Scope Ratings GmbH (Scope) monitors and reviews its credit ratings on an ongoing basis and at least annually, or every six months in the case of sovereigns, sub-sovereigns and supranational organisations.

Scope performs monitoring reviews to determine whether material changes and/or changes in macroeconomic or financial market conditions could have an impact on the credit ratings. Scope considers all available and relevant information when undertaking the monitoring review.

Monitoring reviews are conducted by performing a peer comparison, benchmarking against the rating-change drivers, and/or reviewing the credit ratings’ performance over time, as deemed appropriate by the Lead Analyst or Analytical Team Head, in addition to an assessment of all aspects of the relevant methodology/ies, including key rating assumptions and model(s). Scope publicly announces the completion of each monitoring review on its website.

Scope completed the monitoring review for the European Investment Bank (long-term foreign-currency issuer and senior unsecured debt ratings: AAA/Stable; short-term foreign-currency issuer ratings: S-1+/Stable) on 9 January 2024.

This monitoring note does not constitute a credit rating action, nor does it indicate the likelihood that Scope will conduct a credit rating action in the short term. Information about the latest credit rating action connected with this monitoring note along with the associated rating history can be found on www.scoperatings.com.

Key rating factors

For the updated Annex accompanying this review, click here.

The European Investment Bank’s (EIB) AAA rating reflects the supranational’s ‘Excellent’ intrinsic strength and ‘Excellent’ shareholder support. The EIB’s institutional profile is characterised by a record of excellent governance and an irreplaceable mandate from its EU members. The bank has been critical for supporting EU policies, including EU’s response to the Covid-19 crisis, financial support to Ukraine, and closing investment gaps by leveraging the impact of member states’ Next Generation EU funds and the InvestEU programme, as well as catalysing Europe’s transition to carbon neutrality.

The EIB’s financial profile benefits from its ability to generate and retain capital every year since its inception in 1958, including during the Covid-19 and energy crisis. The EIB’s excellent asset quality with negligible non-performing loans is driven by its conservative lending policies, high asset protection, and its widely diversified portfolio across geographies, sectors and counterparties. The EIB’s strong liquidity profile is supported by its high level, prudently managed liquid assets, excellent market access given its global benchmark issuer status, diversified funding base, and unique access to the liquidity facilities of the ECB. Challenges, which are marginal at the AAA level, relate to its high leverage and moderate liquidity buffers compared to peers’.

The EIB’s unaudited H1-2023 financial results confirm a solid financial performance, with the CET1 ratio increasing to 36.7% in H1-2023 (vs 35.1% at YE 2022) and the net surplus decreasing marginally to EUR 0.9bn (vs EUR 1.1bn in H1-2022). The EIB has an excellent asset quality, reflecting conservative lending policies. Overdue payments beyond 90 days slightly increased to EUR 85.4m (vs EUR 77.7m at YE 2022) but represents just 0.02% of the EIB’s portfolio, one of the lowest ratios among peers. Looking at the wider definition of impaired exposures, the EIB’s record is also exceptional, with impaired loans remaining limited to EUR 2.0bn (0.46% of total disbursed loans, vs 0.41% at YE 2022). Finally, the EIB maintains a strong liquidity profile with treasury assets increasing slightly to EUR 88.2bn in H1-2023, from EUR 77.5bn at YE 2022, covering more than 90% of projected net outflows over the next 12 months.

The EIB Group Operational Plan 2023-2025 points to planned new signature volumes of EUR 68.5bn in 2023 (with +15%/-10% flexibility) and EUR 69.8bn in 2024. Over H1-2023, EIB disbursed EUR 21.0bn out of an annual disbursement orientation of EUR 45.0-52.2bn. As of end-December 2023, borrowings stood at EUR 49.8bn out of the announced borrowing authorisation of EUR 50.0bn for the year, which is consistent with the average funding realised in 2022 (EUR 44.3bn) and in 2021 (EUR 55.3bn). For 2024, the EIB estimates new issuances at EUR 60.0bn against a borrowing authorization of up to EUR 65.0bn.

The EIB is playing a critical role in the implementation of the InvestEU programme and in the EU’s response to Russia’s war in Ukraine. Since Russia’s full-scale invasion of Ukraine in 2022, the EIB disbursed EUR 1.7bn of financing that benefits from guarantees from the European Union (AAA/Stable). An additional EUR 4.0bn credit line was approved in April 2022 to support the integration of Ukrainian refugees in neighbouring EU countries, of which EUR 2.0bn have been allocated to Poland (A/Stable) and EUR 200m to the Czech Republic (AA-/Stable). The Bank also bolstered its local presence in November 2023 with the opening of its Regional Hub for Eastern Europe to address Ukraine’s most urgent infrastructure needs, sustain the economy, and support recovery and reconstruction efforts.

The EIB is also expected to continue leading the emergence of nature-positive finance in the transition towards net zero, alongside other multilateral development banks, as highlighted by its approach to a just transition and just resilience presented during the COP28 climate change conference.

Finally, the EIB benefits from its highly rated key members. The six largest EU economies – Germany (AAA/Stable), France (AA/Negative), Italy (BBB+/Stable), Spain (A-/Stable), the Netherlands (AAA/Stable) and Belgium (AA-/Negative) – together account for around 78% of the EIB’s capital. Their weighted average rating of AA- drives Scope’s ‘Excellent’ assessment of shareholder support, which is further supported by the EIB’s high-quality callable capital of about EUR 135.7bn, which covers around 30% of its outstanding mandated assets.

The Stable Outlook reflects Scope’s assessment of the EIB’s financial buffers to withstand external and balance sheet-driven shocks. The rating could be downgraded if: i) the EIB recorded losses over a sustained period; ii) its liquidity buffers significantly reduced; and/or iii) highly rated key members were downgraded.

The methodology applicable for the reviewed ratings and/or rating Outlooks (Supranational Rating Methodology, 3 August 2023) is available on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.
This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0.
Lead analyst Thomas Gillet, Director

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