2014-02-28 09:07:42 CET
2014-02-28 09:08:44 CET
REGULATED INFORMATION
Finnvera Oyj - Financial Statement Release
Financial Statements of the Finnvera Group for the fourth quarter and 1 January–31 December 2013
Demand focused on the working capital needs of SMEs and on exports
The investments of SMEs remained low in 2013. Financing was mainly needed for
working capital and for the rescheduling of existing credits. Demand for export
financing was concentrated in a few sectors. Utilising the new export credit
system, Finnvera was able to meet export companies' financing needs.
Business operations and financial trend
Finnvera granted domestic loans and guarantees to SMEs totalling EUR 756
million, which is 11 per cent less than in 2012. The amount of export credit
guarantees and special guarantees offered declined by 36 per cent from the
previous year, totalling EUR 3,398 million. Direct venture capital investments
amounted to EUR 16 million, and they were offered to a total of 85 enterprises.
The Finnvera Group's profit for the year 2013 was EUR 75 million (53 million),
or EUR 21 million more than the year before. The main factors contributing to
the improved performance were the increase in the parent company Finnvera plc's
fee and commission income in export financing and the decrease in impairment
losses on receivables and guarantee losses in SME financing. In contrast, the
decrease in the net interest income, caused by lower interest rates and a
reduction of the outstanding credits for SME financing, had a negative effect
on the profit. The profit of the parent company, Finnvera plc, in 2013 stood at
EUR 69 million (56 million).
The Group's operating profit was EUR 75 million (54 million). The profit was
divided between the business areas as follows: The operating profit of SME
Financing was EUR 7 million (-4 million) while that of Export Financing was EUR
74 million (62 million). The result for Venture Capital Investments was EUR 5
million in the red (3 million).
The Finnvera Group's profit for the last quarter of 2013 came to EUR 3 million.
The profit was markedly, or EUR 24 million, smaller than the profit for the
third quarter. The factors contributing to the weaker performance during the
last quarter included especially the impairment losses on receivables and
guarantee losses, which at EUR 35 million were higher than in the previous
quarter.
Within the past few years, Finnvera's outstanding commitments and their risk
levels have risen significantly. Risk levels continued to rise in 2013 as well.
The rise in risk levels is reflected in SME financing, for instance, as poorer
risk ratings for client enterprises and as an increase in the relative share of
non-performing receivables and payment delays. Another indication of the higher
risk level is that, in recent years, the impairment losses on receivables and
guarantee losses materialised in SME financing have been greater than in the
past, although in 2013 impairment losses and guarantee losses were smaller than
the year before. In export financing, no major losses have been recorded in
recent years or in 2013, and no major increases have been made in provisions
for losses in proportion to the outstanding commitments.
Finnvera Q4/201 Q3/201 Q2/201 Q1/201 Q4/201 Change *2013 *2012 Change
Group 3 3 3 3 2
--------------------------------------------------------------------------------
MEUR MEUR MEUR MEUR MEUR % MEUR MEUR %
--------------------------------------------------------------------------------
Net 15 12 14 14 17 -10 56 63 -11
interest
income
--------------------------------------------------------------------------------
Fee and 37 35 30 32 29 28 134 112 20
commissio
n income
and
expenses
(net)
--------------------------------------------------------------------------------
Gains/loss 1 0 -2 -1 5 -75 -2 2 -178
es from
items
carried
at fair
value
--------------------------------------------------------------------------------
Administra -12 -8 -12 -11 -12 -3 -43 -43 0
tive
expenses
--------------------------------------------------------------------------------
Impairment -35 -11 -16 -2 -13 177 -64 -75 -16
losses,
guarantee
losses
--------------------------------------------------------------------------------
Loans and -31 -26 -24 -21 -25 23 -101 -115 -12
domestic
guarantee
s
--------------------------------------------------------------------------------
Credit 7 14 8 18 14 -51 48 50 -3
loss
compensat
ion from
the State
--------------------------------------------------------------------------------
Export -11 0 0 0 -1 611 -11 -10 7
credit
guarantee
s and
special
guarantee
s
--------------------------------------------------------------------------------
Operating 4 27 15 30 25 -85 75 54 39
profit
--------------------------------------------------------------------------------
Profit for 3 27 14 30 23 -86 75 53 40
the
period
--------------------------------------------------------------------------------
The group's key figures on 31 December 2013 (31 December 2012)
-- Capital adequacy 17.6% (16.3)
-- Cost/income ratio 27.0% (27.6)
-- Equity ratio 18.4% (20.3).
Future prospects and impending risks
The unclear economic outlook and a cautious attitude to investments will keep
the demand for SME financing low, at least during the first few months of the
year. New projects take off slowly, because it is difficult to make decisions
on investments and financing concerning risky projects, especially during a
recession. Weak signals of recovery are more frequent than before, but any
appreciable revival of Finnish exports is still on a shaky foundation. As a
result, Finnvera's export financing solutions are important for the
competitiveness of Finnish export companies. Demand for export credits and
export credit guarantees is maintained by risks in buyers' countries, the slow
economic growth and stiffer competition on export markets, where financing
solutions available to the buyer gain added weight.
According to the current estimate, the Finnvera Group's financial performance
for 2014 is likely to fall below that for 2013. The uncertainty factors
associated with economic trends make it difficult to predict the financial
performance. If the materialisation of risks is more widespread than
anticipated, the situation may weaken considerably.
CEO Pauli Heikkilä:
“In Finland, the economic situation was still in the doldrums in 2013. This was
affected by a lack of investments as well as Finland's industrial structure and
the weakening of competitiveness, both of which were reflected in Finnish
exports. Some signs of revival were visible on the world market, and in their
wake some of our client enterprises did remarkably well.
For their part, financial markets have adapted to changes brought about by
regulation, and bank financing still functions reasonably well in Finland. On
the other hand, banks have altered their strategies, which can be seen, for
example, as stricter security and self-financing requirements. The pricing of
risks has also been adjusted. The result is that the margins of new bank
credits have widened. According to surveys conducted, the smallest SMEs
perceive that the availability of financing has declined the most; however, the
principal reasons for financing difficulties have been a falling turnover and
weak profitability.
Thanks to the measures taken in line with the Government Programme, Finnvera
now has better opportunities for financing SMEs and applying enterprise
analysis to make realistic assessments of their potential for profitable
business. During spring 2014, the Government will probably decide on Finnvera's
authorisation to grant export financing. Ensuring sufficient authorisation
would be pivotal for capital goods exporters. In addition, the Government is
likely to decide whether Finnvera is given the task of subscribing to bonds
issued by SMEs.”
Additional information:
Pauli Heikkilä, Chief Executive Officer, tel. +358 29 460 2400
Ulla Hagman, Senior Vice President, Finances and IT, tel. +358 29 460 2458
DISTRIBUTION
NASDAQ OMX Helsinki Oy
Oslo Børs ASA
The principal media
www.finnvera.fi
Finnvera publishes its Annual Report for 2013 as an electronic document on the
company's website in the week 11. The Annual Report also includes the Corporate
Responsibility Report.
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