ACCELERATING IMPACT MOBILIZING INVESTMENT AT SCALE IFC 2024 ANNUAL REPORT FINANCIALS Table of Contents 56 CONSOLIDATED FINANCIAL 2 STATEMENTS AND INTERNAL CONTROL REPORTS MANAGEMENT’S DISCUSSION 57 Management’s Report Regarding AND ANALYSIS   Effectiveness of Internal Control over   Financial Reporting 3 Selected Financial Data 59 Independent Auditors’ Report on the 4 Executive Summary   Effectiveness of Internal Control over 7 Overview   Financial Reporting 9 Client Services 60 Independent Auditors’ Report 23 Liquid Assets 62 Consolidated Balance Sheets 23 Funding Resources 63 Consolidated Statements of Operations 26 Risk Management 64 Consolidated Statements of   Comprehensive Income 40 Critical Accounting Policies 65 Consolidated Statements of 42 Results of Operations   Changes in Capital 50 Governance and Control 66 Consolidated Statements of 53 Appendix   Cash Flows 68 Consolidated Statement of   Capital Stock and Voting Power 70 Notes to Consolidated Financial  Statements 141 INVESTMENT PORTFOLIO Cumulative Gross Commitments by  Region IFC 2024 ANNUAL REPORT FINANCIALS  1 MANAGEMENT’S DISCUSSION AND ANALYSIS 2  IFC 2024 ANNUAL REPORT FINANCIALS This Management’s Discussion and Analysis (MD&A) discusses the financial results of the International Finance Corporation (IFC or the Corporation) for the fiscal year ended June 30, 2024 (FY24). The MD&A contains forward- looking statements which may be identified by such terms as “anticipates”, “believes”, “expects”, “intends”, “plans”, “aims” or words of similar meaning. Such statements involve a number of assumptions and estimates that are based on current expectations, which are subject to risks and uncertainties beyond IFC’s control. Consequently, actual future results could differ materially from those currently anticipated. IFC undertakes no obligation to update any forward-looking statements. Certain reclassifications of prior years’ information have been made to conform with the current year’s presentation. Table 1: Selected Financial Data FOR THE YEAR ENDED JUNE 30 2024 2023 2022 (US$ in millions) (FY24) (FY23) (FY22) Investments Highlights (Section III) Own Account Commitments (Long-Term Finance (LTF) and Short-Term Finance (STF) Commitments) $ 31,654 $ 27,704 $ 22,228 Core Mobilization (LTF and STF Commitments)a 24,433 16,025 11,363 Disbursements 19,147 18,689 13,198 Statement of Operations Net income (loss) (Section VIII) $ 1,485 $ 672 $ (464) Income available for designation (Section II) b 1,558 681 382 AS OF THE YEAR ENDED JUNE 30 (US$ in millions) 2024 2023 Balance Sheet Total assets $108,187 $110,547 Liquid assets (Section IV) c 37,734 40,120 Investments (Section III) 58,747 51,502 Borrowings outstanding, including fair value adjustments (Section V) 55,755 52,443 Total capital (Section V) 37,472 35,038 a. Starting FY23, short-term finance core mobilization commitments were included in commitments reporting. Previous year's information was updated to conform with the current year’s presentation. b. Starting FY24, the Post-retirement Contribution Reserve Fund (PCRF) income was excluded from Income Available for Designations. Please refer to Section II: Basis of preparation of IFC’s consolidated financial statements for more details. N et of securities sold under repurchase agreements, payable for cash collateral received and associated derivatives. c. AS OF THE YEAR ENDED JUNE 30 2024 2023 Capital Utilization Ratio Capital Utilization Ratio (CUR) 60.5% 60.7% IFC 2024 ANNUAL REPORT FINANCIALS  3 SECTION l. and SCI subscription and payment deadlines. As of June 30, 2024, 135 countries have subscribed a total of $4.5 EXECUTIVE SUMMARY billion, and payments of $3.7 billion have been received from 109 countries. Aligned with the capital increase, IFC continued to grow This executive summary highlights selected informa- its footprint in the poorest countries and fragile areas. tion and may not contain all of the information that is New and ongoing challenges continue to influence the important to readers of this document. For a complete global outlook. The Board endorsed the following global description of IFC’s FY24 performance, as well as the challenges: climate change adaptation and mitigation; risks and critical accounting estimates affecting IFC, this fragility and conflict; pandemic prevention and prepared- MD&A should be read in its entirety. ness; energy access; food and nutrition security; water IFC is the largest global development institution focused security and access; enabling digitalization; and protect- on the private sector in developing countries. Established ing biodiversity and nature. In response, IFC has been in 1956, IFC is owned by 186 member countries, a group working with partners at global and country levels to that collectively determines its policies. IFC is a member support its clients in enhancing resilience and laying the of the World Bank Group (WBG)1 but is a legal entity sep- groundwork for rebuilding better through various plat- arate and distinct from IBRD, IDA, MIGA, and ICSID, with forms. For example, in August 2023, IFC announced a its own Articles of Agreement, share capital, financial $400 million increase and one-year extension of the Base structure, management, and staff. Membership in IFC is of the Pyramid (BOP) platform, bringing IFC’s total invest- open only to member countries of IBRD. IFC is not liable ment to $1 billion. First launched in 2021, the platform for the obligations of the other institutions. aims to help financial services providers deliver critical funding to small and informal businesses, and low-income IFC’s mission  —  as one of the WBG entities  —  is to end households. In September 2023, IFC signed a $3.5 billion extreme poverty and boost shared prosperity on a livable credit insurance policy with 13 global insurance compa- planet. As the private sector arm of the WBG, IFC provides nies under its Managed Co-Lending Portfolio Program financing and advisory services to support private sector (MCPP). The initiative, MCPP Financial Institutions Group development in developing economies as a key engine of III, will increase access to finance for micro, small and growth in line with good environmental, social and gov- medium enterprises, including women-owned businesses, ernance standards. To further support these efforts, the as well as firms addressing climate change. On July 1, Board and Management have been working on evolving 2024, the WBG guarantee platform, housed at MIGA, was the WBG to better address the scale of development chal- launched to bring together products and experts from the lenges. As part of this evolution, in October 2023, the World Bank, IFC, and MIGA and aims to boost WBG annual Board of Governors endorsed the new vision and mission, guarantee issuances for all entities. as well as initiatives to increase impact, modernize the approach to delivery, and increase financing capacity. Since then, the WBG has started the implementation and operationalization of the evolution process to address FINANCIAL PERFORMANCE countries’ most pressing development challenges. IFC is at SUMMARY the forefront of these reforms in view of its private sector mandate to close the financing gap beyond what govern- IFC’s financial performance has been influenced by the ments can provide alone to address global challenges. changes in interest rates in FY24. This includes piloting an originate to distribute approach, further identifying and addressing bottlenecks to private NET INCOME AND INCOME AVAILABLE FOR sector activities, while leveraging partnerships with other DESIGNATIONS development financial institutions (DFIs) and multilateral development banks (MDBs) to scale impact  — among oth- IFC’s net income was $1.5 billion in FY24, as compared to ers. Recently, IFC also supported the initiative to grant net income of $672 million in FY23. Income Available for public access to the Global Emerging Markets (GEMs) Designations totaled $1.6 billion in FY24, as compared default and recovery rates to enhance transparency, and to an income of $681 million in FY23. Starting in FY24, help private sector investors boost confidence in emerging the Post-retirement Contribution Reserve Fund (PCRF) markets and make informed decisions. income is excluded from Income Available for Designations. In April 2018 IFC's Board of Governors approved a capital See Section II: Basis of preparation of IFC’s consolidated increase package comprising a three-step capital raising financial statements for more details. The increase in Net process: conversion of a portion of retained earnings into Income and Income Available for Designations was mainly paid-in capital, a Selective Capital Increase (SCI), and driven by higher treasury income and strong net interest General Capital Increase (GCI) that would together pro- income on loans and debt securities in FY24. vide up to $5.5 billion in additional paid-in capital. In April 2024, the subscription deadline for the GCI was extended to April 16, 2025, resulting in the full alignment of the GCI 1. The other institutions of the WBG are the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the Multilateral Investment Guarantee Agency (MIGA), and the International Centre for Settlement of Investment Disputes (ICSID). 4  IFC 2024 ANNUAL REPORT FINANCIALS Figure 1: Income Measures INVESTMENT PORTFOLIO (US$ in millions) The carrying value2 of IFC's outstanding investment port- folio was $58.7 billion as of June 30, 2024, an increase Income Available for Designations    of $7.2 billion compared to June 30, 2023. The portfo- Net income (loss) lio's growth primarily resulted from the $7.7 billion of net disbursements (disbursements net of repayments, pre- 2,000 payments, and divestments), during FY24. 1,558 1,485 1,500 Figure 4: Investments 1,000 681 672 (US$ in billions) 500 382 (464) 0 60 (500) 50 FY22 FY23 FY24 40 30 INVESTMENT OPERATIONS 20 In FY24, IFC delivered a combined total of $56.1 billion 10 in long-term and short-term financing, representing an increase of 28 percent compared to FY23. IFC commit- 0 ted $31.7 billion from its own account ($27.7 billion in FY20 FY21 FY22 FY23 FY24 FY23) and disbursed $19.1 billion in FY24 ($18.7 billion in FY23) excluding guarantees. See more details in Section LIQUID ASSETS III: Client Services. The Net Asset Value (NAV) of the liquid asset portfolio Figure 2: LTF and STF decreased by $2.4 billion to $37.7 billion at June 30, 2024 from June 30, 2023. The decrease was primarily driven Commitments (US$ in billions) by the $2.3 billion decrease in the market funded liquidity portfolio, since outflows from net loan disbursements LTF commitments    STF commitments exceeded inflows from net borrowings. The net worth 50 funded liquidity portfolio decreased slightly by $76 million in FY24. 40 Figure 5: Liquid Assets 30 (US$ in billions 20 10 50 0 40 FY20 FY21 FY22 FY23 FY24 30 Figure 3: Disbursements 20 00 x .75 (US$ in billions) 10 0 20 June 20 June 21 June 22 June 23 June 24 15 10 5 0 FY20 FY21 FY22 FY23 FY24 2. Please refer to Section III: Client Services Disbursed Investment Portfolio section for the definition of carrying value. IFC 2024 ANNUAL REPORT FINANCIALS  5 BORROWINGS ECONOMIC CAPITAL Borrowings outstanding (including fair value adjustments) FRAMEWORK increased by $3.4 billion from $52.4 billion as of June 30, 2023 to $55.8 billion as of June 30, 2024, mainly due to IFC’s Capital Adequacy, as measured by CUR stood at net new issuances of $3.7 billion. 60.5 percent as of June 30, 2024, slightly lower than the 60.7 percent as of June 30, 2023. The reduction (lower New borrowings under the medium- and long-term bor- capital utilization) in CUR was largely attributed to an rowing program (on a funding authorization basis) in FY24 increase in Capital Available, resulting from increases were $13.1 billion as compared to $13.7 billion in FY23. in undesignated retained earnings, paid-in capital, and other comprehensive income. There was also an increase Figure 6: Borrowings in Capital Required, primarily due to the need for addi- tional capital to support the Loan and Equity portfolios. (US$ in billions) During FY24, IFC updated its capital adequacy frame- work. Effective from Q3, IFC increased the granularity in 60 economic capital calculations for trade finance, and also brought IFC’s definition of Capital Available more closely into alignment with Basel Framework and S&P rating 40 methodology by deducting the pension surplus of each pension plan. Effective from Q4, IFC excluded the PCRF 20 assets from Capital Available, aligning with its intended use for post-retirement contributions. 0 Figure 7: Capital June 20 June 21 June 22 June 23 June 24 Utilization Ratio 100% 75% 50% 25% 0% June 20 June 21 June 22 June 23 June 24 6  IFC 2024 ANNUAL REPORT FINANCIALS SECTION II. dollars ($ or US$) or swapped into U.S. dollars. Overall, IFC seeks to minimize foreign exchange and interest rate risks OVERVIEW arising from its loans, debt securities and liquid assets by closely matching the currency and rate basis of its assets in various currencies with liabilities having the same char- IFC is the largest global development institution focused acteristics. IFC generally manages non-equity investment on the private sector in developing countries. Established related and certain lending related residual currency and in 1956, IFC is owned by 186 member countries, a group interest rate risks by utilizing currency and interest rate that collectively determines its policies. IFC is a member swaps and other derivative instruments. of the WBG but is a legal entity separate and distinct from IBRD, IDA, MIGA, and ICSID, with its own Articles of Agreement, share capital, financial structure, manage- BASIS OF PREPARATION OF ment, and staff. Membership in IFC is open only to member countries of IBRD. IFC is not liable for the obligations of IFC’S CONSOLIDATED FINANCIAL the other WBG institutions. STATEMENTS The accounting and reporting policies of IFC conform with FINANCIAL BUSINESS MODEL accounting principles generally accepted in the United States of America (U.S. GAAP). IFC’s accounting poli- IFC helps developing countries achieve sustainable growth cies are discussed in more detail in Section VII: Critical by financing private sector investment, mobilizing capital Accounting Policies, and in Note A to IFC’s consolidated in international financial markets, and providing advisory financial statements as of and for the year ended June 30, services to businesses and governments. IFC’s principal 2024 (FY24 consolidated financial statements). Certain investment products are loans, equity investments, debt reclassifications of prior years’ information have been securities and guarantees. IFC also plays an active and made to conform with the current year’s presentation. direct role in mobilizing additional funding from other IFC uses Income Available for Designations (a non-U.S. investors and lenders through a variety of means (Core GAAP measure) as a basis for designations of retained Mobilization). Unlike most other development institu- earnings. Prior to FY24, Income Available for Designations tions, IFC does not accept host government guarantees comprise net income excluding unrealized gains and losses of repayment. IFC raises virtually all of the funds for its on investments and borrowings3 as well as grants to IDA, lending activities through the issuance of debt obligations which were suspended in FY20 following the conclusion in the international capital markets, while maintaining a of the IDA Eighteen Replenishment of Resources (IDA18). small borrowing window with IBRD. Equity investments In FY24, IFC updated the calculation of Income Available are funded from capital (net worth). Proceeds of borrow- for Designations to exclude income from Post-retirement ings from market sources or net worth not immediately Contribution Reserve Fund (PCRF), aligning it with its disbursed for investments are managed internally by IFC intended use for post-retirement contributions. This in its liquid asset portfolio. change, approved by the Board in June 2024, is effective IFC’s capital base and its assets and liabilities, other than from FY24 and is reflected in the table below. its equity investments, are primarily denominated in U.S. Table 2: Reconciliation of Net Income or Loss to Income Available for Designations FOR THE YEAR ENDED JUNE 30 (US$ in millions) 2024 2023 2022 Net income (loss) $ 1,485 $ 672 (464) $ Adjustments to reconcile Net income (loss) to Income Available for Designations Unrealized losses (gains) on investments 49 (41) 740 Unrealized losses on borrowings 54 50 106 PCRF Income (30) – – Income Available for Designations $ 1,558 $ 681 $ 382 3. Unrealized gains and losses on investments and borrowings presented in the table includes unrealized gains and losses from associated derivatives. IFC 2024 ANNUAL REPORT FINANCIALS  7 Table 3: Summary of Financial Results FOR THE YEAR ENDED JUNE 30 (US$ in millions) 2024 2023 2022 Consolidated statement of operations highlights: Income from loans and guarantees, including realized gains and losses on loans and associated derivatives $ 3,204 $ 2,290 $ 1,156 Provision for losses on loans, off-balance sheet credit exposures and other receivables (9) (22) (126) Income from equity investments and associated derivatives 142 191 208 Income from debt securities, including realized gains and losses on debt securities and associated derivatives 811 518 414 Provision for losses on available-for-sale debt securities (12) (7) (14) Income (loss) from liquid asset trading activities 2,391 1,464 (413) Charges on borrowings (3,815) (2,598) (302) Other income 587 518 419 Other expenses (1,827) (1,721) (1,653) Foreign currency transaction (losses) gains on non-trading activities (115) (86) 76 Income (loss) before net unrealized gains and losses on non-trading financial instruments accounted for at fair value and grants to IDA $ 1,357 $ 547 $ (235) Net unrealized gains (losses) on non-trading financial instruments accounted for at fair value 128 125 (229) Net income (loss) $ 1,485 $ 672 $ (464) AS OF THE YEAR ENDED JUNE 30 (US$ in millions) 2024 2023 Consolidated balance sheet highlights: Total assets $108,187 $ 110,547 Liquid assetsa 37,734 40,120 Investments 58,747 51,502 Borrowings outstanding, including fair value adjustments 55,755 52,443 Total capital $ 37,472 $ 35,038 of which Undesignated retained earnings $ 13,133 $ 11,589 Designated retained earnings 162 221 Accumulated other comprehensive income (AOCI) 957 632 Paid-in capital 23,220 22,596 a. Net of securities sold under repurchase agreements, payable for cash collateral received and associated derivatives. Table 4: Key Financial Ratios AS OF THE YEAR ENDED JUNE 30 (US$ in billions, except ratios) 2024 2023 Overall liquidity ratio a 81.0% 103.8% Debt-to-equity ratiob 1.7 1.6 Total reserve against losses on loans to total disbursed portfolio c 2.9% 3.7% Capital measures: Capital Availabled $ 36.6 $ 34.8 Capital Requirede 22.2 21.1 Capital Utilization Ratio f 60.5% 60.7% a. Overall Liquidity Policy states that IFC would at all times maintain a minimum level of liquidity, plus undrawn borrowing commitments from the IBRD, such that it would cover at least 45% of the next three years’ estimated net cash requirements. IFC’s overall liquidity as a percentage of the next three years' estimated net cash needs stood at 81% as of June 30, 2024, above the minimum requirement of the Board of 45%. b. Debt-to-equity (leverage) ratio is defined as outstanding borrowings plus committed guarantees divided by total capital and comprises paid-in capital, retained earnings and Accumulated other comprehensive income (loss). IFC’s debt-to-equity ratio as of June 30, 2024 was well within the maximum of 4 required by the policy approved by IFC’s Board of Directors. c. Total reserve against losses on loans to total disbursed loan portfolio is defined as reserve against losses on loans as a percentage of the total disbursed loan portfolio. d. Capital Available: Resources available to absorb potential losses, calculated as: IFC’s balance sheets capital minus designated retained earnings minus Pension surplus of each pension plan minus PCRF assets. e. Capital Required: Aggregate minimum Economic Capital required to maintain IFC’s AAA rating. f. CUR is defined as Capital Required divided by Capital Available. 8  IFC 2024 ANNUAL REPORT FINANCIALS SECTION III. IFC supervises its investments by closely monitoring project performance and ensuring compliance with CLIENT SERVICES contractual obligations and IFC’s internal policies and procedures. IFC’s investment products and services are designed to meet the needs of clients in different industries  — prin- cipally infrastructure, manufacturing, agribusiness, BUSINESS disruptive technologies and funds, services, and financial OVERVIEW markets. Investment services product lines include: loans, equity investments, debt securities, trade and commod- ity finance, guarantees and partial credit guarantees, For all new investments, IFC articulates the expected securitizations, client risk management services, blended impact on sustainable development and, as projects finance, and mobilization products discussed below. mature, assesses the quality of the development ben- efits realized. IFC’s strategic focus areas are aligned to advance the WBG’s global priorities. INVESTMENT PRODUCTS INVESTMENT Loans —  IFC finances projects and companies through loans from its own account, typically for seven to twelve SERVICES years. IFC also makes loans to intermediary banks, leasing companies, and other financial institutions for on-lending. IFC’s investments are normally made in its developing While IFC’s loans have traditionally been denominated in member countries. IFC's Articles of Agreement mandate the major currencies, IFC has made it a priority to struc- that IFC shall invest in productive private enterprises. The ture local currency products. IFC has provided funding in requirement for private ownership does not disqualify 74 local currencies. Pricing of IFC loans reflects market enterprises that are partly owned by the public sector conditions and country and project risks, and loans are if such enterprises are organized under local commer- typically variable rate (or swapped into variable rate). cial and corporate law, operate free of host government Equity Investments — Equity investments provide devel- control in a market context and according to profitability opmental support and long-term growth capital that criteria, and/or are in the process of being completely or private enterprises need. IFC invests directly in compa- partially privatized. nies’ equity, and also through private-equity funds. IFC IFC’s investment project cycle generally includes the fol- generally invests between 5 and 20 percent of a com- lowing stages: pany’s equity. IFC’s equity investments are typically in the form of common or preferred stock which is not Figure 8: IFC’s Investment Project Cycle Business Development Project Management Concept Review Disbursement Appraisal Commitment Investment Review Board Approval IFC 2024 ANNUAL REPORT FINANCIALS  9 mandatorily redeemable by the issuer or puttable to the Mobilization Products  — ​IFC promotes development by issuer by IFC. Equity investments are usually denominated mobilizing financing for the private sector in its devel- in the currency of the country in which the investment is oping member countries. Mobilization at IFC is governed made. IFC also uses put and call options, profit partici- by IFC’s Core Mobilization Procedure (the Procedure). pation features, conversion features, warrants and other The Procedure interprets how the harmonized MDB/DFI types of instruments in managing its equity investments. mobilization definitions of mobilization apply to IFC’s private-sector development activities. IFC estimates Core Debt Securities — Investments typically in the form Mobilization at the time of commitment based on the of bonds and notes, securitized debt obligations (e.g., project financing plan. Mobilization activities are included asset-backed securities (ABS), mortgage-backed secu- in Core Mobilization if they meet five criteria: rities (MBS), and other collateralized debt obligations) and preferred shares that are mandatorily redeemable i. Sourced from a third party that is neither IFC nor by the issuer or puttable to the issuer by IFC. the client itself; Trade and Commodity Finance  —  IFC’s Trade and ii. Include financing or credit-risk transfer; Commodity Finance programs offer guarantees, iii. Arranged on commercial terms; risk-sharing facilities, loans and other structured prod- ucts to support trade in emerging markets. IFC’s Global iv. Due to the active and direct involvement of IFC; and Trade Finance Program (GTFP) guarantees trade-related v. Benefit an IFC client. payment obligations of approved financial institutions. Separately, the Global Trade Liquidity Program (GTLP) The Procedure provides product-specific frameworks and Critical Commodities Finance Program (CCFP) provide for interventions to qualify as Core Mobilization. liquidity, through risk sharing, for trade in developing These include: countries. IFC also has a number of other Trade and Supply Chain Finance-related programs, including Global • Syndications — Syndications are debt investments which are a direct result of IFC activities to mobilize Trade Supplier Finance (GTSF), Global Warehouse Finance debt financing from co-investors for a firm in which IFC Program (GWFP), Working Capital Solutions (WCS) and is also investing. IFC programs for debt syndications Global Structured Trade Finance Program (GTST). include B Loans, parallel loans (agented and non- Guarantees and Partial Credit Guarantees — ​IFC’s guar- agented), loans under the Managed Co-Lending Portfolio antee is available for debt instruments, including portfolio Program, credit insurance, debt securities syndications, risk-sharing facilities, and trade obligations of clients and B Bonds, and A-Loan Participations. For syndications, covers commercial as well as noncommercial risks. IFC will Core Mobilization is the amount of financing provided by provide local currency guarantees, but when a guarantee co-investors to IFC investee firms. is called, the client will generally be obligated to reim- • Advisory and upstream — IFC may play a mandated burse IFC in U.S. dollar terms. A partial credit guarantee advisory role to directly design a transaction and represents a promise of full and timely debt service pay- facilitate a successful investment in the same trans- ment up to a predetermined amount. Typically, the sum action. IFC programs for transaction-related advisory that IFC pays out under the guarantee covers creditors and upstream include Public-Private Partnership (PPP) irrespective of the cause of default. Mobilization, Asset Monetization, Mergers & Acquisitions and Pre-Initial Public Offering Advisory Mobilization, Securitizations — ​I FC invests in domestic or cross- and Upstream Collaboration and Co-Developments border securitizations and provides credit enhancement Mobilization. For advisory and upstream, Core to transactions through funded or unfunded participations, Mobilization is the amount of financing provided by mainly at the mezzanine level. investors. Client Risk Management Services  — IFC extends • Anchor investments — Anchor investment entails IFC’s long-maturity risk management products to clients in upfront commitment as an investor in a firm’s planned developing countries to allow them to hedge their interest issuance of securities. IFC’s anchor investment is rate, currency, or commodity-price exposures. evidenced by legal documentation and included in trans- action marketing materials. IFC supplements its anchor Blended Finance — In addition to providing commercial investment by performing a range of activities, including financing for IFC’s own account, IFC uses a number of initiating the concept, advising clients on the selection of complementary tools to crowd in private sector financing an arranger, and referring inquiries from potential inves- that would otherwise not be available to projects with tors to the licensed arranger.4 For anchor investments, high development impact. IFC blends concessional funds, Core Mobilization is the amount of financing provided by typically from development partners, alongside IFC’s own co-investors to IFC investee firms. commercial funding. 4. An IFC investment role is necessary but not sufficient to recognize Core Mobilization in an anchor investment. 10  IFC 2024 ANNUAL REPORT FINANCIALS • Third-party-managed funds — Third-party-managed INVESTMENT PORTFOLIO funds entail IFC’s upfront commitment as an anchor investor in funds, including growth equity, venture capi- MANAGEMENT tal, mezzanine, and senior debt funds targeting Emerging Market and Developing Economies borrowers. IFC’s At the core of IFC’s approach to portfolio management is anchor investment is evidenced by legal documenta- the objective to build and proactively manage a portfolio tion and included in transaction marketing materials. that produces strong financial results and development IFC supplements its anchor investment by performing a impact. IFC achieves this through a combination of strong range of activities, including standard setting and legal presence on the ground and deep sector expertise, that structuring of terms. For third-party-managed funds, enables IFC to stay close to its clients and markets, mon- Core Mobilization is the amount of financing provided by itor trends and anticipate impacts of external factors. co-investors excluding arrangers, underwriters, and any Active portfolio management depends on timely and co-investors receiving more favorable terms than IFC. accurate information to drive business decisions. Regional • Trade finance — Trade finance mobilization reflects the investment teams regularly review the regional industry non-IFC portion of investments under the GTLP, CCFP, portfolio with Senior Management and Risk to ensure GWFP, GTST, and the Global Supply Chain Finance continued oversight and assess broad trends as well as Program (GSCF) made available to a private firm due to performance of select projects. Additionally, quarterly IFC’s active and direct involvement in raising resources. reviews of IFC’s portfolio results are presented to the For trade finance, Core Mobilization is the amount of Board, along with an in-depth analysis at the end of each financing mobilized less the amount of IFC’s financing fiscal year. IFC's investment and portfolio teams, largely or guarantee, which is recognized as an own-account based in field offices, complement global reviews with commitment. asset-by-asset quarterly assessments for investments. • IFC-managed funds —  IFC created IFC's Equity Mobilization Department (formally IFC Asset Management Company, or AMC) as its core equity mobilization platform to attract third-party capital to invest alongside IFC via IFC-managed funds and direct co-investments. For fund management, Core Mobilization is the total of the amount of investment made by an IFC- managed fund excluding the IFC portion and any amount of direct co-investment made by an IFC-managed fund investor. • Guarantees — IFC guarantees on debt instruments to private firms can credit-enhance the credit rating of a securities issuance or support firms in managing expo- sure/capital limits and manage risk aversion. Guarantees can either be on a single-asset or portfolio basis. For guarantees, Core Mobilization is the amount of financing the guarantee mobilizes less the amount of IFC’s guaran- tee, which is recognized as an own-account commitment. Figure 9: IFC’s Investment Portfolio Management Engagement with Sponsors and Government Officials E&S Performance Site Visits Assessment Stress Tests Equity Analysis Investment Portfolio Department of Special Portfolio Analysis Management Operations Engagement IFC 2024 ANNUAL REPORT FINANCIALS  11 At the corporate level, IFC combines portfolio analysis developmental impact. It seeks to keep the project oper- with sector and local expertise along with project knowl- ational to achieve the intended development impact and edge and projections of global macroeconomic and market negotiates agreements with creditors and shareholders trends to inform decisions about program and strategy. to share the burden of restructuring. Investors and other IFC also regularly conducts stress tests to assess the partners participating in IFC’s operations are kept reg- performance of the portfolio against possible macroeco- ularly informed, and IFC consults or seeks their consent nomic developments, and to identify and address risks. as appropriate. At the project level, IFC’s multidisciplinary teams, includ- IFC continues to invest in information-technology sys- ing investment and sector specialists with deep industry tems to better support the management of its portfolio, expertise, closely monitor investment performance and and continuously enhance its governance, through the compliance with investment agreements. IFC does this Portfolio Management Department, which works closely through site visits to evaluate project implementation, together with stakeholders both in the global industry and and through active engagement with sponsors and gov- regional departments. ernment officials, where relevant, to identify potential problems early on and formulate appropriate solutions. IFC also monitors clients’ environmental and social (E&S) performance in a risk-based manner and measures finan- INVESTMENT PROGRAM cial performance and development results. COMMITMENTS IFC closely assesses its equity portfolio on an ongoing basis including proactively identifying assets ready for Investment Commitments include Long-Term Finance and divestments where IFC’s development role has been com- Short-Term Finance Commitments, from both IFC's Own pleted. This rebalancing of the equity portfolio is the result Account and Core Mobilization. Investments made by IFC of an analysis that takes into account market conditions, from its own account utilize its own borrowings or capi- opportunities, expected returns, and risks, and is adjusted tal. Core Mobilization refers to non-IFC financing or risk periodically as required. To improve its governance struc- sharing arranged on commercial terms due to the active ture, IFC has appointed Global Equity Heads, who focus and direct involvement of IFC for the benefit of a client. on strategic business development, central oversight and IFC mobilizes such finance from other private and public management of IFC’s larger and more complex equity entities through a number of means. Own Account invest- positions throughout the investment lifecycle. ments supported 365 LTF projects in FY24 (325 in FY23). For projects in financial distress, IFC’s Department Table 5 outlines a comparative breakdown of IFC's Long- of Special Operations (CSO) determines the appro- Term and Short-Term Finance Commitments, including priate remedial actions to optimize the Corporation’s Own Account and Core Mobilization in FY24 and FY23: overall return on a net present value basis while mini- mizing reputational risk and, where possible, maximizing 12  IFC 2024 ANNUAL REPORT FINANCIALS Table 5: Long-Term Finance and Short-Term Finance Commitments (Own Account and Core Mobilization) FOR THE YEAR ENDED JUNE 30 (US$ in millions) 2024 2023 VARIANCE Long-Term Finance Own Account Commitments Loans $ 17,822 $ 14,135 $ 3,687 Equity investments 1,722 1,761 (39) Guarantees 1,857 704 1,153 Client risk management 57 77 (20) Total Long-Term Finance Own Account Commitments $ 21,458 $ 16,677 $ 4,781 Long-Term Finance Core Mobilization Syndication $ 8,079 $ 6,165 $ 1,914 Advisory and upstream 4,708 3,687 1,021 Anchor investment 4,202 1,580 2,622 Trade finance 1,824 2,163 (339) Third-party-managed funds 2,720 1,142 1,578 IFC-managed funds 16 15 1 Guarantee 600 — 600 Other 355 277 78 Total Long-Term Finance Core Mobilizationa $ 22,504 $15,029 $ 7,475 Total Long-Term Finance Commitments $ 43,962 $31,706 $ 12,256 Short-Term Finance Commitments Short-Term Finance Own Account $ 10,196 $ 11,027 $ (831) Short-Term Finance Core Mobilization 1,929 996 933 Total Short-Term Finance Commitments $ 12,125 $ 12,023 $ 102 Total Commitments (Own Account and Core Mobilization) b $ 56,087 $ 43,729 $12,358 a. In FY24, IFC updated its core mobilization definitions and criteria. Previous year's information was updated to conform with the current year’s presentation. b. Debt security commitments are included in loans or equity investments based on their predominant characteristics. INVESTMENT DISBURSEMENTS During FY24, IFC disbursed $19.1 billion for its own account ($18.7 billion in FY23) as presented in the table below: Table 6: Disbursements of IFC’s Investment Portfolio FOR THE YEAR ENDED JUNE 30 (US$ in millions) 2024 2023 VARIANCE Loans $ 14,482 $ 13,838 $ 644 Equity investments 1,535 1,033 502 Debt securities 3,130 3,818 (688) Total Investment Disbursements $ 19,147 $ 18,689 $ 458 IFC 2024 ANNUAL REPORT FINANCIALS  13 INVESTMENT PORTFOLIO IFC’s total disbursed investment portfolio (a non-U.S. GAAP performance measure) was $59.9 billion as of June 30, 2024 ($52.8 billion — June 30, 2023), as presented in the table below: Table 7: Disbursed Investment Portfolio DISBURSED INVESTMENTS AS A % OF TOTAL FOR THE YEAR ENDED JUNE 30 (US$ in millions) 2024 2023 2024 2023 Loans $ 37,726 $32,886 63% 62% Equity investments 10,910 10,371 18% 20% Debt securities 11,221 9,556 19% 18% Total Investment Disbursements $59,857 $52,813 100% 100% IFC’s disbursed investment portfolio is diversified by region. The distribution of the portfolio by geographical region as of June 30, 2024 and June 30, 2023 is shown below: Figure 10: Disbursed Investment Portfolio Distribution by Region (US$ in billions) Asia and Pacific 18.9 17.1 Latin America and the Caribbean, and Europe 18.8 16.0 Africa 12.1 10.2 Middle East, Central Asia, Türkiye, Pakistan, and Afghanistan 6.7 6.1 Other 3.4 3.5    FY24     FY23 14  IFC 2024 ANNUAL REPORT FINANCIALS IFC’s disbursed investment portfolio is also diversified by industry sector. The distribution of the portfolio by industry sector as of June 30, 2024 and June 30, 2023 is shown below: Table 8: Disbursed Investment Portfolio Distribution by Industry Sector DISBURSED INVESTMENTS AS A % OF TOTAL FOR THE YEAR ENDED JUNE 30 (US$ in millions) 2024 2023 2024 2023 Finance & Insurance $26,503 $23,445 44% 44% Collective Investment Vehicles 5,216 4,745 9% 9% Electric Power 4,719 4,141 8% 8% Chemicals 2,683 2,527 5% 5% Construction and Real Estate 2,383 1,978 4% 4% Transportation and Warehousing 2,332 2,076 4% 4% Industrial & Consumer Products 2,199 1,578 4% 3% Agriculture and Forestry 1,699 1,622 3% 3% Information 1,615 1,236 3% 2% Wholesale and Retail Trade 1,546 1,697 3% 3% Others 8,962 7,768 15% 15% Total $59,857 $52,813 100% 100% The breakdown of committed investment portfolio (sum of (i) committed but undisbursed balance; and (ii) disbursed and outstanding balance) as of June 30, 2024 and June 30, 2023 is presented in the table below: Table 9: Committed Investment Portfolio FOR THE YEAR ENDED JUNE 30 (US$ in millions) 2024 2023 VARIANCE Debt (including loan and loan-like instruments ) a $ 58,534 $ 49,713 $ 8,821 Equity (including equity and equity-like instrumentsa) 14,646 14,190 456 Guarantee and Credit Risk Management 6,689 5,596 1,093 Total Committed Investment Portfolio $ 79,869 $ 69,499 $10,370 a. Loan-like and equity-like instruments are reported as debt securities on IFC’s consolidated financial statements. The carrying value of IFC’s investment portfolio comprises: (i) the disbursed investment portfolio; (ii) less reserve against losses on loans and debt securities; (iii) unamortized deferred loan origination fees; (iv) less disbursed amount allocated to a related financial instrument reported separately in other assets or derivative assets; (v) unrealized gains and losses on equity investments held by consolidated variable interest entities; and (vi) unrealized gains and losses on investments. The breakdown of IFC's investment portfolio as of June 30, 2024 and June 30, 2023 is presented in the table below: Table 10: The Carrying Value of IFC’s Investment Portfolio FOR THE YEAR ENDED JUNE 30 (US$ in millions) 2024 2023 VARIANCE Loans $ 36,437 $ 31,414 $ 5,023 Equity investments 11,121 10,778 343 Debt securities 11,189 9,310 1,879 Total Investments $58,747 $ 51,502 $ 7,245 IFC 2024 ANNUAL REPORT FINANCIALS  15 LOANS The carrying value of IFC’s loan portfolio (comprising the $36.4 billion as of June 30, 2024. The increase was pri- disbursed loan portfolio, together with adjustments as marily driven by net disbursements (disbursements net detailed in Note D to IFC’s FY24 consolidated financial of repayments and prepayments) during the period. See statements), increased by $5.0 billion (16 percent) to breakdown of this movement in Figure 11 below. Figure 11: Carrying Value of Loan Portfolio (US$ in millions) 14,482 (7,694) 36,437 202 (1,414) (92) 31,414 (356) (105) June 2023 Changes Disbursements Repayments Prepayments Write-offs net Foreign Others* June 2024 in Reserves of recoveries Exchange and Fair Value Losses * Mainly represents loan sales, transfers, and conversions to equity investments. *Mainly represents loan sales, transfers and conversions to equity investments. The weighted average contractual interest rate on fixed and variable rate loans was 7.8 percent as of June 30, 2024 and June 30, 2023. IFC offers local currency products. To manage its risk Figure 12: Currency Composition exposure, IFC typically hedges local currency loan cash flows back into U.S. dollars using swaps, or funds local of Disbursed Loan Portfolio currency loans with local currency bond issuance. The outstanding local currency denominated loans were $6.9 (US$ in billions) billion as June 30, 2024, a $973 million increase from June U.S. dollar 30, 2023. IFC has also made loans in a number of frontier market currencies such as Vietnamese dong, Tanzanian 25.2 shilling, Kazakhstan tenge, Bangladeshi taka, Tunisian 22.9 dinar, Pakistani rupee, and Sri Lankan rupee. Euro 5.6 As of June 30, 2024, 67 percent of IFC’s disbursed loan 4.1 portfolio was U.S. dollar-denominated (70 percent as of Chinese renminbi June 30, 2023). After the effect of interest rate swaps and 1.5 currency swaps, IFC’s loans are principally denominated 1.4 in variable rate U.S. dollars. The currency composition of Brazilian real the disbursed loan portfolio as of June 30, 2024 and June 1.3 30, 2023 is shown in Figure 12: 1.1 Colombian peso 0.8 0.5 Others 3.2 2.9     June 30, 2024      June 30, 2023 16  IFC 2024 ANNUAL REPORT FINANCIALS EQUITY INVESTMENTS The carrying value of IFC’s equity investment portfolio (3.2 percent) to $11.1 billion as of June 30, 2024 ($10.8 (comprising the disbursed equity portfolio, together with billion — June 30, 2023). The increase was mainly due to adjustments as detailed in Note D to IFC’s FY24 consol- net purchases (purchases net of sales). See breakdown of idated financial statements), increased by $343 million this movement in Figure 13 below. Figure 13: Carrying Value of Equity Investment Portfolio (US$ in millions) 1,535 136 11,121 10,778 (1,115) (213) June 2023 Changes in Fair Value Purchases Cost of Sales Others* June 2024 * Mainly represents conversions and transfers from loans and debt securities to equity investments. DEBT SECURITIES The carrying value of IFC’s debt security portfolio ($9.3 billion — June 30, 2023). The increase was primarily (comprising the disbursed debt security portfolio, together driven by net purchases (purchases net of redemptions with adjustments as detailed in Note D to IFC’s FY24 and prepayments) during the period. See breakdown of this consolidated financial statements), increased by $1.9 movement in Figure 14 below: billion (20.2 percent) to $11.2 billion as of June 30, 2024 Figure 14: Carrying Value of Debt Security Portfolio (US$ in millions) 3,130 11,189 (1,174) (86) (175) (31) 215 9,310 June 2023 Changes Purchases Redemptions Prepayments Foreign Others* June 2024 in Reserves Exchange and Fair Value Losses * Mainly represents conversions and transfers from debt securities to equity investments. Additional information on IFC’s investment portfolio can be found in Notes D, E, F, G, H, P, R and T to IFC’s FY24 consolidated financial statements. IFC 2024 ANNUAL REPORT FINANCIALS  17 GUARANTEES AND PARTIAL CREDIT GUARANTEES to encourage/mobilize private sector investment in infrastructure projects and public-private partnerships. IFC’s guarantee is available for debt instruments, includ- • Local Currency Facility: Administered by IFC, this facil- ing portfolio risk-sharing facilities, and trade obligations ity is designed to provide local currency denominated of clients and covers commercial as well as non-commer- loans, investments or hedges to private sector clients cial risks. Guarantees of $4.8 billion were outstanding who operate in markets where there are limited cur- (i.e., not called) as of June 30, 2024 ($4.4 billion as of rency hedging capabilities. In the absence of currency June 30, 2023). hedging instruments and creditworthy counterparties, IDA would enter into swaps or indemnity agreements MCPP with IFC. • Blended Finance Facility: Administered by IFC, this facil- MCPP creates diversified portfolios of emerging market ity blends PSW financing support with IFC investments private sector loans. MCPP builds a loan portfolio for an to support SMEs, agribusiness and other pioneering investor that mirrors the portfolio IFC is creating for its investments. own account. Investors pledge capital upfront and then • MIGA Guarantee Facility: Administered by MIGA, this as IFC identifies eligible projects, investor exposure is facility is designed to expand the coverage of MIGA allocated alongside IFC’s own investment in accordance Political Risk Insurance (PRI) products through shared with the terms of the managed co-lending agreement. first-loss or risk participation similar to reinsurance. As of June 30, 2024, seventeen global investors have As of June 30, 2024, a combined total of $4.7 billion ($3.8 pledged $16.2 billion to the MCPP, a $3.5 billion increase billion — June 30, 2023) of instruments under the IDA18 from the $12.7 billion as of June 30, 2023, with certain through IDA20 replenishments had been approved, of programs investing across all sectors and others focused —  which $3.4 billion ($2.8 billion  June 30, 2023) related on infrastructure or financial institutions exclusively. to IFC. Refer to Note B to the FY24 consolidated financial Investors have also approved funding for 316 projects statements for more details. worth $12.1 billion across 69 countries as of June 30, 2024, up from 263 projects worth $10.0 billion across 63 IFC-MANAGED FUNDS countries as of June 30, 2023. Out of these, $9.7 billion ($8.3 billion as of June 30, 2023) has been committed. IFC AMC invests third-party capital and IFC capital, enabling will continue to deploy the remaining funds raised as IFC outside investors to invest alongside IFC in developing identifies projects that meet investors’ criteria. markets. Investors in funds managed by AMC have included sovereign wealth funds, national pension funds, IDA-PSW multilateral and bilateral development institutions, national development agencies and international finan- The IDA Private Sector Window (PSW) was created under cial institutions (IFIs). IDA's Eighteenth Replenishment of Resources (IDA18) to As of June 30, 2024, AMC managed multiple funds (col- mobilize private sector investment in IDA only countries lectively referred to as the AMC Funds), in its capacity as and IDA-eligible Fragile and Conflict-affected Situations General Partner (GP)/Manager of these funds. However, (FCS). Under IDA's Twentieth Replenishment of Resources none of these funds require consolidation by IFC, because (IDA20), $2.5 billion has been allocated to the PSW, bring- the third-party limited partners of these funds have a ing the cumulative total allocation to $5.5 billion. The substantive ability to remove IFC as GP/Manager. All IDA-PSW is implemented through four facilities: AMC Funds are investment companies and are required • Risk Mitigation Facility: Involves both MIGA and IFC, this to report their investment assets at fair value through net facility is designed to provide project-based guarantees income. IFC’s ownership interests in these AMC Funds are shown in the following table: IFC’s ownership AMC Funds interest IFC Capitalization (Equity) Fund, LPa 61% IFC Capitalization (Subordinated Debt) Fund, LP 13% IFC African, Latin American and Caribbean Fund, LP 20% IFC Catalyst Fundsb 18% IFC Global Infrastructure Fund, LP 17% IFC Financial Institutions Growth Fund, LP 30% IFC Global Emerging Markets Fund of Fundsc 19% IFC Middle East and North Africa Fund, LP 37% Women Entrepreneurs Debt Fund, LP 26% IFC Emerging Asia Fund, LP 22% a. By virtue of certain rights granted to non-IFC limited partner interests, IFC does not control or consolidate this fund. b. The ownership interest of 18% reflects IFC’s ownership interest taking into consideration the overall commitments for the IFC Catalyst Funds, which comprises IFC Catalyst Fund, LP, IFC Catalyst Fund (UK), LP and IFC Catalyst Fund (Japan), LP (collectively, IFC Catalyst Funds). IFC does not have an ownership interest in either the IFC Catalyst Fund (UK), LP or the IFC Catalyst Fund (Japan), LP. c. The ownership interest of 19% reflects IFC’s ownership interest taking into consideration the current committed amounts for the IFC Global Emerging Markets Fund of Funds, which comprises IFC Global Emerging Markets Fund of Funds, LP and IFC Global Emerging Markets Fund of Funds, (Japan Parallel) LP. IFC does not have an ownership interest in the IFC Global Emerging Markets Fund of Funds, (Japan Parallel) LP. 18  IFC 2024 ANNUAL REPORT FINANCIALS AMC Funds and their activities as of and for the years ended June 30, 2024 and 2023 are summarized as follows. As of June 30, 2024, all AMC Funds are in the post-investment period. Table 11: AMC Funds THROUGH JUNE 30, 2024 FOR THE YEAR ENDED JUNE 30 TOTAL FUNDS RAISED SINCE INCEPTION 2024 2023 FROM CUMULATIVE COMM- DIS- COMM- DIS- OTHER INVESTMENT ITTED BURSED ITTED BURSED (US$ in millions) TOTAL FROM IFC INVESTORS COMMITMENTS a AMOUNTb AMOUNT AMOUNTb AMOUNT Current Funds IFC Capitalization (Equity) Fund, LP (Equity Capitalization Fund) $ 1,275 $ 775 $ 500 $ 1,214 $ – $ – $ – $ – IFC Capitalization (Subordinated Debt) Fund, LP (Sub-Debt Capitalization Fund) 1,725 225 1,500 1,614 – – – – IFC African, Latin American and Caribbean Fund, LP (ALAC Fund) 1,000 200 800 863 – – – – IFC Catalyst Fund, LP, IFC Catalyst Fund (UK), LP and IFC Catalyst Fund (Japan), LP (collectively, Catalyst Funds) 418 75 343 361 – 7 – 8 IFC Global Infrastructure Fund, LP (Global Infrastructure Fund)c 1,430 200 1,230 902 – – – – IFC Global Emerging Markets Fund of Funds, LP and IFC Global Emerging Markets Fund of Funds (Japan Parallel), LP (collectively, GEM Funds) 800 150 650 757 – 48 – 86 Women Entrepreneurs Debt Fund, LP (WED Fund) 115 30 85 110 – – – – IFC Middle East and North Africa Fund, LP (MENA Fund) 162 60 102 86 – – 4 8 IFC Financial Institutions Growth Fund, LP (FIG Fund) 505 150 355 354 10 10 – 3 IFC Emerging Asia Fund, LP (Asia Fund) 693 150 543 590 17 17 16 97 Current Funds Total $ 8,123 $ 2 ,015 $ 6,108 $6,851 $ 27 $ 82 $ 20 $202 Former Funds Africa Capitalization Fund, Ltd. (Africa Capitalization Fund) $ 182 $ – $ 182 $ 130 $ – $ – $ – $ – China-Mexico Fund, LP (China- Mexico Fund)d 1,200 – 1,200 362 – – – 10 IFC Russian Bank Capitalization Fund, LP (Russian Bank Cap Fund) 550 250 300 82 – – – – Former Funds Total $ 1,932 $ 250 $ 1,682 $ 574 $ – $ – $ – $ 10 Grand Total $ 10,055 $ 2 ,265 $ 7,790 $ 7,425 $ 27 $82 $ 20 $ 212 a. Net of commitment cancellations. b. Excludes commitment cancellations from prior periods. c. Includes co-investment fund managed by AMC on behalf of Fund LPs. d. AMC ceased to be the manager of the China-Mexico Fund on September 15, 2023.. IFC 2024 ANNUAL REPORT FINANCIALS  19 UPSTREAM AND Through IFC’s Upstream and Advisory Services: ADVISORY SERVICES • IFC helps companies attract and retain private investors and partners, enter new markets, and increase their impact. IFC provides tailored market insights as well as Upstream and Advisory is central to delivering on IFC’s technical advice on how to improve companies’ opera- corporate strategy and overall mission, particularly for tional performance and sustainability. IFC’s role in IDA/FCS countries and in its climate and gen- der delivery. IFC’s Articles of Agreement underline a lead • IFC helps industries adopt good practices and stan- dards to increase competitiveness, productivity, and role for the Corporation in private sector development sustainability. “to stimulate, and to help create conditions conducive to, the flow of private capital, domestic and foreign, into pro- • IFC helps governments structure public-private part- nerships to improve people’s access to high-quality ductive investment in member countries.” Upstream and infrastructure and basic services. IFC also advises on Advisory services are cooperating to provide / transform improving the business environment through reforms IFC business development while being driven more effec- that promote investment, spur growth, and create jobs tively from the IFC Regions. It is also helping to align World —  while providing support for the implementation of Bank and IFC operations. In FY24, IFC has been working to these reforms. scale up Upstream delivery. The transformative impact on IFC business development by creating a medium- to • IFC contributes to the costs and efforts necessary to determine the feasibility of a potential project and long-term pipeline of bankable deals returned meaningful brings its expertise to specific project development dividends for the FY24 program. activities, at times using its resources to fund capital Providing advice and engaging in early stage project devel- and/or operational expenditures by the project with the opment activities are critical enablers of IFC strategy to aim of proving a business model in a specific country create markets and mobilize private capital. Through IFC’s or region. Upstream and Advisory programs, IFC works with clients • IFC works in collaboration with the World Bank to pro- — including companies, financial institutions, industries, vide policy advice and develop activities that help create and governments  —  to transform ideas into increased markets and support future transactions in multiple private sector investment, green growth, inclusive job industries, especially in IDA eligible countries and FCS. creation, and bankable projects. IFC helps to establish the • IFC works with global experts to generate ideas and necessary conditions that will attract capital and sus- analyses to address the most urgent challenges in tainable investments and mobilize private capital through private sector development. IFC fosters peer-to-peer its public-private partnerships (PPP) transaction advisory learning at a global scale through its networks convening work. IFC works with its investment clients to improve policymakers and influencers, which IFC effectively lev- their operations and enhance their development impact eraged to help support its clients during the pandemic. on local supply chains and communities. IFC supports the Particularly in the poorest and conflict-affected areas of creation of bankable investment projects in challenging the world, IFC works with clients to improve their environ- markets and nascent sectors through early-stage project mental, social, and governance practices, including those preparation and development, de-risking activities before related to gender. IFC helps developing economies realize their financial close. the economic potential of clean energy and green building. IFC’s Upstream and Advisory work is informed by the joint IFC helps lagging private sectors transform into the digital IFC and World Bank Country Private Sector Diagnostics; age. IFC helps potential investment clients improve their the WBG’s multi-year Country Partnership Frameworks; operational performance and management practices to and IFC’s Country Strategies and Sector Deep Dives. attract the financing they need. IFC’s Upstream and Advisory Services are provided to var- ious clients including companies, financial intermediaries and funds, and governments. Figure 15: Key Stakeholders: Upstream and Advisory Services Upstream & Advisory Services Financial Companies Intermediaries Governments and Funds 20  IFC 2024 ANNUAL REPORT FINANCIALS HOW IFC WORKS WITH COMPANIES governments on how to improve working conditions and boost the competitiveness of the textile sector’s sup- Agribusiness: IFC helps companies improve productivity ply chain. and sustainability by focusing on operational efficiency, Gender and Economic Inclusion (GEI): IFC works with food safety and standards, adoption of technology to the companies to enhance the recruitment, retention, and agribusiness value chain, good soil and water manage- promotion of women and other underserved groups. IFC ment, and professionalizing smallholder farmer supply also helps companies increase women’s access to financial chains while applying climate-smart and gender-smart services, technology, information, and markets. practices. Environmental, Social & Governance (ESG): IFC pro- Health: IFC supports healthcare providers in improving vides integrated ESG advice to help companies improve