IFC Annual Report 2013-The Power of Partnerships

Annual Report 2013
IFC Year in Review
In FY13, our investments climbed to an all-time high of nearly $25billion, leveraging the power of the private sector to create jobs and tackle the worlds most pressing development challenges.
Total Assets
Dollars in millions
80,000
IFC Financial Highlights

Dollars in millions, as of and for the years ended June 30*
2013
2012
2011
2010
2009
Net income (loss) attributable to IFC Grants to IDA

60,000
$ $
1,018 340
$ 1,328 $ 330
$ $ $
1,579 600 2,179
$ $ $
1,746 200 1,946
$ $ $
(151) 450 299
Income before grants to IDA Total assets
$ 1,350 $ 77,525 $34,677 $ 13,309
$ 1,658 $ 75,761 $31,438 $ 11,977
$68,490 $ 29,934 $ 13,126
$ 61,075 $25,944 $ 10,146
$51,483 $ 22,214 $ 7,932
40,000
Loans, equity investments and debt securities, net Estimated fair value of equity investments KEY RATIOS
20,000
Return on average assets (GAAP basis) Return on average capital (GAAP basis)
0 09 10 11 12 13
1.3% 4.8% 77% 2.6:1 $ $ 16.8 20.5 7.20% $ $
1.8% 6.5% 77% 2.7:1 15.5 19.2 6.60% $ $
2.4% 8.2% 83% 2.6:1 14.4 17.9 6.6% $ $
3.1% 10.1% 71% 2.2:1 12.8 16.8 7.4% $ $
-0.3% -0.9% 75% 2.1:1 10.9 14.8 7.4%
Cash and liquid investments as a percentage of next three years estimated net cash requirements Debt-to-equity ratio Total resources required ($ billions) Total resources available ($ billions)
Net Income (Loss) Attributable to IFC

Dollars in millions
2,000
Total reserve against losses on loans to total disbursed loan portfolio
*See Managements Discussion and Analysis and Consolidated Financial Statements for details on the calculation of these numbers: http://www.ifc.org/ifcext/annualreport.nsf/Content/AR2013_Financial_Reporting
IFC Operational Highlights

1,500
2013
2012
2011
2010
2009
Dollars in millions, for the year ended June 30
1,000
NEW INVESTMENT COMMITMENTS Number of projects 612 113 $18,349 576 103 $ 15,462 518 102 $ 12,186 528 103 $ 12,664 447 103 $ 10,547
500
Number of countries For IFCs own account
CORE MOBILIZATION*
500 09 10 11 12 13
Syndicated loans1 Structured nance IFC initiatives & other Asset Management Company (AMC) Funds Public- Private Partnership (PPP)2 Total core mobilization
$ 3,098 $ 1,696 $ $ 768 942
2,691
$ 4,680 $ 1,340 $ 454 $ 6,474
$ $
1,986 797
$ $ $ $
1,858 169 1,927 8
$ $ $
1,727 437 41
$ 2,358 $ 236 $ 5,377
$ 6,504
$ 4,896
$ 3,962
INVESTMENT DISBURSEMENTS For IFCs own account Syndicated loans 3 $ 9,971 $ 2,142 $ 7,981 $ 6,715 $ 6,793 $ 2,855 $ 5,640 $ 1,958
$ 2,587
$ 2,029
COMMITTED PORTFOLIO Number of rms For IFCs own account Syndicated loans 4 1,948 $49,617 $ 13,633 1,825 $ 45,279 $ 11,166 1,737 $ 42,828 $ 12,387 1,656 $38,864 $ 9,302 1,579 $34,502 $ 8,299
ADVISORY SERVICES Advisory Services program expenditures Share of program in IDA countries 5 $ 232.0 65% $ 197.0 65% $ 181.7 64% $ 166.4 62% $ 157.8 52%
*Financing from entities other than IFC that becomes available to client due to IFCs direct involvement in raising resources. 1. Includes B- Loans, Parallel Loans and A- Loan Participation Sales (ALPS). 2. Third-party financing made available for public-private partnership projects due to IFCs mandated lead advisor role to national, local, or other government entity. 3. Includes B- Loans and Agented Parallel Loans. 4. Includes B- Loans, A- Loan Participation Sales (ALPS), Agented Parallel Loans, and Unfunded Risk Participations (URPs). 5. All references in this report to percentages of advisory program expenditures in IDA countries and fragile and conflict-affected areas exclude global projects.
THE POWER OF PARTNERSHIPS
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IFC Annual Report 2013
ABOUT IFC
IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector in developing countries. Established in 1956, IFC is owned by 184 member countries, a group that collectively determines our policies. Our work in more than 100 developing countries allows companies and nancial institutions in emerging markets to create jobs, generate tax revenues, improve corporate governance and environmental performance, and contribute to their local communities. IFCs vision is that people should have the opportunity to escape poverty and improve their lives.
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IFC ANNUAL REPORT 2013
Leadership Perspectives
A Letter from WORLD BANK GROUP PRESIDENT JIM YONG KIM
We are at an auspicious moment in history. Thanks to the successes of the past few decades and a favorable economic outlook, developing countries now have an unprecedented opportunity: the chance to end extreme poverty within a generation. This opportunity must not be squandered.
Earlier this year, we in the World Bank Group set two specic and measurable goals for ourselves and our partners in the development community: effectively ending extreme poverty by shrinking the share of people living on less than $1.25 a day to 3percent by 2030, and promoting shared prosperity by raising the incomes of the poorest 40percent of the population in every developing country. These are ambitious goals, and success is far from inevitable. Nearly ve years after the global nancial crisis began, in 2008, the worlds economic recovery remains fragile. Developed countries struggle with high unemployment and weak economic growth. Developing countries are growing more slowly than before the crisis. Moreover, the ght against poverty will become increasingly difficult as we push toward our target, since those who remain poor will be the hardest to reach. Other challenges could pose new threats to poverty reduction. Conict and political instability present major risks, because they increase poverty and create long-term obstacles to development. Moreover, a warming planet could increase the prevalence and size of drought-affected areas, and make extreme weather events more frequent, with unpredictable costs in terms of lives and nancial resources. Yet, I remain optimistic that achieving the goals is within our reach. Doing so will require systemic and relentless collaboration from the World Bank Group, our 188 member countries, and other partners. IFC will play an important role by mobilizing the power of the private sector to create jobs and opportunity where they are needed most.
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This year, IFC provided a record of nearly $25 billion in nancing for private sector development, $6.5 billion of which was mobilized from investment partners.
This year, IFC provided a record of nearly $25billion innancing for private sector development, $6.5billion of which was mobilized from investment partners. Nearly half of IFCs 612 investment projects took place in the poorest countries served by the International Development Association. More than $5billion went to support private sector development in Sub-Saharan Africa, and more than $2billion went to South Asia. IFC Asset Management Company, an IFC subsidiary that mobilizes capital from third-party investors for investment in developing countries, increased its assets under management to $5.5billion. This represents a signicant milestone for a company set up just four years ago. In addition, IFC mobilized more than $3billion from other investors in theform of syndicated loans. This Annual Report shows the crucial role IFC has played in providing support for small and medium entrepreneurs, expanding access to nance for the poor, creating jobs, and generating opportunities for women. In Cte dIvoire, for example, IFC arranged a nancing package that will allow the Azito power plant to increase energy production by 50percent without using additional gas. This will help reduce power shortages in the country and support its economic recovery. In Latin America, IFC is extending quality healthcare to poor communities in the Brazilian state of Bahia with a highly innovative public-private partnership model. And, working under a joint strategy with the World Bank, IFC is bringing new opportunity to Myanmar, a country whose economic development has lagged signicantly behind that of its East Asian counterparts.
IFC is also making important strides in helping the private sector address climate change. Earlier in 2013, IFC issued the worlds largest green bond, raising $1billion that will be directed to climate-related projects across the globe. Inaddition, IFC helped over 10 building developers in Asia, Latin America, and other regions adopt more energy-efficient designs. These are the types of steps we must take to ensure that climate change does not wipe out the hard-won development gains the world has achieved in recent decades.
JIM YONG KIM World Bank Group President
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Leadership Perspectives
A Letter from IFC EXECUTIVE VICE PRESIDENT AND CHIEF EXECUTIVE OFFICER JIN-YONG CAI
Across the world, the challenges of development are vast and growing. So are the needs of entrepreneurs, investors, and businesses in developing countries, which struggle to overcome constraints in nance, infrastructure, employee skills, and the regulatory environment.
For IFC, this represents a tremendous opportunity: to engage the creativity and resources of the business community to change the world for the better. By helping companies overcome obstacles to sustainable growth, we help them create opportunity and improve lives. We enlist them as partners in the global effort to end extreme poverty and promote shared prosperity. We believe strongly in the power of partnerships to make a transformational difference. As the worlds largest global development institution, we worked this year with nearly 2,000 private sector clients and a wide array of governments, donors, and other stakeholders. The result was another record year for IFC we invested and mobilized more money for private sector development than ever before, helping sustain development in more than 100 countries. Our new investments climbed to an all-time high of nearly $25billion in FY13, including funds mobilized from other investors, providing capital to more than 600 projects and companies across the world. We invested $18.3billion for our own account and mobilized $6.5billion from other investors. In a time of declining official aid ows to developing countries, these investments had an impact in every region of the world. We now have an investment portfolio of nearly $50billion in nearly 2,000 companies in 126 countries. This diversication has contributed to our strong risk-adjusted returns and to our development impact. At the end of 2012, our investments provided jobs for 2.7million people in developing countries. With our support, our clients treated 17.2million patients, educated 1million students, and improved opportunities for 3.1million farmers. They generated power for 52.2million customers, and distributed water to 42million.
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We believe strongly in the power of partnerships to make a transformational difference.
We focused strongly on promoting prosperity in the worlds poorest and most fragile regions. In FY13, nearly half of our projects totaling more than $6billion were in the poorest countries served by the World Banks International Development Association, most of them in Sub-Saharan Africa. About two-thirds of our advisory program expenditures were in IDA countries. Our investments in fragile and conict-affected regions climbed to nearly $600million. Our Advisory Services achieved signicant results for our clients businesses and governments alike. Developmenteffectiveness ratings for Advisory Services reached a record of 75percent while client-satisfaction ratings climbed to an all-time high of 90percent. The advice we provide is a crucial element of the value we bring to our clients, and in FY13 we achieved notable progress in providing client solutions that integrate investment and advice we had active advisory projects with 250 investment clients. In FY13, our advice helped mobilize almost $1billion in private investment through public-private partnerships, which are expected to improve infrastructure and health services for millions of people. In addition, we helped more than 40,000 small and medium enterprises obtain $4.5billion in nancing secured with movable property, through our work with collateral registries. We also provided training and capacity-building to about 350,000 people including farmers, entrepreneurs, and managers of small and medium enterprises. In addition, IFC Asset Management Company continued to grow, increasing its assets under management to $5.5billion across six investment funds, with a strong mix of reputable investors. It has launched two new funds including the IFC Catalyst Fund, which focuses on climate-smart investments, and the Global Infrastructure Fund, which will invest scarce
equity risk capital in the critically important infrastructure sector. I am condent IFC can achieve even greater impact going forward. This year was my rst as IFCs CEO, and Itraveled to nearly three dozen countries in every region of the world to meet with our clients and staff. I saw rsthand what we can achieve by being ambitious, unafraid of risk, client-focused, and open to new ideas. We can tackle the big problems that have long hindered development such as access to nance, energy and climate change, and food security. IFC is a unique organization, one that has managed to combine a businesslike commercial approach with a passionate, focused commitment to achieving meaningful and measurable development impact. Strong, protable growth builds resources for greater development impact in the future. Developing countries need transformative solutions. Working with our partners, IFC is well positioned to providethem.
JIN-YONG CAI IFC Executive Vice President and Chief Executive Officer
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MANAGEMENT TEAM
Our seasoned team of executives ensures that IFCs resources aredeployed effectively, with a focus on maximizing development impact and meeting the needs of our clients. IFCs Management Team benets from years of development experience, a diversity of knowledge, and distinct cultural perspectivesqualities that enhance IFCs uniqueness. The team shapes our strategies and policies, positioning IFC to help improve the lives of more poor people in the developing world. Our executives are vital in maintaining IFCs corporate culture of performance, accountability, and engagement.
Jingdong Hua
Janamitra Devan
Jean Philippe Prosper
Saadia Khairi
Karin Finkelston
Dorothy Berry
Vice President, Treasury and Syndications
Vice President, Financial and Private Sector Development
Vice President, SubSaharan Africa, Latin America and the Caribbean
Vice President, Risk Management and Portfolio
Vice President, Asia-Pacic
Vice President, Human Resources, Communications, and Administration
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Ethiopis Tafara
Vice President, General Counsel
Dimitris Tsitsiragos
Jin-Yong Cai
Nena Stoiljkovic
Gavin Wilson
Rashad Kaldany
IFC Executive Vice President and CEO
Vice President, Business Advisory Services
CEO, IFC Asset Management Company
Vice President and Chief Operating Officer
Jorge Familiar Calderon
Vice President, Europe, Central Asia, Middle East and North Africa
Vice President and Corporate Secretary (not pictured)
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ANNUAL REPORT 2013
With a global presence in more than 100 countries, anetwork of more than 900nancial institutions, andnearly 2,000 private sector clients, IFC is uniquely positioned to create opportunity where its neededmost. We use our capital, expertise, and inuence to help change the world for the better to eliminate extreme poverty and to boost shared prosperity.
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Thats the power of partnerships.
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Partnerships take connections

No institution can solve the challenges of development on its own. But IFC has a distinctive power to bring together a variety of players to address the challenges collectively. We work with our network of partners to craft innovative solutions that make good things happen in difcult places.
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We can end extreme poverty in a generation and boost shared prosperity.
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Partnerships take ambition

In a world in which the needs of developing countries far exceed the available resources, it takes ambition to make a lasting difference in the lives of the poor. We are stepping up to the challenge, unafraid to take risks, and nding new ways to maximize our development impact.
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Partnerships take focus

Our clients hold the key to sustainable private sector development in the poorest countries and regions of the world. We use our distinctive combination of broad global knowledge and deep local expertise to align their needs with the opportunities for transformational development in emerging markets.
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In all our projects, we aim to do the things that no one else is able or inclined to. We seek to achieve maximum impact protably and efficiently, while ensuring we have the funds required to continue ourgrowth.
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Partnerships can improve lives

Our work helps expand employment, improve health and education, and broaden access to nance for those who need it most. In 2012, our clients supported 2.7 million jobs, treated 17.2 million patients, and expanded opportunities for more than 3 million farmers.
2.7
million jobs were supported by IFC clients in 2012.
17.2
million patients were treated by IFC clients.
3.1
million farmers beneted from our work with clients.
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Partnerships can promote prosperity

We help create the conditions needed for sustained prosperity. In 2012, our advice helped governments in 43 countries adopt 76 reforms to strengthen the investment climate. Clients we invested in distributed power to nearly 46 million customers and contributed about $27 billion to government revenues.
76
investment-climate reforms achieved in 43countries.
$27
billion in government revenues, generated by IFC clients.
46
million customers received power because of IFC investments.
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Partnerships can transform the world

Harnessing the creativity of the private sector, we can help end extreme poverty within a generation. We can help lift the incomes of the poorest 40 percent of the population in every developing country. Achieving these goals would change the world.
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IFCS GLOBAL IMPACT
Our record investments and advice helped achieve signicant impact for the poor. Nearly half our investment projects were in the worlds poorest countries. We helped our clients support 2.7million jobs and provide more than $265billion in loans to micro, small, and medium enterprises in 2012. Our advice helped governments in 43 countries adopt 76 reforms related to the investment climate.
$4.8
BILLION
Latin America and the Caribbean
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$25 BILLION
in investments, including $18.3 billion in commitments for our own account
$3.3
BILLION
Europe and Central Asia
$1.7
BILLION
South Asia
$3.5
BILLION
Sub-Saharan Africa
$2.9
BILLION
East Asia and the Pacic
$2.0
BILLION
Middle East and North Africa
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FY13 COMMITMENTS
Dollar amounts in millions Total
BY INDUSTRY
FY13 COMMITMENTS BY ENVIRONMENTAL AND SOCIAL CATEGORY

$18,349 (100%) Category $6,477 (35.3%) $3,647 (19.9%) $2,247 (12.2%) $1,635 (8.9%) $1,314 (7.2%) $1,278 (7.0%) $890 (4.9%) $472 (2.6%) $389 (2.1%) A B C FI FI-1 FI-2 FI-3 Total Commitments Number of ($ millions) Projects $884 $5,490 $6,764 $1,751 $450 $2,203 $807 $18,349 17 167 269 48 14 59 38 612
Trade Finance Financial Markets Infrastructure Consumer & Social Services Manufacturing Agribusiness & Forestry Funds Telecommunications & Information Technology Oil, Gas & Mining
BY REGION
IFCS LARGEST COUNTRY EXPOSURES1

$4,822 (26.28%) $3,501 (19.08%) $3,261 (17.77%) $2,873 (15.66%) $2,038 (11.11%) $1,697 (9.25%) $156 (0.85%) Country (Global Rank) India (1) China (2) Turkey (3) Brazil (4) Russian Federation (5) Committed % of Portfolio Global ($ millions) Portfolio $4,453 $3,002 $2,856 $2,690 $2,145 $1,584 $1,334 9% 6% 6% 5% 4% 3% 3% 2% 2% 2% June 30, 2013 (Based on IFCs Account)
Latin America and the Caribbean Sub-Saharan Africa Europe and Central Asia East Asia and the Pacific Middle East and North Africa South Asia Global
Some amounts include regional shares of investments that are officially classified as global projects.
BY PRODUCT
Mexico (6) $8,519 (46.43%) $6,959 (37.93%) $2,732 (14.89%) $138 (0.75%) Nigeria (7)
Loans1 Guarantees2 Equity3 Risk-management products

1. Includes loan-type, quasi-equity products. 2. Includes trade finance. 3. Includes equity-type, quasi-equity products.
Egypt, Arab Republic of (8) $1,130 Ukraine (9) Colombia (10) $963 $947
1. Excludes individual country shares of regional and global projects.
COMMITTED PORTFOLIO
For IFCs own account as of June 30, 2013 Total
BY INDUSTRY
$49,617 (100%)
Financial Markets Infrastructure Manufacturing Agribusiness & Forestry Consumer & Social Services Funds Trade Finance Oil, Gas & Mining Telecommunications & Information Technology Other
BY REGION
$14,563 (29%) $9,358 (19%) $6,385 (13%) $4,251 (9%) $4,215 (8%) $3,733 (8%) $3,081 (6%) $2,359 (5%) $1,667 (3%) $5 (0%)
Europe and Central Asia Latin America and the Caribbean Sub-Saharan Africa East Asia and the Pacific Middle East and North Africa South Asia Global
$10,994 (22%) $10,993 (22%) $7,833 (16%) $7,726 (16%) $5,793 (12%) $5,582 (11%) $696 (1%)
Amounts include regional shares of investments that are officially classified as global projects.
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FY13 INVESTMENT SERVICES DOTS SCORE BY INDUSTRY

IFC Total Funds Infrastructure Financial Markets Agribusiness & Forestry Oil, Gas & Mining Consumer & Social Services Telecommunications & Information Technology Manufacturing 716 (29,674) 84 (1,199) 101 (4,805) 219 (11,813) 79 (3,215) 28 (2,200) 94 (2,045) 31 (1,067) 80 (3,329)
IFCS CLIENT LEADERSHIP AWARD

66% 79% 73% 70% 68% 64% 56% 55% 49%
Numbers at the left end of each bar are the total number of companies rated. Numbers in parentheses represent total IFC investment ($ millions) in those projects.
FY13 INVESTMENT SERVICES DOTS SCORE BY REGION

IFC Total Latin America and the Caribbean East Asia and the Pacific Middle East and North Africa Europe and Central Asia Sub-Saharan Africa South Asia 716 (29,674) 159 (8,007) 98 (3,922) 80 (3,283) 168 (8,477) 121 (3,094) 81 (2,707) 66% 74% 70% 65% 64% 61% 60%
Numbers at the left end of each bar are the total number of companies rated. Numbers in parentheses represent total IFC investment ($ millions) in those projects.
FY13 ADVISORY SERVICES PROGRAM EXPENDITURES

Dollar amounts in millions Total
BY REGION
231.9 (100%)
Sub-Saharan Africa East Asia and the Pacific Europe and Central Asia South Asia Latin America and the Caribbean Middle East and North Africa Global
BY BUSINESS LINE
65.4 (28%) 38.5 (17%) 36.4 (16%) 33.6 (14%) 25.5 (11%) 20.4 (9%) 12.2 (5%)
Every year, IFC recognizes an organization that reects our values and symbolizes our shared commitment to sustainable development. We present our Client Leadership Award to a corporate client that best demonstrates leadership, innovation, and operational excellence. This year, the award went to Vegpro Group, a dynamic agribusiness company in Kenya. It has been an IFC client for nearly two decades. Vegpro is engaged in a tricky market: supplying fresh food to supermarkets in the European Union. As shoppers demand high-quality, ready-to-eat vegetables, growers must assure yearround supply and quick delivery while complying with strict environmental and safety standards. But the companys creative approach has transformed it into Kenyas largest vegetable producer, with an annual turnover of $100million. All of the fresh produce it supplies to the retail market is certied, which usually means higher income for suppliers 4,000 of whom are small-scale farmers. Vegpro is one of Kenyas largest private employers, with 7,000 employees. About three-quarters of them are women who enjoy starting wages that are almost 50percent higher than the average daily minimum, in addition to benets such as free primary healthcare and counseling.
Investment Climate Access to Finance Sustainable Business Public-Private Partnerships
74.8 (32%) 62.6 (27%) 55.0 (24%) 39.5 (17%)
WEIGHTED AND UNWEIGHTED INVESTMENT SERVICES DOTS SCORES

FY11
FY11 582
$21,181
67% 76% 68% 75% 66% 73%

Unweighted Weighted
FY12
FY12 668
$26,610
FY13
FY13 716
$29,674
Numbers at the left end of each bar for unweighted DOTS score are the total number of companies rated. Numbers at the left end of each bar for weighted DOTS score represent total IFC investment ($ millions) in those projects. FY11 and FY12 weighted scores have been restated to reflect methodology changes (see page 82).
RESULTS SUPPLEMENT
Results by Region
EAST ASIA AND THE PACIFIC
Poverty is declining in East Asia and the Pacific, but one third of the regions population remains poor. IFCs work in the region focuses on supporting sustainable developmentled by the private sectorto ensure that economic growth reaches all segments of society.
Our commitments in East Asia and the Pacific reached a record $3.4 billion in FY13, including $500 million mobilized from other investors. Advisory Services spending in the region climbed to $38.5 million. IFCs projects have created jobs and opportunity for those who need them most. In 2012, our clients supported 716,000 farmers, helped educate more than 2,000 students, and provided employment opportunities for over 700,000 people in the region.
FY13 DEVELOPMENT OUTCOME SCORES

Development Outcome Financial Performance Economic Performance Environment & Social Performance Private Sector Development Impact 98 716 98 719 98 719 97 702 98 714 70% 66% 58% 50% 65% 60% 71% 67% 81% 77%
Numbers at the left end of each bar are the total number of companies rated. East Asia and the Pacific IFC
PROJECT FINANCING AND PORTFOLIO, BY REGION

EAST ASIA AND THE PACIFIC $ millions, for the years ending June 30 IFC commitments Loans Equity Guarantees and risk management Core Mobilization Commitments* Total commitments Committed portfolio for IFCs account Committed portfolio for Loan Syndications** Total committed portfolio FY131 2,873 1,085 354 1,435 502 3,376 7,726 849 8,575 FY121 2,548 1,021 343 1,184 376 2,924 7,216 788 8,004
*Including Loan Syndications (B-Loans, Parallel Loans, and ALPS), IFC Initiatives, AMC, Other Mobilization by Decision, and Public-Private Partnerships (PPP) Mobilization, as applicable for this Region. ** Including B-Loans and Agented Parallel Loans.
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LARGEST COUNTRY EXPOSURES1 IN FY13: EAST ASIA AND THE PACIFIC

RANK WITHIN REGION COUNTRY 1 2 3
1
COMMITTED PORTFOLIO ($ millions) FY13 3,002 916 749 FY12 2,429 919 1,055 China Indonesia Philippines
Based on IFCs Account, as of June 30, 2013. Excludes individual country shares of regional and global projects.
RESULTS SUPPLEMENT
Results by Region
EAST ASIA AND THE PACIFIC (continued)
DEVELOPMENT REACH
EAST ASIA AND THE PACIFIC MSME Loans (number of loans) MSME Loans (amount in $ million) Power Generation (millions of customers)* Water Distribution (millions of customers) Gas Distribution (millions of customers)** Phone Connections (millions of customers) Farmers Reached Patients Reached*** Students Reached Employment Domestic Purchase of Goods and Services ($ million) Payments to Government ($ million)
*CY11 total Power Generation customers revised due to the restatement of one client value in East Asia and the Pacific. ** One client in East Asia and the Pacific contributed 31.14 million of Gas Distribution customers in CY12. *** One client in East Asia and the Pacific contributed 1,948,956 to Patients Reached in CY12.
PORTFOLIO CY12 4,449,260 77,015 22.3 10.0 31.1 4.3 716,280 2,699,059 2,122 728,098 12,176 5,434
CY11 4,089,379 51,485 19.2 11.5 20.4 2.4 1,401,178 1,928,443 1,675 713,448 16,079.6 4,076
RESULTS SUPPLEMENT
Results by Region
EUROPE AND CENTRAL ASIA
IFC invested $4.2 billion in Europe and Central Asia in FY13, including nearly $1 billion mobilized from other investors. Through our investment and advisory programs, we focused on supporting the poorest countries, improving lives in fragile and conflict-affected areas, and facilitating projects related to climate change.
About half of our total commitments in the region were directed to the financial sector, which enabled us to expand access to finance for businesses and individuals, especially in underserved countries and regions. We invested more than $1 billion in projects that target micro, small, and medium enterprises, and nearly the same amount in the manufacturing, agribusiness, and services sectors. Investments in the infrastructure and natural-resources sectors totaled more than $700 million.

Numbers at the left end of each bar are the total number of companies rated. Europe and Central Asia IFC

EUROPE AND CENTRAL ASIA $ millions, for the years ending June 30 IFC commitments Loans Equity Guarantees and risk management Core Mobilization Commitments* Total commitments Committed portfolio for IFCs account Committed portfolio for Loan Syndications** Total committed portfolio FY131 3,261 1,927 277 1,057 944 4,205 10,994 4,792 15,786 FY121 2,915 1,677 288 951 1,092 4,007 10,503 3,957 14,460
*Including Loan Syndications (B-Loans, Parallel Loans, and ALPS), IFC Initiatives, AMC, Other Mobilization by Decision, and Public-Private Partnerships (PPP) Mobilization, as applicable for this Region. ** Including B-Loans, ALPS, and Agented Parallel Loans.
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LARGEST COUNTRY EXPOSURES1 IN FY13: EUROPE AND CENTRAL ASIA

1
COMMITTED PORTFOLIO ($ millions) FY13 2,856 2,145 963 FY12 2,329 2,263 811 Turkey Russian Federation Ukraine
RESULTS SUPPLEMENT
Results by Region
EUROPE AND CENTRAL ASIA (continued)
DEVELOPMENT REACH
EUROPE AND CENTRAL ASIA MSME Loans (number of loans) MSME Loans (amount in $ million) Power Generation (millions of customers) Water Distribution (millions of customers)* Gas Distribution (millions of customers) Power Distribution (millions of customers) Phone Connections (millions of customers) Farmers Reached Patients Reached** Students Reached Employment Domestic Purchase of Goods and Services ($ million) Payments to Government ($ million)
*One client in Europe and Central Asia contributed 4.4 million of Water Distribution customers in CY12. ** CY11 total Patients Reached revised due to the restatement of one client value in Europe and Central Asia.
PORTFOLIO CY12 3,428,229 61,373 1.3 5.2 0.4 10.9 17.2 361,833 4,530,360 7,736 423,938 11,990 2,804
CY11 2,601,527 58,558 1.68 6.6 0.2 14.8 16.4 209,611 3,654,620 1,208 412,629 10,886.9 2,570
RESULTS SUPPLEMENT
Results by Region
LATIN AMERICA AND THE CARIBBEAN
IFC provided a record $6.5 billion to 129projects in Latin America and the Caribbean in FY13, including $1.7billion mobilized from other financial institutions. Our priorities in the region include expanding access to finance and encouraging good environmental and social performance. We also work to boost competitiveness and strengthen regionalintegration.
Our clients in the region supported nearly 680,000 jobs and helped educate about 900,000 students last year. In the financial sector, they provided nearly 15 million loans valued at about $82billion to micro, small, and medium enterprises. Supporting smaller economies is a priority for uswe invested $1 billion in such economies in Central America and the Caribbean in FY13. We also invested more than $400 million in projects in the frontier regions of north and northeast Brazil and the Amazon.

Numbers at the left end of each bar are the total number of companies rated. Latin America and the Caribbean IFC

LATIN AMERICA AND THE CARIBBEAN $ millions, for the years ending June 30 FY131 IFC commitments Loans Equity Guarantees and risk management Core Mobilization Commitments* Total commitments Committed portfolio for IFCs account Committed portfolio for Loan Syndications** Total committed portfolio 4,822 2,234 959 1,630 1,750 6,572 10,993 4,621 15,614 FY121 3,680 1,284 564 1,832 1,292 4,972 10,371 4,310 14,681
*Including Loan Syndications (B-Loans, Parallel Loans, and ALPS), IFC Initiatives, AMC, Other Mobilization by Decision, and Public-Private Partnerships (PPP) Mobilization, as applicable for this Region. ** Including B-Loans, ALPS, Agented Parallel Loans, and Unfunded Risk Participation (URP) (FY13 only).
1
LARGEST COUNTRY EXPOSURES1 IN FY13: LATIN AMERICA AND THE CARIBBEAN

1
COMMITTED PORTFOLIO ($ millions) FY13 2,690 1,584 947 FY12 2,572 1,188 954 Brazil Mexico Colombia
DEVELOPMENT REACH
LATIN AMERICA AND THE CARIBBEAN MSME Loans (number of loans) MSME Loans (amount in $ million) Power Generation (millions of customers) Gas Distribution (millions of customers) Water Distribution (millions of customers) Power Distribution (millions of customers) Phone Connections (millions of customers) Farmers Reached Patients Reached Students Reached Employment Domestic Purchase of Goods and Services ($ million) Payments to Government ($ million) 6,849,385 54,796 12.9 0.2 13.2 19.1 9.7 750,326 1,819,454 791,079 680,870 12,063.8 8,568 PORTFOLIO CY12 14,414,665 82,262 13.4 0.4 18.8 18.8 7.8 97,971 2,153,212 903,162 678,982 11,735 12,444 CY11
RESULTS SUPPLEMENT
Results by Region
MIDDLE EAST AND NORTH AFRICA
By supporting private sector development, IFC has played an important role in addressing the challenges facing the Middle East and North Africa. Our commitments in the region totaled $2.8billion in FY13, including more than $760million mobilized from other investors in spite of the regions political uncertainty.
We continued to implement an integrated Investment and Advisory Services strategy, making access to finance a priority. In FY13, our clients provided about 1.9 million loans to micro, small, and medium enterprises in the region, totaling over $13 billion. Improving the regions investment climate has also been a strategic priority for us. So has strengthening education. In several countries, we rolled out the E4E Initiative for Arab Youth, a program designed to equip youth with the skills and training that employers want most.

Numbers at the left end of each bar are the total number of companies rated. Middle East and North Africa IFC

MIDDLE EAST AND NORTH AFRICA $ millions, for the years ending June 30 FY131 IFC commitments Loans Equity Guarantees and risk management Core Mobilization Commitments* Total commitments Committed portfolio for IFCs account Committed portfolio for Loan Syndications** Total committed portfolio 2,038 547 404 1,088 766 2,804 5,793 887 6,680 FY121 2,210 949 363 897 668 2,878 5,585 971 6,556
1
LARGEST COUNTRY EXPOSURES1 IN FY13: MIDDLE EAST AND NORTH AFRICA

1
COMMITTED PORTFOLIO ($ millions) FY13 1,130 827 625 FY12 1,153 929 656 Egypt, Arab Republic of Pakistan Jordan
DEVELOPMENT REACH
MIDDLE EAST AND NORTH AFRICA MSME Loans (number of loans) MSME Loans (amount in $ million) Power Generation (millions of customers) Water Distribution (millions of customers) Power Distribution (millions of customers)* Phone Connections (millions of customers) Farmers Reached Patients Reached Students Reached Employment Domestic Purchase of Goods and Services ($ million) Payments to Government ($ million)
*One client in Middle East and North Africa contributed 10.22 million of Power Distribution customers in CY12.
PORTFOLIO CY12 1,909,752 13,322 3.4 1.1 10.7 19.6 201,593 3,558,699 4,376 244,491 2,072 1,376
CY11 1,824,652 11,265 4.0 1.0 11.4 17.7 66,679 2,203,935 4,118 108,731 1,621.3 1,300
RESULTS SUPPLEMENT
Results by Region
SOUTH ASIA
IFC has been delivering substantial impact in South Asia, despite challenging local conditions that include rising income inequality and severe poverty.
In FY13, our total commitments in the region totaled nearly $2.5billion, up almost 60percent from the previous year. Resources mobilized by IFC from other investors tripled, to $764million. Advisory Services expenditures reached $33.6million. To help the region grow out of poverty, IFC worked to increase access to finance, infrastructure, and markets. Our clients provided phone access to more than 120million customers and delivered the equivalent of $23.7billion in loans to micro, small, and medium enterprises. Climate change is another priority for IFC in South Asia, especially because of the regions vulnerability to rising temperatures. Our projects aimed at achieving energy efficiency, particularly in agriculture and irrigation.

Numbers at the left end of each bar are the total number of companies rated. South Asia IFC

SOUTH ASIA
$ millions, for the years ending June 30
FY131 1,697 1,006 264 427 764 2,462 5,582 1,091 6,673
FY121 1,312 678 320 314 251 1,563 4,697 570 5,267
IFC commitments Loans Equity Guarantees and risk management Core Mobilization Commitments* Total commitments Committed portfolio for IFCs account Committed portfolio for Loan Syndications** Total committed portfolio
*Including Loan Syndications (B-Loans, Parallel Loans, and ALPS), IFC Initiatives, AMC, Other Mobilization by Decision, and Public-Private Partnerships (PPP) Mobilization, as applicable for this Region. ** Including B-Loans, Agented Parallel Loans, ALPS, and Unfunded Risk Participation (URP).
1
LARGEST COUNTRY EXPOSURES1 IN FY13: SOUTH ASIA

1
COMMITTED PORTFOLIO ($ millions) FY13 4,453 602 204 FY12 3,965 270 178 India Bangladesh Sri Lanka
DEVELOPMENT REACH
SOUTH ASIA MSME Loans (number of loans) MSME Loans (amount in $ million) Power Generation (millions of customers) Water Distribution (millions of customers) Gas Distribution (millions of customers) Power Distribution (millions of customers) Phone Connections (millions of customers)* Farmers Reached Patients Reached Employment Domestic Purchase of Goods and Services ($ million) Payments to Government ($ million)
*One client in South Asia contributed 112.7 million of Phone Connections customers in CY12.
PORTFOLIO CY12 2,768,375 23,762 5.9 0.9 1.9 0.1 120.5 620,843 3,344,689 327,431 4,986 902
CY11 7,184,007 19,772 5.1 0.7 1.6 0.1 97.4 486,683 2,469,057 326,569 5,709.4 861
RESULTS SUPPLEMENT
Results by Region
SUB-SAHARAN AFRICA
IFCs total commitments in Sub-Saharan Africa topped $5.2billion in FY13, including nearly $1.8billion mobilized from other investors.
Our work aims to promote sustainable, inclusive growth across the region. We build on the momentum in more successful countries, helping improve the investment climate and expand access to finance. In others, we help to put in place some of the essential building blocks of private sector development: basic infrastructure to support agribusiness and manufacturing competitiveness. Our clients created more than 250,000 jobs in the region last year. They also reached 675,000 farmers, an increase of more than 70 percent from the previous year. The region accounted for nearly 30 percent of IFCs Advisory Services expenditures in the fiscal year, receiving $65.4 million.

Numbers at the left end of each bar are the total number of companies rated. Sub-Saharan Africa IFC

SUB-SAHARAN AFRICA $ millions, for the years ending June 30 FY131 IFC commitments Loans Equity Guarantees and risk management Core Mobilization Commitments* Total commitments Committed portfolio for IFCs account Committed portfolio for Loan Syndications** Total committed portfolio 3,501 1,691 349 1,461 1,778 5,278 7,833 1,393 9,226 FY121 2,733 1,042 358 1,334 1,217 3,950 6,461 570 7,031
1
LARGEST COUNTRY EXPOSURES1 IN FY13: SUB-SAHARAN AFRICA

1
COMMITTED PORTFOLIO ($ millions) FY13 1,334 900 849 FY12 1,106 646 726 Nigeria South Africa Ghana
RESULTS SUPPLEMENT
Results by Region
SUB-SAHARAN AFRICA (continued)
DEVELOPMENT REACH
SUB-SAHARAN AFRICA MSME Loans (number of loans) MSME Loans (amount in $ million) Power Generation (millions of customers) Water Distribution (millions of customers)* Power Distribution (millions of customers) Phone Connections (millions of customers) Farmers Reached Patients Reached Students Reached** Employment Domestic Purchase of Goods and Services ($ million) Payments to Government ($ million)
** One client in Sub-Saharan Africa contributed 107,000 of Students Reached in CY12.
PORTFOLIO CY12 799,343 7,594 5.9 5.1 5.2 22.3 675,802 915,069 118,993 254,013 3,198 3,857
CY11 450,560 5,219 4.0 4.9 3.9 28.5 382,067 933,800 138,921 255,833 3,428.6 3,974
*CY11 total Water Distribution customers revised due to the restatement of one client value in Sub-Saharan Africa. One client in Sub-Saharan Africa contributed 4.7 million of Water Distribution customers in CY12.
RESULTS SUPPLEMENT
Results by Advisory
ACCESS TO FINANCE
IFC helps increase the availability and affordability of financial services for individuals and for micro, small, and medium enterprises. We help our financial clients provide broadbased financial services and build the financial infrastructure necessary for sustainable growth and employment.
At the end of FY13, we had an active portfolio of 263 projects valued at $342.6millionthat promoted access to finance in 72countries. In FY13, our advisory program expenditures reached about $62.6million, of which 61percent was in countries eligible to borrow from the International Development Associationor IDA, the World Banks fund for the poorest, and13percent was in fragile and conflict-affected areas.
PROGRAM EXPENDITURES BY PRODUCT

Microfinance $13.4 million
Sustainable Energy Finance $9.4 million SME Banking $8.0 million Retail Payments and Mobile Banking $4.7 million Credit Bureaus $4.3 million
Other $22.8 million
ACCESS TO FINANCE: SELECTED 2012 HIGHLIGHTS

We worked with 149 financial intermediaries, in partnership with IFC Investment Services, that provided over 14.2 million microfinance and SME loans (15 percent in IDA countries), totaling nearly $103 billion. We supported 20 financial intermediaries, in partnership with IFC Investment Services, that provided 207,000 housing finance loans, totaling more than $7.3 billion. We helped improve financial markets infrastructure through working with collateral registries that enabled over 40,000 SMEs to receive $4.5 billion in financing secured with movable property, and helped create, strengthen, or license four credit bureau operators. We helped firms avoid greenhouse gas emissions estimated at 2.3 million metric tons annually (calculation based on methodologies in place before adoption of a standardized methodology in 2012).
RESULTS SUPPLEMENT
Results by Advisory
INVESTMENT CLIMATE
IFC helps governments implement reforms that improve the business environment and encourage and retain investment, thereby fostering competitive markets, growth, and job creation. We also help resolve legal and policy weaknesses that inhibit investment.
At the end of FY13, IFC had an active portfolio of 143investmentclimate projects in 65 countries, valued at $288.9 million. In FY13, our advisory program expenditures in these projects totaled $74.8 million, of which 76 percent was in IDA countries, and 29 percent was in fragile and conflict-affected areas.

Business Regulation $19.8 million Business Taxation $8.3 million Industry-specific IC: Real Sectors $8.0 million IC for Infrastructure & Social Sectors $7.4 million Trade Logistics $6.3 million
Other $25.0 million
INVESTMENT CLIMATE: SELECTED 2012 HIGHLIGHTS

We helped governments in 43 countries adopt 76 investment climate reforms (55reforms in IDA countries, including 26 reforms in fragile and conflictaffected situations). Of the 76 reforms, 14 reforms supported entrepreneurs with starting a business; 12 helped businesses comply with license and permit requirements; and five were agribusiness-sector reforms. We helped governments with industry-level reform and investment promotion, resulting in an estimated $750 million in new investments.
RESULTS SUPPLEMENT
Results by Advisory
PUBLIC-PRIVATE PARTNERSHIPS
IFC provides support for governments to design and implement public-private partnerships in infrastructure and other basic public services. Our advice helps maximize the potential of the private sector to increase access to public services such as electricity, water, healthcare, and education while enhancing their quality and efficiency.
At the end of FY13, we had an active portfolio of 103 PPP projects in 53 countries, valued at about $126 million. In FY13, our advisory program expenditures in the area reached $39.5 million.
Advisory Mandate $32.4 million
PPPOther $3.8 million PPP Upstream Work $3.0 million Post Advisory Mandate Support $0.4 million
PUBLIC-PRIVATE PARTNERSHIPS: SELECTED 2012 HIGHLIGHTS

We helped governments sign nine public-private partnership contracts (six in IDA countries, including one in fragile and conflict-affected situations). These partnerships are expected to improve access to infrastructure and health services for over 3 million people (1.7 million in fragile and conflict-affected situations), and mobilize $750 million in private investment ($430 million in IDA countries, including $390 million in fragile and conflict-affected situations).
RESULTS SUPPLEMENT
Results by Advisory
SUSTAINABLE BUSINESS
IFC works with clients to promote sound environmental, social, governance, and industry standards; catalyze investment in clean energy and resource efficiency; and support sustainable supply chains and community investment. We work in several sectors including agribusiness and forestry; manufacturing and services; infrastructure; oil, gas, and mining; and financial markets.
At the end of FY13, we had an active portfolio of 157 sustainablebusiness projects in 58 countries, valued at $279.7million. In FY13, our advisory program expenditures related to this area totaled $55million.

Farmer and SME Training $14.1 million
Clean Energy $12.9 million
Resource Efficiency $7.4 million Environmental, Social, and Trade Standards $7.3 million Corporate Governance $7.1 million Other $6.2 million
SUSTAINABLE BUSINESS: SELECTED 2012 HIGHLIGHTS

We helped 3 million people receive off-grid lighting; enabled 1.3 million people to gain access to village phones; and provided training to almost 350,000 people (76percent in IDA countries), including to farmers, entrepreneurs, and managers of small and medium enterprises. We assisted firms to improve their corporate governance practices, which contributed to additional financing of $200 million, of which $150 million was from IFC. We enabled firms to avoid greenhouse-gas emissions estimated at almost 1.4 million metric tons annually (calculation based on methodologies in place before adoption of a standardized methodology in 2012). We assisted clients to sustainably manage almost 300,000 hectares of land. We helped clients increase their sales revenues by $156 million.
RESULTS SUPPLEMENT
Results by Industry
AGRIBUSINESS & FORESTRY
Agribusiness has an important role to play in poverty reduction. The agricultural sector often accounts for at least half of GDP and employment in many developing countries, which makes it a priority for IFC.
IFC provides support for the private sector to address rising demand in an environmentally sustainable and socially inclusive way. To help clients finance inventories, seeds, fertilizers, chemicals, and fuel for farmers, IFC offers workingcapital facilities. To facilitate trade and lower costs, we pursue investments in infrastructure such as warehouses and coldstorage facilities. To bring land into sustainable production, we work to improve productivity by transferring technologies and making the best use of resources. In FY13, our new commitments in agribusiness and forestry totaled nearly $1.3 billion, accounting for about 7 percent of commitments for IFCs own account.

Numbers at the left end of each bar are the total number of companies rated. Agribusiness & Forestry IFC
PROJECT FINANCING AND PORTFOLIO, BY INDUSTRY

AGRIBUSINESS & FORESTRY $ millions, for the years ending June 30 IFC commitments Loans Equity Guarantees and risk management Core Mobilization Commitments* Total commitments Committed portfolio for IFCs account Committed portfolio for Loan Syndications** Total portfolio FY13 1,278 1,073 72 133 525 1,803 4,251 440 4,691 FY12 1,021 897 64 60 330 1,351 3,556 346 3,902
*Including Loan Syndications (B-Loans, Parallel Loans, and ALPS), IFC Initiatives, AMC, and Other Mobilization by Decision, as applicable for this Industry. ** Including B-Loans, ALPS (FY12 only), and Agented Parallel Loans.
DEVELOPMENT REACH
AGRIBUSINESS & FORESTRY PORTFOLIO CY11 Employment Female Employment Number of Farmers* Number of MSMEs Reached* ** Domestic Purchase of Goods and Services ($ million) Payments to Government ($ million)
*Including all reach in IFC. ** One client in Latin America and the Caribbean contributed 1,008,864 MSME reached in CY12.
CY12 421,503 124,003 3,084,783 2,012,360 6,697 1,438
386,145 116,987 3,296,544 1,020,564 4,560 1,006
RESULTS SUPPLEMENT
Results by Industry
CONSUMER & SOCIAL SERVICES
IFC is the worlds largest multilateral investor in private healthcare and education. We work to increase access to high-quality healthcare and education while also supporting job-creating sectors such as tourism, retail, and property. We help improve standards of quality and efficiency, facilitate the exchange of best practices, and create jobs for skilled professionals.
In addition to making direct investments in socially responsible companies, our role includes sharing industry knowledge and expertise, funding smaller companies, raising medical and education standards, and helping clients expand services to lower-income groups. In FY13, our new commitments in consumer and social services totaled about $1.6 billion, or nearly 9 percent of IFCs commitments for our own account.

Numbers at the left end of each bar are the total number of companies rated. Consumer & Social Services IFC

CONSUMER & SOCIAL SERVICES $ millions, for the years ending June 30 IFC commitments Loans Equity Guarantees and risk management Core Mobilization Commitments* Total commitments Committed portfolio for IFCs account Committed portfolio for Loan Syndications** Total portfolio FY13 1,635 1,310 325 0 133 1,769 4,215 249 4,464 FY12 1,375 1,053 268 54 287 1,662 3,826 245 4,071
*Including Loan Syndications (B-Loans, Parallel Loans, and ALPs), IFC Initiatives, AMC, and Other Mobilization by Decision, as applicable for this Industry. ** Including B-Loans and ALPs.
DEVELOPMENT REACH
CONSUMER & SOCIAL SERVICES PORTFOLIO CY11 Employment Female Employment Number of Patients* Number of Students** Net Income ($ million) Net Sales ($ million) Domestic Purchase of Goods and Services ($ million) Payments to Government ($ million)
*CY11 total Patients Reached revised due to the restatement of one client value in Europe and Central Asia. ** Including all reach in IFC.
CY12 342,807 163,077 17,201,088 1,036,389 1,198 21,145 9,735 1,710
322,844 156,495 13,009,309 937,001 1,637 16,968 9,411 1,086
RESULTS SUPPLEMENT
Results by Industry
FINANCIAL MARKETS
Sound, inclusive, and sustainable financial markets are vital to development as they ensure efficient resource allocation. IFCs work with financial intermediaries has helped strengthen financial institutions and overall financial systems. It has also allowed us to support far more micro, small, and medium enterprises than we would be able to on our own.
Working through financial intermediaries enables IFC to encourage them to become more involved in sectors that are strategic priorities such as women-owned businesses and climate change, and in underserved regions such as fragile and conflict-affected states as well as in housing, infrastructure, and social services. In FY13, our commitments in financial markets totaled about $3.6 billion, about 20 percent of commitments for IFCs own account.

Numbers at the left end of each bar are the total number of companies rated. Financial Markets IFC

FINANCIAL MARKETS (INC. TRADE FINANCE AND FUNDS) $ millions, for the years ending June 30 IFC commitments Loans Equity Guarantees and risk management Core Mobilization Commitments* Total commitments Committed portfolio for IFCs account Committed portfolio for Loan Syndications** Total portfolio FY13 11,014 2,324 1,806 6,884 1,943 12,957 21,377 1,264 22,641 FY12 9,859 2,276 1,240 6,343 1,617 11,476 19,793 1,289 21,083
*Including Loan Syndications (B-Loans, Parallel Loans, and ALPs), IFC Initiatives, AMC, and Other Mobilization by Decision, as applicable for this Industry. ** Including B-Loans, ALPs (FY12 only), and Agented Parallel Loans.
DEVELOPMENT REACH
FINANCIAL MARKETS PORTFOLIO CY11 SME loans ($ million)* SME loans (million of loans)* Microfinance loans ($ million)* Microfinance loans (million of loans)* Housing finance loans ($ million)** Housing finance loans (million of loans)** 181,253 3.29 19,842 19.71 6,241 0.15 CY12 241,299 5.79 24,028 21.98 23,614 0.44
*Portfolio reach figures represent SME and microfinance outstanding loan portfolio of IFC clients as of end of CY11 and CY12, for MSME-oriented financial institutions/projects. 268 and 285 clients were required to report their end-of-year SME and microfinance portfolios in CY11 and CY12, respectively. 252 and 269 clients did so for CY11 and CY12, respectively. The missing data were extrapolated. ** Portfolio reach figures represent housing finance outstanding loan portfolio of IFC clients as of end of CY11 and CY12, for housing finance-oriented financial institutions/projects. 24 and 38 clients were required to report their end-of-year housing finance portfolios in CY11 and CY12, respectively. 24 and 27 clients did so for CY11 and CY12, respectively. The missing data were extrapolated.
GLOBAL TRADE FINANCE Guarantees Issued (US$ amount)* Number of transactions SMEs Supported (by number of transactions) IDA Countries (US$ amount) Africa Volume (US$ amount) South-South Trade Supported (by number of transactions) Total Trade Supported (US$ amount)*
*Adjusted to reflect the historical exchange rate.
FY08 $1,448 m 2,153 84% $741 m (51%) $597 m (41%) 39% $1,877 m
FY09 $2,376 m 3,707 84% $1,219 m (51%) $635 m (27%) 45% $3,075 m
FY10 $3,461 m 4,292 83% $1,761 m (51%) $764 m (22%) 46% $3,971 m
FY11 $4,623 m 4,699 79% $2,439 m (53%) $931 m (20%) 43% $5,599 m
FY12 $5,975 m 5,964 79% $2,844 m (48%) $1,300 m (22%) 41% $7,524 m
FY13 $6,500 m 6,485 80% $3,316 m (51%) $1,442 m (22%) 41% $7,764 m
RESULTS SUPPLEMENT
Results by Industry
INFRASTRUCTURE
Modern infrastructure spurs economic growth, improves living standards, and can represent an opportunity to address emerging development challenges, including rapid urbanization and climate change.
It is also an area in which the private sector can make a significant contribution, providing essential services to large numbers of people, efficiently, affordably, and profitably. This is IFCs focus: supporting private infrastructure projects whose innovative, high-impact business models can be widely replicated. We help increase access to power, transport, and water by financing infrastructure projects and advising client governments on public-private partnerships. We mitigate risk and leverage specialized financial structuring and other capabilities. In FY13, our new commitments in this sector totaled $2.2 billion, or about 12 percent of commitments for IFCs own account.

Numbers at the left end of each bar are the total number of companies rated. Infrastructure IFC

INFRASTRUCTURE
FY13 2,247 1,845 330 72 1,333 3,580 9,358 7,801 17,159
FY12 1,447 1,058 339 50 1,294 2,741 8,608 6,061 14,669
IFC commitments Loans Equity Guarantees and risk management Core Mobilization Commitments* Total commitments Committed portfolio for IFCs account Committed portfolio for Loan Syndications** Total portfolio
*Including Loan Syndications (B-Loans, Parallel Loans, and ALPS), IFC Initiatives, AMC, and Other Mobilization by Decision, as applicable for this Industry. ** Including B-Loans, Agented Parallel Loans, and ALPS.
DEVELOPMENT REACH
INFRASTRUCTURE PORTFOLIO CY11 Employment Female Employment Power Generation (millions of customers) Power Distribution (millions of customers) Water Distribution (millions of customers) Airport Passengers (million)* Airline Passengers (million)* Transportation: Shipping, Freight & Cargo (M TEU Containers) Payments to Government ($ million)
*In FY13, IFC adjusted its methodology to better estimate the numbers of airport passengers and airline passengers reached.
CY12 448,094 146,361 52.2 45.7 42.1 18.0 10.2 12.6 8,703
448,537 141,265 41.9 49.2 34.3 9.9 13.6 9.9 4,916
RESULTS SUPPLEMENT
Results by Industry
OIL, GAS & MINING
Industries that can harness natural resources are vital for many of the worlds poorest countries. They are a key source of jobs, energy, government revenues, and a wide array of other benefits for local economies. In many countries, large-scale sustainable investments in this sector can produce large economic gains.
IFCs mission in the oil, gas, and mining sector is to help developing countries realize these benefits. We provide financing and advice for private sector clients. We also help governments adopt effective regulations and strengthen their capacity to manage these industries across the value chain. We support private investment in this sector, and we work to ensure that local communities enjoy concrete benefits. In FY13, our new commitments in the sector totaled $390 million, or about 2 percent of commitments for IFCs own account.

Numbers at the left end of each bar are the total number of companies rated. Oil, Gas & Mining IFC

OIL, GAS & MINING
FY13 389 336 53 0 346 736 2,359 439 2,798
FY12 491 387 104 0 630 1,121 2,392 545 2,937
*Including Loan Syndications (B-Loans, Parallel Loans, and ALPS), IFC Initiatives, AMC, and Other Mobilization by Decision, as applicable for this Industry. ** Including B-Loans, ALPS, and Unfunded Risk Participation (URP).
DEVELOPMENT REACH
OIL, GAS & MINING PORTFOLIO CY11 Employment Female Employment Gas Distribution (millions of customers)* Community Development Outlay ($ million) Domestic Purchase of Goods and Services ($ million) Payments to Government ($ million)
*Including all reach in IFC. One client in East Asia and the Pacific contributed 31.14 million of Gas Distribution customers in CY12.
CY12 106,772 16,834 33.8 150 6,193 5,574
102,747 9,285 22.4 102 5,392 6,199
RESULTS SUPPLEMENT
Results by Industry
MANUFACTURING
The manufacturing sector plays a vital role in creating opportunity and reducing poverty in developing countries. IFCs manufacturing clients tend to create or maintain more employment than those in any other sector.
We have increased our activities in the sector, which includes construction materials, energy-efficient machinery, chemicals, and equipment for solar and wind power. We invest in companies that are developing new products and markets, and restructuring and modernizing to become internationally competitive. As these industries represent some of the most carbonintensive sectors, we are helping clients develop and undertake investments that help reduce carbon emissions and energy consumption. In FY13, our new commitments in the manufacturing sector totaled $1.3 billion, or about 7 percent of commitments for IFCs own account.

Numbers at the left end of each bar are the total number of companies rated. Manufacturing IFC

MANUFACTURING
FY13 1,314 1,270 43 1 701 2,015 6,385 2,387 8,772
FY12 1,021 838 179 4 534 1,555 5,578 1,738 7,317
*Including Loan Syndications (B-Loans, Parallel Loans, and ALPS), IFC Initiatives, AMC, and Other Mobilization by Decision, as applicable for this Industry. ** B-Loans, ALPS, Agented Parallel Loans, and Unfunded Risk Participation (URP) (FY13 only).
DEVELOPMENT REACH
MANUFACTURING PORTFOLIO CY11 Employment Female Employment Net Income ($ million) Net Sales ($ million) Domestic Purchase of Goods and Services ($ million) Payments to Government ($ million) 368,551 73,457 3,521 64,843 30,241 2,826 CY12 356,854 58,109 2,635 48,274 23,000 2,144
RESULTS SUPPLEMENT
Results by Industry
TELECOMMUNICATIONS, MEDIA & TECHNOLOGY
Modern information and communication technologies make it easier for the poor to obtain access to services and resources. They expand opportunity and make markets and institutions more efficient. IFC works to extend the availability of such technologies. We channel investments toward private companies that build modern communications infrastructure and information-technology businesses, and develop climate-smart technologies.
IFC increasingly helps clients move beyond their own national borders and into other developing markets. In FY13, our new commitments in this sector totaled about $470 million.

