15.2.2024 11:00:01 EET | Finnvera Oyj | Annual Financial
Report
Finnvera Group, Stock Exchange Release, 15 February
2024
Finnvera Group’s Report of the Board of Directors and
Financial Statements 2023 High level of domestic
and export financing – loss provisions could be partially reversed,
Group result EUR 433 million Finnvera Group,
summary of year 2023 (vs. 2022)
- Result 433 MEUR (55) – Loss provisions could be partially
reversed in 2023, especially those related to the shipping sector
and Russia. The change in the loss provisions for export financing
totalled -377 MEUR in 2023. The result was exceptionally good due
to the reversal of loss provisions.
- Result by segment: parent company Finnvera plc’s SME and midcap
business 55 MEUR (-54) and Large Corporates business 351 MEUR (78).
The impact of Finnvera’s subsidiary, Finnish Export Credit Ltd, on
the Group’s result was 27 MEUR (32).
- Parent company Finnvera plc’s result for domestic operations
was 30 MEUR (-25), and the result for export credit guarantee and
special guarantee operations was 377 MEUR (56).
- Total exposure of the parent company Finnvera plc decreased by
2% to EUR 26.2 bn (26.6).
- Balance sheet total increased by 13% to EUR 14.3 bn
(12.6).
- Contingent liabilities reduced by 1% and stood at EUR 16.4 bn
(16.6).
- Non-restricted equity and the assets of the State Guarantee
Fund, which provides the Group’s buffer reserves for covering
future losses, totalled EUR 1.9 bn (1.4), showing an increase of
31%.
- The expected credit losses based on balance sheet items,
standing at EUR 1.2 bn (1.5), reduced by 21%.
- Equity ratio improved by 2.1 pp to 9.3% (7.2).
- Expense-income ratio improved by 1.4 pp to 19.4% (20.7).
- The NPS index, which measures client satisfaction, dropped by 8
points to 64 (72).
|
Finnvera Group, year 2023 (vs. 2022)
|
|
Result for the period
433 MEUR
(55), change 681%
|
Balance sheet total
EUR 14.3 bn
(12.6), change 13%
|
|
Total exposure, the parent
company’s domestic, export
credit guarantee and
special guarantee operations
EUR 26.2 bn
(26.6), change -2%
|
Non-restricted
equity and the assets
of The State
Guarantee Fund
EUR 1.9 bn
(1.4), change 31%
|
|
Expense-income ratio
19.4%
(20.7), change −1.4 pp
|
Equity ratio
9.3%
(7.2), change 2.1 pp
|
|
NPS index
(net promoter score)
64
(72), change -8 points
|
Expected credit losses based
on the balance sheet items
EUR 1.2 bn
(1.5), change -21%
|
CEO Pauli Heikkilä:
“Year 2023 was challenging, both internationally and in the
Finnish economy, with high interest rates and inflation and a tense
geopolitical situation. However, the year was surprisingly busy in
Finnvera’s financing operations.
Finnvera granted domestic loans and guarantees amounting to EUR
1.8 billion (1.0). Of this financing, 92% went according to the
strategy to start-ups and companies seeking growth and
internationalisation as well as investments, transfers of
ownership, export and delivery projects and SME guarantee projects.
The number of small start-ups among Finnvera’s clients dropped
clearly. Domestic financing included considerably more working
capital financing for large corporates than in the previous year. A
total of EUR 36 million was granted in Climate and Digitalisation
Loans, which were introduced in June. These loans, which benefit
from an InvestEU guarantee, were developed in cooperation with the
European Investment Fund. First direct export credits of under EUR
20 million are granted. This was made possible by a legislative
amendment that entered into force in February, under which Finnvera
may grant a loan directly if no bank is involved in financing an
export transaction.
Finnvera granted EUR 5.4 billion (5.9) in export credit
guarantees and special guarantees, and EUR 0.5 billion (0.9) in
export credits. The largest financing projects in 2023 went ahead
in the telecommunications sector. Expensive capital goods typically
predominate in export financing, and the annual volume of financing
is always affected by the timing of individual large export
transactions. Cruise shipping, which is a significant sector in
terms of Finnvera’s exposure, is recovering from challenges caused
by the pandemic, and its outlook for 2024 is good. The client
volumes and profitability of the largest cruise shipping companies
have recovered to their 2019 levels.
The Finnvera Group turned a profit of EUR 433 million (55) in
2023. In particular, changes in the amounts of loss provisions
contributed to the result. Some of the loss provisions made during
the first pandemic year associated with cruise shipping companies
could be partially reversed. Exposure related to Russia also
decreased as a result of repayments. Finnvera’s exposure relating
to Russia amounted to EUR 97 million at the end of 2023, whereas it
was EUR 422 million at the end of 2022 and approximately EUR 1
billion at the end of 2021. Due to the reversal of loss provisions
for export financing the result was exceptionally good.
In line with the objective set for Finnvera the company must,
over the long term, cover the costs of its operations with income
from financing. This cumulative self-sustainability has been
achieved.