the quality of healthcare outcomes through deploying access to capital, achieve long-term success, and imple- the new IFC IQ-Healthcare assessment tool and accom- ment crisis management and pandemic response, by panying Advisory Services. IFC also runs a community of adopting corporate governance structures, in line with practice to support Women’s Leadership in Healthcare, the IFC Corporate Governance Methodology, as well as focusing on the unique challenges to women leaders in environmental and social risk management systems in the sector. line with the IFC Performance Standards. IFC’s guidance Education: Through IFC’s new initiative, Vitae, IFC addresses holistically the management of potential or supports higher education institutions in improving actual changes to the environment, including pollution, employability outcomes for their graduates, thereby biodiversity impacts, carbon emissions, climate change, minimizing the skills gap for the changing job realities of natural resource use; potential or actual changes on surround- the 21st century. ing community and workers, including the incidence of gender-based violence; and improving governance struc- Manufacturing: IFC works with its clients in the manufac- tures and processes, such as board functioning, gender turing sector to develop and finance their decarbonization diversity in corporate leadership, ethical conduct, con- strategies, as well as improve the productivity of their trols, disclosure, and transparency. IFC builds the capacity direct operations and supply chains. This includes bringing of industry associations and service providers to influence a gender-smart lens to companies’ employment chal- ESG practices market wide. lenges and supporting the deployment of supply chain finance tied to improved sustainability performance. Disruptive Technologies: IFC works across the entre- preneurial and venture capital ecosystem supporting Tourism: IFC helps businesses modernize their tourism accelerators, seed funds and new fund managers in offerings and maximize the potential of their natural frontier geographies, connects high-impact proven tech and cultural assets. IFC works with clients to assess the solutions globally with corporate customers to de-risk impact and devise strategies to restore their tourism tech adoption, increases capital flow to women entrepre- sectors as quickly as possible. neurs and promotes adoption of digital training platforms Infrastructure: IFC supports private and sub-sovereign for improving digital skills for employment. public sector clients to become attractive destinations for infrastructure investments and helps close the infra- HOW IFC WORKS WITH FINANCIAL structure gaps. IFC works with subnational governments INTERMEDIARIES AND FUNDS to strengthen institutions and regulations; improve crit- ical infrastructure and environmental sustainability; Financial Institutions: IFC helps clients strengthen risk foster skills and innovation; expand access to finance; management and diversify product offerings to key pri- build capacity to manage tax and royalty payments to ority areas such as SME finance, gender, housing finance, improve community welfare and local content. IFC also and renewable energy. Through knowledge sharing of best works closely with private sector clients to acquire a social SME-banking practices and solutions, IFC helps build license to operate in tough environments by increasing financial institutions’ capacity to expand access to credit; benefits to local communities; mitigating social risks; and expand their financial and non-financial services, including addressing obstacles to gender equality and inclusion in to women-led/owned businesses; supports sustainable the workplace, across the supply chain. supply chains; and catalyzes investment opportunities in emerging and developing market economies. IFC supports Corporate Finance Services: IFC supports clients to financial institutions to define and implement their digi- identify and enter new markets and structure entry talization strategy roadmaps and accelerate their digital strategies. IFC helps companies attract international transformation. investors, bring in new skills, expertise, and capital. IFC supports the structuring of complex projects and offers Fund Managers: IFC helps develop the private equity advice on the design and execution of partnerships, joint industry in frontier markets and provides non-investment- ventures, and acquisitions. related advice to fund managers. IFC helps increase ESG investment into emerging markets by providing asset Green Buildings: IFC offers tools and training to help com- managers with ESG data and artificial intelligence- panies construct buildings that use energy, water, and powered analytics. materials more efficiently. IFC also helps governments establish related policy frameworks and works with banks to launch green-finance products. Small and Medium Enterprises (SMEs): IFC helps SMEs strengthen their skills and performance, improving their ability to participate in the supply and distribu- tion networks of larger firms. IFC advises companies and IFC 2024 ANNUAL REPORT FINANCIALS  21 HOW IFC WORKS WITH GOVERNMENTS with companies implementing joint assessments and management strategies and address environmental and Public-Private Partnerships: IFC helps governments social bottlenecks upstream of investment and project design and implement PPPs that are tailored to local development. needs, helps solve infrastructure bottlenecks, and Enabling Investment Climate: IFC helps improve the achieves national development goals by mobilizing private business environment through economy-wide and technical and managerial expertise and capital. increasingly more sector-specific reforms that address Financial Sector: IFC works with governments and the regulatory barriers and promote investment, spur growth private sector to promote universal access to finance, through increased competitiveness and access to mar- build resilient, transparent, and smooth-functioning kets, and create jobs. This work is increasingly an entry financial systems and capital markets. This includes sup- point for IFC’s upstream agenda. IFC works closely with porting governments to establish the key building blocks, the World Bank to leverage their expertise for private both regulations and institutions, to increase access to sector development. finance, such as credit information, use of moveable Cities Initiative: IFC helps local governments, municipal- assets to secure lending, and debt resolution. IFC works ities, and provinces prioritize and develop sustainable, closely with the World Bank and leverages its expertise resilient infrastructure services for their citizens. alongside IFC investment resources to jointly develop local capital markets in selected focus countries. As of June 30, 2024, the IFC Advisory Services portfolio totaled $1.5 billion ($1.4 billion — June 30, 2023). FY24 pro- ESG Landscape Initiative: IFC helps governments, private gram expenditures were $270 million ($260 million in FY23) companies, and stakeholders assess, and mitigate risks with a strong focus on IFC's strategic priority areas  —  IDA and cumulative impacts at a multi-project level, across eligible countries at 50 percent, fragile and conflict- specific geographic areas (landscapes). Landscape ini- affected situations at 26 percent, and climate change tiatives enable governments to consider E&S impacts in at 28 percent (compared to 54 percent, 28 percent and broader sectoral planning, achieve significant efficiencies 27 percent respectively in FY23). Table 12: IFC Advisory Services — Program Expendituresa by Region PROGRAM EXPENDITURE AS A % OF TOTAL FOR THE YEAR ENDED JUNE 30 (US$ in millions) 2024 2023 2024 2023 Africa $ 97 $ 99 36% 38% East Asia and Pacific 39 34 14% 13% Latin America and the Caribbean 36 27 13% 10% South Asia 27 23 10% 9% Europe 22 21 8% 8% World 22 31 8% 12% Middle East 15 13 6% 5% Central Asia and Türkiye 12 12 4% 5% Total Program Expenditures $270 $260 100% 100% a. The program expenditure presented herein is based on the Operational reporting methodology, which includes all project expenditures associated with an Advisory project. This does not include program expenditure associated with IFC’s Upstream project development activities. Table 13: IFC Advisory Services — Program Expenditures by Business Area PROGRAM EXPENDITURE AS A % OF TOTAL FOR THE YEAR ENDED JUNE 30 (US$ in millions) 2024 2023 2024 2023 Financial Institutions $ 62 $ 70 23% 27% Country Advisory & Economics 55 55 20% 21% Transaction Advisory 54 43 20% 16% Manufacturing Agribusiness & Services 35 37 13% 14% Infrastructure & Natural Resources 21 17 8% 7% Environmental, Social & Governance 11 14 4% 6% Disruptive Technologies & Funds 5 5 2% 2% Other Advisory 27 19 10% 7% Total Program Expenditures $270 $260 100% 100% 22  IFC 2024 ANNUAL REPORT FINANCIALS SECTION IV. IFC generally invests its liquid assets in highly rated fixed and floating rate instruments issued by, or uncondition- LIQUID ASSETS ally guaranteed by, governments, government agencies and instrumentalities, multilateral organizations, and high quality corporate issuers. These include asset- All liquid assets are managed in accordance with an backed securities (ABS) and mortgage-backed securities investment authority approved by the Board of Directors (MBS), time deposits, and other unconditional obligations and the Funding and Liquid Asset Management Directive of banks and financial institutions. Diversification across approved by IFC’s Corporate Risk Committee, a subcom- multiple dimensions ensures a favorable risk return pro- mittee of IFC’s Management Team. file. IFC manages the individual liquid asset portfolios on an aggregate portfolio basis against each portfolio's These liquid assets are funded from two sources: bor- benchmark within specified risk parameters. In imple- rowings from the market and capital (net worth), and menting these portfolio management strategies, IFC are managed in several sub-portfolios related to these utilizes derivative instruments, principally currency and sources. Proceeds of borrowings from market sources not interest rate swaps, foreign exchange forward contracts, immediately disbursed for loans and loan-like debt securi- and futures and options, and it takes positions in various ties are managed internally by IFC against money market industry sectors and countries. benchmarks within the Funded Liquidity Portfolio. The portion of IFC’s net worth not invested in equity and equity- IFC’s liquid assets are accounted for as trading portfo- like investments is managed internally by IFC against a lios. The Net Asset Value of IFC's liquid asset portfolio as U.S. Treasury benchmark within the Net Worth Funded of June 30, 2024 and June 30, 2023 is presented in the Portfolio. Refer to Section V: Funding Resources for addi- table below: tional details on borrowings. Table 14: Liquid Asset Portfolio Net Asset Value FOR THE YEAR ENDED JUNE 30 (US$ in millions) 2024 2023 VARIANCE The Funded Liquidity Portfolio $ 20,878 $ 23,188 $ (2,310) The Net Worth Funded Portfolio 16,856 16,932 (76) Total Liquid Asset Portfolio $ 37,734 $40,120 $ (2,386) The liquid asset portfolio decreased as net disbursements for loans exceeded inflows from net borrowings. SECTION V. Figure 16: IFC's Funding Resources (US$ in billions) FUNDING RESOURCES Borrowings from market sources IFC’s funding resources (comprising borrowings, paid-in 57.3 capital and retained earnings) as of June 30, 2024 and 53.8 June 30, 2023 are as follows: Retained earnings 13.3 11.8 Discount Note Program and other short-term borrowings 2.3 3.0 Paid-in capital 23.2 22.6 Borrowings from IDA 0.2 0.3     June 30, 2024      June 30, 2023 IFC 2024 ANNUAL REPORT FINANCIALS  23 BORROWINGS “Net unrealized gains and losses on non-trading financial instruments accounted for at fair value” in the consoli- The major source of IFC’s borrowings is the international dated statements of operations. Changes in the net fair capital markets. Under IFC’s Articles of Agreement, IFC value of IFC’s borrowings from market, IDA, and associ- may borrow in the public markets of a member country ated derivatives, include the impact of changes in IFC’s only with approvals from that member, together with the own credit spread when measured against reference member in whose currency the borrowing is denominated. rates. IFC’s policy is to generally match the currency, amount, and timing of cash flows on market borrowings Substantially all borrowings are carried at fair value under with the cash flows on the associated derivatives entered the Fair Value Option. The change in the fair value of these into contemporaneously. The outstanding borrowings borrowings resulting from changes in instrument-specific (including fair value adjustments) on IFC's consolidated credit risk is reported in other comprehensive income, balance sheets as of June 30, 2024 and June 30, 2023 is while the remaining change in fair value is reported in presented in the table below: Table 15: Borrowings Portfolio AS OF THE YEAR ENDED JUNE 30 (US$ in millions) 2024 2023 VARIANCE Medium and long-term borrowings $ 53,447 $49,476 $ 3,971 Short-term borrowings under the discount note program 2,308 2,967 (659) Total outstanding borrowings $ 55,755 $52,443 $ 3,312 The increase in outstanding borrowings was mainly driven by new issuances due to robust loan disbursements, partially offset by maturities and repayments, as well as the decrease in short term borrowings as shown in Figure 17 below: Figure 17: Borrowings Portfolio (US$ in millions) 13,312 553 101 55,755 52,443 (9,635) (360) (659) June 2023 New Issuances Maturities & FV Unrealized FX (Gains) / Net issuance Unamortized June 2024 Repayments (Gains) / Losses of discount discount / Losses notes premium Market borrowings are generally swapped into floating- During FY24, IFC raised $17.1 billion in borrowings ($19.8 rate obligations denominated in U.S. dollars. On billion in FY23), net of derivatives and including discount occasion, IFC uses its borrowings as a tool to promote notes with maturities greater than three months of capital markets development in emerging and frontier $4.4 billion ($5.9 billion in FY23). During FY24, IFC markets and this can result in raising local currency repurchased and retired $556 million of outstanding funds. As of June 30, 2024, non-U.S dollar denominated borrowings ($432 million in FY23). market borrowings with no interest rate or currency hedges accounted for 1 percent of the total borrowings IFC maintains short-term discount note programs in from market sources (2 percent as of June 30, 2023), U.S. dollar and Chinese renminbi to provide an additional with outstanding balances amounting to $821 million funding and liquidity management tool. These programs ($1.0 billion as of June 30, 2023). These borrowings were support IFC’s trade finance and supply chain initiatives denominated in various currencies, mainly in Indian and expand the availability of short term local currency rupee, new Romanian lei and Georgian lari. finance. The discount note programs offer issuances with maturities ranging from overnight to one year. During FY24, IFC issued a total of $7.8 billion of discount notes ($11.4 billion in FY23), all of which were in U.S. dollars. 24  IFC 2024 ANNUAL REPORT FINANCIALS CAPITAL AND RETAINED EARNINGS At June 30, 2024 and June 30, 2023, IFC’s capital comprised the following: Table 16: IFC's Capital FOR THE YEAR ENDED JUNE 30 (US$ in millions) 2024 2023 Capital Authorized capital $ 25,080 $ 25,080 Subscribed capital 24,104 23,939 Less: unpaid portion of subscriptions (884) (1,343) Paid-in capital 23,220 22,596 Accumulated other comprehensive income 957 632 Retained earnings 13,295 11,810 Total Capital $ 37,472 $ 35,038 Following the Spring Meetings in April 2018, a financing retained earnings were converted into paid-in-capital, and package was endorsed by the Board of Governors. This the capital subscription process commenced on April 22, package comprised: (i) a three-step capital raising 2020. In April 2023 the deadline for the SCI subscription process: Conversion of a portion of retained earnings and payment was extended to April 16, 2025. The GCI into paid-in capital, a GCI and SCI that would together subscription deadline, initially extended to April 16, 2024 provide up to $5.5 billion in additional paid-in capital; in April 2023, was further extended to April 16, 2025 in (ii) a planned suspension of grants to IDA after the April 2024, thereby aligning with the original deadline for conclusion of the IDA18 replenishment; and (iii) internal GCI payment. As of June 30, 2024, 135 countries have measures for increased efficiency. The authorized subscribed a total of $4.5 billion (GCI —  $3.8 billion and capital stock as of June 30, 2024 is 25,079,991 shares SCI —  $709 million) and payments of $3.7 billion (GCI  —  of $1,000 par value each (unchanged from June 30, $3.0 billion and SCI —  $665 million) were received from 2023). 109 countries. At June 30, 2024 and June 30, 2023, retained earnings The GCI and SCI Resolutions were formally adopted and comprised the following: took effect on April 16, 2020. Concurrently, $17 billion of Table 17: IFC's Retained Earnings FOR THE YEAR ENDED JUNE 30 (US$ in millions) 2024 2023 Undesignated Retained Earnings $ 13,133 $ 11,589 Designated Retained Earnings Creating Markets Advisory Window (CMAW) 93 161 Funding Mechanism for Technical Assistance and Advisory Services 58 48 Small and Medium Enterprise (SME) Ventures 11 12 Total Designated Retained Earnings $ 162 $ 221 Total Retained Earnings $ 13,295 $ 11,810 IFC 2024 ANNUAL REPORT FINANCIALS  25 DESIGNATIONS OF RETAINED EARNINGS Prior to FY24, Income Available for Designations com- prise net income excluding unrealized gains and losses Amounts available to be designated are determined based on investments and borrowings as well as grants to IDA, on a Board of Directors-approved income-based formula which were suspended in FY20 following the conclusion and on a principles-based Board of Directors-approved of IDA18. In FY24, IFC updated the calculation of Income financial distribution policy, and are approved by the Available for Designations to exclude income from PCRF, Board of Directors. aligning it with its intended use for post-retirement con- tributions. This change, approved by the Board in June IFC uses a sliding-scale formula and the methodology 2024, is effective from FY24. for calculating the incremental rate of designation. The approach approved by IFC’s Board of Directors estab- FY23 Designations lishes a threshold that no designations of any kind can Income available for designations in FY23 totaled $681 take place if IFC’s CUR is above 88 percent, and estab- million, calculated as net income excluding unrealized lishes a framework for prioritizing future designations gains and losses on investments and borrowings. On to the Funding Mechanism for Technical Assistance August 3, 2023, the Board of Directors approved a des- and Advisory Services (FMTAAS) and for transfers to ignation of $60 million of IFC’s retained earnings for IDA based on IFC’s CUR and a cushion for FMTAAS. IFC FMTAAS. This designation was noted with approval by has also created the Creating Markets Advisory Window the Board of Governors on October 13, 2023. (CMAW) in fiscal year 2018 to focus on market creation in eligible IDA countries and FCS. SECTION VI: RISK MANAGEMENT ENTERPRISE RISK MANAGEMENT IFC provides investments and advisory services • Cross-cutting risk management principles to ensure to the private sector in emerging markets and is that business decisions are based on a thorough therefore exposed to a range of potential financial and non- understanding of risks and that risks and rewards are financial impacts. Active monitoring and sound manage- balanced appropriately. Another principle is that IFC will ment of evolving risks remain critical pillars in terms of be selective in undertaking activities that could cause fulfilling IFC’s mission. significant adverse reputational impact. In addition to supporting its mission, IFC’s enterprise IFC’s risk culture is central to all aspects of IFC’s risk risk management framework (ERM) is designed to enable management efforts. One of the key objectives of the the prudent management of potential financial, non- framework is to embed a strong risk culture in the financial and reputational impacts that originate from Corporation while ascertaining those tools and capa- the Corporation’s business activities. In this context, IFC’s bilities are in place to facilitate risk management and risk management efforts are designed specifically to help decision-making at different levels of the organization. align the Corporation’s performance with its strategic direction. The framework defines: Figure 18: IFC’s Enterprise Risk • Key risk management objectives for managing risks. Management Framework • A standard classification of roles and responsibilities for risk management, to differentiate and thereby clarify how different parts of the Corporation contrib- RISK MANAGEMENT OBJECTIVES ute toward the overall management of risk through a Development Impact, Financial well-defined risk governance mechanism. Sustainability, Safeguarding Reputation RISK MANAGEMENT PRINCIPLES • A risk appetite component to ascertain the level and type of risk that IFC is able and willing to assume in its exposure and business activities. RISK GOVERNANCE • An updated risk taxonomy for categorizing risks across the organization, to help ensure that risk management efforts are coordinated and aligned across the distinct parts of the organization that share responsibility for managing different aspects of risk. RISK APPETITE RISK CATEGORIZATION 26  IFC 2024 ANNUAL REPORT FINANCIALS KEY RISK MANAGEMENT OBJECTIVES • Financial Sustainability — IFC will generate and main- tain sufficient financial resources, conduct its business IFC has defined three explicit Risk Management Objective and manage risk consistent with standards implied by Statements at the corporate level, which are derived from a triple-A rating. IFC’s purpose, business scope, strategic objectives, and • Safeguarding Reputation — In determining what the risks that it faces. engagements and activities to pursue, IFC will assess whether any potential adverse impact to its reputation • Development Impact — IFC will maximize developmental is in balance with the potential development impact. impact by focusing on the World Bank Group’s mission to end extreme poverty and boost shared prosperity on a livable planet, while maintaining financial sustainability and safeguarding its brand. Figure 19: IFC's Risk Governanceaᵃ GOVERNING BODIES Board, Management Team and Independent Oversight Bodiesb Accountability to stakeholders for organizational oversight Governing body roles: integrity, leadership, and transparency EXTERNAL ASSURANCE PROVIDERS INTERNAL AUDIT STAFF Independent assurance First line roles: Second line roles: own risk and respon- Third line roles: Provide oversight sible for identifying, Independent and and challenge of recording, reporting and objective assurance risk management managing risks KEY: Accountability, reporting Delegation, Direction, Oversight Alignment, collaboration a. Adapted based on the Institute of Internal Auditors three lines model. b. Oversight Bodies include the Integrity Vice Presidency (INT), the Independent Evaluation Group (IEG), the Compliance Advisor/Ombudsman (CAO) and the Ethics and Internal Justice Services Vice Presidency along with the Internal Audit which is listed separately in the picture above due to its role in providing independent oversight of IFC’s risk management practices. IFC 2024 ANNUAL REPORT FINANCIALS  27 IFC’s Enterprise Risk Management follows the shared- • The Tier III Project Committee (T3PC), which is responsibility principle, and IFC’s risk governance struc- a decision-making body to review new projects ture is built on the “three lines model” as defined below: (investment or advisory) that meet certain risk cri- teria including certain economic capital thresholds, • 1st Line —  All staff engaged in the business origination, nominal investment amounts, credit ratings and/or revenue-generating and client-facing areas of IFC and complex E&S and/or integrity issues. The T3PC does all associated support functions including Investment, not set policy recommendations or directives but can Advisory and Treasury staff that are not risk, control or approve exceptions to IFC’s operational directives as compliance monitoring functions. appropriate, for individual projects (unless otherwise • 2nd Line — Staff in risk, controllers, legal, compliance specified in that directive). and communication functions independent of the first line provide oversight and challenge over financial and • The Corporate Risk Committee (CRC), which is primarily responsible for overseeing risks to IFC operational risk activities. (including in relation to Shared Services5). The CRC • 3rd Line— Internal Audit provides independent oversight. reviews and approves all institutional risk-related From an organizational standpoint, three distinct groups matters. govern the risks that IFC undertakes during its day-to- • The Blended Finance and Donor Funds Committee day business activities: (BFC), which is primarily responsible for the terms, proper allocation and utilization of donor funds, • Independent Oversight Bodies: IFC’s blended finance facilities, IDA/PSW funds at • The WBG Internal Audit Vice Presidency provides Concept and Investment Review Meeting (IRM) stage independent oversight of IFC’s risk management and allocation and utilization of grants at or above practices. US$ 1 million. The BFC also reviews and approves • The Integrity Vice Presidency investigates allega- public sector/government-facing advisory projects tions of fraud, corruption, and staff misconduct in that meet certain criteria. IFC’s operations and in WBG-financed operations The MT is also supported by the Information and impacting IFC. Technology Steering Group (ITSG), a largely deliberative • The Independent Evaluation Group assesses the rel- body that formulates proposals, develops new ideas, con- evance, efficacy and efficiency of IFC’s operational siders refinements, promotes coordination, and makes programs and activities (and their contributions to recommendations regarding IFC’s IT strategy, investment development effectiveness). plans and work programs for approval by the MT. • The Compliance Advisor/Ombudsman serves as an independent recourse mechanism for stakeholders MT has delegated to the above Committees the authority in projects supported by IFC. to make certain decisions and to grant permitted excep- • The Ethics and Internal Justice Services Vice tions to Directives and other instruments. Figure 20 at Presidency (EIJ) promotes the WBG's Core Values, right depicts IFC’s management decision-making gover- and provides ethical advisory and conflict resolution nance structure: services to staff. • The Board: IFC’s Articles of Agreement outline the composition, roles and responsibilities of IFC’s senior governance body, its Board of Directors. The Audit Committee of the Board of Directors plays a key role in overseeing risk management at IFC. • Management Team: Under the direction of its Managing Director (MD), IFC’s Management Team (MT) is respon- sible for the Corporation’s day-to-day operations including the management of existing and potential risks. The MT carries out its responsibilities through three Management Committees: 5. IFC has service level agreements (SLAs) with IBRD in place for about 20+ shared services. The scope of these services includes HR services, information technology services, cyber security, accounting services, procurement services, global telecom and client services, knowledge and information services, liability & insurance programs and other specialized support services. These SLAs provide risk management for common risks faced by WBG such as physical safety of staff and information security to ensure cyber resilience. Each SLA has a distinct governance process of its own with representation by both IFC and IBRD. 28  IFC 2024 ANNUAL REPORT FINANCIALS Figure 20: IFC Management Decision Making Governance Management Team MANAGEMENT TEAM (MT) The MT is responsible for Leading the institution overall IFC administration, direction and strategy Management Committees Decide, escalate to MT or MD as needed Tier III Project Corporate Risk Blended Finance Management Committee Committee (CRC) & Donor Funds Committees (T3PC) Institutional risk Committee (BFC) The MT’s three decision- & asset-liability Blended finance making committees review, Complex or high-risk approve and provide projects management, for Investment exceptions to Services, Advisory guidance on significant Mobilization Services fundraising/ operational, strategic, Guidelines, new allocation, complex portfolio and enterprise mobilization public sector risk matters platforms Advisory Services Steering Group Information IT Steering Group Technology A deliberative forum with Steering Group limited delegated decision- Decides within delegated scope, deliberates and making authority that (ITSG) recommends to MT (or CRC as appropriate) formulates proposals, IT matters for decisions beyond that scope promotes coordination and makes recommendations on IT matters. Delegated authority to approve IFC 2024 ANNUAL REPORT FINANCIALS  29 Within IFC, (i) all financial risks and operational risks The Corporate Support Vice Presidency supports align- are consolidated under the Vice President of Risk and ment and coordination across all IFC Policies & Procedures Finance, (ii) non-financial risks, except for Environmental and is responsible for IFC's strategic stakeholder commu- and Social (E&S) risks, are under the Vice President & nication for managing potential and actual reputational General Counsel for Legal and Compliance Risk. E&S risks impacts. Figure 21 depicts IFC’s risk responsibilities struc- are managed by (a) the Environmental and Social Policy ture for financial, operational, and other non-financial and Risk department reporting to the Vice President, risks. Risk and Finance, and (b) regional E&S teams integrated within Regional Directorates reporting to the Regional Vice Presidents. Figure 21: Risk Responsibility within IFC IFC Managing Directora VP & General Counsel, Vice President Vice President Legal, Institutional Risk, Risk & Finance Corporate Support and Governance a. The IFC Vice Presidential Units listed under the IFC Managing Director include only those Vice Presidencies and Directors that have a second line role in the three lines model adopted by IFC. ENTERPRISE LEVEL RISK APPETITE RISK CATEGORIZATION IFC’s Risk Appetite is the level and type of risk that IFC As part of the ERM framework update in FY24, IFC has is able and willing to assume in its exposure and busi- adopted the following risk taxonomy and risk categoriza- ness activities. In FY21, IFC’s Corporate Risk Committee tions. Figure 22 at right reflects the risk categorization approved a Risk Appetite (RA) framework for IFC. The approved in FY23, effective July 1, 2023. It should be noted purpose of the RA framework is to: (i) compare and con- that some of the risks in the taxonomy may be related and trast IFC’s risk appetite against its risk exposure; (ii) as such are not mutually exclusive or totally independent communicate the target level of risks to stakeholders; of one another. Operational Risk Dimensions are further (iii) provide context for the risk policies and frameworks; classified into a third level called Risk Drivers. Examples (iv) make informed decisions; and (v) report on risks to the of Risk Drivers include misconduct, improper business or Board and management. market practices etc. On the financial risks faced by IFC, one of the ways in which the risk appetite is expressed is by key financial pol- icies approved by its Board of Directors as detailed below: • Capital Adequacy Policy — IFC is required to maintain a minimum level of total resources (including paid-in capital, total loss reserve and retained earnings, net of designations) equal to total potential losses for all on- and off-balance sheet exposures estimated at levels consistent with maintaining a triple-A rating. • Leverage Policy — IFC’s outstanding debt plus guar- antees held must not exceed four times its net worth. • Overall Liquidity Policy —  Minimum liquidity (liquid assets) must be sufficient at all times to cover at least 45 percent of IFC’s estimated net cash requirements for the next three years. • Matched Funding Policy — Loans are funded with liabili- ties that have similar characteristics in terms of interest rate basis, currency, and maturity, except for new products, approved by the Board of Directors, involving asset-liability mismatches. 30  IFC 2024 ANNUAL REPORT FINANCIALS Figure 22: IFC’s Risk Taxonomy Domains MARKET RISK LIQUIDITY, CREDIT (Equity, FX Rates, OTHER Risk FUNDING AND RISK Interest Rates, FINANCIAL RISKS ALM RISK Commodity Prices) Credit Risk — Market Risk — Liquidity Capital Investment Investment & Funding Risk Operations Operations Risk Dimensions Risk Asset Liability Credit Risk­  — Market Risk — Pension Management Treasury Treasury Risk Risk Domains OPERATIONAL STRATEGIC AND Risk RISK BUSINESS RISK Environment Environmental Corporate Strategic & Social Governance Risk Risk Risks Risk Dimensions Risk Classified into Integrity, External Climate 15 other risk ML/TF & Tax Financing Risk categories Risk Risk Risks due to IFC’s business Domain OPERATIONAL Risk RISK Information Business Data and Cyber Technology Fraud Continuity Management Security Dimensions Physical Staff Health Process Risk Security and and People Model Execution Safety Well-Being Business Legal, Reporting Conduct and Regulatory and Vendors Other Operational COI Compliance IFC 2024 ANNUAL REPORT FINANCIALS  31 CREDIT RISK • Individual Investment Limits are applied at the indi- vidual project or client level to prevent excessive IFC defines credit risk as the risk of loss of principal or concentrations. loss of an expected financial return due to credit events • Preferential debt exposure to a country is limited by such as a default or downgrade in credit ratings or any reference to that country’s total medium- and long-term other failure to meet a contractual obligation that results external debt. in financial loss. IFC is exposed to credit risk in its Debt • IFC’s total equity and quasi-equity exposure (outstand- portfolio6 and to investment and counterparty credit risk ing exposure net of specific reserve) shall not exceed in its liquid assets portfolio. IFC’s net worth. IFC’s investment projects are actively supervised after INVESTMENT OPERATIONS commitment. Credit ratings are reviewed regularly for each project, with frequency depending on the level of Credit risk in investment projects is actively managed credit rating assigned, and revised if new material infor- throughout the project life cycle. Investment teams are mation is received. An independent risk management responsible for gathering the necessary information from team in the Risk and Finance Vice Presidency assesses the client and other relevant stakeholders to verify the IFC’s portfolio, including stress testing of exposure to financial viability of each project, and for assigning a credit emerging risks. Additionally, the Corporate Portfolio rating (CR) at defined stages in the project approval pro- Management Department, as part of the Industries Vice cess. The credit rating, investment size, product type and Presidency, reports on the performance of the overall other project-related risks determine the authority level Debt and Equity7 portfolio and performs deep dives on required for the approval of each transaction. Projects are selected top country and sector exposures, along with subject to independent credit review of specific projects areas of strategic importance to IFC. When projects show or at a portfolio level under a credit delegation framework signs of financial distress, immediate attention is key for for specific cases. A credit officer within the indepen- improving potential outcomes. Seasoned “workout” pro- dent Risk and Finance Vice Presidency participates in fessionals from IFC’s Department of Special Operations the project approval process. Projects are approved with in the Risk and Finance Vice Presidency focus on projects, reference to a number of operational and prudential limits to implement the restructuring, or possible recovery, of approved by the CRC, including limits related to single IFC’s exposure. project or client exposure, single country exposure, and sector concentration; these are detailed below: The credit risk of loans is quantified in terms of the prob- ability of default, loss given default and exposure at risk. • IFC’s total exposure to a country, for the purpose of These risk parameters are used in the processes to deter- setting exposure limits, is measured as the amount of mine risk-based returns, project-based capital allocation economic capital required to support its investment and internal risk management purposes, as well as for portfolio in that country. Exposure limits are set for each establishing reserve against losses on loans under the country based on the size of its economy. Sub-limits Current Expected Credit Losses accounting standard, apply for certain sector exposures within a country. and exposure limits. • IFC’s total exposure to a single client or client group may not exceed stipulated economic capital and nominal limits based on the credit rating for the client. Selected indicators of credit risk exposure in IFC’s Debt Portfolio, together with the five-year trend of non-performing loans (NPLs), are provided below: Table 18: IFC Debt Portfolio Credit Risk Indicators (US$ in millions, except for %) INDICATOR JUNE 30, 2024 JUNE 30, 2023 VARIANCE NPLs as % of the debt portfolio 1.8% 2.7% (0.9)% Principal amount outstanding on NPLs $ 898 $ 1,124 $ (226) Total reserve against losses on loans $ 1,081 $ 1,209 $ (128) Total reserve against losses on loans as % of disbursed loan portfolio 2.9% 3.7% (0.8)% Total reserve against losses on loans as % of NPLs 120.4% 107.6% 12.8% Total reserve against losses on outstanding guarantees $ 19 $ 15 $ 4 . 6. Debt portfolio herein the section includes loans and loan-like debt securities. 7. Equity portfolio herein the section includes equity and equity-like debt securities. 32  IFC 2024 ANNUAL REPORT FINANCIALS Figure 23: NPLs as Percentage of Disbursed Debt Portfolio (US$ in millions, except for %) $1,770 $1,493 5.48% $1,329 4.43% $1,124 3.85% $898 2.66% 1.84% FY20 FY21 FY22 FY23 FY24 $ NPLs % of disbursed debt portfolio Additional details are provided in Section VIII: Results of Operations (Provision for Losses on Loans, Off-balance Sheet Credit Exposures and Other Receivables). TREASURY OPERATIONS • Exposures to individual counterparties are subject to exposure limits. IFC manages its exposures to investments and counter- • IFC signs agreements with counterparties that typically parties in its Treasury operations to mitigate potential require the posting of collateral when net mark-to- losses from the failure by a counterparty to fulfill its con- market exposures exceed certain predetermined tractual obligations. Counterparty eligibility criteria are thresholds. set by Authorizations from the Board of Directors and by • For exchange-traded instruments, credit risk is lim- Directives approved by IFC’s Corporate Risk Committee. ited by restricting transactions to a list of authorized Eligible investments and counterparties are predom- exchanges, contract types, and dealers. inantly sovereign governments, government agencies, Treasury operations counterparties remain well diver- banks, and financial institutions with high-quality credit sified by sector and geography. In accordance with its ratings issued by leading international credit rating agreements with counterparties, as of June 30, 2024, IFC agencies. held $498 million in cash and $0 in securities as collateral Details of applicable financial policies and guidelines are for changes in mark-to-market exposures on open trades given below: ($185 million in cash and $1 million in securities as of June 30, 2023). In terms of Treasury’s credit profile, IFC invests • Counterparties are selected based on standard eligibility its US dollar liquid assets in deposits with highly-rated criteria, with a tenor limit for deposits and repurchase banks and in securities for which the ratings are generally agreements. AA- or higher, reflecting the primary objective of principal • Counterparties for derivative instruments are gener- protection. ally restricted to banks and financial institutions with high-quality credit ratings from leading international credit rating agencies; for the sole purpose of funding local currency loans, eligibility is extended to central banks and select local banks. IFC 2024 ANNUAL REPORT FINANCIALS  33 MARKET RISK Interest rate volatility remained the largest driver of mar- ket risk in IFC’s Treasury portfolio due to the unhedged Market risk is the risk of losses due to movement in mar- investments in U.S. Treasury securities funded from IFC’s ket factors such as interest rates, credit spreads, equity, net worth. To manage risks associated with interest rate, foreign exchange or commodity prices. IFC’s exposure to foreign exchange, and credit spread risks, a system of market risk is mitigated by its matched funding policy, limits has been employed and closely monitored on a daily whereby it uses derivative instruments to convert loans basis to ensure ongoing compliance throughout the fis- funded from market borrowings, and the market bor- cal year. rowings themselves, into floating rate U.S. dollar assets and liabilities with similar duration. Similarly, market risk resulting from derivative transactions with clients, to LIQUIDITY, FUNDING AND ASSET facilitate clients’ risk management, is typically mitigated by entering offsetting positions with highly rated market LIABILITY MANAGEMENT (ALM) counterparties. IFC’s exposure to unhedged market risk RISK arises primarily from its listed and unlisted equity invest- ments in emerging markets, its quasi-equity loans, and its IFC defines liquidity and funding risk as the risk that, over net worth funded Treasury liquid asset portfolio. a specific horizon, IFC will be unable to meet the demand for additional funds to meet the demand for uses of funds LONDON INTERBANK OFFERED RATE (LIBOR) due to either funding or liquidity issues or both. IFC faces TRANSITION liquidity risk in its core development finance activities because its investments are predominantly illiquid in IFC has substantially transitioned its existing LIBOR- nature due to the lack of capital flows, the infrequency based portfolios to Secured Overnight Financing Rate of transactions, and the lack of price transparency in (SOFR) with 95 percent of the fixed and variable rate many emerging markets. To offset this risk, IFC maintains LIBOR assets book amended as of June 30, 2024 and with appropriate liquid assets funded from its net worth and liabilities and swap conversions substantially completed. market borrowings. IFC manages the risk of mismatches With the anticipated termination of Financial Conduct in foreign exchange rates, interest rates, and maturity Authority (FCA) Synthetic LIBOR on September 30, 2024, dates between balance sheet assets and liabilities. IFC expects to remediate the remaining loans by that time with certain exceptions. LIQUID ASSET PORTFOLIO EQUITY INVESTMENTS Liquidity risk in the liquid asset portfolio is addressed by liquidity coverage ratios (LCR) and strict investment The risk of loss in value of IFC’s emerging markets equity eligibility criteria defined in Directives approved by the investments is mitigated primarily by applying the same Corporate Risk Committee. LCRs are aligned with Basel limits framework, decision-making process and portfolio liquidity standards for regulated banks, include time hori- management methods as described above for its lending zons between 30 days and 3 years, and consider both operations. IFC has a multi-year horizon for its equity normal and stressed cash flow requirements. Examples of investments and accepts short-term price volatility of eligibility criteria include minimum issuance sizes required these investments, which can be significant. for bond investments, limits on single bond issue con- During FY24, equity markets continued reaching new centration, and limits on the percentage of total bond highs due to a positive outlook in developed markets. issuance held by IFC. Consequently, a significant portion The S&P 500, representing US markets, rose 23 percent of the liquid asset portfolio is invested in highly liquid to an all-time high, while Europe’s largest stocks, as mea- securities such as high-quality sovereign, sovereign- sured by Euro Stoxx 50, rose 9 percent. Emerging markets guaranteed, and supranational fixed income instruments. also increased, with the MSCI EM total return index up IFC expects to continue to be able to realize these assets by 13 percent, to a level which is still significantly below as needed to meet its cash requirements, even in a liquid- the highs seen in early 2021. Additionally, the US dollar ity crisis. strengthened 7 percent against a basket of emerging market currencies (JPMorgan EM currency index). IFC FUNDING remains focused on growing its equity book and rigorous analysis of macroeconomic trends continues to be crucial IFC’s funding operations ensure that IFC has the funds in guiding business generation as well as informing deci- required for its lending operations, and that it has suffi- sion-making throughout the project life cycle. cient liquidity to safeguard its triple-A rating and fulfill its counter-cyclical role. IFC can access a variety of funding LIQUID ASSET PORTFOLIO markets, including the U.S. dollar market, British pound market and the Australian dollar market as well as pri- Market risk in IFC’s liquid asset portfolio is managed vate placement and retail markets. IFC’s discount note according to the risk appetite chosen by IFC Management program complements its traditional funding sources using derivatives and other financial instruments such as by providing swift access to short-term funded liquidity. over-the-counter foreign exchange forward agreements, IFC’s triple-A rating is critical to the Corporation’s ability interest rate and currency swaps, and exchange-traded to maintain its low cost of funds. Regular issuance in a interest rate futures. Overall market risk exposure is also variety of markets serves to sustain investor confidence subject to daily monitoring, based on Directives approved and maintain a diversified investor base. by the Corporate Risk Committee, which limits interest rate, credit spread, and foreign exchange risk. 34  IFC 2024 ANNUAL REPORT FINANCIALS ASSET–LIABILITY MANAGEMENT pension plan is underfunded, leading to the need for addi- tional financial support by IFC. While IFC’s matched-funding policy helps mitigate cur- There are two committees that govern the Plans. From rency and interest rate risk, IFC is still exposed to residual a governance standpoint, both committees are inde- market risks in the market borrowings-funded portion pendent of IFC and the Board: (i) The Pension Finance of the balance sheet. Residual currency risk arises from Committee (PFC), which is responsible for the financial factors such as changes in the level of reserve for losses management of the Plans and is supported by the Pension on non-U.S. dollar loans. The aggregate position in each Finance Administrator; and (ii) The Pension Benefits lending currency is monitored and the risk is managed to Administration Committee (PBAC), which is responsible within the limits established for each currency and the for the administration of the benefits of the Plans. total exposure for all currencies. Residual interest rate risk may arise from differing interest rate reset dates on The key policies underpinning the financial management assets and liabilities or from assets that may become of the Plans, including the determination of WBG con- mismatched with hedges over time due to write-downs, tributions and the investment of Plan assets, are the prepayments, or rescheduling. The residual interest rate funding and investment policies. The objective of these risk is managed by measuring the sensitivity of the pres- policies is to ensure that the Plans have sufficient assets ent value of assets and liabilities in each currency to a one to meet benefit payments over the long term. The funding basis point change in interest rates and managing expo- policy, as approved by the PFC, establishes the rules that sures to within the established limits for each currency determine the WBG’s contributions. and the total exposure for all currencies. In FY24, the WBG’s rate for contributions to the Plans was 14.75 percent of net salaries. More details about the WBG’s pension plan can be found in Section XI: Pension OTHER FINANCIAL RISKS and Other Post-retirement Benefits of IBRD’s MD&A. IFC includes Capital Risk and Pension risk as the two other financial risks that it faces. Capital risk is the risk to IFC’s triple-A rating resulting from a low capital ade- OPERATIONAL RISK quacy position, in which available capital falls below the MANAGEMENT level of capital required to support IFC’s activities. Pension Risk is the risk that IFC’s defined-benefit pension plan is Consistent with the Basel Framework, IFC defines oper- underfunded, leading to the need for additional financial ational risk as the risk of loss resulting from inadequate support by IFC. or failed internal processes, people and systems, or from external events, and holds economic capital against CAPITAL RISK such risks. Given IFC’s business model, both financial and non-financial potential impacts are considered in assess- From a financial sustainability perspective, the capital ment of risks. required to maintain a triple-A rating is assessed using an IFC’s Operational Risk Management (ORM) program economic capital framework, which is the foundation of conforms to a Directive approved by the Corporate Risk financial risk management at IFC. Economic capital acts Committee, which defines the management of, and roles as a “common currency of risk” across the organization, and responsibilities for, operational risk management in providing IFC with an objective, quantifiable measure of the Corporation. risk that can be applied consistently across business lines, products, regions, and sectors. IFC holds economic capital IFC identifies, assesses, monitors and reports operational for credit, market, and operational risks. The economic risks across the following key value chains/business func- capital framework covers IFC’s entire balance sheets  —  tions, also known as operational risk areas: Investments, debt, equity, and Treasury assets — and economic capital Treasury, Advisory Services, Third Party Responsibilities, is used for limit-setting, pricing, and risk-adjusted per- Business Support Functions, Corporate Functions, and formance measurement. The primary measure of capital Shared Services. adequacy is IFC’s Capital Utilization Ratio (CUR), which During FY24, IFC continued to expand its operational risk is the ratio of Capital Required for the current portfolio program by implementing enhanced methodologies to to the Capital Available to support future commitments. identify, assess, mitigate, and monitor material opera- Throughout FY24, IFC’s CUR was well within the estab- tional risks in its key activities. The main ORM tools that lished threshold of < 88 percent. IFC utilizes include Risk and Control Self-Assessments (RCSA), recording and analysis of operational risk events, PENSION RISK and monitoring of Risk Indicators (RIs). IFC’s ORM approach in FY24 focused on the RCSAs programs, as IFC participates, along with IBRD and MIGA, in pension well as expanding risk event reporting, and enhancing and post-retirement benefit plans. The Staff Retirement its quarterly report to the Corporate Risk Committee Plan (SRP), Retired Staff Benefits Plan (RSBP), and Post- and the Audit Committee. Also, during FY24, IFC started Employment Benefit Plan (PEBP) (collectively called the developing risk appetite statements for operational risk “Plans”) are defined benefit plans and cover substantially and validated its scenario analysis methodology by con- all WBG employees, retirees and their beneficiaries. ducting two pilot exercises. Finally, during FY24, through Costs, assets, and liabilities associated with the Plans various learning and knowledge sharing events, and train- are allocated among IBRD, IFC, and MIGA, based on their ing initiatives IFC improved awareness and understanding employees' respective participation in the Plans. Pension of operational risks in IFC. Risk is defined as the risk that IFC’s defined-benefit IFC 2024 ANNUAL REPORT FINANCIALS  35 IFC utilizes risk transfer mechanisms, including insur- STRATEGIC RISK ance, at both the project and the institutional levels for mitigation of low probability/frequency and high impact IFC defines strategic risk as the risk associated with initial operational risks. IFC insures its corporate assets and strategy selection, execution, or modification over time, operations against catastrophic losses and cyber-related resulting in a lack of achievement of overall objectives. risks where commercially viable. IFC uses the Anticipated Impact Measurement and IFC also continues to focus on its preparedness to react Monitoring (AIMM) system as an ex-ante assessment to significant events that could disrupt its normal oper- tool to enable IFC staff to measure and monitor the antic- ations through the Business Continuity Management ipated development impact of investment and advisory program, which covers critical business processes across projects. The AIMM system evaluates a project’s develop- all IFC offices. ment impact along two dimensions  — project outcomes and market outcomes. On a quarterly basis, IFC’s corporate ORM function provides a consolidated ORM report to the Corporate • Project outcomes — These refer to a project’s direct Risk Committee and a summarized version to the Audit effects on stakeholders (including employees, custom- Committee. ers, suppliers, and the community); the direct, indirect, and induced effects on the economy and society over- CYBERSECURITY RISK MANAGEMENT all; and the effects on the environment and social sustainability. IFC’s operations rely on the secure processing, storage • Market outcomes — These refer to a project’s poten- and transmission of confidential and other information tial for generating systemic, sector-wide changes that in computer systems and networks. Like other financial enhance market competitiveness, resilience, integra- institutions, cybersecurity risk continues to be significant tion, inclusiveness, and sustainability. for IFC due to the evolving sophistication and complexity The AIMM system is now fully integrated into IFC’s oper- of the cyber threat landscape. These risks are unavoidable ations, allowing development impact considerations to be and IFC seeks to manage them on a cost-effective basis weighed against a range of strategic objectives, including consistent with its risk appetite. volume, financial return, risk, and thematic priorities. To protect the security of its computer systems, software, networks and other technology assets, IFC has devel- ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) oped its cybersecurity risk management program, aligned RISK with its Operational Risk Management Framework. This program consists of cybersecurity policies, procedures, Environmental and Social (E&S) risk is the risk that IFC compliance, and awareness programs. A multi-layered cannot effectively engage with and influence clients to ful- approach for cybersecurity risk management is employed fill the requirements of IFC’s E&S Performance Standards, to prevent and detect malicious activity, both from within within a reasonable period of time, potentially causing the organization and from external sources. In response significant or material adverse impacts to people or the to emerging cyber threats such as malware including ran- environment. Corporate governance risk is the risk that somware, denial of service, phishing attacks and artificial IFC’s investment clients have inadequate corporate gov- intelligence related risks, IFC adapts its technical and ernance, which could lead to negative financial impact or process-level controls and enhances user awareness to reputational harm to IFC. mitigate the risk. When relying on third-party vendors for technology-enabled services, additional meaningful and ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) diligent measures are applied to gain assurance regarding ORGANIZATION the security of its information and technology assets including, as appropriate, legal and cybersecurity con- In FY24, two departments supported IFC's ESG work: tractual safeguards in third-party vendor agreements 1. The E&S Policy and Risk Department (CES) and the review and monitoring of third-party control serving as a regulatory function of IFC’s E&S risk environments. management and ensuring systems, procedures, and IFC periodically assesses the maturity and effectiveness capacity are in place. CES acts as custodian of IFC’s of its cyber defenses through risk mitigation techniques, Sustainability Framework, reviews E&S aspects of all including but not limited to, targeted testing, internal and projects at origination and provides oversight, external audits, incident response desktop exercises and guidance, and support on E&S for high-risk projects in industry benchmarking. all stages of the project cycle. 