Numbers at the left end of each bar are the total number of companies rated. Telecommunications & Information Technology IFC

TELECOMMUNICATIONS & INFORMATION TECHNOLOGY $ millions, for the years ending June 30 IFC commitments Loans Equity Guarantees and risk management Core Mobilization Commitments* Total commitments Committed portfolio for IFCs account Committed portfolio for Loan Syndications** Total portfolio FY13 472 361 103 8 581 1,052 1,667 1,053 2,720 FY12 247 159 89 0 165 412 1,520 938 2,458
*Including Loan Syndications (B-Loans, Parallel Loans, and ALPS), IFC Initiatives, AMC, and Other Mobilization by Decision, as applicable for this Industry. ** Including B-Loans and Agented Parallel Loans.
DEVELOPMENT REACH
TELECOMMUNICATIONS & INFORMATION TECHNOLOGY PORTFOLIO CY11 Employment Female Employment Phone Connections (millions of customers)* Payments to Government ($ million)
*One client in South Asia contributed 112.7 million customers in CY12.
CY12 116,461 42,146 192 1,925
88,979 29,784 172 1,948
30 _
INTRODUCTION
HOW IFC CREATES OPPORTUNITY

INNOVATION, INFLUENCE, DEMONSTRATION, IMPACT
IFC brings a distinctive set of comparative advantages to help reduce poverty and foster inclusive economic growth by leveraging the power of the private sector.
Consider the scale of the challenge:
Across the world, 1.2 billion people struggle on less than $1.25 a day. About 600million jobs must be created within a decade just to accommodate young people entering the workforce. Nearly 1billion people go hungry each day. $1trillion a year in nancing is needed to modernize infrastructure in developing countries. These are needs that cant possibly be lled without tapping the capital and creativity of the private sector. Private enterprises create nine out of every 10 jobs in developing countries. They spur innovation, produce the goods and services people need to improve their lives, and generate most of the tax revenue that governments need to provide essential services for their citizens. The private sector, in short, provides the most timetested means of ending poverty quickly and sustainably. But private sector development doesnt occur in a vacuum. It happens only when governments and the private sector can work together to ensure that businesses operate and grow in ways that promote prosperity for all. This is what we do best. We work in more than 100 developing countries, connecting clients and using our expertise to help them achieve sustainable growth by nancing private sector investment, mobilizing capital in international nancial markets, and providing advice to businesses and governments. This work enables companies to grow and create jobs, improve corporate governance and environmental performance, and contribute to their local communities. We go wherever we are needed most, and deploy our resources wherever they will achieve the greatest impact. In everything we do, we ask ourselves four questions: Are we helping reduce poverty and promoting shared prosperity? Are we achieving maximum impact? Are we doing the type of things that no one else is able or inclined to? Are we doing so protably and efficiently?
1.2
billion people subsist on less than $1.25 a daynearly one out of every ve people on the planet.
32 _
INNOVATION
How IFC Creates Opportunity
PARTNERING FOR
It takes creativity to address the most urgent challenges of development to end poverty, to tackle the dangers of climate change, to introduce modern healthcare to remote corners of the world. For more than half a century, IFC has innovated to strengthen private sector development wherever its needed most. We have helped businesses in developing countries create and preserve jobs by providing loans and investment to enable them to grow quickly and sustainably, and by providing advice that helps them to innovate, raise standards, and mitigate risks.
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INNOVATION
34 _
INNOVATION
Healthcare
IMPROVING SERVICES IN THE MOST CHALLENGING AREAS

We are bringing together governments, the private sector, and civil society organizations in innovative ways to help the poor.
17.2
million patients received healthcare through our clients in2012.
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utside the Hospital do Subrbio in the Brazilian city of Salvador, all seems tranquil: white stucco buildings, manicured lawns, and palm trees swaying in the gentle breeze. Inside, its another story. The state-of-the-art hospital which serves some of the citys poorest neighborhoods has conducted more than 1.8million medical procedures since it opened three years ago. It also has created 1,200 jobs under a public-private partnership that IFC helped the government set up. Last year, the hospital was named one of the worlds 100 most innovative projects by KPMG, a consulting rm. Hospital do Subrbios success illustrates what can be achieved when government authorities join forces with the private sector to address a major development challenge. Brazil and other developing countries have achieved remarkable health advances in recent years. Yet signicant obstacles remain. The benets often dont reach people who need them most the poor. The private sector is an essential part of the solution. In sub-Saharan Africa, where public resources remain scarce, the private sector provides about 60percent of the nancing available for healthcare. A poor woman with a sick child is just
as likely to go to a private hospital or clinic as to a public facility. In some of the worlds most challenging markets, IFC is helping bring together governments, the private sector, and civil society organizations to improve the quality of healthcare. Since we launched our Health in Africa Initiative in 2007, we have supported legal, regulatory, and institutional reforms to improve patient safety and the quality of private health services in eight countries. Our advice led to the enactment of the Kenya Health Bill of 2012, which creates equal opportunity for public and private healthcare providers and is expected to result in expanded coverage for up to 20million Kenyans. In South Sudan where the maternal mortality rate is one of the worlds highest our advice helped the government set up the Drug and Food Control Authority, which will help improve the quality of medicines available in the country. We also see signicant opportunity to improve the quality of healthcare in Indias low-income states. In the state of Meghalaya, where health insurance is limited, we helped the government arrange a public-private partnership that makes health insurance available to all 3million of the states residents, regardless of income.
Left: A patient is treated at Hospital do Subrbio. Brazils rst public-private partnership in health has dramatically improved emergency hospital services for 1million people in the state ofBahia. Above: A road show in the Indian state of Meghalaya encourages low-income households to enroll in the states universal health insurance program, which IFC supported jointly with the World Bank.
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INNOVATION
Climate Change
ADDRESSING GLOBAL WARMING

IFC is providing nancing and advice to help countries mitigate and adapt to a formidable global threat.
he science is unequivocal: without concerted action to reduce greenhouse emissions, the world could grow warmer by 4degrees Celsius within this century. The consequences could be devastating unprecedented heat waves, drought, and oods that put prosperity out of reach for millions of people in developing countries and roll back decades of progress in development. Combating the dangers of climate change will be costly: up to $100billion a year for developing countries. But it can be done if the resources and creativity of the private sector are tapped. IFC is nding ways to unlock private capitalfor climate-smart projects. Were helping nance the development of innovative technologies and encouraging a shift toward energy efficiency and renewable energy. We also provide nancing and advice to help countries mitigate and adapt to climate change. Since 2005, IFC has invested $10.5billion in climate-related investments, including $2.5billion just in FY13. We issued the worlds largest green bond this year, raising $1billion specically for climate-related investments an achievement that
_ 37
$10.5
billion has been channeled to climaterelated investments since 2005.
Above: IFC is supporting the construction of South Africas rst concentrated-solarpower plants, which will use mirrors to reect and concentrate sunlight to heat steam that can power turbines.
underscored the private sectors growing demand for triple-A-rated green bonds. We also launched the IFC Catalyst Fund an innovative fund of funds, managed by IFC Asset Management Company, focused on climate-related investments. In South Africa, we provided an innovative nancing package which included $225million in funds mobilized through loan syndications and $41.5million in donor funds to support the construction of the regions rst concentrated-solarpower plants. The Khi Solar One and KaXu Solar One projects, which use mirrors to reect and concentrate rays of sunlight to heat steam that can power turbines, will help diversify South Africas energy generation away from coal-red power. We are working to address the environmental challenge posed by expanding cities. Buildings account for 15percent of global greenhouse emissions a number that is expected to climb in coming decades as more people in developing countries migrate to cities in search of work. We see a signicant opportunity to make a difference by helping construction companies adopt more affordable, energy-efficient designs. Through
our Excellence in Design for Greater Efficiencies or EDGE tool, we have established an international green-building standard that is helping our clients save money while reducing emissions. In FY13, we made our rst investments through nancial intermediaries in new green buildings including mortgages for energy-efficient homes in India. Along with the World Bank, we have also advised Russian policymakers on groundbreaking legislation that will enable millions of homeowners to obtain new nancing for energyefficiency improvements.
Above top: The Real Solare housing development in Mexico was one of IFCs rst projects to receive EDGE certication by achieving a 20percent reduction in energy, water, andmaterials. Above bottom: IFCs investment in the South African solar-power plants will help diversify energy generation away from coal-red plants.
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INNOVATION
Access to Finance
REACHING THE POOR THROUGH FINANCIAL INSTITUTIONS

Through more than 900 nancial institutions, IFC has increased access to nance for small and medium enterprisesand for millions of people.
onstance Adaes small shop burned to the ground in Accra. Seeing her business wiped out overnight, she feared the worst not knowing how to recover her lost income or repay her loans. Adae didnt know it then, but she had insurance built into the loan that nanced her business. Modest payouts arranged by IFC client MicroEnsure enabled Ghanas Vanguard Assurance to send Adae a rapid settlement. She was able to reopen her shop which sells plastic containers after only a brief interruption. Innovative solutions have the potential to narrow the access-to-nance gap in emerging markets, which is still large. More than 2billion adults dont have access to savings accounts or credit, and 200million small and medium businesses lack access to credit. Backed by nancing from us, MicroEnsure is now partnering with mobile operator Telenor to use its technology platforms as distribution channels to take nancial services to even more low-income individuals in Africa and Asia. Its client base is expected to reach 11million people by 2017, up from 4million today. To establish and maintain inclusive nancial systems, IFC has built up a network of intermediaries more than 900 nancial institutions operating in over 100 developing countries. It allows us to support far more micro, small, and medium enterprises than we would be able to on our own. It also enables us to reach sectors that are
_ 39
Above: Constance Adaes small shop burned to the ground, but payouts arranged by IFC client MicroEnsure helped her reopen her business after only a brief interruption.
2
billion adults dont have access to savings accounts or credit.
200
million small and medium businesses lack access to credit.
strategic priorities but often lack private sector capital for example, women-owned businesses or underserved regions such as conict-affected states. In 2012, our nancial-intermediary clients provided more than $265billion in loans to micro, small, and medium enterprises. In Haiti, we joined forces with the Microinsurance Catastrophe Risk Organisation, or MiCRO, in a $2million project that is expected to provide affordable insurance to help 70,000 women micro entrepreneurs protect their livelihoods against earthquakes, hurricanes, oods, and other natural disasters. Beyond direct investments in nancial intermediaries, IFC has also played a catalytic role in expanding access to nancial services by improving access to credit information, promoting best practices in risk management, and introducing environmental and social standards. We helped Vietnam develop an online registration system that tracks which movable collateral such as machinery or vehicles has been pledged by borrowers to secure their loans. As a result, banks can better assess lending risks, allowing small enterprises without land to obtain loans more easily.
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INFLUENCE
PARTNERING FOR
As the worlds largest development institution focused exclusively on the private sector, IFC plays a signicant role in inuencing the course of private sector development. Our leadership position enables us to help shape the policy agenda. We are helping the Group of 20 advanced and developing economies on a variety of important development matters ranging from food security to access to nance for small enterprises. And a growing number of development nance institutions are adopting our approach to creating jobs, measuring results, and raising corporate-governance standards.
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INFLUENCE
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INFLUENCE
Job Creation
THE SUREST PATHWAY OUT OF POVERTY

Our investment clients directly supported 2.7 million jobs last yearand that was only a small part of our overall effect on employment.
Above: Once unemployed, Ramu Rawat got a job with IFC client OCL. Today, he supervises 200workers at his own construction rm in one of Indias poorest states.
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90%
of the jobs in the developing world are generated by the private sector.
amu Rawat used to spend his days idling around his village in Odisha, one of Indias poorest states. With no experience to offer, he couldnt nd a job. Then he noticed the IFC-nanced plant that local rm OCL India Ltd. had built in his area. Rawat went to the gate and asked for a job. The company hired him to do some manual work. Recognizing his drive and attitude, it put him on his way not just to a job, but to a career. Today Rawat has his own contracting company, supervising 200 workers. Jobs are the surest path out of poverty. They also are the cornerstone of developmentboosting living standards, raising productivity, and fostering social cohesion.
Yet 200million people are unemployed today, most of them women and young people in developing countries. Without work, they cant care for themselves or their families. Addressing this challenge isnt possible without the private sector, which accounts for 90percent of the jobs in developing countries. IFC is playing a leading role in identifying ways to help the private sector strengthen employment. We conducted a study with the support of our donor partners that found that a weak investment climate; inadequate infrastructure; limited access to nance for micro, small, and medium enterprises; and insufficient training pose a particular threat to employment. Removing these obstacles would signicantly increase job creation. Encouraged by our ndings, nearly 30 leading international nance institutions pledged to work with us to address the job crisis. In 2012, our investment clients directly supported 2.7million jobs. Direct job creation, however, tends to be only a small fraction of our overall employment effects. Our study showed that indirect job effects through the supply and distribution chains can be large multiples of thedirect effects. We also supported nancial institutions that provided about $265billion in loans to micro, small, and medium enterprises which in turn employed over 100million people. This year, we provided $285million and mobilized an additional $350million to support Etileno XXI, Mexicos rst major private sector petrochemicals project in more than 20years. It is expected to create 9,000 jobs during the construction phase and 3,000 direct and indirect jobs when operations start in 2015.
Above right: Etileno XXI is Mexicos rst major private sector petrochemicals project in more than 20years. It is expected to create 3,000 jobs, directly and indirectly.
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INFLUENCE
World Bank Group
COLLABORATING TO REVITALIZE MYANMAR

Through joint initiatives, the World Bank and IFC are leveraging our comparative advantages and enhancing the impact of our work.
Myanmar clear its arrears to the World Banks International Development Association, or IDA. The World Bank is providing $165million in zero-interest loans to the country to help it address its most urgent needs. This is in addition to an $80million grant for community-driven development that enables villagers to improve schools, clinics, roads, and the water supply. At the same time, IFC is working to improve the investment climate and expand access to nance in Myanmar, in order to support the growth of the domestic private sector, attract world-class foreign investors, and stimulate job creation. We also are working with the Bank and the Multilateral Investment Guarantee Agency to promote the countrys essential infrastructure services, with an initial focus on the electricity and telecommunications sectors. IFC also began to invest in Myanmar for the rst time. We provided a $2million loan to help our Cambodian client ACLEDA Bank set up a newmicronance institution in the country. Thenew institution aims to provide loans to more than 200,000 people most of them women entrepreneurs by 2020. In addition to the loan, IFC is strengthening the institutions capacity to deliver micronance services, enhancing its risk management practices, and helping it to develop a responsible nance strategy.
ix decades of conict and economic isolation have impoverished Myanmar three quarters of its people go without electricity, half its roads are impassable when it rains, and large numbers of children are malnourished. The future, however, looks brighter. In 2011, the country began a transition to a more democratic form of government and a market-oriented economic system. Those developments offer the potential for a major change: restoring one of the worlds poorest countries to its historic role as one of Asias most dynamic economies. That is a complex undertaking and it will take time. Despite Myanmars ample natural resources, the country faces signicant obstacles to development. To achieve its potential, it must strengthen economic governance, rebuild infrastructure, modernize its legal and regulatory frameworks, and nd ways to bring prosperity to all its people. Those are areas in which IFC and the World Bank can play a critical role, leveraging the distinctive capabilities of each institution. Working under a joint strategy, our institutions began this year by helping
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Small and Medium Enterprises
HELPING BUSINESSES THRIVE

IFC supports the development of small and medium enterprises by improving the investment climate, building managerial skills, and expanding access to nance.
N
Above: Egyptian entrepreneurs such as Nabil al Jabari are attracting new customers, thanks to an electronic payment system developed by IFC client Fawry. Above right: Manoj Kumar, owner of a small watch-shop in the Indian state of Bihar, has beneted from tax-policy reforms that encourage small businesses to join the formal economy.
abil al Jabari and his family have run a small grocery store in downtown Cairo for the past six decades. It has a group of devoted customers, but al Jabari wanted to bring in new business. So he installed an electronic payment system developed by IFC client Fawry, which allows al Jabaris customers to make purchases with credit cards and to pay cellphone bills. That is crucial in a country where almost everyone relies on cash for transactions, a relatively inefficient way of doing business. The new system attracted dozens of new customers to his store, raising revenues by 15percent, al Jabari says. Small and medium enterprises, or SMEs, are a critical force for prosperity in developing countries, accounting for two-thirds of employment. IFC plays a prominent global role in expanding opportunities for these businesses through our partnership with the Group of 20 leading economies and through our own investment and advisory initiatives. That is why we invested $6million in Fawry this year. Our nancing will help the rm expand its network of 20,000 payment terminals potentially stimulating the growth of many small businesses across Egypt. We serve as a technical adviser to the G-20 on a variety of initiatives to expand access to nance for SMEs. For
example, IFC supports the G-20s Global Partnership for Financial Inclusion and manages the SME Finance Innovation Fund announced by U.S. President Barack Obama in 2010. We also manage the Womens Finance Hub, a G-20 initiative to share knowledge and best practices on ways to expand access to nance for women entrepreneurs. We provide investment and advisory services to such enterprises in about 80 countries, focusing on every phase of their development: improving the investment climate, building management skills, and expanding access to nance and markets. In 2012, our clients provided 5.8million loans to small and medium enterprises, totaling $241billion. In India, we advised the state of Bihar in implementing reforms to its tax regime to encourage formalization for small businesses. We also helped it strengthen an online ling and payment system. The changes increased tax revenues and allowed more small companies to enjoy the benets of joining the formal economy. In Sri Lanka, we worked with Nation Trust Bank to open the rst business-training center in the countrys Eastern Province. Through our SME Toolkit, an online resource that provides training and management tools for small businesses, we are helping up to 30,000 small-business owners become more competitive and reach new markets.
46 _
INFLUENCE
Food Security
EXPANDING OPPORTUNITY FOR SMALL FARMERS

We help our clients raise agricultural productivity in developing countries and work to ensure food is available to people who need it most.
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ore than 2billion people a third of mankind depend on food produced by small farmers. Such farmers tend to be the norm in regions of the world where hunger is greatest. Helping these farmers increase their productivity and linking them to markets is an essential way to feed the nearly 1billion people in the world who go hungry every day. Its essential for managing food stocks at a time when global demand for higher-quality food is rising and when climate change poses risks that could hurt agricultural productivity. Strengthening agribusiness is a priority for IFC because it is essential for food security and because it is essential for raising incomes for the poor, three-quarters of whom live in rural areas. Our approach is comprehensive. We work with the private sector to increase the supply of affordable food and to ensure it is available to people who need it most. We also work with nancial institutions, commodity trading rms, companies, and civil society organizations to help large and small farmers overcome obstacles to higher productivity and become part of the agriculture supply chain. Across East Asia and the Pacic, for example, IFC has worked with major coffee buyers such as Ecom Coffee to help farmers achieve the quality and sustainability certications they need to sell coffee in international markets. These certications have helped thousands of farmers increase productivity and boost revenues. IFC plays a prominent role in global initiatives to strengthen food security. We manage the private sector window of the Global Agriculture and Food Security Program (GAFSP), a multilateral fund set up to help the Group of 20 leading economies deliver on its food-security commitments. The private sector part of this fund enables IFC to reach even the smallest farmers and rural enterprises, by blending donor nancing with commercial credit.
Above: Haitian farmer Hermilus Lovana has beneted from affordable insurance provided by IFC client Microinsurance Catastrophe Risk Organisation..
This year, IFC and GAFSPs private sector window jointly invested $10million in Root Capital, a social investment fund, to help it expand access to working capital and markets for 300,000 small farmers over the next four years. Weather, pests and crop disease, land degradation, and market failures can make farming a risky enterprise. Through our innovative Global Index Insurance Facility which we launched with the World Bank and several donor partners we helped about 119,000 small-scale farmers in seven countries in Sub-Saharan Africa and in Sri Lanka to insure their crops and livestock against risks of severe weather events such as oods and drought.
3.1
million farmers were supported by IFC clients in 2012.
Left: A farmer in Vietnam harvests coffee for Ecom, a global commodity trading company that uses inclusive business models, helping producers increase productivity and boost revenues.
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DEMONSTRATION
PARTNERING FOR
We have a long history of setting a good example. We were investing in emerging markets decades before they became a popular asset class for global investors. In fact, we coined the phrase. In the mid-1980s, we launched the worlds rst global investment fund to channel capital toward listed companies in developing countries. The new capital ows lifted many local businesses to international prominence, creating jobs that reduced poverty in countless cities and villages. Today, we continue to demonstrate the rewards of investing in challenging markets.
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DEMONSTRATION
50 _
DEMONSTRATION
Infrastructure
PROMOTING PROSPERITY IN AFRICA

IFC delivers landmark projects with high impact on the poornotably in frontier countries and regions, where our services are most needed.
Above: Expansion of the Azito Thermal Power Plant, in CtedIvoire, will improve access to electricity for Ivoirians and help sustain the countrys economic growth.
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bout 1.2billion people nearly a fth of humanity live without electricity. An estimated 880million people lack access to safe water, and more than 1billion people dont have access to either an all-weather road or telephone services. Infrastructure shortages in the developing world are a key constraint to economic growth. With more efficient infrastructure, millions can benet from access to clean water and safe sanitation. Companies can take their goods to market more quickly and cheaply. Countries with a modern infrastructure are better able to attract foreign investment. Expanding and modernizing infrastructure are priorities for IFC particularly in Africa, and particularly in the transport and power sectors. We invest in projects that can promote prosperity in some of the poorest countries, and help governments design and implement public-private partnerships. In Sub-Saharan Africa where the need for infrastructure improvement is most urgent IFC is taking the lead to support the expansion of energy generation. In FY13, we invested more than $1billion in infrastructure projects in the region, including funds mobilized from other investors. Our work included several innovative solar-power projects (seepage 37). In Cte dIvoire, which is emerging from yearsof political turmoil, we arranged a $345million package to modernize the Azito Thermal Power Plant. Modernization will enable the plant to generate 50percent more energy without using any additional gas. The plant will become one of the largest independent power generators in the region, helping ease power shortages and producing significant savings for Ivoirians who now have to rely on expensive backup electricity systems.
We provided $125million for our own account for the Azito project. Acting as lead arranger, we mobilized the balance from ve European development nance institutions and the West African Development Bank. In areas of Sub-Saharan Africa that are not yet connected to the grid, were stepping up our Lighting Africa project with the World Bank and our donor partners. We are helping people switch from inefficient and expensive fuel-based lighting sources such as kerosene lamps to more affordable and climate-smart alternatives such as solar lampsand dynamo-powered lights similar to those used on bicycles. The program has already improved access to clean lighting for 6.9million people in the African continent, avoiding the emission of over 138,000tons of greenhouse gases equivalent to taking 26,000 cars off the road. We are leading a similar initiative in Asia, aiming to provide off-grid lighting products to 2million people in rural areas of India by 2015.
6.9
million have improved access to clean lighting because of the World Banks Lighting Africaproject.
Above center: An Azito plant technician performs a check on gas pipes. Above right: A young girl breaks into a smile on seeing her house well-lit after sunset. IFCs Lighting Asia program in India is expected to bring lighting to 2million people.
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DEMONSTRATION
Mobilization
OPENING NEW MARKETS FOR PRIVATE INVESTMENT

By bringing together other investors, we combine knowledge and expertiseand maximize the development impact of our projects.
oreign investments in the capital markets of developing countries have increased in recent years. But only a fraction of these investments go to the smallest and poorest countries. Eighty percent of total portfolio ows into developing countries go to just 14 of the largest emerging-market countries. Investors continue to have little interest in smaller countries, where capital markets tend to be less liquid and more risky as a result. IFC is playing an important role in addressing that imbalance. This year we committed $100million to a $500million global fund that brings together large, institutional investors to invest primarily in listed equity securities of private sector rms in these smaller markets the so-called Next 50. Mobilizing capital from other investors is a key component of IFCs business model. Encouraging additional private sector investment to leverage our activities allows us to achieve more than we could on our own. It also enables us to pool knowledge and expertise. In FY13, we worked with banks, international nancial institutions, sovereign funds, pension funds, and other partners to mobilize $6.5billion for investment in developing countries. We did that through several programs including our Syndicated Loan Program (seepage73)and also through our subsidiary, IFC Asset Management Company, which has $5.5billion in assets under management across sixfunds focused on specic sectors or regions. In Sri Lanka, this approach allowed us to increase funding for small and medium enterprises which are critical to rebuilding the economy after decades of conict. We provided a $75million long-term loan to Commercial Bank of Ceylon, the countrys largest private sector bank. The investment was made through IFC Capitalization Fund a $3billion global equity and subordinated debt fund established in
2009 by IFC and Japan Bank for International Cooperation. The fund is managed by IFC Asset Management Company. The investment is expected to increase accessto nance for up to 16,000 small businesses and generate about 170,000 jobs both directly and indirectly by 2017. In Bangladesh, we led a consortium of investors to provide about $345million in nancing including $190million from our own account to telecommunications operator Grameenphone. The investment will help the company extend mobile services to remote areas of the country. IFC also mobilizes capital through syndicated loans, which allows other investors to participate in the loans we make. In FY13, syndicated loans totaled $3.1billion, accounting for nearly half of the funds we mobilized.
Above: An employee at a small business supported by Sri Lankas Commercial Bank of Ceylon, which received a $75million loan from IFC and IFC Asset Management Company.
$3.1
billion in syndicated loans were issued in FY13, accounting for nearly half of the funds we mobilized.
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South-South Investment
A VITAL FORCE FOR DEVELOPMENT

Our projects encourage the transfer of technology from one country to another boosting regional integration and job creation.
or all their economic achievements in recent years, the needs of developing countries remain vast. Sub-Saharan Africa alone will need investments of over $90billion per year over the next decade to meet infrastructure demands such as roads, rail networks, power, and water and sanitation projects. The Middle East and North Africa will need up to $100billion a year to boost economic competitiveness and sustain recent economic growth rates. These needs represent signicant opportunities for private enterprises from other developing countries which have shown a robust appetite to expand into untapped emerging markets. Developing countries now account for more than a third of foreign direct investment in emerging markets. Leveraging our global reach, IFC has been an important facilitator of South-South investment which we see as an important way to stimulate regional integration, job creation, and economic development. In FY13, our investments in such projects climbed to nearly $1.7billion, accounting for nearly 10percent of IFC commitments for our own account. By supporting such projects, we help stimulate the transfer of knowledge and technology from one developing country to another, and expand the availability of previously hard-to-obtain goods
Above: A worker at a factory in South Africa operated by a subsidiary of Indias Apollo Tyres. IFCs investment will help increase production by athird.
and services. We also enable regional companies to develop into transnational corporations that can compete on a global level. We also mobilize funds from other investors to promote South-South investment. In FY13, our syndications program contributed signicantly in this area. Emerging-market nancial institutions increased their participation in our loan syndications doubling their commitments from the previous year and accounting for 29percent of the $3.1billion in IFC syndicated loans for the year. This year, IFC and two funds managed by IFC Asset Management Company bought a $204million equity stake in Moroccos Banque Centrale Populaire to help the bank expand across sub-Saharan Africa where access to nance, especially for smaller rms, remains a challenge. We also invested $11million in a subsidiary of Indias Apollo Tyres to help the company expand production at one of its tire factories in South Africa. The company makes tires for cars, buses, and trucks. Our nancing will help Apollo Tyres produce about 13,000 tires a day at its factory in the city of Ladysmith an increase of about a third.
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DEMONSTRATION
Local Capital Markets
AN EFFECTIVE WAY TO SPUR GROWTH

As the rst international issuer of local-currency bonds in many countries, IFC often provides a modelfor other issuers.
trong local capital markets are the foundation for a prosperous private sector. They reduce countries dependence on foreign debt, protecting economies from sudden swings in international capital ows. Such markets create access to long-term localcurrency nance and help mobilize funds to nance infrastructure and other areas essential for the growth of the private sector the key engine of job creation in developing countries. IFC is a global advocate for efficient local capital markets, and we play an important role in their development in emerging countries. We often are the rst international issuer of local-currency bonds in these countries. In issuing bonds, we work closely with regulators and investors to help improve the regulatory framework, encourage greater participation in the local markets, and provide a model for other international issuers.
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$10
billion in localcurrency nancing has been provided by IFC.
Over the years, IFC has issued bonds in 12local currencies including the Brazilian real, the Russian ruble, the Nigerian naira, the Malaysian ringgit, and the Chinese renminbi. We have provided over $10billion in local-currency nancing across 58 currencies more than any other international nance institution. In Nigeria this year, we were the rst foreigninstitution to issue a naira-denominated bond, raising the equivalent of $75million that will be used to support IFCs development program in the country. All investors were Nigerian pension funds, asset managers, and banks looking to diversify their portfolios. We worked with the Nigerian government and regulators to help them develop a framework that encourages more corporate issuances in the local markets. In addition, we issued the rst ination-indexed bond by a foreign issuer in Russia. In China, we have made a total of six localcurrency investments so far to expand access to nance, promote food safety, and help increase the availability of high-quality and affordable drugs. Those investments reected an earlier achievement our 2011 agreement with Chinese banks to swap U.S. dollars into Chinese renminbi to provide local-currency loans. We were the rst multilateral institution to sign such an agreement. Smaller enterprises often face the greatest difficulty in obtaining local-currency nancing, a challenge IFC is helping them overcome. In the Dominican Republic this year, we issued the rst local-currency bond by an international nance institution, raising $10million that we invested in two micronance institutions Fondesa, which tends to make small loans of less than $1,000; and La Nacional, which nances low-income mortgages with an average home value of about $30,000.
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IMPACT
PARTNERING FOR
IFC plays a leading role in development by leveraging the power of the private sector to create opportunity inemerging countries, in ways that promote prosperity for all. We achieve development impact by venturing where other investors often hesitate to go: in the poorest countries and regions of the world, and in places torn by conict and instability. We achieve it by helping ourclients nd ways to create opportunity across the entire supply chain. We achieve it by rigorously tracking our results against the goals we setfor ourselves.
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IMPACT
58 _
IMPACT
Conict-Affected Areas
GENERATING CONDITIONS FOR SUSTAINABLE GROWTH

Our projects in fragile and conict-affected areas aim to create jobs and help governments rebuild infrastructure.
roadband Internet is a revolutionary technology capable of empowering individuals, unlocking business opportunities, and boosting economies. In war-torn Afghanistan, however, its a technology beyond the reach of virtually the entire population. IFC is working to change that by helping the countrys largest mobile-phone operator extend high-speed broadband services to 80percent of the population in key cities. The $65million in long-term nancing we provided this year to the company, Roshan, will help it acquire a 3G license and strengthen its broadband network. That will also help Roshan expand the array of innovative services it offers to improve the lives of ordinary Afghans. One of them is M-Paisa, a mobile-banking service that gives people without bank accounts a quick, safe, and secure way to send and receive money through their phones. Another
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$577
million was invested in conict-affected areas during FY13.
is Roshans Telemedicine project, which helps bring better healthcare services to isolated areas ofthe country. Conict and instability are a leading causeof poverty across the world. Recognizing that most of the worlds poor will live in fragile and conictaffected areas in coming decades, we are intensifying our focus on creating opportunity in these areas. In FY13, we invested about $580million in fragile and conict-affected areas. Our advisory expenditures in these areas totaled approximately $40million, or 18percent of our advisory program. Our goal is to create jobs, remove constraints to sustainable business growth, and help governments rebuild infrastructure. To do so, we aim to expand the availability of power and credit. We are also helping strengthen the business environment for local enterprises while enabling them to reach new markets. Our work in fragile and conict-affected countries often begins with advisory work to lay the foundation for investment. Working with the World Bank and our donor partners, we supported the adoption of over 60 investment-climate reforms in 22conict-affected states between 2010 and 2012. More than 40 of these reforms were in Africa. In Burundi, for example, we helped the country implement reforms that doubled the number of businesses registered to nearly 1,350 in 2012 from 674 in 2010. As the countrys business climate has improved, foreign investment has grown. Trade nance can also make a critical difference for conict-affected states, which tend to be locked out of international trade. Since FY10, IFC has supported trade in 24 of these countries, enabling more than $510million in trade amid challenging conditions.
Above top: IFC is helping Roshan, Afghanistans largest mobile-phone operator, to expand its network, bringing cellular and Internet services to many people long left off thegrid. Above bottom: A street vendor serves food in Yangon, Myanmar.
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IMPACT
Gender
BOOSTING DEVELOPMENT THROUGH EQUALITY

Addressing obstacles to womens empowerment is an important way to promote shared prosperity and poverty reduction.
Above: Beatriz Cortez, a beauty consultant affiliated with IFC client Belcorp in Peru, enjoys a light moment with her daughter. Belcorps expansion is expected to create signicant jobs and entrepreneurial opportunities for women.
omens participation in the workforce has grown over the past decades. Yet women remain signicantly underrepresented. This inequality is not only unfair. Its also bad economics. Failing to tap the economic potential of women puts a brake on poverty reduction and limits growth and opportunity. Expanding womens participation can raise productivity and improve a variety of development outcomes. IFC works to strengthen womens roles as leaders, entrepreneurs, employees, consumers, and stakeholders. We provide a combination of investment and advice to help our clients expand access to nance for women, deliver business-skills training for women entrepreneurs, and recognize the business case for creating opportunities for women. We also work with our clients to improve working conditions and to dismantle barriers to womens participation in business. This year, we teamed up with The Coca-Cola Company in a $100million, three-year project to provide access to nance for thousands of women entrepreneurs in Africa and other emerging markets. IFC will work through its network of local and regional banking institutions to provide nancing
and business-skills training to small and medium enterprises that are owned or operated by women across the Coca-Cola value chain. The rst step was a $50million IFC investment in Access Bank Nigeria to help it increase lending to women entrepreneurs. We also arranged and syndicated a $130million nancing package to support the expansion of Perus Belcorp, a door-to-door sales cosmetics company that employs close to 9,000 people 74percent of them women. The investment will also help the building of a new plant in Mexico and the rms expansion to newmarkets in Latin America. In China, we stepped up our nancing to support the growth of Chindex, a leading private healthcare network that has been instrumental in raising the quality of local health services. Founded by two women, the company is dedicated to empowering its female staff through leadership and training initiatives. Women make up 75percent of Chindexs workforce. Since 2010, our Banking on Women program has invested more than $600million in support of women-owned small enterprises in developing countries. That included a $470million investment in Brazils Banco Itau the programs largest investment, and its rst in Latin America. We provided $100million from our own account and mobilized $370million through loan syndications. IFC also is a lead sponsor of the Global Banking Alliance for Women, an initiative that brings together about 30 nancial institutions committed to leveraging the womens market around the world.
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Middle-Income Countries
PROMOTING PROSPERITY FOR ALL

Our work in middle-income countries helps them tackle challenges such as urbanization, rural development, and climate change.
Above: Students learn at a Plato training center in Istanbul. IFCs investment in the education rm will help it expand vocational training in Turkey and other Middle Eastern and Central Asian countries.
ore than two-thirds of the worlds poorest people who survive on less than $1.25 a day live in middle-income countries. These countries also are home to large numbers of people without access to clean water, reliable power, or decent health and education services. IFC focuses on the needs of the poor, regardless of their location. Our approach is to help middleincome countries nd creative ways to ensure that their rising prosperity is shared by all citizens. We also work to strengthen rural development and address the challenges of unemployment, urbanization, and climate change. Supporting companies that adopt inclusive business models is an important element of our work. Over the past nine years, we have invested more than $9billion in businesses that provide goods, services, and jobs to people at the base of the economic pyramid by integrating the working poor into their supply chains. We have worked with more than 350inclusive-business clients in more than 80 countries. This year, we provided a $15.6million loan to nance the construction or renovation of 47preschool facilities in Chuvashia Republic, a predominantly rural province in Russia. The project will open up spaces for more than 7,000 students and create jobs for teachers many of whom will be women. In Turkey, we provided nancing and advice to help introduce a technology that will enable one of the countrys largest paper companies to expand production without increasing the consumption of water a key input for the paper industry. Our $8million loan to cardboard maker Modern Karton will help it build a wastewater-recovery system to conserve and reuse water. Thriving private enterprises in middle-income countries can set an important example for others not only by venturing into less-developed areas of their own country but also by stepping out into poorer countries. IFC helps make that happen. This year, we invested $6million in an Istanbul-based education rm, Plato, to help it expand vocational training in Turkey and several Middle Eastern and Central Asian countries. The investment was our rst under our E4E Initiative for Arab Youth, which aims to strengthen job skills in a region where youth unemployment is high. Plato is expected to strengthen employment opportunities for up to 6,000 students.
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IMPACT
IDA Countries
CREATING OPPORTUNITY FOR THE POOREST

We focus on improving lives in the worlds most challenging areas. In FY13, nearly half of our projects were in the poorest countries.
Above: IFCs investment in Kenya Tea Development Agency is nancing a new warehouse that is expected to raise farmers incomes, create jobs, and provide stability in a sector that benets over 4million Kenyans.
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n the poorest countries, the need to improve lives is urgent. Unable to attract investment, many of these countries have no option but to rely on official aid which often is not sufficient. These are the 82 countries eligible to borrow from the International Development Association, or IDA the World Banks fund for the poorest. For IFC, they represent an opportunity to make a critical difference where we are needed most. Our investments in IDA countries have grown nearly tenfold over the past decade, totaling $6.6billion in FY13 alone. Of this amount, a record $1.2billion was mobilized through loan syndications. IDA countries accounted for about half of all IFC investment projects and over 60percent of advisory projects in recent years. In addition, weve contributed more than $2.5billion to IDAs general fund since 2007 including $340million in FY13. Through our Global Trade Finance Program, we have provided more than $13billion in guarantees to businesses in IDA countries since 2005 $3.3billion in FY13 alone. This enabled small and medium enterprises to obtain much-needed nance to expand and join the global trading system. We aim to invest wherever we can do the most good. In Kenya where tea exports generate more than $1billion a year in earnings, beneting 10percent of the population we helped the countrys largest producer of black tea, the Kenya Tea Development Agency. Our $12million investment nanced a 200,000-square-foot facility that is expected to raise farmers income and provide stability in a sector that accounts for two-thirds of the regions jobs. We are helping Lao Peoples Democratic Republic develop its hydropower sector as a way to promote economic growth and alleviate poverty. We are supporting the revision of the countrys water law after launching a program to increase the share of new hydro projects that follow high social and environmental standards. In small IDA countries where the local banking systems tend to be underdeveloped, IFC works with local nancial institutions to strengthen their capabilities and help them grow. Our work with Bai Tushum and Partners, inthe Kyrgyz Republic, has enabled it to develop into the countrys rst micronance bank, serving more than 25,000 customers. In landlocked Bhutan, we invested $28million this year in Bhutan National Bank the countrys largest-ever foreign direct investment to strengthen its capacity to serve micro, small, and medium enterprises and help it adopt international best practices in banking and corporate governance.
$13
billion has been committed to IDA countries through IFCs Global Trade Finance Program since2005.
Above top: In the Kyrgyz Republic, a loan from IFC client Bai Tushum enabled Adalat Murzuraimova to buy cattle and lease land. She has used her farm income to educate her daughter. Above bottom: Kenya Tea Development Agency obtains its tea from small-scale farmers such as this couple.
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Measuring up
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OUR STRATEGIC FOCUS AREAS
IFC strives to deliver what cannot be obtained elsewhere. We offer clients a unique combination of investment and advice designed to promote sustainable private sector development in emerging markets. We call that special edge our additionality. Using it to maximize our development impact is a cornerstone of our strategy. Our activities are guided by ve strategic priorities that allow us to help where we are most needed, and where our assistance can do the most good.
STRENGTHENING THE FOCUS ON FRONTIER MARKETS
IDA countries, fragile and conict situations, and frontier regions of middleincome countries
ADDRESSING CLIMATE CHANGE AND ENSURING ENVIRONMENTAL AND SOCIAL SUSTAINABILITY
ADDRESSING CONSTRAINTS TO PRIVATE SECTOR GROWTH IN INFRASTRUCTURE, HEALTH, EDUCATION, AND THE FOOD SUPPLY CHAIN
Developing new business models and nancing instruments, and setting and raising standards
Increasing access to basic services and strengthening the agribusiness value chain
STRATEGIC AREAS OF FOCUS
DEVELOPING LOCAL FINANCIAL MARKETS
BUILDING LONG-TERM CLIENT RELATIONSHIPS IN EMERGING MARKETS
Building institutions, mobilizing resources, and introducing innovative nancial products
Using the full range of our products and services to guide clients development and assist cross-border growth
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SCORECARD
IFCs Performance on Strategic Focus Areas
Indicator FY13
Performance FY12
DEVELOPMENT RESULTS Investment Companies Rated High (DOTS Score)1 Advisory Projects Rated High2 66% 76% 68% 72%
Focus Areas
FRONTIER MARKETS IDA: Number of Investment Projects IDA: Commitments (millions) IDA: Share of Advisory Services Program in IDA Countries, % 3 Frontier Regions: Number of Investment Projects Fragile and Conict Situations: Number of Investment Projects Fragile and Conict Situations: Share of Advisory Services Program, % Commitments in Sub-Saharan Africa (millions) Commitments in Middle East and North Africa (millions) 288 $6,649 65% 59 44 18% $3,501 $2,038 283 $5,864 65% 42 45 18% $2,733 $2,210
LONG-TERM CLIENT RELATIONSHIPS INCLUDING SOUTH-SOUTH Number of South-South Investment Projects Commitments in South-South Investment Projects (millions) 47 $1,674 41 $1,515
CLIMATE CHANGE, ENVIRONMENTAL AND SOCIAL SUSTAINABILITY Climate-related investments (millions) 4 $2,509 $1,621
INFRASTRUCTURE, HEALTH AND EDUCATION, FOOD SUPPLY CHAIN Commitments in Infrastructure, Health and Education, and Agribusiness and Food Supply Chain (millions)5 $6,934 $6,034
LOCAL FINANCIAL MARKETS Commitments in Financial Markets (millions) 6 Commitments in Micro, Small and Medium Enterprises (millions)7 $10,124 $7,192 $9,375 $6,077
Notes: 1. DOTS scores: percentage of client companies with high development outcome ratings as of June 30 of the respective year, based on projects approved over a rolling six-year period (FY13 ratings are based on approvals from 20042009). 2. For Advisory Services, development effectiveness ratings are for calendar years 2012 and 2011. 3. FY12 and FY13 gures reect improved methodology for measuring Advisory Services expenditures in IDA countries, incorporating regional projects. 4. Climate-related is an attribute of a project involving Climate Mitigation, Climate Adaptation and/or Special Climate activities. For more details on these terms and activities, please visit www.ifc.org/ghgaccounting. 5. Commitments in Infrastructure (excluding Oil, Gas and Mining), Communications & Information Technologies, Subnational Finance, Health & Education, and Agribusiness & Food Supply Chain. 6. Commitments of IFCs Financial Markets excluding Investment Funds and Private Equity. 7. Includes direct MSME borrowers, nancial institutions with more than 50% of their business clients being MSMEs, and any other investments that specically target MSMEs as primary beneciaries.
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CREATING OPPORTUNITY WHERE ITS NEEDED MOST
IFC and our clients make a wide range of contributions in developing countries. Our clients success can have ripple effects across an economy, giving many people including the poor a chance to improve their lives.
EAST ASIA AND THE PACIFIC
EUROPE AND CENTRAL ASIA
LATIN AMERICA AND THE CARIBBEAN
31.1 Million
CUSTOMERS SUPPLIED WITH GAS
6.14 Million
20-FOOT SHIPPING CONTAINERS TRANSPORTED (EQUIVALENT)
903,000
STUDENTS EDUCATED
684,000
MICRO, SMALL, AND MEDIUM ENTERPRISES REACHED
$12 Billion
IN GOODS AND SERVICES PURCHASED FROM DOMESTIC SUPPLIERS
$83 Billion
IN MSME LOANS MADE
$420 Million
IN FINANCING SECURED WITH MOVABLE PROPERTY FOR 38,000 FIRMS
1.7 Million
PEOPLE EXPECTED TO RECEIVE IMPROVED ACCESS TO INFRASTRUCTURE SERVICES AND $390 MILLION MOBILIZED THROUGH PUBLIC-PRIVATE PARTNERSHIPS
$400 Million
IN NEW INVESTMENTS DUE TO INDUSTRY REFORM AND INVESTMENT-PROMOTION WORK WITH GOVERNMENTS
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MIDDLE EAST AND NORTH AFRICA
SOUTH ASIA
SUB-SAHARAN AFRICA
244,000
JOBS PROVIDED
120 Million
PHONE CONNECTIONS
11.1 Million
CUSTOMERS SUPPLIED WITH POWER (GENERATION + DISTRIBUTION)
3.6 Million
PATIENTS CARED FOR
620,000
FARMERS REACHED
$4 Billion
IN FINANCING SECURED WITH MOVABLE PROPERTY FOR 3,600 FIRMS
$180 Million
IN NEW FINANCING FOR FIRMS WITH IMPROVED CORPORATE GOVERNANCE PRACTICES
$310 Million
IN NEW INVESTMENTS DUE TO INDUSTRY REFORM AND INVESTMENT-PROMOTION WORK WITH GOVERNMENTS
3 Million
PEOPLE RECEIVED OFF-GRID LIGHTING
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Our Business and Expertise

Our experience in every region of the world, and in nearly every industry allows us to provide a unique set of advantages to our clients.
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WHERE WE WORK
As the largest global development institution focused on the private sector, IFC operates in more than 100 countries. We are able to apply lessons learned in one region to solve problems in another. We help local companies make better use of their own knowledge, by matching it to opportunities in other developing countries.
OUR OFFICES
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OUR THREE BUSINESSES
IFCs three businesses Investment Services, Advisory Services, and Asset Management are mutually reinforcing, delivering global expertise to clients in developing countries. They give us a special advantage in helping the private sector create opportunity our investment and advice can be tailored to a clients specic needs, and in ways that add value. Our ability to attract other investors brings additional benets, introducing our clients to new sources of capital and better ways of doing business sustainably.
PRODUCT LINES
IFC INVESTMENT SERVICES
LOANS
Our investment services provide a broad suite of nancial products and services that can ease poverty and spur long-term growth by promoting sustainable enterprises, encouraging entrepreneurship, and mobilizing resources that wouldnt otherwise be available. Our nancing products are designed to meet the needs of each project. We provide growth capital, but the bulk of the funding comes from private sector owners, who also bear leadership and management responsibility. In FY13, we invested about $18.3billion in 612 projects, of which $6.6billion went to projects in IDA countries. In addition, we mobilized $6.5billion to support the private sector in developing countries. We now have a $50billion portfolio of investment commitments spanning nearly 2,000 companies in 126 countries.
IFC nances projects and companies through loans from our own account, typically for seven to 12 years. We also make loans to intermediary banks, leasing companies, and other nancial institutions for on-lending. While IFC loans traditionally have been denominated in the currencies of major industrial nations, we have made it a priority to structure local-currency products. IFC has provided local-currency nancing in more than 50 local currencies. In FY13, we made commitments for nearly $8.5billion in new loans, bringing our total committed loan portfolio to around $31.5billion.
EQUITY
Equity investments provide developmental support and long-term growth capital that private enterprises need. We invest directly in companies equity, and also through private-equity funds. In FY13, equity investments accounted for nearly $2.7billion of commitments we made for our own account. This brought our own-account equity portfolio to $12billion, on a cash basis, in 819 companies in 118 countries. IFC generally invests between 5 and 20percent of a companys equity. We often encourage the companies we invest in to broaden share ownership through public listings, thereby deepening local capital markets. We also invest through prot-participating loans, convertible loans, and preferred shares.
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TRADE FINANCE
The IFC Global Trade Finance Program guarantees trade-related payment obligations of approved nancial institutions. The program extends and complements the capacity of banks to deliver trade nance by providing risk mitigation on a per-transaction basis for more than 200 banks across more than 80 countries. In FY13, trade nance accounted for nearly $6.5billion of the commitments we made for IFCs own account. Our Global Trade Liquidity Program has supported $24.4billion in trade in developing countries since it was launched in 2009.
SYNDICATIONS
In FY13, IFC invested about
$18.3
billion in 612projects, of which $6.6billion went to projects in IDA countries. During FY13, IFC made commitments for nearly
Borrowers in the infrastructure sector received 51percent of our total syndications volume. More than a third of nancing we provided through syndications a record $1.2billion went to borrowers in IDA countries. We also achieved our highest-ever volume for borrowers in sub-Saharan Africa $868million.
STRUCTURED FINANCE
BLENDED FINANCE
$8.5
billion in new loans.
IFCs Syndicated Loan Program, the oldest and largest syndicated lending program among multilateral development banks, is an important tool for mobilizing capital to serve development needs. In FY13, it accounted for nearly half the funds mobilized by IFC. In FY13, IFC syndicated about $3.1billion in B-loans and parallel loans, provided by more than 60 co-nanciers including commercial banks, funds, and development nance institutions. This resulted in a $13.6billion syndicated loan portfolio.
IFC uses structured and securitized products to provide cost-effective forms of nancing that would not otherwise be readily available to clients. Products include partial credit guarantees, structured liquidity facilities, portfolio risk transfer, securitizations, and Islamic nance. We use our expertise in structuring along with our international triple-A credit rating to help clients diversify funding, extend maturities, and obtain nancing in their currency of choice.
CLIENT RISK-MANAGEMENT SERVICES
IFC sometimes combines concessional funds typically from donor partners with our own resources to nance initiatives and achieve development impact that would otherwise be unattainable. We have applied this approach in three areas of strategic priority: climate change, agribusiness and food security, and nance for small and medium enterprises. In FY13, we committed more than $155million of donor funds, catalyzing more than $2.5billion of IFC and private sector nancing.
IFC provides derivative products to our clients to allow them to hedge their interest rate, currency, or commodity-price exposures. IFC mediates between clients in developing countries and derivatives market makers in order to provide clients with full market access to riskmanagement products.
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BUSINESS LINES
IFC ADVISORY SERVICES
ACCESS TO FINANCE
We provide advice in
PUBLIC-PRIVATE PARTNERSHIPS
Private sector development requires more than nance. Experience shows the powerful role advisory services can play in strengthening the development impact of IFCs investments, unlocking investment by the private sector, and helping businesses expand and create jobs (see page 84). Companies need more than nancial investment to thrive. They need a regulatory environment that enables entrepreneurship. They need advice on best business practices. Our work includes advising national and local governments on how to improve their investment climate and strengthen basic infrastructure. We help companies improve corporate governance, strengthen risk management, and become more sustainable nancially, environmentally, and socially. We operate in 105 countries, with more than 660 active projects. Funding comes from donor partners, IFC, and clients. In FY13, advisory services program expenditures totaled $232million, up from $197million in FY12. In all, 65percent of our program was in IDA countries, and 18percent in fragile and conict-affected areas.
IFC helps increase the availability and affordability of nancial services for individuals and for micro, small, and medium enterprises. We help our nancial clients provide broad-based nancial services and build the nancial infrastructure necessary for sustainable growth and employment. At the end of FY13, we had an active portfolio of 263 projects valued at $342.6million that promoted access to nance in 72 countries. In FY13, our advisory program expenditures reached about $62.6million, of which 61percent was in IDA countries, and 13percent was in fragile and conict-affected areas.
INVESTMENT CLIMATE
105
countries, with more than 660active projects. In FY13, our total advisory program expenditures reached morethan
$232
million, of which 65percent was in IDA countries and 18 percent in conict-affected areas.
IFC provides support for governments to design and implement public-private partnerships in infrastructure and other basic public services. Our advice helps maximize the potential of the private sector to increase access to public services such as electricity, water, health, and education while enhancing their quality and efficiency. At the end of FY13, we had an active portfolio of 103 PPP projects in 53 countries, valued at about $126million. In FY13, our advisory program expenditures in the area reached $39.5million.
SUSTAINABLE BUSINESS
IFC helps governments implement reforms that improve the business environment and encourage and retain investment, thereby fostering competitive markets, growth, and job creation. We also help resolve legal and policy weaknesses that inhibit investment. At the end of FY13, IFC had an active portfolio of 143 investment-climate projects in 65 countries, valued at $288.9million. In FY13, our advisory program expenditures in these projects totaled $74.8million, of which 76percent was in IDA countries, and 29percent was in fragile and conict-affected areas.
IFC works with clients to promote sound environmental, social, governance, and industry standards; catalyze investment in clean energy and resource efficiency; and support sustainable supply chains and community investment. We work in several sectors including agribusiness and forestry; manufacturing and services; infrastructure; oil, gas,and mining; and nancial markets. At the end of FY13, we had an active portfolio of 157 sustainablebusiness projects in 58 countries, valued at $279.7million. In FY13, our advisory program expenditures related to this area totaled $55million.
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AMC FUNDS
IFC ASSET MANAGEMENT COMPANY
IFC CAPITALIZATION FUND
IFC Asset Management Company LLC, a wholly owned subsidiary of IFC, mobilizes and manages funds for investment in developing and frontier markets. It was created in 2009 to provide investors with access to IFCs emerging-markets investment pipeline and to expand the supply of long-term capital to these markets, enhancing IFCs development goals and generating prots for investors by leveraging IFCs global reach, standards, investment approach, and track record. As of June30, 2013, AMC had approximately $5.5billion in assets under management. It manages six investment funds on behalf of a wide variety of institutional investors, including sovereign wealth funds, pension funds, and development nance institutions.
The $3billion IFC Capitalization Fund consists of an equity fund of $1.3billion and a subordinated debt fund of $1.7billion. Launched in 2009, the fund helps strengthen systemically important banks in emerging markets, bolstering their ability to cope with nancial and economic downturns. The fund is jointly supported by a $2billion capital commitment from the Japan Bank for International Cooperation and a $1billion investment from IFC. From its inception through the end of FY13, the fund made 29 investment commitments totaling nearly $2.1billion.
IFC AFRICAN, LATIN AMERICAN, AND CARIBBEAN FUND
for International Development, and Sumitomo Mitsui Banking Corporation. Since its start through the end of FY13, the fund made six investment commitments totaling $101.8million.
IFC RUSSIAN BANK CAPITALIZATION FUND
The $550million IFC Russian Bank Capitalization Fund was launched in 2012 to invest in commercial banking institutions in Russia. The fund, which had its nal close in June 2013, has commitments from IFC, the Russian Ministry of Finance, and Russias Vnesheconombank, or VEB. As of the end of FY13, the fund made two investment commitments totaling $78.2million.
IFC CATALYST FUND
The $1billion IFC African, Latin American, and Caribbean Fund was launched in 2010 and has commitments from IFC, the Abu Dhabi Investment Authority, the Dutch pension fund manager PGGM, Korea Investment Corporation, State Oil Fund of the Republic of Azerbaijan, a Saudi government fund, and an international pension fund. The fund co-invests with IFC in equity and equity-related investments across a range of sectors in sub-Saharan Africa, Latin America, and the Caribbean. From its inception through the end of FY13, the fund made 19 investment commitments totaling $609.9million.
THE AFRICA CAPITALIZATION FUND
The IFC Catalyst Fund invests in funds that provide growth capital to companies developing innovative ways to address climate change in emerging markets. It also invests directly in those companies. As of FY13, the investors in the fund include IFC, the United Kingdoms Department of Energy and Climate Change, the U.K. Department for International Development, the State Oil Fund of the Republic of Azerbaijan, and the Government of Canada.
IFC GLOBAL INFRASTRUCTURE FUND
The $182million Africa Capitalization Fund was launched in 2010 to invest in systemically important commercial banking institutions in Africa. Among its investors are the Abu Dhabi Fund for Development, African Development Bank, CDC Group, European Investment Bank, OPEC Fund
The IFC Global Infrastructure Fund co-invests with IFC in equity and equityrelated investments in the infrastructure sector in emerging markets. As of FY13, the funds investors include IFC, the State Oil Fund of the Republic of Azerbaijan, the Transport for London Pension Fund, and an Asian sovereign wealth fund.
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OUR INDUSTRY EXPERTISE
IFCs leadership role in sustainable private sector development reects a special advantage the depth and breadth of expertise we have acquired over more than 50 years of helping emerging-market rms succeed and grow. We have moved to leverage our global industry knowledge across our investment and advisory services to tackle the biggest development challenges of the coming years.
AGRIBUSINESS AND FORESTRY
Agribusiness has an important role to play in poverty reduction. The agricultural sector often accounts for at least half of GDP and employment in many developing countries, which makes it a priority for IFC. IFC provides support for the private sector to address rising demand in an environmentally sustainable and socially inclusive way. To help clients nance inventories, seeds, fertilizers, chemicals, and fuel for farmers, IFC offers working-capital facilities. To facilitate trade and lower costs, we pursue investments in infrastructure such as warehouses and cold-storage facilities. To bring land into sustainable production, we work to improve productivity by transferring technologies and making the best use of resources. In FY13, our new commitments in agribusiness and forestry totaled nearly $1.3billion, accounting for about 7percent of commitments for IFCs own account.
FINANCIAL MARKETS
micro, small, and medium enterprises than we would be able to on our own. Working through nancial intermediaries enables IFC to encourage them to become more involved in sectors that are strategic priorities such as women-owned businesses and climate change, and in underserved regions such as fragile and conict-affected states as well as in housing, infrastructure, and social services. In FY13, our commitments in nancial markets totaled about $3.6billion, about 20percent of commitments for IFCs own account.
CONSUMER AND SOCIAL SERVICES
Sound, inclusive, and sustainable nancial markets are vital to development as they ensure efficient resource allocation. IFCs work with nancial intermediaries has helped strengthen nancial institutions and overall nancial systems. It has also allowed us to support far more
IFC is the worlds largest multilateral investor in private healthcare and education. We work to increase access to high-quality health and education while also supporting job-creating sectors such as tourism, retail, and property. We help improve standards of quality and efficiency, facilitate the exchange of best practices, and create jobs for skilled professionals. In addition to making direct investments in socially responsible companies, our role includes sharing industry knowledge and expertise, funding smaller companies, raising medical and education standards, and helping clients expand services to lower-income groups. In FY13,
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In FY13, our commitments in nancial markets totaled about
$3.6
billion, about 20percent of commitments for IFCs own account.
our new commitments in consumer and social services totaled about $1.6billion, or nearly 9percent of IFCs commitments for our own account.
INFRASTRUCTURE
Modern infrastructure spurs economic growth, improves living standards, and can represent an opportunity to address emerging development challenges, including rapid urbanization and climate change. It is also an area in which the private sector can make a signicant contribution, providing essential services to large numbers of people, efficiently, affordably, and protably. This is IFCs focus: supporting private infrastructure projects whose innovative, high-impact business models can be widely replicated. We help increase access to power, transport, and water by nancing infrastructure projects and advising client governments on public-private partnerships. We mitigate risk and leverage specialized nancial structuring and other capabilities. In FY13, our new commitments in this sector totaled $2.2billion, or about 12percent of commitments for IFCs own account.
MANUFACTURING
and reducing poverty in developing countries. IFCs manufacturing clients tend to create or maintain more employment than those in any other sector. We have increased our activities in the sector, which includes construction materials, energyefficient machinery, chemicals, and equipment for solar and wind power. We invest in companies that are developing new products andmarkets, and restructuring and modernizing to become internationally competitive. As these industries represent some of the most carbon-intensive sectors, we are helping clients develop and undertake investments that help reduce carbon emissions and energy consumption. In FY13, our new commitments in the manufacturing sector totaled $1.3billion, or about 7percent of commitments for IFCs own account.
OIL, GAS, AND MINING
IFCs mission in the oil, gas, and mining sector is to help developing countries realize these benets. We provide nancing and advice for private sector clients, and also help governments adopt effective regulations and strengthen their capacity to manage these industries across the value chain. We support private investment in these industries, and we work to ensure that local communities enjoy concrete benets. In FY13, our new commitments in the sector totaled $390million, or about 2percent of commitments for IFCs own account.
TELECOMMUNICATIONS, MEDIA, AND TECHNOLOGY
The manufacturing sector plays a vital role in creating opportunity
Industries that can harness natural resources are vital for many of the worlds poorest countries. They are a key source of jobs, energy, government revenues, and a wide array of other benets for local economies. In many countries, large-scale sustainable investments in these industries can create equally large-scale gains in economic development.
Modern information and communication technologies make it easier for the poor to obtain access to services and resources. They expand opportunity and make markets and institutions more efficient. IFC works to extend the availability of such technologies. We channel investments toward private companies that build modern communications infrastructure and information-technology businesses, and develop climatesmart technologies. IFC increasingly helps clients move beyond their own national borders and into other developing markets. In FY13, our new commitments in this sector totaled about $470million.
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Our people and practices

IFCs commitment to alleviating poverty and creating opportunity for the developing worlds most vulnerable people is reected in our corporate culture.
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THE IFC WAY
Our history shows we learn from experience and take on new challenges. Ourstaff is better positioned than ever to maximize IFCs development impact. More than half of us are based in developing countries, close to the clients and communities we serve. We are also more diverse than ever nearly two-thirds of our staff hail from developing countries. A strong corporate culture is central to any organizations ability to succeed and adapt to new challenges. The IFC Way is a way of being, dening, and solidifying IFCs culture and brand, and a process that engages staff at all levels and in all regions to inform management decision making. It includes our vision, our core corporate values, our purpose, and the way we work.
OUR VISION
THE WAY WE WORK
That people should have the opportunity to escape poverty and improve their lives
OUR VALUES
Excellence, Commitment, Integrity, Teamwork, and Diversity

OUR PURPOSE
To create opportunity for people to escape poverty and improve their lives by catalyzing the means for inclusive and sustainable growth, through: Mobilizing other sources of nance for private enterprise development Promoting open and competitive markets in developing countries Supporting companies and other private sector partners where there is a gap Helping generate productive jobs and deliver essential services to the poor and vulnerable To achieve our purpose, IFC offers development-impact solutions through rm-level interventions (Investment Services, Advisory Services, and the IFC Asset Management Company); promoting global collective action; strengthening governance and standard-setting; and businessenabling-environment work.
We help our clients succeed in a changing world Good business is sustainable, and sustainability is good business One IFC, one team, one goal Diversity creates value Creating opportunity requires partnership Global knowledge, local know-how Innovation is worth the risk We learn from experience Work smart and have fun No frontier is too far or too difficult
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HOW WE MEASURE DEVELOPMENT RESULTS
Measuring the results of our work is critical to understanding how well our strategy is working and whether IFC is reaching people and markets that most need our help. Our results measurement system features three mutually reinforcing components: the IFC Development Goals, a monitoring system to measure development results, and systematic evaluations of the impact of both our investment and advisory work. Besides development results, we also track IFCs additionality the distinctive advantages and benets of ourinvolvement in a project.
GOALS
EVALUATION
MONITORING
We are also now studying the extent to which IFCs activities change the behavior of other market participants in areas unrelated to our own projects. These changes in behavior what we call demonstration effects may include things like a bank starting to lend in a new sector, a new developer nancing a project similar to the one implemented with IFC support, or a government replicating reform instituted by an IFC client government. Understanding the impact of our activities and feeding into our operations the lessons we learn from results measurement continues to be a priority. To strengthen our ability to do this, we began testing and implementing additional monitoring instruments, and additional evaluative approaches. These efforts will contribute to the achievement of two overarching World Bank Group goals ending extreme poverty by 2030 and boosting shared prosperity. We have also continued to work closely with other development nance institutions, or DFIs. We are currently leading a collective effort aimed at harmonizing a set of core indicators for monitoring development results of investment operations. Our collaboration with DFIs was further strengthened following the launch of IFCs Jobs Study (see page 43 for more details). About 30 other institutions agreed to collaborate with us to help create more and better jobs. We are now working on implementing the recommendations of the study.
THE IFC DEVELOPMENT GOALS
The IFC Development Goals are targets for reach, access, or other tangible development outcomes that projects signed or committed by IFC are expected to deliver during their lifetime. Two such goals pertaining to health, education, and nancial services moved from testing into implementation in FY13 and are fully integrated into IFCs corporate scorecard and incentives for management. They will soon apply also to long-term performance awards for staff. Whether being tested or implemented, the IFC Development Goals have proved useful in steering IFCs business to where it has the biggest impact. The goals also are encouraging staff to work across departments and advisory business lines, adopting cross-cutting and programmatic approaches to enhance development impact. We plan for one additional goal to be implemented in FY14 tracking the number of people for whom we increase or improve sustainable farming opportunities.
_ 81
1: Agribusiness Increase or improve sustainable farming opportunities 2: Health and Education Improve health and education services 3. Financial Services Increase access to nancial services for individuals, microenterprises, and SME clients 4: Infrastructure Increase or improve infrastructure services 5: Economic Growth Increase the value added by IFC clients to their respective countrys economy 6: Climate Change Reduce greenhouse emissions
MONITORING AND TRACKING RESULTS
because their outcome and impact results had not been achieved by the review dates. We continue to report on development results for our entire portfolio and have them assured by an external rm.
EVALUATING RESULTS
We use our Development Outcome Tracking System to monitor the development results of IFCs investment and advisory services. For Investment Services, DOTS covers after certain exclusions 1,727 companies under supervision. This report focuses on 716 out of about 780 investments approved between 2004 and 2009, which are mature enough to be rated and recent enough to be relevant. The FY13 ratings reect our clients 2012 data and performance. Every year, the group of investments we report on shifts by one year. The report also addresses the current reach of all active investments in IFCs portfolio. Reach indicators measure the number of people reached by IFC clients or the dollar benet to particular stakeholders, regardless of IFCs investment size. DOTS does not typically track certain projects, including projects that are expansions of existing ones, split projects, and certain nancial products such as rights issues. For Advisory Services, DOTS covers all projects that are active, completed, or on hold, dating back to FY06. The FY13 ratings are dened as a review of 149 completion reports led in 2012, of which 124 could be assessed. The rolling average is based on a review of 494 completion reports led in calendar years 2010 through 2012, of which 396 were assessed. Advisory projects that could not be assessed for development effectiveness were excluded from the analysis, because they were non-client-facing projects or
At any given time, there are more than
20
evaluations ongoing, covering both investment and advisory services.
Evaluation has been integral to IFCs results measurement since 2005, when IFC rst began working with external evaluators to generate useful lessons and produce impartial assessments of development effectiveness. By revealing the factors for success or failure, evaluations help us understand what we need to do more of and less of to achieve IFCs mission. IFCs investment in evaluation has grown rapidly, and we now have more than 20 evaluations ongoing at any given time, covering both investment and advisory services. Our evaluations are undertaken at project, programmatic, or thematic levels, as well as at the level of donor-funded facilities, countries, and regions. Our evaluation strategy is focused on maximizing opportunities for learning. It has four main objectives: (1) to credibly articulate IFCs development impact; (2) to learn how to maximize the effectiveness of IFC interventions; (3) to provide useful business intelligence to clients and partners; and (4) to exchange knowledge with others outside IFC. These strategic objectives shape our evaluation work program. Our portfolio of evaluations is selected to address knowledge gaps, learn lessons from successful and unsuccessful initiatives, assess operations never before evaluated, and deliver evaluation services to interested clients. In particular, the new strategy focuses
82 _
HOW IFC MONITORS RESULTS
DOTS allows for real-time tracking of development results throughout the project cycle. At the outset of a project, IFC staff members identify appropriate indicators with baselines and targets. They track progress throughout supervision, which allows for real-time feedback into operations, until project closure. This report provides the DOTS score the percentage of projects that have achieved a high rating (in the top half of the rating scale) for IFC overall and by region, industry, and business line. Ratings are based on qualitative assessments provided by project teams. They are reviewed centrally by the Development Impact Department, with the support of an automated system of ags that helps identify deviations from rating requirements. For Investment Services, the overall DOTS score is a synthesis of four performance areas (nancial, economic, environmental and social, and broader private sector development impacts). The weighting of each area is informed by standardized industryspecic indicators, comparing actual results against absolute benchmarks. To obtain a high rating, a project must make a positive contribution to the host countrysdevelopment. This year, we excluded trade-nance clients from the weighting to ensure methodological consistency in the calculation of both weighted and unweighted scores. Accordingly, we restated the weighted DOTS scores shown on page 29. For Advisory Services, the overall DOTS score or development-effectiveness rating is a synthesis of the overall strategic relevance, efficiency, and effectiveness (as measured by project outputs, outcomes, and impacts). At project completion, intended results are compared with achieved results. The DOTS score is part of IFCs corporate scorecard and cascades into department scorecards and incentives for individual staff members.
attention on the poverty-reduction and job-creation effects of our work that typically cannot be captured by monitoring and tracking alone. The new evaluation strategy complements the work of the Independent Evaluation Group (see page 92) which reports directly to the Board of Directors and is charged with providing its own assessments and lessons of experience. IEGs evaluations incorporate ndings from IFCs own monitoring and evaluations. IFCs evaluation staff works closely with IEG to discuss work programs, share knowledge, and align efforts whenever possible.
INVESTMENT RESULTS
Over the past ve years, DOTS ratings have been broadly stable, staying within a ve-percentagepoint range. In FY13, IFCs development results for investment services continued to exceed our long-term target of 65percent, with 66percent of our investment clients rated high. Across the world, our clients continued to increase their development reach. In Latin America and the Caribbean, the number of loans to micro, small, and medium enterprises rose about 110percent to 14.4million. In Sub-Saharan Africa, the number of farmers reached increased by almost 80percent to over 675,000. In the Middle East and North Africa, the number of patients
reached increased by 61percent to 3.5million. Meanwhile, our clients in South Asia provided 120million phone connections, accounting for 63percent of total phone connections reported by IFC clients. By region, our strongest performance was in Latin America and the Caribbean, where the percentage of clients rated high rose 2 points to 74percent. The progress reected stronger performance by clients in Colombia, Mexico, and Peru. It also reected improved performance of nancial markets operations, as well as solid performance of clients in funds, infrastructure mainly electric power and transportation and consumer and social services (especially health and education). Our clients in the Middle East and North Africa also showed improved results, with 65percent of investment operations rated high an increase of 5 points over the previous year. The increase reected improved results in nancial markets, specically in Egypt. The rating also increased because of positive results in the health sector. In Europe and Central Asia, the share of clients rated high rose to 64percent from 61percent mainly because of solid performance by clients in the infrastructure and funds sectors in Russia, and because of continued improvement in the results of manufacturing clients in Turkey. Our ratings weakened in East Asia and the Pacic, Sub-Saharan Africa, and South Asia. In East Asia and the Pacic, 70percent of our clients were rated high, a decline of 10 points from the previous year.
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The drop reected the deteriorating performance of manufacturing companies predominantly in China, where slower growth compressed margins. It also reected the weaker performance of clients in nancial markets, specically in Indonesia. In Sub-Saharan Africa, 61percent of clients were rated high a decline of 3 points that reected deterioration among clients in Ghana, Tanzania, and Cameroon. Clients in the funds sector showed improved results, while ratings declined in agribusiness and forestry. In South Asia, 60percent of our clients were rated high in FY13 down from 73percent in FY12. The decline reected the weak performance of Indian companies, which account for 90percent of the regions rated portfolio. At the industry level, ratings improved for clients in the funds sector, were steady in nancial markets, and declined in all other sectors. Clients development reach, however, continued to be signicant (see page 86). The funds sector had the best performance, with 79percent of clients rated high thanks to better performance of new and existing investments, particularly in Europe and Central Asia and in Latin America and the Caribbean. The performance of investments in thenancial markets sector remained stable, with 70percent ofclients rated high. In the infrastructure sector, the share of projects rated high fell by 3points to 73percent, mainly because of weaker performance of clients in the warehousing, storage,
The funds sector had the best performance, with
79%
of clients rated high thanks to better performance of new and existing investments, particularly in Europe and Central Asia and in Latin America and theCaribbean.
shipping, and logistics sectors. Even so, the DOTS score for the sector continued to be well above the IFC average. In the agribusiness and forestry sector, 68percent of our clients were rated high a decline of 4 points from FY12. The drop was mostly due to deteriorating ratings of clients in Sub-Saharan Africa and South Asia. In oil, gas, and mining, 64percent of clients were rated high, down from 69percent in FY12. The exit of high-performing clients from the reporting cohort was the main reason for the decline this year, while the sector continued to suffer from political uncertainties in the Middle East and North Africa and from the commercial difficulties of some clients in Latin America. In the consumer and social services sector, the percentage of investments rated high went from 57percent to 56percent amid a deterioration in the tourism sector and in East Asia. The percentage of clients rated high in the telecommunications, media, and technology sectors declined a point to 55percent. Our clients in this sector are often start-ups, so their odds of success generally tend to be lower. In the manufacturing sector, 49percent of clients were rated high a decline of 14 points from the previous year. Performance deteriorated across all regions, with the largest declines occurring among clients in the Middle East and North Africa and in South Asia.
84 _
LEARNING FROM OUR WORK IN CONFLICT-AFFECTED COUNTRIES
ADVISORY RESULTS
To maximize opportunities for learning, IFC increasingly conducts global, regional, programmatic, and thematic evaluations and meta-evaluations of our work in addition to evaluations of individual projects. Recently an external consulting rm completed a mid-term review of our Con ict-Affected States in Africa program. The program, also known as CASA, was launched in 2008 to enhance the delivery of IFC Advisory Services in fragile and conict-affected states. It now serves eight countries Burundi, Central African Republic, Cte dIvoire, Democratic Republic of Congo, Guinea, Liberia, Sierra Leone, and South Sudan. The review found that CASAs focus on private sector development addresses one of the most important challenges in post-conict reconstruction. According to stakeholder feedback, no other agency addresses private sector development in these countries as comprehensively as IFC does through the CASA program. CASA promotes private sector development in one of three ways: rst, it facilitates tailored and coordinated Advisory Services projects; second, it provides funds to support implementation of projects; and third, it promotes knowledge management, including the dissemination of IFC tools, lessons learned, and best practice. Based on the review, the consulting rm recommended that IFC build on the programs success by going beyond a country-by-country approach and leveraging the distinctive strengths of all four of IFCs advisory business lines Access to Finance, Investment Climate, Public-Private Partnerships, and Sustainable Business. Such an approach, it said, would help build key relationships and enhance CASAs effectiveness. The rm also recommended that IFC extend CASAs reach by establishing similar programs in new countries and advocating for wider adoption of this model within the World Bank Group. IFCs senior management has endorsed expanding the program to 18 countries in sub-Saharan Africa and is implementing other recommendations.
Development effectiveness ratings and client satisfaction both reached record highs for IFC Advisory Services in FY13. Development effectiveness ratings increased for the fourth consecutive year, with 76percent of 124 advisory projects that closed during the year and could be assessed for development effectiveness being rated high. Outcomes could be assessed for all 124 projects, and impacts could be evaluated for 73percent of them. Ratings improved for operations in IDA countries climbing to 78percent in FY13 from 74percent in FY12. Ninety percent of clients reported satisfaction with IFC Advisory Services work in FY13. To strengthen our impact, Advisory Services undertakes programmatic approaches that harness contributions from across our four business lines: Access to Finance, Investment Climate, Public-Private Partnerships, and Sustainable Business. Here are a few selected highlights from 2012 across Advisory Services: We helped governments sign nine public-private partnership contracts (six in IDA countries, including one in fragile and conictaffected situations), expected to improve access to infrastructure and health services for over 3 million people (1.7 million in fragile and conict-affected situations), and mobilize $750 million in private investment. We helped 3million people receive off-grid lighting; helped 1.3million people gain access to village
phones; and provided capacity building to almost 350,000 people (76percent in IDA countries), including to farmers, entrepreneurs, and management of small and medium enterprises. We helped governments in 43countries adopt 76 investment climate reforms (55 reforms in IDA countries, including 26reforms in fragile and conictaffected situations). We provided governments with industry-level reform and investment-promotion support that have contributed to an estimated $750million in new investments. We helped rms improve corporate governance practices, which contributed to additional nancing of $200million, $150million of which was from IFC. We worked with 149 nancial intermediaries, in partnership with IFC Investment Services, that provided over 14.2million micronance and SME loans (15percent in IDA countries) totaling nearly $103billion; we also worked with 20 nancial intermediaries that provided 207,000 housing nance loans, totaling more than $7.3billion. We helped improve nancial markets infrastructure through working with collateral registries that facilitated over 40,000 SMEs to receive $4.5billion in nancing secured with movable property, and helped create, strengthen or license four credit bureau operators. We helped rms avoid greenhouse gas emissions estimated at 3.7million metric tons annually (calculation based on methodologies in place before adoption of a standardized methodology in 2012).
_ 85
DOTS PERFORMANCE CATEGORIES: INVESTMENT SERVICES

Examples of Specic Indicators Assessed against Targets
Return on invested capital, return on equity, project implemented on time and on budget Economic return on invested capital, number of connections to basic services, loans to small enterprises, people employed, tax payments Environmental and social management systems, ef uent or emission levels, community development programs Demonstration effects (other rms replicating a new approach, product, or service), linkages to other private companies, corporate governance improvements

FY13 IDG Commitments
760,000 people 7.06 million people 41.25 million people 1.04 million people 36.74 million people 6.20 million metric tons
Performance Category
Financial Performance
General Indicators and Benchmarks

Returns to nanciers, e.g., nancial returns at or above weighted average cost of capital Returns to society, e.g., economic returns at or above 10 percent or the weighted average cost of capital Project meets IFCs Performance Standards
Goal
Increase or improve sustainable farming opportunities Improve health and education services Increase access to nancial services for micronance clients Increase access to nancial services for SME clients Increase or improve infrastructure services Reduce greenhouse-gas emissions
FY13 IDG Target

Benet 1 million people Benet 4.22 million people Benet 28.05 million people Benet 1.15 million people Benet 19.75 million people Reduce by 4.90 million metric tons of CO2 equivalent per year
Percent of Target Achieved

76%
167%
Economic Performance
147%
Environmental and Social Performance
90%
186%
Private Sector Development Impact
Project contributes to improvement for the private sector beyond the project company
127%
DOTS PERFORMANCE CATEGORIES: ADVISORY SERVICES

Examples of Specic Indicators Assessed against Targets
Client contributions, alignment with country strategy Cost-benet ratios, project implemented on time and budget Improvements in operations, investments enabled, increase in revenues for beneciaries, cost savings from policy reforms
Performance Category
Strategic Relevance
General Indicators and Benchmarks

Potential impact on local, regional, national economy Returns on investment in advisory operations Outputs, outcomes, and impacts. Project contributes to improvement for the client, the beneciaries, and the broader private sector
Efciency
Effectiveness
86 _
DEVELOPMENT REACH BY IFCS INVESTMENT CLIENTS

Portfolio CY11 Investments
Employment (millions of jobs)1 2.5 2.7
FIVE-YEAR PERFORMANCE ADVISORY SERVICES DOTS SCORE, FY09FY13

Portfolio CY12
% Rated High
100%
Micronance loans2
Number (million) Amount ($ billions) 19.7 19.84 22.0 24.03
76%
80%
67% 62% 72%

60%
SME loans2
Number (million) Amount ($ billions) 3.3 181.25 5.8 241.30
56%
40%
Customers reached with services

Power generation (millions)3 Power distribution (millions) Water distribution (millions) 4 Gas distribution (millions)5 Phone connections (millions) 6 Patients reached (millions)7 Students reached (millions) Farmers reached (millions) 47.0 49.2 38.7 22.4 172.2 13.0 0.9 3.3 52.2 45.7 42.1 33.8 192.0 17.2 1.0 3.1
20%
0% FY09 FY10 FY11 FY12 FY13
FIVE-YEAR PERFORMANCE INVESTMENT SERVICES DOTS SCORE, FY09FY13

% Rated High
Payments to suppliers and governments

Domestic purchases of goods and services ($ billions) Contribution to government revenues or savings ($ billions) 49.84 21.73 46.19 27.00
100%
80%
67%
60%
68%
66%
These gures represent the reach of IFC clients as of the end of CY11 and CY12. CY11 and CY12 portfolio data are not strictly comparable, because they are based on a changed portfolio of IFC clients. In many cases, results reect also contributions from Advisory Services. 1. Portfolio gures for employment include jobs provided by Funds. 2. Portfolio reach gures represent SME and micronance outstanding loan portfolio of IFC clients as of end of CY11 and CY12, for MSME-oriented nancial institutions/ projects. 268 and 285 clients were required to report their end-of-year SME and micronance portfolios in CY11 and CY12, respectively. 252 and 269 clients did so for CY11 and CY12, respectively. The missing data were extrapolated. 3. CY11 total Power Generation customers revised due to the restatement of one client value in East Asia and the Pacic. 4. CY11 total Water Distribution customers revised due to the restatement of one client value in Sub-Saharan Africa. 5. One client in East Asia and the Pacic contributed 31.14 million of Gas Distribution customers in CY12. 6. One client in South Asia contributed 112.7 million of phone connection customers in CY12. 7. CY11 total Patients Reached revised due to the restatement of one client value in Europe and Central Asia.
71%
71%
40%
20%
0% FY09 FY10 FY11 FY12 FY13
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INVESTMENT SERVICES DOTS SCORE BY PERFORMANCE AREA, FY13

% Rated High Development Outcome
INVESTMENT SERVICES DOTS SCORE BY REGION, FY12 VS. FY13

% Rated High
66% 73%
IFC Total
68% 66%
Financial Performance
50% 58%
72% 74%
Economic Performance
60% 69%
East Asia and the Pacific
80% 70%
Environment & Social Performance Private Sector Development Impact

Unweighted Weighted
67% 69% 77% 83%
60% 65%
61% 64%
Sub-Saharan Africa
64% 61%
INVESTMENT SERVICES DOTS SCORE BY INDUSTRY, FY12 VS. FY13

% Rated High IFC Total
South Asia
73% 60%
FY12
FY13
68% 66%
ADVISORY SERVICES DOTS SCORE BY BUSINESS LINE

Funds
73% 79%
Infrastructure
76% 73%
76% 71%
Financial Markets
70% 70%
Sustainable Business
87% 75%
Agribusiness & Forestry
72% 68%
Investment Climate
75% 70%
Oil, Gas & Mining
69% 64%
Access to Finance
74% 75%
Consumer & Social Services
57% 56%
Public-Private Partnerships
50% 55%
Telecoms and IT
56% 55%
FY13
FY11 to FY13
Manufacturing
63% 49%
ADVISORY SERVICES DOTS SCORE BY REGION

FY12
FY13
76% 71%
South Asia
92% 84%
76% 80%
76% 79%
Sub-Saharan Africa
72% 67%
East Asia and the Pacific
67% 68%
64% 50%
FY13
FY11 to FY13
88 _
OUR STAFF
IFCs employees are diverse. They are our most important asset. Representing more than 140 countries, our staff brings innovative solutions and global best practices to local clients. Our offices are in 109 cities in 99 countries. More than half of us 57percent are based in eld offices, an increasing percentage that reects our commitment to decentralization. Most IFC staff also hail from developing countries, 63percent in all, a diversity that enriches our perspective and underscores our focus on areas where private sector development can have the biggest impact.
WHERE WE WORK
Location
Washington, D.C. Field Ofces Total IFC Staff
FY05
1,350 (55%) 1,083 (45%) 2,433
FY13
1,737 (43%) 2,278 (57%) 4,015
NATIONAL ORIGINSALL FULL-TIME STAFF

National Origins
Developed Countries Developing Countries Total
FY05
1,004 (41%) 1,429 (59%) 2,433
FY13
1,502 (37%) 2,513 (63%) 4,015
NATIONAL ORIGINSALL STAFF AT OFFICER LEVEL AND HIGHER

National Origins
Developed Countries Developing Countries Total
FY05
690 (50%) 682 (50%) 1,372
FY13
1,163 (44%) 1,462 (56%) 2,625
GENDERALL FULL-TIME STAFF

Gender
Male Staff Female Staff Total
FY05
1,194 (49%) 1,239 (51%) 2,433
FY13
1,880 (47%) 2,135 (53%) 4,015
GENDERALL STAFF AT OFFICER LEVEL AND HIGHER

Gender
Male Staff Female Staff Total
FY05
911 (66%) 461 (34%) 1,372
FY13
1,507 (57%) 1,118 (43%) 2,625
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IFCs staff represents more than
COMPENSATION
BENEFITS PROGRAMS
140
countries.
63%
of our staff hail from developing countries.
IFCs compensation guidelines are part of the World Bank Groups framework. The international competitiveness of compensation is essential to our capacity to attract and retain a highly qualied, diverse staff. The salary structure of the World Bank Group for staff recruited in Washington, D.C., is determined with reference to the U.S. market, which historically has been globally competitive. Salaries for staff hired in countries outside the United States are based on local competitiveness, determined by independent local market surveys. Based on the World Bank Groups status as a multilateral organization, staff salaries are determined on a net-oftax basis.
VARIABLE PAY PROGRAMS
57%
are based in eld offices.
IFCs variable pay programs consist of several components, including recognition, annual, and long-term performance awards that support IFCs highperformance culture. These awards are designed to encourage teamwork, reward top performance, and support IFCs strategic priorities, such as projects in Fragile and Conict-Affected States.
IFC provides a competitive package of benets, including medical insurance and a retirement plan. Washingtonbased employees are covered by Aetna, contracted through an open procurement process. Other staff members are covered by Vanbreda, an international healthcare provider. Medical insurance costs are shared 75percent is paid by IFC and 25percent by the insured. IFCs pension is part of the World Bank Group plan, based on two benet components: rst, years of service, salary, and retirement age; second, a cash savings plan, which includes a mandatory contribution of ve percent of salary, to which IFC adds 10percent annually. Legacy pension benets from earlier World Bank Group pension plans include termination grants and additional cash payouts.
STAFF SALARY STRUCTURE (WASHINGTON, D.C.)

