INTERNAL


May 2025


Management’s Discussion and Analysis
and Condensed Quarterly Financial Statements:
31 March 2025
(Unaudited)


Distribution of this document is limited until it has been approved by the Board of Directors. Following such approval, this document will be reclassified as public and disclosed in accordance with ADB's Access to Information Policy.



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MANAGEMENT’S DISCUSSION AND ANALYSIS

EXECUTIVE SUMMARY

Under Strategy 2030, which sets the direction for the Asian Development Bank (ADB) to respond effectively to the changing needs of Asia and the Pacific, ADB continues to sustain its efforts to achieve a prosperous, inclusive, resilient, and sustainable Asia and the Pacific. In its Strategy 2030 Midterm Review1, ADB approved an ambitious new road map to guide its evolution and scale up its support on key challenges facing Asia and the Pacific.
During the first three months of 2025, ADB delivered total commitments of $2.0 billion ($2.2 billion – 2024) and disbursements of $4.7 billion ($3.3 billion – 2024).2

Financial Results: Ordinary capital resources (OCR) reported net income of $327 million ($699 million – 2024) and allocable net income of $332 million ($386 million – 2024) for the three months ended 31 March 2025. The net income decreased mainly due to the unrealized losses from fair value changes of financial instruments. The allocable net income (non-GAAP measure) decreased due to higher provision for credit losses and administrative expenses, partially offset by higher income from loans and equity-funded liquidity investments.

As of 31 March 2025, loans outstanding balance was $156.3 billion, a $2.4 billion increase from $153.9 billion at 31 December 2024. Liquidity investments after swaps increased by $11.9 billion to $61.6 billion as of 31 March 2025 from $49.7 billion at the end of 2024. Borrowings after swaps increased by $12.6 billion to $168.9 billion at 31 March 2025 from $156.3 billion at the end of 2024. For the three months ended 31 March 2025, ADB issued $18.5 billion bonds ($16.3 billion – 2024).

Allocation of 2024 Net Income3: In May 2025, the Board of Governors approved the ADB’s 2024 financial statements and the allocation of 2024 OCR net income during the ADB’s 58th Annual Meeting. The 2024 allocable net income of $1,539 million was allocated as follows: OCR’s ordinary reserve ($1,016 million), the Asian Development Fund ($394 million), and the Technical Assistance Special Fund ($130 million).

ADF 14 Replenishment: The 13th replenishment of the Asian Development Fund (ADF 14) and the eighth regularized replenishment of the Technical Assistance Special Fund (TASF) became effective on 23 April 2025, when instruments of contribution deposited with ADB for unqualified contributions reached the equivalent of $1,694 million, representing more than 50% of all pledged contributions4, in accordance with the provisions of the Board of Governors (BOG) Resolution No. 427.

1
ADB. 2024. Strategy 2030 Midterm Review: An Evolution Approach for the Asian Development Bank.
2
The figures are for ordinary capital resources (OCR) and Special Funds. Special Funds include the Asian Development Fund (ADF), Technical Assistance Special Fund (TASF), Japan Special Fund (JSF), Regional Cooperation and Integration Fund (RCIF), Asia Pacific Disaster Response Fund (APDRF), Climate Change Fund (CCF) and Financial Sector Development Partnership Special Fund (FSDPSF).
3
ADB. 2025. Board of Governor’s Resolution No. 434 – Allocation of Net Income.
4
Table A of ADB. 2024. Board of Governors’ Resolution No. 427 – Thirteenth Replenishment of the Asian Development Fund and Eighth Regularized Replenishment of the Technical Assistance Special Fund.
 
I. OVERVIEW
The Asian Development Bank (ADB), a multilateral development bank, was established in 1966 under the Agreement Establishing the Asian Development Bank (the Charter).1 ADB is owned by 69 members, 50 of which are regional members providing 63.7% of its capital and 19 nonregional members providing 36.3% of its capital.2

ADB provides various forms of financial assistance to its developing member countries (DMCs). The main instruments are loans, technical assistance (TA), grants, guarantees, and equity investments. These instruments are funded through ordinary capital resources (OCR), Special Funds, and trust funds. The Charter requires that funds from each resource be kept and used separately. Trust funds are generally funded by contributions and administered by ADB as the trustee.
ADB also offers debt management products such as interest rate swaps and cross currency swaps (including local currency swaps) to its sovereign and sovereign-guaranteed borrowers and entities fully guaranteed by members for their third-party liabilities. In addition, ADB provides policy dialogue and transaction advisory services to its DMCs and private sector clients to promote public–private partnerships in the region, and mobilizes financial resources through its cofinancing operations, which access official and other concessional, commercial, and export credit sources to maximize the development impact of its assistance. Cofinancing for ADB projects can be in the form of external loans, grants for TA and components of loans, equity investments, and credit enhancement products such as guarantees and syndications.

ADB continued to focus on implementing Strategy 2030, its long-term corporate strategy, to achieve a prosperous, inclusive, resilient, and sustainable Asia and the Pacific. During the first three months of 2025, ADB delivered total commitments of $2.0 billion ($2.2 billion – 2024) and disbursements of $4.7 billion ($3.3 billion – 2024).3

In February 2025, ADB approved a plan to scale up its operations by 50% over the next decade, leveraging its existing capital base to enhance its development impact across Asia and the Pacific.4 Under the Capital Utilization Plan, ADB will increase its annual financing commitments from $24 billion in 2024 to more than $36 billion by 2034.

1
ADB. 1966. Agreement Establishing the Asian Development Bank.
2
Following the provisions of Board of Governor Resolution No. 431, one nonregional member became a regional member effective 30 April 2025.
3
The figures are for ordinary capital resources (OCR) and Special Funds. Special Funds include the Asian Development Fund (ADF), Technical Assistance Special Fund (TASF), Japan Special Fund (JSF), Regional Cooperation and Integration Fund (RCIF), Asia Pacific Disaster Response Fund (APDRF), Climate Change Fund (CCF) and Financial Sector Development Partnership Special Fund (FSDPSF).
4
ADB. 2025. Capital Utilization Plan. https://www.adb.org/documents/capital-utilization-plan

2

II. ORDINARY CAPITAL RESOURCES
OCR provides financial assistance to sovereign and nonsovereign borrowers in DMCs in the form of loans, equity investments, and other debt securities. In addition to direct lending, OCR also provides guarantees to assist DMC governments and nonsovereign borrowers in securing commercial funds for ADB-assisted projects and provides transaction advisory services to sovereign and nonsovereign clients.

Funding of OCR lending, investment and other ordinary operations comes from three distinct sources: borrowings from the capital markets and private placements; paid-in capital provided by shareholders; and accumulated retained income (reserves). To fund its OCR operations, ADB issues debt securities in the international and domestic capital markets. ADB's debt securities carry the highest possible investment ratings from three major international credit rating agencies. The funding strategy is aimed at ensuring availability of funds for operations at the most stable and lowest possible cost. Such strategy has enabled OCR to achieve cost-efficient funding levels for its borrowing members.

A.
Basis of Financial Reporting
ADB’s basis of financial reporting are (i) statutory reporting, which is in accordance with accounting principles generally accepted in the United States (US GAAP) reporting requirements, and (ii) management reporting, which is used as the primary measure to make financial management decisions and to monitor key financial ratios. The key financial performance indicator under these two bases is net income for statutory reporting and allocable net income for management reporting.

Statutory reporting. ADB prepares OCR financial statements in accordance with US GAAP. ADB manages its balance sheet by selectively using derivatives to minimize interest rate and currency risks associated with its financial instruments. Derivatives are used to enhance asset and liability management of individual positions and overall portfolios. ADB has elected not to define any qualifying hedging relationships, not because economic hedges do not exist, but rather because the application of hedging criteria under the accounting standards does not make fully evident ADB’s risk management strategies.

ADB reports all derivative instruments on the balance sheet at fair value and recognizes the changes in fair value for the year as part of net income. To apply a consistent accounting treatment between the borrowings and their related swaps, ADB elects to measure all borrowings that are swapped or are intended to be swapped in the future at fair value. All investments for liquidity purpose, other debt securities classified as available for sale, and equity investments (except for those accounted for under the equity method) are reported at fair value. ADB continues to report its loans, other debt securities classified as held-to-maturity, and the remaining borrowings at amortized cost.
Management reporting (non-GAAP measure). ADB also reports OCR financial results based on internal management reporting basis which is used as the primary measure to make financial management decisions and to monitor key financial ratios.
ADB reports allocable net income, which is defined as net income after appropriation of guarantee fees to special reserve and certain adjustments reported in the cumulative revaluation adjustments account.5 The cumulative revaluation adjustments account sets aside the impact of unrealized gains or losses from fair value changes associated with certain financial instruments

5
ADB’s Charter stipulates that the Board of Governors shall determine the allocation of net income annually.
ADB MANAGEMENT’S DISCUSSION AND ANALYSIS: 31 MARCH 2025

3

and from translation adjustments of non-functional currencies, and unrealized gains or losses from equity investments accounted for under the equity method.

ADB intends to hold most borrowings and swaps until maturity or call, hence interim net unrealized gains and losses reported under the statutory reporting basis will generally converge with the net realized income and expenses that ADB recognizes over the life of these financial instruments.
For equity investments, ADB generally holds its investments until ADB’s development role has been fulfilled. Any gains or losses from equity investments recorded at fair value are realized and are deemed available for allocation when ADB exits the investments. Therefore, the periodic net unrealized gains or losses are excluded from the allocable net income until the exit date.

The management reporting basis balance sheet reconciled from the statutory reporting basis balance sheet as of 31 March 2025 is provided in the Appendix.

ADB MANAGEMENT’S DISCUSSION AND ANALYSIS: 31 MARCH 2025

4

B.
Overall Financial Results

OCR reported net income of $327 million ($699 million – 2024) and allocable net income of $332 million ($386 million – 2024) for the three months ended 31 March 2025. Table 1 presents the overall financial results for the three months ended 31 March 2025 and 2024.
Table 1: Overall Financial Results for the Three Months Ended 31 March
($ million)
Item
  
2025
    
2024
    
Change
  
Revenue from loans—operationsa
    
1,784
      
2,051
      
(267
)
Sovereign regular
    
1,496
      
1,743
      
(247
)
Sovereign concessional
    
179
      
183
      
(4
)
Nonsovereign
    
109
      
125
      
(16
)
Revenue from investments for liquidity purpose
    
614
      
645
      
(31
)
Interest
    
616
      
653
      
(37
)
Realized losses on sale of investments
    
(2
)
    
(8
)
    
6
  
Revenue from equity investments—operations
    
63
      
43
      
20
  
Net realized gainsb
    
1
      
2
      
(1
)
Dividends and others
    
1
      
1
      
–
  
Realized losses on equity method investmentsc
    
(2
)
    
(6
)
    
4
  
Unrealized gains on equity method investmentsc
    
63
      
46
      
17
  
Revenue from guarantees—operations
    
8
      
6
      
2
  
Revenue from other debt securities—operations
    
12
      
11
      
1
  
Revenue from other sources
    
27
      
29
      
(2
)
Borrowings and related expenses
    
(1,856
)
    
(2,203
)
    
347
  
(Provision) Release of provision for credit losses
    
(52
)
    
26
      
(78
)
Administrative expenses—OCR
    
(186
)
    
(163
)
    
(23
)
Other expenses
    
(11
)
    
(7
)
    
(4
)
Net unrealized (losses) gains
    
(76
)
    
261
      
(337
)
Fair value changes
    
(78
)
    
259
      
(337
)
Reclassification of unrealized gains on divested equity investmentsb
    
–
      
(1
)
    
1
  
Translation adjustments of nonfunctional currencies
    
2
       3
       (1 )
Net income
    
327
       699
       (372 )
Appropriation of guarantee fees to special reserve
    
(8
)
     (6 )     (2 )
Net income after appropriation of guarantee fees to special reserve
    
319
      
693
      
(374
)
Adjustments
    
13
      
(307
)
    
320
  
Net unrealized losses (gains)
    
76
      
(261
)
    
337
  
Unrealized gains on equity method investmentsc
     (63 )     (46 )     (17 )
Allocable net income (non-GAAP measure)
     332
       386
       (54 )
( ) = negative, – = nil, ADB = Asian Development Bank, OCR = ordinary capital resources.
a
Includes interest revenue, commitment charges, amortization of front-end fees and loan origination cost and interest on asset swaps. Excludes funding costs.
b
Sale of equity investments in 2024 resulted in reclassification of the unrealized gains up to 31 December 2023 of $1 million to realized gains. The net realized gains up to the date of sale in 2025 totaled $1 million ($2 million – 2024).
c
Pertains to ADB's proportionate share of gains or losses from equity method investments.

ADB MANAGEMENT’S DISCUSSION AND ANALYSIS: 31 MARCH 2025

5

Net income. Net income for the three months ended 31 March 2025 decreased to $327 million, from $699 million reported in 2024, mainly due to the unrealized losses from fair value changes of financial instruments.
Allocable net income.6 OCR allocable net income for the three months ended 31 March 2025 decreased to $332 million, compared with $386 million in 2024, driven by higher provision for credit losses and administrative expenses, partially offset by higher income from loans and equity- funded liquidity investments.
The change in net income and allocable net income were driven by the following factors.

 
-
Revenue from loans decreased by $267 million compared to the same period in 2024 mainly because of the lower average interest rates (Figure 1) applied to regular OCR loans, partially offset by increase in average outstanding loans in 2025 (Figure 2),

 
-
Revenue from investments for liquidity purpose decreased by $31 million compared to the same period in 2024 mainly because of the $37 million decrease in interest revenue driven by the lower short-term interest rates on debt-funded liquidity investments compared to the same period in 2024,

 
-
Revenue from equity investments, excluding unrealized gains/losses on equity method investments, slightly increased by $3 million mainly due to the lower realized losses on equity method investments,

 
-
Borrowings and related expenses decreased by $347 million compared to the same period in 2024 mainly because of lower level of short-term interest rates (Figure 1) . Consistent with the market movements, average cost of borrowings under management reporting basis for the three months ended 31 March 2025 decreased to 4.6% from 5.7% of the same period in 2024,

 
-
Provision for credit losses amounted to $52 million for the three months ended 31 March 2025. The provision in 2025 was mainly driven by the ongoing macroeconomic uncertainty and shifts in borrower risk characteristics,

 
-
Administrative expenses of OCR increased by $23 million primarily because of higher salaries and benefits expenses, and



6
Allocable net income is defined as net income after appropriation of guarantee fees to special reserve and certain adjustments set aside in the cumulative revaluation adjustments account.
ADB MANAGEMENT’S DISCUSSION AND ANALYSIS: 31 MARCH 2025

6

 
-
$76 million net unrealized losses for the three months ended 31 March 2025 ($261 million net unrealized gains – 2024) was largely due to the fair value losses on borrowing and derivatives driven mainly by the movement of medium- and long-term interest rates (Table 2).

Table 2: Details of Net Unrealized (Losses) Gains
for the Three Months Ended 31 March
($ million)
Item
  
2025
    
2024
    
Change
  
Fair value changes from:
    
(78
)
    
259
      
(337
)
Borrowings and related derivatives
    
(50
)
    
285
      
(335
)
Loans related derivatives
    
(4
)
    
(98
)
    
94
  
Investments related derivatives
    
(8
)
    
66
      
(74
)
Equity investments
    
(16
)
    
6
      
(22
)
Reclassification of unrealized gains on divested equity investment
    
–
      
(1
)
    
1
  
Translation adjustments of nonfunctional currencies
    
2
      
3
      
(1
)
Total
    
(76
)
    
261
      
(337
)
( ) = negative, – = nil.                        

Selected Financial Data. Selected financial data are presented in Table 3. For the three months ended 31 March 2025, return on earning assets and return on equity, under both reporting bases, decreased because of lower net income and allocable net income compared to the same period in 2024. Return on loans, return on investments for liquidity purposes, and cost of borrowings, under both reporting bases, decreased because of lower levels of short-term interest rates in 2025 compared to the same period in 2024.

ADB MANAGEMENT’S DISCUSSION AND ANALYSIS: 31 MARCH 2025

7

Table 3: Selected Financial Data
(%, unless otherwise stated)
Item
31 March 2025
31 March 2024
31 December 2024
Operational Highlights ($ million)
      
Loans, Guarantees, EI, and ODS Committeda
2,014
2,144
22,920
Loans, EI, and ODS Disbursements
4,588
3,281
17,911
Loans and ODS Principal Repayments and Prepayments
3,104
2,547
12,956
Loans, EI, and ODS Outstanding
158,648
152,901
156,112
Statutory Reporting Basis


Net Income ($ million)
327
699
1,629
Return on Earning Assetsb
0.6
0.9
0.8
Return on Equityc
2.4
3.5
2.9
Return on Loansd
4.4
5.2
4.9
Return on Investments for Liquidity Purposee
4.3
5.1
4.8
Cost of Borrowingsf
4.5
5.5
5.2
Management Reporting Basis (non-GAAP measure)g
      
Allocable Net Incomeh ($ million)
332
386
1,539
Return on Earning Assetsb
0.6
0.8
0.7
Return on Equityc
2.4
2.9
2.8
Return on Loansd
4.5
5.3
5.2
Return on Investments for Liquidity Purposee
4.3
4.8
4.8
Cost of Borrowingsf
4.6
5.7
5.5
Capital Utilization Ratioi
71.7
71.4
71.5
EI = equity investments, ODS = other debt securities.
Note: All ratios are annualized and based on average monthly balances. Amounts and ratios are year-to-date figures except for outstanding balances and capital utilization ratio, which are as of period-end.
a
Includes commitments under the private sector programs namely, the Trade and Supply Chain Finance and the Microfinance Program.
b
Net income (for statutory reporting basis) or allocable net income (for management reporting basis) divided by average earning assets. Earning assets comprise investments for liquidity purpose, loans outstanding, equity investments, and other debt securities (all after swaps, if applicable).
c
Net income (for statutory reporting basis) or allocable net income (for management reporting basis) divided by average equity balances.
d
Interest revenue on loans, commitment fees, other revenue or expenses on loans and related swaps, and gains or losses on related swaps divided by average outstanding loans after swaps. For the three months ended 31 March 2025, under statutory basis reporting, the return on regular and concessional OCR loans was 4.9% and 2.6%, respectively, while under management basis reporting, the return on regular and concessional OCR loans was 5.1% and 2.1%, respectively.
e
Interest revenue and gains or losses on investments and related swaps divided by average balances of investments after swaps.
f
Financial expenses and gains or losses on borrowings and related swaps divided by average outstanding borrowings after swaps.
g
Management reporting basis ratios exclude impact of unrealized gains or losses from fair value changes associated with certain financial instruments, unrealized gains or losses on equity method investments, and nonnegotiable and noninterest-bearing demand obligations on account of subscribed capital.
h
Allocable net income is defined as net income after appropriation of guarantee fees to special reserve and certain adjustments set aside in the cumulative revaluation adjustments account.
i
Capital utilization ratio is the ratio of the total economic capital used to usable equity.

 
1.
Loans

Loans—operations. ADB’s OCR lending falls into two categories: sovereign and nonsovereign. Sovereign loans consist of sovereign regular OCR loans and sovereign concessional OCR loans. Sovereign regular OCR loans are available to sovereign and sovereign-guaranteed borrowers in ADB DMCs that have attained higher economic development and sovereign concessional OCR loans are available for the poorest and most vulnerable members of ADB. ADB also provides lending without sovereign guarantee to privately-held or state-owned or subsovereign entities. In its nonsovereign operations, ADB provides financial assistance based on market-based terms and conditions. ADB, as needed, helps mobilize additional debt from diverse institutions, such as private and public financial institutions and development partners.

ADB MANAGEMENT’S DISCUSSION AND ANALYSIS: 31 MARCH 2025

8

OCR offers lending products broadly in three modalities:

 
-
Project – Also known as investment lending, it finances expenditures incurred for discrete investment projects and focuses on project implementation. Disbursements in this modality are linked to expenditures for inputs. Nonsovereign loans fall under this modality.

 
-
Policy-based – This modality provides sovereign budget support for structural reforms and development expenditure programs in developing member countries. In certain circumstances, it may also be used to provide balance of payments or counter-cyclical fiscal support. It is linked to the implementation of policy reforms, disbursed quickly, and targeted to sector-wide and economy-wide impact.

 
-
Results-based – It supports government-owned sector programs and disburses ADB funds based on the achievement of program results.

Table 4 shows OCR’s loans outstanding by modality.

Table 4: OCR Loans Outstanding by Modality
as of 31 March 2025 and 31 December 2024
($ million)
   
Sovereign
              
   
Regular
    
Concessional
    
NSO
    
Total
  
31 March 2025
                        
Project Loan
    
73,186
      
21,706
      
6,156
      
101,048
  
Policy-based Loan
    
38,156
      
11,113
      
–
      
49,269
  
Results-based Loan
    
6,152
      
952
      
–
      
7,104
  
Total Outstanding
    
117,494
      
33,771
      
6,156
      
157,421
  
Accounting adjustmentsa
    
(344
)
    
(102
)
    
(38
)
    
(484
)
     
117,150
      
33,669
      
6,118
      
156,937
  
Allowance for credit losses on loans
    
(95
)
    
(170
)
    
(328
)
    
(594
)
Loans Outstanding
    
117,055


33,499


5,790


156,343
  
                                 
31 December 2024
    
     
     
     
 
Project Loan
    
72,968
      
21,441
      
5,754
      
100,163
  
Policy-based Loan
    
36,537
      
11,133
      
–
      
47,670
  
Results-based Loan
    
5,872
      
866
      
–
      
6,738
  
Total Outstanding
    
115,377
      
33,439
      
5,754
      
154,570
  
Accounting adjustmentsa
    
(25
)
    
(107
)
    
(34
)
    
(166
)
     
115,352
      
33,332
      
5,720
      
154,404
  
Allowance for credit losses on loans
    
(91
)
    
(163
)
    
(286
)
    
(540
)
Loans Outstanding
    
115,261
      
33,169
      
5,434
      
153,864
  
                                 
( ) = negative, – = nil, NSO = nonsovereign operations, OCR = ordinary capital resources.
Note: Numbers may not sum precisely because of rounding.
a
Includes fair value adjustment on loans, unamortized loan origination cost, and unamortized front-end fee.

Expected credit loss. ADB measures expected credit losses for loans, guarantees, and held-to- maturity other debt securities. Credit losses are measured over the contractual term (lifetime) of the asset or commitment based on all available information: historical experience, current conditions, and macroeconomic forecasts. ADB is also exposed to credit risks on off-balance sheet exposures and records a liability for credit losses on undisbursed loan and held-to-maturity other debt securities commitments and guarantees.
As of 31 March 2025, total allowance for credit losses and liability for credit losses on off-balance sheet exposures increased to $726 million ($675 million – 31 December 2024), primarily attributed to the ongoing macroeconomic uncertainty and shifts in borrower risk characteristics. Allowance

ADB MANAGEMENT’S DISCUSSION AND ANALYSIS: 31 MARCH 2025

9
for credit losses and liability for credit losses on off-balance sheet exposures are summarized in Table 5.

Table 5: Summary of Allowance for Credit Losses and
Liability for Credit Losses on Off-Balance Sheet Exposures
($ million)
Item
31 March 2025
  
31 December 2024
Allowance for credit losses on loans
594
  
540
Sovereign regular OCR loans
95
  
91
Sovereign concessional OCR loansa
170
  
163
Nonsovereign loans
328
  
286
Allowance for credit losses on other debt securities
13
  
14
Liability for credit losses on off-balance sheet exposures
119
  
121
Totalb
726
  
675
OCR = ordinary capital resources.
 
a
Include allowance for heavily indebted poor countries debt relief ($33 million – 31 March 2025, $33 million – 31 December 2024).
 
b
Excludes Recovery Assets from risk transfer arrangements.

Status of loans. ADB places loans in non-accrual status when the principal, interest or other charges are overdue by more than 180 days or in case of loans that are not yet overdue by more than 180 days, when there is expectation that loan service payment will not be collected when they become due at the point when such information is known. Once a loan to a borrower is placed in non-accrual status, all other overdue loans to the same borrower will be placed in non- accrual status. On the date a borrower’s loan is placed into non-accrual status, unpaid interest and other charges accrued are deducted from the revenue of the current period. As of 31 March 2025, there was one sovereign concessional loan borrower with 11 loans in non-accrual status with outstanding amount of $495 million (one sovereign concessional loan borrower with 11 loans with outstanding amount of $486 million – 31 December 2024) and there were seven nonsovereign borrowers in non-accrual status with outstanding amount of $95 million (seven nonsovereign borrowers with outstanding amount of $98 million – 31 December 2024).
Summary of loan activities. Table 6 shows the summary of loan commitments and Table 7 shows the disbursements and repayments for sovereign regular OCR, sovereign concessional OCR and nonsovereign loans. For the three months ended 31 March 2025, the total OCR loan commitments was $1,447 million ($1,533 million – 2024). The $86 million or 5.6% decrease in loan commitments was mainly due to the decrease in sovereign project loan commitments, and sovereign concessional OCR project loan commitments, partially offset by the increase in sovereign regular OCR policy-based and results-based loan commitments and nonsovereign project loan commitments. The total loan disbursements during the three months ended 31 March 2025 increased to $4,529 million from $3,212 million during the same period in 2024 due to the higher sovereign and nonsovereign loan disbursements in 2025.

ADB MANAGEMENT’S DISCUSSION AND ANALYSIS: 31 MARCH 2025

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Table 6: OCR Loan Commitments
for the Three Months Ended 31 March
($ million)
 
 2025  
2024
  
 
Numbera
Amount
  
Numbera
Amount
Change
Sovereign Regular
5
1,351
  
7
1,064
287
Project
2
303
  
7
1,064
(761)
Policy-based
2
1,000
  
–
–
1,000
Results-based
1
48
  
–
–
48
Sovereign Concessional
–
–
  
6
385
(385)
Project
–
–  
6
385
(385)
Policy-based
–
–  
–
–
–
Results-based
–
–  
–
–
–
Nonsovereign—Project
4 
 96  
3
84
12
Total
9
 1,447  
16
1,533
(86)
( ) = negative, – = nil, OCR = ordinary capital resources
Note: Amounts are based on exchange rates at loan signing date.
a
Commitments for sovereign loans and nonsovereign project loans are counted based on the number of loans committed.

Table 7: OCR Loan Disbursements and Repayments
for the Three Months Ended 31 March
($ million)
   
2025
   
2024
 
   
Disbursements
    
Repaymentsa
    
Disbursements
    
Repaymentsa
  
Sovereign Regular
    
3,361
      
2,291
      
2,575
      
1,632
  
Project
    
843
      
898
      
1,079
      
857
  
Policy-based
    
2,293
      
1,371
      
1,406
      
753
  
Results-based
    
225
      
22
      
90
      
22
  
Sovereign Concessional
    
402
      
405
      
305
      
422
  
Project
    
308
      
306
      
274
      
318
  
Policy-based
    
–
      
86
      
–
      
91
  
Results-based
    
94
      
13
      
31
      
13
  
Nonsovereignb
    
766
      
377
      
332
      
473
  
Total
    
4,529
      
3,073
      
3,212
      
2,527
  
– = nil, OCR = ordinary capital resources
Note: Numbers may not sum precisely because of rounding.
a
Includes prepayment of $4 million for two nonsovereign loans for the three months ended 31 March 2025 ($52 million for one sovereign regular OCR loans and $96 million for one nonsovereign loan – 2024). Amounts are based on the United States dollar equivalent as of receipt of payment.
b
Includes loan disbursements and repayments under the private sector programs.

ADB MANAGEMENT’S DISCUSSION AND ANALYSIS: 31 MARCH 2025

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Table 8: OCR Loans Outstanding by Product
as of 31 March 2025 and 31 December 2024
($ million)
 
Sovereign
      
 
  
Regular
   
Concessional
   
Nonsovereign
 
Product
   2025
    2024     2025     2024     2025
    2024  
Flexible loan producta
    
115,086
       114,212      
n/a
      
n/a
      
4,596
      
4,172
  
Local currency loans
    
2,272
       1,013      
n/a
      
n/a
      
1,560
      
1,582
  
Concessional loans
    
n/a
      
n/a
      
33,771
      
33,439
      
n/a
      
n/a
  
Pool-based single currency loansb
    
136
       152
   
n/a
       n/a      
n/a
       n/a  
Total Outstanding
    
117,494
       115,377      
33,771
      
33,439
      
6,156
      
5,754
  
Accounting adjustmentsc
    
(344
)
     (25 )    
(102
)
    
(107
)
    
(38
)
    
(34
)
Allowance for credit losses
    
(95
)
     (91 )    
(170
)
    
(163
)
    
(328
)
    
(286
)
Loans Outstanding
    
117,055
       115,261      
33,499
      
33,169
      
5,790
      
5,434
  
( ) = negative, n/a = not applicable, OCR = ordinary capital resources, PSCL = Pool-based single currency loan Note: Numbers may not sum precisely because of rounding.
a
Includes fixed rate loans amounting to $6,708 million for sovereign regular OCR loans and $549 million for nonsovereign loans as of 31 March 2025 ($7,474 million for sovereign regular OCR loans and $500 million for nonsovereign loans – 31 December 2024).
b
PSCLs are legacy loan products and are no longer offered.
c
Includes fair value adjustment on loans, unamortized loan origination cost, and unamortized front-end fee.

Sovereign regular OCR loans. The Flexible Loan Product (FLP) is the primary loan product for sovereign regular OCR. The cost-base rate 7 used for FLP loans are the Secured Overnight Financing Rate (SOFR) compounded in arrears for US dollar-denominated loans and the Tokyo Overnight Average Rate (TONA) for yen-denominated loans. FLP loans have a lending rate consisting of the cost-base rate, lending spread, rebates or surcharges, and maturity premiums, if applicable (Table 9). If the lending rate calculated for any 6-month interest period is negative, the interest rate floor of zero will apply.
The FLP is designed to meet demand by borrowers for loan products that suit project needs and effectively manage their external debt. ADB provides sovereign regular OCR borrowers of FLP loans with options to manage their interest rate and exchange rate risks, while providing low intermediation risk to ADB. Borrowers may request a conversion of all or any portion of the principal amount of the loan through: (i) conversions to any standard currency or changes to the loan currency of all or part of the disbursed or undisbursed loan amounts; (ii) conversions to any nonstandard currency in which ADB can effectively intermediate (other than for conversions to a local currency) or changes to the loan currency of all or a part of the disbursed or undisbursed loan amounts; (iii) an interest rate conversion from floating to fixed or vice-versa of all or part of the disbursed or undisbursed loan amounts at the time of disbursement; and (iv) an establishment of an interest rate cap or an interest rate collar on a floating rate. During the three months ended 31 March 2025, ADB executed 19 local currency and interest rate conversions totaling $1,863 million (nil – 2024). There were nine loan conversions made effective totaling $1,324 million, comprising of six loan conversions executed in 2025, and three loan conversions executed in October 2024.
Local currency loans (LCLs) are offered to sovereign borrowers in different local currencies which ADB can effectively intermediate. ADB responds to the evolving financial needs of borrowers to reduce their currency mismatch in DMCs.
LCLs may be made on a fixed or floating rate basis with an effective contractual spread. Floating rate LCLs typically reset every three or six months. The cost-base rate of an LCL is determined

7
The Euro Interbank Offered Rate (EURIBOR) and New Zealand Dollar (NZD) bank bill rate will continue to be used for Euro and NZD loans, respectively.
ADB MANAGEMENT’S DISCUSSION AND ANALYSIS: 31 MARCH 2025

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by its financing mode. Table 9 shows the summary of charges on sovereign regular OCR FLP loans and LCLs as of 31 March 2025.
Table 9: Summary of Charges on Sovereign Regular OCR
Flexible Loan Product and Local Currency Loans as of 31 March 2025
(basis point)
Item FLP CSF SPBL

A. Loan Term
For project and results-based, flexible loan terms of up to 19 years of average loan maturity; For policy-based, loan term of 15 years including a grace period of up to 3 years
Loan term of 7 years, including a grace period of up to 3 years
Loan term of 5 to 8 years, including a grace period of up to 3 years

 

B. Cost-Base Rate

1.  US dollar

2.  Yen

3.  Euro

4.  New Zealand dollar

6-month SOFR compounded in arrears 
6-month TONA compounded in arrears
6-month EURIBOR
6-month Bank Bill Rate
C. Lending Spreada 50 75 200
D. Maturity Premiumb for loans  
with average maturity of  
1.   < 9 years 0
2.  9 years up to 13 years 0 – 40
3.   >13 years up to 16 years 0 – 50
4.   >16 years up to 19 years 0 – 75
E. Surcharge or (Rebate)c    
1.  US dollar 37 43
2.  Yen (24)  
3.  Euro 12  
4.  New Zealand dollar 52  
F. Commitment Chargesd 15 15 75
( ) = negative, CSF = Countercyclical Support Facility, EURIBOR = Euro Interbank Offered rate, FLP = Flexible Loan Product, LCL = local currency loan, OCR = ordinary capital resources, SOFR = Secured Overnight Financing Rate, SPBL = special policy- based loan, TONA = Tokyo Overnight Average Rate, US = United States.
a
The current FLP and LCL effective contractual spread is 50 basis points for loans negotiated on or after 1 January 2014. The terms of emergency assistance loans are similar to FLP terms.
b
For loans which formal negotiations were completed on or after 1 April 2012, a maturity premium is added to the contractual spread and applied for the entire life of the loan. A limit of 19 years applies to the average loan maturity of FLP loans and LCLs. For all loans to regular OCR-only borrowing countries, approved on or after 1 January 2021, a new pricing structure was implemented to adjust the pricing framework and introduce diversity in the current flat pricing structure for countries in different stages of development. The new maturity premium is applied for the life of a loan regardless of country group changes during the tenor of the loan.
c
To maintain the principle of the cost pass-through pricing policy, ADB passes on its actual funding cost margin to its borrowers through a surcharge or rebate and these are incorporated into the interest rate for the succeeding interest period. Rebates or surcharges for all FLPs are determined in January and July every year on the basis of the average funding cost margin below or above the relevant benchmark for the preceding 6 months. The information presented is applicable for 1 January to 30 June 2025.
d
The commitment charge is levied on undisbursed balances beginning 60 days after signing of the applicable loan agreement. For loans under contingent disaster financing, the borrower will pay, in lieu of commitment charges, a front-end fee of 25 or 10 basis points of the committed loan amount depending on the contingent disaster financing option.

Sovereign concessional OCR loans. ADB offers sovereign concessional OCR loans to eligible DMCs. Concessional loans represent the concessional financing to DMCs with (i) per capita gross national income below the International Development Association (IDA) operational cut-off; (ii) least developed countries with per capita gross national income above the IDA operational cut- off; and (iii) per capita gross national income above the IDA operational cut-off with limited or lack of creditworthiness.

