Finnvera Oyj - Financial Statement Release

CORRECTION: Financial Statements of the Finnvera Group for the fourth quarter and 1 January–31 December 2014

Finnvera's possibilities to provide financing improved markedly

Correction: Added the attachment "Statement on the Corporate Governance and
Steering System 2014". 

The Finnish financial market was marked by diffuse economic prospects and the
effects of tightening bank regulation, which were felt, in particular, in the
credit terms and credit margins of the weakest borrowers. Demand for financing
focused heavily on working capital, and there were very few investment
projects. The government greatly improved Finnvera's possibilities to provide
public financing. 

The Group's financial trend

The Finnvera Group's profit for the year 2014 was EUR 101 million, or 27
million euros more than the year before (75 million). The main factor improving
the performance was the decrease of 47 per cent in impairment losses on
receivables and in guarantee losses, totalling EUR 34 million (64 million). In
addition, financial performance was improved by the reduction of administrative
expenses by 5 per cent, to EUR 41 million (43 million) and the increase of 3
per cent in the net value of fee and commission income and expenses, totalling
EUR 138 million (134 million). Correspondingly, the performance was encumbered,
among other factors, by the lower net interest income, EUR 52 million (56
million), due to a fall in interest levels and in the amount of outstanding
credits in SME financing. Moreover, losses on venture capital investments and
on the recognition of derivatives and liabilities at fair value totalled EUR 10
million (2 million). The financial performance of the parent company, Finnvera
plc, in 2014 came to EUR 94 million (69 million). 

The Group's operating profit amounted to EUR 102 million (75 million) and was
broken down as follows: EUR 6 million for SME financing (7 million) and EUR 104
million for export financing (74 million). The operating profit from venture
capital investments was EUR 7 million in the red (5 million). 

The Finnvera Group's profit for the last quarter of 2014 was EUR 25 million, or
clearly less than for the third quarter (42 million). The main factors
affecting the smaller profit were the impairment losses on receivables and
guarantee losses, which nearly doubled and were EUR 19 million more than in the
third quarter. 

Within the past few years, Finnvera's outstanding commitments and their risk
levels have risen significantly. However, in 2014 the outstanding commitments
for SME financing fell and the risk level did not rise any longer. The
outstanding commitments for export financing increased in 2014 but, as in the
case of SME financing, the risk level did not rise. Nevertheless, the risk
levels are still high, as evidenced by the considerable impairment losses and
guarantee losses in SME financing in recent years, even though the impairment
losses on receivables and guarantee losses in 2014 were below the figures for
2013. In export financing, no major losses have been recorded in recent years
or in 2014. The estimated provisions for losses in export financing were
reduced in 2014 when compared against the provisions for losses in the
financial statements for 2013. 

The extent and risk level of Finnvera's outstanding commitments will have a
significant impact on its financial performance and long-term economic
self-sustainability in the coming years. In examining the financial
performance, it is important to note that, at the end of December 2014,
Finnvera's total commitments for export credit guarantees and special
guarantees amounted to EUR 12.6 billion and the commitments for credits and
guarantees in SME financing, as well as guarantee receivables, stood at EUR 2.4
billion. Seen against these commitments, the net profit building a loss buffer
on the balance sheet is now about 0.7 per cent at the annual level and the
equity 6 per cent. 



