TOWARDS A GREENER TOMORROW ANNUAL REPORT 2016 ANNUAL REPORT 2016 CONTENTS 01 Message from the President 1 04 What NDB has Done Key Milestones in NDB’s Development 26 02 New Development Bank Projects approved in 2016 28 Purpose 6 First Green Bond Issuance 32 Our Identity 6 Partnerships 33 Membership and Voting Rights 7 Governance 8 05 Major Events NDB’s Staff 13 Institutional Capacity Building 14 NDB Headquarters Agreement Signed in Shanghai 36 Environmental & Social Framework 15 NDB’s First Annual Meeting 36 Regional Offices 17 On the Global Stage 37 06 Financial Highlights 38 03 Promoting Infrastructure & Sustainable Development Operating Context 20 07 Auditor’s Report 42 Our Lending Approach 22 08 Financial Statements 46 Funding 22 Investments 22 This is NDB's first annual report. ANNUAL REPORT 2016 CONTENTS 01 Message from the President 1 04 What NDB has Done Key Milestones in NDB’s Development 26 02 New Development Bank Projects approved in 2016 28 Purpose 6 First Green Bond Issuance 32 Our Identity 6 Partnerships 33 Membership and Voting Rights 7 Governance 8 05 Major Events NDB’s Staff 13 Institutional Capacity Building 14 NDB Headquarters Agreement Signed in Shanghai 36 Environmental & Social Framework 15 NDB’s First Annual Meeting 36 Regional Offices 17 On the Global Stage 37 06 Financial Highlights 38 03 Promoting Infrastructure & Sustainable Development Operating Context 20 07 Auditor’s Report 42 Our Lending Approach 22 08 Financial Statements 46 Funding 22 Investments 22 This is NDB's first annual report. ANNUAL REPORT 2016 MESSAGE FROM THE PRESIDENT Since its founding in July 2015, New Development Bank (NDB or the Bank) has progressed with the joint efforts of all stakeholders. I wish to thank our shareholders and representatives of our member governments for their generous support. Our host country, China, and host city, Shanghai, have received us with great warmth and hospitality. The Government of the People’s Republic of China has provided support at every step of our establishment, for which I am deeply grateful. Special thanks go to our Governors and their Alternates, as well as our Directors and their Alternates. With their active support, guidance and oversight, they played a pivotal role in contributing to NDB's progress. We have had the privilege of working with various institutions such as multilateral development banks, international organizations, financial institutions, and other partners. To all of these collaborators and partners, I convey my thanks. I wish to thank all my colleagues at NDB, who have demonstrated enormous commitment, passion and energy to get the Bank off the ground. ANNUAL REPORT 2016 MESSAGE FROM THE PRESIDENT Since its founding in July 2015, New Development Bank (NDB or the Bank) has progressed with the joint efforts of all stakeholders. I wish to thank our shareholders and representatives of our member governments for their generous support. Our host country, China, and host city, Shanghai, have received us with great warmth and hospitality. The Government of the People’s Republic of China has provided support at every step of our establishment, for which I am deeply grateful. Special thanks go to our Governors and their Alternates, as well as our Directors and their Alternates. With their active support, guidance and oversight, they played a pivotal role in contributing to NDB's progress. We have had the privilege of working with various institutions such as multilateral development banks, international organizations, financial institutions, and other partners. To all of these collaborators and partners, I convey my thanks. I wish to thank all my colleagues at NDB, who have demonstrated enormous commitment, passion and energy to get the Bank off the ground. 1 ANNUAL REPORT 2016 Since the beginning, we have been focusing on across all of its member countries. We will models, and environmental demands. building a solid foundation for NDB by setting continue to explore fundraising opportunities We are already experiencing some of the up all the functional areas of the Bank and in our members’ local capital markets challenges of this new world, which are formulating decisive policy and administrative and promote local currency lending growing inequality and significant measures. During the course of 2016, we wherever possible. migration patterns. successfully commenced the lending and Next year promises to bring both significant borrowing operations of the Bank. Such challenges and opportunities will in challenges and opportunities. In the past year, turn trigger the development of new Seven infrastructure loan projects were our member countries experienced cyclical headwinds to their economic prospects, infrastructure, new thinking, new approved in all member countries for a resulting in slower growth and volatility in their institutional structures, new products, new total amount of over USD 1.5 Billion, the financial and capital markets. services, new partner ecosystems and new bulk of which was in the renewable At the same time, developing countries in collaborations amongst multilateral energy