ADB MANAGEMENT’S DISCUSSION AND ANALYSIS: 31 MARCH 2025

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Table 10: Sovereign Concessional OCR Loan Terms
as of 31 March 2025
 
 
Terms
Concessional
Assistance-Only
Countriesa
OCR Blend
Countriesb, c
SIDS
Emergency
Assistance
A. Maturity (years)
24 – 32
25
40
40
B. Grace period (years)
8
5
10
10
C. Interest rate during the grace period
1.0%
2.0%
1.0%
1.0%
D. Interest rate during the amortization period
1.5%
2.0%
1.0%
1.0%
E. Principal repayment
        
1. First 10 years after the grace period
Equal
Equal
2.0%d
2.0%d
2. Year thereafter
Equal
Equal
4.0%d
4.0%d
OCR = ordinary capital resources, SIDS = small island developing states
a
Countries that are eligible for sovereign concessional OCR loans and/or Asian Development Fund grants.
b
Countries that are eligible for both sovereign regular and concessional OCR loans.
c
Applicable for projects with loan negotiations completed on or after 1 January 2013.
d
Principal repayment will be calculated based on the approved loan amount multiplied by the annual rate of 2.0% for the first 10 years after the grace period and 4.0% thereafter.

The borrowers of sovereign concessional OCR loans may choose a currency of liability in special drawing rights (SDR) or a currency that is available under ADB’s FLP and in the SDR basket, subject to ADB's confirmation of the availability of such currency. As of 31 March 2025, over 97% (97% – 31 December 2024) of the sovereign concessional OCR loans were in SDR (54%) and US dollars (43%).

Nonsovereign loans. The FLP is the primary loan product for nonsovereign operations. Similar with the sovereign regular OCR loans, the cost-base rate used for FLP loans are SOFR compounded in arrears as primary option together with the optional Term SOFR for US dollar- denominated loans, and the TONA compounded in arrears is the cost-base rate for yen- denominated loans. As of 31 March 2025, all nonsovereign loans have successfully transitioned to the FLP, with the exception of a few loans where ADB applies its cost of funds until contract amendments are finalized.
ADB applies market-based pricing to determine the lending spread, front-end fees, and commitment charges, and other fees for each loan. The lending spread is intended to cover ADB’s risk exposure to specific borrowers and projects and the front-end fee to cover the administrative costs incurred in loan origination. Front-end fees are typically 1% to 1.25% depending on the transaction. ADB applies a commitment fee (typically 0.50% to 1.0% per year) on the undisbursed loan balance.

LCLs are also offered to nonsovereign borrowers in different local currencies which ADB can effectively intermediate. ADB responds to the evolving financial needs of borrowers to reduce their currency mismatch in DMCs. LCLs are priced based on relevant local currency funding benchmarks or ADB’s funding costs and a credit spread.

 
2.
Guarantees

Private Sector Programs. ADB’s private sector programs include the Trade and Supply Chain Finance (TSCFP) and Microfinance programs (MFP). The TSCFP has two main streams of activity: (i) it provides guarantees and loans through partner banks to close market gaps for trade finance, including among small and medium-sized businesses, to generate the trade-led growth and jobs that underpin development; and (ii) it delivers knowledge products, services, and

ADB MANAGEMENT’S DISCUSSION AND ANALYSIS: 31 MARCH 2025

14

solutions to make global trade and supply chains green, resilient, inclusive, transparent and socially responsible. The MFP provides risk participation on revolving basis for loans made by commercial financial institutions to microfinance institutions in ADB's DMCs. Table 11 shows the commitments under the private sector programs.

Table 11: OCR Commitments under Private Sector Programs
for the Three Months Ended 31 March
($ million)
   
2025
    
2024
    
Change
  
Short-term
    
463
      
418
      
45
  
Long-term
    
68
       153       (85 )
Totala
    
530
       571
       (40 )
MFP = Microfinance Program, OCR = ordinary capital resources, TSCFP = Trade and Supply Chain Finance Program
Note: Short-term has maturity of less than 365 days. Long-term has maturity of 365 days or more. Numbers may not sum precisely because of rounding.
a  Includes $382 million guarantees ($395 million – 2024) and $99 million loans ($75 million – 2024) under TSCFP, and $49 million ($101 million – 2024) guarantees under MFP.

Exposure Exchange Agreement. The exposure exchange agreement (EEA) provides for the simultaneous exchange of credit risk coverage for potential non-accrual events on the exchanged sovereign exposures. In case of non-accrual events, the party providing protection would pay the other counterparty interest for any period the covered exposure is in nonaccrual, and principal when the covered exposure is fully or partially written-off. The EEA transaction is treated as an exchange of two separate financial guarantees (guarantee provided and guarantee received). As of 31 March 2025, ADB’s total amount of guarantee provided and received under its EEA with peer multilateral development banks amounted to $6.0 billion ($6.0 billion – 31 December 2024).

 
3.
Investments for Liquidity Purpose

The OCR liquidity investment portfolio after swaps including securities purchased under resale arrangements  and  securities  transferred  under  repurchase  agreements  amounted  to $61,571 million as of 31 March 2025 ($49,725 million – 31 December 2024). ADB’s liquidity investment portfolio primarily consists of high-quality liquid fixed income investments. For the three months ended 31 March 2025, the overall rate of return under the management reporting basis decreased to 4.3% from 4.8% during the same period in 2024.

 
4.
Borrowings

OCR borrowings after swaps as of 31 March 2025 amounted to $168,886 million ($156,348 million – 31 December 2024). The average cost of borrowings after swaps for the three months ended 31 March 2025 was 4.6% under the management reporting basis (5.7% – 2024). For the three months ended 31 March 2025, ADB issued $18,546 million bonds ($16,305 million – 2024) and $812 million in short-term funds under its Euro-Commercial Paper Programme ($2,625 million – 2024).

C.
Equity and Headrooms

As of 31 March 2025, ADB’s total authorized capital of 10,639,233 shares valued at $141,038 million was fully subscribed, which consisted of $7,068 million paid-in and $133,970 million callable capital. The details of ADB’s equity as of 31 March 2025 and 31 December 2024 are shown in Table 12.

ADB MANAGEMENT’S DISCUSSION AND ANALYSIS: 31 MARCH 2025

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Table 12: Details of Equity
as of 31 March 2025 and 31 December 2024
($ million, SDR million)
   
31 March 2025
    
31 December 2024
  
Authorized (SDR106,392)
            
Subscribed (SDR106,392)
  
$
141,038
    
$
138,749
  
Less: Callable capital subscribed
    
133,970
      
131,796
  
Paid-in capital subscribed
    
7,068
      
6,953
  
Less: Other adjustmentsa
    
24
      
25
  
     
7,044
      
6,928
  
Add: (1) ADF assets transferb
    
30,748
      
30,748
  
(2) Other reservesc
    
19,420
      
18,759
  
Total Equity
  
$
57,212
    
$
56,435
  
ADF = Asian Development Fund, SDR = special drawing rights, OCR = ordinary capital resources.
a
Comprises discount and nonnegotiable, noninterest-bearing demand obligations on account of subscribed capital. (See OCR-1 of the Financial Statements).
b
The transfer of ADF assets to OCR on 1 January 2017 was treated as a contribution from ADF which was recognized as a one- time income.
c
Includes ordinary reserve, special reserve, surplus, cumulative revaluation adjustments, net income after appropriation less net notional amounts required to maintain value of currency holdings, and accumulated other comprehensive income (loss). (See OCR-1 of the Financial Statements).

Callable capital. Callable capital can be called only if required to meet ADB’s obligations incurred on borrowings or guarantees under OCR. No call has ever been made on ADB’s callable capital.

Paid-in capital. ADB’s paid-in capital may be freely used in its ordinary operations, except that DMCs have the right under the Charter to restrict the use of a portion of their paid-in capital to make payments for goods and services produced and intended for use in their respective territories.

New Regional Member. Following the provisions of Board of Governor Resolution No. 431, Türkiye became a regional member effective 30 April 2025. Türkiye joined ADB as a nonregional member in 1991. With its new status, Türkiye becomes eligible for ADB’s ordinary capital resources lending and full participation in ADB’s operations.

Allocation of OCR net income.8 In accordance with Article 40 of the Charter, the BOG annually approves the allocation of the previous year’s net income to reserves and/or surplus. In addition, to the extent feasible, it approves the transfer of part of net income to Special Funds to support development activities in the DMCs. In May 2025 and 2024, the BOG approved the allocation of OCR’s net income for 2024 and 2023, respectively, as shown in Table 13.

8
ADB. 2025. Board of Governors’ Resolution No. 434 – Allocation of Net Income.
ADB MANAGEMENT’S DISCUSSION AND ANALYSIS: 31 MARCH 2025

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Table 13: Allocation of OCR Net Income
($ million)
   
For the years ended
  
   
2024
    
2023
  
Net Income
    
1,629
      
938
  
Adjustment to cumulative revaluation adjustments
    
(63
)
    
513
  
Appropriation of guarantee fees to special reserve
    
(27
)
    
(28
)
Allocable net income (non-GAAP measure)
    
1,539
      
1,423
  
Allocation to ordinary reserve
    
1,016
      
1,005
  
Allocation to special funds
                
Asian Development Fund
    
394
      
293
  
Technical Assistance Special Fund
    
130
      
110
  
Asia Pacific Disaster Response Fund
    
–
      
15
  
Total Allocated Net Income
    
1,539
      
1,423
  
                 
( ) = negative, – = nil, OCR = ordinary capital resources.
Note: Numbers may not sum precisely because of rounding.
                

Headrooms. ADB’s lending limitation policy limits the total amount of disbursed loans, disbursed equity investments, disbursed other debt securities, related prudential buffer, and the maximum amount that could be demanded from ADB under its guarantee portfolio, to the total amount of ADB’s unimpaired subscribed capital, reserves, and surplus, exclusive of the special reserve. The Charter allows the use of OCR for equity investments up to 10% of ADB’s unimpaired paid-in capital actually paid up at any given time together with reserves and surplus, excluding special reserves.
In February 2025, ADB’s Board of Directors approved the report on the removal of the Charter lending limitation (CLL) together with a resolution for submission to the BOG requesting the BOG to cast their votes on the proposed resolution to remove the CLL within the specified voting period, which is expected to conclude in October 2025 (subject to extension by the Board of Directors as appropriate). Upon the adoption of the resolution by a supermajority of ADB’s BOG, the removal of the CLL will enter into force and take effect 3 months after the date that ADB officially communicates the adoption of said resolution to its members. In conjunction with the CLL removal, the Board of Directors also approved in February 2025 the introduction of a new non- risk-based Basel-type capital-to-exposure ratio into ADB’s CAF, which will replace the CLL and become effective as of the effective date of the amendment of the Charter.

As of 31 March 2025, ADB’s lending headroom was $31,091 million, representing 84% utilization of the lending authority ($32,107 million representing 83% utilization – 31 December 2024). Equity investment headroom was $3,391 million, representing 35% utilization of the ceiling ($3,362 million representing 35% utilization – 31 December 2024).

D.
Capital Adequacy

ADB’s capital adequacy framework (CAF) aims to ensure that large risk events will not lead to a downgrade of ADB’s AAA rating or to an erosion of investor confidence. The framework is designed to protect the risk-bearing capacity of ADB without relying on callable capital, and to maintain ADB’s ability to lend even during crises.

Under the CAF, ADB holds capital to protect against eight risk types: credit risk in the operations portfolio, equity investment risk, interest rate risk, treasury credit risk, operational risk, pension risk, currency risk, and countercyclical lending buffer. ADB uses a capital utilization ratio (CUR)

ADB MANAGEMENT’S DISCUSSION AND ANALYSIS: 31 MARCH 2025

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as the key metric in measuring capital adequacy. The CUR is the ratio of the total economic capital used (numerator) to usable equity (denominator).

As of 31 March 2025, ADB was adequately capitalized and reported CUR of 71.7% (71.5% – 31 December 2024).

III.   SPECIAL FUNDS

ADB is authorized by the Charter to establish and administer Special Funds. These are the ADF, Technical Assistance Special Fund (TASF), Japan Special Fund (JSF), Asian Development Bank Institute (ADBI), Regional Cooperation and Integration Fund (RCIF), Climate Change Fund (CCF), Asia Pacific Disaster Response Fund (APDRF), and Financial Sector Development Partnership Special Fund (FSDPSF). Financial statements for each Special Fund are prepared in accordance with US GAAP.

A.
Asian Development Fund
The ADF is ADB’s largest Special Fund and main source of grant resources for supporting ADB’s poorest and most vulnerable DMCs. Established in 1974, the ADF initially provided loans on concessional terms to ADB’s lower income DMCs. ADF grants were introduced in 2005 to reduce debt burdens in ADB’s poorest DMCs. Beginning in 2017 and following the merger of ADF lending with OCR, ADF is now focused exclusively on grants, while concessional lending is provided through the concessional OCR window. ADF resources mainly come from contributions of ADB’s member countries, mobilized through periodic replenishments and net income transfers from OCR. ADF resources have been replenished 13 times, the latest being ADF 14 for the period 2025-2028, and received contributions from 39 regional and nonregional members since establishment.

ADF 14 (Thirteenth Replenishment). In September 2024, the Board of Governors adopted the resolution for the 13th replenishment of the ADF (ADF 14) and the eighth regularized replenishment of the TASF to provide grant and TA financing to eligible recipients from 2025 to 2028. The total replenishment size was $4,995 million, consisting of $4,435 million for ADF 14 and $560 million for TASF 8. The replenishment will be financed from four sources: (i) $2,564 million from new donor contributions; (ii) $1,574 million from OCR net income transfers subject to annual approvals by ADB’s Board of Governors as part of the annual net income allocation; (iii) $351 million income from liquidity investments; and (iv) $506 million from other sources generated from savings and cancellations from previous ADF cycles, as well as partial releases of ADF 13 funds allocated to the expanded disaster and pandemic response facility and debt distress reserve. The replenishment shall become effective upon ADB’s receipt of instruments of contributions from donors for unqualified contribution commitments totaling to at least $1,282 million.9 As of 31 March 2025, ADB received instruments of contribution from 12 donors totaling $533 million equivalent, which represents 21% of the total ADF and TASF donor contribution commitment amounting to $2,564 million. One donor has deposited all its installment payments in December 2024.
On 23 April 2025, the ADF 14 and TASF 8 became effective when instruments of contribution deposited with ADB for unqualified contributions reached an amount equivalent to $1,694 million, representing more than 50% of all pledged contributions reflected in Table A of Resolution No. 427 of ADB’s Board of Governors.

9
ADB. 2024. Board of Governors’ Resolution No. 427 – Thirteenth Replenishment of the Asian Development Fund and Eighth Regularized Replenishment of the Technical Assistance Special Fund.

ADB MANAGEMENT’S DISCUSSION AND ANALYSIS: 31 MARCH 2025

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Contributed resources. The balance of the commitment authority available for commitment as of 31 March 2025 was $992 million ($921 million – 31 December 2024) equivalent.10
In May 2025, the Board of Governors approved the transfer of $394 million to the ADF as part of OCR’s 2024 net income allocation ($293 million – 2024) (footnote 8).

Operations. During the three months ended 31 March 2025, there were no grants committed (five grants totaling $24 million – 2024) while 19 grants totaling $262 million (13 grants totaling $195 million – 2024) became effective. Grant expenses amounted to $262 million ($131 million – 2024), net of $0.2 million ($63 million – 2024) undisbursed grants that were reversed as reduction in grant expenses.

Investments for liquidity purpose. The ADF investment portfolio totaled $4,667 million as of 31 March 2025 compared with $4,661 million at the end of 2024.11 As of 31 March 2025, about 4% of the portfolio was invested in time deposits (6% – 31 December 2024) and 96% in fixed- income securities (94% – 31 December 2024). For the three months ended 31 March 2025, the rate of return on ADF investments, excluding unrealized gains and losses, was 3.0% (2.8% – 2024).

B.
Technical Assistance Special Fund

The TASF is an important source of financing for ADB’s TA activities. The TASF supports project preparation, policy advice, capacity development, and research and development in ADB developing member countries. The funds resources consist of regularized replenishments and direct voluntary contributions by members, allocations from the net income of OCR, and revenue from investments and other sources. The TASF provides a stable and predictable funding source and acts as a catalyst for mobilizing funding from other TA sources.

TASF Eighth Regularized Replenishment. In September 2024, the Board of Governors adopted a resolution for the 13th replenishment of the ADF (ADF 14) and the eighth regularized replenishment of the TASF to provide grant and TA financing to eligible recipients from 2025 to 2028. The total replenishment size was $4,995 million, of which donors agreed to allocate $560 million to TASF. TA will play an increasingly important role during the ADF 14 period as ADB expands its lending volumes under the Capital Utilization Plan. On 23 April 2025, TASF 8 became effective.

Contributed resources. As of 31 March 2025, $501 million donor contributions have been received out of the $517 million allocated to TASF under ADF 13.

As of 31 March 2025, cumulative TASF resources totaled $4,238 million, of which $4,135 million had been used, leaving an uncommitted balance of $103 million ($94 million –31 December 2024).

In May 2025, the Board of Governors approved the transfer of $130 million to the TASF as part of OCR’s 2024 net income allocation ($110 million – 2024) (footnote 8).

Operations. For the three months ended 31 March 2025, net TA expenses amounted to $7 million ($5 million – 2024), comprising $13 million for 10 TA projects and eight supplementary TA ($12 million for 11 TA projects and 10 supplementary TA – 2024) made effective during the period, net of $5 million ($7 million – 2024) undisbursed amounts that were reversed as reduction in TA expenses. The undisbursed TA, net of TA advances of $3 million, amounted to $738 million as of 31 March 2025 ($778 million – 31 December 2024).

10
Includes $337 million funds from ADF 12 earmarked for ADF 13.
11
Includes securities purchased under resale arrangements.
ADB MANAGEMENT’S DISCUSSION AND ANALYSIS: 31 MARCH 2025

19

Investments for liquidity purpose. As of 31 March 2025, the total investment portfolio amounted to $790 million ($820 million – 31 December 2024). About 31% of the portfolio was invested in time deposits and 69% in fixed-income securities (39% in time deposits and 61% in fixed-income securities – 31 December 2024). For the three months ended 31 March 2024, the rate of return on TASF investments was 4.3% (3.8% – 2024).

C.
Japan Special Fund

The JSF was established in March 1988 when the Government of Japan and ADB entered into an agreement whereby the Government of Japan made an initial contribution of JPY 2.5 billion with ADB as the administrator. The purpose of JSF is to help ADB’s DMCs restructure their economies in light of changing global environment and to broaden their investment opportunities.
In 2009, due to the global conditions and to align the assistance provided by the Government of Japan through other multilateral development banks, JSF’s role and function was transferred to the Japan Fund for Poverty Reduction to cover support for ADB’s TA operations. In January 2022, JSF operations were resumed to maximize its benefits in supporting the needs of ADB’s DMC through TA operations.

JSF IF-CAP Window. In October 2024, the Board of Directors approved the establishment of the JSF Innovative Finance Facility for Climate in Asia and the Pacific Financing Partnership Facility (IF-CAP) Window (JSF IF-CAP Window) as a separate, special-purpose component of the JSF to channel the contribution of the Government of Japan to IF-CAP.12 The contribution will be in the form of noninterest bearing, nonnegotiable government notes cashable by ADB at any time to meet the demands for non-payments under the IF-CAP Guarantee Mechanism. Any excess encashments, reflows, and other funds that may be contributed from the Government of Japan for the same purposes may be included as part of the arrangements of the JSF-IF CAP Window. The Government of Japan has also elected for any premium payable to them by the ADB to be deposited into the JSF IF-CAP Window for future obligations under the IF-CAP Guarantee Mechanism. The first guarantee fee premium payment of $1 thousand was received from ADB in April 2025.

The JSF IF-CAP Window will be administered by ADB under the governance structure of the JSF.

Contributed resources. As of 31 March 2025, the cumulative fund resources of JSF totaled $1,013 million, of which $906 million had been used, leaving an uncommitted balance of $107 million ($111 million – 31 December 2024).
Operations. For the three months ended 31 March 2025, two TA projects and one supplementary TAs amounting to $5 million became effective (one TA project amounting to $0.75 million – 2024). The balance of undisbursed TA, net of TA advances, amounted to $18 million as of 31 March 2025 ($14 million – 31 December 2024).

Investments for liquidity purpose. As of 31 March 2025, the total investment portfolio, which was in time deposits, amounted to $124 million ($123 million – 31 December 2024).

12
In the event of a nonaccrual in the reference portfolio under the IF-CAP Guarantee Mechanism, the Government of Japan’s payment of its share of risk participation will be channeled through the JSF IF-CAP Window.

ADB MANAGEMENT’S DISCUSSION AND ANALYSIS: 31 MARCH 2025

20

D.
Asian Development Bank Institute
ADBI was established in 1996 as a subsidiary body of ADB, whose objectives are to identify effective development strategies and capacity improvements for sound development management in the DMCs. Its operating costs are met by ADBI, and it is administered in accordance with the Statute of the ADBI.

For the three months ended 31 March 2025, there were no committed contributions (nil – 2024) to ADBI and expenses of ADBI totaled $3 million ($4 million – 2024). As of 31 March 2025, the balance of uncommitted balance without donor restriction (excluding property, furniture, and equipment and lease liability) available for future projects and programs was about $18 million ($20 million – 31 December 2024).
Investments for liquidity purpose. As of 31 March 2025, the total investment portfolio, which was in time deposits, amounted to $11 million ($12 million – 31 December 2024).

E.
Regional Cooperation and Integration Fund
Established in February 2007 as a special fund under the Regional Cooperation and Integration Financing Partnership Facility, the RCIF aims to enhance regional cooperation and integration in Asia and the Pacific by financing TA projects that support greater and higher quality connectivity between economies, expand global and regional trade and investment opportunities, and increase and diversify regional public goods.

Contributed  resources.  As  of  31  March  2025,  cumulative  RCIF  resources  totaled $107 million, of which $105 million had been used, leaving an uncommitted balance of $2 million ($2 million – 31 December 2024).

Operations. During the three months ended 31 March 2025 and 2024, no TA project became effective. Undisbursed TA reversed as reduction in TA expense totaled $0.2 million ($0.5 million – 2024). The balance of undisbursed TA, net of TA advances, as of 31 March 2025 amounted to
$12 million ($14 million – 31 December 2024).

Investments for liquidity purpose. As of 31 March 2025, the total investment portfolio, which was in time deposits, amounted to $13 million ($14 million – 31 December 2024).

F.
Climate Change Fund

The CCF was established in April 2008 to facilitate greater investments in DMCs to effectively address the causes and consequences of climate change. CCF supports investments on (i) adaptation; (ii) clean energy; and (iii) reducing emissions from deforestation and forest degradation (REDD+) and land use management by providing resources through technical assistance, grant components of investment projects, and direct charges.

Contributed resources. As of 31 March 2025, cumulative CCF resources totaled $105 million, of which $93 million had been used, leaving an uncommitted balance of $12 million ($12 million – 31 December 2024).

Operations. During the three months ended 31 March 2025 and 2024, no grant was committed while one grant totaling $0.9 million became effective (three grants and one TA project totaling $2.4 million– 2024) and $0.04 million undisbursed amounts were reversed as a reduction in TA expense (nil – 2024). The balance of undisbursed grants and TA, net of advances as of 31 March 2025 amounted to $13 million ($13 million – 31 December 2024).

ADB MANAGEMENT’S DISCUSSION AND ANALYSIS: 31 MARCH 2025

21

Investments for liquidity purpose. As of 31 March 2025, the total investment portfolio, which was in time deposits, amounted to $24 million ($25 million – 31 December 2024).

G.
Asia Pacific Disaster Response Fund

The APDRF was established in April 2009 to provide timely incremental grant resources to DMCs affected by disasters triggered by natural hazards. In September 2021, a second window under the APDRF was established to finance experts to provide speedy post-disaster technical support for the preparation of post-disaster needs assessments, recovery plans, and post-disaster projects, including emergency assistance loan. The second window will not finance any technical support needs arising during post-disaster project implementation and will not be available should the fund’s balance fall below $6 million.
Contributed resources. As of 31 March 2025, cumulative fund resources totaled $174 million, of which $144 million had been used, leaving an uncommitted balance of $30 million ($34 million – 31 December 2024). The net assets without donor restrictions as of 31 March 2025 amounted to $30 million ($34 million – 31 December 2024).
Contributions received for specific purposes or grant programs are classified as support with donor restrictions. In May 2020, the Government of Japan contributed $75 million―valid for 2 years―to APDRF which was earmarked for ADB’s response to the COVID-19 pandemic. In July 2023, the Government of Japan requested ADB to transfer the unused balance of its contributions to the Japan Fund for Prosperous and Resilient Asia and the Pacific (JFPR). An initial transfer of $27 million was made to the JFPR in August 2024 from the total unused funds of $27.25 million, with the remaining balance of $0.27 million recorded as payable to JFPR as of 31 March 2025.

In May 2024, the Board of Governors approved the transfer of $15 million to the APDRF as part of OCR’s 2023 net income allocation. There was no allocation made for APDRF from OCR’s 2024 net income.

Operations. For the three months ended 31 March 2025, two grants amounting to $2.5 million were committed and three grants amounting to $4.5 million became effective (nil – 2024), and no undisbursed amounts were reversed as a reduction in grant expenses ($0.2 million – 2024). The balance of undisbursed grants, net of grant advances as of 31 March 2025 amounted to $2 million (nil – 31 December 2024).

In April 2025, the ADB Board of Directors approved a $3,000,000 APDRF grant to support the emergency and humanitarian needs of the people of Myanmar affected by the 7.7 magnitude earthquake on 28 March 2025. The grant was signed and made effective on 12 April 2025 and will be provided through the United Nations World Food Programme.

Investments for liquidity purpose. As of 31 March 2025, the total investment portfolio, which was in time deposits amounted to $30 million ($32 million – 31 December 2024).

H.
Financial Sector Development Partnership Special Fund

The FSDPSF was established in January 2013 to strengthen regional, subregional, and national financial systems in Asia and the Pacific. With the approval of the Finance Sector Directional Guide on 22 November 2022, the FSDPSF will support the six areas of operational focus: (i) enhancing support to emerging areas such as sustainable development goal aligned financing, including green and blue financing; (ii) promoting long-term finance and quality infrastructure; (iii) leveraging digital technology to deliver financial services for financial inclusion; (iv) expanding financing to micro, small and medium enterprises and women; (v) establishing frameworks for disaster and epidemic risk financing; and (vi) strengthening the finance sector foundation.

ADB MANAGEMENT’S DISCUSSION AND ANALYSIS: 31 MARCH 2025

22

Contributed  resources.  As  of  31  March  2025,  cumulative  fund  resources  totaled $32 million, of which $30 million had been used, leaving an uncommitted balance of $2 million ($1 million – 31 December 2024).

On 5 May 2025, the Government of Luxembourg committed a contribution of €2.5 million (equivalent to $2.8 million) to the FSDPSF.

Operations. During the three months ended 31 March 2025, no TA project became effective (one supplementary TA project totaling $0.4 million – 2024), and $0.6 million undisbursed amount were reversed as reduction in TA expense (nil – 2024). The balance of undisbursed TA, net of TA advances as of 31 March 2025 amounted to $9 million ($10 million – 31 December 2024).

Investments for liquidity purpose. As of 31 March 2025, the total investment portfolio, which was in time deposits, amounted to $10 million ($10 million – 31 December 2024).

ADB MANAGEMENT’S DISCUSSION AND ANALYSIS: 31 MARCH 2025

Appendix
 23

ORDINARY CAPITAL RESOURCES
CONDENSED MANAGEMENT REPORTING (Non-GAAP measure) BALANCE SHEETS
As of 31 March 2025 and 31 December 2024
($ million)
  
   
2025
    
2024
  
Item
  
Statutory
Reporting Basis
    
Adjustmentsa
    
Management
Reporting Basis
    
Management
Reporting Basis
  
Due from banks
    
1,447
      
–
      
1,447
      
2,235
  
Investments for liquidity purpose
    
58,565
      
–
      
58,565
      
46,695
  
Securities transferred under repurchase agreements
    
908
      
–
      
908
      
–
  
Securities purchased under resale arrangements
    
237
      
–
      
237
      
260
  
Loans outstanding — operations
    
156,343
      
–
      
156,343
      
153,864
  
Equity investments — operations
    
1,702
      
(346
)
    
1,356
      
1,329
  
Other debt securities — operations
    
603
      
–
      
603
      
621
  
Derivative Assets
                                
Borrowings
    
70,248
      
292
      
70,540
      
62,476
  
Investments for liquidity purpose
    
28,002
      
(337
)
    
27,665
      
25,669
  
Loans — operations
    
17,170
      
661
      
17,831
      
18,149
  
Accrued interest receivable
    
2,059
      
–
      
2,059
      
1,697
  
Other assets
    
1,941
      
11
      
1,952
      
2,010
  
TOTAL
    
339,225
      
281
      
339,506
      
315,005
  
Borrowings and accrued interest
    
160,838
      
4,341
      
165,179
      
151,959
  
Derivative Liabilities
                                
Borrowings
    
77,388
      
(4,049
)
    
73,339
      
66,906
  
Investments for liquidity purpose
    
26,141
      
(186
)
    
25,955
      
23,058
  
Loans — operations
    
14,834
      
1,071
      
15,905
      
15,675
  
Payable under securities repurchase agreements
    
908
      
–
      
908
      
–
  
Payable for swap related and other collateral
    
739
      
–
      
739
      
857
  
Accounts payable and other liabilities
    
1,165
      
–
      
1,165
      
977
  
Total Liabilities
    
282,013
      
1,177
      
283,190
      
259,432
  
Paid-in capital
    
7,044
      
11
      
7,055
      
6,940
  
Net notional maintenance of value receivable
    
(1,533
)
    
–
      
(1,533
)
    
(1,481
)
Ordinary reserve
    
47,540
      
2
      
47,542
      
47,542
  
Special reserve
    
566
      
–
      
566
      
558
  
Surplus
    
1,065
      
–
      
1,065
      
1,065
  
Cumulative revaluation adjustments account
    
462
      
(462
)
    
–
      
–
  
Unallocated net incomeb
                                
For the calendar year 2024
    
1,602
      
(63
)
    
1,539
      
1,539
  
For the three months ended 31 March 2025
    
319
      
13
      
332
      
–
  
Accumulated other comprehensive loss
    
147
      
(397
)
    
(250
)
    
(590
)
Total Equity
    
57,212
      
(896
)
    
56,316
      
55,573
  
TOTAL
    
339,225
      
281
      
339,506
      
315,005
  
( ) = negative, – = nil.
a
Unrealized gains or losses from fair value adjustments associated with certain financial instruments, share of unrealized gain or loss from equity method investments, and nonnegotiable and noninterest-bearing demand obligations on account of subscribed capital.
b
After appropriation of guarantee fees to the Special Reserve.

ADB MANAGEMENT’S DISCUSSION AND ANALYSIS: 31 MARCH 2025

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Financial Statements

26

ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
CONDENSED BALANCE SHEET
31 March 2025 and 31 December 2024
Expressed in Millions of US Dollars
A S S E T S
  
   
31 March
(Unaudited)
   
31 December
(Audited)
  
DUE FROM BANKS
      
$
1,447
        
$
2,235
  
                         
INVESTMENTS FOR LIQUIDITY PURPOSE (Notes C and O)
        
58,565
          
46,695
  

                       
SECURITIES TRANSFERRED UNDER REPURCHASE AGREEMENT (Notes C, D, and O)
        
908
          
–
  
                         
SECURITIES PURCHASED UNDER RESALE ARRANGEMENTS (Notes C, D, and O)
        
237
          
260
  
                         
LOANS OUTSTANDING — OPERATIONS (Notes E and O)
(Including net unamortized loan origination costs of $254 –
31 March 2025 and $245 – 31 December 2024)
                        
Sovereign
                        
Regular
$
117,150
        
$
115,352
        
Concessional
  
33,669
          
33,332
        
   
150,819
          
148,684
        
Nonsovereign
  
6,118
          
5,720
        
   
156,937
          
154,404
        
Less—allowance for credit losses
  
594
    
156,343
    
540
    
153,864
  
                         
EQUITY INVESTMENTS — OPERATIONS (Notes G and O)
        
1,702
          
1,627
  
                         
OTHER DEBT SECURITIES — OPERATIONS (Notes H and O)
(Net of allowance for credit losses of $13 – 31 March 2025
and $14 – 31 December 2024)
        
603
          
621
  
                         
ACCRUED INTEREST RECEIVABLE
        
2,059
          
1,697
  
                         
DERIVATIVE ASSETS (Notes I and O)
                        
Borrowings
  
70,248
          
61,872
        
Investments for liquidity purpose
  
28,002
          
26,062
        
Loans — operations
  
17,170
    
115,420
    
17,671
    
105,605
  
                         
OTHER ASSETS
                        
Property, furniture, and equipment (Note J)
  
325
          
309
        
Swap related and other collateral (Notes I and O)
  
739
          
857
        
Net postretirement medical benefit plan asset
   253
          253
       
Miscellaneous (Notes C, F, K, and O)
  
624
    
1,941
    
579
    
1,998
  
                         
TOTAL
      
$
339,225
        
$
314,602
  
The accompanying Notes are an integral part of these condensed financial statements (OCR-6).

