2014-08-14 12:04:15 CEST
2014-08-14 12:05:16 CEST
REGULATED INFORMATION
Finnvera Oyj - Interim report (Q1 and Q3)
The Finnvera Group’s Interim Report for January–June 2014
A substantial increase in the authority to grant export credit guarantees and
export credits
Finnvera received substantially more authority for export financing during the
Q2/2014 period. The maximum amount of export credit guarantees rose by EUR 4.5
billion to EUR 17 billion and the maximum amount of financing for export
credits increased by EUR 4.0 billion to EUR 7.0 billion. Finnvera now has
better possibilities to supplement the private financial markets with regard to
financing arrangements for SMEs and for export transactions that require
long-term financing. Finnvera also received the possibility to subscribe to SME
bonds, thereby strengthening Finnvera's operational possibilities.
During the period under review, demand for Finnvera's financing was slightly
lower than in the first quarter of the year. Financial markets functioned
reasonably well in Finland in the first half of the year. The greatest
impediments to arranging financing for companies were unprofitable activities
and insufficient equity.
Business operations and financial trend
The euro value of the loan and guarantee offers given to SMEs in JanuaryJune
increased by 10 per cent on the same period in 2013. As in 2013, most of the
offers involved working capital. In contrast, the amount of offers given for
export financing fell by one-third in comparison to the first half of the
previous year.
The Finnvera Group's profit for JanuaryJune was EUR 34 million. This was EUR
10 million less than the profit for the corresponding period in the previous
year (44 million). The most important factors decreasing the profits were the
increase in the impairment losses on receivables and guarantee losses incurred
by the parent company Finnvera plc, and losses on venture capital investments
for items carried at fair value. At the same time, the downturn in profits was
partially offset by higher fee and commission income and lower administrative
expenses than in the corresponding period of 2013.
The profit of the parent company Finnvera plc amounted to EUR 40 million, or
EUR 7 million less than the year before (46 million). The parent company's
profit for export credit and special guarantee activities was EUR 31 million
(39 million), while the result for credit and guarantee operations related to
SME financing was EUR 4 million (8 million).
Finnvera Group Q2/201 Q1/201 Change Q2/201 Change H1/201 H1/201 Change
4 4 3 4 3
--------------------------------------------------------------------------------
Financial MEUR MEUR % MEUR % MEUR MEUR %
performance
--------------------------------------------------------------------------------
Net interest 15 13 16 14 7 28 28 0
income
--------------------------------------------------------------------------------
Fee and 34 37 -9 30 12 71 62 15
commision
income and
expenses (net)
--------------------------------------------------------------------------------
Gains/losses -4 -3 12 -2 147 -7 -3 149
from items
carried at fair
value
--------------------------------------------------------------------------------
Administrative -11 -10 2 -12 -9 -21 -23 -8
expenses
--------------------------------------------------------------------------------
Impairment -7 -28 -77 -16 -58 -35 -18 94
losses,
guarantee
losses
--------------------------------------------------------------------------------
Loans and -22 -19 14 -24 -8 -41 -44 -7
domestic
guarantees
--------------------------------------------------------------------------------
Credit loss 11 12 -1 8 34 23 27 -15
compensation
from the State
--------------------------------------------------------------------------------
Export credit 4 -21 -119 0 - -17 0 -
guarantees and
special
guarantees
--------------------------------------------------------------------------------
Operating profit 27 7 290 15 85 34 44 -23
--------------------------------------------------------------------------------
Profit for the 27 8 248 14 86 34 44 -22
period
--------------------------------------------------------------------------------
The Group's key figures on 30 June 2014
-- Equity ratio 16.5 per cent (17.9)
-- Capital adequacy 18.5 per cent (16.5)
-- Cost-income ratio 25.8 per cent (29.5)
Outlook for financing
During the latter half of the year, demand for SME financing will probably
remain at moderate levels, a result of uncertain economic prospects and
investments that are lower than normal. SMEs need financing for working capital
and the rescheduling of existing credits.
The situation in Russia causes uncertainty in the financing of the exports and
trade. Current sanctions and the threat of further sanctions and
countermeasures by Russia impede the operation of banks. In practice, banks in
the EU region will have to take account of the existing sanctions issued by the
United States, and those anticipated, because they have operating licences in
the US and extensive payment transactions denominated in the US dollar.
Businesses in Russia are finding it more difficult to obtain financing. This
situation has impacted on the demand for Finnvera's short-term guarantees,
which is lower than in the corresponding period during 2013 in terms of both
numbers and value. The value of guarantees applied for capital goods exports in
January-June was only about half of the preceding year's figure although new
orders received by Finnish industry have shown an upward trend during the first
six months of the year. Finnvera expects the demand for export guarantees to
revive in the latter half of the year. The outstanding commitments for export
credit guarantees include some cases where credit rearrangement may become
necessary or where the risk of loss has increased during the spring.
CEO Pauli Heikkilä:
“The amendments made to the Act on the State's Export Credit Guarantees in June
increased the maximum amounts of Finnvera's export credit guarantees and export
credits. When exports from Finland return to a growth track, we will be well
prepared, alongside banks, to participate in the arrangement of financing for
the international customers of Finnish export companies. We obtain the funds
needed to finance export credits and SMEs from the capital markets. In April,
we successfully launched a EUR 500 million bond, which is the largest bond to
date for our acquisition of funds.
We can still provide coverage for political and commercial risks incurred by
Finnish exporters for projects carried out in Russia. We abide by the sanctions
approved by the EU and assess our possibilities to participate in projects on a
case-by-case basis according to our normal criteria.
One of our targets is to identify growth companies and encourage them to grow
internationally. In order to accelerate this process, together with Tekes and
Finpro, we started the Team Finland LetsGrow project, which provides financing
and advisory services to help companies implement their internationalisation
plans. The LetsGrow programme allows Finnvera, for the first time ever, to
offer unsecured financing on a broad basis.”
Additional information:
Pauli Heikkilä, CEO, tel. +358 29 460 2400
Ulla Hagman, Senior Vice President, Finances and IT, tel. +358 29 460 2458
This Interim Report is available at www.finnvera.fi > Finnvera > Publications >
Annual Reviews and Interim Reports.
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