the Multilateral Investment Guarantee Agency
(MIGA), which insures certain investments against political risks in emerging markets; and the
International Centre for Settlement of Investment Disputes. The United States is the single largest
shareholder of the IBRD, with 16.5% of subscribed capital, followed by Japan with 9.7%, as of June
30, 2012.
The IBRD’s main functions are to supplement the domestic savings of borrowing countries with loans
and to serve as a catalyst for additional external financial flows to those countries through co-financing
arrangements. The Bank finances both investment projects and development policy programs in
support of policy reforms alongside borrowing governments, official aid agencies, and private financial
institutions. The IBRD lends exclusively to member countries that meet eligibility requirements, or to
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CREDIT ANALYSIS: IBRD (WORLD BANK)
SOVEREIGN & SUPRANATIONAL
borrowers in those jurisdictions under the guarantee of the member states. The Bank does not aim to
maximize profits, although it earns a significant net income. The IBRD’s financial policies are
comparable to—and are often more conservative than—accepted private sector practice.
During FY2012 the IBRD introduced a new lending instrument called Program-for-Results. The
instrument links the disbursement of funds directly to the achievement of defined, verifiable results.
One of the main goals of the new instrument is to help member countries improve the design and
implementation of their development programs and increase accountability. During the fiscal year,
$300 million in commitments were made under the new instrument.
Capital Increase Impacts Voting Power and Supports Growth in Lending Operations
In March 2011, the Board of Governors approved the capital increase that had been proposed the
previous year. The increase includes a general component as well as a selective component that
together raised the total subscribed capital by $86.2 billion. The general component amounted to
$58.4 billion, of which $3.5 billion will be paid-in and the remainder callable. The selective
component amounted to $27.8 billion (of which $1.6 billion will be paid-in) and increased the voice
and participation of developing and transition countries by 4.59% since FY2008 to a total voting
power of 47.19%. Complementing the selective capital increase was the creation of a third chair on the
Board of Executive Directors for Africa; this Voice Reform began in 2008 with the long-term goal of
equitable voting power between developed and developing member countries.
As of June 30, 2012, subscriptions received and paid-in related to the general increase amounted to
$15,278 million. For the selective increase, the amount was $917 million.
Overall, the capital increase supports the Bank’s elevated level of lending after the global crisis as it
continues to serve as a counter-cyclical force and leaves it able to respond again should the European
sovereign debt crisis spill over to the global real economy.
LTIP Liquidated During FY2012 to Support Elevated Lending Operations
To increase its expected operating income over the long term, during FY2008 the IBRD approved a
new investment portfolio called the Long-Term Income Portfolio (LTIP), which commenced in
FY2009. $1 billion was invested in a diversified risk asset portfolio (developed market public equities
and developed market fixed-income investments). The first three years of the program were very
successful with annual returns of the LTIP between 10% and 13%, compared to roughly 1% annual
returns on its liquid asset portfolio over the same period. LTIP returns during FY2012 were much
lower at around 3% due to low equity returns.
The creation of the LTIP marked a shift in the Bank’s strategy with regard to deployment of its equity
capital, which had previously been used only to support loans. After its creation, equity deemed in
excess of what was required to support loans was used to support additional risk assets that the Bank
acquired under the LTIP with the objective of enhancing income generation to further its
development goals.
In April 2012, the Bank decided to liquidate the LTIP in order to maximize its lending capacity to
borrowing members. As with many MDBs, the global crisis, and actions by the IBRD to act as a
counter-cyclical force or fill in where private sector lenders had retrenched, reduced the amount of
“excess” capital it was holding.
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JANUARY 11, 2013
CREDIT ANALYSIS: IBRD (WORLD BANK)
SOVEREIGN & SUPRANATIONAL
Asset/Liability Management and Liquidity
The aim of IBRD’s asset/liability management framework is to provide adequate funding for each loan
and liquid asset at the lowest available cost and to manage the portfolio of liabilities supporting each
loan and liquid asset within the prescribed risk guidelines. The liability portfolios are monitored and
adjusted for currency composition, maturity profile and interest rate sensitivity as needed. To
minimize exchange rate risk, IBRD matches borrowings in any one currency with assets in the same
currency (as mandated by its Articles) and also undertakes currency conversions to match the currency
composition of its equity to that of its outstanding loans.