27
OCR-1

LIABILITIES AND EQUITY
   
31 March
(Unaudited)
  
31 December
(Audited)
  
                                     
BORROWINGS (Notes L and O)
          
$
160,838
                
$
146,517
  
                                     
DERIVATIVE LIABILITIES (Notes I and O)
                                        
Borrowings
    
$
77,388
                  
$
71,703
          
Investments for liquidity purpose
      
26,141
                    
23,292
          
Loans — operations
      
14,834
      
118,363
            
14,821
      
109,816
  

                                       
PAYABLE UNDER SECURITIES REPURCHASE AGREEMENTS (Notes C, D, and O)
              
908
                    
–
  
                                         
ACCOUNTS PAYABLE AND OTHER LIABILITIES                                        
Swap related and other collateral (Notes I and O)
      
739
                    
857
          
Accrued pension and postretirement medical benefit costs
     
158
                    
165
          
Liability for credit losses on off-balance sheet exposures (Notes E, F, and H)
       119
                    121
         
Miscellaneous (Notes C, F, J, K, and O)
      
888
      
1,904
            
691
      
1,834
  
Total Liabilities
              
282,013
                    
258,167
  
                                         
EQUITY (OCR-4)
                                        
Capital Stock (Note M)
                                        
Authorized and subscribed (SDR106,392 million)
      
141,038
                    
138,749
          
Less—“callable” shares subscribed (SDR101,061 million)
      
133,970
                    
131,796
          
“Paid-in” shares subscribed (SDR5,331 million)
      
7,068
                    
6,953
          
Less—discount
      
13
                    
13
          
         
7,055
                    
6,940
          
Nonnegotiable, noninterest-bearing demand obligations on account of subscribed capital (Note M)
      
(11
)
    
7,044
            
(12
)
    
6,928
  
                                         
Net notional amounts required to maintain value of currency holdings
      
(1,533
)
                  
(1,481
)
        
Ordinary reserve (Note M)
                                        
From ADF assets transfer
   $ 30,748                     $ 30,748                  
From retained earnings
     16,792       47,540               16,792      
47,540
          
Special reserve
             566                      
558
          
Surplus
             1,065                      
1,065
          
Cumulative revaluation adjustments account
             462                      
462
          
Net income after appropriation to special reserve
                                                
For the calendar year 2024
             1,602      
             
1,602
          
For the three months ended 31 March 2025 (OCR-2)
             319
                      
–
          
Accumulated other comprehensive income (loss) (Note M)
            
147
       50,168              
(239
)
    
49,507
  
Total Equity
                     57,212                      
56,435
  
TOTAL
                   $ 339,225                    
$
314,602
  

28
OCR-2

ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
CONDENSED STATEMENT OF INCOME AND EXPENSES—UNAUDITED
For the Three Months Ended 31 March 2025 and 2024
Expressed in Millions of US Dollars







  2025     2024  
REVENUE (Note N)                
Loans — operations (Notes E and I)
  
$
1,784
    
$
2,051
  
Investments for liquidity purpose (Notes C and I)
    
616
      
653
  
Equity investments — operations
    
62
      
41
  
Guarantees — operations
    
8
      
6
  
Other debt securities — operations
    
12
      
11
  
Other sources—net
    
27
      
29
  
Total
    
2,509
      
2,791
  

EXPENSES (Note N)                
Borrowings and related expenses (Note I)
    
(1,856
)
    
(2,203
)
Administrative expenses (Note M)
    
(186
)
    
(163
)
(Provision) Release of provision for credit losses—net (Notes E, F, and H)
     (52 )     26  
Other expenses
    
(11
)
    
(7
)
Total
    
(2,105
)
    
(2,347
)
NET REALIZED LOSSES                
Investments for liquidity purpose (Notes C, I, M, and N)
    
(2
)
    
(8
)
Equity investments — operations (Note N)
    
1
      
2
  
Total
    
(1
)
    
(6
)
NET UNREALIZED (LOSSES) GAINS (Notes G, I, L, and N)
    
(76
)
    
261
  

               
NET INCOME
  
$
327
    
$
699
  
The accompanying Notes are an integral part of these condensed financial statements (OCR-6).

29

OCR-3

ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
CONDENSED STATEMENT OF COMPREHENSIVE INCOME—UNAUDITED
For the Three Months Ended 31 March 2025 and 2024
Expressed in Millions of US Dollars
               

  2025    
2024
  
NET INCOME (OCR-2)                                                                                                                      
         $ 327          
$
699
  

                               
Other comprehensive income (loss) (Note M)
Unrealized holding gains (losses)
   $ 303            
$
(492
)
        
Currency translation adjustments
     89              
(70
)
        
Pension/postretirement liability adjustments
     (6 )     386      
(6
)
    
(568
)

                               
COMPREHENSIVE INCOME
           $ 713            
$
131
  
The accompanying Notes are an integral part of these condensed financial statements (OCR-6).

OCR-4

ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
            
CONDENSED STATEMENT OF CHANGES IN EQUITY—UNAUDITED
            
For the Three Months Ended 31 March 2025 and 2024
            
Expressed in Millions of US Dollars
            

  2025  
2024
  
Balance, beginning of period                                                                                                                      
   $ 56,435    
$
55,294
  
Comprehensive income for the period (OCR-3)
     713      
131
  
Encashment of demand obligations     2       3  
Change in US dollar value on
    
     

 
Paid-in capital
     114       (93 )
Demand obligations
     0      
0
  
Net notional maintenance of value receivable  
     (52 )    
23
  
Balance, end of period                                                                                                                      
   $ 57,212    
$
55,358
  
Note: 0 = less than $0.5 million.
The accompanying Notes are an integral part of these condensed financial statements (OCR-6).

30
OCR-5

ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
CONDENSED STATEMENT OF CASH FLOWS—UNAUDITED
For the Three Months Ended 31 March 2025 and 2024
Expressed in Millions of US Dollars
            
   
2025
    
2024
  
CASH FLOWS FROM OPERATING ACTIVITIES
            
Interest and other charges received on loans — operations
  
$
1,407
    
$
1,443
  
Interest received on investments for liquidity purpose
    
459
      
544
  
Interest received for securities purchased under resale/repurchase arrangement
    
3
      
7
  
Interest and other charges received on other debt securities — operations
    
14
      
13
  
Dividends and other cash distributions received on equity investments — operations
    
25
      
30
  
Interest and other financial expenses paid
    
(2,366
)
    
(2,332
)
Administrative expenses paid
    
(199
)
    
(191
)
Others—net
    
21
      
16
  
Net Cash Used in Operating Activities
    
(636
)
    
(470
)
CASH FLOWS FROM INVESTING ACTIVITIES
                
Sales of investments for liquidity purpose
    
1,009
      
572
  
Maturities of investments for liquidity purpose
    
67,951
      
90,686
  
Purchases of investments for liquidity purpose
    
(80,629
)
    
(95,971
)
Receipts from securities purchased under resale arrangements
    
15,620
      
34,172
  
Payments for securities purchased under resale arrangements
    
(15,597
)
    
(33,959
)
Principal collected on loans — operations
    
3,073
      
2,527
  
Loans — operations disbursed
    
(4,489
)
    
(3,152
)
Derivatives—net
    
756
      
249
  
Property, furniture, and equipment acquired
    
(14
)
    
(13
)
Sales of equity investments — operations
    
1
      
5
  
Purchases of equity investments — operations
    
(52
)
    
(39
)
Maturities of other debt securities — operations
    
31
      
21
  
Purchases of other debt securities — operations
    
(7
)
    
(30
)
Net Cash Used in Investing Activities
    
(12,347
)
    
(4,932
)
CASH FLOWS FROM FINANCING ACTIVITIES
                
Proceeds from new borrowings
    
20,320
      
24,256
  
Borrowings redeemed
    
(7,517
)
    
(18,666
)
Issuance expenses paid
    
(14
)
    
(14
)
Demand obligations of members encashed
    
2
      
3
  
Derivatives—net
    
(294
)
    
(152
)
Change in swap related collateral
    
(118
)
    
225
  
Net Cash Provided by Financing Activities
    
12,379
      
5,652
  
Effect of Exchange Rate Changes on Cash
    
(302
)
    
(73
)
Net (Decrease) Increase in Cash
    
(906
)
    
177
  
Cash at Beginning of Period
                
Due from Banks
    
2,235
      
998
  
Swap Related and Other Collateral
    
857
      
393
  
Total
    
3,092
      
1,391
  
Cash at End of Period
                
Due from Banks
    
1,447
      
952
  
Swap Related and Other Collateral
    
739
      
616
  
Total
  
$
2,186
    
$
1,568
  
                 
The accompanying Notes are an integral part of these condensed financial statements (OCR-6).

31

OCR-6

ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
NOTES TO CONDENSED FINANCIAL STATEMENTS
For the Three Months Ended 31 March 2025 and 2024
(Unaudited)

NOTE A—INTERIM FINANCIAL INFORMATION

These unaudited condensed interim financial statements should be read in conjunction with the 31 December 2024 audited financial statements and the notes included therein. In the opinion of Management, all material adjustments necessary for a fair statement of the results of operations for the three months ended 31 March 2025 and 2024 have been included. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.
NOTE B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (US GAAP) requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosed contingent liabilities at the end of the period and the reported amounts of revenues and expenses during the period. The actual results could differ from those estimates.
The functional currencies of ordinary capital resources (OCR) comprise the currencies of all members and special drawing right (SDR) as these are the currencies of the primary economic environments in which Asian Development Bank (ADB) operates. The reporting currency is the United States (US) dollar, and the financial statements are reported in US dollars.
Allowance for Credit Losses
ADB records an allowance for credit losses over the remaining lifetime of financial assets measured at amortized cost (including loans and held-to-maturity debt securities). In addition, a liability is recorded for off- balance sheet credit exposures for undisbursed loan commitments and financial guarantees over the contractual period. ADB estimates the expected credit losses based on relevant information about past events, current conditions, and reasonable and supportable forecasts. The expected credit losses are measured as the product of exposure at default (EAD), probability of default (PD), and loss given default (LGD). When loans are considered impaired, they are individually reviewed and assessed to determine the expected credit losses using appropriate methods, including discounted cash flow method.
The allowance for credit losses and liability for credit losses on off-balance sheet exposures such as guarantees and undisbursed commitments for loans, and debt securities, are reviewed quarterly, and the amount necessary to adjust the allowance and liability for credit losses is reported as Provision for credit losses in the Statement of Income and Expenses under EXPENSES. ADB elects not to record the allowance on accrued interest receivables as it reverses the accrued interest of the loans under non-accrual status in accordance with its non- accrual policy. Partial or full write-off of financial assets will be deducted from the allowance. Expected recoveries of amounts previously written-off or expected to be written-off are recognized as a negative allowance which does not exceed the aggregate of amounts previously written off and expected to be written off.
ADB uses risk transfer contracts between ADB and third parties such as insurance companies or banks, where the third parties agree to assume a portion of the credit risk in a loan, held-to-maturity debt security, or guarantee provided by ADB. A recovery asset related to the risk transfer contracts is recognized at the time of recording of expected credit losses for the loans, held-to-maturity debt securities, and guarantees. The recovery asset is reviewed quarterly, and the amount to adjust the recovery asset is reflected in Provision for credit losses.
When an available-for-sale (AFS) debt security’s fair value is lower than amortized cost, ADB recognizes impairment losses in earnings if ADB has the intent to sell the debt securities or if it is more likely than not that ADB will be required to sell the debt securities before recovery of the amortized cost. When ADB intends to

32

OCR-6

continued
hold and is not required to sell the debt securities, ADB will evaluate to determine if a credit loss exists. Portion of the decline in fair value below amortized cost basis due to credit-related factors will be recognized as an allowance for credit losses with a related charge to Provision for credit losses.
For certain financial assets, such as Due from Banks, Securities Purchased under Resale Arrangements, and Swap related and other collateral, no expected loss is determined based on the credit quality.
Derivative Financial Instruments
ADB reports all derivative transactions in accordance with Accounting Standards Codification (ASC) 815, “Derivatives and Hedging.” ADB has elected not to define any qualifying hedging relationships, not because economic hedges do not exist, but rather because the application of ASC 815 hedging criteria does not make fully evident ADB’s risk management strategies. All derivative instruments are reported at fair value (FV) and changes in FV have been recognized in net income. ADB records derivatives in the Balance Sheet as either assets or liabilities, consistent with the legal rights and way the instruments are settled. Individual interest rate swaps are recorded on a net basis, while all other swaps, including cross currency and foreign exchange (FX) swaps, are recorded on a gross basis.
Fair Value of Financial Instruments
ASC 820, “Fair Value Measurement” defines FV as the price that would be received to sell an asset or paid to transfer a liability at measurement date in an orderly transaction among willing participants with an assumption that the transaction takes place in the entity’s principal market, or in the absence of principal market, in the most advantageous market for the asset or liability. The most advantageous market is the market where the sale of the asset or transfer of liability would maximize the amount received for the asset or minimize the amount paid to transfer the liability. The FV measurement is not adjusted for transaction costs.
Fair Value Hierarchy
ASC 820 establishes an FV hierarchy that gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1), next priority to observable market inputs or market corroborated data (Level 2), and the lowest priority to unobservable inputs without market corroborated data (Level 3).
The FVs of ADB’s financial assets and liabilities are categorized as follows:
Level 1: FVs are based on unadjusted quoted prices for identical assets or liabilities in active markets.
Level 2: FVs are based on quoted prices for similar assets or liabilities in active markets or markets that are not active; or valuation models for which significant inputs are obtained from market-based data that are observable.
Level 3: FVs are based on prices or valuation models for which significant inputs to the model are unobservable.
Accounting and Reporting Developments
In June 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2022-03, “Fair Value Measurement (Topic 820)—Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”. The amendment clarifies what contractual sale restrictions of an equity security are inconsistent with the unit of account of the equity security, and, therefore, should not be considered in measuring the fair value. It also clarifies that an entity cannot, as a separate unit of account, recognize and measure certain contractual sale restrictions. The amendments also require certain disclosures for equity securities subject to contractual sales restrictions. The update is effective for ADB on 1 January 2024. The adoption of this ASU did not have a material impact on OCR’s financial statements.
In December 2022, the FASB issued ASU 2022-06, “Reference Rate Reform (Topic 848) —Deferral of the Sunset Date of Topic 848,” with immediate effectivity to extend the optional relief provided in Topic 848 for

33

OCR-6
continued
eligible contracts and transactions affected by reference rate reform from 31 December 2022 to 31 December 2024. ADB has adopted the provisions of Topic 848, and as provided by the Update, will continue monitoring and assessing contract modifications for the use of the optional expedients and exceptions provided as we continue to amend the remaining nonsovereign LBLs and LIBOR-based swaps. ADB does not expect the adoption of this Update to have a significant impact on the financial statements.
In October 2023, the FASB issued ASU 2023-06, “Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative”. This Update incorporates certain disclosures requirements referred to by the SEC in its final rule in August 2018 that overlap or are incremental to those in GAAP and introduces technical corrections and clarifications. The SEC intends to eliminate the related disclosure requirements from its existing regulations when the amendments in GAAP are issued to avoid duplication. The effective date of each amendment will be the date on which the SEC’s removal of that related disclosure from its regulations becomes effective, with early adoption prohibited. ADB does not expect the adoption of this Update to have a material impact on the financial statements.
In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”. This Update expands reportable segment disclosure requirements by primarily requiring public entities to disclose significant expenses for reportable segments in both interim and annual reporting periods. In addition, it now requires public entities with a single reportable segment to provide all segment disclosures under Topic 820. The amendments in this Update are effective for fiscal years beginning after 15 December 2023, and interim periods within fiscal years beginning after 15 December 2024. Early adoption is permitted. ADB is evaluating the disclosure requirements in the ASU and does not expect the adoption of this Update to have a material impact on the financial statements.
In March 2024, the FASB issued ASU 2024-02, “Codification Improvements – Amendments to Remove References to the Concepts Statements”. This Update contains amendments to the Codification that remove references to various FASB Concepts Statements. The amendments in this Update are effective for public business entities for fiscal years beginning after 15 December 2024. For all other entities, the amendments are effective for fiscal years beginning after 15 December 2025. Early adoption is permitted. ADB is evaluating the disclosure requirements in the ASU and does not expect the adoption of this Update to have a material impact on the financial statements.
NOTE C—INVESTMENTS FOR LIQUIDITY PURPOSE
The main investment management objective is to maintain security and liquidity. Subject to these parameters, ADB seeks the highest possible return on its investments. Investments are governed by the Investment Authority approved by the Board of Directors.

All investment securities and time deposits held by ADB are considered to be AFS and are reported at FV. Unrealized gains and losses are reported in EQUITY as part of Accumulated other comprehensive income (loss). Realized gains and losses are reported in the Statement of Income and Expenses under NET REALIZED (LOSSES) GAINS from investments for liquidity purpose and are measured by the difference between amortized cost and the net proceeds of the sale using the specific identification method for internally managed investment portfolio and the weighted average cost method for externally managed investment portfolio.
Interest income on investment securities and time deposits is recognized as earned and reported, net of amortizations of premium and discounts.
ADB may engage in securities lending of government or government-related obligations and corporate obligations, for which ADB receives a guarantee from the securities custodian and a fee. Transfers of securities by ADB to counterparties are not accounted for as sales as the accounting criteria for the treatment of a sale have not been met. These securities are available to meet ADB’s obligation to counterparties. Included in investments as of 31 March 2025 were securities transferred under securities lending

34
OCR-6
continued
arrangements of government or government-related obligations and corporate obligations totaling $144 million ($153 million – 31 December 2024).

ADB records time deposits on the settlement dates and all other investment securities on the trade date. As of 31 March 2025, there were $88 million unsettled sales and uncollected maturities ($37 million – 31 December 2024) included under OTHER ASSETS – Miscellaneous and $270 million unsettled purchases ($86 million – 31 December 2024) included under ACCOUNTS PAYABLE AND OTHER LIABILITIES – Miscellaneous.
The FV and amortized cost of the investments by contractual maturity as of 31 March 2025 and 31 December 2024 are as follows:

($ million)
   
31 March 2025
    
31 December 2024
  
         
Amortized
    
   
Amortized
  
   
Fair Value
    
Cost
   
Fair Value
    
Cost
 
Due in one year or less
  
$
27,242
    
$
27,280
    
$
14,824
    
$
14,857
  
Due after one year through five years
    
25,675
      
26,078
      
27,734
      
28,270
  
Due after five years through ten years
    
2,771
      
2,781
      
2,459
      
2,599
  
Due after ten years through fifteen years
    
2,123
      
2,104
      
949
      
987
  
Due after fifteen years
    
754
      
841
      
729
      
830
  
Total
  
$
58,565
    
$
59,084
    
$
46,695
    
$
47,543
  

Additional information relating to investments for liquidity purpose in government or government-related obligations and other securities classified as AFS are as follows:
($ million)
   
Amortized
    
Gross Unrealized
        

 
Cost
   
Gains
   
Losses
   
Fair Value
  
31 March 2025
                        
Government or government-related obligations
  
$
35,124
    
$
119
    
$
(551
)
  
$
34,692
  
Other securities
                                
Corporate obligations
    
9,314
      
61
      
(56
)
    
9,319
  
Asset/Mortgage-backed securities
    
1,827
      
7
      
(98
)
    
1,736
  
Total
  
$
46,265
    
$
187
    
$
(705
)
  
$
45,747
  
31 December 2024
                                
Government or government-related obligations
  
$
31,759
    
$
59
    
$
(761
)
  
$
31,057
  
Other securities
                                
Corporate obligations
    
9,359
      
48
      
(84
)
    
9,323
  
Asset/Mortgage-backed securities
    
1,823
      
5
      
(115
)
    
1,713
  
Total
  
$
42,941
    
$
112
    
$
(960
)
  
$
42,093
  

For the three months ended 31 March:
    2025
    
2024
 
Change in net unrealized gains and losses from prior period
  
$
330
    
$
(52
)
Proceeds from sales
    
1,009
      
572
  
Gross gain on sales
    
2
      
1
  
Gross loss on sales
    
(4
)
    
(9
)

35
OCR-6
continued

The following table shows the gross unrealized losses and fair value of investments with unrealized losses aggregated by investment category and length of time that individual securities had unrealized losses position as of 31 March 2025 and 31 December 2024. There were 142 government or government-related obligations (148 – 31 December 2024), 354 corporate obligations (411 – 31 December 2024), and 156 asset- backed/mortgage-backed securities (161 – 31 December 2024) that had unrealized losses for over one year representing 29.96% (38.65% – 31 December 2024) of the total investments.

($ million)
   
One year or less
    
Over one year
    
Total
  
         
Unrealized
          
Unrealized
          
Unrealized
  
   
Fair Value
    
Losses
    
Fair Value
    
Losses
    
Fair Value
    
Losses
  
31 March 2025
                                    
Government or government-related obligations
  
$
3,332
    
$
35
    
$
15,246
    
$
516
    
$
18,578
    
$
551
  
Other securities Corporate obligations
    
1,119
      
5
      
1,662
      
51
      
2,781
      
56
  
Asset/Mortgage-backed securities
    
242
      
1
      
640
      
97
      
882
      
98
  
Total
  
$
4,693
    
$
41
    
$
17,548
    
$
664
    
$
22,241
    
$
705
  
                                                 
31 December 2024
                                                
Government or government-related obligations
  
$
9,819
    
$
142
    
$
15,623
    
$
619
    
$
25,442
    
$
761
  
Other securities Corporate obligations
    
1,954
      
14
      
1,766
      
70
      
3,720
      
84
  
Asset/Mortgage-backed securities
    
434
      
4
      
659
      
111
      
1,093
      
115
  
Total
  
$
12,207
    
$
160
    
$
18,048
    
$
800
    
$
30,255
    
$
960
  

As of 31 March 2025, ADB had the intent to hold and was not required to sell the AFS debt securities of which the fair value is lower than amortized cost. ADB also assessed and determined that the decline of fair value below the amortized cost basis of the AFS securities was not due to credit-related factors.

Fair Value Disclosure

The FV of INVESTMENTS FOR LIQUIDITY PURPOSE and related financial assets as of 31 March 2025 and 31 December 2024 is as follows:

($ million)
         
Fair Value Measurements
  
   
Total
    
Level 1
    
Level 2
    
Level 3
  
31 March 2025
                        
Investments for liquidity purpose
                       
Government or government-related obligations
 
$
34,692
    
$
30,952
    
$
3,740
    
$
–
  
Time deposits
    
12,819
      
–
      
12,819
      
–
  
Other securities
    
11,054
      
7,566
      
3,488
      
–
  
Securities transferred under repurchase agreements
    
908
      
908
      
–
      
–
  
Securities purchased under resale arrangements
    
237
      
–
      
237
      
–
  
Total at fair value
  
$
59,710
    
$
39,426
    
$
20,284
    
$
–
  

36

OCR-6
continued

($ million)
         
Fair Value Measurements
  
   
Total
    
Level 1
    
Level 2
    
Level 3
  
31 December 2024
                        
Investments for liquidity purpose                                
Government or government-related obligations
  
$
31,057
    
$
28,474
    
$
2,583
    
$
–
  
Time deposits
    
4,602
      
–
      
4,602
      
–
  
Other securities
    
11,036
      
7,123
      
3,913
      
–
  
Securities transferred under repurchase agreements
    
–
      
–
      
–
      
–
  
Securities purchased under resale arrangements
    
260
      
–
      
260
      
–
  
Total at fair value
  
$
46,955
    
$
35,597
    
$
11,358
    
$
–
  

If available, active market quotes are used to assign fair values to investment securities and related financial assets. These include most government or government-related obligations and corporate obligations. Investments and related financial assets where active market quotes are not available are categorized as Level 2 or Level 3, and valuations are obtained from independent valuation services, custodians, and asset managers, and are based on discounted cash flow model using market observable inputs, such as interest rates, FX rates, basis spreads, cross currency rates, volatilities, and unobservable inputs, such as option adjusted spreads, and other techniques. Time deposits are reported at cost, which approximates FV.
NOTE D— SECURITIES TRANSFERRED UNDER REPURCHASE AGREEMENTS AND SECURITIES PURCHASED UNDER RESALE ARRANGEMENTS

Transfer of financial assets are accounted for as sales when control over the transferred assets has been relinquished. Otherwise, the transfers are accounted for as repurchase/resale agreements and collateralized financing arrangements. Under repurchase agreements, securities transferred are recorded as assets and reported at FV and cash received as collateral is recorded as a liability. ADB monitors the FV of securities transferred under repurchase agreements and the received collateral. Under resale arrangements, securities purchased are recorded as assets and are not re-pledged.

ADB has entered into Global Master Repurchase Agreements (GMRA) in which ADB agrees to transfer securities under repurchase agreements. The agreements provide for the right of a party to terminate if any of the specified default and termination events occur and include provisions to offset the sum due from one party against the sum due from the other. All securities transferred under repurchase agreements are investment grade government or government-related securities. ADB monitors periodically the FV of securities transferred against the amount of cash received under the agreement and the counterparty credit exposure against approved limits. ADB only deals with counterparties that meet the required credit rating and have signed a GMRA or its equivalent.

The gross amounts of PAYABLE UNDER SECURITIES REPURCHASE AGREEMENTS subject to enforceable master netting agreements as of 31 March 2025 and 31 December 2024 are summarized below.

($ million)
   
(a)
        
  (b)
      
(c) = (a) – (b)
  
   
Gross amount
    
Gross amounts not offset in the
        
   
of liabilities
    
balance sheet
        
 
presented in the
    
Financial
      
Collateral
        
   
balance sheet
  
instruments
      
pledged
  
Net amount
  
31 March 2025
                          
Payable under securities repurchase agreements
  
$
908
    
$
908
  
 
  
$
–
    
$
0
  
31 December 2024
                                  
Payable under securities repurchase agreements
  
$
–
    
$
–
      
$
–
    
$
–
  

37

OCR-6

continued

The contractual maturity of payable under securities repurchase agreements as of 31 March 2025 and 31 December 2024 are summarized below:

($ million)
   
Remaining contractual maturity of the agreements
  
   
1-30 Days
    
31-90 Days
    
> 90 Days
    
Total
  
31 March 2025
                        
Payable under securities repurchase agreement
                    
Government or government-related obligations
  
$
908
    
$
–
    
$
–
    
$
908
  
Gross amount of recognized liabilities for repurchase agreements disclosed above
            
908
  
Amounts related to agreements not included in offsetting disclosure
            
$
–
  
                                 
31 December 2024
                                
Payable under securities repurchase agreement
                          
Government or government-related obligations
  
$
–
    
$
–
    
$
–
    
$
–
  
Gross amount of recognized liabilities for repurchase agreements disclosed above
            
–
  
Amounts related to agreements not included in offsetting disclosure
            
$
–
  

NOTE E—LOANS — OPERATIONS

ADB offers sovereign and nonsovereign loans. Sovereign loans consist of regular OCR loans and concessional OCR loans.
ADB’s available loan products are the Flexible Loan Product (FLP) and the local currency loan (LCL) product. The FLP is the primary loan product for sovereign regular OCR and nonsovereign operations.

ADB provides sovereign regular OCR borrowers of FLP loans with options to manage their interest rate and exchange rate risks, while providing low intermediation risk to ADB. Borrowers may request a conversion of all or any portion of the principal amount of the loan through: (i) currency conversion to an approved currency of all or any portion of the principal amount of the loan whether unwithdrawn or withdrawn and outstanding; (ii) an interest rate conversion of all or any portion of the principal amount of the loan withdrawn and outstanding; and (iii) establishment of an interest rate cap or an interest rate collar on a floating rate applicable to all or any portion of the principal amount of the loan withdrawn and outstanding.

ADB offers LCLs to sovereign and nonsovereign borrowers in different local currencies which ADB can effectively intermediate. ADB responds to the evolving financial needs of borrowers to reduce their currency mismatch in DMCs.

In addition to the FLP loans and LCLs, ADB offers sovereign concessional OCR loans to eligible DMCs. Concessional loans represent the concessional financing to DMCs with (i) per capita gross national income below the International Development Association (IDA) operational cut-off; (ii) least developed countries with per capita gross national income above the IDA operational cut-off; and (iii) per capita gross national income above the IDA operational cut-off with limited or lack of creditworthiness.

38

OCR-6

continued

As of 31 March 2025 and 31 December 2024, the outstanding loans to borrowers that exceeded 5% of total outstanding loans, before the effect of any risk transfers, are as follows:
   
31 March 2025
    
31 December 2024
  
Borrower
  
$ million
    
%
    
$ million
    
%
  
India
  
$
26,556
      
17
    
$
26,012
      
17
  
People’s Republic of China
    
18,005
      
11
      
18,101
      
12
  
Philippines
    
17,234
      
11
      
15,728
      
10
  
Bangladesh
    
16,515
      
11
      
16,373
      
11
  
Pakistan
    
16,207
      
10
      
16,042
      
10
  
Indonesia
    
14,565
      
9
      
13,903
      
9
  
Others (individually less than 5% of total loans)
    
48,340
      
31
      
48,411
      
30
  
     
157,422
      
100
      
154,570
      
100
  
Fair value adjustment on loans
    
(738
)
            
(411
)
        
Allowance for credit losses
    
(594
)
            
(540
)
        
Unamortized loan origination costs—net
    
253
              
245
          
     
(1,079
)
            
(706
)
        
Loans Outstanding
  
$
156,343
            
$
153,864
        
 

The following table summarizes the net loans outstanding by major category as of 31 March 2025 and 31 December 2024:

($ million)
   
31 March 2025
    
31 December 2024
  
Sovereign loans
            
Regular
  
$
117,055
    
$
115,261
  
Concessional
    
33,499
      
33,169
  
Subtotal
    
150,554
      
148,430
  
Nonsovereign loans
    
5,789
      
5,434
  
Total
  
$
156,343
    
$
153,864
  










As of 31 March 2025 and 31 December 2024, the undisbursed balances of committed loans and approved loans that are not yet committed, are as follows:

($ million)

  
31 March 2025
    
31 December 2024
  
   
Undisbursed
  
Loans
    
Undisbursed
  
Loans
  
   
Committed Loans
  
Approved
    
Committed Loans
  
Approved
  
       
Not Yet
  
Not Yet
        
Not Yet
  
Not Yet
  
 
Effective
  
Effective
  
Committed
  
Effective
  
Effective
  
Committed
  
Sovereign loans
                                    
Regular
  
$
32,615
    
$
1,005
    
$
880
    
$
29,025
    
$
6,338
    
$
1,020
  
Concessional
    
12,227
      
866
      
125
      
11,500
      
2,033
      
–
  
Subtotal
    
44,842
      
1,871
      
1,005
      
40,525
      
8,371
      
1,020
  
Nonsovereign loans
    
1,718
      
–
      
293
      
2,219
      
–
      
350
  
Total
  
$
46,560
    
$
1,871
    
$
1,298
    
$
42,744
    
$
8,371
    
$
1,370
  

39
OCR-6

continued
Past Due Loans

An analysis of the age of the recorded loans outstanding that are past due as of 31 March 2025 and 31 December 2024 is as follows:

($ million)
   
Overdue Loan Service Payments
              
   
1-90
    
91-180
    
> 180
    
Total
              
   
Days
    
Days
    
Days
    
Past Due
    
Current
    
Total
  
31 March 2025
                                        
Sovereign loans
                                        
Regular
  
$
–
    
$
–
    
$
–
    
$
–
    
$
117,494
    
$
117,494
  
Concessional
    
4
      
2
      
14
      
20
      
33,751
      
33,771
  
Subtotal
    
4
      
2
      
14
      
20
      
151,245
      
151,265
  
Nonsovereign loans
    
3
      
3
      
44
      
50
      
6,107
      
6,157
  
Total
  
$
7
    
$
5
    
$
58
    
$
70
    
$
157,352
      
157,422
  
Fair value adjustment on loans
                                            
(738
)
Allowance for credit losses
                                            
(594
)
Unamortized loan origination cost—net
                                            
253
  
Loans Outstanding
                                          
$
156,343
  
Notes: The amount of accrued interest excluded from the amortized cost basis in the above table is $1,749 million.
($ million)
   
Overdue Loan Service Payments
              
   
1-90
    
91-180
    
> 180
    
Total
              
   
Days
    
Days
    
Days
    
Past Due
    
Current
    
Total
  
31 December 2024
                                        
Sovereign loans
                                        
Regular
  
$
–
    
$
–
    
$
–
    
$
–
    
$
115,377
    
$
115,377
  
Concessional
    
2
      
4
      
10
      
16
      
33,423
      
33,439
  
Subtotal
    
2
      
4
      
10
      
16
      
148,800
      
148,816
  
Nonsovereign loans
    
3
      
2
      
44
      
49
      
5,705
      
5,754
  
Total
  
$
5
    
$
6
    
$
54
    
$
65
    
$
154,505
      
154,570
  
Fair value adjustment on concessional loans
                                            
(411
)
Allowance for credit losses
                                            
(540
)
Unamortized loan origination cost—net
                                            
245
  
Loans Outstanding
                                          
$
153,864
  
Note: The amount of accrued interest excluded from the amortized cost basis in the above table is $1,427 million.

Loans in Non-Accrual Status

ADB places loans in non-accrual status when the principal, interest, or other charges are overdue by more than 180 days or in case of loans that are not yet overdue by more than 180 days, when there is expectation that loan service payment will not be collected when they become due, at the point when such information is known. Once a loan to a borrower is placed in non-accrual status, all other overdue loans to the same borrower will be placed in non-accrual status. On the date a borrower’s loans are placed into non-accrual status, unpaid interest and other charges accrued are deducted from the revenue of the current period. Interest on non-accruing loans is included in revenue only to the extent that payments have actually been received by ADB.

40

OCR-6

continued

The following tables provide a summary of financial information related to loans in non-accrual status:

($ million)
As of
  
31 March 2025
    
31 December 2024
  
Amortized cost basis of loans in non-accrual statusa
            
Sovereign
            
Regular
  
$
–
    
$
–
  
Concessional
    
495
      
486
  
Nonsovereign
    
95
      
98
  
Total
  
$
590
    
$
584
  
Loans past due for more than 90 days not in non-accrual status
                
Sovereign
                
Regular
  
$
–
    
$
–
  
Concessional
    
–
      
–
  
Nonsovereign
    
–
      
–
  
Total
  
$
–
    
$
–
  
                 
For the three months ended 31 March:
    
2025
      
2024
  
Interest income recognized on payments received for loans in non-accrual status
  

         
Sovereign
                
Regular
  
$
–
    
$
–
  
Concessional
    
–
      
6
  
Nonsovereign
    
1
      
–
  
Total
  
$
1
    
$
6
  

a An allowance for credit losses has been recorded against each of the loans in non-accrual status.

Fair Value Adjustment on Loans

Fair value adjustments on loans involve recognizing the loans at their FV at initial recognition, considering market conditions or specific loan terms. This adjustment includes the FV adjustment for ADF loans at the time of their transfer to OCR, as detailed below.
On 1 January 2017, concessional loans from Asian Development Fund (ADF) were transferred to OCR at FV. The FV of the ADF loan was approximated by the nominal value of the loan outstanding amount adjusted for credit risk, which was measured by the expected loss of the ADF loan portfolio based on ADB credit risk management framework.

The FV adjustment of concessional loans transferred was $281 million. The FV adjustment is recognized as income over the life of the loans based on the maturity structure of the transferred loans and as the loan service payments are received. As of 31 March 2025, the unamortized balance of the FV adjustment on concessional loans was $151 million ($154 million – 31 December 2024).

Credit Quality Information

ADB is exposed to credit risks in the loan portfolio if a borrower defaults or its creditworthiness deteriorates. Credit risks represent the potential loss due to possible nonperformance by borrowers under the terms of the contract. ADB manages credit risk for lending operations by monitoring creditworthiness of the borrowers and the capital adequacy framework.

ADB monitors credit quality of the loans by assigning a risk rating to each loan on an internal scale from 1 to 14 with 1 denoting the lowest expectation of credit risk and 14 denoting that the borrower has defaulted. The rating scale corresponds to the rating scales used by international rating agencies. For sovereign loans, ADB has a process of assigning internal ratings to provide more accurate inputs for risk measurements. For nonsovereign loans, each transaction is reviewed and assigned a rating based on a methodology that is

41
OCR-6
continued

broadly aligned with the rating approach of international rating agencies. The risk ratings are used to monitor the credit quality in the portfolio.

