The economic situation was visible in Finnvera’s operations and in the result of domestic financing

The global economic crisis and the subsequent changes on the financial market had a major impact on the demand for Finnvera’s financing in 2009. Credit and guarantee losses increased on the previous year and the financial performance of domestic financing was negative. In export financing, the claims paid remained low and financial performance was positive.

During the year, Finnvera financed enterprises’ domestic operations by nearly EUR 1.2 billion, which was 16 per cent more than the year before. In particular, Counter-cyclical Loans and Guarantees increased the volume of financing. Offers for export credit guarantees totalled EUR 4.4 billion. The total sum of offers fell by about one third, but owing to credit insurance, the number of offers nearly quadrupled.

Financial performance

The consolidated financial statements and the parent company’s financial statements for 2009 have been drawn up in accordance with the International Financial Reporting Standards (IFRS).

The Finnvera Group’s profit for 2009 came to EUR 17.7 million (8.1 million). The factor contributing the most to the increase in profit was the rise of EUR 18.6 million in fee and commission income. The parent company’s share of the profit was EUR 24.4 million, or EUR 9.2 million more than in 2008. The separate result for export credit and special guarantee activities referred to in §4 of the Act on the State Guarantee Fund (444/1998) totalled EUR 33.1 million, and the result for Finnvera plc’s domestic financing EUR -8.7 million.

Moderate rise in losses for domestic financing

The parent company’s credit and guarantee losses totalled EUR 84.9 million (77.8 million) before the State’s compensation for credit losses. Credit and guarantee losses increased during the period under review, but at 9 per cent, the increase was considerably less than the year before. The economic recession affected the rise in losses. Losses remained low in the financing for exports.

“The number of bankruptcy proceedings initiated in the whole of Finland in 2009 was one quarter more than in 2008. Bankruptcies also increased among our client enterprises. We are prepared for the eventuality that credit risks will rise in our domestic operations in 2010 as well,” says Executive Vice President Veijo Ojala.

Owing to the growth in the volumes of domestic financing, outstanding loan and guarantee commitments rose rapidly. At the end of 2009, the parent company’s outstanding loan commitments totalled EUR 1,663.9 million. During the year, the outstanding loan commitments increased by EUR 281.6 million and the commitments for domestic guarantees by EUR 124.2 million. At the end of 2009, domestic guarantees totalled EUR 1,007.0 million. Outstanding commitments arising from export credit guarantees and special guarantees (current commitments and offers given) totalled EUR 9,665.0 million (8,292.5 million).

Capital adequacy and acquisition of funds

At the end of 2009, the capital adequacy ratio of the Finnvera Group was 15.0 per cent. According to the target set, the capital adequacy ratio should be at least 12 per cent.

The parent company’s long-term funding totalled EUR 529.6 million, which includes EUR 80.0 million of subordinated loans from the State.

Future prospects

The situation on the financial market has eased both in Finland and internationally. The brisk demand for Finnvera’s financing levelled off during autumn 2009, and demand has remained at the normal level in early 2010. The budding growth of export demand also breathes new life into domestic industry, and the need for Finnvera’s financing for deliveries and investments may rise again during this spring.

“Most sectors still have plenty of unused capacity for increasing production. The increase in export demand will gradually revitalise many sectors of industry. We expect that demand for enterprise financing will already show some signs of growth during this spring,” says Veijo Ojala.

Difficulties and the number of bankruptcies may increase in 2010, especially among SMEs operating on the domestic market.

Orders for exports will start to revive gradually. However, recovery will be slow and will vary from one sector to another. In many sectors, the launching of new investments is postponed by overcapacity or sufficient capacity.

“Finnvera’s relative share of export financing will remain greater than the average, but, owing to the reactivation of the commercial financial markets, we no longer expect to reach the record-high volumes of 2008 and 2009,” Executive Vice President Topi Vesteri predicts.

On the basis of the existing offers and the projects under processing, the principal outstanding commitments for export credit guarantees that come into effect in 2010 will be associated with the exports of telecommunications networks and ships.

According to the current estimate, the financial performance for 2010 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.

Finnvera’s Annual Review 2009 and Financial Review 2009 can be downloaded by following the links below.

Annual Review 2009
Financial Review 2009

Finnvera will introduce quarterly reporting in 2010. In addition to the financial statements for the whole year and the Interim Report for the first six months of the year, the company will publish reports for the periods 1 January–31 March and 1 January–30 September in May and November, respectively.

Additional information:
Topi Vesteri, Executive Vice President, Deputy of the Managing Director tel. +358 20 460 7238 or +358 400 702 002 (Financing of exports)
Veijo Ojala, Executive Vice President, tel. +358 20 460 7405 or +358 400 672 401 (Domestic financing)
Ulla Hagman, Senior Vice President, Finances and IT, tel. +358 20 460 7409 or +358 40 715 9224

Leena Jaakkola, Senior Vice President, Communications and Marketing, tel. +358 20 460 7232 or
+358 40 352 9332