During the period July 1, 2012, to June 30, 2013, the salary structure (net of tax) and average net salaries/benets for World Bank Group staff were as follows:
STAFF AT GRADE LEVEL (%) 0.0% 0.7% 9.2% 7.5% 9.6% 19.8% 31.4% 18.4% 2.9% 0.4% 0.1% AVERAGE SALARY/ GRADE 34,269 41,379 53,698 66,204 77,073 100,089 137,075 188,958 249,266 309,632 354,189
GRADES GA GB GC GD GE GF GG GH GI GJ GK
REPRESENTATIVE JOB TITLES Ofce Assistant Team Assistant, Information Technician Program Assistant, Information Assistant Senior Program Assistant, Information Specialist, Budget Assistant Analyst Professional Senior Professional Manager, Lead Professional Director, Senior Advisor Vice President Managing Director, Executive Vice President
MINIMUM ($) 25,100 31,700 39,100 46,200 62,100 82,500 111,300 151,700 202,200 276,700 304,000
MARKET REFERENCE ($) 32,600 41,200 50,900 60,100 80,700 107,300 144,700 197,200 264,500 310,000 344,700
MAXIMUM ($) 42,400 57,700 71,300 84,200 113,000 150,200 202,500 254,900 303,300 347,100 379,100
AVERAGE BENEFITSa 19,591 23,657 30,699 37,849 44,063 57,221 78,366 108,027 142,505 177,016 195,637
Note: Because World Bank Group (WBG) staff, other than U.S. citizens, usually are not required to pay income taxes on their WBG compensation, the salaries are set on a net-of-tax basis, which is generally equivalent to the aftertax take-home pay of the employees of the comparator organizations and rms from which WBG salaries are derived. Only a relative small minority of staff will reach the upper third of the salary range. a. Includes medical, life and disability insurance; accrued termination benets; and other nonsalary benets.
90 _
OUR GOVERNANCE
Our Place in the World Bank Group The World Bank Group is a vital source of nancial and technical assistance to developing countries. Established in 1944, its mission is to ght poverty with passion and professionalism, for lasting results. IFC is one of ve members of the Bank Group, though it is a separate legal entity with separate Articles of Agreement, share capital, nancial structure, management, and staff. Membership in IFC is open only to member countries of the World Bank. As of June 30, 2013, IFCs total cumulative paid-in capital of about $2.4billion was held by 184 member countries. These countries guide IFCs strategy, programs, and activities. IFC works with the private sector to create opportunity where its needed most. Since our founding in 1956, we have committed more than $144 billion of our own funds for private sector investments in developing countries, and we have mobilized billions more from others.
In working toward a world free of poverty, we collaborate closely with other members of the Bank Group, including: The International Bank for Reconstruction and Development, which lends to governments of middle-income and creditworthy low-income countries. The International Development Association, which provides interest-free loans called credits to governments of the poorest countries. The Multilateral Investment Guarantee Agency, which provides guarantees against losses caused by noncommercial risks to investors in developing countries. The International Centre for Settlement of Investment Disputes, which provides international facilities for conciliation and arbitration of investment disputes.
OUR BOARD
EXECUTIVE COMPENSATION
The salary of the President of the World Bank Group is determined by the Board of Directors. The salary structure for IFCs Executive Vice President and CEO is determined by positioning a midpoint between the salary structure of staff at the highest level, as determined annually by independent U.S. compensation market surveys, and the salary of the World Bank Group President. The compensation of our executive leadership is transparent. IFCs Executive Vice President and CEO, Jin-Yong Cai, received a salary of $350,000, net of taxes. There are no executive incentive compensation packages.
OUR MEMBER COUNTRIESSTRONG SHAREHOLDER SUPPORT
Capital Stock by Country Grand Total United States Japan Germany France United Kingdom Canada India Italy Russian Federation Netherlands 174 Other Countries 100.00% 23.69% 5.87% 5.36% 5.04% 5.04% 3.38% 3.38% 3.38% 3.38% 2.34% 39.14%
Each of our member countries appoints one governor and one alternate. Corporate powers are vested in the Board of Governors, which delegates most powers to a board of 25 directors. Voting power on issues brought before them is weighted according to the share capital each director represents. The directors meet regularly at World Bank Group headquarters in Washington, D.C., where they review and decide on investments and provide overall strategic guidance to IFC management. The President of the World Bank Group is also President of IFC.
_ 91
FAR LEFT ROW: No. 5 - John Whitehead, New Zealand; No. 4 - Roberto B. Tan, Philippines; No. 3 - Satu Santala, Finland
5 4 3 2 1 6 7 9 8 10 11 12 13 14 15 16 17 18 19 20 21 25 22 23 24
SECOND ROW LEFT: No. 7 - Shaolin Yang, China; No. 6 - Marie-Lucie Morin, Canada; No. 2 - Agapito Mendes Dias, Sao Tome and Principe; No. 1 - Merza Hasan, Kuwait THIRD ROW LEFT: No. 9 - Vadim Grishin, Russian Federation; No. 8 - Gwen Hines, United Kingdom; No. 10 - Mukesh N. Prasad, India MIDDLE ROW: No. 12 - Piero Cipollone, Italy; No. 14 - Ibrahim M. Alturki (alt.), Saudi Arabia; No. 13 - Omar Bougara, Algeria; No. 11 - Mansur Muhtar, Nigeria FIRST RIGHT ROW: No. 18 - Denny H. Kalyalya, Zambia; No. 19 - Csar Guido Forcieri, Argentina; No. 15 - Gino Alzetta, Belgium; No. 16 - Hideaki Suzuki, Japan; No. 17 - Ingrid-Gabriela Hoven, Germany SECOND RIGHT ROW: No. 20 - Juan Jos Bravo, Mexico; No. 21 - Sara Aviel (alt.), United States FAR RIGHT ROW: No. 22 - Herv de Villeroch, France; No. 23 - Frank Heemskerk, Netherlands; No. 24 - Jrg Frieden, Switzerland; No. 25 - Sundaran Annamalai, Malaysia
92 _
ACCOUNTABILITY
INDEPENDENT EVALUATION GROUP
The Independent Evaluation Group generates lessons from evaluations to contribute to IFCs learning agenda. IEG is independent of IFC management and reports directly to IFCs Board of Directors. It aims to strengthen IFCs performance and inform its strategies and future directions. IEGs Biennial Report on Operations Evaluation, which focused on assessing, monitoring, and evaluation in IFC and MIGA, reported that IFC has an advanced results management system to gather, analyze, and apply investment and advisory project information. IEG found that IFC has made strides in developing, aggregating, disclosing, and strategically using its development indicators. The data from the Development Outcome Tracking System are used in corporate and departmental scorecards and corporation-wide development goals. IEGs evaluation provided important input to rene and strengthen IFCs results management system. IEG validates 45percent of eligible IFC investment projects
and 51percent of eligible advisory projects. IEG communicates these ratings to IFC and aggregates them in its annual evaluation of World Bank Groups results and performance. That most recent IEG report found that IFCs overall development results have been relatively stable on a three-year rolling average. Another IEG evaluation this year covered the Global Trade Finance Program. IEG reported that the program signicantly improved IFCs engagement in trade nance and has been effective in helping expand the supply of trade nance by mitigating risks that would otherwise inhibit the activity of commercial banks. This year IEG relaunched E-LRN, a database of lessons from IFC investment projects since 1996. E-LRN gives access to more than 3,000 lessons from 15 years of evaluations. The lessons are searchable and easily accessible to staff, helping improve IFCs development effectiveness. IEGs reports are disclosed on its website: http://ieg.worldbank group.org.
IEG validates
OFFICE OF THE COMPLIANCE ADVISOR OMBUDSMAN
45%
of eligible IFC investment projects and 51 percent of eligible advisory projects.
The Office of the Compliance Advisor Ombudsman is the independent recourse mechanism for IFC and the Multilateral Investment Guarantee Agency. CAO helps address complaints from people affected by IFC and MIGA projects, and reports directly to the World Bank Group President. CAOs goal is to enhance the environmental and social performance of projects and to foster greater public accountability of IFC and MIGA. Through its three roles, CAO helps resolve disputes between local communities and IFC clients; provides independent oversight of IFCs environmental and social compliance; and provides independent advice to the President and IFC management. During the year, CAO addressed 42 cases in 19 countries. These cases related to IFC investments in extractive industries, infrastructure, agribusiness, manufacturing, advisory services, and nancial intermediaries. In its compliance role, CAO handled 12 audits of IFCs performance. CAO determined it had sufficient
_ 93
basis to close two regarding IFCs investments in palm oil in Indonesia and agribusiness in Peru. Seven audits are in process, while CAO is monitoring IFCs response to three audits related to metals manufacturing in Mozambique, the power sector in Kosovo, and global nancial intermediaries. The nancial intermediaries audit analyzed 188 IFC investments and raised concerns about IFCs approach to supporting appropriate environmental and social management capacities in its nancial intermediary clients, and identied challenges in the way IFC monitors the environmental and social impact of such investments. IFC is working on an action plan to address CAOs audit ndings. CAOs dispute-resolution team is working in Albania, Cambodia, Cameroon, Chad, Colombia, Indonesia, India, Mexico, Mongolia, Nicaragua, Papua New Guinea, Peru, South Africa, and Uganda helping communities and IFC clients address issues of concern. CAO closed a labor complaint related to a nancial intermediary client in Africa, and is monitoring settlements for two cases in the palm oil
CAO addressed
42
cases in 19countries.
sector in Indonesia and sugar industry in Nicaragua, respectively. CAO this year revised its Operational Guidelines in consultation with civil society, IFC/MIGA, and other stakeholders. The revised guidelines were implemented in March and aim to improve CAOs effectiveness. More information about CAO is available at www.cao-ombudsman.org
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PARTNERSHIPS
FORMING PRODUCTIVE PARTNERSHIPS
IFC works with governments, corporations, foundations, and other multilateral organizations and development institutions to foster innovative partnerships that create prosperity and eradicate poverty. As the largest global development institution focused on the private sector in developing countries, IFC, together with our partners, strives to address urgent development challenges. Our collaborative approach emphasizes the power of long-term partnerships, maintains a focus on results measurement and efficiency, and leverages the contributions of our partners.
WORKING WITH DONOR PARTNERS
IFC maintains long-term relationships with its donor partners, with whom we work to promote private sector development across the globe. Our donor partners strongly support the work of IFC Advisory Services, to which they committed more than $254million in FY13. In addition, a number of these partners have deepened their collaboration with IFC by investing alongside us on various investment initiatives. In cooperation with the global donor community, IFC launched several strategic partnerships in FY13, which blended exible nancing, thought leadership, and knowledge sharing to maximize our development impact. We created the Canada-IFC Partnership Fund to address pressing development issues in the extractive and nancial sectors and to promote gender equality worldwide. We strengthened the Luxembourg-IFC and Ireland-IFC Partnerships to jointly promote
sustainable business, corporate governance, and a more robust investment climate globally, as well as support conict-affected states in Africa. We also extended the Netherlands-IFC Partnership to work together on sustainable business, investment climate, access to nance, public-private partnerships, and conict situations. In Asia, we established the Pacic Partnership with Australia and New Zealand to help drive regional private sector development. We also deepened our partnership with Japan to further our activities in Asia and sub-Saharan Africa. Here are a few additional highlights of our work with partners in FY13: Austrias Federal Ministry of Finance renewed its commitment to enhance collaboration in Eastern Europe and Central Asia, with a focus on public-private partnerships, agribusiness, and sustainable energy. Likewise, the Development Bank of Austria supported increased investments in renewable energy and energy efficiency in East Africa. The Bill & Melinda Gates Foundation and IFC continued cooperation in the water and sanitation sector, and in access to nance, launching a market development project for household sanitation in Kenya and a mobile nancial services project in Tanzania. The Government of Canada contributed to strengthening the investment climate in Sub-Saharan Africa and Latin America and the Caribbean as well as enhancing food security in East Asia and the Pacic. Canada also supported our climate-change activities as an investor in the IFC Catalyst Fund.
In FY13, more than
$254
million was committed by donor partners to support IFCs advisory work.
$44
billion was provided by international nancial institutions for private sector development in 2011.
The Government of Denmark supported our resource efficiency and clean energy programs in Egypt and Tunisia. The Government of the French Republic continued its cooperation with IFC on the Business Law Reform Program in SubSaharan Africa. Germanys Gesellschaft fr Internationale Zusammenarbeit contributed to IFCs work with nancial institutions to improve their social and environmental risk-management activities, while the Federal Ministry for Economic Cooperation and Development helped IFC explore opportunities for green-growth investments. The Netherlands Ministry of Foreign Affairs supported job creation in the Middle East and North Africa, water-related activities in South Asia, investment-climate reforms in Sub-Saharan Africa, and the Global SME Finance Innovation program. In addition, the Netherlands provided muchneeded trade nancing through a contribution to our Global Trade Liquidity Program. Norways Ministry of Foreign Affairs provided additional funding to IFCs Conict-Affected States in Africa Initiative. The Republic of South Africa, through the Department of Trade and Industry, renewed its commitment to IFCs private sector development activities in Africa. The Swedish International Development Cooperation Agency became a partner in our private sector development work in Ethiopia. Switzerlands State Secretariat for Economic Affairs supported IFCs work in investment climate, access to nance, infrastructure, and environmental and social risk
_ 95
management globally. SECO also provided substantial support to IFCs sustainable business advisory activities, with a particular emphasis on activities that strengthen gender equality. The United Kingdoms Department for International Development contributed to our work on investment climate in Central Asia and Sub-Saharan Africa, regional trade and SME development in South Asia, private-public partnerships in Central and South Asia, and job creation in the Middle East and North Africa. DFID also committed to the private sector window of the Global Agriculture and Food Security Program. In addition, DFID and the U.K. Department for Energy & Climate Change made a signicant commitment to the IFC Catalyst Fund. The United States Agency for International Development supported IFCs business reform activities in Eastern Europe and Central Asia, Latin America and the Caribbean, and the Middle East and North Africa.
FINANCIAL COMMITMENTS TO IFC ADVISORY SERVICES
(US$ Million Equivalent)*
Governments
New Zealand Norway South Africa Sweden Switzerland United Kingdom United States Total
FY12
0.00 4.85 0.00 12.38 57.15 69.94 14.14 247.28
FY13
4.00 2.01 0.67 5.32 63.51 34.79 5.78 239.61
Institutional & Private Partners

Blue Moon Fund Inc. BNDESPAR The Coca-Cola Company* CTF Disney Worldwide Services, Inc. European Commission Bill & Melinda Gates Foundation Inter-American Development Bank Kauffman Foundation Marie Stopes International The MasterCard Foundation Nestl SA* Omidyar Network Fund, Inc. PepsiCo Foundation* SABMiller PLC* UN Agencies/Entities Total
*Contributor to the 2030 Water Resource Group
FY12
0.00 3.00 0.00 0.80 0.05 8.90 2.57 1.00 0.05 0.00 37.45 0.00 0.00 0.00 0.00 0.25 54.08
FY13
0.25 0.00 2.00 0.50 0.00 0.00 2.87 0.00 0.00 3.87 0.03 1.00 0.07 2.00 0.25 1.16 14.01
Summary
Governments Institutional/Multilateral Partners Corporations, Foundations, and NGOs Total
*Unaudited gures
FY12
247.28 10.95 43.13 301.36
FY13
239.61 1.66 12.35 253.62
WORKING WITH OTHER DEVELOPMENT INSTITUTIONS
Governments
Australia Austria Canada Denmark Finland France Germany Ireland Japan Korea Luxembourg The Netherlands
FY12
1.57 25.55 5.63 0.96 0.13 0.03 0.60 1.51 9.48 1.00 0.00 42.37
FY13
21.87 12.70 47.83 3.61 0.00 2.65 1.15 1.12 7.22 0.00 6.79 18.59
International nance institutions including multilateral and bilateral development nance institutions play a critical role in spurring the private sector to help improve lives and reduce poverty. They have a track record of success in difficult environments. They provide capital when private markets become risk-averse. They provide advice that strengthens markets and makes private sector development inclusive and sustainable. Over the past decade, the private sector nancing activities of international nance institutions in developing countries quadrupled to more than $44billion in 2011.
Every dollar invested by these institutions unlocks $2 to $3 of investment from others. IFC has teamed up with an array of IFIs, pooling resources to share knowledge, expand reach, and maximize impact. Following the pattern of previous years, the private sector operations of IFIs continue their strong focus on the nancial sector and infrastructure, and additional areas of emphasis remain the Middle East, renewable energy, and food security. Collaboration among these institutions also continues to expand. Ongoing areas of cooperation include the Master Cooperation Agreement with 17 development nance institutions. The agreement details how such institutions work together through loan syndications to co-nance projects led by IFC. We also collaborate on the Busan Initiative follow-up, corporate governance, gender, and climate change. Joint efforts on concessional nance, local-currency nance, integrity issues, and harmonizing development indicators continue to be led by IFC. Since January 2012, IFC has been leading an outreach campaign in Europe to promote the themes of the report International Finance Institutions and Development Through the Private Sector. Atthe conference to launch IFC Jobs Study in January 2013, 28 institutions issued a joint communiqu pledging to collaborate to create more and better jobs (see page43). IFC also continues to build leadership in corporate governance, for example through the IFI Corporate Governance Development Framework, which is based on IFCs methodology, in collaboration with almost 30nancial institutions. The following development nance institutions have invested in funds managed by IFC Asset Management Company: Japan Bank for International Cooperation Abu Dhabi Fund for Development African Development Bank CDC Group European Investment Bank The OPEC Fund for International Development
96 _
MANAGING RISKS
PORTFOLIO MANAGEMENT
Portfolio management is an intrinsic part of managing IFCs business to ensure strong nancial and development results of our projects. IFCs management reviews our entire portfolio globally ona quarterly basis and reports on the portfolio performance to the Board annually. Our portfolio teams, largely based in eld offices, complement global reviews with asset-by-asset quarterly reviews. On the corporate level, IFC combines the analysis of our $50billion portfolio performance with projections of global macroeconomic and market trends to inform decisions about our future investments. IFC also regularly tests the performance of the portfolio against possible macroeconomic developments in emerging markets to identify and proactively address risks. Stress tests serve as a basis to determine the potential impact of macroeconomic events on the IFC portfolio. On the project level, IFC actively monitors compliance with investment agreements, visits sites to evaluate project status, and helps identify solutions to address potential problems. We systematically
track environmental and social performance, and measures nancial and development results. For projects in nancial distress, our Special Operations Department determines the appropriate remedial actions. It seeks to negotiate agreements with creditors and shareholders to share the burden of restructuring so problems can be worked out while the project continues to operate. Investors and other partners participating in IFCs operations are kept regularly informed on project developments. IFC consults or seeks their input as appropriate.
TREASURY SERVICES
New borrowings in the international markets totaled the equivalent of about
LIQUIDITY MANAGEMENT
$12
billion in FY13.
Liquid assets on IFCs balance sheet totaled $30.3billion as of June 30, 2013, compared with $29.7billion a year earlier. Most liquid assets are held in U.S. dollars. The exposure arising from assets denominated in currencies other than U.S. dollars is hedged into U.S. dollars to manage currency risk. The level of these assets is determined with a view to ensure sufficient resources to meet commitments even during times of market stress.
FY13 BORROWING IN INTERNATIONAL MARKETS
Amount (USD equivalent) Percent
6,597,029,098 1,377,411,350 891,776,917 792,480,000 605,262,000 488,293,678 368,637,282 55.80% 11.60% 7.50% 6.70% 5.10% 4.10% 3.10%
IFC funds lending by issuing bonds in international capital markets. We are often the rst multilateral institution to issue bonds in the local currencies of emerging markets. Most of IFCs lending is denominated in U.S. dollars, but we borrow in a variety of currencies to diversify access to funding, reduce borrowing costs, and help develop local capital markets. IFCs borrowings have continued to keep pace with our lending. New borrowings in the international markets totaled the equivalent of about $12billion in FY13.
Currency
U.S. dollar Australian dollar Brazilian real New Zealand dollar Japanese yen Russian ruble Turkish lira
_ 97
CAPITAL ADEQUACY AND FINANCIAL CAPACITY
Sound risk management plays a crucial role in ensuring IFCs ability to fulll our development mandate. The very nature of IFCs business, as a long-term investor in dynamic yet volatile emerging markets, exposes us to nancial and operational risks. Prudent risk management and a sound capital position enable us to preserve our nancial strength and play a countercyclical role during times of economic and nancial turmoil. In addition, IFCs nancial strength results in low borrowing costs, allowing us to provide affordable nancing to our clients. The soundness and quality of IFCs risk management and nancial position can be seen in our triple-A credit rating, which has been maintained since coverage began in 1989. We assess IFCs minimum capital requirement in accordance with our economic capital framework, which is aligned with the Basel framework and leading industry practice. Economic capital acts as a common currency of risk, allowing us to model and aggregate the risk of losses from a range of different investment products as well as other
In FY13, IFCs debt-to-equity ratio was
2.6:1
well within the 4:1 limit prescribed by our nancial policies.
risks. Aggregating these risks determines our estimate of the minimum amount of capital that we must hold to retain IFCs triple-A rating. IFCs total resources available consist of paid-in capital, retained earnings net of designations and certain unrealized gains, and total loan-loss reserves. The excess available capital, beyond what is required to support existing business, allows for future growth of our portfolio while also providing a buffer against unexpected external shocks. As of June 2013, total resources available reached $20.5 billion, while the minimum capital requirement totaled $16.8 billion. As of June 2013, IFCs debt-to-equity ratio was 2.6:1, well within the limit of 4:1 prescribed by our nancial policies.
98 _
WORKING RESPONSIBLY
IFCS APPROACH TO SUSTAINABILITY
Businesses operate in a dynamic landscape. In a time of climate change, resource scarcities, and rising social pressures, environmental, social, and governance issues are increasingly important for businesses and for our clients. IFC believes that doing business sustainably drives positive development outcomes. Our Sustainability Framework and advice to clients help them nd opportunities for growth and innovation. It also promotes sound environmental and social practices, broadens our development impact, and encourages transparency and accountability. This framework articulates IFCs strategic commitment to sustainable development and is an integral part of our approach to risk management. It enables us to manage a diverse client base that includes both advisory and investment clients many of which are nancial intermediaries.
THE IFC PERFORMANCE STANDARDS
At the core of the framework are eight IFC Performance Standards that address a range of environmental and social issues facing the private sector. These standards are designed to help clients avoid, mitigate, and manage risk as a way of doing business sustainably. They help them devise solutions that are good for business, good for investors, and good for the environment and communities. This can include reducing costs through improved energy efficiency, increasing revenue and market share through environmentally and socially sound products and services, or forging better stakeholder relations through robust engagement. In situations where the Performance Standards cannot be applied appropriately (for example, short-term and trade nance), IFC has developed risk-screening tools to achieve the objectives of the Sustainability Framework.
The IFC Performance Standards have become globally recognized as a leading benchmark for environmental and social risk management in the private sector. They are reected in the Equator Principles, now used by 76 nancial institutions around the world. In addition, other nancial institutions also reference IFCs Performance Standards in their policies including 15 European Development Finance Institutions and 32 Export Credit Agencies from countries belonging to the Organization for Economic Co-operation and Development. IFC clients continue to indicate that our environmental and social expertise is an important factor in their decision to work with us. Our annual client survey shows that more than 90percent of the clients that received support from us on environmental and social matters found our assistance to be helpful. They said it helped them improve relationships with stakeholders, strengthen brand value and recognition, and establish sound riskmanagement practices. When a project is proposed for nancing, IFC conducts a social and environmental review as part of our overall due diligence. This review takes into account the clients assessment of the projects impact and the clients commitment and capacity to manage it. It also assesses whether the project adhered to the IFC Performance Standards. Where there are gaps, we and the client agree on an Environmental and Social Action Plan to ensure that the standards are met over time. We supervise our projects throughout the life of our investment, monitoring client commitments to environmental and social performance.
SUSTAINABILITY IN PRACTICE
IFC believes that sound economic growth, driven by private sector development, is crucial to poverty reduction. In our investment and advisory activities across the globe, we consider four dimensions of sustainability nancial, economic, environmental, and social. Being nancially sustainable enables IFC and our clients to work together to make a longterm contribution to development. Making our projects economically sustainable ensures that they can contribute meaningfully to the host economies. Ensuring environmental sustainability in our clients operations and supply chains helps protect and conserve natural resources, mitigate environmental degradation, and address the global challenge of climate change. IFC is the rst international nance institution to comprehensively incorporate the concept of ecosystem services in our environmental and social policies. These are naturally occurring services that benet people and businesses providing, among other things, food, fresh water, and medicinal plants. They underscore the economic and societal benets of maintaining a healthy environment. With climate risk included in the Sustainability Framework, IFC has scaled up the development of climate tools and programs of climate risk assessment andadaptation for clients. We support social sustainability by working to improve living and working standards, strengthen communities, consult with indigenous peoples, and promote respect for key issues relevant tobusiness and human rights. IFCs approach to gender is integrated and mainstreamed throughout the Performance Standards, reecting the expectation that these issues will be general requirements protecting all workers, and reducing risks and impacts to all communities. These
_ 99
standards recognize the importance of both addressing differentiated impacts and ensuring gender-responsive consultation processes. IFC is committed to ensuring that the benets of economic development are shared with those who are poor or vulnerable, and that development takes place in a sustainable manner. We also see sustainability as an opportunity to transform markets, drive innovation, and add value to our clients by helping them improve their business performance.
CORPORATE GOVERNANCE
IFC also helps strengthen corporate governance by developing training materials and institution-building tools and products. This includes tools that can help companies in the areas of corporate governance associations, codes and scorecards, board leadership training, dispute resolution, and the training of business reporters. Strong corporate governance depends on diversity in board leadership. We strive to increase the number of women who serve as nominee directors on the boards of our clients. Nearly 20percent of IFC nominee directors are women. We are committed to increasing that share to 30percent by 2015.
OUR FOOTPRINT COMMITMENT
Improving corporate governance among our clients and across the private sector in developing countries is a priority for IFC. We provide advice on good practices for improving board effectiveness, strengthening shareholder rights, and enhancing the governance of risk management, internal controls and corporate disclosure. We also advise regulators, stock markets, and others with an interest in improving corporate governance. We are ramping up our corporate governance programs in underserved areas of the world especially in Africa, Latin America, and South Asia. Our experience allows IFC to apply global principles to the realities of the private sector in developing countries. As a result, development banks and other investors working in emerging markets now look to IFC for leadership on corporate governance. We do this in a variety of ways including establishing the IFC Corporate Governance Methodology, a system for evaluating corporate governance risks and opportunities that is recognized as the most advanced of its kind among development nance institutions. This methodology is the basis for a common approach to corporate governance now implemented by more than 30 development nance institutions working in some of the most challenging markets.
At IFC, we aim to make sustainability an integral part of our culture and way of doing business. By continually improving our environmental and social performance, we commit to the same standards as we ask of our clients. IFC took a more global approach to our Footprint Commitment in FY13. For example, electricity use constitutes nearly 30percent of our global carbon footprint. We invested in a power management system for all networked IFC computers, laptops, and monitors. IFCs rst global electricity reduction initiative is estimated to reduce computer-associated electricity use by a third, with a payback period of just one year. We also took a global approach to reducing our solid waste footprint. We announced our rst global target to reduce paper consumption by 15percent by FY15.
Our IFC Waste Challenge campaign encouraged over a dozen country offices to implement new waste programs, and more than 830 staff from over 65 countries to make personal commitments to reduce waste via an online map, entitled IFC Pledge. IFC headquarters set the rst waste target: to reduce overall waste tonnage by 10percent and to improve its combined recycling/composting rate from 35percent to 85percent by FY15. A new waste system was implemented, and an interim audit showed we are on track to meet or exceed our FY15 target. In addition, 58,876pounds of office supplies and furniture at headquarters were donated to charitable organizations. In FY12, carbon emissions from IFCsglobal internal business operations totaled about 47,800metric tons of carbon dioxide equivalent. IFC has collected and reported data on our global carbon footprint since FY07. IFC continues to be carbon-neutral for our global corporate operations. To offset our carbon footprint, we purchased carbon credits from LifeStraw Carbon for Water a unique program that distributes water lters to low-income communities so they avoid boiling water using wood, which generates greenhouse gases. This project is reaching over 800,000 families, providing 4.5million people with safe drinking water in rural Kenya while reducing carbon emissions.
FY12 CARBON EMISSIONS INVENTORY FOR IFCS GLOBAL BUSINESS OPERATIONS

Metric Tons of Carbon Dioxide Equivalent
Business Travel HQ Ofce Electricity Country- Ofce Electricity Other TOTAL EMISSIONS
33,195.94 7,512.34 4,703.90 2,404.83 47,817.02
tCO2e tCO2e tCO2e tCO2e tCO2e
69% 16% 10% 5%
IFCs FY12 carbon emissions totaled approximately 47,800 metric tons of carbon dioxide equivalent.(tCO2e), which includes emissions from carbon dioxide, methane, and nitrous oxide.
100 _
OUR ACCESS TO INFORMATION POLICY
As a global institution with operations in many regions and sectors, IFC affects a diverse range of stakeholders. Transparency and accountability are fundamental to fullling our development mandate. IFCs Access to Information Policy, which came into effect in 2012, improves our ability to communicate our development impact and how we manage environmental and social risk. This increased transparency about our projects and investments allows for more informed dialogue and feedback. IFC now discloses information on the environmental, social, and development impact of our projects during all stages of the investment cycle. These requirements, which place a greater emphasis on results reporting, also apply to investments made through nancial intermediaries an important and growing area of IFCs portfolio. The disclosure of development results for IFCs investment projects is being phased in by region, with our Latin America and the Caribbean, East Asia and the Pacic, and Europe and Central Asia regions beginning disclosure in FY13. All other regions will begin disclosure of development results in 2014. IFCs advisory services projects, which began disclosing
development impact indicators when the AIP came into effect in 2012, will begin displaying calendar-year results following the publication of the Annual Report. Increased transparency regarding investments through nancial intermediaries includes the periodic disclosure of the list of names, locations, and sectors of high-risk sub-projects supported by IFCs investments in Private Equity Funds. IFCs project-level and Annual Report data sets are now also available on the World Bank Groups Open Finances platform. This initiative increases the accessibility of IFCs project and nancial information, and enables users to slice and visualize the data as they choose. While IFC maintains provisions to protect commercially sensitive, deliberative, and condential information, stakeholders may now pursue an independent two-stage appeals mechanism to challenge decisions not to disclose particular information. IFC believes that greater transparency can improve business performance and promote good governance. We believe that over time the changes will result in better project outcomes, increased awareness on the part of affected communities, and stronger relationships with stakeholders. For more information, visit www.ifc.org /disclosure.
2_
IFC Financials and Projects 2013
Managements Discussion and Analysis

I. OVERVIEW OF FINANCIAL RESULTS
International Finance Corporation (IFC or the Corporation) is an international organization, established in 1956, to further economic growth in its developing member countries by promoting private sector development. IFC is a member of the World Bank Group, which also comprises the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the Multilateral Investment Guarantee Agency (MIGA), and the International Centre for Settlement of Investment Disputes (ICSID). It is a legal entity separate and distinct from IBRD, IDA, MIGA, and ICSID, with its own Articles of Agreement, share capital, financial structure, management, and staff. Membership in IFC is open only to member countries of IBRD. As of June30, 2013, IFCs entire share capital was held by 184 member countries. IFC helps developing countries achieve sustainable growth by financing private sector investment, mobilizing capital in international financial markets, and providing advisory services to businesses and governments. IFCs principal investment products are loans and equity investments, with smaller debt securities and guarantee portfolios. IFC also plays an active and direct role in mobilizing additional funding from other investors and lenders through a variety of means. Such means principally comprise: loan participations, parallel loans, sales of loans, the non- IFC portion of structured finance transactions which meet core mobilization criteria, the non- IFC portion of commitments in IFCs initiatives, and the non-IFC investment portion of commitments in funds managed by IFCs wholly owned subsidiary, IFC Asset Management Company LLC (AMC), (collectively Core Mobilization). Unlike most other development institutions, IFC does not accept host government guarantees of its exposures. IFC raises virtually all of the funds for its lending activities through the issuance of debt obligations in the international capital markets, while maintaining a small borrowing window with IBRD. Equity investments are funded from net worth. For the year ended June30, 2013 (FY13), IFC had an authorized borrowing program of up to $10 billion, and up to $2billion to allow for possible prefunding during FY13 of the funding program for the year ending June 30, 2014 (FY14). For FY14, IFC has an authorized borrowing program of up to $13.5 billion, and, subject to completion of its FY14 program, up to $2.0billion to allow for possible prefunding during FY14 of the funding program for the year ending June30, 2015. IFCs capital base and its assets and liabilities, other than its equity investments, are primarily denominated in US dollars. IFC seeks to minimize foreign exchange and interest rate risks by closely matching the currency and rate bases of its assets in various currencies with liabilities having the same characteristics. IFC generally manages non-equity investment related and certain lending related residual currency and interest rate risks by utilizing currency and interest rate swaps and other derivative instruments. The Managements Discussion and Analysis contains forward looking statements which may be identified by such terms as anticipates, believes, expects, intends, plans or words of similar meaning. Such statements involve a number of assumptions and estimates that are based on current expectations, which are subject to risks and uncertainties beyond IFCs control. Consequently, actual future results could differ materially from those currently anticipated.
Basis of Preparation of IFCs Consolidated Financial Statements
The accounting and reporting policies of IFC conform to accounting principles generally accepted in the United States (US GAAP). IFCs accounting policies are discussed in more detail in Section VI, Critical Accounting Policies, and in Note A to IFCs Consolidated Financial Statements as of and for the year ended June 30, 2013 (FY13 Consolidated Financial Statements).
Financial Performance Summary
From year to year, IFCs net income is affected by a number of factors that can result in volatile financial performance. Such factors are detailed more fully in Section VII, Results of Operations. IFC reported income before net gains and losses on other non- trading financial instruments accounted for at fair value and grants to IDA of $928million in FY13, as compared to $1,877million in the year ended June30, 2012 (FY12) and $2,024million in the year ended June30, 2011 (FY11). The decrease in income before net gains and losses on other non- trading financial instruments accounted for at fair value and grants to IDA in FY13 when compared to FY12 and in FY12 when compared to FY11 was principally as a result of the following (US$ millions):
Increase (decrease) FY13 vs FY12
Realized capital gains on equity investments Provisions for losses on loans, guarantees and other receivables Foreign currency transaction gains and losses on non- trading activities Advisory services expenses, net Expense from pension and other postretirement benefit plans Unrealized gains on equity investments Income from liquid asset trading activities Other- than-temporary impairments on equity investments Other, net Overall change $ ( 1,079)
(126) (110) (91) (77) 154 187 251 (58)
$ (949)

Unrealized losses on equity investments Other- than-temporary impairments on equity investments Income from liquid asset trading activities Gains on non- monetary exchanges of equity investments Provisions for losses on loans, guarantees and other receivables Advisory services expenses, net Foreign currency transaction gains and losses on non- trading activities Realized capital gains on equity investments Other, net Overall change $ (582)
(474) (216) (214) (157) 132 178 1,263 (77) $ (147)
Net gains on other non- trading financial instruments accounted for at fair value totaled $422million in FY13 (net losses of $219million in FY12 and net gains of $155 million in FY11) resulting in income before grants to IDA of $1,350million in FY13, as compared
_3
to $1,658 million in FY12 and $2,179 million in FY11. Grants to IDA totaled $340million in FY13, as compared to $330million in FY12 and $600 million in FY11. Net loss attributable to noncontrolling interests totaled $8million in FY13 ($0 in FY12 and FY11). Accordingly, net income attributable to IFC totaled $1,018million
in FY13, as compared with $1,328million in FY12 and $1,579millionin FY11. IFCs financial performance is detailed more fully in Section VII, Results of Operations.
The table below presents selected financial data for the last five fiscal years (in millions of US dollars, except where otherwise stated):
As of and for the years ended June 30
Net income highlights: Income from loans and guarantees (Provision) release of provision for losses on loans & guarantees Income (loss) from equity investments Of which: Realized gains on equity investments Gains on non- monetary exchanges Unrealized gains (losses) on equity investments Dividends and profit participations Other- than-temporary impairments Fees and other Income from debt securities Income from liquid asset trading activities Charges on borrowings Other income Service fees Advisory services income Other Other expenses Administrative expenses Advisory services expenses Expense from pension and other postretirement benefit plans Other Foreign currency transaction gains (losses) on non- trading activities Income (loss) before net gains and losses on other non- trading financial instruments accounted for at fair value and grants to IDA Net gains (losses) on other non- trading financial instruments Of which: Realized gains Gains on non- monetary exchanges Unrealized gains (losses) Income before grants to IDA Grants to IDA Net income (loss) Less: Net loss attributable to noncontrolling interests Net income (loss) attributable to IFC 35 2 11 10 63 22 70 5 6 45 407 299 (845) (351) (173) (32) 35 (798) (290) (96) (23) 145 (700) (153) (109) (19) (33) (664) (108) (69) (12) (82) (582) (134) (34) (14) 10 101 60 269 119 88 134 70 39 114 921 6 26 2,000 3 737 217 1,290 28 990 14 $ 1,059 $ 938 (117) $ 877 40 $ 801 $ 871
2013
2012
2011
2010
2009
(243) 752
(155) 1,638
(438) (42)
1,457
1,464
(128) 274
454 280 (218) (6) 46
240 285 (203) (2)
(299) 311
248 (441) (8) 5
(692) 81 313 (181)
(1,058) 71 474
108 815
500 (220)
529 (140)
(163)
(488)
239 101
106
928 422
1,877 (219)
2,024 155
2,285 (339)
(153) 452
385 1,350 (340) 1,010 8
(240) 1,658 (330) 1,328
(350) 1,946 (200) 1,746
2,179 (600) 1,579
(450) $ (151) (151)
$ 1,018
$ 1,328
$ 1,579
$ 1,746
4_
As of and for the years ended June 30

Consolidated balance sheet highlights: Total assets Liquid assets, net of associated derivatives Investments Borrowings outstanding, including fair value adjustments Total capital Of which: Undesignated retained earnings Designated retained earnings Capital stock Accumulated other comprehensive income (AOCI) Noncontrolling interests Financial ratios:1 Return on average assets (GAAP basis)2 Return on average assets (non- GAAP basis)3 Return on average capital (GAAP basis) 4 Return on average capital (non- GAAP basis)5 Cash and liquid investments as a percentage of next three years estimated net cash requirements External funding liquidity level 6 Debt to equity ratio7 Total reserves against losses on loans to total disbursed portfolio 8 Capital measures: Capital to risk- weighted assets ratio9 Total Resources Required ($ billions)10 Total Resources Available ($ billions)11 Strategic Capital12 Deployable Strategic Capital13 Deployable Strategic Capital as a percentage of Total Resources Available
2013
2012
2011
2010
2009
$ 77,525
$ 75,761
$ 6 8,490
$ 61,075
$ 51,483
31,237 34,677 44,869 $ 22,275
29,721 31,438 44,665 $ 20,580
24,517 29,934 38,211 $ 20,279
21,001 25,944 31,106 $ 18,359
17,864 22,214 25,711 $ 16,122
$ 18,435 278
$ 17,373 322
$ 16,032 335
$ 14,307 481
$ 12,251 791
2,403 1,121 38
2,372 513
2,369 1,543
2,369 1,202
2,369 711
1.3% 0.9% 4.8% 3.1% 77% 309% 2.6:1 7.2%
1.8% 2.8% 6.5% 9.9% 77% 327% 2.7:1 6.6%
2.4% 1.8% 8.2% 6.0% 83% 266% 2.6:1 6.6%
3.1% 3.8% 10.1% 11.8% 71% 190% 2.2:1 7.4%
(0.3%) (1.1%) (0.9%) (3.0%) 75% 163% 2.1:1 7.4%
n/a 16.8 20.5 3.8 1.7 8%
n/a 15.5 19.2 3.7 1.8 9%
n/a 14.4 17.9 3.6 1.8 10%
n/a 12.8 16.8 4.0 2.3 14%
44% 10.9 14.8 3.9 2.3 16%
1. Certain financial ratios, as described below, are calculated excluding the effects of unrealized gains and losses on investments, other non- trading financial instruments, AOCI, and impacts from consolidated Variable Interest Entities (VIEs). 2. Net income for the fiscal year as a percentage of the average of total assets at the end of such fiscal year and the previous fiscal year. 3. Net income excluding unrealized gains and losses on certain investments accounted for at fair value, income from consolidated VIEs, and net gains and losses on non- trading financial instruments accounted for at fair value, as a percentage of total disbursed loan and equity investments (net of reserves) at cost, liquid assets net of repos, and other assets averaged for the current period and previous fiscal year. 4. Net income for the fiscal year as a percentage of the average of total capital (excluding payments on account of pending subscriptions) at the end of such fiscal year and the previous fiscal year. 5. Net income excluding unrealized gains and losses on certain investments accounted for at fair value, income from consolidated VIEs, and net gains and losses on non- trading financial instruments accounted for at fair value, as a percentage of paid-in share capital and retained earnings (before certain unrealized gains and losses and excluding cumulative designations not yet expensed) averaged for the current period and previous fiscal year. 6. IFCs objective is to maintain a minimum level of liquidity, consisting of proceeds from external funding to cover at least 65% of the sum of (i) 100% of committed but undisbursed straight senior loans; (ii) 30% of committed guarantees; and (iii) 30% of committed client risk management products. As of FY13 Q3, IFCs management decided to modify the External Funding Policy by eliminating the cap on the operational range of 65% to 85%. 7. Leverage (Debt/equity) ratio is defined as the number of times outstanding borrowings plus outstanding guarantees cover paid- in capital and accumulated earnings (net of retained earnings designations and certain unrealized gains/losses). 8. Total reserves against losses on loans to total disbursed loan portfolio is defined as reserve against losses on loans as a percentage of the total disbursed loan portfolio at the end of the fiscal year. 9. The ratio of capital (including paid- in capital, retained earnings, and portfolio (general) loan loss reserves) to risk- weighted assets, both on- and off- balance sheet. The ratio does not include designated retained earnings reported in total capital on IFCs consolidated balance sheet. The Board of Directors has approved the use of a risk- based economic capital framework beginning in the year ended June30, 2008 (FY08). Parallel use of the capital to risk- weighted assets ratio has now been discontinued. 10. The minimum capital required consistent with the maintenance of IFCs AAA rating. It is computed as the aggregation of risk- based economic capital requirements for each asset class across the Corporation. 11. Paid-in capital plus retained earnings net of designated retained earnings plus general and specific reserves against losses on loans. This is the level of available resources under IFCs risk- based economic capital adequacy framework. 12. Total resources available less total resources required. 13. 90% of total resources available less total resources required.
_5
II. CLIENT SERVICES

Business Overview
IFC carefully supervises its projects to monitor project performance and compliance with contractual obligations and with IFCs internal policies and procedures.
Investment Products
IFC fosters sustainable economic growth in developing countries by financing private sector investment, mobilizing capital in the international financial markets, and providing advisory services to businesses and governments. IFC has five strategic focus areas: strengthening the focus on frontier markets addressing climate change and ensuring environmental and social sustainability addressing constraints to private sector growth in infrastructure, health, education, and the food- supply chain developing local financial markets building long- term client relationships in emerging markets For all new investments, IFC articulates the expected impact on sustainable development, and, as the projects mature, IFC assesses the quality of the development benefits realized. IFCs strategic focus areas are aligned to advance the World Bank Groups global priorities. IFCs three businesses are: Investment Services, Advisory Services, and Asset Management.
Investment Services
IFCs investments are normally made in its developing member countries. The Articles of Agreement mandate that IFC shall invest in productive private enterprise. The requirement for private ownership does not disqualify enterprises that are partly owned by the public sector if such enterprises are organized under local commercial and corporate law, operate free of host government control in a market context and according to profitability criteria, and/or are in the process of being totally or partially privatized. IFC provides a range of financial products and services to its clients to promote sustainable enterprises, encourage entrepreneurship, and mobilize resources that wouldnt otherwise be available. IFCs financing products are tailored to meet the needs of each project. Investment Services product lines include: loans, equity investments, trade finance, loan participations, structured finance, client risk management services, and blended finance. IFCs investment project cycle can be divided into the following stages: Business Development Concept Review Appraisal (Due Diligence) Investment Review Negotiations Public Disclosure Board of Directors Review and Approval Commitment Disbursement of funds Project Supervision and Development Outcome Tracking Evaluation Closing
Loans IFC finances projects and companies through loans, typically for seven to twelve years. IFC also makes loans to intermediary banks, leasing companies, and other financial institutions for on- lending. IFCs loans traditionally have been denominated in the currencies of major industrial nations, but has a growing local currency product line. EquityI FCs equity investments provide developmental support and long- term growth capital for private enterprises, and opportunities to support corporate governance and enhanced social responsibility. IFC invests directly in companies equity, and also through private equity funds. IFC generally invests between 5 and 20percent of a companys equity. IFC also invests in preferred shares and uses put and call options, profit participation features, conversion features, warrants and other types of instruments in managing its equity investments. Debt Securities Investments typically in the form of bonds and notes issued in bearer or registered form, securitized debt obligations and preferred shares that are mandatorily redeemable by the issuer or puttable by IFC are classified as debt securities in IFCs consolidated balance sheet. Trade and Supply Chain FinanceI FCs Global Trade Finance Program (GTFP) guarantees trade- related payment obligations of approved financial institutions. Separately, the Global Trade Liquidity Program (GTLP) and Critical Commodities Finance Program (CCFP) provides liquidity for trade in developing countries. IFC has also commenced a number of other Trade and Supply Chain Finance- related programs, including Global Trade Supplier Finance, Global Warehouse Finance Program, Working Capital and Systemic Solutions and Global Trade Structured Trade. Loan Participations IFCs loan participation program mobilizes capital from international commercial banks, emerging market banks, funds, insurance companies, and development-finance institutions for development needs. Structured Finance IFC uses structured and securitized products to provide forms of financing that may not otherwise be available to clients to help clients diversify funding, extend maturities, and obtain financing in particular currencies. Products include partial credit guarantees, structured liquidity facilities, portfolio risk transfer, securitizations, and Islamic finance. Client Risk Management ServicesI FC provides derivative products to its clients to allow them to hedge their interest rate, currency, or commodity- price exposures. IFC intermediates between clients in developing countries and derivatives market makers to provide such clients with access to riskmanagement products. Blended Finance IFC combines concessional funds, typically from donor partners, with IFCs resources to finance certain projects.
6_
Advisory services
Asset Management Company
Advisory Services are recognized as a key part of the Corporations mandate, and have grown to become an increasingly important tool for delivering on IFCs mission. Advisory Services play a crucial role in helping government clients create an effective enabling environment for private investment, while strengthening the capacity and know-how of private sector clientsthereby extending IFCs reach into challenging markets. IFCs Advisory Services are organized into four business lines: Access to finance Works with financial intermediaries to expand access to financial services. Provides advice on small and medium enterprises (SMEs) and micro/retail finance solutions, as well as enabling financial infrastructure. Investment climate Works with governments to create an enabling environment to increase the role of private sector growth and development. Provides advice on business regulation and taxation, investment policies, as well as industry- specific investment climate reform. Public-private partnershipsWorks to help governments design and implement public- private partnerships (PPPs) in infrastructure and other basic public services. Provides advice on preparing and structuring of PPP mandates. Sustainable businessW orks with companies and their supply chains to promote adoption of, and catalyze investment in, sound environmental, social and governance practices and technologies that create a competitive edge. Around half of IFCs advisory projects work with government clients to help unlock investment opportunities for IFC and othersa s is the case when IFC assists governments to improve the investment climate or to design and implement PPPs, complementing the work of IBRD and the International Monetary Fund. The other half of advisory projects involves work with private sector clients to build capacity or demonstrate the business case for desirable business practices. Investment Services and Advisory Services may be offered either in tandem or sequentially. Examples include microfinance, SME banking, energy efficiency financing, corporate governance, or supply chain development in the agricultural sector. Advisory Services make a substantial contribution to IFCs shared corporate priorities. Advisory Services are often IFCs first offering in new or challenging markets. Advisory Services have continuously strengthened their alignment and deepened their synergies with investment operations, particularly with regards to Fragile & Conflict Situations, Climate Change, SMEs, Agribusiness and Infrastructure, with gender as a cross- cutting priority.
AMC, a wholly-owned subsidiary of IFC, invests third-party capital and IFC capital, enabling outside investors to benefit from IFCs expertise in achieving strong equity returns, as well as positive development impact in the countries in which it invests in developing and frontier markets. Investors in funds managed by AMC include sovereign wealth funds, national pension funds, multilateral and bilateral development institutions, national development agencies and international financial institutions. AMC helps IFC mobilize additional capital resources for investment in productive private enterprise in developing countries. At June30, 2013, AMC managed seven funds, with $5.5billion under management: the IFC Capitalization (Equity) Fund, L.P. (Equity Capitalization Fund); the IFC Capitalization (Subordinated Debt) Fund, L.P. (Sub- Debt Capitalization Fund); the IFC African, Latin American and Caribbean Fund, LP (ALAC Fund); the Africa Capitalization Fund, Ltd. (Africa Capitalization Fund); the IFC Russian Bank Capitalization Fund, LP (Russian Bank Cap Fund); the IFC Catalyst Fund, LP and the IFC Catalyst Fund (UK), LP (collectively, Catalyst funds); and the IFC Global Infrastructure Fund, LP (Global Infrastructure Fund). The Equity Capitalization Fund and the Sub-Debt Capitalization Fund are collectively referred to as the Global Capitalization Fund. The Global Capitalization Fund, established in the year ended June 30, 2009 (FY09), helps strengthen systemically important banks in emerging markets. The ALAC Fund was established in FY10. The ALAC Fund invests in equity investments across a range of sectors in Sub- Saharan Africa, Latin America, and the Caribbean. The Africa Capitalization Fund was established in FY10 to capitalize systemically important commercial banking institutions in northern and Sub- Saharan Africa. The Russian Bank Cap Fund was established in FY12 to invest in mid- sized, commercial banks in Russia that are either: (i) privately owned and controlled; or (ii) state-owned; or (iii) controlled and on a clear path to privatization. The Catalyst Funds were established in FY13 to make investments in selected climate- and resource efficiency- focused private equity funds in emerging markets. The Global Infrastructure Fund was established in FY13 to focus on making equity and equity-related investments in the infrastructure sector in global emerging markets.
_7
Investment Program
Commitments
Disbursements
In FY13, total commitments were $24,853million, compared with $20,358 million in FY12, an increase of 22%, of which IFC commitments totaled $18,349million ($15,462millionF Y12) and Core Mobilization totaled $6,504million ($4,896millionF Y12). FY13 and FY12 commitments and Core Mobilization comprised the following (US$ millions):
FY13
Total commitments1 IFC commitments Loans Equity investments Guarantees: Global Trade Finance Program Other Client risk management Total IFC commitments Core Mobilization Loan participations, parallel loans, and other mobilization Loan participations Parallel loans Other mobilization Total loan participations, parallel loans and other mobilization AMC Equity Capitalization Fund Sub- debt Capitalization Fund ALAC Fund Africa Capitalization Fund Russian Bank Cap Fund Total AMC Other initiatives Global Trade Liquidity Program and Critical Commodities Finance Program Public Private Partnership (PPP) Infrastructure Crisis Facility Debt & Asset Recovery Program Total other initiatives Total Core Mobilization Core Mobilization Ratio $ 1,096 942 110 10 $ $ 850 41 63 954 $ $ 214 209 210 92 43 768 $ $ 24 215 190 8 437 $ 1,829 1,269 480 $ 1,764 927 814 6,477 482 138 6,004 398 110 $ 8,520 2,732 $ 6,668 2,282 $ 24,853
IFC disbursed $10,012 million for its own account in FY13 ($7,981million in FY12): $6,940million of loans ($5,651million in FY12), $2,549million of equity investments ($1,810million in FY12), including $42million attributable to noncontrolling interest ($0 in FY12), and $523million of debt securities ($520million in FY12).
Disbursed investment portfolio
FY12
$ 20,358
$ 18,349
$ 15,462
IFCs total disbursed investment portfolio (a non- US GAAP performance measure) was $33,885 million at June 30, 2013 ($30,700million at June30, 2012), comprising the disbursed loan portfolio of $22,606 million ($21,043 million at June 30, 2012), the disbursed equity portfolio of $9,209 million ($7,547 million at June 30, 2012), and the disbursed debt security portfolio of $2,070million ($2,110million at June30, 2012). IFCs disbursed investment portfolio is diversified by industry sector and geographic region with a focus on strategic high development impact sectors such as financial markets and infrastructure. The carrying value of IFCs investment portfolio comprises: (i)the disbursed investment portfolio; (ii) reserves against losses on loans; (iii) unamortized deferred loan origination fees, net and other; (iv) disbursed amount allocated to a related financial instrument reported separately in other assets or derivative assets; (v)unrealized gains and losses on equity investments held by consolidated variable interest entities; (vi) unrealized gains and losses on investments accounted for at fair value as available-for-sale; and (vii) unrealized gains and losses on investments.
$ 3,578
$ 3,505
$ 2,158 $ 6,504 0.35
$ 4,896 0.32
1. Debt security commitments are included in loans and equity investments based on their predominant characteristics.
8_
The following charts show the distribution of the disbursed investment portfolio by geographical region and industry sector as of June30, 2013, and June30, 2012:
Distribution by Region
FY13 FY12
Electric Power Asia Europe and Central Asia Collective Investment Vehicles
Distribution by Industry Sector

Finance and Insurance
Asia
Oil, Gas, and Mining
Transportation and Warehousing Latin America and Caribbean Latin America and Caribbean
Agriculture and Forestry
Middle East and North Africa Sub-Saharan Africa Other
Middle East and North Africa Sub-Saharan Africa Other
Chemicals
Information
Nonmetallic Mineral Product Manufacturing
Industrial and Consumer Products
Food and Beverages
Health Care
Utilities
Construction and Real Estate
Wholesale and Retail Trade
Primary Metals
Accommodation and Tourism Services
Education Services
Pulp and Paper
Textiles, Apparel and Leather
Other
Percentage
FY12 FY13
10
15
20
25
30
35
40
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Disbursed Loan Participations
The portfolio of disbursed and outstanding loan participations, which are serviced by IFC at June30, 2013, totaled $6,621million, as compared with $6,463million at June30, 2012. Additional information on IFCs investment portfolio as of and for the years ended June30, 2013, and June30, 2012, can be found in Notes B, D, E, F, G, H and I to IFCs FY13 Consolidated Financial Statements.
Loans
The currency position of the disbursed loan portfolio at June30, 2013 and June30, 2012 is shown below:
Currencies
US dollars
Euro
Chinese renminbi
Loans generally have the following characteristics: Termt ypically amortizing with final maturities generally for seven to twelve years, although some loans have been made for tenors as long as 20 years Currency primarily in major convertible currencies, principally US dollar, and to a lesser extent, Euro, but with a growing local currency loan portfolio Interest rate t ypically variable (or fixed and swapped into variable) Pricing reflects such factors as market conditions and country and project risks IFCs loans traditionally have been made in major currencies, based on client demand and on IFCs ability to economically hedge loans in these currencies through the use of mechanisms such as cross- currency swaps or forward contracts. Fixed- rate loans and loans in currencies other than US dollars are normally economically hedged using currency and/or interest rate swaps, into US dollar variable rate assets. Loans traditionally have been denominated in the currencies of major industrial nations, but IFC has a growing portfolio of local currency products. IFC typically offers local currency products in other currencies where it can economically hedge the local currency loan cash flows back into US dollars using swap markets or where it can fund itself in local bond markets. IFCs disbursed loan portfolio at June30, 2013 includes $2,633million of currency products denominated in Indian rupee, Mexican peso, Chinese renminbi, Philippine pesos, Russian ruble, South African rand, Brazilian reais, Indonesian rupiah, Colombian pesos, Turkish lira and Vietnamese dong ($2,314million at June30, 2012). IFC has also made loans in a number of frontier market currencies such as Tunisian dinar, Paraguayan guarani, Rwandan franc, and Zambian kwacha. IFCs disbursed loan portfolio totaled $22,606million at June30, 2013 ($21,043million at June30, 2012). The carrying amount of IFCs loan portfolio on IFCs consolidated balance sheet (comprising the disbursed loan portfolio together with adjustments as detailed in Note D to IFCs FY13 Consolidated Financial Statements) grew 7% to $20,831million at June30, 2013 ($19,496million at June30, 2012). Loans comprise 67% of the disbursed investment portfolio as of June 30, 2013 (68% at June 30, 2012) and 60% of the carrying amount of the investment portfolio as of June 30, 2013 (62% at June30, 2012). At June30, 2013, 74% (74% at June30, 2012) of IFCs disbursed loan portfolio was US dollar- denominated.
Indian rupees
Mexican pesos
Philippine pesos
Brazilian reais
South African rand
Russian rubles
Indonesian rupiah
Colombian pesos
Turkish lira
Other
0
FY12 FY13
2,000
4,000
6,000
8,000 10,000 12,000 14,000 16,000
Equity investments
IFCs equity investments are typically in the form of common or preferred stock which is not mandatorily redeemable by the issuer or puttable to the issuer by IFC and are usually denominated in the currency of the country in which the investment is made. IFCs disbursed equity portfolio totaled $9,209 million at June30, 2013 ($7,547million at June30, 2012), an increase of 22%. The carrying amount of IFCs equity investment portfolio (comprising the disbursed equity portfolio, together with adjustments as detailed in Note D to IFCs FY13 Consolidated Financial Statements), grew 20% to $11,695 million at June 30, 2013 ($9,774 million at June30, 2012). The fair value of IFCs equity portfolio2 was $14,654million at June30, 2013 ($12,985million at June30, 2012). Equity investments accounted for 27% of IFCs disbursed investment portfolio at June 30, 2013, compared with 25% at June 30, 2012 and 34% of the carrying amount of the investment portfolio at June30, 2013 (31% at June30, 2012).
Debt Securities
Debt securities are typically in the form of bonds and notes issued in bearer or registered form, securitized debt obligations (e.g. asset- backed securities (ABS), mortgage- backed securities (MBS), and other collateralized debt obligations) and preferred shares that are mandatorily redeemable by the issuer or puttable to the issuer by IFC.
2. Including equity- like securities classified as debt securities in IFCs consolidated balance sheet and equity- related options.
10 _
IFCs disbursed debt securities portfolio totaled $2,070million at June30, 2013 ($2,110million at June30, 2012). The carrying amount of IFCs debt securities portfolio (comprising the disbursed debt securities portfolio, together with adjustments as detailed in Note D to IFCs FY13 Consolidated Financial Statements), was $2,151 million at June 30, 2013 ($2,168million at June30, 2012). Debt securities accounted for 6% of IFCs disbursed investment portfolio at June30, 2013 (7% at June30, 2012) and 6% of the carrying amount of the investment portfolio at June30, 2013 (7% at June30, 2012).
Guarantees
GLOBAL TRADE FINANCE PROGRAM
raising resources. IFC finances only a portion, usually not morethan 25%, of the cost of any project. All IFC-financed projects, therefore, require other financial partners. IFC mobilizes such private sector finance from other entities through loan participations, parallel loans, partial credit guarantees, securitizations, loan sales, and risk sharing facilities. In FY09, IFC launched AMC and a number of other initiatives, each with a formally approved Core Mobilization component, and revised its mobilization resources definition accordingly to include these in the measure. In FY12, IFC expanded the Core Mobilization definition to account for third party financing made available for PPP projects due to IFCs mandated lead advisor role to national, local government or other government entity. The components of Core Mobilization are as follows:
LOAN PARTICIPATIONS
FY13 commitments include $6,477million ($6,004millionF Y12) relating to GTFP.

