Exhibit 13

Exhibit 13

Asian Infrastructure Investment Bank

Condensed Financial Statements (Unaudited)

for the Nine Months Ended Sep. 30, 2023

Contents

Financial Statements


Condensed Statement of Comprehensive Income			1
Condensed Statement of Financial Position			2
Condensed Statement of Changes in Equity			3
Condensed Statement of Cash Flows			4
Notes to the Condensed Financial Statements			5-46
A. General Information			5
B. Accounting Policies			5-6
C. Disclosure Notes			7-30
D. Financial Risk Management			31-42
E. Fair Value Disclosure			43-46

Asian Infrastructure Investment Bank

Condensed Statement of Comprehensive Income

For the nine months ended Sep. 30, 2023


In thousands of US Dollars	Note	For the nine months ended Sep. 30, 2023 (unaudited)			For the nine months ended Sep. 30, 2022 (unaudited)
Interest income	C1		1,381,793			371,340
Interest expense	C1		(563,915	)		(200,690	)
Net interest income			817,878			170,650
Net fee and commission income	C2		24,760			26,481
Net gain on financial instruments measured at fair value through profit or loss	C3		187,068			155,355
Net loss on financial instruments measured at amortized cost	C9		(4,406	)		(13,172	)
Share of gain on investment in associate	C10		3,313			573
Impairment provision	C4		(13,732	)		(158,673	)
General and administrative expenses	C5		(164,222	)		(131,948	)
Net foreign exchange loss			(142,181	)		(97,439	)
Operating profit/(loss) for the period			708,478			(48,173	)
Accretion of paid-in capital receivables	C11		1,015			1,866
Net profit/(loss) for the period			709,493			(46,307	)
Other comprehensive income Items will not be reclassified to profit or loss
Unrealized (loss)/gain on fair-valued borrowings arising from changes in own credit risk	C13		(99,229	)		82,321
Total comprehensive income			610,264			36,014
Attributable to:
Equity holders of the Bank			610,264			36,014

The accompanying notes are an integral part of these financial statements.

Asian Infrastructure Investment Bank

Condensed Statement of Financial Position

As at Sep. 30, 2023


In thousands of US Dollars	Note	Sep. 30, 2023 (unaudited)			Dec. 31, 2022 (audited)
Assets
Cash and cash equivalents	C6		2,198,509			3,077,356
Term deposits	C6		3,201,055			6,669,005
Investments at fair value through profit or loss	C7		16,574,052			12,701,947
Loan investments, at amortized cost	C8		20,613,499			17,641,931
Bond investments, at amortized cost	C9		7,701,427			4,565,178
Paid-in capital receivables	C11		269,388			304,862
Derivative assets	C14		656,653			477,469
Investment in associate	C10		58,489			49,176
Property and equipment			5,476			4,365
Intangible assets			5,957			6,712
Other assets	C12		1,764,080			1,911,247
Total assets			53,048,585			47,409,248
Liabilities
Borrowings	C13		29,321,439			24,475,728
Derivative liabilities	C14		2,182,982			2,286,664
Prepaid paid-in capital			1,000			-
Other liabilities	C15		456,675			181,131
Total liabilities			31,962,096			26,943,523
Members’ equity
Paid-in capital	C16		19,403,400			19,392,900
Reserves
Accretion of paid-in capital receivables			(1,253	)		(2,268	)
Unrealized (loss)/gain on fair-valued borrowings arising from changes in own credit risk			(89,681	)		9,548
Retained earnings			1,774,023			1,065,545
Total members’ equity			21,086,489			20,465,725
Total liabilities and members’ equity			53,048,585			47,409,248

The accompanying notes are an integral part of these financial statements

Asian Infrastructure Investment Bank

Condensed Statement of Changes in Equity

For the nine months ended Sep. 30, 2023


									Reserves

In thousands of US Dollars	Note	Subscribed capital		Less: callable capital			Paid-in capital		Accretion of paid-in capital receivables			Unrealized (loss)/gain on fair-valued borrowings arising from changes in own credit risk			Retained earnings			Total members’ equity
Jan. 1, 2022			96,775,100		(77,420,100	)		19,355,000		(3,463	)		(61,622	)		876,003			20,165,918
Capital subscription and contribution			189,600		(151,700	)		37,900		-			-			-			37,900
Net loss for the period			-		-			-		-			-			(46,307	)		(46,307	)
Other comprehensive income			-		-			-		-			82,321			-			82,321
Paid-in capital receivables - accretion effect			-		-			-		(1,162	)		-			-			(1,162	)
Transfer of accretion	C11		-		-			-		1,866			-			(1,866	)		-
Sep. 30, 2022 (unaudited)	C16		96,964,700		(77,571,800	)		19,392,900		(2,759	)		20,699			827,830			20,238,670
Jan. 1, 2023			96,964,700		(77,571,800	)		19,392,900		(2,268	)		9,548			1,065,545			20,465,725
Capital subscription and contribution			52,600		(42,100	)		10,500		-			-			-			10,500
Net profit for the period			-		-			-		-			-			709,493			709,493
Other comprehensive income			-		-			-		-			(99,229	)		-			(99,229	)
Paid-in capital receivables - accretion effect			-		-			-		-			-			-			-
Transfer of accretion	C11		-		-			-		1,015			-			(1,015	)		-
Sep. 30, 2023 (unaudited)	C16		97,017,300		(77,613,900	)		19,403,400		(1,253	)		(89,681	)		1,774,023			21,086,489

The accompanying notes are an integral part of these financial statements.

Asian Infrastructure Investment Bank

Condensed Statement of Cash Flows

For the nine months ended Sep. 30, 2023


In thousands of US Dollars	Note		For the nine months ended Sep. 30, 2023 (unaudited)			For the nine months ended Sep. 30, 2022 (unaudited)
Cash flows from operating activities
Net profit/(loss) for the period				709,493			(46,307	)
Adjustments for:
Interest income from term deposits				(240,592	)		(58,662	)
Interest expense		C13,C1		557,642			194,465
Issuance cost for borrowings		C5		9,169			5,348
Accretion of paid-in capital receivables		C11		(1,015	)		(1,866	)
Net gain on financial instruments measured at fair value through profit or loss				(133,007	)		(144,658	)
Share of gain on investment in associate		C10		(3,313	)		(573	)
Impairment provision		C4		13,732			158,673
Depreciation and amortization				2,316			1,915
Increase in loan investments		C8		(2,983,635	)		(3,011,236	)
Increase in bond in investment operations portfolio				(439,112	)		(58,287	)
Net cash (paid for)/received from derivatives				(680,593	)		48,894
Decrease/(increase) in other assets				147,257			(1,785,366	)
Increase in other liabilities				274,958			82,721
Net cash used in operating activities				(2,766,700	)		(4,614,939	)
Cash flows from investing activities
Increase in investment of funds, trusts and others				(211,408	)		(247,624	)
Dividends received and return of capital contributions				28,708			44,415
Bond at amortized cost purchased in treasury investment portfolio				(2,991,270	)		(2,028,501	)
Net purchase in other treasury investment				(3,115,137	)		(844,012	)
Decrease in term deposits				3,432,061			1,750,000
Increase in investment in associate				(6,000	)		(13,500	)
Interest received from term deposits				276,479			33,533
Increase in intangible assets, property and equipment				(1,709	)		(2,808	)
Net cash used in investing activities				(2,588,276	)		(1,308,497	)
Cash flows from financing activities
Proceeds from borrowings, net		C13		11,374,978			7,058,185
Repayments of borrowings		C13		(6,528,330	)		(376,313	)
Interest payments on borrowings		C13		(418,508	)		(148,709	)
Capital contributions received		C11		46,989			26,257
Prepaid paid-in capital received				1,000			-
Net cash from financing activities				4,476,129			6,559,420
Net (decrease)/increase in cash and cash equivalents				(878,847	)		635,984
Cash and cash equivalents at beginning of period				3,077,356			2,109,608
Cash and cash equivalents at end of period		C6		2,198,509			2,745,592

The accompanying notes are an integral part of these financial statements.

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

General Information

The Asian Infrastructure Investment Bank (the “Bank” or “AIIB”) is a multilateral development bank. By the end of year 2015, representatives from 57 countries signed AIIB’s Articles of Agreement (the “AOA”) which entered into force on Dec. 25, 2015. The Bank commenced operations on Jan. 16, 2016. AIIB’s principal office is in Beijing, the People’s Republic of China (the “PRC”).

As at Sep. 30, 2023, the Bank’s total approved membership is 109, of which 93 have completed the membership process and have become members of AIIB in accordance with the AOA.

AIIB’s purpose is to (i) foster sustainable economic development, create wealth and improve infrastructure connectivity in Asia by investing in infrastructure and other productive sectors; and (ii) promote regional cooperation and partnership in addressing development challenges by working in close collaboration with other multilateral and bilateral development institutions.

The legal status, privileges and immunities for the operation and functioning of AIIB in the PRC are agreed in the AOA and further defined in the Headquarters Agreement between the government of the People’s Republic of China (the “Government”) and the Bank on Jan. 16, 2016.

The Bank’s first overseas office, an Interim Operational Hub (the “Hub”), was established in Abu Dhabi, the United Arab Emirates, upon the government of the United Arab Emirates (the “UAE”) and the Bank signing an agreement regarding the establishment of an office in the UAE on April 19, 2023. The Hub provides proximity to global financial centers and connectivity with the international infrastructure ecosystem which is important in maintaining AIIB’s growth momentum.

Accounting Policies

Basis of preparation

These condensed interim financial statements for the nine months ended Sep. 30, 2023 have been prepared in accordance with International Financial Reporting Standard: IAS 34 Interim Financial Reporting, and should be read in conjunction with the annual financial statements for the year ended Dec. 31, 2022.

The accounting policies adopted are consistent with those used in the Bank’s annual financial statements for the year ended Dec. 31, 2022.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise judgment in its process of applying the Bank’s accounting policies. The financial statements have been prepared on a going concern basis.

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Accounting Policies

New accounting pronouncements

The new accounting pronouncements, amendments and interpretations issued during the nine months ended Sep. 30, 2023, do not have any significant impact on the operating results, financial position and comprehensive income of the Bank, based on the assessment of the Bank.

Comparatives

The comparative date of the Condensed Statement of Financial Position is as at Dec. 31, 2022, while the comparative period of the Condensed Statement of Comprehensive Income, the Condensed Statement of Changes in Equity and the Condensed Statement of Cash Flows are from Jan. 1, 2022 to Sep. 30, 2022.