With its financing authorisations, Finnvera is well placed to
expedite companies’ growth projects, investments and exports even
in a challenging economic environment. We welcome the highly
important reference made in the Finnish Government Programme to an
overhaul of the legislation applicable to Finnvera, which will
enable us to provide competitive export financing also in the
future. An external evaluation commissioned by the Ministry of
Economic Affairs and Employment found that Finnvera is a highly
significant player in financing Finnish SMEs that manages its
mission professionally, efficiently and to a high standard. The
recommendations of the evaluation included increasing targeted
risk-taking in SME financing and a stronger role in financing the
clean transition. Finnvera is making plans to implement these
recommendations.
In line with our strategy, we have created a climate target for
Finnvera, and through our financing we encourage companies to
invest and be part of the solution to climate challenges.”
Finnvera Group Financing granted in 2023
(vs. 2022)
- Domestic loans and guarantees: EUR 1.8 bn (1.0), change
81%.
- Export credit guarantees and special guarantees, incl. SME and
midcap export credit guarantees: EUR 5.4 bn (5.9), change -9%.
- Export credits: EUR 0.5 bn (0.9), change -42%.
- The credit risk for the subsidiary Finnish Export Credit Ltd’s
export credits is covered by the parent company Finnvera plc’s
export credit guarantee.
- The fluctuation in the amount of export credit guarantees and
export credits is influenced by the timing of individual major
export transactions.
Exposure 31 December 2023 (vs. 31 December 2022)
- Domestic loans and guarantees: EUR 3.0 bn (2.7), change
11%.
- Export credit guarantees and special guarantees, incl. SME and
midcap export credit guarantees: EUR 23.2 bn (23.9), change -3%.
- Drawn exposure: EUR 14.0 bn (14.1), change -1%, of which Large
Corporates’ cruise shipping exposure EUR 7.3 bn (6.6)
- Undrawn exposure: EUR 4.5 bn (7.9) and binding offers EUR 4.7
bn (1.9), in total EUR 9.2 bn (9.8), change -5%, of which Large
Corporates’ cruise shipping exposure in total EUR 4.6 bn
(6.1).
- Drawn export credits: EUR 7.3 bn (7.5), change -2%.
|
Finnvera Group
Financial performance
|
Q4/2023
MEUR
|
Q4/2022
MEUR
|
Change
%
|
1-9/2023
MEUR
|
2023
MEUR
|
2022
MEUR
|
Change
%
|
|
Net interest income
|
33
|
19
|
79%
|
82
|
115
|
69
|
68%
|
|
Net fee and commission income
|
40
|
49
|
-18%
|
137
|
177
|
204
|
-13%
|
|
Gains and losses from financial instruments carried at fair
value through P&L and foreign exchange gains and losses
|
-5
|
-10
|
-46%
|
-4
|
-9
|
-6
|
48%
|
|
Other operating income
|
0
|
-41
|
-
|
0
|
0
|
0
|
-32%
|
|
Operational expenses
|
-14
|
-14
|
-2%
|
-36
|
-50
|
-49
|
1%
|
|
Other operating expenses and depreciations
|
-1
|
-1
|
6%
|
-4
|
-5
|
-6
|
-10%
|
|
Realised credit losses and change in expected credit losses,
net
|
209
|
74
|
181%
|
1
|
210
|
-148
|
-
|
|
Operating result
|
262
|
76
|
247%
|
177
|
439
|
64
|
591%
|
|
Result for the period
|
261
|
75
|
250%
|
172
|
433
|
55
|
681%
|
Financial performance
The Finnvera Group’s result for 2023 was EUR 433 million (55).
EUR 261 million of the result was generated in October–December and
EUR 172 million in January–September. In particular, changes in
loss provisions for expected losses contributed to this result.
Finnvera was able to partially reverse loss provisions in 2023,
particularly regarding the shipping sector. Also the loss
provisions relating to exposure in Russia decreased. The change in
the loss provisions for export financing totalled EUR -377 million
during the year, which resulted in exceptionally good results for
the parent company’s export credit guarantee and special guarantee
operations and for the Group.
The Group’s realised credit losses for the period under review
totalled EUR 128 million (39). The expected losses decreased by EUR
320 million, whereas they increased by EUR 137 million in the
previous year. While an individual large amount of export credit
guarantee compensation was paid out in 2023, this did not affect
the result due to the previously made loss provisions. The State’s
loss compensations amounted to EUR 18 million (29). The realised
credit losses and the change in the expected credit losses were EUR
210 million positive during the period under review whereas the
impact in the previous year was EUR 148 million negative.