GUARANTEES AND PARTIAL CREDIT GUARANTEES
IFC offers partial credit guarantees to clients covering, on a risk- sharing basis, client obligations on bonds and/or loans. IFCs guarantee is available for debt instruments and trade obligations of clients and covers commercial as well as noncommercial risks. IFC will provide local currency guarantees, but when a guarantee is called, the client will generally be obligated to reimburse IFC in US dollar terms. Guarantee fees are consistent with IFCs loan pricing policies. FY13 commitments include $482million of guarantees ($398millionF Y12).
Client Risk Management Products
The principal direct means by which IFC mobilizes private sector finance is through the sale of participations in its loans. Through the loan participation program, IFC has worked primarily with commercial banks but also with nonbank financial institutions in financing projects since the early 1960s. Whenever it participates a loan, IFC will always make a loan for its own account, thereby sharing the risk alongside its loan participants. IFC acts as the lender of record and is responsible for the administration of the entire loan, including the loan participation. IFC charges fees to the borrower at prevailing market rates to cover the cost of the loan participation. Loan participation commitments were $1,829 million in FY13 ($1,764million in FY12).
PARALLEL LOANS
IFC provides derivative products to its clients to allow them to hedge their interest rate, currency or commodity price exposures. IFC intermediates between its developing country clients and derivatives market makers in order to provide IFCs clients with full market access to risk management products. FY13 commitments included $138million of such products ($110millionF Y12).
Core Mobilization
Loans from other financial institutions that IFC helped arrange for clients and received a fee, but for which IFC is not the lender of record, in FY13 were $1,269million ($927million in FY12).
other mobilization
Other case- by-case mobilization decisions totaled $480million in FY13 ($814million in FY12).
Core Mobilization is financing from entities other than IFC that becomes available to clients due to IFCs direct involvement in
_ 11
AMC
The activities of the funds managed by AMC at June30, 2013 and June30, 2012 can be summarized as follows (US$ millions unless otherwise indicated):
Equity Sub-Debt Capitalization Capitalization Fund Fund Assets under management as of June30, 2013 From IFC From other investors For the year ended June30, 2013 Fund Commitments to Investees: From IFC From other investors Disbursements from investors to Fund: From IFC From other investors Disbursements made by Fund Disbursements made by Fund (number) 336 217 546 7 33 63 94 91 4 38 46 78 2 1 2 1 3 472 837 1,261 30 332 214 31 52 210 92 35 43 450 768 Africa Capitalization ALAC Fund Fund Russian Bank Cap Fund Global Catalyst Infrastructure Funds Fund
Total
$ 1,275
$ 1,725
$ 1 ,000
$ 182
$ 550
$ 282
$ 500
$ 5,514
775 500
225 1,500
200 800
182
250 300
75 207
100 400
1,625 3,889
209
223 249 5
252 297 12
Equity Sub-Debt Capitalization Capitalization Fund Fund Assets under management as of June30, 2012 From IFC From other investors For the year ended June30, 2012 Fund Commitments to Investees: From IFC From other investors Disbursements from investors to Fund: From IFC From other investors Disbursements made by Fund Disbursements made by Fund (number) 62 40 97 6 28 186 36 24 32 215
Africa Capitalization ALAC Fund Fund
Russian Bank Cap Fund
Global Catalyst Infrastructure Funds Fund
Total
$ 1,275
$ 1,725
$ 1 ,000
$ 182
$ 275
$ 4 ,457
775 500
225 1,500
200 800
182
125 150
1,325 3,132
48
116
190
437
52
14 11 3
142
208 174 8
448 490 19
208 2
OTHER INITIATIVES
Core Mobilization Ratio
GTLP and CCFP IFCs FY13 Core Mobilization included $1,096million ($850millionF Y12) relating to GTLP and CCFP. Infrastructure Crisis Facility The infrastructure crisis facility is a facility that includes debt and equity components and provides short- to medium- term financing for infrastructure projects. It also includes advisory services to help governments design or redesign public- private-partnership projects. FY13 Core Mobilization includes $110million relating to the Infrastructure Crisis Facility ($63million F Y12). PPP Mobilization FY13 resources mobilized includes $942 million relating to PPP Mobilization, which is the non- IFC, non- government portion of financing made available for PPP projects due to IFCs mandated lead advisor role to national/local government or other government entity ($41millionF Y12).
The Core Mobilization ratio is defined as: Loan participations + parallel loans + sales of loans and other mobilization + non- IFC investment part of structured finance which meets core mobilization criteria + non- IFC commitments in Initiatives + non- IFC investments committed in funds managed by AMC + PPP Mobilization Commitments (IFC investments + IFC portion of structured finance + IFC commitments in new Initiatives + IFC investments committed in funds managed by AMC) For each dollar that IFC committed, IFC mobilized (in the form of loan participations, parallel loans, other mobilization, the non- IFC portion of structured finance and the non- IFC commitments in Initiatives, and the non- IFC investments committed in funds managed by AMC) $0.35 in FY13 ($0.32 in FY12).
12 _
ADVISORY SERVICES
The IFC Advisory Services Portfolio as of June 30, 2013 totaled $1,037million, as compared to $894million as of June30, 2012. The Advisory Services program with clients grew to $232million in FY13, up from $197million in FY12, with continued focus on strategic priority areas, including IDA, fragile situations and climate change. In FY13 the Advisory Services program grew in each of these areas. The largest regional advisory program in FY13 was in Sub Saharan Africa ($65million), comprising, 28% of the total Advisory Services program, followed by East Asia and the Pacific ($39million; 17%), Europe and Central Asia ($36million; 16%), South Asia ($34million; 14%) and others regions ($58million; 25%). Program
focus by business line shows that the largest program was in Investment Climate ($75 million; 32%), followed by Access to Finance ($63million; 27%), Sustainable Business ($55million; 24%) and Public Private Partnerships ($39million; 17%). In FY13, the Advisory Services program in IDA countries grew by 17% to $142million, or 65% of the total Advisory Services program. The program in Fragile and Conflict Situations grew by 18% to $39million (18% of the total Advisory Services program). Engagements in climate change increased almost 80% to $53million (24% of the total Advisory Services program). Program results continue to show a positive trend. Development effectiveness ratings of the projects reached a record 76% success rate in FY13, up from 72% in FY12. Likewise, client satisfaction reached a record of 90%, up from 88% in FY12.
III. LIQUID ASSETS

IFC invests its liquid assets portfolio in highly rated fixed and floating rate instruments issued by, or unconditionally guaranteed by, governments, government agencies and instrumentalities, multilateral organizations, and high quality corporate issuers; these include ABS and MBS, time deposits, and other unconditional obligations of banks and financial institutions. Diversification in multiple dimensions ensures a favorable risk return profile. IFC manages the market risk associated with these investments through a variety of hedging techniques including derivatives, principally currency and interest rate swaps and financial futures. IFCs liquid assets are invested in seven separate portfolios, internally named P0 through P4, P6 and P7. All seven portfolios are accounted for as trading portfolios. IFCs liquid assets portfolio is summarized as follows:
Portfolio
P0
Fair Value ($ Billions)*

$1.7 ($0.5) $22.5 ($21.9)
Comprising
Proceeds from discount note program and cash inflows from investment operations Proceeds from market borrowings invested pending disbursement of operational loans
Managed by
IFCs Treasury Department IFCs Treasury Department
Invested In
Money market instruments
Benchmark
Overnight US dollar London Interbank Bid Rate (LIBID) Custom- created index of a series of six, equally weighted 6-month LIBID deposits that mature on the 15th of each month average life of 3 months** Lehman Brothers US 13year maturity Treasury Index*** Same as for P1
P1
Principally global government bonds, ABS, bank deposits, and high quality corporate bonds generally swapped into 3-month US dollar LIBOR
P2
$4.4 ($5.6)
Primarily IFCs paid- in capital and accumulated earnings that have not been invested in equity and quasi- equity investments An outsourced portion of the P1portfolio An outsourced portion of the P2portfolio The proceeds of liquidity raised in local currency prior to disbursement
IFCs Treasury Department
US Treasuries, ABS, and other sovereign and agency issues
P3
$0.9 ($0.9) $0.8 ($0.8) $0.9 ($0.7)
External managers appointed by IFC External managers appointed by IFC IFCs Treasury Department
Global government bonds and other high quality corporate bonds as well as mortgage- backed securities Global government bonds, and other high quality corporate bonds as well as mortgage- backed securities Short- term money market instruments denominated in South African rand, Turkish lira, Polish zloty, Russian rubles, Mexican pesos and Brazilian reais
P4
Same as for P2
P6
Local interbank rate indices
Total
$31.2 ($30.4)
* at June30, 2013 (June30, 2012) ** The net duration of the P1 and P3 benchmarks is approximately 0.25 years. *** The net duration of the P2 and P4 benchmark is 1.9 years.
The P7 portfolio was created in FY10, and, prior to FY13, contained the after- swap proceeds from variable- rate borrowings denominated and invested in Euros. In FY13, IFC invested part of the proceeds of a Nigeria naira borrowing in the P7 portfolio. The P7 portfolio was $31million at June30, 2013. IFC has a flexible approach to managing the liquid assets portfolios by making investments on an aggregate portfolio basis against its benchmark within specified risk parameters. In implementing
these portfolio management strategies, IFC utilizes derivative instruments, including futures and options, and takes positions in various industry sectors and countries. All liquid assets are managed according to an investment authority approved by the Board of Directors and liquid asset investment guidelines approved by IFCs Corporate Risk Committee, a subcommittee of IFCs Management Team.
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IV. FUNDING RESOURCES

IFCs funding resources (comprising borrowings, capital and retained earnings) as of June 30, 2013 and June 30, 2012 are as follows:
FY13
FY12
Borrowings from market sources
Borrowings from market sources
Retained earnings Paid-in capital Discount Note Program Borrowings from IBRD
Retained earnings Paid-in capital Discount Note Program Borrowings from IBRD
IFCs mandate to help develop domestic capital markets can result in raising local currency funds. As of June30, 2013, $0.5billion of such non- US$-denominated market borrowings were outstanding, denominated in C.F.A. francs, Chinese renminbi, Dominican pesos, Nigerian naira, and Russian rubles. Proceeds of such borrowings were invested in such local currencies, onlent to clients and/or partially swapped into US dollars. The weighted average cost of market borrowings after currency and interest rate swap transactions was 0.4% at June30, 2013 (0.7% at June30, 2012). Prior to FY13, IFC had a short term US$ discount note program to provide an additional funding and liquidity management tool for IFC in support of certain of IFCs trade finance and supply chain initiatives. Beginning in FY13, IFC launched a short term CNY discount note program to complement the US$ program and to expand the availability of short- term local currency finance for private enterprises in CNY. The discount note program provides for issuances with maturities ranging from overnight to one year. AtJune30, 2013, $1.1billion ($1.4billionJ une 30 2012).and $0.2billion ($0 June30, 2012) were outstanding under the US$ and CNY short- term discount note programs, respectively.
CAPITAL AND RETAINED EARNINGS
BORROWINGS
The major source of IFCs borrowings is the international capital markets. Under the Articles of Agreement, IFC may borrow in the public markets of a member country only with approvals from that member, together with the member in whose currency the borrowing is denominated. IFC borrowed (after the effect of borrowing- related derivatives) $12.8billion during FY13 ($11.9billion in FY12 and $10.3 billion in FY11). In addition, the Board of Directors has authorized the repurchase and/or redemption of debt obligations issued by IFC, which enhances the liquidity of IFCs borrowings. During FY13, IFC repurchased and retired $0.4billion of outstanding debt ($0.6billion in FY12 and $0.3billion in FY11), generating gains on buybacks of $11million in FY13 ($19million FY12 and $10million F Y11). IFC diversifies its borrowings by currency, country, source, and maturity to provide flexibility and cost- effectiveness. IFC also has a developmental role in helping open up new domestic markets to foreign issuers in its member countries. In FY13 IFC borrowed in fourteen currencies and in final maturities ranging from one to 30years. Outstanding market borrowings have remaining maturities ranging from less than one year to approximately 30 years, with a weighted average remaining contractual maturity of 4.1years at June30, 2013 (5.5 years at June30, 2012). Actual maturities may differ from contractual maturities due to the existence of call features in certain of IFCs borrowings. Market borrowings are generally swapped into floating- rate obligations denominated in US dollars. As of June 30, 2013, IFC had gross payables from borrowing- related currency swaps of $18.7billion ($18.3billion at June30, 2012) and from borrowing- related interest rate swaps in the notional principal payable amount of $37.8billion ($35.2billion at June30, 2012). After the effect of these derivative instruments is taken into consideration, 99% of IFCs market borrowings at June 30, 2013 were variable rate US dollar-denominated (99%June30, 2012).
As of June 30, 2013, IFCs authorized capital was $2.58 billion ($2.58 billion June 30, 2012), of which $2.40 billion was subscribed and paid in at June30, 2013 ($2.37billion at June30, 2012). As of June30, 2013, IFCs total capital as reported in IFCs consolidated balance sheet amounted to $22.28 billion, up from the June30, 2012 level of $20.58billion. At June30, 2013, total capital comprised $2.40billion of paid- in capital, up from $2.37billion at June30, 2012, $18.71billion of retained earnings ($17.70billion at June30, 2012), and $1.12billion of accumulated other comprehensive income ($0.51billion at June30, 2012). Noncontrolling interests totaled $0.05 billion at June 30, 2013 ($0June30, 2012).
Selective Capital Increase (SCI)
On July 20, 2010, the Board of Directors recommended that the Board of Governors approve an increase in the authorized share capital of IFC of $130 million, to $2,580 million, and through the issuance of $200 million of shares (including $70 million of unallocated shares). The Board of Directors also recommended that the Board of Governors approve an increase in Basic Votes aimed at enhancing the voice and participation of developing and transition countries (DTCs) and requiring an amendment to IFCs Articles of Agreement. The resolution recommended by the Board of Directors was adopted by the Board of Governors on March9, 2012. The amendment to the Articles of Agreement and the increase in the authorized share capital have become effective on June27, 2012. As of the same date, eligible members have been authorized to subscribe to their allocated IFC shares. The subscription period will end on June27, 2014 and payment of subscribed shares must occur no later than June27, 2015. During the year ended FY13, IFC received $31million of capital subscriptions related to the SCI.
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Designations of Retained Earnings
Beginning in the year ended June30, 2004, IFC began a process of designating retained earnings to increase its support of advisory services and, subsequently, for performancebased grants (PBG) (year ended June 30, 2005), grants to IDA (year ended June 30, 2006 (FY06)), the Global Infrastructure Project Development Fund (FY08), and IFC SME Ventures for IDA Countries (FY08). The levels and purposes of retained earnings designations are set based on the Board of Directors- approved principles, which are applied each year to assess IFCs financial capacity and to determine the maximum levels of retained earnings designations. Amounts available to be designated are determined based on a Board of Directors-approved income-based formula and, beginning in FY08, on a principles- based Board of Directors- approved financial distribution policy, and are approved by the Board of Directors. IFC recognizes designations of retained earnings for advisory services when the Board of Directors approves it and recognizes designation of retained earnings for grants to IDA when it is noted with approval by the Board of Governors. Expenditures for the various approved designations are recorded as expenses in IFCs consolidated income statement in the year in which they occur, and have the effect of reducing retained earnings designated for this specific purpose.
FY12 Designations
designation of $251million of IFCs retained earnings for grants to IDA. This designation is expected to be noted with approval by the Board of Governors, and thereby concluded, in FY14.
Deployable Strategic Capital
IFCs deployable strategic capital decreased from 9.3% at June30, 2012 to 8.4% at June30, 2013. This decrease represents the effects of increases in investment commitments and disbursements partially offset by realized gains in FY13 and the reduction in the net unfunded status of the pension plans as of June30, 2013 when compared to June30, 2012.
V. ENTERPRISE RISK MANAGEMENT

In executing its sustainable private sector development business, IFC assumes various risks of various types. Active management of these risks is critical to IFCs ability to maintain financial sustainability and achieve development impact. IFC has developed a comprehensive enterprise risk management framework within which risks are continually identified, measured, monitored, analyzed and controlled. This framework is defined in terms of several interrelated dimensions: IFCs guiding principles provide the foundation for active management of risk in IFCs business, in its entirety, under the supervision of the Board of Directors, the Audit Committee, the Executive Vice President/CEO and the Management Team. Risk appetite is defined and implemented in the form of exposure limits, policies and procedures. The Risk Management and Portfolio Vice Presidency, together with independent institutional oversight bodies, monitors compliance with prescribed limits, policies and procedures. Risk governance is provided by a subcommittee of the Management Team, the Corporate Risk Committee, which reviews and approves all risk policies, sets risk standards and receives regular reports on different aspects of risk management at the enterprise level. As a member of the World Bank Group, IFC liaises with the corresponding Risk Management areas across the group on a regular basis.
KEY RISK MANAGEMENT PRINCIPLES
On August9, 2012, the Board of Directors approved the designation of $340million of IFCs retained earnings for grants to IDA and a designation of $80million of IFCs retained earnings for advisory services. On October12, 2012, the Board of Governors noted with approval these designations. On January15, 2013, IFC recognized expenditures against grants to IDA of $340 million on signing of a grant agreement between IDA and IFC concerning the transfer to IDA and use of funds corresponding to the aforementioned paragraph. IFC recognized expenditures for advisory services and expenditures against other designated retained earnings totaling $124 million, compared to $82million in FY12. At June30, 2013, retained earnings comprised $18,435million of undesignated retained earnings ($17,373million at June30, 2012; and $16,032million at June30, 2011), $199million of retained earnings designated for advisory services ($219million at June30, 2012; and $217million at June30, 2011), $31million of retained earnings designated for PBG ($41million at June30, 2012; and $54million at June30, 2011), $20million of retained earnings designated for the Global Infrastructure Project Development Fund ($30 million at June30, 2012; and $30million at June30, 2011), and $28million of retained earnings designated for IFC SME Ventures for IDA countries ($32million at June30, 2012; and $34million at June30, 2011).
FY13 Designations
Income available for designations in FY13 (a non- GAAP measure)3 totaled $1,060 million. Based on the Board- approved distribution policy, the maximum amount available for designation was $251million. On August7, 2013, the Board of Directors approved a
The key principles which guide IFCs integrated risk management framework are: The effective balancing of development impact, risk and reward; Ensuring business decisions are based on an understanding of risks; Being extremely selective in undertaking activities which may result in adverse reputational impact; and Shared responsibility for risk management across the Corporation.
RISK PROFILE
3. Income available for designations generally comprises net income excluding unrealized gains and losses on investments and unrealized gains and losses on other non- trading financial instruments, income from consolidated VIEs, and expenses reported in net income related to prior year designations.
At the highest level, IFCs risk management objectives are to maintain financial soundness and preserve its reputation. Financial soundness is impacted by, among other things, the level of deployable strategic capital, IFCs cost of funding and the liquidity of the liquid asset portfolios. Key to maintaining IFCs reputation is the
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Corporations ability to continually adapt to an evolving external business environment, the integrity and corporate governance of its business partners and clients, and the environmental and social effects of the projects with which IFC is associated. IFCs capacity to take risks is constrained primarily by its capital base.
RISK APPETITE
public affairs and brand marketing and collaborates across the Corporation to help develop and implement effective communications strategies.
FY13 Enterprise Risk Highlights
IFCs risk appetite defines the types of risk which IFC is willing to assume in the pursuit of its business objectives. Risk tolerance defines the amount of each risk type that IFC considers acceptable in the context of its business activities. IFC translates risk appetite and tolerance into limits, policies, procedures and directives. The Corporation regularly measures, monitors and evaluates its risk profile to ensure that both individual and aggregated risks remain within the ranges deemed acceptable by Senior Management.
RISK GOVERNANCE
The Board of Directors and Board Committees oversee the overall risk tolerance for the Corporation and provide the highest level of oversight. Centralized risk management is provided by IFCs Management Committees and Senior Management. IFCs Management Team, under the direction of the Executive Vice President and CEO, is responsible for the Corporations day- today operations, including oversight and management of existing and potential risks. The Risk Management and Portfolio Vice Presidency is responsible for managing IFCs financial and operational risks. Project- specific environmental, social and corporate governance issues which arise out of IFCs activities are overseen by the Business Advisory Services Vice Presidency; legal issues are overseen by the General Counsel Vice Presidency. There is common and shared accountability for strategic and stakeholder risk management at the IFC Management Team level. The Independent Evaluation Group assesses the alignment between projected and realized outcomes while the Compliance Advisor/Ombudsman, ensures that IFC remains accessible to its stakeholders. In addition, the World Bank Groups Internal Audit Vice Presidency monitors internal controls and governance while the Integrity Vice Presidency monitors integrity in operations and investigates allegations of fraud and corruption.
MANAGING FINANCIAL AND REPUTATIONAL IMPACT
Highlights from significant changes made in FY13 are as follows: Updated the existing framework to include a more comprehensive approach to measuring economic capital for IFCs Treasury activities. Created a working group, tasked with improving and formalizing the process and methodology for Corporation-wide stress testing. Extended Risk and Control Self-Assessment to all departments to support active management of operational risk. Designed enhancements to IFCs Integrity Due Diligence process to increase consistency, better manage accountability and augment decision- making efficiency. Created a new Regional Chief Risk Officer role to serve IFCs decentralized business model and provide senior risk oversight for the Sub- Saharan Africa region. Benchmarked IFC against industry best practice in workouts and operational risk management.
STRATEGIC RISK
The consequences of failing to manage risks optimally are financial loss and/or adverse impact to IFCs reputation. Reputational impact is of significant concern to IFC as negative perceptions of stakeholders and/or the general public may adversely impact IFCs ability to carry out its business effectively. Risks are mitigated in practice by a variety of measures including close monitoring by risk management units and oversight by IFCs Senior Management. In FY13, communication activities related to reputational impact were managed by the Corporate Relations Department, which provides advice on strategic and crisis communications in order to manage potential and actual reputational impacts both at the corporate and project levels throughout the investment cycle. This team is also responsible for external and internal communications,
IFC defines strategic risk as the potential reputation, financial, and other consequences of a failure to achieve its strategic objectives, and in particular, the risk of not achieving IFCs purpose of furthering economic development by encouraging the growth of productive private enterprise in member countries and its vision that people should have the opportunity to escape poverty and improve their lives. The key guiding principles and policies established as part of the framework for managing IFCs strategic risks consist of: An ex- a nte assessment of strategic fit of each project; Guiding principles for IFCs operations (catalytic role, business partnership and additionality); Environment and social policies; and IFCs sanctions procedures. The overall management of strategic risk is effected through the design, confirmation and implementation of an annual strategy for IFC. The strategy is developed by Senior Management and approved by the Board of Directors. IFC monitors the implementation of its strategy through many processes, including: (i)corporate and department scorecards; (ii) cascaded objectives; (iii) and an integrated quarterly management report. In addition, the Independent Evaluation Group conducts ex- post evaluations of the implementation of IFCs strategy on an ongoing basis. Given the nature and scope of products and services that IFC provides its clients in furtherance of its development mandate, operational or business conflicts of interest can arise in the normal course of its activities. IFC recognizes that adverse reputational, client-relationship and other implications can arise if such conflicts are not carefully managed. In order to properly manage operational or business conflicts, IFC has implemented processes directed at (i)the identification of such conflicts as and when they arise; and (ii) the application of mitigation measures specifically tailored to the circumstances pertaining to the identified conflicts.
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IFCs Sustainability Framework articulates the Corporations strategic commitment to sustainable development and is an integral component of IFCs approach to risk management. The Sustainability Framework comprises IFCs Policy and Performance Standards on Environmental and Social Sustainability and IFCs Access to Information Policy: The Policy on Environmental and Social Sustainability describes IFCs commitments, roles and responsibilities in relation to environmental and social sustainability. The Performance Standards are intended to help guide clients on sustainable business practices a part of which involves continually identifying and managing risks through stakeholder engagements and client disclosure obligations in relation to project-level activities. IFCs Access to Information Policy reflects the Corporations commitment to transparency and good governance and outlines institutional disclosure obligations. IFC uses the Sustainability Framework along with other strategies, policies and initiatives to focus business activities on achieving the Corporations development objectives. All project teams are required to record expectations of development outcomes with time-bound targets using standard indicators. These indicators are tracked and performance is rated on an annual basis for the entire duration of every project.
Guiding Principles for IFCs Operations
FINANCIAL RISK
Catalytic role: IFC will seek above all to be a catalyst in facilitating productive investments in the private sector of its developing member countries. It does so by mobilizing financing from both foreign and domestic investors from the private and public sectors. Business partnership: IFC functions as a business in partnership with the private sector. Thus, IFC takes the same commercial risks as do private institutions, investing its funds under the discipline of the marketplace. Additionality: IFC participates in an investment only when it can make a special contribution not offered or brought to the deal by other investors.
sanctions procedures
Financial risk management is about taking calculated risks that are aligned with the Corporations overall risk appetite and within the boundaries of established tolerances. As such, financial risk management at IFC begins with an articulation of the Corporations risk appetite as defined by the types of risk that the Corporation is willing to take in the pursuit of its strategic objectives. Following from this articulation is an enterprise risk management framework that encompasses strategy, capital planning, target setting and risk monitoring and management. IFCs risk appetite, as it pertains to financial risk, has been defined by Senior Management and the Board of Directors as maintaining a AAA rating within a three- year time horizon. To align risk tolerance with this definition, IFC uses its economic capital framework to measure the capital required to maintain its AAA rating. Further, processes are in effect which translate IFCs risk appetite into limits, policies, procedures and directives that help guide the management of IFCs financial risk within acceptable tolerance bands. An important consideration when setting IFCs risk appetite is the need to use capital efficiently by recognizing the inherent trade- offs involved with maintaining reserve capital. Excess capital that is not deployed has limited financial and no development impact; at the same time, keeping some capital in reserve allows IFC to maintain financial strength and respond proactively in the event of future crises.
Key Financial Policies and Guidelines
In FY07, IFC established a set of procedures to sanction parties involved in IFC projects committing corrupt, fraudulent, collusive, coercive or obstructive practices. In April 2010, the World Bank Group concluded an agreement with other multilateral development banks (MDBs) whereby entities debarred by one MDB may be sanctioned for the same misconduct by the other participating development banks. The enhanced emphasis on combating fraud and corruption does not change the high expectations IFC has always held for its staff, clients and projects, including due diligence and commitment to good corporate governance.
FY13 Strategic Risk Highlights
IFC operates under a number of key financial policies and guidelines as detailed below, which have been approved by its Board of Directors: Minimum liquidity (liquid assets plus undrawn borrowing commitments from IBRD) must be sufficient at all times to cover at least 45% of IFCs estimated net cash requirements for the next three years. Loans are funded with liabilities that have similar characteristics in terms of interest rate basis and currency and, for fixed rate loans, duration except for the Board of Directors- approved new products involving asset- liability mismatches. IFC maintains a minimum level of liquidity, consisting of proceeds from external funding, that covers at least 65% of the sum of: (i) 100% of committed but undisbursed straight senior loans; (ii) 30% of committed guarantees; and (iii) 30% of committed client risk management products. IFC is required to maintain a minimum level of total resources (including paid- in capital, total loss reserves and retained earnings, net of designations) equal to total potential losses for all on- and off-balance sheet exposures estimated at levels consistent with the maintenance of a AAA rating.
Credit Risk
IFCs Development Goals (IDGs) are targets for reach, access, or other tangible development outcomes that IFC projects are expected to deliver during their lifetime. In FY12, the testing phase for two such goals, IDG 2 (Health and Education) and IDG 3 (Financial Services), was completed and in FY13, they moved into implementation and are fully integrated into IFCs corporate scorecard and incentives for management.
IFC defines credit risk as the risk that third parties that owe IFC money, securities or other assets will not fulfill their obligations. These parties may default on their obligations to IFC due to bankruptcy, lack of liquidity, operational failure or other reasons. Credit risk management consists of policies, procedures and tools for managing credit risk, primarily in IFCs loan portfolio, but also
_ 17
related to counterparty risk taken in the liquid asset and borrowing portfolios. Credit risk management spans investment origination to final repayment or sale; it includes portfolio management and risk modeling activities that provide an integrated view of credit risks and their drivers across the Corporation. With respect to IFCs credit risk exposure to clients in developing emerging markets, at key steps during the investment approval process, information obtained from the investment departments is analyzed and an independent review of the credit risk of the transaction undertaken, including the assignment of a credit risk rating. The credit risk rating, together with investment size and product type, is a key input into the risk tiering that determines authority levels required for transaction approval. After commitment, the quality of IFCs investment portfolio is monitored according to principles and procedures defined in the Operational Policies and Procedures. Responsibility for the day- to-day monitoring and management of credit risk in the portfolio rests with the individual investment departments. Credit risk also includes concentration risk: the risk of extreme credit losses due to concentration of credit exposure to a common risk factor. IFC manages concentration risk through a number of operational and prudential limits, including limitations on single project/client exposure, single country exposure, and segment concentration. Similarly, credit policies and guidelines have been formulated covering treasury operations; these are subject to annual review and approval by the Corporate Risk Committee. Credit risk across IFCs investment portfolio is monitored and managed through proactive identification of emerging risks and portfolio stress testing in focus sub- portfolios. For impaired loans and other investments at risk, rapid response is essential, as early involvement is the key to recovery when projects get into difficulty. IFC provides focused attention on portfolio projects that require more sophisticated workout and restructuring. To help enable early involvement, seasoned professionals from IFCs Special Operations Department comprised of workout professionals with extensive experience in handling such projects, work in close coordination with IFCs Legal Department to provide rapid response. The credit risk of loans is quantified in terms of the probability of default, loss given default and exposure at risk. These risk parameters are used to determine risk based economic capital for capital adequacy, capital allocation and internal risk management purposes as well as for setting general loan loss reserves and limits. Treasury counterparty credit risk is managed to mitigate potential losses from the failure of a trading counterparty to fulfill its contractual obligations. General counterparty eligibility criteria are set by the Board of Directors- approved Asset- Liability Management and Derivative Products Authorization and Liquid Asset Management General Investment Authorization. IFC Counterparties are subject to conservative eligibility criteria and are predominantly restricted to banks and financial institutions with high quality credit ratings by leading international credit rating agencies. The eligibility criteria and limits of Treasury counterparties are stipulated by the Liquid Asset Investment Directives.
Specifically, IFC has adopted the following key financial policies and guidelines that have been approved by the Corporate Risk Committee:
Investment Operations
IFC does not normally finance for its own account more than 25% of a projects cost. Total exposure to a country is based on the amount of economic capital required to support its investment portfolio in that country. Exposure limits are set for each country based on the size of its economy and its risk score. Sub- limits apply for certain sector exposures within a country. Lender of record exposure in a country may not exceed a specified percentage of a countrys total long- term external debt. Lower trigger levels are set for certain countries. IFCs total exposure to a single obligor and groups of obligors may not exceed stipulated economic capital and nominal limits based on the riskiness of the obligor. IFCs committed exposure in guarantees that are subrogated in local currency is limited to $300million for currencies for which there are no adequate currency and interest rate risk hedging instruments as determined by IFCs Treasury Department at the time of commitment. There is a sublimit of $100 million for an individual currency under this limit.
Treasury Operations
Counterparties are subject to conservative eligibility criteria. For derivative instruments, IFCs counterparties are currently restricted to banks and financial institutions with high quality credit ratings (with a mark-to-market agreement) by leading international credit rating agencies. In addition to IFCs traditional use of top- rated international banks as swap counterparties, for the sole purpose of funding local currency loans, IFC has recently extended the universe of eligible swap counterparties to include central banks and select local banks. Exposures to individual counterparties are subject to concentration limits. For derivatives, exposure is measured in terms of replacement cost for measuring total potential exposure. Institution- specific limits are updated at least quarterly based on changes in the total size of IFC derivatives portfolio or as needed according to changes in counterpartys fundamental situation or credit status. To limit its exposure, IFC signs collateral agreements with counterparties that require the posting of collateral when net mark-to-market exposures exceed certain predetermined thresholds. IFC also requires that low quality counterparties should not have more than 30% of total net- of-collateral exposures. Because counterparties can be downgraded during the life of a given transaction, the agreements provide an option for IFC to terminate all swaps if the counterparty is downgraded below investment grade or if other early termination events materialize. For exchange- t raded instruments, IFC limits credit risk by restricting transactions to a list of authorized exchanges, contracts and dealers, and by placing limits on the Corporations position in each contract.
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FY13 Credit Risk Highlights
MARKET RISK
Investment operations
The quality of IFCs loan portfolio, as measured by aggregate risk ratings was substantially unchanged between June 30, 2012 and June30, 2013. IFC does not recognize income on loans where collectability is in doubt or payments of interest or principal are past due more than 60 days unless collection of interest is expected in the near future. The amount of non- performing loans as a percentage of the disbursed loan portfolio4, a key indicator of loan portfolio performance, was 5.6% at June30, 2013 (4.1% at June30, 2012). The principal amount outstanding on non- performing loans totaled $1,272million at June30, 2013, an increase of $413million (48%) from the June30, 2012 level of $859million. The increase in the amount of non- performing loans as a percentage of the disbursed loan portfolio was largely driven by the placing of seven loans with principal outstanding greater than $45 million for an aggregate amount of $423million, partially offset by the removal of one loan with principal outstanding of $45million. Total reserves against losses on loans at June30, 2013, increased to $1,628 million ($1,381 million at June 30, 2012). Total reserves against losses on loans are equivalent to 7.2% of the disbursed loan portfolio (6.6%J une30, 2012). The five- year trend of non- performing loans is presented below:
Non-performing Loans
$ millions 0 200 400 600 800 1,000 1,200
IFCs exposure to market risk is largely mitigated by the Corporations matched- f unding policy and by the use of derivative instruments to convert most of IFCs assets that are funded from market borrowings and such market borrowings into floating rate US dollar assets and liabilities with similar duration. Additional strategies that are employed are as described below.
Investment Operations
FY09 FY10 FY11 FY12 FY13

Percentage 0.0
$ millions
IFC takes equity risk in its listed and unlisted equity investments in emerging markets. The Corporate Equity Committee, a subcommittee of the Management Team, provides guidance on IFCs overall strategy in equity investments, equity portfolio management and asset allocation. Numerous factors are taken into consideration when making asset allocation decisions, reflecting IFCs roles as a development institution and long- term investor, as well as the fact that most of the Corporations equity investments are in private securities, at least at origination. The factors taken into consideration by the Corporate Equity Committee include projected developmental impact, IFCs additionality and comparative advantages, country diversification, sector diversification, IFCs country exposure considerations, macroeconomic considerations, global trends in equity markets, and valuations. Interest rate and currency exchange risk associated with fixed rate and/or non- US dollar lending is largely economically hedged via currency and interest rate swaps that convert cash flows into variable rate US dollar flows. Market risk resulting from derivative transactions with clients, which are intended to facilitate clients risk management, is mitigated by entering into offsetting positions with highly rated market counterparties.
Liquid Asset Portfolios
1.0
2.0
3.0
4.0
5.0
6.0
Percentage of disbursed loans
The guarantee portfolio is exposed to the same idiosyncratic and systematic risks as IFCs loan portfolio and the inherent probable losses in the guarantee portfolio need to be covered by a reserve for loss. The reserve at June30, 2013, was $17million, down from $21million at June30, 2012, based on the year- end portfolio, and is included in payables and other liabilities on IFCs consolidated balance sheet. There was a release of provision of $4 million on guarantees in the consolidated income statement in FY13 ($3million release of provision F Y12).
Treasury operations
Counterparty credit risk in IFCs Treasury operations is managed on a daily basis through strict eligibility criteria and accompanying limits. Treasury operations counterparties also remain well diversified by sector and geography. In accordance with IFCs key financial policies and guidelines noted above, IFC holds collateral in the amount of $1,274million at June30, 2013 ($3,570million June30, 2012).
The market risk in the internally-managed liquid asset portfolios is measured using a corporate value- at-risk model, which calculates daily value-at-risk measurements, interest rate exposure and credit spread exposure. The primary instruments for maintaining sufficient liquidity are IFCs seven liquid asset portfolios: P0, which is generally invested in short- dated deposits, money market funds, fixed certificates of deposits, one- month floater securities and repos, reflecting its use for short- term funding requirements P1 and P2, which are generally invested in: (a) high quality foreign sovereign, sovereign- g uaranteed and supranational fixed income instruments; (b) US Treasury or agency instruments; (c) high quality ABS rated by at least two rating agencies and/or other high quality notes issued by corporations; (d) MBS; (e) interest rate futures and swaps to manage currency risk in the portfolio, as well as its duration relative to benchmark; and (f) cash deposits and repos P3, which is an outsourced portion of the P1 portfolio (managed by external managers) P4, which is an outsourced portion of the P2 portfolio (managed by external managers) P6, which is invested in short- term local currency money market instruments and local government securities
4. Excluding loan- like debt securities.
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P7, which consists of after-swap proceeds from variable- rate borrowings denominated and invested in Euros and proceeds from fixed-rate borrowings denominated and invested in Nigerian naira. The P0, P1 and P3 portfolios are managed to variable rate US dollar benchmarks, on a portfolio basis. To this end, a variety of derivative instruments are used, including short- term, over- t hecounter foreign exchange forwards (covered forwards), interest rate and currency swaps, and exchange-traded interest rate futures and options. IFC takes both long and short positions in securities in the management of these portfolios to their respective benchmarks. The primary source of interest rate risk in the liquid asset portfolios is the P2 and P4 portfolios, which are managed to Barclays 1-3 year US Treasury Index benchmark. P2 represents the portion of IFCs capital not disbursed as equity investments, and the benchmark reflects the chosen risk profile for this un- invested capital (paid-in capital and retained earnings). P4 represents an outsourced portion of the P2 portfolio. In addition, the P1 and P3 portfolios also contain spread risk of high quality credit counterparties. The P6 portfolio consists of foreign currency proceeds raised locally through swaps and other funding instruments to provide more flexible local currency loan products to clients. The Euro portion of the P7 portfolio is managed to six equal- weighted EURIBID deposits maturing at the next six monthly reset dates of outstanding liabilities, rebalanced at each calendar month- end. The Nigerian naira portion of the P7 portfolio is managed to the related IFC debenture issued in FY13.
Borrowing Activities
FY13 Market Risk Highlights
IFC expands its access to funding and decreases its overall funding cost by issuing debt securities in various capital markets in a variety of currencies, sometimes using complex structures. These structures include borrowings payable in multiple currencies, or borrowings with principal and/or interest determined by reference to a specified index such as a reference interest rate, or one or more foreign exchange rates. Market risk associated with fixed rate obligations and structured instruments entered into as part of IFCs funding program is generally mitigated by using derivative instruments to convert them into variable rate US dollar obligations, consistent with the matched- funding policy.
Asset-Liability Management
The overall level of market risk in IFCs Treasury operations increased in FY13 due to increasing volatility of Sovereign interest rates near the end of FY13 yet Treasury market risk still remained low compared to other portfolios and risk types. Interest rate, foreign exchange, and spread risk are all carefully controlled on a daily basis using a system of limits that remained in compliance during FY13. Shortly after the fiscal year began, the European Central Bank announced their, not- yet-used, Outright Monetary Transactions (OMT) program aimed at equalizing borrowing costs for private borrowers across the European Union by providing support for short- dated sovereign government bonds. Risk premia receded across financial markets in response. The decrease in risk premia was further supported by the United States when it avoided the fiscal cliff and the Bank of Japan, which announced a much greater- t han-expected ease in monetary policy. The liquid asset portfolios benefitted from this improvement in the markets and remained fully invested in spread risk throughout the fiscal year. The overall level of market risk in IFCs equity portfolio was quite elevated in FY13, due to large fluctuations in global equity markets, foreign exchange rates and commodity prices. Equity valuations improved steadily during the first half of FY13, both in local currency and, to a greater degree, in IFCs reporting currency, the US$, as most emerging market currencies appreciated moderately against the US$ in the first half of FY13. This period was followed by sideways fluctuations in the third quarter of FY13 and the first half of the last quarter of FY13, but the last seven weeks of FY13 virtually erased all gains from the first half of FY13, as prospects of a less accommodative Federal Reserve and renewed concerns on global growth, dominated world markets. It should also be noted that emerging market equities lagged most developed equity markets in FY13, accelerating the trend that started in late 2010. In response to such heightened volatility, the Corporation remained especially selective at entry and managed its equity investment portfolio proactively through close monitoring, quarterly portfolio reviews and continued oversight from the Corporate Equity Committee. Active portfolio management enabled the Corporation to revolve its funds significantly in FY13, and maintain an acceptable level of profitability.
LIQUIDITY RISK
While IFCs matched- f unding policy provides a significant level of protection against currency and interest rate risk, IFC can be exposed to residual market risks in its overall asset and liability management of the market borrowings funded balance sheet. Residual currency risk arises from events such as changes in the level of non- US dollar loan loss reserves. The aggregate position in each lending currency is monitored on a daily basis and the risk is managed within a range of +/ $5 million equivalent in each currency. Residual interest rate risk may arise from differing interest rate reset dates on assets and liabilities or assets that are fully match- funded at inception, which can become mismatched over time due to write- downs, prepayments, or rescheduling. The residual interest rate risk is managed by measuring the sensitivity of the present value of assets and liabilities in each currency to a one basis point change in interest rates and managed on a daily basis within a range of +/ $50,000.
IFCs investments are predominantly illiquid in nature due to the lack of capital flows, the infrequency of transactions, and the lack of price transparency in many emerging markets. To offset this liquidity risk, strict investment eligibility criteria for the Liquid Asset portfolios are defined in the Liquid Asset Management Investment Guidelines. Examples of these criteria include minimum sizes for bond issuances, single bond issue concentration limits and percentage of total bond issuance limits. Consequently, a significant portion of the liquid assets is invested in highly liquid securities such as: (i) high quality foreign sovereign, sovereign- g uaranteed and supranational fixed income instruments; (ii) US Treasury or agency instruments; and (iii) money market mutual funds. In the event of a liquidity crisis, these assets will be available to generate funds that are needed to support IFCs cash requirements.
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IFCs liquid assets maintained similar exposure to high credit quality counterparties, while credit spread risk declined in FY13 due to improving credit conditions. Net interest rate risk of IFCs Liquid Asset portfolios remained concentrated in short- maturity obligations and the spread risk is well diversified by sector and geography.
FY13 Liquidity Risk Highlights
On June 30, 2013, IFCs liquid assets portfolio stood at $31.2 billion ($30.4billion on June30, 2012). Current levels of liquid assets also represented 309% of the sum of (i) 100% of committed but undisbursed straight senior loans; (ii) 30% of committed guarantees; and (iii) 30% of committed client risk management products (327% on June30, 2012).
FUNDING RISK
IFCs primary objective with respect to managing funding risk isto maintain its triple- A credit ratings and, thereby, maintain access tomarket funding as needed at the lowest possible cost. The risk of higher funding costs is also reduced by IFCs annual funding targets, the US$ benchmark bonds, and the Discount Note Program. Accessing the capital markets for financing establishes investor confidence, liquidity, price transparency, and a diversified investor base, all of which help to reduce financing cost. IFCs Discount Note Program provides swift access to funded liquidity, to complement traditional funding sources, and to provide a natural funding source for short term financing programs.
FY13 Funding Risk Highlights
IFC utilizes risk transfer, including insurance, at both the project and the institutional levels for mitigation of low frequency and high severity operational risks. At both levels, IFC identifies and evaluates risks, determines available contractual transfer and insurance options, implements the optimal structure, and tracks its effectiveness over time. IFC also insures its corporate assets and operations against catastrophic losses where commercially viable. Other key components of IFCs operational risk management approach include: Operational risk assessment and measurement based on market practices and tools. Adoption of the COSO5 control framework as the basis for its evaluation of the effectiveness of its internal controls over financial reporting. Ongoing independent review of the effectiveness of IFCs internal controls in selected key areas and functions performed by the Internal Audit Vice Presidency of the World Bank Group. Promoting data integrity in the Corporation based on its data management policy. Ensuring that processes and controls are in place to manage the risks in new products and initiatives before they are executed, through a New Initiative and Product Assessment Group with representation from key business and support functions.
FY13 Operational Risk Highlights
During FY13, IFC raised $12.8billion, net of derivatives ($11.9billion in FY12 and $10.3 billion in FY11). The outstanding balance under the Discount Note Program at June30, 2013 was $1.3billion ($1.4billionJ une30, 2012). During FY13, credit spreads for IFCs new borrowings deteriorated to around Libor flat for a 5 year term issue, from Libor minus 10 basis points in FY12.
OPERATIONAL RISK
Consistent with Internal Convergence of Capital Measurement and Capital Standards, A Revised Framework issued by the Basel Committee on Banking Supervision in June 2004, IFC defines operational risk as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. IFCs Operational Risk Management (ORM) program is based on a directive approved by the Corporate Risk Committee during FY10. This directive establishes the approach and roles and responsibilities for operational risk management in the Corporation. IFCs ORM approach is designed to ensure that operational risks are identified, assessed, and managed so as to minimize potential adverse impacts and to enable Senior Management to determine which risks IFC will: (i) manage internally, as part of its ongoing business; (ii) mitigate through contingency planning; or (iii)transfer to third parties, whether by subcontracting, outsourcing, or insurance. IFC seeks to mitigate the risks it manages internally by maintaining a comprehensive system of internal controls that is designed not only to identify the parameters of various risks but also to monitor and control those areas of particular concern.
IFC is continuing a multiyear effort to develop and implement enhanced methodologies for identifying, measuring, monitoring and managing operational risk in its key activities. IFC continued the program established in FY12 for obtaining annual written assertions on operational risk management by Vice Presidents and Directors. To support this, IFC also: Formalized a network of departmental Operational Risk Management Liaisons and provided training for them in applying operational risk management tools to their business processes. Extended Risk and Control Self- Assessment to all departments. Continued rolling out other operational risk management methodologies and tools, including risk events tracking, root cause analysis and key risk indicators. Conducted events to promote and raise awareness of operational risk management. IFC also continues to focus on its preparedness to react to an emergency situation that could disrupt its normal operations. During FY13, IFC: Collaborated with the World Bank in updating the World Bank Group Business Continuity Management policy to align with internationally recognized business continuity standards. Conducted emergency simulation exercises in Washington, in cooperation with the World Bank. Maintained Emergency Management Teams in all regions; and held emergency management workshops and simulations in larger country offices in one region. Conducted exercises involving individual members of the Management Team, in anticipation of an exercise for the whole Management Team.
5. COSO refers to the Internal Control 1992 Integrated Framework formulated by the Committee of Sponsoring Organizations of the Treadway Commission, which was convened by the US Congress in response to the well- publicized irregularities that occurred in the financial sector in the United States during the late 1980s.
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Leveraging Business Impact Analysis results, updated Business Continuity Plans for departments responsible for critical business processes, and conducted a business continuity exercise for one critical Treasury process. Continued to implement the information technology disaster recovery testing strategy established in FY12 by performing component and integration tests for most applications supporting critical business processes. Began planning for a comprehensive update to IFCs Business Impact Analysis in FY14.
VI. CRITICAL ACCOUNTING POLICIES

Note A to IFCs FY13 Consolidated Financial Statements contain a summary of IFCs significant accounting policies, including a discussion of recently adopted accounting standards and accounting and financial reporting developments. Certain of these policies are considered to be critical to the portrayal of IFCs financial condition and results of operations, since they require management to make difficult, complex or subjective judgments, some of which may relate to matters that are inherently uncertain. These policies include: Determining the level of reserves against losses in the loan portfolio; Determining the level and nature of impairment for equity investments and debt securities carried at fair value with changes in fair value being reported in other comprehensive income (OCI) and for equity investments accounted for at cost less impairment (where impairment is determined with reference to fair value); Determining the fair value of certain equity investments, debt securities, loans, liquid assets, borrowings and derivatives, which have no quoted market prices and are accounted for at fair value; and Determining the future pension and postretirement benefit costs and obligations using actuarial assumptions based on financial market interest rates, past experience, and managements best estimate of future benefit cost changes and economic conditions. Many of IFCs financial instruments are classified in accordance with the fair value hierarchy established by accounting standards for fair value measurements and disclosures where the fair value and/or impairment is estimated based on internally developed models or methodologies utilizing significant inputs that are non-observable.
RESERVE AGAINST LOSSES ON LOANS
The assessment of the adequacy of reserves against losses for loans is highly dependent on managements judgment about factors such as its assessment of the financial capacity of borrowers, geographical concentration, industry, regional and macroeconomic conditions, and historical trends. Due to the inherent limitation of any particular estimation technique, management utilizes a capital pricing and risk framework to estimate the probable losses on loans inherent in the portfolio but not specifically identifiable. This Board of Directors- approved framework uses actual loan loss history and aligns the loan loss provisioning framework with IFCs capital adequacy framework. The reserve against losses on loans is separately reported in the consolidated balance sheet as a reduction of IFCs total loans. Increases or decreases in the reserve level are reported in the income statement as provision for losses or release of provision for losses on loans, and guarantees. The reserve against losses on loans relates only to the Investment services segment of IFC (see Note T to the FY13 Consolidated Financial Statements for further discussion of IFCs business segments).
OTHER-THAN-TEMPORARY IMPAIRMENTS ON EQUITY INVESTMENTS AND DEBT SECURITIES
IFC assesses all equity investments accounted for at fair value through OCI and all equity investments accounted for at cost less impairment for impairment each quarter. When impairment is identified and is deemed to be other- t han-temporary, the equity investment is written down to its impaired value, which becomes the new cost basis in the equity investment. IFC generally presumes that all equity impairments are deemed to be other-than-temporary. Impairment losses on equity investments accounted for at cost less impairment are not reversed for subsequent recoveries in value of the equity investment until it is sold. Recoveries in value on equity investments accounted for at fair value through OCI that have been the subject of an other- than-temporary impairments are reported in OCI until sold. IFC assesses all debt security investments accounted for at fair value through OCI for impairment each quarter. When impairment is identified, the entire impairment is recognized in net income if certain conditions are met (as detailed in Note A to IFCs FY13 Consolidated Financial Statements). However, if IFC does not intend to sell the debt security and it is not more likely than not that IFC will be required to sell the security, but the security has suffered a credit loss, the credit- related impairment loss is recognized in net income and the non- credit related loss is recognized in OCI.
VALUATION OF FINANCIAL INSTRUMENTS WITH NO QUOTED MARKET PRICES
IFC considers a loan as impaired when, based on current information and events, it is probable that IFC will be unable to collect all amounts due according to the loans contractual terms. The reserve against losses for impaired loans reflects managements judgment of the present value of expected future cash flows discounted at the loans effective interest rate. The reserve against losses for loans also includes an estimate of probable losses on loans inherent in the portfolio but not specifically identifiable. The reserve is established through periodic charges to income in the form of a provision for losses on loans. Loans written off, as well as any subsequent recoveries, are recorded through the reserve.
IFC reports at fair value all of its derivative instruments, all of its liquid asset trading securities and certain borrowings, loans, equity investments and debt securities. In addition, various investment agreements contain embedded or standalone derivatives that, for accounting purposes, are separately accounted as either derivative assets or liabilities, including puts, caps, floors, and forwards. IFC classifies all financial instruments accounted for at fair value based on the fair value hierarchy established by accounting standards for fair value measurements and disclosures as described in more detail in Notes A and R to IFCs FY13 Consolidated Financial Statements.
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Many of IFCs financial instruments accounted for at fair value are valued based on unadjusted quoted market prices or using models where the significant assumptions and inputs are market- observable. The fair values of financial instruments valued using models where the significant assumptions and inputs are not market- observable are generally estimated using complex pricing models of the net present value of estimated future cash flows. Management makes numerous assumptions in developing pricing models, including an assessment about the counterpartys financial position and prospects, the appropriate discount rates, interest rates, and related volatility and expected movement in foreign currency exchange rates. Changes in assumptions could have a significant impact on the amounts reported as assets and liabilities and the related unrealized gains and losses reported in the income statement and statement of OCI. The fair value computations affect both the Investment services and Treasury segments of IFC (see
Note T to the FY13 Consolidated Financial Statements for further discussion of IFCs business segments).
PENSION AND OTHER POSTRETIREMENT BENEFITS
IFC participates, along with IBRD and MIGA, in pension and postretirement benefit plans that cover substantially all of their staff members. All costs, assets and liabilities associated with the plans are allocated between IBRD, IFC and MIGA based upon their employees respective participation in the plans. The underlying actuarial assumptions used to determine the projected benefit obligations, the fair value of plan assets and the funded status associated with these plans are based on financial market interest rates, past experience, and managements best estimate of future benefit cost changes and economic conditions. For further details, please refer to Note W to the FY13 Consolidated Financial Statements.
VII. RESULTS OF OPERATIONS