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Disclosure Notes

Interest income and expense


	For the nine months ended Sep. 30, 2023			For the nine months ended Sep. 30, 2022
Interest income
Loan investments ⁽¹⁾		874,488			246,553
Cash, cash equivalents, and deposits		384,372			79,024
Bond investments		122,933			45,763
Total interest income		1,381,793			371,340
Interest expense
Borrowings ⁽²⁾		(563,900	)		(200,690	)
Lease		(15	)		-
Total interest expense		(563,915	)		(200,690	)
Net interest income		817,878			170,650

⁽¹⁾Interest income for loan investments includes amortization of front-end fees, and other incremental and directly related costs in relation to loan origination that are an integral part of the effective interest rate of those loans.

⁽²⁾Interest expense is accrued mainly based on the notional coupon rate. However, the Bank uses derivatives to manage interest rate and foreign currency risks, and hence, the actual borrowing cost for the Bank is swapped from fixed to floating rate. The hedging results are presented in Note C14 Derivatives.

Net fee and commission income


	For the nine months ended Sep. 30, 2023			For the nine months ended Sep. 30, 2022
Loan commitment fee and service fee		26,232			26,175
Special Funds administration fee (Note C20)		113			188
MCDF administration fee ⁽¹⁾		1,710			1,681
Implementing entity administration fee ⁽²⁾		69			278
Others		-			15
Total fee and commission income		28,124			28,337
Cofinancing service fee		(3,364	)		(1,856	)
Total fee and commission expense		(3,364	)		(1,856	)
Net fee and commission income		24,760			26,481

⁽¹⁾According to the Governing Instrument of the Finance Facility of the Multilateral Cooperation Center for Development Finance (“MCDF Finance Facility”) and the agreement on the terms and conditions of service as the administrator of the MCDF Finance Facility, AIIB provides administrative and financial services to the MCDF Finance Facility, including hosting of the secretariat of the Multilateral Cooperation Center for Development Finance (“MCDF”). Therefore, the Bank charges an administration fee for the services provided as the administrator of the MCDF Finance Facility. The MCDF serves as a multilateral initiative to foster high-quality infrastructure and connectivity investments in developing countries.

⁽²⁾Implementing entity refers to AIIB’s role as either implementing partner, technical partner, or another analogous role, in a multilateral partnership facility.

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Disclosure Notes

Net gain on financial instruments measured at fair value through profit or loss


	For the nine months ended Sep. 30, 2023			For the nine months ended Sep. 30, 2022
Money Market Funds (Note C6)		54,061			10,697
Investments at fair value through profit or loss (Note C7)		282,280			(330,922	)
Borrowings (Note C13)		248,454			2,000,049
Derivatives (Note C14):
- Borrowings associated		(893,060	)		(1,972,277	)
- Loan investments associated		148,206			121,690
- Treasury investment portfolio and bond investments associated		347,127			326,118
Total		187,068			155,355

Impairment provision


	For the nine months ended Sep. 30, 2023		For the nine months ended Sep. 30, 2022
Impairment provision for
- Loan investments (Note C8)		11,586		150,075
- Bond investments (Note C9)		2,146		8,598
Total impairment provision		13,732		158,673

General and administrative expenses


	For the nine months ended Sep. 30, 2023		For the nine months ended Sep. 30, 2022
Staff costs		86,059		71,316
Professional service expenses		23,066		21,079
IT services		15,416		14,215
Facilities and administration expenses		12,938		12,188
Travel expenses		10,294		2,198
Issuance cost for borrowings		9,169		5,348
Others		7,280		5,604
Total general and administrative expenses		164,222		131,948

Refer to Note C20 for details of key management remuneration.

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Disclosure Notes

Cash, cash equivalents, and deposits with banks


	Sep. 30, 2023		Dec. 31, 2022
Cash		-		-
Deposits with banks
- Demand deposits ⁽¹⁾		129,120		106,253
- Term deposits with initial maturity of three months or less		1,274,037		1,690,454
Money Market Funds ⁽²⁾		795,352		1,280,649
Total cash and cash equivalents		2,198,509		3,077,356
Add: term deposits with initial maturity more than three months ⁽³⁾		3,201,055		6,669,005
Total cash, cash equivalents, and deposits with banks		5,399,564		9,746,361

⁽¹⁾

USD58.09 million of demand deposits is segregated for the externally managed portfolios (Dec. 31, 2022: USD73.15 million).

⁽²⁾

Money Market Funds


	For the nine months ended Sep. 30, 2023			For the year ended Dec. 31, 2022
As at beginning of period/year		1,280,649			1,710,022
Additions		14,071,588			13,402,000
Disposals		(14,610,946	)		(13,848,258	)
Fair value gain, net		54,061			16,885
Total Money Market Funds		795,352			1,280,649

Money Market Funds (“MMFs”) are rated triple-A equivalent and invest in a diversified portfolio of short-term high-quality assets. The objective of the investment is only to meet short-term cash commitments. The MMFs are subject to an insignificant risk of changes in value, with daily liquidity and an investment return comparable to normal USD denominated money market interest rates. The MMFs are exposed to credit, market and liquidity risks, and are measured at fair value.

⁽³⁾

Term deposits with initial maturity more than three months have maturities up to 24 months. As at Sep. 30, 2023, USD3.2 billion of term deposits has remaining maturity within 12 months (Dec. 31, 2022: USD6.67 billion).

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Disclosure Notes

Investments at fair value through profit or loss


	For the nine months ended Sep. 30, 2023			For the year ended Dec. 31, 2022
As at beginning of period/year		12,701,947			10,565,949
Additions, net		3,608,995			2,174,149
Return of capital contributions		(19,170	)		(55,845	)
Net gain of investments		282,280			17,694
Total investments at fair value through profit or loss		16,574,052			12,701,947

Analysis of investments at fair value through profit or loss:


	Sep. 30, 2023		Dec. 31, 2022
External Managers Program (a)		4,150,191		4,020,106
Bond investments (b)		8,565,689		5,738,255
Certificates of deposit and commercial papers (c)		2,798,529		2,114,223
Investment operations fixed income portfolio (d)		232,678		220,451
Investment in funds,trusts and others (e)		826,965		608,912
Total investments at fair value through profit or loss		16,574,052		12,701,947

(a)

The Bank has engaged external asset managers to invest in portfolios of high credit quality securities (the “External Managers Program”). The portfolios are fair value measured and securities are eligible for sale. The following table sets out the amounts of the investment portfolio by asset categories.


External Managers Program	Sep. 30, 2023		Dec. 31, 2022
Investment grade corporate bonds		1,622,964		1,704,603
Treasury bills and notes		996,947		692,923
Sovereign, supranational and agency bonds		978,345		1,163,506
Commercial papers		242,691		109,895
Term deposits and certificates of deposit		191,614		238,171
Other investment securities		117,630		111,008
Total		4,150,191		4,020,106

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Disclosure Notes

Investments at fair value through profit or loss (Continued)

(b)

The Bank invests in bond securities which are actively managed. The bond investments are measured at fair value through profit or loss. The bonds invested are mainly of high credit quality. The Bank also invests in securities for infrastructure and development purposes in its investment operations portfolio.

(c)

The Bank invests in certificates of deposit and commercial papers which are actively managed within treasury investment portfolio and measured at fair value through profit or loss. The certificates of deposit and commercial papers are of high credit quality.

(d)

The Bank has engaged external asset managers to invest in a fixed-income portfolio. The objective of this portfolio is to develop the climate bond markets in Asia, composing of labeled green bonds and unlabeled climate-aligned bonds. The investment strategy targets climate bond issuers who rate high on the evaluation of three dimensions related to the Paris Agreement: (a) climate mitigation, (b) climate adaptation and (c) contribution to the transition to a low carbon, climate resilient economy.

(e)

The Bank invests in limited partnership funds (“LP Funds”), trust and others. LP Funds are managed by the general partners, who manage all investments on behalf of the limited partners. The Bank, along with other investors, has entered into the LP Funds as a limited partner. The trust is managed by investment manager who makes investment decisions on behalf of the trust as per the trust deed and the investment management agreement. The investment in funds, trusts and others do not have an expected maturity date within twelve months.

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Disclosure Notes

Loan investments, loan commitments and related ECL allowance


Loan investments	Sep. 30, 2023			Dec. 31, 2022
Gross carrying amount		20,918,727			17,935,092
ECL allowance		(305,228	)		(293,161	)
Net carrying amount		20,613,499			17,641,931

Loan investments are carried at amortized cost. At initial recognition, loan investments are measured at fair value using the assumptions market participants of either sovereign-backed or nonsovereign-backed projects would use when pricing the loan assets. The market where the Bank enters into such transactions is considered to be the principal market. The transaction price normally represents the fair value of loans at their initial recognition.

All sovereign-backed loans to eligible members are subject to the same pricing, taking into account the “preferred creditor status” and other terms giving the Bank rights more favorable than those available to commercial creditors. The Bank applies commercial pricing practices to nonsovereign-backed loans. The Bank has no intention to sell sovereign-backed loans, nor does it believe there is a secondary market for such loans.

The Bank began offering variable spread loans in 2019 where the lending rate consists of a variable reference rate and a variable spread. The variable spread consists of a fixed contractual lending spread and maturity premium along with a variable borrowing cost margin. The reference rate and the borrowing cost margin are determined at each interest rate reset date and are applicable for the following six months. The borrowing cost margin is based on the cost of the underlying funding for these loans at the time of the reset. As at Sep. 30, 2023, USD12,961.97 million of the total carrying amount of the Bank’s loans are variable spread loans (Dec. 31, 2022: USD10,887.26 million).

As at Sep. 30, 2023, USD1,245.87 million of the total carrying amount matures within 12 months (Dec. 31, 2022, USD618.65 million).

The following table sets out overall information about the credit quality of loan investments and loan commitments issued for effective contracts as at Sep. 30, 2023. The gross amounts of loans are net of the transaction costs and fees that are capitalized through the effective interest method, or EIR method.


	Sep. 30, 2023			Dec. 31, 2022
Loan investments, gross carrying amount		20,918,727			17,935,092
Loan commitments		12,344,448			13,039,033

		33,263,175			30,974,125
Total ECL allowance (a)		(306,022	)		(294,436	)

		32,957,153			30,679,689

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Disclosure Notes

Loan investments, loan commitments and related ECL allowance (Continued)

(a)

As at Sep. 30, 2023, the total ECL allowance related to loan commitments is USD0.79 million (Dec. 31, 2022: USD1.28 million), and is presented as a provision in Note C15.

For the nine months ended Sep. 30, 2023, the impairment losses on loan investments and loan commitments were USD11.59 million (for the nine months ended Sep. 30, 2022: USD150.07 million), as disclosed in Note C4.