After the result of the period under review, the parent
company’s reserves for domestic operations and export credit
guarantee and special guarantee operations for covering potential
future losses amounted to a total of EUR 1,676 million (1,261) at
year end. The credit risk for the subsidiary Finnish Export Credit
Ltd’s export credits is covered by the parent company Finnvera
plc’s export credit guarantee. At year end, the reserves consisted
of a reserve for domestic operations of EUR 405 million (375) as
well as a reserve for export credit and special guarantee financing
and the assets in the State Guarantee Fund totalling EUR 1,272
million (886). The State Guarantee Fund is an off-budget fund whose
assets include assets accumulated from the activities of Finnvera’s
predecessor organisations. Under the Act on the State Guarantee
Fund, the Fund covers a loss-making result in the export credit
guarantee and special guarantee operations if the reserve funds in
the company’s balance sheet are not sufficient.
The non-restricted equity of the subsidiary Finnish Export
Credit Ltd was EUR 198 million at year end (171).
Outlook for financing
From the perspective of SMEs, uncertainty will continue in 2024,
which will affect the demand for Finnvera’s financing and
especially SME investments. The operating environment will remain
challenging from the viewpoint of profitability for many companies.
Finnvera, together with commercial providers of financing, is
committed to enabling the growth and internationalisation of
companies and their future-oriented investments.
In keeping with our strategy, we will continue to diversify the
financing opportunities available for companies. The possibilities
of using Finnvera’s SME Guarantee were expanded from the beginning
of 2024. As before, no collateral is required for the SME
Guarantee, which is suitable for domestic investments, product
development as well as working capital. With our Climate and
Digitalisation Loans, we can promote SMEs’ clean transition
projects and digitalisation. We accelerate the green transition
with incentives and products for sustainable financing in projects
with climate-positive features. We will supplement the product
range of export financing with Bill of Exchange financing in spring
2024.
The Government Programme sets the aim of increasing the number
of middle-sized midcap enterprises in Finland. We are preparing to
work together with the new Tesi Group, especially when it comes to
financing growth companies.
We expect the overall demand for export guarantees and export
credits to remain at previous years’ levels. Overall demand is
affected by individual major projects that go ahead during the
financial period. In uncertain times, the significance of export
financing for the competitiveness of companies is emphasised. We
will invest in more active export promotion in the future. Trade
Facilitators appointed to the role in early 2024 aim to bring
together foreign buyers and Finnish exporters and to promote trade
using Finnvera’s export financing in close cooperation with
Business Finland.
Finnvera is involved in Finland’s national reconstruction
programme for Ukraine, and Finnvera’s export credit guarantees have
an important role in financing the reconstruction by carrying the
risks of Finnish companies exporting to Ukraine. Finnvera has
started granting export credit guarantees to Ukraine again since 1
January 2024. The arrangement applies particularly to financing
transactions with a short payment period.
In domestic financing, the risk ratings of companies have
deteriorated, payment difficulties have increased, and the numbers
of corporate reorganisations and bankruptcies are up. We are
preparing for an increase in financial restructuring arrangements
in 2024. The increase in costs and interest rates has also delayed
the implementation of construction phase projects in overseas
industrial-scale investments.
Outlook
The business outlook for cruise shipping companies improved in
2023, and the Group’s exposure relating to this sector, and also to
Russia, decreased. The credit loss risk of export financing
liabilities remains high, however, which may result in uncertainty
about the Finnvera Group’s performance in 2024.
Further information:
Pauli Heikkilä, CEO, tel. +358 29 460 2400
Ulla Hagman, CFO, tel. +358 29 460 2458
Finnvera publishes its Board of Directors’ Report and its
financial statements as an XHTML file compliant with the European
Single Electronic Format (ESEF) requirements. Auditors KPMG Oy have
issued an independent assurance report that provides reasonable
assurance concerning Finnvera’s ESEF financial statements. The
XHTML file is available in Finnish and English. Finnvera
additionally publishes the report and financial statements in PDF
format.
ESEF-report: 743700T69OBBJO7TCA15-2023-12-31-en (ZIP)
Finnvera Group’s Report of the Board of Directors and Financial
Statements 1 January–31 December 2023 (PDF)
For the report and other documents
www.finnvera.fi/financial_reports.
Distribution: NASDAQ Helsinki Ltd, London Stock Exchange, the
principal media, www.finnvera.fi/eng
Finnvera publishes quarterly reports.
About Finnvera Oyj
Finnvera provides financing for the start, growth and
internationalisation of enterprises and guarantees against risks
arising from exports. Finnvera strengthens the operating potential
and competitiveness of Finnish enterprises by offering loans,
guarantees and other services associated with the financing of
exports. The risks included in financing are shared between
Finnvera and other providers of financing. Finnvera is a
specialised financing company owned by the State of Finland and it
is the official Export Credit Agency (ECA) of Finland.
www.finnvera.fi/eng
Attachments
- 743700T69OBBJO7TCA15-2023-12-31-en.zip
-
Finnvera-Report-of-the-Board-of-Directors-and-Financial-Statements-2023.pdf
- Finnvera-Annual-Review-and-Sustainability-Report-2023.pdf
- Finnvera-Corporate-Governance-and-Steering-System-2023.pdf
News Source: Ritzau