Finnvera Oyj - Interim report (Q1 and Q3)

The Finnvera Group’s Interim Report for January–September 2012

The best credit ratings for Finnvera's acquisition of funds

Finnvera's loan programme of three billion euros received the best possible
ratings from two credit rating agencies: Moody's (Aaa) and Standard & Poor's
(AAA). The ratings correspond to the ratings assigned to the State of Finland
for its long-term funding. Finnvera's loan programme is guaranteed by the State
of Finland and is used for acquiring funds from the market for financing both
SMEs and export credits. 

Business operations and financial trend

The value of financing offers given by Finnvera for exports during
January-September was four per cent less than the year before but more than
double the value of offers given during the corresponding period in 2010. The
number of financing offers given for SMEs declined slightly, and the value of
the offers was about one fifth less than during the corresponding period last
year. 

In Finnvera's venture capital investments, the value of initial investments
made in January-September increased on the figure for the same period in 2011.
Moreover, 53 new business angels joined Finnvera's network of business angels
during the period under review, bringing the total to 232. Demand for services
offered by Finnish Export Credit Ltd was brisk, while the value of offers
remained at the same level as last year. 

The Group's profit for the third quarter was EUR 11 million, or clearly better
than the result for the second quarter. The profit accounted for over one third
of the profit of EUR 30 million recorded for January-September. The nine-month
profit that was clearly less than in 2011 is explained by increased credit
risks in SME financing and the resulting impairment losses and provisions for
losses. 

The Group's net interest income and the net sum of fee and commission income
and expenses increased in January-September by 10 per cent on the previous
year. In January-September, administrative expenses remained more or less
unchanged from the previous year, but impairment losses on receivables and
guarantee losses increased by over 40 per cent. Owing to the losses recorded,
SME financing showed a negative result for January-September. Export financing
showed a profit.The Group companies and associated companies had an effect of
EUR -4 million on the profit. 

  -- At the end of September, the Finnvera Group's capital adequacy ratio was
     15.8 per cent, or 0.5 percentage points better than a year ago.
  -- The Group's cost/income ratio improved by 0.4 percentage points on the
     previous year and was 27.6 per cent.
  -- The Group's equity ratio declined by 3.5 percentage points and stood at
     23.4 per cent at the end of September.

*Table (see the PDF version of this release attached)

Outlook for the rest of the year

Demand for SME financing is not expected to change significantly during the
rest of 2012. The sluggish economy will not encourage investments or company
reorganisations; in this respect, demand will thus remain moderate. Demand for
financing will still focus on working capital and on the arrangement of
delivery security enabling transactions. 

Demand for Finnvera's export credit guarantees and export credits is likely to
continue fairly active despite the downturn in exports. The underlying factors
are the increased awareness of risks and the banks' need to reduce the share of
long-term credits on their balance sheets. Finnvera's guarantees and financing
are likely to play a greater role for Finnish exports. 

The uncertain economic trend makes it more difficult to predict Finnvera's
financial performance. According to current estimates, the financial
performance of both the Group and the parent company is expected to fall below
that for 2011. If materialised, individual risks may weaken the result
considerably. 

CEO Pauli Heikkilä:

The debt crisis in the euro zone and the uncertainty of the global economy have
continued to weaken the overall economic situation when compared against the
first six months of the current year. This has been reflected as caution
especially in the investments of SMEs. Another indication is that most of the
financing we have offered to SMEs has been needed for working capital. Demand
for export credit guarantees has been high both in Finland and internationally.
However, only some of the planned export transactions materialise in the end. 

Finnvera issued the first notes under the Euro Medium Term Note programme to
the international capital market at the end of October. This funding enables us
to finance export credits for buyers of Finnish capital goods. The scheme helps
to ensure the competitive standing of Finnish export companies because, in most
cases, securing an export contract also requires the arrangement of long-term
financing for the buyer. 

The Ministry of Employment and the Economy has stated that venture capital
investments for start-up enterprises with growth potential will be transferred
from Finnvera to Tekes at the latest in January 2014. Finnvera will focus on
providing SMEs with loans and domestic guarantees, as well as export credits
and export credit guarantees for export financing. The funds needed for this
purpose are acquired from the market. 

Additional information:
Pauli Heikkilä, CEO, tel. +358 29 460 2400
Ulla Hagman, Senior Vice President, Finances and IT, tel. +358 29 460 2458
Terhi Kannisto, Communications Officer, tel. +358 29 460 2860

Attachments:

Tiedote_Q3_22112012_eng_FINAL.pdf

ovk_q3_2012_eng_final.pdf