Bond investments at amortized cost


Bond investments	Sep. 30, 2023			Dec. 31, 2022
Externally managed fixed-income portfolio (a)		1,993,458			2,000,504
Internally managed fixed-income portfolio (b)		5,018,064			2,019,748
Investment operations bond portfolios (c)		704,980			557,855
Gross carrying amount		7,716,502			4,578,107
ECL allowance		(15,075	)		(12,929	)
Net carrying amount		7,701,427			4,565,178

(a)

In Sep. 2021, the Bank engaged an external asset manager to invest in a portfolio of high credit quality securities. The portfolio adopts a hold-to-maturity business strategy. The bonds are initially recognized at fair value and subsequently measured at amortized cost.

(b)

In April 2022, the Bank started an internally managed portfolio to invest in high credit quality securities. The portfolio adopts a hold-to-maturity business strategy. The bonds are initially recognized at fair value and subsequently measured at amortized cost.

(c)

The Bank has invested in a fixed income bond investment portfolio which comprises Asian infrastructure-related bonds and other private bond investment. The bonds are initially recognized at fair value and subsequently measured at amortized cost.

For the nine months ended Sep. 30, 2023, USD4.41 million investment loss was recognized as a result of disposal of certain bonds in the portfolios (for the nine months ended Sep. 30, 2022: USD13.17 million).

Bond investments at amortized cost are subject to credit losses estimated by applying an ECL model, assessed on a forward-looking basis. As at Sep. 30, 2023, ECL allowance of USD14.49 million and USD0.59 million has been provided respectively to bonds in investment operations and treasury investment portfolio (ECL allowance of USD12.93 million has been provided to bonds in investment operations as at Dec. 31, 2022).

As at Sep. 30, 2023, USD2,401.70 million of the gross carrying amount matures within 12 months (Dec. 31, 2022: USD12.59 million).

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Disclosure Notes

C10

Investment in associate

On April 2, 2020, the Bank subscribed for a 30% economic interest in a private company incorporated in Singapore and limited by shares. The purpose of the investee is to acquire and securitize infrastructure loans. As at Sep. 30, 2023, the undrawn capital commitment is nil (as at Dec. 31, 2022: USD6 million).

For the nine months ended Sep. 30, 2023, the associate recognized a profit of USD11.0 million (for the year ended Dec. 31, 2022: profit of USD6.1 million). The Bank has recorded a net profit of USD3.3 million following the equity method (for the year ended Dec. 31, 2022: net profit of USD1.8 million).


	For the nine months ended Sep. 30, 2023		For the year ended Dec. 31, 2022
As at beginning of period/year		49,176		33,842
Additions		6,000		13,500
Share of gain for the period/year		3,313		1,834
Total investment in associate		58,489		49,176

C11

Paid-in capital receivables

According to the AOA, payments for paid-in capital (refer to Note C16) are due in five installments, with the exception of members considered as less developed countries, who may pay in ten installments. Paid-in capital receivables represent amounts due from members in respect of paid-in capital. These amounts are initially recognized at fair value and subsequently measured at amortized cost. The fair value discount is accreted through income using the effective interest method. For the nine months ended Sep. 30, 2023, none of discount (for the nine months ended Sep. 30, 2022: USD1.16 million) has been debited to the reserve. An amount of USD1.02 million (for the nine months ended Sep. 30, 2022: USD1.87 million) has been accreted through income in the current period.

As at Sep. 30, 2023, overdue contractual undiscounted paid-in capital receivables amounting to USD198.55 million (Dec. 31, 2022: USD214.06 million) (Note C16) are not considered impaired.

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Disclosure Notes

C11

Paid-in capital receivables (Continued)

As at Sep. 30, 2023, USD231.31 million (Dec. 31, 2022: USD258.96 million) of the paid-in capital balance is due within 12 months.


	For the nine months ended Sep. 30, 2023			For the year ended Dec. 31, 2022
As at beginning of period/year		304,862			303,695
Paid-in capital receivables originated		10,500			36,737
Contributions received		(46,989	)		(36,727	)
Transfer from prepaid paid-in capital to contribution		-			(1,200	)
Accretion to profit or loss		1,015			2,357
Total paid-in capital receivables		269,388			304,862

C12

Other assets



	Sep. 30, 2023		Dec. 31, 2022
Cash collateral receivable (Note C14)		1,657,084		1,872,002
Receivable for unsettled trades		96,789		29,790
Prepayments		6,157		6,008
Receivable for MCDF administration fee		1,711		2,218
Others		2,339		1,229
Total other assets		1,764,080		1,911,247

C13

Borrowings



	Sep. 30, 2023		Dec. 31, 2022
i) Borrowings carried at fair value
SEC-registered notes (a)		17,365,066		16,135,993
Global Medium-Term Notes (b)		8,482,162		5,411,566
Australian Dollar and New Zealand Dollar Bonds (c)		936,071		964,221
RMB Denominated Panda Bond (d)		764,538		656,531
Total borrowings at fair value		27,547,837		23,168,311

	Sep. 30, 2023		Dec. 31, 2022
ii) Borrowings carried at amortized cost
Global Medium-Term Notes (b)		1,262,576		1,208,555
Euro Commercial Papers (e)		411,314		-
Other bond issuance (f)		99,712		98,862
Total borrowings at amortized cost		1,773,602		1,307,417
Total borrowings		29,321,439		24,475,728

^(a)

As at Sep. 30, 2023, the Bank has issued a total of USD21.25 billion SEC-registered fixed rate global notes in the capital markets. These notes are listed on the London Stock Exchange’s main market. The following table sets out the details of the SEC-registered notes.

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Disclosure Notes

C13

Borrowings (Continued)


(in USD million)
Date of issuance	Notional amount		Cash proceeds		Coupon (per annum)			Coupon payment		Maturity date
May 16, 2019		2,500		2,492.95		2.25	%		Semi-annual		May 16, 2024
May 28, 2020		3,000		2,984.94		0.50	%		Semi-annual		May 28, 2025
Sep. 29, 2020		3,000		2,994.09		0.25	%		Semi-annual		Sep. 29, 2023
Jan. 27, 2021		3,000		2,987.16		0.50	%		Semi-annual		Jan. 27, 2026
Sep. 16, 2021		2,500		2,496.30		0.50	%		Semi-annual		Oct. 30, 2024
June 29, 2022		1,250		1,246.08		3.375	%		Semi-annual		June 29, 2025
Sep. 14, 2022		2,000		1,994.40		3.75	%		Semi-annual		Sep. 14, 2027
Jan. 18, 2023		2,000		1,988.00		4.00	%		Semi-annual		Jan. 18, 2028
Sep. 14, 2023		2,000		1,994.70		4.875	%		Semi-annual		Sep. 14, 2026
Total		21,250		21,178.62

^(b)

As at Sep. 30, 2023, the Bank issued a total of USD11,676.96 million equivalent fixed rate notes, and a total of USD1,250 million floating rate notes under its Global Medium-Term Note (“GMTN”) program through a combination of private and public placements, of which amount of USD2,009.37 million equivalent fixed rate notes have been repaid. The following table sets out the details of the GMTN notes by denominated currency. The interest expense is mostly payable annually.


GMTNs in denominated
currency	Sep. 30, 2023		Dec. 31, 2022
GBP		3,288,186		2,070,561
USD		1,875,000		2,025,000
EUR		1,767,498		161,898
CNH		1,015,103		1,238,492
HKD		767,458		302,942
MXN		667,501		125,123
TRY		646,153		549,253
INR		298,071		202,950
Others		592,619		622,204
Total		10,917,589		7,298,423

^(c)

As at Sep. 30, 2023, the Bank has issued a total of USD1,483.05 million equivalent fixed rate notes under its Australian Dollar and New Zealand Dollar Debt Issuance program through a combination of private and public placements, of which amount of USD364.03 million equivalent fixed rate notes have been repaid. The interest expense payable is semi-annually.

^(d)

As at Sep. 30, 2023, the Bank has issued a total of USD1,215.58 million equivalent fixed rate Renminbi denominated bonds (“RMB Denominated Panda Bond”) through public placements, of which amount of USD424.63 million equivalent fixed rate notes have been repaid. The interest expense payable is annually.

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Disclosure Notes

C13

Borrowings (Continued)

^(e)

As at Sep. 30, 2023, the Bank has issued a total of USD1,761.79 million under its Euro Commercial Paper (“ECP”) program to expand the Bank’s short-term funding options in the debt capital market, of which amount of USD1,347.79 million equivalent fixed rate notes have been repaid.

^(f)

As at Sep. 30, 2023, the Bank has USD100 million equivalent floating rate bond issuances through private placement in local onshore market, interest expense payable quarterly.

Borrowings that are paired with swaps are designated as financial liabilities at fair value through profit or loss, in order to significantly reduce accounting mismatches that would have otherwise arisen if the borrowings were carried at amortized cost while the related swaps are carried at fair value. Interest from borrowings was calculated based on outstanding balances of the borrowings and coupon rates and presented as interest expense in the Statement of Comprehensive Income.

Floating rate notes and ECP are carried at amortized cost with interest expenses recognized under effective interest rate method.

The fair value changes for financial liabilities that are designated as at fair value through profit or loss, that is attributable to changes in the Bank’s own credit risk, are recognized in other comprehensive income in accordance with the requirements of IFRS 9. Fair value movements attributable to changes in the Bank’s own credit risk are determined using the mark-to-market approach by applying an observable own credit spread curve to the Bank’s exposure at the reporting date.

For the nine months ended Sep. 30, 2023, the fair value loss attributable to changes in the Bank’s own credit risk included in the other comprehensive income amounted to USD99.23 million (for the nine months ended Sep. 30, 2022: fair value gain of USD82.32 million).

The following table sets out information about changes in liabilities arising from borrowing activities, including changes arising from cash flows and non-cash changes for the nine months ended Sep. 30, 2023 and the year ended Dec. 31, 2022.


	For the nine months ended Sep. 30, 2023			For the year ended Dec. 31, 2022
As at beginning of period/year		24,475,728			19,267,851
Changes arising from cash flows
- Proceeds from borrowings, net		11,374,978			7,248,788
- Repayment of borrowings		(6,528,330	)		(387,574	)
- Interest payments		(418,508	)		(235,063	)
- Issuance cost for borrowings		9,169			5,598
Non-cash changes
- Accrued interest		557,627			325,156
- Changes in fair values included in the other comprehensive income		99,229			(71,170	)
- Changes in fair values included in profit or loss (Note C3)		(248,454	)		(1,677,858	)
Total borrowings		29,321,439			24,475,728

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Disclosure Notes

C14

Derivatives

As at Sep. 30, 2023, the Bank has entered into several interest rate swap, foreign exchange forward and cross currency swap contracts. The Bank makes use of derivatives primarily to hedge the Bank’s borrowings, so as to convert issuance proceeds into the currency and interest rate structure sought by the Bank. The Bank also uses derivatives to manage the net interest rate and foreign exchange risks arising from its financial assets including, but not limited to, loans, certificates of deposit and bond investments.