OVERVIEW
The overall market environment has a significant influence on IFCs financial performance. The main elements of IFCs net income and comprehensive income and influences on the level and variability of net income and comprehensive income from year to year are:
Elements
Net income: Yield on interest earning assets Market conditions including spread levels and degree of competition. Nonaccruals and recoveries of interest on loans formerly in nonaccrual status and income from participation notes on individual loans are also included in income from loans. Realized and unrealized gains and losses on the liquid asset portfolios, which are driven by external factors such as: the interest rate environment; and liquidity of certain asset classes within the liquid asset portfolio. Global climate for emerging markets equities, fluctuations in currency and commodity markets and company- specific performance for equity investments. Performance of the equity portfolio (principally realized capital gains, dividends, equity impairments, gains on non- monetary exchanges and unrealized gains and losses on equity investments). Risk assessment of borrowers and probability of default and loss given default. Level of advisory services provided by IFC to its clients, the level of expense from the staff retirement and other benefits plans, and the approved administrative and other budgets. Principally, differences between changes in fair values of borrowings, including IFCs credit spread, and associated derivative instruments and unrealized gains associated with the investment portfolio including puts, warrants and stock options which in part are dependent on the global climate for emerging markets. These securities are valued using internally developed models or methodologies utilizing inputs that may be observable or non- observable. Level of the Board of Governors- approved grants to IDA.
Significant Influences
Liquid asset income
Income from the equity investment portfolio
Provisions for losses on loans and guarantees Other income and expenses
Gains and losses on other non- trading financial instruments accounted for at fair value
Grants to IDA Other comprehensive income: Unrealized gains and losses on listed equity investments and debt securities accounted for as available- for-sale
Global climate for emerging markets equities, fluctuations in currency and commodity markets and company- specific performance. Such equity investments are valued using unadjusted quoted market prices and debt securities are valued using internally developed models or methodologies utilizing inputs that may be observable or non- observable. Returns on pension plan assets and the key assumptions that underlay projected benefit obligations, including financial market interest rates, staff expenses, past experience, and managements best estimate of future benefit cost changes and economic conditions.
Unrecognized net actuarial gains and losses and unrecognized prior service costs on benefit plans
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IFCs net income (loss) for each of the past five fiscal years ended June30, 2013 is presented below (US$ millions):
Net Income (loss)
US$ millions 2009 2010 2011 2012 2013
-250 0 250 500 750 1,000 1,250 1,500 17,50
Income From Loans and Guarantees
The following paragraphs detail significant variances between FY13 and FY12, and FY12 and FY11, covering the periods included in IFCs FY13 Consolidated Financial Statements. Certain amounts in FY12 and FY11 have been reclassified to conform to the current years presentation. Where applicable, the following paragraphs reflect reclassified prior year comparative information. Such reclassifications had no effect on net income or total assets.
FY13 VERSUS FY12
Net Income
IFCs primary interest earning asset is its loan portfolio. Income from loans and guarantees for FY13 totaled $1,059 million, compared with $938million in FY12, an increase of $121million. The disbursed loan portfolio grew by $1,563 million, from $21,043million at June30, 2012 to $22,606million at June30, 2013. The weighted average contractual interest rate on loans at June30, 2013 was 4.5%, versus 4.7% at June30, 2012. These factors combined resulted in $90million higher interest income than in FY12. Commitment and financial fees were $28 million higher than in FY12. Recoveries of interest on loans removed from nonaccrual status, net of reversals of income on loans placed in nonaccrual status were $26million lower than in FY12. There were no gains on sale of loans in FY13 as compared to $2million in FY12. Income from IFCs participation notes over and above minimum contractual interest and other income were $3million lower than in FY12. Unrealized gains on loans accounted for at fair value and gains on non- monetary exchanges were $34million higher than in FY12.
INCOME FROM EQUITY INVESTMENTS
IFC reported income before net gains and losses on other non- trading financial instruments accounted for at fair value and grants to IDA of $928million in FY13, as compared to $1,877million in FY12. The decrease in income before net gains and losses on other non- trading financial instruments accounted for at fair value and grants to IDA in FY13 when compared to FY12 was principally as a result of the following (US$ millions):
Realized capital gains on equity investments Provisions for losses on loans, guarantees and other receivables Foreign currency transaction gains and losses on non- trading activities Advisory services expenses, net Expenses from pension and other postretirement benefit plans Unrealized gains on equity investments Income from liquid asset trading activities Other- than-temporary impairments on equity investments Other, net Overall change $ ( 1,079)
(126) (110) (91) (77) 154 187 251 (58)
$ (949)
Net gains on other non- trading financial instruments accounted for at fair value totaled $422million in FY13, $641million higher than net losses of $219 million in FY12. Accordingly, IFC has reported income before grants to IDA of $1,350million, $308million lower than income before grants to IDA of $1,658 million in FY12. Grants to IDA totaled $340 million in FY13, as compared to $330million in FY12. Net loss attributable to noncontrolling interest totaled $8million in FY13 as compared to $0 in FY12. Accordingly, net income attributable to IFC totaled $1,018 million in FY13, as compared with a net income of $1,328million in FY12. A more detailed analysis of the components of IFCs net income follows.
Income from the equity investment portfolio decreased by $705million from $1,457million in FY12 to $752million in FY13. IFC generated realized gains on sales of equity investments for FY13 of $921million, as compared with $2,000million for FY12, a decrease of $1,079 million. IFC sells equity investments where IFCs developmental role was complete, and where pre-determined sales trigger levels had been met and, where applicable, lock ups have expired. Total realized gains on equity investments are concentratedin FY13, 10 investments generated individual capital gains in excess of $20million for a total of $562million, or 61%, of the FY13 realized gains, compared to 11 investments generating individual capital gains in excess of $20million for a total of $1,821million, or 91%, of the FY12 realized gains. Gains on non-monetary exchanges in FY13 totaled $6million, as compared with $3million in FY12. Dividend income totaled $248 million, as compared with $274million in FY12, a decrease of $26million. The decrease was largely due to a one time dividend from one investment in FY12 in the amount of $41million that did not recur in FY13. Dividend income in FY13 included returns from four unincorporated joint ventures (UJVs) in the oil, gas and mining sectors accounted for under the cost recovery method, which totaled $36million, as compared with $43million from three such UJVs in FY12. Other- t han-temporary impairments on equity investments totaled $441million in FY13 ($289million on equity investments accounted for as available- for-sale; and $152 million on equity investments accounted for at cost less impairment), as compared with $692 million in FY12 ($420 million on equity investments accounted for as available- for-sale; and $272 million on equity investments accounted for at cost less impairment). In FY13, three investments generated individual other- t han-temporary impairments in excess of $20million for a total of $90million. In FY12, eight investments generated individual other- t han-temporary impairments in excess of $20 million for a total of $298 million. Other- than temporary impairments on equity investments in FY13 were concentrated in the last three months of FY13, reflecting the weaker performance of emerging markets equities in general. Such
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impairments totaled $201million in the last three months of FY13, as compared to $240million in the first nine months of FY13. Unrealized gains on equity investments in FY13 totaled $26million, as compared with unrealized losses of $128million in FY12. One investment accounted for $217million of unrealized gains in FY13. Seven investments in equity funds accounted for $162million of the unrealized losses in FY13. Seven investments in equity funds accounted for $146million of the unrealized losses in FY12. Individual investments in such Funds provided a significant component of such unrealized gains and losses.
INCOME FROM DEBT SECURITIES
Income from debt securities decreased to $5 million in FY13 from $81 million in FY12, a decrease of $76 million. The largest components of the decrease were higher other- t han-temporary impairments ($19million) and unrealized losses on debt securities accounted for at fair value ($60million) in FY13 when compared with FY12. Realized gains on debt securities were $2million lower in FY13 as compared to FY12.
PROVISION FOR LOSSES ON LOANS AND GUARANTEES AND OTHER RECEIVABLES
same variable rate benchmark as the P1 portfolio, returned $17million in FY13, or 1.9%, $3million higher than the $14million, or 1.6%, return in FY12. The P2 and externally-managed P4 portfolios returned $147million (3.1%) and $2million (0.3%) in FY13, respectively, as compared to $62million (1.2%) and $14million (2.0%) in FY12, respectively. IFCs P0 portfolio earned $2million in FY13, a return of 0.1%, as compared to $7million (0.5%) in FY12. The P6 local currency liquidity portfolio generated income of $42million (4.5%) in FY13, $1million less than the $43million (5.7%) in FY12. At June30, 2013, trading securities with a fair value of $85million are classified as Level 3 securities ($150million on June30, 2012).
CHARGES ON BORROWINGS
The quality of IFCs loan portfolio, as measured by average country risk ratings and average credit risk ratings was substantially unchanged during FY13. By another measure, non- performing loans increased from $859 million (4.1%) of the disbursed loan portfolio at June30, 2012 to $1,272million (5.6%) at June30, 2013. IFC recorded provision for losses on loans, guarantees and other receivables of $243million in FY13 ($298million of specific provisions for losses on loans, $49million release of portfolio provisions for losses on loans, and $6million release of provision for losses on guarantees and other receivables) as compared to provisions for losses of $117 million in FY12 ($76 million of specific provisions for losses on loans, $39 million of portfolio provisions for losses on loans and $2million of provision for losses on guarantees and other receivables). On June 30, 2013, IFCs total reserves against losses on loans were 7.2% of the disbursed loan portfolio (6.6% at June30, 2012). Specific reserves against losses at June30, 2013 of $741million ($447million at June30, 2012) are held against impaired loans of $1,403million ($923million at June30, 2012), a coverage ratio of 53% (48%).
INCOME FROM LIQUID ASSET TRADING ACTIVITIES
IFCs charges on borrowings increased by $39 million, from $181 million in FY12 to $220 million in FY13, largely reflecting the increased level of borrowings partly set off by lower US dollar interest rate environment, when comparing FY13 and FY12. During FY13, IFC bought back $0.4billion of its market borrowings ($0.6billion in FY12). Charges on borrowings of $220million in FY13 ($181million in FY12) are reported net of gains on buybacks of $11million ($19million in FY12). The weighted average rate of IFCs borrowings outstanding from market sources, after the effects of borrowing- related derivatives, and excluding short- term borrowings issued under the Discount Note Program, declined during the year from 0.7% at June 30, 2012 to 0.4% at June 30, 2013. The size of the borrowings portfolio (excluding the short- term Discount Note Program), net of borrowing- related derivatives and before fair value adjustments, increased by $3.2billion during FY13 from $40.7billion at June30, 2012, to $43.9billion at June30, 2013.
OTHER INCOME
Other income of $441million for FY13 was $7million lower than in FY12 ($448 million). Other income in FY13 includes management fees and service fee reimbursements from AMC of $40million ($28million in FY12) and income from advisory services of $239million ($269million in FY12). In FY13, income from advisory services included $210million contributed by donors ($189million F Y12) and $29million of fees from clients and administrative fees from donors ($25millionF Y12).
OTHER EXPENSES
The liquid assets portfolio, net of derivatives and securities lending activities, increased from $30.4billion at June30, 2012, to $31.2billion at June 30, 2013. Income from liquid asset trading activities totaled $500million in FY13 ($313million in FY12). In FY13 and FY12, all liquid asset portfolios outperformed their respective benchmarks, except for the P4 portfolio (which has a Net Asset Value (NAV) of $769million and marginally underperformed). Interest income in FY13 totaled $430 million. In addition, the portfolio of ABS and MBS experienced fair value gains totaling $161 million in FY13. Holdings in other products, including US Treasuries, global government bonds, high quality corporate bonds and derivatives generated $91million of losses in FY13, a net gain of $70million. The P1 portfolio generated a return of $292million in FY13, or 1.4%. In FY12, the P1 portfolio generated a return of $217million, or 0.9%. The externally managed P3 portfolio, managed against the
Administrative expenses (the principal component of other expenses) increased by $47million from $798million in FY12 to $845million in FY13, driven largely by a 6.7% increase in staffing and, to a lesser extent, salary increases to existing staff. Administrative expenses include the grossing-up effect of certain revenues and expenses attributable to IFCs reimbursable program and expenses incurred in relation to workout situations (Jeopardy Projects) ($26million in FY13, as compared with $22million in FY12). IFC recorded expenses from pension and other postretirement benefit plans in FY13 of $173million, as compared with $96million in FY12, an increase driven by actuarial assumptions related to the funding status of the various benefit plans at June30, 2012. Advisory services expenses totaled $351 million in FY13 ($290 million in FY12). Advisory services expenses included $210million of funds contributed by donors that were utilized in the provision of advisory services in FY13 ($189millionF Y12).
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NET GAINS AND LOSSES ON OTHER NON- TRADING FINANCIAL INSTRUMENTS
As discussed in more detail in Note A to IFCs FY13 Consolidated Financial Statements, IFC accounts for certain financial instruments at fair value with unrealized gains and losses on such financial instruments being reported in net income, namely: (i) all swapped market borrowings; and (ii) all equity investments in which IFC has greater than 20% holdings and/or equity and fund investments which, in the absence of the Fair Value Option, would be required to be accounted for under the equity method, and (iii)substantially all market borrowings. All other non-trading derivatives, including standalone and embedded derivatives in the loan, equity and debt security portfolios continue to be accounted for at fair value. The resulting effects of fair value accounting for these non- trading financial instruments on net income in FY13 and FY12 are summarized as follows (US$ millions):
FY13
Realized gains and losses on derivatives associated with investments $ 35 2
issuance deteriorated by around 10 basis points in FY13 contributing to overall unrealized gains on market borrowings and associated derivatives of $32million. IFC reported net gains on derivatives associated with investments (principally put options, stock options, conversion features, warrants and interest rate and currency swaps economically hedging the fixed rate and/or non- US$ loan portfolio) of $390million in FY13 (net losses of $13million in FY12). Gains and losses are highly concentrated, with five derivatives accounting for $153million of gains and five derivatives accounting for $73 million of losses in FY13 (five derivatives accounting for $113million of gains and five derivatives accounting for $73million of losses in FY12).
Grants to IDA
During FY13, IFC recorded a grant to IDA of $340million, as compared with $330million in FY12.
Other Comprehensive Income
FY12
$ 11 10
Unrealized gains and losses on equity investmenTS and debt securities
Non- monetary gains on derivatives associated with investments Unrealized gains and losses on derivatives associated with investments
353
(34) (206) $ (219)
Unrealized gains and losses on market borrowings and associated derivatives, net 32 Net gains and losses on other non- t rading financial instruments accounted for at fair value $ 422
Changes in the fair value of IFCs market borrowings and associated derivatives, net, includes the impact of changes in IFCs own credit spread when measured against US$ LIBOR. As credit spreads widen, unrealized gains are recorded and when credit spreads narrow, unrealized losses are recorded (notwithstanding the impact of other factors, such as changes in risk- free interest and foreign currency exchange rates). The magnitude and direction (gain or loss) can be volatile from period to period but do not alter cash flow. IFCs policy is to generally match currency, amount and timing of cash flows on market borrowings with cash flows on associated derivatives entered into contemporaneously. In FY12, unsettled conditions in European sovereign debt markets and renewed signs of flagging economic activity were accompanied by further interest rate declines from already low levels. Risk appetites in the capital markets receded, as evidenced by some flight to quality along the credit spectrum. This led to better pricing for triple- A IFC issues which in FY11 sat at around LIBOR flat, but moved back to 5 to 10 basis points below LIBOR by the end of FY12 for US$ issuances at 5 year tenor. This development, along with movements in foreign exchange basis swap rates, resulted in adverse after swap revaluations on market borrowings, net of associated derivatives and accordingly, IFC reported unrealized losses in FY12 of $206million. In FY13, interest rate levels remained stable through the first nine months of the year, then, in the last three months of FY13, bond markets weakened on the prospect of tighter liquidity conditions amid signs of accelerating US economic activity. Benchmark 5 year US$ interest rates jumped around 50 basis points during the last three months of FY13 causing large revaluation gains on IFCs portfolio of medium to long term borrowings, offset by losses on associated derivatives. Credit spreads for benchmark IFC USD
IFCs investments in debt securities and equity investments that are listed in markets that provide readily determinable fair values are classified as available-for-sale, with unrealized gains and losses on such investments being reported in OCI until realized. When realized, the gain or loss is transferred to net income. Changes in unrealized gains and losses on equity investments and debt securities reported in OCI are significantly impacted by (i) the global environment for emerging markets; and (ii) the realization of gains on sales of such equity investments and debt securities. The net change in unrealized gains and losses on equity investments and debt securities in OCI can be summarized as follows:
FY13
Net unrealized gains and losses on equity investments arising during the year: Unrealized gains Unrealized losses Reclassification adjustment for realized gains and other- than-temporary impairments included in net income Net unrealized gains and losses on equity investments Net unrealized gains and losses on debt securities arising during the year Unrealized gains Unrealized losses $ 194 $ 85 $ 757 $ 290
FY12
(396)
(813)
24 $ 385
277 $ (246)
(201)
(358)
Reclassification adjustment for realized gains, non- credit related portion of impairments which were recognized in net income and other- thantemporary included in net income 29 Net unrealized gains and losses on debt securities Total unrealized gains and losses on equity investments and debt securities $ 22 $ 407
14
$ (259) $ (505)
Changes in the funded status of pension and other postretirement benefit plans are recognized in OCI, to the extent they are not recognized in net income under periodic benefit cost for the year. During FY13, IFC experienced a gain of $201million primarily due to $200 million of unrecognized net actuarial gains, resulting from the increase in the discount rates used to determine the
26 _
projected benefit obligations and higher return on pension assets. The discount rate assumption used to determine the projected benefit obligation for the largest benefit plan, the Staff Retirement Plan, increased from 3.9% at June30, 2012 to 4.6% at June30, 2013.
FY12 Versus FY11
Net Income
on loans accounted for at fair value and gains on non- monetary exchanges were $67million lower than in FY11.
Income from equity investments
IFC reported income before net gains and losses on other non- trading financial instruments accounted for at fair value and grants to IDA of $1,877 million in FY12, as compared to $2,024 million in FY11. The decrease in income before net gains and losses on other non- trading financial instruments accounted for at fair value and grants to IDA in FY12 when compared to FY11 was principally as a result of (US$ millions):
Unrealized losses on equity investments accounted for at fair value Other- than-temporary impairments on equity investments Income from liquid asset trading activities Gains on non- monetary exchanges Provisions for losses on loans, guarantees and other receivables Advisory services expenses, net Foreign currency transaction gains and losses on non- trading activities Realized capital gains on equity investments Other, net Overall change $ (582)
(474) (216) (214) (157) 132 178 1,263 (77) $ (147)
Net losses on other non-trading financial instruments accounted for at fair value totaled $219million in FY12 (net gains of $155million in FY11), resulting in income before grants to IDA of $1,658 million in FY12, as compared to $2,179million in FY11. Grants to IDA totaled $330million in FY12, as compared to $600million in FY11. Accordingly, net income totaled $1,328 million in FY12, as compared with $1,579million in FY11. A more detailed analysis of the components of IFCs net income follows.
Income from loans and guarantees
IFCs primary interest earning asset is its loan portfolio. Income from loans and guarantees for FY12 totaled $938million, compared with $877million in FY11, an increase of $61million. The disbursed loan portfolio grew by $1,159 million, from $19,884million at June30, 2011 to $21,043million at June30, 2012. The weighted average contractual interest rate on loans at June30, 2012 was 4.7%, versus 4.6% at June30, 2011. These factors resulted in $90million higher interest income than in FY11. Commitment and financial fees were $12million higher than in FY11. Recoveries of interest on loans removed from nonaccrual status, net of reversals of income on loans placed in nonaccrual status were $14million higher than in FY11. Gain on sales of loan was $2million as compared to no such gains in FY11. Income from IFCs participation notes over and above minimum contractual interest and other income were $10 million higher than in FY11. Unrealized gains
Income from the equity investment portfolio decreased by $7million from an income of $1,464 million in FY11 to $1,457 million in FY12. IFC generated record realized gains on sales of equity investments for FY12 of $2,000million, as compared with $737million for FY11, an increase of $1,263million. IFC sells equity investments where IFCs developmental role was complete, and where predetermined sales trigger levels had been met and, where applicable, lock ups have expired. Total realized gains on equity investments are concentratedin FY12, 11 investments generated individual capital gains in excess of $20million for a total of $1,821million, or 91%, of the FY12 gains, compared to 10 investments generating individual capital gains in excess of $20million for a total of $416million, or 56%, of the FY11 gains. Gains on non-monetary exchanges in FY12 totaled $3million, as compared with $217million in FY11. There were two large transactions that resulted in the recording of gains on non- monetary exchanges in FY11 that did not recur in FY12. Dividend income totaled $274 million, as compared with $280million in FY11. Consistent with FY11, a significant amount of IFCs dividend income in FY12 was due to returns on IFCs joint ventures in the oil, gas and mining sectors accounted for under the cost recovery method, which totaled $43million in FY12, as compared with $57million in FY11. Other- t han-temporary impairments on equity investments totaled $692million in FY12 ($420million on equity investments accounted for as available- for-sale; and $272 million on equity investments accounted for at cost less impairment), as compared with $218 million in FY11 ($131 million on equity investments accounted for as available- for-sale; and $87 million on equity investments accounted for at cost less impairment). In FY12, eight investments generated individual other- t han-temporary impairments in excess of $20million for a total of $298million. In FY11, one investment generated an other- t han-temporary impairment loss of $40million. There were no other investments that generated an other- than-temporary impairment loss in excess of $20million. Unrealized losses on equity investments that are accounted for at fair value through net income in FY12 totaled $128million, as compared with gains of $454million in FY11. Seven investmentsin equity funds accounted for $146 million of the unrealized losses inFY12. Six investments in equity funds accounted for $199million of the unrealized gains in FY11. Individual investments in such Funds provided a significant component of the unrealized gains and losses.
Income from debt securities
Income from debt securities increased to $81million in FY12 from $46million in FY11, an increase of $35million. The largest compo nents of the increase were higher interest income ($21million) and higher unrealized gains on debt securities accounted for at fair value ($23 million) in FY12 when compared with FY11. Realized gains on debt securities were $14million higher in FY12 as compared to FY11.
_ 27
Provision for losses on loans and guarantees
The quality of IFCs loan portfolio, as measured by average country risk ratings and average credit risk ratings was substantially unchanged during FY12. By another measure, non- performing loans decreased from $943 million (4.7%) of the disbursed loan portfolio at June30, 2011 to $859million (4.1%) at June30, 2012. IFC recorded provision for losses on loans and guarantees of $112million in FY12 ($76million specific provisions on loans, $39million portfolio provisions on loans, and $3 million release of provision for losses on guarantees) as compared to release of provision of $40million in FY11 ($16million release in specific provisions, and $24million release in portfolio provisions). On June 30, 2012, IFCs total reserves against losses on loans were 6.6% of the disbursed loan portfolio (6.6% at June30, 2011). Specific reserves against losses at June30, 2012 of $447million ($382 million at June 30, 2011) are held against impaired loans of $923million ($918million at June30, 2011), a coverage ratio of 48% (42%).
Income from liquid asset trading activities
bought back $0.6billion of its market borrowings ($0.3billion in FY11). Charges on borrowings of $181 million in FY12 ($140 million in FY11) are reported net of gains on buybacks of $19million ($10million in FY11). The weighted average rate of IFCs borrowings outstanding from market sources, after the effects of borrowing- related derivatives, and excluding short- term borrowings issued under the Discount Note Program, rose during the year from 0.3% at June30, 2011 to 0.7% at June 30, 2012. The size of the borrowings portfolio (excluding the short- term Discount Note Program), net of borrowing- related derivatives and before fair value adjustments, increased by $6.8billion during FY12 from $33.9billion at June30, 2011, to $40.7billion at June30, 2012.
Other income
Income from liquid asset trading activities comprises interest from time deposits and securities, net gains and losses on trading activities, and a small currency effect. The liquid assets portfolio, net of derivatives and securities lending activities, increased from $24.5billion at June30, 2011, to $29.7billion at June30, 2012. Income from liquid asset trading activities totaled $313million in FY12 ($529million in FY11). In FY12 and FY11, all liquid asset portfolios, except for the P7 portfolio (which has an NAV less than $10million), outperformed their respective benchmarks. In addition to interest income and foreign currency transaction gains of $648million, the portfolio of ABS and MBS experienced fair value losses totaling $8 million in FY12. Holdings in other products, including US Treasuries, global government bonds, high quality corporate bonds and derivatives generated $327million of losses in FY12. At June30, 2012, trading securities with a fair value of $150million are classified as Level 3 securities ($210million on June30, 2011). The P1 portfolio generated a return of $218million in FY12, or 0.95%. In FY11, the P1 portfolio generated a return of $330million, or 2.29%. The externally managed P3 portfolio, managed against the same variable rate benchmark as the P1 portfolio, returned $13million in FY12, or 1.64%, $7million higher than the $6million, or 0.97% return in FY11. The P2 and externally- managed P4 portfolios returned $60million (1.15%) and $13million (2.00%) in FY12, respectively, as compared to $179 million (3.33%) and $9 million (1.87%) in FY11, respectively. IFCs P0 portfolio earned $9million in FY12, a total return of 0.47%, as compared to $4million (0.44%) in FY11. The P7 portfolio earned less than $0.5million (1.15%) in FY12 as compared to earning $1million (1.32%) in FY11.
Charges on borrowings
Other income of $448 million for FY12 was $226 million higher than in FY11 ($222 million). Other income in FY12 includes income from the P6 local currency liquidity portfolio of $43million (reported in income from liquid asset trading in FY13 and amounting to $44million in FY11), management fees and service fee reimbursements from AMC of $28million ($28million in FY11) and income from advisory services of $269million ($0 in FY11). In FY12, income from advisory services included $189million contributed by donors and $25million of fees from clients and administrative fees from donors.
Other expenses
Administrative expenses (the principal component of other expenses) increased by $98 million from $700 million in FY11 to $798million in FY12, driven largely by a 9% increase in staffing and, to a lesser extent, salary increases to existing staff. Administrative expenses include the grossing- up effect of certain revenues and expenses attributable to IFCs reimbursable program and Jeopardy Projects ($22 million in FY12, as compared with $24 million in FY11). IFC recorded an expense from pension and other postretirement benefit plans in FY12 of $96 million, as compared with $109million in FY11, a decrease driven by actuarial assumptions. Advisory services expenses totaled $290 million in FY12 ($153 million in FY11). Advisory services expenses included $189million of funds contributed by donors that were utilized in the provision of advisory services.
Net gains and losses on other non-trading financial instruments
IFCs charges on borrowings increased by $41 million, from $140million in FY11 to $181million in FY12, largely reflecting the higher US dollar interest rate environment and increased level of borrowings, when comparing FY12 and FY11. During FY12, IFC
As discussed in more detail in Note A to IFCs FY12 Consolidated Financial Statements, IFC accounts for certain financial instruments at fair value with unrealized gains and losses on such financial instruments being reported in net income, namely: (i)all swapped market borrowings; and (ii) all equity investments in which IFC has greater than 20% holdings and/or equity and fund investments which, in the absence of the Fair Value Option, would be required to be accounted for under the equity method, and (iii) substantially all market borrowings. All other non-trading derivatives, including standalone and embedded derivatives in the loan, equity and debt security portfolios continue to be accounted for at fair value.
28 _
The resulting effects of fair value accounting for these non- trading financial instruments on net income in FY12 and FY11 are summarized as follows (US$ millions):
FY12
Realized gains and losses on derivatives associated with investments $ 11 10
Other comprehensive income
Unrealized gains and losses on equity investmenTS and debt securities
FY11
$ 63
Non- monetary gains on derivatives associated with investments Unrealized gains and losses on derivatives associated with investments
22 (23) 93 $ 155
(34)
Unrealized gains and losses on market borrowings and associated derivatives, net (206) Net gains and losses on other non- t rading financial instruments accounted for at fairvalue $ (219)
Changes in the fair value of IFCs market borrowings and associated derivatives, net includes the impact of changes in IFCs own credit spread when measured against US$ LIBOR. As credit spreads widen, unrealized gains are recorded and when credit spreads narrow, unrealized losses are recorded (notwithstanding the impact of other factors, such as changes in risk- free interest and foreign currency exchange rates). The magnitude and direction (gain or loss) can be volatile from period to period but do not alter cash flow. IFCs policy is to generally match currency, amount and timing of cash flows on market borrowings with cash flows on associated derivatives entered into contemporaneously. In FY11, the trend decline in global interest rate paused temporarily in the second quarter of the year and interest rates remained stable at low levels subsequently. Credit spreads were little changed throughout FY11 and resulting pricing was at around LIBOR flat for IFCs benchmark US$ global bond offerings. In FY10, credit spreads remained elevated relative to the levels that prevailed before FY09. As a result, IFC reported unrealized gains for FY11 of $93million, as compared to unrealized losses of $226million in FY10. In FY12, unsettled conditions in European sovereign debt markets and renewed signs of flagging economic activity were accompanied by further interest rate declines from already low levels. Risk appetites in the capital markets receded, as evidenced by some flight to quality along the credit spectrum. This led to better pricing for AAA IFC issues which in FY11 sat at around LIBOR flat, but moved back to 5 to 10 basis points below LIBOR by the end of FY12. This development, along with movements in foreign exchange basis swap rates, resulted in adverse after swap revaluations on IFCs financial statements and IFC reported unrealized losses for FY12 of $206million, as compared to unrealized gains of $93million in FY11. IFC reported net losses on derivatives associated with investments (principally put options, stock options, conversion features, warrants and swaps associated with loans) of $13million in FY12 (net gains of $62million in FY11). Gains and losses are highly concentrated, with five derivatives accounting for $113million of gains and five derivatives accounting for $73million of losses in FY12 (five derivatives accounting for $140million of gains and five derivatives accounting for $58million of losses in FY11).
Grants to IDA
IFCs investments in debt securities and equity investments that are listed in markets that provide readily determinable fair values at fair value are classified as available- for-sale, with unrealized gains and losses on such investments being reported in OCI until realized. When realized, the gain or loss is transferred to net income. Changes in unrealized gains and losses on equity investments and debt securities reported in OCI are significantly impacted by (i) the global environment for emerging markets; and (ii) the realization of gains on sales of such equity investments and debt securities. The net change in unrealized gains and losses on equity investments and debt securities in OCI can be summarized as follows:
FY12
Net unrealized gains and losses on equity investments arising during the year: Unrealized gains Unrealized losses $ 290 $ 697
FY11
(813)
(309) (274) $ 114
Reclassification adjustment for realized gains and impairments included in net income 277 Net unrealized gains and losses on equity investments Net unrealized gains and losses on debt securities arising during the year Unrealized gains Unrealized losses $ 85 $ (246)
$ 234
(358)
(97)
Reclassification adjustment for realized gains, non credit- related portion of impairments which were recognized in net income and impairments included in net income Net unrealized gains and losses on debt securities Total unrealized gains and losses on equity investments and debt securities
14
4 141
$ (259) $ (505)
$ 255
Changes in the funded status of pension and other postretirement benefit plans are recognized in OCI, to the extent they are not recognized in net income under periodic benefit cost for the year. During FY12, IFC experienced a loss of $525million primarily due to the following factors: Unrecognized net actuarial losses on benefits plans: $501million of unrecognized net actuarial losses, primarily due to the decrease in the discount rates used to determine the projected benefit obligations and lower return on pension assets. The discount rate assumption used to determine the projected benefit obligation for the largest benefit plan, the Staff Retirement Plan, decreased from 5.3% at June30, 2011 to 3.9% at June30, 2012. Unrecognized net prior service cost on benefit plans: $24million of unrecognized prior service cost, primarily due to an amendment made to the pension plan. See notes to FY12 Consolidated Financial Statements Note W Pension and Other Postretirement Benefits for further details.
During FY12, IFC recorded a grant to IDA of $330million, as compared with $600million in FY11.
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VIII. GOVERNANCE AND CONTROL

SENIOR MANAGEMENT CHANGES
BOARD MEMBERSHIP
The following changes occurred in the Senior Management of IFC since June30, 2012: Dr. Jim Yong Kim became President, effective July1, 2012. Mr. Thierry Tanoh retired as Vice President, Sub-Saharan Africa, Latin America and the Caribbean, and Western Europe, effective July16, 2012. Mr. Bernard Sheahan, Director, Global Infrastructure and Natural Resources, was appointed Acting Vice President, Sub- Saharan Africa, Latin America and the Caribbean, and Western Europe, effective July16, 2012 and ending on February14, 2013. Mr. Jin- Yong Cai became Executive Vice President and CEO, effective October1, 2012. Ms. Rachel Robbins retired as Vice President and General Counsel, effective October 31, 2012. Mr. David Harris, Deputy General Counsel, was Acting Vice President and General Counsel, effective November1, 2012 and ending on March31, 2013. Mr. Jean Philippe Prosper became Vice President, Sub- Saharan Africa, Latin America and the Caribbean, effective February15, 2013. Mr. Dimitris Tsitsiragos title changed from Vice President, Eastern Europe, Central Asia, Middle East and North Africa to Vice President, Europe, Central Asia, Middle East and North Africa, effective February15, 2013. Ms. Saadia Khairis title changed from Vice President, Risk, Finance and Strategy to Vice President, Risk Management and Reporting, effective February15, 2013. Mr. Rashad Kaldanys title changed from Vice President, Global Industries to Vice President and Chief Operating Officer, effective February15, 2013. Mr. Ethiopis Tafara was appointed IFCs Vice President and General Counsel, effective April1, 2013. Ms. Dorothy Berry retired as Vice President, Human Resources, Communications, and Administration, effective June30, 2013. The position of Vice President, Human Resources, Communications, and Administration will not be filled. Effective July1, 2013, Human Resource services to IFC will be provided by the World Bank Group Integrated Services, and IFC Human Resources business partners, under the leadership of Sean McGrath. Mr. Rashad Kaldany, Vice President and Chief Operating Officerwill retire from IFC on September6, 2013 whereupon the positions will not be filled.
GENERAL GOVERNANCE
In accordance with its Articles of Agreement, members of the Board of Directors are appointed or elected every two years by their member governments. Currently, the Board of Directors is composed of 25 Directors. These Directors are neither officers nor staff of IFC. The President is the only member of the Board of Directors from management, serving as a non- voting member and as Chairman of the Board of Directors. The Board of Directors has established several Committees including: Audit Committee Budget Committee Committee on Development Effectiveness Committee on Governance and Executive Directors Administrative Matters Ethics Committee Human Resources Committee The Board of Directors and their Committees function in continuous session at the principal offices of IBRD, as business requires. Each Committees terms of reference establishes its respective roles and responsibilities. As Committees do not vote on issues, their role is primarily to serve the Board of Directors in discharging its responsibilities. The Board of Directors considers proposals made by the President on the use of IFCs net income: retained earnings and designation of retained earnings and is responsible for the conduct of the general operations of IFC. The Directors are also responsible for presenting to the Board of Governors, at the Annual meetings, audited accounts, an administrative budget, and an annual report on operations and policies as well as other matters.
AUDIT COMMITTEE Membership
The Audit Committee consists of eight Directors. Membership on the Audit Committee is determined by the Board of Directors, based upon nominations by the Chairman of the Board of Directors, following informal consultation with the Directors.
Key Responsibilities
IFCs decision-making structure consists of the Board of Governors, the Board of Directors, the President, the Executive Vice President and CEO, other officers and staff. The Board of Governors is the highest decision- making authority. Governors are appointed by their member governments for a five- year term, which is renewable. The Board of Governors may delegate authority to the Board of Directors to exercise any of its powers, except those reserved to the Board of Governors under the Articles of Agreement.
The Audit Committee is appointed by the Board of Directors to assist it in the oversight and assessment of IFCs finances and accounting, including the effectiveness of financial policies, the integrity of financial statements, the system of internal controls regarding finance, accounting and ethics (including fraud and corruption), and financial and operational risks. The Audit Committee also has the responsibility for reviewing the performance and recommending to the Board of Directors the appointment of the external auditor, as well as monitoring the independence of the external auditor. The Audit Committee participates in oversight of the internal audit function and reviews the annual internal audit plan. In the execution of its role, the Audit Committee discusses with management, the external auditors, and the internal auditors, financial issues and policies which have a bearing on IFCs financial position and risk-bearing capacity. The Committee also reviews with the external auditor the financial statements prior to their publication and recommends the annual audited financial statements for approval to the Board of Directors. The Audit Committee
30 _
monitors the evolution of developments in corporate governance and the role of audit committees on an ongoing basis and updated its terms of reference in July 2009.
Executive Sessions
Auditor independence
Under the Audit Committees terms of reference, members of the Audit Committee may convene in executive session at any time, without management present. It meets separately in executive session with the external and internal auditors.
Access to Resources and to Management
Throughout the year, the Audit Committee receives a large volume of information, which supports the execution of its duties. The Audit Committee meets both formally and informally throughout the year to discuss relevant matters. The Audit Committee has complete access to management and reviews and discusses with management topics contemplated in their Terms of Reference. The Audit Committee has the capacity, under exceptional circumstances, to obtain advice and assistance from outside legal, accounting or other advisors as deemed appropriate.
BUSINESS CONDUCT
IFC promotes a positive work environment where staff members understand their ethical obligations to the institution, which are embodied in its Core Values and Principles of Staff Employment. In support of this commitment, the institution has in place a code of conduct, entitled Living our Values (the Code). The Code applies to all World Bank Group staff worldwide and is available on www.worldbank.org. In addition to the Code, Staff and Administrative Manuals, guidance for staff is also provided through programs, training materials, and other resources. Managers are responsible for ensuring that internal systems, policies, and procedures are consistently aligned with the IFCs business conduct framework. There exists both an Ethics HelpLine and a Fraud and Corruption hotline. A third- party service offers numerous methods of worldwide communication. Reporting channels include: phone, mail, email, or through confidential submission through a website. IFC has in place procedures for the receipt, retention and handling of recommendations and concerns relating to business conduct identified during accounting, internal control and auditing processes. Staff Rules clarify and codify the obligations of staff in reporting suspected fraud, corruption or other misconduct that may threaten operations or governance of the Corporation. Additionally, these rules offer protection from retaliation.
The appointment of the external auditor of IFC is governed by a set of Board of Director- approved principles. Key features of those principles include: Prohibition of the external auditor from the provision of all non audit-related services. All audit-related services must be pre-approved on a case-by-case basis by the Board of Directors, upon recommendation of the Audit Committee. Mandatory rebidding of the external audit contract every five years, with a limitation of two consecutive terms and mandatory rotation thereafter. External auditors are appointed to a five- year term of service. This is subject to annual reappointment based on the recommendation of the Audit Committee and approval of a resolution by the Board of Directors. In FY14, KPMG LLP will begin a second five- year term as IFCs external auditor. Communication between the external auditor and the Audit Committee is ongoing, as frequently as is deemed necessary by either party. The Audit Committee meets periodically with the external auditor, and individual members of the Audit Committee have independent access to the external auditor. IFCs external auditors also follow the communication requirements with audit committees set out under generally accepted auditing standards in the United States of America.
INTERNAL CONTROL
Internal Control Over Financial Reporting
Management makes an annual assertion whether, as of June 30 of each fiscal year, its system of internal control over its external financial reporting has met the criteria for effective internal control over external financial reporting as described in the Internal Control- Integrated Framework issued in 1992 by the Committee of Sponsoring Organizations of the Treadway Commission. Concurrently, IFCs external auditor provides an attestation report on whether managements assertion regarding the effectiveness of internal control over external financial reporting is fairly stated in all material respects. For each fiscal year, management performs an evaluation of internal control over external financial reporting for the purpose of determining if there are any changes made in internal controls during the fiscal year covered by the report that materially affect, or would be reasonably likely to materially affect IFCs internal control over external financial reporting. As of June30, 2013, no such changes had occurred.
Disclosure Controls and Procedures
Disclosure controls and procedures are those processes which are designed to ensure that information required to be disclosed is accumulated and communicated to management as appropriate, to allow timely decisions regarding required disclosure by IFC. Management has undertaken an evaluation of the effectiveness of such controls and procedures. Based on that evaluation, management has concluded that these controls and procedures were effective as of June30, 2013.
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INTERN NATIONAL FINANCE CO ORPORATIO ON
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INTERNATIONAL FINANCE CORPORATION
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CONSOLIDATED BALANCE SHEETS

as of June 30, 2013 and June 30, 2012 (US$ millions)
Assets Cash and due from banks .......................................................................................................... $ Time deposits ............................................................................................................................ Trading securities - Notes C and R ........................................................................................... Securities purchased under resale agreements ........................................................................ Investments - Notes B, D, E, F, R and U Loans ($493 - June 30, 2013 and $591 - June 30, 2012 at fair value; $43 - June 30, 2013 and $60 - June 30, 2012 at lower of cost or fair value; net of reserve against losses of $1,628 - June 30, 2013 and $1,381 - June 30, 2012) - Notes D, E and R ............................................................................................................. Equity investments ($8,576 - June 30, 2013 and $6,708 - June 30, 2012 at fair value) - Notes B, D and R ... Debt securities - Notes D, F and R ........................................................................................ Total investments .......................................................................................................... Derivative assets - Notes Q and R ............................................................................................ Receivables and other assets - Note J ...................................................................................... Total assets ..................................................................................................................... $
2013 616 5,889 30,349 337 $
2012 1,328 5,719 28,868 964
20,831 11,695 2,151 34,677 3,376 2,281 77,525 $
19,496 9,774 2,168 31,438 4,615 2,829 75,761
Liabilities and capital Liabilities Securities sold under repurchase agreements ...................................................................... $ Borrowings outstanding - Notes K and R .............................................................................. From market sources at amortized cost ........................................................................... From market sources at fair value ..................................................................................... From International Bank for Reconstruction and Development at amortized cost ............ Total borrowings ........................................................................................................... Derivative liabilities - Notes Q and R ..................................................................................... Payables and other liabilities - Note L ................................................................................... Total liabilities ................................................................................................................... Capital Capital stock, authorized (2,580,000 - June 30, 2013 and June 30, 2012) shares of $1,000 par value each - Note M Subscribed and paid-in ................................................................................................ Accumulated other comprehensive income - Note O ............................................................ Retained earnings - Note O ................................................................................................... Total IFC capital ........................................................................................................... Noncontrolling interests ......................................................................................................... Total capital .................................................................................................................. Total liabilities and capital ........................................................................................... $ 5,736 1,715 42,924 230 44,869 2,310 2,335 55,250 $ 6,397 1,777 42,846 42 44,665 1,261 2,858 55,181
2,403 1,121 18,713 22,237 38 22,275 77,525 $
2,372 513 17,695 20,580 20,580 75,761
The notes to the Consolidated Financial Statements are an integral part of these statements
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_ 37
CONSOLIDATED INCOME STATEMENTS

for each of the three years ended June 30, 2013 (US$ millions)
2013 Income from investments Income from loans and guarantees - Note E ............................................................ $ (Provision) release of provision for losses on loans, guarantees and other receivables - Note E ............................................................................. Income from equity investments - Note G ................................................................. Income from debt securities - Note F ........................................................................ Total income from investments ..................................................................... Income from liquid asset trading activities - Note C ..................................................... Charges on borrowings - Note K .................................................................................. Income from investments and liquid asset trading activities, after charges on borrowings .............................................................................. Other income Service fees ............................................................................................................. Advisory services income ......................................................................................... Other - Notes B and N ............................................................................................. Total other income ............................................................................................. Other expenses Administrative expenses - Note X ............................................................................ Advisory services expenses ..................................................................................... Expense from pension and other postretirement benefit plans - Note W ................ Other - Note B ........................................................................................................... Total other expenses ......................................................................................... Foreign currency transaction gains and losses on non-trading activities...................... Income before net gains and losses on other non-trading financial instruments accounted for at fair value and grants to IDA............................ Net gains and losses on other non-trading financial instruments accounted for at fair value - Note P Realized gains .......................................................................................................... Gains on non-monetary exchanges ......................................................................... Unrealized gains (losses) .......................................................................................... Total net gains (losses) on other non-trading financial instruments accounted for at fair value ............................................................................. Income before grants to IDA ................................................................................... Grants to IDA - Note O .................................................................................................. Net income ............................................................................................................... $ Less: Net loss attributable to noncontrolling interests................................................... Net income attributable to IFC ............................................................................... $
2012
2011
1,059 (243) 752 5 1,573 500 (220) 1,853 101 239 101 441 (845) (351) (173) (32) (1,401) 35 928
938 (117) 1,457 81 2,359 313 (181) 2,491 60 269 119 448 (798) (290) (96) (23) (1,207) 145 1,877
877 40 1,464 46 2,427 529 (140) 2,816 88 134 222 (700) (153) (109) (19) (981) (33) 2,024
35 2 385 422 1,350 (340) 1,010 8 1,018 $ $
11 10 (240) (219) 1,658 (330) 1,328 1,328 $ $
63 22 70 155 2,179 (600) 1,579 1,579
38 _
Page 45
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

2013 Net income attributable to IFC ................................................................................... $ Other comprehensive income (loss) Unrealized gains and losses on debt securities Net unrealized (losses) gains on available-for-sale debt securities arising during the year ...................................................................................................... Add (less): reclassification adjustment for realized (gains) losses included in net income .............................................................................. Less: reclassification adjustment for gains on non-monetary exchanges included in net income .............................................................................. Add: reclassification adjustment for other-than-temporary impairments included in net income .............................................................................. Net unrealized gains (losses) on debt securities......................................... Unrealized gains and losses on equity investments Net unrealized gains (losses) on available-for-sale equity investments arising during the year ...................................................................................................... Less: reclassification adjustment for realized gains included in net income ......... Add: reclassification adjustment for other-than-temporary impairments included in net income .............................................................................. Net unrealized gains (losses) on equity investments ................................. Net unrecognized actuarial gains (losses) and unrecognized prior service credits (costs) on benefit plans ........................................................................ Total other comprehensive income (loss) ........................................................... Total comprehensive income ..................................................................... $ 361 (265) 289 385 201 608 1,626 $ (7) (10) (7) 46 22 1,018 $
2012 1,328 $
2011 1,579
(273) (12) (1) 27 (259)
137 2 2 141
(523) (143) 420 (246) (525) (1,030) 298 $
388 (405) 131 114 86 341 1,920
Page 46
_ 39
CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL

Attributable to IFC Accumulated other comprehensive Total income retained Note O earnings $ 14,788 $ 1,202
At June 30, 2010 Year ended June 30, 2011 Net income attributable to IFC Other comprehensive income attributable to IFC Designation of retained earnings Note O Expenditures against designated retained earnings - Note O At June 30, 2011 Year ended June 30, 2012 Net income attributable to IFC Other comprehensive loss attributable to IFC Designation of retained earnings Note O Payments received for IFC capital stock subscribed Expenditures against designated retained earnings - Note O At June 30, 2012 Year ended June 30, 2013 Net income attributable to IFC Other comprehensive income attributable to IFC Payments received for IFC capital stock subscribed Designation of retained earnings Note O Expenditures against designated retained earnings - Note O Noncontrolling interests issued Net loss attributable to noncontrolling interests At June 30, 2013
Undesignated Retained earnings $ 14,307
Designated retained earnings $ 481
Capital stock $ 2,369
Total IFC capital $ 18,359
Noncontrolling interests $ -
Total capital $ 18,359
1,579
1,579 341
1,579 341 $ 1,543 $ 2,369 $ 20,279 $ $
1,579 341 20,279
(610) 756 $ 16,032 $
610 (756) 335
$ 16,367
1,328
1,328 (1,030)
1,328 (1,030) 3 3 $ 513 $ 2,372 $ 20,580 $ $
1,328 (1,030) 3 20,580
(399)
399
412 $ 17,373 $
(412) 322
$ 17,695
1,018
1,018 608 31
1,018 608 31 46 (8) $ 38 $
1,018 608 31 46 (8) 22,275
(420) 464
420 (464)
18,435
278
$ 18,713
1,121
2,403
22,237
40 _
Page 47
CONSOLIDATED STATEMENTS OF CASH FLOWS

2013 (6,940) (2,549) (523) 5,321 377 1,502 35 (2,777) $ 2012 (5,651) (1,810) (520) 3,733 231 10 2,452 56 (1,499) $ 2011 (4,519) (1,884) (312) 3,297 72 26 1,433 12 (1,875)
Cash flows from investing activities Loan disbursements ................................................................................................. $ Investments in equity securities ................................................................................ Investments in debt securities .................................................................................. Loan repayments ..................................................................................................... Debt securities repayments ..................................................................................... Proceeds from sales of loans.................................................................................... Proceeds from sales of equity investments .............................................................. Proceeds from sales of debt securities .................................................................... Net cash used in investing activities ............................................................ Cash flows from financing activities Medium and long-term borrowings New issues ........................................................................................................... Retirement ............................................................................................................ Medium and long-term borrowings related derivatives, net .................................. Short-term borrowings, net ....................................................................................... Capital subscriptions ................................................................................................. Noncontrolling interests issued ................................................................................. Net cash provided by financing activities ................................................... Cash flows from operating activities Net income attributable to IFC .................................................................................. Add: Net loss attributable to noncontrolling interests ................................................ Net income ............................................................................................................... Adjustments to reconcile net income to net cash used in operating activities: Gains on non-monetary exchanges of loans ........................................................ Realized gains on debt securities and gains on non-monetary exchanges.......... Realized gains on equity investments and gains on non-monetary exchanges ... Unrealized (gains) losses on loans accounted for at fair value ............................ Unrealized losses (gains) on debt securities accounted for at fair value ......... Unrealized (gains) losses on equity investments ................................................. Provision (release of provision) for losses on loans and guarantees ................... Other-than-temporary impairments on debt securities ......................................... Other-than-temporary impairments on equity investments................................... Net discounts paid on retirement of borrowings.. .. Net realized gains on extinguishment of borrowings ............................................ Foreign currency transaction (gains) losses on non-trading activities .................. Net (gains) losses on other non-trading financial instruments accounted for at fair value ................................................................................ Change in accrued income on loans, time deposits and securities ..................... Change in payables and other liabilities .............................................................. Change in receivables and other assets .............................................................. Change in trading securities and securities purchased and sold under resale and repurchase agreements .................................................................. Net cash used in operating activities .......................................................... Change in cash and cash equivalents ......................................................................... Effect of exchange rate changes on cash and cash equivalents ................................. Net change in cash and cash equivalents ................................................................... Beginning cash and cash equivalents .......................................................................... Ending cash and cash equivalents .......................................................................... $ Composition of cash and cash equivalents Cash and due from banks ......................................................................................... $ Time deposits ........................................................................................................... Total cash and cash equivalents .......................................................................... $
12,718 (9,481) 401 (337) 31 46 3,378 1,018 (8) 1,010 (20) (17) (927) (35) 39 (26) 243 46 441 (2) (11) (35) (422) 18 (666) 696 (1,800) (1,468) (867) 325 (542) 7,047 6,505 616 5,889 6,505 $ $ $
11,636 (5,182) 329 (49) 3 6,737 1,328 1,328 (78) (13) (2,003) 57 (21) 128 117 27 692 (1) (19) (145) 219 (48) 1,171 (331) (5,211) (4,131) 1,107 473 1,580 5,467 7,047 1,328 5,719 7,047 $ $ $
9,882 (5,139) 410 43 5,196 1,579 1,579 (9) (2) (954) (79) 2 (454) (40) 2 218 (3) (10) 33 (155) 51 354 138 (4,722) (4,051) (730) 234 (496) 5,963 5,467 642 4,825 5,467
Page 48
_ 41
CONSOLIDATED STATEMENTS OF CASH FLOWS

2013 Supplemental disclosure Change in ending balances resulting from currency exchange rate fluctuations: Loans outstanding ............................................................................................... $ Debt securities ..................................................................................................... Loan and debt security-related currency swaps .................................................. Borrowings ............................................................................................................ Borrowing-related currency swaps ...................................................................... Client risk management-related currency swaps .................................................. Charges on borrowings paid, net .............................................................................. $ Non-cash items: Loan and debt securities conversion to equity, net .............................................. $ Increase in net assets due to exchange, recorded at fair value, of equity investment for non-cash asset ........................................................... $ 21 (19) 63 1,868 (1,876) 277 77 217 $ (675) (221) 915 1,282 (1,275) 139 90 $ 601 142 (699) (2,358) 2,327 (6) 159 75 2012 2011
$ $ $
$ $ $
42 _
Page 49
CONSOLIDATED STATEMENT OF CAPITAL STOCK AND VOTING POWER

as of June 30, 2013 (US$ thousands)
Members Afghanistan ............................. Albania .................................... Algeria ..................................... Angola ..................................... Antigua and Barbuda .............. Argentina ................................. Armenia ................................... Australia .................................. Austria ..................................... Azerbaijan ............................... Bahamas, The ... Bahrain Bangladesh Barbados Belarus .................................... Belgium ................................... Belize ...................................... Benin ... Bhutan . Bolivia . Bosnia and Herzegovina . Botswana Brazil ... Bulgaria .. Burkina Faso ........................... Burundi .................................... Cambodia ................................ Cameroon ............................... Canada ... Cape Verde Central African Republic . Chad Chile China .. Colombia Comoros . Congo, Dem. Rep. of .. Congo, Republic of ... Costa Rica .............................. Cte d'Ivoire ............................ Croatia .................................... Cyprus . Czech Republic . Denmark . Djibouti Dominica ................................. Dominican Republic ................ Ecuador ................................... Egypt, Arab Republic of .......... El Salvador .............................. Equatorial Guinea ................... Eritrea ..................................... Estonia .................................... Ethiopia ... Fiji Finland France . Gabon . Gambia, The .. Georgia ... Germany . Ghana . Greece .................................... Grenada .................................. Guatemala .............................. Guinea .................................... Guinea-Bissau ........................ Guyana ... Haiti . Honduras Hungary . Iceland India . Indonesia Iran, Islamic Republic of .. Iraq .. Ireland . Israel Italy . Jamaica .. Japan .. Jordan . Kazakhstan Kenya . Kiribati Korea, Republic of Kosovo Kuwait . Kyrgyz Republic Lao People's Dem. Rep. .. Latvia .. Lebanon .. Capital Stock Amount Percent paid of total 111 * 1,302 0.05 5,621 0.23 1,481 0.06 13 * 38,129 1.59 992 0.04 47,329 1.97 19,741 0.82 2,367 0.1 335 0.01 1,746 0.07 9,037 0.38 361 0.02 5,162 0.21 50,610 2.11 101 * 119 * 720 0.03 1,902 0.08 620 0.03 113 * 39,479 1.64 4,867 0.2 836 0.03 100 * 339 0.01 885 0.04 81,342 3.38 15 * 119 * 1,364 0.06 11,710 0.49 43,047 1.79 12,606 0.52 14 * 2,159 0.09 131 0.01 952 0.04 3,544 0.15 2,882 0.12 2,139 0.09 8,913 0.37 18,554 0.77 21 * 42 * 1,187 0.05 2,161 0.09 12,360 0.51 29 * 43 * 935 0.04 1,434 0.06 127 0.01 287 0.01 15,697 0.65 121,015 5.04 1,268 0.05 94 * 1,380 0.06 128,908 5.36 5,071 0.21 6,898 0.29 74 * 1,084 0.05 339 0.01 18 * 1,392 0.06 822 0.03 495 0.02 10,932 0.45 42 * 81,342 3.38 29,384 1.22 1,444 0.06 147 0.01 1,290 0.05 2,135 0.09 81,342 3.38 4,282 0.18 141,174 5.87 941 0.04 4,637 0.19 4,041 0.17 12 * 22,020 0.92 1,454 0.06 9,947 0.41 1,720 0.07 278 0.01 2,150 0.09 135 0.01 Voting Power Number of Percent of total votes 878 0.03 2,069 0.08 6,388 0.25 2,248 0.09 780 0.03 38,896 1.53 1,759 0.07 48,096 1.89 20,508 0.81 3,134 0.12 1,102 0.04 2,513 0.1 9,804 0.39 1,128 0.04 5,929 0.23 51,377 2.02 868 0.03 886 0.03 1,487 0.06 2,669 0.1 1,387 0.05 880 0.03 40,246 1.58 5,634 0.22 1,603 0.06 867 0.03 1,106 0.04 1,652 0.06 82,109 3.23 782 0.03 886 0.03 2,131 0.08 12,477 0.49 43,814 1.72 13,373 0.53 781 0.03 2,926 0.12 898 0.04 1,719 0.07 4,311 0.17 3,649 0.14 2,906 0.11 9,680 0.38 19,321 0.76 788 0.03 809 0.03 1,954 0.08 2,928 0.12 13,127 0.52 796 0.03 810 0.03 1,702 0.07 2,201 0.09 894 0.04 1,054 0.04 16,464 0.65 121,782 4.79 2,035 0.08 861 0.03 2,147 0.08 129,675 5.1 5,838 0.23 7,665 0.3 841 0.03 1,851 0.07 1,106 0.04 785 0.03 2,159 0.08 1,589 0.06 1,262 0.05 11,699 0.46 809 0.03 82,109 3.23 30,151 1.19 2,211 0.09 914 0.04 2,057 0.08 2,902 0.11 82,109 3.23 5,049 0.2 141,941 5.58 1,708 0.07 5,404 0.21 4,808 0.19 779 0.03 22,787 0.9 2,221 0.09 10,714 0.42 2,487 0.1 1,045 0.04 2,917 0.11 902 0.04 Capital Stock Amount Percent paid of total 71 * 83 * 55 * 2,341 0.1 2,139 0.09 536 0.02 432 0.02 1,822 0.08 15,222 0.63 16 * 451 0.02 1,615 0.07 663 0.03 214 0.01 1,665 0.07 27,589 1.15 744 0.03 1,192 0.05 144 0.01 1,035 0.04 9,632 0.4 322 0.01 666 0.03 404 0.02 822 0.03 56,131 2.34 3,583 0.15 715 0.03 147 0.01 21,643 0.9 17,599 0.73 1,187 0.05 19,380 0.81 25 * 1,007 0.04 1,147 0.05 436 0.02 6,898 0.29 13,653 0.57 7,236 0.3 8,324 0.35 1,650 0.07 2,661 0.11 81,342 3.38 306 0.01 35 * 439 0.02 30,062 1.25 2,299 0.1 1,803 0.08 27 * 223 0.01 177 0.01 4,457 0.19 1,585 0.07 37 * 83 * 17,418 0.72 1,880 0.08 37,026 1.54 7,135 0.3 638 0.03 74 * 111 * 620 0.03 684 0.03 26,876 1.12 44,063 1.83 194 0.01 1,212 0.05 1,003 0.04 11,201 0.47 777 0.03 808 0.03 34 * 4,112 0.17 3,566 0.15 14,545 0.61 810 0.03 735 0.03 9,505 0.4 4,033 0.17 121,015 5.04 569,379 23.69 3,569 0.15 3,873 0.16 55 * 27,588 1.15 446 0.02 715 0.03 1,286 0.05 2,120 0.09 2,403,217 100.00+ 2,371,896 100.00+ Voting Power Number of Percent votes of total 838 0.03 850 0.03 822 0.03 3,108 0.12 2,906 0.11 1,303 0.05 1,199 0.05 2,589 0.1 15,989 0.63 783 0.03 1,218 0.05 2,382 0.09 1,430 0.06 981 0.04 2,432 0.1 28,356 1.11 1,511 0.06 1,959 0.08 911 0.04 1,802 0.07 10,399 0.41 1,089 0.04 1,433 0.06 1,171 0.05 1,589 0.06 56,898 2.24 4,350 0.17 1,482 0.06 914 0.04 22,410 0.88 18,366 0.72 1,954 0.08 20,147 0.79 792 0.03 1,774 0.07 1,914 0.08 1,203 0.05 7,665 0.3 14,420 0.57 8,003 0.31 9,091 0.36 2,417 0.09 3,428 0.13 82,109 3.23 1,073 0.04 802 0.03 1,206 0.05 30,829 1.21 3,066 0.12 2,570 0.1 794 0.03 990 0.04 944 0.04 5,224 0.21 2,352 0.09 804 0.03 850 0.03 18,185 0.71 2,647 0.1 37,793 1.49 7,902 0.31 1,405 0.06 841 0.03 878 0.03 1,387 0.05 1,451 0.06 27,643 1.09 44,830 1.76 961 0.04 1,979 0.08 1,770 0.07 11,968 0.47 1,544 0.06 1,575 0.06 801 0.03 4,879 0.19 4,333 0.17 15,312 0.6 1,577 0.06 1,502 0.06 10,272 0.4 4,800 0.19 121,782 4.79 570,146 22.41 4,336 0.17 4,640 0.18 822 0.03 28,355 1.11 1,213 0.05 1,482 0.06 2,053 0.08 2,887 0.11 2,544,345 100.00+ 2,511,184 100.00+
* Less than .005 percent + May differ from the sum of the individual percentages shown because of rounding
Members Lesotho ... Liberia . Libya Lithuania . Luxembourg Macedonia, FYR of ... Madagascar ... Malawi . Malaysia . Maldives . Mali .. Malta Marshall Islands Mauritania .. Mauritius . Mexico . Micronesia, Fed. States of Moldova .. Mongolia . Montenegro Morocco .. Mozambique .. Myanmar . Namibia .. Nepal ... Netherlands New Zealand .. Nicaragua ... Niger Nigeria . Norway Oman .. Pakistan .. Palau ... Panama .. Papua New Guinea .. Paraguay Peru . Philippines .. Poland . Portugal .. Qatar ... Romania . Russian Federation .. Rwanda .. Samoa . Sao Tome and Principe Saudi Arabia .. Senegal .. Serbia .. Seychelles .. Sierra Leone .. Singapore ... Slovak Republic . Slovenia .. Solomon Islands Somalia ... South Africa South Sudan .. Spain ... Sri Lanka St. Kitts and Nevis St. Lucia .. Sudan .. Suriname Swaziland ... Sweden ... Switzerland . Syrian Arab Republic Tajikistan Tanzania . Thailand .. Timor-Leste Togo Tonga .. Trinidad and Tobago Tunisia Turkey . Turkmenistan . Uganda ... Ukraine United Arab Emirates ... United Kingdom . United States . Uruguay .. Uzbekistan . Vanuatu .. Venezuela, Rep. Boliv. de .. Vietnam .. Yemen, Republic of .. Zambia Zimbabwe .. Total June 30, 2013 Total June 30, 2012
Page 50 INTERNATIONAL FINANCE CORPORATION
_ 43
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PURPOSE The International Finance Corporation (IFC), an international organization, was established in 1956 to further economic development in its member countries by encouraging the growth of private enterprise. IFC is a member of the World Bank Group, which also comprises the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the Multilateral Investment Guarantee Agency (MIGA), and the International Centre for Settlement of Investment Disputes (ICSID). Each member is legally and financially independent. Transactions with other World Bank Group members are disclosed in the notes that follow. IFCs activities are closely coordinated with and complement the overall development objectives of the other World Bank Group institutions. IFC, together with private investors, assists in financing the establishment, improvement and expansion of private sector enterprises by making loans, equity investments and investments in debt securities where sufficient private capital is not otherwise available on reasonable terms. IFCs share capital is provided by its member countries. It raises most of the funds for its investment activities through the issuance of notes, bonds and other debt securities in the international capital markets. IFC also plays a catalytic role in mobilizing additional funding from other investors and lenders through parallel loans, loan participations, partial credit guarantees, securitizations, loan sales, risk sharing facilities, and fund investments through the IFC Asset Management Company, LLC and other IFC crisis initiatives. In addition to project finance and mobilization, IFC offers an array of financial and technical advisory services to private businesses in the developing world to increase their chances of success. It also advises governments on how to create an environment hospitable to the growth of private enterprise and foreign investment. NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING AND RELATED POLICIES The Consolidated Financial Statements include the financial statements of IFC and consolidated subsidiaries as detailed in Note B. The accounting and reporting policies of IFC conform with accounting principles generally accepted in the United States of America (US GAAP). In the opinion of management, the Consolidated Financial Statements reflect all adjustments necessary for the fair presentation of IFCs financial position and results of operation. Consolidated Financial Statements presentation IFC has reclassified certain amounts on the consolidated statement of cash flows for the year ended June 30, 2012 to amend the presentation of certain foreign currency related remeasurements. The reclassification had the effect of reducing "change in trading securities and securities purchased and sold under resale and repurchase agreements" and increasing "effect of exchange rate changes on cash and cash equivalents" for the year ended June 30, 2012, each in the amount of $909 million. The reclassification had no impact on the consolidated balance sheet or the consolidated income statement. Advisory services Beginning July 1, 2011, IFC adopted a new reporting basis for funds received from donors for IFCs advisory services business and reported advisory services business as a separate segment. See Notes T and V. Funding received for IFC advisory services from governments and other donors are recognized as contribution revenue when the conditions on which they depend are substantially met. Advisory services expenses are recognized in the period incurred. Advisory client fees and administration fees are recognized as income when earned. Functional currency IFCs functional currency is the United States dollar (US dollars or $). Use of estimates The preparation of the Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of income and expense during the reporting periods. Actual results could differ from these estimates. A significant degree of judgment has been used in the determination of: the reserve against losses on loans and impairment of debt securities and equity investments; estimated fair values of financial instruments accounted for at fair value (including equity investments, debt securities, loans, trading securities and derivative instruments); projected benefit obligations, fair value of pension and other postretirement benefit plan assets, and net periodic pension income or expense. There are inherent risks and uncertainties related to IFCs operations. The possibility exists that changing economic conditions could have an adverse effect on the financial position of IFC. IFC uses internal models to determine the fair values of derivative and other financial instruments and the aggregate level of the reserve against losses on loans and impairment of equity investments. IFC undertakes continuous review and respecification of these models with the objective of refining its estimates, consistent with evolving best practices appropriate to its operations. Changes in estimates resulting from refinements in the assumptions and methodologies incorporated in the models are reflected in net income in the period in which the enhanced models are first applied. Consolidation, non-controlling interests and variable interest entities IFC consolidates: i) all majority-owned subsidiaries; ii) limited partnerships in which it is the general partner, unless the presumption of control is overcome by certain management participation or other rights held by minority shareholders/limited partners; and iii) variable interest entities (VIEs) for which IFC is deemed to be the VIE's primary beneficiary (together, consolidated subsidiaries). Significant intercompany accounts and transactions are eliminated in consolidation. Equity interests in consolidated subsidiaries held by third parties are referred to as non-controlling interests. Such interests and the amount of consolidated net income/loss attributable to those interests are identified within IFC's consolidated balance sheet and consolidated income statement as "non-controlling interest" and "net income attributable to non-controlling interest", respectively.
44 _

An entity is a VIE if: i) its equity is not sufficient to permit the entity to finance its activities without additional subordinated financial support from other parties; ii) its equity investors do not have decision-making rights about the entity's operations; or iii) if its equity investors do not absorb the expected losses or receive the expected returns of the entity proportionally to their voting rights. A variable interest is a contractual, ownership or other interest whose value changes as the fair value of the VIE's net assets change. IFC's variable interests in VIEs arise from financial instruments, service contracts, guarantees, leases or other monetary interests in those entities. IFC is considered to be the primary beneficiary of a VIE if it has the power to direct the VIE's activities that most significantly impact its economic performance and the obligation to absorb losses of or the right to receive benefits from the VIE that could potentially be significant to the VIE unless: i) the entity has the attributes of an investment company or for which it is industry practice to account for their assets at fair value through earnings; ii) IFC has an explicit or implicit obligation to fund losses of the entity that could be potentially significant to that entity; and iii) the entity is a securitization vehicle, an asset-backed financing entity, or an entity that was formerly considered a qualifying special purpose entity, as well as entities that are required to comply with or operate in accordance with requirements that are similar to those included in Rule 2a-7 of the Investment Company Act of 1940. In those cases, IFC is considered to be the entity's primary beneficiary if it will absorb the majority of the VIE's expected losses or expected residual returns. IFC has a number of investments in VIEs that it manages and supervises in a manner consistent with other portfolio investments. Fair Value Option and Fair Value Measurements IFC has adopted the Financial Accounting Standards Boards (FASB) Accounting Standards Codification (ASC) Topic 820, Fair Value Measurements and Disclosures (ASC 820) and the Fair Value Option subsections of ASC Topic 825, Financial Instruments (ASC 825 or the Fair Value Option). ASC 820 defines fair value, establishes a framework for measuring fair value and a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels and applies to all items measured at fair value, including items for which impairment measures are based on fair value. ASC 825 permits the measurement of eligible financial assets, financial liabilities and firm commitments at fair value on an instrument-by-instrument basis, that are not otherwise permitted to be accounted for at fair value under other accounting standards. The election to use the Fair Value Option is available when an entity first recognizes a financial asset or liability or upon entering into a firm commitment. The Fair Value Option IFC has elected the Fair Value Option for the following financial assets and financial liabilities existing at the time of adoption of ASC 825 and subsequently entered into: i) investees in which IFC has significant influence: a) direct investments in securities issued by the investee and, if IFC would have otherwise been required to apply equity method accounting, all other financial interests in the investee (e.g., loans) b) investments in Limited Liability Partnerships (LLPs), Limited Liability Companies (LLCs) and other investment fund structures that maintain specific ownership accounts and loans or guarantees to such; ii) direct equity investments representing 20 percent or more ownership but in which IFC does not have significant influence; iii) certain hybrid instruments in the investment portfolio; and iv) all market borrowings, except for such borrowings having no associated derivative instruments. Beginning July 1, 2010, IFC has elected the Fair Value Option for all new equity interests in funds. All borrowings for which the Fair Value Option has been elected are associated with existing derivative instruments used to create an economic hedge. Measuring at fair value those borrowings for which the Fair Value Option has been elected mitigates the earnings volatility caused by measuring the borrowings and related derivative differently (in the absence of a designated accounting hedge) without having to apply ASC Topic 815s, Derivatives and Hedging (ASC 815) complex hedge accounting requirements. The Fair Value Option was not elected for all borrowings from IBRD and all other market borrowings because such borrowings fund assets with similar characteristics. Measuring at fair value those equity investments that would otherwise require equity method accounting simplifies the accounting and renders a carrying amount on the consolidated balance sheet based on a measure (fair value) that IFC considers superior to equity method accounting. For the investments that otherwise would require equity method accounting for which the Fair Value Option is elected, ASC 825 requires the Fair Value Option to also be applied to all eligible financial interests in the same entity. IFC has disbursed loans to certain of such investees; therefore, the Fair Value Option is also applied to those loans. IFC elected the Fair Value Option for equity investments with 20% or more ownership where it does not have significant influence so that the same measurement method (fair value) will be applied to all equity investments with more than 20% ownership. Equity securities held by consolidated subsidiaries that are investment companies Pursuant to ASC Topic 946, Financial Services - Investment Companies (ASC 946) and ASC Topic 810, Consolidation, equity securities held by consolidated subsidiaries that are investment companies are accounted for at fair value, with unrealized gains and losses reported in earnings.
_ 45

