2023 AIIB ANNUAL REPORT AND FINANCIALS

This past year has been a testament to the resilience and dedication of our AIIB community. Despite daunting challenges on a global scale throughout 2023, we at AIIB unswervingly stayed the course to make steadfast progress towards our mission of investing in Infrastructure for Tomorrow.

The global landscape remained complex in 2023. Developing countries were particularly affected by growing geoeconomic fragmentation, the pervading atmosphere of a gloomy macroeconomic environment, and the severe impacts of climate change rarely seen before. In the face of such a precarious situation, AIIB’s firm support for its Members was critical. Our efforts will make a meaningful difference in their economic and social growth, including uninterrupted investment in infrastructure, job creation, gender equity and improved diversity and inclusion.

Since our establishment in 2016, AIIB has made tremendous efforts to focus on strategic targets that we set for ourselves at the very outset. We have achieved more than we dared to hope, exceeding the 12 | 2023 AIIB ANNUAL REPORT expectations of our shareholders and stakeholders. 2023 saw the approval of USD11.66 billion in financing, bringing the Bank’s total cumulative financing approvals to USD50.47 billion. The financing covered 19 Members, of which Argentina and Romania benefitted from the Bank’s financing for the first time, while the first multi-country project that originated in Hong Kong, China, will benefit neighboring Members. The 50 projects approved for the year were evenly split between sovereign and non-sovereign projects, bringing the total number up to 252 projects. Finally, we grew our staff to 537, up from 454 in 2022. Altogether, our staff now represent 69 economies, with women professionals comprising 42% of our professional staff. These accomplishments are a testament to the soundness of the strategic guidance provided by our Board of Directors, the collective efforts of our talented team and the trust placed in us by our partners and stakeholders.

Despite growing global tensions, 2023 saw the international development community come together in closer collaboration than ever. In partnership with our fellow multilateral development banks (MDBs), we agreed on a series of joint initiatives to improve the way MDBs work as a system. These initiatives aim to increase our collective financing capacity, boost joint climate action, enhance country-level collaboration, strengthen co-financing and catalyze private sector engagement. AIIB has shown dedication and innovation in driving this agenda forward. Most notably, we partnered with the International Bank for Reconstruction and Development (IBRD) to establish a new USD1 billion guarantee facility. Through this facility, AIIB guaranteed sovereign‑backed loans issued by IBRD, enabling IBRD to provide fresh lending while diversifying and enhancing AIIB’s own portfolio. We will continue dedicating ourselves to advancing the G20 agenda into next year and beyond.

We have also taken further innovative approaches to enhance the effectiveness of our operations. We launched two major digital projects: (a) the AIIB Client Portal, which promotes a more seamless, accessible client experience and improved operational efficiency; and (b) the InfraTech Portal, a new platform that facilitates the discovery, adoption and development of infrastructure technology, enhancing the ability of our clients and other infrastructure partners to meet the needs of the communities we all serve.

In 2023, we continued to make great strides in achieving our corporate strategy targets in climate financing, cross-border connectivity and private sector financing, which reflect our focus areas and thematic priorities.

AIIB’s climate finance activities in 2023 exhibited many commendable achievements. Strong, committed and collective action is urgently needed to mitigate the disastrous effects of changing climate on people’s lives and livelihoods. This year, we launched our Climate Action Plan (CAP), which consolidates our commitments as set out in our key strategies and policies. The CAP reaffirmed our commitment to aligning all new financing operations with the Paris Agreement. We attained this target in the second half of the year, with all new financing fully aligned with the Paris Agreement from July 1 onwards. This is a significant milestone. Beyond this signpost, all new investment operations will be consistent with low-carbon and climate-resilient development pathways. The CAP also clarifies the principles of our climate financing and identifies key actions to guide our investments. As part of this, we developed our own detailed technical methodology, which guides the application of the joint MDB methodological framework to AIIB operations.

AIIB’s climate financing volumes continue to grow year on year. In 2023, climate finance amounted to USD3.43 billion, or 60% of total approved regular financing, up from 56% in 2022 and surpassing our target of 50% climate financing by 2025. Not only did climate finance increase as a share of the approved financings, such financing also jumped significantly in absolute value, up by USD1 billion from 2022. This reflects our continuous effort to mainstream climate financing across our investment operations— indeed, of the 37 regular financing projects this year, 31 involved climate financing as an integral component. This was driven by sizable growth in climate mitigation projects, which comprised 90% of climate financing. Going forward, we will further increase financing for climate change adaptation, particularly relevant at a time when a number of our clients are grappling with the consequences of the climate change.

Cross-border connectivity remains woefully inadequate in many Members in Asia. There is a palpable pent-up demand for new cross- border projects in transport, energy and digital infrastructure. In 2023, 32% of the total number of approved regular financing projects fell within the connectivity and regional cooperation thematic priority. More needs to be done in this area.

We continued to support projects that directly or indirectly mobilize private infrastructure financing by leveraging our balance sheet and promoting infrastructure as an asset class. In 2023, we mobilized an estimated USD3.1 billion in private capital in total, up from USD2.6 billion in 2022. This year, the major financing instruments for mobilizing private capital through non-sovereign backed projects were project loans, together with private equity fund investments.

