Demand for Finnvera’s financing levelled off

Key figures for the first quarter of 2010

• Loans and domestic guarantees granted: EUR 211.0 million (Q1/2009: EUR 274 million)
• Export credit guarantees, export guarantees and special guarantees granted: EUR 421.6 million (Q1/2009: EUR 509.1 million)
• Outstanding commitments in domestic financing: EUR 3,118.7 million (12/2009: EUR 3,068.9 million)
• Outstanding commitments in export financing EUR 10,097.5 million (12/2009: EUR 9,556.5 million)
• The Finnvera Group’s financial performance: EUR 12.6 million (Q1/2009: EUR –0.8 million)
• Finnvera plc’s financial performance: EUR 12.8 million (Q1/2009: EUR –0.9 million)
• Impairment losses on receivables and guarantee losses: EUR 12.8 million (Q1/2009: EUR 21.5 million)

“Enterprises are still cautious, especially with regard to investments, although the financial situation has stabilised and even improved slightly. In Finnvera’s domestic financing, demand focused on needs for working capital; the number of applications was high, but the sums applied for were fairly small. The demand for export financing indicates that the number of major transactions in capital goods is still low; instead, demand for short-term credit insurance was brisk. The various aftereffects and reverberations of the global economic crisis are still evident. However, thanks to the stabilisation of the economy, our credit losses diminished from the figure recorded during the first quarter of 2009,” says Managing Director Pauli Heikkilä.

Demand for Finnvera’s domestic financing during the first quarter of 2010 totalled EUR 419.3 million, or 37 per cent less than during the same period the year before. The number of applications was 8 per cent lower than during the corresponding period last year, but higher than in 2008.

The value of loans and guarantees granted by Finnvera amounted to EUR 211.0 million, or 23 per cent less than during the first quarter in 2009. A total of EUR 15.7 million in counter-cyclical financing was granted to nearly 60 enterprises.

Demand for export credit guarantees and special guarantees during the period under review came to EUR 1,476.8 million, or 47 per cent less than the year before. In contrast, the number of applications doubled. The total value of export credit guarantees and export guarantees offered by Finnvera was EUR 421.6 million (509.1 million). Export projects pertained to the traditional export sectors, i.e. telecommunications, forest industry, power generation and shipbuilding.

Financial trend

The Finnvera Group’s profit for the period under review totalled EUR 12.6 million, or 13.5 million more than during the corresponding period in 2009 (–0.8 million). The parent company, Finnvera plc, accounted for EUR 12.8 million of the profit (–0.9 million). During the period under review, domestic financing showed a loss, although the amount of credit losses diminished. In export financing, the claims paid remained low and financial performance was positive.

The factors having the greatest effects on the Group’s improved financial performance were the net increase of EUR 4.7 million in the parent company’s fee and commission income and expenses, and the decline of EUR 8.8 million in Finnvera’s share of impairment losses on receivables and guarantee losses, after the State’s compensation for credit losses.

The parent company’s share of the impairment losses on receivables and guarantee losses amounted to EUR 12.8 million (21.5 million), of which credits and guarantees in domestic financing accounted for EUR 11.9 million (20.7 million) and export credit guarantees and special guarantees for EUR 0.9 million (0.9 million). The subsidiaries had no losses during the period under review.

On 31 March 2010, the parent company’s capital adequacy was 14.2 per cent and that of the Group 14.5 per cent.

Foreseeable risks and future prospects

Demand for financing is expected to increase as the economy and investments are reviving. On the other hand, disturbances on the international financial market may create new uncertainties.

Revival of exports is slow and varies from one sector to the next. Financial markets have recovered but, on the other hand, uncertainties in economic developments and in banking regulation will raise the demand for export credit guarantees. However, it is unlikely that the demand for guarantees would reach the record levels of 2008 and 2009.

According to the current estimate, the financial performance for this year is likely to remain at the same level as in 2009. However, if more risks materialise than has been anticipated, the situation may change considerably.

Additional information:
Pauli Heikkilä, Managing Director, tel. +358 20 460 7321
Topi Vesteri, Executive Vice President, tel. +358 20 460 7238 (Financing of exports)
Veijo Ojala, Executive Vice President, tel. +358 20 460 7405 (Domestic financing)
Ulla Hagman, Senior Vice President, Finances and IT, tel. +358 20 460 7409

Leena Jaakkola, Senior Vice President, Communications and Marketing, tel. +358 40 352 9332

The Finnvera Group’s interim report for the first quarter of 2010

The Finnvera Group’s Interim Report for the period 1 January–30 June 2010 will be published on 25 August 2010.