Derivative contracts are financial instruments valued at each reporting date using valuation techniques that consider observable market data such as yield curves, interest rates, and foreign currency rates. Net interest paid or received on these derivative contracts is included within the net gain on financial instruments.

The following table sets out the contractual notional amounts and fair values of the derivatives as at Sep. 30, 2023 and Dec. 31, 2022. The payments under each of the derivative contracts are subject to enforceable master netting arrangements.

As at Sep. 30, 2023

Contractual notional
amount

Fair value

Assets

Liabilities

Derivatives

Interest rate swaps

32,045,025

245,535

1,086,820

Cross currency swaps

15,161,452

367,842

1,093,601

FX forwards

2,053,362

43,276

2,561

Total derivatives

49,259,839

656,653

2,182,982

As at Dec. 31, 2022

Contractual notional
amount

Fair value

Assets

Liabilities

Derivatives

Interest rate swaps

32,374,705

198,691

1,193,693

Cross currency swaps

10,571,179

278,778

1,008,593

FX forwards

1,189,853

84,378

Total derivatives

44,135,737

477,469

2,286,664

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Disclosure Notes

C14

Derivatives (Continued)

The table below presents the undiscounted cash flows in/(out) of the derivatives the Bank has entered into as at Sep. 30, 2023 and Dec. 31, 2022.


	As at Sep. 30, 2023
	Less than 1 month			1-3 months			3-12 months			1-5 years			Over 5 years			Total
Derivatives
Interest rate swaps		(80,954	)		(54,091	)		(394,442	)		(352,328	)		6,110			(875,705	)
Gross settling cross currency swaps - inflow		204,331			653,501			2,488,821			12,178,385			1,990,825			17,515,863
Gross settling cross currency swaps - outflow		(194,755	)		(722,053	)		(2,566,654	)		(12,678,359	)		(1,769,144	)		(17,930,965	)
Gross settling FX forwards - inflow		649,514			779,691			233,655			1,112			-			1,663,972
Gross settling FX forwards - outflow		(629,210	)		(763,744	)		(224,014	)		-			-			(1,616,968	)
Total derivatives		(51,074	)		(106,696	)		(462,634	)		(851,190	)		227,791			(1,243,803	)

	As at Dec. 31, 2022
	Less than 1 month			1-3 months			3-12 months			1-5 years			Over 5 years			Total
Derivatives
Interest rate swaps		(63,188	)		(101,881	)		(371,607	)		(506,796	)		4,638			(1,038,834	)
Gross settling cross currency swaps - inflow		258,023			62,412			3,330,754			6,762,364			590,245			11,003,798
Gross settling cross currency swaps - outflow		(256,015	)		(84,848	)		(3,395,789	)		(7,299,287	)		(589,471	)		(11,625,410	)
Gross settling FX forwards - inflow		499,779			690,074			-			-			-			1,189,853
Gross settling FX forwards - outflow		(542,180)			(728,402	)		-			-			-			(1,270,582	)
Total derivatives		(103,581	)		(162,645	)		(436,642	)		(1,043,719	)		5,412			(1,741,175	)

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Disclosure Notes

C14

Derivatives (Continued)

The Bank requires collateral in the form of cash against the exposures to derivative counterparties. The Bank records cash collateral in respect of the interest rate swaps and cross currency swaps based on the fair value of the swaps. This amount is presented separately in the Bank’s Statement of Financial Position as the cash flows are not applied towards the settlement of net interest payments. The collateral would only be applied against amounts due in the event that some or all the corresponding swaps are terminated early, including, but not limited to, as a result of a default by the relevant counterparty. As at Sep. 30, 2023, the Bank has received cash collateral of USD82.46 million (Note C15) (Dec. 31, 2022: USD112.23 million) from the swap counterparties, and has paid cash collateral of USD1,657.08 million (Note C12) (Dec. 31, 2022: USD1,872.00 million) to the swap counterparties.

Due to the collateral arrangements in the Bank’s derivatives contracts, the counterparty valuation adjustment (“CVA”) and debt valuation adjustment (“DVA”) do not have a material impact on the derivative valuations as at Sep. 30, 2023 and Dec. 31, 2022.

As at Sep. 30, 2023, the Bank makes use of derivatives with notional amount of USD33,391.53 million to hedge the borrowings with carrying amount of USD27,547.84 million. The Bank enters into derivatives with notional amount of USD3,282.01 million to hedge loans with carrying amount of USD2,619.98 million. The Bank makes use of derivatives with notional amount of USD571.21 million to hedge bonds in investment operations with carrying amount of USD579.07 million. Derivatives with notional amount of USD12,015.10 million are used to hedge financial instruments in treasury investment portfolio. The Bank’s risk exposures have been well managed; therefore, the respective profit and loss are effectively hedged on a net basis.

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Disclosure Notes

C15

Other liabilities


	Sep. 30, 2023		Dec. 31, 2022
Payable and advance receipt for unsettled trades		298,551		-
Cash collateral payable (Note C14)		82,455		112,231
Deferred interest (Note C20)		39,308		34,495
Accrued expenses		26,045		24,001
Staff costs payable		8,338		8,617
Provision—ECL allowance (Note C8)		794		1,275
Lease liability		996		-
Deferred administration fee (Note C20)		188		300
Others		-		212
Total other liabilities		456,675		181,131

C16

Share capital


	Sep. 30, 2023			Dec. 31, 2022
Authorized capital		100,000,000			100,000,000
– Allocated
- Subscribed		97,017,300			96,964,700
- Unsubscribed		983,700			1,621,800
– Unallocated		1,999,000			1,413,500
Total authorized capital		100,000,000			100,000,000
Subscribed capital		97,017,300			96,964,700
Less: callable capital		(77,613,900	)		(77,571,800	)
Paid-in capital		19,403,400			19,392,900
Paid-in capital comprises:
– amounts received		19,132,759			19,085,770
– amounts due but not yet received		198,552			214,062
– amounts not yet due		72,089			93,068
Total paid-in capital		19,403,400			19,392,900

In accordance with Articles 4 and 5 of the AOA, the initial authorized capital stock of the Bank is USD100 billion, divided into 1,000,000 shares, which shall be available for subscription only by members.

The original authorized capital stock is divided into paid-in shares and callable shares, with paid-in shares having an aggregate par value of USD20 billion and callable shares having an aggregate par value of USD80 billion.

Payment of the amount subscribed to the callable capital stock of the Bank shall be subject to call only as and when required by the Bank to meet its liabilities. Calls on unpaid subscriptions shall be uniform in percentage on all callable shares.

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Disclosure Notes

C16

Share capital (Continued)

In accordance with Article 37 of the AOA, any member may withdraw from the Bank at any time by delivering a notice in writing to the Bank at its principal office. A withdrawing member remains liable for all direct and contingent obligations to the Bank to which it was subject at the date of delivery of the withdrawal notice. At the time a country ceases to be a member, the Bank shall arrange for the repurchase of such country’s shares by the Bank as a part of the settlement of accounts with such country.


Members	Total shares		Subscribed capital		Callable capital		Paid-in capital
Afghanistan		866		86,600		69,300		17,300
Algeria		50		5,000		4,000		1,000
Argentina		50		5,000		4,000		1,000
Australia		36,912		3,691,200		2,953,000		738,200
Austria		5,008		500,800		400,600		100,200
Azerbaijan		2,541		254,100		203,300		50,800
Bahrain		1,036		103,600		82,900		20,700
Bangladesh		6,605		660,500		528,400		132,100
Belarus		641		64,100		51,300		12,800
Belgium		2,846		284,600		227,700		56,900
Benin		50		5,000		4,000		1,000
Brazil		50		5,000		4,000		1,000
Brunei Darussalam		524		52,400		41,900		10,500
Cambodia		623		62,300		49,800		12,500
Canada		9,954		995,400		796,300		199,100
Chile		100		10,000		8,000		2,000
China		297,804		29,780,400		23,824,300		5,956,100
Cook Islands		5		500		400		100
Côte d’Ivoire		50		5,000		4,000		1,000
Croatia		50		5,000		4,000		1,000
Cyprus		200		20,000		16,000		4,000
Denmark		3,695		369,500		295,600		73,900
Ecuador		50		5,000		4,000		1,000
Egypt		6,505		650,500		520,400		130,100
Ethiopia		458		45,800		36,600		9,200
Fiji		125		12,500		10,000		2,500
Finland		3,103		310,300		248,200		62,100
France		33,756		3,375,600		2,700,500		675,100
Georgia		539		53,900		43,100		10,800
Germany		44,842		4,484,200		3,587,400		896,800
Ghana		50		5,000		4,000		1,000
Greece		100		10,000		8,000		2,000
Guinea		50		5,000		4,000		1,000
Hong Kong, China		7,651		765,100		612,100		153,000
Hungary		1,000		100,000		80,000		20,000
Iceland		176		17,600		14,100		3,500
India		83,673		8,367,300		6,693,800		1,673,500
Indonesia		33,607		3,360,700		2,688,600		672,100
Iran		15,808		1,580,800		1,264,600		316,200
Iraq		250		25,000		20,000		5,000
Ireland		1,313		131,300		105,000		26,300
Israel		7,499		749,900		599,900		150,000
Italy		25,718		2,571,800		2,057,400		514,400
Jordan		1,192		119,200		95,400		23,800

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Disclosure Notes

C16

Share capital (Continued)


Members	Total shares		Subscribed capital		Callable capital		Paid-in capital
Kazakhstan		7,293		729,300		583,400		145,900
Korea		37,387		3,738,700		2,991,000		747,700
Kyrgyz Republic		268		26,800		21,400		5,400
Lao PDR		430		43,000		34,400		8,600
Liberia		50		5,000		4,000		1,000
Libya		526		52,600		42,100		10,500
Luxembourg		697		69,700		55,800		13,900
Madagascar		50		5,000		4,000		1,000
Malaysia		1,095		109,500		87,600		21,900
Maldives		72		7,200		5,800		1,400
Malta		136		13,600		10,900		2,700
Mongolia		411		41,100		32,900		8,200
Morocco		50		5,000		4,000		1,000
Myanmar		2,645		264,500		211,600		52,900
Nepal		809		80,900		64,700		16,200
Netherlands		10,313		1,031,300		825,000		206,300
New Zealand		4,615		461,500		369,200		92,300
Norway		5,506		550,600		440,500		110,100
Oman		2,592		259,200		207,400		51,800
Pakistan		10,341		1,034,100		827,300		206,800
Peru		1,546		154,600		123,700		30,900
Philippines		9,791		979,100		783,300		195,800
Poland		8,318		831,800		665,400		166,400
Portugal		650		65,000		52,000		13,000
Qatar		6,044		604,400		483,500		120,900
Romania		1,530		153,000		122,400		30,600
Russia		65,362		6,536,200		5,229,000		1,307,200
Rwanda		50		5,000		4,000		1,000
Samoa		21		2,100		1,700		400
Saudi Arabia		25,446		2,544,600		2,035,700		508,900
Serbia		50		5,000		4,000		1,000
Singapore		2,500		250,000		200,000		50,000
Spain		17,615		1,761,500		1,409,200		352,300
Sri Lanka		2,690		269,000		215,200		53,800
Sudan		590		59,000		47,200		11,800
Sweden		6,300		630,000		504,000		126,000
Switzerland		7,064		706,400		565,100		141,300
Tajikistan		309		30,900		24,700		6,200
Thailand		14,275		1,427,500		1,142,000		285,500
Timor-Leste		160		16,000		12,800		3,200
Tonga		12		1,200		1,000		200
Tunisia		50		5,000		4,000		1,000
Türkiye		26,099		2,609,900		2,087,900		522,000
United Arab Emirates		11,857		1,185,700		948,600		237,100
United Kingdom		30,547		3,054,700		2,443,800		610,900
Uruguay		50		5,000		4,000		1,000
Uzbekistan		2,198		219,800		175,800		44,000
Vanuatu		5		500		400		100
Viet Nam		6,633		663,300		530,600		132,700
Total		970,173		97,017,300		77,613,900		19,403,400

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Disclosure Notes

C17

Reserves

Based on Article 18.1 of the AOA, the Board of Governors shall determine at least annually what part of the net income of the Bank shall be allocated, after making provision for reserves, to retained earnings or other purposes and what part, if any, shall be distributed to the members.