The amortized cost basis by origination year and internal risk rating for loans as of 31 March 2025 and 31 December 2024 is as follows:

($ million)
                       
31 March 2025
                    
                                         
Private
        
                 
Origination Year
                
sector
        
Risk Class
Risk Rating
  
2025
    
2024
    
2023
    
2022
    
2021
    
Prior
    
programs
    
Total
  
Sovereign Loans:
 
                                                
Low credit risk
1–5 (AAA to BBB–)
  
$
501
    
$
3,863
    
$
4,593
    
$
4,065
    
$
6,669
    
$
55,554
    
$
–
    
$
75,245
  
Medium credit risk
6–8 (BB+ to BB–)
    
–
      
52
      
17
      
109
      
424
      
10,832
      
–
      
11,434
  
Significant credit risk
9–10 (B+ to B)
    
–
      
2,136
      
2,094
      
2,257
      
2,739
      
24,746
      
–
      
33,972
  
High credit risk and non-accrual
11–14 (B– to D)
    
–
      
1,797
      
1,274
      
2,464
      
2,250
      
22,383
      
–
      
30,168
  
Total Sovereign Loans
 
    
501
      
7,848
      
7,978
      
8,895
      
12,082
      
113,515
      
–
      
150,819
  
Nonsovereign Loans:
 
                                                                
Low credit risk
1–5 (AAA to BBB–)
    
–
      
176
      
122
      
223
      
–
      
975
      
86
      
1,582
  
Medium credit risk
6–8 (BB+ to BB–)
    
–
      
526
      
360
      
320
      
193
      
990
      
69
      
2,458
  
Significant credit risk
9–10 (B+ to B)
    
–
      
108
      
245
      
107
      
10
      
670
      
69
      
1,209
  

 
                                                                
High credit risk and non-accrual
11–14 (B– to D)
    
–
      
14
      
58
      
9
      
11
      
753
      
24
      
869
  
Total Nonsovereign Loans
    
–
      
824
      
785
      
659
      
214
      
3,388
      
248
      
6,118
  
Total
    
$
501
    
$
8,672
    
$
8,763
    
$
9,554
    
$
12,296
    
$
116,903
    
$
248
    
$
156,937
  
Notes:
1.
Private sector programs include Trade and Supply Chain Finance Program and Microfinance Program.
2.
The amount of accrued interest excluded from the amortized cost basis in the above table is $1,749 million.

($ million)
                       
31 December 2024
                    
                                         
Private
        
 
 
Origination Year
    
sector
        
Risk Class
Risk Rating
  
2024
    
2023
    
2022
    
2021
    
2020
    
Prior
    
programs
    
Total
  
Sovereign Loans:
                                                  
Low credit risk
1–5 (AAA to BBB–)
  
$
1,721
    
$
4,464
    
$
3,982
    
$
6,594
    
$
9,902
    
$
46,925
    
$
–
    
$
73,588
  
Medium credit risk
6–8 (BB+ to BB–)
    
33
      
16
      
104
      
430
      
408
      
10,413
      
–
      
11,404
  
Significant credit risk
9–10 (B+ to B)
    
2,088
      
1,949
      
2,220
      
2,704
      
3,527
      
21,203
      
–
      
33,691
  
High credit risk and
                                                                  
non-accrual
11–14 (B– to D)
    
1,651
      
1,237
      
2,439
      
2,222
      
2,518
      
19,934
      
–
      
30,001
  
Total Sovereign Loans
      
5,493
      
7,666
      
8,745
      
11,950
      
16,355
      
98,475
      
–
      
148,684
  
Gross write-offs
      
–
      
–
      
–
      
–
      
–
      
10
      
–
      
10
  
Nonsovereign Loans:
                                                                  
Low credit risk
1–5 (AAA to BBB–)
    
(1
)
    
122
      
232
      
–
      
47
      
973
      
82
      
1,455
  
Medium credit risk
6–8 (BB+ to BB–)
    
248
      
303
      
322
      
202
      
157
      
870
      
47
      
2,149
  
Significant credit risk
9–10 (B+ to B)
    
64
      
243
      
119
      
17
      
96
      
526
      
92
      
1,157
  
High credit risk and
                                                                  
non-accrual
11–14 (B– to D)
    
14
      
65
      
9
      
11
      
–
      
848
      
12
      
959
  
Total Nonsovereign Loans
    
325
      
733
      
682
      
230
      
300
      
3,217
      
233
      
5,720
  
Gross write-offs
      
–
      
–
      
–
      
–
      
–
      
65
      
–
      
65
  
Total
    
$
5,818
    
$
8,399
    
$
9,427
    
$
12,180
    
$
16,655
    
$
101,692
    
$
233
    
$
154,404
  
Notes:
1.
Private sector programs include Trade and Supply Chain Finance Program and Microfinance Program.
2.
The amount of accrued interest excluded from the amortized cost basis in the above table is $1,427 million.

No sovereign and nonsovereign loans were written off during the three months ended 31 March 2025.

42

OCR-6

continued

No trade and supply chain finance, and microfinance programs were converted to term loans for the three months ended 31 March 2025 and for the year ended 31 December 2024.

ADB’s internal risk ratings are reviewed at least annually for sovereign and nonsovereign exposures and may be revised based on the availability of new/updated information. ADB’s internal risk ratings are mapped into the corresponding PD for sovereign and nonsovereign borrowers based on ADB’s risk rating model.

Rollforward of the Allowance for Credit Losses
The changes in the allowance for credit losses on loans outstanding during the three months ended 31 March 2025 and for the year ended 31 December 2024, are as follows:

($ million)
   
31 March 2025
    
31 December 2024
  
 
Sovereign
  
Nonsovereign
        
Sovereign
  
Nonsovereign
        
 
Loans
  
Loans
  
Total
  
Loans
  
Loans
  
Total
  
Beginning balance
  
$
254
    
$
286
    
$
540
    
$
271
    
$
381
    
$
652
  
Provision (Release of provision)
    
11
      
43
      
54
      
(7
)
    
(30
)
    
(37
)
Write-off
    
–
      
–
      
–
      
(10
)a
    
(65
)
    
(75
)
Ending balance
  
$
265
    
$
329
    
$
594
    
$
254
    
$
286
    
$
540
  
a Represents write-off of provision for HIPC debt relief to Afghanistan.

For the three months ended 31 March 2025 and for the year ended 31 December 2024, there were no loan modifications for borrowers facing financial difficulties.

Liability for Credit Losses

ADB recognizes expected credit losses for undisbursed loan commitments as these cannot be cancelled by ADB unconditionally. EAD for undisbursed commitments is estimated based on projected disbursements, prepayments, cancellations considering historical experience, and contractual amortization schedule. The credit losses are determined based on the same methodology that is used for loans. As of 31 March 2025, the amount of liability for credit losses on undisbursed loan commitments was $67 million ($64 million – 31 December 2024) and reported under ACCOUNTS PAYABLE AND OTHER LIABILITIES – Liability for credit losses on off-balance sheet exposures in the Balance Sheet.

Fair Value Disclosure

ADB does not sell its sovereign loans. As of 31 March 2025 and 31 December 2024, all loans are carried at amortized cost.

The FV hierarchy of ADB loans as of 31 March 2025 and 31 December 2024 is as follows:

($ million)
   
31 March 2025
    
31 December 2024
  
Level 1
  
$
–
    
$
–
  
Level 2
    
–
      
–
  
Level 3
    
157,341
      
154,436
  
Total at fair value
  
$
157,341
    
$
154,436
  

43

OCR-6

continued
NOTE F—GUARANTEES — OPERATIONS
ADB provides project guarantees and guarantees under its private sector programs. While counter-guarantees from the host government are required for all sovereign guarantees, guarantees for nonsovereign projects may be provided with or without a host government counter-guarantee. ADB also seeks risk-sharing arrangements that set ADB’s net exposure under a guarantee at the lowest level required to mobilize the necessary financing while maintaining a participation that is meaningful to its financing partners. A counter-guarantee takes the form of a counter-guarantor’s agreement to indemnify ADB for any payment it makes under the guarantee. In the event that a guarantee is called, ADB has the contractual right to require payment from the counter-guarantor, on demand, or as ADB may otherwise direct.

Tenors of guarantees are subject to risk considerations and market conditions. They should normally not exceed the maximum tenor of ADB’s ordinary capital resources lending operations, as may be adjusted from time to time, and there is no minimum tenor. In some cases however, guarantees may be for short tenors if the underlying obligations are short term, such as trade-related products.

The maximum potential exposure and outstanding amounts of these guarantee obligations as of 31 March 2025 and 31 December 2024 covered:

($ million)

  
31 March 2025
    
31 December 2024
  

  Maximum           Maximum    
 

 
Potential
    
Outstanding
     Potential     Outstanding  

 
Exposure
    
Amount
    
Exposure
     Amount  
Project
                        
Sovereign
                        
with counterguarantee
  
$
33
    
$
–
    
$
33
    
$
–
  
without counterguaranteea
    
6,427
      
6,343
      
6,427
      
6,344
  
     
6,460
      
6,343
      
6,460
      
6,344
  
Nonsovereign
                                
with counterguarantee
    
80
      
34
      
81
      
35
  
without counterguarantee
    
97
      
45
      
99
      
46
  
     
177
      
79
      
180
      
81
  
Subtotal
    
6,637
      
6,422
      
6,640
      
6,425
  
                                 
Private Sector Programs
                                
Nonsovereign
                                
with counterguarantee
    
715
      
715
      
964
      
964
  
without counterguarantee
    
996
      
996
      
989
      
989
  
Subtotal
    
1,711
      
1,711
      
1,953
      
1,953
  
Total
  
$
8,348
    
$
8,133
    
$
8,593
    
$
8,378
  
a Includes exposure exchange agreement amounting to $6,000 million ($6,000 million – 31 December 2024).

The maximum potential exposure represents the undiscounted future payments that ADB could be required to make, inclusive of standby portion for which ADB is committed but not currently at risk. The outstanding amount represents the guaranteed amount utilized under the related loans, which have been disbursed as of the end of a reporting period, exclusive of the standby portion.

ADB entered into an exposure exchange agreement (EEA) with other multilateral development banks (MDBs) which is recognized as financial guarantees in the financial statements. The EEA provides for the simultaneous exchange of credit risk coverage for potential non-accrual events on the exchanged sovereign exposures. In case of non-accrual events, the party providing protection would pay the other counterparty interest for any period the covered exposure is in non-accrual, and principal when the covered exposure is fully or partially written-off. The EEA transaction is treated as an exchange of two separate financial guarantees (guarantee

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provided and guarantee received). Under the EEA, (i) ADB provides a guarantee for the sovereign exposures received from the counterpart MDB (ADB as a seller of protection), and (ii) ADB receives a guarantee for the sovereign exposures transferred to the counterpart MDB (ADB as a buyer of protection). As of 31 March 2025, outstanding amount of guarantee provided under EEA amounted to $6.0 billion ($6.0 billion – 31 December 2024).

As of 31 March 2025, a total liability of $334 million ($331 million – 31 December 2024) relating to standby ready obligations for eight credit risk guarantees (eight – 31 December 2024) and one political risk guarantee (one – 31 December 2024)1 is reported in ACCOUNTS PAYABLE AND OTHER LIABILITIES – Miscellaneous in the Balance Sheet for all guarantees issued after 31 December 2002. Of this amount, $286 million ($293 million – 31 December 2024) pertains to EEA.

Credit Quality Information

For guarantees, each transaction is reviewed and assigned a rating based on the same methodology as the loans, that is broadly aligned with the rating approach of international rating agencies (See Note E). The risk ratings are used to monitor the credit quality of guarantees.

Liability for Credit Losses

ADB recorded a liability for estimated expected credit losses on off-balance sheet credit exposures over the contractual lifetime of guarantees. The credit losses are estimated based on the same methodology that is used for loans (See Note E). The liability for credit losses on off-balance sheet exposures for guarantees is reviewed quarterly, and the amount to adjust the liability is recorded in the Statement of Income and Expenses as Provision for credit losses.

As of 31 March 2025, a liability of $51 million ($56 million – 31 December 2024) for the expected credit losses from guarantees have been included in ACCOUNTS PAYABLE AND OTHER LIABILITIES – Liability for credit losses on off-balance sheet exposures in the Balance Sheet.

Fair Value Disclosure

As of 31 March 2025 and 31 December 2024, all of ADB’s future guarantee receivables and guarantee liabilities are classified as Level 3 within the FV hierarchy.

Future guarantee receivables and guarantee liabilities are stated at discounted present value using significant unobservable inputs such as discount rates applicable to individual guarantee contracts that are internally determined and are classified under Level 3. An increase (decrease) in discount rates generally results in a decrease (increase) in the FV of the guarantees.

The valuation technique and significant unobservable quantitative input for guarantee receivables/guarantee liabilities classified as Level 3 as of 31 March 2025 and 31 December 2024 are as follows:

   
Unobservable
        
Valuation Technique
  
Input
  
31 March 2025
  
31 December 2024
Discounted cash flows
  
Discount rates
2.22%
2.22%

1
ADB provides two primary guarantee products – a credit guarantee and a political risk guarantee. ADB’s credit guarantee is designed as credit enhancements for eligible projects to cover risks that the project and its commercial cofinancing partners cannot easily absorb or manage on their own. ADB also provides political risk guarantees to cover specifically defined political risks such as expropriation, currency inconvertibility or non-transfer. Reducing these risks can make a significant difference in mobilizing private sector financing for projects.

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The following table presents the changes in the carrying amounts of ADB’s Level 3 future guarantee receivable/liability for the three months ended 31 March 2025 and for the year ended 31 December 2024:

($ million)
   
Guarantee Receivable/Liability
  
   
31 March 2025
    
31 December 2024
  
Balance, beginning of the period
  
$
331
    
$
207
  
Issuances
    
16
      
172
  
Amortization
    
(13
)
    
(48
)
Balance, end of the period
  
$
334
    
$
331
  






Note: There were no realized/unrealized gains and losses included in earnings and other comprehensive income (loss).

NOTE G—EQUITY INVESTMENTS — OPERATIONS

ADB’s equity investments may be in the form of direct equity investments (e.g. common, preferred, or other capital stock) or through private equity funds. All equity investments (except for those that are accounted for under the equity method) are reported at FV with changes in FV reported in the Statement of Income and Expenses under NET UNREALIZED (LOSSES) GAINS. Realized gains and losses are reported in the Statement of Income and Expenses under NET REALIZED (LOSSES) GAINS from equity investments – operations and are measured by the difference between cost and sales proceeds. Previously recognized unrealized gains and losses are reversed upon sale of investments.

Breakdown of equity investments as of 31 March 2025 and 31 December 2024 are as follows:

($ million)
            

 
31 March 2025
    
31 December 2024
  
Equity method
  
$
1,303
    
$
1,254
  
Fair value method
    
399
      
373
  
Total
  
$
1,702
    
$
1,627
  

Additional information relating to equity investments reported at FV are as follows:

($ million)
      
As of
  
31 March 2025
   
31 December 2024
  
Cost
  
$
375
    
$
333
  
Fair value
    
399
      
373
  
Gross unrealized gains
    
90
      
98
  
Gross unrealized losses
    
(66
)
    
(58
)
                 
For the three months ended 31 March:
    
2025
      
2024
  
Net unrealized (losses) gains
  
$
(16
)
  
$
5
  
Net realized gains
    
1
      
2
  
Net (losses) gains
    
(15
)
    
7
  












As of 31 March 2025, approved equity investments that have not been committed/signed amounted to $32 million ($14 million – 31 December 2024) and committed/signed equity investments that have not been disbursed amounted to $746 million ($761 million – 31 December 2024).

Fair Value Disclosure

ADB’s equity investments reported at FV as of 31 March 2025 were $399 million ($373 million – 31 December 2024). Equity investments with readily determinable market prices are valued using quoted prices in active markets and are classified as Level 1. Equity investments valued using inputs other than quoted prices within Level 1 that are observable, such as prices of recent investments, are classified as

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Level 2. Equity investments valued with financial models using unobservable inputs are classified as Level 3.

The FV hierarchy of ADB’s equity investments at FV as of 31 March 2025 and 31 December 2024 is as follows:

($ million)
             
   
31 March 2025
    
31 December 2024
  
Level 1
  
$
84
    
$
96
  
Level 2
    
148
      
124
  
Level 3
    
167
      
153
  
Total equity investments at fair value
  
$
399
    
$
373
  

The valuation techniques and significant unobservable inputs for equity investments classified as Level 3 as of 31 March 2025 and 31 December 2024 are presented as follows.


  
Fair Value
  
 
Range
Valuation Technique  
($ million)
   Unobservable Inputs  
(Weighted Average)a
31 March 2025             
Discounted cash flow
   $ 34
  
Discount rate
     15.10% – 23.70% (18.67%)
Comparable valuations     80
   Price-to-book multiples
    0.48x – 1.07x(0.86x)

        EV/EBITDA     15.40x
Net asset value    
53
   Discount     40%
    $ 167           
                  
31 December 2024                 
Discounted cash flow   $ 19
   Discount rate     13.4% – 14.6% (14.24%)
Comparable valuations     85
   Price-to-book multiples
    0.50x – 1.10x(0.92x)
          EV/EBITDA     (17.50x)
Net asset value
     49
   Discount     (40%)
    $
 153
          

EV/EBITDA = enterprise value/earnings before interest, taxes, depreciation, and amortization. WACC = weighted average cost of capital.
a Unobservable inputs were weighted by the relative fair value of the instruments.

An increase (decrease) in the discount rate, independently, will decrease (increase) the FV of equity investments. Conversely, significant increase (decrease) in price-to-book multiples, and EV/EBITDA will generally increase (decrease) the FV of the equity investments. The valuation technique used for one Level 2 and one Level 3 equity investments was changed during the three months ended 31 March 2025 (two Level 2 and two Level 3 equity investments – for the year ended 31 December 2024) to reflect a more relevant FV measurement.

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The following table presents the changes in the carrying amounts of ADB’s Level 3 equity investment for the three months ended 31 March 2025 and for the year ended 31 December 2024:

($ million)
   
Equity investments under FV Method
  
   
31 March 2025
    
31 December 2024
  
Balance, beginning of period
  
$
153
    
$
240
  
Transfer to Level 3
    
25
      
34
  
Disbursement
    
–
      
0
  
Divestment
    
(0
)
    
(48
)
Reclassified out of Level 3
    
(8
)
    
(24
)
Total unrealized losses
                
Included in earningsa
    
(5
)
    
(44
)
Included in other comprehensive income (loss)b
    
2
      
(5
)
Balance, end of period
  
$
167
    
$
153
  

               
The amount of total losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at reporting datea
  
$
(7
)
  
$
(41
)

0 = less than $0.5 million.
a Included in net unrealized (losses) gains (OCR-2).
b Included in accumulated translation adjustments (Note M).

NOTE H—OTHER DEBT SECURITIES — OPERATIONS

ADB’s financial assistance to nonsovereign entities in its developing member countries may be made by way of subscription to an entity’s debt instruments such as bonds and debentures issued for the purpose of financing development projects. Investments in other debt securities may be classified as held-to-maturity (HTM) or AFS based on the intent and ability of ADB to hold these securities to maturity. HTM securities are reported at amortized cost while AFS securities are reported at FV. As of 31 March 2025 and 31 December 2024, HTM and AFS other debt securities are as follows:

($ million)
   
31 March 2025
    
31 December 2024
  
Available for sale
  
$
124
    
$
120
  
Held-to-maturity
    
492
      
515
  
     
616
      
635
  
Allowance for credit losses
    
(13
)
    
(14
)
Total
  
$
603
    
$
621
  

The amortized cost and FV of the outstanding other debt securities by contractual maturity as of 31 March 2025 and 31 December 2024 are presented below:

($ million)
   
31 March 2025
    
31 December 2024
  

 
Amortized
Cost
    
Fair Value
    
Amortized
Cost
    
Fair Value
  
Due in one year or less
  
$
172
    
$
193
    
$
179
    
$
202
  
Due after one year through five years
    
401
      
399
      
411
      
407
  
Due after five years through ten years
    
42
      
32
      
48
      
35
  
Due after ten years through fifteen years
    
–
      
–
      
–
      
–
  
Due after fifteen years through twenty years
    
0
      
2
      
–
      
1
  
Total
  
$
615
    
$
626
    
$
638
    
$
645
  
0 = less than $0.5 million.

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Credit Quality Information

For HTM debt securities, each transaction is reviewed and assigned a rating based on the same methodology as the loans, that is broadly aligned with the rating approach of international rating agencies (See Note E). The risk ratings are used to monitor the credit quality of HTM debt securities.

The amortized cost basis by origination  year and internal risk rating for HTM debt  securities  as of 31 March 2025 and 31 December 2024 is as follows:

($ million)
     
31 March 2025
  
        Origination Year        
Risk Class
  
Risk Rating
  
2025
    
2024
    
2023
    
2022
    
2021
    
Prior
    
Total
  
Low credit risk
  
1-5 (AAA to BBB–)
  
$
–
    
$
–
    
$
–
    
$
 10
    
$
–
    
$
–
    
$
10
  
Medium credit risk
  
6-8 (BB+ to BB–)
    
–
      
24
      
88
      
24
      
36
      
202
      
374
  
Significant credit risk
  
9-10 (B+ to B)
    
–
      
12
      
7
      
–
      
–
      
–
      
19
  
High credit risk and
non-accrual
  
11-14 (B– to D)
    
–
      
–
      
–
      
–
      
–
       89       89
  
Total       $ –     $ 36     $ 95     $ 34
     $ 36
     $ 291     $ 492  
Note: The amount of accrued interest excluded from the amortized cost basis in the above table is $10 million.

($ million)
        
31 December 2024
  
        
Origination Year
      
Risk Class
  
Risk Rating
  
2024
    
2023
    
2022
    
2021
    
2020
    
Prior
    
 Total  
Low credit risk
  
1-5(AAA to BBB–)
  
$
–
    
$
–
    
$
10
    
$
–
    
$
–
    
$
–
    
$
10
  
Medium credit risk
  
6-8(BB+ to BB–)
    
24
      
92
      
25
      
40
      
38
      
172
      
391
  
Significant credit risk
    9-10 (B+ to B)    
12
      
7
      
7
      
–
      
–
      
–
      
26
  
High credit risk and
                                                            
non-accrual
    11-14 (B– to D)    
–
      
–
      
–
      
–
      
–
      
88
      
88
  
Total
      
$
36
    
$
99
    
$
42
    
$
40
    
$
38
    
$
260
    
$
515
  
Note: The amount of accrued interest excluded from the amortized cost basis in the above table is $12 million.

Internal risk ratings of HTM debt securities are updated at least annually and may be revised based on the availability of new/updated information. Internal risk ratings are mapped into the corresponding probability of default for issuers of HTM debt securities based on ADB’s risk rating model.

Rollforward of the Allowance for Credit Losses

The changes in the allowance for credit losses on outstanding other debt securities for the three months ended 31 March 2025 and for the year ended 31 December 2024 are as follows:

($ million)
   
31 March 2025
    
31 December 2024
  
Balance, beginning of the period
  
$
14
    
$
4
  
(Release of provision) Provision
    
(1
)
    
10
  
Balance, end of the period
  
$
13
    
$
14
  

0 = less than $0.5 million.

Past Due Status and Non-Accrual Status

ADB places HTM debt securities in non-accrual status when the principal, interest, or other charges are overdue by more than 180 days or in case of securities that are not yet overdue by more than 180 days, when there is expectation that interest and other charges will not be collected when they become due, at the

49

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point when such information is known. Interest on non-accruing HTM debt securities is included in revenue only to the extent that payments have been received by ADB.

As of 31 March 2025 and 31 December 2024, there are no HTM debt securities that are past due or in non-accrual status.

Liability for Credit Losses

ADB recorded a liability for estimated expected credit losses on off-balance sheet credit exposures over the undisbursed portion of HTM debt securities. The credit losses are estimated based on the same methodology that is used for loans (See Note E). The liability for credit losses on off-balance sheet exposures for HTM debt securities is reviewed quarterly, and the amount to adjust the liability is recorded in net income as Provision for credit losses.

As of 31 March 2025, the amount of liability for credit losses on undisbursed HTM debt securities commitments was $1 million ($1 million – 31 December 2024) and reported under ACCOUNTS PAYABLE AND OTHER LIABILITIES – Liability for credit losses on off-balance sheet exposures in the Balance Sheet.

Fair Value Disclosure

The FV hierarchy of ADB’s other debt securities as of 31 March 2025 and 31 December 2024 is as follows:

($ million)
   
31 March 2025
    
31 December 2024
  
Level 1
  
$
113
    
$
95
  
Level 2
    
–
      
15
  
Level 3
    
513
      
535
  
Total at fair value
  
$
626
    
$
645
  






There are two AFS other debt security classified as Level 3 as of 31 March 2025 and 31 December 2024.

The valuation technique and significant unobservable input for AFS other debt securities classified as Level 3 as of 31 March 2025 and 31 December 2024 are as follows:

    Unobservable  
Range (Average)a
  
Valuation Technique
Inputs
  
31 March 2025
    
31 December 2024
  
Discounted cash flows
Discount rate
  
18.30%

 
18.30%

Scenario-based
             
financial model
Future cash flows
  
20.00% to 93.35% (83.75%)
    
79.00% to 96.00% (80.00%)
  

a Average represents the arithmetic average of the unobservable inputs.

Significant increase (decrease) in the discount rate, independently, will generally decrease (increase) the FV of the debt securities. The valuation technique used for one Level 2 ODS was changed during the three months ended 31 March 2025 (one Level 2 ODS – for year ended 31 December 2024) to reflect a more relevant FV measurement. The transfer into Level 3 in 2024 was due to change of valuation method from price of recent investment to discounted cash flow.

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The following table presents the changes in the carrying amounts of ADB’s Level 3 other debt securities at fair value method for the three months ended 31 March 2025 and for the year ended 31 December 2024:

($ million)
   
31 March 2025
    
31 December 2024
  
Balance, beginning of the period
  
$
10
    
$
–
  
Transfer into Level 3
    
–
      
10
  

               
Total unrealized gains (losses) included in accumulated other comprehensive incomea
    
1
      
(0
)
Balance, end of the period
  
$
11
    
$
10
  
The amount of total gains for the period included in other comprehensive  income attributable to the change in net unrealized gains or lossesb relating assets still held at the reporting date
   $ 1
    $ (0
)

0 = less than $0.5 million.
a Included in unrealized holding gains from other debt securities — operations and accumulated translation adjustments (Note M).
b Included in unrealized holding gains from other debt securities — operations (Note M).

Additional information relating to other debt securities classified as AFS are as follows:

($ million)
      
As of
  
31 March 2025
   
31 December 2024
  
Amortized cost
  
$
123
    
$
123
  
Fair value
    
124
      
120
  
Gross unrealized gains
    
4
      
1
  
Gross unrealized losses
    
(3
)
    
(4
)
                 
For the three months ended 31 March:
  
 2025
    2024  
Change in net unrealized gains or losses from prior period
   $ 4
    $ 2
 
0 = less than $0.5 million.

As of 31 March 2025, ADB had the intent to hold and was not required to sell the AFS other debt securities of which the fair value is lower than amortized cost. ADB also assessed and determined that the decline of fair value below the amortized cost basis of the AFS securities was not due to credit-related factors.

NOTE I—DERIVATIVE INSTRUMENTS

ADB uses derivative instruments such as interest rate swaps, currency swaps, and FX swaps and forward contracts for asset and liability management of individual positions and portfolios. The FV of outstanding currency and interest rate swap agreements is determined at the estimated amount that ADB would receive or pay to terminate the agreements using market-based valuation models. The basis of valuation is the present value of expected cash flows based on market data.

Included in DERIVATIVE ASSETS/DERIVATIVE LIABILITIES – Borrowings are interest rate and currency swaps that ADB has entered into for the purpose of hedging specific borrowings. The terms of ADB’s interest rate and currency swaps usually match the terms of particular borrowings. Included in DERIVATIVE ASSETS/DERIVATIVE LIABILITIES – Investments for liquidity purpose are interest rate, currency and FX swaps and forward contracts that ADB has entered into for the purpose of hedging specific investments. Included in DERIVATIVE ASSETS/DERIVATIVE LIABILITIES – Loans – Operations are interest rate, and currency swaps that ADB has entered into for the purpose of hedging specific loans or a portfolio of loans. The loans related swaps were executed to better align the composition of certain outstanding loans with funding sources and future requirements.

Future dated derivatives as of 31 March 2025 amounted to $1,338 million for derivative assets ($620 million – 31 December 2024) and $926 million for derivative liabilities ($477 million – 31 December 2024).

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Fair Value Disclosure

The FV hierarchy of ADB’s derivatives and the balance sheet location as of 31 March 2025 and 31 December 2024 are as follows:

($ million) 
  Balance Sheet   Fair Value Measurements        
  Location
  Total   Level 1   Level 2   Level 3  
31 March 2025                    
Assets                    
Borrowings related derivatives
Derivative Assets
- Borrowings
                  
Currency swaps
    
$
69,895
    
$
–
    
$
67,037
    
$
2,858
  
Interest rate swaps
        
353
      
–
      
352
      
1
  
Investments related derivatives
Derivative Assets
- Investments for
                                  
Currency swaps
      
19,055
      
–
      
19,055
      
–
  
Interest rate swaps
liquidity purpose
      
254
      
–
      
254
      
–
  
Foreign exchange swaps
        
8,543
      
–
      
8,543
      
–
  
Foreign exchange forward
        
150
      
–
      
150
      
–
  
Loans related derivatives
 Derivative Assets
- Loans — Operations
                                  
Currency swaps
      
16,942
      
–
      
16,942
      
–
  
Interest rate swaps
        
228
      
–
      
228
      
–
  
Total assets at fair value
       $
115,420
     $ –     $
112,561
     $
2,859
  
                                     
Liabilities
                                    
Borrowings related derivatives
Derivative Liabilities
- Borrowings
      

                         
Currency swaps
     $
73,944
     $
 –     $
 73,944     $
 –  
Interest rate swaps
        
3,444
       –       3,444       0
  
Investments related derivatives
Derivative Liabilities
- Investments for
liquidity purpose
                             
 
Currency swaps
      
17,358
       –      
17,358
       –  
Interest rate swaps
      
68
       –      
68
       –  
Foreign exchange swaps
        
8,563
       –      
8,563
       –  
Foreign exchange forward
        
152
       –      
152
       –  
Loans related derivatives
Derivative Liabilities
- Loans —
Operations
      
                     
 
Currency swaps
      
14,746
       –      
12,084
       2,662
  
Interest rate swaps
        
88
       –      
88
       –  
Total liabilities at fair value
       $
118,363
     $
 –     $
115,701
     $
2,662
  
0 = less than $0.5 million.

52

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continued

($ million) 
  Balance Sheet   Fair Value Measurements

Location
  
Total
   
Level 1
    
Level 2
    
Level 3
31 December 2024                        
Assets                        
Borrowings related derivatives
Derivative Assets
                      
Currency swaps
- Borrowings
  
$
61,141
    
$
–
    
$
58,608
    
$
2,533
Interest rate swaps
      
143
      
–
      
143
      
0
Foreign exchange swaps
   
588
      
–
       588
      –
Investments related derivatives
Derivative Assets
                             
Currency swaps
 - Investments for
   
16,485
      
–
      
16,485
      
–
Interest rate swaps
 liquidity purpose
   
299
      
–
      
299
      
–
Foreign exchange swaps
      
9,077
      
–
      
9,077
      
–
Foreign exchange forward
      
201
      
–
      
201
      
–
Loans related derivatives
Derivative Assets
                              
Currency swaps
- Loans —
Operations
    
17,415
      
–
      
17,415
      
–
Interest rate swaps
      
256
      
–
      
256
       –
Total assets at fair value
    
$
105,605
    
$
–
    
$
103,072
    
$
2,533
                                 
Liabilities
                             
Borrowings related derivatives
Derivative Liabilities
                              
Currency swaps
- Borrowings
  
$
66,502
    
$
–
    
$
66,502
    
$
–
Interest rate swaps
      
4,615
      
–
      
4,614
      
1
Foreign exchange swaps
      
586
       –       586       –
Investments related
derivatives
 Derivative Liabilities                              
Currency swaps
- Investments for
    
14,388
      
–
      
14,388
      
–
Interest rate swaps
 liquidity purpose    
99
      
–
      
99
      
–
Foreign exchange swaps
      
8,599
      
–
      
8,599
      
–
Foreign exchange forward
      
206
      
–
      
206
      
–
Loans related derivatives
Derivative Liabilities
                              
Currency swaps
- Loans —
Operations
    
14,698
      
–
      
12,986
      
1,712
Interest rate swaps
      
123
      
–
      
123
       –
Total liabilities at fair value
    
$
109,816
    
$
–
    
$
108,103
    
$
1,713

0 = less than $0.5 million.

ADB uses discounted cash flow models in determining FV of derivatives. Market inputs, such as yield curves, FX rates, cross currency basis spreads, yield basis spread, interest rates and FX volatilities and correlation are obtained from market data providers and applied to the models. ADB has a process to validate the appropriateness of the models and inputs in determining the hierarchy levels. This involves evaluating the nature of rates and spreads to determine if they are indicative and binding.

53


OCR-6

 

continued


The valuation technique and quantitative information on significant unobservable inputs used in valuing ADB’s derivative instruments classified as Level 3 as of 31 March 2025 and 31 December 2024 are presented below:

      
Range (Weighted Average)a
Valuation Technique
Unobservable Inputs
31 March 2025
  
31 December 2024
Discounted cash flows
  
Basis swap spreads
  
-0.48% to 42.55% (58.39%)
  
-0.47% to 38.83% (6.05%)

a Unobservable inputs were weighted by the relative fair value of the instruments.

A significant increase (decrease) in the basis swap spread will generally decrease (increase) the FV of derivatives.

The following tables present the changes in the carrying amounts of ADB’s Level 3 derivative assets and derivative liabilities for the three months ended 31 March 2025 and for the year ended 31 December 2024:

($ million)
   
Borrowings related
        
   
derivatives
   
Loans related derivatives
  
   
Assets
    
Liabilities
    
Assets
    
Liabilities
  
31 March 2025
                        
Balance, beginning of period
  
$
2,533
    
$
(1
)
  
$
0
    
$
(1,712
)
Total realized/unrealized gains (losses)
                                
Included in earningsa
    
15
      
0
      
–
      
(78
)
Included in other comprehensive (loss) incomeb
    
84
      
0
      
–
      
39
  
Issuances
    
294
      
–
      
–
      
(1,028
)
Maturities/Redemptions
    
(67
)
    
–
      
–
      
117
  
Balance, end of period
  
$
2,859
    
$
(1
)
  
$
–
    
$
(2,662
)

                               
The amount of total gains (losses) for the period included in earnings attributable to the change in net unrealized gains or lossesa relating to assets/liabilities still held at the reporting date
  
$
(66
)
  
$
1
    
$
–
    
$
(81
)
                                 
31 December 2024
                                
Balance, beginning of year
  
$
2,083
    
$
(1
)
  
$
0
    
$
(913
)
Total realized/unrealized gains (losses)
                                
Included in earningsa
    
(57
)
    
(0
)
    
(0
)
    
(41
)
Included in other comprehensive (loss) incomeb
    
(112
)
    
0
      
–
      
27
  
Issuances
    
1,073
      
–
      
–
      
(910
)
Maturities/Redemptions
    
(454
)
    
–
      
–
      
125
  
Balance, end of year
  
$
2,533
    
$
(1
)
  
$
0
    
$
(1,712
)

                               
The amount of total gains (losses) for the year  included in earnings attributable to the change in  net unrealized gains or lossesa relating to assets/liabilities still held at the reporting date
  
$
(21
)
  
$
(0
)
  
$
0
    
$
(39
)

0 = less than $0.5 million.
a Included in net unrealized gains (losses) (OCR-2).
b Included in accumulated translation adjustments (Note M).

