Finnvera Oyj - Interim report (Q1 and Q3)

The Finnvera Group's Interim Report for January-March 2015

Demand for financing revived despite uncertainty

From the perspective of the economy, the first quarter of 2015 was varied.
Despite unstable and negative economic outlook, the weakening of the euro
brought a little light to export enterprises. SME financing was sought
actively, and Finnvera strove to meet enterprises' expectations through its
wider range of financing possibilities. The great majority of enterprises can
obtain financing for profitable projects even though banks have introduced more
stringent requirements for loans and collateral. Thanks to some major
individual projects, the total demand for export credit guarantees, expressed
in euros, was many times greater than during the same period a year ago. 

Finnvera's risks pertaining to Russia have increased. The company continues to
grant export credit guarantees for Finnish exporters' projects in Russia, but
the Russian counterparty's credit standing is examined increasingly carefully.
The exposure trend and repayment times are monitored. 

Business operations and the financial trend

In January-March, the value of offers given by Finnvera for export transactions
was over three times greater than the year before. Loans and guarantees granted
to SMEs and - by virtue of the authorisation received by Finnvera at the start
of 2015 - to enterprises larger than the EU's definition of an SME increased by
over 40 per cent on the figure for the previous year. 

The Finnvera Group's financial performance in January-March came to EUR 26
million, or EUR 19 million more than during the corresponding period the year
before (8 million). The main factors improving the performance were the
decrease in impairment losses on receivables and in guarantee losses, as well
as profits on items carried at fair value. 

The profit of the parent company, Finnvera plc, stood at EUR 26 million (10
million). The subsidiaries and associated companies had an impact of EUR 1
million on the Group's profit (-3 million). Venture capital investments
accounted for EUR -0.5 million (-3.3 million) of this impact. Interest
equalisation and financing of export credits by Finnish Export Credit Ltd
accounted for EUR 1.1 million (0.7 million). 

The parent company's export financing and SME financing showed a profit: the
separate result for export credit guarantees and special guarantees came to EUR
24 million (5 million) while the profit for credits and guarantees in SME
financing was EUR 0.3 million (5 million). The parent company's result included
a surplus of EUR 2 million (0.2 million) from export credit financing. 



Finnvera Group              Q1/201  Q1/201  Change  Change  *2014  *2013  Change
                                 5       4                                      
--------------------------------------------------------------------------------
Financial performance         MEUR    MEUR    MEUR       %   MEUR   MEUR       %
--------------------------------------------------------------------------------
Net interest income             14      13       1       6     52     56      -7
--------------------------------------------------------------------------------
Fee and commission income       37      37       0       0    138    134       3
 and expenses (net)                                                             
--------------------------------------------------------------------------------
Gains/losses from items          1      -3      -5    -135    -10     -2     496
 carried at fair value            
--------------------------------------------------------------------------------
Administrative expenses        -11     -10       1       9    -41    -43      -5
--------------------------------------------------------------------------------
Impairment losses,             -12     -28     -16     -58    -34    -64     -47
 guarantee losses                                                               
--------------------------------------------------------------------------------
Loans and domestic             -65     -19     -46    -241   -105   -101       4
 guarantees                                                                     
--------------------------------------------------------------------------------
Credit loss compensation        55      12      44     381     64     48      33
 from the State                                                                 
--------------------------------------------------------------------------------
Export credit guarantees        -2     -21     -19     -91      8    -11    -173
 and special guarantees                                                         
--------------------------------------------------------------------------------
Operating profit                27       7      20     295    102     75      36
--------------------------------------------------------------------------------
Profit for the period           26       8      19     245    101     75      36
--------------------------------------------------------------------------------



The Group's key figures on 31 March 2015 (31 December 2014)

• Equity ratio                       13.9% (14.4%)
• Capital adequacy, Tier 2  18.1% (18.6%)
• Cost-income ratio             24.1% (25.7%)

Outlook for financing

During the first quarter of 2015, demand for Finnvera's SME financing was
livelier than during the same period a year ago. The total sum of applications
for financing increased by nearly 50 per cent. The deal flow in financing for
growth and internationalisation is likely to remain good, and some signs of
recovery are also visible in the subcontracting chains of large enterprises.
However, most of the demand for SME financing still focuses on working capital;
this would indicate that the investment level will remain low. 

Demand for export financing is rising when compared to the previous year. Owing
to ownership arrangements in the shipyard industry, demand for ship financing
will increase. Another consideration contributing to the higher demand for
export credit guarantees is the fact that Finnvera can now provide financing
for large enterprises' domestic projects targeted at exports. Demand for
guarantees to finance transactions in Russia has been very brisk in early 2015
despite the fact that Finnish exports to Russia have shrunk. Finnvera estimates
that the Russian share of the total exposure will not increase. 

CEO Pauli Heikkilä:

“The international market has improved although the prospects for the Finnish
economy are unclear. Finnvera's financing possibilities have been expanded in
various ways. For instance, Finnvera can now subscribe bonds, finance domestic
investments benefiting exports, and provide financing for larger enterprises
than before. An indication of this was that demand for financing during the
first quarter clearly exceeded the figure for the year before. A welcome
feature was that, after a long time, enterprises also sought financing for some
fairly large investments, although most of the demand still focused on working
capital needs. 

In the challenging financial situation, banks require more self-financing from
enterprises, which may make it more difficult for enterprises to obtain
financing. It would therefore be important to strengthen the equity of Finnish
enterprises.” 

Additional information:
Pauli Heikkilä, CEO, tel. +358 29 460 2400
Ulla Hagman, Senior Vice President, Finance and IT, tel. +358 29 460 2458


DISTRIBUTION
NASDAQ OMX Helsinki Ltd
Oslo Børs ASA
London Stock Exchange
Major media
www.finnvera.fi

This Interim Report is available at www.finnvera.fi> Finnvera > Publications >
Annual Reviews and Interim Reports.

Attachments:

Ovk_Q1_2015_EN.pdf