Fair Value Measurements ASC 820 defines fair value as the price that would be received to sell an asset or transfer a liability (i.e., an exit price) in an orderly transaction between independent, knowledgeable and willing market participants at the measurement date assuming the transaction occurs in the entitys principal (or most advantageous) market. Fair value must be based on assumptions market participants would use (inputs) in determining the price and measured assuming that market participants act in their economic best interest, therefore, their fair values are determined based on a transaction to sell or transfer the asset or liability on a standalone basis. Under ASC 820, fair value measurements are not adjusted for transaction costs. Notwithstanding the following paragraph, pursuant to ASC Topic 320, Investments - Debt and Equity Securities (ASC 320), IFC reports equity investments that are listed in markets that provide readily determinable fair values at fair value, with unrealized gains and losses being reported in other comprehensive income. The fair value hierarchy established by ASC 820 gives the highest priority to unadjusted quoted prices in active markets for identical unrestricted assets and liabilities (Level 1), the next highest priority to observable market based inputs or unobservable inputs that are corroborated by market data from independent sources (Level 2) and the lowest priority to unobservable inputs that are not corroborated by market data (Level 3). Fair value measurements are required to maximize the use of available observable inputs. Level 1 primarily consists of financial instruments whose values are based on unadjusted quoted market prices. It includes IFCs equity investments, which are listed in markets that provide readily determinable fair values, government issues and money market funds in the liquid assets portfolio, and market borrowings that are listed on exchanges. Level 2 includes financial instruments that are valued using models and other valuation methodologies. These models consider various assumptions and inputs, including time value, yield curves, volatility factors, prepayment speeds, default rates, loss severity and current market and contractual pricing for the underlying asset, as well as other relevant economic measures. Substantially all of these inputs are observable in the market place, can be derived from observable data or are supported by observable levels at which market transactions are executed. Financial instruments categorized as Level 2 include non-exchange-traded derivatives such as interest rate swaps, cross-currency swaps, certain assetbacked securities, as well as the majority of trading securities in the liquid asset portfolio, and the portion of IFCs borrowings accounted for at fair value not included in Level 1. Level 3 consists of financial instruments whose fair value is estimated based on internally developed models or methodologies utilizing significant inputs that are non-observable. It also includes financial instruments whose fair value is estimated based on price information from independent sources that cannot be corroborated by observable market data. Level 3 includes equity investments that are not listed in markets that provide readily determinable fair values, all loans for which IFC has elected the Fair Value Option, all of IFCs debt securities in the investment portfolio, and certain hard-to-price securities in the liquid assets portfolio. IFC estimates the fair value of its investments in private equity funds that do not have readily determinable fair value based on the funds net asset values (NAVs) per share as a practical expedient to the extent that a fund reports its investment assets at fair value and has all the attributes of an investment company, pursuant to ASC 946. If the NAV is not as of IFCs measurement date, IFC adjusts the most recent NAV, as necessary, to estimate a NAV for the investment that is calculated in a manner consistent with the fair value measurement principles established by ASC 820. Remeasurement of foreign currency transactions Assets and liabilities not denominated in US dollars, other than disbursed equity investments, are expressed in US dollars at the exchange rates prevailing at June 30, 2013 and June 30, 2012. Disbursed equity investments, other than those accounted for at fair value, are expressed in US dollars at the prevailing exchange rates at the time of disbursement. Income and expenses are recorded based on the rates of exchange prevailing at the time of the transaction. Transaction gains and losses are credited or charged to income. Loans IFC originates loans to facilitate project finance, restructuring, refinancing, corporate finance, and/or other developmental objectives. Loans are recorded as assets when disbursed. Loans are generally carried at the principal amounts outstanding adjusted for net unamortized loan origination costs and fees. It is IFCs practice to obtain collateral security such as, but not limited to, mortgages and third-party guarantees. Certain loans are carried at fair value in accordance with the Fair Value Option as discussed above. Unrealized gains and losses on loans accounted for at fair value under the Fair Value Option are reported in income from loans and guarantees on the consolidated income statement. Certain loans originated by IFC contain income participation, prepayment and conversion features. These features are bifurcated and separately accounted for in accordance with ASC 815 if IFC has not elected the Fair Value Option for the loan host contracts and the features meet the definition of a derivative, and are not considered to be clearly and closely related to their host loan contracts. Otherwise, these features are accounted for as part of their host loan contracts in accordance with IFCs accounting policies for loans as indicated herein. Loans held for sale are carried at the lower of cost or fair value. The excess, if any, of amortized cost over fair value is accounted for as a valuation allowance. Changes in the valuation allowance are recognized in net income as they occur. Revenue recognition on loans Interest income and commitment fees on loans are recorded as income on an accrual basis. Loan origination fees and direct loan origination costs are deferred and amortized over the estimated life of the originated loan; such amortization is determined using the interest method unless the loan is a revolving credit facility in which case amortization is determined using the straight-line method. Prepayment fees are recorded as income when received in freely convertible currencies.
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IFC does not recognize income on loans where collectability is in doubt or payments of interest or principal are past due more than 60 days unless management anticipates that collection of interest will occur in the near future. Any interest accrued on a loan placed in nonaccrual status is reversed out of income and is thereafter recognized as income only when the actual payment is received. Interest not previously recognized but capitalized as part of a debt restructuring is recorded as deferred income, included in the consolidated balance sheet in payables and other liabilities, and credited to income only when the related principal is received. Such capitalized interest is considered in the computation of the reserve against losses on loans in the consolidated balance sheet. Reserve against losses on loans IFC recognizes impairment on loans not carried at fair value in the consolidated balance sheet through the reserve against losses on loans, recording a provision or release of provision for losses on loans in net income, which increases or decreases the reserve against losses on loans. Individually impaired loans are measured based on the present value of expected future cash flows to be received, observable market prices, or for loans that are dependent on collateral for repayment, the estimated fair value of the collateral. The reserve against losses on loans reflects managements estimates of both identified probable losses on individual loans (specific reserves) and probable losses inherent in the portfolio but not specifically identifiable (portfolio reserves). The determination of identified probable losses represents managements judgment of the creditworthiness of the borrower. Reserves against losses are established through a review of individual loans undertaken on a quarterly basis. IFC considers a loan as impaired when, based on current information and events, it is probable that IFC will be unable to collect all amounts due according to the loans contractual terms. Information and events, with respect to the borrower and/or the economic and political environment in which it operates, considered in determining that a loan is impaired include, but not limited to, the borrowers financial difficulties, breach of contract, bankruptcy/reorganization, credit rating downgrade as well as geopolitical conflict, financial/economic crisis, commodity price decline, adverse local government action and natural disaster. Unidentified probable losses are the losses incurred at the reporting date that have not yet been specifically identified. The risks inherent in the portfolio that are considered in determining unidentified probable losses are those proven to exist by past experience and include: country systemic risk; the risk of correlation or contagion of losses between markets; uninsured and uninsurable risks; nonperformance under guarantees and support agreements; and opacity of, or misrepresentation in, financial statements. There were no changes, during the periods presented herein, to IFCs accounting policies and methodologies used to estimate its reserve against loan losses. For purposes of providing certain disclosures about IFCs entire reserve against losses on loans, IFC considers its entire loan portfolio to comprise one portfolio segment. A portfolio segment is the level at which the method for estimating the reserve against losses on loans is developed and documented. Loans are written-off when IFC has exhausted all possible means of recovery, by reducing the reserve against losses on loans. Such reductions in the reserve are partially offset by recoveries, if any, associated with previously written-off loans. Equity investments IFC invests primarily for developmental impact; IFC does not seek to take operational, controlling, or strategic equity positions within its investees. Equity investments are acquired through direct ownership of equity instruments of investees, as a limited partner in LLPs and LLCs, and/or as an investor in private equity funds. Revenue recognition on equity investments Equity investments, which are listed in markets that provide readily determinable fair values, are accounted for as available-for-sale securities at fair value with unrealized gains and losses being reported in other comprehensive income in accordance with ASC 320. As noted above under Fair Value Option and Fair Value Measurements, direct equity investments and investments in LLPs and LLCs that maintain ownership accounts in which IFC has significant influence, direct equity investments representing 20 percent or more ownership but in which IFC does not have significant influence and, beginning July 1, 2010, all new equity interests in funds are accounted for at fair value under the Fair Value Option. Direct equity investments in which IFC does not have significant influence and which are not listed in markets that provide readily determinable fair values are carried at cost, less impairment. Notwithstanding the foregoing, equity securities held by consolidated subsidiaries that are investment companies are accounted for at fair value, with unrealized gains and losses reported in earnings. IFCs investments in certain private equity funds in which IFC is deemed to have a controlling financial interest, as are fully consolidated by IFC, as the presumption of control by the fund manager or the general partner has been overcome. Certain equity investments, for which recovery of invested capital is uncertain, are accounted for under the cost recovery method, such that receipts of freely convertible currencies are first applied to recovery of invested capital and then to income from equity investments. The cost recovery method is principally applied to IFC's investments in its oil and gas unincorporated joint ventures (UJVs). IFCs share of conditional asset retirement obligations related to investments in UJVs are recorded when the fair value of the obligations can be reasonably estimated. The obligations are capitalized and systematically amortized over the estimated economic useful lives. Unrealized gains and losses on equity investments accounted for at fair value under the Fair Value Option are reported in income from equity investments on the consolidated income statement. Unrealized gains and losses on equity investments listed in markets that provide readily determinable fair values which are accounted for as available-for-sale are reported in other comprehensive income. Realized gains on the sale or redemption of equity investments are measured against the average cost of the investments sold and are generally recorded as income from equity investments when received. Capital losses are recognized when incurred.
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Profit participations received on equity investments are recorded when received in freely convertible currencies. Dividends received on equity investments through June 30, 2011 were recorded as income when received in freely convertible currencies. Beginning July 1, 2011, dividends on listed equity investments are recorded on the ex dividend date - dividends on unlisted equity investments are recorded upon receipt of notice of declaration. Realized gains on the sale or redemption of equity investments are measured against the average cost of the investments sold and, through June 30, 2011, were recorded as income in income from equity investments when received in freely convertible currencies. Beginning July 1, 2011, realized gains on listed equity investments are recorded upon trade date - realized gains on unlisted equity investments are recorded upon incurring the obligation to deliver the applicable shares. Losses are recognized when incurred. IFC enters into put and call option and warrant agreements in connection with certain equity investments; these are accounted for in accordance with ASC 815 to the extent they meet the definition of a derivative. Gains and losses on nonmonetary exchanges Nonmonetary transactions typically arise through: (1) the exchange of nonmonetary assets by exercising a conversion option that results in the exchange of one financial instrument (i.e., loan, equity, or debt security) for another financial instrument (i.e., debt securities or equity shares); or (2) a nonreciprocal transfer where IFC receives a nonmonetary asset for which no assets are relinquished in exchange. Generally, accounting for exchanges of nonmonetary assets should be based on the fair values of the assets involved. Thus, the amount initially recorded for a nonmonetary asset received in exchange for another nonmonetary asset is the fair value of the asset received. The difference between the fair value of the asset received and the recorded amount of the asset surrendered (immediately prior to the exchange transaction) is recorded as a gain or loss on non-monetary exchanges in the income statement. Impairment of equity investments Equity investments accounted for at cost, less impairment and available-for-sale are assessed for impairment each quarter. When impairment is identified, it is generally deemed to be other than temporary, and the equity investment is written down to the impaired value, which becomes the new cost basis in the equity investment. Such other than temporary impairments are recognized in net income. Subsequent increases in the fair value of available-for-sale equity investments are included in other comprehensive income - subsequent decreases in fair value, if not other than temporary impairment, also are included in other comprehensive income. Debt securities Debt securities in the investment portfolio are classified as available-for-sale and carried at fair value on the consolidated balance sheet with unrealized gains and losses included in accumulated other comprehensive income until realized. Realized gains on sales of debt securities and interest on debt securities is included in income from debt securities on the consolidated income statement. Certain debt securities are carried at fair value in accordance with the Fair Value Option as discussed above. Unrealized gains and losses on debt securities accounted for at fair value under the Fair Value Option are reported in income from debt securities on the consolidated income statement. IFC invests in certain debt securities with conversion features; these features are accounted for in accordance with ASC 815 to the extent they meet the definition of a derivative. Impairment of debt securities In determining whether an unrealized loss on debt securities is other-than-temporary, IFC considers all relevant information including the length of time and the extent to which fair value has been less than amortized cost, whether IFC intends to sell the debt security or whether it is more likely than not that IFC will be required to sell the debt security, the payment structure of the obligation and the ability of the issuer to make scheduled interest or principal payments, any changes to the ratings of a security, and relevant adverse conditions specifically related to the security, an industry or geographic sector. Debt securities in the investment portfolio are assessed for impairment each quarter. When impairment is identified, the entire impairment is recognized in net income if (1) IFC intends to sell the security, or (2) it is more likely than not that IFC will be required to sell the security before recovery. However, if IFC does not intend to sell the security and it is not more likely than not that IFC will be required to sell the security but the security has suffered a credit loss, the impairment charge will be separated into the credit loss component, which is recognized in net income, and the remainder which is recorded in other comprehensive income. The impaired value becomes the new amortized cost basis of the debt security. Subsequent increases and decreases - if not an additional other-than-temporary impairment - in the fair value of debt securities are included in other comprehensive income. The difference between the new amortized cost basis of debt securities for which an other-than-temporary impairment has been recognized in net income and the cash flows expected to be collected is accreted to interest income using the effective yield method. Significant subsequent increases in the expected or actual cash flows previously expected are recognized as a prospective adjustment of the yield. Guarantees IFC extends financial guarantee facilities to its clients to provide credit enhancement for their debt securities and trade obligations. IFC offers partial credit guarantees to clients covering, on a risk-sharing basis, client obligations on bonds or loans. Under the terms of IFC's guarantees, IFC agrees to assume responsibility for the clients financial obligations in the event of default by the client (i.e., failure to pay when payment is due). Guarantees are regarded as issued when IFC commits to the guarantee. Guarantees are regarded as outstanding when the underlying financial obligation of the client is incurred, and this date is considered to be the inception of the guarantee. Guarantees are regarded as called when IFCs obligation under the guarantee has been invoked. There are two liabilities associated with the guarantees: (i) the stand-ready obligation to perform and (ii) the contingent liability. The fair value of the stand-ready obligation to perform is recognized at the inception of the guarantee unless a contingent liability exists at that time or is expected to exist in the near term. The contingent liability associated with the financial guarantee is recognized when it is probable the guarantee will be called and when the amount of guarantee called can be reasonably estimated. All liabilities associated with guarantees are included in payables and other liabilities, and the receivables are included in other assets on the consolidated balance sheet. When the guarantees are called, the amount disbursed is recorded as a new loan, and specific reserves against losses are established, based on the estimated probable loss. Guarantee fees are recorded in income as the stand-ready obligation to perform is fulfilled. Commitment fees on guarantees are recorded as income on an accrual basis.
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Designations of retained earnings IFC establishes funding mechanisms for specific Board approved purposes through designations of retained earnings. Designations of retained earnings for grants to IDA are recorded as a transfer from undesignated retained earnings to designated retained earnings when the designation is approved by the Board of Governors. All other designations are recorded as a transfer from undesignated retained earnings to designated retained earnings when the designation is noted with approval by the Board of Directors. Total designations of retained earnings are determined based on IFCs annual income before expenditures against designated retained earnings and net gains and losses on other non-trading financial instruments accounted for at fair value in excess of $150 million, and contemplating the financial capacity and strategic priorities of IFC. Expenditures resulting from such designations are recorded as expenses in IFCs consolidated income statement in the year in which they are incurred, also having the effect of reducing the respective designated retained earnings for such purposes. Expenditures are deemed to have been incurred when IFC has ceded control of the funds to the recipient. If the recipient is deemed to be controlled by IFC, the expenditure is deemed to have been incurred only when the recipient disburses the funds to a non-related party. On occasion, recipients who are deemed to be controlled by IFC make investments. In such cases, IFC includes those assets on its consolidated balance sheet until the recipient disposes of or transfers the asset or IFC is deemed to no longer be in control of the recipient. These investments have had no material impact on IFCs financial position, results of operations, or cash flows. Investments resulting from such designations are recorded on IFCs consolidated balance sheet in the year in which they occur, also having the effect of reducing the respective designated retained earnings for such purposes. Liquid asset portfolio The liquid asset portfolio, as defined by IFC, consists of: time deposits and securities; related derivative instruments; securities purchased under resale agreements, securities sold under repurchase agreements; receivables from sales of securities and payables for purchases of securities; and related accrued income and charges. IFCs liquid funds are invested in government, agency and governmentsponsored agency obligations, time deposits and asset-backed, including mortgage-backed, securities. Government and agency obligations include positions in high quality fixed rate bonds, notes, bills, and other obligations issued or unconditionally guaranteed by governments of countries or other official entities including government agencies and instrumentalities or by multilateral organizations. Asset-backed and mortgage-backed securities include agency and non-agency residential mortgage-backed securities, commercial mortgage-backed securities, consumer, auto and student loans-backed securities, commercial real estate collateralized debt obligations and collateralized loan obligations. Securities and related derivative instruments within IFCs liquid asset portfolio are classified as trading and are carried at fair value with any changes in fair value reported in income from liquid asset trading activities. Interest on securities and amortization of premiums and accretion of discounts are also reported in income from liquid asset trading activities. Gains and losses realized on the sale of trading securities are computed on a specific security basis. IFC classifies cash and due from banks and time deposits (collectively, cash and cash equivalents) as cash and as cash equivalents in the consolidated statement of cash flows because they are generally readily convertible to known amounts of cash within 90 days of acquisition generally when the original maturities for such instruments are under 90 days or in some cases are under 180 days. Repurchase and resale agreements Repurchase agreements are contracts under which a party sells securities and simultaneously agrees to repurchase the same securities at a specified future date at a fixed price. Resale agreements are contracts under which a party purchases securities and simultaneously agrees to resell the same securities at a specified future date at a fixed price. It is IFCs policy to take possession of securities purchased under resale agreements, which are primarily liquid government securities. The market value of these securities is monitored and, within parameters defined in the agreements, additional collateral is obtained when their value declines. IFC also monitors its exposure with respect to securities sold under repurchase agreements and, in accordance with the terms of the agreements, requests the return of excess securities held by the counterparty when their value increases. Repurchase and resale agreements are accounted for as collateralized financing transactions and recorded at the amount at which the securities were acquired or sold plus accrued interest. Borrowings To diversify its access to funding, and reduce its borrowing costs, IFC borrows in a variety of currencies and uses a number of borrowing structures, including foreign exchange rate-linked, inverse floating rate and zero coupon notes. Generally, IFC simultaneously converts such borrowings into variable rate US dollar borrowings through the use of currency and interest rate swap transactions. Under certain outstanding borrowing agreements, IFC is not permitted to mortgage or allow a lien to be placed on its assets (other than purchase money security interests) without extending equivalent security to the holders of such borrowings. Substantially all borrowings are carried at fair value under the Fair Value Option with changes in fair value reported in net gains and losses on other non-trading financial instruments accounted for at fair value in the consolidated income statement. Interest on borrowings and amortization of premiums and accretion of discounts are reported in charges on borrowings. Risk management and use of derivative instruments IFC enters into transactions in various derivative instruments for financial risk management purposes in connection with its principal business activities, including lending, investing in debt securities and equity investments, client risk management, borrowing, liquid asset portfolio management and asset and liability management. There are no derivatives designated as accounting hedges.
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All derivative instruments are recorded on the consolidated balance sheet at fair value as derivative assets or derivative liabilities. Where they are not clearly and closely related to the host contract, certain derivative instruments embedded in loans, debt securities and equity investments are bifurcated from the host contract and recorded at fair value as derivative assets and liabilities. The fair value at inception of such embedded derivatives is excluded from the carrying amount of the host contracts on the consolidated balance sheet. Changes in fair values of derivative instruments used in the liquid asset portfolio are recorded in income from liquid asset trading activities. Changes in fair values of derivative instruments other than those in the liquid asset portfolio are recorded in net gains and losses on other non-trading financial instruments accounted for at fair value. The risk management policy for each of IFCs principal business activities and the accounting policies particular to them are described below. Lending activities IFCs policy is to closely match the currency, interest rate basis, and maturity of its loans and borrowings. Derivative instruments are used to convert the cash flows from fixed rate US dollar or non-US dollar loans into variable rate US dollars. IFC has elected not to designate any hedging relationships for any of its lending-related derivatives. Client risk management activities IFC enters into derivatives transactions with its clients to help them hedge their own currency, interest rate, or commodity risk, which, in turn, improves the overall quality of IFCs loan portfolio. To hedge the market risks that arise from these transactions with clients, IFC enters into offsetting derivative transactions with matching terms with authorized market counterparties. Changes in fair value of all derivatives associated with these activities are reported in net income in net gains and losses on other non-trading financial instruments accounted for at fair value. Borrowing activities IFC issues debt securities in various capital markets with the objectives of minimizing its borrowing costs, diversifying funding sources, and developing member countries capital markets, sometimes using complex structures. These structures include borrowings payable in multiple currencies, or borrowings with principal and/or interest determined by reference to a specified index such as a stock market index, a reference interest rate, a commodity index, or one or more foreign exchange rates. IFC uses derivative instruments with matching terms, primarily currency and interest rate swaps, to convert such borrowings into variable rate US dollar obligations, consistent with IFCs matched funding policy. IFC elected to carry at fair value, under the Fair Value Option, all market borrowings for which a derivative instrument is used to create an economic hedge. Changes in the fair value of such borrowings and the associated derivatives are reported in net gains and losses on other non-trading financial instruments accounted for at fair value in the consolidated income statement. Liquid asset portfolio management activities IFC manages the interest rate, currency and other market risks associated with certain of the time deposits and securities in its liquid asset portfolio by entering into derivative transactions to convert the cash flows from those instruments into variable rate US dollars, consistent with IFCs matched funding policy. The derivative instruments used include short-term, over-the-counter foreign exchange forwards (covered forwards), interest rate and currency swaps, and exchange-traded interest rate futures and options. As the entire liquid asset portfolio is classified as a trading portfolio, all securities (including derivatives) are carried at fair value with changes in fair value reported in income from liquid asset trading activities. No derivatives in the liquid asset portfolio have been designated as hedging instruments under ASC 815. Asset and liability management In addition to the risk managed in the context of its business activities detailed above, IFC faces residual market risk in its overall asset and liability management. Residual currency risk is managed by monitoring the aggregate position in each lending currency and reducing the net excess asset or liability position through sales or purchases of currency. Interest rate risk arising from mismatches due to write-downs, prepayments and re-schedulings, and residual reset date mismatches is monitored by measuring the sensitivity of the present value of assets and liabilities in each currency to each basis point change in interest rates. IFC monitors the credit risk associated with these activities by careful assessment and monitoring of prospective and actual clients and counterparties. In respect of liquid assets and derivatives transactions, credit risk is managed by establishing exposure limits based on the credit rating and size of the individual counterparty. In addition, IFC has entered into master agreements governing derivative transactions that contain close-out and netting provisions and collateral arrangements. Under these agreements, if IFCs credit exposure to a counterparty, on a mark-tomarket basis, exceeds a specified level, the counterparty must post collateral to cover the excess, generally in the form of liquid government securities or cash. IFC does not offset the fair value amounts of derivatives and obligations to return cash collateral associated with these masternetting agreements. Loan participations IFC mobilizes funds from commercial banks and other financial institutions (Participants) by facilitating loan participations, without recourse. These loan participations are administered and serviced by IFC on behalf of the Participants. The disbursed and outstanding balances of loan participations that meet the applicable accounting criteria are accounted for as sales and are not included in IFCs consolidated balance sheet. All other loan participations are accounted for as secured borrowings and are included in loans on IFCs consolidated balance sheet, with the related secured borrowings included in payables and other liabilities on IFCs consolidated balance sheet. Pension and other postretirement benefits IBRD has a defined benefit Staff Retirement Plan (SRP), a Retired Staff Benefits Plan (RSBP) and a Post-Employment Benefits Plan (PEBP) that cover substantially all of its staff members as well as the staff of IFC and of MIGA. The SRP provides regular pension benefits and includes a cash balance plan. The RSBP provides certain health and life insurance benefits to eligible retirees. The PEBP provides pension benefits administered outside the SRP. All costs associated with these plans are allocated between IBRD, IFC, and MIGA based upon their employees respective participation in the plans. In addition, IFC and MIGA reimburse IBRD for their share of any contributions made to these plans by IBRD. The net periodic pension and other postretirement benefit income or expense allocated to IFC is included in income or expense from pension and other postretirement benefit plans in the consolidated income statement. IFC includes a receivable from IBRD in receivables and other assets, representing prepaid pension and other postretirement benefit costs.
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Recently adopted accounting standards In June 2011, the FASB issued ASU 2011-05, Presentation of Comprehensive Income (ASU 201105). ASU 2011-05 revises the manner in which entities must present comprehensive income in their financial statements by requiring either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements of income and comprehensive income, respectively. ASU 2011-05 does not change the items that must be reported in other comprehensive income, does not require any additional disclosures and is effective for fiscal years ending after December 15, 2011 (which was the year ended June 30, 2012 for IFC) and interim and annual periods thereafter. IFC currently presents two separate but consecutive consolidated statements of income and comprehensive income, respectively. ASU 2011-05 is effective for annual reporting periods, and interim periods within those annual periods, beginning after December 15, 2011 (which was the year ended June 30, 2012 for IFC). Accounting and financial reporting developments In July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Act) became law. The Act seeks to reform the U.S. financial regulatory system by introducing new regulators and extending regulation over new markets, entities, and activities. The implementation of the Act is dependent on the development of various rules to clarify and interpret its requirements. Pending the development of these rules, no impact on IFC has been determined as of June 30, 2013. IFC continues to evaluate the potential future implications of the Act. In December 2011, the FASB issued ASU 2011-11, Disclosures about Offsetting Assets and Liabilities (ASU 2011-11), and ASU 2011-12, Deferral of the Effective date for Amendments to the Presentation of reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05 (ASU 2011-12). ASU 2011-11 contains new disclosure requirements regarding the reporting entitys rights of setoff and related arrangements associated with its financial instruments and derivatives. The new disclosures will also provide information about both gross and net exposures. ASU 2011-11 is effective for annual reporting periods, and interim periods within those annual periods, beginning on or after January 1, 2013 (which is the year ending June 30, 2014 for IFC), and must be applied retroactively. In January 2013, the FASB issued ASU 2013-01, Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities (ASU 2013-01). ASU 2013-01 clarifies that instruments within ASC 2011-11s scope are limited to derivatives, repurchase and reverse repurchase (resale) agreements and securities lending transactions that are either offset in accordance with ASC 210-20-45 or ASC 815-10-45 or subject to a master netting arrangement or similar agreement. In February 2013, the FASB issued ASU 2013-02, Reporting Amounts Reclassified Out of Accumulated Other Comprehensive Income (ASU 201302). ASU 2013-02 requires disclosure of information about changes in AOCI balances by component and significant items reclassified out of AOCI. It does not amend any existing reporting requirements for measuring net income or other comprehensive income. ASU 2013-02 is effective for annual reporting periods, and interim periods within those annual periods, beginning after December 15, 2012 (which is the year ending June 30, 2014 for IFC). In June 2013, the FASB issued ASU 2013-08, Investment Companies (Topic 946); Amendments to the Scope, Measurement and Disclosure Requirements (ASU 2013-08). Among other things, ASU 2013-08 amends the criteria for an entity to qualify as an investment company under ASC Topic 946, introduces new disclosure requirements applicable to investment companies, and amends the measurement criteria for certain investments by an investment company in another investment company. ASU 2013-08 is applicable for annual reporting periods and interim periods within those annual periods, beginning after December 15, 2013 (which is the year ending June 30, 2015 for IFC). IFC is currently evaluating the impact of ASU 2013-08. In addition, during the year ended June 30, 2013, the FASB issued and/or approved various other ASUs. IFC analyzed and implemented the new guidance, as appropriate, with no material impact on the financial position, results of operations or cash flows of IFC.
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NOTE B SCOPE OF CONSOLIDATION IFC Asset Management Company, LLC (AMC) and AMC Funds IFC through its wholly owned subsidiary, AMC, seeks to mobilize capital from outside IFCs traditional investor pool and to manage third-party capital. AMC is consolidated into IFCs financial statements. At June 30, 2013, IFC has provided $2 million of capital to AMC ($2 million - June 30, 2012). As a result of the consolidation of AMC, IFCs consolidated balance sheet at June 30, 2013 includes $18 million in cash, receivables and other assets ($12 million - June 30, 2012), less than $0.5 million in equity investments (less than $0.5 million - June 30, 2012) and $1 million in payables and other liabilities ($2 million - June 30, 2012). Other income in IFCs consolidated income statement includes $40 million during the year ended June 30, 2013 ($28 million - year ended June 30, 2012 and $28 million - year ended June 30, 2011) and other expenses includes $11 million during the year ended June 30, 2013 ($10 million - year ended June 30, 2012 and $5 million - year ended June 30, 2011). At June 30, 2013, AMC managed seven funds (collectively referred to as the AMC Funds). All AMC Funds are investment companies and are required to report their investment assets at fair value through net income. IFCs ownership interests in these AMC Funds are shown in the following table: AMC Fund IFC Capitalization (Equity) Fund, L.P. IFC Capitalization (Subordinated Debt) Fund, L.P. IFC African, Latin American and Caribbean Fund, LP Africa Capitalization Fund, Ltd. IFC Russian Bank Capitalization Fund, LP IFC Catalyst Funds
(*)
IFCs ownership interest 61% 13% 20% 45% 27%

(*)
IFC Global Infrastructure Fund, LP

(*)
20%
The ownership interest of 27% reflects IFCs ownership interest taking into consideration the overall commitments for the IFC Catalyst Fund, which is comprised of IFC Catalyst Fund, LP and IFC Catalyst Fund (UK), LP (collectively, IFC Catalyst Fund). IFC does not have an ownership interest in the IFC Catalyst Fund (UK), LP.
IFCs investments in AMC Funds, except for IFC Russian Bank Capitalization Fund, LP (RBCF), are accounted for at fair value under the Fair Value Option. RBCF, created in June 2012, is consolidated into IFCs financial statements because of the presumption of control by IFC as owner of the general partner of RBCF. As a result of consolidating RBCF, IFCs consolidated balance sheet at June 30, 2013 includes $74 million of equity investments ($0 - June 30, 2012), and noncontrolling interests of $38 million ($0 - June 30, 2012). These noncontrolling interests meet the ASC's definition of mandatorily redeemable financial instruments because the terms of the underlying partnership agreement provide for a termination date at which time its remaining assets are to be sold, its liabilities settled and the remaining net proceeds distributed to the noncontrolling interest holders and IFC. RBCF's termination date is 2021 with a possible extension to 2023. As RBCF is considered an investment company, its investment securities (equity investments) are measured at fair value in IFC's consolidated balance sheet; therefore, the settlement value or estimate of cash that would be due and payable to settle these noncontrolling interests, assuming an orderly liquidation of RBCF on June 30, 2013, approximates the $38 million of noncontrolling interests reflected on IFC's consolidated balance sheet at June 30, 2013. Other Consolidated entities In October 2009, IFC created a special purpose vehicle, Hilal Sukuk Company, to facilitate a $100 million Sukuk under IFCs borrowings program. The Sukuk is scheduled to mature in November 2014. Hilal Sukuk Company is a VIE and has been consolidated into these Consolidated Financial Statements, albeit with no material impact. The collective impact of this and other entities consolidated into these Consolidated Financial Statements under the VIE or voting interest model is insignificant.
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NOTE C LIQUID ASSET PORTFOLIO Income from liquid asset trading activities Income from the liquid asset trading activities for the years ended June 30, 2013, June 30, 2012 and June 30, 2011 comprises (US$ millions): Interest income Net gains and losses on trading activities: Realized losses Unrealized gains (losses) Net gains (losses) on trading activities Total income from liquid asset trading activities $ $ 2013 430 (103) 173 70 500 $ $ 2012 670 (70) (287) (357) 313 $ $ 2011 473 (76) 132 56 529
Net gains and losses on trading activities comprises net gains on asset-backed and mortgage-backed securities of $161 million in the year ended June 30, 2013 ($8 million losses - year ended June 30, 2012; $159 million gains - year ended June 30, 2011) and net losses on other trading securities of $91 million in the year ended June 30, 2013 ($349 million losses - year ended June 30, 2012; $103 million losses - year ended June 30, 2011). The annualized rate of return on the trading liquid asset portfolio, calculated as total income from the liquid asset trading activities divided by fair value average daily balance of total trading securities, during the year ended June 30, 2013, was 1.6% (1.2% - year ended June 30, 2012; 2.1% year ended June 30, 2011). After the effect of associated derivative instruments, the liquid asset portfolio generally reprices within one year. Composition of liquid asset portfolio The composition of IFCs liquid asset portfolio included in the consolidated balance sheet captions is as follows (US$ millions): Assets Cash and due from banks Time deposits Trading securities Securities purchased under resale agreements Derivative assets Receivables and other assets: Receivables from unsettled security trades Accrued interest income on time deposits and securities Accrued income on derivative instruments Total assets Liabilities Securities sold under repurchase agreements Derivative liabilities Payables and other liabilities: Payables for unsettled security trades Accrued charges on derivative instruments Total liabilities Total net liquid asset portfolio $ June 30, 2013 $ 65 5,889 30,349 337 376 236 135 21 37,408 5,736 210 179 46 6,171 31,237 $ June 30, 2012 $ 883 5,038 28,868 964 264 691 123 20 36,851 6,397 223 477 33 7,130 29,721
The liquid asset portfolio is denominated primarily in US dollars; investments in other currencies, net of the effect of associated derivative instruments that convert non-US dollar securities into US dollar securities, represent 2.7% of the portfolio at June 30, 2013 (2.7% - June 30, 2012). Collateral The estimated fair value of securities held by IFC at June 30, 2013 as collateral in connection with derivatives transactions and purchase and resale agreements that may be sold or repledged was $1,029 million ($3,387 million - June 30, 2012). Collateral given by IFC to counterparties in connection with repurchase agreements that may be sold or repledged by the counterparty approximates the amounts classified as Securities sold under repurchase agreements. At June 30, 2013, trading securities with a carrying amount (fair value) of $205 million ($210 million - June 30, 2012) were pledged in connection with borrowings under a short-term discount note program, the carrying amount of which was $1,317 million ($1,400 million - June 30, 2012).
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Trading securities Trading securities comprises: Year ended June 30, 2013 Fair value average daily balance (US$ million) $ 14,927 8,569 6,464 463 $ 30,423
Government, agency and government-sponsored agency obligations Asset-backed securities Corporate securities Money market funds Total trading securities
At June 30, 2013 Weighted average Fair value contractual (US$ millions) maturity (years) $ 14,047 2.1 9,076 17.9 6,458 2.6 768 n/a $ 30,349
Government, agency and government-sponsored agency obligations Asset-backed securities Corporate securities Money market funds Total trading securities
Year ended June 30, 2012 Fair value average daily balance (US$ million) $ 11,367 7,419 6,634 463 $ 25,883
At June 30, 2012 Weighted average Fair value contractual (US$ millions) maturity (years) $ 13,684 1.6 8,252 18.6 6,823 2.2 109 n/a $ 28,868
The expected maturity of the asset-backed securities may be significantly shorter than the contractual maturity, as reported above, due to prepayment features. NOTE D INVESTMENTS The carrying amount of investments at June 30, 2013 and June 30, 2012 comprises (US$ millions): Loans Loans at amortized cost Less: Reserve against losses on loans Net loans Loans held for sale at lower of amortized cost or fair value Loans accounted for at fair value under the Fair Value Option (outstanding principal balance $474 - June 30, 2013, $607 - June 30, 2012) Total loans Equity investments Equity investments at cost less impairment* Equity investments accounted for at fair value as available-for-sale (cost $2,397 - June 30, 2013, $1,783 - June 30, 2012) Equity investments accounted for at fair value (cost $3,697 - June 30, 2013, $2,636 - June 30, 2012) Total equity investments Debt securities Debt securities accounted for at fair value as available-for-sale (amortized cost $1,889 - June 30, 2013, $1,916 - June 30, 2012) Debt securities accounted for at fair value under the Fair Value Option (amortized cost $237 - June 30, 2013, $210 - June 30, 2012) Total debt securities Total carrying amount of investments $ June 30, 2013 $ 21,923 (1,628) 20,295 43 493 20,831 3,119 4,230 4,346 11,695 $ June 30, 2012 20,226 (1,381) 18,845 60 591 19,496 3,066 3,231 3,477 9,774
1,911 240 2,151 34,677 $
1,916 252 2,168 31,438
* Equity investments at cost less impairment at June 30, 2013 includes unrealized gains of $2 million ($2 million - June 30, 2012) related to equity investments accounted for as available-for-sale in previous periods and for which readily determinable fair vales are no longer available.
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The distribution of the investment portfolio by industry sector and by geographical region and a reconciliation of total disbursed portfolio to carrying amount of investments is as follows (US$ millions): Sector Manufacturing, agribusiness and services Asia $ Europe, Middle East and North Africa Sub-Saharan Africa, Latin America and Caribbean Other Total manufacturing, agribusiness and services Financial markets Asia Europe, Middle East and North Africa Sub-Saharan Africa, Latin America and Caribbean Other Total financial markets Infrastructure and natural resources Asia Europe, Middle East and North Africa Sub-Saharan Africa, Latin America and Caribbean Other Total infrastructure and natural resources Total disbursed investment portfolio Reserve against losses on loans Unamortized deferred loan origination fees, net and other Disbursed amount allocated to a related financial instrument reported separately in other assets or derivative assets Adjustments to disbursed investment portfolio Unrealized losses on equity investments held by consolidated VIEs Unrealized gains on investments accounted for at fair value as availablefor-sale Unrealized gains (losses) on investments Carrying amount of investments $ $ June 30, 2013 Equity Debt investments securities 503 $ 634 473 100 1,710 1,381 1,815 1,797 872 5,865 430 399 622 183 1,634 9,209 $ 264 $ 76 36 376 125 755 437 164 1,481 66 66 69 12 213 2,070 $ June 30, 2012 Equity Debt investments securities 385 $ 599 390 1,374 1,098 1,564 1,526 546 4,734 401 356 448 234 1,439 7,547 $ 201 $ 36 37 274 274 552 682 128 1,636 55 10 130 5 200 2,110 $
Loans
Total 2,787 4,007 2,614 1,118 10,526 3,348 4,907 4,295 1,338 13,888 2,198 2,779 3,885 609 9,471 33,885 (1,628) (139) $ $
Loans
Total 2,532 3,766 2,374 615 9,287 2,590 4,776 4,004 1,056 12,426 2,198 2,639 3,656 494 8,987 30,700 (1,381) (120)
2,020 $ 3,297 2,105 1,018 8,440 1,842 2,337 2,061 302 6,542 1,702 2,314 3,194 414 7,624 22,606 $ (1,628) (139) (35) 8
1,946 $ 3,131 1,947 615 7,639 1,218 2,660 1,796 382 6,056 1,742 2,273 3,078 255 7,348 21,043 $ (1,381) (120) (38) 8
(37) 44 (3) 1,833 649 11,695 $
(72) 52 (3)
(64) 3 (1) 1,448 841 9,774 $
(3) (12)
(105) (1) (1)
19 20,831 $
78 3 2,151 $
1,911 671 34,677 $
(16) 19,496 $
31 42 2,168 $
1,479 867 31,438
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NOTE E LOANS AND GUARANTEES Loans Income from loans and guarantees for the years ended June 30, 2013, June 30, 2012 and June 30, 2011, comprise the following (US$ millions): Interest income Commitment fees Other financial fees Gains on sale of loans Gains on non-monetary exchanges Unrealized gains (losses) on loans accounted for at fair value under the Fair Value Option Income from loans and guarantees $ 2013 879 35 90 20 35 $ 1,059 $ $ 2012 818 29 68 2 78 (57) 938 $ $ 2011 704 33 52 9 79 877
The currency composition and average contractual rate of the disbursed loan portfolio are summarized below: June 30, 2013 Average contractual Amount (US$ millions) rate (%) $ 16,711 3.9 2,959 4.0 472 5.4 417 10.0 417 7.9 273 7.2 245 8.9 233 9.1 207 10.8 198 8.3 83 8.3 48 12.1 40 17.4 39 264 $ 22,606 3.2 8.9 4.5 $ June 30, 2012 Average Amount contractual (US$ millions) rate (%) 4.2 $ 15,635 4.4 2,831 5.1 337 9.8 390 2.9 367 7.9 308 8.9 157 9.2 165 11.3 224 9.5 145 10.1 117 13.1 52 14.3 52 53 210 21,043 3.4 7.0 4.7
US dollar Euro Chinese renminbi Indian rupee Mexican peso Philippine pesos Brazilian real South African rand Russian ruble Indonesian rupiah Colombian pesos Turkish lira Vietnamese dong Other currencies OECD currencies Non-OECD currencies Total disbursed loan portfolio
After the effect of interest rate swaps and currency swaps, IFCs loans are principally denominated in variable rate US dollars. Loans in all currencies are repayable during the years ending June 30, 2014 through June 30, 2018 and thereafter, as follows (US$ millions): Fixed rate loans Variable rate loans Total disbursed loan portfolio $ $ 2014 994 4,210 5,204 $ $ 2015 576 2,711 3,287 $ $ 2016 774 2,920 3,694 $ $ 2017 368 2,129 2,497 $ $ 2018 662 1,814 2,476 Thereafter $ 1,294 4,154 $ 5,448 $ $ Total 4,668 17,938 22,606
At June 30, 2013, 21% of the disbursed loan portfolio consisted of fixed rate loans (21% - June 30, 2012), while the remainder was at variable rates. At June 30, 2013, the disbursed loan portfolio included $86 million of loans serving as collateral under secured borrowing arrangements ($100 million - June 30, 2012). IFCs disbursed variable rate loans generally reprice within one year. During the year ended June 30, 2013, IFC received mortgage loans with an initial carrying amount of $0 ($6 million - year ended June 30, 2012) in conjunction with the settlement of borrowers obligation to IFC. These loans are classified as held-for-sale.
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Reserve against losses on loans and provision for losses on loans Changes in the reserve against losses on loans for the years ended June 30, 2013, June 30, 2012 and June 30, 2011, as well as the related recorded investment in loans, evaluated for impairment individually (specific reserves) and on a pool basis (portfolio reserves) respectively, are summarized below (US$ millions): Year ended June 30, 2013 Specific Portfolio reserves reserves 447 $ 934 $ 298 (49) (13) (2) 2 11 741 21,923 1,403 $ $ 887 20,520 $ $ Total reserves 1,381 249 (13) 11 1,628 21,923
Beginning balance Provision (release of provision for) losses on loans, net Write-offs Foreign currency transaction adjustments Other adjustments* Ending balance Related recorded investment in loans at June 30, 2013 evaluated for impairment** Recorded investment in loans with specific reserves
$ $ $
Beginning balance Provision for losses on loans, net Write-offs Recoveries of previously written off loans Foreign currency transaction adjustments Other adjustments* Ending balance Related recorded investment in loans at June 30, 2012 evaluated for impairment** Recorded investment in loans with specific reserves
Year ended June 30, 2012 Specific Portfolio reserves reserves 382 $ 925 $ 76 39 (13) 2 (5) (30) 5 447 20,226 923 $ $ 934 19,303 $ $
Total reserves 1,307 115 (13) 2 (35) 5 1,381 20,226
$ $ $
Beginning balance Release of provision for losses on loans, net Write-offs Recoveries of previously written off loans Foreign currency transaction adjustments Other adjustments* Ending balance Related recorded investment in loans at June 30, 2011 evaluated for impairment** Recorded investment in loans with specific reserves
Year ended June 30, 2011 Specific Portfolio reserves reserves 432 $ 917 $ (16) (24) (56) 4 10 32 8 382 19,038 918 $ $ 925 18,120 $ $
Total reserves 1,349 (40) (56) 4 42 8 1,307 19,038
$ $ $
*Other adjustments comprise reserves against interest capitalized as part of a debt restructuring. **IFC individually evaluates all loans for impairment. Portfolio reserves are established for losses incurred, but not specifically identifiable, on loans for which no specific reserve is established.
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Reserve for losses on guarantees and other receivables and provision for losses on guarantees and other receivables Changes in the reserve against losses on guarantees for the years ended June 30, 2013, June 30, 2012 and June 30, 2011, are summarized below (US$ millions): 2013 2012 2011 Beginning balance $ 21 $ 24 $ 24 Release of provision for losses on guarantees (4) (3) Ending balance $ 17 $ 21 $ 24
Changes in the reserve against losses on other receivables for the years ended June 30, 2013, June 30, 2012 and June 30, 2011, are summarized below (US$ millions): 2013 2012 2011 Beginning balance $ 5 $ $ (Release of) provision for losses on other receivables (2) 5 Ending balance Impaired loans The average recorded investment during the year ended June 30, 2013, in loans at amortized cost that are impaired was $1,352 million ($908 million - year ended June 30, 2012). The recorded investment in loans at amortized cost that are impaired at June 30, 2013 was $1,403 million ($923 million - June 30, 2012). Loans at amortized cost that are impaired with specific reserves are summarized by industry sector and geographic region as follows (US$ millions): Unpaid principal balance $ 171 517 460 1,148 17 24 32 73 72 188 33 293 $ 1,514 $ June 30, 2013 Related specific reserve $ 116 297 189 602 3 7 7 17 35 76 11 122 741 $ Average recorded investment $ 162 515 333 1,010 18 22 7 47 72 187 36 295 1,352 $ Interest income recognized $ 2 10 13 25 1 1 1 3 4 2 6 34 $ 3 $ 5 $ -
Recorded investment Manufacturing, agribusiness and services Asia Europe, Middle East and North Africa Sub-Saharan Africa, Latin America and Caribbean Total manufacturing, agribusiness and services Financial markets Asia Europe, Middle East and North Africa Sub-Saharan Africa, Latin America and Caribbean Total financial markets Infrastructure and natural resources Asia Europe, Middle East and North Africa Sub-Saharan Africa, Latin America and Caribbean Other Total infrastructure and natural resources Total IFC had no impaired loans at June 30, 2013 with no specific reserves. $ $ 165 508 398 1,071 15 17 7 39 72 188 33 293 1,403
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Recorded investment Manufacturing, agribusiness and services Asia Europe, Middle East and North Africa Sub-Saharan Africa, Latin America and Caribbean Total manufacturing, agribusiness and services Financial markets Asia Europe, Middle East and North Africa Sub-Saharan Africa, Latin America and Caribbean Total financial markets Infrastructure and natural resources Asia Europe, Middle East and North Africa Sub-Saharan Africa, Latin America and Caribbean Total infrastructure and natural resources Total IFC had no impaired loans at June 30, 2012 with no specific reserves. Nonaccruing loans $ $ 100 436 181 717 22 40 7 69 73 14 50 137 923 $ $
Unpaid principal balance 106 444 244 794 24 46 32 102 73 14 51 138 1,034
June 30, 2012 Related specific reserve $ 72 235 46 353 5 18 7 30 25 6 33 64 $ 447
Average recorded investment $ 101 440 163 704 19 48 7 74 70 14 46 130 $ 908
Interest income recognized $ 12 5 17 2 3 1 6 3 3 6 $ 29
Loans on which the accrual of interest has been discontinued amounted to $1,272 million at June 30, 2013 ($859 million - June 30, 2012). The interest income on such loans for the years ended June 30, 2013 and June 30, 2012 is summarized as follows (US$ millions): Interest income not recognized on nonaccruing loans Interest income recognized on loans in nonaccrual status related to current and prior years, on a cash basis $ 2013 90 38 $ 2012 47 21 $ 2011 61 22
The recorded investment in nonaccruing loans at amortized cost is summarized by industry sector and geographic region as follow (US$ millions): June 30, 2013 Manufacturing, agribusiness and services $ 148 460 388 $ 996 Financial markets Infrastructure and natural resources Total recorded investment in nonaccruing loans $ 227 464 517 $ 1,208
Asia Europe, Middle East and North Africa Sub-Saharan Africa, Latin America and Caribbean Total disbursed loans at amortized cost
15 4 19
64 129 193
June 30, 2012 Manufacturing, agribusiness and services $ 82 467 142 $ 691 Financial markets Infrastructure and natural resources
Asia Europe, Middle East and North Africa Sub-Saharan Africa, Latin America and Caribbean Total disbursed loans at amortized cost
9 9
8 14 32 54
Total recorded investment in nonaccruing loans $ 90 490 174 $ 754
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Past due loans An age analysis, based on contractual terms, of IFCs loans at amortized cost by industry sector and geographic region follows (US$ millions): 30-59 days past due $ 10 31 41 1 1 $ 42 $ $ 60-89 days past due 35 35 1 1 4 4 40 $ June 30, 2013 90 days or greater Total past due past due $ 141 399 146 686 4 4 64 130 194 884 $ $ 141 409 212 762 5 1 6 68 130 198 966 $ $
Manufacturing, agribusiness and services Asia Europe, Middle East and North Africa Sub-Saharan Africa, Latin America and Caribbean Other Total manufacturing, agribusiness and services Financial markets Asia Europe, Middle East and North Africa Sub-Saharan Africa, Latin America and Caribbean Other Total financial markets Infrastructure and natural resources Asia Europe, Middle East and North Africa Sub-Saharan Africa, Latin America and Caribbean Other Total infrastructure and natural resources Total disbursed loans at amortized cost Unamortized deferred loan origination fees, net and other Disbursed amount allocated to a related financial instrument reported separately in other assets or derivative assets Recorded investment in loans at amortized cost
Current 1,820 2,803 1,860 1,017 7,500 1,837 2,290 1,946 216 6,289 1,627 2,306 2,996 413 7,342 21,131 $ $
Total loans 1,961 3,212 2,072 1,017 8,262 1,837 2,295 1,946 217 6,295 1,695 2,306 3,126 413 7,540 22,097 (139) (35) $ 21,923
At June 30, 2013, there are no loans 90 days or greater past due still accruing.
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Manufacturing, agribusiness and services Asia Europe, Middle East and North Africa Sub-Saharan Africa, Latin America and Caribbean Other Total manufacturing, agribusiness and services Financial markets Asia Europe, Middle East and North Africa Sub-Saharan Africa, Latin America and Caribbean Other Total financial markets Infrastructure and natural resources Asia Europe, Middle East and North Africa Sub-Saharan Africa, Latin America and Caribbean Other Total infrastructure and natural resources Total disbursed loans at amortized cost Unamortized deferred loan origination fees, net and other Disbursed amount allocated to a related financial instrument reported separately in other assets or derivative assets Recorded investment in loans at amortized cost
30-59 days past due $ 18 18 $ 18 $ $
60-89 days past due 26 40 66 66 $ $
June 30, 2012 90 days or greater Total past due past due 73 397 63 533 4 4 14 32 46 583 $ $ 91 423 103 617 4 4 14 32 46 667 $ $
Current 1,821 2,600 1,824 615 6,860 1,198 2,576 1,712 330 5,816 1,548 2,250 2,988 255 7,041 19,717 $ $
Total loans 1,912 3,023 1,927 615 7,477 1,198 2,580 1,712 330 5,820 1,548 2,264 3,020 255 7,087 20,384 (120) (38) $ 20,226
At June 30, 2012, there are no loans 90 days or greater past due still accruing.
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Loan Credit Quality Indicators IFC utilizes a rating system to classify loans according to credit worthiness and risk. Each loan is categorized as very good, good, average, watch, substandard, doubtful or loss. A description of each category (credit quality indicator), in terms of the attributes of the borrower, the business environment in which the borrower operates or the loan itself, follows: Credit quality indicator Description Very good Excellent debt service capacity; superior management; market leader; very favorable operating environment; may also have strong collateral and/or guaranteed arrangements. Good Average Watch Substandard Strong debt service capacity: good liquidity; stable performance, very strong management, high market share; minimal probability of financial deterioration. Satisfactory balance sheet ratios, average liquidity; good debt service capacity; good management; average size and market share. Tight liquidity; financial performance below expectations; higher than average leverage ratio; week management in certain aspects; uncompetitive products and operations; unfavorable or unstable macroeconomic factors. Poor financial performance; difficulty servicing debt; inadequate net worth and debt service capacity; loan not fully secured: partial past due amounts of interest and/or principal; well-defined weaknesses may adversely impact collection but no loss of principal is expected. Bad financial performance; serious liquidity and debt service capacity issues: large and increasing past due amounts: partial loss is very likely. Close to or already in bankruptcy; serious regional geopolitical issues/conflicts; default and total loss highly likely.
Doubtful Loss
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A summary of IFCs loans at amortized cost by credit quality indicator updated effective June 30, 2013 and June 30, 2012 respectively, as well as by industry sector and geographic region follows (US$ millions): June 30, 2013 Very good Manufacturing, agribusiness and services Asia $ Europe, Middle East and North Africa Sub-Saharan Africa, Latin America and Caribbean Europe Other Total manufacturing, agribusiness and services Financial markets Asia Europe, Middle East and North Africa Sub-Saharan Africa, Latin America and Caribbean Other Total financial markets Infrastructure and natural resources Asia Europe, Middle East and North Africa Sub-Saharan Africa, Latin America and Caribbean Other Total infrastructure and natural resources Total disbursed loans at amortized cost $ Unamortized deferred loan origination fees, net and other Disbursed amount allocated to a related financial instrument reported separately in other assets or derivative assets Recorded investment in loans at amortized cost $ Good Average Watch Substandard Doubtful Loss Total
- $ 9 25 34 41 41 75 $
420 $ 369 184 826 1,799 713 530 870 2,113 291 245 232 35 803 4,715 $
830 $ 986 998 164 2,978 813 1,280 911 1 3,005 589 825 1,072 49 2,535 8,518 $
440 $ 994 344 24 1,802 242 289 148 216 895 664 924 1,472 123 3,183 5,880 $
86 $ 400 208 3 697 12 165 10 187 79 290 238 206 813 1,697 $
51 $ 86 248 385 16 27 7 50 8 22 43 73 508 $
134 $ 368 65 567 4 4 64 69 133 704 $
1,961 3,212 2,072 1,017 8,262 1,837 2,295 1,946 217 6,295 1,695 2,306 3,126 413 7,540 22,097 (139)
(35) 21,923
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June 30, 2012 Very good Manufacturing, agribusiness and services Asia $ Europe, Middle East and North Africa Sub-Saharan Africa, Latin America and Caribbean Europe Other Total manufacturing, agribusiness and services Financial markets Asia Europe, Middle East and North Africa Sub-Saharan Africa, Latin America and Caribbean Other Total financial markets Infrastructure and natural resources Asia Europe, Middle East and North Africa Sub-Saharan Africa, Latin America and Caribbean Other Total infrastructure and natural resources Total disbursed loans at amortized cost $ Unamortized deferred loan origination fees, net and other Disbursed amount allocated to a related financial instrument reported separately in other assets or derivative assets Recorded investment in loans at amortized cost $ Good Average Watch Substandard Doubtful Loss Total
- $ - $
381 $ 312 218 336 1,247 649 425 338 1,412 257 243 301 44 845 3,504 $
793 $ 1,092 933 279 3,097 283 1,440 1,181 2,904 553 779 1,015 102 2,449 8,450 $
461 $ 904 531 1,896 244 387 176 330 1,137 630 1,066 1,383 109 3,188 6,221 $
187 $ 302 110 599 267 10 277 35 31 226 292 1,168 $
81 $ 231 114 426 22 57 7 86 41 143 54 238 750 $
9 $ 182 21 212 4 4 32 2 41 75 291 $
1,912 3,023 1,927 615 7,477 1,198 2,580 1,712 330 5,820 1,548 2,264 3,020 255 7,087 20,384 (120)
(38) 20,226
Loan modifications during the year ended June 30, 2013 considered troubled debt restructurings were not significant. There were no loans that defaulted during the year ended June 30, 2013 that had been modified in a troubled debt restructuring within 12 months prior to the date of default. Guarantees IFC extends financial guarantee facilities to its clients to provide full or partial credit enhancement for their debt securities and trade obligations. Under the terms of IFCs guarantees, IFC agrees to assume responsibility for the clients financial obligations in the event of default by the client, where default is defined as failure to pay when payment is due. Guarantees entered into by IFC generally have maturities consistent with those of the loan portfolio. Guarantees signed at June 30, 2013 totaled $4,933 million ($4,507 million - June 30, 2012). Guarantees of $3,565 million that were outstanding (i.e., not called) at June 30, 2013 ($3,420 million - June 30, 2012), were not included in loans on IFCs consolidated balance sheet. The outstanding amount represents the maximum amount of undiscounted future payments that IFC could be required to make under these guarantees.
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NOTE F DEBT SECURITIES Income from debt securities for the years ended June 30, 2013, June 30, 2012 and June 30, 2011, comprise the following (US$ millions): Interest income Dividends Realized gains (losses) on sales of debt securities Gains on non-monetary exchanges Other-than-temporary impairments Unrealized (losses) gains on debt securities accounted for at fair value under the Fair Value Option Total income from debt securities $ 2013 59 14 10 7 (46) (39) $ 5 $ $ 2012 60 14 12 1 (27) 21 81 $ $ 2011 39 9 (2) 4 (2) (2) 46
Debt securities accounted for as available-for-sale at June 30, 2013 and June 30, 2012 comprise (US$ millions): June 30, 2013 Unrealized Amortized cost Fair value gains losses $ 1,381 $ 6 $ (17) $ 1,370 438 43 (10) 471 67 67 3 3 $ 1,889 $ 49 $ (27) $ 1,911 June 30, 2012 Unrealized Amortized cost Fair value gains losses $ 1,425 $ - $ (26) $ 1,399 483 41 (15) 509 6 6 2 2 $ 1,916 $ 41 $ (41) $ 1,916
Corporate debt securities Preferred shares Asset-backed securities Other debt securities Total
Unrealized losses on debt securities accounted for as available-for-sale at June 30, 2013 are summarized below (US$ millions): Less than 12 months Fair Unrealized value losses 224 $ (5) 23 (2) 247 $ (7) 12 months or greater Fair Unrealized value losses 173 $ (12) 106 (8) 279 $ (20) Fair value Total 397 129 526 Unrealized losses $ (17) (10) $ (27)
Corporate debt securities Preferred shares Total
$ $
$ $
$ $
Unrealized losses on debt securities accounted for as available-for-sale at June 30, 2012 are summarized below (US$ millions): Less than 12 months Fair Unrealized value losses 127 $ (3) 179 (15) 306 $ (18) 12 months or greater Fair Unrealized value losses 339 $ (23) 339 $ (23) Fair value Total 466 179 645 Unrealized losses $ (26) (15) $ (41)
Corporate debt securities Preferred shares Total
$ $
$ $
$ $
Corporate debt securities comprise investments in bonds and notes. Unrealized losses associated with corporate debt securities are primarily attributable to movements in the credit default swap spread curve applicable to the issuer. Based upon IFCs assessment of expected credit losses, IFC has determined that the issuer is expected to make all contractual principal and interest payments. Accordingly, IFC expects to recover the cost basis of these securities. Preferred shares comprise investments in preferred equity investments that are redeemable at the option of IFC or mandatorily redeemable by the issuer. Unrealized losses associated with preferred shares are primarily driven by changes in discount rates associated with changes in credit spreads or interest rates, minor changes in exchange rates and comparable market valuations in the applicable sector. Based upon IFCs assessment of the expected credit losses, IFC expects to recover the cost basis of these securities.
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Debt securities with contractual maturities that are accounted for as available-for-sale have contractual maturities during the years ending June 30, 2014 through June 30, 2018 and thereafter, as follows (US$ millions): Corporate debt securities Asset-backed securities Preferred shares Total disbursed portfolio of debt securities with contractual maturities $ 2014 207 2 209 $ 2015 201 2 203 $ 2016 136 67 203 $ 2017 100 2 102 $ 2018 319 1 320 Thereafter $ 345 12 44 $ 401 $ Total 1,308 86 44 1,438
The expected maturity of asset-backed securities may differ from the contractual maturity, as reported above, due to prepayment features. In addition, IFC has $505 million of redeemable preferred shares and other debt securities with undefined maturities ($489 million - June 30, 2012). The currency composition and average contractual rate of debt securities with contractual maturities that are accounted for as available-for-sale are summarized below: June 30, 2013 June 30, 2012 Average Average Amount contractual Amount contractual (US$ millions) rate (%) (US$ millions) rate (%) US dollar $ 816 3.5 $ 541 3.5 Brazilian real 261 7.4 511 10.2 Euro 100 3.3 69 2.6 South African rand 100 5.6 121 6.1 Turkish lira 88 7.9 25 8.1 Other non-OECD currencies 73 5.3 169 6.7 Total disbursed portfolio of debt securities with contractual maturities $ 1,438 4.7 $ 1,436 6.5 After the effect of interest rate swaps and currency swaps, IFCs debt securities with contractual maturities that are accounted for as available-forsale are principally denominated in variable rate US dollars. NOTE G EQUITY INVESTMENTS Income from equity investments for the years ended June 30, 2013, June 30, 2012 and June 30, 2011 comprises the following (US$ millions): 2013 2012 2,000 3 274 (272) (420) (692) (128) $ 1,457 $ 2011
Realized gains on equity sales, net Gains on non-monetary exchanges Dividends and profit participations Custody, fees and other Other-than-temporary impairments: Equity investments at cost less impairment Equity investments available-for-sale Total other-than-temporary impairments Unrealized gains (losses) on equity investments Total income from equity investments
921 6 248 (8) (152) (289) (441) 26
737 217 280 (6) (87) (131) (218) 454
752
1,464
Dividends and profit participations include $36 million at June 30, 2013 ($43 million - year ended June 30, 2012; $57 million - year ended June 30, 2011) of receipts received in freely convertible currency, net of cash disbursements, in respect of investments accounted for under the cost recovery method, for which cost has been fully recovered. Equity investments include several private equity funds that invest primarily in emerging markets across a range of sectors and that are accounted for at fair value under the Fair Value Option. These investments cannot be redeemed. Instead distributions are received through the liquidation of the underlying assets of the funds. IFC estimates that the underlying assets of the funds will be liquidated over five to eight years. The fair values of all these funds have been determined using the net asset value of IFCs ownership interest in partners capital and totaled $2,687 million as of June 30, 2013 ($2,181 million - June 30, 2012).
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NOTE H INVESTMENT TRANSACTIONS COMMITTED BUT NOT DISBURSED OR UTILIZED Loan, equity and debt security commitments signed but not yet disbursed, and guarantee and client risk management facilities signed but not yet utilized are summarized below (US$ millions): Investment transactions committed but not disbursed: Loans, equity investments and debt securities Investment transactions committed but not utilized: Guarantees Client risk management facilities Total investment transactions committed but not disbursed or utilized June 30, 2013 $ 10,358 1,368 290 $ 12,016 $ $ June 30, 2012 9,641 1,087 250 10,978
The disbursements of investment transactions committed but not disbursed or utilized are generally subject to fulfillment of conditions of disbursement. NOTE I LOAN PARTICIPATIONS Loan participations signed as commitments for which disbursement has not yet been made and loan participations disbursed and outstanding which are serviced by IFC for participants are as follows (US$ millions): Loan participations signed as commitments but not disbursed Loan participations disbursed and outstanding which are serviced by IFC NOTE J RECEIVABLES AND OTHER ASSETS Receivables and other assets are summarized below (US$ millions): Receivables from unsettled security trades Accrued interest income on time deposits and securities Accrued income on derivative instruments Accrued interest income on loans Headquarters building: Land Building Less: Accumulated building depreciation Headquarters building, net Deferred charges and other assets Total receivables and other assets $ $ June 30, 2013 236 135 440 207 89 233 (122) 200 1,063 2,281 $ $ June 30, 2012 691 126 507 229 89 225 (106) 208 1,068 2,829 $ $ June 30, 2013 1,961 6,621 $ $ June 30, 2012 1,880 6,463
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NOTE K BORROWINGS Market borrowings and associated derivatives IFC's borrowings outstanding from market sources and currency and interest rate swaps, net of unamortized issue premiums and discounts, are summarized below: June 30, 2013 Interest rate swaps Currency swaps notional principal payable (receivable) payable (receivable) Notional Amount amount Weighted Weighted (US$ average (US$ average millions) rate (%) millions) rate (%) $ 18,400 (0.2) $ 37,767 0.4 (37,987) (1.4) (8,136) (4.8) (2,684) (2.6) (1,616) (4.3) (1,367) (7.5) (1,318) (6.3) (692) (6.3) (406) (3.8) 30 6.4 (447) (2.9) (81) (1.9) (320) (4.8) (269) (7.4) 8 0.4 (8) (0.3) (183) (2.8) (166) (3.3) (128) (5.1) (49) (10.2) (60) (7.9) (39) (1.8) (11) (14.9) $ 458 $ (220)
Market borrowings Amount Weighted (US$ average millions) rate (%) $ 25,148 1.9 8,136 2,684 1,616 1,367 1,318 692 498 447 432 320 277 183 166 128 74 60 40 39 11 9 43,645 1,316 44,961 (499) 44,462 177 $ 44,639 4.8 2.6 4.3 7.5 6.3 6.3 3.8 2.9 3.0 4.8 7.2 2.8 3.3 5.1 10.2 7.9 4.3 1.8 14.9 10.5
Net currency obligation Amount Weighted (US$ average millions) rate (%) $ 43,328 0.3 122 351 8 25 40 9 $ 43,883 4.6 3.2 0.4 10.2 4.3 10.5 0.4
US dollar Australian dollar Japanese yen New Zealand dollar Turkish lira Brazilian real South African rand Russian ruble Pound sterling Chinese renminbi Mexican peso Euro Canadian dollar Norwegian kroner Hong Kong dollar Nigerian naira Costa Rican colones C.F.A. franc South Korean won New Ghanaian cedi Dominican pesos Principal at face value Borrowings under the shortterm Discount Note Program Unamortized discounts, net Total market borrowings Fair value adjustments Carrying amount of market borrowings
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June 30, 2012 Interest rate swaps notional principal Currency swaps payable (receivable) payable (receivable) Notional Amount amount Weighted Weighted (US $ average (US $ average millions) rate (%) millions) rate (%) $ 17,946 (0.5) $ 35,208 0.7 (35,454) (1.7) (9,048) (5.4) (3,831) (2.1) (1,801) (8.9) (1,264) (5.9) (913) (8.4) (780) (4.6) (629) (6.9) (490) (3.1) (277) (3.4) (259) (6.8) 8 1.0 (8) (0.8) (158) (1.1) (128) (5.1) (124) (6.0) (111) (4.6) (60) (7.9) (39) (1.8) (30) (5.8) 30 6.5 $ (1,966) $ (246)
Market borrowings Amount Weighted (US $ average millions) rate (%) $ 22,573 2.3 9,048 3,831 1,801 1,264 913 780 629 490 339 277 267 158 128 124 111 60 39 38 30 5.4 2.1 8.9 5.9 8.4 4.6 6.9 3.1 3.2 3.4 6.6 1.1 5.1 6.0 4.6 7.9 1.8 4.3 5.8
Net currency obligation Amount Weighted (US $ average millions) rate (%) $ 40,273 0.6 339 8 38 30 $ 40,688 3.2 1.0 4.3 6.5 0.7
US dollar Australian dollar Japanese yen Turkish lira New Zealand dollar Brazilian real Canadian dollar South African rand Pound sterling Chinese renminbi Norwegian kroner Euro Singapore dollar Hong Kong dollar Mexican peso Swiss franc Costa Rican colones South Korean won C.F.A. franc Russian ruble
Principal at face value Borrowings under the shortterm Discount Note Program Unamortized discounts, net Total market borrowings Fair value adjustments Carrying amount of market borrowings
42,900 1,400 44,300 (640) 43,660 963 $ 44,623
The net currency obligations in C.F.A. francs, Chinese renminbi, Dominican pesos, Nigerian naira, and Russian rubles at June 30, 2013 have generally been invested and/or onlent to the clients in such currencies. The weighted average remaining maturity of IFCs borrowings from market sources was 4.1 years at June 30, 2013 (5.5 years - June 30, 2012). Charges on borrowings for the year ended June 30, 2013 include $4 million of interest expense on secured borrowings ($5 million - year ended June 30, 2012; $4 million - year ended June 30, 2011) and is net of $11 million of gains on buybacks of market borrowings ($19 million - June 30, 2012; $10 million - year ended June 30, 2011). The net nominal amount payable from currency swaps of $458 million and the net notional amount receivable from interest rate swaps of $220 million at June 30, 2013 (receivable of $1,966 million from currency swaps and of $246 million from interest rate swaps - June 30, 2012), shown in the above table, are represented by currency and interest rate swap assets at fair value of $1,503 million and currency and interest rate swap liabilities at fair value of $1,823 million ($3,369 million and $627 million - June 30, 2012), included in derivative assets and derivative liabilities, respectively, on the consolidated balance sheet. Short-term market borrowings IFCs short-term Discount Note Program has maturities ranging from overnight to one year. The amount outstanding under the program at June 30, 2013 is $1,316 million ($1,400 million - June 30, 2012). Charges on borrowings for the year ended June 30, 2013, include $2 million in respect of this program ($1 million - June 30, 2012; $3 million - June 30, 2011).
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Borrowings from IBRD Borrowings outstanding from IBRD and currency are summarized below: June 30, 2013 Weighted Principal average amount cost (%) (US$ millions) $ 34 4.0 196 0.2 $ 230 June 30, 2012 Weighted Principal average amount cost (%) (US$ millions) $ 42 4.0 $ 42
Saudi Arabian riyal US dollar Total borrowings outstanding from IBRD
The weighted average remaining maturity of borrowings from IBRD was 3.8 years at June 30, 2013 (2.7 years - June 30, 2012). Charges on borrowings for the year ended June 30, 2013, includes $2 million ($2 million - year ended June 30, 2012; $2 million - year ended June 30, 2011) in respect of borrowings from IBRD. Maturity of borrowings The principal amounts repayable on borrowings outstanding in all currencies, gross of any premiums or discounts, during the years ending June 30, 2014, through June 30, 2018, and thereafter are summarized below (US$ millions): Borrowings from market sources Borrowings under the short-term Discount Note Program Borrowings from IBRD Total borrowings, gross Unamortized discounts, net Fair value adjustments Carrying amount of borrowings After the effect of interest rate and currency swaps, IFCs borrowings generally reprice within one year. NOTE L PAYABLES AND OTHER LIABILITIES Payables and other liabilities are summarized below (US$ millions): Accrued charges on borrowings Accrued charges on derivative instruments Payables for unsettled security trades Secured borrowings Liabilities under retirement benefit plans Accounts payable, accrued expenses and other liabilities Deferred income Total payables and other liabilities NOTE M CAPITAL TRANSACTIONS On July 20, 2010, the Board of Directors recommended that the Board of Governors approve an increase in the authorized share capital of IFC of $130 million, to $2,580 million, and the issuance of $200 million of shares (including $70 million of unallocated shares). The resolution recommended by the Board of Directors was adopted by the Board of Governors on March 9, 2012. The amendment to the Articles of Agreement and the increase in the authorized share capital have become effective on June 27, 2012. During the year ended June 30, 2013, 31,321 shares, at a par value of $1,000 each, were subscribed and paid by member countries (2,500 shares at a par value of $1,000 each - year ended June 30, 2012; 0 shares at a par value of $1,000 each - year ended June 30, 2011). $ June 30, 2013 395 153 179 86 183 1,225 114 2,335 $ June 30, 2012 491 180 477 100 338 1,162 110 2,858 $ 2014 9,264 1,316 8 $ 10,588 $ $ 2015 7,053 8 7,061 $ $ 2016 6,236 8 6,244 $ $ 2017 7,027 8 7,035 $ $ 2018 8,191 198 8,389 $ Thereafter $ 5,874 5,874 $ $ Total 43,645 1,316 230 45,191 (499) 177 44,869
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Under IFCs Articles of Agreement, in the event a member withdraws from IFC, IFC and the member may negotiate on the repurchase of the members capital stock on such terms as may be appropriate under the circumstances. Such agreement may provide, among other things, for a final settlement of all obligations of the member to IFC. If such an agreement is not made within six months after the member withdraws or such other time as IFC and the member may agree, the repurchase price of the members capital stock shall be the value thereof shown by the books of IFC on the day when the member withdraws. The repurchase of capital stock is subject to certain conditions including payments in installments, at such times and in such available currency or currencies as IFC reasonably determines, taking into account the financial position of IFC. IFCs Articles of Agreement also provide for the withdrawing member to repay losses on loans and equity investments in excess of reserves provided on the date of withdrawal. NOTE N OTHER INCOME Other income for the year ended June 30, 2013, predominantly comprises $25 million of fees collected from clients ($20 million - year ended June 30, 2012; $24 million - year ended June 30, 2011), $41 million of income from consolidated entities ($28 million - year ended June 30, 2012; $29 million - year ended June 30, 2011) and income under other reimbursable arrangements of $8 million ($10 million - year ended June 30, 2012; $6 million - year ended June 30, 2011). NOTE O RETAINED EARNINGS DESIGNATIONS AND RELATED EXPENDITURES AND ACCUMULATED OTHER COMPREHENSIVE INCOME Designated retained earnings The components of designated retained earnings and related expenditures are summarized below (US$ millions):
SME Ventures for IDA countries Global Infrastructure Project Development Fund Total designated retained earnings
Grants to IDA
Advisory services
Performancebased grants
At June 30, 2010 Year ended June 30, 2011 Designations of retained earnings Expenditures against designated retained earnings At June 30, 2011 Year ended June 30, 2012 Designations of retained earnings Expenditures against designated retained earnings At June 30, 2012 Year ended June 30, 2013 Designations of retained earnings Expenditures against designated retained earnings At June 30, 2013
600
313 10
101 -
37 -
30 -
481 610
(600) $ 330 $
(106) 217 69 $
(47) 54 $
(3) 34 $
30 $
(756) 335 399
(330) $ 340 $
(67) 219 80 $
(13) 41 $
(2) 32 $
30 $
(412) 322 420
(340) $ $
(100) 199 $
(10) 31 $
(4) 28 $
(10) 20 $
(464) 278
On August 9, 2012, the Board of Directors approved a designation of $340 million of IFCs retained earnings for grants to IDA and $80 million of IFCs retained earnings for advisory services. On October 12, 2012, the Board of Governors noted with approval the designations approved by the Board of Directors. IFC recognizes designation of retained earnings for advisory services when the Board of Directors approves it and recognizes designation of retained earnings for grants to IDA when it is noted with approval by the Board of Governors. On January 15, 2013, IFC recognized expenditures against grants to IDA on signing of a grant agreement between IDA and IFC concerning the transfer to IDA and use of funds corresponding to designation of retained earnings for grants to IDA approved by the Board of Directors on August 9, 2012 and noted with approval by the Board of Governors on October 12, 2012.
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Accumulated other comprehensive income The components of accumulated other comprehensive income at June 30, 2013 and June 30, 2012 are summarized as follows (US$ millions): Net unrealized gains on available-for-sale debt securities Net unrealized gains on available-for-sale equity investments Unrecognized net actuarial losses and unrecognized prior service costs on benefit plans Total accumulated other comprehensive income $ June 30, 2013 22 1,835 (736) 1,121 $ June 30, 2012 1,450 (937) 513
NOTE P NET GAINS AND LOSSES ON OTHER NON-TRADING FINANCIAL INSTRUMENTS ACCOUNTED FOR AT FAIR VALUE Net gains and losses on other non-trading financial instruments accounted for at fair value for the years ended June 30, 2013, June 30, 2012 and June 30, 2011, comprises (US$ millions): Net realized gains and losses on derivatives associated with investments: Realized (losses) gains on derivatives associated with loans Realized gains on derivatives associated with debt securities Realized gains on derivatives associated with equity investments Total net realized gains on derivatives associated with investments Net gains and losses on non-monetary exchanges of derivatives associated with investments: Gains (losses) on non-monetary exchanges of derivatives associated with loans Gains on non-monetary exchanges of derivatives associated with debt securities Gains on non-monetary exchanges of derivatives associated with equity investments Total net non-monetary gains on derivatives associated with investments Net unrealized gains and losses on other non-trading financial instruments: Unrealized gains and losses on derivatives associated with investments: Unrealized gains (losses) on derivatives associated with loans Unrealized gains (losses) on derivatives associated with debt securities Unrealized (losses) gains on derivatives associated with equity investments Total unrealized gains (losses) on derivatives associated with investments Unrealized gains and losses on market borrowings accounted for at fair value: Credit spread component Interest rate, foreign exchange and other components Total unrealized gains (losses) on market borrowings Unrealized (losses) gains on derivatives associated with market borrowings Net unrealized gains (losses) on market borrowings and associated derivatives Total net unrealized gains (losses) on other non-trading financial instruments Net gains (losses) on other non-trading financial instruments accounted for at fair value $ 2013 $ (30) 25 40 35 $ 2012 (1) 12 11 $ 2011 4 11 48 63
2 2
(1) 11 10
8 14 22
279 134 (60) 353 31 755 786 (754) 32 385 422 $
(99) (14) 79 (34) (59) (1,148) (1,207) 1,001 (206) (240) (219) $
(68) (30) 75 (23) (44) 187 143 (50) 93 70 155
As discussed in Note A, Summary of significant accounting and related policies, market borrowings with associated derivatives are accounted for at fair value under the Fair Value Option. Differences arise between the movement in the fair value of market borrowings and the fair value of the associated derivatives primarily due to the different credit characteristics. The change in fair value reported in Net unrealized gains (losses) on market borrowings and associated derivatives includes the impact of changes in IFC's own credit spread. As credit spreads widen, unrealized gains are recorded and when such credit spreads narrow, unrealized losses are recorded (notwithstanding the impact of other factors, such as changes in risk-free interest and foreign currency exchange rates). The magnitude and direction (gain or loss) can be volatile from period to period but do not alter the cash flows on the market borrowings.
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NOTE Q DERIVATIVE AND OTHER FINANCIAL INSTRUMENTS As discussed in Note A, Summary of significant accounting and related policies, IFC enters into transactions in various derivative instruments for financial risk management purposes in connection with its principal business activities, including lending, investing in debt securities, equity investments, client risk management, borrowing, liquid asset management and asset and liability management. None of these derivative instruments are designated as hedging instruments under ASC Topic 815. Note A describes how and why IFC uses derivative instruments. The fair value of derivative instrument assets and liabilities by risk type at June 30, 2013 and June 30, 2012 is summarized as follows (US$ millions): Consolidated balance sheet location Derivative assets Interest rate Foreign exchange Interest rate and currency Equity Other derivative Total derivative assets Derivative liabilities Interest rate Foreign exchange Interest rate and currency Equity and other Total derivative liabilities June 30, 2013 Fair value $ 684 124 1,787 780 1 3,376 446 41 1,823 2,310 $ June 30, 2012 Fair value 905 174 3,116 418 2 4,615 410 68 782 1 1,261
$ $
$ $
The effect of derivative instruments contracts on the consolidated income statement for the years ended June 30, 2013, June 30, 2012 and June 30, 2011 is summarized as follows (US$ millions): Derivative risk category Interest rate Income statement location Income from loans and guarantees Income from liquid asset trading activities Charges on borrowings Other income Net gains and losses on other non-trading financial instruments accounted for at fair value Foreign currency transaction gains and losses on non-trading activities Income from liquid asset trading activities Net gains and losses on other non-trading financial instruments accounted for at fair value Income from loans and guarantees Income from debt securities Income from liquid asset trading activities Charges on borrowings Foreign currency transaction gains and losses on non-trading activities Net gains and losses on other non-trading financial instruments accounted for at fair value Other income Net gains and losses on other non-trading financial instruments accounted for at fair value Net gains and losses on other non-trading financial instruments accounted for at fair value Total $ $ 2013 (48) (237) 373 9 (365) 134 (179) 14 (157) (29) 164 910 (2,829) (105) (7) 93 (1) (2,260) $ $ 2012 (39) (282) 440 2 267 75 (22) 26 (187) (61) (74) 940 512 660 40 (5) 2,292 $ $ 2011 (50) (238) 464 11 (38) 46 (33) (11) (198) (79) (32) 943 993 (81) (5) 135 7 1,834
Foreign exchange
Interest rate and currency
Equity Other derivative contracts
The income related to each derivative instrument category includes realized and unrealized gains and losses.
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At June 30, 2013, the outstanding volume, measured by US$ equivalent notional, of interest rate contracts was $55,400 million ($51,147 million June 30, 2012), foreign exchange contracts was $10,853 million ($11,605 million - June 30, 2012) and interest rate and currency contracts was $31,765 million ($28,730 million - June 30, 2012). At June 30, 2013, there were 263 equity risk and other contracts related to IFCs loan and equity investment portfolio recognized as derivatives assets or liabilities under ASC Topic 815 (221 equity risk and other contracts - June 30, 2012). IFC enters into interest rate and currency derivative instruments under standard industry contracts that contain credit risk-linked contingent features with respect to collateral requirements. Should IFCs credit rating be downgraded from the current AAA, the credit support annexes of these standard swap agreements detail, by swap counterparty, the collateral requirements IFC must satisfy in this event. The aggregate fair value of derivatives containing a credit risk-linked contingent feature in a net liability position was $724 million at June 30, 2013 ($105 million - June 30, 2012). At June 30, 2013, IFC had no collateral posted under these agreements. If IFC was downgraded from the current AAA to AA+ or less, then collateral in the amount of $233 million would be required to be posted against net liability positions with counterparties at June 30, 2013 ($6 million - June 30, 2012). As of June 30, 2013, IFC had $245 million ($183 million - June 30, 2012) of outstanding obligations to return cash collateral under master netting agreements. NOTE R FAIR VALUE MEASUREMENTS Many of IFCs financial instruments are not actively traded in any market. Accordingly, estimates and present value calculations of future cash flows are used to estimate the fair values. Determining future cash flows for fair value estimation is subjective and imprecise, and minor changes in assumptions or methodologies may materially affect the estimated values. The excess or deficit resulting from the difference between the carrying amounts and the fair values presented does not necessarily reflect the values which will ultimately be realized, since IFC generally holds loans, borrowings and other financial instruments with contractual maturities, with the aim of realizing their contractual cash flows. The estimated fair values reflect the interest rate environments as of June 30, 2013 and June 30, 2012. In different interest rate environments, the fair value of IFCs financial assets and liabilities could differ significantly, especially the fair value of certain fixed rate financial instruments. Reasonable comparability of fair values among financial institutions is not likely, because of the wide range of permitted valuation techniques and numerous estimates that must be made in the absence of secondary market prices. This lack of objective pricing standards introduces a greater degree of subjectivity and volatility to these derived or estimated fair values. Therefore, while disclosure of estimated fair values of financial instruments is required, readers are cautioned in using these data for purposes of evaluating the financial condition of IFC. The fair values of the individual financial instruments do not represent the fair value of IFC taken as a whole. IFCs financial instruments measured at fair value have been classified as Level 1, Level 2 or Level 3 based on the fair value hierarchy in ASC 820, as described in Note A. i) Level 1 primarily consists of financial instruments whose values are based on unadjusted quoted market prices. ii) Level 2 financial instruments are valued using models and other valuation methodologies and substantially all of the inputs are observable in the market place, can be derived from observable data or are supported by observable levels at which market transactions are executed. iii) Level 3 consists of financial instruments whose fair value is estimated based on internally developed models or methodologies utilizing inputs that are non-observable. Significant increases (decreases) in any of those inputs in isolation would result in a significantly lower (higher) fair value measurement. All of IFCs financial instruments in its liquid assets portfolio are managed according to an investment authority approved by the Board of Directors and investment guidelines approved by IFCs Corporate Risk Committee (CRC), a subcommittee of IFCs Management Team. Third party independent vendor prices are used to price the vast majority of the liquid assets. The vendor prices are evaluated by IFC's Treasury department and IFCs Integrated Risk department, maintains oversight for the pricing of liquid assets. IFCs regional and industry departments are primarily responsible for fair valuing IFCs investment portfolio (equity investments, debt securities, loan investments and related derivatives). IFCs Portfolio Valuation Unit and Loss Provisioning Unit in the Accounting and Financial Operations department, provide oversight over the fair valuation process by monitoring and reviewing the fair values of IFCs investment portfolio. IFCs Valuation Oversight Subcommittee, which is a subcommittee of CRC, reviews significant valuation principles and the reasonableness of high exposure valuations quarterly. IFC's borrowings are fair valued by the Quantitative Analysis Group in IFCs Treasury department under the oversight of the Integrated Risk department.
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The methodologies used and key assumptions made to estimate fair values as of June 30, 2013, and June 30, 2012, are summarized below. Liquid assets - The primary pricing source for the liquid assets is valuations obtained from external pricing services (vendor prices). The most liquid securities in the liquid asset portfolio are exchange traded futures, options, and US Treasuries. For exchange traded futures and options, exchange quoted prices are obtained and these are classified as Level 1 in accordance with ASC 820. Liquid assets valued using quoted market prices are also classified as Level 1. Securities valued using vendor prices for which there is evidence of high market trade activity may also be classified as Level 1. US Treasuries are valued using index prices and also classified as Level 1. The remaining liquid assets valued using vendor prices are classified as Level 2 or Level 3 based on the results of IFCs evaluation of the vendor's pricing methodologies. Most vendor prices use some form of matrix pricing methodology to derive the inputs for projecting cash flows or to derive prices. When vendor prices are not available, liquid assets are valued internally by IFC using yield-pricing approach or comparables model approach and these are classified as Level 2 or Level 3 depending on the degree that the inputs are observable in the market. The critical factors in valuing liquid assets in both Level 2 and Level 3 are the estimation of cash flows and yield. Other significant inputs for valuing corporate securities, quasi-government securities and sovereign or sovereign-guaranteed securities include reported trades, broker/dealer quotes, benchmark securities, option adjusted spread curve, volatilities, and other reference data. In addition to these inputs, valuation models for securitized or collateralized securities use collateral performance inputs, such as weighted average coupon rate, weighted average maturity, conditional prepayment rate, constant default rate, vintage, and credit enhancements. Loans and debt securities - Loans and debt securities in IFCs investment portfolio that do not have available market prices are primarily valued using discounted cash flow approaches. All loans measured at fair value are classified as Level 3. Certain loans contain embedded conversion and/or income participation features. If not bifurcated as standalone derivatives, these features are considered in determining the loans fair value based on the quoted market prices or other calculated values of the equity investments into which the loans are convertible and the discounted cash flows of the income participation features. The valuation techniques and significant unobservable inputs for loans and debt securities classified as Level 3 as of June 30, 2013 and June 30, 2012 are presented below: June 30, 2013 Fair value (US$ Valuation technique millions) Discounted cash flows $ 267 Relative valuations 130 Net asset value 148 Recent transactions 33 Other techniques 7 585 Discounted cash flows Recent transactions Other techniques Total loans and other debt securities Total $ 1,545 416 98 2,059 2,644 Weighted average (%) 13.3 n/a Credit default swap spreads Expected recovery rates 1.0 - 50.0 0.0 - 85.0 2.9 45.6 Weighted average (%) 12.0
Debt securities - preferred shares
Significant inputs Discount rate Valuation multiples* Third party pricing
Range (%) 6.9 - 18.0
Total preferred shares Loans and other debt securities
Debt securities - preferred shares
June 30, 2012 Fair value (US$ millions) Valuation technique Discounted cash flows $ 159 Relative valuations 91 Net asset value 123 Recent transactions 275 Other techniques 9 657 Discounted cash flows Recent transactions Other techniques 2,037 57 8 2,102 $ 2,759
Significant inputs Discount rate Valuation multiples* Third party pricing
Range (%) 8.0 - 22.2 n/a
Total preferred shares Loans and other debt securities
Credit default swap spreads Expected recovery rates
0.7 - 80.0 0.0 - 85.0 n/a
3.9 44.8 n/a
Total loans and other debt securities Total
* In case of valuation techniques with multiple significant inputs, the range and weighted average are not provided.
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Borrowings - Fair values derived by using quoted prices in active markets are classified as Level 1. Fair values derived by determining the present value of estimated future cash flows using appropriate discount rates and option specific models where appropriate are classified as Level 2. The significant inputs used in valuing borrowings classified as Level 2 are presented below: Classes Structured bonds Unstructured bonds Significant Inputs Foreign exchange rate and inter-bank yield curves, IFC's credit curve and swaption volatility matrix, foreign exchange rate volatility, equity spot price, volatility and dividend yield. Inter-bank yield curve and IFC's credit curve.
As of June 30, 2013 IFC had four inflation index linked structured borrowing issues classified as level 3 with a total fair value of $391 million. The significant unobservable inputs in the valuation of this structure are the correlations between and the weights of the constituents of the inflation index. Derivative instruments - The various classes of derivative instruments include interest rate contracts, foreign exchange contracts, interest rate and currency contracts, equity contracts and other derivative contracts. Certain over the counter derivatives in the liquid asset portfolio priced in-house are classified as Level 2, while certain over the counter derivatives priced using external manager prices are classified as Level 3. Fair values for derivative instruments are derived by determining the present value of estimated future cash flows using appropriate discount rates and option specific models where appropriate. The significant inputs used in valuing the various classes of derivative instruments classified as Level 2 and significant unobservable inputs for derivative instruments classified as Level 3 as of June 30, 2013 and June 30, 2012 are presented below: Level 2 derivatives Interest rate contracts Foreign exchange Interest rate and currency rates Significant Inputs Inter-bank yield curves, foreign exchange basis curve and yield curves specified to index floating rates. Foreign exchange rate, inter-bank yield curves and foreign exchange basis curve. Foreign exchange rate, inter-bank yield curves, foreign exchange basis curve and yield curves specified to index floating rates. June 30, 2013 Fair value (US$ millions) Type Fixed strike price options $ 38 Variable strike price options 742 Other techniques 1 Inflation index linked note (26) $ 755
Level 3 derivatives Equity related derivatives Borrowing related structured currency swap Total
Significant inputs Volatilities Contractual strike price* Inflation index weights and correlations
Range (%) 1.0 - 70.6
Weighted average (%) 21.5
Level 3 derivatives Equity related derivatives Other derivatives Total
June 30, 2012 Fair value (US$ millions) Type Fixed strike price options $ 76 Variable strike price options 332 Other techniques 7 4 $ 419
Significant inputs Volatilities Contractual strike price*
Range (%) 14.4 -115.1
Weighted average (%) 34.9
* In case of valuation techniques with multiple significant inputs, the range and weighted average are not provided
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Equity investments - Equity investments valued using quoted prices in active markets are classified as Level 1. Equity investments classified as Level 2 were valued using quoted prices in inactive markets. The valuation techniques and significant unobservable inputs for equity investments classified as Level 3 as of June 30, 2013 and June 30, 2012 are presented below: June 30, 2013 Fair value (US$ millions) Significant inputs $ 674 Cost of equity Asset growth rate Return on assets Perpetual growth rate 261 Price/book value 203 Discount for lock-up 271 96 1,505 Net Asset Value Recent transactions Net Asset Value Recent transactions 886 2 1,801 42 2,731 Discounted cash flows Relative valuations Listed price (adjusted) Recent transactions Other techniques Total others Total $ 318 174 29 156 138 815 5,051 Weighted average cost of capital Cost of equity Valuation multiples* Discount for lock-up 6.7 - 16.7 8.7 - 19.1 2.1 - 24.0 11.8 13.1 11.0 Weighted average (%) 15.0 9.7 2.2 5.0 1.3 11.2
Sector Banking and other financial institutions
Valuation technique Discounted cash flows
Total banking and other financial institutions AMC Funds Other funds Total funds Others
Relative valuations Listed price (adjusted) Recent transactions Other techniques
Range (%) 9.2 - 22.1 (5.9) - 170.0 (14.2) - 6.2 2.5 - 11.0 1.0 - 1.3 8.1 - 30.0
Third party pricing
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June 30, 2012 Fair value (US$ millions) Significant inputs $ 514 Cost of equity Asset growth rate Return on assets Perpetual growth rate 203 Price/book value 207 Discount for lock-up 70 14 1,008 Net Asset Value Net Asset Value Recent transactions 491 1,690 103 2,284 Discounted cash flows Relative valuations Listed price (adjusted) Recent transactions Other techniques Total others Total $ 177 135 37 151 161 661 3,953 Weighted average cost of capital Cost of equity Valuation multiples* Discount for lock-up 6.8 - 16.1 10.2 - 16.4 5.0-18.7 n/a 10.4 13.9 6.5 n/a Third party pricing
Sector Banking and other financial institutions
Valuation technique Discounted cash flows
Total banking and other financial institutions AMC Funds Other funds Total funds Others
Relative valuations Listed price (adjusted) Recent transactions Other techniques
Weighted Range (%) average (%) 9.8 - 22.7 16.8 (34.0) - 113.0 20.1 (8.6) - 7.4 2.1 3.0 - 11.0 5.2 1.5 - 2.4 1.5 9.4 - 27.8 12.5 n/a n/a
n/a
n/a
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Fair value of assets and liabilities Estimated fair values of IFCs financial assets and liabilities and off-balance sheet financial instruments at June 30, 2013 and June 30, 2012 are summarized below (US$ millions). June 30, 2013 June 30, 2012 Carrying Carrying amount Fair value amount Fair value Financial assets Cash and due from banks, time deposits, trading securities and securities purchased under resale agreements $ 37,191 $ 37,191 $ 36,879 $ 36,879 Investments: Loans at amortized cost, net of reserves against losses Loans held for sale at lower of amortized cost or fair value Loans accounted for at fair value under the Fair Value Option Total loans Equity investments at cost less impairment Equity investments accounted for at fair value as available-forsale Equity investments accounted for at fair value Total equity investments Debt securities accounted for at fair value as available-for-sale Debt securities accounted for at fair value under the Fair Value Option Total debt securities Total investments Derivative assets: Borrowings-related Liquid asset portfolio-related and other Investment-related Client risk management-related Total derivative assets Other investment-related financial assets Financial liabilities Securities sold under repurchase agreements and payable for cash collateral received Market and IBRD borrowings outstanding Derivative liabilities: Borrowings-related Liquid asset portfolio-related and other Investment-related Client risk management-related Total derivative liabilities 20,295 43 493 20,831 3,119 4,230 4,346 11,695 1,911 240 2,151 34,677 1,503 376 1,378 119 3,376 5 21,801 84 493 22,378 4,733 4,230 4,346 13,309 1,911 240 2,151 37,838 1,503 376 1,378 119 3,376 120 18,845 60 591 19,496 3,066 3,231 3,477 9,774 1,916 252 2,168 31,438 3,369 264 852 130 4,615 37 19,452 84 591 20,127 5,269 3,231 3,477 11,977 1,916 252 2,168 34,272 3,369 264 852 130 4,615 158
5,736 44,869 1,823 210 157 120 2,310
5,736 44,863 1,823 210 157 120 2,310
6,397 44,665 627 223 281 130 1,261
6,397 44,669 627 223 281 130 1,261
Other investment-related financial assets comprise standalone options and warrants that do not meet the definition of a derivative. The fair value of loan commitments amounted to $24 million at June 30, 2013 ($20 million - June 30, 2012). Fair values of loan commitments are based on present value of loan commitment fees.
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Fair value hierarchy The following tables provide information as of June 30, 2013 and June 30, 2012, about IFCs financial assets and financial liabilities measured at fair value on a recurring basis. As required by ASC 820, financial assets and financial liabilities are classified in their entirety based on the lowest level input that is significant to the fair value measurement (US$ millions): June 30, 2013 Level 1 Level 2 Level 3 Total Trading securities: Money market funds $ 768 $ $ $ 768 Treasury securities 6,098 6,098 Foreign government obligations 6,491 6,491 Government guaranteed obligations 436 55 491 Supranational bonds 131 26 157 Municipal bonds 900 900 Agency bonds 170 2 172 Foreign agency bonds 893 893 Agency residential mortgage-backed securities 184 63 247 Asset-backed securities 3,533 5 3,538 Foreign asset-backed securities 2,359 2,359 Corporate bonds 4,930 4,930 Commercial mortgage-backed securities 601 601 Foreign residential mortgage-backed securities 19 2,281 2,300 Non-agency residential mortgage-backed securities 311 34 345 Collateralized debt and collateralized loan obligations 13 46 59 Total trading securities 21,020* 9,244 85 30,349 Loans (outstanding principal balance $474) Equity investments: Banking and non-banking financial institutions Insurance companies Funds Others Total equity investments Debt securities: Corporate debt securities Preferred shares Asset-backed securities Other debt securities Total debt securities Derivative assets: Interest rate contracts Foreign exchange Interest rate and currency Equity Others Total derivative assets Total assets at fair value Borrowings: Structured bonds Unstructured bonds Total borrowings (outstanding principal balance $43,245**) Derivative liabilities: Interest rate contracts Foreign exchange Interest rate and currency rates Total derivative liabilities Total liabilities at fair value $ $ $ 1,669 229 1,490 3,388 24,408 24,798 24,798 24,798 $ $ $ 18 73 46 137 684 124 1,787 2,595 11,976 3,606 14,129 17,735 446 41 1,797 2,284 20,019 $ $ $ 493 1,464 41 2,731 815 5,051 1,474 585 87 5 2,151 780 1 781 8,561 391 391 26 26 417 $ $ $ 493 3,151 343 2,731 2,351 8,576 1,474 585 87 5 2,151 684 124 1,787 780 1 3,376 44,945 3,997 38,927 42,924 446 41 1,823 2,310 45,234
* includes securities priced at par plus accrued interest, which approximates fair value, with a fair value of $768 million at June 30, 2013. ** includes discount notes (not under the short-term Discount Note Program), with original maturities greater than one year, with principal due at maturity of $2,386 million, with a fair value of $1,925 million as of June 30, 2013. Note: For the year ended June 30, 2013: trading securities with a fair value of $180 million transferred from level 2 to level 1 due to indications of improved market activity; and trading securities with a fair value of $1 million were transferred from level 1 to level 2 due to decrease in market activity. Equity investments with fair value of $72 million transferred from level 1 to level 2 and $49 million from level 2 to level 1 due to decrease/increase in market activities. Bonds issued by IFC with a fair value of $1,090 million transferred from level 1 to level 2 due to change in information quality.
80 _

