In line with the strategic portfolio management approach adopted by the Bank
in 1999, the 2006 Strategic Portfolio Review (SPR) contains a retrospective
examination of key strategic portfolio development trends from an integrated
perspective covering transition, operational, risk and financial factors.
The SPR contains sections with a constant content which allow for
cross-temporal trend analysis along a fixed structure and sections with a
changing content reflecting specific portfolio trends relevant to the current
period of analysis. Accordingly, the special topics selected for analysis in
the 2006 SPR include:
-
an analysis of currency composition trends reflecting in particular the rising
share of local currency financing;
-
an examination of average commitment size underpinning an understanding of
recent business volume trends; and
-
an assessment of reflow trends reflecting the rising impact of reflows on
portfolio development.
Main points emerging from the analysis of these special topics are:
-
While the currency composition of Bank annual business volume and the
portfolio has changed over the period 2002 to 2006 including a rising share of
euro and rouble denominated assets, currency composition trends have varied
considerably across regions of operations. In Central Europe and Russia, the
use of local currency financing has risen significantly particularly in terms
of rouble financing in Russia in 2005 and 2006. In South-eastern Europe, the
currency composition has shifted almost entirely to the euro while the euro
share has increased significantly relative to the US dollar in Eastern Europe
and the Caucasus. Annual business volume in Central Asia has remained
predominantly in US dollar with a rise in local currency during the past two
years.
-
While the share of very large commitments in the business volume has decreased
substantially since 2002 from 35 per cent to 23 per cent in 2006, the number
of very small commitments has almost doubled growing from 70 in 2002 to 138 in
2006.
-
The Bank’s strategic shift south and east has resulted in a significant growth
of the very small operations in Eastern Europe and Caucasus during the past
five years from 9 in 2002 to 55 in 2006.
-
The number of mid-sized operations in Russia was a key driver to the Bank’s
business volume growth with an increase from 8 operations in 2002 to 42
operations in 2006.
-
The volumes of prepayment and cancellation continue to constitute a
substantial and volatile component of the annual portfolio reflow pressure as
the combined prepayment and cancellation volume exceeded €1 billion for the
first time in 2006.
-
Repayments have grown on average by 10 per cent per year since 2001 and are
expected to reach €1.5 billion for the first time in 2007. Annual reflows are
expected to rise as the Bank’s portfolio continues to grow and mature with a
rising impact on portfolio growth rates.