C18

Distribution

Retained earnings as at Sep. 30, 2023 are USD1,774.02 million (Dec. 31, 2022: USD1,065.55 million). For the nine months ended Sep. 30, 2023, USD1.02 million (for the nine months ended Sep. 30, 2022: USD1.87 million) of retained earnings has been transferred to the serve for accretion of the paid-in capital receivables.

No dividends were declared during the reporting period.

C19

Unconsolidated structured entities

Special Funds established and administered by the Bank based on Article 17.1 of the AOA are unconsolidated structured entities for accounting purposes. Consistent with Article 10 of the Bank’s AOA, the resources of the Special Funds shall at all times and in all respects be held, used, committed, invested or otherwise disposed of entirely separately from the Bank’s ordinary resources.

The Project Preparation Special Fund

The objective of the Project Preparation Special Fund is to support and facilitate preparatory activities during the preparation and early implementation of projects, on a grant basis, for the benefit of one or more members of the Bank that, at the time when the decision to extend the grant is made by the Bank, are classified as recipients of financing from the International Development Association (“IDA”), and other members of the Bank with substantial development needs and capacity constraints.

The resources of the Project Preparation Special Fund consist of: (a) amounts accepted from any member of the Bank, any of its political or administrative sub-divisions, or any entity under the control of the member or such sub-divisions or any other country, entity or person approved by the President may become a contributor to the Special Funds; (b) income derived from investment of the resources of the Special Funds; and (c) funds reimbursed to the Special Funds, if any.

The full cost of administering the Project Preparation Special Fund is charged to the Project Preparation Special Fund. The Bank charges an administration fee equal to 1% of any contribution, and the Project Preparation Special Fund bears all expenses appertaining directly to operations financed from the resources of the Project Preparation Special Fund.

As at Sep. 30, 2023, the Project Preparation Special Fund has aggregate contributions received amounting to USD128 million (Dec. 31, 2022: USD128 million). For the nine months ended Sep. 30, 2023, fees recognized as income amounted to USD0.11 million (for the nine months ended Sep. 30, 2022: USD0.19 million) (Note C2). As at Sep. 30, 2023, deferred administration fees recognized as other liabilities amounted to USD0.19 million (Dec. 31, 2022: USD0.3 million) (Note C15).

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Disclosure Notes

C19

Unconsolidated structured entities (Continued)

The Special Fund Window for Less Developed Members

The Special Fund Window for Less Developed Members provides interest rate buy-down to eligible sovereign-backed financing aligned with AIIB’s Corporate Strategy in eligible members according to the approved Rules and Regulations. The Special Fund Window for Less Developed Members was funded by the amounts transferred by the Bank from its Project Preparation Special Fund and was renamed from the Special Fund Window under the COVID-19 Crisis Recovery Facility upon the approval of the AIIB Board of Directors on March 23, 2022.

As at Sep. 30, 2023, interest rate buy-down balance for eligible sovereign-backed loans from Special Fund Window for Less Developed Members amounted to USD39.3 million (Dec. 31, 2022: USD34.50 million) (Note C15).

AIIB External Special Funds

Special Fund resources received by AIIB in its role as implementing entity of multilateral partnership facilities are considered as AIIB External Special Funds collectively. AIIB became the Global Infrastructure Facility Technical Partner (“GIF TP”) on June 23, 2021 after executing the Financial Procedures Agreement; the MCDF Implementing Partner (“MCDF IP”) on Aug. 9, 2021 after executing the Implementing Partner Agreement; and the Pandemic Prevention, Preparedness and Response Trust Fund Implementing Entity (“PPR IE”) on Feb. 10, 2023 after executing the Financial Procedures Agreement. Resources from the multilateral partnership facilities are administrated in separate External Special Funds (i.e., the GIF TP Special Fund, the MCDF IP Special Fund and the PPR IE Special Fund).

The Bank is not obliged to provide financial support to the Special Funds.

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Disclosure Notes

C20

Related party transactions

Parties are generally considered to be related if the parties are under common control, or one party has the ability to control the other party or can exercise significant influence over the other party in making financial or operational decisions. In considering each possible related party relationship, attention is directed to the substance of the relationship, not merely to the legal form.

Major outstanding balances with related parties are as follows:


	Sep. 30, 2023				Dec. 31, 2022
	PRC related entities		Other related parties		PRC related entities		Other related parties
Loan investments		1,626,434		-		1,175,621		-
LP Fund		60,262		-		58,121		-
Equity and bond investment in associate		-		217,624		-		162,850
Other liabilities		-		39,496		-		34,795

The income and expense items affected by transactions with related parties are as follows:


	For the nine months ended				For the nine months ended
	Sep. 30, 2023				Sep. 30, 2022
	PRC related entities		Other related parties		PRC related entities		Other related parties
Income from loan investments		54,562		-		18,760		-
Net gain on LP Fund		3,040		-		4,287		-
Net gain/(loss) on equity and bond investment in associate		-		11,498		-		(612	)
Income from Special Funds (Administration Fee)		-		113		-		188

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Disclosure Notes

C20

Related party transactions (Continued)

Shareholder with significant influence

The Bank considers PRC as the member that has a significant influence over the Bank’s financial and operating policies through its ability to exercise its voting powers in the Board. As of Sep. 30, 2023, the Government of the PRC (the “Government”) owned approximately 30.70% of the paid-in capital of the Bank (Dec. 31, 2022: approximately 30.71%).

The Bank enters into transactions with enterprises ultimately controlled by the Government (State-owned Entities), including but not limited to, lending, bond investments, equity and fund investments, deposits and interbank placements, goods and services.

The Bank considers the transactions with PRC state-owned entities are activities conducted in the ordinary course of business, and the dealings of the Bank have not been significantly or unduly affected by the fact that these entities are ultimately controlled by the Government.

Significant transactions with the PRC related entities are as follows:

⁽¹⁾

Loan investments

The Bank approved loan facilities to nonsovereign borrowers that are ultimately controlled by State-owned Entities with a total effective amount of USD480.78 million as at Sep. 30, 2023. The Bank entered into the agreement with the borrowers in the ordinary course of business under normal commercial terms and at market rates.

The Bank approved sovereign-backed facilities to PRC with a total effective amount of USD2,300.7 million equivalent as of Sep. 30, 2023. AIIB’s standard interest rate for sovereign-backed loans has been applied. PRC sovereign-backed loans on USD LIBOR have been transitioned to SOFR.

⁽²⁾

LP Fund

In July 2019, the Bank approved a USD75 million investment into a limited partnership fund organized under the laws of Hong Kong, China and subscribed to an interest therein in November 2019. In addition to the Bank, the Government and other entities related therewith are also limited partners of the Fund. The Bank will not take part in the management of the Fund. As at Sep. 30, 2023, the fair value of the Bank’s interest in the Fund is USD60.26 million (Dec. 31, 2022: USD58.12 million).

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Disclosure Notes

C20

Related party transactions (Continued)

Transactions with other related parties are as follows:

⁽¹⁾

Equity and bond investment in associate

In April 2020, the Bank subscribed for USD54 million in an associate. The terms of the preference shares provide the Bank with 30% voting power over the financial and operating decisions of the investee’s governing body (Note C10). As at Sep. 30, 2023, the Bank holds USD159.1 million of infrastructure asset-backed securities issued by the associate (Note C7).

⁽²⁾

Other liabilities

As at Sep. 30, 2023, other liabilities relate to the Project Preparation Special Fund deferred administration fee of USD0.19 million (Dec. 31, 2022: USD0.3 million) and the interest rate buy-down balance of USD39.3 million from Special Fund Window for Less Developed Members (Dec. 31, 2022: USD34.50 million) (Note C19).

Key management personnel

Key management personnel are those persons who have the authority and responsibility to plan, direct, and control the activities of the Bank. Key management personnel of the Bank is defined as the members of the Bank’s Executive Committee, that is, in accordance with the Terms of Reference of the Executive Committee dated Jan. 5, 2022, the President, the Vice Presidents, the General Counsel, the Chief Risk Officer, the Chief Financial Officer and the Chief Economist.

For the nine months ended Sep. 30, 2023 and the year ended Dec. 31, 2022, the Bank has no material transactions with key management personnel.

The compensation of key management personnel during the period comprises short-term employee benefits of USD3.12 million (for the nine months ended Sep. 30, 2022: USD3.13 million) and defined contribution plans of USD0.62 million (for the nine months ended Sep. 30, 2022: USD0.62 million).

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Disclosure Notes

C20

Related party transactions (Continued)

Use of office building

In accordance with Article 5 of the Headquarters Agreement, Government will provide a permanent office building (“Permanent Premises”) and temporary office accommodation to the Bank, free of charge. The Permanent Premises and temporary office accommodation are provided to the Bank for the purposes of carrying out its Official Activities, as defined in Article 1(k) of the Headquarters Agreement. The Bank does not have legal ownership of the Permanent Premises. Please refer to Headquarters Agreement disclosed on public domain of AIIB website.

The provision of the Permanent Premises and temporary office accommodation is not subject to any consideration payable by the Bank, or any conditions relating to the Bank’s lending or investing activities. The Bank, however, remains responsible for the management of the Premises and/or for the associated costs, including that of utilities and services.