June 30, 2012 Level 2 Level 3 $ 14 1,436 38 301 4 171 62 3,780 1,026 73 874 1,946 348 18 10,091 69 13 61 143 905 174 3,116 4,195 $ $ 14,429 6,219 13,183 19,402 410 68 782 1,260 $ 20,662 $ $ $ $ 10 46 94 150 591 930 78 2,284 661 3,953 1,495 657 7 9 2,168 418 2 420 7,282 1 1 1 $ $ $ $
Trading securities: Money market funds Treasury securities Foreign government obligations Government guaranteed obligations Supranational bonds Municipal bonds Agency bonds Foreign agency bonds Agency residential mortgage-backed securities Asset-backed securities Foreign asset-backed securities Corporate bonds Commercial mortgage-backed securities Foreign residential mortgage-backed securities Non-agency residential mortgage-backed securities Collateralized debt and collateralized loan obligations Total trading securities Loans (outstanding principal balance $607) Equity investments: Banking and non-banking financial institutions Insurance companies Funds Others Total equity investments Debt securities: Corporate debt securities Preferred shares Asset-backed securities Other debt securities Total debt securities Derivative assets: Interest rate contracts Foreign exchange Interest rate and currency rate Equity Other Total derivative assets Total assets at fair value Borrowings: Structured bonds Unstructured bonds Total borrowings (outstanding principal balance $42,523**) Derivative liabilities: Interest rate contracts Foreign exchange Interest rate and currency rates Equity price risk contracts Total derivative liabilities Total liabilities at fair value
Level 1 $ 109 6,362 6,251 696 63 480 (95) 1,020 213 1 3,503 24 18,627* 1,353 114 1,145 2,612 $ $ 21,239 23,444 23,444 $ 23,444
Total 109 6,362 6,265 2,132 101 781 (91) 1,191 275 3,790 1,027 3,576 874 1,970 394 112 28,868 591 2,352 205 2,284 1,867 6,708 1,495 657 7 9 2,168 905 174 3,116 418 2 4,615 42,950 6,219 36,627 42,846 410 68 782 1 1,261 44,107
* includes securities priced at par plus accrued interest, which approximates fair value, with a fair value of $109 million at June 30, 2012. ** includes discount notes (not under the short-term Discount Note Program), with original maturities greater than one year, with principal due at maturity of $3,229 million, with a fair value of $2,640 million as of June 30, 2012. Note: For the year ended June 30, 2012: trading securities with a fair value of $214 million were transferred from level 2 to level 1 due to indications of improved market activity; and, trading securities with a fair value of $749 million were transferred from level 1 to level 2 due to decrease in market activity. Equity investments with fair value of $116 million were transferred from level 1 to level 2 due to decrease in market activity. Bonds issued by IFC with a fair value of $514 million were transferred from level 2 to level 1, while bonds issued with a fair value of $1,952 million were transferred from level 1 to level 2 due to change in information quality.
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The following tables present the changes in the carrying value of IFCs Level 3 financial assets and financial liabilities for the year ended June 30, 2013 and June 30, 2012 (US$ millions). IFCs policy is to recognize transfers in and transfers out at the beginning of the reporting period. Level 3 trading securities for the year ended June 30, 2013 Mortgage Asset backed backed securities securities Balance as of July 1, 2012 $ 10 $ 46 Transfers out Level 3 (*) (5) Net gains and losses (realized and unrealized) in net income 9 Purchases, issuances, sales and settlements: Purchases 5 Sales (5) Settlements and others (21) Balance as of June 30, 2013 For the year ended June 30, 2013: Net unrealized gains and losses included in net income $ $ 5 $ $ 34 13 Collateralized loan and debt obligations $ 94 19 (4) (63) $ $ 46 18 $ $ Total $ 150 (5) 28 5 (9) (84) 85 31
(*)Transfers out of Level 3 are due to availability of observable market data resulting from an increase in market activity for these securities or sales of some securities that were part of June 2012 beginning balance as of June 30, 2013.
Level 3 loans for the year ended June 30, 2013 Balance as of July 1, 2012 Net gains and losses (realized and unrealized) in: Net income Purchases, issuances, sales and settlements: Issuances Settlements and others Balance as of June 30, 2013 For the year ended June 30, 2013: Net unrealized gains and losses included in net income Level 3 debt securities for the year ended June 30, 2013 Corporate Preferred Asset securities shares backed securities Balance as of July 1, 2012 $ 1,495 $ 657 $ 7 Net gains and losses (realized and unrealized) in: Net income (14) (37) Other comprehensive income 14 1 Purchases, issuances, sales and settlements: Purchases 387 50 86 Proceeds from sales (35) Settlements and others (408) (51) (6) Balance as of June 30, 2013 For the year ended June 30, 2013: Net unrealized gains and losses included in net income Net unrealized gains and losses included in other comprehensive income $ $ $ 1,474 (1) 18 $ $ $ 585 (48) 2 $ $ $ 87 (1) $
Loans 591 38 141 (277)
Total
591 38 141 (277)
$ $
493 38
$ $
493 38
Others $ 9 (4) $ $ $ 5 (4) $ $ $ $
Total 2,168 (55) 15 523 (35) (465) 2,151 (53) 19
82 _

Level 3 equity investments for the year ended June 30, 2013 Banking and Insurance Funds non-banking companies institutions Balance as of July 1, 2012 $ 930 $ 78 $ 2,284 Transfers into Level 3 (*) 52 Transfers out of Level 3 (**) (65) (51) Net gains and losses (realized and unrealized) in: Net income 4 (8) 34 Other comprehensive income 43 2 Purchases, issuances, sales and settlements: Purchases 322 21 713 Proceeds from sales (13) (316) Settlements and others 191 (1) 16 Balance as of June 30, 2013 For the year ended June 30, 2013: Net unrealized gains and losses included in net income Net unrealized gains and losses included in other comprehensive income $ $ $ 1,464 39 50 $ $ $ 41 (8) 2 $ $ $ 2,731 (142) -
Others $ 661 (33) (75) 6 167 (19) 108 $ $ $ 815 (77) 5 $ $ $ $
Total 3,953 52 (149) (45) 51 1,223 (348) 314 5,051 (188) 57
(*) Transfers into Level 3 are due to lack of observable market data resulting from a decrease in market activity for these securities as of June 30, 2013. (**)Transfers out of Level 3 are due to availability of observable market data resulting from an increase in market activity for these securities or sales of some securities that were part of June 2012 beginning balance as of June 30, 2013.
Level 3 derivative assets for the year ended June 30, 2013 Equity Balance as of July 1, 2012 $ 418 Net gains and losses (realized and unrealized) in: Net income 93 Purchases, issuances, sales and settlements: Purchases 5 Settlements and others 264 Balance as of June 30, 2013 For the year ended June 30, 2013: Net unrealized gains and losses included in net income $ $ 780 78
Other
2 (1) -
Total
420 92 5 264
$ $
1 (2)
$ $
781 76
Level 3 bond liabilities for the year ended June 30, 2013 Structured Balance as of July 1, 2012 $ Net gains and losses (realized and unrealized) in: Net income 52 Purchases, issuances, sales and settlements: Issuances (443) Balance as of June 30, 2013 For the year ended June 30, 2013: Net unrealized gains and losses included in net income $ $ (391) 52
Unstructured
Total
52 (443)
$ $
$ $
(391) 52
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Level 3 derivative liabilities for the year ended June 30, 2013 Balance as of July 1, 2012 Net gains and losses (realized and unrealized) in: Net income Purchases, issuances, sales and settlements: Purchases and other Balance as of June 30, 2013 For the year ended June 30, 2013: Net unrealized gains and losses included in net income Level 3 trading securities for the year ended June 30, 2012 Mortgage Asset backed backed securities securities Balance as of July 1, 2011 $ 43 $ 64 Transfers into Level 3 (*) 5 Transfers out of Level 3 (**) (43) (13) Net gains and losses (realized and unrealized) in: Net income (5) Purchases, issuances, sales and settlements: Purchases 5 Settlements and others Balance as of June 30, 2012 For the year ended June 30, 2012: Net unrealized gains and losses included in net income $ $ 10 $ $ 46 10 $
Interest rate and currency
Total
(34) 8
(34) 8 $ $ (26) (34) $ $
(26) (34)
Collateralized loan and debt obligations $ 103 13 (22) $ $ 94 12
Total
210 5 (56) 8 5 (22)
$ $
150 22
Level 3 loans for the year ended June 30, 2012 Balance as of July 1, 2011 Net gains and losses (realized and unrealized) in: Net income Purchases, issuances, sales and settlements: Issuances Settlements and others Balance as of June 30, 2012 For the year ended June 30, 2012: Net unrealized gains and losses included in net income Level 3 debt securities for the year ended June 30, 2012 Asset backed Corporate Preferred securities securities shares Balance as of July 1, 2011 $ 1,620 $ 516 $ 22 Net gains and losses (realized and unrealized) in: Net income 10 27 Other comprehensive income (221) (38) Purchases, issuances, sales and settlements: Purchases 307 214 Proceeds from sales (56) Settlements and others (221) (6) (15) Balance as of June 30, 2012 For the year ended June 30, 2012: Net unrealized gains and losses included in net income Net unrealized gains and losses included in other comprehensive income $ $ $ 1,495 (7) (171) $ $ $ 657 13 (38) $ $ $ 7 $
Loans 637 (13) 129 (162)
Total
637 (13) 129 (162)
$ $
591 (14)
$ $
591 (14)
Others
8 1 -
Total 2,166 38 (259) 521 (56) (242)
$ $ $
9 1 -
$ $ $
2,168 7 (209)
84 _

Level 3 equity investments for the year ended June 30, 2012 Banking and non-banking Insurance institutions companies Funds Balance as of July 1, 2011 $ 566 $ 14 $ 2,104 Transfers into Level 3 (*) 393 Transfers out of Level 3 (**) (110) Net gains and losses (realized and unrealized) in: Net income (4) (2) (19) Other comprehensive income (3) 41 Purchases, issuances, sales and settlements: Purchases 58 13 436 Proceeds from sales (28) (237) Settlements and others 58 12 Balance as of June 30, 2012 For the year ended June 30, 2012: Net unrealized gains and losses included in net income Net unrealized gains and losses included in other comprehensive income $ $ $ 930 29 (3) $ $ $ 78 (2) 41 $ $ $ 2,284 (157) -
Others 548 21 (59) (8) 19 138 (1) 3
Total 3,232 414 (169) (33) 57 645 (266) 73
$ $ $
661 (6) 19
$ $ $
3,953 (136) 57
Level 3 derivative assets for the year ended June 30, 2012 Equity Balance as of July 1, 2011 $ 390 Net gains and losses (realized and unrealized) in: Net income 40 Purchases, issuances, sales and settlements: Purchases and issuances 8 Settlements and others (20) Balance as of June 30, 2012 For the year ended June 30, 2012: Net unrealized gains and losses included in net income $ $ 418 70
Other
7 (5) -
Total
397 35 8 (20)
$ $
2 (5)
$ $
420 65
Gains and losses (realized and unrealized) from trading securities, loans, equity investments and debt securities included in net income for the period are reported on the consolidated income statement in income from liquid asset trading activities, income from loans and guarantees, income from equity investments and income from debt securities, respectively. As of June 30, 2013, equity investments, accounted for at cost less impairment, with a carrying amount of $1,090 million were written down to their fair value of $938 million ($1,519 million and $1,247 million - June 30, 2012), resulting in a loss of $152 million, which was included in income from equity investments in the consolidated income statement during the year ended June 30, 2013 (loss of $272 million - year ended June 30, 2012). The amount of the write-down was based on a Level 3 measure of fair value.
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NOTE S CURRENCY POSITION IFC conducts its operations for loans, debt securities, equity investments, time deposits, trading securities, and borrowings in multiple currencies. IFCs policy is to minimize the level of currency risk by closely matching the currency of its assets (other than equity investments and quasi-equity investments) and liabilities by using hedging instruments. IFCs equity investments in enterprises located in its developing member countries are typically made in the local currency of the country. As a matter of policy, IFC carries the currency risk of equity investments and funds these investments from its capital and retained earnings. The following table summarizes IFCs exposure in major currencies at June 30, 2013 and June 30, 2012 (US$ millions): June 30, 2013 US dollar $ 2,965 17,630 337 16,594 (1,200) 15,394 1,528 16,922 6,833 1,238 $ 45,925 $ $ Euro 1,461 2,256 2,935 (218) 2,717 100 2,817 537 577 7,648 $ $ Japanese yen 4 330 20 20 20 2,683 41 3,078 $ Other currencies $ 2,075 10,133 2,910 (210) 2,700 11,695 523 14,918 15,623 425 43,174 $ Fair value and other adjustments $ (22,300) (22,300) $ $
Assets Cash and cash equivalents Trading securities Securities purchased under resale agreements Investments: Loans Less: Reserve against losses on loans Net loans Equity investments Debt securities Total investments Derivative assets Receivables and other assets Total assets Liabilities Securities sold under repurchase agreements Borrowings Derivative liabilities Payables and other liabilities Total liabilities
Total 6,505 30,349 337 22,459 (1,628) 20,831 11,695 2,151 34,677 3,376 2,281 77,525
5,715 26,406 9,009 1,346 42,476
21 278 6,438 584 7,321
2,685 26 40 2,751
15,500 9,874 365 25,739
(23,037) (23,037)
5,736 44,869 2,310 2,335 55,250
86 _

June 30, 2012 US dollar $ 2,397 18,763 931 15,496 (1,120) 14,376 1,287 15,663 6,454 1,986 $ 46,194 $ $ Euro 1,480 997 2,807 (164) 2,643 69 2,712 393 80 5,662 $ $ Japanese yen 208 1,359 30 (1) 29 29 3,832 36 5,464 $ Other currencies $ 2,962 7,749 33 2,544 (96) 2,448 9,774 812 13,034 16,034 727 40,539 $
Assets Cash and cash equivalents Trading securities Securities purchased under resale agreements Investments Loans Less: Reserve against losses on loans Net loans Equity investments Debt securities Total investments Derivative assets Receivables and other assets Total assets Liabilities Securities sold under repurchase agreements Borrowings Derivative liabilities Payables and other liabilities Total liabilities NOTE T SEGMENT REPORTING
Fair value and other adjustments $ (22,098) (22,098) $ $
Total 7,047 28,868 964 20,877 (1,381) 19,496 9,774 2,168 31,438 4,615 2,829 75,761
6,397 24,672 6,811 2,099 39,979
267 4,871 89 5,227
3,833 1,383 36 5,252
15,893 10,492 634 27,019
(22,296) (22,296)
6,397 44,665 1,261 2,858 55,181
For management purposes, IFCs business comprises three segments: investment services, treasury services and advisory services. The investment services segment consists primarily of lending and investing in debt and equity securities. The investment services segment also includes AMC, which is not separately disclosed due to its immaterial impact. Further information about the impact of AMC on IFCs consolidated balance sheets and income statements can be found in Note B. Operationally, the treasury services segment consists of the borrowing, liquid asset management, asset and liability management and client risk management activities. Advisory services provide consultation services to governments and the private sector. Consistent with internal reporting, net income or expense from asset and liability management and client risk management activities in support of investment services is allocated from the treasury segment to the investment services segment. The performance of investment services, treasury services and advisory services is assessed by senior management on the basis of net income for each segment, return on assets, and return on capital employed. Advisory services are primarily assessed based on the level and adequacy of its funding sources (See Note V). IFCs management reporting system and policies are used to determine revenues and expenses attributable to each segment. Consistent with internal reporting, administrative expenses are allocated to each segment based largely upon personnel costs and segment headcounts. Transactions between segments are immaterial and, thus, are not a factor in reconciling to the consolidated data.
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An analysis of IFCs major components of income and expense by business segment for the years ended June 30, 2013, June 30, 2012 and June 30, 2011, is provided below (US$ millions): June 30, 2013 Investment Treasury Advisory services services services Total Income from loans and guarantees $ 1,059 $ $ $ 1,059 Provision for losses on loans, guarantees and other receivables (243) (243) Income from equity investments 752 752 Income from debt securities 5 5 Income from liquid asset trading activities 500 500 Charges on borrowings (109) (111) (220) Advisory services income 239 239 Other income 202 202 Administrative expenses (781) (22) (42) (845) Advisory services expenses (351) (351) Expense from pension and other postretirement benefit plans (120) (6) (47) (173) Other expenses (32) (32) Foreign currency transaction gains and losses on non-trading activities 35 35 Income (loss) before net gains and losses on other non-trading financial instruments accounted for at fair value and grants to IDA 768 361 (201) 928 Net gains and losses on other non-trading financial instruments accounted for at fair value Realized gains 35 35 Gains on non-monetary exchanges 2 2 Unrealized gains 353 32 385 Income (loss) before grants to IDA 1,158 393 (201) 1,350 Grants to IDA (340) (340) Net income (loss) 818 393 (201) 1,010 Less: Net loss attributable to noncontrolling interests 8 8 Net income (loss) attributable to IFC $ 826 $ 393 $ (201) $ 1,018
Income from loans and guarantees Provision for losses on loans, guarantees and other receivables Income from equity investments Income from debt securities Income from liquid asset trading activities Charges on borrowings Advisory services income Other income Administrative expenses Advisory services expenses Expense from pension and other postretirement benefit plans Other expenses Foreign currency transaction gains and losses on non-trading activities Income (loss) before net gains and losses on other non-trading financial instruments accounted for at fair value and grants to IDA Net gains and losses on other non-trading financial instruments accounted for at fair value Realized gains Gains on non-monetary exchanges Unrealized losses Income (loss) before grants to IDA Grants to IDA Net income (loss)
Investment services $ 938 (117) 1,457 81 (92) 179 (728) (68) (23) 145 1,772 11 10 (34) 1,759 (330) $ 1,429
June 30, 2012 Treasury Advisory services services $ 313 (89) 269 (23) (47) (290) (3) (25) 198 (206) (8) (93) (93) $ (93)
Total
938 (117) 1,457 81 313 (181) 269 179 (798) (290) (96) (23) 145
1,877 11 10 (240) 1,658 (330) $ 1,328
(8)
88 _

June 30, 2011 Treasury Advisory services services 8 $ 529 (31) (9) (4) 493 93 586 $ 586 $
Income from loans and guarantees Release of provisions for losses on loans, guarantees and other receivables Income from equity investments Income from debt securities Income from liquid asset trading activities Charges on borrowings Other income Administrative expenses Advisory services expenses Expense from pension and other postretirement benefit plans Other expenses Foreign currency transaction gains and losses on non-trading activities Income (loss) before net gains and losses on other non-trading financial instruments accounted for at fair value and grants to IDA Net gains and losses on other non-trading financial instruments accounted for at fair value Realized gains Gains on non-monetary exchanges Unrealized gains (losses) Income (loss) before grants to IDA Grants to IDA Net income (loss)
Investment services $ 869 40 1,464 46 (109) 222 (665) (80) (19) (33) 1,735 63 22 (23) 1,797 (600) $ 1,197
Total
877
(26) (153) (25) (204) (204) (204) $
40 1,464 46 529 (140) 222 (700) (153) (109) (19) (33) 2,024 63 22 70 2,179 (600) 1,579
Geographical segment data in respect of investment services is disclosed in Note D, and the composition of Liquid Assets is provided in Note C. NOTE U VARIABLE INTEREST ENTITIES Significant variable interests IFC has identified 139 investments in VIEs which are not consolidated by IFC but in which it is deemed to hold significant variable interests at June 30, 2013 (106 investments - June 30, 2012). The majority of these VIEs do not involve securitizations or other types of structured financing. IFC is usually the minority investor in these VIEs. These VIEs are mainly: (a) investment funds, where the general partner or fund manager does not have substantive equity at risk, which IFC does not consolidate because it does not absorb the majority of funds expected losses or expected residual returns and (b) entities whose total equity investment is considered insufficient to permit such entity to finance its activities without additional subordinated financial support or whose activities are so narrowly defined by contracts that equity investors are considered to lack decision making ability, which IFC does not consolidate because it does not have the power to control the activities that most significantly impact their economic performance. IFCs involvement with these VIEs includes investments in equity interests and senior or subordinated interests, guarantees and risk management arrangements. IFCs interests in these VIEs are recorded on IFCs consolidated balance sheet primarily in equity investments, loans, debt securities, and other liabilities, as appropriate. Based on the most recent available data of these VIEs, the balance sheet size, including committed funding, in which IFC is deemed to hold significant variable interests, totaled $22,810 million at June 30, 2013 ($18,143 million - June 30, 2012). IFCs maximum exposure to loss as a result of its investments in these VIEs, comprising both carrying value of investments and amounts committed but not yet disbursed, was $4,712 million at June 30, 2013 ($3,213 million - June 30, 2012).
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The industry sector and geographical regional analysis of IFCs maximum exposures as a result of its investment in these VIEs at June 30, 2013 and June 30, 2012 is as follows (US$ millions): Equity investments $ 7 18 42 67 69 263 208 1 541 42 39 28 109 $ 717 $ $ June 30, 2013 Debt securities Guarantees 19 1 20 201 41 159 401 8 4 14 26 447 $ $ 51 2 121 174 7 7 181 $ Risk management $ 10 15 25 48 35 83 108 $ $
Manufacturing, agribusiness and services Asia Europe, Middle East and North Africa Sub-Saharan Africa, Latin America and Caribbean Total manufacturing, agribusiness and services Financial markets Asia Europe, Middle East and North Africa Sub-Saharan Africa, Latin America and Caribbean Other Total financial markets Infrastructure and natural resources Asia Europe, Middle East and North Africa Sub-Saharan Africa, Latin America and Caribbean Total infrastructure and natural resources Maximum exposure to VIEs
Loans $ 91 459 266 816 158 55 48 78 339 594 429 1,081 2,104 $ 3,259
Total 117 478 308 903 288 521 418 253 1,480 644 520 1,165 2,329 4,712
Manufacturing, agribusiness and services Asia Europe, Middle East and North Africa Sub-Saharan Africa, Latin America and Caribbean Total manufacturing, agribusiness and services Financial markets Asia Europe, Middle East and North Africa Sub-Saharan Africa, Latin America and Caribbean Other Total financial markets Infrastructure and natural resources Asia Europe, Middle East and North Africa Sub-Saharan Africa, Latin America and Caribbean Total infrastructure and natural resources Maximum exposure to VIEs
Loans $ 93 284 140 517 20 56 62 72 210 721 406 556 1,683 $ 2,410
Equity investments $ 30 31 61 57 42 114 213 33 31 27 91 $ 365 $ $
June 30, 2012 Debt securities Guarantees 4 3 7 85 55 122 262 33 2 25 60 329 $ $ 1 1 8 8 9
Risk management $ 13 13 72 15 87 $ 100 $ $
Total 97 317 171 585 77 183 232 207 699 787 511 631 1,929 3,213
90 _