2. The ESG Sustainability, Advice and Solutions Department (CEG) worked closely with investment, STRATEGIC AND BUSINESS RISK advisory, and upstream teams and clients to identify, evaluate, and manage ESG risks and opportunities, These are risks that are specific to IFC given its mission leveraging IFC’s expertise and experience in emerging and strategy and include Strategic Risk, Environmental markets regarding the adoption of ESG standards. & Social Risk, Climate Risk, Corporate Governance Risk, Together these departments advised IFC management Integrity Risk, Anti-Money Laundering/Combating the on significant ESG risks in its projects, supported IFC cli- Financing of Terrorism (AML/CFT) Risk and External ents in strengthening their ESG performance, and enabled Financing Risk. accountability to stakeholders. In addition to promoting ESG standards and disclo- sure across emerging markets, IFC builds internal and 36  IFC 2024 ANNUAL REPORT FINANCIALS external capacity to identify, assess and mitigate ESG 4) Unsatisfactory. The score is calculated at appraisal risks. IFC continuously strengthens its ESG risk manage- as a baseline and is then updated after each supervision ment approach by improving its internal ESG systems, activity. procedures and practices; building capacity through Focused supervision efforts in the last five fiscal years internal and external training and advisory or enhanced have improved the E&S risk profile of IFC’s investment client supervision; fostering project-level grievance portfolio by reducing the number of poorly performing mechanisms; clarifying the application of IFC’s E&S projects, defined as a historical ESRR scale of 3 and 4. requirements for clients, including financial intermedi- The supervision program is closely monitored, and helped aries; and mainstreaming cross-cutting topics such as maintain a substantively healthy E&S portfolio perfor- climate change, gender, human rights, biodiversity, and mance. Figure 24 below presents the ESRR distribution contextual risk assessment in due diligence and super- of IFC’s investment portfolio from FY20 to FY24. vision. At the project level, IFC manages ESG risks in accordance with its Sustainability Policy, E&S Review Procedures and Corporate Governance Procedures. IFC Figure 24: ESRR Distribution provides capacity building, guidance and supports its FY20–FY24 clients in identifying, assessing and mitigating ESG risks through standards, guidelines, guidance notes, good prac- FY20 tice notes, tip sheets, handbooks, tools, training and other 4% knowledge products. 82% 4 On July 1, 2024, IFC reorganized its structure to further 13% strengthen the E&S risk management function by inte- 1% grating frontline E&S operational expertise within the FY21 Regional Vice Presidencies. Through this reorganization 4% IFC is investing significantly in its E&S resources, under- 83% scoring the strategic and operational importance of E&S 12% 3 risk management. The new structure with increased 1% managerial capacity will enable more proactive E&S risk FY22 management throughout the project cycle and strengthen 4% CES’s oversight and guidance role for projects. CES will 84% coordinate E&S knowledge and learning products, and 11% provide guidance on the consistency of management responses to Compliance Advisor Ombudsman (CAO) 1% 2 reports. It will also maintain its role as the corporate FY23 interface on E&S matters with the Board, CAO, and civil 3% society organizations and translate lessons learned from 86% IFC’s portfolio into new tools, policies, and approaches. 10% 1% The Corporate Governance team will continue to operate as a global team within the Legal & Compliance Risk Vice FY24 1 Presidency, providing expert advice to investment and 3% advisory teams and clients. 86% 10% ENVIRONMENTAL AND SOCIAL (E&S) RISK 1% MANAGEMENT APPROACH ESRR distribution scale: 1) Excellent IFC’s E&S risk management approach is anchored in 2) Satisfactory its Sustainability Framework, which articulates the 3) Partly Unsatisfactory 4) Unsatisfactory Corporation's strategic commitment to sustainable devel- opment and is composed of: 1. The Policy on E&S Sustainability — describing IFC's commitments, roles, and responsibilities in relation to environmental and social sustainability. 2. The E&S Performance Standards — guiding clients on sustainable business practices, including continually identifying and managing risks through analytical work such as environmental and social assessments; stakeholder engagement; and client disclosure obligations in relation to project-level activities. 3. IFC's Access to Information Policy — reflects the 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Corporation’s commitment to transparency and good governance and outlines institutional disclosure obligations. IFC uses an E&S Risk Rating (ESRR) system to eval- uate a client’s performance in managing E&S risks, including avoidance, mitigation and control of risks and adverse impacts. The ESRR scale includes: 1) Excellent, 2) Satisfactory, 3) Partly Unsatisfactory, and IFC 2024 ANNUAL REPORT FINANCIALS  37 CLIENT CORPORATE GOVERNANCE RISK Furthermore, a climate risk appetite statement has been developed, and work is underway to create a climate risk IFC manages corporate governance risk primarily by con- taxonomy. Market developments in areas such as climate ducting a structured evaluation of every new investment factors scoring, sensitivity analysis, scenario analysis, project, covering the following six areas: and stress testing at the portfolio level are being closely assessed. These initiatives aim to enhance IFC's ability to • Effectiveness of the Board of Directors; effectively manage climate risk and ensure the sustain- • Sufficiency of internal controls, audit, risk management ability of its operations. and compliance; • Adequacy of financial and non-financial disclosures, Highlights of climate risk management measures in FY24 including ESG/sustainability reporting; include: • Adequacy of shareholders’ rights; • Implementation of counterparty approach for Paris • Adequacy of governance of stakeholder engage- Alignment for real and financial sector projects with ment; and undefined use of proceeds. • Demonstration of the client’s commitment to imple- • Further integration of climate risk into IFC’s enterprise ment high quality corporate governance policies and risk framework and operations through a cross-organi- practices. zational Climate Risk Working Group (CRWG). The findings from these assessments are considered in The WBG's Climate Change Action Plan for FY21 to FY25, the decision on whether to proceed with the project. aims to increase support to deliver climate results, with a focus on reducing the trajectory of emissions and CLIMATE RISK strengthening adaptation and resilience in developing countries. As part of this plan, IFC has committed to Climate Risk, as defined by IFC, encompasses the actual increase its direct climate financing to at least 35 per- or potential negative effects of climate-related conditions cent of own-account long-term total commitments on and events on IFC's investments, corporate operations, average over the five-year period. IFC is also committed reputation or consolidated financial statements. There to aligning its financial flows with the objectives of the are two primary climate-related risk categories: (1) phys- Paris Agreement. Starting July 1, 2023, 85 percent of ical risks and (2) transition risks. Board approved operations are expected to be aligned “Physical risks” include both “acute” and “chronic” phys- with the Paris Agreement’s goals, and 100 percent of ical risks to business operations. Acute physical risks these are expected to be aligned starting July 1, 2025. In are event-driven, stemming from short-term extreme FY24, the President of the World Bank Group committed weather events like hurricanes, floods, tornadoes, wild- to a new climate finance target of 45 percent of its annual fires, storms, drought or heatwaves. Chronic physical financing to climate-related projects (up from 35 percent) risks emerge from longer-term shifts in climate patterns, for the WBG starting in FY25. such as progressive changes in precipitation and tem- perature, which could lead to rising sea levels, alteration INTEGRITY, MONEY LAUNDERING AND TERRORIST of ecosystems, desertification, water scarcity, soil deg- FINANCING, AND TAX RISKS radation, and deterioration of marine ecology. Group of interrelated risks that IFC’s Clients may have “Transition risks” are attributable to the global shift ineffective governance structures and/or controls to toward a lower-carbon economy. These risks are multi- manage exposure to integrity risk, money laundering and faceted and arise from changes in law or regulation, public terrorist financing (ML/TF) risk and tax risk. Integrity policies, technological breakthroughs, shifts in investor risks are the risks of engaging with external institutions and public sentiment, and disruptive innovations in busi- or persons whose background or activities, may have ness models aimed at addressing climate change. adverse reputational and, often, financial impact on These risks could carry financial and non-financial impli- IFC. ML/TF risks are the associated risks arising from cations for IFC. inadequate controls and processes to manage money laundering or financing of terrorism risk exposures when Climate risk is integrated into IFC’s operations through IFC invests with financial institutions or private equity its commitment under the capital increase and more funds. Tax risk is the risk that IFC’s clients or projects may recently to align with the goals of the Paris Agreement. be structured so as to evade taxes or allow the adoption As part of its efforts to align with the Paris Agreement, of aggressive tax strategies or practices. IFC has begun assessing certain aspects of transition and physical climate risks in all new investment projects, IFC works with a wide range of clients and partners in including potential impacts on the project’s financial, Investment Operations, Upstream and Advisory Services environmental, and social performance as well as expo- activities, from multi‑national to small companies, and sure to stranded asset risk and carbon lock-in risk. IFC from government institutions to non-governmental orga- has developed tools, methodologies and approaches to nizations. Thus, each transaction or service opportunity help industry, E&S, and climate specialists conduct these presents unique integrity risks, affected by different assessments. factors, including the type of engagement, financial instrument, structure, geography and duration of the IFC’s dedicated second line climate risk management engagement. IFC conducts integrity due diligence on cli- function is in the process of developing methodologies ents and partners to manage these risks and to mitigate and tools to integrate climate risk management into IFC's them where it reasonably can, both before engagement overall financial sustainability management, portfolio, and on an ongoing basis during the engagement. balance sheets, capital adequacy and Enterprise Risk Management (ERM) framework. 38  IFC 2024 ANNUAL REPORT FINANCIALS ML/TF risk is the risk that IFC’s financial intermediary cli- EXTERNAL FINANCING RISK ents may have ineffective controls to manage exposure to money laundering and terrorist financing risk, subjecting As well as using its own resources to invest in and provide IFC to potential integrity, reputational, or financial risk. advice to clients, IFC raises additional funds from public IFC conducts anti-money laundering (AML)/combating and private sector institutional investors, lenders, and the financing of terrorism (CFT) due diligence on financial donors through several different mechanisms. External institution clients and funds in addition to its integrity due financing risk is the risk that when entrusted with over- diligence to determine whether: sight of such funds, IFC does not meet its contractual obligations to the third parties involved. 1. the client’s AML/CFT procedures and controls are structured to comply with relevant AML/CFT To mitigate this risk, IFC works within agreed frameworks standards; which establish IFC's responsibilities and obligations with 2. the AML/CFT procedures and controls are respect to the third parties. For example, where financ- appropriate for the client’s business and ing to clients is mobilized through B Loans or MCPP, the operating environments; specialized Syndications Department follows defined pro- IFC has been strengthening its AML capacity, through cesses to identify co-financiers, advise on structuring, in-house trainings of its business teams and roll out of and monitor compliance with investment agreements. technical capacity building programs (e.g., to promote the In some cases, financing from third parties, including countering of trade-based money laundering for financial donors, is administered through trust funds. IFC follows institutions in developing markets). predefined procedures for clearing all IFC trust fund pro- posals and agreements and overseeing IFC's trust fund Tax risk is the risk that IFC’s clients or projects may be portfolio. Finally, AMC has an independent governance structured so as to evade taxes or to allow the adoption process to make decisions for the benefit of investors in of aggressive tax strategies or practices. The World Bank AMC-managed funds and AMC compliance matters are Group Intermediate Jurisdiction and Tax Policy, which subject to oversight by the Business Risk and Compliance went into effect on January 23, 2023, reflects significant Department (CBR). changes in the international tax landscape and the cur- rent global focus on tax transparency and responsible tax practices and applies tax due diligence to invest- ment projects involving intermediate jurisdictions and material cross-border related party transactions. IFC has been raising awareness regarding the Policy and the corresponding processes through targeted trainings for regional and industry teams. IFC 2024 ANNUAL REPORT FINANCIALS  39 SECTION VII: CRITICAL more detail in Notes A and R to IFC’s FY24 consolidated financial statements. ACCOUNTING POLICIES IFC’s regional and industry departments are primarily responsible for fair valuing IFC’s investment portfolio (equity investments, debt securities, loan investments and related derivatives). The Investment Valuation Unit in IFC's Corporate Risk Management8 department in the IFC’s accounting policies, as well as estimates made Risk and Finance Vice Presidency provides oversight over by Management, are integral to its financial reporting. the fair valuation process by monitoring and reviewing the Some of these accounting policies require Management fair values of IFC’s investment portfolio. to make highly difficult, complex, and subjective judg- IFC’s borrowings are fair valued by the Quantitative ments as these relate to matters inherently uncertain Analysis department in IFC’s Treasury and Syndications and susceptible to change. Note A to IFC’s FY24 consoli- Vice Presidency. Third-party independent vendor prices dated financial statements contains a summary of IFC’s are used to price the vast majority of IFC’s liquid assets. significant accounting policies, including a discussion of The vendor prices are evaluated by IFC’s independent recently adopted accounting standards and accounting middle office in Treasury department who maintains over- and financial reporting developments. Certain of these sight for the pricing of liquid assets. All of IFC’s financial policies are considered to be “critical” to the portrayal of instruments in its liquid assets portfolios are managed IFC’s financial condition and results of operations, since according to an investment authority approved by the they require Management to make difficult, complex or Board of Directors and investment guidelines approved subjective judgments, some of which may relate to mat- by IFC’s Corporate Risk Committee. ters that are inherently uncertain. The change in fair value of borrowings carried at fair value These policies include: resulting from changes in instrument-specific credit risk • Determining the fair value of equity investments, is reported in Other Comprehensive Income, while the debt securities, loans, liquid assets, borrowings and remaining change in fair value is reported in Net Income. derivatives; Many of IFC’s financial instruments accounted for at fair • Determining the level of reserve against losses in the value are valued based on unadjusted quoted market loan portfolio; prices or using models where the significant assump- • Determining the level and nature of impairment for debt tions and inputs are market-observable. The fair values securities carried at fair value with changes in fair value of financial instruments valued using models where the being reported in other comprehensive income (OCI); and significant assumptions and inputs are not market- • Determining the future pension and post-retirement observable are generally estimated using complex pric- benefit costs and obligations using actuarial assump- ing models of the net present value of estimated future tions based on financial market interest rates, past cash flows. Management makes numerous assumptions experience, and best estimate of future benefit cost in developing pricing models, including an assessment changes and economic conditions. about the counterparty’s financial position and pros- Many of IFC’s financial instruments are classified in pects, the appropriate discount rates, interest rates, accordance with the fair value hierarchy established by and related volatility and expected movement in foreign accounting standards for fair value measurements and currency exchange rates. Changes in assumptions could disclosures which permit the fair value and/or impairment have a significant impact on the amounts reported as to be estimated based on internally developed models assets and liabilities and the related unrealized gains or methodologies utilizing significant inputs that are and losses reported in the income statement and unobservable. Other Comprehensive Income. The fair value computa- tions affect both the Investment services and Treasury segments of IFC (see Note S to the FY24 consolidated financial statements for further discussion of IFC’s busi- VALUATION OF FINANCIAL ness segments). INSTRUMENTS IFC reports at fair value all of its derivative instruments, liquid asset trading securities, equity investments, RESERVE AGAINST LOSSES ON investments in debt securities and certain borrowings, LOANS AND OFF-BALANCE SHEET and loans. In addition, various investment agreements contain embedded or standalone derivatives that, for CREDIT ARRANGEMENTS accounting purposes, are separately accounted for as In accordance with Accounting Standards Update derivative assets or liabilities. IFC classifies all financial 2016-13, Measurement of Credit Losses on Financial instruments accounted for at fair value based on the fair value hierarchy established by accounting standards for Instruments and related amendments, which is incor- porated in ASC Topic 326, Financial Instruments-Credit fair value measurements and disclosures as described in Losses (ASC 326), IFC recognizes a reserve for credit 8. Effective July 1, 2023, the Investment Valuation Unit moved to IFC’s Investment and Credit Risk department. 40  IFC 2024 ANNUAL REPORT FINANCIALS losses that is deducted from the amortized cost basis IMPAIRMENT OF DEBT of loans to present the net amount expected to be col- lected on loans on the balance sheets. IFC uses a credit SECURITIES loss methodology that reflects an estimate of expected credit losses over the remaining contractual life of a loan, For all debt security investments classified as avail- considering forward-looking information. The process for able-for-sale, IFC assesses impairment each quarter. In determining the reserve against credit losses is discussed accordance with ASC 326, IFC established an impairment in Note A to IFC’s FY24 consolidated financial statements. model to determine whether all or a portion of the unreal- ized loss is a credit loss, and recognizes a reserve for credit The determination of the reserve against credit losses is losses. When impairment is identified, the entire impair- based on complex inputs and assumptions, which require ment is recognized in net income if certain conditions a high degree of judgment. In particular, the forecast of are met (as detailed in Note A to IFC’s FY24 consolidated key economic variables relevant to the loan portfolio is financial statements). IFC considers all relevant infor- one of the critical assumptions to IFC’s estimation of mation including the extent to which fair value has been expected credit losses. Information and events, with less than amortized cost, whether IFC intends to sell the respect to the borrower and/or the economic and politi- debt security or whether it is more likely than not that cal environment in which it operates, that are considered IFC will be required to sell the debt security, the payment in determining a loss reserve include, but are not limited structure of the obligation and the ability of the issuer to, the borrower’s financial difficulties, assessing the risk to make scheduled interest or principal payments, any of breach of contract, bankruptcy/reorganization, credit changes to the ratings of a security, and relevant adverse rating downgrade as well as geopolitical conflict, finan- conditions specifically related to the security, an industry cial/economic crisis, commodity price decline, adverse or geographic sector. local government action and natural disaster. The risks inherent in the portfolio that are considered in determin- ing the portfolio reserve are those proven to exist by past experience and include: country systemic risk; the risk PENSION AND OTHER POST- of correlation or contagion of losses between markets; uninsured and uninsurable risks; nonperformance under RETIREMENT BENEFITS guarantees and support agreements; and opacity of, or IFC participates, along with IBRD and MIGA, in pension misrepresentation in a borrower's financial statements. and post-retirement benefit plans that cover substan- IFC recognizes a reserve against credit losses on off-bal- tially all of its staff members. The underlying actuarial ance sheet credit exposures for guarantees that are assumptions used to determine the projected benefit obli- not measured at fair value and other off-balance sheet gations, accumulated benefit obligations, and the funded arrangements. Methodologies for estimating the reserve status associated with these plans are based on financial for credit losses on off-balance sheet credit exposures, market interest rates, experience, and management’s including loans committed but not disbursed, are gen- best estimate of future benefit changes and economic erally consistent with methodologies for estimating the conditions. All costs, assets and liabilities associated with reserve for credit losses for the disbursed loan portfolio. these plans are allocated between IBRD, IFC and MIGA based upon their employees’ respective participation IFC periodically reviews these variables and reassesses in the plans. IFC reimburses IBRD for its proportionate the adequacy of the reserve against credit losses accord- share of any contributions made to these plans by IBRD. ingly. Actual losses may differ from expected losses owing Contributions to these plans are calculated as a percent- to unforeseen changes in any of the variables affecting the age of salary. For further details, please refer to Note V creditworthiness or estimates inherent in the exposure to the FY24 consolidated financial statements. measurements. IFC’s regional and industry departments are primarily responsible for individual loss reserve and for credit risk and facility risk ratings, which are used for the portfolio loss reserve. A critical component of the portfolio loss reserve calculations is the quarterly and annual reevalu- ation of current expected credit loss (CECL) assumptions, which are a collective effort of the Investment & Credit Risk department, Corporate Risk Management department, Global Macro and Market Research unit, and Controllers department. The Loan Loss Steering Committee is the final approving authority for these assumptions. The Portfolio Review unit in IFC’s Controllers department pro- vides oversight over the individual loss reserve process by monitoring and reviewing the individual loss reserve of IFC’s debt portfolio, and collates inputs and runs the portfolio loss reserve calculations. IFC 2024 ANNUAL REPORT FINANCIALS  41 SECTION VIII. RESULTS OF OPERATIONS OVERVIEW The overall market environment has a significant influence on IFC’s financial performance. The main elements of IFC’s net income and other comprehensive income, and influences on the level and variability of net income and other comprehensive income from year to year are: Table 19: Main Elements of Net Income and Other Comprehensive Income ELEMENTS SIGNIFICANT INFLUENCES Net income: Yield on interest earning assets Market conditions including spread levels and degree of competition. (principally loans) Nonaccruals and recoveries of interest on loans formerly in nonaccrual status, and income from participation notes on individual loans are also included in income from loans. Liquid asset income Realized and unrealized gains and losses on the liquid asset portfolio, in particular the portion of the liquid asset portfolio funded by net worth, which are driven by external factors such as the interest rate environment and liquidity of certain asset classes within the liquid asset portfolio. Income from the equity investment Global climate for emerging markets equities, fluctuations in currency portfolio markets and company-specific performance for equity investments. Overall performance of the equity portfolio. Provision for losses on loans, Risk assessment of borrowers, probability of default, loss given default, guarantees, and available-for-sale and expected balance at default considering prepayment and disbursement debt securities assumption used to estimate expected utilization rates. Other income and expenses Level of advisory services provided by IFC to its clients, the level of expense from the staff retirement and other benefits plans, the approved and actual administrative expenses, and other budget resources. Gains and losses on other non-trading Principally, differences between changes in fair values of borrowings, excluding financial instruments accounted for IFC’s credit spread and associated derivative instruments and unrealized gains at fair value or losses associated with the investment portfolio including puts, warrants, and stock options, which in part are dependent on the global climate for emerging markets. These securities may be valued using internally developed models or methodologies, utilizing inputs that may be observable or non-observable. Other comprehensive income: Unrealized gains and losses on Global climate for emerging markets, fluctuations in currency and commodity debt securities accounted for as markets and company-specific performance, and consideration of the extent available-for-sale to which unrealized losses are considered a credit loss. Debt securities may be valued using internally developed models or methodologies, utilizing inputs that may be observable or non-observable. Unrealized gains and losses Fluctuations in IFC’s own credit spread measured against reference rate, attributable to instrument-specific resulting from changes over time in market pricing of credit risk. As credit credit risk on borrowings at fair value spreads widen, unrealized gains are recorded, and when credit spreads narrow, under the Fair Value Option unrealized losses are recorded. Unrecognized net actuarial gains and Returns on pension plan assets and the key assumptions that underlay losses and unrecognized prior service projected benefit obligations, including financial market interest rates, staff costs on benefit plans expenses, past experience, and management’s best estimate of future benefit cost changes and economic conditions. 42  IFC 2024 ANNUAL REPORT FINANCIALS IFC’s net income or loss for the past three fiscal years ended June 30, 2024 are presented below: Figure 25: IFC's Net Income (Loss) FY22–FY24 (US$ in millions) Fiscal year ended June 30, FY22 (464) FY23 672 FY24 672 1,485 -1,000 -500 0 500 1,000 1,500 2,000 The following paragraphs detail significant variances between FY24 and FY23 covering the periods included in IFC’s FY24 consolidated financial statements. The $813 million increase in net income was principally a result of the following: 0X3 Figure 26: Change in Net Income FY24 vs FY23 (US$ in millions) 619 24 813 (90) (4) 48 8 7 298 (97) Total Income Loss URG(L)** Equity URG(L)** Net Administrative URG(L)** on Others*** Change in from Loans Provision on Loans Income on Equity Treasury Expenses & Borrowings Net Income and Debt and Debt Investments Income** Pensions Securities* Securities * Total income from loans and debt securities and net treasury income are net of allocated charges on borrowings. ** URG(L) refers to Unrealized Gains (Losses). *** Others mainly represents foreign exchange gains/losses, service fees, and net advisory service expenses. A more detailed analysis of the components of IFC’s net NON-PERFORMING LOANS (NPLS) income is as follows. NPLs decreased by $226 million to $898 million9 of the INCOME FROM LOANS AND GUARANTEES, disbursed loan portfolio as of June 30, 2024. The decrease INCLUDING REALIZED GAINS AND LOSSES ON was largely due to $275 million of positive develop- LOANS AND ASSOCIATED DERIVATIVES ments and $110 million net write-offs, partially offset by $98 million new NPL additions. In FY24, the top three Income from loans and guarantees, including realized loans that were placed in NPL status totaled $63 million. gains and losses on loans and associated derivatives for FY24 amounted to $3.2 billion. This represents an increase of $914 million compared to $2.3 billion in FY23, primarily due to higher interest income from increased interest rates and portfolio growth. 9. Includes $53 million reported as debt securities and $126 million reported as loans under Fair Value Option on the Balance Sheet as of June 30, 2024 ($59 million Debt securities and $137 million FVO loans — June 30, 2023). IFC 2024 ANNUAL REPORT FINANCIALS  43 Figure 27: Non-performing Loans (US$ in millions) 98 1,124 61 898 (275) (110) June 2023 Increase in NPL Positive Write-offs and Others* June 2024 balance developments losses on sale net of recoveries * Mainly represents balance changes due to deferrals, restructuring, disbursements, interest capitalization, conversions and foreign exchange gains/losses. PROVISION FOR LOSSES ON LOANS, AVAILABLE-FOR-SALE DEBT SECURITIES, OFF-BALANCE SHEET CREDIT EXPOSURES AND OTHER RECEIVABLES IFC recorded a net provision for losses on loans, available-for-sale debt securities, off-balance sheet credit exposures and other receivables of $21 million in FY24 (provision of $29 million in FY23) analyzed as below: Table 20: Portfolio and Individual Provision (Release of Provision) FOR THE YEAR ENDED JUNE 30 (US$ in millions) 2024 2023 VARIANCE Portfolio (release of provision) provision on disbursed loans $ (26) $ 91 $ (117) Individual provision (release of provision) on disbursed loans 5 (76) 81 Portfolio provision (release of provision) on undisbursed loans 20 (3) 23 Release of individual provision on undisbursed loans ­(1) – ­(1) Provision on off-balance sheet credit exposures and other receivables 11 10 1 Individual provision on available-for-sale debt securities 12 7 5 Total $ 21 $ 29 $ (8) Total portfolio provision decreased in FY24 mainly due to a $110 million reduction in the Qualitative Overlay par- tially offset by an increase due to new commitments and disbursements. Individual provision was mainly due to project-specific developments. Total reserve against losses on loans disbursed and loans committed but not disbursed decreased by $110 million to $1.3 billion as of June 30, 2024 analyzed as follows: Figure 28: Reserve against Losses for Disbursed and Undisbursed Loans (US$ in millions) 1,379 4 (6) 1,269 (91) (17) June 2023 Individual Portfolio Write-offs net Others* June 2024 Provision Provision of recoveries * Others comprise release of provision for capitalized interest of $5m and foreign exchange movements of $12m reserve graphs present the reserve against losses on disbursed and undisbursed debt portfolio only (without Guarantees). 44  IFC 2024 ANNUAL REPORT FINANCIALS The breakdown of total reserve against losses on loans disbursed and loans committed but not disbursed and the reserve coverage ratio as of June 30, 2024 and June 30, 2023 are presented in the table below: Table 21: Reserve against Losses on Loans Disbursed and Loans Committed but Not Disbursed and Reserve Coverage Ratio FOR THE YEAR ENDED JUNE 30 2024 2023 VARIANCE RESERVE RESERVE RESERVE COVERAGE COVERAGE COVERAGE (US$ in millions, unless otherwise noted) RESERVE RATIO a RESERVE RATIO a RESERVE RATIO a Reserve against losses on disbursed loans Portfolio reserve $801 2.3% $  843 2.8% $(42) (0.5)% Individual reserve 280 25.3% 366 30.2% (86) (4.9)% $1,081 3.0% $1,209 3.9% (128) (0.9)% Reserve against losses on loans committed but not disbursed Portfolio reserve 188 2.2% 169 2.5% 19 (0.3)% Individual reserve – – 1 2.2% (1) (2.2)% 188 2.2% 170 2.5% 18 (0.3)% Total reserve $ 1,269 2.8% $ 1,379 3.6% $ (110) (0.8)% a. Reserve coverage ratio is calculated as the reserve over related disbursed loans balances or reserve over related loans committed but not disbursed balances. The decrease in individual reserve against losses on dis- INCOME FROM EQUITY INVESTMENTS AND bursed loans was mainly due to a $106 million decrease ASSOCIATED DERIVATIVES in the impaired disbursed loan portfolio. IFC divests equity investments where IFC’s developmental In FY24, the top ten largest individual provisions and top role has been fulfilled, where pre-determined sales trigger ten largest individual releases of provision comprised levels have been met, and where applicable, lock-ups have 73 percent and 74 percent of the total individual provisions expired. Gains and losses on equity investments and asso- and total individual releases of provision, respectively, for ciated derivatives include both realized and unrealized losses on loans. gains or losses. The reserve against losses as of June 30, 2024 reflected Income from equity investments and associated deriva- credit risk assessments as of that date. The assessment tives (consisting of dividends and net gains), decreased of the level of reserve against losses carried a heightened by $49 million, as analyzed below: degree of uncertainty and judgment. As of June 30, 2024, a $25 million Qualitative Overlay was applied ($135 mil- lion as of June 30, 2023). This represents a reduction of $110 million in FY24, since the original circumstances requiring the overlay are now broadly reflected in the credit ratings. Table 22: Income from Equity Investments and Associated Derivatives FOR THE YEAR ENDED JUNE 30 (US$ in millions) 2024 2023 VARIANCE Net realized gains $ 245 $ 161 $ 84 Net unrealized losses (231) (134) (97) Dividend income, custody, fees and other 128 164 (36) Total income from equity investments and associated derivatives $ 142 $ 191 $ (49) IFC 2024 ANNUAL REPORT FINANCIALS  45 In FY24, the top five investments with net gains totaled $272 million, while the top five investments with net losses were $287 million. In comparison, in FY23 the top five investments with net gains were $230 million and the top five investments with net losses were $197 million. INCOME FROM DEBT SECURITIES AND REALIZED INCOME FROM LIQUID ASSETS GAINS AND LOSSES ON DEBT SECURITIES, AND TRADING ACTIVITIES ASSOCIATED DERIVATIVES Income from liquid assets trading activities gross of fund- Income from debt securities and associated derivatives ing costs and net of funding costs are analyzed in the increased by $293 million from $518 million in FY23 to table below: $811 million in FY24. The increase was primarily due to a $348 million increase in interest income resulting from higher outstanding balances, partially offset by a $55 million decrease in realized gains. Table 23: Income from Liquid Assets Trading Activities FOR THE YEAR ENDED JUNE 30 (US$ in millions) 2024 2023 VARIANCE Liquid asset income, gross of funding costs: Market Funded Liquidity Portfolio $ 1,341 $ 1,215 $ 126 Net Worth Funded Liquidity Portfolio 1,050 249 801 Total liquid asset income, gross of funding costs $ 2,391 $ 1,464 $ 927 Liquid asset income, net of funding costs: Market Funded Liquidity Portfolio $ 106 $ 208 $ (102) Net Worth Funded Liquidity Portfolio 754 33 721 Total liquid asset income, net of funding costs $ 860 $ 241 $ 619 The year-over-year increase of $619 million (net of fund- The weighted average cost of IFC’s outstanding bor- ing costs) was mainly attributable to higher net income rowings from market sources, after the effects of from the Net Worth Funded Portfolio, as U.S. Treasury borrowing-related derivatives, and excluding short-term yields stabilized in FY24 while rose sharply in FY23. The borrowings from market and other sources, was 5.7 per- decline in income on the Market Funded Portfolio was due cent at June 30, 2024, an increase from 5.2 percent at to narrow credit spreads at the inception of the fiscal year June 30, 2023. which persisted for much of the year and a net decline in The increase in charges on borrowings was predominantly the size of the Market Funded Portfolio. due to rising interest rates. The size of the borrowings portfolio (excluding short-term borrowings), net of CHARGES ON BORROWINGS borrowing-related derivatives and before unamortized discounts and fair value adjustments, increased by IFC’s charges on borrowings increased by $1.2 billion, $3.3 billion during FY24 from $56.7 billion at June 30, from $2.6 billion in FY23 to $3.8 billion in FY24, pri- 2023, to $60.0 billion at June 30, 2024. marily due to higher reference rates in FY24 compared to FY23. Charges on borrowings for the year ended OTHER INCOME June 30, 2024 included $133 million expenses from short term discount notes ($109 million  — year ended Other income increased by $69 million mainly driven by June 30, 2023) and $4 million in respect of borrow- an increase in Advisory services income, Post-retirement ings from IDA ($6 million — year ended June 30, 2023). Contributions Reserve Fund (PCRF) income and invest- ment returns on Post-Employment Benefit Plan assets. The components of other income are analyzed in the Table 24: Other Income table below: FOR THE YEAR ENDED JUNE 30 (US$ in millions) 2024 2023 VARIANCE Upstream and Advisory Services Income $ 268 $ 247 $ 21 Service Fees 131 128 3 Investment returns on Post-Employment Benefit Plan assets 63 55 8 PCRF Income 30 15 15 CRM Income/ Expense 25 18 7 Other Miscellaneous Income 70 55 15 Total $ 587 $ 518 $ 69 46  IFC 2024 ANNUAL REPORT FINANCIALS OTHER EXPENSES Other Expenses increased by $106 million. The increase in administrative expenses is mainly due to higher staff costs partially offset by lower pension expenses. The com- ponents of other expenses are analyzed in the table below: Table 25: Other Expenses FOR THE YEAR ENDED JUNE 30 (US$ in millions) 2024 2023 VARIANCE Administrative expenses $ 1,516 $ 1,430 $ 86 Upstream and Advisory services expenses 339 317 22 Income from pension and other postretirement benefit plans (37) (41) 4 Other Expenses 9 15 (6) Total $ 1,827 $ 1,721 $ 106 FOREIGN CURRENCY TRANSACTION GAINS AND gains or losses from foreign currency transactions LOSSES ON NON-TRADING ACTIVITIES are reported in other comprehensive income, while the impact from the associated derivatives are reported in net Foreign currency transaction gains and losses are recog- income. The net foreign exchange related gains/(losses) nized in both net income and other comprehensive income. are analyzed in the table below: For debt securities classified as available-for-sale, the Table 26: Foreign Currency Transaction Gains and Losses on Non-Trading Activities FOR THE YEAR ENDED JUNE 30 (US$ in millions) 2024 2023 VARIANCE Reported in Net Income $ (115) $ (86) $ (29) Reported in Other Comprehensive Income, net of reclassifications to net income upon sale or repayment 100 111 (11) Total $ (15) $ 25 $ (40) IFC 2024 ANNUAL REPORT FINANCIALS  47 NET UNREALIZED GAINS AND LOSSES ON (i) market borrowings with associated currency or interest NON-TRADING FINANCIAL INSTRUMENTS rate swaps; (ii) certain loans, debt securities and associ- ated derivatives; and (iii) borrowings from IDA. IFC accounts for certain financial instruments at fair value with unrealized gains and losses on such finan- cial instruments being reported in net income, namely: Table 27: Net Unrealized Gains (Losses) on Non-Trading Financial Instruments FOR THE YEAR ENDED JUNE 30 (US$ in millions) 2024 2023 Unrealized gains (losses) on the loan and debt securities portfolio carried at fair value $ 280 $ (46) Unrealized (losses) gains on associated derivatives (98) 221 Unrealized gains on loans, debt securities and associated derivatives 182 175 Unrealized (losses) gains on borrowings from market and IDA (627) 270 Unrealized gains (losses) on associated derivatives 573 (320) Unrealized losses on borrowings from market, IDA and associated derivatives (54) (50) Net unrealized gains on non-trading financial instruments accounted for at fair value $ 128 $ 125 IFC reported $182 million of unrealized gains on loans, IFC reported $54 million of unrealized losses on borrow- debt securities, net of associated derivatives in FY24. ings from market sources and IDA, net of associated The unrealized losses on associated derivatives of derivatives in FY24. These net after-swap unrealized $98 million in FY24, consists of $75 million losses on cli- losses comprised losses on U.S. dollar, British pound and ent risk management swaps mainly on Euro interest rate Japanese yen portfolios. swaps, and an additional $13 million losses on lending related swaps mainly in Euro, U.S. dollar and Colombian peso portfolios in FY24. 48  IFC 2024 ANNUAL REPORT FINANCIALS OTHER COMPREHENSIVE INCOME UNREALIZED GAINS AND LOSSES ON DEBT SECURITIES AND BORROWINGS Table 28: Other Comprehensive Income — Unrealized Gains and Losses on Debt Securities and Borrowings FOR THE YEAR ENDED JUNE 30 (US$ in millions) 2024 2023 Net unrealized gains and losses on debt securities arising during the period: Unrealized gains $ 151 $ 275 Unrealized losses (41) (155) Reclassification adjustment for realized gains and credit-related portion of impairments that were recognized in net income 11 (58) Net unrealized gains on debt securities $ 121 $ 62 Net unrealized gains and losses attributable to instrument-specific credit risk on borrowings at fair value under the Fair Value Option: Unrealized gains $ 439 $ 474 Unrealized losses (377) (536) Reclassification adjustment for realized gains included in net income upon derecognition of borrowings 12 12 Net unrealized gains (losses) on borrowings $ 74 $ (50) Total unrealized gains on debt securities and borrowings $ 195 $ 12 Net unrealized gains on debt securities in FY24 included cause volatility in comprehensive income. Given its long- foreign currency gains of $100 million on debt securities term planning horizon for pension plans, Management is accounted for as available-for-sale, primarily represent- focused mainly on ensuring that contributions to pension ing reversals of unrealized losses upon sales. plans appropriately reflect long-term assumptions about asset returns and discount rates. Net unrealized gains on borrowings of $74 million was recognized through other comprehensive income in FY24 During FY24, IFC recorded a gain of $130 million (net unrealized losses of $50 million in FY23). This was ($127 million of unrecognized net actuarial gains and a mainly due to widening of IFC's credit spread in U.S. dollar, $3 million reduction of prior service cost). The decrease in Australian dollar and British pound issuance. the underfunded status of the portion of the pension plans, net of PEBP assets, was primarily due to the increase in UNRECOGNIZED NET ACTUARIAL GAINS AND the value of the Plan Assets due to higher-than-expected LOSSES AND UNRECOGNIZED PRIOR SERVICE assets returns. As the Plans are managed with a long- COSTS ON BENEFITS PLANS term horizon, results over shorter time periods may be impacted positively or negatively by market fluctuations. Unrecognized pension adjustments largely represent the For discussion of IFC’s financial results for the year ended unrecognized net actuarial gains and losses on benefit June 30, 2023 as compared to the year ended June 30, plans. Actuarial gains and losses occur when actual results 2022, see Section VIII: Results of Operations in IFC’s differ from expected results in determining the funded Management’s Discussion and Analysis and Consolidated status of the pension plans. Since the pension plans are Financial Statements for the year ended June 30, 2023. long term, changes in asset returns and discount rates IFC 2024 ANNUAL REPORT FINANCIALS  49 SECTION IX. GOVERNANCE AND CONTROL SENIOR MANAGEMENT AND CHANGES The following is a list of the principal officers of IFC as of June 30, 2024: President Ajay Banga Managing Director Makhtar Diop Regional Vice President, Africa Sérgio Pimenta Regional Vice President, Europe, Latin America and the Caribbean Alfonso García Mora Regional Vice President, Middle East, Central Asia, Türkiye, Afghanistan and Pakistan Hela Cheikhrouhou Regional Vice President, Asia and the Pacific Riccardo Puliti Vice President, Cross-Cutting Solutions Emmanuel Nyirinkindi Vice President, Corporate Support Elena Bourganskaia Vice President, Economics and Private Sector Development Susan M. Lund Vice President and General Counsel, Legal, Institutional Risk, and Governance Ramit Nagpal Vice President, Industries Mohamed Gouled Vice President, Risk and Finance Federico Galizia Vice President, Treasury & Mobilization John Gandolfo The FY24 consolidated financial statements reflect the organization structure at June 30, 2024. Figure 29: Governance Structure BOARD OF GOVERNORS Audit Committee BOARD OF Committee on DIRECTORS Development Effectiveness Budget Committee Committee on Governance and Executive Directors’ Human Resources Committee PRESIDENT Administrative Matters BUSINESS CONDUCT IFC has procedures in place for receiving, retaining, and handling recommendations and concerns relating to busi- The WBG promotes a positive work environment in which ness conduct identified during the accounting, internal staff members understand their ethical obligations to the control and auditing processes. institutions. In support of this commitment, the institu- WBG staff rules clarify and codify the staff’s obliga- tions have in place a Code of Conduct. The WBG has both tions in reporting suspected fraud, corruption, or other an Ethics Help Line and a Fraud and Corruption hotline. misconduct that may threaten the operations or gover- A third-party service offers many methods of worldwide nance of the WBG. These rules also offer protection from communication. Reporting channels include telephone, retaliation. mail, email, or confidential submission through a website. 50  IFC 2024 ANNUAL REPORT FINANCIALS GENERAL GOVERNANCE AUDIT COMMITTEE IFC’s decision-making structure consists of the Board MEMBERSHIP of Governors, the Board of Directors (Board of Directors or the Board), the President, the Managing Director, The Audit Committee consists of eight Directors. Management and staff. The Board of Governors is the Membership in the Committee is determined by the Board, highest decision-making authority. Governors are based on nominations by the Chairman of the Board, fol- appointed by their member governments for a five-year lowing informal consultation with Directors. term, which is renewable. The Board of Governors may delegate authority to the Board of Directors to exercise KEY RESPONSIBILITIES any of its powers, except those reserved to the Board of Governors under IFC's Articles of Agreement. The Audit Committee is appointed by the Board for the primary purpose of assisting the Board in overseeing IFC’s finances, accounting, risk management, internal BOARD OF DIRECTORS controls and institutional integrity. Specific responsibil- ities include: In accordance with IFC's Articles of Agreement, Directors are appointed or elected every two years by their member • Oversight of the integrity of IFC’s financial statements. governments. The Board currently has 25 Directors who • Appointment, qualifications, independence and perfor- mance of the External Auditor. represent all member countries. Directors are neither offi- cers nor staff of IFC. The President is the only member of • Performance of the Group Internal Audit. the Board from management, and he serves as a non-vot- • Adequacy and effectiveness of financial and accounting policies and internal controls and the mechanisms to ing member and as Chairman of the Board. deter, prevent and penalize fraud and corruption in IFC The Board is required to consider proposals made by the operations and corporate procurement. President on the use of IFC’s net income: retained earnings • Effective management of financial, fiduciary, and com- and designation of retained earnings and on other poli- pliance risks in IFC. cies that affect its general operations. The Board is also • Oversight of the institutional arrangements and pro- responsible for presenting to the Board of Governors, at cesses for risk management across IFC. the Annual Meetings, audited accounts, an administrative In carrying out its role, the Audit Committee discusses budget, and an annual report on operations and policies financial issues and policies that affect IFC’s financial and other matters. position and capital adequacy with Management, exter- The Board and its committees are in continuous sessions nal auditors, and internal auditors. It recommends the based in Washington DC, as business requires. Each com- annual audited financial statements for approval to the mittee’s terms of reference establish its respective roles Board. The Audit Committee monitors and reviews devel- and responsibilities. As committees do not vote on issues, opments in corporate governance and its own role on an their role is primarily to serve the Board in discharging its ongoing basis. responsibilities. EXECUTIVE SESSIONS The committees are made up of eight members and func- tion under their respective stipulated terms of reference. Under the Audit Committee’s terms of reference, it These committees are as follows: may convene in executive session at any time, without • Audit Committee — assists the Board in overseeing IFC’s Management’s presence. The Audit Committee meets finances, accounting, risk management and internal separately in executive session with the external and controls (see further explanation below). internal auditors. • Budget Committee — assists the Board in approving IFC’s budget and in overseeing the preparation and exe- ACCESS TO RESOURCES AND TO MANAGEMENT cution of IFC’s business plans. The committee provides guidance to management on strategic directions. Throughout the year, the Audit Committee receives a • Committee on Development Effectiveness — supports large volume of information to enable it to carry out its the Board in assessing IFC’s development effectiveness, duties, and meets both formally and informally through- providing guidance on strategic directions, and monitor- out the year to discuss relevant matters. It has complete ing the quality and results of operations. access to Management, and reviews and discusses with • Committee on Governance and Executive Directors’ Management topics considered in its terms of reference. Administrative Matters  —  assists the Board on The Audit Committee has the authority to seek advice issues related to governance, the Board’s own effec- and assistance from outside legal, accounting, or other tiveness, and the administrative policy applicable to advisors as it deems necessary. Directors’ offices. • Human Resources Committee — strengthens the effi- ciency and effectiveness of the Board in discharging its oversight responsibility on IFC’s human resources strategy, policies and practices, and their alignment with the business needs of the organization. IFC 2024 ANNUAL REPORT FINANCIALS  51 AUDITOR INDEPENDENCE reporting. See “Management’s report regarding effec- tiveness of Internal Control over Financial Reporting” for The appointment of the external auditor for IFC is gov- additional information. erned by a set of Board-approved principles. These include: IFC’s internal control over financial reporting was audited by Deloitte & Touche, LLP and their report expresses an • Limits on the external auditor's provision of non-audit- related services unqualified opinion on the effectiveness of IFC's internal control over financial reporting as of June 30, 2024. See • Requiring all audit-related services to be pre-approved on a case-by-case basis by the Board, upon recommen- “Independent Auditor’s Report” for additional information. dation of the Audit Committee, and DISCLOSURE CONTROLS AND PROCEDURES • Renewal of the external audit contract every five years, with a limit of two consecutive terms and mandatory rotation thereafter. Disclosure controls and procedures are designed to ensure that information required to be disclosed is gathered and The external auditor may provide non-prohibited, non- communicated to Management, as appropriate, to allow audit-related services subject to monetary limits. Broadly, timely decisions regarding required disclosure by IFC. the list of prohibited non-audit services includes those Management conducted an evaluation of the effective- that would put the external auditor in the roles typically ness of such controls and procedures and the President, performed by management and in a position of auditing the Managing Director and Executive Vice President, the their own work, such as accounting services, internal Vice President, Risk and Finance and the Controller have audit services, and provision of investment advice. The concluded that these controls and procedures were effec- total non-audit services fees over the term of the relevant tive as of June 30, 2024. external audit contract shall not exceed 70 percent of the audit fees over the same period. Communication between the external auditor and the Audit Committee is ongoing and carried out as often as deemed necessary by either party. The Audit Committee meets periodically with the external auditor and individ- ual committee members have independent access to the external auditor. IFC’s external auditors also follow the communication requirements with the Audit Committees as set out under generally accepted auditing standards in the United States. EXTERNAL AUDITORS The external auditor is appointed to a five-year term, with a limit of two consecutive terms, and is subject to annual reappointment based on the recommendation of the Audit Committee and approval of a resolution by the Board. In May 2022, IFC’s Directors approved Deloitte & Touche, LLP as IFC’s external auditor for a second five-year term commencing in FY24. INTERNAL CONTROL INTERNAL CONTROL OVER FINANCIAL REPORTING Each fiscal year, Management evaluates the internal con- trols over financial reporting to determine whether any changes made in these controls during the fiscal year materially affect, or would be reasonably likely to mate- rially affect IFC’s internal control over financial reporting. The internal control framework promulgated by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), “Internal Control  —  Integrated Framework (2013)” provides guidance for designing, implementing and conducting internal control and assess- ing its effectiveness. IFC uses the 2013 COSO framework to assess the effectiveness of the internal control over financial reporting. As of June 30, 2024, management maintained effective internal control over financial 52  IFC 2024 ANNUAL REPORT FINANCIALS SECTION X. IFC's Equity Mobilization Department: IFC's Equity Mobilization Department (formally IFC Asset Management APPENDIX Company, or AMC), a division of IFC effective January 31, 2020, invests third-party capital and IFC capital, enabling outside investors to invest alongside IFC in developing markets. Investors in funds managed by AMC have included sovereign wealth funds, national pension GLOSSARY OF TERMS funds, multilateral and bilateral development institutions, national development agencies and international financial institutions. These funds collectively are referred to as Articles: IFC’s Articles of Agreement. the AMC Funds. Board: The Board of Directors as established by IFC’s Income Available for Designations: IFC uses Income Articles of Agreement. Available for Designations (a non-U.S. GAAP measure) Capital Adequacy: A measure of IFC’s ability to withstand as a basis for designations of retained earnings. Prior to unexpected shocks as IFC is required to maintain a min- FY24, Income Available for Designations comprised net imum level of capital available (Balance Sheets Capital income excluding unrealized gains and losses on invest- less Designated Retained Earnings minus Pension surplus ments and borrowings as well as grants to IDA, which of each pension plan minus PCRF assets) equal to total were suspended in FY20 following the conclusion of IDA18. potential losses for all on- and off-balance sheet expo- In FY24, IFC updated the calculation of Income Available sures estimated at levels consistent with maintaining for Designations to exclude income from PCRF, aligning IFC's AAA rating. it with its intended use for post-retirement contributions. Capital Available: Under IFC’s economic capital frame- Paris Agreement: The Paris Agreement is the univer- work, resources available to absorb potential losses, sal, legally binding global climate change agreement, calculated as: IFC’s balance sheets capital minus desig- adopted at the Paris climate conference in December nated retained earnings minus pension surplus of each 2015. It sets out a global framework to avoid dangerous pension plan minus PCRF assets. climate change by limiting global warming and aims to strengthen countries’ ability to deal with the impacts of Capital Required: Aggregate minimum Economic Capital climate change and support them in their efforts. required to maintain IFC’s AAA rating. Qualitative Overlay: Qualitative Overlay is an adjust- Core Mobilization: Non-IFC financing or risk sharing ment applied to the calculated loan loss reserve based on arranged on commercial terms due to the active and qualitative factors, reflecting potential risks and uncer- direct involvement of IFC for the benefit of a Client. A tainties that are prevailing and may not be fully captured Client is a legal entity to which IFC provides Advisory by quantitative models. Services (AS) or Investment Services (IS). Spring Meetings: The Spring Meetings of the International Core Value: All institutions of the World Bank Group have Monetary Fund and the Boards of Governors of the World collectively adopted these core values: Impact, integrity, Bank Group is a gathering that features the Development respect, teamwork, and innovation. Committee and International Monetary and Financial Capital Utilization Ratio (CUR): A ratio to measure IFC's Committee plenary session to discuss work of the capital adequacy expressed as Capital Required divided institutions. by Capital Available. Upstream: Upstream activities aim to unlock and/or cre- Credit spread: A credit spread is the difference in yield ate new, additional investment opportunities for which between two bonds of similar maturity but different IFC is both willing and likely to be a financial partner. credit quality. Upstream activities comprise IFC engagements which aim to (i) Support the creation and realization of spe- Economic Capital (EC): Minimum U.S. dollar amount of cific projects, for which IFC is a likely finance partner capital required to meet expected and unexpected losses. (Transaction Upstream); and/or have a wider market or For Financial Product(s), calculated as Exposure at Risk sectoral impact to facilitate private sector investment, (EAR) multiplied by Economic Capital Ratio for relevant for which in turn IFC could be a potential financing partner product/sub-product. (Creating Markets Upstream). IDA18: IDA's Eighteenth Replenishment of Resources. U.S. GAAP: Accounting principles generally accepted in IDA19: IDA's Nineteenth Replenishment of Resources. the United States of America. IDA20: IDA’s Twentieth Replenishment of Resources. World Bank: The World Bank consists of IBRD and IDA. IDA-eligible countries: Countries eligible to borrow from World Bank Group (WBG): The World Bank Group con- IDA on concessional terms. sists of IBRD, IDA, IFC, MIGA, and ICSID. IFC 2024 ANNUAL REPORT FINANCIALS  53 ABBREVIATIONS AND ACRONYMS ABS Asset-Backed Securities GCI General Capital Increase AIMM Anticipated Impact Measurement GEI Gender and Economic Inclusion and Monitoring GEMs Global Emerging Markets (GEMs) ALM Asset Liability Management GP General Partner AML/CFT Anti-Money Laundering/ GTFP Global Trade Finance Program Combating the Financing of Terrorism GTLP Global Trade Liquidity Program AOCI Accumulated Other GTSF Global Trade Supplier Program Comprehensive Income GTST General Structured Trade BFC Blended Finance and Donor Funds Finance Program Committee IBRD International Bank for BOP Base of the Pyramid Reconstruction and Development CAO Compliance Advisory/Ombudsman ICSID International Centre for Settlement of Investment Disputes CBR Business Risk and Compliance Department IDA International Development Association CECL Current Expected Credit Loss IDA-PSW IDA Private Sector Window CEG Sustainability and Gender Solutions Department IEG Independent Evaluation Group CES Environmental and Social Policy IFC or the and Risk Department Corporation International Finance Corporation CMAW Creating Markets Advisory Window IFIs International Financial Institutions COSO Committee of Sponsoring INT Integrity Vice Presidency Organizations of the Treadway ITSG Information and Technology Commission Steering Group CR Credit Rating LCR Liquidity Coverage Ratios CRC Corporate Risk Committee LIBOR London Interbank Offered Rate CRM Client Risk Management LTF Long-Term Finance CRWG Climate Risk Working Group MBS Mortgage-Backed Securities CSO Department of Special Operations MCPP Managed Co-Lending CUR Capital Utilization Ratio Portfolio Program DARP Distressed Asset Recovery Program MDBs Multilateral Development Banks DFIs Development Financial Institutions MD Managing Director E&S Environmental and Social MD&A Management’s Discussion and Analysis EIJ Ethics and Internal Justice MIGA Multilateral Investment Guarantee ERM Enterprise Risk Management Agency Framework ML/TF Money Laundering And ESG Environmental, Social Terrorist Financing & Governance MT IFC’s Management Team ESRR E&S Risk Rating NAV Net Asset Value FCA Financial Conduct Authority NPLs Non-performing Loans FCS Fragile and Conflict-Affected Situations OCI Other Comprehensive Income FMTAAS Funding Mechanism for Technical ORM IFC’s Operational Risk Assistance and Advisory Services Management 54  IFC 2024 ANNUAL REPORT FINANCIALS PBAC Pension Benefits Administration Committee PCRF Post-retirement Contributions Reserve Fund PEBP Post-Employment Benefit Plan PFC Pension Finance Committee PPP Public-Private Partnership PRI Political Risk Insurance PSW Private Sector Window RA Risk Appetite RCSA Risk and Control Self-Assessments RIs Risk Indicators RSBP Retired Staff Benefits Plan SCI Selective Capital Increase SLAs Service Level Agreements SMEs Small and Medium Enterprises SOFR Secured Overnight Financing Rate SRP Staff Retirement Plan STF Short-Term Finance T3PC Tier III Project Committee VPU Vice Presidency Unit IFC 2024 ANNUAL REPORT FINANCIALS  55 CONSOLIDATED FINANCIAL STATEMENTS AND INTERNAL CONTROL REPORTS 56  IFC 2024 ANNUAL REPORT FINANCIALS Page 58 Management's Report Regarding Effectiveness of Internal Control over Financial Reporting August 7, 2024 The management of the International Finance Corporation (IFC) is responsible for the preparation, integrity, and fair presentation of its published consolidated financial statements. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP) and include amounts based on informed judgments and estimates made by management. The consolidated financial statements have been audited by an independent audit firm, which was given unrestricted access to all financial records and related data, including minutes of all meetings of the Board of Directors and their Committees. Management believes that all representations made to the independent auditors during their audit of IFC's consolidated financial statements and audit of its internal control over financial reporting were valid and appropriate. The independent auditors’ reports accompany the audited consolidated financial statements. Management is responsible for establishing and maintaining effective internal control over financial reporting for financial statement presentations in conformity with US GAAP. Management maintains a comprehensive system of controls intended to ensure that transactions are executed in accordance with management's authorization, assets are safeguarded, and financial records are reliable. The system of internal control contains monitoring mechanisms, and actions are taken to correct deficiencies identified. Management believes that internal control over financial reporting supports the integrity and reliability of the external consolidated financial statements. There are inherent limitations in the effectiveness of any internal control, including the possibility of human error and the circumvention or overriding of controls. Accordingly, even effective internal controls can provide only reasonable assurance with respect to financial statement preparation. Further, because of changes in conditions, the effectiveness of internal controls may vary over time. IFC assessed its internal control over financial reporting for financial statement presentation in conformity with US GAAP as of June 30, 2024. This assessment was based on the criteria for effective internal control over financial reporting described in the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based upon this assessment, management believes that IFC maintained effective internal control over financial reporting presented in conformity with US GAAP as of June 30, 2024. The independent audit firm that audited the consolidated financial statements has issued an Independent Auditor’s Report which expresses an opinion on IFC’s internal control over financial reporting. The Board of Directors has appointed an Audit Committee responsible for monitoring the accounting practices and internal controls of IFC. The Audit Committee is comprised entirely of Directors who are independent of IFC's management. The Audit Committee is responsible for recommending to the Board of Directors the selection of independent auditors. It meets periodically with management, the independent auditors, and the internal auditors to ensure that they are carrying out their responsibilities. The Audit Committee is responsible for performing an oversight role by reviewing and monitoring the financial, accounting and auditing procedures of IFC in addition to reviewing IFC's financial reports. The independent auditors and the internal auditors have full and free access to the Audit Committee, with or without the presence of management, to discuss the adequacy of internal control over financial reporting and any other matters which they believe should be brought to the attention of the Audit Committee. IFC 2024 ANNUAL REPORT FINANCIALS  57 58  IFC 2024 ANNUAL REPORT FINANCIALS Page 60 INDEPENDENT AUDITOR’S REPORT President and Board of Directors International Finance Corporation Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of International Finance Corporation and its consolidated entities ("IFC") as of June 30, 2024, based on the criteria established in the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, IFC maintained, in all material respects, effective internal control over financial reporting as of June 30, 2024, based on the criteria established in the Internal Control - Integrated Framework (2013) issued by COSO. We also have audited, in accordance with auditing standards generally accepted in the United States of America (GAAS), the consolidated financial statements as of and for the year ended June 30, 2024 of IFC, and our report dated August 7, 2024, expressed an unmodified opinion on those financial statements. Basis for Opinion We conducted our audit in accordance with GAAS. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of Internal Control over Financial Reporting section of our report. We are required to be independent of IFC and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Responsibilities of Management for Internal Control over Financial Reporting Management is responsible for designing, implementing, and maintaining effective internal control over financial reporting, and for its assessment about the effectiveness of internal control over financial reporting, included in the accompanying Management's Report Regarding Effectiveness of Internal Control over Financial Reporting. Auditor’s Responsibilities for the Audit of Internal Control over Financial Reporting Our objectives are to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects and to issue an auditor’s report that includes our opinion on internal control over financial reporting. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit of internal control over financial reporting conducted in accordance with GAAS will always detect a material weakness when it exists. In performing an audit of internal control over financial reporting in accordance with GAAS, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Obtain an understanding of internal control over financial reporting, assess the risks that a material weakness exists, and test and evaluate the design and operating effectiveness of internal control over financial reporting based on the assessed risk. Definition and Inherent Limitations of Internal Control over Financial Reporting An entity's internal control over financial reporting is a process effected by those charged with governance, management, and other personnel, designed to provide reasonable assurance regarding the preparation of reliable financial statements in accordance with accounting principles generally accepted in the United States of America. An entity's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the entity; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the entity are being made only in accordance with authorizations of management and those charged with governance; and (3) provide reasonable assurance regarding prevention, or timely detection and correction of unauthorized acquisition, use, or disposition of the entity's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent, or detect and correct, misstatements. Also, projections of any assessment of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. August 7, 2024 IFC 2024 ANNUAL REPORT FINANCIALS  59 Page 61 INDEPENDENT AUDITOR’S REPORT President and Board of Directors International Finance Corporation Opinion We have audited the consolidated financial statements of International Finance Corporation and its consolidated entities ("IFC"), which comprise the consolidated balance sheets as of June 30, 2024 and 2023, and the related consolidated statements of operations, comprehensive income, changes in capital and cash flows, for each of the three years in the period ended June 30, 2024, and the related notes to the consolidated financial statements (collectively referred to as the "consolidated financial statements"). In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of IFC as of June 30, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2024, in accordance with accounting principles generally accepted in the United States of America. We have also audited, in accordance with auditing standards generally accepted in the United States of America (GAAS), IFC's internal control over financial reporting as of June 30, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated August 7, 2024, expressed an unmodified opinion on IFC’s internal control over financial reporting. Basis for Opinion We conducted our audits in accordance with GAAS. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are required to be independent of IFC and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Responsibilities of Management for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about IFC’s ability to continue as a going concern for one year after the date that the consolidated financial statements are issued. Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements. In performing an audit in accordance with GAAS, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. 60  IFC 2024 ANNUAL REPORT FINANCIALS Page 62 • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the consolidated financial statements. • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about IFC’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit. Report on Supplemental Information Our audits were conducted for the purpose of forming an opinion on the consolidated financial statements as a whole. The consolidated statement of capital stock and voting power as of June 30, 2024 ("supplemental information") listed in the table of contents is presented for the purpose of additional analysis and is not a required part of the consolidated financial statements. This supplemental information is the responsibility of IFC’s management and was derived from and relates directly to the underlying accounting and other records used to prepare the consolidated financial statements. Such information has been subjected to the auditing procedures applied in our audits of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated financial statements themselves, and other additional procedures in accordance with GAAS. In our opinion, such information is fairly stated in all material respects in relation to the consolidated financial statements as a whole. Other Information Included in Management’s Discussion and Analysis and Consolidated Financial Statements Management is responsible for the other information included in Management’s Discussion and Analysis and Consolidated Financial Statements. The other information comprises the information included in Management’s Discussion and Analysis and Consolidated Financial Statements but does not include the consolidated financial statements and our auditor’s report thereon. Our opinion on the consolidated financial statements does not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audits of the consolidated financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the consolidated financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. August 7, 2024 IFC 2024 ANNUAL REPORT FINANCIALS  61 INTERNATIONAL FINANCE CORPORATION Page 63 CONSOLIDATED BALANCE SHEETS as of June 30, 2024 and June 30, 2023 (US$ in millions) June 30, 2024 June 30, 2023 Assets Cash and due from banks – Note C.................................................................................................................. $ 781 $ 1,051 Time deposits – Note C....................................................................................................................................... 9,752 10,215 Trading securities – Notes C and R .................................................................................................................. 28,555 31,020 (includes $4,420 and $6,446 securities pledged to creditors under repurchase and collateral agreements as of June 30, 2024 and June 30, 2023, respectively) ........................................................ Securities purchased under resale agreements and receivable for cash collateral pledged – Notes C, R and W........................................................................................................................................................ 1,226 5,192 Investments – Notes B, D, E, F, G, R and T Loans (includes $1,789 and $1,506 loans held at fair value as of June 30, 2024 and June 30, 2023, respectively; net of reserve against losses of $1,081 and $1,209 at June 30, 2024 and June 30, 2023, respectively)............................................................................................................................... – Notes D, E, R and T ..................................................................................................................................... 36,437 31,414 Equity investments – Notes B, D, G, R and T ................................................................................................................................ 11,121 10,778 Debt securities – Notes D, F, R and T .......................................................................................................... 11,189 9,310 (includes available-for-sale securities of $845 and $1,394, with associated amortized cost of $962 and $1,632, and reserve against credit losses of $34 and $21 as of June 30, 2024 and June 30, 2023, respectively) ..................................................................................................................... Total investments ................................................................................................................................................. 58,747 51,502 Derivative assets – Notes B, C, Q, R and W ................................................................................................... 2,954 5,722 Receivables and other assets – Notes B, C, J, T and U .............................................................................. 6,172 5,845 Total assets $ 108,187 $ 110,547 Liabilities and capital Liabilities Securities sold under repurchase agreements and payable for cash collateral received – Notes C and W................................................................................................................................................................. $ 1,541 $ 6,631 Borrowings outstanding – Notes B, K and R From market and other sources at amortized cost ..................................................................................... 2,536 3,327 From market sources at fair value................................................................................................................. 53,049 48,873 From International Development Association at fair value ........................................................................ 170 243 Total borrowings ................................................................................................................................................... 55,755 52,443 Derivative liabilities – Notes B, C, Q, R and W ............................................................................................... 7,356 11,195 Payables and other liabilities – Notes B, C, E, L, T, U and V........................................................................ 6,063 5,240 Total liabilities........................................................................................................................................................ 70,715 75,509 Capital Authorized capital, shares of $1,000 par value each – Note M ............................................................... (25,079,991 shares as of June 30, 2024 and June 30, 2023) .................................................................. Subscribed capital............................................................................................................................................ 24,104 23,939 Less: unpaid portion of subscriptions ........................................................................................................... (884) (1,343) Paid-in capital ....................................................................................................................................................... 23,220 22,596 Accumulated other comprehensive income – Note O.................................................................................... 957 632 Retained earnings – Note O............................................................................................................................... 13,295 11,810 Total capital ........................................................................................................................................................... 37,472 35,038 Total liabilities and capital $ 108,187 $ 110,547 The notes to consolidated financial statements are an integral part of these statements. 62  IFC 2024 ANNUAL REPORT FINANCIALS INTERNATIONAL FINANCE CORPORATION Page 64 CONSOLIDATED STATEMENTS OF OPERATIONS for the three years ended June 30, 2024, June 30, 2023 and June 30, 2022 (US$ in millions) 2024 2023 2022 Income from investments Income from loans and guarantees, including realized gains and losses on loans and associated derivatives – Note E ............................................................................... $ 3,204 $ 2,290 $ 1,156 Provision for losses on loans, off-balance sheet credit exposures and other receivables – Note E .......................................................................................................... (9) (22) (126) Income from equity investments and associated derivatives – Note G ......................... 142 191 208 Income from debt securities, including realized gains and losses on debt securities and associated derivatives – Note F ............................................................................... 811 518 414 Provision for losses on available-for-sale debt securities – Note F ................................ (12) (7) (14) Total income from investments 4,136 2,970 1,638 Income (loss) from liquid asset trading activities – Note C .............................................. 2,391 1,464 (413) Charges on borrowings.......................................................................................................... (3,815) (2,598) (302) Income from investments and liquid asset trading activities, after charges on borrowings 2,712 1,836 923 Other income Upstream and Advisory services income – Note U ........................................................... 268 247 233 Service fees ............................................................................................................................. 131 128 142 Other – Note N ........................................................................................................................ 188 143 44 Total other income 587 518 419 Other expenses Administrative expenses – Notes B and V ......................................................................... (1,516) (1,430) (1,441) Upstream and Advisory services expenses – Note U....................................................... (339) (317) (287) Other, net – Note V................................................................................................................. 28 26 75 Total other expenses (1,827) (1,721) (1,653) Foreign currency transaction (losses) gains on non-trading activities ........................... (115) (86) 76 Income (loss) before net unrealized gains and losses on non-trading financial instruments accounted for at fair value 1,357 547 (235) Net unrealized gains (losses) on non-trading financial instruments accounted for at fair value – Note P .............................................................................................................. 128 125 (229) Net income (loss) – Note S $ 1,485 $ 672 $ (464) The notes to consolidated financial statements are an integral part of these statements. IFC 2024 ANNUAL REPORT FINANCIALS  63 INTERNATIONAL FINANCE CORPORATION Page 65 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME for the three years ended June 30, 2024, June 30, 2023 and June 30, 2022 (US$ in millions) 2024 2023 2022 Net income (loss) – Note S $ 1,485 $ 672 $ (464) Other comprehensive income Unrealized gains and losses on debt securities Net unrealized gains (losses) on available-for-sale debt securities arising during the year ....................................................................................................................................... 110 120 (254) Reclassification adjustment for realized gains included in net income (income from debt securities and realized gains and losses on debt securities and associated derivatives) .......................................................................................................................... (1) (65) (38) Reclassification adjustment for impairments related to credit loss included in net income ................................................................................................................................. 12 7 14 Net unrealized gains (losses) on debt securities 121 62 (278) Unrealized gains and losses on borrowings Net unrealized gains (losses) arising during the year attributable to instrument- specific credit risk on borrowings at fair value under the fair value option ................ $ 62 (62) 239 Reclassification adjustment for realized gains included in net income upon derecognition of borrowings .............................................................................................. 12 12 1 Net unrealized gains (losses) on borrowings 74 (50) 240 Net unrecognized net actuarial gains and unrecognized prior service credits on benefit plans – Note V........................................................................................................ 130 702 1,074 Total other comprehensive income 325 714 1,036 Total comprehensive income $ 1,810 $ 1,386 $ 572 The notes to consolidated financial statements are an integral part of these statements. 64  IFC 2024 ANNUAL REPORT FINANCIALS INTERNATIONAL FINANCE CORPORATION Page 66 CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL for the three years ended June 30, 2024, June 30, 2023 and June 30, 2022 Accumulated other Undesignated Designated Total comprehensive retained retained retained income (loss) – Paid-in Total (US$ in millions) earnings earnings earnings Note O capital capital As of June 30, 2021 $ 11,395 $ 207 $ 11,602 $ (1,118) $ 20,760 $ 31,244 Year ended June 30, 2022 Net loss ............................................................................. (464) (464) (464) Other comprehensive income ....................................... 1,036 1,036 Designation of retained earnings – Note O ................. (161) 161 — — Expenditures against designated retained earnings – Note O........................................................................ 70 (70) — — Payments received for subscribed capital................... 989 989 As of June 30, 2022 $ 10,840 $ 298 $ 11,138 $ (82) $ 21,749 $ 32,805 Year ended June 30, 2023 Net income ....................................................................... 672 672 672 Other comprehensive income ....................................... 714 714 Designations of retained earnings – Note O ............... (6) 6 — — Expenditures against designated retained earnings – Note O........................................................................ 83 (83) — — Payments received for subscribed capital................... 847 847 As of June 30, 2023 $ 11,589 $ 221 $ 11,810 $ 632 $ 22,596 $ 35,038 Year ended June 30, 2024 Net income ....................................................................... 1,485 1,485 1,485 Other comprehensive income ....................................... 325 325 Designations of retained earnings – Note O ............... (60) 60 — — Expenditures against designated retained earnings – Note O........................................................................ 119 (119) — — Payments received for subscribed capital................... 624 624 As of June 30, 2024 $ 13,133 $ 162 $ 13,295 $ 957 $ 23,220 $ 37,472 The notes to consolidated financial statements are an integral part of these statements. IFC 2024 ANNUAL REPORT FINANCIALS  65 INTERNATIONAL FINANCE CORPORATION Page 67 CONSOLIDATED STATEMENTS OF CASH FLOWS for the three years ended June 30, 2024, June 30, 2023 and June 30, 2022 (US$ in millions) 2024 2023 2022 Cash flows from investing activities Loan disbursements.......................................................................................................................................... $(14,235) $(13,354) $ (9,719) Investments in equity securities ...................................................................................................................... (1,535) (1,034) (1,471) Investments in debt securities ......................................................................................................................... (3,115) (3,818) (1,622) Loan repayments............................................................................................................................................... 8,860 8,209 8,286 Debt securities repayments ............................................................................................................................. 1,216 1,066 898 Proceeds from sales of loans .......................................................................................................................... 2 67 11 Proceeds from sales of equity investments .................................................................................................. 1,394 1,405 2,567 Proceeds from sales of debt securities .......................................................................................................... 36 81 185 Loan origination fees received ........................................................................................................................ 109 65 72 Other investing activities, net .......................................................................................................................... (9) — — Investment in fixed assets................................................................................................................................ (91) (62) (50) Net cash used in investing activities (7,368) (7,375) (843) Cash flows from financing activities Medium and long-term borrowings Issuance ......................................................................................................................................................... 17,242 19,167 14,018 Retirement ...................................................................................................................................................... (14,142) (14,393) (15,072) Change in derivatives associated with borrowings, net .......................................................................... (203) (364) (160) Short-term borrowings, net ............................................................................................................................... (306) (308) 640 Capital subscriptions.......................................................................................................................................... 624 847 1,446 Net cash provided by financing activities 3,215 4,949 872 Cash flows from operating activities Net income (loss) ................................................................................................................................................ 1,485 672 (464) Adjustments to reconcile net income or loss to net cash provided by (used in) operating activities: Realized losses (gains) on loans and associated derivatives, net ............................................................ 10 (8) 9 Realized gains on debt securities and associated derivatives, net ........................................................... (17) (75) (112) Gains on equity investments and related derivatives, net .......................................................................... (14) (27) (25) Net realized gains on extinguishment of borrowings ................................................................................... (4) (1) (8) Provision ............................................................................................................................................................. 21 29 140 Accretion of net discounts, premiums and loan origination fees ............................................................... 43 47 (54) Depreciation expenses ..................................................................................................................................... 60 56 71 Foreign currency transaction losses (gains) on non-trading activities ...................................................... 115 86 (76) Net unrealized (gains) losses on non-trading financial instruments accounted for at fair value .......... (128) (125) 229 Net discounts paid on retirement of borrowings ........................................................................................... (134) (83) (3) Change in accrued income on loans and debt securities (after swaps), net ........................................... (210) (287) (49) Change in accrued expenses on borrowings (after swaps), net................................................................ 73 498 119 Change in liquid asset trading portfolio.......................................................................................................... 3,733 6,539 (9,570) Change in derivatives associated with loans and client risk management, net ...................................... 240 349 514 Change in payables and other liabilities ........................................................................................................ 207 306 267 Change in receivables and other assets ....................................................................................................... (176) (268) (349) Net cash provided by (used in) operating activities 5,304 7,708 (9,361) Change in cash and cash equivalents ............................................................................................................... 1,151 5,282 (9,332) Effect of exchange rate changes on cash and cash equivalents .................................................................. (168) 195 (368) Net change in cash and cash equivalents......................................................................................................... 983 5,477 (9,700) Beginning cash and cash equivalents................................................................................................................ 8,799 3,322 13,022 Ending cash and cash equivalents $ 9,782 $ 8,799 $ 3,322 Composition of cash and cash equivalents Cash and due from banks .................................................................................................................................. 781 1,051 702 Time deposits with maturities under three months ........................................................................................ 9,001 7,748 2,620 Total cash and cash equivalents $ 9,782 $ 8,799 $ 3,322 The notes to consolidated financial statements are an integral part of these statements. 66  IFC 2024 ANNUAL REPORT FINANCIALS INTERNATIONAL FINANCE CORPORATION Page 68 CONSOLIDATED STATEMENTS OF CASH FLOWS for the three years ended June 30, 2024, June 30, 2023 and June 30, 2022 (US$ in millions) 2024 2023 2022 Supplemental disclosure Change in ending balances resulting from currency exchange rate fluctuations: Loans outstanding.............................................................................................................................................. $ (356) $ 114 $ (635) Debt securities .................................................................................................................................................... (175) 15 (454) Loan and debt security-related currency swaps ........................................................................................... 566 (115) 972 Borrowings .......................................................................................................................................................... 360 187 3,209 Borrowing-related currency swaps .................................................................................................................. (333) (173) (3,156) Charges on borrowings paid, net ........................................................................................................................ $ 3,875 $ 2,183 $ 186 Non-cash items: Loan and debt security conversion to equity, net.......................................................................................... $ 21 $ 101 $ 54 The notes to consolidated financial statements are an integral part of these statements. IFC 2024 ANNUAL REPORT FINANCIALS  67 INTERNATIONAL FINANCE CORPORATION Page 69 SUPPLEMENTAL INFORMATION: CONSOLIDATED STATEMENT OF CAPITAL STOCK AND VOTING POWER as of June 30, 2024 (US$ in thousands) Capital Stock Voting Power Capital Stock Voting Power Amount Percent Number of Percent Amount Percent Number of Percent Members paid of total votes of total Members paid of total votes of total Afghanistan .......................................... 1,727 0.01 9,063 0.04 Ecuador ........................................ 20,256 0.09 27,592 0.11 Albania.................................................. 11,099 0.05 18,435 0.07 Egypt, Arab Republic of ............. 102,017 0.44 109,353 0.44 Algeria .................................................. 68,309 0.29 75,645 0.31 El Salvador ................................... 702 0.00 8,038 0.03 Angola .................................................. 14,952 0.06 22,288 0.09 Equatorial Guinea ....................... 328 0.00 7,664 0.03 Antigua and Barbuda ......................... 99 0.00 7,435 0.03 Eritrea ........................................... 7,129 0.03 14,465 0.06 Argentina .............................................. 323,320 1.39 330,656 1.34 Estonia .......................................... 12,796 0.06 20,132 0.08 Armenia ................................................ 10,489 0.05 17,825 0.07 Eswatini ........................................ 5,812 0.03 13,148 0.05 Australia ............................................... 463,234 1.99 470,570 1.91 Ethiopia ......................................... 2,036 0.01 9,372 0.04 Austria .................................................. 193,216 0.83 200,552 0.82 Fiji .................................................. 4,151 0.02 11,487 0.05 Azerbaijan ............................................ 21,516 0.09 28,852 0.12 Finland .......................................... 146,844 0.63 154,180 0.63 Bahamas, The ..................................... 4,997 0.02 12,333 0.05 France ........................................... 1,132,088 4.88 1,139,424 4.63 Bahrain ................................................. 13,313 0.06 20,649 0.08 Gabon ........................................... 9,668 0.04 17,004 0.07 Bangladesh .......................................... 87,484 0.38 94,820 0.39 Gambia, The ................................ 717 0.00 8,053 0.03 Barbados .............................................. 2,752 0.01 10,088 0.04 Georgia ......................................... 14,579 0.06 21,915 0.09 Belarus ................................................. 42,439 0.18 49,775 0.20 Germany ....................................... 1,261,691 5.43 1,269,027 5.16 Belgium ................................................ 473,452 2.04 480,788 1.96 Ghana ........................................... 42,286 0.18 49,622 0.20 Belize .................................................... 1,348 0.01 8,684 0.04 Greece .......................................... 67,514 0.29 74,850 0.30 Benin ..................................................... 2,106 0.01 9,442 0.04 Grenada ........................................ 1,576 0.01 8,912 0.04 Bhutan .................................................. 5,490 0.02 12,826 0.05 Guatemala .................................... 8,265 0.04 15,601 0.06 Bolivia ................................................... 14,502 0.06 21,838 0.09 Guinea .......................................... 2,585 0.01 9,921 0.04 Bosnia and Herzegovina ................... 7,115 0.03 14,451 0.06 Guinea-Bissau ............................. 137 0.00 7,473 0.03 Botswana ............................................. 2,094 0.01 9,430 0.04 Guyana ......................................... 13,838 0.06 21,174 0.09 Brazil ..................................................... 423,812 1.83 431,148 1.75 Haiti ............................................... 6,267 0.03 13,603 0.06 Brunei Darussalam ............................. 2,503 0.01 9,839 0.04 Honduras ...................................... 4,407 0.02 11,743 0.05 Bulgaria ................................................ 56,666 0.24 64,002 0.26 Hungary ........................................ 117,492 0.51 124,828 0.51 Burkina Faso ....................................... 8,849 0.04 16,185 0.07 Iceland .......................................... 2,619 0.01 9,955 0.04 Burundi ................................................. 1,792 0.01 9,128 0.04 India............................................... 963,064 4.15 970,400 3.95 Cabo Verde .......................................... 114 0.00 7,450 0.03 Indonesia ...................................... 309,305 1.33 316,641 1.29 Cambodia ............................................. 3,943 0.02 11,279 0.05 Iran, Islamic Republic of............. 11,010 0.05 18,346 0.07 Cameroon ............................................ 11,076 0.05 18,412 0.07 Iraq ................................................ 6,349 0.03 13,685 0.06 Canada ................................................. 796,137 3.43 803,473 3.27 Ireland ........................................... 22,493 0.10 29,829 0.12 Central African Republic .................... 907 0.00 8,243 0.03 Israel ............................................. 26,000 0.11 33,336 0.14 Chad ..................................................... 10,400 0.04 17,736 0.07 Italy ................................................ 760,950 3.28 768,286 3.13 Chile ...................................................... 96,428 0.42 103,764 0.42 Jamaica ........................................ 32,648 0.14 39,984 0.16 China .................................................... 671,360 2.89 678,696 2.76 Japan ............................................ 1,800,442 7.75 1,807,778 7.35 Colombia .............................................. 133,679 0.58 141,015 0.57 Jordan ........................................... 7,175 0.03 14,511 0.06 Comoros ............................................... 107 0.00 7,443 0.03 Kazakhstan .................................. 35,355 0.15 42,691 0.17 Congo, Democratic Republic of........ 19,833 0.09 27,169 0.11 Kenya ............................................ 30,811 0.13 38,147 0.16 Congo, Republic of ............................. 999 0.00 8,335 0.03 Kiribati ........................................... 91 0.00 7,427 0.03 Costa Rica ........................................... 10,092 0.04 17,428 0.07 Korea, Republic of ...................... 308,769 1.33 316,105 1.29 Cote d'Ivoire......................................... 39,129 0.17 46,465 0.19 Kosovo .......................................... 14,231 0.06 21,567 0.09 Croatia .................................................. 27,614 0.12 34,950 0.14 Kuwait ........................................... 134,106 0.58 141,442 0.58 Cyprus .................................................. 20,936 0.09 28,272 0.11 Kyrgyz Republic .......................... 13,114 0.06 20,450 0.08 Czechia ................................................ 93,778 0.40 101,114 0.41 Lao People's Democratic 2,929 0.01 10,265 0.04 Republic ..................................... Denmark ............................................... 170,267 0.73 177,603 0.72 Latvia............................................. 20,113 0.09 27,449 0.11 Djibouti.................................................. 160 0.00 7,496 0.03 Lebanon ........................................ 1,029 0.00 8,365 0.03 Dominica .............................................. 1,153 0.00 8,489 0.03 Lesotho ......................................... 1,474 0.01 8,810 0.04 Dominican Republic ........................... 9,050 0.04 16,386 0.07 Liberia ........................................... 1,580 0.01 8,916 0.04 The notes to consolidated financial statements are an integral part of these statements. 68  IFC 2024 ANNUAL REPORT FINANCIALS INTERNATIONAL FINANCE CORPORATION Page 70 SUPPLEMENTAL INFORMATION: CONSOLIDATED STATEMENT OF CAPITAL STOCK AND VOTING POWER as of June 30, 2024 (US$ in thousands) Capital Stock Voting Power Capital Stock Voting Power Amount Percent Number of Percent Amount Percent Number of Percent Members paid of total votes of total Members paid of total votes of total Libya ..................................................... 419 0.00 7,755 0.03 Saudi Arabia................................. 583,805 2.51 591,141 2.40 Lithuania ............................................... 22,912 0.10 30,248 0.12 Senegal......................................... 17,986 0.08 25,322 0.10 Luxembourg ......................................... 23,835 0.10 31,171 0.13 Serbia ............................................ 19,760 0.09 27,096 0.11 Madagascar ......................................... 6,834 0.03 14,170 0.06 Seychelles .................................... 206 0.00 7,542 0.03 Malawi .................................................. 13,892 0.06 21,228 0.09 Sierra Leone ................................ 2,730 0.01 10,066 0.04 Malaysia ............................................... 126,614 0.55 133,950 0.54 Singapore ..................................... 8,789 0.04 16,125 0.07 Maldives ............................................... 709 0.00 8,045 0.03 Slovak Republic........................... 46,629 0.20 53,965 0.22 Mali........................................................ 5,274 0.02 12,610 0.05 Slovenia ........................................ 16,896 0.07 24,232 0.10 Malta ..................................................... 15,807 0.07 23,143 0.09 Solomon Islands .......................... 282 0.00 7,618 0.03 Marshall Islands .................................. 5,055 0.02 12,391 0.05 Somalia ......................................... 633 0.00 7,969 0.03 Mauritania ............................................ 1,632 0.01 8,968 0.04 South Africa .................................. 132,805 0.57 140,141 0.57 Mauritius ............................................... 17,482 0.08 24,818 0.10 South Sudan ................................ 14,334 0.06 21,670 0.09 Mexico .................................................. 232,794 1.00 240,130 0.98 Spain ............................................. 401,622 1.73 408,958 1.66 Micronesia, Federated States of ...... 5,673 0.02 13,009 0.05 Sri Lanka ...................................... 65,217 0.28 72,553 0.30 Moldova ................................................ 10,068 0.04 17,404 0.07 St. Kitts and Nevis....................... 4,864 0.02 12,200 0.05 Mongolia ............................................... 1,769 0.01 9,105 0.04 St. Lucia ........................................ 564 0.00 7,900 0.03 Montenegro.......................................... 9,010 0.04 16,346 0.07 Sudan ............................................ 846 0.00 8,182 0.03 Morocco................................................ 90,135 0.39 97,471 0.40 Suriname ...................................... 4,727 0.02 12,063 0.05 Mozambique ........................................ 2,455 0.01 9,791 0.04 Sweden ......................................... 244,918 1.05 252,254 1.03 Myanmar .............................................. 5,078 0.02 12,414 0.05 Switzerland................................... 431,268 1.86 438,604 1.78 Namibia ................................................ 3,080 0.01 10,416 0.04 Syrian Arab Republic .................. 1,479 0.01 8,815 0.04 Nepal .................................................... 6,267 0.03 13,603 0.06 Tajikistan ....................................... 10,429 0.04 17,765 0.07 Netherlands ......................................... 518,561 2.23 525,897 2.14 Tanzania ....................................... 8,923 0.04 16,259 0.07 New Zealand ....................................... 47,437 0.20 54,773 0.22 Thailand ........................................ 129,382 0.56 136,718 0.56 Nicaragua ............................................. 7,508 0.03 14,844 0.06 Timor-Leste .................................. 6,667 0.03 14,003 0.06 Niger ..................................................... 1,121 0.00 8,457 0.03 Togo............................................... 6,161 0.03 13,497 0.05 Nigeria .................................................. 270,840 1.17 278,176 1.13 Tonga ............................................ 1,226 0.01 8,562 0.03 North Macedonia ................................ 5,932 0.03 13,268 0.05 Trinidad and Tobago ................... 31,352 0.14 38,688 0.16 Norway ................................................. 165,868 0.71 173,204 0.70 Tunisia .......................................... 33,486 0.14 40,822 0.17 Oman .................................................... 11,002 0.05 18,338 0.07 Türkiye .......................................... 167,498 0.72 174,834 0.71 Pakistan................................................ 183,167 0.79 190,503 0.77 Turkmenistan ............................... 6,176 0.03 13,512 0.05 Palau ..................................................... 191 0.00 7,527 0.03 Tuvalu ........................................... 520 0.00 7,856 0.03 Panama ................................................ 9,856 0.04 17,192 0.07 Uganda ......................................... 5,604 0.02 12,940 0.05 Papua New Guinea ............................ 8,745 0.04 16,081 0.07 Ukraine ......................................... 77,458 0.33 84,794 0.34 Paraguay .............................................. 3,324 0.01 10,660 0.04 United Arab Emirates ................. 30,750 0.13 38,086 0.15 Peru ...................................................... 83,589 0.36 90,925 0.37 United Kingdom ........................... 1,132,088 4.88 1,139,424 4.63 Philippines............................................ 121,863 0.52 129,199 0.53 United States ............................... 4,341,278 18.70 4,348,614 17.69 Poland .................................................. 74,893 0.32 82,229 0.33 Uruguay ........................................ 28,970 0.12 36,306 0.15 Portugal ................................................ 63,467 0.27 70,803 0.29 Uzbekistan ................................... 39,115 0.17 46,451 0.19 Qatar ..................................................... 12,581 0.05 19,917 0.08 Vanuatu......................................... 419 0.00 7,755 0.03 Romania ............................................... 48,335 0.21 55,671 0.23 Venezuela, Republica Bolivariana de ........................... 210,347 0.91 217,683 0.89 Russian Federation ............................ 784,211 3.38 791,547 3.22 Viet Nam ....................................... 3,401 0.01 10,737 0.04 Rwanda ................................................ 2,333 0.01 9,669 0.04 Yemen, Republic of ..................... 5,452 0.02 12,788 0.05 Samoa .................................................. 1,180 0.01 8,516 0.03 Zambia .......................................... 15,953 0.07 23,289 0.09 Sao Tome and Principe ...................... 3,347 0.01 10,683 0.04 Zimbabwe ..................................... 24,513 0.11 31,849 0.13 * May differ from the sum of individual percentages shown because of rounding Total June 30, 2024 23,220,348 100.00* 24,584,844 100.00* Total June 30, 2023 22,595,632 100.00* 23,923,300 100.00* The notes to consolidated financial statements are an integral part of these statements. IFC 2024 ANNUAL REPORT FINANCIALS  69 INTERNATIONAL FINANCE CORPORATION Page 71 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS PURPOSE The International Finance Corporation (IFC), an international organization, was established in 1956 to further economic development in its member countries by encouraging the growth of private enterprise. IFC is a member of the World Bank Group (WBG), which also comprises the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the Multilateral Investment Guarantee Agency (MIGA), and the International Centre for Settlement of Investment Disputes (ICSID). Each member is legally and financially independent. Transactions with other World Bank Group members are disclosed in the notes that follow. IFC’s activities are closely coordinated with and complement the overall development objectives of the other World Bank Group institutions. IFC, together with private investors, assists in financing the establishment, improvement and expansion of private sector enterprises by making loans, equity investments and investments in debt securities where sufficient private capital is not otherwise available on reasonable terms. IFC’s share capital is provided by its member countries. It raises most of the funds for its investment activities through the issuance of notes, bonds and other debt securities in the international capital markets. IFC also plays a catalytic role in mobilizing additional funding from other investors and lenders through parallel loans, loan participations, partial credit guarantees, securitizations, loan sales, risk sharing facilities, fund investments and other IFC crisis initiatives. In addition to project finance and mobilization, IFC offers an array of financial and technical advisory services to private businesses in the developing world to increase their chances of success. It also advises governments on how to create an environment hospitable to the growth of private enterprise and foreign investment. NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The consolidated financial statements include the financial statements of IFC and its consolidated entities. The accounting and reporting policies of IFC conform with accounting principles generally accepted in the United States of America (U.S. GAAP). In the opinion of management, the consolidated financial statements reflect all adjustments necessary for the fair presentation of IFC’s financial position and results of operations in accordance with U.S. GAAP. Consolidated Financial Statements presentation – Certain amounts in prior years have been changed to conform to the current year’s presentation. Functional currency – IFC’s functional currency is the United States dollar (U.S. dollars, US$ or $). Use of estimates – The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expense during the reporting periods. Actual results could differ from these estimates. A significant degree of judgment has been used in the determination of: the estimated fair value of financial instruments accounted for at fair value (including equity investments, debt securities, loans, trading securities, borrowings and derivative instruments): reserve against losses on loans and off-balance sheet credit exposures; impairment of debt securities; projected pension benefit obligations, fair value of pension and other postretirement benefit plan assets, and net periodic pension income or expense. There are inherent risks and uncertainties related to IFC’s operations. The possibility exists that changing economic conditions could have an adverse effect on the financial position of IFC. IFC uses internal models to determine the fair values of derivative and other financial instruments and the aggregate level of the reserve against credit losses on loans, off-balance sheet credit exposures, and available-for-sale debt securities. IFC undertakes continuous review and analysis of these models with the objective of refining its estimates, consistent with evolving best practices appropriate to its operations. Changes in estimates resulting from refinements in the assumptions and methodologies incorporated in the models are reflected in net income in the period in which the enhanced models are first applied. Consolidation, non-controlling interests and variable interest entities – IFC consolidates: i. entities where IFC holds the majority voting rights, unless noncontrolling shareholders/limited partners have substantive participating rights or other rights that would overcome the presumption of control by the majority owner; ii. limited partnerships in which it is the general partner, unless the presumption of control is overcome by certain management participation or other rights held by noncontrolling shareholders/limited partners; and iii. variable interest entities (VIEs) for which IFC is deemed to be the VIE's primary beneficiary. Such entities are collectively referred to as IFC’s consolidated entities. Significant intercompany accounts and transactions are eliminated in consolidation. An entity is a VIE if: i. its equity is not sufficient to permit the entity to finance its activities without additional subordinated financial support from other parties; ii. its equity investors do not have decision-making rights about the entity's operations; or iii. its equity investors do not absorb the expected losses or receive the expected returns of the entity proportionally to their voting rights. The notes to consolidated financial statements are an integral part of these statements. 