On June 1, 2020, the Bank officially moved to the Permanent Premises. The temporary office was returned to the Government on June 5, 2020.

The Permanent Premises of the Bank are located at Towers A and B, Asia Financial Center, No.1 Tianchen East Road, Chaoyang District, Beijing 100101 and, as of the reporting date, provides the Bank with approximately 81,580 square meters of office space and associated facilities and equipment.

On September 11, 2019, the People’s Government of Tianjin Municipality (the “Tianjin Municipality”) and the Bank entered into a Memorandum of Understanding (the “MOU”), in accordance with Article 5 of the Headquarters Agreement, to set out the arrangements regarding the premises of the Bank as its back-up business office in Tianjin (the “Tianjin Premises”). Specifically, according to the MOU, Tianjin Municipality will provide the Tianjin Premises to the Bank for its use, free of charge, similar to the arrangements for the Permanent Premises.

On March 31, 2021, Tianjin Municipality officially handed over the Tianjin Premises to the Bank. The Tianjin Premises are located at Level 25, Level 26, 3-14, No. 681, Ronghe Road, Binhai New Area, Tianjin, and provide the Bank with approximately 4,258 square meters of office space.

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Disclosure Notes

C21

Segment reporting

The Bank has only one reportable segment since financial results are reviewed and resource allocation decisions are made at the entity level.

The following table presents the Bank’s loan revenue by borrowers’ geographic region for the nine months ended Sep. 30, 2023, and Sep. 30, 2022.

Loan revenue comprises loan interest incomes, loan commitment fee and service fees.


	For the nine months ended Sep. 30, 2023						For the nine months ended Sep. 30, 2022
Region	Sovereign -backed loans		Nonsovereign -backed loans		Total		Sovereign -backed loans		Nonsovereign -backed loans		Total
Central Asia		51,088		8,077		59,165		3,762		2,997		6,759
Eastern Asia		46,993		16,803		63,796		14,382		6,471		20,853
Southeastern Asia		165,015		11,721		176,736		44,743		7,701		52,444
Southern Asia		322,939		19,283		342,222		82,291		15,186		97,477
Western Asia		145,842		51,794		197,636		43,857		19,754		63,611
Oceania		5,485		-		5,485		1,049		-		1,049
Other Regional		-		13,823		13,823		-		16,417		16,417
Total Regional		737,362		121,501		858,863		190,084		68,526		258,610
Total Non-Regional		30,395		11,462		41,857		7,263		6,855		14,118
Total		767,757		132,963		900,720		197,347		75,381		272,728

C22

Events after the end of the reporting period

There have been no other material events since the reporting date that would require disclosure or adjustment to these financial statements.

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Financial Risk Management

Overview

The Bank adopts a proactive and comprehensive approach to risk management that is instrumental to the Bank’s financial viability and success in achieving its mandate. The ability to identify, mitigate, and manage risk begins with the Bank’s policies established with a strong risk culture. In addition to establishing appropriate risk parameters and a thorough and robust project review and monitoring process, the risk management function provides independent oversight of credit and other investment risk, market risk, liquidity risk, counterparty credit risk, model risk, operational risk, and compliance risk in the Bank’s activities. It is also designed to manage assets and liabilities to minimize the volatility in equity value and to maintain sufficient liquidity.

For further information, please refer to the accompanying notes D Financial Risk Management included in the Bank’s financial statements for the year ended Dec. 31, 2022.

Market risk

IBOR reform

The following table contains details of the main financial instruments that the Bank holds as at Sep. 30, 2023, which reference to USD LIBOR and to be transitioned to SOFR:


	Carrying amount/ Notional amount as at Sep. 30, 2023		Carrying amount/ Notional amount as at Dec. 31, 2022
*Non-derivative assets and liabilities at carrying amount*
Loan investments, at amortized cost		3,717,780		6,247,872
Bond investments, at amortized cost		-		16,224
Investments at fair value through profit or loss
- Bond investments – Treasury investment portfolio		-		236,794
- Bond investments – Investment operations portfolio		-		51,700

Non-derivative assets		3,717,780		6,552,590
Loan commitment		2,245,767		4,651,969

Following the transition notices sent to sovereign borrowers for their variable spread loans, informing them of the selection of SOFR as the replacement reference rate to LIBOR and the related amendments to the provisions of the loan agreement, all variable spread sovereign loans have been transitioned to SOFR as of June. 30, 2022.

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Financial Risk Management

Market risk (Continued)

IBOR reform (Continued)

Fixed spread sovereign-backed loans on a LIBOR reference rate shall be replaced by SOFR at the first interest reprice date after July 1, 2023, following a transition notification sent to the borrowers, as established in the Bank’s General Conditions. By the date when the financial statements are authorized for issue, a total carrying amount of USD2,058 million of the fixed spread sovereign-backed loans, with a commitment amount of USD972 million, have been replaced by SOFR.

The Bank continues the amendment of agreements for nonsovereign loans on a LIBOR reference rate. This is in line with the Bank’s defined nonsovereign transition strategy, as part of which the Bank has adopted Term SOFR as an additional risk-free rate for nonsovereign borrowers from June 2022.

The Bank follows the standard terms of the ISDA IBOR Fallbacks Protocol, all swaps have been transitioned to a SOFR reference rate (as of Dec 31, 2022, notional amount of USD10,314 million were yet to be transitioned).

Credit risk

Credit quality analysis

Except for loan investments and bond investments, other financial assets are paid-in capital receivables, deposits with banks and MMFs, for which the credit risk is not material.

The following table sets out the loans and loan commitments for sovereign-backed loans, nonsovereign-backed loans and bond investments at amortized cost, with their respective ECL allowance balances.


	Sep. 30, 2023							Dec. 31, 2022
	Gross Carrying amount		Commitments		ECL			Gross Carrying amount		Commitments		ECL
Sovereign-backed loans		18,632,459		11,716,228		(201,386	)		15,889,289		12,541,658		(176,429	)
Nonsovereign-backed loans		2,286,268		628,220		(104,636	)		2,045,803		497,375		(118,007	)
Loan investments		20,918,727		12,344,448		(306,022	)		17,935,092		13,039,033		(294,436	)
Bond investments		7,716,502		-		(15,075	)		4,578,107		-		(12,929	)
Total		28,635,229		12,344,448		(321,097	)		22,513,199		13,039,033		(307,365	)

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Financial Risk Management

Credit risk (Continued)

Credit quality analysis (Continued)

(i) Concentration of credit risk

The geographical distribution of the Bank’s loan investments (gross carrying amount of loans and exposure of loan commitments) and ECL is as follows:


	Sep. 30, 2023						Dec. 31, 2022
Region	Stage 1		Stage 2		Total		Stage 1		Stage 2		Total
Sovereign-backed loans
Central Asia		2,159,331		50,424		2,209,755		2,246,288		49,994		2,296,282
Eastern Asia		2,516,724		-		2,516,724		2,435,457		-		2,435,457
Southeastern Asia		5,069,169		70,346		5,139,515		4,574,645		70,339		4,644,984
Southern Asia		13,938,416		831,828		14,770,244		12,748,127		832,773		13,580,900
Western Asia		3,800,216		608,740		4,408,956		3,611,329		602,787		4,214,116
Oceania		122,070		-		122,070		120,142		-		120,142
Total Regional		27,605,926		1,561,338		29,167,264		25,735,988		1,555,893		27,291,881
Total Non-Regional		1,181,423		-		1,181,423		1,139,066		-		1,139,066
Subtotal		28,787,349		1,561,338		30,348,687		26,875,054		1,555,893		28,430,947

	Sep. 30, 2023						Dec. 31, 2022
Region	Stage 1		Stage 2		Total		Stage 1		Stage 2		Total
ECL allowance
Central Asia		964		7,343		8,307		2,107		7,969		10,076
Eastern Asia		727		-		727		425		-		425
Southeastern Asia		709		19,742		20,451		457		18,461		18,918
Southern Asia		25,578		122,237		147,815		28,931		90,965		119,896
Western Asia		6,526		14,492		21,018		7,261		16,925		24,186
Oceania		647		-		647		317		-		317
Total Regional		35,151		163,814		198,965		39,498		134,320		173,818
Total Non-Regional		2,421		-		2,421		2,611		-		2,611
Subtotal		37,572		163,814		201,386		42,109		134,320		176,429

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Financial Risk Management

Credit risk (Continued)

Credit quality analysis (Continued)

(i) Concentration of credit risk (Continued)


	Sep. 30, 2023								Dec. 31, 2022
Region	Stage 1		Stage 2		Stage 3⁽¹⁾		Total		Stage 1		Stage 2		Stage 3⁽¹⁾		Total
Nonsovereign- backed loans
Central Asia		210,858		-		-		210,858		129,875		-		-		129,875
Eastern Asia		530,286		-		-		530,286		502,510		-		-		502,510
Southeastern Asia		381,430		-		73,519		454,949		191,339		-		74,068		265,407
Southern Asia		489,886		-		-		489,886		441,483		-		-		441,483
Western Asia		760,884		54,672		-		815,556		523,111		175,238		-		698,349
Other Regional		-		251,574		-		251,574		-		332,379		-		332,379
Total Regional		2,373,344		306,246		73,519		2,753,109		1,788,318		507,617		74,068		2,370,003
Total Non- Regional		50,223		111,156		-		161,379		50,804		122,371		-		173,175
Subtotal		2,423,567		417,402		73,519		2,914,488		1,839,122		629,988		74,068		2,543,178
Total		31,210,916		1,978,740		73,519		33,263,175		28,714,176		2,185,881		74,068		30,974,125

	Sep. 30, 2023								Dec. 31, 2022
Region	Stage 1		Stage 2		Stage 3⁽¹⁾		Total		Stage 1		Stage 2		Stage 3⁽¹⁾		Total
ECL allowance
Central Asia		751		-		-		751		407		-		-		407
Eastern Asia		215		-		-		215		125		-		-		125
Southeastern Asia		651		-		68,945		69,596		222		-		66,909		67,131
Southern Asia		481		-		-		481		437		-		-		437
Western Asia		4,921		1,436		-		6,357		4,406		7,002		-		11,408
Other Regional		-		13,912		-		13,912		-		31,035		-		31,035
Total Regional		7,019		15,348		68,945		91,312		5,597		38,037		66,909		110,543
Total Non-Regional		538		12,786		-		13,324		609		6,855		-		7,464
Subtotal		7,557		28,134		68,945		104,636		6,206		44,892		66,909		118,007
Total		45,129		191,948		68,945		306,022		48,315		179,212		66,909		294,436

⁽¹⁾

A nonsovereign-backed loan was assessed as “credit impaired” and downgraded to Stage 3 in 2021. As at Sep. 30, 2023, USD68.95 million of ECL allowance has been provided for the loan (as at Dec. 31, 2022: USD66.91 million).