Equity Duration Extension Strategy Reduces Interest Rate Sensitivity
During FY2008 the Bank implemented an equity duration extension strategy with the goal of
reducing the interest rate sensitivity of its operating income by taking a greater exposure to long-term
interest rates. The need for this arose as the loan portfolio shifted from pool loans to floating LIBORbased loans, which increased the sensitivity of IBRD’s operating income to changes in market interest
rates. The strategy was executed by entering into interest rate swaps with a 10-year ladder repricing
profile to extend the duration of equity from three months to roughly five years. The strategy has
proven successful as interest income from the swaps has offset the fall in interest income from equityfunded loans.
Liquidity Position Historically Exceeds Strong Policy Requirements
The goal of IBRD’s liquidity management is to ensure cash flows are available to meet all of the Bank’s
financial commitments. In accordance with the Bank’s liquidity policy (which was last revised during
FY1997), liquid assets must equal at least the highest consecutive six months of anticipated debt
service plus one-half of the anticipated net loan disbursements over the coming fiscal year (if positive).
The prudential minimum for FY2013 is $22 billion, which is $1 billion higher than for FY2012; in
general, the liquid asset portfolio should not exceed 150% of the prudential minimum liquidity level 2.
Historically, the Bank’s actual liquidity has tended to be comfortably above the minimum set by
policy, and is conservatively managed to protect the principal amount of the investments while
generating a reasonable return. At the end of the last financial year, liquidity was $34.2 billion, an
increase of $6.0 billion from the previous year.
Capital Adequacy
The steady expansion of IBRD’s capital resources over the years, combined with strict lending
limitations, means that the Bank has sufficient capital to cope with its above-average business risk. The
Bank realizes that by having enough resources of its own to absorb risks it protects members from a
possible capital call. The Bank judges its capital adequacy as the ability of its equity to generate future
net income to support normal loan growth and respond to a potential crisis without having to resort to
a call on capital.
There are various safeguards used to protect capital adequacy. The statutory lending limit is defined by
the IBRD charter, which stipulates that the total amount outstanding of disbursed loans, participations
in loans, and callable guarantees may not exceed the total value of subscribed capital, reserves, and
surplus. As of June 30, 2012 the Bank’s total exposure to borrowing countries amounted to 59% of
this limit, minimally changed from 60% the previous fiscal year (which was the highest level since the
2
4
The IBRD may exceed 150%, from time to time, to provide flexibility in timing its borrowing transactions and to meet working capital needs.
JANUARY 11, 2013
CREDIT ANALYSIS: IBRD (WORLD BANK)
SOVEREIGN & SUPRANATIONAL
first half of the 1990’s). The Bank’s leverage has increased, but remains moderate, with borrowings
through debt issuance accounting for about 62% of subscribed capital, reserves and surplus. The 10
percentage point increase in this ratio in both FY2010 and FY2009 (FY2008=40%) was to support
higher lending needs to respond to the global crisis. Since the crisis has eased IBRD’s increased
borrowing needs have eased as well, with this ratio posting only minimal increases since 2010.
Equity-to-Loans Ratio Falls to the Top of the Target Range
The Bank also uses the equity-to-loans ratio (ETL) as one of its primary measures of risk-bearing
capacity. The ETL ratio allows the Bank to monitor the adequacy of its risk-bearing capacity in
relation to its predominant risk asset. In FY2012 it fell for the third year in a row, to 27.0% (net of
relevant accumulated provisions and deferred loan income in the fiscal year), from 28.6% and 29.4%
in FY2011 and FY2010, respectively. The fall over the past three years was primarily due to increased
lending, although the most recent fiscal year also experienced a decrease in usable equity. The ratio is
now at the top end of the 23-27% target risk coverage range. Before the Bank’s response to the global
crisis, the ratio had climbed steadily from 29.4% in 2004 to 37.6% in 2008, well above the target.