Finnve  Q4/201  Q3/201  Change  Change  Q4/201  Change  2014  2013  Change 
Change 
ra           4       4                       3 
 Group 
--------------------------------------------------------------------------------
-- 
Financ    MEUR    MEUR    MEUR       %    MEUR    MEUR  MEUR  MEUR    MEUR     
 % 
ial 
 perfo 
rmance 
--------------------------------------------------------------------------------
-- 
Net         10      14      -5     -32      15      -5    52    56      -4     
-7 
 inter 
est 
 incom 
e 
--------------------------------------------------------------------------------
-- 
Fee         35      33       2       7      37      -2   138   134       4     
 3 
 and 
 commi 
ssion 
 incom 
e and 
 expen 
ses 
 (net) 
--------------------------------------------------------------------------------
-- 
Gains/       4      -6     -10    -156       1       2   -10    -2       8    
496 
losses 
 from 
 items 
 carri 
ed at 
 fair 
 value 
--------------------------------------------------------------------------------
-- 
Admini     -11      -8       3      35     -12       0   -41   -43      -2     
-5 
strati 
ve 
 expen 
ses 
--------------------------------------------------------------------------------
-- 
Impair      -9      10      19     190     -35     -26   -34   -64     -30    
-47 
ment 
 losse 
s, 
 guara 
ntee 
 losse 
s 
--------------------------------------------------------------------------------
-- 
Loans      -26     -38     -11     -30     -31      -5  -105  -101       5     
 4 
 and 
 domes 
tic 
 guara 
ntees 
--------------------------------------------------------------------------------
-- 
Credit      18      23      -4     -19       7      11    64    48      16     
33 
 loss 
 compe 
nsatio 
n from 
 the 
 State 
--------------------------------------------------------------------------------
-- 
Export      -1      25      26     103     -11     -10     8   -11     -19   
-173 
 credi 
t 
 guara 
ntees 
 and 
 speci 
al 
 guara 
ntees 
--------------------------------------------------------------------------------
-- 
Operat      27      41     -15     -36       4      23   102    75      27     
36 
ing 
 profi 
t 
--------------------------------------------------------------------------------
-- 
Profit      25      42     -17     -41       3      22   101    75      27     
36 
 for 
 the 
 perio 
d 
--------------------------------------------------------------------------------
-- 

The group's key figures on 31 December 2014 (31 December 2013)

- Capital adequacy, Tier2  18.6% (16.9)
- Cost/income ratio  25.7% (27.0)
- Equity ratio  14.4% (18.4)

Outlook for financing

The U.S. economy has got a foothold on the growth path, but economic growth in
the euro area is stagnating. In Russia, the sanctions focusing on the country's
economy, the falling oil prices and the change in the political direction
caused financial difficulties for the country in late 2014. 

The situation will affect the demand for Finnvera's export financing and the
company's risk position in an essential way if the current uncertain political
and financial situation continues. Finnvera's financing plays an increasingly
central role in the conclusion of export transactions. Despite this, it is
expected that the demand for export financing will decrease further from the
previous year, as uncertainty keeps the volume of investments small. Finnvera's
possibilities to provide financing for large enterprises' domestic projects
intended for exports will become concrete when Finnvera can participate in
investment projects undertaken by the export industry in Finland. 

The slow economic growth and the low investment level will keep the demand for
SME financing moderate in 2015. However, according to Finnvera's estimate, the
new mandates received by the company and, for its part, the regulation of banks
may increase the overall level of demand. Most financing needs are still
associated with working capital. 

The uncertainty of the economy makes it difficult to predict financial
performance. The materialisation of large individual export credit guarantee
claims may considerably weaken the projected situation. According to the
current estimate, the Finnvera Group's financial performance for 2015 is likely
to be somewhat weaker than that for 2014. 

CEO Pauli Heikkilä:
“The government greatly improved Finnvera's possibilities to provide public
financing. Thanks to the amendments made to legislation and commitments, we can
increase our risk-taking in both SME financing and export financing. Financing
through bonds, guaranteeing large enterprises' domestic investments relating to
exports, and the possibility to provide financing for enterprises larger than
the SME definition applied by the EU, diversified our selection of means. Once
the bill on the refinancing guarantee is passed, we can state that, in terms of
authorisations and financial instruments, we are on the same level as our
principal reference countries, such as Sweden and Germany. 

One of our goals is to identify growth companies and encourage them to grow
internationally. With respect to enterprises operating on the domestic market,
our principle is to share risks so that a bank or some other private provider
of financing, such as an insurance company, is the principal source of
financing. In particular, we focus our financing on situations of change within
companies and on the financing needed by start-up enterprises during
establishment. We continue our efforts to ensure that our financing has the
maximum impact and is allocated to the most important uses in view of
industrial policy. 

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
London Stock Exchange
The principal media
www.finnvera.fi


Finnvera publishes its Annual Report for 2014 as an electronic document on the
company's website in the week 11 in Finnish, English and as a summary in
Swedish. The Annual Report also includes the Corporate Responsibility Report.

Attachments:

Tilinpaatos_2014_EN.pdf

Statement_on_the_Corporate_Governance_and_Steering_System_2014.pdf