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Financial Risk Management

Credit risk (Continued)

Credit quality analysis (Continued)

(i) Concentration of credit risk (Continued)

The sector distribution of the Bank’s loan investments (gross carrying amount of loans and exposure of loan commitments) and ECL is as follows:


	Sep. 30, 2023						Dec. 31, 2022
Sector	Stage 1		Stage 2		Total		Stage 1		Stage 2		Total
Sovereign-backed loans
CRF⁽¹⁾-Economic Resilience/PBF⁽²⁾		7,854,616		-		7,854,616		7,153,708		-		7,153,708
CRF-Finance/Liquidity		1,208,212		233,598		1,441,810		1,346,014		230,190		1,576,204
CRF-Public Health		3,506,355		-		3,506,355		3,648,831		-		3,648,831
Education Infrastructure		251,449		-		251,449		249,912		-		249,912
Energy		4,007,707		908,043		4,915,750		4,096,871		901,622		4,998,493
Transport		6,072,013		137,929		6,209,942		5,067,408		144,134		5,211,542
Urban		1,772,414		201,470		1,973,884		1,402,846		200,015		1,602,861
Water		3,631,108		-		3,631,108		3,627,625		-		3,627,625
Multi-sector		400,776		-		400,776		199,765		-		199,765
Others		82,699		80,298		162,997		82,074		79,932		162,006
Subtotal		28,787,349		1,561,338		30,348,687		26,875,054		1,555,893		28,430,947

	Sep. 30, 2023						Dec. 31, 2022
Sector	Stage 1		Stage 2		Total		Stage 1		Stage 2		Total
ECL allowance
CRF-Economic Resilience/PBF		25,921		-		25,921		30,256		-		30,256
CRF-Finance/Liquidity		2,990		26,541		29,531		3,599		35,825		39,424
CRF-Public Health		1,641		-		1,641		1,707		-		1,707
Education Infrastructure		11		-		11		5		-		5
Energy		2,759		42,703		45,462		3,321		48,779		52,100
Transport		1,140		26,099		27,239		1,068		26,335		27,403
Urban		1,645		50,305		51,950		935		16,906		17,841
Water		1,131		-		1,131		1,139		-		1,139
Multi-sector		316		-		316		54		-		54
Others		18		18,166		18,184		25		6,475		6,500
Subtotal		37,572		163,814		201,386		42,109		134,320		176,429

⁽¹⁾

Crisis Recovery Facility (CRF) is to support AIIB’s members and clients in alleviating and mitigating economic, financial and public health pressures arising from COVID-19.

⁽²⁾

PBF refers to policy-based financing.

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Financial Risk Management

Credit risk (Continued)

Credit quality analysis (Continued)

(i) Concentration of credit risk (Continued)


	Sep. 30, 2023								Dec. 31, 2022
Sector	Stage 1		Stage 2		Stage 3		Total		Stage 1		Stage 2		Stage 3		Total
Nonsovereign- backed loans
CRF-Finance/ Liquidity		374,361		251,574		-		625,935		301,638		332,379		-		634,017
CRF-Public Health		99,889		-		-		99,889		99,702		-		-		99,702
Digital Infrastructure and Technology		134,993		-		73,519		208,512		135,724		-		74,068		209,792
Energy		940,430		165,828		-		1,106,258		732,146		191,234		-		923,380
Multi-sector		280,767		-		-		280,767		300,806		-		-		300,806
Transport		284,807		-		-		284,807		67,044		-		-		67,044
Urban		308,320		-		-		308,320		202,062		106,375		-		308,437
Subtotal		2,423,567		417,402		73,519		2,914,488		1,839,122		629,988		74,068		2,543,178
Total		31,210,916		1,978,740		73,519		33,263,175		28,714,176		2,185,881		74,068		30,974,125

	Sep. 30, 2023								Dec. 31, 2022
Sector	Stage 1		Stage 2		Stage 3		Total		Stage 1		Stage 2		Stage 3		Total
ECL allowance
CRF-Finance/ Liquidity		2,488		13,912		-		16,400		2,860		31,035		-		33,895
CRF-Public Health		92		-		-		92		79		-		-		79
Digital Infrastructure and Technology		203		-		68,945		69,148		129		-		66,909		67,038
Energy		2,135		14,222		-		16,357		1,881		9,047		-		10,928
Multi-sector		590		-		-		590		675		-		-		675
Transport		1,093		-		-		1,093		465		-		-		465
Urban		956		-		-		956		117		4,810		-		4,927
Subtotal		7,557		28,134		68,945		104,636		6,206		44,892		66,909		118,007
Total		45,129		191,948		68,945		306,022		48,315		179,212		66,909		294,436

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Financial Risk Management

Credit risk (Continued)

Credit quality analysis (Continued)

(ii) Reconciliation of gross carrying amount of loans and exposure of loan commitments, bond investments, and ECL

An analysis of the changes in the gross carrying amount of loans and exposure of loan commitments, with the related changes in ECL allowances is as follows:

Sovereign-backed loans


	Stage 1			Stage 2			Total
Gross carrying amount of loans and exposure of loan commitments as at Jan. 1, 2023		26,875,054			1,555,893			28,430,947
New loans and commitments originated		2,302,750			-			2,302,750
Repayments		(120,449	)		(6,596	)		(127,045	)
Movement in net transaction costs, fees, and related income through EIR method		160,510			12,041			172,551
Cancelled commitment		(392,738	)		-			(392,738	)
Foreign exchange movements		(37,778	)		-			(37,778	)
Transfer to stage 1		-			-			-
Transfer to stage 2		-			-			-
As at Sep. 30, 2023		28,787,349			1,561,338			30,348,687

	Stage 1			Stage 2			Total
ECL allowance as at Jan. 1, 2023		42,109			134,320			176,429
Additions		1,223			-			1,223
Change in risk parameters ⁽¹⁾		(5,715	)		29,494			23,779
Change from lifetime (stage 2) to 12-month (stage 1) ECL		-			-			-
Change from 12-month (stage 1) to lifetime (stage 2) ECL		-			-			-
Reversal of ECL allowance		(45	)		-			(45	)
As at Sep. 30, 2023		37,572			163,814			201,386

⁽¹⁾

The change in the loss allowance is due to change in the Probability of Default (“PD”), Loss Given Default (“LGD”) and exposure at default used to calculate the expected credit loss for the loans.

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Financial Risk Management

Credit risk (Continued)

Credit quality analysis (Continued)

Nonsovereign-backed loans


	Stage 1			Stage 2			Stage 3			Total
Gross carrying amount of loans and exposure of loan commitments as at Jan. 1, 2023		1,839,122			629,988			74,068			2,543,178
New loans and commitments originated		585,152			-			-			585,152
Repayments		(81,595	)		(22,107	)		-			(103,702	)
Movement in net transaction costs, fees, and related income through EIR method		(3,955	)		2,586			(549	)		(1,918	)
Derecognition and cancelled commitment		(1,799	)		-			-			(1,799	)
Foreign exchange movements		(20,917	)		(85,506	)		-			(106,423	)
Transfer to stage 1		107,559			(107,559	)		-			-
Transfer to stage 2		-			-			-			-
As at Sep. 30, 2023		2,423,567			417,402			73,519			2,914,488

	Stage 1			Stage 2			Stage 3			Total
ECL allowance as at Jan. 1, 2023		6,206			44,892			66,909			118,007
Additions		1,483			-			-			1,483
Change in risk parameters ⁽¹⁾		(959	)		(11,948	)		2,036			(10,871	)
Change from lifetime (stage 2) to 12-month (stage 1) ECL		827			(4,810	)		-			(3,983	)
Change from 12-month (stage 1) to lifetime (stage 2) ECL		-			-			-			-
Reversal of ECL allowance		-			-			-			-
As at Sep. 30, 2023		7,557			28,134			68,945			104,636
Total gross carrying amount of loans and exposure of loan commitments as at Sep. 30, 2023		31,210,916			1,978,740			73,519			33,263,175
Total ECL allowance as at Sep. 30, 2023		45,129			191,948			68,945			306,022

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Financial Risk Management

Credit risk (Continued)

Credit quality analysis (Continued)

Sovereign-backed loans


	Stage 1			Stage 2			Total
Gross carrying amount of loans and exposure of loan commitments as at Jan. 1, 2022		18,547,751			1,792,176			20,339,927
New loans and commitments originated		8,244,122			-			8,244,122
Repayments		(92,991	)		(17,646	)		(110,637	)
Movement in net transaction costs, fees, and related income through EIR method		109,067			8,001			117,068
Cancelled commitment		(53,140	)		(19,448	)		(72,588	)
Foreign exchange movements		(86,945	)		-			(86,945	)
Transfer to stage 1		287,142			(287,142	)		-
Transfer to stage 2		(79,952	)		79,952			-
As at Dec. 31, 2022		26,875,054			1,555,893			28,430,947

		Stage 1			Stage 2			Total
ECL allowance as at Jan. 1, 2022		16,121			97,658			113,779
Additions		14,359			-			14,359
Change in risk parameters ⁽¹⁾		12,003			29,612			41,615
Change from lifetime (stage 2) to 12-month (stage 1) ECL		213			(5,585	)		(5,372	)
Change from 12-month (stage 1) to lifetime (stage 2) ECL		(491	)		13,001			12,510
Reversal of ECL allowance		(96	)		(366	)		(462	)
As at Dec. 31, 2022		42,109			134,320			176,429

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Financial Risk Management

Credit risk (Continued)

Credit quality analysis (Continued)

Nonsovereign-backed loans


	Stage 1			Stage 2			Stage 3			Total
Gross carrying amount of loans and exposure of loan commitments as at Jan. 1, 2022		1,977,604			316,388			75,525			2,369,517
New loans and commitments originated		540,986			-			-			540,986
Repayments		(148,194	)		(185,686	)		(1,739	)		(335,619	)
Movement in net transaction costs, fees, and related income through EIR method		5,149			(887	)		282			4,544
Derecognition and cancelled commitment		(16,258	)		(6,714	)		-			(22,972	)
Foreign exchange movements		(13,278	)		-			-			(13,278	)
Transfer to stage 1		54,239			(54,239	)		-			-
Transfer to stage 2		(561,126	)		561,126			-			-
As at Dec. 31, 2022		1,839,122			629,988			74,068			2,543,178