IBRD Scores Well on Our Risk Asset Coverage Ratio
Moody’s believes that reference to a more focused measure—the risk asset coverage ratio—may
provide further value in assessing the strength of the IBRD’s capital base. At fiscal year-end 2012, the
Bank’s usable capital (hard-currency paid-in capital plus reserves) plus the callable capital pledged by
Aaa/Aa-rated member countries equaled 354% of what Moody’s regards as its high risk assets (i.e.,
loans outstanding to countries that Moody’s considers to be less than investment grade). This figure
continues to grow even after reaching a historical high in FY2011, as a result of the capital increase,
which offset some of the credit rating downgrades of euro area members (Italy, Slovenia, and Spain).
Conversely, credit rating upgrades lowered the amount of loans qualifying as risky, the most notable of
which was Indonesia’s upgrade to Baa3.
Strong Capital Position Allowed Aggressive Response to the Global Crisis…
As a result of its large capital base, the IBRD was able to aggressively respond to the global crisis to
help mitigate the negative impact on developing countries. New loan commitments increased by
5.0%, 144.4%, and 34.3% in FY2008, FY2009, and FY2010, respectively. In those same years, gross
loans outstanding increased by 1.3%, 6.7%, and 13.6%, respectively (following a 5-year period of
declining oustandings). The Bank’s initiatives were tailored to the specific circumstances of the
borrowing country but in general helped to create jobs, ensured delivery of essential services and
infrastructure, established safety net programs for the vulnerable, and restored confidence in financial
markets. As the global crisis eased, the Bank started scaling back the significant increase in operations.
In FY2012 new loan commitments decreased by 23.0% although gross loans outstanding increased by
2.9%.
…with No Adverse Impact on Financial Health
The IBRD performed the above-detailed response by deploying its existing capital. While some capital
adequacy ratios deteriorated, it was not significant, and there was no stress on its financial strength or
the Aaa rating. Despite this, to ensure that its capital adequacy supports continued growth in
outstanding loans, the Bank enhanced its financial capacity by increasing the capital base through a
capital increase totaling $86.2 billion (of which $5.1 billion will be paid in). In addition, the Bank has
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JANUARY 11, 2013
CREDIT ANALYSIS: IBRD (WORLD BANK)
SOVEREIGN & SUPRANATIONAL
increased pricing, introduced premiums for longer maturity loans3, and worked with relevant member
countries to convert existing but not fully usable capital into fully-usable paid-in capital.
Members’ Callable Capital Complements IBRD’s Own Resources
If the Bank were unable to service its own debt—an event Moody’s considers as being extremely
remote as reflected in its Aaa rating—it has the option of making capital calls on all member countries
in proportion to their subscribed shares. About 62% of the Bank’s callable capital represents the
obligations of Aaa/Aa-rated shareholders. The callable capital is an unconditional and full faith
obligation of each member country, the fulfillment of which is independent of the action of other
shareholders. Should one or more of the member countries fail to meet this obligation, successive calls
on the other members would be made until the full amounts needed were obtained. However, no
country would be required to pay more than its total callable subscription.
The United States has in place legislation (including the Bretton Woods Agreements Act) that allows
the Secretary of Treasury to pay up to $7.7 billion of the $31.8 billion in callable capital pledged to
the IBRD without any requirement of further congressional action.
The Bank has never made a capital call and is highly unlikely to need to resort to such an action in the
future.