54


OCR-6

 

continued


Effect of Derivative Instruments on the Statement of Income and Expenses

ADB reports changes in the FV of its derivative instruments as part of net unrealized gains and losses in its Statement of Income and Expenses while all interest income, expenses, and related amortization of discounts, premiums, and fees are reported as part of revenue and expenses. These are summarized below:

($ million)
         
Amount of Gain (Loss) recognized
  

  Location of Gain (Loss)
 
in Income (Expenses) on
  

  recognized in Income (Expenses)
 
Derivatives
  

 
on Derivatives
  
31 March2025
    
31 March 2024
  
Borrowings related derivatives
                
Currency swaps
  
Borrowings and related expenses
  
$
(189
)
  
$
(347
)

 
Net Realized Losses
    
–
      
–
  

 
Net Unrealized (Losses) Gains
    
(63
)
    
(127
)
                     
Interest rate swaps
  
Borrowings and related expenses
    
(423
)
    
(791
)

 
Net Unrealized (Losses) Gains
    
1,150
      
(752
)
Foreign exchange swaps
  
Borrowings and related expenses
    
1
      
–
  

 
Net Unrealized (Losses) Gains
    
(0
)
    
–
  
         
$
476
    
$
(2,017
)
Investments related derivatives
                    
Currency swaps
  
Revenue from Investments for
                

 
liquidity purpose
  
$
143
    
$
202
  

 
Net Unrealized (Losses) Gains
    
19
      
47
  
                     
Interest rate swaps
  
Revenue from Investments for
                

 
liquidity purpose
    
16
      
19
  

 
Net Unrealized (Losses) Gains
    
(26
)
    
21
  
                     
Foreign exchange swaps
  
Revenue from Investments for
                

 
liquidity purpose
    
69
      
59
  

 
Net Unrealized (Losses) Gains
    
(1
)
    
(2
)
         
$
220
    
$
346
  
Loans related derivatives
                    
Currency swaps
  
Revenue from Loans — Operations
  
$
653
    
$
196
  

 
Net Unrealized (Losses) Gains
    
(9
)
    
(89
)

 







 
Interest rate swaps
  
Revenue from Loans — Operations
    
6
      
8
  

 
Net Unrealized (Losses) Gains
    
5
      
(9
)
         
$
655
    
$
106
  

Counterparty Credit Risks

ADB has entered into several agreements with its derivative counterparties under the International Swaps and Derivatives Association (ISDA) Master Agreement and the Master Agreement of the National Association of Financial Market Institutional Investors. The agreements provide for the right of a party to terminate the derivative transaction if any of the various events of default and termination events specified occur. Events of default include failure to pay and cross default. Termination events include the situation where (i) the long term unsecured and unsubordinated indebtedness of ADB or the counterparty ceases to be rated at the minimum credit rating level negotiated with the relevant counterparty, or (ii) such indebtedness ceases to be rated by any international credit rating agencies. If ADB’s counterparties are entitled under the agreements to terminate their derivative transactions with ADB, ADB will be required to pay an amount equal to its net liability position with each counterparty (in the case of counterparties who have entered into the ISDA Master Agreement absent of local market constraints) and an amount equal to its gross liability position with each counterparty (in the case of counterparties without enforceable netting agreement).

55

OCR-6

continued

Counterparty credit risk is also mitigated by requiring counterparties to post collateral based on specified credit rating driven thresholds. As of 31 March 2025, ADB had received collateral of $805 million ($1,053 million – 31 December 2024) in connection with swap agreements, comprising of $708 million ($827 million – 31 December 2024) in cash included under swap related and other collateral in the balance sheet and $97 million ($226 million – 31 December 2024) in liquid securities.

ADB has elected not to offset any derivative instruments by counterparty in the balance sheet. Gross amounts of DERIVATIVE ASSETS and DERIVATIVE LIABILITIES not offset in the balance sheet that are subject to enforceable master netting agreements as of 31 March 2025 and 31 December 2024 are summarized as follows (see Note D for PAYABLE UNDER SECURITIES REPURCHASE AGREEMENTS):

($ million)
  

 
31 March 2025
    
31 December 2024
  

 
Derivative
    
Derivative
    
Derivative
    
Derivative
  

 
assets
    
liabilities
    
assets
    
liabilities
  
Gross amounts presented in the balance sheet
  
$
115,420
    
$
(118,363
)
  
$
105,605
    
$
(109,816
)
Gross amounts not offset in the balance sheet
      


 


 


   
Financial instruments
    
(114,641
)
    
114,641
      
(104,561
)
    
104,561
  
Collateral receiveda
    
(417
)
    
–
      
(728
)
    
–
  
Net amountb
  
$
362
    
$
(3,722
)
  
$
316
    
$
(5,255
)
a
Includes cash and securities collateral used to cover positive marked-to-market exposures.
b
ADB is not required to post collateral to counterparties when it is in a net liability position.

NOTE J—PROPERTY, FURNITURE, AND EQUIPMENT

Property, furniture, and equipment includes (i) land; (ii) buildings and improvements; (iii) office furniture and equipment; and (iv) right-of-use asset. Breakdown as of 31 March 2025 and 31 December 2024 is as follows:

($ million)
  
   
31 March 2025
   
31 December 2024
  
Land
  
$
10
    
$
10
  
Buildings and improvements
    
119
      
121
  
Office furniture and equipment
    
134
      
127
  
Right-of-use asset
    
62
      
51
  
Total
  
$
325
    
$
309
  

Land, buildings and improvements, and office furniture and equipment are shown at net book value.

Right-of-use asset pertains to lease of real properties such as offices, buildings and parking lots in field offices, classified as operating lease. Right-of-use asset is derived from the lease liability, which is the present value of future lease payments using the applicable discount rate, adjusted by prepaid rent and deferred rent. As of 31 March 2025, lease liability amounted to $57 million ($45 million – 31 December 2024) and is recorded as part of Miscellaneous under ACCOUNTS PAYABLE AND OTHER LIABILITIES.

56

OCR-6

continued

NOTE K—RELATED PARTY TRANSACTIONS

As of 31 March 2025 and 31 December 2024, ADB had the following net receivables and payables to ADF, other Special Funds, external trust funds under ADB administration (Trust Funds), and employee benefit plans consisting of the Staff Retirement Plan, the Retiree Medical Plan Fund, and the Defined Contribution Plan. These are included in Miscellaneous under OTHER ASSETS and ACCOUNTS PAYABLE AND OTHER LIABILITIES:

($ million)
  

 
31 March 2025
    
31 December 2024
  
Amounts receivable from:
            
Asian Development Fund (Note N)
  
$
20
    
$
29
  
Other Special Funds
    
1
      
1
  
Trust Funds and Others—net
    
6
      
5
  
Employee Benefit Plans—net
    
–
      
3
  
Total
  
$
27
    
$
38
  
Amounts payable to:
                
Employee Benefit Plans—net
  
$
6
    
$
–
  

NOTE L—BORROWINGS

The key objective of ADB’s borrowing strategy is to raise funds at the most stable and lowest possible cost for the benefit of its borrowers. ADB uses financial derivative instruments in connection with its borrowing activities to increase cost efficiency, while achieving risk management objectives. Currency and interest rate swaps enable ADB to raise operationally needed currencies in a cost-efficient way and to maintain its borrowing presence in the major capital markets. Interest rate swaps are used to reduce interest rate mismatches arising from lending and liquidity operations.

The carrying amounts of ADB’s outstanding borrowings as of 31 March 2025 and 31 December 2024 are as follows:

($ million)




 
   
31 March 2025
    
31 December 2024
  
At Amortized cost
  
$
2,376
    
$
2,394
  
At Fair value
    
158,462
      
144,123
  
Total
  
$
160,838
    
$
146,517
  

Fair Value Disclosure

Plain vanilla borrowings are valued using discounted cash flow methods with market-based observable inputs such as yield curves, FX rates, and credit spreads. On some borrowings, significant unobservable input is also used such as derived credit spread. Structured borrowings issued by ADB are valued using financial models that discount future cash flows and simulated expected cash flows. These involve the use of pay-off profiles within the realm of accepted market valuation models such as Hull-White and Black-Scholes. The model incorporates market observable inputs, such as yield curves, FX rates, credit spreads, interest rates and FX volatilities and correlation.

ADB reports borrowings that are swapped or are intended to be swapped in the future and selected floating- rate borrowings at FV. Changes in FV are reported in the Statement of Income and Expenses under NET UNREALIZED (LOSSES) GAINS. ADB measures the portion of the FV change due to instrument-specific credit risk and presents the amount separately in Accumulated other comprehensive income (loss) account.

57

OCR-6

continued

The FV hierarchy of ADB’s outstanding borrowings reported at amortized cost and FV as of 31 March 2025 and 31 December 2024 are as follows:

($ million)
            
   
31 March 2025
    
31 December 2024
  
At Amortized cost
            
Level 1
  
$
–
    
$
–
  
Level 2
    
2,046
      
2,040
  
Level 3
    
433
      
441
  
Subtotal
    
2,479
      
2,481
  
At Fair value
                
Level 1
    
–
      
–
  
Level 2
    
149,347
      
136,948
  
Level 3
    
9,115
      
7,175
  
Subtotal
    
158,462
      
144,123
  
Total borrowings at fair value
  
$
160,941
    
$
146,604
  

For Level 3 borrowings carried at FV, the quantitative information on significant unobservable input used for valuation as of 31 March 2025 and 31 December 2024 are presented below:


  






Range (Weighted Average)a
Valuation Technique
Unobservable Inputs
31 March 2025
31 December 2024
Discounted cash flows
Derived credit spreads
-0.71% to 5.94% (0.19%)
-1.54% to 6.11% (0.1%)

a Unobservable inputs were weighted by the relative fair value of the instruments.


A significant increase (decrease) in credit spreads generally decreases (increases) the FV of the borrowings.

The following table presents the changes in the carrying amounts of ADB’s Level 3 borrowings reported at FV for the three months ended 31 March 2025 and the year ended 31 December 2024:

($ million)
            
   
31 March 2025
    
31 December 2024
  
Balance, beginning of the period
  
$
7,175
    
$
7,033
  
Total losses (gains) - (realized/unrealized)
                
Included in earningsa
    
37
      
(27
)
Included in other comprehensive incomeb
    
85
      
(151
)
Issuances
    
2,092
      
3,540
  
Maturities/Redemptions
    
(274
)
    
(3,220
)
Balance, end of the period
  
$
9,115
    
$
7,175
  
The amount of total losses for the period included in earnings attributable to the change in net unrealized gains or lossesa relating to liabilities still held at the reporting date
  
$
(6
)
  
$
(29
)
The amount of total losses (gains) for the period included in other comprehensive income attributable to the change in net unrealized gains or lossesc relating to liabilities still held at the reporting date
  
$
(42
)
  
$
54
  
a
Included in net unrealized (losses) gains (OCR-2).
b
Included in unrealized holding gains from borrowings and accumulated translation adjustments (Note M).
c
Included in unrealized holding gains from borrowings (Note M).

58

OCR-6

continued

NOTE M—EQUITY

Capital Stock

The authorized capital stock of ADB as of 31 March 2025 totaling 10,639,233 shares, was fully subscribed by members. Of the subscribed shares, 10,106,089 are “callable” and 533,144 are “paid-in”. The “callable” share capital is subject to call by ADB only as and when required to meet ADB’s obligations incurred on borrowings of funds for inclusion in its OCR or on guarantees chargeable to such resources. The “paid-in” share capital has been received, partly in convertible currencies and partly in the currency of the subscribing member which may be convertible. In accordance with Article 6, paragraph 3 of the Charter, ADB accepts nonnegotiable, noninterest-bearing demand obligations in satisfaction of the portion payable in the currency of the member, provided such currency is not required by ADB for the conduct of its operations. Nonnegotiable, noninterest- bearing demand obligations received on demand amounted to $11 million ($12 million – 31 December 2024).

As of 31 March 2025, the value of the SDR in terms of the US dollar was $1.325639 ($1.304130 – 31 December 2024) giving a value for each share of ADB’s capital equivalent to $13,256.39 ($13,041.30 – 31 December 2024).

In September 2024, Israel became ADB’s 69th member, subscribing to 150 shares of ADB’s authorized capital stock.

Allocation of One-Time Income from Asset Transfer from ADF

On 15 March 2017, the Board of Governors approved the allocation of the one-time income of $30,748 million from ADF assets transfer to OCR ordinary reserve effective 1 January 2017, pursuant to Resolution No. 387.

Accumulated Other Comprehensive Income (Loss)

Comprehensive income (loss) has two major components: net income and other comprehensive income (loss) comprising gains and losses affecting equity that, under US GAAP, are excluded from net income (loss). Other comprehensive income (loss) includes items such as translation adjustments for functional currencies; pension and postretirement liability adjustment; and unrealized gains and losses on financial instruments classified as AFS, equity investments under equity method and fair value changes of borrowings related to ADB’s own credit spread.

The changes in Accumulated Other Comprehensive Income (Loss) balances for the three months ended 31 March 2025 and 2024 are as follows:

($ million)  
         
Unrealized Holding (Losses) Gains
          
Pension/
    
Accumulated
  
   
Accumulated
    
Investments
    
Equity
    
Other Debt
          
Postretirement
    
Other
  
   
Translation
    
for liquidity
    investments —     Securities —          
Liability
    
Comprehensive
  
   
Adjustments
    
purposea
    
Operations
    
Operations
    
Borrowings
    
Adjustments
    
Income (Loss)
  
Balance, 1 January 2025
  
$
(161
)
  
$
(848
)
  
$
(4
)
  
$
(3
)
  
$
253
    
$
524
    
$
(239
)
Other comprehensive
                                                        
income (loss) before
                                                        
reclassifications
    
89
      
293
      
–
      
4
      
2
      
–
      
388
  
Amounts reclassified
                                                        
from accumulated other
                                                        
comprehensive income
                                                        
(loss)
    
–
      
4
      
–
      
–
      
–
      
(6
)
    
(2
)
Net current-period other
                                                        
comprehensive income (loss)
    
89
      
297
      
–
      
4
      
2
      
(6
)
    
386
  
Balance, 31 March 2025
  
$
(72
)
  
$
(551
)
  
$
(4
)
  
$
1
    
$
255
    
$
518
    
$
147
  

a
Includes securities transferred under repurchase agreements.

59

OCR-6

continued

($ million)
        Unrealized Holding (Losses) Gains   Pension/   Accumulated
    Accumulated
Translation
Adjustments		   Investments
 for liquidity
purposea		   Equity
investments —
Operations		   Other Debt
Securities —
Operations		   Borrowings   Postretirement
Liability
Adjustments		  
Other
Comprehensive
Income (Loss)
Balance, 1 January 2024   $ 58     $ (1,057 )   $ (16 )   $ (5 )   $ 496     $ 221     $ (303 )
Other comprehensive (loss) income before reclassifications     (70 )
     (118
 )
     5  
     2
    (388 )     –       (659 )
Amounts reclassified from accumulated other comprehensive income (loss)     –       7
    –       –       –       (6 )     1  
Net current-period other comprehensive (loss) income     (70 )
     (111
 )
     5
    2
    (388 )     (6 )     (568 )
Balance, 31 March 2024
   $ (12)
     $ (1,168 )   $ (11 )   $ (3 )   $ 108     $ 215     $ (871
 )
a
Includes securities transferred under repurchase agreements.

The reclassifications of Accumulated Other Comprehensive Income (Loss) to Net Income for the three months ended 31 March 2025 and 2024 are presented below:

($ million)            
Accumulated Other Comprehensive
Income (Loss) Components
  
Amounts Reclassified from
Accumulated Other
Comprehensive Income (Loss)a
  

Affected Line Item in the Statement of

Income and Expenses 

    2025       2024    
Unrealized Holding (Losses) Gains                    
Investments for liquidity purpose   $ (4 )   $ (7
 )   NET REALIZED LOSSES
                    From investments for liquidity purpose
Pension/Postretirement Liability                    
Adjustments Actuarial losses     6       6     Administrative expenses
Total reclassifications for the period   $ 2
  $ (1 )    
a
Amounts in parentheses indicate debits to net income.

NOTE N—INCOME AND EXPENSES

REVENUE from loan operations for the three months ended 31 March 2025 was $1,784 million ($2,051 million – 2024). This comprises interest income totaling $1,774 million ($2,042 million – 2024), and commitment charges and other income2 totaling $10 million ($9 million – 2024). The average return on the loan portfolio for the three months ended 31 March 2025 was 4.4% (5.2% – 2024).

REVENUE from investments for liquidity purpose for the three months ended 31 March 2025 was $616 million ($653 million – 2024). This comprises interest income including interest earned for securities transferred under repurchase agreements, and securities purchased under resale arrangements. The annualized rate of return on the average investments held during the three months ended 31 March 2025, excluding unrealized gains and losses on investments, was 4.3% (5.1% – 2024).

REVENUE from equity investment operations for the three months ended 31 March 2025 amounted to $62 million ($41 million – 2024). This comprises gains from equity method investments totaling $61 million

2
 Includes amortized front-end fees and loan origination costs, risk participation charges, and other loan-related income and/or expenses.

60

OCR-6

continued

($40 million – 2024), and dividend and other income and expenses from equity investments totaling $1 million ($1 million – 2024).

REVENUE from other debt securities for the three months ended 31 March 2025 was $12 million ($11 million – 2024) consisting mostly of interest income.

REVENUE from other sources for the three months ended 31 March 2025 was $27 million ($29 million – 2024). This included income received as administration fees for projects and/or programs totaling $6 million ($10 million – 2024), and other miscellaneous income of $21 million ($19 million – 2024).

Borrowings and related expenses for the three months ended 31 March 2025 amounted to $1,856 million ($2,203 million – 2024). These consist of interest expense and other related expenses such as amortization of issuance costs, discounts, and premiums. The average cost of borrowings outstanding after swaps was 4.5% (5.5% – 2024).

Administrative expenses for the three months ended 31 March 2025 were allocated between OCR and the ADF in proportion to the relative volume of operational activities. Of the total administrative expenses for the three months ended 31 March 2025 of $206 million ($181 million – 2024), $20 million ($18 million – 2024) was accordingly charged to the ADF.

For the three months ended 31 March 2025, the net provision for credit losses amounted to $52 million ($26 million net release of provision for credit losses – 2024).

Net realized losses for the three months ended 31 March 2025 was $1 million ($6 million – 2024). This included losses on sale of investments for liquidity purpose totaling $2 million ($8 million – 2024) and gains on sale of equity investments of $1 million ($2 million – 2024).

The following table provides information on the net unrealized gains or losses included in income for the three months ended 31 March 2025 and 2024:

($ million)
            
   
2025
    
2024
  
Fair value changes from:
            
Borrowings and related derivatives
  
$
(50
)
  
$
285
  
Investments related derivatives
    
(8
)
    
66
  
Loans related derivatives
    
(4
)
    
(98
)
Equity investments
    
(16
)
    
6
  
Reclassification of unrealized gains on divested equity investment
    
–
      
(1
)
Translation adjustments of nonfunctional currencies
    
2
      
3
  
Total
  
$
(76
)
  
$
261
  

61

OCR-6
 
continued

NOTE O—OTHER FAIR VALUE DISCLOSURES
 
The carrying amounts and FVs of ADB’s financial instruments as of 31 March 2025 and 31 December 2024 are summarized below:
 
($ million)
            
   
31 March 2025
    
31 December 2024
  
   
Carrying
    
Fair
    
Carrying
    
Fair
  
   
Amount
    
Value
    
Amount
    
Value
  
On-balance sheet financial instruments:
                        
ASSETS:
                        
Due from banks
  
$
1,447
    
$
1,447
    
$
2,235
    
$
2,235
  
Investments for liquidity purpose (Note C)
    
58,565
      
58,565
      
46,695
      
46,695
  
Securities transferred under repurchase agreements (Note C)
    
908
      
908
      
–
      
–
  
Securities purchased under resale arrangements (Note C)
    
237
      
237
      
260
      
260
  
Loans outstanding (Note E)
    
156,343
      
157,341
      
153,864
      
154,436
  
Equity investments — operations carried at fair value (Note G)
    
399
      
399
      
373
      
373
  
Other debt securities — operations (Note H)
    
603
      
626
      
621
      
645
  
Derivative assets - borrowings (Note I)
    
70,248
      
70,248
      
61,872
      
61,872
  
Derivative assets - investments for liquidity purpose (Note I)
    
28,002
      
28,002
      
26,062
      
26,062
  
Derivative assets - loans — operations (Note I)
    
17,170
      
17,170
      
17,671
      
17,671
  
Swap related and other collateral (Note I)
    
739
      
739
      
857
      
857
  
Future guarantee receivable (Note F)
    
334
      
334
      
331
      
331
  
                                 
LIABILITIES:
                                
Borrowings (Note L)
    
160,838
      
160,941
      
146,517
      
146,604
  
Derivative liabilities - borrowings (Note I)
    
77,388
      
77,388
      
71,703
      
71,703
  
Derivative liabilities - investments for liquidity purpose (Note I)
    
26,141
      
26,141
      
23,292
      
23,292
  
Derivative liabilities - loans — operations (Note I)
    
14,834
      
14,834
      
14,821
      
14,821
  
Payable under securities repurchase agreements (Note D)
    
908
      
908
      
–
      
–
  
Swap related and other collateral (Note I)
    
739
      
739
      
857
      
857
  
Guarantee liability (Note F)
    
334
      
334
      
331
      
331
  

As of 31 March 2025 and 31 December 2024, ADB has no material assets or liabilities measured at FV on a non-recurring basis.
 
NOTE P—SUBSEQUENT EVENTS
 
ADB has evaluated subsequent events after 31 March 2025 through 26 May 2025, the date these condensed financial statements are available for issuance. During this period, ADB has raised additional borrowings of approximately $4,588 million in various currencies.
 
On 5 May 2025, the Board of Governors approved the allocation of (i) $1,016 million to ordinary reserve; (ii) $394 million to the ADF; and (iii) $130 million to the Technical Assistance Special Fund, in each case, as part of OCR’s 2024 net income allocation.

62
 
ADF-1
 
ASIAN DEVELOPMENT BANK—ASIAN DEVELOPMENT FUND
CONDENSED BALANCE SHEET
31 March 2025 and 31 December 2024
Expressed in Millions of US Dollars

   
31 March
    
31 December
  
   
(Unaudited)
    
(Audited)
  
ASSETS
                        
DUE FROM BANKS
        
$
2
          
$
16
  
INVESTMENTS FOR LIQUIDITY PURPOSE (Note C)
                            
Government or government-related obligations
  
$
3,679
            
$
3,641
          
Time deposits
    
199
              
289
          
Corporate obligations
    
766
      
4,644
      
707
      
4,637
  
                                 
SECURITIES PURCHASED UNDER
                                
RESALE ARRANGEMENTS (Note C)
            
23
              
24
  
ACCRUED REVENUE
            
29
              
29
  
ADVANCES UNDER GRANTS (Note I)
            
321
              
385
  
OTHER ASSETS (Note F)
            
55
              
53
  
                                 
TOTAL
          
$
5,074
            
$
5,144
  
                                 
LIABILITIES AND FUND BALANCES
                                
ACCOUNTS PAYABLE AND OTHER LIABILITIES
                                
Payable to related funds and other liabilities (Note E)
          
$
21
            
$
29
  
Advance payments on contributions (Note F)
            
103
              
103
  
Undisbursed grants (Note I)
            
3,138
              
3,044
  
Total Liabilities
            
3,262
              
3,176
  
FUND BALANCES (ADF-4)
                                
Contributions received
                                
Contributed resources (Note F)
  
$
36,707
            
$
36,694
          
Unamortized discount
    
(37
)
    
36,670
      
(37
)
    
36,657
  
Transfers from Ordinary Capital Resources and Technical Assistance Special Fund
           
3,910
              
3,910
  
             
40,580
              
40,567
  

                               
Nonnegotiable, noninterest-bearing demand obligations on account of contributions
           
(398
)
            
(419
)
Accumulated deficit
                                
From assets transfer to OCR
    
(31,029
)
            
(31,029
)
        
From others
    
(5,746
)
    
(36,775
)
    
(5,497
)
    
(36,526
)
Accumulated other comprehensive loss (Note G)
            
(1,595
)
            
(1,654
)
Total Fund Balance
            
1,812
              
1,968
  
                                 
TOTAL
          
$
5,074
            
$
5,144
  
The accompanying Notes are an integral part of these financial statements (ADF-6).

63

ADF-2
 
ASIAN DEVELOPMENT BANK—ASIAN DEVELOPMENT FUND
CONDENSED STATEMENT OF INCOME AND EXPENSES—UNAUDITED
For the Three Months Ended 31 March 2025 and 2024
Expressed in Millions of US Dollars

   
2025
    
2024
  
                 
REVENUE FROM INVESTMENTS FOR LIQUIDITY PURPOSE (Note C)
  
$
35
    
$
32
  
                 
EXPENSES
                
Grants (Note I)
    
(262
)
    
(131
)
Administrative expenses (Notes E and H)
    
(20
)
    
(18
)
Amortization of discounts on contributions
    
(1
)
    
(1
)
Others—net
    
(0
)
    
(1
)
TOTAL EXPENSES
    
(283
)
    
(151
)
NET UNREALIZED LOSSES
    
(0
)
    
(0
)
                 
NET LOSS
  
$
(248
)
  
$
(119
)
0 = less than $0.5 million.
The accompanying Notes are an integral part of these financial statements (ADF-6).

64
 
ADF-3
 
ASIAN DEVELOPMENT BANK—ASIAN DEVELOPMENT FUND
CONDENSED STATEMENT OF COMPREHENSIVE LOSS—UNAUDITED
For the Three Months Ended 31 March 2025 and 2024
Expressed in Millions of US Dollars

   
2025
    
2024
  
                 
NET LOSS (ADF-2)
  
$
(248
)
  
$
(119
)
                 
Other comprehensive income (loss) (Note G)
                
Unrealized investment holding gains (losses) on investments for liquidity purpose
    
59
      
(22
)
                 
COMPREHENSIVE LOSS
  
$
(189
)
  
$
(141
)
The accompanying Notes are an integral part of these financial statements (ADF-6).
 
ADF-4

CONDENSED STATEMENT OF CHANGES IN FUND BALANCES —UNAUDITED
For the Three Months Ended 31 March 2025 and 2024
Expressed in Millions of US Dollars

   
2025
    
2024
  
             
Balance, 1 January
  
$
1,968
    
$
1,947
  
Comprehensive loss (ADF-3, Note G)
    
(189
)
    
(141
)
Contributions made available for operational commitment
    
13
      
(19
)
Net amortization of discount on donor's contribution
    
0
      
1
  
Demand obligations received
    
–
      
0
  
Encashment of demand obligations
    
20
      
63
  
Balance, 31 March
  
$
1,812
    
$
1,851
  
Note: 0 = less than $0.5 million.
The accompanying Notes are an integral part of these financial statements (ADF-6).

65

ADF-5

ASIAN DEVELOPMENT BANK—ASIAN DEVELOPMENT FUND
CONDENSED STATEMENT OF CASH FLOWS—UNAUDITED
For the Three Months Ended 31 March 2025 and 2024
Expressed in Millions of US Dollars

   
2025
    
2024
  
CASH FLOWS FROM OPERATING ACTIVITIES
            
Interest received from investments for liquidity purpose
  
$
33
    
$
30
  
Interest received from securities purchased under resale arrangement
    
0
      
0
  
Administrative expenses paid
    
(28
)
    
(26
)
Grants disbursed
    
(103
)
    
(46
)
Net Cash Used in Operating Activities
    
(98
)
    
(42
)
                 
CASH FLOWS FROM INVESTING ACTIVITIES
                
Maturities of investments for liquidity purpose
    
4,469
      
5,759
  
Purchases of investments for liquidity purpose
    
(4,415
)
    
(5,767
)
Receipts from securities purchased under resale arrangements
    
1,419
      
1,402
  
Payments for securities purchased under resale arrangements
    
(1,418
)
    
(1,396
)
Net Cash Provided by (Used in) Investing Activities
    
55
      
(2
)
                 
CASH FLOWS FROM FINANCING ACTIVITIES
                
Contributions received and encashed
    
29
      
44
  
Cash Provided by Financing Activities
    
29
      
44
  
Effect of Exchange Rate Changes on Due from Banks
    
0
      
(0
)
Net Decrease in Due from Banks
    
(14
)
    
(0
)
Due from Banks at Beginning of Period
    
16
      
2
  
Due from Banks at End of Period
  
$
2
    
$
2
  
0 = less than $0.5 million.
The accompanying Notes are an integral part of these financial statements (ADF-6).

66
ADF-6

ASIAN DEVELOPMENT BANK—ASIAN DEVELOPMENT FUND
NOTES TO CONDENSED FINANCIAL STATEMENTS
For the Three Months Ended 31 March 2025 and 2024
(Unaudited)
NOTE A—INTERIM FINANCIAL INFORMATION

These unaudited condensed interim financial statements should be read in conjunction with the 31 December 2024 audited financial statements and the notes included therein. In the opinion of management, all material adjustments necessary for a fair statement of the results of operations for the three months ended 31 March 2025 and 2024 have been included. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year.

Replenishments
In September 2024, the Board of Governors adopted a resolution providing for the 13th replenishment of the Asian Development Fund (ADF 14) and the eighth regularized replenishment of the Technical Assistance Special Fund (TASF).1 The replenishment provides resources to finance the ADF grant program and the TASF operations from 2025-2028. As of 31 March 2025, ADB received instruments of contributions from 12 donors totaling $533 million, which represent 21% of the total ADF and TASF donor contribution commitment amounting to $2,564 million. Donors agreed to allocate $560 million out of the total donor contributions to TASF.

NOTE B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Presentation of the Financial Statements
The financial statements of ADF are prepared in accordance with the accounting principles generally accepted in the United States of America (US GAAP).

The preparation of financial statements requires management to make reasonable estimates and assumptions that affect the reported amounts of assets and liabilities as of the end of the period and the reported amounts of revenue and expenses during the period. The actual results could differ from those estimates. Judgements have been used in the valuation of certain financial instruments.
The US dollar is the functional and reporting currency for the purpose of presenting the financial position and the results of operations.
Fair Value of Financial Instruments

Accounting Standards Codification (ASC) 820, “Fair Value Measurement” defines fair value (FV) as the price that would be received to sell an asset or paid to transfer a liability at measurement date in an orderly transaction among willing participants with an assumption that the transaction takes place in the entity’s principal market, or in the absence of principal market, in the most advantageous market for the asset or liability. The most advantageous market is the market where the sale of the asset or transfer of liability would maximize the amount received for the asset or minimize the amount paid to transfer the liability. The FV measurement is not adjusted for transaction cost.

Fair Value Hierarchy
ASC 820 establishes a FV hierarchy that gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1), next priority to observable market inputs or market corroborated data (Level 2), and the lowest priority to unobservable inputs without market corroborated data (Level 3).

1 ADB. 2024. Board of Governors’ Resolution No. 427: Thirteenth Replenishment of the Asian Development Fund and Eighth Regularized Replenishment of the Technical Assistance Special Fund.

67

ADF-6

continued

The FVs of ADB’s financial assets and liabilities are categorized as follows:

Level 1: FVs are based on unadjusted quoted prices for identical assets or liabilities in active markets.
Level 2: FVs are based on quoted prices for similar assets or liabilities in active markets or markets that are not active; or valuation models for which significant inputs are obtained from market-based data that are observable.
Level 3: FVs are based on prices or valuation models for which significant inputs to the model are unobservable.
Contributions and Contributed Resources

Upon effectivity of replenishment, contributions committed are recorded as Contributed Resources when the Instruments of Contribution are acknowledged and are made available for operational commitment. Contributions are generally paid in the currency of the contributor either in cash or promissory notes, based on agreed payment and encashment schedules.

Donors have the option to pay their contributions under the accelerated note encashment (ANE) program and receive a discount. ADF invests the cash generated from this program and the investment income is used to finance operations. The related contributions are recorded at the full undiscounted amount, and the discount is amortized over the standard encashment period of 10 years for ADF IX and ADF 12, 9 years for ADF X and ADF XI, and 11 years for ADF 13 and ADF 14.

Advanced Payments on Contributions
Payments received in advance or as qualified contributions that cannot be made available for operational commitment are recorded as advance payments on contributions and included under ACCOUNTS PAYABLE AND OTHER LIABILITIES.

Allowance for Credit Losses
When an available-for-sale (AFS) debt security’s fair value is lower than amortized cost, ADB recognizes impairment losses in earnings if ADB has the intent to sell the debt securities or if it is more likely than not that ADB will be required to sell the debt securities before recovery of the amortized cost. When ADB intends to hold or is not required to sell the debt securities, ADB will evaluate to determine if a credit loss exists. A portion of the decline in fair value below amortized cost basis due to credit-related factors will be recognized as an allowance for credit losses with a related charge to provision for credit losses. For certain financial assets, such as Due from Banks and Securities Purchased under Resale Arrangements, no expected loss is determined based on the credit quality.

A liability is recorded for off-balance sheet credit exposures for financial guarantees over the contractual period. ADB estimates the expected credit losses based on relevant information about past events, current conditions, and reasonable and supportable forecasts. The expected credit losses are measured as the product of exposure at default (EAD), probability of default (PD), and loss given default (LGD).
Accounting and Reporting Developments
In March 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2024-02, “Codification Improvements – Amendments to Remove References to the Concepts Statements”. This Update contains amendments to the Codification that remove references to various FASB Concepts Statements. The amendments in this Update are effective for public business entities for fiscal years beginning after 15 December 2024. For all other entities, the amendments are effective for fiscal years beginning after 15 December 2025. Early adoption is permitted for all entities. ADB does not expect the adoption of this Update to have a material impact on the financial statements.

68
ADF-6

continued

NOTE C—INVESTMENTS FOR LIQUIDITY PURPOSE

Investment securities and time deposits are classified as available for sale and are reported at FV. Unrealized gains and losses are reported in FUND BALANCES as part of Accumulated other comprehensive loss. Realized gains and losses are measured by the difference between amortized cost and the net proceeds of sales.
Interest income on investment securities and time deposits is recognized as earned, and reported net of amortizations of premiums and discounts.
ADB records time deposits on the settlement dates and all other investment securities on the trade date.