70  IFC 2024 ANNUAL REPORT FINANCIALS INTERNATIONAL FINANCE CORPORATION Page 72 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) A variable interest is a contractual, ownership or other interest whose value changes as the fair value of the VIE's net assets change. IFC's variable interests in VIEs arise from financial instruments, service contracts, guarantees, leases or other monetary interests in those entities. IFC is considered to be the primary beneficiary of a VIE if it has the power to direct the VIE's activities that most significantly impact its economic performance and the obligation to absorb losses of or the right to receive benefits from the VIE that could potentially be significant to the VIE. Fair Value Option – IFC has elected the Fair Value Option under the subsections of ASC Topic 825, Financial Instruments (ASC 825 or the Fair Value Option) for several of its financial assets and financial liabilities. ASC 825 permits, on an instrument-by-instrument basis, the measurement of eligible financial assets, financial liabilities and firm commitments at fair value that are not otherwise permitted to be accounted for at fair value under other accounting standards. The election to use the Fair Value Option is available when an entity first recognizes a financial asset or liability or upon entering into a firm commitment. IFC has elected the Fair Value Option (FVO) for the following financial assets and financial liabilities: i. direct equity investments which give IFC significant influence, which in the absence of FVO, would have to be accounted for under equity method and all other financial interests in the same investee (e.g., guarantees, loans) ii. all market borrowings that are economically hedged with financial instruments that are accounted for at fair value with changes therein reported in income; iii. borrowings from IDA; effective July 1, 2018: iv. substantially all investments in debt securities; and v. substantially all hybrid instruments in the loan investment portfolio. All borrowings for which the FVO has been elected are economically hedged with derivative or other financial instruments accounted for at fair value with changes in fair value reported in earnings as such changes occur. Measuring at fair value those borrowings for which the FVO has been elected mitigates the earnings volatility that would otherwise occur, due to measuring the borrowings and related economic hedges differently, without having to apply ASC Topic 815, Derivatives and Hedging (ASC 815)'s complex hedge accounting requirements. Measuring at fair value those equity investments that would otherwise require equity method accounting simplifies the accounting and renders a carrying amount on the consolidated balance sheets based on a measure (fair value) that IFC considers preferable to equity method accounting. For the investments that otherwise would require equity method accounting for which the FVO is elected, ASC 825 requires the FVO to also be applied to all eligible financial interests in the same entity. IFC has disbursed loans and issued guarantees to some of those investees; therefore, the FVO is also applied to those loans and issued guarantees. The FVO has been elected for substantially all investments in debt securities and hybrid loan instruments recognized after June 30, 2018. Among other things, measuring all investments in debt securities and hybrid loan instruments at fair value eliminates the requirement to bifurcate the host and embedded derivative that may have otherwise applied in certain instances, results in more accounting consistency across IFC’s investment portfolio and results in a measurement method that is consistent with the manner in which the portfolio is managed. Fair Value Measurements IFC adopted FASB Accounting Standards Codification (ASC) Topic 820, Fair Value Measurements and Disclosures (ASC 820). ASC 820 defines fair value; establishes a framework for measuring fair value and a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels; and applies to all items measured at fair value, including items for which impairment measures are based on fair value. ASC 820 defines fair value as the price that would be received to sell an asset or transfer a liability (i.e., an exit price) in an orderly transaction between independent, knowledgeable and willing market participants at the measurement date assuming the transaction occurs in the entity’s principal (or most advantageous) market. Fair value must be based on assumptions market participants would use (inputs) in determining the price and measured assuming that market participants act in their economic best interest and, therefore, their fair values are determined based on a transaction to sell or transfer the asset or liability on a standalone basis. Under ASC 820, fair value measurements are not adjusted for transaction costs. ASC 820 establishes a fair value hierarchy which gives the highest priority to unadjusted quoted prices in active markets for identical unrestricted assets and liabilities (Level 1), the next highest priority to observable market-based inputs or unobservable inputs that are corroborated by market data from independent sources (Level 2) and the lowest priority to unobservable inputs that are not corroborated by market data (Level 3). Fair value measurements are required to maximize the use of available observable inputs. The notes to consolidated financial statements are an integral part of these statements. IFC 2024 ANNUAL REPORT FINANCIALS  71 INTERNATIONAL FINANCE CORPORATION Page 73 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date. Level 2: Other than quoted prices included in Level 1, inputs that are observable for the asset or liability, either directly or indirectly for substantially the full term of the asset or liability. It includes quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and financial instruments that are valued using models and other valuation methodologies. These models consider various assumptions and inputs, including time value, yield curves, volatility factors, prepayment speeds, default rates, loss severity and current market and contractual pricing for the underlying asset, as well as other relevant economic measures. Substantially all of these inputs are observable in the market place, can be derived from observable data or are supported by observable levels at which market transactions are executed. Level 3: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. It consists of financial instruments whose fair value is estimated based on internally developed models or methodologies utilizing significant inputs that are unobservable. It also includes financial instruments whose fair value is estimated based on price information from independent sources that cannot be corroborated by observable market data. IFC’s policy is to recognize transfers in and transfers out of levels as of the beginning of the reporting period in which they occur. IFC estimates the fair value of its investments in private equity funds that do not have readily determinable fair value based on the funds’ net asset values (NAVs) per share as a practical expedient to the extent that a fund reports its investment assets at fair value and has all the attributes of an investment company, pursuant to ASC Topic 946, Financial Services – Investment Companies (ASC 946). If the NAV is not as of IFC’s measurement date, IFC adjusts the most recent NAV, as necessary, to estimate a NAV for the investment that is calculated in a manner consistent with the fair value measurement principles established by ASC 820. Remeasurement of foreign currency transactions – IFC’s reporting and functional currency is the U.S. dollar. Monetary assets and liabilities not denominated in U.S. dollars, are remeasured to U.S. dollars at the exchange rates prevailing at end of each reporting period. Income and expenses are recorded based on the rates of exchange prevailing at the time of the transaction. Transaction gains and losses are credited or charged to income. Loans – IFC originates loans to facilitate project finance, restructuring, refinancing, corporate finance, and/or other developmental objectives. Loans are recorded as assets when disbursed. Loans are generally carried at the principal amounts outstanding, adjusted for net unamortized loan origination costs and fees. It is IFC’s practice to obtain collateral security such as, but not limited to, mortgages and third-party guarantees. For a loan restructuring, IFC records assets received at fair value (less cost to sell), with a corresponding decrease to the loan amortized cost basis. If assets were received in partial satisfaction of the loan, IFC also determines whether the restructured loan should be accounted for as a new loan. If assets were received in full satisfaction of the loan, IFC reports the difference between the loan’s amortized cost basis and the received asset’s fair value (less cost to sell) into net income, to the extent the difference is not offset against the loan’s allowance. Certain loans are carried at fair value in accordance with the FVO as discussed above. Unrealized gains and losses on loans accounted for at fair value under the FVO are reported in Net unrealized gains and losses on non-trading financial instruments accounted for at fair value on the consolidated statements of operations. Certain loans originated by IFC contain income participation, prepayment and conversion features. These features are bifurcated and separately accounted for in accordance with ASC 815 if IFC has not elected the Fair Value Option for the loan host contracts and the features meet the definition of a derivative and are not considered to be clearly and closely related to their host loan contracts. Otherwise, these features are accounted for as part of their host loan contracts in accordance with IFC’s accounting policies for loans as indicated herein. Revenue recognition on loans – Interest income and commitment fees on loans are recorded as income on an accrual basis. Loan origination fees and direct loan origination costs are deferred and amortized over the estimated life of the originated loan; such amortization is determined using the interest method unless the loan is a revolving credit facility in which case amortization is determined using the straight-line method. Prepayment fees are recorded as income when received. IFC has elected to present interest income separately from other changes in the fair value of loans measured at fair value through earnings under the FVO. IFC applies cost recovery or cash method for recognizing interest income from certain debt securities and beneficial interests accounted for as debt securities whose cash flows cannot be reliably estimated. IFC does not recognize income on loans where collectability is in doubt or payments of interest or principal are past due more than 60 days unless management anticipates that collection of interest will occur in the near future. Any interest accrued on a loan placed in nonaccrual status is reversed out of income and is thereafter recognized as income only when the actual payment is received. Interest not previously recognized but capitalized as part of a debt restructuring is recorded as deferred income, included in the consolidated The notes to consolidated financial statements are an integral part of these statements. 72  IFC 2024 ANNUAL REPORT FINANCIALS INTERNATIONAL FINANCE CORPORATION Page 74 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) balance sheets in payables and other liabilities, and credited to income only when the related principal is received. Such capitalized interest is considered in the computation of the reserve against losses on loans in the consolidated balance sheets. Accrued interest balances are reported within receivables and other assets on the consolidated balance sheets. IFC elected not to measure expected credit losses for accrued interest receivables related to its loans and the available-for-sale securities portfolio as IFC’s policy is to write-off uncollectible accrued interest receivable balances in a timely manner. Accrued interest is written off by reversing interest income during the quarter the financial asset is moved from an accrual to a nonaccrual status. Reserve against losses on loans and off-balance sheet credit arrangements In accordance with ASC Topic 326, Financial Instruments - Credit Losses (ASC 326), IFC recognizes a reserve for credit losses that is deducted from the amortized cost basis of the financial asset to present the net amount expected to be collected on the financial asset on the balance sheets. In accordance with ASC 326, IFC's credit loss methodology reflects an estimate of expected credit losses over the remaining contractual life of a financial asset, considering forward-looking information. IFC considers the relevant inputs and assumptions required to perform the estimate. These include, but are not limited to, historical and current loan portfolio data, data relevant to current economic conditions, and data relevant to reasonable and supportable forecasts of economic conditions. Inputs and assumptions are quantitative or qualitative in nature. In particular, the forecast of key economic variables relevant to the loan portfolio is one of the critical assumptions to IFC’s estimation of expected credit losses. The forecast of economic variables are credit loss drivers that produce a macro-economic response estimate of loss over the 3-year period that IFC deems to be reasonable and supportable. For periods beyond the reasonable and supportable forecast period, expected credit losses are estimated by reverting to historical loss information without adjustment for changes in economic conditions. This reversion is phased in over a one-year period on a straight-line basis. The segmentation process is based on a facility risk and credit risk rating, with certain assumptions segmented by industry. The facility risk rating applies to an individual investment product and provides information on the amount of loss that IFC is likely to incur on that product if the obligor defaults. IFC’s forecast of expected credit losses is based on the probability of a loan defaulting associated with each credit risk rating, the expected loss percentage given a default associated with each facility risk rating, and the expected balance at the estimated date of default. The estimate of the expected balance at the time of default considers a prepayment assumption and, for loans with available credit, a disbursement assumption that estimates expected utilization rates. The reserve against losses on loans are established through a review process undertaken on a quarterly basis and has two main components: (a) a portfolio reserve for expected losses determined from the historical loss rates, adjusted for qualitative factors, and forecasted expected losses on the segments associated with the loan class with similar risk characteristics; and (b) an individual reserve which is a separate reserve representing the reserve assigned to individually evaluated loans that do not share similar risk characteristics with other loans. IFC considers its entire loan portfolio to comprise one portfolio segment and defines the one major category of loans to be the grouping of the loan receivable based on risk characteristics and the method for monitoring and assessing credit risk. The risks inherent in the portfolio that are considered in determining the portfolio reserve are those proven to exist by past experience and include: country systemic risk; the risk of correlation or contagion of losses between markets; uninsured and uninsurable risks; nonperformance under guarantees and support agreements; and opacity of, or misrepresentation in a borrower's financial statements. For individual reserve, loans identified as not sharing similar risk characteristics with other assets are individually evaluated for the net amount expected to be collected, and the reserve is determined for them outside of the portfolio reserve computation. Information and events, with respect to the borrower and/or the economic and political environment in which it operates, that are considered in determining a loss reserve include, but are not limited to, the borrower’s financial difficulties, assessing the risk of breach of contract, bankruptcy/reorganization, credit rating downgrade as well as geopolitical conflict, financial/economic crisis, commodity price decline, adverse local government action and natural disaster. Individually evaluated loans are measured based on the present value of expected future cash flows to be received, or for loans that are dependent on collateral for repayment, the estimated fair value of the collateral, less the cost to sell. IFC recognizes a reserve on loans not carried at fair value in the consolidated balance sheets through the reserve against losses on loans, with corresponding provision or release of provision for losses on loans in net income, which increases or decreases the reserve against losses on loans. Loans are written-off along with its reserve against losses when IFC has exhausted all possible means of recovery. The reductions in the reserve are partially offset by recoveries which are considered in the reserving process, if any, associated with previously written-off loans. The notes to consolidated financial statements are an integral part of these statements. IFC 2024 ANNUAL REPORT FINANCIALS  73 INTERNATIONAL FINANCE CORPORATION Page 75 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) IFC recognizes a reserve for credit losses on off-balance sheet credit exposures for guarantees that are not measured at fair value and other off-balance sheet arrangements, primarily loans committed but not disbursed, based on expected credit losses over the contractual period in which IFC is exposed to credit risk via a present contractual obligation to extend credit, unless that obligation is unconditionally cancellable by IFC. Reserve against losses on off-balance sheet credit exposures are included within Payables and other liabilities on the consolidated balance sheets, with changes recognized through provision for losses on loans in net income. Methodologies for estimating the reserve for credit losses on off-balance sheet credit exposures, including loans committed but not disbursed, are generally consistent with methodologies for estimating the reserve for credit losses for the disbursed loan portfolio, as discussed above as applicable, but is subject to an additional parameter reflecting the likelihood that funding will occur. Equity investments – IFC invests primarily for developmental impact; IFC does not seek to take operational, controlling, or strategic equity positions within its investees. Equity investments are acquired through direct ownership of equity instruments of investees, as a limited partner in LLPs and LLCs, and/or as an investor in private equity funds. Pursuant to ASC Topic 321, Investments – Equity Securities (ASC 321), all equity investments are measured at fair value, with unrealized gains and losses reported in net income. IFC’s investments in certain private equity funds in which IFC is deemed to have a controlling financial interest, are consolidated by IFC, as the presumption of control by the fund manager or the general partner has been overcome. Certain equity investments, for which recovery of invested capital is uncertain, are accounted for under the cost recovery method, such that receipts are first applied to recovery of invested capital and then to income from equity investments. The cost recovery method is applied to IFC's investments in its natural resources unincorporated joint ventures (UJVs). IFC’s share of conditional asset retirement obligations related to investments in UJVs are recorded when the fair value of the obligations can be reasonably estimated. The obligations are capitalized and systematically amortized over the estimated economic useful lives. Unrealized gains and losses on equity investments accounted for at fair value are reported in income from equity investments and associated derivatives on the consolidated statements of operations. Realized gains on the sale or redemption of equity investments are measured against the average cost of the investments sold. Dividends on listed equity investments are recorded on the ex-dividend date, and dividends on unlisted equity investments are recorded upon receipt of notice of declaration. Realized gains on listed equity investments are recorded on trade date, and realized gains on unlisted equity investments are recorded upon incurring the obligation to deliver the applicable shares. Losses are recognized when incurred. IFC enters into put options, call options and warrant agreements in connection with equity investments; these are accounted for in accordance with ASC 815 to the extent they meet the definition of a derivative. Put options, call options and warrant agreements that do not meet the definition of a derivative are measured at fair value with unrealized gains and losses recognized in earnings in accordance with ASC 321 and included in “Equity investments” on the consolidated balance sheets. Gains and losses on loan and debt security conversions and exchanges of equity interests – Loan and debt security conversions to equity interests are based on the fair value of the equity interests received. Transfers of equity interests in exchange for equity interests in other entities and other non-cash transactions are generally accounted for based on the fair value of the asset relinquished unless the fair value of the asset received is more clearly evident in which case the accounting is based on the fair value of the asset received. The difference between the fair value of the asset received and the recorded amount of the asset relinquished is recorded as a gain or loss in the consolidated statements of operations. Debt securities – IFC invests in debt securities for various purposes. Debt securities in the liquid asset portfolio provide a source of income through yield or resale and are classified as trading. Debt securities in the investment portfolio are used to further economic development in IFC’s member countries and consist of corporate debt, preferred shares and asset-back securities. Debt securities in the investment portfolio are primarily reported at fair value in accordance with the FVO as discussed above. Certain debt securities in the investment portfolio are classified as available-for-sale and are carried at fair value on the consolidated balance sheets with unrealized gains and losses included in accumulated other comprehensive income until realized. IFC has elected to present interest income separately from other changes in the fair value of debt securities measured at fair value through earnings under the FVO. Unrealized gains and losses on debt securities accounted for at fair value under the FVO are reported in “Net unrealized gains and losses on non-trading financial instruments accounted for at fair value” on the consolidated statements of operations. IFC invests in certain debt securities with conversion features; if the hybrid instrument is not measured at fair value with unrealized gains and losses reported in net income, these features are accounted for in accordance with ASC 815 to the extent they meet the definition of a derivative. The notes to consolidated financial statements are an integral part of these statements. 74  IFC 2024 ANNUAL REPORT FINANCIALS INTERNATIONAL FINANCE CORPORATION Page 76 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Impairment of debt securities IFC adopted the guidance under ASC 326 for available-for-sale debt securities by amending the impairment model to determine whether all or a portion of the unrealized loss on such securities is a credit loss, and recognizing a reserve for credit losses, instead of recording a write-down as required by pre-ASC 326 guidance. In determining whether all or a portion of the unrealized loss on such securities is a credit loss, IFC considers all relevant information including the extent to which fair value has been less than amortized cost, whether IFC intends to sell the debt security or whether it is more likely than not that IFC will be required to sell the debt security, the payment structure of the obligation and the ability of the issuer to make scheduled interest or principal payments, any changes to the ratings of a security, and relevant adverse conditions specifically related to the security, an industry or geographic sector. Debt securities in the investment portfolio classified as available-for-sale are assessed for impairment each quarter. When impairment is identified, the entire impairment is recognized in net income if (1) IFC intends to sell the security, or (2) it is more likely than not that IFC will be required to sell the security before recovery. However, if IFC does not intend to sell the security and it is not more likely than not that IFC will be required to sell the security but the security has a credit loss, the impairment charge is separated into two components: (1) the credit loss component, which is recognized as a reserve for credit losses (through net income), limited to the amount by which the security’s amortized cost basis exceeds the fair value, and reversal of impairment losses are allowed when the credit of the issuer improves, and (2) the noncredit related impairment losses, which are recorded in other comprehensive income. Guarantees – IFC extends financial guarantee facilities to its clients to provide credit enhancement for their debt security issuances and loan obligations. As part of these financial guarantee facilities, IFC offers partial credit guarantees to clients covering, on a risk- sharing basis, client obligations on bonds or loans. Under the terms of IFC's guarantees, IFC agrees to assume responsibility for the client’s financial obligations in the event of default by the client (i.e., failure to pay when payment is due). Guarantees are regarded as issued when IFC commits to the guarantee. Guarantees are regarded as outstanding when the underlying financial obligation of the client is incurred, and this date is considered to be the “inception” of the guarantee. Guarantees are regarded as called when IFC’s obligation under the guarantee has been invoked. There are two liabilities associated with the guarantees: (i) the stand-ready obligation to perform and (ii) the contingent liability. The fair value of the stand-ready obligation to perform is recognized at the inception of the guarantee. For guarantees that are within scope of ASC 326, the expected credit losses (the contingent liability) associated with the financial guarantee is measured and accounted for in addition to and separately from IFC’s liability recognized for the stand-ready obligation to perform. Guarantee fees are recorded in income as the stand-ready obligation to perform is fulfilled. Commitment fees on guarantees are recorded as income on an accrual basis. All liabilities associated with guarantees are included in payables and other liabilities, and the receivables are included in other assets on the consolidated balance sheets. Designations of retained earnings – IFC establishes funding mechanisms for specific Board-approved purposes through designations of retained earnings. Designations of retained earnings for grants to IDA are recorded as a transfer from undesignated retained earnings to designated retained earnings when the designation is noted with approval by the Board of Governors. IFC has not made new designations to IDA since June 30, 2020. All other designations are recorded as a transfer from undesignated retained earnings to designated retained earnings when the designation is approved by the Board of Directors. Expenditures resulting from such designations are recorded as expenses in IFC’s consolidated statements of operations in the year in which they are incurred and reduces the respective designated retained earnings for such purposes. Expenditures are deemed to have been incurred when IFC has ceded control of the funds to the recipient. Liquid asset portfolios – The liquid asset portfolios mainly consist of: time deposits and securities; related derivative instruments; securities purchased under resale agreements and receivable for cash collateral pledged, securities sold under repurchase agreements and payable for cash collateral received; receivables from sales of securities and payables for purchases of securities; and related accrued income and charges. IFC’s liquid funds are invested in government, agency and government-sponsored agency obligations, time deposits and asset-backed, including mortgage-backed, securities. Government and agency obligations include positions in high- quality fixed rate bonds, notes, bills, and other obligations issued or unconditionally guaranteed by governments of countries or other official entities including government agencies and instrumentalities or by multilateral organizations. Asset-backed and mortgage- backed securities include agency and non-agency residential mortgage-backed securities, commercial mortgage-backed securities, consumer, auto and student loan-backed securities, commercial real estate collateralized debt obligations and collateralized loan obligations. Securities and related derivative instruments within IFC’s liquid asset portfolios are classified as trading and, with the exception of cash equivalent securities which are carried at amortized cost, are carried at fair value with any changes in fair value reported in income from liquid asset trading activities. Interest on securities and amortization of premiums and accretion of discounts are also reported in income from liquid asset trading activities. Gains and losses realized on the sale of trading securities are computed on a specific security basis. The notes to consolidated financial statements are an integral part of these statements. IFC 2024 ANNUAL REPORT FINANCIALS  75 INTERNATIONAL FINANCE CORPORATION Page 77 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Cash and cash equivalents – IFC classifies cash and due from banks as cash and time deposits with original maturities of three months or less as cash equivalents in the consolidated statement of cash flows (collectively, cash and cash equivalents) because they are generally readily convertible to known amounts of cash within three months of acquisition, generally when the original maturities for such instruments are three months or less, or six months or less when the time deposit is optionally redeemable within three months. Repurchase, resale and securities lending agreements – Repurchase agreements are contracts under which a party sells securities and simultaneously agrees to repurchase the same securities at a specified future date at a fixed price. Resale agreements are contracts under which a party purchases securities and simultaneously agrees to resell the same securities at a specified future date at a fixed price. Securities lending agreements are similar to repurchase agreements except that the securities loaned are securities that IFC has received as collateral under unrelated agreements and allowed by contract to rehypothecate. Amounts due under securities lending agreements are included in securities sold under repurchase agreements and payable for cash collateral received on the consolidated balance sheets. It is IFC’s policy to take possession of securities purchased under resale agreements, which are primarily liquid government securities. The market value of these securities is monitored and, within parameters defined in the agreements, additional collateral is obtained when their value declines. IFC also monitors its exposure with respect to securities sold under repurchase agreements and, in accordance with the terms of the agreements, requests the return of excess securities held by the counterparty when their value increases. Repurchase, resale and securities lending agreements are accounted for as collateralized financing transactions and recorded at the amount at which the securities were acquired or sold plus accrued interest. Borrowings – To diversify its access to funding, and reduce its borrowing costs, IFC borrows in a variety of currencies and uses a number of borrowing structures, including foreign exchange rate-linked, inverse floating rate and zero coupon notes. In managing the currency exposure inherent in borrowing in a variety of currencies, generally, IFC either simultaneously converts such borrowings into variable rate U.S. dollar borrowings through the use of currency and interest rate swap transactions or utilizes liquid asset portfolio or debt investments denominated in the same currency to economically hedge changes in the fair value of certain borrowings. Under certain outstanding borrowing agreements, IFC is not permitted to mortgage or allow a lien to be placed on its assets (other than purchase money security interests) without extending equivalent security to the holders of such borrowings. Interest on borrowings and amortization of premiums and accretion of discounts are reported in charges on borrowings. Substantially all borrowings are carried at fair value under the Fair Value Option. All changes in the fair value of these borrowings resulting from changes in instrument-specific credit risk is reported in “other comprehensive income”, while the remaining change in fair value is reported in Net unrealized gains and losses on non-trading financial instruments accounted for at fair value in the consolidated statements of operations. Risk management and use of derivative instruments – IFC enters into transactions in various derivative instruments primarily for financial risk management purposes in connection with its principal business activities, including lending, investing in debt securities and equity investments, client risk management, borrowing, liquid asset portfolio management and asset and liability management. There are no derivatives designated as accounting hedges. All derivative instruments are recorded on the consolidated balance sheets at fair value as derivative assets or derivative liabilities. Where they are not clearly and closely related to the host contract, certain derivative instruments embedded in loans and debt securities are bifurcated from the host contract and recorded at fair value as derivative assets or liabilities unless the hybrid instrument is accounted for at fair value with any changes in fair value reported in income. The fair value at inception of such bifurcated embedded derivatives is excluded from the carrying amount of the host contracts on the consolidated balance sheets. Changes in fair values of derivative instruments used in the liquid asset portfolio are recorded in “income from liquid asset trading activities”. Changes in fair values of derivative instruments other than those in the liquid asset or equity portfolios are recorded in “net unrealized gains and losses on non-trading financial instruments accounted for at fair value”. The risk management policy for each of IFC’s principal business activities and the accounting policies particular to them are described below. Lending activities IFC’s policy is to closely match the currency, interest rate basis, and maturity of its loans and borrowings. Derivative instruments are used to convert the cash flows from fixed rate U.S. dollar or non-U.S. dollar loans into variable rate U.S. dollars. Changes in fair value of all derivatives associated with these activities are reported in net income in ”Net unrealized gains and losses on non-trading financial instruments accounted for at fair value,” in the consolidated statements of operations. Realized gains and losses associated with these activities are reported in “Income from loans and guarantees, including realized gains and losses on loans and associated derivatives. Client risk management activities IFC enters into derivatives transactions with its clients to help them hedge their own currency, interest rate, or commodity risk, which, in turn, improves the overall quality of IFC’s loan portfolio. To hedge the market risks that arise from these transactions with clients, IFC enters into offsetting derivative transactions with matching terms with authorized market counterparties. Changes in fair value of all derivatives associated with these activities are reported in "Net unrealized gains and losses The notes to consolidated financial statements are an integral part of these statements. 76  IFC 2024 ANNUAL REPORT FINANCIALS INTERNATIONAL FINANCE CORPORATION Page 78 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) on non-trading financial instruments accounted for at fair value", in the consolidated statements of operations. Realized gains and losses associated with these activities are reported in “Other Income”, in the consolidated statements of operations. Borrowing activities IFC issues debt securities in various capital markets with the objectives of minimizing its borrowing costs, diversifying funding sources, and developing member countries’ capital markets, sometimes using complex structures. These structures include borrowings payable in multiple currencies, or borrowings with principal and/or interest determined by reference to a specified index such as a stock market index, a reference interest rate, a commodity index, or one or more foreign exchange rates. IFC generally uses derivative instruments with matching terms, primarily currency and interest rate swaps, to convert certain of such borrowings into variable rate U.S. dollar obligations, consistent with IFC’s matched funding policy. IFC elects to carry at fair value, under the FVO, all market borrowings for which a derivative instrument, liquid asset portfolio investment or debt investment is used to create an economic hedge. Changes in the fair value of such borrowings and the associated derivatives are reported in "Net unrealized gains and losses on non-trading financial instruments accounted for at fair value" in the consolidated statements of operations. Realized gains and losses associated with these activities are reported in “Charges on borrowings”, in the consolidated statements of operations. Liquid asset portfolio management activities IFC manages the interest rate, currency and other market risks associated with certain of the time deposits and securities in its liquid asset portfolio by entering into derivative transactions to convert the cash flows from those instruments into variable rate U.S. dollars or by utilizing market borrowings denominated in the same currency to economically hedge changes in the fair value of certain liquid asset portfolio investments. The derivative instruments used include short-term, over-the- counter foreign exchange forwards (covered forwards), interest rate and currency swaps, and exchange-traded interest rate futures and options. As the entire liquid asset portfolio is classified as a trading portfolio, all securities (including derivatives) are carried at fair value with changes in fair value reported in "Income from liquid asset trading activities" in the consolidated statements of operations. Asset and liability management In addition to the risk managed in the context of its business activities detailed above, IFC faces residual market risk in its overall asset and liability management. Residual currency risk is managed by monitoring the aggregate position in each lending currency and reducing the net excess asset or liability position through sales or purchases of currency. Interest rate risk arising from mismatches due to write-downs, prepayments and reschedulings, and residual reset date mismatches is monitored by measuring the sensitivity of the present value of assets and liabilities in each currency to each basis point change in interest rates. IFC monitors the credit risk associated with these activities by careful assessment and monitoring of prospective and actual clients and counterparties. In respect of liquid assets and derivatives transactions, credit risk is managed by establishing exposure limits based on the credit rating and size of the individual counterparty. In addition, IFC has entered into master agreements with its derivative market counterparties governing derivative transactions that contain close-out and netting provisions and collateral arrangements. Under these agreements, if the credit exposure to one of the parties to the agreement, on a mark-to-market basis, exceeds a specified level, that party must post collateral to cover the excess, generally in the form of liquid government securities or cash. IFC does not offset the fair value amounts of derivatives and obligations to return, or rights to receive, cash collateral associated with these master-netting agreements. Changes in fair value of all derivatives associated with these activities are reported in ”Net unrealized gains and losses on non-trading financial instruments accounted for at fair value,” in the consolidated statements of operations. Realized gains and losses associated with these activities are reported in “Other income”, in the consolidated statements of operations. Loan participations – IFC mobilizes funds from commercial banks and other financial institutions (Participants) by facilitating loan participations, without recourse. These loan participations are administered and serviced by IFC on behalf of the Participants. The disbursed and outstanding balances of loan participations that meet the applicable accounting criteria are accounted for as sales and are not included in IFC’s consolidated balance sheets. All other loan participations are accounted for as secured borrowings; the participated loans are included in loans on IFC’s consolidated balance sheets, with the related secured borrowings included in payables and other liabilities on IFC’s consolidated balance sheets. Advisory services – Funding received for IFC advisory services from governments and other donors are recognized as contribution revenue when the conditions on which they depend are substantially met. Advisory services expenses are recognized in the period incurred. Advisory client fees and administration fees are recognized as income when earned. Pension and other post-retirement benefits – IBRD sponsors a Staff Retirement Plan and Trust (SRP), a Retired Staff Benefits Plan (RSBP) and a Post-Employment Benefits Plan (PEBP) that are defined benefit plans and cover substantially all of its staff members as well as the staff of IFC and of MIGA. The SRP provides regular pension benefits and includes a cash balance plan. The RSBP provides certain health and life insurance benefits to eligible retirees. The PEBP provides pension benefits administered outside the SRP. All costs associated with these plans are allocated between IBRD, IFC, and MIGA based upon their employees’ respective participation in the Plans. In addition, IFC and MIGA reimburse IBRD for their share of any contributions made to these plans by IBRD. In accordance with ASU 2017-07, the service cost component of the net periodic benefit costs allocated to IFC is included in “Administrative expenses” in the consolidated statements of operations. The remaining components of the net periodic benefit costs The notes to consolidated financial statements are an integral part of these statements. IFC 2024 ANNUAL REPORT FINANCIALS  77 INTERNATIONAL FINANCE CORPORATION Page 79 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) allocated to IFC are included in “Other” in the consolidated statements of operations. IFC includes a receivable from IBRD in receivables and other assets, representing prepaid pension and other post-retirement benefit costs. Recently adopted accounting standards In January 2020, the FASB issued ASU 2020-01, Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) – Clarifying the Interactions between Topic 321, Topic 323, and Topic 815. The amendments on the interactions between Topic 321 and Topic 323 clarify that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. These amendments do not impact IFC because IFC has elected the FVO for direct equity investments which give IFC significant influence, which in the absence of FVO, would have to be accounted for under the equity method. The amendments on the interactions between Topic 323 and Topic 815, clarify that an entity should not consider whether, upon the settlement of a nonderivative forward contract or exercise of a nonderivative purchased option, individually or with existing investments, the underlying securities would be accounted for under the equity method in Topic 323 or the Fair Value Option in accordance with the financial instruments guidance in Topic 825. IFC adopted ASU 2020-01 effective July 1, 2021 with no material impact on IFC’s consolidated financial statements. In October 2020 the FASB issued ASU 2020-08 Codification Improvements to Subtopic 310-20, Receivables–Nonrefundable Fees and Other Costs. The amendments in ASU 2020-08 affect the guidance in ASU 2017-08, Receivables–Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. ASU 2017-08 had shortened the required amortization period for investments in callable debt securities purchased for a premium to the earliest call date. IFC had adopted ASU 2017-08 effective July 1, 2019 and ASU 2020-08 effective July 1, 2021 with no material impact on IFC’s consolidated financial statements. In November 2021, FASB issued ASU 2021-10 Government Assistance (Topic 832) Disclosures by Business Entities about Government Assistance. ASU 2021-10 requires business entities to provide certain annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy to other accounting guidance (for example, a grant model within IAS 20, Accounting for Government Grants and Disclosure of Government Assistance, or Subtopic 958-605, Not-For-Profit Entities–Revenue Recognition). ASU 2021-10 is effective for financial statements issued for annual periods beginning after December 15, 2021. Early application of the amendments is permitted. IFC adopted ASU 2021-10 effective June 30, 2023, with no material impact on IFC’s consolidated financial statements. In December 2022, FASB issued ASU 2022-06 Reference Rate Reform (Topic 848) Deferral of the Sunset Date of Topic 848. The amendments in this ASU defer the sunset date of ASU 848 Reference Rate Reform from December 31, 2022, to December 31, 2024. ASU 2022-06 is effective immediately. The ASU was effective upon issuance and the adoption did not have a material impact on IFC’s consolidated financial statements. In March 2022, the FASB issued ASU 2022-02, Financial Instruments–Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures. The ASU eliminates the recognition and measurement guidance for troubled debt restructurings (“TDRs”) in Subtopic 310-40, Receivables–Troubled Debt Restructurings by Creditors, and requires reporting entities to apply the loan refinancing and restructuring guidance to determine whether a modification results in a new loan or a continuation of an existing loan. The ASU eliminates the requirement to use the discounted cash flow approach to measure the reserve against losses on loans formerly considered TDRs. The ASU also requires enhanced disclosure requirements for certain loan refinancing and restructurings by creditors when a borrower is experiencing financial difficulty and disclosure of current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments–Credit Losses–Measured at Amortized Cost. IFC adopted ASU 2022-02 effective July 1, 2023 with no material impact on IFC’s consolidated financial statements, with the elimination of TDR recognition and measurement on a modified retrospective basis and the new disclosures on a prospective basis in accordance with the ASU. In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The amendments in this ASU clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction and require certain disclosures for equity securities subject to contractual sale restrictions. IFC early adopted ASU 2022-03 effective July 1, 2023, with no material impact on IFC’s consolidated financial statements. The notes to consolidated financial statements are an integral part of these statements. 78  IFC 2024 ANNUAL REPORT FINANCIALS INTERNATIONAL FINANCE CORPORATION Page 80 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Accounting standards under evaluation In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. The new guidance is intended to align U.S. GAAP requirements with those of the SEC and to facilitate the application of U.S. GAAP for all entities. If by June 30, 2027, the SEC has not removed the related SEC requirement, the related ASU amendment will not become effective. IFC is currently evaluating the impact of this ASU on its consolidated financial statements. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires additional segment disclosures for public entities, such as the significant segment expenses that are regularly provided to the Chief Operating Decision Maker (CODM), the title and position of the CODM, as well as an explanation of how the CODM uses the reported measure of segment profit or loss. All existing annual disclosures about segment profit or loss must be provided on an interim basis in addition to disclosure of significant segment expenses. For IFC, the ASU will be effective for the annual period ending on June 30, 2025 (annual statements of fiscal year 2025). IFC is currently evaluating the impact of the ASU on its consolidated financial statements. The notes to consolidated financial statements are an integral part of these statements. IFC 2024 ANNUAL REPORT FINANCIALS  79 INTERNATIONAL FINANCE CORPORATION Page 81 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE B – RELATED PARTY TRANSACTIONS IFC transacts with related parties including receiving loans, participating in shared service arrangements, as well as through cost sharing of IBRD’s sponsored pension and other post-retirement plans. IFC's receivables from (payables to) its related parties are presented in the following table: June 30, 2024 June 30, 2023 (US$ in millions) IBRD IDA MIGA Total IBRD IDA MIGA Total Services and Support (Payables) Receivables $ (1) $ — $ 5 $ 4 $ (35) $ — $ 4 $ (31) IDA PSW – Local Currency Facility — 94 — 94 — 50 a — 50 IDA PSW – Blended Finance Facility — (106) — (106) — (93) — (93) Borrowings — (170) — (170) — (243) — (243) Pension and Other Post-retirement Benefits 774 — — 774 704 — — 704 Post-retirement Contribution Reserve Fund 344 — — 344 385 — — 385 $ 1,117 $ (182) $ 5 $ 940 $ 1,054 $ (286) $ 4 $ 772 _________ a Includes other payable of $4 million related to unsettled Local Currency Facility trades that is included in Payables and other liabilities on the consolidated balance sheets as of June 30, 2023. Services and Support Payments IFC obtains certain administrative and overhead services from IBRD in those areas where common services can be efficiently provided by IBRD. This includes shared costs of the Boards of Governors and Directors, and other services such as IT support services and human resource shared services. IFC makes payments for these services to IBRD based on negotiated fees and chargebacks, and allocated charges. Expenses allocated to IFC for the year ended June 30, 2024, were $172 million ($168 million – year ended June 30, 2023; $156 million – year ended June 30, 2022). Other chargebacks include $33 million for the year ended June 30, 2024 ($28 million – year ended June 30, 2023; $26 million – year ended June 30, 2022). These expenses are included in Administrative expenses on the consolidated statements of operations. The associated payables are included in the Payables and other liabilities on the consolidated balance sheets. Fee Income from MIGA Transactions with MIGA include marketing fees received for referral and due diligence services on jointly-developed guarantee projects. Fee income received from MIGA for the year ended June 30, 2024 were $4 million ($4 million – year ended June 30, 2023 and year ended June 30, 2022) included in Other Income on the consolidated statements of operations. The associated receivables are included in Receivables and other assets on the consolidated balance sheets. IDA Private Sector Window (IDA-PSW) The PSW was created under IDA's Eighteenth Replenishment of Resources (IDA18) to mobilize private sector investment in IDA-only countries and IDA-eligible Fragile and Conflict-affected Situations (FCS). The PSW continued under IDA’s Twentieth Replenishment of Resources (IDA20), which commenced on July 1, 2022, with an initial allocation set at $2.5 billion. Under the fee arrangement for the IDA-PSW, IDA receives fee income for transactions executed under this window and reimburses IFC for the related costs incurred in administering these transactions. As of June 30, 2024 and June 30, 2023, IFC committed $1.3 billion for IDA guarantees to support IFC's Guarantee Programs in IDA-PSW eligible countries under the Blended Finance facility. The Blended Finance facility included in Payables and other liabilities on the consolidated balance sheets represents IFC's liability to IDA for IDA-PSW synthetic equity investments. The Local currency facility represents currency swaps with IDA to support local currency denominated loans and is included in Derivative assets on the consolidated balance sheets. The notes to consolidated financial statements are an integral part of these statements. 