Asset Quality
Total assets at the end of FY2012 amounted to $338.2 billion, with net loans outstanding representing
39.7% of that total. The IBRD limits its exposure to individual borrowers based on its risk-bearing
capacity. The single-borrower exposure limit for FY2012 was $17.5 billion for India and $16.5 billion
for the other largest borrowing countries deemed to be the most creditworthy by the IBRD; the Board
reviews and approves this figure every year and has left it unchanged for FY2013. There also is an
equitable access limit of 10% of IBRD’s subscribed capital, reserves and unallocated surplus ($23
billion at end-FY2012). The overall country limit for the largest and most creditworthy borrowing
countries is the lower of the single-borrower limit and the equitable access limit.
In FY2003 the IBRD instituted a policy whereby it could continue to lend to a country that had
reached its concentration limit, provided arrangements were made so that IBRD’s net exposure to the
borrower would not increase. As of June 30, 2012, China was the only country with which the Bank
had such an arrangement, and since it was below the limit the agreement had not been activated.
3
6
In early FY2010, the IBRD increased the contractual interest spread for new loans by 20 basis points to 50 basis points. During FY2011, the Bank introduced a new
loan pricing structure by restoring the average maturity limits for new loans and guarantees to the pre-2008 level of 12 years and allowing borrowing members an option
to extend the average loan maturity from 12 years to 18 years by paying an annual maturity premium of 10 to 20 basis points.
JANUARY 11, 2013
CREDIT ANALYSIS: IBRD (WORLD BANK)
SOVEREIGN & SUPRANATIONAL
FIGURE 1
IBRD Top Ten Borrowers Ranked By Share Of Total Loans Outstanding
FY 2010
Country
US$, bn.
FY 2011
(%) Country
10.7 China
FY 2012
US$, bn.
(%) Country
US$, bn.
(%)
13.0
9.8 Mexico
13.6
10.0
9.8 China
13.1
9.6
China
12.9
Brazil
11.3
9.4 Turkey
12.9
India
10.8
9.0 Mexico
12.2
9.2 Turkey
12.7
9.3
Mexico
10.5
8.7 India
11.4
8.6 India
11.7
8.6
Turkey
10.2
8.5 Brazil
10.4
7.9 Brazil
10.1
7.4
Indonesia
7.6
6.3 Indonesia
8.9
6.8 Indonesia
9.9
7.3
Colombia
7.2
6.0 Colombia
7.5
5.6 Colombia
7.5
5.5
Argentina
5.3
4.4 Poland
5.6
4.2 Poland
5.6
4.1
Poland
3.8
3.2 Argentina
5.4
4.1 Argentina
5.6
4.1
Ukraine
3.2
2.7 Romania
3.3
2.5 Romania
3.6
2.6
93.2
68.4
Total
82.8
68.9 Total
90.5
68.4 Total
As is suggested by the table above, change in the composition of principal borrowers is a slow process.
Seven of the top ten borrowers in FY2012 were among the top ten a decade earlier, and over that time
the top ten borrowers have consistently accounted for approximately two-thirds of all loans
outstanding. Thus, there is a degree of concentration risk in the portfolio.
Problem Loans Remain Miniscule…
Since FY2008 when Cote D’Ivoire and Liberia cleared all of their overdue principal, interest, and
charges due to IBRD, Zimbabwe has been the only country with loans in nonaccrual status.
The Bank does not reschedule its loans. It has never written off a loan and continues to seek recovery
on all arrears. Loans in nonaccrual status (overdue by 180+ days) amount to approximately $462
million or 0.3% of total gross loan outstanding. This amounts to less a fifth of the $3.5 billion in
nonaccrual loans recorded in FY2005.
…and More-than-Adequately Covered
The loans in nonaccrual status are amply covered by accumulated loan loss provisions of $1.7 billion.
Furthermore, general reserves total $26.3 billion, and were further increased with the addition of the
$390 million allocation from the FY2012 net income. In the event of a major increase in nonaccruals,
aside from the portfolio of liquid assets, the Bank also has the options of reducing lending activity,
increasing borrowings from capital markets and conceivably also from member governments or their
central banks. As a result of all these factors, Moody’s considers a resort to callable capital to be highly
unlikely.