The FV and amortized cost of investments for liquidity purpose as of 31 March 2025 and 31 December 2024 are as follows:

($ million)
            

  31 March 2025     31 December 2024  

 
Fair Value
    
Amortized
Cost
    
Fair Value
    
Amortized
Cost
  
Due in one year or less
  
$
1,426
    
$
1,437
    
$
1,455
    
$
1,469
  
Due after one year through five years
    
2,504
      
2,566
      
2,490
      
2,586
  
Due after five years through ten years
    
711
      
733
      
686
      
731
  
Due after ten years through fifteen years
    
3
      
3
      
6
      
6
  
Total
  
$
4,644
    
$
4,739
    
$
4,637
    
$
4,792
  

Additional information relating to investments in government or government-related obligations and corporate obligations classified as available for sale are as follows:

($ million)
      
 
  
31 March 2025
   
31 December 2024
  
As of
Amortized cost
  
$
4,540
    
$
4,503
  
Fair value
    
4,444
      
4,348
  
Gross unrealized gains
    
16
      
4
  
Gross unrealized losses
    
(111
)
    
(159
)
                 
For the three months ended 31 March
    
2025
      
2024
  
Change in net unrealized losses from prior period
    
59
      
(22
)

The annualized rate of return on the average investments for liquidity purpose held during the three months ended 31 March 2025, including securities purchased under resale arrangements, was 3.0% (2.8% – 2024) excluding unrealized gains and losses on investments, and 4.3% (2.4% – 2024) including unrealized gains and losses on investments.

The table below provides a listing of investments that sustained unrealized losses as of 31 March 2025 and 31 December 2024. There were 152 government or government-related obligations (159 – 31 December 2024) and nine corporate obligations (10 – 31 December 2024) that have been in continuous losses for over one year.

69

ADF-6
continued
($ million)
                                    
 
  
One year or less
    
Over one year
    
Total
  
 
  
Fair
  
Unrealized
    
Fair
    
Unrealized
    
Fair
    
Unrealized
  
 
  
Value
    
Losses
    
Value
    
Losses
    
Value
    
Losses
  
As of 31 March 2025
                                    
Government or government- related obligations
  
$
389
    
$
5
    
$
2,670
    
$
102
    
$
3,060
    
$
107
  
Corporate obligations
    
31
      
0
      
161
      
4
      
192
      
4
  
Total
  
$
420
    
$
5
    
$
2,831
    
$
106
    
$
3,252
    
$
111
  
As of 31 December 2024
                                                
Government or government-related obligations
  
$
718
    
$
17
    
$
2,777
    
$
135
    
$
3,495
    
$
153
  
Corporate obligations
    
76
      
0
      
170
      
6
      
246
      
6
  
Total
  
$
794
    
$
17
    
$
2,947
    
$
141
    
$
3,741
    
$
159
  
0 = less than $0.5 million.
Note: Numbers may not sum precisely because of rounding.
As of 31 March 2025, ADB had the intent and ability to hold the AFS debt securities of which the fair value is lower than amortized cost. ADB also assessed and determined that the decline of fair value below the amortized cost basis of the AFS securities was not due to credit-related factors.
Fair Value Disclosure

The FV of INVESTMENTS FOR LIQUIDITY PURPOSE and related financial assets as of 31 March 2025 and 31 December 2024 are as follows:

($ million)
                  
 
        
Fair Value Measurements
  
 
  
Total
    
Level 1
    
Level 2
    
Level 3
  
31 March 2025
                        
Investments for liquidity purpose
Government or government-
related obligations
 
$
3,679
    
$
3,492
    
$
187
    
$
–
  
Time deposits
    
199
      
–
      
199
      
–
  
Corporate obligations
    
766
      
766
      
–
      
–
  
Securities purchased under resale arrangements
    
23
      
–
      
23
      
–
  
Total at fair value
  
$
4,667
    
$
4,258
    
$
409
    
$
–
  
31 December 2024
                                
Investments for liquidity purpose
Government or government-
related obligations
 
$
3,641
    
$
3,470
    
$
171
    
$
–
  
Time deposits
    
289
      
–
      
289
      
–
  
Corporate obligations
    
707
      
707
      
–
      
–
  
Securities purchased under resale arrangements
    
24
      
–
      
24
      
–
  
Total at fair value
  
$
4,661
    
$
4,177
    
$
484
    
$
–
  

If available, active market quotes are used to measure fair values of investment securities and related financial assets. Otherwise, they are categorized as Level 2 or Level 3, and valuation is provided by independent valuation services, custodians, and asset managers, or based on discounted cash flow model using market observable inputs, such as interest rates, foreign exchange rates, basis spreads, cross currency rates, and volatilities. Time deposits are reported at cost, which approximates FV.

70
ADF-6
continued

NOTE D—GUARANTEES

ADB provides guarantees under the Private Sector Window (PSW) of the ADF. Such guarantees include credit guarantees where certain principal is covered. As of 31 March 2025, the guarantees have a maximum potential exposure of $6 million ($6 million – 31 December 2024) and an outstanding amount of $5 million ($5 million – 31 December 2024). The maximum potential exposure represents the undiscounted future payments that ADB could be required to make, inclusive of standby portion for which ADB is committed but not currently at risk. The outstanding amount represents the guaranteed amount utilized under the related loans, which have been disbursed as of the end of a reporting period, exclusive of the standby portion.
NOTE E—RELATED PARTY TRANSACTIONS AND OTHER LIABILITIES

Included in Payable to related funds and other liabilities as of 31 March 2025 is the net amount of $20 million ($29 million – 31 December 2024) payable to ordinary capital resources (OCR). The payable to OCR represents the amount of administrative and operational expenses allocated to the ADF pending settlement (see Note H).

As of 31 March 2025, ADF guarantees to OCR under the PSW had a maximum potential exposure of $6 million ($6 million – 31 December 2024).

NOTE F—CONTRIBUTED RESOURCES AND ADVANCED CONTRIBUTIONS
As of 31 March 2025, a total of $1,917 million was committed and acknowledged for ADF 13, of which $1,584 million was made available for operational commitment, and a total of $12 million was committed and acknowledged for ADF 14, of which $3 million was made available for operational commitment, and recorded in Contributed Resources.

Advance payments on contributions received from donors as of 31 March 2025 totaled $103 million ($103 million – 31 December 2024) and are presented under ACCOUNTS PAYABLE AND OTHER LIABILITIES. Of this amount, $48 million ($50 million – 31 December 2024) were received in cash, while the remaining $55 million ($53 million – 31 December 2024) were received in demand obligations and reported under OTHER ASSETS.
NOTE G—ACCUMULATED OTHER COMPREHENSIVE LOSS
Comprehensive Loss has two major components: net loss (ADF-2) and other comprehensive income (loss) (ADF-3). Other comprehensive income (loss) includes unrealized gains and losses on available for sale securities.
The following table presents the changes in Accumulated other comprehensive loss balances for the three months ended 31 March 2025 and 2024:
($ million)
      
   
Accumulated other
comprehensive loss
 
    2025
    2024  
Balance, 1 January
  
$
(1,654
)
  
$
(1,685
)

               
Unrealized Holding Gains (Losses) on Investments for Liquidity Purpose
Other comprehensive gains (losses) before reclassification
    
59
      
(22
)
Balance, 31 March
  
$
(1,595
)
  
$
(1,707
)

There were no reclassifications of Accumulated other comprehensive loss to Income and Expenses for the three months ended 31 March 2025 and 2024.

71

ADF-6


continued

NOTE H—ADMINISTRATIVE EXPENSES

Administrative expenses represent administration charges allocated to ADF, which is an apportionment of all administrative expenses of ADB in the proportion of the relative volume of operational activities.
NOTE I—GRANTS AND UNDISBURSED GRANTS

Undisbursed grants are denominated in US dollars and represent effective grants not yet disbursed and unliquidated. During the period, 19 grants (13 grants – 2024) became effective resulting in a total Grants expense of $262 million ($131 million – 2024), net of $0.2 million ($63 million – 2024) undisbursed grants that were reversed as reduction in grant expenses. The undisbursed grants of $3,138 million as of 31 March 2025 ($3,044 million – 31 December 2024) includes $321 million ($385 million – 31 December 2024) advances under grants.

The FV of undisbursed commitments approximates the amount outstanding, because ADB expects that disbursements will substantially be made for all the projects/programs covered by the commitments.
NOTE J—SUBSEQUENT EVENTS

ADB has evaluated subsequent events after 31 March 2025 through 26 May 2025, the date these condensed financial statements are available for issuance. On 23 April 2025, the thirteenth replenishment of the ADF (ADF 14) and the eighth regularized replenishment of the TASF (TASF 8) became effective when instruments of contribution deposited with ADB for unqualified contributions reached an amount equivalent to $1,694 million, or more than 50% of all pledged contributions, in accordance with para. 5(a) of Resolution No. 427.
On 5 May 2025, the Board of Governors approved the transfer of $394 million to the ADF as part of OCR’s 2024 net income allocation.

72
TASF-1
ASIAN DEVELOPMENT BANK—TECHNICAL ASSISTANCE SPECIAL FUND
CONDENSED STATEMENT OF FINANCIAL POSITION
31 March 2025 and 31 December 2024
Expressed in Thousands of US Dollars

   
31 March
    
31 December
  
ASSETS
  
(Unaudited)
    
(Audited)
  
                         
DUE FROM BANKS (Note H)
        
$
5,737
          
$
7,553
  
                             
INVESTMENTS FOR LIQUIDITY PURPOSE
                            
(Notes C and H)
Government or government-related obligations
  
$
386,443
            
$
352,280
          
Time deposits
    
242,230
              
317,496
          
Corporate obligations
    
161,163
      
789,836
      
150,122
      
819,898
  
                                 
ACCRUED REVENUE
            
3,666
              
3,512
  
                                 
DUE FROM CONTRIBUTORS (Note F)
            
41,778
              
39,217
  
                                 
ADVANCES FOR TECHNICAL ASSISTANCE (Note E)
            
2,933
              
4,579
  
                                 
OTHER ASSETS (Notes C and D)
            
766
              
2,227
  
                                 
TOTAL
          
$
844,716
            
$
876,986
  

LIABILITIES AND UNCOMMITTED BALANCES
                        
                         
ACCOUNTS PAYABLE AND OTHER LIABILITIES
                        
Payable to related funds (Note D)
  
$
386
          
$
464
        
Deferred credits
    
500
    
$
886
    
–     $
464
  
                                 
UNDISBURSED TECHNICAL ASSISTANCE (Note E)
            
741,060
              
782,952
  
                                 
TOTAL LIABILITIES
            
741,946
              
783,416
  
                                 
UNCOMMITTED BALANCES (TASF-2), represented by:
                                
Net assets without donor restrictions
            
102,770
              
93,570
  
                                 
TOTAL
          
$
844,716
            
$
876,986
  

The accompanying Notes are an integral part of these condensed financial statements (TASF-4).

73
TASF-2
ASIAN DEVELOPMENT BANK—TECHNICAL ASSISTANCE SPECIAL FUND
CONDENSED STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS—UNAUDITED
For the Three Months Ended 31 March 2025 and 2024
Expressed in Thousands of US Dollars

 
2025
    
2024
  
CHANGES IN NET ASSETS WITHOUT DONOR RESTRICTIONS
            
CONTRIBUTIONS (Note F)
  
$
3,242
    
$
–
  
                 
REVENUE
                
From investments for liquidity purpose—net (Note C)
    
12,906
      
6,252
  
From other sources (Notes D)
    
2,633
      
2,614
  
                 
Total
    
18,781
      
8,866
  
                 
EXPENSES
                
Technical assistance—net (Notes E and G)
    
(7,226
)
    
(5,042
)
Administrative expenses (Note D)
    
(2,456
)
    
(2,452
)
Financial expenses
    
(16
)
    
(14
)
                 
Total
    
(9,698
)
    
(7,508
)
                 
CONTRIBUTIONS AND REVENUE IN EXCESS OF EXPENSES
    
9,083
      
1,358
  
                 
EXCHANGE GAINS (LOSSES)—net
    
117
      
(4,936
)
                 
INCREASE (DECREASE) IN NET ASSETS
    
9,200
      
(3,578
)
                 
NET ASSETS AT BEGINNING OF PERIOD
    
93,570
      
213,299
  
                 
NET ASSETS AT END OF PERIOD
  
$
102,770
    
$
209,721
  

The accompanying Notes are an integral part of these condensed financial statements (TASF-4).

74
TASF-3

ASIAN DEVELOPMENT BANK—TECHNICAL ASSISTANCE SPECIAL FUND
CONDENSED STATEMENT OF CASH FLOWS—UNAUDITED
For the Three Months Ended 31 March 2025 and 2024
Expressed in Thousands of US Dollars


  
2025
    
2024
  
CASH FLOWS FROM OPERATING ACTIVITIES
            
Contributions received
  
$
1,276
    
$
111
  
Interest received on investments for liquidity purpose
    
6,976
      
7,558
  
Technical assistance disbursed
    
(46,068
)
    
(47,549
)
Financial expenses paid
    
(16
)
    
(14
)
Others—net
    
178
      
162
  
                 
Net Cash Used in Operating Activities
    
(37,654
)
    
(39,732
)
                 
CASH FLOWS FROM INVESTING ACTIVITIES
                
Maturities of investments for liquidity purpose
    
2,844,256
      
1,336,165
  
Purchases of investments for liquidity purpose
    
(2,808,418
)
    
(1,296,934
)
                 
Net Cash Provided by Investing Activities
    
35,838
      
39,231
  
                 
Effect of Exchange Rate Changes on Due from Banks
    
(0
)
    
(2
)
                 
Net Decrease in Due from Banks
    
(1,816
)
    
(503
)
                 
Due from Banks at Beginning of Period
    
7,553
      
7,947
  
                 
Due from Banks at End of Period
  
$
5,737
    
$
7,444
  

0 is less than $500.
The accompanying Notes are an integral part of these condensed financial statements (TASF-4).

75
TASF-4

ASIAN DEVELOPMENT BANK—TECHNICAL ASSISTANCE SPECIAL FUND
NOTES TO CONDENSED FINANCIAL STATEMENTS
For the Three Months Ended 31 March 2025 and 2024
(Unaudited)

NOTE A—INTERIM FINANCIAL INFORMATION

These unaudited condensed interim financial statements should be read in conjunction with the 31 December 2024 audited financial statements and the notes included therein. In the opinion of management, all material adjustments necessary for a fair statement of the results of operations for the three months ended 31 March 2025 and 2024 have been included. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.

Replenishments

In November 2020, the Board of Governors adopted a resolution for the 12th replenishment of the Asian Development Fund and the seventh regularized replenishment of the Technical Assistance Special Fund (ADF 13).1 The replenishment which became effective on 8 June 2021 provides grant financing to eligible recipients from 2021 to 2024. Donors agreed to allocate $517 million to TASF out of the total replenishment. As of 31 March 2025, TASF received contribution commitments from 32 donors totaling $517 million, or 100% of the total commitment.
In September 2024, the Board of Governors adopted a resolution for the 13th replenishment of the ADF and the eighth regularized replenishment of the TASF (ADF 14).2 The replenishment will provide grant financing to eligible recipients from 2025 to 2028. Donors agreed to allocate $560 million to TASF out of the total replenishment.

NOTE B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Presentation of Financial Statements
The financial statements are presented on the basis of those for not-for-profit organizations. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (US GAAP) requires management to make reasonable estimates and assumptions that affect the reported amounts of assets, liabilities and uncommitted balances as of the end of the period and the reported amounts of revenue and expenses during the period. The actual results could differ from those estimates.

The financial statements are expressed in US dollars. The US dollar is the functional and reporting currency and is used to measure exchange gains and losses.

Fair Value of Financial Instruments

Accounting Standards Codification (ASC) 820, “Fair Value Measurement” defines fair value (FV) as the price that would be received to sell an asset or paid to transfer a liability at measurement date in an orderly transaction among willing participants with an assumption that the transaction takes place in the entity’s principal market, or in the absence of principal market, in the most advantageous market for the asset or liability. The most advantageous market is the market where the sale of the asset or transfer of liability would maximize the amount received for the asset or minimize the amount paid to transfer the liability. The FV measurement is not adjusted for transaction costs.

1
ADB. 2020. Board of Governors’ Resolution No. 408: Twelfth Replenishment of the Asian Development Fund and Seventh Regularized Replenishment of the Technical Assistance Special Fund.
2
ADB. 2024. Board of Governors’ Resolution No. 427 – Thirteenth Replenishment of the Asian Development Fund and Eighth Regularized Replenishment of the Technical Assistance Special Fund.

76
TASF-4

continued

Fair Value Hierarchy
ASC 820 establishes a FV hierarchy that gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1), next priority to observable market inputs or market corroborated data (Level 2), and the lowest priority to unobservable inputs without market corroborated data (Level 3).
The FVs of ADB’s financial assets and liabilities are categorized as follows:

Level 1: FVs are based on unadjusted quoted prices for identical assets or liabilities in active markets.
Level 2: FVs are based on quoted prices for similar assets or liabilities in active markets or markets that are not active; or valuation models for which significant inputs are obtained from market-based data that are observable.
Level 3: FVs are based on prices or valuation models for which significant inputs to the model are unobservable.

Accounting and Reporting Developments
In March 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2024-02, “Codification Improvements – Amendments to Remove References to the Concepts Statements”. This Update contains amendments to the Codification that remove references to various FASB Concepts Statements. The amendments in this Update are effective for public business entities for fiscal years beginning after 15 December 2024. For all other entities, the amendments are effective for fiscal years beginning after 15 December 2025. Early adoption is permitted for all entities. ADB does not expect the adoption of this Update to have a material impact on the financial statements.

NOTE C—INVESTMENTS FOR LIQUIDITY PURPOSE

The main investment management objective is to maintain security and liquidity. Subject to these parameters, ADB seeks the highest possible return on its investments. Investments are governed by the Investment Authority approved by the Board of Directors.
All investments for liquidity purpose held by TASF are reported at FV. Interest income earned, realized and unrealized gains and losses are included in REVENUE From investments for liquidity purpose. During the three  months  ended  31  March  2025,  REVENUE  From  investments  for  liquidity  purpose  of $12,906,000 ($6,252,000 – 2024) included income from securities, time deposits and corporate obligations of $7,170,000 ($7,339,000 – 2024), and unrealized investment holding gains of $5,736,000 ($1,087,000 losses – 2024).

The annualized rate of return on the average investments held during the three months ended 31 March 2025, based on the portfolio held at the beginning and end of each month, was 4.3% (3.8% – 2024).

The FV of INVESTMENTS FOR LIQUIDITY PURPOSE and related financial assets by contractual maturity as of 31 March 2025 and 31 December 2024 are as follows:

 ($ thousand)
                            

     
31 March 2025
          
31 December 2024
        
Investments for liquidity
                                    
purpose
0-1 year
  
> 1 year
    
Total
  
0-1 year
  
> 1 year
    
Total
  
Government or government- related obligations
  
$
92,078
    
$
294,365
    
$
386,443
    
$
64,658
    
$
287,622
    
$
352,280
  
Time deposits
    
242,230
      
–
      
242,230
      
317,496
      
–
      
317,496
  
Corporate obligations
    
49,931
      
111,232
      
161,163
      
49,773
      
101,349
      
150,122
  
Total at fair value
  
$
384,239
    
$
405,597
    
$
789,836
    
$
431,927
    
$
387,971
    
$
819,898
  

77

TASF-4

continued

Fair Value Disclosure

The FV of INVESTMENTS FOR LIQUIDITY PURPOSE and related financial assets as of 31 March 2025 and 31 December 2024 are as follows:

($ thousand)
  
   
 
         
Fair Value Measurements
  
   
Total
    
Level 1
    
Level 2
    
Level 3
  
31 March 2025
                        
Investments for liquidity purpose
                        
Government or government-related obligations
  
$
386,443
    
$
359,527
    
$
26,916
    
$
–
  
Time deposits
    
242,230
      
–
      
242,230
      
–
  
Corporate obligations
    
161,163
      
161,163
      
–
      
–
  
Total at fair value
  
$
789,836
    
$
520,690
    
$
269,146
    
$
–
  

                               
31 December 2024
                                
Investments for liquidity purpose
                                
Government or government-related obligations
  
$
352,280
    
$
299,736
    
$
52,544
     $
–
  
Time deposits
    
317,496
      
–
      
317,496
      
–
  
Corporate obligations
    
150,122
      
150,122
      
–
      
–
  
Total at fair value
  
$
819,898
    
$
449,858
    
$
370,040
    
$
–
  

If available, investments are fair valued based on active market quotes. These include government or government-related obligations. Time deposits are reported at cost, which approximates FV.

NOTE D—RELATED PARTY TRANSACTIONS

The OCR and Special Funds resources are at all times used, committed, and invested entirely separately from each other. Under the four most recent replenishments, a specific portion of the total contributions is allocated to the TASF as regularized replenishments. ADF receives the contributions from members and subsequently transfers the specified portion to the TASF. Regional technical assistance projects and program activities may be cofinanced by ADB’s other special funds and trust funds administered by ADB. Interfund accounts are settled regularly between the TASF and the other funds.

ADB does not allocate any service fees to TASF for administering Technical Assistance (TA) which involves a range of personnel services. The TASF has estimated the FV of personnel services involved in administering TA projects to be 5% of amounts disbursed for TA projects. For the three months ended 31 March 2025, the calculated service fee was $2,456,000 ($2,452,000 – 2024) recorded as Administrative expenses under EXPENSES, and REVENUE From other sources. The transaction has no impact on the net assets of TASF.

78

TASF-4

continued

The interfund account balances included in OTHER ASSETS and ACCOUNTS PAYABLE AND OTHER LIABILITIES are as follows:

($ thousand)




 

 
31 March 2025
    
31 December 2024
  
Receivable from:
            
Regional Cooperation and Integration Fund—net
  
$
138
    
$
154
  
Climate Change Fund—net
    
25
      
265
  
Japan Special Fund
    
9
      
68
  
Financial Sector Development Partnership Special Fund
    
–
      
7
  
Trust Funds—net
    
448
      
1,722
  
Total
  
$
620
    
$
2,216
  
                 
Payable to:
                
Ordinary capital resources—net
  
$
247
    
$
463
  
Financial Sector Development Partnership Special Fund
    
2
      
–
  
Total
  
$
249
    
$
463
  

NOTE E—TECHNICAL ASSISTANCE AND UNDISBURSED TECHNICAL ASSISTANCE

TA is recognized as expense in the financial statements when the project becomes effective. During the three months ended 31 March 2025, 10 TA projects and eight supplementary TA (11 TA projects and 10 supplementary TA – 2024) became effective resulting in a total TA expense of $7,226,000 ($5,042,000 – 2024), net of $5,489,000 ($6,533,000 – 2024) undisbursed TA that were reversed as a reduction in TA expenses.

Undisbursed TA are denominated in US dollars and represent effective TA not yet disbursed and unliquidated. The undisbursed TA of $741,060,000 as of 31 March 2025 ($782,952,000 – 31 December 2024) includes $2,933,000 ($4,579,000 – 31 December 2024) advances for TA.

NOTE F—CONTRIBUTIONS

During the three months ended 31 March 2025, TASF received total contributions of $3,242,000 (nil – 2024) from additional contributions from ADF 14. During the period, TASF received cash and promissory notes from ADF replenishments and direct voluntary comprising of the following:

($ thousand)




 
   
31 March 2025
    
31 March 2024
  
             
Direct Voluntary
  
$
–
    
$
70
  
                 
Regularized Replenishments
                
ADF 14
  
$
810
    
$
–
  
ADF 13
    
–
      
131
  
ADF 12
    
–
      
–
  
ADF IX
    
–
      
–
  
     
810
      
131
  
Total
  
$
810
    
$
201
  

79

TASF-4

continued

Total contributions not yet received and reported as DUE FROM CONTRIBUTORS are as follows:

($ thousand)  
   
 
             
   
31 March 2025
    
31 December 2024
  
             
Direct Voluntary
  
$
–
    
$
–
  
                 
Regularized Replenishments
                
ADF 14
  
$
2,412
    
$
–
  
ADF 13
    
15,779
      
15,779
  
ADF X
    
19,470
      
19,342
  
ADF IX
    
4,117
      
4,096
  
     
41,778
      
39,217
  
Total
  
$
41,778
    
$
39,217
  

NOTE G—TECHNICAL ASSISTANCE EXPENSES

TA expenses are classified according to their nature using the budget allocation specified in the relevant TA agreement for the TA projects that became effective during the period. The details of TA expenses for the three months ended 31 March 2025 and 2024 are as follows:

($ thousand)            

 
2025
    
2024
  
Consultants
  
$
7,703
    
$
9,619
  
Trainings and seminars
    
3,859
      
1,202
  
Studies
    
170
      
108
  
Equipment
    
10
      
22
  
Other expenses—neta
    
(4,516
)
    
(5,909
)
Total
  
$
7,226
    
$
5,042
  
a Net of undisbursed commitment balances that were reversed as a reduction in TA expenses. (See Note E).

NOTE H—LIQUIDITY AND AVAILABILITY OF RESOURCES

Liquidity risk refers to the risk that the fund has difficulties in meeting its short-term obligations. As part of TASF’s liquidity management, it has a policy to structure its financial assets to be available as its general expenditures, liabilities, and other obligations come due. In addition, TASF invests cash in excess of daily requirements in short-term investments.

As of 31 March 2025, TASF has liquidity of $389,976,000 ($439,480,000 – 31 December 2024) consisting of DUE FROM BANKS of $5,737,000 ($7,553,000 – 31 December 2024), INVESTMENTS FOR LIQUIDITY PURPOSE in Time deposits of $242,230,000 ($317,496,000 – 31 December 2024), Government or government-related obligations of $92,078,000 ($64,658,000 – 31 December 2024), and Corporate obligations of $49,931,000 ($49,773,000 – 31 December 2024), available within one year of the balance sheet date to meet cash needs for general expenditure.

NOTE I—SUBSEQUENT EVENTS

ADB has evaluated subsequent events after 31 March 2025 through 26 May 2025, the date these condensed financial statements are available for issuance. On 23 April 2025, the eighth regularized replenishment of the TASF (in conjunction with ADF 14) became effective when instruments of contribution deposited with ADB

80

TASF-4

continued

for unqualified contributions for both ADF and TASF reached an amount equivalent to $1,694,000,000, representing more than 50% of all pledged contributions reflected in Table A of Resolution No. 427 of ADB’s Board of Governors. With the effectiveness of ADF 14 on 23 April 2025, additional contributions of $386,000,000 were recognized.

On 5 May 2025, the Board of Governors approved the transfer of $130,000,000 to the TASF as part of OCR’s 2024 net income allocation.

81

JSF-1

ASIAN DEVELOPMENT BANK—JAPAN SPECIAL FUND 
CONDENSED STATEMENT OF FINANCIAL POSITION
31 March 2025 and 31 December 2024
Expressed in Thousands of US Dollars

           
31 March
            
31 December
  
           
(Unaudited)
            
(Audited)
  
ASSETS
                            
                             
DUE FROM BANKS (Note G)
          
$
1,052
            
$
1,046
  
                                 
INVESTMENTS FOR LIQUIDITY PURPOSE (Notes C and G)
                                
Time deposits
            
124,464
              
123,205
  
                                 
ACCRUED REVENUE
            
356
              
929
  
                                 
ADVANCES FOR TECHNICAL ASSISTANCE (Note E)
            
1
              
2
  
                                 

                               
TOTAL
          
$
125,873
            
$
125,182
  
                                 

LIABILITIES AND NET ASSETS












 
                             
ACCOUNTS PAYABLE AND OTHER LIABILITIES












 
Payable to related funds (Note D)
  
$
16
          
$
92
        
Accrued expenses
    
–
    
$
16
      
20
    
$
112
  
                                 
UNDISBURSED TECHNICAL ASSISTANCE (Note E)
            
18,449
              
14,192
  
                                 
TOTAL LIABILITIES
            
18,465
              
14,304
  
                                 
UNCOMMITTED BALANCES (JSF-2), represented by: 
Net assets without donor restrictions
            
107,408
              
110,878
  
                                 
                                 
TOTAL
          
$
125,873
            
$
125,182
  
                                 
The accompanying Notes are an integral part of these condensed financial statements (JSF-4).

82

JSF-2

ASIAN DEVELOPMENT BANK—JAPAN SPECIAL FUND
CONDENSED STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS—UNAUDITED
For the Three Months Ended 31 March 2025 and 2024
Expressed in Thousands of US Dollars

   
2025
    
2024
  
CHANGES IN NET ASSETS WITHOUT DONOR RESTRICTIONS
            
             
REVENUE
            
From investments for liquidity purpose (Note C)
  
$
1,386
    
$
1,609
  
From other sources
    
10
      
35
  
                 
Total
    
1,396
      
1,644
  
                 
EXPENSES
                
Technical assistance (Notes E and F)
    
(4,850
)
    
(750
)
Administrative expenses (Note F)
    
(16
)
    
(15
)
                 
Total
    
(4,866
)
    
(765
)
                 
(DECREASE) INCREASE IN NET ASSETS
    
(3,470
)
    
879
  
                 
NET ASSETS AT BEGINNING OF PERIOD
    
110,878
      
112,123
  
                 








 
NET ASSETS AT END OF PERIOD
  
$
107,408
    
$
113,002
  
                 
The accompanying Notes are an integral part of these condensed financial statements (JSF-4).

83

JSF-3

ASIAN DEVELOPMENT BANK—JAPAN SPECIAL FUND 
CONDENSED STATEMENT OF CASH FLOWS—UNAUDITED
For the Three Months Ended 31 March 2025 and 2024
Expressed in Thousands of US Dollars

   
2025
    
2024
  
CASH FLOWS FROM OPERATING ACTIVITIES
            
Interest received on investments for liquidity purpose
  
$
1,959
    
$
1,141
  
Net cash received from other sources
    
10
      
35
  
Technical assistance disbursed
    
(669
)
    
(80
)
Administrative expenses paid
    
(35
)
    
(37
)
                 
Net Cash Provided by Operating Activities
    
1,265
      
1,059
  
                 
CASH FLOWS FROM INVESTING ACTIVITIES
                
Maturities of investments for liquidity purpose
    
328,385
      
974,451
  
Purchases of investments for liquidity purpose
    
(329,644
)
    
(979,492
)
                 
Net Cash Used in Investing Activities
    
(1,259
)
    
(5,041
)
                 
Net Increase (Decrease) in Due From Banks
    
6
      
(3,982
)
                 
Due from Banks at Beginning of Period
    
1,046
      
4,959
  
                 
Due from Banks at End of Period
  
$
1,052
    
$
977
  
                 
The accompanying Notes are an integral part of these condensed financial statements (JSF-4).

84

JSF-4

ASIAN DEVELOPMENT BANK—JAPAN SPECIAL FUND 
NOTES TO CONDENSED FINANCIAL STATEMENTS
For the Three Months Ended 31 March 2025 and 2024 
(Unaudited)

NOTE A—INTERIM FINANCIAL INFORMATION

These unaudited condensed interim financial statements should be read in conjunction with the 31 December 2024 audited financial statements and the notes included therein. In the opinion of Management, all material adjustments necessary for a fair statement of the results of operations for the three months ended 31 March 2025 and 2024 have been included. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.

NOTE B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Presentation of the Financial Statements

The financial statements are presented on the basis of those for not-for-profit organizations and as net assets with and without donor restrictions. The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America (US GAAP) requires Management to make reasonable estimates and assumptions that affect the reported amounts of assets and liabilities as of the end of the period and the reported amounts of revenue and expenses during the period. The actual results could differ from those estimates.

The financial statements are expressed in US dollars. The US dollar is the functional and reporting currency of the Japan Special Fund (JSF), representing the currency of the primary economic operating environment. The JSF reports donor’s contributed cash and other assets as support without donor restrictions as these are made available to the JSF without conditions other than for the purposes of pursuing the objectives of the JSF.

Fair Value of Financial Instruments

Accounting Standards Codification (ASC) 820, “Fair Value Measurement” defines fair value (FV) as the price that would be received to sell an asset or paid to transfer a liability at measurement date in an orderly transaction among willing participants with an assumption that the transaction takes place in the entity’s principal market, or in the absence of principal market, in the most advantageous market for the asset or liability. The most advantageous market is the market where the sale of the asset or transfer of liability would maximize the amount received for the asset or minimize the amount paid to transfer the liability. The FV measurement is not adjusted for transaction costs.

Fair Value Hierarchy

ASC 820 establishes a FV hierarchy that gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1), next priority to observable market inputs or market corroborated data (Level 2), and the lowest priority to unobservable inputs without market corroborated data (Level 3).

The FVs of ADB’s financial assets and liabilities are categorized as follows:

Level 1: FVs are based on unadjusted quoted prices for identical assets or liabilities in active markets.
Level 2: FVs are based on quoted prices for similar assets or liabilities in active markets or markets that are not active; or valuation models for which significant inputs are obtained from market-based data that are observable.
Level 3: FVs are based on prices or valuation models for which significant inputs to the model are unobservable.

85

JSF-4

continued

Accounting and Reporting Developments

In March 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2024-02, “Codification Improvements – Amendments to Remove References to the Concepts Statements”. This Update contains amendments to the Codification that remove references to various FASB Concepts Statements. The amendments in this Update are effective for public business entities for fiscal years beginning after 15 December 2024. For all other entities, the amendments are effective for fiscal years beginning after 15 December 2025. Early adoption is permitted for all entities. ADB does not expect the adoption of this Update to have a material impact on the financial statements.

NOTE C—INVESTMENTS FOR LIQUIDITY PURPOSE

All investments for liquidity purpose held as of 31 March 2025 and 31 December 2024 were in US dollar time deposits.

Interest income on time deposits is recognized as earned and reported in REVENUE FROM INVESTMENTS FOR LIQUIDITY PURPOSE.

The annualized rates of return on the average investments for liquidity purpose held during the three months ended 31 March 2025, based on the portfolio held at the beginning and end of each month, was 4.5% (5.5% – 2024).

Fair Value Disclosure

The FV of INVESTMENTS FOR LIQUIDITY PURPOSE as of 31 March 2025 and 31 December 2024 is as follows:

($ thousand)        
 
         
Fair Value Measurements
  

 
Total
    
Level 1
    
Level 2
    
Level 3
  
31 March 2025
                        
Investments for liquidity purpose
                        
Time deposits
  
$
124,464
    
$
–
    
$
124,464
    
$
–
  
                                 
31 December 2024
                                
Investments for liquidity purpose
                                
Time deposits
  
$
123,205
    
$
–
    
$
123,205
    
$
–
  

Time deposits are reported at cost, which approximates FV.

NOTE D—RELATED PARTY TRANSACTIONS

The ordinary capital resources (OCR) and Special Funds resources are at all times used, committed, and invested entirely separately from each other. The administrative and operational expenses pertaining to JSF are settled regularly with OCR and other funds. Regional technical assistance projects and programs may be combined activities financed by Special Funds and trust funds.

86

JSF-4

continued

The interfund account balances included in ACCOUNTS PAYABLE AND OTHER LIABILITIES as of 31 March 2025 and 31 December 2024 are as follows:

($ thousand)




 


31 March 2025

31 December 2024
  
Payable to:
            
Ordinary capital resources—net
  
$
7
    
$
9
  
Technical Assistance Special Fund
    
9
      
68
  
Trust Funds
    
–
      
15
  
                 
Total
  
$
16
    
$
92
  

NOTE E—TECHNICAL ASSISTANCE AND UNDISBURSED TECHNICAL ASSISTANCE

TA is recognized as expense in the financial statements when the project becomes effective. Upon completion or cancellation of a TA project, any undisbursed committed balance is reversed. TA expenses are also reversed accordingly. During the three months ended 31 March 2025, two TA projects and one supplementary TA (one TA project – 2024) became effective resulting in a total TA expense of $4,850,000 ($750,000 – 2024).