80  IFC 2024 ANNUAL REPORT FINANCIALS INTERNATIONAL FINANCE CORPORATION Page 82 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE B – RELATED PARTY TRANSACTIONS (continued) Borrowings In September 2014, IFC issued an amortizing, non-interest bearing promissory note, maturing September 15, 2039, to IDA (the Note) in exchange for $1.2 billion with an effective interest rate of 1.84%. IFC has elected the Fair Value Option for the Note, which is included in the Borrowings from IDA at fair value on the consolidated balance sheets. IFC recognized interest expense of $4 million for the year ended June 30, 2024 ($6 million – year ended June 30, 2023, $8 million – year ended June 30, 2022 ). IFC has a Local Currency Loan Facility Agreement with IBRD, which is capped at $300 million. As of June 30, 2024 and June 30, 2023, IFC had no borrowings outstanding under this facility. Pension and Other Post-retirement Benefits The receivable from IBRD represents IFC’s net share of prepaid costs for pension and other post-retirement benefit plans and Post- Employment Benefits Plan (PEBP) assets included in Receivables and other assets on the consolidated balance sheets. These will be realized over the lives of the plan participants. Post-Retirement Contribution Reserve Fund (PCRF) The PCRF was established to stabilize contributions made to the pension plans. The receivable from IBRD represents IFC's share of investments associated with the PCRF, and is included in Receivables and other assets on the consolidated balance sheets. In June 2024, IFC's Board approved the release of $190 million from the PCRF, which was returned by IBRD to the IFC. IFC recognized other income of $30 million for the year ended June 30, 2024 ($15 million – year ended June 30, 2023, $1 million – year ended June 30, 2022). IFC contributed $119 million to the PCRF during the year ended June 30, 2024 ($111 million – year ended June 30, 2023, $82 million – year ended June 30, 2022 ). IFC-managed Funds IFC's Equity Mobilization Department (formally IFC Asset Management Company, or AMC), invests third-party capital and IFC capital, enabling outside investors to invest alongside IFC in developing markets. As of June 30, 2024, AMC managed multiple funds (collectively referred to as the AMC Funds), in its capacity as General Partner (GP) / Manager of these funds, none of which require consolidation by IFC. A management fee is charged for the management services provided to the AMC funds. IFC’s ownership interests in these AMC Funds are shown in the following table: AMC Funds IFC’s ownership interest % IFC Capitalization (Equity) Fund, L.P. a 61% IFC Capitalization (Subordinated Debt) Fund, L.P. 13% IFC African, Latin American and Caribbean Fund, LP 20% IFC Catalyst Funds b 18% IFC Global Infrastructure Fund, LP 17% IFC Financial Institutions Growth Fund, LP 30% IFC Global Emerging Markets Fund of Funds c 19% IFC Middle East and North Africa Fund, LP 37% Women Entrepreneurs Debt Fund, LP 26% IFC Emerging Asia Fund, LP 22% _________ a By virtue of certain rights granted to non-IFC limited partner interests, IFC does not control or consolidate this fund. b The ownership interest of 18% reflects IFC’s ownership interest taking into consideration the overall commitments for the IFC Catalyst Funds, which comprises IFC Catalyst Fund, LP, IFC Catalyst Fund (UK), LP and IFC Catalyst Fund (Japan), LP (collectively, IFC Catalyst Funds). IFC does not have an ownership interest in either the IFC Catalyst Fund (UK), LP or the IFC Catalyst Fund (Japan), LP. c The ownership interest of 19% reflects IFC’s ownership interest taking into consideration the current committed amounts for the IFC Global Emerging Markets Fund of Funds, which comprises IFC Global Emerging Markets Fund of Funds, LP and IFC Global Emerging Markets Fund of Funds, (Japan Parallel) LP. IFC does not have an ownership interest in the IFC Global Emerging Markets Fund of Funds, (Japan Parallel) LP. As of June 30, 2024, IFC invested $483 million ($505 million as of June 30, 2023) as a limited partner in funds managed by AMC. These investments were included in Equity investments on the consolidated balance sheets. $22 million of management fee income was recognized for the year ended June 30, 2024 ($23 million and $29 million for the year ended June 30, 2023 and June 30, 2022), which is included in other income on the consolidated statements of operations. The notes to consolidated financial statements are an integral part of these statements. IFC 2024 ANNUAL REPORT FINANCIALS  81 INTERNATIONAL FINANCE CORPORATION Page 83 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE C — LIQUID ASSET PORTFOLIO Composition of Liquid Asset Portfolio The composition of IFC’s net liquid asset portfolio included in the consolidated balance sheets is as follows: (US$ in millions) June 30, 2024 June 30, 2023 Assets Cash and due from banks a $ 19 $ 43 Time deposits b 9,752 10,215 Trading securities 28,555 31,020 Securities purchased under resale agreements and receivable for cash collateral pledged 1,226 5,192 Derivative assets 365 433 Receivables and other assets: Receivables from sales of securities 557 791 Accrued interest income on time deposits and securities 261 243 Accrued income on derivative instruments 157 248 Total assets 40,892 48,185 Liabilities Securities sold under repurchase agreements and payable for cash collateral received 1,541 6,631 Derivative liabilities 78 241 Payables and other liabilities: Payables for purchase of securities 1,415 1,002 Accrued charges on derivative instruments 124 191 Total liabilities 3,158 8,065 Total net liquid asset portfolio $ 37,734 $ 40,120 _________ a Represents cash and due from banks from the liquid asset portfolio and does not include cash and due from banks from other cash accounts of $762 million and $1,008 million as of June 30, 2024 and June 30, 2023 respectively. b Includes time deposits with maturities greater than three months of $751 million and 2,467 million, as of June 30, 2024 and June 30, 2023 respectively. The liquid asset portfolio is denominated primarily in U.S. dollars; investments in other currencies, net of the effect of associated derivative instruments that convert non-U.S. dollar securities into U.S. dollar securities, represent 1.9% of the portfolio at June 30, 2024 (2.1% – June 30, 2023). Income (Loss) from liquid asset trading activities Income (Loss) from liquid asset trading activities for the years ended June 30, 2024, June 30, 2023 and June 30, 2022 comprises: For the year ended June 30, (US$ in millions) 2024 2023 2022 Interest income, net $ 1,753 $ 1,364 $ 331 Net gains (losses) on asset-backed and mortgage-backed securities 25 21 (61) Net gains (losses) on other trading securities 613 79 (683) Net gains (losses) on trading activities (realized and unrealized) 638 100 (744) Total income (loss) from liquid asset trading activities $ 2,391 $ 1,464 $ (413) The annualized rate of return on the liquid asset trading portfolio, calculated as total income from the liquid asset trading activities divided by fair value average daily balance of total trading securities, during the year ended June 30, 2024, was 8.0% (4.5% – year ended June 30, 2023; (1.2)% – year ended June 30, 2022). After the effect of associated derivative instruments, the liquid asset portfolio generally reprices within one year. The notes to consolidated financial statements are an integral part of these statements. 82  IFC 2024 ANNUAL REPORT FINANCIALS INTERNATIONAL FINANCE CORPORATION Page 84 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE C – LIQUID ASSET PORTFOLIO (continued) IFC’s Trading securities comprises of the following: Year ended June 30, 2024 At June 30, 2024 Weighted average Fair value average daily contractual maturity (US$ in millions) balance Fair value (years) Government, agency and government-sponsored agency obligations $ 21,025 $ 21,068 1.9 Asset-backed securities 6,258 5,058 17.9 Corporate securities 2,423 2,429 1.7 Total trading securities $ 29,706 $ 28,555 4.7 Year ended June 30, 2023 At June 30, 2023 Weighted average Fair value average daily contractual maturity (US$ in millions) balance Fair value (years) Government, agency and government-sponsored agency obligations $ 21,822 $ 21,766 1.9 Asset-backed securities 6,446 5,232 22.1 Corporate securities 3,941 4,022 1.1 Total trading securities $ 32,209 $ 31,020 5.2 The expected maturity of the asset-backed securities may be significantly shorter than the contractual maturity, as reported above, due to prepayment features. The notes to consolidated financial statements are an integral part of these statements. IFC 2024 ANNUAL REPORT FINANCIALS  83 INTERNATIONAL FINANCE CORPORATION Page 85 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE D – INVESTMENTS The carrying value of investments as of June 30, 2024 and June 30, 2023 comprises: (US$ in millions) June 30, 2024 June 30, 2023 Loans Loans at amortized cost $ 35,729 $ 31,117 Less: Reserve against losses on loans (1,081) (1,209) Loans at amortized cost less reserve against losses 34,648 29,908 Loans accounted for at fair value under the Fair Value Option (amortized cost $1,851 as of June 30, 2024, $1,642 as of June 30, 2023) 1,789 1,506 Total loans 36,437 31,414 Equity investments Equity investments accounted for at fair value a b (cost $10,887 as of June 30, 2024, $10,331 as of June 30, 2023) 11,121 10,778 Total equity investments 11,121 10,778 Debt securities Debt securities accounted for at fair value as available-for-sale (amortized cost $962 as of June 30, 2024, $1,632 as of June 30, 2023) 845 1,394 Less: Reserve against losses on available-for sale debt securities (34) (21) Debt securities, available-for-sale less reserve against losses 811 1,373 Debt securities accounted for at fair value under the Fair Value Option (amortized cost $10,380 as of June 30, 2024, $8,145 as of June 30, 2023) 10,378 7,937 Total debt securities 11,189 9,310 Total carrying value of investments $ 58,747 $ 51,502 _________ a Equity investments at fair value as of June 30, 2024 comprise investments in common or preferred shares of $5.4 billion ($5.5 billion as of June 30, 2023), equity interests in private equity funds of $5.7 billion ($5.2 billion as of June 30, 2023), and equity-related options and other financial instruments of $45 million ($36 million as of June 30, 2023). b Includes $3 million and $2 million, respectively, as of June 30, 2024 and June 30, 2023 of equity investments primarily accounted for under the cost recovery method. As the recovery of invested capital is uncertain, the fair value measurement is not applicable to these investments. The distribution of the investment portfolio by geographical region and by industry sector and a reconciliation of total disbursed portfolio to carrying amount of investments is as follows: The notes to consolidated financial statements are an integral part of these statements. 84  IFC 2024 ANNUAL REPORT FINANCIALS INTERNATIONAL FINANCE CORPORATION Page 86 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE D – INVESTMENTS (continued) (US$ in millions) June 30, 2024 June 30, 2023 Equity Debt Equity Debt Sector/Region Loans investments securities Total Loans investments securities Total Africa Manufacturing, agribusiness and services $ 2,313 $ 733 $ 178 $ 3,224 $ 2,153 $ 687 $ 102 $ 2,942 Financial markets 3,858 311 550 4,719 2,771 336 466 3,573 Infrastructure and natural resources 2,252 621 306 3,179 2,067 501 217 2,785 Disruptive technologies and funds 5 936 17 958 5 833 12 850 Total Africa 8,428 2,601 1,051 12,080 6,996 2,357 797 10,150 Asia and Pacific Manufacturing, agribusiness and services 2,997 1,101 1,455 5,553 3,176 1,141 886 5,203 Financial markets 5,547 762 2,476 8,785 4,673 687 2,170 7,530 Infrastructure and natural resources 1,648 208 1,047 2,903 1,773 202 813 2,788 Disruptive technologies and funds 6 1,627 27 1,660 5 1,558 30 1,593 Total Asia and Pacific 10,198 3,698 5,005 18,901 9,627 3,588 3,899 17,114 Latin America and the Caribbean, and Europe Manufacturing, agribusiness and services 4,938 285 226 5,449 3,856 311 244 4,411 Financial markets 5,203 467 3,181 8,851 4,568 495 2,907 7,970 Infrastructure and natural resources 2,411 588 472 3,471 1,906 499 364 2,769 Disruptive technologies and funds 26 929 31 986 5 834 46 885 Total Latin America and the Caribbean, and Europe 12,578 2,269 3,910 18,757 10,335 2,139 3,561 16,035 Middle East, Central Asia, Türkiye, Pakistan, and Afghanistan Manufacturing, agribusiness and services 1,875 283 99 2,257 1,306 330 96 1,732 Financial markets 1,392 537 776 2,705 1,191 546 695 2,432 Infrastructure and natural resources 1,374 134 — 1,508 1,430 202 60 1,692 Disruptive technologies and funds — 219 — 219 — 194 — 194 Total Middle East, Central Asia, Türkiye, Pakistan, and Afghanistan 4,641 1,173 875 6,689 3,927 1,272 851 6,050 Other Manufacturing, agribusiness and services 497 26 18 541 467 25 — 492 Financial markets 1,201 514 354 2,069 1,534 386 440 2,360 Infrastructure and natural resources 183 31 — 214 — 21 — 21 Disruptive technologies and funds — 598 8 606 — 583 8 591 Total Other 1,881 1,169 380 3,430 2,001 1,015 448 3,464 Total disbursed investment portfolio $ 37,726 $ 10,910 $ 11,221 $59,857 $ 32,886 $ 10,371 $ 9,556 $ 52,813 Reserve against losses on loans and debt securities (1,081) — (34) (1,115) (1,209) — (21) (1,230) Unamortized deferred loan origination fees, net and other (146) — — (146) (127) — — (127) Disbursed amount allocated to a related financial instrument reported separately in other assets or derivative assets — (19) — (19) — (36) — (36) Unrealized (losses) on equity investments held by consolidated VIEs — (4) — (4) — (4) — (4) Unrealized gains (losses) on investments accounted for at fair value as available-for- sale — — 4 4 — — (17) (17) Unrealized (losses) gains on investments accounted for under the Fair Value Option (62) 234 (2) 170 (136) 447 (208) 103 Carrying value of investments $ 36,437 $ 11,121 $ 11,189 $58,747 $ 31,414 $ 10,778 $ 9,310 $ 51,502 The notes to consolidated financial statements are an integral part of these statements. IFC 2024 ANNUAL REPORT FINANCIALS  85 INTERNATIONAL FINANCE CORPORATION Page 87 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE E – LOANS AND GUARANTEES Loans Income from loans and guarantees, including realized gains and losses on loans and associated derivatives for the years ended June 30, 2024, June 30, 2023 and June 30, 2022 comprise the following: For the year ended June 30, (US$ in millions) 2024 2023 2022 Interest income $ 3,080 $ 2,131 $ 999 Commitment fees 44 56 50 Guarantee fees 119 92 63 Other financial fees 8 3 53 Realized (losses) gains on loans, guarantees and associated derivatives a (47) 8 (9) Income from loans and guarantees, including realized gains (losses) on loans and associated derivatives $ 3,204 $ 2,290 $ 1,156 ___________ a Includes realized gains and losses on loans under the Fair Value Option, nil for the year ended June 30, 2024; $8 million realized losses and nil for the years ended June 30, 2023 and June 30, 2022, respectively. The currency composition and weighted average contractual rate of the disbursed loan portfolio are summarized below: For the year ended June 30, 2024 June 30, 2023 Weighted Weighted average average contractual contractual (US$ in millions, except for rates) Amount rate (%) Amount rate (%) U.S. dollar $ 25,222 7.8 $ 22,859 7.8 Euro 5,638 5.9 4,134 5.4 Chinese renminbi 1,513 4.3 1,429 4.6 Brazilian real 1,325 12.3 1,081 14.9 Colombian peso 815 12.7 523 9.2 Other currencies 3,213 9.6 2,860 9.7 Total disbursed loan portfolio $ 37,726 7.8 $ 32,886 7.8 After the effect of interest rate and currency swaps, IFC’s loans are principally denominated in variable rate U.S. dollars. IFC’s disbursed variable rate loans generally reprice within one year. As of June 30, 2024, loans in all currencies repayable during the years ending June 30, 2025 through June 30, 2029 and thereafter, are as follows: (US$ in millions) 2025 2026 2027 2028 2029 Thereafter Total Fixed rate loans $ 2,457 $ 1,724 $ 1,034 $ 766 $ 857 $ 1,114 $ 7,952 Variable rate loans 6,373 4,147 5,206 4,077 3,712 6,259 29,774 Total disbursed loan portfolio $ 8,830 $ 5,871 $ 6,240 $ 4,843 $ 4,569 $ 7,373 $ 37,726 As of June 30, 2023, loans repayable during the years ending June 30, 2024 through June 30, 2028 and thereafter, are as follows: (US$ in millions) 2024 2025 2026 2027 2028 Thereafter Total Fixed rate loans $ 1,472 $ 1,908 $ 1,580 $ 737 $ 665 $ 1,571 $ 7,933 Variable rate loans 4,586 4,836 3,924 3,430 2,919 5,258 24,953 Total disbursed loan portfolio $ 6,058 $ 6,744 $ 5,504 $ 4,167 $ 3,584 $ 6,829 $ 32,886 As of June 30, 2024, 21% of the disbursed loan portfolio are fixed rate loans (24% – June 30, 2023), while the remainder are at variable rates. As of June 30, 2024, the disbursed loan portfolio includes $62 million of loans serving as collateral under secured borrowing arrangements ($74 million – June 30, 2023). The notes to consolidated financial statements are an integral part of these statements. 86  IFC 2024 ANNUAL REPORT FINANCIALS INTERNATIONAL FINANCE CORPORATION Page 88 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE E – LOANS AND GUARANTEES (continued) Reserve against losses on loans and provision for losses on loans The reserve against losses as of June 30, 2024 reflected credit risk assessments as of that date. The assessment of the level of reserve against losses carried a heightened degree of uncertainty and judgment. As of June 30, 2024, a $25 million qualitative overlay for reserve against losses on loans and guarantees was applied ($135 million as of June 30, 2023), a reduction of $110 million in the year ended June 30, 2024 since the circumstances requiring the overlay are now broadly reflected in the credit ratings and reserve. Changes in the reserve against losses on loans disbursed and loans committed but not disbursed for the years ended June 30, 2024, June 30, 2023 and June 30, 2022 as well as the related loans at amortized cost evaluated for impairment individually (individual reserve) and on a pool basis (portfolio reserve) are summarized below: For the year ended June 30, 2024 Loans Committed but not Loans Disbursed Disbursed Individual Portfolio Total Individual Portfolio Total (US$ in millions) reserve reserve reserve reserve reserve reserve Beginning balance $ 366 $ 843 $ 1,209 $ 1 $ 169 $ 170 Provision (release of provision) for losses 5 (26) (21) (1) 20 19 Write-offs (95) — (95) — — — Recoveries of previously written-off loans 4 — 4 — — — Foreign currency transaction adjustments (1) (10) (11) — (1) (1) Other adjustments a 1 (6) (5) — — — Ending balance $ 280 $ 801 $ 1,081 $ — $ 188 $ 188 Total disbursed loans at June 30, 2024 $ 1,106 $ 34,769 $ 35,875 Loans committed but not disbursed at June 30, 2024 $ 49 $ 8,678 $ 8,727 Unamortized deferred loan origination fees, net and other (146) Loans at amortized cost $ 35,729 ___________ a Other adjustments comprise reserve against capitalized interest. For the year ended June 30, 2023 Loans Committed but not Loans Disbursed Disbursed Individual Portfolio Total Individual Portfolio Total (US$ in millions) reserve reserve reserve reserve reserve reserve Beginning balance $ 461 $ 748 $ 1,209 $ 1 $ 171 $ 172 (Release of provision) provision for losses (76) 91 15 — (3) (3) Write-offs (37) — (37) — — — Recoveries of previously written-off loans 18 — 18 — — — Foreign currency transaction adjustments (1) 6 5 — 1 1 Other adjustments a 1 (2) (1) — — — Ending balance $ 366 $ 843 $ 1,209 $ 1 $ 169 $ 170 Total disbursed loans at Jun 30, 2023 $ 1,212 $ 30,032 $ 31,244 Loans committed but not disbursed at June 30, 2023 $ 46 $ 6,796 $ 6,842 Unamortized deferred loan origination fees, net and other $ (127) Loans at amortized cost $ 31,117 ___________ a Other adjustments comprise reserve against interest capitalized. The notes to consolidated financial statements are an integral part of these statements. IFC 2024 ANNUAL REPORT FINANCIALS  87 INTERNATIONAL FINANCE CORPORATION Page 89 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE E – LOANS AND GUARANTEES (continued) For the year ended June 30, 2022 Loans Committed but not Loans Disbursed Disbursed Individual Portfolio Total Individual Portfolio Total (US$ in millions) reserve reserve reserve reserve reserve reserve Beginning balance $ 598 $ 726 $ 1,324 $ 2 $ 141 $ 143 Provision (release of provision) for losses 52 41 93 (1) 33 32 Write-offs (200) — (200) — — — Recoveries of previously written-off loans 3 — 3 — — — Foreign currency transaction adjustments (8) (17) (25) — (3) (3) Other adjustments b 16 (2) 14 — — — Ending balance $ 461 $ 748 $ 1,209 $ 1 $ 171 $ 172 Total disbursed loans at June 30, 2022 $ 1,464 $ 24,716 $ 26,180 Loans committed but not disbursed at June 30, 2022 $ 14 $ 8,158 $ 8,172 Unamortized deferred loan origination fees, net and other $ (122) Loans at amortized cost $ 26,058 ___________ a Other adjustments comprise reserve against interest capitalized. Reserve for losses and provision for losses on off-balance sheet guarantee exposures and other receivables Changes in the reserve against losses on off-balance sheet guarantee exposures for the years ended June 30, 2024, June 30, 2023 and June 30, 2022 are summarized below : For the year ended June 30, 2024 2023 2022 Outstanding Issued Outstanding Issued Outstanding Issued (US$ in millions) Guarantees a Guarantees a Guarantees a Guarantees a Guarantees a Guarantees a Beginning balance $ 15 $ 13 $ 11 $ 7 $ 11 $ 6 Provision for losses on off-balance sheet credit exposure 6 5 4 7 — 1 Foreign currency transaction adjustments (2) (1) — (1) — — Ending balance $ 19 $ 17 $ 15 $ 13 $ 11 $ 7 ___________ a Guarantees are considered issued when IFC commits to the guarantee obligation. Guarantees are considered outstanding when the underlying financial obligation of the client is incurred. There was no reserve against losses on other receivables as of June 30, 2024 and June 30, 2023. The outstanding balance of other receivables was $10 million and nil as of June 30, 2024 and June 30, 2023, respectively. Accrued interest The accrued interest balances were $658 million and $524 million, as of June 30, 2024 and June 30, 2023 respectively, and are reported within receivables and other assets on the consolidated balance sheets. Accrued interest is written off by reversing interest income during the year the financial asset is moved from an accrual to a nonaccrual status. The amount of accrued interest receivables written off by reversing interest income is $9 million and $5 million for the years ended June 30, 2024 and June 30, 2023, respectively. Accrued interest receivable is excluded from the amortized cost basis for disclosure purposes. The notes to consolidated financial statements are an integral part of these statements. 88  IFC 2024 ANNUAL REPORT FINANCIALS INTERNATIONAL FINANCE CORPORATION Page 90 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE E – LOANS AND GUARANTEES (continued) Nonaccruing loans Loans on which the accrual of interest has been discontinued amounted to $845 million as of June 30, 2024 ($1.1 billion as of June 30, 2023). The interest income on such loans for the years ended June 30, 2024, June 30, 2023 and June 30, 2022 is summarized as follows: For the year ended June 30, (US$ in millions) 2024 2023 2022 Interest income not recognized on nonaccruing loans $ 103 $ 139 $ 92 Interest income recognized on loans in nonaccrual status related to current and prior years, on cash basis 44 78 65 There were no loans in nonaccrual status without an individual reserve against losses as of June 30, 2024 and June 30, 2023. The amortized cost of nonaccruing loans as of June 30, 2024 and June 30, 2023 is summarized by geographic region and industry sector as follows: June 30, 2024 Total non- Manufacturing, Infrastructure Disruptive accruing loans agribusiness Financial and natural technologies at amortized (US$ in millions) and services markets resources and funds cost a Africa $ 128 $ — $ 159 $ 9 $ 296 Asia and Pacific 50 5 6 1 62 Latin America and the Caribbean, and Europe 186 15 114 6 321 Middle East, Central Asia, Türkiye, Pakistan, and Afghanistan 87 39 93 — 219 Total disbursed loans b $ 451 $ 59 $ 372 $ 16 $ 898 June 30, 2023 Total non- Manufacturing, Infrastructure Disruptive accruing loans agribusiness Financial and natural technologies at amortized (US$ in millions) and services markets resources and funds cost a Africa $ 196 $ — $ 161 $ 5 $ 362 Asia and Pacific 118 7 19 — 144 Latin America and the Caribbean, and Europe 159 12 151 1 323 Middle East, Central Asia, Türkiye, Pakistan, and Afghanistan 91 74 130 — 295 Total disbursed loans b $ 564 $ 93 $ 461 $ 6 $ 1,124 _________ a Includes all components of amortized cost except unamortized fees. The related unamortized fees are considered insignificant. b Includes $53 million reported as debt securities and $126 million reported as loans under Fair Value Option on the Balance Sheets as of June 30, 2024 ($59 million Debt securities and $137 million Fair Value Option loans as of June 30, 2023). The notes to consolidated financial statements are an integral part of these statements. IFC 2024 ANNUAL REPORT FINANCIALS  89 INTERNATIONAL FINANCE CORPORATION Page 91 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE E – LOANS AND GUARANTEES (continued) Past due loans IFC considers a loan past due when payments have not been made according to its contractual terms. An aging analysis, based on contractual terms, of IFC’s loans at amortized cost by geographic region and industry sector follows: June 30, 2024 Greater 31-60 61-90 than 90 1-30 Days days past days past days past Total (US$ in millions) Current past due due due due loans Africa Manufacturing, agribusiness and services $ 1,870 $ 278 $ — $ — $ 49 $ 2,197 Financial markets 3,214 365 — — — 3,579 Infrastructure and natural resources 1,821 82 — — 91 1,994 Disruptive technologies and funds — — — — 4 4 Total Africa 6,905 725 — — 144 7,774 Asia and Pacific Manufacturing, agribusiness and services 2,801 121 — — 20 2,942 Financial markets 5,395 1 — — 4 5,400 Infrastructure and natural resources 1,525 18 48 — — 1,591 Total Asia and Pacific 9,721 140 48 — 24 9,933 Latin America and the Caribbean, and Europe Manufacturing, agribusiness and services 4,823 12 — 25 79 4,939 Financial markets 4,567 64 — — 8 4,639 Infrastructure and natural resources 2,252 14 15 — 21 2,302 Disruptive technologies and funds 17 — — — — 17 Total Latin America and the Caribbean, and Europe 11,659 90 15 25 108 11,897 Middle East, Central Asia, Türkiye, Pakistan, and Afghanistan Manufacturing, agribusiness and services 1,768 87 — — 11 1,866 Financial markets 1,010 236 — — 20 1,266 Infrastructure and natural resources 1,074 161 — — 30 1,265 Total Middle East, Central Asia, Türkiye, Pakistan, and Afghanistan 3,852 484 — — 61 4,397 Other Manufacturing, agribusiness and services 488 2 — — — 490 Financial markets 1,201 — — — — 1,201 Infrastructure and natural resources 183 — — — — 183 Total Other 1,872 2 — — — 1,874 Total disbursed loans $ 34,009 $ 1,441 $ 63 $ 25 $ 337 $ 35,875 Unamortized deferred loan origination fees, net and other (146) Loans at amortized cost $ 35,729 The notes to consolidated financial statements are an integral part of these statements. 90  IFC 2024 ANNUAL REPORT FINANCIALS INTERNATIONAL FINANCE CORPORATION Page 92 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE E – LOANS AND GUARANTEES (continued) June 30, 2023 Greater than 90 1-30 Days 31-60 days 61-90 days days past (US$ in millions) Current past due past due past due due Total loans Africa Manufacturing, agribusiness and services $ 1,905 $ 13 $ — $ 10 $ 90 $ 2,018 Financial markets 2,731 5 — 1 — 2,737 Infrastructure and natural resources 1,706 4 — — 109 1,819 Disruptive technologies and funds — — — — 4 4 Total Africa 6,342 22 — 11 203 6,578 Asia and Pacific Manufacturing, agribusiness and services 3,022 66 — — 18 3,106 Financial markets 4,553 — — — 5 4,558 Infrastructure and natural resources 1,706 — — — 6 1,712 Total Asia and Pacific 9,281 66 — — 29 9,376 Latin America and the Caribbean, and Europe Manufacturing, agribusiness and services 3,736 — 25 — 94 3,855 Financial markets 3,987 — — — 6 3,993 Infrastructure and natural resources 1,749 — — — 26 1,775 Total Latin America and the Caribbean, and Europe 9,472 — 25 — 126 9,623 Middle East, Central Asia, Türkiye, Pakistan, and Afghanistan Manufacturing, agribusiness and services 1,222 64 — — 12 1,298 Financial markets 1,019 — — 23 33 1,075 Infrastructure and natural resources 1,274 31 — — — 1,305 Total Middle East, Central Asia, Türkiye, Pakistan, and Afghanistan 3,515 95 — 23 45 3,678 Other Manufacturing, agribusiness and services 450 5 — — — 455 Financial markets 1,534 — — — — 1,534 Total Other 1,984 5 — — — 1,989 Total disbursed loans $ 30,594 $ 188 $ 25 $ 34 $ 403 $ 31,244 Unamortized deferred loan origination fees, net and other (127) Loans at amortized cost $ 31,117 Certain loans that are 90 days or more past due continue to accrue interest as management anticipates the collection of interest will occur in the near future. Amortized cost of these loans amounted to $2 million as of June 30, 2024 ($9 million as of June 30, 2023). The notes to consolidated financial statements are an integral part of these statements. IFC 2024 ANNUAL REPORT FINANCIALS  91 INTERNATIONAL FINANCE CORPORATION Page 93 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE E – LOANS AND GUARANTEES (continued) Loan Credit Quality Indicators IFC utilizes a rating system to classify loans according to credit worthiness and risk. A description of each credit rating and categorization in terms of the attributes of the borrower, the business environment in which the borrower operates or the loan itself under the rating system follows: Indicative Credit Risk External Rating Rating Category Description AAA, AA+, An obligor rated CR-1 is the highest rating assigned by IFC. The obligor's ability to meet CR-1 Very Strong AA, AA- its financial obligations is very strong. An obligor rated CR-2 is slightly more susceptible to the negative effects of changes in CR-2 A+, A, A- Strong circumstances and economic conditions than obligors rated CR-1. The obligor's ability to meet its financial obligations remains strong. An obligor rated CR-3 exhibits an adequate financial profile, even though at a weaker CR-3 BBB+ level than "CR-1" and "CR-2". An obligor rated CR-4 exhibits an adequate financial profile. However, adverse CR-4 BBB economic conditions or changing circumstances are more likely to lead to a Adequate deterioration of the obligor’s ability to meet its financial obligations. An obligor rated CR-5, as the lowest of the investment grade ratings, exhibits an adequate financial profile. However, adverse economic conditions and/or changing CR-5 BBB- circumstances are more likely to lead to a weaker financial profile and a deterioration of the obligor’s ability to meet its financial obligations. An obligor rated CR-6, as the first non-investment grade rating, is less vulnerable to CR-6 BB+ default than other non-investment obligors. An obligor rated CR-7 can face major uncertainties. Exposure to negative business, CR-7 BB financial, or economic conditions could lead to the obligor's insufficient financial profile Moderate and a deterioration of the obligor’s ability to meet its financial obligations. An obligor rated CR-8 faces major ongoing uncertainties. Exposure to negative business, financial, or economic conditions could lead to the obligor's insufficient CR-8 BB- financial profile and a deterioration of the obligor’s ability to meet its financial obligations. An obligor rated CR-9 is less vulnerable to default than obligors rated 'CR-10’ or CR-9 B+ ‘CR-11'. Significantly negative business, financial, or economic conditions will likely weaken the obligor's financial profile and ability to meet its financial obligations. An obligor rated CR-10 is more vulnerable to default than obligors rated 'CR-9’ but the obligor still has the capacity to meet its financial obligations. Negative business, CR-10 B Weak financial, or economic conditions will likely weaken the obligor's financial profile and ability to meet its financial obligations. An obligor rated CR-11 is more vulnerable to default than obligors rated 'CR-9’ or ‘CR-10’. The obligor still has the capacity to meet its obligations but slightly negative CR-11 B- business, financial, or economic conditions are more likely to weaken the obligor's financial profile and ability to meet its financial obligations than a company rated CR-10. An obligor rated CR-12 faces significant challenges. While such obligors will likely have Very Weak/ some positive characteristics, these may be outweighed by large uncertainties or major CR-12 CCC+ Special exposures to adverse conditions. The obligor is dependent upon favorable business, Attention financial, and economic conditions to meet its financial obligations. An obligor rated CR-13 is currently vulnerable to default, and is dependent upon significantly favorable business, financial, and economic conditions to meet its financial Very Weak/ CR-13 CCC obligations. In the event of negative business, financial, or economic conditions, the Substandard obligor is not likely to meet its financial obligations and rescheduling and/or restructuring is likely to be required. An obligor rated CR-14 is highly vulnerable to default. It is highly likely that a Extremely rescheduling and/or restructuring are required without which a default under IFC’s CR-14 CCC- Weak/Doubtful accounting definition would ensue. In some cases, even though default has not occurred yet, cash flow may be insufficient to service debt in full. An obligor rated CR-15 is currently extremely vulnerable to nonpayment and there are CR-15 Worse than Imminent indications that the next payment will not be made before meeting IFC’s accounting CCC- and D Default definition of default. /Default D An obligor rated D is in payment default according to IFC’s definition of default. The notes to consolidated financial statements are an integral part of these statements. 92  IFC 2024 ANNUAL REPORT FINANCIALS INTERNATIONAL FINANCE CORPORATION Page 94 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE E – LOANS AND GUARANTEES (continued) The following table presents the loans disbursed by credit quality indicator based on risk rating and origination year as of June 30, 2024 and June 30, 2023 and gross write-offs for the year ended June 30, 2024. The origination year is based on the commitment date that represents the date that the decision was made to extend credit and IFC entered into a legally binding agreement with the borrower. All subsequent loan disbursements, as well as loan modifications, extensions, and renewals for an associated loan commitment are reported based on the original commitment date: June 30, 2024 (US$ in millions) Loans at Amortized cost basis by Risk class Very Weak/ Very Special Weak/ Extremely Imminent Gross Originated during the year Very Attenti Sub- Weak/ Default/ Total write- ended June 30, Strong Strong Adequate Moderate Weak on standard Doubtful Default Contracts offs 2024 $ — $ 119 $ 3,519 $ 2,785 $1,409 $ 147 $ 20 $ 22 $ 9 $ 8,030 $ — 2023 — 460 2,161 3,306 2,127 110 6 123 — 8,293 — 2022 — 356 1,423 2,049 1,270 225 — 31 98 5,452 36 2021 — — 1,286 1,878 944 8 13 — 8 4,137 — 2020 69 — 911 897 393 209 77 161 9 2,726 1 Prior 66 158 1,146 1,018 2,351 388 189 97 449 5,862 58 Total $ 135 $1,093 $ 10,446 $ 11,933 $8,494 $1,087 $ 305 $ 434 $ 573 $ 34,500 $ 95 Revolving loans — — — 1,222 55 30 — — 12 1,319 Revolving Contracts Converted to Term Contracts — — 22 — 34 — — — — 56 Total disbursed loans $ 135 $1,093 $ 10,468 $ 13,155 $8,583 $1,117 $ 305 $ 434 $ 585 $ 35,875 Unamortized deferred loan origination fees, net and other (146) Loans at amortized cost $ 35,729 June 30, 2023 (US$ in millions) Loans at Amortized cost basis by Risk class Very Weak/ Extremely Imminent Originated during the year Very Special Very Weak/ Weak/ Default/ Total ended June 30, Strong Strong Adequate Moderate Weak Attention Substandard Doubtful Default Contracts 2023 $ — $ 590 $ 1,525 $ 2,475 $ 1,559 $ 72 $ 20 $ 4 $ — $ 6,245 2022 — 470 1,186 2,255 1,471 143 — 62 — 5,587 2021 — 66 1,456 2,608 1,409 145 21 — 10 5,715 2020 69 — 1,129 1,196 586 257 59 91 6 3,393 2019 — 127 295 832 782 182 18 52 52 2,340 Prior 40 222 885 1,454 2,241 427 166 189 643 6,267 Total $ 109 $ 1,475 $ 6,476 $ 10,820 $ 8,048 $ 1,226 $ 284 $ 398 $ 711 $ 29,547 Revolving Loans — — — 1,569 86 — 25 — — 1,680 Revolving contracts converted to Term contracts — — 7 10 — — — — — 17 Total disbursed loans $ 109 $ 1,475 $ 6,483 $ 12,399 $ 8,134 $ 1,226 $ 309 $ 398 $ 711 $ 31,244 Unamortized deferred loan origination fees, net and other (127) Loans at amortized cost $ 31,117 The notes to consolidated financial statements are an integral part of these statements. IFC 2024 ANNUAL REPORT FINANCIALS  93 INTERNATIONAL FINANCE CORPORATION Page 95 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE E – LOANS AND GUARANTEES (continued) Following is a summary of IFC’s loans at amortized cost by credit quality indicator, geographic region, and industry sector, as of June 30, 2024 and June 30, 2023 : June 30, 2024 Very Weak/ Extremely Imminent Very Special Very Weak/ Weak/ Default/ (US$ in millions) Strong Strong Adequate Moderate Weak Attention Substandard Doubtful Default Total Geographic Region Africa $ — $ 7 $ 638 $ 2,470 $ 3,564 $ 534 $ 181 $ 219 $ 161 $ 7,774 Asia and Pacific 69 520 4,229 2,844 2,163 62 — 3 43 9,933 Latin America and the Caribbean, and Europe — 55 5,031 4,757 1,318 264 85 207 180 11,897 Middle East, Central Asia, Türkiye, Pakistan, and Afghanistan — 19 225 2,113 1,538 257 39 5 201 4,397 Other 66 492 345 971 — — — — — 1,874 Total geographic region $ 135 $ 1,093 $ 10,468 $ 13,155 $ 8,583 $ 1,117 $ 305 $ 434 $ 585 $35,875 Unamortized deferred loan origination fees, net and other (146) Loans at amortized cost $35,729 June 30, 2024 Very Weak/ Extremely Imminent Very Special Very Weak/ Weak/ Default/ (US$ in millions) Strong Strong Adequate Moderate Weak Attention Substandard Doubtful Default Total Industry Sector Manufacturing, agribusiness and services $ 135 $ 301 $ 3,973 $ 5,467 $ 1,725 $ 370 $ 64 $ 88 $ 311 $12,434 Financial markets — 737 4,800 6,205 4,146 92 39 25 41 16,085 Infrastructure and natural resources — 55 1,695 1,483 2,712 655 185 321 229 7,335 Disruptive technologies and funds — — — — — — 17 — 4 21 Total industry sector $ 135 $1,093 $ 10,468 $ 13,155 $ 8,583 $ 1,117 $ 305 $ 434 $ 585 $35,875 Unamortized deferred loan origination fees, net and other (146) Loans at amortized cost $35,729 The notes to consolidated financial statements are an integral part of these statements. 94  IFC 2024 ANNUAL REPORT FINANCIALS INTERNATIONAL FINANCE CORPORATION Page 96 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE E – LOANS AND GUARANTEES (continued) June 30, 2023 Very Weak/ Extremely Imminent Very Special Very Weak/ Weak/ Default/ (US$ in millions) Strong Strong Adequate Moderate Weak Attention Substandard Doubtful Default Total Geographic Region Africa $ — $ 25 $ 394 $ 1,992 $3,303 $ 313 $ 205 $ 137 $ 209 $ 6,578 Asia and Pacific 69 460 3,284 3,250 2,019 192 6 18 78 9,376 Latin America and the Caribbean, and Europe — 517 2,515 4,255 1,497 356 98 215 170 9,623 Middle East, Central Asia, Türkiye, Pakistan, and Afghanistan — — 179 1,537 1,315 365 0 28 254 3,678 Other 40 473 111 1,365 — — — — — 1,989 Total geographic region $ 109 $1,475 $ 6,483 $ 12,399 $8,134 $ 1,226 $ 309 $ 398 $ 711 $31,244 Unamortized deferred loan origination fees, net and other (127) Loans at amortized cost $31,117 June 30, 2023 Very Weak/ Extremely Imminent Very Special Very Weak/ Weak/ Default/ (US$ in millions) Strong Strong Adequate Moderate Weak Attention Substandard Doubtful Default Total Industry Sector Manufacturing, agribusiness and services $ 109 $ 770 $ 2,992 $ 4,147 $ 1,685 $ 339 $ 223 $ 145 $ 322 $10,732 Financial markets — 638 2,626 6,676 3,686 155 28 36 52 13,897 Infrastructure and natural resources — 67 865 1,576 2,763 732 58 217 333 6,611 Disruptive technologies and funds — — — — — — — — 4 4 Total industry sector $ 109 $1,475 $ 6,483 $ 12,399 $ 8,134 $ 1,226 $ 309 $ 398 $ 711 $31,244 Unamortized deferred loan origination fees, net and other (127) Loans at amortized cost $31,117 Modifications for Borrowers Experiencing Financial Difficulties IFC adopted ASU 2022-02 Financial Instruments – Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures effective July 1, 2023. All related disclosures for the year ended June 30, 2024 are provided on a prospective basis in accordance with the ASU. These disclosures do not include loan modifications and the effects related to suspension and standstill agreements where principal and interest payments are temporarily suspended. As of June 30, 2024 amortized cost of these loans amounted to $71 million. Loans are modified through changes in interest rates, repayment schedules, and maturity date, in addition to reductions of loan principal and waiver of accrued interest. For loans at amortized cost, the following table presents information related to modifications for borrowers experiencing financial difficulties, per major modification types (including interest rate reduction, other-than-insignificant The notes to consolidated financial statements are an integral part of these statements. IFC 2024 ANNUAL REPORT FINANCIALS  95 INTERNATIONAL FINANCE CORPORATION Page 97 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE E – LOANS AND GUARANTEES (continued) payment delay, principal forgiveness, and term extension or a combination of these modifications), by geographic region and industry sector during the year ended June 30, 2024. For the year ended June 30, 2024 Interest Rate Reduction, Term Term Extension Extension and and Total loans Payment Payment Payment Total Loan % by region and (US$ in millions) Delay Delay Delay Modification a of total loans industry Africa Manufacturing, agribusiness and services $ 3 $ 1 $ 13 $ 17 0.8 % $ 2,197 Infrastructure and natural resources — — 29 29 1.5 1,994 Total Africa 3 1 42 46 0.6 7,774 Asia and Pacific Manufacturing, agribusiness and services — 11 — 11 0.4 2,942 Infrastructure and natural resources — — 6 6 0.4 1,591 Total Asia and Pacific — 11 6 17 0.2 9,933 Latin America and the Caribbean, and Europe Manufacturing, agribusiness and services 73 24 — 97 2.0 4,939 Financial markets 0 0 4 4 0.1 4,639 Infrastructure and natural resources 15 72 6 93 4.0 2,302 Total Latin America and the Caribbean, and Europe 88 96 10 194 1.6 11,897 Middle East, Central Asia, Türkiye, Pakistan, and Afghanistan Infrastructure and natural resources — 25 60 85 6.7 1,265 Total Middle East, Central Asia, Türkiye, Pakistan, and Afghanistan — 25 60 85 1.9 4,397 Total $ 91 $ 133 $ 118 $ 342 1.0 % $ 35,875 ___________ a Includes all components of amortized cost except unamortized fees which are considered insignificant. The following table summarizes the financial effect of loan modifications for borrowers experiencing financial difficulty by geographic region and industry sector for the year ended June 30, 2024. The notes to consolidated financial statements are an integral part of these statements. 96  IFC 2024 ANNUAL REPORT FINANCIALS INTERNATIONAL FINANCE CORPORATION Page 98 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE E – LOANS AND GUARANTEES (continued) For the Year ended June 30, 2024 Principal Interest Rate Forgive- Other than Insignificant (US$ in millions) Reduction Term Extension ness Payment Delay Weighted Average Weighted Weighted Interest Rate Average Months Principal Amount Average Months Reduction % Extended Forgiven Delayed Delayed Africa Manufacturing, agribusiness and services 1.7 % 64 $ 5 $ 39 44 Infrastructure and natural resources — 42 3 8 12 Total Africa 1.7 106 8 470 56 Asia and Pacific Manufacturing, agribusiness and services — — — 8 6 Infrastructure and natural resources — 36 — 33 36 Total Asia and Pacific — 36 — 410 42 Latin America and the Caribbean, and Europe Manufacturing, agribusiness and services 8.4 91 — 106 26 Financial markets — 12 — 4 12 Infrastructure and natural resources 2.4 152 15 16 177 Total Latin America and the Caribbean, and Europe 10.8 255 15 1260 215 Middle East, Central Asia, Türkiye, Pakistan, and Afghanistan Infrastructure and natural resources — 36 — 67 34 Total Middle East, Central Asia, Türkiye, Pakistan, and Afghanistan — 36 — 670 34 Total disbursed loans 12.5 % 433 $ 23 $ 281 347 For loans at amortized cost, the following table presents an aging analysis of loan modifications made for borrowers experiencing financial difficulty from July 1, 2023 through June 30, 2024, presented by geographic region and industry sector as of June 30, 2024. The notes to consolidated financial statements are an integral part of these statements. IFC 2024 ANNUAL REPORT FINANCIALS  97 INTERNATIONAL FINANCE CORPORATION Page 99 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE E – LOANS AND GUARANTEES (continued) June 30, 2024 Greater Up to 30 than 90 days past days past (US$ in millions) Current due due Total a Africa Manufacturing, agribusiness and services $ 11 $ 3 $ 3 $ 17 Infrastructure and natural resources 29 — — 29 Total Africa 40 3 3 46 Asia and Pacific Manufacturing, agribusiness and services — 11 — 11 Infrastructure and natural resources 6 — — 6 Total Asia and Pacific 6 11 — 17 Latin America and the Caribbean, and Europe Manufacturing, agribusiness and services 73 — 24 97 Financial markets 4 — — 4 Infrastructure and natural resources 93 — — 93 Total Latin America and the Caribbean, and Europe 170 — 24 194 Middle East, Central Asia, Türkiye, Pakistan, and Afghanistan Infrastructure and natural resources 61 — 24 85 Total Middle East, Central Asia, Türkiye, Pakistan, and Afghanistan 61 — 24 85 Total $ 277 $ 14 $ 51 $ 342 ___________ a Includes all components of amortized cost except unamortized fees which are considered insignificant. The following table presents loans that had a payment default during the year ended June 30, 2024 after they had been modified to borrowers experiencing financial difficulty from July 1, 2023 through June 30, 2024, by geographic region and industry sector. Payment default is defined as loans that are 60 or more days past due as of June 30, 2024. For the year ended June 30, 2024 Interest Rate Reduction, Term Extension and Payment Payment Total Loan (US$ in millions) Delay Delay Modification a Africa Manufacturing, agribusiness and services $ 3 $ — $ 3 Total Africa 3 — — 3 Latin America and the Caribbean, and Europe Manufacturing, agribusiness and services — 24 24 Total Latin America and the Caribbean, and Europe — — 24 24 Middle East, Central Asia, Türkiye, Pakistan, and Afghanistan Infrastructure and natural resources — 25 25 Total Middle East, Central Asia, Türkiye, Pakistan, and Afghanistan — — 25 25 Total $ 3 $ 49 $ 52 ___________ a Includes all components of amortized cost except unamortized fees which are considered insignificant. The notes to consolidated financial statements are an integral part of these statements. 98  IFC 2024 ANNUAL REPORT FINANCIALS INTERNATIONAL FINANCE CORPORATION Page 100 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE E – LOANS AND GUARANTEES (continued) Troubled Debt Restructurings Disclosures Prior to the Adoption of ASU 2022-02 Loans are modified through changes in interest rates, repayment schedules, and maturity date, in addition to reductions of loan principal and waiver of accrued interest. The following table presents information related to loan modifications, including past due amounts capitalized and written off, during the years ended June 30, 2023 and June 30, 2022 that are considered Troubled Debt Restructurings (TDRs), prior to the adoption of ASU 2022-02, as defined by the previous accounting guidance in effect at that time: For the year ended June 30, 2023 2022 Number Number (US$ in millions) of TDRs Amount of TDRs Amount Loans modified as TDRs 20 $ 568 31 $ 792 Loan at amortized cost modifications considered TDRs during the years ended June 30, 2023 and June 30, 2022 is summarized by geographic region and industry sector as follows: For the year ended June 30, 2023 Manufacturing, Infrastructure Total Loan agribusiness Financial and natural modifications (US$ in millions) and services markets resources considered TDRs a Geographic Region Africa $ 151 $ — $ — $ 151 Asia and Pacific 70 9 14 93 Middle East, Central Asia, Türkiye, Pakistan, and Afghanistan — — 160 160 Latin America and the Caribbean, and Europe — 5 159 164 Total $ 221 $ 14 $ 333 $ 568 For the year ended June 30, 2022 Manufacturing, Infrastructure Total Loan agribusiness Financial and natural modifications (US$ in millions) and services markets resources considered TDRs a Geographic Region Africa $ 112 $ — $ 53 $ 165 Asia and Pacific 106 — 24 130 Middle East, Central Asia, Türkiye, Pakistan, and Afghanistan — 46 240 286 Latin America and the Caribbean, and Europe 98 21 92 211 Total $ 316 $ 67 $ 409 $ 792 ___________ a Includes all components of amortized cost except unamortized fees which are considered insignificant. Following is a summary of loans that defaulted during the years ended June 30, 2023 and June 30, 2022 that had been modified in a troubled debt restructuring within 12 months prior to the date of default: For the year ended June 30, (US$ in millions, except for number of loans) 2023 2022 Loan amount $ 137 $ 43 Number of Loans 12 7 The notes to consolidated financial statements are an integral part of these statements. IFC 2024 ANNUAL REPORT FINANCIALS  99 INTERNATIONAL FINANCE CORPORATION Page 101 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE E – LOANS AND GUARANTEES (continued) Collateral-Dependent Loans A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. The following tables summarize the amortized cost of collateral dependent loans a by collateral type, geographic region and industry sector as of June 30, 2024 and June 30, 2023 : June 30, 2024 June 30,2023 Property, Land Property, Land and and (US$ in millions) Equipment Others Total Equipment Others Total Geographic Region Africa $ 1 $ — $ 1 $ 2 — $ 2 Asia and Pacific 11 — 11 — — — Latin America and the Caribbean, and Europe 7 5 12 3 6 9 Total $ 19 $ 5 $ 24 $ 5 $ 6 $ 11 June 30, 2024 June 30,2023 Property, Land Property, Land and and (US$ in millions) Equipment Others Total Equipment Others Total Industry Sector Manufacturing, agribusiness and services $ 15 $ — $ 15 $ 3 — $ 3 Financial markets — 5 5 — 6 6 Infrastructure and natural resources 4 — 4 2 — 2 Total $ 19 $ 5 $ 24 $ 5 $ 6 $ 11 ___________ a Includes all components of amortized cost except unamortized fees which are considered insignificant. Guarantees IFC extends financial guarantee facilities to its clients to provide full or partial credit enhancement for their debt securities and trade obligations. Under the terms of IFC’s guarantees, IFC agrees to assume responsibility for the client’s financial obligations in the event of default by the client, where default is defined as failure to pay when payment is due. Guarantees entered into by IFC generally have maturities consistent with those of the loan portfolio. Guarantees signed as of June 30, 2024 totaled $6.3 billion ($5.1 billion as of June 30, 2023). Guarantees of $4.8 billion were outstanding (i.e., not called) as of June 30, 2024 ($4.4 billion as of June 30, 2023). These amounts represent the maximum amount of undiscounted future payments that IFC could be required to make under these guarantees and are not included in IFC’s consolidated balance sheets. The notes to consolidated financial statements are an integral part of these statements. 100  IFC 2024 ANNUAL REPORT FINANCIALS INTERNATIONAL FINANCE CORPORATION Page 102 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE F – DEBT SECURITIES Income from debt securities, including net realized gains on debt securities and associated derivatives for the years ended June 30, 2024, June 30, 2023 and June 30, 2022 comprises the following: For the year ended June 30, June 30, June 30, (US$ in millions) 2024 2023 2022 Interest income $ 790 $ 442 $ 297 Dividends 1 1 5 Net realized gains on debt securities and associated derivatives a 20 75 112 Total income from debt securities, including realized gains on debt securities and associated derivatives $ 811 $ 518 $ 414 _________ a Includes realized gains on debt securities under the Fair Value Option $1 million, $4 million, and $74 million for the years ended June 30, 2024, June 30, 2023, and June 30, 2022, respectively. Debt securities accounted for as available-for-sale as of June 30, 2024 and June 30, 2023 comprise: June 30, 2024 Amortized Unrealized Unrealized Reserve for (US$ in millions) cost gains a losses a credit losses Fair value Corporate debt securities $ 839 $ 1 $ (118) $ (24) $ 698 Preferred shares 28 1 (2) (10) 17 Asset-backed securities 95 3 (2) — 96 Total $ 962 $ 5 $ (122) $ (34) $ 811 _________ a Includes net foreign exchange losses of $121 million as of June 30, 2024. June 30, 2023 Amortized Unrealized Unrealized Reserve for (US$ in millions) cost gains a losses a credit losses Fair value Corporate debt securities $ 1,304 $ 16 $ (194) $ (13) $ 1,113 Preferred shares 28 1 (1) (8) 20 Asset-backed securities 300 2 (62) — 240 Total $ 1,632 $ 19 $ (257) $ (21) $ 1,373 _________ a Includes net foreign exchange losses of $221 million as of June 30, 2023. The table below presents the amortized cost, unrealized losses, and fair value of available-for-sale debt securities that are in an unrealized loss position without credit losses aggregated by major security type as of June 30, 2024 and June 30, 2023. The reserve for credit losses is not included herein and is presented separately in the reserve for credit losses on debt securities roll-forward table. June 30, 2024 June 30, 2023 Amortized Unrealized Amortized Unrealized (US$ in millions) Costs Losses a Fair value Costs Losses a Fair value Corporate debt securities $ 560 $ (110) $ 450 $ 857 $ (194) $ 663 Preferred shares 10 (2) 8 9 (1) 8 Asset-backed securities 10 (2) 8 225 (62) 163 Total $ 580 $ (114) $ 466 $ 1,091 $ (257) $ 834 ___________ a Includes net foreign exchange losses of $118 million as of June 30, 2024 and $217 million as of June 30, 2023. The notes to consolidated financial statements are an integral part of these statements. IFC 2024 ANNUAL REPORT FINANCIALS  101 INTERNATIONAL FINANCE CORPORATION Page 103 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE F – DEBT SECURITIES (continued) The following table shows the unrealized losses and fair value of available-for-sale debt securities as of June 30, 2024 and June 30, 2023 by length of time that individual securities had been in a continuous loss position where the fair value of securities declined below their cost basis: June 30, 2024 Less than 12 months 12 months or greater Total Fair Unrealized Fair Unrealized Fair Unrealized (US$ in millions) value losses value losses value losses Corporate debt securities $ — $ — $ 450 $ (110) $ 450 $ (110) Preferred shares — — 8 (2) 8 (2) Asset-backed securities — — 8 (2) 8 (2) Total $ — $ — $ 466 $ (114) $ 466 $ (114) June 30, 2023 Less than 12 months 12 months or greater Total Fair Unrealized Fair Unrealized Fair Unrealized (US$ in millions) value losses value losses value losses Corporate debt securities $ — $ — $ 663 $ (194) $ 663 $ (194) Preferred shares 7 — 1 (1) 8 (1) Asset-backed securities — — 163 (62) 163 (62) Total $ 7 $ — $ 827 $ (257) $ 834 $ (257) Corporate debt securities comprise investments in bonds and notes. Fair value associated with corporate debt securities is primarily attributable to movements in the credit default swap spread curve applicable to the issuer, and also impacted by movements in the risk- free rates and foreign exchange rates. Based upon IFC's assessment of expected credit losses, a reserve for credit losses is made for securities where the issuer is not expected to make all contractual principal and interest payments. Preferred shares comprise investments in preferred equity investments that are redeemable at the option of IFC or mandatorily redeemable by the issuer. Unrealized losses associated with preferred shares are primarily driven by changes in discount rates associated with changes in credit spreads or interest rates, minor changes in exchange rates and comparable market valuations in the applicable sector. Based upon IFC's assessment of expected credit losses, a reserve for credit losses is made for securities where IFC does not expect to recover the cost basis of these securities. Asset-backed securities comprise investments in bonds and notes that are collateralized by self-liquidating financial assets that allow IFC to receive payments that depend primarily on cash flow from those assets. The tables below present a roll-forward by major security type for the years ended June 30, 2024, June 30, 2023 and June 30, 2022 of the reserve for credit losses on debt securities accounted for as available-for-sale held at the period end: For the year ended (US$ in millions) June 30, 2024 June 30, 2023 June 30, 2022 Corporate Corporate Corporate Debt Preferred Debt Preferred Debt Preferred Securities shares Total Securities shares Total Securities shares Total Beginning balance $ 13 $ 8 $ 21 $ 11 $ 3 $ 14 $ — $ 3 $ 3 Provision for losses 11 2 13 2 5 7 11 3 14 Write-offs — — — — — — — (3) (3) Ending balance $ 24 $ 10 $ 34 $ 13 $ 8 $ 21 $ 11 $ 3 $ 14 The notes to consolidated financial statements are an integral part of these statements. 