sector. general, and our members in particular, institutions. will continue to play a major role in global NDB has thus embarked on the journey towards implementation of the founders’ growth. The BRICS economies are home to Speed, agility and innovative thinking are the vision of financing infrastructure and 41% of the world population (2016) and prerequisites needed to succeed and meet sustainable development. We have also aspirations in a world where rapid change approved our first loan in Renminbi (RMB) to represent 22% of the global economy (2016). is a given. Shanghai Lingang Rooftop Solar Project, which New Development Bank enters this exciting marks the beginning of local currency lending In addition their share in world exports is about and challenging new world with a clear-cut by NDB. 20% (2015)1 . NDB is conscious of its goal to contribute to the overall success of its responsibility to augment the efforts of our Our member governments demonstrated their member countries. In this collaboration, we members to raise the productive potential of strong support for the Bank, with timeous believe it is crucial to combine the energy and their economies, through the investment in payment of their paid-in capital contributions, innovation of youth with the experience and sustainable infrastructure. in some instances ahead of schedule. In July wisdom of age. I look forward to working with 2016, NDB issued its first green bond in the The world is expected to face further dramatic all our stakeholders in the year ahead. Chinese interbank bond market for RMB 3 changes as technology continues to disrupt billion (equivalent to about USD 448 million). traditional business models. We now live at the K. V. Kamath cusp of what has been often referred to as the President We have welcomed staff from our member Fourth Industrial Revolution. The first revolution countries at all levels of the Bank, and will was caused by the use of steam and water continue our efforts to strengthen the talent power. The second was caused by the use of pool as we grow. Our recruitment policy will electric power. The third is the digital revolution, continue to target bright and skilled individuals, which includes the use of electronics and with a strong emphasis on hiring young information technology. The Fourth Revolution, professionals as part of our efforts to develop which is already upon us, is brought about by and nurture talent. the combination of digital and physical In the forthcoming year, we are planning to systems including exponential use of consolidate and strengthen our foundation. automation, artificial intelligence and Our activities will be firmly guided by our virtual reality. founders’ vision and our commitment to Developing countries are already witnessing finance green and environmentally the first signs of this revolution. Furthermore, friendly projects. they will both influence and be influenced by During 2017, NDB is expected to present 10 to such disruption. New opportunities will arise 12 projects to its Board with the combined with the emergence of new production value of approximately USD 2.5 to 3 billion systems, employment patterns, urbanization 1 The sources of world population, GDP and exports are the BRICS Joint Statistical Publication 2017, the World Bank and the World Trade Organization, respectively. 2 ANNUAL REPORT 2016 Since the beginning, we have been focusing on across all of its member countries. We will models, and environmental demands. building a solid foundation for NDB by setting continue to explore fundraising opportunities We are already experiencing some of the up all the functional areas of the Bank and in our members’ local capital markets challenges of this new world, which are formulating decisive policy and administrative and promote local currency lending growing inequality and significant measures. During the course of 2016, we wherever possible. migration patterns. successfully commenced the lending and Next year promises to bring both significant borrowing operations of the Bank. Such challenges and opportunities will in challenges and opportunities. In the past year, turn trigger the development of new Seven infrastructure loan projects were our member countries experienced cyclical headwinds to their economic prospects, infrastructure, new thinking, new approved in all member countries for a resulting in slower growth and volatility in their institutional structures, new products, new total amount of over USD 1.5 Billion, the financial and capital markets. services, new partner ecosystems and new bulk of which was in the renewable At the same time, developing countries in collaborations amongst multilateral energy sector. general, and our members in particular, institutions. will continue to play a major role in global NDB has thus embarked on the journey towards implementation of the founders’ growth. The BRICS economies are home to Speed, agility and innovative thinking are the vision of financing infrastructure and 41% of the world population (2016) and prerequisites needed to succeed and meet sustainable development.