Undisbursed TA are denominated in US dollars and represent effective TA projects not yet disbursed and unliquidated. The undisbursed TA of $18,449,000 as of 31 March 2025 ($14,192,000 – 31 December 2024) includes $1,000 ($2,000 – 31 December 2024) advances for TA.

NOTE F—EXPENSES

Technical assistance

TA expenses are classified according to its nature using the budget allocation specified in the relevant TA agreement for the TA projects that became effective during the year. The details of TA expenses for the three months ended 31 March 2025 and 2024 are as follows:

($ thousand)            
   
2025
   
2024
 
Consultants
  
$
3,997
    
$
479
  
Trainings and seminars
    
526
      
140
  
Studies
    
180
      
–
  
Other expenses
    
147
      
131
  
Total
  
$
4,850
    
$
750
  

Administrative expenses

Administrative expenses include salaries and benefits, which are incurred for management and general supporting activities. For the three months ended 31 March 2025, salaries and benefits totaled $16,000 ($15,000 – 2024).

87

JSF-4

continued

NOTE G—LIQUIDITY AND AVAILABILITY OF RESOURCES

Liquidity risk refers to the risk that the fund has difficulties in meeting its short-term obligations. As part of JSF’s liquidity management, it has a policy to structure its financial assets to be available as its general expenditures, liabilities, and other obligations come due. In addition, JSF invests cash in excess of daily requirements in short- term investments.

As of 31 March 2025, the JSF has liquidity of $125,516,000 ($124,251,000 – 31 December 2024) consisting of DUE FROM BANKS of $1,052,000 ($1,046,000 – 31 December 2024) and INVESTMENTS FOR LIQUIDITY PURPOSE in time deposits of $124,464,000 ($123,205,000 – 31 December 2024), available within one year of the balance sheet date to meet cash needs for general expenditure.

NOTE H—SUBSEQUENT EVENTS

ADB has evaluated subsequent events after 31 March 2025 through 26 May 2025, the date these condensed financial statements are available for issuance. As a result of this evaluation, there are no subsequent events that require recognition or disclosure in the JSF’s financial statements as of 31 March 2025.

88

ADBI-1
 
ASIAN DEVELOPMENT BANK—ASIAN DEVELOPMENT BANK INSTITUTE
CONDENSED STATEMENT OF FINANCIAL POSITION
31 March 2025 and 31 December 2024
Expressed in Thousands of US Dollars

   
31 March
    
31 December
  
ASSETS
  
(Unaudited)
    
(Audited)
  
                       
                             
DUE FROM BANKS (Note I)
        
$
13,378
          
$
10,259
  
                             
INVESTMENTS FOR LIQUIDITY PURPOSE (Notes C and I)
                            
Time deposits
          
11,068
            
11,640
  

                           
PROPERTY, FURNITURE, AND EQUIPMENT (Note D)
                            
Property, Furniture, and Equipment
  
$
4,404
            
$
4,677
          
Less—allowance for depreciation
    
2,119
      
2,285
      
2,003
      
2,674
  
                                 
DUE FROM CONTRIBUTORS (Note F)
            
167
              
4,452
  
                                 
LONG-TERM GUARANTEE DEPOSITS (Note E)
            
950
              
908
  
                                 
OTHER ASSETS (Note G)
            
437
              
470
  

TOTAL
        
$
28,285
          
$
30,403
  
                             
LIABILITIES AND UNCOMMITTED BALANCES
                            
                             
ACCOUNTS PAYABLE AND OTHER LIABILITIES
                            
Accrued pension and postretirement
                            
medical benefit costs
  
$
3,598
            
$
3,621
          
Asset reinstatement obligations (Note E)
    
1,335
              
1,275
          
Lease liability (Note E)
    
1,801
              
2,190
          
Others (Note H)
    
1,661
    
$
8,395
      
1,463
    
$
8,549
  
                                 
UNCOMMITTED BALANCES (ADBI-2), represented by:
                                
Net assets without donor restrictions
    
18,782
              
20,631
          
Net assets with donor restrictions (Note G)
    
1,108
      
19,890
      
1,223
      
21,854
  
                                 
TOTAL
          
$
28,285
            
$
30,403
  
The accompanying Notes are an integral part of these condensed financial statements (ADBI-4).

89

ADBI-2

ASIAN DEVELOPMENT BANK—ASIAN DEVELOPMENT BANK INSTITUTE
CONDENSED STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS—UNAUDITED
For the Three Months Ended 31 March 2025 and 2024
Expressed in Thousands of US Dollars
 
2025
 
 
2024
 
CHANGES IN NET ASSETS WITHOUT DONOR RESTRICTIONS
 
 
 
 
 
 
 
 
 
 
 
 
 
REVENUE
 
 
 
 
 
 
From rental (Note G)
 
$
57
 
 
$
60
 
From investments for liquidity purpose (Note C)
 
 
125
 
 
 
154
 
From other sources—net (Notes G and H)
 
 
187
 
 
 
193
 
 
 
 
 
 
 
 
 
 
NET ASSETS RELEASED FROM ASSETS WITH DONOR RESTRICTIONS (Note G)
 
 
121
 
 
 
64
 
 
 
 
 
 
 
 
 
 
Total
 
 
490
 
 
 
471
 
 
 
 
 
 
 
 
 
 
EXPENSES
 
 
 
 
 
 
 
 
Administrative expenses (Notes G and H)
 
 
(1,834
)
 
 
(1,992
)
Program expenses (Note G)
 
 
(1,049
)
 
 
(1,577
)
 
 
 
 
 
 
 
 
 
Total
 
 
(2,883
)
 
 
(3,569
)
 
 
 
 
 
 
 
 
 
REVENUE LESS THAN EXPENSES
 
 
(2,393
)
 
 
(3,098
)
 
 
 
 
 
 
 
 
 
EXCHANGE GAINS (LOSSES)—net
 
 
725
 
 
 
(949
)
 
 
 
 
 
 
 
 
 
TRANSLATION ADJUSTMENTS
 
 
(181
)
 
 
(100
)

 
 
 
 
 
 
 
 
DECREASE IN NET ASSETS WITHOUT DONOR RESTRICTIONS
 
 
(1,849
)
 
 
(4,147
)
 
 
 
 
 
 
 
 
 
CHANGES IN NET ASSETS WITH DONOR RESTRICTIONS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
REVENUE FROM OTHER SOURCES (Note G)
 
 
6
 
 
 
7
 

 
 
 
 
 
 
 
 
NET ASSETS RELEASED TO ASSETS WITHOUT DONOR RESTRICTIONS (Note G)
 
 
(121
)
 
 
(64
)
 
 
 
 
 
 
 
 
 
DECREASE IN NET ASSETS WITH DONOR RESTRICTIONS
 
 
(115
)
 
 
(57
)
 
 
 
 
 
 
 
 
 
DECREASE IN NET ASSETS
 
 
(1,964
)
 
 
(4,204
)
 
 
 
 
 
 
 
 
 
NET ASSETS AT BEGINNING OF PERIOD
 
 
21,854
 
 
 
26,165
 
 
 
 
 
 
 
 
 
 
NET ASSETS AT END OF PERIOD
 
$
19,890
 
 
$
21,961
 
The accompanying Notes are an integral part of these condensed financial statements (ADBI-4).

90
ADBI-3

ASIAN DEVELOPMENT BANK—ASIAN DEVELOPMENT BANK INSTITUTE
CONDENSED STATEMENT OF CASH FLOWS—UNAUDITED
For the Three Months Ended 31 March 2025 and 2024
Expressed in Thousands of US Dollars


  
2025
    
2024
  
CASH FLOWS FROM OPERATING ACTIVITIES
            
Contributions received
  
$
4,331
    
$
5,017
  
Interest received on investments for liquidity purpose
    
128
      
160
  
Expenses paid
    
(2,645
)
    
(3,448
)
Others—net
    
982
      
(675
)

               
Net Cash Provided by Operating Activities
    
2,796
      
1,054
  

               
CASH FLOWS FROM INVESTING ACTIVITIES
                
Maturities of investments for liquidity purpose
    
72,781
      
81,881
  
Purchases of investments for liquidity purpose
    
(72,209
)
    
(82,341
)

               
Net Cash Provided by (Used in) Investing Activities
    
572
      
(460
)

               
Effect of Exchange Rate Changes on Due from Banks
    
(249
)
    
187
  

               
Net Increase in Due From Banks
    
3,119
      
781
  

               
Due From Banks at Beginning of Period
    
10,259
      
13,514
  

               
Due From Banks at End of Period
  
$
13,378
    
$
14,295
  
The accompanying Notes are an integral part of these condensed financial statements (ADBI-4).

91

ADBI-4

ASIAN DEVELOPMENT BANK—ASIAN DEVELOPMENT BANK INSTITUTE
NOTES TO CONDENSED FINANCIAL STATEMENTS
For the Three Months Ended 31 March 2025 and 2024
(Unaudited)

NOTE A—INTERIM FINANCIAL INFORMATION

These unaudited condensed interim financial statements should be read in conjunction with the 31 December 2024 audited financial statements and the notes included therein. In the opinion of Management, all material adjustments necessary for a fair statement of the results of operations for the three months ended 31 March 2025 and 2024 have been included. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.

NOTE B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Presentation of the Financial Statements

The financial statements are presented on the basis of those for not-for-profit organizations. The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America (US GAAP) requires Management to make reasonable estimates and assumptions that affect the reported amounts of assets and liabilities as of the end of the period and the reported amounts of revenue and expenses during the period. The actual results could differ from those estimates.

The functional currency of Asian Development Bank Institute (the Institute) is yen, representing the currency of primary economic operating environment of the Institute. The reporting currency is the US dollar and the financial statements are expressed in US dollars.

The Institute reports donor’s contributed cash and other assets as support without donor restrictions as these are made available to the Institute without conditions other than for the purposes of pursuing the objectives of the Institute.

The Institute reports donor’s contributed cash and other assets as support with donor restrictions if they are received with donor stipulations that limit the use of the donated assets. When the donor restriction expires, that is, when a stipulated time or purpose restriction is accomplished, net assets with donor restrictions are reclassified to net assets without donor restrictions and reported in the Statement of Activities and Changes in Net Assets as NET ASSETS RELEASED TO ASSETS WITHOUT DONOR RESTRICTIONS.

Fair Value of Financial Instruments

Accounting Standards Codification (ASC) 820, “Fair Value Measurement” defines fair value (FV) as the price that would be received to sell an asset or paid to transfer a liability at measurement date in an orderly transaction among willing participants with an assumption that the transaction takes place in the entity’s principal market, or in the absence of principal market, in the most advantageous market for the asset or liability. The most advantageous market is the market where the sale of the asset or transfer of liability would maximize the amount received for the asset or minimize the amount paid to transfer the liability. The FV measurement is not adjusted for transaction cost.

Fair Value Hierarchy

ASC 820 establishes a FV hierarchy that gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1), next priority to observable market inputs or market corroborated data (Level 2), and the lowest priority to unobservable inputs without market corroborated data (Level 3).

92

ADBI-4

continued

The FVs of ADB’s financial assets and liabilities are categorized as follows:

Level 1: FVs are based on unadjusted quoted prices for identical assets or liabilities in active markets.
Level 2: FVs are based on quoted prices for similar assets or liabilities in active markets or markets that are not active; or valuation models for which significant inputs are obtained from market-based data that are observable.
Level 3: FVs are based on prices or valuation models for which significant inputs to the model are unobservable.

Accounting and Reporting Developments

In March 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2024-02, “Codification Improvements – Amendments to Remove References to the Concepts Statements”. This Update contains amendments to the Codification that remove references to various FASB Concepts Statements. The amendments in this Update are effective for public business entities for fiscal years beginning after 15 December 2024. For all other entities, the amendments are effective for fiscal years beginning after 15 December 2025. Early adoption is permitted for all entities. ADB does not expect the adoption of this Update to have a material impact on the financial statements.

NOTE C—INVESTMENTS FOR LIQUIDITY PURPOSE

All investments for liquidity purpose held as of 31 March 2025 and 31 December 2024 were in US dollar time deposits. ADB records time deposits on the settlement dates and all other investment securities on the trade date.

Interest income on time deposits is recognized as earned and reported in REVENUE From investments for liquidity purpose.

The annualized rates of return on the average investments for liquidity purpose held during the three months ended 31 March 2025, based on the portfolio held at the beginning and end of each month, was 4.4% (5.6% – 2024).

Fair Value Disclosure

The FV of INVESTMENTS FOR LIQUIDITY PURPOSE as of 31 March 2025 and 31 December 2024 is as follows:

($ thousand)
         
Fair Value Measurements
  
31 March 2025
  
Total
    
Level 1
    
Level 2
    
Level 3
  
                       
Investments for liquidity purpose
  


   


   


   


 
Time deposits
   $
11,068
     $
–
     $
11,068
     $
–
                                 
31 December 2024
                                
Investments for liquidity purpose
                                
Time deposits
  
$
11,640
    
$
–
    
$
11,640
    
$
–
  

Time deposits are reported at cost, which approximates FV.

NOTE D—PROPERTY, FURNITURE, AND EQUIPMENT

As of 31 March 2025, property, furniture, and equipment totaled $2,285,000 ($2,674,000 – 31 December 2024), which consist of $40,000 for office furniture ( $42,000 – 31 December 2024), $93,000 for office equipment ($94,000 – 31 December 2024), $188,000 for information system and software ($192,000 – 31 December 2024), and $1,964,000 for right- of-use asset relating to the Institute’s office lease ($2,346,000 – 31 December 2024). Additional information on right-of-use asset is provided in Note E.

93

ADBI-4

continued

NOTE E—LEASE

Right-of-use asset and Lease liability

The Institute’s right-of-use asset and lease liability pertain to its leased office space, classified as an operating lease. Rental expenses under operating lease for the three months ended 31 March 2025 amounted to $473,000 ($507,000 – 2024). As of 31 March 2025, the right-of-use asset of $1,964,000 ($2,346,000 – 31 December 2024), which included prepaid rent of $164,000 ($156,000 – 31 December 2024), was presented as part of PROPERTY, FURNITURE, AND EQUIPMENT. The lease liability of $1,801,000 as of 31 March 2025 ($2,190,000 – 31 December 2024) was presented as part of ACCOUNTS PAYABLE AND OTHER LIABILITIES in the Institute’s Statement of Financial Position.

The Institute’s lease agreement for its office space was renewed until 31 March 2026. The Institute’s sublease agreement for a part of its office space was also renewed accordingly. The sublease has been classified as an operating lease. Additional information on the sublease is provided in Note G.

Long-term guarantee deposits

The Institute leases office space and deposits the equivalent of three months of office rent to the lessor, as stipulated in the contract of lease signed in 1997. The amount is updated every contract renewal. The last renewal date was 1 April 2023. As of 31 March 2025, the LONG-TERM GUARANTEE DEPOSITS presented in the Institute’s Statement of Financial Position amounted to $950,000 ($908,000 – 31 December 2024).

Asset reinstatement obligations

The Institute has recorded estimated asset reinstatement obligations for restoration costs to be incurred upon termination of its office space lease. As of 31 March 2025, asset reinstatement obligations amounted to $1,335,000 ($1,275,000 – 31 December 2024) and presented as part of ACCOUNTS PAYABLE AND OTHER LIABILITIES in the Institute’s Statement of Financial Position.

NOTE F—CONTRIBUTIONS

Contributions pertain to donations from governments of ADB’s member countries and are approved by the ADB Board of Directors. Contributions are recognized in the Statement of Activities and Changes in Net Assets at date of commitment.

Contributions committed and received during the three months ended 31 March 2025 and 2024 are as follows:

(in thousands)
  
     
   
Amount of commitment
  
Commitment
  
Donor
  
LC
    
USDa
  
date
Receipt date
Government of Japan
                   
45th contribution
  

¥672,069
    
$
4,285
  
December 2024
January 2025
43rd contribution
  

¥743,069
    
$
5,268
  
December 2023
January 2024

LC = local currency, USD = US dollar.
a The USD equivalent of Japan’s contributions is valued at exchange rate at date of commitment.

NOTE G—REVENUE AND EXPENSES

Revenue from rental

Revenue from rental totaled $ 57,000 for the three months ended 31 March 2025 ($60,000 – 2024). This pertains to the sublease rental income received according to a space-sharing agreement with the Japanese Representative Office of ADB. The transactions with ADB were made in the ordinary course of business and negotiated at arm’s length. See Note H.

94

ADBI-4

continued

Revenue from other sources

Revenue from other sources include service fees to OCR (See Note H), fees from honorariums, publication royalties, and grants from private donors and other government agencies.

Grants received from private donors and other government agencies for a specific purpose or program are classified as support with donor restrictions. No grants were committed during the three months ended 31 March 2025 and 2024.

As of 31 March 2025, receivable from private donors totaled $292,000 ($292,000 – 31 December 2024) and is included in OTHER ASSETS. The net assets with donor restrictions including net accumulated interest income totaled $1,108,000 as of 31 March 2025 ($1,223,000 – 31 December 2024) and are restricted for (i) the city-wide inclusive sanitation program expenses and program activities that enhance climate resilience in the Asia-Pacific region, and (ii) research and capacity development activities on climate-resilient agriculture and food security in the same region.

Net assets released to assets without donor restrictions amounted to $121,000 during the three months 31 March 2025 ($64,000 – 2024) which have satisfied the conditions specified by the donors.

Administrative expenses

Administrative expenses include salaries and benefits, office and occupancy, external services, travel, and other expenses, which are incurred for management and general supporting activities. The following table summarizes administrative expenses for the three months ended 31 March 2025 and 2024:

($ thousand)
            
Salaries and benefits
  
2025
    
2024
  
 
$
949
    
$
1,058
  
Office and occupancya
    
574
      
667
  
External services
    
191
      
178
  
Travel
    
48
      
65
  
Other expenses
    
72
      
24
  
Total Administrative Expenses
  
$
1,834
    
$
1,992
  
a Includes operating lease expense (Note E).

Program expenses

Program expenses generally represent trainings and seminars and consultant expenses related to research and capacity building projects of the Institute.

The following table summarizes program expenses for the three months ended 31 March 2025 and 2024:

($ thousand)
            
Trainings and seminars
  
2025
    
2024
  
 
$
792
    
$
1,312
  
Consultants
    
257
      
265
  
Total Program Expenses
  
$
1,049
    
$
1,577
  

95

ADBI-4

continued

NOTE H—RELATED PARTY TRANSACTIONS

ADB has not allocated service fees to the Institute for a range of administrative and financial services such as managing the investments or administering the Staff Retirement Plan and Health Benefit Plan for Retirees. The fair value of those personnel services has been estimated to be 10 basis points of the average balance of the Institute’s liquid assets. For the three months ended 31 March 2025, the calculated service fee was $5,000 ($6,000 – 2024) and recorded as Administrative expenses and REVENUE From other sources—net. The transaction has no impact on the net assets of the Institute.

The Institute is a lessor in a sublease agreement with the Japan Representative Office of ADB. For the three months ended 31 March 2025, the revenue from the sublease rental amounted to $57,000 ($60,000 – 2024). See Note G.

Included in ACCOUNTS PAYABLE AND OTHER LIABILITIES were the amounts net payable to OCR of $1,066,000 at 31 March 2025 ($715,000 – 31 December 2024). The payable resulted from transactions in the normal course of business.

NOTE I—LIQUIDITY AND AVAILABILITY OF RESOURCES

Liquidity risk refers to the risk that the fund has difficulties in meeting its short-term obligations. As part of the Institute’s liquidity management, it has a policy to structure its financial assets to be available as its general expenditures, liabilities, and other obligations come due. In addition, the Institute invests cash in excess of daily requirements in short-term investments.

As of 31 March 2025, the Institute has liquidity of $24,446,000 ($21,899,000 – 31 December 2024) consisting of DUE FROM BANKS of $13,378,000 ($10,259,000 – 31 December 2024) and INVESTMENTS FOR LIQUIDITY PURPOSE in time deposits of $11,068,000 ($11,640,000 – 31 December 2024), available within one year of the balance sheet date to meet cash needs for general expenditure. See Note G for discussions relating to donor restrictions on the Institute’s uncommitted balance.

NOTE J—SUBSEQUENT EVENTS

The Institute has evaluated subsequent events after 31 March 2025 through 26 May 2025, the date these condensed financial statements are available for issuance. As a result of this evaluation, there are no subsequent events that require recognition or disclosure in the Institute’s condensed financial statements as of 31 March 2025.

96

RCIF-1

ASIAN DEVELOPMENT BANK—REGIONAL COOPERATION AND INTEGRATION FUND
CONDENSED STATEMENT OF FINANCIAL POSITION
31 March 2025 and 31 December 2024
Expressed in Thousands of US Dollars

   
31 March
            
31 December
  
   
(Unaudited)
            
(Audited)
  
ASSETS
                    
                     
DUE FROM BANKS (Note G)
  
$
1,004
            
$
1,019
  
                         
INVESTMENTS FOR LIQUIDITY PURPOSE (Notes C and G)
                        
Time deposits
    
12,962
              
14,461
  
                         
ACCRUED REVENUE
    
31
              
79
  
                         
ADVANCES FOR TECHNICAL ASSISTANCE (Note E)
    
69
              
107
  
                         
OTHER ASSETS (Note D)
    
–
              
1
  
                         
TOTAL
  
$
14,066
            
$
15,667
  

LIABILITIES AND UNCOMMITTED BALANCES
                        
 
                        
ACCOUNTS PAYABLE AND OTHER LIABILITIES
                        
Payable to related funds (Note D)
  
$
163
          
$
234
        
Accrued Expenses
    
–
    
$
163
      
20
    
$
254
  

                               
UNDISBURSED TECHNICAL ASSISTANCE (Note E)
            
12,106
              
13,857
  

                               
TOTAL LIABILITIES
            
12,269
              
14,111
  

 
                           
UNCOMMITTED BALANCES (RCIF-2), represented by:
Net assets without donor restrictions
            
1,797
              
1,556
  
                                 
TOTAL
          
$
14,066
            
$
15,667
  
The accompanying Notes are an integral part of these condensed financial statements (RCIF-4).

97

RCIF-2

ASIAN DEVELOPMENT BANK—REGIONAL COOPERATION AND INTEGRATION FUND
CONDENSED STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS—UNAUDITED
For the Three Months Ended 31 March 2025 and 2024
Expressed in Thousands of US Dollars

   
2025
    
2024
  
CHANGES IN NET ASSETS WITHOUT DONOR RESTRICTIONS
            

           
REVENUE
            
From investments for liquidity purpose (Note C)
  
$
152
    
$
274
  
From other sources
    
0
      
3
  
Total
    
152
      
277
  

               
EXPENSES
                
Technical assistance—net (Notes E and F)
    
168
      
492
  
Administrative and financial expenses (Notes D and F)
    
(80
)
    
(99
)
Total
    
88
      
393
  

               
REVENUE IN EXCESS OF EXPENSES
    
240
      
670
  

               
EXCHANGE GAINS (LOSSES)—net
    
1
      
(5
)
                 
INCREASE IN NET ASSETS
    
241
      
665
  

               
NET ASSETS AT BEGINNING OF PERIOD
    
1,556
      
639
  

               
NET ASSETS AT END OF PERIOD
  
$
1,797
    
$
1,304
  
0 = Less than $500.
The accompanying Notes are an integral part of these condensed financial statements (RCIF-4).

98

RCIF-3

ASIAN DEVELOPMENT BANK—REGIONAL COOPERATION AND INTEGRATION FUND
CONDENSED STATEMENT OF CASH FLOWS—UNAUDITED
For the Three Months Ended 31 March 2025 and 2024
Expressed in Thousands of US Dollars


  
2025
    
2024
  
CASH FLOWS FROM OPERATING ACTIVITIES
            
Interest received on investments for liquidity purpose
  
$
200
    
$
212
  
Cash received from other sources
    
0
      
3
  
Technical assistance disbursed
    
(1,594
)
    
(1,721
)
Administrative and financial expenses paid
    
(120
)
    
(149
)
Net Cash Used in Operating Activities
    
(1,514
)
    
(1,655
)
                 
CASH FLOWS FROM INVESTING ACTIVITIES
                
Maturities of investments for liquidity purpose
    
66,489
      
183,104
  
Purchases of investments for liquidity purpose
    
(64,990
)
    
(182,716
)
                 
Net Cash Provided by Investing Activities
    
1,499
      
388
  
                 
Net Decrease in Due From Banks
    
(15
)
    
(1,267
)
                 
Due from Banks at Beginning of Period
    
1,019
      
2,309
  
                 
Due from Banks at End of Period
  
$
1,004
    
$
1,042
  
0 = Less than $500.
The accompanying Notes are an integral part of these condensed financial statements (RCIF-4).

99

RCIF-4

ASIAN DEVELOPMENT BANK—REGIONAL COOPERATION AND INTEGRATION FUND
NOTES TO CONDENSED FINANCIAL STATEMENTS
For the Three Months Ended 31 March 2025 and 2024
(Unaudited)

NOTE A—INTERIM FINANCIAL INFORMATION

These unaudited condensed interim financial statements should be read in conjunction with the 31 December 2024 audited financial statements, and the notes included therein. In the opinion of Management, all material adjustments necessary for a fair statement of the results of operations for the three months ended 31 March 2025 and 2024 have been included. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.

NOTE B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Presentation of the Financial Statements

The financial statements are presented on the basis of those for not-for-profit organizations. The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America (US GAAP) requires Management to make reasonable estimates and assumptions that affect the reported amounts of assets and liabilities as of the end of the period and the reported amounts of revenue and expenses during the period. The actual results could differ from those estimates.

The financial statements are expressed in US dollars. The US dollar is the functional and reporting currency of the Regional Cooperation and Integration Fund (RCIF), representing the currency of the primary economic operating environment.

Fair Value of Financial Instruments

Accounting Standards Codification (ASC) 820, “Fair Value Measurement” defines fair value (FV) as the price that would be received to sell an asset or paid to transfer a liability at measurement date in an orderly transaction among willing participants with an assumption that the transaction takes place in the entity’s principal market, or in the absence of principal market, in the most advantageous market for the asset or liability. The most advantageous market is the market where the sale of the asset or transfer of liability would maximize the amount received for the asset or minimize the amount paid to transfer the liability. The FV measurement is not adjusted for transaction costs.

Fair Value Hierarchy

ASC 820 establishes a FV hierarchy that gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1), next priority to observable market inputs or market corroborated data (Level 2), and the lowest priority to unobservable inputs without market corroborated data (Level 3).

The FVs of ADB’s financial assets and liabilities are categorized as follows:

Level 1: FVs are based on unadjusted quoted prices for identical assets or liabilities in active markets.
Level 2: FVs are based on quoted prices for similar assets or liabilities in active markets or markets that are not active; or valuation models for which significant inputs are obtained from market-based data that are observable.
Level 3: FVs are based on prices or valuation models for which significant inputs to the model are unobservable.

100

RCIF-4

continued
Accounting and Reporting Developments

 In March 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2024-02, “Codification Improvements – Amendments to Remove References to the Concepts Statements”. This Update contains amendments to the Codification that remove references to various FASB Concepts Statements. The amendments in this Update are effective for public business entities for fiscal years beginning after 15 December 2024. For all other entities, the amendments are effective for fiscal years beginning after 15 December 2025. Early adoption is permitted for all entities. ADB does not expect the adoption of this Update to have a material impact on the financial statements.

NOTE C—INVESTMENTS FOR LIQUIDITY PURPOSE
All investments for liquidity purpose held as of 31 March 2025 and 31 December 2024 were in US dollar time deposits.
Interest income on time deposits is recognized as earned and reported in REVENUE From investments for liquidity purpose.
The annualized rate of return on the average investments for liquidity purpose held during the three months ended 31 March 2025, based on the portfolio held at the beginning and end of each month, was 4.5% (5.5% – 2024).

Fair Value Disclosure
The FV of INVESTMENTS FOR LIQUIDITY PURPOSE as of 31 March 2025 and 31 December 2024 is as follows:

($ thousand)






       
Fair Value Measurements
  

 
Total
    
Level 1
    
Level 2
    
Level 3
  
31 March 2025
                        
Investments for liquidity purpose
                        
Time deposits
  
$
12,962
    
$
–
    
$
12,962
    
$
–
  
                                 
31 December 2024
                                
Investments for liquidity purpose
                                
Time deposits
  
$
14,461
    
$
–
    
$
14,461
    
$
–
  

Time deposits are reported at cost, which approximates FV.

NOTE D—RELATED PARTY TRANSACTIONS

The ordinary capital resources (OCR) and Special Funds resources are at all times used, committed, and invested entirely separately from each other. The administrative and operational expenses pertaining to the RCIF are settled regularly with OCR and the other funds. Regional technical assistance projects and programs may be combined activities financed by Special Funds and trust funds. ADB charges a service fee to cover ADB’s incremental cost for the administration, management, supervision and operation of the RCIF and RCI Trust Fund, a trust fund administered by ADB. The service fee is currently 5% of the amount disbursed for technical assistance and 2% of the amount disbursed for grant components of investment projects. As of 31 March 2025, all service fees pertain to the administration of TA projects. See Note F for service fees during the three months ended 31 March 2025 and 2024.

101

RCIF-4

continued
The interfund account balances included in OTHER ASSETS and ACCOUNTS PAYABLE AND OTHER LIABILITIES as of 31 March 2025 and 31 December 2024 are as follows:

($ thousand)




 

 
31 March 2025
    
31 December 2024
  
Receivable from:
            
Trust Funds
  
$
–
    
$
1
  
Total
  
$
–
    
$
1
  

               
Payable to:
                
Ordinary capital resources—net
  
$
25
    
$
75
  
Technical Assistance Special Fund—net
    
138
      
154
  
Trust Funds
    
–
      
4
  
Total
  
$
163
    
$
234
  

Note: Numbers may not sum precisely because of rounding.

NOTE E—TECHNICAL ASSISTANCE AND UNDISBURSED TECHNICAL ASSISTANCE

TA is recognized as expense in the financial statements when the project becomes effective. Upon completion or cancellation of a TA project, any undisbursed committed balance is reversed. TA expenses are also reversed accordingly. During the three months ended 31 March 2025, no TA project (nil – 2024) became effective. Undisbursed TA reversed as reduction in TA expenses totaled $168,000 ($492,000 – 2024) during the period.
Undisbursed TA are denominated in US dollars and represent effective TA projects not yet disbursed and unliquidated. The undisbursed TA of $12,106,000 as of 31 March 2025 ($13,857,000 – 31 December 2024), includes $69,000 ($107,000 – 31 December 2024) advances for TA.

NOTE F—EXPENSES

Technical assistance—net
TA expenses are classified according to its nature using the budget allocation specified in the relevant TA agreement for the TA that became effective during the period. The details of TA expenses for the three months ended 31 March 2025 and 2024 are as follows:

($ thousand)





 
2025
  
2024
  
Other expensesa
  
$
(168
)
  
$
(492
)
a Undisbursed TA reversed as reduction in TA expenses (See Note E).

102

RCIF-4
continued
Administrative and financial expenses
Administrative expenses include service fees to OCR, which are incurred for management and general supporting activities. The table below summarizes administrative and financial expenses for the three months ended 31 March 2025 and 2024:

($ thousand)






 
2025
    
2024
  
Service fees to OCR (Note D)
  
$
79
    
$
98
  
Financial expenses
    
1
      
1
  
Total
  
$
80
    
$
99
  

NOTE G—LIQUIDITY AND AVAILABILITY OF RESOURCES
Liquidity risk refers to the risk that the fund has difficulties in meeting its short-term obligations. As part of RCIF’s liquidity management, it has a policy to structure its financial assets to be available as its general expenditures, liabilities, and other obligations come due. In addition, RCIF invests cash in excess of daily requirements in short-term investments.

As of 31 March 2025, the RCIF has liquidity of $13,966,000 ($15,480,000 – 31 December 2024) consisting of DUE FROM BANKS of $1,004,000 ($1,019,000 – 31 December 2024) and INVESTMENTS FOR LIQUIDITY PURPOSE in time deposits of $12,962,000 ($14,461,000 – 31 December 2024), available within one year of the balance sheet date to meet cash needs for general expenditure. None of the financial assets are subject to donor or other contractual restrictions that make them unavailable for general expenditure within one year of the balance sheet date.
NOTE H—SUBSEQUENT EVENTS
ADB has evaluated subsequent events after 31 March 2025 through 26 May 2025, the date these condensed financial statements are available for issuance. As a result of this evaluation, there are no subsequent events that require recognition or disclosure in the RCIF’s condensed financial statements as of 31 March 2025.

103

CCF-1

ASIAN DEVELOPMENT BANK—CLIMATE CHANGE FUND
CONDENSED STATEMENT OF FINANCIAL POSITION
31 March 2025 and 31 December 2024
Expressed in Thousands of US Dollars

   
31 March
            
31 December
  
   
(Unaudited)
            
(Audited)
  
ASSETS
  
           
 
                     
DUE FROM BANKS (Note G)
  
$
1,052
            
$
1,059
  
                         
INVESTMENTS FOR LIQUIDITY PURPOSE (Notes C and G)
                        
Time deposits
    
24,060
              
24,790
  
                         
ACCRUED REVENUE
    
61
              
158
  
                         
ADVANCES UNDER TECHNICAL ASSISTANCE
                        
AND GRANTS (Note E)
    
311
              
278
  
                         
OTHER ASSETS
    
–
              
3
  
                         
                         
TOTAL
  
$
25,484
            
$
26,288
  
                         

LIABILITIES AND UNCOMMITTED BALANCES
                            
                             
ACCOUNTS PAYABLE AND OTHER LIABILITIES
                            
Payable to related funds (Note D)
  
$
58
      
   
$
344
      
 
Accrued expenses
    
-
    
$
58
      
312
    
$
656
  
                                 
UNDISBURSED TECHNICAL ASSISTANCE
                                
AND GRANTS (Note E)
            
13,480
              
13,274
  
                                 
TOTAL LIABILITIES
            
13,538
              
13,930
  
                                 
UNCOMMITTED BALANCES (CCF-2), represented by:
                                
Net assets without donor restrictions
            
11,946
              
12,358
  
                                 
                                 
TOTAL
          
$
25,484
            
$
26,288
  
                                 
The accompanying Notes are an integral part of these condensed financial statements (CCF-4).