102  IFC 2024 ANNUAL REPORT FINANCIALS INTERNATIONAL FINANCE CORPORATION Page 104 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE F – DEBT SECURITIES (continued) As of June 30, 2024, debt securities with contractual maturities that are accounted for as available-for-sale have contractual maturities during the years ending June 30, 2025 through June 30, 2029 and thereafter, as follows: (US$ in millions) 2025 2026 2027 2028 2029 Thereafter Total Corporate debt securities $ 260 $ 62 $ 253 $ 132 $ 3 $ 9 $ 719 Asset-backed securities 58 21 15 — — — 94 Total disbursed portfolio of debt securities with contractual maturities $ 318 $ 83 $ 268 $ 132 $ 3 $ 9 $ 813 As of June 30, 2023, debt securities with contractual maturities that are accounted for as available-for-sale have contractual maturities during the years ending June 30, 2024 through June 30, 2028 and thereafter, as follows: (US$ in millions) 2024 2025 2026 2027 2028 Thereafter Total Corporate debt securities $ 288 $ 395 $ 63 $ 255 $ 133 $ 11 $ 1,145 Asset-backed securities 144 58 21 15 — — 238 Total disbursed portfolio of debt securities with contractual maturities $ 432 $ 453 $ 84 $ 270 $ 133 $ 11 $ 1,383 The expected maturity of asset-backed securities may differ from the contractual maturity, as reported above, due to prepayment features. In addition, IFC has $28 million of redeemable preferred shares and other debt securities with undefined maturities ($28 million – June 30, 2023). The currency composition and weighted average contractual rate of debt securities with contractual maturities that are accounted for as available-for-sale are summarized below: June 30, 2024 June 30, 2023 Weighted Weighted average average contractual contractual (US$ in millions, except for ratios) Amount rate (%) Amount rate (%) Euro $ 331 % 6.6 $ 417 % 5.9 US dollar 178 7.5 457 7.8 Indian rupee 176 8.0 275 8.0 Colombian peso 104 13.1 187 14.5 South African Rand 20 11.3 22 11.3 West African CFA franc 4 6.0 — — Türkish lira — — 21 14.7 C.F.A. Francs BCEAO — — 4 6.0 Total disbursed portfolio of debt securities with contractual maturities $ 813 % 8.1 $ 1,383 % 8.3 After the effect of interest rate swaps and currency swaps, IFC’s debt securities that are accounted for as available-for-sale are primarily denominated in variable rate U.S. dollars. Nonaccruing debt securities The disbursed and outstanding balances of debt securities on which the accrual of interest has been discontinued amounted to $53 million at June 30, 2024 ($59 million – June 30, 2023). The interest income on such debt securities for the year ended June 30, 2024, June 30, 2023 and June 30, 2022 is summarized as follows: For the year ended (US$ in millions) June 30, 2024 June 30, 2023 June 30, 2022 Interest income not recognized on nonaccruing debt securities $ 9 $ 1 $ 3 Interest income recognized on debt securities in nonaccrual status related to current and prior years, on a cash basis 1 — 1 The notes to consolidated financial statements are an integral part of these statements. IFC 2024 ANNUAL REPORT FINANCIALS  103 INTERNATIONAL FINANCE CORPORATION Page 105 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE G – EQUITY INVESTMENTS AND ASSOCIATED DERIVATIVES Income from equity investments and associated derivatives for the years ended June 30, 2024, June 30, 2023 and June 30, 2022 comprises the following: For the year ended (US$ in millions) June 30, 2024 June 30, 2023 June 30, 2022 Unrealized (losses) on equity investments and associated derivatives a $ (231) $ (134) $ (617) Realized gains on equity investments and associated derivatives, net 245 161 642 Gains on equity investments and associated derivatives, net 14 27 25 Dividends 115 162 180 Custody, fees and other 13 2 3 Total income from equity investments and associated derivatives $ 142 $ 191 $ 208 _________ a Includes unrealized gains and losses related to equity securities still held as of June 30, 2024, net gains of $156 million for the year ended June 30, 2024 (net gains of $115 million - June 30, 2023 and net losses of $42 million - June 30, 2022). Equity investments include several private equity funds that invest primarily in emerging markets across a range of sectors and that are accounted for at fair value under the Fair Value Option. The fair values of these funds have been determined using the net asset value of IFC’s ownership interest in partners’ capital as a practical expedient and totaled $5.7 billion as of June 30, 2024 ($5.2 billion as of June 30, 2023). These investments cannot be redeemed. Distributions will be received from these funds as the underlying assets are liquidated or distributed, the timing of which is uncertain. As of June 30, 2024, the maximum unfunded commitments subject to capital calls for these funds were $1.9 billion ($1.6 billion as of June 30, 2023). As of June 30, 2024, IFC invested $483 million ($505 million as of June 30, 2023) as a limited partner in funds managed by AMC. Amounts previously distributed by the AMC Funds may be callable through the life of the respective fund. The sale of IFC’s limited partner interests in these funds needs prior consent from the other limited partners. NOTE H – INVESTMENT TRANSACTIONS COMMITTED BUT NOT DISBURSED OR UTILIZED Loan, equity and debt security commitments signed but not yet disbursed, and guarantee and client risk management facilities signed but not yet utilized are summarized below: (US$ in millions) June 30, 2024 June 30, 2023 Investment transactions committed but not disbursed: Loans, equity investments and debt securities $ 13,324 $ 11,090 Investment transactions committed but not utilized: Guarantees 1,544 747 Client risk management facilities 183 202 Total investment transactions committed but not disbursed or utilized $ 15,051 $ 12,039 The disbursements of investment transactions committed but not disbursed or utilized are generally subject to fulfillment of conditions of disbursement. NOTE I – LOAN PARTICIPANTS Loan participations signed as commitments for which disbursement has not yet been made and loan participations disbursed and outstanding which are serviced by IFC for participants are as follows: (US$ in millions) June 30, 2024 June 30, 2023 Loan participations signed as commitments but not disbursed $ 1,231 $ 785 Loan participations disbursed and outstanding which are serviced by IFC 7,504 7,784 The notes to consolidated financial statements are an integral part of these statements. 104  IFC 2024 ANNUAL REPORT FINANCIALS INTERNATIONAL FINANCE CORPORATION Page 106 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE J — RECEIVABLES AND OTHER ASSETS Receivables and other assets are summarized below: (US$ in millions) June 30, 2024 June 30, 2023 Accrued income on derivative instruments $ 1,397 $ 1,131 Pension and other post-retirement benefits receivable from IBRD 774 704 Accrued interest income on loans 658 524 Receivables from sales of securities 557 791 Post-retirement contribution reserve fund 344 385 Assets under retirement benefit plans 293 246 Accrued interest income on time deposits and securities 261 243 Fixed assets 1,429 1,346 Less: Accumulated depreciation (871) (819) Fixed assets, net 558 527 Deferred charges and other assets 1,330 1,294 Total receivables and other assets $ 6,172 $ 5,845 The notes to consolidated financial statements are an integral part of these statements. IFC 2024 ANNUAL REPORT FINANCIALS  105 INTERNATIONAL FINANCE CORPORATION Page 107 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE K — BORROWINGS Market borrowings and associated derivatives IFC diversifies its borrowings by currency, country, source, and maturity to provide flexibility and cost-effectiveness. For the year ended June 30, 2024, IFC borrowed in 22 currencies. The currency composition on IFC's market borrowings (excluding borrowings from IDA), before swaps, net of unamortized premiums and discounts, are summarized below: June 30, 2024 June 30, 2023 (US$ in millions, except for %) Amount As a % of Total Amount As a % of Total Medium and long term (MLT) borrowings U.S. dollar $ 23,204 37.0 % $ 21,639 36.0 % Australian dollar 12,028 19.2 10,434 17.3 Pounds sterling 7,352 11.7 5,703 9.5 Mexican peso 4,432 7.1 5,221 8.7 Canadian dollar 2,374 3.8 2,073 3.4 Others 11,018 17.6 12,136 20.2 Principal at face value - MLT 60,408 96.3 % 57,206 95.1 % Short-term borrowings 2,308 3.7 2,967 4.9 Principal at face value - Total 62,716 100 % 60,173 100 % Unamortized discounts, net (3,140) (3,433) Fair value adjustments (3,991) (4,540) Carrying amount of market borrowings $ 55,585 $ 52,200 The interest rate composition on IFC's market borrowings (excluding borrowings from IDA), before swaps, are summarized below: June 30, 2024 June 30, 2023 Weighted Weighted average cost average cost (US$ in millions, except for %) Amount (%) Amount (%) MLT borrowings Fixed rate $ 56,612 3.3 % $ 52,606 3.0 % Variable rate 3,796 4.7 4,600 5.1 Principal at face value - MLT 60,408 57,206 Short-term borrowings - Fixed rate 2,308 5.0 2,967 4.1 Principal at face value - Total 62,716 60,173 Unamortized discounts, net (3,140) (3,433) Fair value adjustments (3,991) (4,540) Carrying amount of market borrowings $ 55,585 $ 52,200 The weighted average remaining maturity of IFC’s market borrowings was 5.0 years at June 30, 2024 (5.4 years – June 30, 2023). Actual maturities may differ from contractual maturities due to the existence of call features in certain of IFC’s borrowings. IFC’s short- term Discount Note Program has maturities ranging from overnight to one year. The amount outstanding under the program at June 30, 2024 was $2.3 billion ($3.0 billion – June 30, 2023). The notes to consolidated financial statements are an integral part of these statements. 106  IFC 2024 ANNUAL REPORT FINANCIALS INTERNATIONAL FINANCE CORPORATION Page 108 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE K – BORROWINGS (continued) Borrowings from IDA Borrowings outstanding from IDA are summarized below: June 30, 2024 Interest rate swap notional principal IDA Borrowings payable (receivable) Net currency obligation Weighted Weighted Weighted Principal average Notional average Notional average (US$ in millions, except for ratios) amount cost (%) amount cost (%) amount cost (%) U.S. dollar $ 185 1.8 $ 185 5.6 $ 185 5.6 (185) (1.8) Total IDA borrowings outstanding $ 185 $ — $ 185 5.6 Fair value adjustments (15) Carrying amount of IDA borrowings $ 170 June 30, 2023 Interest rate swap notional principal IDA Borrowings payable (receivable) Net currency obligation Weighted Weighted Weighted Principal average Notional average Notional average (US$ in millions, except for ratios) amount cost (%) amount cost (%) amount cost (%) U.S. dollar $ 262 1.8 $ 262 5.5 $ 262 5.5 (262) (1.8) Total IDA borrowings outstanding $ 262 $ — $ 262 5.5 Fair value adjustments (19) Carrying amount of IDA borrowings $ 243 The weighted average remaining maturity of borrowings from IDA was 3.6 years at June 30, 2024 (3.4 years – June 30, 2023). IFC uses derivatives, reported at fair value, to manage the currency risk and the interest rate risk on its borrowings. The nominal payable amount on the currency and interest rate swaps on market borrowings are shown in the table below: (US$ in millions) June 30, 2024 June 30, 2023 Currency swaps $ 35,906 $ 34,278 Interest rate swaps 23,742 22,197 The following table summarizes IFC’s borrowing portfolio after derivatives: (US$ in millions) June 30, 2024 June 30, 2023 Borrowings $ 55,755 $ 52,443 Currency and interest rate swap (assets) (183) (2,795) Currency and interest rate swap liabilities 6,648 10,032 Borrowings after swaps $ 62,220 $ 59,680 After the effect of interest rate and currency swaps, IFC’s borrowings generally reprice within one year. The notes to consolidated financial statements are an integral part of these statements. IFC 2024 ANNUAL REPORT FINANCIALS  107 INTERNATIONAL FINANCE CORPORATION Page 109 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE K – BORROWINGS (continued) Maturity of borrowings As of June 30, 2024, the principal amounts repayable on borrowings outstanding in all currencies during the years ending June 30, 2025, through June 30, 2029, and thereafter are summarized below: (US$ in millions) 2025 2026 2027 2028 2029 Thereafter Total Borrowings from market sources $ 10,151 $ 12,951 $ 11,964 $ 5,339 $ 6,374 $ 13,629 $ 60,408 Short-term borrowings from market and other sources 2,308 — — — — — 2,308 Borrowings from IDA 61 34 12 11 11 56 185 Total borrowings, gross $ 12,520 $ 12,985 $ 11,976 $ 5,350 $ 6,385 $ 13,685 $ 62,901 Unamortized discounts, net (3,140) Fair value adjustments (4,006) Carrying amount of borrowings $ 55,755 As of June 30, 2023, the principal amounts repayable on borrowings outstanding in all currencies during the years ending June 30, 2024, through June 30, 2028, and thereafter are summarized below: (US$ in millions) 2024 2025 2026 2027 2028 Thereafter Total Borrowings from market sources $ 9,042 $ 9,706 $ 12,543 $ 7,016 $ 5,248 $ 13,652 $ 57,207 Short-term borrowings from market and other sources 2,967 — — — — — 2,967 Borrowings from IDA 77 61 34 12 11 67 262 Total borrowings, gross $ 12,086 $ 9,767 $ 12,577 $ 7,028 $ 5,259 $ 13,719 $ 60,436 Unamortized discounts, net (3,433) Fair value adjustments (4,560) Carrying amount of borrowings $ 52,443 NOTE L — PAYABLES AND OTHER LIABILITIES Payables and other liabilities are summarized below: (US$ in millions) June 30, 2024 June 30, 2023 Accounts payable, accrued expenses and other liabilities $ 1,457 $ 1,378 Payables for unsettled security trades 1,415 1,002 Accrued charges on derivative instruments 1,256 1,089 Accrued charges on borrowings 920 785 Liabilities under post-employment benefit plan 734 710 Deferred income 126 91 Liabilities under retirement benefit plans 93 112 Secured borrowings and short sold securities 62 73 Total payables and other liabilities $ 6,063 $ 5,240 The notes to consolidated financial statements are an integral part of these statements. 108  IFC 2024 ANNUAL REPORT FINANCIALS INTERNATIONAL FINANCE CORPORATION Page 110 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE M – CAPITAL TRANSACTIONS Following the Spring Meetings in April 2018, a financing package was endorsed by the Board of Governors that included a three-step capital raising process: conversion of a portion of retained earnings into paid-in capital, a Selective Capital Increase (SCI) and General Capital Increase (GCI) that would provide up to $5.5 billion in additional paid-in capital. The GCI and SCI Resolutions were adopted and became effective on April 16, 2020. In April 2023 the deadline for the SCI subscription and payment was extended to April 16, 2025. The GCI subscription deadline, initially extended to April 16, 2024 in April 2023, was further extended to April 16, 2025 in April 2024, thereby aligning with the original deadline for GCI payment. The authorized capital stock was increased by the creation of 16,999,998 additional shares each having a par value of $1,000 after converting a portion of the retained earnings into paid-in capital. The authorized capital stock was increased by 919,998 and 4,579,995 shares of capital stock each having a par value of $1,000 as per the SCI and GCI respectively. The authorized capital stock as of June 30, 2024 and June 30, 2023 consists of 25,079,991 shares of $1,000 par value each. As of June 30, 2024, 135 countries have subscribed a total of $4.5 billion and payments of $3.7 billion were received from 109 countries. During the year ended June 30, 2024, 16 countries subscribed a total of $165 million (GCI of $134 million and SCI of $31 million) and payments of $624 million were received from 59 countries. For the years ended June 30, 2023 and June 30, 2022, $328 million and $803 million were subscribed and $847 million and $987 million of payments were received, respectively. Under IFC’s Articles of Agreement, in the event a member withdraws from IFC, IFC and the member may negotiate on the repurchase of the member’s capital stock on such terms as may be appropriate under the circumstances. Such agreement may provide, among other things, for a final settlement of all obligations of the member to IFC. If such an agreement is not made within six months after the member withdraws or such other time as IFC and the member may agree, the repurchase price of the member’s capital stock shall be the value thereof shown by the books of IFC on the day when the member withdraws. The repurchase of capital stock is subject to certain conditions including payments in installments, at such times and in such available currency or currencies as IFC reasonably determines, taking into account the financial position of IFC. IFC’s Articles of Agreement also provide for the withdrawing member to repay losses on loans and equity investments in excess of reserve provided on the date of withdrawal. NOTE N – OTHER INCOME Other income for the years ended June 30, 2024, June 30, 2023 and June 30, 2022 comprise the following: For the year ended (US$ in millions) June 30, 2024 June 30, 2023 June 30, 2022 Investments gains (losses) on PEBP assets $ 63 $ 55 $ (17) Post-retirement Contributions Reserve Fund (PCRF) income 30 15 1 Fees collected from clients 18 16 13 Other reimbursable arrangements 11 9 14 Others 66 48 33 Total Other Income $ 188 $ 143 $ 44 The notes to consolidated financial statements are an integral part of these statements. IFC 2024 ANNUAL REPORT FINANCIALS  109 INTERNATIONAL FINANCE CORPORATION Page 111 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE O – RETAINED EARNINGS DESIGNATIONS AND ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Designated retained earnings IFC designates its retained earnings to support the following Upstream and Advisory Services: Funding Mechanism for Technical Assistance and Advisory Services (FMTAAS) – FMTAAS supports the delivery of Upstream and Advisory related activities, primarily in non-IDA/Fragile and FCS countries. Creating Markets Advisory Window (CMAW) – CMAW supports the delivery of Upstream and Advisory related activities in eligible IDA and FCS countries with the aim of addressing the complex challenge of building a pipeline of bankable private sector projects in these markets. Small and Medium Enterprise (SME) Ventures – SME Ventures covers program, administrative, legal, and consulting expenses in connection with IFC’s private equity program for financing of SMEs. The components of designated retained earnings and related expenditures are summarized below: Funding Mechanism for Creating Small and Total Technical Markets Medium Designated Assistance and Advisory Enterprise Retained (US$ in millions) Advisory Services Window Ventures Earnings As of June 30, 2021 $ 42 $ 151 $ 14 $ 207 Year ended June 30, 2022 Designations of retained earnings 72 89 — 161 Expenditures against designated retained earnings (36) (33) (1) (70) As of June 30, 2022 $ 78 $ 207 $ 13 $ 298 Year ended June 30, 2023 Designations of retained earnings 6 — — 6 Expenditures against designated retained earnings (36) (46) (1) (83) As of June 30, 2023 $ 48 $ 161 $ 12 $ 221 Year ended June 30, 2024 Designations of retained earnings 60 — — 60 Expenditures against designated retained earnings (50) (68) (1) (119) As of June 30, 2024 $ 58 $ 93 $ 11 $ 162 On August 3, 2023 the Board of Directors approved a designation of $60 million to FMTAAS. This designation was approved by the Board of Governors on October 13, 2023. Accumulated other comprehensive income The components of accumulated other comprehensive income as of June 30, 2024 and June 30, 2023 are summarized as follows: (US$ in millions) June 30, 2024 June 30, 2023 Net unrealized losses on available-for-sale debt securities $ (117) $ (238) Net unrealized gains on borrowings at fair value under the Fair Value Option due to changes in instrument-specific credit risk 414 340 Unrecognized net actuarial gains and unrecognized prior service costs on benefit plans 660 530 Total accumulated other comprehensive income $ 957 $ 632 The notes to consolidated financial statements are an integral part of these statements. 110  IFC 2024 ANNUAL REPORT FINANCIALS INTERNATIONAL FINANCE CORPORATION Page 112 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE P – NET UNREALIZED GAINS AND LOSSES ON NON-TRADING FINANCIAL INSTRUMENTS ACCOUNTED FOR AT FAIR VALUE Net unrealized gains and losses on non-trading financial instruments accounted for at fair value for the years ended June 30, 2024, June 30, 2023 and June 30, 2022 comprise: For the year ended June 30, June 30, June 30, (US$ in millions) 2024 2023 2022 Unrealized gains and losses on loans, debt securities and associated derivatives: Unrealized gains (losses) on loans under the Fair Value Option $ 74 $ 9 $ (95) Unrealized (losses) gains on derivatives associated with loans (102) 172 389 Unrealized gains (losses) on debt securities under the Fair Value Option 206 (55) (532) Unrealized gains on derivatives associated with debt securities 4 49 115 Total net unrealized gains (losses) on loans, debt securities and associated derivatives 182 175 (123) Unrealized gains and losses on borrowings from market, IDA and associated derivatives: Unrealized (losses) gains on market borrowings accounted for at fair value (623) 265 3,795 Unrealized gains (losses) on derivatives associated with market borrowings 573 (320) (3,928) Unrealized (losses) gains on borrowings from IDA accounted for at fair value (4) 5 27 Total net unrealized losses on borrowings from market, IDA and associated derivatives (54) (50) (106) Net unrealized gains and losses on non-trading financial instruments accounted for at fair value $ 128 $ 125 $ (229) The notes to consolidated financial statements are an integral part of these statements. IFC 2024 ANNUAL REPORT FINANCIALS  111 INTERNATIONAL FINANCE CORPORATION Page 113 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE Q – DERIVATIVES IFC enters into transactions in various derivative instruments for financial risk management purposes in connection with its principal business activities, including lending, investing in debt securities, equity investments, client risk management, borrowing, liquid asset management and asset and liability management. None of these derivative instruments are designated as accounting hedges under ASC Topic 815. The following table summarizes IFC's use of derivatives in its various financial portfolios: Portfolio Derivative instruments used Purpose / Risk being managed Risk Management purposes: Investments a Currency swaps, currency forward contracts, Manage currency and interest rate risk interest rate swaps, options, swaptions and futures contracts, to-be-announced (TBA) securities Loans Currency swaps and interest rate swaps Manage currency risk and interest rate risk between loans and borrowings Currency swaps and interest rate swaps Manage currency risk and interest rate risk Borrowings between loans and borrowings Other asset/liability Currency swaps and interest rate swaps Manage currency risk and duration of IFC's management equity Other purposes: Currency swaps, currency forward contracts and Assist clients in managing risks Client operations interest rate swaps –––––––– a Excludes options and warrant agreements that are accounted for as derivatives associated with IFC's equity investments. The fair value of derivative instrument assets and liabilities by risk type as of June 30, 2024 and June 30, 2023 is summarized as follows: (US$ in millions) June 30, 2024 June 30, 2023 Derivative assets Interest rate $ 656 $ 843 Foreign exchange 244 225 Interest rate and currency 1,907 4,465 Equity 96 124 Credit and other 51 65 Total derivative assets $ 2,954 $ 5,722 Derivative liabilities Interest rate $ 2,067 $ 2,245 Foreign exchange 67 217 Interest rate and currency 5,201 8,706 Equity 10 10 Credit and other 11 17 Total derivative liabilities $ 7,356 $ 11,195 The notes to consolidated financial statements are an integral part of these statements. 112  IFC 2024 ANNUAL REPORT FINANCIALS INTERNATIONAL FINANCE CORPORATION Page 114 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE Q – DERIVATIVES (continued) The effect of derivative instrument contracts on the consolidated statements of operations for the years ended June 30, 2024, June 30, 2023 and June 30, 2022 is summarized as follows: (US$ in millions) For the year ended Derivative risk June 30, June 30, June 30, category Consolidated Statements of Operations location 2024 2023 2022 Interest rate Income (loss) from loans and guarantees, including realized gains and losses on loans and associated derivatives $ 104 $ 54 $ (25) Income (loss) from debt securities, including realized gains and losses on debt securities and associated derivatives 41 20 (13) (Loss) income from liquid asset trading activities (26) 56 73 Charges on borrowings (691) (407) 243 Other income 23 18 17 Net unrealized gains (losses) on non-trading financial instruments accounted for at fair value 46 (248) (1,263) Foreign exchange Income (loss) from liquid asset trading activities 737 (62) 2,223 Foreign currency transaction gains (losses) on non-trading activities 3 (12) 8 Net unrealized (losses) gains on non-trading financial instruments accounted for at fair value (6) 7 (3) Interest rate and Loss from loans and guarantees, including realized gains and losses on currency loans and associated derivatives (6) (9) (217) Loss from debt securities, including realized gains and losses on debt securities and associated derivatives (43) (109) (64) Income (loss) from liquid asset trading activities 125 (209) 575 Charges on borrowings (878) (372) 781 Foreign currency transaction gains (losses) on non-trading activities 244 (285) (2,180) Other income 3 3 2 Net unrealized gains (losses) on non-trading financial instruments accounted for at fair value 444 108 (2,144) Equity (Losses) gains from equity investments and associated derivatives (27) 43 (43) Net unrealized gains (losses) on non-trading financial instruments accounted for at fair value — (1) (13) Other derivative Net unrealized (losses) gains on non-trading financial instruments contracts accounted for at fair value (8) 33 (3) Total $ 85 $ (1,372) $ (2,046) The income related to each derivative risk category includes realized and unrealized gains and losses. As of June 30, 2024, the outstanding volume, measured by U.S. dollar equivalent notional, of interest rate contracts was $69.3 billion ($74.5 billion as of June 30, 2023), foreign exchange contracts was $17.2 billion ($20.7 billion as of June 30, 2023) and interest rate and currency contracts was $58.4 billion ($53.6 billion as of June 30, 2023). At June 30, 2024, there were 115 derivative instrument contracts related to IFC’s equity investment portfolio and 33 other derivative contracts, recognized as derivative assets or liabilities under ASC Topic 815 (129 equity risk and 27 other contracts as of June 30, 2023). The notes to consolidated financial statements are an integral part of these statements. IFC 2024 ANNUAL REPORT FINANCIALS  113 INTERNATIONAL FINANCE CORPORATION Page 115 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE R – FAIR VALUE MEASUREMENTS ASC 820 defines fair value as the price that would be received to sell an asset or transfer a liability (i.e., an exit price) in an orderly transaction between independent, knowledgeable and willing market participants at the measurement date assuming the transaction occurs in the entity’s principal (or most advantageous) market. IFC categorizes its financial instruments into three levels based on the established fair value hierarchy. For more information regarding the fair value hierarchy and how IFC measures fair value, see Note A – Summary of Significant Accounting Policies. Readers are cautioned in using these data for purposes of evaluating the financial condition of IFC as the fair values of the individual financial instruments do not represent the fair value of IFC taken as a whole. IFC utilized, where available, comparator, sector and country information, in addition to discounted cash flow models, in valuing its equity investment portfolio as of June 30, 2024. Debt securities and loans accounted for at fair value that do not have available market prices were primarily valued using discounted cash flow approaches and reflected spreads at June 30, 2024. For the following instruments, the significant unobservable inputs and its relationship to the fair valuation movement are listed below: Instrument Significant Unobservable Input Changes in Unobservable Input Results In IFC Local Currency Borrowings IFC Yield Curve Decrease in Fair Value Interest Rate Swaps (hedging loans Yield Curve Points Increase in Fair Value and liquid assets) Interest Rate Swaps (hedging Yield Curve Points Decrease in Fair Value borrowings) Currency Swaps (hedging loans and Yield Curve and Exchange Rates Increase in Fair Value liquid assets) Currency Swaps (hedging borrowings) Yield Curve and Exchange Rates Decrease in Fair Value Discount Rates, Credit Default Spreads Decrease in Fair Value Debt Securities and Loans Valuation Multiple, Recovery Rates Increase in Fair Value Cost of equity, discounts for lack of Decrease in Fair Value marketability, weighted average cost of capital Equity Securities and Equity Related Derivatives Growth rates, return on assets, perpetual Increase in Fair Value growth rates, EV/EBITDA, price to book value and other valuation multiples and volatilities The methodologies used and key assumptions made to estimate fair values as of June 30, 2024 and June 30, 2023, are summarized below. Liquid assets – The primary pricing source for the liquid assets is valuations obtained from external pricing services (vendor prices). The most liquid securities in the liquid asset portfolio are U.S. Treasuries. U.S. Treasuries and U.S. Government agency bonds are classified as Level 1. The remaining liquid assets valued using vendor prices are classified as Level 2 or Level 3 based on the results of IFC’s evaluation of the vendor’s pricing methodologies and individual security facts and circumstances. Most vendor prices use some form of matrix pricing methodology to derive the inputs for projecting cash flows or to derive prices. When vendor prices are not available, liquid assets are valued internally by IFC using executable or indicative dealer quotes from the market and these are classified as Level 2 or Level 3 depending on the degree that the inputs are observable in the market. The critical factors in valuing liquid assets in both Level 2 and Level 3 are the estimation of cash flows and yield. Other significant inputs for valuing corporate securities, quasi-government securities and sovereign or sovereign-guaranteed securities include reported trades, broker/dealer quotes, benchmark securities, option adjusted spread curve, volatilities, and other reference data. In addition to these inputs, valuation models for securitized or collateralized securities use collateral performance inputs, such as weighted average coupon rate, weighted average maturity, conditional prepayment rate, constant default rate, vintage, and credit enhancements. There were no liquid assets classified as Level 3 as of June 30, 2024 and June 30, 2023. Loans and debt securities – Loans and debt securities in IFC’s investment portfolio that do not have available market prices are primarily valued using discounted cash flow approaches. The majority of loans measured at fair value are classified as Level 3. Certain loans contain embedded conversion and/or income participation features. If not bifurcated as standalone derivatives, these features are considered in determining the loans’ fair value based on the quoted market prices or other calculated values of the equity investments into which the loans are convertible and the discounted cash flows of the income participation features. The significant unobservable inputs used in the fair value measurement of loans and debt securities are discount rates, credit default swap spreads, and expected recovery rates. The valuation techniques and significant unobservable inputs for loans and debt securities classified as Level 3 as of June 30, 2024 and as of June 30, 2023 are presented below. The notes to consolidated financial statements are an integral part of these statements. 114  IFC 2024 ANNUAL REPORT FINANCIALS INTERNATIONAL FINANCE CORPORATION Page 116 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE R – FAIR VALUE MEASUREMENTS (continued) June 30, 2024 Weighted average (US$ in millions) Valuation technique Fair value Significant inputs Range (%) (%) Debt securities - preferred shares Discounted cash flows $ 14 Discount rate 10.7 - 16.0 12.4 Market comparables 47 Valuation multiples a Recent transactions 158 Other techniques 19 Total preferred shares 238 Credit default swap Other loans and debt securities Discounted cash flows 7,550 spreads 0.0 - 20.5 2.7 Expected recovery rates 0.0 - 95.0 44.1 Recent transactions 1,677 Other techniques 416 Total other loans and debt securities 9,643 Total $ 9,881 _________ a Includes valuation techniques with multiple significant inputs, therefore the range and weighted average are not provided. June 30, 2023 Weighted average (US$ in millions) Valuation technique Fair value Significant inputs Range (%) (%) Debt securities – preferred shares Discounted cash flows $ 15 Discount rate 10.6 - 16.0 12.0 Market comparables 44 Valuation multiples a Recent transactions 121 Other techniques 28 Total preferred shares 208 Credit default swap Other loans and debt securities Discounted cash flows 5,886 spreads 0.4 - 20.2 3.3 Expected recovery rates 0.0 - 75.0 44.7 Recent transactions 1,825 Other techniques 411 Total other loans and debt securities 8,122 Total $ 8,330 ________ a Includes valuation techniques with multiple significant inputs, therefore the range and weighted average are not provided. Borrowings – Fair values derived by determining the present value of estimated future cash flows using appropriate discount rates and option specific models where appropriate are classified as Level 2. Fair values derived from market source pricing are also classified as Level 2. The significant inputs used in valuing borrowings classified as Level 2 are presented below: Classes Significant Inputs Structured bonds Foreign exchange rate and inter-bank yield curves, IFC’s credit curve and swaption volatility matrix, foreign exchange rate volatility, equity spot price, volatility and dividend yield. Unstructured bonds Inter-bank yield curve and IFC’s credit curve. As of June 30, 2024, IFC had bond issuances with a total fair value of $83 million classified as level 3 in Azerbaijani manat, Bangaladeshi taka, Jamaican dollar, Serbian dinar and Uzbekistan sum where the significant unobservable inputs were yield curve data ($228 million as of June 30, 2023). As of June 30, 2024, the weighted average effective interest rate on medium and long-term borrowings carried at amortized cost was 8.0% (7.3% as of June 30, 2023) and the effective interest rate on short-term borrowings carried at amortized cost was 5.0% (4.1% as of June 30, 2023). Derivative instruments — The various classes of derivative instruments include interest rate contracts, foreign exchange contracts, interest rate and currency contracts, equity contracts and other derivative contracts. Certain over the counter derivatives in the liquid The notes to consolidated financial statements are an integral part of these statements. IFC 2024 ANNUAL REPORT FINANCIALS  115 INTERNATIONAL FINANCE CORPORATION Page 117 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE R – FAIR VALUE MEASUREMENTS (continued) asset portfolio priced in-house are classified as Level 2, while certain over the counter derivatives priced using external manager prices are classified as Level 3. Fair values for derivative instruments are derived by determining the present value of estimated future cash flows using appropriate discount rates and option specific models where appropriate. The significant inputs used in valuing the various classes of derivative instruments classified as Level 2 and significant unobservable inputs for derivative instruments classified as Level 3 as of June 30, 2024 and June 30, 2023 are presented below: Level 2 derivatives Significant Inputs Interest rate Inter-bank yield curves, foreign exchange basis curve and yield curves specified to index floating rates. Foreign exchange Foreign exchange rate, inter-bank yield curves and foreign exchange basis curve. Interest rate and currency Foreign exchange rate, inter-bank yield curves, foreign exchange basis curve and yield curves specified to index floating rates. (US$ in millions) June 30, 2024 Weighted average Level 3 derivatives Type Fair value Significant inputs Range (%) (%) Equity related derivatives Fixed strike price options $ — Volatilities 24.3 - 28.1 27.8 Variable strike price options 86 Contractual strike price a Yield curve points, Interest rate and currency swap assets Vanilla swaps 120 exchange rates Interest rate and currency swap Yield curve points, liabilities Vanilla swaps (7) exchange rates Total $ 199 _________ a In case of valuation techniques with multiple significant inputs, the range and weighted average are not provided. (US$ in millions) June 30, 2023 Weighted average Level 3 derivatives Type Fair value Significant inputs Range (%) (%) Equity related derivatives Fixed strike price options $ 1 Volatilities 28.1 - 44.3 44.3 Variable strike price options 113 Contractual strike price a Yield curve points, Interest rate and currency swap assets Vanilla swaps 74 exchange rates Interest rate and currency swap Yield curve points, liabilities Vanilla swaps (10) exchange rates Total $ 178 _________ a In case of valuation techniques with multiple significant inputs, the range and weighted average are not provided. The notes to consolidated financial statements are an integral part of these statements. 116  IFC 2024 ANNUAL REPORT FINANCIALS INTERNATIONAL FINANCE CORPORATION Page 118 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE R – FAIR VALUE MEASUREMENTS (continued) Equity investments – Equity investments valued using quoted prices in active markets are classified as Level 1. Equity investments classified as Level 2 are valued using quoted prices in inactive markets. Equity investments classified as Level 3 are primarily valued using discounted cash flow and market comparable approaches. The significant unobservable inputs include cost of equity, weighted average cost of capital, asset growth rate, return on assets, perpetual growth rate, price to book and market multiples. The valuation techniques and significant unobservable inputs used in fair value measurements categorized within Level 3 of the fair value hierarchy for equity investments that were measured at fair value through net income as of June 30, 2024 and June 30, 2023 are presented below. (US$ in millions) June 30, 2024 Weighted average Sector Valuation technique Fair value Significant inputs Range (%) Banking and other financial Discounted cash flows $ 317 Cost of equity (%) 12.2 - 34.4 15.2 Institutions Asset growth rate (%) (8.6) - 56.6 4.5 Return on assets (%) (0.6) - 6.2 1.9 Perpetual growth rate (%) 3.0 - 15.0 5.4 Market comparables 509 Price to book value 0.3 - 4.9 2.9 EV/Sales 2.1 - 11.2 7.4 Other valuation multiples a Discount for lack of Listed price (adjusted) 237 marketability (%) 20.0 - 30.0 27.6 Recent transactions 634 Other techniques 132 Associated options b 46 Total banking and other financial institutions 1,875 Funds Recent transactions 123 Market comparables 2 Other techniques 85 Total funds 210 Weighted average cost of Others Discounted cash flows 942 capital (%) 7.9 - 26.1 11.8 Cost of equity (%) 10.8 - 23.9 15.3 Market comparables 645 EV/Sales 0.7 - 19.1 5.4 EV/EBITDA 6.2 - 22.0 12.6 Price to book value 0.6 - 2.2 1.5 Other valuation multiples a Recent transactions 480 Other techniques 96 Associated options b 103 Total others 2,266 Total $ 4,351 _________ a Includes price/earnings ratio and price/sales ratio, the range and weighted average are not provided due to the immaterial amounts. b Fair values for associated options are derived by determining the present value of estimated future cash flows using appropriate discount rates and option specific models where appropriate. The notes to consolidated financial statements are an integral part of these statements. IFC 2024 ANNUAL REPORT FINANCIALS  117 INTERNATIONAL FINANCE CORPORATION Page 119 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE R – FAIR VALUE MEASUREMENTS (continued) (US$ in millions) June 30, 2023 Weighted average Sector Valuation technique Fair value Significant inputs Range (%) Banking and other financial Discounted cash flows $ 517 Cost of equity (%) 11.0 - 26.0 13.7 Institutions Asset growth rate (%) (1.5) - 56.6 8.6 Return on assets (%) 0.3 - 8.7 2 Perpetual growth rate (%) 2.5 - 13.0 5.2 Market comparables 400 Price to book value 0.3 - 1.5 1.3 EV/Sales 1.5 - 15.4 9.6 Discount for lack of Listed price (adjusted) 199 marketability (%) * 35.0 Recent transactions 380 Other techniques 180 Associated options b 31 Total banking and other financial institutions 1,707 Funds Recent transactions 106 Other techniques 53 Total funds 159 Weighted average cost of Others Discounted cash flows 896 capital (%) 7.2 - 29.8 11.5 Cost of equity (%) 9.7 - 25.5 14.9 Market comparables 746 EV/Sales 0.7 - 20.3 4.2 EV/EBITDA 4.2 - 22.0 14 Price to book value 0.6 - 2.4 1.8 Other valuation multiples a Recent transactions 521 Other techniques 81 Associated options b 91 Total others 2,335 Total $ 4,201 _________ * No range is provided as all of the projects that use this valuation technique are with the same institution and have the same discount percentage. a Includes price/earnings ratio and price/sales ratio, the range and weighted average are not provided due to the immaterial amounts. b Fair values for associated options are derived by determining the present value of estimated future cash flows using appropriate discount rates and option specific models where appropriate. The notes to consolidated financial statements are an integral part of these statements. 118  IFC 2024 ANNUAL REPORT FINANCIALS INTERNATIONAL FINANCE CORPORATION Page 120 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE R – FAIR VALUE MEASUREMENTS (continued) Fair value of assets and liabilities Estimated fair values of IFC’s financial assets and liabilities and off-balance sheet financial instruments at June 30, 2024 and June 30, 2023 are summarized below: June 30, 2024 June 30, 2023 Carrying Fair Carrying Fair (US$ in millions) value value value value Financial assets Cash and due from banks, time deposits, trading securities and securities purchased under resale agreements and receivable for cash collateral pledged $ 40,314 $ 40,314 $ 47,478 $ 47,478 Investments: Loans at amortized cost, net of reserve against losses 34,648 35,711 29,908 30,369 Loans accounted for at fair value under the Fair Value Option 1,789 1,789 1,506 1,506 Total loans 36,437 37,500 31,414 31,875 a a Equity investments accounted for at fair value 11,121 11,118 10,778 10,776 Debt securities accounted for at fair value as available-for-sale 811 811 1,373 1,373 Debt securities accounted for at fair value under the Fair Value Option 10,378 10,378 7,937 7,937 Total debt securities 11,189 11,189 9,310 9,310 Total investments $ 58,747 $ 59,807 $ 51,502 $ 51,961 Derivative assets: Borrowings-related 183 183 2,795 2,795 Liquid asset portfolio-related and other 365 365 433 433 Investment-related 1,978 1,978 1,977 1,977 Client risk management-related 428 428 517 517 Total derivative assets $ 2,954 $ 2,954 $ 5,722 $ 5,722 Other investment-related financial assets — 2 — 3 Financial liabilities Securities sold under repurchase agreements and payable for cash collateral received $ 1,541 $ 1,541 $ 6,631 $ 6,631 Market, IBRD, IDA and other borrowings outstanding 55,755 55,754 52,443 52,433 Derivative liabilities: Borrowings-related 6,648 6,648 10,032 10,032 Liquid asset portfolio-related and other 77 77 241 241 Investment-related 312 312 523 523 Client risk management-related 319 319 399 399 Total derivative liabilities $ 7,356 $ 7,356 $ 11,195 $ 11,195 _________ a Includes $3 million as of June 30, 2024 ($2 million as of June 30, 2023) of equity investments primarily accounted for under the cost recovery method, no fair value measurement is provided since the recovery of invested capital is uncertain. The fair value of loan commitments amounted to $39 million as of June 30, 2024 ($39 million as of June 30, 2023). Fair values of loan commitments are based on present value of loan commitment fees. The notes to consolidated financial statements are an integral part of these statements. IFC 2024 ANNUAL REPORT FINANCIALS  119 INTERNATIONAL FINANCE CORPORATION Page 121 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE R – FAIR VALUE MEASUREMENTS (continued) Fair value hierarchy As required by ASC 820, financial assets and financial liabilities are classified in their entirety based on the lowest level input that is significant to the fair value measurement. The following tables provide information as of June 30, 2024 and June 30, 2023, about IFC’s financial assets and financial liabilities measured at fair value on a recurring basis: June 30, 2024 (US$ in millions) Level 1 Level 2 Level 3 Total Time deposits with maturities greater than three months a $ — $ 751 $ — $ 751 Trading securities: Asset-backed securities — 5,058 — 5,058 Corporate debt securities b — 2,429 — 2,429 Government obligations 16,784 4,284 — 21,068 Total trading securities 16,784 11,771 — 28,555 Loans — 113 1,671 1,784 Loans measured at net asset value c 5 Total Loans (outstanding principal balance $1,851) — 113 1,671 1,789 Equity investments: Banking and other financial institutions 603 16 1,875 2,494 Funds — 12 210 222 Others 480 6 2,266 2,752 Equity investments measured at net asset value c 5,650 Total equity investments 1,083 34 4,351 11,118 Debt securities: Corporate debt securities — 2,437 7,170 9,607 Preferred shares — — 238 238 Asset-backed securities — — 802 802 Debt securities measured at net asset value c 542 Total debt securities — 2,437 8,210 11,189 Derivative assets: Interest rate — 656 — 656 Foreign exchange — 244 — 244 Interest rate and currency — 1,787 120 1,907 Equity and other — — 96 96 Credit and Other derivative contracts — 51 51 Total derivative assets — 2,738 216 2,954 Total assets at fair value $ 17,867 $ 17,844 $ 14,448 $ 56,356 Borrowings: d Structured bonds $ — $ 4,309 $ — $ 4,309 Unstructured bonds — 48,827 83 48,910 Total borrowings (outstanding principal balance $60,365) — 53,136 83 53,219 Derivative liabilities: Interest rate — 2,067 — 2,067 Foreign exchange — 67 — 67 Interest rate and currency — 5,194 7 5,201 Equity and other — — 10 10 Credit and Other derivative contracts — 11 11 Total derivative liabilities — 7,339 17 7,356 Total liabilities at fair value $ — $ 60,475 $ 100 $ 60,575 _________ a Time deposits with maturities greater than three months are carried at cost, which approximates fair value and are considered to be level 2. b Includes securities priced at par plus accrued interest, which approximates fair value. c In accordance with ASC 820, investments that are measured at fair value using net asset value per share have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in consolidated balance sheets. d Includes discount notes (not under the short-term Discount Note Program), with original maturities greater than one year, with principal due at maturity of $5.6 billion, with a fair value of $1.7 billion as of June 30, 2024. The notes to consolidated financial statements are an integral part of these statements. 120  IFC 2024 ANNUAL REPORT FINANCIALS INTERNATIONAL FINANCE CORPORATION Page 122 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE R – FAIR VALUE MEASUREMENTS (continued) June 30, 2023 (US$ in millions) Level 1 Level 2 Level 3 Total Time Deposits with maturities greater than three months a $ — $ 2,467 $ — $ 2,467 Trading securities: Asset-backed securities — 5,232 — 5,232 Corporate debt securities b — 4,022 — 4,022 Government obligations 17,042 4,724 — 21,766 Total trading securities 17,042 13,978 — 31,020 Loans — — 1,488 1,488 Loans measured at net asset value c 18 Total Loans (outstanding principal balance $1,642) — — 1,488 1,506 Equity investments: Banking and other financial institutions 662 17 1,707 2,386 Funds — 16 159 175 Others 681 1 2,335 3,017 Equity investments measured at net asset value c 5,198 Total equity investments 1,343 34 4,201 10,776 Debt securities: Corporate debt securities — 1,839 5,911 7,750 Preferred shares — — 208 208 Asset-backed securities — 55 723 778 Debt securities measured at net asset value c 574 Total debt securities — 1,894 6,842 9,310 Derivative assets: Interest rate — 843 — 843 Foreign exchange — 225 — 225 Interest rate and currency — 4,391 74 4,465 Equity and other — — 124 124 Credit and Other derivative contracts — 65 — 65 Total derivative assets — 5,524 198 5,722 Total assets at fair value $ 18,385 $ 23,897 $ 12,729 $ 60,801 Borrowings: d Structured bonds $ — $ 4,073 $ — $ 4,073 Unstructured bonds — 44,815 228 45,043 Total borrowings (outstanding principal balance $52,174) — 48,888 228 49,116 Derivative liabilities: Interest rate — 2,245 — 2,245 Foreign exchange — 217 — 217 Interest rate and currency — 8,696 10 8,706 Equity and other — — 10 10 Credit and Other derivative contracts — 17 — 17 Total derivative liabilities — 11,175 20 11,195 Total liabilities at fair value $ — $ 60,063 $ 248 $ 60,311 _________ a Time deposits with maturities greater than three months are carried at cost, which approximates fair value and are considered to be level 2. b Includes securities priced at par plus accrued interest, which approximates fair value. c In accordance with ASC 820, investments that are measured at fair value using net asset value per share have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in consolidated balance sheets. d Includes discount notes (not under the short-term Discount Note Program), with original maturities greater than one year, with principal due at maturity of $5.8 billion, with a fair value of $1.8 billion as of June 30, 2023. The notes to consolidated financial statements are an integral part of these statements. IFC 2024 ANNUAL REPORT FINANCIALS  121 INTERNATIONAL FINANCE CORPORATION Page 123 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE R – FAIR VALUE MEASUREMENTS (continued) The following tables present the changes in the carrying value of IFC’s Level 3 financial assets and financial liabilities for the years ended June 30, 2024, June 30, 2023, and June 30, 2022. For the year ended June 30, 2024 Net unrealized Net unrealized gains (losses) gains (losses) Net gains (losses) (realized included in net included in other Purchases, and unrealized) included in income (loss) comprehensive issuances, related to income (loss) Balance as Other sales, Transfers Transfers Balance as assets / related to assets / of July 1, comprehensive settlements into out of of June 30, liabilities held at liabilities held at (US$ in millions) 2023 Net income income and others Level 3 a Level 3 b 2024 year end year end Loans $ 1,488 $ 74 $ — $ 227 $ — $ (118) $ 1,671 $ 55 $ — Equity investments: Banking and other financial institutions 1,707 85 — 83 12 (12) 1,875 106 — Funds 159 20 — 31 — — 210 7 — Others 2,335 (154) — 112 5 (32) 2,266 (228) — Total equity investments 4,201 (49) — 226 17 (44) 4,351 (115) — Debt securities: Corporate debt securities 5,911 (51) 49 1,639 1,157 (1,535) 7,170 (14) 15 Preferred shares 208 33 (2) (1) — — 238 7 — Asset-backed securities 723 (79) 61 43 54 — 802 (16) (1) Total debt securities 6,842 (97) 108 1,681 1,211 (1,535) 8,210 (23) 14 Derivative assets: Interest rate and currency 74 27 — 39 — (20) 120 63 — Equity and other 124 (18) — (10) — — 96 1 — Total derivative assets 198 9 — 29 — (20) 216 64 — Total assets at fair value $ 12,729 $ (63) $ 108 $ 2,163 $ 1,228 $ (1,717) $ 14,448 $ (19) $ 14 Borrowings: Unstructured bonds $ (228) $ 14 $ — $ (48) $ (4) $ 183 $ (83) $ 14 $ — Total borrowings (228) 14 — (48) (4) 183 (83) 14 — Derivative liabilities: Interest rate and currency (10) (6) — (5) (1) 15 (7) (6) — Equity and other (10) — — — — (10) — — Total derivative liabilities (20) (6) — (5) (1) 15 (17) (6) — Total liabilities at fair value $ (248) $ 8 $ — $ (53) $ (5) $ 198 $ (100) $ 8 $ — _________ a Transfers into Level 3 are due to lack of observable market data resulting from a decrease in market activity for these securities as of June 30, 2024. b Transfers out of Level 3 are due to availability of observable market data resulting from an increase in market activity for these securities that were part of July 1, 2023 beginning balance as of June 30, 2024. The notes to consolidated financial statements are an integral part of these statements. 122  IFC 2024 ANNUAL REPORT FINANCIALS INTERNATIONAL FINANCE CORPORATION Page 124 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE R – FAIR VALUE MEASUREMENTS (continued) For the year ended June 30, 2023 Net unrealized Net unrealized gains (losses) gains (losses) Net gains (losses) (realized included in net included in other Purchases, and unrealized) included in income (loss) comprehensive issuances, related to income (loss) Balance as Other sales, Transfers Transfers Balance as assets / related to assets / of July 01, Net income comprehensive settlements into out of of June 30, liabilities held at liabilities held at (US$ in millions) 2022 (loss) income and others Level 3 a Level 3 b 2023 year end year end Trading securities: Asset-backed securities $ — $ 1 $ — $ 55 $ — $ (56) $ — $ — $ — Corporate debt securities 7 — — — — (7) — — — Government and agency obligations 172 (1) — 97 — (268) — — — Total trading securities 179 — — 152 — (331) — — $ — Loans 1,303 30 — 101 54 — 1,488 17 — Equity investments: Banking and other financial institutions 1,573 28 — 68 55 (17) 1,707 12 — Funds 43 12 — 104 — — 159 5 — Others 2,448 (23) — (137) 47 — 2,335 (145) — Total equity investments 4,064 17 — 35 102 (17) 4,201 (128) — Debt securities: Corporate debt securities 4,070 (106) 105 2,218 574 (950) 5,911 88 3 Preferred shares 184 49 (54) 29 — — 208 (17) (4) Asset-backed securities 817 4 5 (103) — — 723 13 8 Total debt securities 5,071 (53) 56 2,144 574 (950) 6,842 84 7 Derivative assets: Interest rate and currency 35 (7) — 55 12 (21) 74 65 — Equity and other 77 53 — (6) — — 124 58 — Total derivative assets 112 46 — 49 12 (21) 198 123 — Total assets at fair value $ 10,729 $ 40 $ 56 $ 2,481 $ 742 $ (1,319) $ 12,729 $ 96 $ 7 Borrowings: Unstructured bonds $ (232) $ (12) $ 1 $ (121) $ (4) $ 140 $ (228) $ (12) $ 1 Total borrowings (232) (12) 1 (121) (4) 140 (228) (12) 1 Derivative liabilities: Interest rate and currency (34) 15 — (2) (4) 15 (10) (2) — Equity and other (4) (6) — — — — (10) (6) — Total derivative liabilities (38) 9 — (2) (4) 15 (20) (8) — Total liabilities at fair value $ (270) $ (3) $ 1 $ (123) $ (8) $ 155 $ (248) $ (20) $ 1 _________ a Transfers into Level 3 are due to lack of observable market data resulting from a decrease in market activity for these securities as of June 30, 2023. b Transfers out of Level 3 are due to availability of observable market data resulting from an increase in market activity for these securities that were part of July 1, 2022 beginning balance as of June 30, 2023. The notes to consolidated financial statements are an integral part of these statements. IFC 2024 ANNUAL REPORT FINANCIALS  123 INTERNATIONAL FINANCE CORPORATION Page 125 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE R – FAIR VALUE MEASUREMENTS (continued) For the year ended June 30, 2022 Net unrealized Net unrealized gains (losses) gains (losses) Net gains (losses) (realized included in net included in other Purchases, and unrealized) included in income (loss) comprehensive issuances, related to income (loss) Balance as Other sales, Transfers Transfers Balance as assets / related to assets / of July 01, Net income comprehensive settlements into out of of June 30, liabilities held at liabilities held at (US$ in millions) 2021 (loss) income and others Level 3 a Level 3 b 2022 year end year end Trading securities: Asset-backed securities $ — $ — $ — $ 30 $ — $ (30) $ — $ — $ — Corporate debt securities — (4) — 120 — (109) 7 (1) — Government and agency obligations 271 9 — 126 — (234) 172 (10) — Total trading securities 271 5 — 276 — (373) 179 (11) $ — Loans 1,313 (122) — 171 — (59) 1,303 (122) — Equity investments: Banking and other financial institutions 1,663 62 — (152) — — 1,573 (65) — Funds 16 (4) — 31 — — 43 (6) — Others 2,989 36 — (233) — (344) 2,448 (16) — Total equity investments 4,668 94 — (354) — (344) 4,064 (87) — Debt securities: Corporate debt securities 3,985 (425) (153) 318 884 (539) 4,070 (335) (165) Preferred shares 483 (99) (19) (181) — — 184 17 8 Asset-backed securities 892 (72) (35) 32 — — 817 (68) (44) Total debt securities 5,360 (596) (207) 169 884 (539) 5,071 (386) (201) Derivative assets: Interest rate and currency 26 12 — 9 10 (22) 35 27 — Equity and other 133 (57) — 1 — — 77 (57) — Total derivative assets 159 (45) — 10 10 (22) 112 (30) — Total assets at fair value $ 11,771 $ (664) $ (207) $ 272 $ 894 $ (1,337) $ 10,729 $ (636) $ (201) Borrowings: Unstructured bonds $ (90) $ 3 $ — $ (214) $ (44) $ 113 $ (232) $ 3 $ — Total borrowings (90) 3 — (214) (44) 113 (232) 3 — Derivative liabilities: Interest rate and currency (10) 4 — (17) (21) 10 (34) (23) — Equity and other (5) 1 — — — — (4) 1 — Total derivative liabilities (15) 5 — (17) (21) 10 (38) (22) — Total liabilities at fair value $ (105) $ 8 $ — $ (231) $ (65) $ 123 $ (270) $ (19) $ — _________ a Transfers into Level 3 are due to lack of observable market data resulting from a decrease in market activity for these securities as of June 30, 2022. b Transfers out of Level 3 are due to availability of observable market data resulting from an increase in market activity for these securities that were part of July 1, 2021 beginning balance as of June 30, 2022. The notes to consolidated financial statements are an integral part of these statements. 