	Stage 1			Stage 2			Stage 3			Total
ECL allowance as at Jan. 1, 2022		5,956			19,022			44,018			68,996
Additions		2,596			-			-			2,596
Change in risk parameters ⁽¹⁾		(824	)		(13,726	)		22,891			8,341
Change from lifetime (stage 2) to 12-month (stage 1) ECL		183			(2,777	)		-			(2,594	)
Change from 12-month (stage 1) to lifetime (stage 2) ECL		(1,694	)		42,700			-			41,006
Reversal of ECL allowance		(11	)		(327	)		-			(338	)
As at Dec. 31, 2022		6,206			44,892			66,909			118,007
Total gross carrying amount of loans and exposure of loan commitments as at Dec. 31, 2022		28,714,176			2,185,881			74,068			30,974,125
Total ECL allowance as at Dec. 31, 2022		48,315			179,212			66,909			294,436

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Financial Risk Management

Credit risk (Continued)

Credit quality analysis (Continued)

Bond investments


	Stage 1			Stage 2		Stage 3⁽¹⁾		Total
Bond investments as at Jan. 1, 2023		4,564,046			-		14,061		4,578,107
New bond investments		3,154,545			-		-		3,154,545
Accrual and amortization		54,258			-		329		54,587
Foreign exchange movements		(1,233	)		-		-		(1,233	)
Transfer to stage 1		-			-		-		-
Transfer to stage 2		-			-		-		-
Transfer to stage 3		-			-		-		-
Derecognition		(69,504	)		-		-		(69,504	)
As at Sep. 30, 2023		7,702,112			-		14,390		7,716,502

	Stage 1			Stage 2		Stage 3		Total
ECL allowance as at Jan. 1, 2023		1,122			-		11,806		12,928
Additions		548			-		-		548
Change in risk parameters		314			-		1,857		2,171
Change from lifetime (stage 2) to 12-month (stage 1) ECL		-			-		-		-
Change from 12-month (stage 1) to lifetime (stage 2) ECL		-			-		-		-
Change from 12-month (stage 1) to lifetime (stage 3) ECL		-			-		-		-
Reversal of ECL allowance		(572	)		-		-		(572	)
As at Sep. 30, 2023		1,412			-		13,663		15,075

⁽¹⁾

The Bank held bonds from four issuers that were assessed as “credit impaired” and downgraded to Stage 3. As at Sep. 30, 2023, USD13.66 million of ECL allowance has been provided for the bonds.

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Financial Risk Management

Credit risk (Continued)

Credit quality analysis (Continued)

Bond investments


	Stage 1			Stage 2			Stage 3			Total
Bond investments as at Jan. 1, 2022		2,401,627			98,016			-			2,499,643
New bond investments		2,203,979			-			-			2,203,979
Accrual and amortization		18,033			(495	)		-			17,538
Transfer to stage 1		59,533			(59,533	)		-			-
Transfer to stage 3		(9,788	)		(14,061	)		23,849			-
Derecognition		(109,338	)		(23,927	)		(9,788	)		(143,053	)
As at Dec. 31, 2022		4,564,046			-			14,061			4,578,107

	Stage 1			Stage 2			Stage 3			Total
ECL allowance as at Jan. 1, 2022		699			3,825			-			4,524
Additions		168			-			-			168
Change in risk parameters		(17	)		-			-			(17	)
Change from lifetime (stage 2) to 12-month (stage 1) ECL		403			(2,161	)		-			(1,758	)
Change from 12-month (stage 2) to lifetime (stage 3) ECL		-			(1,166	)		11,807			10,641
Change from 12-month (stage 1) to lifetime (stage 3) ECL		(12	)		-			1,280			1,268
Reversal of ECL allowance		(119	)		(498	)		(1,280	)		(1,897	)
As at Dec. 31, 2022		1,122			-			11,807			12,929

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Fair Value Disclosures

The majority of the Bank’s assets and liabilities in the Statement of Financial Position are financial assets and financial liabilities. Fair value measurement of nonfinancial assets and nonfinancial liabilities do not have a material impact on the Bank’s financial position and operations, taken as a whole.

The Bank does not have any financial assets or financial liabilities subject to nonrecurring fair value measurements for the nine months ended Sep. 30, 2023 (for the nine months ended Sep. 30, 2022: none).

The fair value of the Bank’s financial assets and financial liabilities are determined as follows:

If traded in active markets, fair values of financial assets and financial liabilities with standard terms and conditions are determined with reference to quoted market bid prices and ask prices, respectively.

If not traded in active markets, fair values of financial assets and financial liabilities are determined in accordance with generally accepted pricing models or discounted cash flow analysis using prices from observable current market transactions for similar instruments or using unobservable inputs relevant to the Bank’s assessment.

Fair value hierarchy

The Bank classifies financial assets and financial liabilities into the following three levels based on the extent to which inputs to valuation techniques used to measure fair value of the financial assets and financial liabilities are observable:

Level 1:

Fair value measurements are those derived from quoted prices (unadjusted) in an active market for identical assets or liabilities;

Level 2:

Fair value measurements are those derived from inputs other than quoted included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices); and

Level 3:

Fair value measurements are based on models, and unobservable inputs are significant to the entire measurement.

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Fair Value Disclosures

Financial assets and financial liabilities not measured at fair value on the Statement of Financial Position

The table below summarizes the carrying amounts and fair values of those financial instruments not measured in the Statement of Financial Position at their fair value:


	Sep. 30, 2023				Dec. 31, 2022
	Carrying amount		Fair value		Carrying amount		Fair value
*Financial assets*
- Term deposits		3,201,055		3,201,055		6,669,005		6,669,005
- Loan investments, at amortized cost		20,613,499		21,220,860		17,641,931		18,120,730
- Bond investments, at amortized cost		7,716,502		7,308,518		4,565,178		4,281,812
- Paid-in capital receivables		269,388		266,421		304,862		301,569
Total financial assets		31,800,444		31,996,854		29,180,976		29,373,116
*Financial liabilities*
- Borrowings		1,773,602		1,773,643		1,307,417		1,302,352
Total financial liabilities		1,773,602		1,773,643		1,307,417		1,302,352

As at Sep. 30, 2023, other than those disclosed above, the Bank’s balances of financial instruments not measured at fair value but with short-term maturity approximate their fair values.

Fair value of loan investments and paid-in capital receivables measured at amortized cost has been calculated using Level 3 inputs by discounting the cash flows at a current interest rate applicable to each loan and paid-in capital receivable.

The significant input used in the fair value of loan investments are risk-free rate, credit default swap spreads, expected recovery rate and foreign exchange rates. Management makes certain assumptions about the unobservable inputs to the model. These are regularly assessed for reasonableness and impact on the fair value of loans. An increase in the level of forecast cash flows in subsequent periods would lead to an increase in the fair value and an increase in the discount rate used to discount to forecast cash flow would lead to a decrease in the fair value of loans.

Fair value of bond investments held at amortized cost are generally based upon quoted market prices, if available. If the market prices are not readily available, fair values are estimated using either values obtained from independent parties offering pricing services or adjusted quoted market prices of comparable investments or using the discounted cash flow methodology.

Fair value of borrowings held at amortized cost are generally based upon quoted market prices, if available. If the market prices are not readily available, fair values are determined using discounted cash flow models.

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Fair Value Disclosures

Financial assets and financial liabilities measured at fair value on the Statement of Financial Position (Continued)

The table below summarizes the fair values of the financial assets and financial liabilities measured in the Statement of Financial Position at their fair value:


As at Sep. 30, 2023
	Level 1		Level 2			Level 3		Total
Financial assets and financial liabilities
Investments at fair value through profit or loss
- External Managers Program		3,598,256		551,935			-		4,150,191
- Investment in funds, trusts and others		-		-			826,965		826,965
- Bond investments		8,138,884		426,805			-		8,565,689
- Certificates of deposit and commercial papers		-		2,798,529			-		2,798,529
- Investment operations fixed-income portfolio		232,678		-			-		232,678
Money Market Funds		-		795,352			-		795,352
Derivative assets		-		656,653			-		656,653
Total financial assets		11,969,818		5,229,274			826,965		18,026,057
Borrowings		-		(27,547,837	)		-		(27,547,837	)
Derivative liabilities		-		(2,182,982	)		-		(2,182,982	)
Total financial liabilities		-		(29,730,819	)		-		(29,730,819	)

As at Dec. 31, 2022
	Level 1		Level 2			Level 3		Total
Financial assets and financial liabilities
Investments at fair value through profit or loss
- External Managers Program		3,561,032		459,074			-		4,020,106
- Investment in funds, trusts and others		-		-			608,912		608,912
- Bond investments		5,624,581		113,674			-		5,738,255
- Certificates of deposit and commercial papers		-		2,114,223			-		2,114,223
- Investment operations fixed-income portfolio		220,451		-			-		220,451
Money Market Funds		-		1,280,649			-		1,280,649
Derivative assets		-		477,469			-		477,469
Total financial assets		9,406,064		4,445,089			608,912		14,460,065
Borrowings		-		(23,168,311	)		-		(23,168,311	)
Derivative liabilities		-		(2,286,664	)		-		(2,286,664	)
Total financial liabilities		-		(25,454,975	)		-		(25,454,975	)

Asian Infrastructure Investment Bank

Notes to the Condensed Financial Statements

For the nine months ended Sep. 30, 2023

(All amounts in thousands of US Dollars unless otherwise stated)

Fair Value Disclosures

Financial assets and financial liabilities measured at fair value on the Statement of Financial Position (Continued)

The table below provides a reconciliation of the fair values of the Bank’s Level 3 financial assets for the nine months ended Sep. 30, 2023 and the year ended Dec. 31, 2022.

Investment in funds, trusts and others:


	For the nine months ended Sep. 30, 2023			For the year ended Dec. 31, 2022
As at beginning of period/year		608,912			332,226
Additions		211,408			318,967
Return of capital contributions		(19,170	)		(55,845	)
Fair value gain, net		25,815			13,564
Total investment in funds, trusts and others		826,965			608,912

The fair value gains or losses are attributable to the change in unrealized gains or losses relating to those financial assets held at the end of the reporting period. For the nine months ended Sep. 30, 2023, the realized gain arising from the Bank’s Level 3 financial assets amounting to USD9.5 million (for the nine months ended Sep. 30, 2022: USD10.6 million).

The MMFs’ shares are not traded in any market. The fair value of the MMFs is derived from that of the net assets value. Certificates of deposit, External Managers Program, bond investments and commercial papers have been valued at instrument level, adopting either discounted cash flow method based on observable market input, or obtained from market prices. Derivative instruments and borrowings have been valued using discounted cash flow methodology based on observable market inputs. Discounted cash flow valuation technique is mainly used for the valuation of the underlying assets of the funds, trusts and others. The unobservable inputs mainly include weighted average cost of capital, liquidity discount and projected cash flows. The fair value of the investment in funds, trusts and others is based on an adjusted net assets method.

There has been no transfer among Level 1, Level 2 and Level 3 during the nine months ended Sep. 30, 2023 (for the year ended Dec. 31, 2022: none).