The carrying value of investments and maximum exposure to VIEs at June 30, 2013 and June 30, 2012 is as follows (US$ millions): Carrying value of investments $ 2,207 504 447 181 69 $ 3,408 June 30, 2013 Committed but not yet disbursed $ 1,052 213 39 $ 1,304 Maximum exposure 3,259 717 447 181 108 4,712
Investment category Loans Equity investments Debt securities Guarantees Risk management Maximum exposure to VIEs
Investment category Loans Equity investments Debt securities Guarantees Risk management Maximum exposure to VIEs
Carrying value of investments $ 1,749 212 329 9 79 $ 2,378
June 30, 2012 Committed but not yet disbursed $ 661 153 21 $ 835
Maximum exposure 2,410 365 329 9 100 3,213
NOTE V ADVISORY SERVICES IFC provides advisory services to government and private sector clients through four business lines: access to finance; investment climate; publicprivate partnerships; and sustainable business. IFC funds this business line by a combination of cash received from government and other donors and IFCs operations via retained earnings and operating budget designations as well as fees received from the recipients of the services. IFC administers donor funds through trust funds. The donor funds may be used to support feasibility studies, project preparation, and other advisory services initiatives. Donor funds are restricted for purposes specified in agreements with the donors. IFCs funding for advisory services are made in accordance with terms approved by IFCs Board. Donor funds under administration and IFCs funding can be comingled in accordance with administration agreements with donors. The comingled funds are held in a separate liquid asset investment portfolio managed by IBRD, which is not commingled with IFCs other liquid assets and is reported at fair value in other assets. Donor funds are refundable until expended for their designated purpose. As of June 30, 2013, other assets include undisbursed donor funds of $391 million ($406 million - June 30, 2012) and IFCs advisory services funding of $170 million ($196 million - June 30, 2012). Included in other liabilities as of June 30, 2013 is $391 million ($406 million - June 30, 2012) of refundable undisbursed donor funds.
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NOTE W PENSION AND OTHER POSTRETIREMENT BENEFITS IBRD, IFC and MIGA participate in a defined benefit Staff Retirement Plan (SRP), a Retired Staff Benefits Plan (RSBP) and a Post-Employment Benefits Plan (PEBP) that cover substantially all of their staff members. The SRP provides pension benefits and includes a cash balance plan. The RSBP provides certain health and life insurance benefits to eligible retirees. The PEBP provides certain pension benefits administered outside the SRP. IFC uses a June 30 measurement date for its pension and other postretirement benefit plans. The amounts presented below reflect IFCs respective share of the costs, assets and liabilities of the plans. All costs, assets and liabilities associated with these plans are allocated between IBRD, IFC and MIGA based upon their employees respective participation in the plans. Costs allocated to IBRD are then shared between IBRD and IDA based on an agreed cost-sharing ratio. IDA, IFC and MIGA reimburse IBRD for their proportionate share of any contributions made to these plans by IBRD. Contributions to these plans are calculated as a percentage of salary. The following table summarizes the benefit costs associated with the SRP, RSBP, and PEBP allocated to IFC for the years ended June 30, 2013, June 30, 2012 and June 30 2011 (US$ millions): 2013 116 101 (141) 1 36 113 $ $ SRP 2012 87 112 (150) 2 6 57 $ $ 2011 78 109 (137) 1 20 71 $ $ 2013 25 17 (18) 2 9 35 $ $ RSBP 2012 17 17 (18) 4 20 $ $ 2011 16 16 (16) * 6 22 $ $ 2013 11 7 * 7 25 $ $ PEBP 2012 9 6 * 4 19 $ $ 2011 8 5 * 3 16
Benefit cost Service cost $ Interest cost Expected return on plan assets Amortization of prior service cost Amortization of unrecognized net loss Net periodic pension cost (income) $
* Less than $0.5 million
The expenses for the SRP, RSBP, and PEBP are included in expense from pension and other postretirement benefit plans. For the years ended June 30, 2013, June 30, 2012 and June 30, 2011, expenses for these plans of $173 million, $96 million and $109 million, respectively, were allocated to IFC. The following table summarizes the projected benefit obligations, fair value of plan assets, and funded status associated with the SRP, RSBP, and PEBP for IFC for the years ended June 30, 2013 and June 30, 2012 (US$ millions). Since the assets for the PEBP are not held in an irrevocable trust separate from the assets of IBRD, they do not qualify for off-balance sheet accounting and are therefore included in IBRD's investment portfolio. IFC has recognized a receivable (prepaid asset) from IBRD and a payable (liability) to IBRD equal to the amount required to support the plan. The assets of the PEBP are invested in fixed income and equity instruments. 2013 $ 2,647 116 101 30 (106) (85) 2,703 2,431 30 183 75 (106) 2,613 (90) $ 1,918 $ SRP $ 2012 2,166 87 112 27 (100) 355 2,647 2,347 27 94 63 (100) 2,431 (216) 1,812 $ $ 2013 416 25 17 2 * 2 (7) (22) 433 294 2 23 28 (7) 340 (93) 433 $ RSBP $ 2012 305 17 17 2 25 (6) 56 416 266 2 6 26 (6) 294 (122) 416 $ $ 2013 175 11 7 1 (5) 6 195 (195) 163 $ PEBP $ 2012 127 9 7 * (6) 38 175 (175) 148
Projected benefit obligations Beginning of year Service cost Interest cost Participant contributions Federal subsidy received Plan amendments Benefits paid Actuarial loss (gain) End of year Fair value of plan assets Beginning of year Participant contributions Actual return on assets Employer contributions Benefits paid End of year Funded status* Accumulated benefit obligations
* Positive funded status is reflected in Receivables and other assets under prepaid pension and other postretirement benefit cost, in Note J; negative funded status is included in Payables and other liabilities under liabilities under retirement benefits plans, in Note L
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During the fiscal year ended June 30, 2012, amendments were made to the RSBP. These included: (i) Providing reimbursements for standard and income related premiums paid by eligible Medicare B participants effective on July 1, 2012, (ii) moving from the current Retiree Drug Subsidy (RDS) arrangement to an Employer Group Waiver Plan (EGWP) effective January 1, 2013, (iii) providing reimbursements of Medicare Part D income-related premium amounts once the plan moved to the EGWP arrangement and (iv) eliminating the Medicare savings feature. The combined effect of these changes was a $25 million increase to the projected benefit obligation at June 30, 2012. During the fiscal year ended June 30, 2013, IFC decided not to transition the RSBP plan from RDS to EGWP following further evaluations of the design and administrative requirements of the EGWP. The effect of this change was a $2 million increase to the projected benefit obligation at June 30, 2013. The following tables present the amounts included in Accumulated other comprehensive income relating to Pension and Other Postretirement Benefits (US$ millions): Amounts included in Accumulated other comprehensive income in the year ended June 30, 2013: Net actuarial loss Prior service cost Net amount recognized in accumulated other comprehensive loss $ $ SRP 485 3 488 $ $ RSBP 115 25 140 $ $ PEBP 108 108 $ $ Total 708 28 736
Amounts included in Accumulated other comprehensive income in the year ended June 30, 2012: Net actuarial loss Prior service cost Net amount recognized in accumulated other comprehensive loss $ $ SRP 648 4 652 $ $ RSBP 151 25 176 $ $ PEBP 108 1 109 $ $ Total 907 30 937
The estimated amounts that will be amortized from Accumulated other comprehensive income (loss) into net periodic benefit cost in the fiscal year ending June 30, 2014 are as follows (US$ millions): Net actuarial loss Prior service cost Net amount recognized in accumulated other comprehensive loss
$ $
SRP
20 1 21
$ $
RSBP
5 3 8
$ $
PEBP
7 * 7
$ $
Total
32 4 36
Assumptions The actuarial assumptions used are based on financial market interest rates, inflation expectations, past experience, and managements best estimate of future benefit changes and economic conditions. Changes in these assumptions will impact future benefit costs and obligations. The expected long-term rate of return for the SRP assets is a weighted average of the expected long-term (10 years or more) returns for the various asset classes, weighted by the portfolio allocation. Asset class returns are developed using a forward-looking building block approach and are not strictly based on historical returns. Equity returns are generally developed as the sum of expected inflation, expected real earnings growth and expected long-term dividend yield. Bond returns are generally developed as the sum of expected inflation, real bond yield, and risk premium/spread (as appropriate). Other asset class returns are derived from their relationship to equity and bond markets. The expected longterm rate of return for the RSBP is computed using procedures similar to those used for the SRP. The discount rate used in determining the benefit obligation is selected by reference to the year-end yield of AA corporate bonds. Actuarial gains and losses occur when actual results are different from expected results. Amortization of these unrecognized gains and losses will be included in income if, at the beginning of the fiscal year, they exceed 10 percent of the greater of the projected benefit obligation or the marketrelated value of plan assets. If required, the unrecognized gains and losses are amortized over the expected average remaining service lives of the employee group.
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The following tables present the weighted-average assumptions used in determining the projected benefit obligations and the net periodic pension costs for the years ended June 30, 2013, June 30, 2012 and June 30, 2011: Weighted average assumptions used to determine projected benefit obligation (%) 2013 4.60 5.70 SRP 2012 3.90 5.40 2011 5.30 5.90 2013 4.80 5.90 3.90 2022 RSBP 2012 4.10 6.30 3.60 2022 2011 5.50 6.90 4.00 2022 2013 4.50 5.70 PEBP 2012 3.90 5.40 2011 5.20 5.90
Discount rate Rate of compensation increase Health care growth rates - at end of fiscal year Ultimate health care growth rate Year in which ultimate rate is reached
Weighted average assumptions used to determine net periodic pension cost (%) 2013 3.90 5.80 5.40 SRP 2012 5.30 6.40 5.90 2011 5.75 6.75 6.20 2013 4.10 6.10 6.30 3.60 2022 RSBP 2012 5.50 6.70 6.90 4.00 2022 2011 6.00 7.75 7.00 4.25 2022 2013 3.90 5.40 PEBP 2012 5.20 5.90 2011 5.75 6.20
Discount rate Expected return on plan assets Rate of compensation increase Health care growth rates - at end of fiscal year Ultimate health care growth rate Year in which ultimate rate is reached
The medical cost trend rate can significantly affect the reported postretirement benefit income or costs and benefit obligations for the RSBP. The following table shows the effects of a one-percentage-point change in the assumed healthcare cost trend rate (US$ millions): Effect on total service and interest cost Effect on projected benefit obligation Investment Strategy The investment policies establish the framework for investment of the plan assets based on long-term investment objectives and the trade-offs inherent in seeking adequate investment returns within acceptable risk parameters. A key component of the investment policy is to establish a Strategic Asset Allocation (SAA) representing the policy portfolio (i.e., target mix of assets) around which the plans are invested. The SAA for the plans is reviewed in detail and reset about every three years, with more frequent reviews and changes if and as needed based on market conditions. The key long-term objective is to target and secure asset performance that is reasonable in relation to the growth rate of the underlying liabilities and the assumed sponsor contribution rates. This is particularly so in the case of the SRP, which has liabilities that can be projected based on the actuarial assumptions. Given the relatively long investment horizons of the SRP and RSBP, and the relatively modest liquidity needs over the short-term to pay benefits and meet other cash requirements, the focus of the investment strategy is on generating sustainable long-term investment returns through various asset classes and strategies including public and private equity and real estate. The SAA is derived using a mix of quantitative analysis that incorporates expected returns and volatilities by asset class as well as correlations across the asset classes, and qualitative considerations such as the desired liquidity needs of the plans. The SAA is comprised of a diversified portfolio drawn from among fixed-income, equity, real assets and absolute return strategies. $ $ One-percentage-point increase 12 109 One-percentage-point decrease $ (9) $ (82)
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The following table presents the actual and target asset allocation at June 30, 2013 and June 30, 2012 by asset category for the SRP and RSBP. The target allocations for SRP and RSBP were last revised in May 2013. Target Allocation 2013 (%) 27 26 20 10 12 5 100 SRP % of Plan Assets 2013 30 28 18 12 12 100 2012 24 33 20 11 12 100 Target Allocation 2013 (%) 29 24 20 10 12 5 100 RSBP % of Plan Assets 2013 30 29 21 9 11 100 2012 27 32 24 8 9 100
Asset class Public equity Fixed income & cash Private equity Hedge funds Real assets* Opportunistic** Total
* Real assets include public and private real estate, infrastructure and timber. ** Opportunistic strategies are designed to take advantage of temporary market opportunities that are not captured in other parts of portfolio.
Significant concentrations of risk in Plan assets The assets of the SRP and RSBP are diversified across a variety of asset classes. Investments in these asset classes are further diversified across funds, managers, strategies, geographies and sectors, to limit the impact of any individual investment. In spite of such level of diversification, equity market risk remains the primary source of the overall return volatility of the Plans. Risk management practices Managing investment risk is an integral part of managing the assets of the Plans. Liability driven investment management and asset diversification are central to the overall investment strategy and risk management approach for the SRP. The surplus volatility risk (defined as the annualized standard deviation of asset returns relative to that of liabilities) and downside risk measures are considered key indicators of the Plans overall investment risk. These measures are used to define the risk tolerance level and establish the overall level of investment risk. Investment risk is regularly monitored at the absolute level, as well as at the relative levels with respect to the investment policy, manager benchmarks, and liabilities of the Plans. Stress tests are performed periodically using relevant market scenarios to assess the impact of extreme market events. Monitoring of performance (at both manager and asset class levels) against benchmarks, and compliance with investment guidelines, is carried out on a regular basis as part of the risk monitoring process. Risk management for different asset classes is tailored to their specific characteristics and is an integral part of the external managers due diligence and monitoring processes. Credit risk is monitored on a regular basis and assessed for possible credit event impacts. The liquidity position of the Plans is analyzed at regular intervals and periodically tested using various stress scenarios to ensure that the Plans have sufficient liquidity to meet all cash flow requirements. In addition, the long-term cash flow needs of the Plans are considered during the SAA exercise and are one of the main drivers in determining maximum allocation to the illiquid investment vehicles. The plans mitigate operational risk by maintaining a system of internal controls along with other checks and balances at various levels.
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Fair value measurements and disclosures All plan assets are measured at fair value on recurring basis. The following table presents the fair value hierarchy of major categories of plans assets as of June 30, 2013 and June 30, 2012 (US$ millions): June 30, 2013 Fair value measurements on a recurring basis SRP RSBP Level 2 Level 3 Total Level 1 Level 2 Level 3 * $ 55 513 568 88 419 27 56 590 * $ 1,158 $ 40 $ 119 25 14 32 230 226 205 2 76 (*) 739 $ - $ 483 79 181 743 $ 40 55 632 25 14 32 798 88 419 27 56 590 226 483 284 2 257 (27) 2,613 $ $ * $ 4 35 39 7 52 7 6 72 (*) 111 $ 6 $ 53 2 * * 61 37 21 * 6 125 $ - $ 71 8 23 102 $
Debt securities Time deposits Securities purchased under resale agreements Government and agency securities Corporate and convertible bonds Asset-backed securities Mortgage-backed securities Total debt securities Equity securities US common stocks Non-US common stocks Mutual funds Real estate investment trusts Total equity securities Commingled funds Private equity Hedge funds Derivative assets/ liabilities Real estate (including infrastructure and timber) Other assets/ liabilities**, net Total Assets
Level 1 $
Total 6 4 88 2 * * 100 7 52 7 6 72 37 71 29 * 29 2 340
Debt securities Time deposits Securities purchased under resale agreements Government and agency securities Corporate and convertible bonds Asset-backed securities Mortgage-backed securities Total debt securities Equity securities US common stocks Non-US common stocks Mutual funds Real estate investment trusts Total equity securities Commingled funds Private equity Hedge funds Derivative assets/ liabilities Real estate (including Infrastructure and timber) Other assets/ liabilities**, net Total Assets
Level 1 $ - $ 15 595 610 73 240 107 57 477 (*) $ 1,087 $
June 30, 2012 Fair value measurements on a recurring basis SRP RSBP Level 2 Level 3 Total Level 1 Level 2 Level 3 9 $ 104 27 9 49 198 140 173 (1) 65 * 575 $ - $ * * * * 491 68 174 733 $ 9 15 699 27 9 49 808 73 240 107 57 477 140 491 241 (1) 239 36 2,431 $ $ - $ 3 38 41 8 33 9 3 53 1 * 95 $ 4 $ 49 3 1 1 58 28 16 (*) 2 104 $ - $ * * * 67 7 21 95 $
Total 4 3 87 3 1 1 99 8 33 9 3 53 28 67 23 1 23 294
*Less than $0.5 million ** Includes receivables and payables carried at amounts that approximate fair value
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The following tables present a reconciliation of Level 3 assets held during the year ended June 30, 2013 and June 30, 2012 (US$ millions). For the fiscal year ended June 30, 2012, investments in certain real estate funds that were identified as redeemable within 90 days of the period end were transferred out of Level 3 into Level 2. June 30, 2013 SRP: Fair value measurements using significant unobservable inputs Assetbacked securities * $ * (*) (*) $ - $ * $ (*) - $ Mortgagebacked securities * $ * (*) (*) - $ Private equity 491 $ 92 (22) (78) 483 $ Real estate 174 $ 2 15 (10) 181 $ Hedge funds 68 6 * 6 11 (12) 79 $ $
Corporate and convertible debt Beginning of the fiscal year Actual return on plan assets: Relating to assets still held at the reporting date Relating to assets sold during the period Purchase, issuances and settlements, net Transfer in Transfer out Balance at end of fiscal year
Total 733 100 (7) (82) 11 (12) 743
June 30, 2013 RSBP: Fair value measurements using significant unobservable inputs Assetbacked securities - $ * $ (*) - $ Mortgagebacked securities * $ (*) - $ Private equity 67 $ 14 (3) (7) 71 $ Real estate 21 $ * 2 (*) 23 $ Hedge funds 7 $ 1 * 1 1 (2) 8 $
Total 95 15 (1) (6) 1 (2) 102
- $
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June 30, 2012 SRP: Fair value measurements using significant unobservable inputs Assetbacked securities - $ * * (*) $ * $ 5 $ (*) * (5) (*) * $ Mortgagebacked securities 3 $ 1 (1) (2) * (1) * $ Private equity 475 $ (42) 40 18 491 $ Real estate 139 $ 4 6 25 174 $ Hedge funds 61 $ (1) (1) 11 4 (6) 68 $
Total 683 (38) 44 47 4 (7) 733
June 30, 2012 RSBP: Fair value measurements using significant unobservable inputs Assetbacked securities - $ * $ (*) (*) (*) (*) * $ Mortgagebacked securities * $ * * (*) (*) * $ Private equity 66 $ (5) 6 * 67 $ Real estate 17 $ 3 2 (1) 21 $ Hedge funds 6 $ (*) (*) 2 * (1) 7 $
Total 89 (2) 8 1 * (1) 95
- $
Valuation methods and assumptions The following are general descriptions of asset categories, as well as the valuation methodologies and inputs used to determine the fair value of each major category of Plan assets. It is important to note that the investment amounts in the asset categories shown in the table above may be different from the asset category allocation shown in the Investment Strategy section of the note. Asset classes in the table above are grouped by the characteristics of the investments held. The asset class break-down in the Investment Strategy section is based on managements view of the economic exposures after considering the impact of derivatives and certain trading strategies. Debt securities Debt securities include time deposits, U.S. treasuries and agencies, debt obligations of foreign governments and debt obligations in corporations of domestic and foreign issuers. Fixed income also includes investments in asset backed securities such as collateralized mortgage obligations and mortgage backed securities. These securities are valued by independent pricing vendors at quoted market prices for the same or similar securities, where available. If quoted market prices are not available, fair values are based on discounted cash flow models using market-based parameters such as yield curves, interest rates, volatilities, foreign exchange rates and credit curves. Some debt securities are valued using techniques which require significant unobservable inputs. The selection of these inputs may involve some judgment. Management believes its estimates of fair value are reasonable given its processes for obtaining securities prices from multiple independent third-party vendors, ensuring that valuation models are reviewed and validated, and applying its approach consistently from period to period. Unless quoted prices are available, money market instruments and securities purchased under resale agreements are reported at face value which approximates fair value.
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Equity securities Equity securities, including Real estate investment trusts (REITS), are invested in companies in various industries and countries. Investments in public equity listed on securities exchanges are valued at the last reported sale price on the last business day of the fiscal year. Commingled funds Commingled funds are typically common or collective trusts reported at net asset value (NAV) as provided by the investment manager or sponsor of the fund based on valuation of underlying investments, and reviewed by management. Private equity Private equity includes investments primarily in leveraged buyouts, distressed investments and venture capital funds across North America, Europe and Asia in a variety of sectors. A large number of these funds are in the investment phase of their life cycle. Private Equity investments do not have a readily determinable fair market value and are reported at NAV provided by the fund managers, and reviewed by management, taking into consideration the latest audited financial statements of the funds. The underlying investments are valued using inputs such as cost, operating results, discounted future cash flows and trading multiples of comparable public securities. Real estate Real estate includes several funds which invest in core real estate as well as non-core type of real estate investments such as debt, value add, and opportunistic equity investments. Real estate investments do not have a readily determinable fair market value and are reported at NAV provided by the fund managers, and reviewed by management, taking into consideration the latest audited financial statements of the funds. The valuations of underlying investments are based on income and/or cost approaches or comparable sales approach, and taking into account discount and capitalization rates, financial conditions, local market conditions among others. Hedge fund investments Hedge fund investments include those seeking to maximize absolute returns using a broad range of strategies to enhance returns and provide additional diversification. Hedge Funds include investments in equity, event driven, fixed income, multi strategy and macro relative value strategies. These investments do not have a readily determinable fair market value and are reported at NAVs provided by external managers or fund administrators (based on the valuations of underlying investments) on a monthly basis, and reviewed by management, taking into consideration the latest audited financial statements of the funds. Investments in hedge funds and commingled funds can typically be redeemed at NAV within the near term while investments in private equity and most real estate are inherently long term and illiquid in nature with a quarter lag in reporting by the fund managers. Reporting of those asset classes with a reporting lag, management estimates are based on the latest available information taking into account underlying market fundamentals and significant events through the balance sheet date. Investment in derivatives Investment in derivatives such as equity or bond futures, TBA securities, swaps, options and currency forwards are used to achieve a variety of objectives that include hedging interest rates and currency risks, gaining desired market exposure of a security, an index or currency exposure and rebalancing the portfolio. Over-the-counter derivatives are reported using valuations based on discounted cash flow methods incorporating market observable inputs. Estimated future benefits payments The following table shows the benefit payments expected to be paid in each of the next five years and subsequent five years. The expected benefit payments are based on the same assumptions used to measure the benefit obligation at June 30, 2013 (US$ millions): SRP July 1, 2013 - June 30, 2014 July 1, 2014 - June 30, 2015 July 1, 2015 - June 30, 2016 July 1, 2016 - June 30, 2017 July 1, 2017 - June 30, 2018 July 1, 2018 - June 30, 2023
109 117 126 135 145 872
RSBP Before Federal subsidy
7 $ 8 9 10 11 77
Federal subsidy
PEBP * * * * * 2 $ 9 10 11 12 13 81
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Expected contributions IFCs contribution to the SRP and RSBP varies from year to year, as determined by the Pension Finance Committee, which bases its judgment on the results of annual actuarial valuations of the assets and liabilities of the SRP and RSBP. The best estimate of the amount of contributions expected to be paid to the SRP and RSBP for IFC during the year beginning July 1, 2013 is $88 million and $33 million, respectively. NOTE X SERVICE AND SUPPORT PAYMENTS IFC obtains certain administrative and overhead services from IBRD in those areas where common services can be efficiently provided by IBRD. This includes shared costs of the Boards of Governors and Directors, and other services such as communications, internal auditing, administrative support, supplies, and insurance. IFC makes payments for these services to IBRD based on negotiated fees, chargebacks and allocated charges, where chargeback is not feasible. Expenses allocated to IFC for the year ended June 30, 2013, were $60 million ($57 million - year ended June 30, 2012; $50 million - year ended June 30, 2011). Other chargebacks include $30 million for the year ended June 30, 2013 ($26 million - year ended June 30, 2012; $26 million - year ended June 30, 2011). NOTE Y CONTINGENCIES In the normal course of its business, IFC is from time to time named as a defendant or co-defendant in various legal actions on different grounds in various jurisdictions. Although there can be no assurances, based on the information currently available, IFCs Management does not believe the outcome of any of the various existing legal actions will have a material adverse effect on IFCs financial position, results of operations or cash flows.
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Project Commitments
Fiscal Year 2013
This table includes projects signed and processed during FY13. All amounts are given in U.S. dollars, regardless of the currency of the transaction. Under the Global Trade Finance Program, IFC provides guarantee coverage of bank risk in emerging markets, where confirming banks need risk mitigation to support their export clients because of limited capacity for country and bank exposure.
NOTE ON CATEGORIZATION OF PROJECTS:
Projects are assigned a category of A, B, or C, according to their potential environmental and social impactso r FI, in the case of investments through financial intermediaries that on- lend to clients whose projects may present environmental and social risks. A: Business activities with potential significant adverse environmental or social risks and/or impacts that are diverse, irreversible, or unprecedented. B: Business activities with potential limited adverse environmental or social risks and/or impacts that are few in number, generally site-specific, largely reversible, and readily addressed through mitigation measures. C: Business activities with minimal or no adverse environmental or social risks and/or impacts. FI: Business activities involving investments in FIs or through delivery mechanisms involving financial intermediation. This category is further divided into: FI1: when an FIs existing or proposed portfolio includes, or is expected to include, substantial financial exposure to business activities with potential significant adverse environmental or social risks or impacts that are diverse, irreversible, or unprecedented. FI2: when an FIs existing or proposed portfolio consists of, or is expected to consist of, business activities that have potential limited adverse environmental or social risks or impacts that are few in number, generally site- specific, largely reversible, and readily addressed through mitigation measures; or includes a very limited number of business activities with potential significant adverse environmental or social risks or impacts that are diverse, irreversible, or unprecedented. FI3: when an FIs existing or proposed portfolio includes financial exposure to business activities that predominantly have minimal or no adverse environmental or social impacts.
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IFC Region
Country Name
Company Name
Environment & Social Category Code
IFC Loan & Quasi-Loan Commitments ($)
East Asia and the Pacific Cambodia ACLEDA Bank Plc. Prasac Microfinance Institution China Anyou Biotechnology Group Company Limited Aqualyng Holding AS Bank of Beijing Bank of Deyang Bank of Jiangsu Bank of Shanghai Ltd. Co. Bayan Rongxing Village and Township Bank CFPA Microfinance Management Co. CHUEE FacilityBank of Beijing CHUEE FacilityBank of Nanjing China Environmental Fund III, L.P. China Everbright International Limited China Flooring Holding Company Limited Concord Medical Services Holdings Limited Daguan Jingyun Hydropower Industry Co., Ltd EDC China Holding Ltd ENN Energy Holdings Ltd. Fullerton Credit Chongqing Ltd Fullerton Credit Hubei Ltd. Fullerton Credit Sichuan Ltd Guizhou Dushan Lidu Industry Development Co., Ltd Jiangxi Tianren Ecology Co., Ltd Muyuan Foodstuff Co., Ltd New Hope Agriculture and Food Fund II, L.P. Peak Reinsurance Holdings Limited Qingdao Jason Electric Co., Ltd SNF (China) Flocculant Co., Limited Shandong Changlin Deutz-Fahr Machinery Co., Ltd. Shanghai F-Road Commercial Services Co., Ltd Shanghai Fosun Pharmaceutical Group Co. Ltd Yingjiang Menglang Hydropower Co., Ltd East Asia and Pacific Region ADM Asia Restructuring Facility Armstrong South East Asia Clean Energy Fund, L.P. Aureos South-East Asia Fund II LP Lakeshore Capital Asia Ltd. Salamander Energy plc. Indonesia PT Bina Usaha Keluarga PT HARUM ALAM SEGAR PT MITRA ALAM SEGAR PT Moya Indonesia PT Moya Tangerang PT Tirta Alam Segar PT Wintermar Offshore Marine Tbk PT. Bank Hana Indonesia Sayap Mas Utama Lao Peoples Democratic Republic Mongolia Acleda Bank Lao Ltd Khan Bank of Mongolia, Ulanbaatar, Mongolia MCS Properties Limited Mongolia Opportunities Fund I, L.P. Suu JSC XacBank Ltd. Myanmar ACLEDA MFI Myanmar Co., Ltd. FI-2 FI-3 B B FI FI FI-2 FI-2 FI FI-3 FI-2 FI-2 FI B A B A B B FI FI-2 FI A B B FI-1 FI-3 B B B FI-3 B A FI FI-2 FI FI-2 B FI-3 B B B B B B FI-2 B FI-2 FI-2 B FI B FI-2 FI-3 10,000,000 20,000,000 12,000,000 70,000,000 40,000,000 50,000,000 17,000,000 75,000,000 14,853,936 9,902,624 24,756,560 6,000,000 20,000,000 30,000,000 13,005,000 27,000,000 10,000,000 4,937,002 13,750,000 4,750,000 23,553,613 11,750,000 10,000,000 30,000,000 13,750,000 8,000,000 20,000,000 60,000,000 2,000,000
Project Commitments Fiscal Year 2013
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IFC Equity & Quasi-Equity Commitments ($)
Risk Management Commitments ($)
Trade Finance Guarantee Commitments ($)
Non-Trade Finance Guarantee Commitments ($)
Total Commitments for IFCs Own Account ($)
Syndications Commitments [B-loans only] ($)
4,900,000 57,000 3,586,516 250,178 9,999,950 8,500,000 20,000,000 81,950,000 6,000,000 5,500,000 25,000,000 20,000,000 25,000,000 20,000,000 3,932,323 8,742,607 1,250,000 7,347,227
10,000,000 100,000
582,768 229,245,765 4,927,427 4,273,151 2,030,694
74,071,105 40,252,463 70,723,631 40,183,881
5,482,768 10,000,000 20,000,000 12,000,000 229,245,765 4,927,427 74,071,105 40,252,463 57,000 3,586,516 70,723,631 40,183,881 250,178 70,000,000 40,000,000 50,000,000 17,000,000 9,999,950 75,000,000 14,853,936 9,902,624 24,756,560 6,000,000 8,500,000 20,000,000 20,000,000 81,950,000 6,000,000 30,000,000 13,005,000 5,500,000 25,000,000 27,000,000 10,000,000 20,000,000 25,000,000 20,000,000 10,000,000 8,869,324 13,750,000 4,750,000 8,742,607 23,553,613 11,750,000 10,000,000 30,000,000 13,750,000 8,000,000 24,273,151 60,000,000 1,250,000 100,000 9,377,921 2,000,000
75,000,000 13,750,000 4,750,000 11,750,000 13,750,000
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IFC Region
Country Name
Company Name
East Asia and the Pacific Papua New Guinea Avenell Engineering System Limited Bank South Pacific Bank of South Pacific Limited Philippines Navegar I L.P. Philippine Asset Growth One, Inc. Philippine Asset Growth Two, Inc. Philippine Resources Savings Banking Corporation Thailand Bank of Ayudhya Public Company Limited Chalybs Cylinders Ltd. Timor-Leste Vietnam Tuba Rai Metin An Binh Commercial Joint Stock Bank Asia Commercial Bank DongA Commercial Joint Stock Bank Methis Environmental Vietnam Co., Ltd. Orient Commercial Joint Stock Bank SN Power Holdings Singapore, Inc. Saigon Thuong Tin Commercial Joint Stock Bank Vietnam International Commercial Joint Stock Bank Vietnam Joint Stock Commercial Bank for Industry and Trade Vietnam Technological and Commercial Joint Stock Bank Vina Eco Board Co., Ltd. Europe and Central Asia Albania Banka Credins SHA Bankers Petroleum Ltd. Armenia ACBA-Credit Agricole Bank Closed Joint Stock Company Ameriabank CJSC Armeconombank Byblos Bank Armenia Euroterm Closed Joint Stock Company HSBC Bank Armenia cjsc Inecobank Lydian International Ltd Azerbaijan AccessBank AzeriGazbank DEMIRBANK OJSC Finca Azerbaijan LLC JSC Bank Respublika Belarus Belarusky Narodny Bank JSC BPS-BANK (Formerly Belpromstroibank) JSC Belgazprombank MINSK TRANSIT BANK Millex International Bosnia and Herzegovina Bekto Precisa d.o.o. Sisecam Soda Lukavac Bulgaria Central Asia Region Central Europe Region Croatia Eurobank EFG Bulgaria AD Fawaz Abdulaziz Al Hokair & Co. Organica Water Inc. Atlantic Trade d.o.o. Croatia SAME DEUTZ-FAHR Zetelice D.O.O. Vjetroelektrana Jelinak d.o.o, Georgia Bank of Georgia Clean Energy Invest AS JSC Bank Republic JSC MFO FINCA Georgia JSC m2 Real Estate FI-2 B FI-3 FI-3 FI C B FI FI-3 B FI-2 FI FI FI FI-2 FI C C FI B B B C B B B B B FI-2 A FI-3 FI-3 B 11,806,200 50,000,000 5,000,000 2,500,000 11,000,000 15,000,000 14,000,000 20,000,000 10,393,600 21,436,800 25,000,000 20,515,033 15,096,600 20,139,350 365,200 4,000,000 10,000,000 B FI-2 FI-1 FI-2 FI FI-3 FI-3 FI B FI-3 FI C FI-3 C FI-2 C FI FI-2 FI FI-2 B 4,000,000 34,479,274 24,312,992 200,000,000 26,155,000 500,000 400,000
_ 107
20,000,000 15,911,873 700,000
300,000
4,191,792 2,250,000 5,025,600 38,318,059 78,452,423 38,281,212 162,200,000 25,000,000 454,077,704
65,064,125
4,000,000 4,191,792 65,064,125 20,000,000 34,479,274 24,312,992 15,911,873 200,000,000 26,155,000 500,000 2,250,000 5,025,600 38,318,059 700,000 78,452,423 400,000 38,281,212 162,200,000 25,000,000 454,077,704 300,000
1,949,162 1,114,366 4,000,000
50,000 1,000,000 1,000,000 350,000 1,200,000
7,549,633 1,135,590 2,000,000 3,176,417 10,568,704 218,613 4,675,061 23,958,415 25,739,415 5,289,566 28,429,873 26,065,351 3,435,611
11,856,200 50,000,000 1,000,000 8,549,633 1,135,590 5,000,000 2,500,000 11,000,000 2,000,000 1,949,162 15,000,000 4,290,783 10,568,704 350,000 14,218,613 4,675,061 23,958,415 25,739,415 5,289,566 20,000,000 10,393,600 22,636,800 28,429,873 25,000,000 4,000,000 20,515,033 15,096,600 20,139,350 26,065,351 365,200 3,435,611 4,000,000 10,000,000
30,401,280
108 _
IFC Region
Country Name
Company Name
Europe and Central Asia Joint Stock Company Kor Standard Bank TBC Bank Tetri Qudi LLC Kazakhstan Bank CenterCredit Eastcomtrans LLP MicroCredit Organization Arnur Credit LLP Subsidiary Bank Sberbank of Russia JSC Kosovo Kyrgyz Republic TEB Sh.A. CJSC Finca Micro-Credit Company Kompanion Financial Group Microfinance CJSC Macedonia, Former Yugoslav Republic of NLB Tutunska banka, A.D. Skopje Stopanska Banka a.d. Skopje Universal Investment Bank AD Skopje Moldova Aragvi Holding International Limited Bostavan Wineries, Ltd. CB Moldova Agroindbank SA Romania Banca Romaneasca S.A. Banca Transilvania S.A. Bancpost S.A. GE Garanti Bank Patria Credit IFN SA UniCredit Tiriac Bank SA Russian Federation Almaz Capital Russia Fund II LP Asian-Pacific Bank (Open joint-stock company) Brunswick Rail Finance Limited CREDIT BANK OF MOSCOW (OJSC) CapMan Russia Fund II, LP Chuvash Republic Elbrus Capital Fund II IFC Russian Bank Capitalization Fund, LP IXcellerate Ltd. Joint Stock Company Commercial Bank Center-Invest OAO Promsvyazbank OJSC Bank Saint Petersburg OJSC KKS-Group RosEvroBank Joint Stock Commercial Bank Samara region Sanoh Rus limited liability company Transcapitalbank ZAO Credit Evropa Bank ZAO Locko Bank ZAO Masterslavl Serbia Eurobank EFG a.d. Beograd Grand Prom d.o.o. Victoria Group a.d. Slovenia Southern Europe Region Droga Kolinska d.d. Slovenija European Fund for Southeast Europe Schwarz Group Tajikistan Turkey Open Joint Stock Company, Bank Eskhata Acwa Guc Elektrik Isletme ve Yonetim Sanayi ve Ticaret Ltd. Sti. Asyaport Liman A.S. Denizbank Covered Bond Earlybird Digital East Fund 2012 SCA SICAR FI-2 FI B FI B FI-3 FI-2 FI-2 FI FI FI C C B B FI C FI-2 FI FI FI-3 FI-1 FI FI B FI FI-2 B FI-2 FI C FI-2 C C B C B B FI FI FI B FI B B B FI B FI A B FI-2 FI-2 7,000,000 1,500,000 30,000,000 70,000,000 5,846,400 30,000,000 25,637,000 10,425,123 37,039,781 30,000,000 50,000,000 31,895,237 1,022,076 29,915,240 8,095,855 64,423,131 4,618,913 14,689,632 75,143,100 29,825,335 10,000,000 125,000,000 75,000,000 69,525,558
_ 109
4,279,687 20,000,000 1 252,000 25,000,000 38,442,300 19,507,500 20,000,000 41,747,245 1,126,052 5,592,484 6,000,000 1,598,850 2,414,098 20,328,750 105,207,309 25,000,000
115,000 610,000 250,000
16,583,460 4,105,032 21,885,747 258,450 3,575,728 2,903,943 287,507 2,000,000 2,155,522 1,830,850 82,296,429 375,016 26,641,760 128,210,288 117,155,923 2,662,000 14,000,000 28,316,005 2,539,102 117,901,940 61,593,625 83,903,752 269,500
7,000,000 20,863,147 1,500,000 4,105,032 50,000,000 115,000 91,885,747 6,104,850 610,000 250,000 3,575,728 2,903,943 287,507 30,000,001 252,000 2,000,000 2,155,522 27,467,850 82,296,429 375,016 10,425,123 37,039,781 25,000,000 56,641,760 50,000,000 166,652,588 19,507,500 31,895,237 20,000,000 41,747,245 2,148,128 29,915,240 117,155,923 2,662,000 13,688,339 14,000,000 64,423,131 6,000,000 29,914,855 2,539,102 120,316,039 4,618,913 61,593,625 14,689,632 75,143,100 29,825,335 20,328,750 199,111,060 269,500 125,000,000 75,000,000 69,525,558 25,000,000
20,000,000 152,352,875
110 _
IFC Region
Country Name
Company Name
Europe and Central Asia Fibabanka A.S. Finansbank A.S. Is Finansal Kiralama A.S. Izmir Buyuksehir Belediyesi Izmir Su ve Kanalizasyon Idaresi Genel Mudurlugu Kipas Kagit Sanayi Isletmeleri A.S. Mediterra Capital Partners I, LP Modern Karton Sanayii ve Ticaret A.S. Sanko Tekstil Isletmeleri Sanayi ve Ticaret A.S. Sekerbank T.A.S. Super Film Ambalaj Sanayi ve Ticaret A.S. T.C Ozyegin Universitesi T.C. Plato Meslek Yuksek Okulu TURKIYE SINAI KALKINMA BANKASI, A.S. Turkiye Sise ve Cam Fabrikalari, A.S. Yapi ve Kredi Bankasi, A.S. Ukraine Axzon A/S CJSC Myronivsky Hliboproduct FE Integrated Agrosystems LLC Real Estate F.C.A.U. LLC Savservice Center LLC Firm Astarta-Kyiv Limited Liability Company Okkoskhidinvest NIBULON AGRICULTURAL LIMITED LIABILITY COMPANY PJSC OTP Bank Raiffeisen Bank Aval The State Export Import Bank of Ukraine Uzbekistan Latin America and the Caribbean Argentina BBVA Frances S.A. Banco CMF S.A. Banco Itau Argentina S.A. Banco Patagonia S.A. Banco Supervielle S.A. Banco de Galicia y Buenos Aires, S.A. S.A. San Miguel A.G.I.C.I. y F. Belize Atlantic Bank Belize Banco Bisa S.A. Banco Ganadero Banco Mercantil S.A. Banco de Credito Brazil AEGEA Saneamento S/A BHG S.A. Brazilian Hospitality Group Banco ABC BRASIL S.A. Banco Cooperativo Sicredi S/A Banco Daycoval S.A. Banco Fibra S.A. Banco Industrial do Brasil S.A. Banco Industrial e Comercial S.A. Banco Indusval S.A. Banco Itau Unibanco S.A. Banco Pine S.A. Banco Sofisa S.A. Canopus Holding S.A. Centro de Imagem Diagnosticos S.A. Companhia Brasileira de Securitizacao C C C FI C FI B FI C FI-2 FI C B B FI-2 FI FI-2 FI FI-2 FI FI-2 FI-2 C FI B B C 100,000,000 50,000,000 Asaka Bank FI-2 FI-2 FI-2 C B B FI B B FI-2 B B B FI-2 B FI B B B B B B B B C FI C C 75,000,000 35,000,000 58,522,500 35,891,800 50,000,000 8,000,000 25,000,000 45,000,000 42,500,000 6,000,000 75,000,000 40,000,000 50,000,000 16,000,000 30,000,000 10,000,000 40,000,000 30,000,000 30,000,000
_ 111
19,999,500 21,086,940
32,391,400 32,645,496 109,249,592 1,297,477 35,537,369 35,976,124 527,588
32,391,400 75,000,000 35,000,000 58,522,500 35,891,800 50,000,000 19,999,500 8,000,000 25,000,000 32,645,496 45,000,000 42,500,000 6,000,000 75,000,000 40,000,000 109,249,592 21,086,940 50,000,000 16,000,000 30,000,000 10,000,000 40,000,000 30,000,000 30,000,000 1,297,477 35,537,369 35,976,124 527,588
55,000,000
12,396,182 24,368,902 10,000,000 14,927,972 25,000,000 39,182
450,000
10,000,000 5,678,341 29,506,093 4,858,886 3,887,620 66,719,226 1,726,825 2,474,781 3,745,610 5,286,851 125,494 65,049,747 61,000,000 144,884,025 34,480,000 151,256,273 53,681,788 167,406,100 25,527,201
10,000,000 5,678,341 29,506,093 4,858,886 3,887,620 66,719,226 450,000 1,726,825 2,474,781 3,745,610 5,286,851 125,494 12,396,182 24,368,902 65,049,747 10,000,000 75,927,972 144,884,025 34,480,000 151,256,273 53,681,788 100,000,000 167,406,100 25,527,201 25,000,000 50,000,000 39,182
300,000,000
112 _
IFC Region
Country Name
Company Name
Latin America and the Caribbean Equatorial Energia S.A. FIRST Brazil Impact Investing Fund, LP Gavea Fundo De Investimento Em Cotas De Fundo De Investimento Em Direitos Creditorios Gvea Crdito Estruturado Fundo De Investimento Em Direitos Creditrios Munich Re Surety Facility NBC BANK BRASIL S.A. BANCO MULTIPLO Recovery do Brasil Consultoria S.A. Sul America S.A. Caribbean Region Chile Portland Private Equity Banco Bilbao Vizcaya Argentaria (Chile), S.A Banco de Credito e Inversiones Bco Internacional SA Corpbanca Inversiones Magallanes S.A. Virgin Mobile Chile SPA Colombia BBVA Colombia S.A. Credivalores - Crediservicios S.A.S Energia Integral Andina S.A. Grupo Factoring de Occidente S.A.S PetroNova Inc. Recaudo Bogota SAS TRIADA S.A.S. Virgin Mobile Colombia S.A.S Costa Rica Banco General (Costa Rica) S.A. Banco Improsa S.A. Banco LAFISE Costa Rica, S.A Banco Promerica de Costa Rica, S.A. Coopealianza R.L. Grupo Financiero Coocique R.L Dominican Republic Banco Multiple Leon, S.A. Indicana Holdings Inc InterEnergy Holdings Unigold Inc. Ecuador El Salvador Procesadora Nacional de Alimentos C.A. - PRONACA Banco Agricola S.A. La Hipotecaria Guatemala Banco GyT Continental S.A. Banco Industrial S.A. (Guatemala) Banco Internacional S.A. Compartamos, S.A. Seguros G&T, S.A. Guyana Haiti Honduras Guyana Goldfields Inc Turgeau Developments S.A. BANCO DEL PAIS S.A. Banco Atlantida S.A. Banco Financiera Centroamericana, S.A. Banco Financiera Comercial Hondurena S.A. (Banco Ficohsa) Banco LAFISE Honduras ,S.A. Jamaica Latin America Region MBJ Airports Limited Amerra Latin America Finance LLC Grupo Santillana de Ediciones, S.L. IFC African, Latin American & Caribbean Fund, LP SAFTPAY, INC. A FI-2 FI-1 FI-1 FI-3 C FI FI-3 FI-1 C FI-2 FI-2 FI-1 FI C C FI-3 B FI-3 B C B C FI-2 FI C FI FI-2 FI-3 C B A B B FI C FI FI C FI-3 FI B B C FI FI-2 FI C B FI-2 C FI C 19,032,212 75,000,000 11,000,000 25,000,000 10,000,000 3,000,000 55,000,000 14,000,000 20,000,000 9,996,002 5,001,000 20,000,000 25,000,000 10,000,000 7,683,361 13,250,000 10,000,000 7,500,000 50,000,000 32,795,000
_ 113
105,207,309 15,000,000 9,516,106 100,000,000 197,604,051 20,000,000 22,752,239 259,281 14,981,273 10,000,000 50,000,001 4,943,887 830,140 5,250,000 5,539,767 54,002,521 7,000,000
7,500,000
11,000,000 8,545,485 6,000,000 10,415,806 15,190,000 19,984,077 13,422,996 8,740,945 9,000,000 65,000,000 71,483,456 23,000,000 10,000,000 69,934,882 8,000,000 70,984,931 10,000,000
70,000,000
105,207,309 15,000,000 9,516,106 19,032,212 70,000,000 11,000,000 100,000,000 197,604,051 20,000,000 8,545,485 75,000,000 6,000,000 22,752,239 259,281 11,000,000 10,415,806 25,000,000 10,000,000 3,000,000 14,981,273 62,500,000 10,000,000 14,000,000 20,000,000 15,190,000 19,984,077 13,422,996 9,996,002 5,001,000 8,740,945 20,000,000 50,000,001 4,943,887 25,000,000 9,000,000 10,000,000 65,830,140 71,483,456 23,000,000 7,683,361 5,250,000 5,539,767 13,250,000 10,000,000 69,934,882 18,000,000 70,984,931 10,000,000 7,500,000 50,000,000 32,795,000 54,002,521 7,000,000
10,000,000 13,250,000 7,500,000
114 _
IFC Region
Country Name
Company Name
Latin America and the Caribbean Yellowpepper Holding Corp Mexico Agrofinanzas S.A. Institucion de Banca Multiple Banco Mercantil del Norte, S. A. Institucion de Banca Multiple Banco Monex, S.A. Institucion de Banca Multiple Banco del Bajio, S.A. Braskem Idesa, S.A.P.I. CHG Meridian Mexico, S.A.P.I de C.V. Credit Suisse Mexico Opportunities Trust Desarrolladora Homex S.A.B de C.V. Edilar, S.A. de C.V. Financiamiento Progresemos, SA de CV, SOFOM ENR Proyectos Adamantine S.A. de C.V. Sociedad Financiera de Objeto Multiple E.N.R. Grupo Calidra, S.A. de C.V. Hospitaria Tenedora, S.A.P.I. de C.V. Norson Holding, S. de R.L. de C.V. Proteak Uno S.A.P.I.B de C.V. Servicios Comerciales de Energia, S.A. de C.V. Tenedora Nemak, S.A. de C.V. Tiendas Comercial Mexicana S.A. de C.V. nnope Urbi, Desarrollos Urbanos, S.A.B. de C.V. Nicaragua Banco de America Central, S.A. Banco de Finanzas Banco de la Produccion S.A. Consorcio Naviero Nicaraguense S.A. LAFISE Bancentro, S.A. Panama BBVA Panama S.A. Banco LAFISE Panam, S.A. Desarrollos Urbanos Educativos S.A. Multibank Paraguay BANCO ITAU PARAGUAY S.A. Banco Bilbao Vizcaya Argentaria Paraguay S.A. Banco Continental S.A.E.C.A. Banco Regional S.A. Sudameris Bank Peru APM Terminals Callao S.A. BBVA Banco Continental Banco Interamericano de Finanzas S.A. Suriname Uruguay De Surinaamsche Bank N.V. Cooperativa Nacional de Productores de Leche Girocantex S.A. Nuevo Banco Comercial S.A. Surinor S.A. Middle East and North Africa Afghanistan Afghanistan International Bank CJSC Telecom Development Company Afghanistan Limited Egypt, Arab Republic of Nile Kordsa Company for Industrial Fabrics SAE Ahli United Bank (Egypt) S.A.E. Fawry for Banking and Payment Technology Services SAE Petroceltic International PLC Transglobe Energy Corporation Iraq Commercial Bank of Iraq Gulftainer Company Karbala Cement Manufacturing Limited C B B FI C B B FI B B 65,000,000 11,000,000 100,000,000 33,333,333 30,000,000 70,000,000 C FI FI C FI A FI FI-1 B B FI C B B B B B B B B B C FI C A C FI C B C FI FI-3 FI FI FI B FI-1 FI-2 C B B FI B 44,563,770 285,000,000 18,412,180 141,882,673 14,711,747 496,295 50,000,000 10,062,271 40,000,000 10,000,000 25,316,045 101,562,629 423,323,112 47,055,952 50,000,000 15,000,000 25,000,000 15,000,000 15,000,000 46,750,000 75,000,000 30,000,000 74,000,000 9,000,000
_ 115
113,441 1,394,483 50,000,000 1,789,607 50,000,000
12,000,000 36,615 20,000,000 13,330,897 500,000 19,600,000 15,194,689 547,253 82,840,778 106,000 24,540,074 15,453,500 14,447,550 31,936,000 7,330,785 10,000,000 1,170,310 38,011
113,441 1,394,483 44,563,770 12,000,000 36,615 285,000,000 18,412,180 50,000,000 141,882,673 14,711,747 1,789,607 496,295 50,000,000 10,062,271 40,000,000 10,000,000 25,316,045 101,562,629 423,323,112 47,055,952 50,000,000 20,000,000 13,330,897 500,000 15,000,000 19,600,000 15,194,689 547,253 25,000,000 82,840,778 106,000 39,540,074 15,453,500 29,447,550 31,936,000 46,750,000 82,330,785 60,000,000 1,170,310 30,000,000 74,000,000 38,011 9,000,000
350,000,000 40,000,000 170,250,000 30,000,000
6,000,000 8,000,000 12,128,923
1,400,490 56,150,000
1,400,490 65,000,000 11,000,000 56,150,000 6,000,000 100,000,000 41,333,333 12,128,923 30,000,000 70,000,000
116 _
IFC Region
Country Name
Company Name
Middle East and North Africa Jordan AL ETIHAD Bank of Jordan LTD CTI Group Inc. Cairo Amman Bank Capital Bank of Jordan Middle East Microcredit Company (non-profit) LLC Tamweelcom Lebanon BLC bank S.A.L. Bank of Beirut Bank of Beirut and the Arab Countries S.A.L. Banque Libano-Francaise Butec Group S.A.L. (Holding) Credit Libanais SAL Fransabank SAL (Fransabank) Vitas SAL MENA Region FIMBank P.L.C. GC Credit Opportunities GP Limited Metito Holdings Limited Renaissance Services SAOG Sakr Energy Solutions FZCO Morocco Banque Centrale Populaire S.A. Capital North Africa Venture Fund II SICAV-SIF S.C.A. Institut des Hautes Etudes de Management Oman Ahli Bank S.A.O.G. BANKMUSCAT SAOG Pakistan Allied Bank Limited Bank Al Habib Limited Bank Alfalah Limited BankIslami Pakistan Limited Habib Bank Limited (HBL) Habib Metropolitan Bank Ltd. IMPERIAL DEVELOPERS & BUILDERS (PRIVATE) LIMITED Karachi Organic Energy (Private) Limited MCB Bank Limited Meezan Bank Limited NIB Bank Limited SilkBank Limited Soneri Bank Limited United Bank Limited Tunisia Amen Bank S.A. ENDA Inter-Arabe West Bank and Gaza Bank of Palestine National Bank South Asia Bangladesh AB Bank Limited Ananta Apparels Limited BRAC Bank Butterfly Marketing Limited Eastern Bank Limited GrameenPhone Limited Green Delta Insurance Company Ltd. Leopard Bangladesh Fund L.P. Southeast Bank Limited The City Bank Limited bKash Limited FI-3 B FI-2 B C B FI FI-2 FI FI-2 FI-3 35,000,000 6,250,000 150,000,000 C C B C FI FI-3 FI-3 C FI C C B FI FI FI FI-3 FI-2 B B B FI FI B FI FI-1 FI C C C FI C B C C U C FI C C FI-2 FI FI U 2,000,000 2,000,000 2,000,000 10,000,000 8,000,000 2,000,000 30,000,000 50,000,000 30,000,000 12,000,000 11,000,000 2,500,000 6,292,870
_ 117
105,207,309 20,000,000 599,154 5,076,984 62,042,172 13,218,500 7,000,000 6,495,980 82,497,857 4,796,212
4,960,946 2,410,680 6,617,662 38,429,179 6,044,073 6,668,473 125,316,420 83,903,752 114,585,605 52,344,500 3,053,601 36,400,664 15,564,790 5,680,602 70,351,759 67,179,572 56,661,711 15,550,396 25,138,022 12,965,237 16,340,430 7,036,890 14,524,354 300,000
4,960,946 2,410,680 2,000,000 6,617,662 38,429,179 2,000,000 2,000,000 6,044,073 115,207,309 6,668,473 125,316,420 8,000,000 83,903,752 114,585,605 2,000,000 82,344,500 20,000,000 50,599,154 30,000,000 17,076,984 62,042,172 13,218,500 7,000,000 6,495,980 82,497,857 3,053,601 36,400,664 15,564,790 5,680,602 70,351,759 67,179,572 11,000,000 2,500,000 56,661,711 15,550,396 25,138,022 12,965,237 16,340,430 7,036,890 4,796,212 6,292,870 14,524,354 300,000
6,294,672 9,990,848 15,000,000 10,000,000
2,014,210 142,702,612 123,877,282 38,330,263 33,598,750
37,014,210 6,250,000 142,702,612 6,294,672 123,877,282 150,000,000 9,990,848 15,000,000 38,330,263 33,598,750 10,000,000
40,000,000
118 _
IFC Region
South Asia
Country Name
Company Name
Bhutan
Bank of Bhutan Bhutan National Bank Limited
C FI-1 B FI FI-3 B C A FI C FI-3 C B B B B B FI-3 B FI-2 B B B FI FI B B A B B A FI-2 A B FI-2 B B B FI-3 FI-2 FI-3 B FI FI B B C C C C C FI-1 FI-1 FI-2
1,421,936 2,939,866 70,000,000 55,000,000 8,107,865 2,103,371 60,000,000 8,000,000 14,000,000 50,000,000 9,000,000 50,000,000 7,531,727 5,000,000 18,353,198 40,000,000 30,000,000 100,000,000 14,000,000 74,994,129 85,768,693 12,291,134 2,763,194 6,900,000 2,500,000 24,000,000
India
ATC Tires Private Limited Aavishkaar Goodwell India Microfinance Development Company II Avanse Financial Services Pvt. Ltd Azure Power India Private Limited Azure Sun Energy Private Limited Bhilwara Energy Limited CapAleph Indian Millennium Fund DQ Entertainment Plc Dewan Housing Finance Corporation Ltd. Ecolibrium Energy Private Limited Fortis Healthcare Limited Green Infra Solar Farms Limited Green Infra Solar Projects Limited Gujarat Pipavav Port Limited Hikal Limited IFMR Rural Channels and Services Private Limited Inabensa Bharat Private Limited India 2020 Fund II Limited Inox Renewables (Jaisalmer) Limited JMT Auto Limited Jain Irrigation Systems Ltd Kaizen Private Equity Kotak Mahindra Bank Limited LNJ Power Ventures Limited Meghmani Finechem Limited NSL Renewable Power Pvt Ltd NSL Wind Power Company (Satara) Pvt Limited National Collateral Management Services Limited OCL India Limited PTC INDIA FINANCIAL SERVICES LIMITED Power Grid Corporation of India Limited Ramkrishna Forgings Limited Religare Enterprises Limited Rhodia Inc. SEI Solar Power Pvt. Ltd Snowman Logistics Limited Suryoday Microfinance Private Limited The Ratnakar Bank Limited Utkarsh Micro Finance Private Limited Value and Budget Housing Corporation Private Limited YES BANK LTD
Nepal
Bank of Kathmandu Limited Buddha Air Private Limited Butwal Power Company (BPC) Himalayan Bank Limited Laxmi Bank Limited Nepal Industrial and Commercial Bank Ltd. Nepal Investment Bank Ltd
Southern Asia Region Sri Lanka
Earthport PLC Cargills Agriculture and Commercial Bank Limited Commercial Bank of Ceylon National Development Bank PLC
_ 119
28,932,663 10,000,000 4,200,000 2,257,236 473,979 1,029,253 15,000,000 1,500,000 750,000 45,000,000 7,081,526 25,000,000 9,971,510 3,000,000 1,240,340 3,200,000 4,943,820 5,871 2,783,964 22,068,584 774,336 11,061,947 10,000,000 3,876,273
163,975 490,712 36,098,008 13,887,266 3,462,156 1,225,033 47,680 874,107 6,639,677 7,427,714
163,975 29,423,375 10,000,000 4,200,000 2,257,236 1,895,914 2,939,866 1,029,253 15,000,000 1,500,000 70,000,000 750,000 100,000,000 8,107,865 2,103,371 60,000,000 8,000,000 7,081,526 14,000,000 25,000,000 50,000,000 9,000,000 59,971,510 3,000,000 36,098,008 7,531,727 1,240,340 5,000,000 18,353,198 3,200,000 40,000,000 30,000,000 100,000,000 18,943,820 75,000,000 85,768,693 12,291,134 2,763,194 2,783,964 22,068,584 774,336 11,061,947 13,887,266 3,462,156 6,900,000 2,500,000 1,225,033 47,680 874,107 6,639,677 10,000,000 3,876,273 7,427,714 24,000,000
92,000,000 65,000,000 120,000,000
120 _
IFC Region
South Asia
Country Name
Company Name
National Development Bank Plc. Nations Trust Bank LTD. Softlogic Holdings PLC Uni Walkers (Private) Limited Union Bank of Colombo PLC Sub-Saharan Africa Africa Region Actis Africa Real Estate Fund 2 LP African Development Partners II LP Afrimax Limited BNP Paribas (Suisse) SA & BNP Paribas Business Partners International (Proprietary) Limited DiViNetworks Ltd. ETC Group Flexenclosure AB (publ) IHS Holding Limited IHS Nigeria Plc Root Capital, Inc. Satya Capital Africa Fund II L.P. Angola Benin Banco de Fomento. S.A.R.L Diamond Bank Benin S.A. Ecobank Benin Botswana Burkina Faso Tsodilo Resource Limited Coris Bank International S.A. Ecobank-Burkina Gryphon Minerals Burundi Cameroon Interbank Burundi S.A. Ecobank Cameroun S.A. Societe Commerciale de Banque Cameroun Central African Republic Chad Congo, Democratic Republic of Ecobank Centrafrique S. A. Ecobank Tchad S.A. Advans Banque Congo FINCA DRC S.A.R.L Rawbank Commercial Banking Congo, Republic of Cte dIvoire Credit du Congo Azito Energie, S.A. Compagnie Hoteliere de la Lagune S.A. EcobankCte dIvoire S.A. IAS International Aircraft Services Ltd. Sama Resources Inc Societe Ivoirienne de Banque Eastern Africa Region Gambia, The Ghana Africa Railways Limited Ecobank Gambia Limited Advans Ghana Savings and Loans Company Limited Bank of Africa Ghana Limited EB-ACCION Savings and Loans Company Limited Ecobank Ghana Limited Fidelity Bank Limited Guaranty Trust Bank (Ghana) Limited HFC Bank Ghana Limited Kosmos Energy Finance International Takoradi International Company (TICO) UT Bank Ltd Guinea Kenya Ecobank Guinea Bank of Africa Kenya Ltd Chase Bank (Kenya) Ltd
FI C B B C
10,000,000 15,000,000
B FI-2 B FI-2 FI C B C B B FI-2 FI-2 C C C B C C B FI FI FI-2 FI FI FI FI-3 FI-2 C B B C B B C A C FI FI-2 FI FI C C C A B FI-2 C FI C
250,000,000 70,000,000 25,000,000 5,000,000 2,000,000 4,000,000 125,000,000 7,870,800 7,000,000 33,000,000 80,000,000
_ 121
165,876 349,741 253,192
165,876 349,741 10,000,000 15,000,000 253,192
10,000,000 40,000,000 10,000,000 10 5,000,000 12,258,619 10,000,000 35,000,000 40,000,000 1,997,503 1,561,096 1,265,761 2,079,275 497,822 141,814
5,000,000 5,000,000
74,386,926 38,357,747 24,204,404 142,033 9,634,919 252,000 6,834,458 18,332,382 202,015 1,865,881 2,251,870 13,532,151 2,749,967 6,948,529 2,000,000 387,888 68,416,806 5,992,800 55,769,356 9,262,550 76,079,429 15,977,177 5,774,323 105,836
10,000,000 40,000,000 10,000,000 250,000,000 10 5,000,000 70,000,000 12,258,619 10,000,000 60,000,000 5,000,000 40,000,000 74,386,926 38,357,747 24,204,404 1,997,503 142,033 9,634,919 1,561,096 252,000 6,834,458 18,332,382 202,015 1,865,881 2,000,000 4,000,000 2,251,870 13,532,151 130,000,000 7,870,800 2,749,967 7,000,000 1,265,761 6,948,529 2,079,275 2,000,000 497,822 387,888 141,814 68,416,806 5,992,800 55,769,356 9,262,550 33,000,000 85,000,000 76,079,429 15,977,177 5,774,323 105,836
60,000,000
122 _
IFC Region
Country Name
Company Name
Sub-Saharan Africa Cooperative Bank of Kenya Limited DTBK RSF Diamond Trust of Kenya Limited Ecobank Kenya Limited Electrawinds SE Fina Bank Kenya Limited Gulf African Bank Limited Gulf Power Limited Housing Finance Company of Kenya Limited I and M Bank Ltd. Kenya Commercial Bank Kenya Power and Lighting Company Limited Kenya Tea Development Agency Holdings Limited Kipeto Energy Limited Prime Bank Limited Liberia AccessBank Liberia Ecobank Liberia Guaranty Trust Bank (Liberia) Ltd Hummingbird Resources Plc Madagascar Malawi Bank of Africa Madagascar First Merchant Bank Ltd., Malawi NBS Bank Limited Mali Mauritania Ecobank Mali Attijariwafa Bank Mauritanie S.A BB ENERGY (GULF) DMCC Generale de Banque de Mauritanie pour lInvestissement et le Commerce Mozambique Niger Nigeria AFRICAN BANKING CORPORATION MOZAMBIQUE Ecobank Niger AB Nigeria Microfinance Bank Access Bank Plc Access Bank Plc. Diamond Bank Plc Ecobank Nigeria Plc Fidelity Bank First City Monument Bank Guaranty Trust Bank Plc. Indorama Eleme Fertilizer & Chemicals Limited Kaizen Partners Limited LAPO Microfinance Bank Natural Prime Resources Nigeria Limited RSF Access Bank Zenith Bank Plc Rwanda Banque Commerciale du Rwanda (BCR) Ecobank Rwanda Limited So Tom and Prncipe Senegal Banco Internacional de So Tom e Prncipe CBAO Groupe Attijariwafa Ecobank Senegal Matelec S.A.L. MicroCred Senegal Sierra Leone Ecobank Sierra Leone Limited Guranty Trust Bank Sierra Leone Sierra Leone Commercial Bank South Africa Amakhala Emoyeni RE Project 1 (RF) Proprietary Ltd Country Bird Holdings Limited FI-2 FI-2 FI-2 FI C C FI A FI-1 FI-2 FI-2 B B C C FI FI C B FI C FI FI C B FI C C FI-3 FI-2 FI-2 FI FI C FI FI B FI FI-3 B FI-2 C C C C C C A FI C C C B B 60,000,000 20,000,000 3,000,000 26,922,420 16,000,000 40,000,000 50,000,000 12,000,000 2,000,000 127,500,000 50,000,000 47,200,000 150,000,000 5,087,440 19,800,000 1,000,000 70,703,691 25,000,000
_ 123
4,982,497 231,000 4,751,100 572,337 20,250,000 424,934
2,800,000
6,774,372 4,413,002 21,463 13,118,498 107,994,261 8,422,320 12,000,000 8,904,832 40,432,374 7,869,669 1,470,576 18,264,438 8,571,734 11,817,545 19,647,879 4,000,000 66,388,917 295,073,539 38,511,386 3,784,041 140,749,282 282,000 124,607,617 5,672,158 11,415,589 201,590 7,005,774 12,231,221 2,000,000 44,400 112,495
10,155,317 11,203,588
60,000,000 10,155,317 26,774,372 4,413,002 3,000,000 21,463 4,982,497 26,922,420 16,000,000 13,118,498 147,994,261 50,000,000 12,000,000 2,000,000 8,422,320 231,000 12,000,000 8,904,832 4,751,100 40,432,374 7,869,669 1,470,576 18,264,438 8,571,734 127,500,000 11,817,545 19,647,879 4,000,000 572,337 66,388,917 50,000,000 342,273,539 38,511,386 3,784,041 140,749,282 282,000 150,000,000 20,250,000 5,087,440 19,800,000 11,203,588 124,607,617 5,672,158 11,415,589 201,590 7,005,774 12,231,221 1,000,000 424,934 2,000,000 44,400 112,495 73,503,691 25,000,000
26,922,420 75,000,000
124 _
IFC Region
Country Name
Company Name
Sub-Saharan Africa CustomCapitalSPV Hans Merensky Holdings (Proprietary) Limited International Housing Solutions, S. r.l. Kaxu Solar One (RF) Proprietary Limited Khi Solar One (RF) Proprietary Limited Petra Diamonds Limited SRF Flexipak (South Africa) (Pty) Ltd. Sasfin Bank Limited Western Platinum LTD Southern Africa Region Tanzania Business Partners International Southern Africa SME Fund AFRICAN BANKING CORPORATION TANZANIA AccessBank Tanzania Limited Aldwych International Limited Diamond Trust Bank Tanzania Ltd Exim Bank of Tanzania FINCA Tanzania Limited National Bank of Commerce (NBC) Togo Uganda Ecobank Togo Diamond Trust Bank Uganda Ltd Eaton Towers Uganda Limited Orient Bank Limited Umeme Ltd. Zambia WORLD World Region APRM-Socit Gnral AllianceBernstein Next 50 Emerging Markets LLC Altobridge Limited Citibank, N.A. Columbia Sportswear Company Delta Partners Emerging Markets TMT Growth Fund II, L.P. Global Climate Partnership Fund SA Global Health Investment Fund Goodyear Tire & Rubber Company IFC Capitalization (Equity) Fund, L.P. IFC Capitalization (Subordinated Debt) Fund, L.P. IFC Catalyst Fund, LP IFC Global Infrastructure Fund L.P. Laureate Education Inc. Levi Strauss & Co. MICROENSURE HOLDING LIMITED Perry Ellis International, Inc. Socit Gnrale S.A. Sunpreme Co. Ltd The Bank of Tokyo-Mitsubishi UFJ, Ltd. Eleni LLC FI FI-3 C FI B FI-2 FI FI-2 B FI FI FI FI B B FI-3 B FI-2 B FI-2 FI-3 270,000,000 3,956,744 30,000,000 50,513,831 33,105,829 65,664 862,500 10,040,989 100,000,000 3,000,000 AFRICAN BANKING CORPORATION ZAMBIA FI-2 B FI-2 B B B B FI A FI C FI-3 C FI-2 FI FI-3 FI C FI-2 B C B C 26,764,804 75,514,769 69,450,224 25,000,000 40,000,000 4,000,000 3,000,000 30,000,000
_ 125
34,586,917 25,000,000 3,007,273 5,011,488 8,000,000 485,258 6,898,955 10,000,000
1,325,000 1,215,000
2,995,346 2,689,404 332,644 2,598,857 8,930,814 38,875 1,753,840 1,360,195
26,764,804 34,586,917 25,000,000 76,839,769 70,665,224 28,007,273 40,000,000 2,995,346 5,011,488 8,000,000 2,689,404 485,258 4,000,000 332,644 2,598,857 3,000,000 6,898,955 8,930,814 38,875 30,000,000 1,753,840 10,000,000 1,360,195
100,000,000 3,125,852 20,000,000 10,000,000 336,277,841 512,241 876,690 1,030,773 100,000,000 1,312,500 1,000,000
100,000,000
100,000,000
100,000,000 100,000,000 3,125,852 270,000,000 3,956,744 20,000,000 30,000,000 10,000,000 50,513,831 336,277,841 33,618,070 876,690 1,030,773 100,000,000 65,664 2,175,000 10,040,989 100,000,000 3,000,000 100,000,000 1,000,000
126 _
Investment Portfolio
Region Country
Sub-Saharan Africa Angola Benin Botswana Burkina Faso Burundi Cameroon Cape Verde Central African Republic Chad Congo, Democratic Republic of Congo, Republic of Cte dIvoire Djibouti Eritrea Ethiopia Gabon Gambia, The Ghana Guinea Guinea-Bissau Kenya Lesotho Liberia Madagascar Malawi Mali Mauritania Mauritius Mozambique Namibia Niger Nigeria Rwanda So Tom and Prncipe Senegal Seychelles Sierra Leone Somalia South Africa South Sudan Sudan Swaziland Tanzania Togo Uganda Zambia Zimbabwe Regional Investments: Sub-Saharan Africa East Asia and the Pacific Cambodia China Fiji Indonesia Kiribati Korea, Republic of
Statement of Cumulative Gross Commitments1 (at June 30, 2013) (US$ Thousands)
Number of Enterprises
IFC
Loan & Guarantee Participations
Total
7 10 6 15 9 37 6 1 7 21 7 49 1 1 8 5 10 72 11 4 97 2 8 21 20 23 14 17 27 6 3 95 15 1 31 7 9 2 83 1 6 9 57 11 51 37 51 85
326,353.0 157,645.0 35,451.6 86,750.6 46,512.5 597,275.5 15,901.9 5,730.4 48,510.1 245,973.1 138,442.5 473,018.8 4,000.0 949.2 98,927.5 145,588.0 22,192.8 1,819,705.8 235,660.8 7,246.0 1,482,458.7 454.0 70,957.4 224,374.5 158,109.8 179,233.7 269,664.4 130,794.8 337,103.7 44,969.3 22,808.1 5,910,464.9 96,341.2 501.1 267,871.5 39,443.2 69,007.9 974.6 2,211,244.5 5,000.0 27,267.8 47,779.5 322,728.3 190,327.4 371,982.8 243,785.7 284,261.9 2,459,664.2
471,500.0 13,900.0 94,000.0 25,000.0 70,963.8 1,719.0 110,000.0 432,750.0 86,217.1 21,000.0 9,500.0 40,000.0 9,502.6 96.0 312,155.0 12,398.0 2,500.0 25,000.0 15,000.0 6,488.8 13,040.5 13,088.4 20,285.8 99,000.0 61,906.0
326,353.0 157,645.0 35,451.6 86,750.6 46,512.5 1,068,775.5 15,901.9 5,730.4 62,410.1 339,973.1 163,442.5 543,982.6 4,000.0 949.2 100,646.5 255,588.0 22,192.8 2,252,455.8 235,660.8 7,246.0 1,568,675.8 454.0 70,957.4 245,374.5 167,609.8 219,233.7 279,167.0 130,890.8 337,103.7 44,969.3 22,808.1 6,222,619.9 96,341.2 501.1 280,269.5 41,943.2 94,007.9 974.6 2,226,244.5 5,000.0 33,756.6 47,779.5 335,768.8 190,327.4 385,071.1 264,071.5 383,261.9 2,521,570.2
10 233 8 118 1 51
151,727.9 5,974,551.1 47,993.2 3,142,475.8 1,798.0 868,449.2
60,000.0 1,308,109.3 2,500.0 1,768,655.4 195,700.0
211,727.9 7,282,660.4 50,493.2 4,911,131.1 1,798.0 1,064,149.2
Investment portfolio Statement of Cumulative Gross Commitments1 (at June 30, 2013) (US$ Thousands)
_ 127
Region
Country
IFC
Total
East Asia and the Pacific Lao Peoples Democratic Republic Malaysia Mongolia Myanmar Papua New Guinea Philippines Samoa Singapore Solomon Islands Thailand Timor-Leste Tonga Vanuatu Vietnam Regional Investments: East Asia and the Pacific South Asia Bangladesh Bhutan India Maldives Nepal Sri Lanka Regional Investments: South Asia Europe and Central Asia Albania Armenia Azerbaijan Belarus Bosnia and Herzegovina Bulgaria Croatia Czech Republic Estonia Georgia Hungary Kazakhstan Kosovo Kyrgyz Republic Latvia Lithuania Macedonia, Former Yugoslav Republic of Moldova Montenegro Poland Romania Russian Federation Serbia Slovak Republic Slovenia Tajikistan Turkey Ukraine Uzbekistan Regional Investments: Europe and Central Asia 19 13 26 17 30 25 19 18 11 21 34 33 3 15 7 11 15 18 6 44 41 191 38 7 12 17 170 49 17 56 442,129.3 271,543.8 533,557.2 420,158.5 333,885.3 674,179.3 607,865.3 455,175.9 137,806.1 646,286.0 437,985.4 1,348,545.0 33,904.4 102,396.2 80,966.8 95,041.0 207,445.2 233,322.9 86,754.2 438,121.4 1,637,840.3 8,087,572.0 1,320,017.3 115,543.7 241,309.5 76,157.0 6,975,595.8 1,981,937.9 93,974.6 2,273,450.3 9,893.0 197,930.0 10,577.6 183,646.7 197,096.8 245,587.9 11,855.0 11,500.0 70,334.8 282,916.7 35,000.0 9,309.0 25,000.0 45,000.0 115,316.8 478,163.5 2,448,372.0 135,630.3 47,382.7 3,443,543.2 686,700.0 12,900.0 200,880.0 452,022.3 271,543.8 731,487.2 420,158.5 344,462.9 857,826.0 804,962.0 700,763.8 149,661.1 657,786.0 508,320.2 1,631,461.7 33,904.4 102,396.2 115,966.8 104,350.0 232,445.2 278,322.9 86,754.2 553,438.3 2,116,003.8 10,535,944.0 1,455,647.5 115,543.7 288,692.2 76,157.0 10,419,139.0 2,668,637.9 106,874.6 2,474,330.3 36 3 365 7 18 39 9 1,607,442.1 43,245.9 9,540,409.0 168,250.0 172,888.9 573,143.6 221,570.0 92,745.4 1,648,639.8 8,500.0 36,000.0 23,615.6 1,700,187.5 43,245.9 11,189,048.8 176,750.0 208,888.9 596,759.2 221,570.0 11 12 16 1 10 101 7 1 1 84 1 1 3 50 39 49,951.8 154,868.4 304,511.5 2,000.0 323,894.8 2,685,757.4 20,096.6 546.8 35,000.0 2,000,805.1 500.0 6,787.0 16,604.0 3,428,694.6 1,141,814.0 5,389.1 695,879.6 1,748,419.3 253,135.0 49,951.8 160,257.5 304,511.5 2,000.0 323,894.8 3,381,637.0 20,096.6 546.8 35,000.0 3,749,224.5 500.0 6,787.0 16,604.0 3,681,829.6 1,141,814.0
128 _
Region
Country
IFC
Total
Latin America and the Caribbean Antigua and Barbuda Argentina Barbados Belize Bolivia Brazil Chile Colombia Costa Rica Dominica Dominican Republic Ecuador El Salvador Grenada Guatemala Guyana Haiti Honduras Jamaica Mexico Nicaragua Panama Paraguay Peru St. Lucia Suriname Trinidad and Tobago Uruguay Venezuela, Republica Bolivariana de Regional Investments: Latin America and the Caribbean Middle East and North Africa Afghanistan Algeria Bahrain Egypt, Arab Republic of Iran, Islamic Republic of Iraq Jordan Lebanon Morocco Oman Pakistan Saudi Arabia Syrian Arab Republic Tunisia United Arab Emirates Yemen, Republic of Regional Investments: Middle East and North Africa 8 14 1 90 11 7 45 35 41 7 127 8 4 29 2 14 39 220,372.8 253,557.3 216,274.0 2,646,568.7 63,342.9 402,025.0 1,109,100.5 2,095,376.5 855,237.8 319,853.4 4,395,495.3 261,286.0 24,731.6 458,686.9 30,000.0 206,004.2 1,592,181.2 5,556.9 789,871.3 8,199.5 50,000.0 380,384.0 230,430.0 515,014.1 57,000.0 607,970.1 417,227.8 56,104.7 3,000.0 220,372.8 259,114.2 216,274.0 3,436,440.0 71,542.4 452,025.0 1,489,484.5 2,325,806.5 1,370,251.9 376,853.4 5,003,465.4 261,286.0 24,731.6 875,914.7 30,000.0 262,108.9 1,595,181.2 1 191 6 4 29 244 56 117 30 1 36 23 18 2 26 7 11 20 22 191 21 27 15 72 3 1 15 18 39 71 30,000.0 4,820,481.0 128,625.1 28,663.7 460,894.9 11,978,013.0 1,685,509.5 2,670,627.6 463,188.6 700.0 635,279.0 348,127.5 339,883.1 8,000.0 966,587.9 31,417.0 94,664.5 828,560.2 426,295.6 6,294,797.8 359,942.0 1,554,606.0 721,596.3 2,013,978.7 45,421.9 3,065.9 358,653.7 337,853.6 897,229.5 1,516,641.4 3,654,163.0 11,000.0 140,500.0 6,037,821.8 1,160,604.7 1,168,631.0 99,708.8 241,850.0 39,240.1 113,500.0 210,000.0 25,250.0 124,400.8 194,244.5 2,607,133.5 12,428.6 153,300.0 10,000.0 923,871.2 235,000.0 120,000.0 703,791.4 350,000.0 30,000.0 8,474,644.0 128,625.1 39,663.7 601,394.9 18,015,834.8 2,846,114.1 3,839,258.7 562,897.5 700.0 877,129.0 387,367.6 453,383.1 8,000.0 1,176,587.9 31,417.0 119,914.5 952,961.0 620,540.1 8,901,931.3 372,370.6 1,707,906.0 731,596.3 2,937,849.9 45,421.9 3,065.9 593,653.7 457,853.6 1,601,021.0 1,866,641.4
Investment portfolio Statement of Cumulative Gross Commitments1 (at June 30, 2013) (US$ Thousands)
_ 129
Region
Country
IFC
Total
Worldwide Australia Cyprus Finland Greece Israel Italy Portugal Spain Regional Investments: Worldwide Other2 TOTAL 2 7 4 6 1 1 7 5 109 24 5,260 975.0 32,181.5 1,233.1 25,742.3 10,500.0 960.0 51,811.1 19,042.5 6,198,359.9 304,853.3 144,902,712.4 645.3 1,914.5 40,131.3 11,000.0 1,685.0 183,000.0 11,400.0 40,425,808.9 975.0 32,826.7 3,147.6 65,873.6 10,500.0 960.0 62,811.1 20,727.5 6,381,359.9 316,253.3 185,328,521.3
1. Commitments are composed of funds to be provided by IFC for its own account and funds to be provided by participants through the purchase of an interest in IFCs investment. 2. Of this amount, $9.8million ($8.4m for IFC and $1.4m for participants account) represents investments made at a time when the authorities on Taiwan represented China in the International Finance Corporation. The balance represents investments in West Bank and Gaza, Taiwan, China, and Hong Kong SAR, China.
130 _
NOTES AND DEFINITIONS
The fiscal year at IFC runs from July 1 to June 30. Thus FY13 began on July1, 2012, and ended on June30, 2013. Investment amounts are given in U.S. dollars unless otherwise specified. Rounding of numbers may cause totals to differ from the sum of individual figures in some tables. Loan participants and IFC fully share the commercial credit risks of projects but, because IFC is the lender of record, participants receive the same tax and country risk benefits that IFC derives from its special status as a multilateral financial institution. Quasi- equity instruments incorporate both loan and equity features, which are designed to provide varying degrees of risk/ return trade- offs that lie between those of straight loan and equity investments. On- lending is the process of lending funds from IFCs own sources through intermediaries, such as local banks and micro finance institutions. The World Bank includes the International Bank of Reconstruction and Development and the International Development Association. The World Bank Group includes IBRD, IDA, IFC, the Multilateral Investment Guarantee Agency, and the International Centre for Settlement of Investment Disputes.
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202.473.3800 ifc.org

IFC Annual Report 2013-The Power of Partnerships

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Annual Report 2013

IFC Year in Review

IFC Financial Highlights

Net income (loss) attributable to IFC Grants to IDA

1,579 600 2,179

1,746 200 1,946

(151) 450 299

Income before grants to IDA Total assets

$ 1,350 $ 77,525 $34,677 $ 13,309

$ 1,658 $ 75,761 $31,438 $ 11,977

$68,490 $ 29,934 $ 13,126

$ 61,075 $25,944 $ 10,146

$51,483 $ 22,214 $ 7,932

1.3% 4.8% 77% 2.6:1 $ $ 16.8 20.5 7.20% $ $

1.8% 6.5% 77% 2.7:1 15.5 19.2 6.60% $ $

2.4% 8.2% 83% 2.6:1 14.4 17.9 6.6% $ $

3.1% 10.1% 71% 2.2:1 12.8 16.8 7.4% $ $

-0.3% -0.9% 75% 2.1:1 10.9 14.8 7.4%

Net Income (Loss) Attributable to IFC

Total reserve against losses on loans to total disbursed loan portfolio

IFC Operational Highlights

Dollars in millions, for the year ended June 30

Number of countries For IFCs own account

$ 3,098 $ 1,696 $ $ 768 942

$ 4,680 $ 1,340 $ 454 $ 6,474

1,858 169 1,927 8

$ 2,358 $ 236 $ 5,377

THE POWER OF PARTNERSHIPS