In order to minimize the risk that future large and protracted nonaccruals might disrupt normal
lending operations, the IBRD uses an internal stress test of the equity-to-loans ratio to monitor and to
evaluate its risk-bearing and financial capacities, resulting in an upward trend in general reserves in
recent years. In keeping with its mission as a development organization, the Bank does not seek to
maximize profits, and consequently shapes its financial policies to reduce risk while meeting its
minimum profitability requirements.
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JANUARY 11, 2013
CREDIT ANALYSIS: IBRD (WORLD BANK)
SOVEREIGN & SUPRANATIONAL
Profitability
The IBRD’s profitability has been low relative to historical averages. However, for developmentmandated institutions our primary consideration of profitability is not the magnitude, rather, that
operating results do not contribute to the erosion of the capital base (via large and protracted losses).
Focus of Our Analysis is on Operating Income Rather than Net Income
Starting in FY2009, the IBRD reports all instruments in the investments, borrowings, and
asset/liability management portfolios as well as loans with embedded derivatives at fair value. As such,
the Bank reports changes in fair value resulting from fluctuations in interest rates or the Bank’s credit
spreads as net unrealized gains or losses which is reflected in net income. The Bank reported a net loss
of $676 million in FY2012 (after also taking into account the effects of Board of Governors approved
transfers), a return to loss after the previous fiscal year’s net income of $930 million.
However, since the instruments in these portfolios are held to maturity, Moody’s considers operating
income to be a more relevant measure of the Bank’s financial health in that it better reflects underlying
trends in the Bank’s core operations. Operating income has been positive every year since Moody’s
first rated the Bank in 1993 and averaged approximately $1,264 million during the FY2006-12 period.
IBRD still reports its loan portfolio at amortized cost, creating an asymmetry that affects variations in
net income.
FY2012 Operating Income Results…
Operating income fell to $783 million in FY2012 from $1,023 million in FY2011, which is low
compared to the historical average. Contributing to the results was higher net interest income, as loan
income increased mildly4 while borrowing costs continued to fall. More significantly, there was a $189
provisioning charge compared to a $45 million release of provisions during the previous fiscal year;
income from the LTIP was lower 5; and administrative expenses rose.
Over the medium term, the outlook for the Bank’s profits is fundamentally positive. Growth in
operating income will be supported by robust loan volume and pricing, and the equity duration
extension that will reduce the sensitivity of the Bank’s operating income to changes in short-term
market interest rates (discussed in more detail in the Assets/Liability Management and Liquidity
section above).
…Support Build-Up of Reserves and Contribution to IDA
Out of FY2012 net income, the Bank allocated $390 million toward increasing the general reserve in
order to increase its risk-bearing capacity. In turn, the Bank’s build-up of reserves is expected to
support earnings by growing the contribution of free funds to overall returns.
In December 2010, the Bank announced that it would once again participate in the IDA
replenishment. For the IDA16 Replenishment (2011-2014) the IBRD has promised $1.825 billion,
subject to adequacy of reserve retention, to help the 79 poorest countries in the world. In FY2012, the
Bank recorded as an expense $650 million of transfers from FY2011 net income approved by the
Board of Governors. The IDA received $520 million from unallocated net income and the Trust Fund
4
5
8
A result of the new loan pricing terms approved in FY2010 and an increase in loan volume.
Due to lower returns from the equity portfolio.
JANUARY 11, 2013
CREDIT ANALYSIS: IBRD (WORLD BANK)
SOVEREIGN & SUPRANATIONAL
for Gaza and West Bank and the South Sudan Transition Trust Fund received $55 million and $75
million, respectively, from surplus.