104

CCF-2
ASIAN DEVELOPMENT BANK—CLIMATE CHANGE FUND
CONDENSED STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS—UNAUDITED
For the Three Months Ended 31 March 2025 and 2024
Expressed in Thousands of US Dollars

   
2025
    
2024
  
CHANGES IN NET ASSETS WITHOUT DONOR RESTRICTIONS
            
             
REVENUE
            
From investments for liquidity purpose (Note C)
    
273
       411  
From other sources
    
10
      
21
  
                 
Total
    
283
      
432
  
                 
EXPENSES
                
Technical assistance (Notes E and F)
    
37
      
(400
)
Grants (Note E)
    
(900
)
    
(2,000
)
Administrative and other expenses (Notes D and F)
    
168
      
(539
)
                 
Total
    
(695
)
    
(2,939
)
                 
DECREASE IN NET ASSETS
    
(412
)
    
(2,507
)
                 
NET ASSETS AT BEGINNING OF PERIOD
    
12,358
      
14,550
  
                 
                 
NET ASSETS AT END OF PERIOD
  
$
11,946
    
$
12,043
  
                 
The accompanying Notes are an integral part of these condensed financial statements (CCF-4).

105

CCF-3

ASIAN DEVELOPMENT BANK—CLIMATE CHANGE FUND
CONDENSED STATEMENT OF CASH FLOWS—UNAUDITED
For the Three Months Ended 31 March 2025 and 2024
Expressed in Thousands of US Dollars

   
2025
    
2024
  
CASH FLOWS FROM OPERATING ACTIVITIES
            
Interest received on investments for liquidity purpose
    
370
      
309
  
Cash received from other activities
    
10
      
21
  
Technical assistance and grants disbursed
    
(947
)
    
(1,442
)
Administrative and other expenses paid
    
(170
)
    
(307
)
                 
Net Cash Used in Operating Activities
    
(737
)
    
(1,419
)
                 
CASH FLOWS FROM INVESTING ACTIVITIES
                
Maturities of investments for liquidity purpose
    
96,573
      
265,715
  
Purchases of investments for liquidity purpose
    
(95,843
)
    
(265,824
)
                 
Net Cash Provided by (Used in) Investing Activities
    
730
      
(109
)
                 
Net Decrease in Due From Banks
    
(7
)
    
(1,528
)
                 
Due from Banks at Beginning of Period
    
1,059
      
2,098
  
                 
Due from Banks at End of Period
  
$
1,052
    
$
570
  
The accompanying Notes are an integral part of these condensed financial statements (CCF-4).

106

CCF-4
ASIAN DEVELOPMENT BANK—CLIMATE CHANGE FUND
NOTES TO CONDENSED FINANCIAL STATEMENTS
For the Three Months Ended 31 March 2025 and 2024
(Unaudited)
NOTE A—INTERIM FINANCIAL INFORMATION
These unaudited condensed interim financial statements should be read in conjunction with the 31 December 2024 audited financial statements and the notes included therein. In the opinion of Management, all material adjustments necessary for a fair statement of the results of operations for the three months ended 31 March 2025 and 2024 have been included. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.
NOTE B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Presentation of the Financial Statements
The financial statements are presented on the basis of those for not-for-profit organizations. The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America (US GAAP) requires Management to make reasonable estimates and assumptions that affect the reported amounts of assets and liabilities as of the end of the period and the reported amounts of revenue and expenses during the period. The actual results could differ from those estimates.
The financial statements are expressed in US dollars. The US dollar is the functional and reporting currency of the Climate Change Fund (CCF), representing the currency of the primary economic operating environment.
Fair Value of Financial Instruments
Accounting Standards Codification (ASC) 820, “Fair Value Measurement” defines fair value (FV) as the price that would be received to sell an asset or paid to transfer a liability at measurement date in an orderly transaction among willing participants with an assumption that the transaction takes place in the entity’s principal market, or in the absence of principal market, in the most advantageous market for the asset or liability. The most advantageous market is the market where the sale of the asset or transfer of liability would maximize the amount received for the asset or minimize the amount paid to transfer the liability. The FV measurement is not adjusted for transaction costs.
Fair Value Hierarchy
ASC 820 establishes a FV hierarchy that gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1), next priority to observable market inputs or market corroborated data (Level 2), and the lowest priority to unobservable inputs without market corroborated data (Level 3).
The FVs of ADB’s financial assets and liabilities are categorized as follows:
Level 1: FVs are based on unadjusted quoted prices for identical assets or liabilities in active markets.
Level 2: FVs are based on quoted prices for similar assets or liabilities in active markets or markets that are not active; or valuation models for which significant inputs are obtained from market-based data that are observable.
Level 3: FVs are based on prices or valuation models for which significant inputs to the model are unobservable.

107
CCF-4
continued
Accounting and Reporting Developments
In March 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2024-02, “Codification Improvements – Amendments to Remove References to the Concepts Statements”. This Update contains amendments to the Codification that remove references to various FASB Concepts Statements. The amendments in this Update are effective for public business entities for fiscal years beginning after 15 December 2024. For all other entities, the amendments are effective for fiscal years beginning after 15 December 2025. Early adoption is permitted for all entities. ADB does not expect the adoption of this Update to have a material impact on the financial statements.
NOTE C—INVESTMENTS FOR LIQUIDITY PURPOSE
All investments for liquidity purpose held as of 31 March 2025 and 31 December 2024 were in US dollar time deposits.
Interest income on time deposits is recognized as earned and reported in REVENUE From investments for liquidity purpose.
The annualized rate of return on the average investments for liquidity purpose held during the three months ended 31 March 2025, based on the portfolio held at the beginning and end of each month, was 4.5% (5.5% – 2024).
Fair Value Disclosure
The FV of INVESTMENTS FOR LIQUIDITY PURPOSE as of 31 March 2025 and 31 December 2024 is as follows:

($ thousand)
  

 
 
Fair Value Measurements
  

 
Total
    
Level 1
    
Level 2
    
Level 3
  
                         
31 March 2025
                        
Investments for liquidity purpose
                        
Time deposits
  
$
24,060
    
$
–
    
$
24,060
    
$
–
  
                                 
31 December 2024
                                
Investments for liquidity purpose
                                
Time deposits
  
$
24,790
    
$
–
    
$
24,790
    
$
–
  

Time deposits are reported at cost, which approximates FV.
NOTE D—RELATED PARTY TRANSACTIONS
The ordinary capital resources (OCR) and Special Funds resources are at all times used, committed, and invested entirely separately from each other. The administrative and operational expenses pertaining to the CCF are settled regularly with OCR and the other funds. Regional technical assistance projects and programs may be combined activities financed by Special Funds and trust funds. ADB charges a service fee to cover ADB’s incremental cost for the administration, management, supervision, and operation of the CCF. The service fee is set at 5% of the amount disbursed for technical assistance and 2% of the amount disbursed for grant components of investment projects. As of 31 March 2025, all service fees pertain to the administration of TA projects. See Note F for service fees during the three months ended 31 March 2025 and 2024.

108
CCF-4
continued
The interfund account balances included in ACCOUNTS PAYABLE AND OTHER LIABILITIES as of 31 March 2025 and 31 December 2024 are as follows:

($ thousand)
            
             

 
31 March 2025
    
31 December 2024
  
Payable to:
            
Ordinary capital resources—net
  
$
33
    
$
62
  
Technical Assistance Special Fund—net
    
25
      
265
  
Trust Funds
    
–
      
17
  
Total
  
$
58
    
$
344
  

NOTE E—TECHNICAL ASSISTANCE, GRANTS, AND UNDISBURSED TECHNICAL ASSISTANCE AND GRANTS
Technical assistance (TA) and grant is recognized as expense in the financial statements when the project becomes effective. Upon completion or cancellation of a TA project or grant, any undisbursed committed balance is reversed. TA or grant expenses are also reversed accordingly.
For the three months ended 31 March 2025, no TA project became effective (TA project amounting to $400,000 – 2024). Undisbursed TA reversed as reduction in TA expenses totaled $37,000 (nil – 2024). Additionally, one grant (three – 2024) became effective, resulting in total grant expense of $900,000 ($2,000,00 – 2024).
Undisbursed TA or grants are denominated in US dollars and represent effective TA projects or grants not yet disbursed and unliquidated. As of 31 March 2025, undisbursed TA totaled $10,280,000 ($10,974,000 – 2024), which included $40,000 ($6,000 – 2024) of advances for TA, while undisbursed grants totaled
$3,200,000 ($2,300,000 – 31 December 2024), including $271,000 ($272,000 – 31 December 2024) of advances for grants.
NOTE F—EXPENSES
Technical assistance—net
TA expenses are classified according to its nature using the budget allocation specified in the relevant TA agreement for the TA that became effective during the period. The details of TA expenses for the three months ended 31 March 2025 and 2024 is as follows:

($ thousand)
            
             

 
2025
    
2024
  
Consultants
  
$
–
    
$
369
  
Studies
    
–
      
8
  
Other expenses—net
    
(37
)a
    
23
  
                 
Total
  
$
(37
)
  
$
400
  
a Undisbursed TA reversed as reduction in TA expenses (See Note E).

109

CCF-4

continued

Administrative and other expenses

Administrative expenses include service fees to OCR, which are incurred for management and general supporting activities. Other expenses include direct charges for project-related and operational-related expenses that are not part of a TA and/or part of an investment project.

The following table summarizes administrative and other expenses for the three months ended 31 March 2025 and 2024:

($ thousand)
            

 
2025
    
2024
  
Administrative expenses





Service fees to OCR (Note D)
  
$
33
    
$
78
  
                 
Other expenses
                
Direct charges
                
Consultants
    
(201
)
    
461
  
Total
  
$
(168
)
  
$
539
  

NOTE G—LIQUIDITY AND AVAILABILITY OF RESOURCES

Liquidity risk refers to the risk that the fund has difficulties in meeting its short-term obligations. As part of CCF’s liquidity management, it has a policy to structure its financial assets to be available as its general expenditures, liabilities, and other obligations come due. In addition, CCF invests cash in excess of daily requirements in short-term investments.

As of 31 March 2025, the CCF has liquidity of $25,112,000 ($25,849,000 – 31 December 2024) consisting of DUE FROM BANKS of $1,052,000 ($1,059,000 – 31 December 2024) and INVESTMENTS FOR LIQUIDITY PURPOSE in time deposits of $24,060,000 ($24,790,000 – 31 December 2024), available within one year of the balance sheet date to meet cash needs for general expenditure. None of the financial assets are subject to donor or other contractual restrictions that make them unavailable for general expenditure within one year of the balance sheet date.

NOTE H—SUBSEQUENT EVENTS

ADB has evaluated subsequent events after 31 March 2025 through 26 May 2025, the date these condensed financial statements are available for issuance. As a result of this evaluation, there are no subsequent events that require recognition or disclosure in the CCF’s condensed financial statements as of 31 March 2025.

110

APDRF-1

ASIAN DEVELOPMENT BANK—ASIA PACIFIC DISASTER RESPONSE FUND
CONDENSED STATEMENT OF FINANCIAL POSITION
31 March 2025 and 31 December 2024
Expressed in Thousands of US Dollars

           
31 March
            
31 December
  
           
(Unaudited)
            
(Audited)
  
ASSETS
                            
                             
DUE FROM BANKS (Note H)
          
$
2,815
            
$
2,840
  
                                 
INVESTMENTS FOR LIQUIDITY PURPOSE (Notes C and H)
                                
Time deposits
            
29,590
              
31,643
  
                                 
ACCRUED REVENUE
            
55
              
174
  
                                 
ADVANCES FOR GRANTS (Note E)
            
5,300
              
2,800
  
                                 
                                 
TOTAL
          
$
37,760
            
$
37,457
  
                                 

LIABILITIES AND UNCOMMITTED BALANCES
                        
                         
ACCOUNTS PAYABLE AND OTHER LIABILITIES
                        
Payable to related funds (Note D)
  
$
293
          
$
266
        
Accrued expenses
  

–
     $ 293    

20
   $ 286  
                               
UNDISBURSED GRANTS (Note E)
            
7,300
              
2,800
  
                                 
TOTAL LIABILITIES
            
7,593
              
3,086
  
                                 
UNCOMMITTED BALANCES (APDRF-2, Note F), represented by:
                                
Net assets without donor restrictions
            
30,167
              
34,371
  
                                 
                                 
TOTAL
          
$
37,760
            
$
37,457
  
                                 
The accompanying Notes are an integral part of these condensed financial statements (APDRF-4).

111

APDRF-2

ASIAN DEVELOPMENT BANK—ASIA PACIFIC DISASTER RESPONSE FUND
CONDENSED STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS—UNAUDITED
For the Three Months Ended 31 March 2025 and 2024
Expressed in Thousands of US Dollars

   
2025
    
2024
  
CHANGES IN NET ASSETS WITHOUT DONOR RESTRICTIONS
            
             
REVENUE
            
From investments for liquidity purpose (Note C)
  
$
327
    
$
577
  
From other sources
    
7
      
25
  
                 
Total
    
334
      
602
  
                 
EXPENSES
                
Grants—net (Note E)
    
(4,500
)
    
197
  
Administrative and other expenses (Notes D and G)
    
(38
)
    
(20
)
                 
Total
    
(4,538
)
    
177
  
                 
(DECREASE) INCREASE IN NET ASSETS
    
(4,204
)
    
779
  
                 
NET ASSETS AT BEGINNING OF PERIOD
    
34,371
      
47,013
  
                 
                 
NET ASSETS AT END OF PERIOD
  
$
30,167
    
$
47,792
  
                 
The accompanying Notes are an integral part of these condensed financial statements (APDRF-4).

112

APDRF-3

ASIAN DEVELOPMENT BANK—ASIA PACIFIC DISASTER RESPONSE FUND
CONDENSED STATEMENT OF CASH FLOWS—UNAUDITED
For the Three Months Ended 31 March 2025 and 2024
Expressed in Thousands of US Dollars

   
2025
    
2024
  
CASH FLOWS FROM OPERATING ACTIVITIES
            
Interest received on investments for liquidity purpose
  
$
447
    
$
539
  
Cash received from other sources
    
7
      
25
  
Grants disbursed
    
(2,500
)
    
(500
)
Administrative and other expenses paid
    
(32
)
    
(44
)
                 
Net Cash (Used in) Provided by Operating Activities
    
(2,078
)
    
20
  
                 
CASH FLOWS FROM INVESTING ACTIVITIES
                
Maturities of investments for liquidity purpose
    
206,313
      
482,096
  
Purchases of investments for liquidity purpose
    
(204,260
)
    
(488,635
)
                 
Net Cash Provided by (Used in) Investing Activities
    
2,053
      
(6,539
)
                 
Net Decrease in Due From Banks
    
(25
)
    
(6,519
)
                 
Due from Banks at Beginning of Period
    
2,840
      
9,722
  
                 
Due from Banks at End of Period
  
$
2,815
    
$
3,203
  
The accompanying Notes are an integral part of these condensed financial statements (APDRF-4).

113

APDRF-4

ASIAN DEVELOPMENT BANK—ASIA PACIFIC DISASTER RESPONSE FUND
NOTES TO CONDENSED FINANCIAL STATEMENTS
For the Three Months Ended 31 March 2025 and 2024
(Unaudited)

NOTE A—INTERIM FINANCIAL INFORMATION

These unaudited condensed interim financial statements should be read in conjunction with the 31 December 2024 audited financial statements and the notes included therein. In the opinion of Management, all material adjustments necessary for a fair statement of the results of operations for the three months ended 31 March 2025 and 2024 have been included. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.

NOTE B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Presentation of Financial Statements

The financial statements are presented on the basis of those for not-for-profit organizations. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (US GAAP) requires Management to make reasonable estimates and assumptions that affect the reported amounts of assets, liabilities and uncommitted balances as of the end of the period and the reported amounts of revenue and expenses during the period. The actual results could differ from those estimates.

The financial statements are expressed in US dollars. The US dollar is the functional and reporting currency of the Asia Pacific Disaster Response Fund (APDRF), representing the currency of the primary economic operating environment.

The APDRF reports donor’s contributed cash and other assets as support without donor restrictions as these are made available to the APDRF without conditions other than for the purposes of pursuing the objectives of the APDRF.
Fair Value of Financial Instruments

Accounting Standards Codification (ASC) 820, “Fair Value Measurement” defines fair value (FV) as the price that would be received to sell an asset or paid to transfer a liability at measurement date in an orderly transaction among willing participants with an assumption that the transaction takes place in the entity’s principal market, or in the absence of principal market, in the most advantageous market for the asset or liability. The most advantageous market is the market where the sale of the asset or transfer of liability would maximize the amount received for the asset or minimize the amount paid to transfer the liability. The FV measurement is not adjusted for transaction costs.

Fair Value Hierarchy

ASC 820 establishes a FV hierarchy that gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1), next priority to observable market inputs or market corroborated data (Level 2), and the lowest priority to unobservable inputs without market corroborated data (Level 3).

The FVs of ADB’s financial assets and liabilities are categorized as follows:

Level 1: FVs are based on unadjusted quoted prices for identical assets or liabilities in active markets.
Level 2: FVs are based on quoted prices for similar assets or liabilities in active markets or markets that are not active; or valuation models for which significant inputs are obtained from market-based data that are observable.
Level 3: FVs are based on prices or valuation models for which significant inputs to the model are unobservable.

114

APDRF-4

continued

Accounting and Reporting Developments

In March 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2024-02, “Codification Improvements – Amendments to Remove References to the Concepts Statements”. This Update contains amendments to the Codification that remove references to various FASB Concepts Statements. The amendments in this Update are effective for public business entities for fiscal years beginning after 15 December 2024. For all other entities, the amendments are effective for fiscal years beginning after 15 December 2025. Early adoption is permitted for all entities. ADB does not expect the adoption of this Update to have a material impact on the financial statements.

NOTE C—INVESTMENTS FOR LIQUIDITY PURPOSE

All investments for liquidity purpose held as of 31 March 2025 and 31 December 2024 were in US dollar time deposits.

Interest income on time deposits is recognized as earned and reported in REVENUE From investments for liquidity purpose.

The annualized rate of return on the average investments for liquidity purpose held during the three months ended 31 March 2025, based on the portfolio held at the beginning and end of each month, was 4.5% (5.5% – 2024).

Fair Value Disclosure

The FV of INVESTMENTS FOR LIQUIDITY PURPOSE as of 31 March 2025 and 31 December 2024 is as follows:

($ thousand)

    
Fair Value Measurements
  

Total
  
Level 1
  
Level 2
  
Level 3
  
31 March 2025
                
Investments for liquidity purpose
                
Time deposits
  
$
29,590
    
$
–
    
$
29,590
    
$
–
  
31 December 2024
                                
Investments for liquidity purpose
                                
Time deposits
  
$
31,643
    
$
–
    
$
31,643
    
$
–
  

Time deposits are reported at cost, which approximates FV.

NOTE D—RELATED PARTY TRANSACTIONS

The ordinary capital resources (OCR) and Special Funds resources are at all times used, committed, and invested entirely separately from each other. The administrative and operational expenses pertaining to the APDRF are settled regularly with OCR and the other funds. Grants programs may be combined activities financed by Special Funds and trust funds. ADB charges a service fee to cover ADB’s cost for the administration, management, supervision, and operation of the APDRF. The service fee is currently set at 2% of the amount disbursed for grant components of investment projects. See Note G for service fees during the three months ended 31 March 2025 and 2024.

115

APDRF-4

continued

The interfund account balances included in ACCOUNTS PAYABLE AND OTHER LIABILITIES as of 31 March 2025 and 31 December 2024 are as follows:

($ thousand)
        

31 March 2025
  
31 December 2024
  
Payable to:


 
Ordinary capital resources
  
$
26
  
$
–
  
JFPR (Note F)
  
267
  
 
266
  
Total
  
$
293
  
$
266
  

JFPR = Japan Fund for Prosperous and Resilient Asia and the Pacific.

NOTE E—GRANTS AND RELATED UNDISBURSED GRANTS

Grants are recognized as expenses in the financial statements when the project becomes effective. Upon completion or cancellation of a grant, the corresponding undisbursed balance, if any, is reversed as reduction in Grants expense. During the three months ended 31 March 2025, three grants (nil – 2024) became effective resulting in a total Grants expense of $4,500,000 (nil – 2024). There were no grants that were reversed as a reduction in grant expense during the period ($197,000 – 2024).

Undisbursed grants are denominated in US dollars and represent effective grants not yet disbursed and unliquidated. The undisbursed grants of $7,300,000 as of 31 March 2025 ($2,800,000 – 31 December 2024) includes $5,300,000 ($2,800,000 – 31 December 2024) advances for grants.

NOTE F—CONTRIBUTIONS AND UNCOMITTED BALANCES

Contributions received for specific purpose or grant programs are classified as support with donor restrictions. In May 2020, the Government of Japan contributed $75,000,000 to the APDRF, valid for two years, earmarked for ADB’s response to the COVID-19 pandemic. In July 2023, the government requested ADB to transfer the unused remaining balance of its contributions to the Japan Fund for Prosperous and Resilient Asia and the Pacific (JFPR), resulting in an initial transfer of $27,000,000 in August 2024, and the remaining $267,000 recorded as payable to JFPR as of 31 March 2025.

Uncommitted balances comprise amounts which have not been committed by APDRF as of 31 March 2025 and 31 December 2024.

NOTE G—ADMINISTRATIVE AND OTHER EXPENSES

Administrative expenses include service fees to OCR, which are incurred for management and general supporting activities. Other Expenses include direct charges of consultants engaged under the second window of APDRF to provide a speedy post-disaster technical support.

116

APDRF-4

continued

The following table summarizes administrative and other expenses for the three months ended 31 March 2025 and 2024:
($ thousand)




 

  2025


2024  
Administrative expenses
            
Service fees to OCR (Note D)
  
$
–
    
$
20
  
Other expenses
                
Direct charges
                
Consultants
    
38
      
0
  

               
Total
  
$
38
    
$
20
  

0 = Less than $500.

NOTE H—LIQUIDITY AND AVAILABILITY OF RESOURCES

Liquidity risk refers to the risk that the fund has difficulties in meeting its short-term obligations. As part of APDRF’s liquidity management, it has a policy to structure its financial assets to be available as its general expenditures, liabilities, and other obligations come due. In addition, as part of its liquidity management, APDRF invests cash in excess of daily requirements in short-term investments.

As of 31 March 2025, APDRF has liquidity of $32,405,000 ($34,483,000 – 31 December 2024) consisting of DUE FROM BANKS of $2,815,000 ($2,840,000 – 31 December 2024) and INVESTMENTS FOR LIQUIDITY PURPOSE in time deposits of $29,590,000 ($31,643,000 – 31 December 2024), available within one year of the balance sheet date to meet cash needs for general expenditure.

NOTE I—SUBSEQUENT EVENTS

ADB has evaluated subsequent events after 31 March 2025 through 26 May 2025, the date these condensed financial statements are available for issuance. On 10 April 2025, the Board of Directors approved a $3,000,000 APDRF grant to support the emergency and humanitarian needs of the people of Myanmar affected by the 7.7 magnitude earthquake on 28 March 2025. The grant was signed and made effective on 12 April 2025 and will be provided through the United Nations World Food Programme.

117

FSDPSF-1

ASIAN DEVELOPMENT BANK—FINANCIAL SECTOR DEVELOPMENT PARTNERSHIP SPECIAL FUND
CONDENSED STATEMENT OF FINANCIAL POSITION
31 March 2025 and 31 December 2024
Expressed in Thousands of US Dollars

           
31 March
            
31 December
  
           
(Unaudited)
            
(Audited)
  
ASSETS
                            
DUE FROM BANKS (Note G)
          
$
390
            
$
557
  
INVESTMENTS FOR LIQUIDITY PURPOSE (Notes C and G)
Time deposits
            
10,004
              
10,458
  
ACCRUED REVENUE
            
21
              
53
  
ADVANCES FOR TECHNICAL ASSISTANCE (Note E)
            
7
              
8
  
OTHER ASSETS (Note D)
            
2
              
–
  
                                 
TOTAL
          
$
10,424
            
$
11,076
  

LIABILITIES AND UNCOMMITTED BALANCES
                        
ACCOUNTS PAYABLE AND OTHER LIABILITIES
                        
Payable to related funds (Note D)
  
$
10
          
$
21
        
Accrued Expenses
    
–
    
$
10
      
20
    
$
41
  
UNDISBURSED TECHNICAL ASSISTANCE (Notes E and F)
            
8,517
              
9,830
  
TOTAL LIABILITIES
            
8,527
              
9,871
  
UNCOMMITTED BALANCES (FSDPSF-2), represented by:
Net assets without donor restrictions
            
1,897
              
1,205
  
                                 
TOTAL
          
$
10,424
            
$
11,076
  
The accompanying Notes are an integral part of these condensed financial statements (FSDPSF-4).

118

FSDPSF-2

ASIAN DEVELOPMENT BANK—FINANCIAL SECTOR DEVELOPMENT PARTNERSHIP SPECIAL FUND
CONDENSED STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS—UNAUDITED
For the Three Months Ended 31 March 2025 and 2024
Expressed in Thousands of US Dollars

   
2025
    
2024
  
CHANGES IN NET ASSETS WITHOUT DONOR RESTRICTIONS
            
REVENUE
            
From investments for liquidity purpose (Note C)
    
113
      
144
  
From other sources
    
2
      
11
  
Total
    
115
      
155
  
EXPENSES
                
Technical assistance—net (Notes E and F)
    
612
      
(350
)
Administrative expenses (Notes D and F)
    
(35
)
    
(24
)
Total
    
577
      
(374
)
REVENUE IN EXCESS OF (LESS THAN) EXPENSES
    
692
      
(219
)
EXCHANGE LOSSES—net
    
(0
)
    
(38
)
INCREASE (DECREASE) IN NET ASSETS
    
692
      
(257
)
NET ASSETS AT BEGINNING OF PERIOD
    
1,205
      
4,894
  
                 
NET ASSETS AT END OF PERIOD
  
$
1,897
    
$
4,637
  
0 = Less than $500.
The accompanying Notes are an integral part of these condensed financial statements (FSDPSF-4).

119

FSDPSF-3

ASIAN DEVELOPMENT BANK—FINANCIAL SECTOR DEVELOPMENT PARTNERSHIP SPECIAL FUND
CONDENSED STATEMENT OF CASH FLOWS—UNAUDITED
For the Three Months Ended 31 March 2025 and 2024
Expressed in Thousands of US Dollars

   
2025
    
2024
  
CASH FLOWS FROM OPERATING ACTIVITIES
            
Contributions received
  
$
–
    
$
2,170
  
Interest received on investments for liquidity purpose
    
145
      
116
  
Cash received from other sources
    
2
      
11
  
Technical assistance disbursed
    
(715
)
    
(442
)
Administrative expenses paid
    
(53
)
    
(45
)
Net Cash (Used in) Provided by Operating Activities
    
(621
)
    
1,810
  
CASH FLOWS FROM INVESTING ACTIVITIES
                
Maturities of investments for liquidity purpose
    
58,014
      
104,042
  
Purchases of investments for liquidity purpose
    
(57,560
)
    
(107,558
)
Net Cash Provided by (Used in) Investing Activities
    
454
      
(3,516
)
Net Decrease in Due From Banks
    
(167
)
    
(1,706
)
Due from Banks at Beginning of Period
    
557
      
2,262
  
Due from Banks at End of Period
  
$
390
    
$
556
  
The accompanying Notes are an integral part of these condensed financial statements (FSDPSF-4).

120

FSDPSF-4

ASIAN DEVELOPMENT BANK—FINANCIAL SECTOR DEVELOPMENT PARTNERSHIP SPECIAL FUND
NOTES TO CONDENSED FINANCIAL STATEMENTS
For the Three Months Ended 31 March 2025 and 2024
(Unaudited)

NOTE A—INTERIM FINANCIAL INFORMATION

These unaudited condensed interim financial statements should be read in conjunction with the 31 December 2024 audited financial statements, and the notes included therein. In the opinion of Management, all material adjustments necessary for a fair statement of the results of operations for the three months ended 31 March 2025 and 2024 have been included. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.

NOTE B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Presentation of Financial Statements

The financial statements are presented on the basis of those for not-for-profit organizations. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (US GAAP) requires Management to make reasonable estimates and assumptions that affect the reported amounts of assets, liabilities and uncommitted balances as of the end of the period and the reported amounts of revenue and expenses during the period. The actual results could differ from those estimates.
The financial statements are expressed in US dollars. The US dollar is the functional and reporting currency of the Financial Sector Development Partnership Special Fund (FSDPSF), representing the currency of the primary economic operating environment.

Fair Value of Financial Instruments

Accounting Standards Codification (ASC) 820, “Fair Value Measurement” defines fair value (FV) as the price that would be received to sell an asset or paid to transfer a liability at measurement date in an orderly transaction among willing participants with an assumption that the transaction takes place in the entity’s principal market, or in the absence of principal market, in the most advantageous market for the asset or liability. The most advantageous market is the market where the sale of the asset or transfer of liability would maximize the amount received for the asset or minimize the amount paid to transfer the liability. The FV measurement is not adjusted for transaction costs.

Fair Value Hierarchy

ASC 820 establishes a FV hierarchy that gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1), next priority to observable market inputs or market corroborated data (Level 2), and the lowest priority to unobservable inputs without market corroborated data (Level 3).

The FVs of ADB’s financial assets and liabilities are categorized as follows:

Level 1: FVs are based on unadjusted quoted prices for identical assets or liabilities in active markets.
Level 2: FVs are based on quoted prices for similar assets or liabilities in active markets or markets that are not active; or valuation models for which significant inputs are obtained from market-based data that are observable.
Level 3: FVs are based on prices or valuation models for which significant inputs to the model are unobservable.

121

FSDPSF-4

continued

Accounting and Reporting Developments

In March 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2024-02, “Codification Improvements – Amendments to Remove References to the Concepts Statements”. This Update contains amendments to the Codification that remove references to various FASB Concepts Statements. The amendments in this Update are effective for public business entities for fiscal years beginning after 15 December 2024. For all other entities, the amendments are effective for fiscal years beginning after 15 December 2025. Early adoption is permitted for all entities. ADB does not expect the adoption of this Update to have a material impact on the financial statements.

NOTE C—INVESTMENTS FOR LIQUIDITY PURPOSE

All investments for liquidity purpose held as of 31 March 2025 and 31 December 2024 were in US dollar time deposits.

Interest income on time deposits is recognized as earned and reported in REVENUE From investments for liquidity purpose.

The annualized rate of return on the average investments for liquidity purpose held during the three months ended 31 March 2025, based on the portfolio held at the beginning and end of each month, was 4.5% (5.5% – 2024).

Fair Value Disclosure

The FV of INVESTMENTS FOR LIQUIDITY PURPOSE as of 31 March 2025 and 31 December 2024 is as follows:

($ thousand)




 
         
Fair Value Measurements
  
   
Total
    
Level 1
    
Level 2
    
Level 3
  
30 March 2025
                        
Investments for liquidity purpose
                        
Time deposits
  
$
10,004
    
$
–
    
$
10,004
    
$
–
  
                                 
31 December 2024
                                
Investments for liquidity purpose
                                
Time deposits
  
$
10,458
    
$
–
    
$
10,458
    
$
–
  

Time deposits are reported at cost, which approximates FV.

NOTE D—RELATED PARTY TRANSACTIONS

The ordinary capital resources (OCR) and Special Funds resources are at all times used, committed, and invested entirely separately from each other. The administrative and operational expenses pertaining to the FSDPSF is settled regularly with OCR and the other funds. Regional technical assistance projects and programs may be combined activities financed by Special Funds and trust funds. ADB charges a service fee to cover ADB’s incremental cost for the administration, management, supervision, and operation of the FSDPSF. The service fees are set at (i) 5% of amounts disbursed for technical assistance projects; and (ii) 5% of amounts disbursed for grant components of investment projects up to $5,000,000, or 2% of amounts disbursed for grant components of investment projects above $5,000,000 with a minimum of $250,000, whichever is greater. As of 31 March 2025, all service fees pertain to the administration of TA projects. See Note F for service fees during the three months ended 31 March 2025 and 2024.

122

FSDPSF-4

continued

The interfund account balances included in OTHER ASSETS and ACCOUNTS PAYABLE AND OTHER LIABILITIES as of 31 March 2025 and 31 December 2024 are as follows:

($ thousand)




 
   
31 March 2025
    
31 December 2024
  
Receivable from:
            
Technical Assistance Special Fund
  
$
2
    
$
–
  
Total
  
$
2
    
$
–
  
                 
Payable to:
                
Ordinary capital resources–net
  
$
10
    
$
14
  
Technical Assistance Special Fund–net
    
–
      
7
  
Total
  
$
10
    
$
21
  

NOTE E—TECHNICAL ASSISTANCE AND UNDISBURSED TECHNICAL ASSISTANCE

TA is recognized as expense in the financial statements when the project becomes effective. Upon completion or cancellation of a TA project, any undisbursed committed balance is reversed. TA expenses are also reversed accordingly. During the three months ended 31 March 2025, no TA projects (one supplementary TA amounting to $350,000 – 2024) became effective. Undisbursed TA reversed as reduction in TA expenses totaled $612,000 (nil – 2024) during the period.

Undisbursed TA are denominated in US dollars and represent effective TA projects not yet disbursed and unliquidated. The undisbursed TA of $8,517,000 as of 31 March 2025 (9,830,000 – 31 December 2024), includes $7,000 ($8,000 – 31 December 2024) advances for TA.

NOTE F—EXPENSES

Technical assistance–net

TA expenses are classified according to their nature using the budget allocation specified in the relevant TA agreement for the TA that became effective during the period. The details of TA expenses for the three months ended 31 March 2025 and 2024 are as follows:

($ thousand)




 
   
2025
    
2024
  
Consultants
  
$
–
    
$
202
  
Trainings and Seminars
    
–
      
130
  
Other expenses–neta
    
(612
)a
    
18
  
Total
  
$
(612
)
  
$
350
  

a undisbursed TA reversed as reduction in TA expenses (See Note E).

Administrative expenses

Administrative expenses include service fees to OCR, which are incurred for management and general supporting activities. For the three months ended 31 March 2025, service fees to OCR (Note D) totaled $35,000 ($24,000 – 2024).

123

FSDPSF-4

continued

NOTE G—LIQUIDITY AND AVAILABILITY OF RESOURCES

Liquidity risk refers to the risk that the fund has difficulties in meeting its short-term obligations. As part of FSDPSF’s liquidity management, it has a policy to structure its financial assets to be available as its general expenditures, liabilities, and other obligations come due. In addition, FSDPSF invests cash in excess of daily requirements in short-term investments.

As of 31 March 2025, FSDPSF has liquidity of $10,394,000 ($11,015,000 – 31 December 2024) consisting of DUE FROM BANKS of $390,000 ($557,000 – 31 December 2024) and INVESTMENTS FOR LIQUIDITY PURPOSE in time deposits of $10,004,000 ($10,458,000 – 31 December 2024), available within one year of the balance sheet date to meet cash needs for general expenditure. None of the financial assets are subject to donor or other contractual restrictions that make them unavailable for general expenditure within one year of the balance sheet date.

NOTE H—SUBSEQUENT EVENTS

ADB has evaluated subsequent events after 31 March 2025 through 26 May 2025, the date these condensed financial statements are available for issuance. On 5 May 2025, the Government of Luxembourg committed a contribution of €2,500,000 (equivalent to $2,800,000) to the FSDPSF.