Nonetheless, capital markets remained a crucial contributor to private capital mobilization in 2023, particularly projects supporting the continued development of infrastructure asset-backed securities (IABS) market in Asia. These projects are a crucial element of our strategy to catalyze private capital for infrastructure investment in the region by developing Asian infrastructure as an asset class for global institutional investors.

I am immensely proud of the AIIB staff who continue, year on year, to deliver our programs with unqualified commitment and esprit de corps. Our performance in 2023, thanks to the Board’s guidance and the staff’s hard work, has inspired confidence in the Bank as an institution and in the many impressive capabilities of our staff. We have further strengthened our governance, increased our staffing and enhanced our overall capacity. A steadily maturing AIIB is here for everyone to see. I expect that 2024 will bring its own challenges; we remain alert to these, and I am confident that we will address these challenges head on just as we did in 2023.

I thank our Board of Directors for continuing to provide strategic oversight and direction. AIIB’s growth and trajectory testify to the effectiveness and soundness of our governance. The close collaboration between the Board and the Bank’s Management team is the ultimate assurance that AIIB will continue to adapt and develop innovative solutions to meet the challenges of the 21st century.

It is our great privilege to work under the guidance provided by our Board of Governors and Board of Directors. We cherish the relationship with our shareholders, clients, peer institutions, CSO and NGO stakeholders, and project beneficiaries. We at AIIB will continue to deliver on our commitment to our mission of financing Infrastructure for Tomorrow in Asia and beyond.

Jin Liqun
President and Chair of the Board of Directors

AIIB pursued its upward trajectory in 2023, further cementing its position as a premier multilateral development bank (MDB), underpinned by its robust shareholder structure, excellent capital standing, sound balance sheet, solid portfolio and pipeline, and AAA-rating reaffirmed by the three major credit rating agencies.

The Board considered and approved several important transactions and operations during the year. One noteworthy transaction was the signing of the USD1 billion guarantee facility between the Bank and the International Bank for Reconstruction and Development (IBRD), in response to the recommendation of the G20 Capital Adequacy Framework (CAF) working group for MDBs to expand the use of financial innovation to provide additional lending headroom. The year 2023 also saw the sunset of the COVID-19 Crisis Recovery Facility (the Facility) which overall was successful and effective in meeting its objectives of helping sovereign and nonsovereign borrowers with pandemic response and recovery. By the time it closed on Dec. 31, 2023, the Facility had approved 68 projects in 26 Members, for a total amount of USD18.48 billion, enabling AIIB to mobilize resources and deploy financing swiftly as part of the multilateral system.

In the ongoing efforts to enhance the Bank’s support to Members in line with its Corporate Strategy, the Board of Directors considered AIIB’s Approach to Emergency Response and adopted decisions to extend Policy-Based Cofinancing as part of the Bank’s broader approach to help Members respond to and recover from future eligible crises. With the Board’s guidance and impetus, the Bank on July 1, 2023 also issued its methodology for assessing the alignment of its investment operations with the Paris Agreement (PA). This was followed by the launch of the first AIIB Climate Action Plan (CAP), a framework designed to guide AIIB’s climate ambition from 14 | 2023 AIIB ANNUAL REPORT 2024 to 2030, bringing together the principles governing the Bank’s climate financing while identifying crucial action areas to steer AIIB’s investments in its Members.

In addition, the Board reaffirmed the Bank’s robust governance. The Board had an opportunity to discuss the stock-take of progress in strengthening the Bank’s governance and Board efficiency in preparation for the 2024 Comprehensive Review of the Accountability Framework. Furthermore, as reflected in the Board-commissioned Board Effectiveness Review, the Directors expressed broad satisfaction with the functioning of the Board of Directors, including the functioning of Committees, support from the Secretariat, and the Bank’s culture of accountability. An external assessment of AIIB’s Performance Review process for the President also noted that the Bank was at the forefront of leadership performance review practices among international financial institutions.

A key highlight of the year 2023 for our Board of Directors was the resumption of physical quarterly Board meetings and events, following a hiatus in in-person engagement due to the COVID-19 pandemic. These physical gatherings provide Board members with a valuable opportunity to engage, not only with Management and staff but also among themselves, and discuss issues, policies, strategies and projects of notable importance to the Bank, in both formal and informal settings.

Other important highlights of 2023 included the inauguration on Sep. 19 of the Bank’s interim operational hub in Abu Dhabi, UAE, following the Board’s approval of the Bank’s Approach to Global Presence in June 2022. Likewise, there were signings of several important partnership agreements and the admission of new Members to the AIIB family.

The Board of Directors is proud of the progress made by the Asian Infrastructure Investment Bank and the achievements realized throughout the past year. We extend our gratitude to Bank staff, Management and stakeholders for their unwavering commitment and support. As we look to the future, we are excited about the opportunities ahead and remain steadfast in our mission to drive sustainable development and make a positive impact. Together, we will continue to build on our successes and work toward a brighter and more prosperous future for our Members.