Rating History
Issuer Rating
9
JANUARY 11, 2013
Senior Unsecured
Outlook
Date
Long-term
Short-term
Rating Assigned
--
P-1
--
--
Outlook Assigned
--
--
--
Stable
Rating Assigned
Aaa
--
--
--
December-94
Rating Assigned
--
--
Aaa
--
March-93
Aug-10
March-97
CREDIT ANALYSIS: IBRD (WORLD BANK)
SOVEREIGN & SUPRANATIONAL
Annual Statistics
IBRD (World Bank)
2005
2006
2007
2008
2009
2010
2011
2012
Total
222,008
212,326
207,900
233,311
275,420
281,835
314,211
338,178
Cash
1,177
758
765
890
3,044
1,803
2,462
5,806
505
65
41
122
2,380
1,581
2,312
5,682
ASSETS, LIABILITIES AND CAPITAL (US$ Mil.)
ASSETS
o/w Unrestricted Cash
Investments
26,733
25,672
23,054
25,213
41,012
35,960
32,598
33,466
Derivative Assets
85,889
78,483
81,436
102,833
123,065
121,823
144,711
160,814
Gross Loans
138,145
137,942
133,245
137,226
156,823
183,677
196,894
199,241
9,822
9,082
10,566
11,779
21,558
20,796
19,430
13,372
Less Loans Approved But Not Yet Effective
Less Undisbursed Balance of Effective Loans
Equals Gross Loans Outstanding
23,922
25,856
24,874
26,397
29,567
42,778
45,005
49,544
104,401
103,004
97,805
99,050
105,698
120,103
132,459
136,325
3,009
2,296
1,932
1,370
1,632
1,553
1,549
1,690
482
487
440
412
409
446
440
426
100,910
100,221
95,433
97,268
103,657
118,104
130,470
134,209
7,299
7,192
7,212
7,107
4,642
4,145
3,970
3,883
183,420
175,852
168,104
191,763
235,383
245,574
274,528
301,493
101,297
95,835
87,759
87,402
110,040
128,577
135,242
145,339
77,742
74,877
75,191
96,731
115,642
110,615
130,429
144,837
4,381
5,140
5,154
7,630
9,701
6,382
8,857
11,317
38,588
36,474
39,796
41,548
40,037
36,261
39,683
36,685
189,718
189,718
189,801
189,801
189,918
189,943
193,732
205,394
178,235
178,235
178,315
178,315
178,427
178,451
182,012
192,976
Accumulated Loan Loss Provision
Deferred Loan Income
Net Loans Outstanding
Other Assets
LIABILITIES
Total
Total Borrowings
Derivative Liabilities
Other Liabilities
CAPITAL AND RESERVES
Total
Total Subscribed Capital
Less Total Callable Capital
(CC of Aaa/Aa members) [1]
103,735
103,735
105,628
105,796
105,652
111,507
118,751
118,883
(CC of IG members) [2]
140,242
140,834
141,288
141,288
141,288
145,503
149,811
159,599
37,993
37,401
37,027
37,027
37,139
32,948
32,201
33,377
11,483
11,483
11,486
11,486
11,491
11,492
11,720
12,418
-58
-102
-236
-853
-240
-150
-862
-488
(CC of members below IG) [3]
Equals Paid-in Capital
Less net amounts required to maintain value of
currency holdings under capital subscriptions
Less amounts subject to restrictions
2,509
2,460
2,448
2,443
1,848
1,332
1,273
944
9,032
9,125
9,274
9,896
9,883
10,310
11,309
11,962
29,355
23,762
26,990
28,754
31,447
27,277
29,235
28,308
o/w General Reserve
22,222
22,912
23,948
24,859
25,670
25,670
25,951
26,351
o/w Special Reserve
293
293
293
293
293
293
293
293
Equals Usable Paid-in Capital
Plus Total Reserves, incl. unallocated net income
and accumulated loan loss provision
o/w Accumulated Net Income -- Unallocated
Equals Usable Equity
3,831
-1,739
817
2,232
3,852
-239
1,442
-26
38,387
32,887
36,264
38,650
41,330
37,587
40,544
40,270
Surplus
448
360
43
0
595
257
227
172
Other
311
3,165
3,209
2,678
-1,864
-1,212
50
-2,523
222,008
212,326
207,900
233,311
275,420
281,835
314,211
338,178
TOTAL LIABILITIES, CAPITAL AND RESERVES
[1] Member countries viewed by Moody's as having credit standing of Aaa/Aa.
