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PRESS RELEASE February 29, 1988

World Bank Announces Strong Financial Results in First Half of FY 88

World Bank net income for the six months ended December 31, 1987 increased to $679 million from $655 million for the same period last year.

This achievement was made possible by continued low costs for the Bank's borrowings, an outstanding performance of its investment portfolio and increases in its equity.

The Bank borrowed the equivalent of $7.7 billion in 17 currencies at an average cost of 6.92 percent, after swaps, and an average maturity of 10.9 years. This compares to a cost of 5.80 percent and an average maturity of 11.7 years in the first half of FY87.

Six currencies accounted for 96 percent, after swaps, of the $7. 7 billion borrowed. These were Deutsche mark (14 percent), Dutch guilders (6 percent), Japanese yen (27 percent), Pounds sterling (8 percent), Swiss francs (15 percent), and U.S. dollars (26 percent). Other borrowings before currency swaps, which change the "effective" currency structure of the borrowing program, were in Australian dollars, Austrian schilling, Belgian francs, Canadian dollars, Danish kroner, Finnish markkaa, French francs, Kuwaiti dinars (the first since 1981), Luxembourg francs, Spanish pesetas (the first ever) and European Currency Units. Borrowings in some of these other currencies served as vehicles for currency swaps that provided indirect, reduced cost access to Swiss francs, Deutsche marks, Dutch guilders and Japanese yen.

The annualized realized rate of return on average investments ($20.8 billion as of December 31, 1987 compared to $20.6 billion a year earlier) was 8.88 percent, compared to 8.44 percent for the first half of FY87. These returns resulted in part from active management which took advantage of market opportunities.

The World Bank’s equity at December 31, 1987 amounted to $14.7 billion, consisting of $5.8 billion of usable paid-in capital and $8.9 billion of reserves and accumulated net income. This was an increase of $2.7 billion over December 31, 1986. The average cost in the first half of FY88 of total available funds (outstanding borrowings plus equity) was 6.48 percent, compared to 6.82 percent for the corresponding period in FY87.

The reduce costs of total outstanding borrowings enabled the Bank to reduce its interest charges on loans from 7.76 percent to 7.72 percent for the six-months January 1-June 30, 1988. This is the eleventh consecutive reduction in the Bank’s lending rate since variable rates were introduced in July 1982. The lending rate is determined by adding 0.50 percent to the average cost of all outstanding borrowings by the Bank since July 1982 in the preceding six months period.

New loan commitments totaled $3.6 billion in the first half of FY88, compared to $3.5 billion for the first half of FY87. Disbursements on loans during these periods were $5.8 billion and $ 6.0 billion, respectively.

Attachment I

World Bank Financial Information (in $ billions)


First Half FY88

First Half FY87

Cash and Investments



Loans Outstanding






Liabilities, Capital and Reserves



Short-term Borrowing



Medium-and Long-Term Borrowing



Total Borrowings, Outstanding






Other Liabilities (Net of Other Assets)



Paid-in Capital Available for Lending, Reserves and Accumulated Net Income, Unallocated











*/ The Bank’s principal financial statements are expressed in US dollars. In general, translation adjustments at market rates of exchange affect the Bank’s stated income and expenses as well as its loan balances and other assets and its liabilities, including charges or credits to the general reserve.