Q4 and Financial Statements for the Finnvera Group 1 January–31 December 2015
A variable and record-breaking year
Compared against the previous year, the world economy gained a little momentum in 2015. However, the economy did not develop steadily; instead, situations and divergent estimates varied throughout the year. The subdued outlook for exports and low spirits on the domestic market kept the demand for SME financing for investments modest. In contrast, financing for working capital and credits for changes of ownership were in great demand. In exports, shipbuilding orders were the biggest single factor increasing the demand for financing. Finnvera’s contribution was also needed in some other large export projects.
Business operations and the financial trend In 2015, Finnvera’s offers for export credit guarantees increased by 28 per cent, while offers to finance export credits rose by 46 per cent on the previous year. The volume of loans and guarantees granted to SMEs and enterprises larger than the SME definition applied by the EU was 19 per cent greater than the year before.
|
Finnvera Group |
1 Jan–31 Dec 2015 | 1 Jan–31 Dec 2014 | Change % |
| Offered financing | |||
| Loans and guarantees | 906 MEUR | 763 MEUR | 19% |
| Export credit guarantees and special guarantees | 6 760 MEUR | 5 274 MEUR | 28% |
| Export credits | 4 131 MEUR | 2 829 MEUR | 46% |
| 31 Dec 2015 | 31 Dec 2014 | Change | |
| Outstanding commitments | |||
| Loans and guarantees | 2 285 MEUR | 2 378 MEUR | -4% |
| Export credit guarantees and special guarantees | 17 436 MEUR | 12 600 MEUR | 38% |
| Export credits | 4 240 MEUR | 3 330 MEUR | 27% |
| 1 Jan–31 Dec 2015 | 1 Jan–31 Dec 2014 | Change % | |
| Net interest income and fee and commission income and expenses (net) | 197 MEUR | 189 MEUR | 4% |
| Operating profit | 114 MEUR | 101 MEUR | 13% |
| Profit for the period | 111 MEUR | 100 MEUR | 11% |
| 31 Dec 2015 | 31 Dec 2014 | Change %-point | |
| Equity ratio | 13.3% | 15.2% | -1.9% |
| Capital adequacy, Tier 2 | 19.6% | 18.6% | 1% |
| Cost-income ratio | 28.3% | 25.9% | 2.4% |
The profit for the last quarter of 2015 was EUR 5 million. The figure was two thirds, or EUR 46 million, less than the profit for the previous quarter (51 million). The main factors affecting the smaller profit were the impairment losses on receivables and guarantee losses, which doubled and were EUR 33 million more than in the previous quarter. The increase in the impairment losses on receivables and guarantee losses between the two quarters was partly due to the reversal and reduction of impairment losses and provisions for losses, which took place in the previous quarter.
The profit for the Group in 2015 was EUR 111 million (100 million). This was 11 per cent better than the year before. The main factor improving the financial performance was the decrease of 57 per cent, or EUR 19 million, in impairment losses on receivables and guarantee losses. In addition, the increase of 8 per cent in the net interest income and the rise of 3 per cent in the net value of fee and commission income and expenses improved the financial performance.
The profit of the parent company, Finnvera plc, in 2015 stood at EUR 95 million (92 million). This was 3 per cent more than the year before. When divided between the business areas, the parent company’s financial performance was as follows: the profit for export financing was EUR 82 million (96 million) and that for SME financing EUR 38 million (6 million). In addition, the impairment losses recognised on investments, EUR 25 million (9 million), had an impact on the parent company’s profit.
| Finnvera Group | Q4/2015 | Q3/2015 | Change | Q4/2014 | Change | *2015 | *2014 | Change |
| Profit for the period | MEUR | MEUR | % | MEUR | % | MEUR | MEUR | % |
| Net interest income | 13 | 15 | -12 | 10 | 35 | 56 | 52 | 8 |
| Fee and commission income and expenses (net) | 34 | 34 | -1 | 35 | -4 | 141 | 137 | 3 |
| Gains/losses from items carried at fair velue | -13 | -2 | - | 4 | - | -21 | -10 | 108 |
| Other operating income | 2 | 0 | - | 0 | - | 2 | 2 | 43 |
| Administrative expenses | -12 | -9 | 32 | -11 | 9 | -44 | -41 | 8 |
| Impairment losses, guarantee losses | -17 | 16 | 201 | -9 | 84 | -15 | -34 | -57 |
| Loans and guarantees | -21 | 6 | 444 | -26 | -22 | -87 | -105 | -18 |
| Credit loss compensation from the State | 13 | 9 | 42 | 18 | -28 | 83 | 64 | 30 |
| Export credit guarantees and special guarantees | -9 | 1 | 927 | -1 | - | -10 | 8 | 232 |
| Operating profit | 5 | 53 | -90 | 27 | -81 | 114 | 101 | 13 |
| Profit for the period | 5 | 51 | -90 | 25 | -80 | 111 | 100 | 11 |
Outlook for financing
Economic growth and investments are likely to remain at a low level in 2016, and SME financing continues to focus on working capital needs. However, it is expected that the increase in changes of ownership and the investments disclosed by large corporations will have a positive effect on the demand for SME financing. In addition, Finnvera’s new mandates and financing products support the rise in the volume of SME financing.
Financing solutions offered to buyers will continue to play a pivotal role in exports of capital goods sold by large corporations. It is expected that the demand for export credit guarantees and export credits will decline slightly from the previous year if no individual major orders are placed in 2016. Ships, telecommunications and the forest industry are still anticipated to account for the bulk of demand associated with large corporations’ exports.
According to the current estimate, the Finnvera Group’s financial performance for 2016 is likely to fall below that for 2015. The uncertainty factors associated with economic trends make it difficult to predict financial performance. If more risks materialise than has been anticipated, the situation may weaken considerably from what is projected.
CEO Pauli Heikkilä:
“The new tasks assigned to us added momentum to the year and increased the demand for our financing. We granted markedly more financing to SMEs than the year before. This rise was mainly attributable to our new mandates and to a positive trend in changes of ownership. However, investments did not pick up yet; instead, SME financing continued to be needed mainly for working capital.
The total value of offers pertaining to exports was record high. The orders for ships that followed the ownership arrangements of the Turku shipyard, an event important from the point of view of industrial history, were the absolute highlight of the year and were also visible in our export financing. To provide financing for the buyer, export credit guarantees or, possibly, pre-delivery financing are needed in practice almost always for major shipbuilding projects. In consequence, ship financing will account for an exceptionally large share, or about one third, of our current commitments. The shipyard is an important employer in the Turku region and also has several hundreds of sub-contractors giving work to tens of thousands of people.”
Financial Statements 2015 (PDF)
Statement on the Corporate Governance and Steering System 2015 (PDF)
Additional information:
Pauli Heikkilä, Chief Executive Officer, tel. +358 29 460 2400
Ulla Hagman, Senior Vice President, CFO, tel. +358 29 460 2458
Distribution
NASDAQ OMX Helsinki Oy
London Stock Exchange
The principal media
www.finnvera.fi
Finnvera publishes its Annual Report for 2015 as an electronic document on the company’s website in Finnish and English during week 10. The Annual Report also includes the Corporate Responsibility Report. The half year report 1 Jan–31 June of the company will be published on 11 August 2016.