[2] Member countries viewed by Moody's as having investment grade credit standing (Baa or above).
[3] Member countries viewed by Moody's as having below investment grade credit standing (below Baa).
10
JANUARY 11, 2013
CREDIT ANALYSIS: IBRD (WORLD BANK)
SOVEREIGN & SUPRANATIONAL
IBRD (World Bank)
2005
2006
2007
2008
2009
2010
2011
2012
5,053
6,235
7,012
6,863
5,037
4,206
4,377
4,389
INCOME STATEMENT SUMMARY (US$ Mil.)
Total Gross Income
Income from Loans
4,155
4,864
5,467
5,497
3,835
2,491
2,470
2,585
4,084
4,791
5,391
5,426
3,789
2,458
2,449
2,572
Commitment Fees
71
73
76
71
46
33
21
13
Investment Income
627
1,107
1,281
1,066
603
367
367
219
Other
271
264
264
300
599
1,348
1,540
1,585
Total Gross Expenses
3,733
4,495
5,353
4,592
4,465
3,406
3,354
3,606
Borrowing Expenses
3,037
3,987
4,519
4,017
2,739
1,750
1,687
1,652
2,942
3,882
4,427
3,934
2,664
1,750
1,687
1,652
95
105
92
83
75
--
--
--
Administrative Expenses
1,021
1,059
1,066
1,082
1,244
1,519
1,564
1,631
Provision for Loan Losses
-502
-724
-405
-684
284
-32
-45
189
173
173
171
176
197
168
147
133
4
0
2
1
1
1
1
1
1,320
1,740
1,659
2,271
572
800
1,023
783
Interest
Interest on Borrowings
Other borrowing expenses
Contribution to Special Programs
Other
Net Operating Income
Plus Board of Governors-approved transfers
-642
-650
-957
-740
-738
-839
-513
-650
Plus net unrealized gains (losses) on non-trading portfolio
2,511
-3,479
-842
-40
3,280
-1,038
420
-809
Equals Net Income
3,189
-2,389
-140
1,491
3,114
-1,077
930
-676
11
JANUARY 11, 2013
CREDIT ANALYSIS: IBRD (WORLD BANK)
SOVEREIGN & SUPRANATIONAL
IBRD (World Bank)
2005
2006
2007
2008
2009
2010
2011
2012
Return on Total Assets (operating income)
0.6
0.8
0.8
Return on Earning Assets
1.0
1.3
1.3
1.0
0.2
1.8
0.4
0.3
0.3
0.2
0.5
0.6
0.5
Return on Equity
3.5
4.6
4.5
5.8
1.4
2.0
2.6
1.9
Return on Usable Equity
3.8
4.9
4.8
6.1
1.4
2.0
2.6
1.9
Interest on Loans/Loans Outstanding
3.9
4.7
5.4
5.6
3.7
2.2
2.0
1.9
Interest Coverage Ratio (x)
1.4
1.4
1.4
1.6
1.2
1.5
1.6
1.5
61.4
53.3
62.1
65.6
66.6
68.0
75.2
89.6
Usable Equity + CC of Aaa/Aa Members/Risk Assets [1]
227.5
221.4
243.2
245.0
236.8
269.6
295.4
354.3
Usable Equity + CC of IG Members/Risk Assets [1]
285.9
281.5
304.3
305.2
294.3
331.0
353.0
444.9
Liquid Assets (less restricted cash)/Total Assets
12.3
12.1
11.1
10.9
15.8
13.3
11.1
11.6
Liquid Assets (less restricted cash)/Borrowings
26.9
26.9
26.3
29.0
39.4
29.2
25.8
26.9
46.5
50.2
43.5
46.4
61.8
43.4
36.4
36.3
116.7
102.2
95.8
98.9
149.0
88.3
77.9
79.3
FINANCIAL RATIOS
Performance Statistics (%)
Capital Adequacy Ratios (%)
Usable Equity as % Risk Assets [1]
Liquidity Ratios (%)
Liquid Assets (less restricted cash) as % of
Principal Payments due next five years
Total Liquid Assets/Undisbursed Effective Loans
Maturity of Outstanding Borrowings (% of total)
One Year
15.9
16.5
25.4
28.1
28.4
26.4
19.6
15.2
Two to Five
43.6
41.3
33.5
31.9
35.4
40.8
51.3
59.0
More than Five
40.6
42.2
41.1
40.0
36.2
32.8
29.1
25.8
28.1
23.1
27.6
29.0
29.8
22.7
22.1
20.8
2.7
3.1
2.7
2.6
2.6
3.2
3.3
3.4
47.4
47.0
44.0
45.0
49.0
55.0
60.0
59.0
Reserves to Loans Ratio (%)
Total Reserves/Loans Outstanding
Loans To Usable Equity (X)
Loans Outstanding/Usable Equity
Lending Limitation (%) [2]
Loans and Callable Guarantees Outstanding/Subscribed
Capital and Reserves
[1] Risk assets defined as loans to countries considered by Moody's to be below investment grade.