124  IFC 2024 ANNUAL REPORT FINANCIALS INTERNATIONAL FINANCE CORPORATION Page 126 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE R – FAIR VALUE MEASUREMENTS (continued) The following tables present gross purchases, sales, issuances and settlements related to the changes in the carrying value of IFC’s Level 3 financial assets and financial liabilities for the years ended June 30, 2024, June 30, 2023, and June 30, 2022. For the year ended June 30, 2024 Settlements (US$ in millions) Purchases Sales Issuances and others Net Loans — — 454 (227) 227 Equity investments: Banking and other financial institutions 176 (84) — (9) 83 Funds 234 — — (203) 31 Others 428 (329) — 13 112 Total equity investments 838 (413) — (199) 226 Debt securities: Corporate debt securities 2,454 — — (815) 1,639 Preferred shares 33 (20) — (14) (1) Asset-backed securities 339 — — (296) 43 Total debt securities 2,826 (20) — (1,125) 1,681 Derivative assets: Interest rate and currency — — 39 — 39 Equity and other — — — (10) (10) Total derivative assets — — 39 (10) 29 Total assets at fair value $ 3,664 $ (433) $ 493 $ (1,561) $ 2,163 Borrowings: Unstructured bonds $ — $ — $ (48) $ — $ (48) Total borrowings — — (48) — (48) Derivative liabilities: Interest rate and currency — — (5) — (5) Total derivative liabilities — — (5) — (5) Total liabilities at fair value $ — $ — $ (53) $ — $ (53) The notes to consolidated financial statements are an integral part of these statements. IFC 2024 ANNUAL REPORT FINANCIALS  125 INTERNATIONAL FINANCE CORPORATION Page 127 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE R – FAIR VALUE MEASUREMENTS (continued) For the year ended June 30, 2023 Settlements (US$ in millions) Purchases Sales Issuances and others Net Trading securities: Asset-backed securities $ 67 $ — $ — $ (12) $ 55 Government and agency obligations 97 — — — 97 Total trading securities 164 — — (12) 152 Loans — (37) 297 (159) 101 Equity investments: Banking and other financial institutions 116 (61) — 13 68 Funds 146 (1) — (41) 104 Others 203 (416) — 76 (137) Total equity investments 465 (478) — 48 35 Debt securities: Corporate debt securities 3,141 (2) — (921) 2,218 Preferred shares 112 (78) — (5) 29 Asset-backed securities 148 — — (251) (103) Total debt securities 3,401 (80) — (1,177) 2,144 Derivative assets: Interest rate and currency — — 53 2 55 Equity and other — — — (6) (6) Total derivative assets — — 53 (4) 49 Total assets at fair value $ 4,030 $ (595) $ 350 $ (1,304) $ 2,481 Borrowings: Unstructured bonds $ — $ — $ (121) $ — $ (121) Total borrowings — — (121) — (121) Derivative liabilities: Interest rate and currency — — (4) 2 (2) Total derivative liabilities — — (4) 2 (2) Total liabilities at fair value $ — $ — $ (125) $ 2 $ (123) The notes to consolidated financial statements are an integral part of these statements. 126  IFC 2024 ANNUAL REPORT FINANCIALS INTERNATIONAL FINANCE CORPORATION Page 128 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE R – FAIR VALUE MEASUREMENTS (continued) For the year ended June 30, 2022 Settlements (US$ in millions) Purchases Sales Issuances and others Net Trading securities: Asset-backed securities $ 44 $ — $ — $ (14) $ 30 Corporate debt securities 240 (120) — — 120 Government and agency obligations 220 — — (94) 126 Total trading securities 504 (120) — (108) 276 Loans — — 296 (125) 171 Equity investments: Banking and other financial institutions 112 (259) — (5) (152) Funds 119 (7) — (81) 31 Others 367 (434) — (166) (233) Total equity investments 598 (700) — (252) (354) Debt securities: Corporate debt securities 1,143 — — (825) 318 Preferred shares — (124) — (57) (181) Asset-backed securities 168 — — (136) 32 Total debt securities 1,311 (124) — (1,018) 169 Derivative assets: Interest rate and currency — — 6 3 9 Equity and other — — — 1 1 Total derivative assets — — 6 4 10 Total assets at fair value $ 2,413 $ (944) $ 302 $ (1,499) $ 272 Borrowings: Unstructured bonds $ — $ — $ (214) $ — $ (214) Total borrowings — — (214) — (214) Derivative liabilities: Interest rate and currency — — (20) 3 (17) Total derivative liabilities — — (20) 3 (17) Total liabilities at fair value $ — $ — $ (234) $ 3 $ (231) The following table summarizes the line items on the consolidated statements of operations where gains and losses are reported by major types of financial assets and financial liabilities: Instruments Line item on the consolidated statements of operations Trading securities Income from liquid asset trading activities Loans Income from Loans and guarantees including realized gains and losses on loans and associated derivatives Equity investments Income from equity investments and associated derivatives Debt securities Income from debt securities and realized gains and losses on debt securities and associated derivatives Non-trading financial instruments Net unrealized gains and losses on non-trading financial instruments accounted for at fair value The notes to consolidated financial statements are an integral part of these statements. IFC 2024 ANNUAL REPORT FINANCIALS  127 INTERNATIONAL FINANCE CORPORATION Page 129 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE S – SEGMENT REPORTING For management purposes, IFC’s business comprises three segments: investment services, treasury services, and upstream and advisory services. The investment services segment consists primarily of lending and investing in debt and equity securities. Operationally, the treasury services segment consists of the borrowing, liquid asset management, asset and liability management and client risk management activities. Upstream and advisory services includes providing advisory services to government and private sector clients to create markets and mobilize private capital, and engages in early stage project development activities to develop bankable investment projects. Consistent with internal reporting, net income or expense from asset and liability management and client risk management activities in support of investment services is allocated from the treasury segment to the investment services segment. The performance of investment services, treasury services and upstream and advisory services is assessed by senior management on the basis of net income for each segment, return on assets, and return on capital employed. Upstream and advisory services are primarily assessed based on the level and adequacy of its funding sources (See Note U). IFC’s management reporting system and policies are used to determine revenues and expenses attributable to each segment. Consistent with internal reporting, administrative expenses are allocated to each segment based largely upon personnel costs and segment headcounts. Transactions between segments are immaterial and, thus, are not a factor in reconciling to the consolidated data. The assets of the investment, treasury, and upstream and advisory services segments are detailed in Notes D, C, and U, respectively. An analysis of IFC’s major components of income and expense by business segment for the years ended June 30, 2024, June 30, 2023 and June 30, 2022, is provided below: For the year ended June 30, 2024 Upstream and Investment Treasury Advisory (US$ in millions) services services services Total Income from loans and guarantees, including realized gains and losses on loans and associated derivatives $ 3,204 $ — $ — $ 3,204 Provision for losses on loans, off-balance sheet credit exposures and other receivables (9) — — (9) Income from equity investments and associated derivatives 142 — — 142 Income from debt securities, including realized gains and losses on debt securities and associated derivatives 811 — — 811 Provision for losses on available-for-sale debt securities (12) — — (12) Income from liquid asset trading activities — 2,391 — 2,391 Charges on borrowings (2,284) (1,531) — (3,815) Upstream and Advisory services income — — 268 268 Service fees and other income 319 — — 319 Administrative expenses (1,329) (48) (139) (1,516) Upstream and Advisory services expenses — — (339) (339) Other, net 17 2 9 28 Foreign currency transaction losses on non-trading activities (115) — — (115) Income (loss) before net unrealized gains and losses on non- trading financial instruments accounted for at fair value 744 814 (201) 1,357 Net unrealized gains (losses) on non-trading financial instruments accounted for at fair value 182 (54) — 128 Net income (loss) $ 926 $ 760 $ (201) $ 1,485 The notes to consolidated financial statements are an integral part of these statements. 128  IFC 2024 ANNUAL REPORT FINANCIALS INTERNATIONAL FINANCE CORPORATION Page 130 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE S – SEGMENT REPORTING (continued) For the year ended June 30, 2023 Upstream Investment Treasury and Advisory (US$ in millions) services services services Total Income from loans and guarantees, including realized gains and losses on loans and associated derivatives $ 2,290 $ — $ — $ 2,290 Provision for losses on loans, off-balance sheet credit exposures and other receivables (22) — — (22) Income from equity investments and associated derivatives 191 — — 191 Income from debt securities, including realized gains and losses on debt securities and associated derivatives 518 — — 518 Provision for losses on available-for-sale debt securities (7) — — (7) Income from liquid asset trading activities — 1,464 — 1,464 Charges on borrowings (1,375) (1,223) — (2,598) Upstream and Advisory services income — — 247 247 Service fees and other income 271 — — 271 Administrative expenses (1,201) (53) (176) (1,430) Upstream and Advisory services expenses — — (317) (317) Other, net 15 3 8 26 Foreign currency transaction losses on non-trading activities (86) — — (86) Income (loss) before net unrealized gains and losses on non- trading financial instruments accounted for at fair value 594 191 (238) 547 Net unrealized gains (losses) on non-trading financial instruments accounted for at fair value 175 (50) — 125 Net income (loss) $ 769 $ 141 $ (238) $ 672 For the year ended June 30, 2022 Upstream Investment Treasury and Advisory (US$ in millions) services services services Total Income from loans and guarantees, including realized gains and losses on loans associated derivatives $ 1,156 $ — $ — $ 1,156 Provision for losses on loans, off-balance sheet credit exposures and other receivables (126) — — (126) Income from equity investments and associated derivatives 208 — — 208 Income from debt securities, including realized gains and losses on debt securities and associated derivatives 414 — — 414 Provision for losses on available-for-sale debt securities (14) — — (14) Loss from liquid asset trading activities — (413) — (413) Charges on borrowings (194) (108) — (302) Upstream and Advisory services income — — 233 233 Service fees and other income 186 — — 186 Administrative expensesa (1,187) (50) (204) (1,441) Upstream and Advisory services expenses — — (287) (287) Other, net 55 4 16 75 Foreign currency transaction gains on non-trading activities 76 — — 76 Income (loss) before net unrealized gains and losses on non- trading financial instruments accounted for at fair value 574 (567) (242) (235) Net unrealized losses non-trading financial instruments accounted for at fair value (123) (106) — (229) Net income (loss) $ 451 $ (673) $ (242) $ (464) __________ a. Starting January 2023, upstream and advisory organizational units in IFC regional industry departments have been fully integrated to deliver holistic solutions to enable new investment opportunities for IFC and others, enhance the development impact and operational performance of existing IFC investments, and improve the enabling environment to open new markets for private sector investments. As a result, upstream administrative expenses of $70 million reported in the Investment Services segment were reclassed to Upstream and Advisory services segment. The notes to consolidated financial statements are an integral part of these statements. IFC 2024 ANNUAL REPORT FINANCIALS  129 INTERNATIONAL FINANCE CORPORATION Page 131 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE T – VARIABLE INTEREST ENTITIES Significant variable interests IFC has identified investments in 234 VIEs which are not consolidated by IFC but in which it is deemed to hold significant variable interests at June 30, 2024 (227 investments – June 30, 2023). The majority of these VIEs do not involve securitizations or other types of structured financing. IFC is usually the minority investor in these VIEs. These VIEs are mainly: (a) investment funds, where the general partner or fund manager does not have substantive equity at risk, which IFC does not consolidate because it does not have the power to direct the activities of the VIEs that most significantly impact their economic performance and (b) entities whose total equity investment is considered insufficient to permit such entity to finance its activities without additional subordinated financial support or whose activities are so narrowly defined by contracts that equity investors are considered to lack decision making ability, which IFC does not consolidate because it does not have the power to control the activities that most significantly impact their economic performance. IFC’s involvement with these VIEs includes investments in equity interests and senior or subordinated interests, guarantees and risk management arrangements. IFC’s maximum exposure to loss as a result of its investments in these VIEs was $6.5 billion at June 30, 2024 ($5.3 billion – June 30, 2023). IFC’s maximum exposure to loss is based on the unlikely event that all of the assets in the VIEs become worthless and incorporates not only potential losses associated with assets recorded on IFC’s consolidated balance sheets (maximum funded exposure) but also potential losses associated with undisbursed commitments (maximum unfunded exposure). The maximum funded exposure represents the balance sheets carrying value of IFC’s investment in the VIE and reflects the initial amount of cash invested in the VIE, adjusted for principal payments received, increases or declines in fair value and any impairment in value recognized in earnings. The maximum exposure of unfunded positions represents the remaining committed but undisbursed amount. The carrying values and the maximum exposure of IFC’s investment in these VIEs at June 30, 2024 and June 30, 2023 are as follows: June 30, 2024 June 30, 2023 Nonconsolidated VIEs Carrying Value Maximum Exposure Carrying Value Maximum Exposure (US$ in millions) Assets Investments Loans a $ 1,136 $ 1,271 $ 1,355 $ 1,527 Equity Investments 2,402 3,514 1,399 2,426 Debt Securities 1,682 1,731 1,333 1,408 Liabilities Derivative Liabilities b $ (62) $ (62) $ (89) $ (89) Other Off-Balance Sheet Arrangements Guarantees Not Applicable $ 39 Not Applicable $ 55 _________ a The presented carrying value of the loans does not include the associated loan loss reserve of $58 million and $63 million as of June 30, 2024 and June 30, 2023, respectively. b Represents Client Risk Management arrangements. IFC transacted with a VIE, of which IFC is the primary beneficiary, to construct an office building at 2100 K Street on land owned by IFC adjacent to its current office premise. IFC commenced occupying the building in March 2019. The building and land, totaling $108 million are included in “Receivables and other assets” on IFC's consolidated balance sheets. The notes to consolidated financial statements are an integral part of these statements. 130  IFC 2024 ANNUAL REPORT FINANCIALS INTERNATIONAL FINANCE CORPORATION Page 132 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE U – UPSTREAM AND ADVISORY IFC continues to address increasingly complex development challenges and is enhancing its creating markets strategy by undertaking both Upstream and Advisory activities. Specifically, IFC provides advisory services to government and private sector clients to create markets and mobilize private capital, and engages in early stage project development activities to develop bankable investment projects. IFC also works in collaboration with the World Bank to provide policy advice and develop activities that help create markets and support future transactions in multiple industries, especially in IDA eligible countries and FCS. IFC funds this business line by a combination of cash received from IFC shareholders’ development agencies and other development partners, IFC’s operations via retained earnings and operating budget allocations, as well as fees received from the recipients of the services. As of June 30, 2024, undisbursed donor funds of $575 million ($574 million as of June 30, 2023) were included in other assets. As the undisbursed donor funds are refundable, a corresponding liability is recorded in other liabilities. IFC’s advisory services funding of $360 million ($327 million as of June 30, 2023) was included in other assets . Upstream and advisory services income for the year ended June 30, 2024 was $268 million ($247 million and $233 million for the year ended June 30, 2023 and June 30, 2022, respectively). Upstream and advisory services expenses for the year ended June 30, 2024 amounted to $339 million ($317 million and $287 million for the year ended June 30, 2023 and June 30, 2022, respectively), including $220 million sourced from government and other development partners for the year ended June 30, 2024 ($234 million and $217 million for the year ended June 30, 2023 and June 30, 2022, respectively). The funds received from government and other development partners were also recognized as advisory services income in IFC’s consolidated statements of operations. NOTE V – PENSION AND OTHER POST-RETIREMENT BENEFITS IBRD, IFC and MIGA participate in the defined benefit Staff Retirement Plan (SRP), a Retired Staff Benefits Plan (RSBP) and a Post- Employment Benefits Plan (PEBP) (collectively “the Pension Plans”) that cover substantially all WBG employees, retirees and their beneficiaries. The SRP provides pension benefits and includes a cash balance plan. The RSBP provides certain health and life insurance benefits to eligible retirees. The PEBP provides certain pension benefits administered outside the SRP. IFC uses a June 30th measurement date for its pension and other post-retirement benefit plans. All costs, assets, and liabilities associated with the Pension Plans are allocated among IBRD, IFC, and MIGA based upon their employees’ respective participation in the Pension Plans. IDA, IFC, and MIGA reimburse IBRD for their proportionate share of any contributions made to the Pension Plans by IBRD. Contributions to the Pension Plans are calculated as a percentage of salary. The following table summarizes the benefit costs associated with the SRP, RSBP, and PEBP allocated to IFC for the years ended June 30, 2024, June 30, 2023 and June 30, 2022. For the years ended June 30, 2024, June 30, 2023 and June 30, 2022, the service cost of $204 million ($255 million and $339 million) are included in “Administrative expenses”, respectively. The components of net periodic pension cost, other than the service cost component, are included in “Other, net” in the consolidated statements of operations. For the year ended June 30, SRP RSBP PEBP (US$ in millions) 2024 2023 2022 2024 2023 2022 2024 2023 2022 Pension Plan Benefit costs Service cost $ 141 $ 179 $ 239 $ 34 $ 42 $ 55 $ 29 $ 34 $ 45 Other components Interest cost 254 236 167 37 37 28 34 33 23 Expected return on plan assets (292) (290) (270) (58) (56) (52) — — — Amortization of unrecognized prior service cost 1 1 1 — 3 3 2 1 1 Amortization of unrecognized net actuarial (gains) losses — — — (15) (6) — — — 22 Sub total (37) (53) (102) (36) (22) (21) 36 34 46 Net periodic pension cost $ 104 $ 126 $ 137 $ (2) $ 20 $ 34 $ 65 $ 68 $ 91 The following table summarizes the Projected Benefit Obligations (PBO), fair value of plan assets, and funded status associated with the SRP, RSBP and PEBP for IFC for the years ended June 30, 2024 and June 30, 2023. Since the assets for the PEBP are not held in an irrevocable trust separate from the assets of IBRD, they do not qualify for off-balance sheet accounting and are therefore included in IBRD's investment portfolio. IFC has recognized a receivable (prepaid asset) from IBRD and a payable (liability) to IBRD equal to the amount required to support the PEBP. The assets of the PEBP are mostly invested in fixed income, equity instruments and other fund investments. The notes to consolidated financial statements are an integral part of these statements. IFC 2024 ANNUAL REPORT FINANCIALS  131 INTERNATIONAL FINANCE CORPORATION Page 133 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE V – PENSION AND OTHER POST-RETIREMENT BENEFITS (continued) SRP RSBP PEBP (US$ in millions) 2024 2023 2024 2023 2024 2023 Projected benefit obligations Beginning of year $ 5,277 $ 5,426 $ 765 $ 842 $ 710 $ 739 Service cost 141 179 34 42 29 34 Interest cost 254 236 37 37 34 33 Net entity transfers (25) 7 (3) 1 — — Participant contributions 62 58 5 5 3 3 Benefits paid (181) (171) (18) (16) (15) (13) Actuarial (gain) loss 10 (458) (33) (146) (27) (86) End of year 5,538 5,277 787 765 734 710 Fair value of plan assets Beginning of year 5,165 4,926 1,011 948 — — Net entity transfers (25) 7 (3) 1 — — Participant contributions 62 58 5 5 — — Actual return on assets 371 298 72 60 — — Employer contributions 53 47 13 13 — — Benefits paid (181) (171) (18) (16) — — End of year 5,445 5,165 1,080 1,011 — — Funded status a (93) (112) 293 246 (734) (710) Accumulated benefit obligations $ 5,106 $ 4,867 $ 787 $ 765 $ 665 $ 647 _________ a Negative funded status is included in “Payables and other liabilities” and positive funded status is included in “Receivables and other assets” on the Balance Sheets. As of June 30, 2024, the RSBP was overfunded by $293 million. The SRP was underfunded by $93 million and the PEBP, after reflecting IFC’s share of assets which are included in the Pension and Other Post-retirement Benefits receivable from IBRD ($774 million), was overfunded by $40 million. During the fiscal years ended June 30, 2024 and June 30, 2023, there were no amendments made to the retirement benefit plans. The following tables present the amounts included in Accumulated Other Comprehensive Income relating to Pension and Other Post- retirement Benefits: Amounts included in Accumulated other comprehensive income at June 30, 2024: (US$ in millions) SRP RSBP PEBP Total Net actuarial gain $ (270) $ (338) $ (57) $ (665) Prior service cost 1 2 2 5 Net amount recognized in accumulated other comprehensive income $ (269) $ (336) $ (55) $ (660) Amounts included in Accumulated other comprehensive income at June 30, 2023: (US$ in millions) SRP RSBP PEBP Total Net actuarial gain $ (202) $ (306) $ (30) $ (538) Prior service cost 2 2 4 8 Net amount recognized in accumulated other comprehensive income $ (200) $ (304) $ (26) $ (530) Assumptions The actuarial assumptions used are based on financial market interest rates, inflation expectations, past experience, and Management’s best estimate of future benefit changes and economic conditions. Changes in these assumptions will impact future benefit costs and obligations. The expected long-term rate of return for the SRP assets is a weighted average of the expected long-term (10 years or more) returns for the various asset classes, weighted by the portfolio allocation. Asset class returns are developed using a forward-looking building block approach and are not strictly based on historical returns. Equity returns are generally developed as the sum of expected inflation, expected real earnings growth and expected long-term dividend yield. Bond returns are generally developed as the sum of expected The notes to consolidated financial statements are an integral part of these statements. 132  IFC 2024 ANNUAL REPORT FINANCIALS INTERNATIONAL FINANCE CORPORATION Page 134 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE V – PENSION AND OTHER POST-RETIREMENT BENEFITS (continued) inflation, real bond yield, duration-adjusted change in yields and risk premium/spread (as appropriate). Other asset class returns are derived from their relationship to equity and bond markets. The expected long-term rate of return for the RSBP is computed using procedures similar to those used for the SRP. The discount rate used in determining the benefit obligation is selected by reference to the year end yield of AA corporate bonds. Actuarial gains and losses occur when actual results are different from expected results. Amortization of these unrecognized gains and losses will be included in income if, at the beginning of the fiscal year, they exceed 10 percent of the greater of the projected benefit obligation or the market-related value of plan assets. If required, the unrecognized gains and losses are amortized over the expected average remaining service lives of the employee group. The following tables present the weighted-average assumptions used in determining the projected benefit obligations for the years ended June 30, 2024 and June 30, 2023 and the net periodic pension costs for the years ended June 30, 2024, June 30, 2023 and June 30, 2022: Weighted average assumptions used to determine projected benefit obligations SRP RSBP PEBP (In percent, except years) 2024 2023 2024 2023 2024 2023 Discount rate 5.30 4.90 5.40 4.90 5.30 4.90 Rate of compensation increase 5.20 5.10 5.20 5.10 Health care growth rates – at end of fiscal year 5.40 5.40 Ultimate health care growth rate 4.40 4.20 Year in which ultimate rate is reached 2031 2031 Interest crediting rate 5.40 5.20 n.a n.a 5.40 5.20 Weighted average assumptions used to determine net periodic pension cost SRP RSBP PEBP (In percent, except years) 2024 2023 2022 2024 2023 2022 2024 2023 2022 Discount rate 4.90 4.40 2.70 4.90 4.50 2.80 4.90 4.50 2.80 Expected return on plan assets 5.70 5.90 5.40 5.70 5.90 5.40 Rate of compensation increase 5.10 5.30 4.80 5.10 5.30 4.80 Health care growth rates – at end of fiscal year 5.40 5.80 5.40 Ultimate health care growth rate 4.20 4.40 3.90 Year in which ultimate rate is reached 2031 2031 2031 Interest crediting rate 5.20 5.40 4.90 n.a n.a n.a 5.20 5.40 4.90 The medical cost trend rate can significantly affect the reported post-retirement benefit income or costs and benefit obligations for the RSBP. For the fiscal year ended June 30, 2024 and June 30, 2023, the net actuarial gains were primarily due to an increase in the value of the plan assets in excess of expected asset returns which was partially offset by the actuarial losses attributable to the increase in inflation assumptions and demographic experience. For the fiscal year ended June 30, 2023, the actuarial gains were primarily due to an increase in the discount rates. Investment Strategy The investment policies establish the framework for investment of the plan assets based on long-term investment objectives and the trade-offs inherent in seeking adequate investment returns within acceptable risk parameters. A key component of the investment policy is to establish a Strategic Asset Allocation (SAA) representing the policy portfolio (i.e., policy mix of assets) around which the SRP and RSBP (the Plans) are invested. The SAA is derived using a mix of quantitative analysis that incorporates expected returns and volatilities by asset class as well as correlations across the asset classes, and qualitative considerations such as the liquidity needs of the Plans. The SAA for the Plans is reviewed in detail and reset about every three to five years, with more frequent reviews and changes if and as needed based on market conditions. The notes to consolidated financial statements are an integral part of these statements. IFC 2024 ANNUAL REPORT FINANCIALS  133 INTERNATIONAL FINANCE CORPORATION Page 135 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE V – PENSION AND OTHER POST-RETIREMENT BENEFITS (continued) The key long-term objective is to generate asset performance that is reasonable in relation to the growth rate of the underlying liabilities and the assumed sponsor contribution rates, without taking undue risks. Given the relatively long investment horizons of the SRP and RSBP, and the relatively modest liquidity needs over the short-term to pay benefits and meet other cash requirements, the focus of the investment strategy is on generating sustainable long-term investment returns through a globally diversified set of strategies including fixed income, public and private equity and real assets. The most recent review of the SAA was completed and approved in April 2024 with an effective date of July 1, 2024. The new SAA slightly increased the Credit Strategy allocation from 6% to 7% and Real Assets from 13% to 15% while marginally reducing the Public Equities allocation from 31% to 29% and Market Neutral Hedge Funds from 10% to 9%. The changes will improve the forward-looking risk/return profile over the next 10 years. The following table presents the policy asset allocation at June 30, 2024 and the actual asset allocations at June 30, 2024 and June 30, 2023 by asset category for the SRP and RSBP. SRP RSBP Policy Policy Allocation Actual Allocation % Allocation Actual Allocation % 2024 (%) 2024 2023 2024 (%) 2024 2023 Asset class Public equity 29 22 22 29 23 22 Fixed income & cash 20 19 16 20 19 16 Private equity 20 27 28 20 26 27 Real assets a 15 14 14 15 15 15 Market neutral hedge funds 9 9 11 9 8 11 Credit strategy 7 8 8 7 8 8 Other b — 1 1 — 1 1 Total 100 100 100 100 100 100 _________ a Includes public and private real estate, infrastructure and timber. b Includes authorized investments that are outside the policy allocations primarily in hedge funds. Significant concentrations of risk in plan assets The assets of the SRP and RSBP are diversified across a variety of asset classes. Investments in these asset classes are further diversified across funds, managers, strategies, geographies and sectors, to limit the impact of any individual investment. In spite of such level of diversification, equity market risk remains the primary source of the overall return volatility of the Plans. As of June 30, 2024, the largest exposure to a single counterparty was 10% and 12% of the Plan assets in SRP and RSBP, respectively (9% and 11%, respectively – June 30, 2023). Risk management practices Managing investment risk is an integral part of managing the assets of the Plans. Asset diversification is central to the overall investment strategy and risk management approach for the Plans. Absolute risk indicators such as the overall return volatility and drawdown of the Plans are the primary measures used to define the risk tolerance level and establish the overall level of investment risk. In addition, the level of active risk (defined as the annualized standard deviation of portfolio returns relative to those of the policy portfolio) is closely monitored and managed on an ongoing basis. Market risk is regularly monitored at the absolute level, as well as at the relative levels with respect to the investment policy, manager benchmarks, and liabilities of the Plans. Stress tests are performed periodically using relevant market scenarios to assess the impact of extreme market events. Monitoring of performance (at both manager and asset class levels) against benchmarks, and compliance with investment guidelines, are carried out on a regular basis which provides helpful information for assessing the impact on the portfolios caused by market risk factors. Risk management for different asset classes is tailored to their specific characteristics and is an integral part of the external managers’ due diligence and monitoring processes. The notes to consolidated financial statements are an integral part of these statements. 134  IFC 2024 ANNUAL REPORT FINANCIALS INTERNATIONAL FINANCE CORPORATION Page 136 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE V – PENSION AND OTHER POST-RETIREMENT BENEFITS (continued) Credit risk is monitored on a regular basis and assessed for possible credit event impacts. The liquidity position of the Plans is analyzed at regular intervals and periodically tested using various stress scenarios to ensure that the Plans have sufficient liquidity to meet all cash flow requirements. In addition, the long-term cash flow needs of the Plans are considered during the SAA exercise and are one of the main drivers in determining maximum allocation to the illiquid investment vehicles. The Plans mitigate operational risk by maintaining a system of internal controls along with other checks and balances at various levels. Fair value measurements and disclosures All plan assets are measured at fair value on a recurring basis. The following tables present the fair value hierarchy of major categories of plan assets as of June 30, 2024 and June 30, 2023: June 30, 2024 SRP RSBP (US$ in millions) Level 1 Level 2 Total Level 1 Level 2 Total Debt securities Discount notes and time deposits $ 2 $ 8 $ 10 $ 1 $ 2 $ 3 Securities purchased under resale agreements 46 — 46 9 — 9 Government and agency securities 534 58 592 128 11 139 Corporate and convertible bonds — 77 77 — 17 17 Asset-backed securities — 35 35 — 8 8 Mortgage-backed securities — 87 87 — 19 19 Total debt securities 582 265 847 138 57 195 Equity securities US common stocks 147 — 147 25 — 25 Non-US common stocks 421 — 421 76 — 76 Mutual funds — — — — — — Real estate investment trusts (REITs) 37 — 37 6 — 6 Total equity securities 605 — 605 107 — 107 Other funds at NAV a Commingled funds — — 790 — — 155 Private equity funds — — 1,470 — — 276 Private credit — — 449 — — 84 Hedge funds — — 538 — — 103 Real asset funds (including real estate,infrastructure and timber) — — 726 — — 155 Total other funds — — 3,973 — — 773 Derivative assets/ liabilities 2 — 2 — — — Other assets/ liabilities b, net — — 18 — — 5 Total Assets $ 1,189 $ 265 $ 5,445 $ 245 $ 57 $ 1,080 _________ a Investments measured at fair value using NAV as a practical expedient have not been included under the fair value hierarchy. b Includes receivables and payables carried at amounts that approximate fair value. The notes to consolidated financial statements are an integral part of these statements. IFC 2024 ANNUAL REPORT FINANCIALS  135 INTERNATIONAL FINANCE CORPORATION Page 137 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE V – PENSION AND OTHER POST-RETIREMENT BENEFITS (continued) June 30, 2023 SRP RSBP (US$ in millions) Level 1 Level 2 Total Level 1 Level 2 Total Debt securities Discount notes and time deposits $ 1 $ 5 $ 6 $ 1 $ 2 $ 3 Securities purchased under resale agreements 6 — 6 3 — 3 Government and agency securities 502 71 573 118 19 137 Corporate and convertible bonds — 65 65 — 14 14 Asset-backed securities — 39 39 — 9 9 Mortgage-backed securities — 63 63 — 13 13 Total debt securities 509 243 752 122 57 179 Equity securities US common stocks 52 — 52 16 — 16 Non-US common stocks 330 — 330 60 — 60 Real estate investment trusts (REITs) 28 — 28 5 — 5 Total equity securities 410 — 410 81 — 81 Other funds at NAV a Commingled funds — — 741 — — 131 Private equity funds — — 1,440 — — 275 Private credit — — 432 — — 80 Hedge funds — — 618 — — 112 Real asset funds (including real estate,infrastructure and timber) — — 700 — — 146 Total other funds — — 3,931 — — 744 Derivative assets/ liabilities (2) (1) (3) — — — Other assets/ liabilities b, net — — 75 — — 7 Total Assets $ 917 $ 242 $ 5,165 $ 203 $ 57 $ 1,011 _________ a Investments measured at fair value using NAV as a practical expedient have not been included under the fair value hierarchy. b Includes receivables and payables carried at amounts that approximate fair value. Valuation methods and assumptions The following are general descriptions of asset categories, as well as the valuation methodologies and inputs used to determine the fair value of each major category of Plan assets. Investment amounts in the asset categories shown in the table above may be different from the asset category allocation shown in the Investment Strategy section of the note. Asset classes in the table above are grouped by the characteristics of the investments held. The asset class break-down in the Investment Strategy section is based on Management’s view of the economic exposures after considering the impact of derivatives and certain trading strategies. Debt securities Debt securities include discount notes, securities purchased under resale agreements, U.S. treasuries and agencies, debt obligations of foreign governments, sub-sovereigns and debt obligations in corporations of domestic and foreign issuers. Debt securities also include investments in ABS such as collateralized mortgage obligations and MBS. These securities are valued by independent pricing vendors at quoted market prices for the same or similar securities, where available. If quoted market prices are not available, fair values are based on discounted cash flow models using market-based parameters such as yield curves, interest rates, volatilities, foreign exchange rates and credit curves. Some debt securities are valued using techniques which require significant unobservable inputs. The selection of these inputs may involve some judgment. Management believes its estimates of fair value are reasonable given its processes for obtaining securities prices from multiple independent third-party vendors, ensuring that valuation models are reviewed and validated, and applying its approach consistently from period to period. Unless quoted prices are available, money market instruments and securities purchased under resale agreements are reported at face value which approximates fair value. Equity securities Equity securities (including Real Estate Investment Trusts) represent investments in entities in various industries and countries. Investments in public equity listed on securities exchanges are valued at the last reported sale price on the last business day of the fiscal year. The notes to consolidated financial statements are an integral part of these statements. 136  IFC 2024 ANNUAL REPORT FINANCIALS INTERNATIONAL FINANCE CORPORATION Page 138 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE V – PENSION AND OTHER POST-RETIREMENT BENEFITS (continued) Commingled funds Commingled funds are typically collective investment vehicles, such as trusts that are reported at NAV as provided by the investment manager or sponsor of the fund based on the valuation of underlying investments. Private equity funds Private equity funds include investments primarily in leveraged buyouts, growth capital, distressed investments and venture capital funds across North America, Europe and Asia in a variety of sectors. Many of these funds are in the investment phase of their life cycle. Private Equity investments do not have a readily determinable fair market value and are reported at NAV provided by the fund managers, taking into consideration the latest audited financial statements of the funds. Private credit funds Private credit funds include investments primarily in direct lending and opportunistic credit funds. Direct lending funds provide private financing to performing medium-size companies primarily owned by private equity sponsors. Opportunistic credit strategies (including distressed debt and multi-strategy funds) have flexible mandates to invest across both public and private markets globally. Private credit investments do not have a readily determinable fair value and are reported at NAV provided by the fund managers, taking into consideration the latest audited financial statements of the funds. Real asset funds (including real estate and infrastructure) Real asset funds include investments in core real estate, non-core real estate investments (such as debt, value add, and opportunistic equity investments) and infrastructure. Real asset investments do not have a readily determinable fair market value and are reported at NAV provided by the fund managers, taking into consideration the latest audited financial statements of the funds. Hedge funds Hedge fund investments include those seeking to maximize absolute returns using a broad range of strategies to enhance returns and provide additional diversification. Hedge Funds include investments in equity, event driven, fixed income, multi strategy and macro relative value strategies. These investments do not have a readily determinable fair market value and are reported at NAV provided by external managers or fund administrators (based on the valuations of underlying investments) monthly, taking into consideration the latest audited financial statements of the funds. Investments in hedge funds and commingled funds can typically be redeemed at NAV within the near term while investments in private equity and most real estate are inherently long term and illiquid in nature with a quarter lag in reporting by the fund managers. Since the reporting of those asset classes is done with a lag, management estimates are based on the latest available information considering underlying market fundamentals and significant events through the balance sheets date. Investment in derivatives Investment in derivatives such as equity or bond futures, swaps, options and currency forwards are used to achieve a variety of objectives that include hedging interest rates and currency risks, gaining desired market exposure of a security, an index or currency exposure and rebalancing the portfolio. Over-the-counter derivatives are reported using valuations based on discounted cash flow methods incorporating observable market inputs. Estimated future benefits payments The following table shows the benefit payments expected to be paid in each of the next five years and subsequent five years. The expected benefit payments are based on the same assumptions used to measure the benefit obligation: (US$ in millions) SRP RSBP PEBP July 1, 2024 – June 30, 2025 $ 205 $ 16 $ 23 July 1, 2025 – June 30, 2026 220 17 25 July 1, 2026 – June 30, 2027 236 19 27 July 1, 2027 – June 30, 2028 254 21 30 July 1, 2028 – June 30, 2029 271 23 32 July 1, 2029 – June 30, 2034 1,619 149 203 Expected contributions IFC’s contribution to the SRP and RSBP varies from year to year, as determined by the PFC, which bases its judgment on the results of annual actuarial valuations of the assets and liabilities of the SRP and RSBP. The best estimate of the amount of contributions expected to be paid to the SRP and RSBP by IFC during the fiscal year beginning July 1, 2024 is $45 million and $11 million, respectively. The notes to consolidated financial statements are an integral part of these statements. IFC 2024 ANNUAL REPORT FINANCIALS  137 INTERNATIONAL FINANCE CORPORATION Page 139 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE W – OFFSETTING ASSETS AND LIABILITIES IFC does not present derivative assets and liabilities or amounts due or owed under resale, repurchase and securities lending transactions related to contracts entered into with the same counterparty under a legally enforceable netting agreement on a net basis on its consolidated balance sheets. The following table provides the gross and net positions of IFC’s derivative contracts, resale, repurchase and securities lending agreements considering amounts and collateral held or pledged in accordance with enforceable counterparty credit support and netting agreements described below. The gross and net positions include derivative assets of $199 million and derivative liabilities of $388 million as of June 30, 2024, related to derivative contracts that are not subject to counterparty credit support or netting agreements. Collateral amounts are included only to the extent of the related net derivative fair values or net resale, repurchase and securities lending agreements amounts. (US$ in millions) June 30, 2024 Gross amounts not offset in the Gross amount of consolidated balance sheets assets presented in the consolidated Financial Collateral Assets balance sheets instruments received Net amount a c Derivative assets $ 4,351 $ 2,439 $ 468 $ 1,444 Total assets $ 4,351 $ 2,439 $ 468 $ 1,444 (US$ in millions) June 30, 2024 Gross amounts not offset in the Gross amount of consolidated balance sheets liabilities presented in the consolidated Financial Collateral Liabilities balance sheets instruments pledged Net amount b Derivative liabilities $ 8,612 $ 2,439 $ 4,521 $ 1,652 Repurchase and securities lending agreements 1,051 1,050 — 1 Total liabilities $ 9,663 $ 3,489 $ 4,521 $ 1,653 (US$ in millions) June 30, 2023 Gross amounts not offset in the Gross amount of consolidated balance sheets assets presented in the consolidated Financial Collateral Assets balance sheets instruments received Net amount a c Derivative assets $ 6,853 $ 5,474 $ 169 $ 1,210 Total assets $ 6,853 $ 5,474 $ 169 $ 1,210 (US$ in millions) June 30, 2023 Gross amounts not offset in the consolidated balance sheets Gross amount of liabilities presented in the consolidated Financial Collateral Liabilities balance sheets instruments pledged Net amount b Derivative liabilities $ 12,283 $ 5,474 $ 5,159 $ 1,650 Repurchase and securities lending agreements 6,483 6,476 — 7 Total liabilities $ 18,766 $ 11,950 $ 5,159 $ 1,657 _________ a Includes accrued income of $1.4 billion and $1.1 billion as of June 30, 2024 and June 30, 2023, respectively. b Includes accrued charges of $1.3 billion and $1.1 billion as of June 30, 2024 and June 30, 2023, respectively. c Includes cash collateral of $468 million and $168 million as of June 30, 2024 and June 30, 2023, respectively. The remaining amounts of collateral received consist of off- balance-sheet U.S. Treasury securities reported in the above table at fair value. The notes to consolidated financial statements are an integral part of these statements. 138  IFC 2024 ANNUAL REPORT FINANCIALS INTERNATIONAL FINANCE CORPORATION Page 140 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE W – OFFSETTING ASSETS AND LIABILITIES (continued) IFC’s derivative contracts with market counterparties are entered into under standardized master agreements published by the International Swaps and Derivatives Association (ISDA) Agreements. ISDA Agreements provide for a single lump sum settlement amount upon the early termination of transactions following a default or termination event whereby amounts payable by the non- defaulting party to the other party may be applied to reduce any amounts that the other party owes the non-defaulting party. This setoff effectively reduces any amount payable by the non-defaulting party to the defaulting party. IFC’s ISDA Agreements are appended by a Credit Support Annex (CSA) that provides for the receipt, and in some cases, posting, of collateral in the form of cash, U.S. Treasury securities or U.K. gilts to reduce mark-to-market exposure among derivative market counterparties. IFC recognizes cash collateral received and a corresponding liability on its balance sheets for the obligation to return it. Securities received as collateral are not recognized on IFC’s balance sheets. Since October 2023, IFC started posting securities as collateral. IFC recognizes a receivable on its balance sheets for its rights to cash collateral posted. In accordance with the CSAs, IFC may rehypothecate securities received as collateral, subject to the obligation to return such collateral and any related distributions received. In the event of a counterparty default, IFC may exercise certain rights and remedies, including the right to set off any amounts payable by the counterparty against any collateral held by IFC and the right to liquidate any collateral held. As of June 30, 2024 and June 30, 2023, no collateral was rehypothecated under securities lending agreements. The table below summarizes IFC's collateral pledged and received under CSAs as of June 30, 2024, and June 30, 2023: (US$ in millions) June 30, 2024 June 30, 2023 Cash collateral received $ 498 $ 185 Securities collateral received (fair value) — 1 Cash collateral pledged 1,220 5,170 Trading securities pledged (fair value) 3,378 — Under certain CSA’s IFC is not required to pledge collateral unless its credit rating is downgraded from its current AAA/Aaa. The aggregate fair value of derivatives containing such a credit risk-linked contingent feature in a net liability position was $91 million as of June 30, 2024 ($93 million as of June 30, 2023). As of June 30, 2024, IFC had no collateral posted under these agreements. If IFC’s credit rating were to be downgraded from its current AAA/Aaa to AA+/Aa1 or below, then collateral in the amount of $63 million would be required to be posted against net liability positions with counterparties as of June 30, 2024 ($78 million as of June 30, 2023). IFC’s resale, repurchase and securities lending transactions are entered into with counterparties under industry standard master netting agreements which generally provide the right to offset amounts owed one another with respect to multiple transactions under such master netting agreement and to liquidate the purchased or borrowed securities in the event of counterparty default. IFC had no securities held as collateral under these master netting agreements as of June 30, 2024 and June 30, 2023. The following table presents an analysis of IFC’s repurchase agreements by (1) class of collateral pledged and (2) their remaining contractual maturity as of June 30, 2024 and June 30, 2023: Remaining Contractual Maturity of the Agreements — June 30, 2024 Overnight and Up to 30 Greater than (US$ in millions) Continuous days 30-90 days 90 days Total Repurchase agreements U.S. Treasury securities $ — $ 191 $ 331 $ 529 $ 1,051 Total Repurchase agreements $ — $ 191 $ 331 $ 529 $ 1,051 Plus cash collateral payable 498 Less: accrued interest on cash collateral and repos, net. (8) Securities sold under repurchase agreements and payable for cash collateral received $ 1,541 The notes to consolidated financial statements are an integral part of these statements. IFC 2024 ANNUAL REPORT FINANCIALS  139 INTERNATIONAL FINANCE CORPORATION Page 141 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE W – OFFSETTING ASSETS AND LIABILITIES (continued) Remaining Contractual Maturity of the Agreements — June 30, 2023 Overnight and Up to 30 Greater than (US$ in millions) Continuous days 30-90 days 90 days Total Repurchase agreements U.S. Treasury securities $ — $ 1,479 $ 3,530 $ 1,474 $ 6,483 Total Repurchase agreements $ — $ 1,479 $ 3,530 $ 1,474 $ 6,483 Plus cash collateral payable 185 Less: accrued interest on cash collateral and repos, net. $ (37) Securities sold under repurchase agreements and payable for cash collateral received $ 6,631 As of both June 30, 2024 and June 30, 2023, IFC has no repurchase-to-maturity transactions nor securities lending transactions outstanding. NOTE X – CONTINGENCIES From time to time, IFC may be named as a defendant or co-defendant in legal actions on different grounds in various jurisdictions. The outcome of any existing legal action, in which IFC has been named as a defendant or co-defendant, as of and for the fiscal year ended June 30, 2024, is not expected to have a material adverse effect on IFC's financial position, results of operations or cash flows. The notes to consolidated financial statements are an integral part of these statements. 140  IFC 2024 ANNUAL REPORT FINANCIALS INVESTMENT PORTFOLIO IFC 2024 ANNUAL REPORT FINANCIALS  141 STATEMENT OF CUMULATIVE GROSS COMMITMENTS (at June 30, 2024) Cumulative Commitments1 (US$ thousands) Investment Portfolio NUMBER OF LOAN & GUARANTEE REGION COUNTRY ENTERPRISES IFC PARTICIPATIONS TOTAL Africa Algeria 15 303,557 5,557 309,114 Angola 12 1,115,087 0 1,115,087 Benin 16 382,514 0 382,514 Botswana 9 102,952 0 102,952 Burkina Faso 33 1,541,083 0 1,541,083 Burundi 11 68,648 7,500 76,148 Cabo Verde 9 65,941 0 65,941 Cameroon 47 1,081,199 471,500 1,552,699 Central African Republic 1 9,880 0 9,880 Chad 13 170,314 13,900 184,214 Comoros 1 14,888 0 14,888 Congo, Democratic Republic of 37 807,086 143,800 950,886 Congo, Republic of 12 164,432 25,000 189,432 Côte d'Ivoire 88 1,623,509 175,275 1,798,783 Djibouti 2 9,290 0 9,290 Egypt, Arab Republic of 152 5,922,853 1,133,389 7,056,242 Eritrea 1 949 0 949 Eswatini 9 47,779 0 47,779 Ethiopia 27 982,657 46,336 1,028,993 Gabon 7 342,668 110,000 452,668 Gambia, The 10 47,270 0 47,270 Ghana 96 3,559,204 913,750 4,472,954 Guinea 26 705,750 191,000 896,750 Guinea-Bissau 5 9,156 0 9,156 Kenya 151 5,121,472 278,936 5,400,408 Lesotho 2 454 0 454 Liberia 15 283,660 0 283,660 Madagascar 31 525,449 21,000 546,449 Malawi 24 300,692 9,500 310,192 Mali 39 383,483 40,000 423,483 Mauritania 18 241,093 79,503 320,595 Mauritius 21 510,203 96 510,299 Morocco 65 1,859,972 526,934 2,386,905 Mozambique 36 615,717 136,913 752,630 Namibia 10 198,391 0 198,391 Niger 8 97,612 0 97,612 Nigeria 149 23,789,869 1,578,005 25,367,874 Rwanda 28 359,611 10,000 369,611 São Tomé and Príncipe 2 2,051 0 2,051 1. Includes long-term and short-term investment commitments. 142  IFC 2024 ANNUAL REPORT FINANCIALS NUMBER OF LOAN & GUARANTEE REGION COUNTRY ENTERPRISES IFC PARTICIPATIONS TOTAL Senegal 61 1,042,871 177,194 1,220,065 Seychelles 8 49,443 12,000 61,443 Sierra Leone 14 223,622 25,000 248,622 Somalia 2 975 0 975 South Africa 132 7,185,105 190,025 7,375,130 South Sudan 2 8,750 0 8,750 Sudan 6 27,268 6,489 33,757 Tanzania 73 1,391,697 15,541 1,407,237 Togo 23 459,426 0 459,426 Tunisia 38 637,334 427,228 1,064,561 Uganda 60 684,944 86,788 771,732 Zambia 51 546,883 20,286 567,169 Zimbabwe 51 284,262 99,000 383,262 Regional Investments: Africa 201 6,396,690 82,182 6,478,872 Central Asia and Türkiye Kazakhstan 40 1,859,079 302,933 2,162,012 Kyrgyz Republic 19 177,826 0 177,826 Tajikistan 23 238,363 0 238,363 Türkiye 236 23,492,494 4,235,087 27,727,581 Turkmenistan 1 35,000 0 35,000 Uzbekistan 34 997,640 22,900 1,020,540 Regional Investments: Central Asia and Türkiye 3 60,000 0 60,000 East Asia and the Pacific Cambodia 21 813,991 660,727 1,474,719 China 357 14,835,293 2,735,933 17,571,226 Fiji 12 57,493 2,500 59,993 Indonesia 159 6,492,207 3,149,331 9,641,538 Kiribati 1 1,798 0 1,798 Korea, Republic of 53 1,208,449 195,700 1,404,149 Lao People's Democratic Republic 16 132,202 10,000 142,202 Malaysia 13 204,868 5,389 210,258 Mongolia 22 1,437,739 976,428 2,414,167 Myanmar 32 874,352 20,000 894,352 Papua New Guinea 13 412,139 25,000 437,139 Philippines 129 4,478,604 718,470 5,197,073 Samoa 8 22,097 0 22,097 Solomon Islands 3 55,000 0 55,000 Thailand 103 4,255,877 1,763,419 6,019,297 Timor-Leste 3 8,000 0 8,000 Tonga 1 6,787 0 6,787 Vanuatu 4 18,104 0 18,104 Viet Nam 94 13,622,872 756,706 14,379,578 Regional Investments: East Asia and the Pacific 90 2,728,909 0 2,728,909 IFC 2024 ANNUAL REPORT FINANCIALS  143 NUMBER OF LOAN & GUARANTEE REGION COUNTRY ENTERPRISES IFC PARTICIPATIONS TOTAL Europe Albania 23 562,391 78,613 641,004 Armenia 23 832,509 0 832,509 Azerbaijan 27 619,654 212,930 832,584 Belarus 21 809,388 18,000 827,388 Bosnia and Herzegovina 33 358,576 10,578 369,154 Bulgaria 32 1,090,476 183,647 1,274,123 Croatia 24 1,130,465 228,199 1,358,664 Georgia 34 1,270,321 49,825 1,320,146 Kosovo 11 93,601 0 93,601 Moldova 18 285,454 45,000 330,454 Montenegro 7 100,203 0 100,203 North Macedonia 17 304,463 25,000 329,463 Poland 63 1,510,866 135,317 1,646,183 Romania 70 5,528,633 867,489 6,396,122 Russian Federation 194 8,797,461 2,523,372 11,320,833 Serbia 47 2,165,216 369,723 2,534,939 Ukraine 69 3,880,379 976,251 4,856,630 Regional Investments: Europe 73 4,819,248 349,773 5,169,021 Latin America and the Caribbean Antigua and Barbuda 1 30,000 0 30,000 Argentina 213 8,520,810 6,161,343 14,682,152 Barbados 7 29,025 0 29,025 Belize 4 33,066 11,000 44,066 Bolivia 33 627,030 155,500 782,530 Brazil 356 28,110,105 10,141,753 38,251,858 Chile 84 4,876,516 1,578,155 6,454,671 Colombia 168 6,843,121 1,748,198 8,591,319 Costa Rica 37 1,928,795 104,709 2,033,504 Dominica 1 700 0 700 Dominican Republic 39 1,038,822 241,850 1,280,672 Ecuador 32 2,160,235 197,740 2,357,975 El Salvador 23 2,408,259 256,000 2,664,259 Grenada 2 8,000 0 8,000 Guatemala 33 3,588,034 230,000 3,818,034 Guyana 8 76,417 0 76,417 Haiti 17 146,735 26,000 172,735 Honduras 29 2,426,121 142,901 2,569,022 Jamaica 25 557,846 194,244 752,090 Mexico 267 10,522,525 2,985,750 13,508,274 Nicaragua 28 1,780,985 206,036 1,987,021 Panama 37 2,916,237 153,300 3,069,537 Paraguay 20 2,040,349 53,000 2,093,349 Peru 85 3,329,061 1,062,099 4,391,161 St. Lucia 5 80,422 35,000 115,422 Suriname 1 4,066 0 4,066 Trinidad and Tobago 19 433,654 235,000 668,654 Uruguay 22 475,842 120,000 595,842 144  IFC 2024 ANNUAL REPORT FINANCIALS NUMBER OF LOAN & GUARANTEE REGION COUNTRY ENTERPRISES IFC PARTICIPATIONS TOTAL Venezuela, Republica Bolivariana de 39 897,230 703,791 1,601,021 Regional Investments: Latin America and the Caribbean 112 3,001,074 350,000 3,351,074 Middle East Afghanistan 10 249,254 0 249,254 Bahrain 2 340,271 0 340,271 Iran, Islamic Republic of 11 63,343 8,199 71,542 Iraq 21 1,368,985 486,270 1,855,255 Jordan 75 2,539,508 725,617 3,265,125 Lebanon 43 6,323,413 230,430 6,553,843 Oman 7 319,853 57,000 376,853 Pakistan 160 10,623,657 759,249 11,382,906 Saudi Arabia 13 726,277 0 726,277 Syrian Arab Republic 4 24,732 0 24,732 United Arab Emirates 20 485,252 30,000 515,252 West Bank and Gaza 29 570,606 10,000 580,606 Yemen, Republic of 17 281,004 96,105 377,109 Regional Investments: Middle East 35 1,537,775 3,000 1,540,775 South Asia Bangladesh 82 8,661,165 199,120 8,860,286 Bhutan 6 54,517 0 54,517 India 611 24,168,394 1,743,640 25,912,033 Maldives 10 293,250 8,500 301,750 Nepal 34 573,221 63,520 636,741 Sri Lanka 54 2,036,973 128,616 2,165,588 Regional Investments: South Asia 12 312,023 15,000 327,023 Worldwide Australia 2 975 0 975 Cyprus 8 32,181 645 32,827 Czechia 18 455,176 245,588 700,764 Estonia 11 137,806 11,855 149,661 Finland 4 1,233 1,915 3,148 Greece 15 998,689 40,131 1,038,821 Hungary 34 790,041 70,335 860,376 Israel 1 10,500 0 10,500 Italy 1 960 0 960 Latvia 7 80,967 35,000 115,967 Lithuania 11 95,041 9,309 104,350 Portugal 7 51,811 11,000 62,811 Slovak Republic 7 115,544 0 115,544 Slovenia 13 292,535 47,383 339,918 Spain 5 19,043 1,685 20,728 Regional Investments: Worldwide 229 30,804,668 539,134 31,343,802 Other2 9 367,868 1,400 369,268 7,621 369,693,745 61,386,880 431,080,625 2. Of this amount, $9.8 million ($8.4 million for IFC and $1.4 million for participant's account) represents investments made at a time when the authorities on Taiwan represented China in the International Finance Corporation. The balance represents investments in Taiwan, China and Hong Kong SAR, China. IFC 2024 ANNUAL REPORT FINANCIALS  145 International Finance Corporation 2121 Pennsylvania Avenue, NW Washington, DC 20433 USA ifc.org