Demand for export credits, new mandates and ownership arrangements gave momentum to 2015 for Finnvera
The economic situation posed challenges both to enterprises operating on the domestic market and to export companies. As in the previous year, continued uncertainty in the global economy dampened companies’ willingness to invest, make growth plans and take risks.
However, a positive feature was the upswing in companies’ ownership arrangements, the first since 2012. It is estimated that Finnvera is involved in every third company acquisition. Otherwise, despite the improved investment expectations of SMEs, there was no change of course in the allocation of financing. It is four years since investments accounted for a larger share of financing offered to SMEs than working capital.
Long-term financing played an important role in negotiations for export-related purchase agreements. Banks were still cautious when financing transactions requiring long repayment periods; in consequence, the role of Finnish Export Credit, in particular, was emphasised. Institutional investors participated in loan arrangements on credit markets slightly more than before but, owing to investors’ expectations for returns, demand and supply did not meet in export credits, with a few exceptions.
In international comparison, Finland has well-functioning financial markets, and good projects receive financing from banks. However, the definition of a good project is more demanding than before. “Companies must have credible plans, a good balance sheet structure and adequate collateral. Finnvera is needed as a co-financier in projects especially at the start of enterprise activities and in various situations of change. Internationally, the impact of bank regulation is seen the most in demand for Finnvera’s export financing,” says CEO Pauli Heikkilä.
A positive trend in ownership arrangements
In 2015, Finnvera granted a total of EUR 1,116 million in financing to SMEs and to companies larger than the SME definition used by the EU. Of the financing granted, over 50 per cent was used to finance working capital. Loans and domestic guarantees accounted for EUR 906 million of the financing; this was 19 per cent more than the year before. The factors contributing to this increase included the mandate granted to Finnvera at the start of 2015 to provide financing for companies larger than SMEs, the increase in changes of ownership, and the restructuring of financing granted earlier. The value of guarantees granted to SMEs for exports totalled EUR 210 million, or 13 per cent less than the year before. In 2015, about 950 enterprises received financing for ownership changes. The total sum was EUR 116 million.
At the end of 2015, outstanding commitments for SME financing totalled EUR 2.7 billion.
The volume of offers for export credit guarantees increased
The value of export credit guarantees and special guarantees offered rose by 30 per cent, to a total of EUR 6,550 million. Western banks think carefully before granting credits with long repayment periods, especially when they exceed five years. This underlines the importance of the Finnvera Group’s financing. Offers pertaining to the financing of export credits totalled EUR 4,131 million. This is nearly 50 per cent more than the year before. At annual level, the value of export credits offered was the greatest in Finnvera’s history.
In total, 88 per cent of the export credit guarantees offered concerned the traditional sectors of Finnish capital goods exports, such as shipbuilding, telecommunications and the forest industry.
At the end of 2015, outstanding commitments for export financing totalled EUR 17.0 billion.
Additional information:
Pauli Heikkilä, Chief Executive Officer, tel. +358 29 460 2400
Finnvera publishes the financial statements for the period 1 January to 31 December 2015 on 26 February 2016 and the Annual Report during week 10.