[2] World Bank charter limits commitments on loans and guarantees to 100% of subscribed capital and reserves.
12
JANUARY 11, 2013
CREDIT ANALYSIS: IBRD (WORLD BANK)
SOVEREIGN & SUPRANATIONAL
Capital Subscriptions and Voting Power (US$ Mil.)
(as of June 30, 2012)
Par Value of Shares
Per Cent of Total
Total
Paid-in
Callable
Voting Power Per
Cent of Total
16.51
33,921
2,116
31,805
15.63
Japan
9.72
19,958
1,222
18,736
9.21
Germany
4.84
9,946
616
9,331
4.60
France
4.33
8,890
552
8,339
4.12
United Kingdom
4.33
8,890
571
8,320
4.12
China, People's Republic
3.46
7,101
437
6,664
3.29
Russian Federation
2.63
5,404
334
5,070
2.51
Canada
3.10
6,359
392
5,966
2.95
India
2.97
6,098
375
5,723
2.83
Italy
2.63
5,404
335
5,069
2.51
Saudi Arabia
2.63
5,404
335
5,069
2.51
42.85
88,019
5,134
82,885
45.72
100.00
205,394
12,418
192,976
100.00
United States
Others
Total
13
JANUARY 11, 2013
CREDIT ANALYSIS: IBRD (WORLD BANK)
SOVEREIGN & SUPRANATIONAL
Moody’s Related Research
Credit Opinions:
»
IBRD (WB)
»
International Finance Corporation
Analysis:
» International Finance Corporation, November 2012 (146849)
To access any of these reports, click on the entry above. Note that these references are current as of the date of publication of
this report and that more recent reports may be available. All research may not be available to all clients.
Related Websites
»
IBRD (WB)
»
International Finance Corporation
MOODY’S has provided links or references to third party World Wide Websites or URLs (“Links or References”) solely for your
convenience in locating related information and services. The websites reached through these Links or References have not
necessarily been reviewed by MOODY’S, and are maintained by a third party over which MOODY’S exercises no control.
Accordingly, MOODY’S expressly disclaims any responsibility or liability for the content, the accuracy of the information, and/or
quality of products or services provided by or advertised on any third party web site accessed via a Link or Reference. Moreover,
a Link or Reference does not imply an endorsement of any third party, any website, or the products or services provided by any
third party.
14
JANUARY 11, 2013
CREDIT ANALYSIS: IBRD (WORLD BANK)
SOVEREIGN & SUPRANATIONAL
Report Number: 148642
Authors
Steven A. Hess
Annette Swahla
Production Associate
Steven Prudames
© 2013 Moody’s Investors Service, Inc. and/or its licensors and affiliates (collectively, “MOODY’S”). All rights reserved.
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15
JANUARY 11, 2013
CREDIT ANALYSIS: IBRD (WORLD BANK)