Finnvera Group, summary H1/2024 (vs. H1/2023 or 31 December 2023) 

• Result 85 MEUR (148) – The result for the period under review was strong for all business operations. Net interest income increased by 43% to 69 MEUR (48). Net fee and commission income increased by 11% to 101 MEUR (91). The loss provisions for export credit guarantee and special guarantee operations, which have had a significant impact on Finnvera’s financial performance in recent years, remained unchanged during the period under review, when in the reference period they were reversed by 150 MEUR.
• Expense-income ratio was very good and whereas by 4.4 pp to 16.4% (20.8%).
• Non-restricted equity and the assets of the State Guarantee Fund, which provides the Group’s buffer reserves for covering possible future losses, grew by 5% and totalled EUR 2.0 bn (1.9).
• Expected credit losses on the balance sheet were EUR 1.2 bn (1.2) and increased by 1% during the period under review.
• The cumulative self-sustainability target set for Finnvera’s operations is achieved when the results of domestic and export financing are calculated to the end of June 2024.
• Results by business area – The result of the SME and midcap business of the parent company, Finnvera plc, during the period under review was 9 MEUR (15), while the Large Corporates business was 53 MEUR (119).
• The impact of Finnish Export Credit Ltd, a Finnvera subsidiary, on the Group’s result was 23 MEUR (14).
• The balance sheet total was EUR 15.4 bn (14.3), representing an increase of 8%.
• Contingent liabilities stood at EUR 17.6 bn (16.4), increasing by 7%.
• Equity ratio was reduced by 0.1 pp to 9.2% (9.3).
• The NPS index, which is used to measure client satisfaction, was at an excellent level, improving by 25 points to 86 (61).

Comments from CEO Juuso Heinilä:

“Our economic operating environment stabilised during the first half of the year, and fears of continuing interest rate hikes were dissipated. The outlook for the global economy is improving as a result of decreasing inflation, lower interest rates, and growth in real income.

Between January and June, Finnvera granted EUR 0.5 billion (0.8) in domestic loans and guarantees. The decrease denominated in euros from the previous year is due to a major individual financing decision that was made during the reference period. The number of financing decisions was at the same level as during reference period, demonstrating that the decline in business activity has ceased, and SMEs in particular have begun implementing their previous investment plans. Although the amount of domestic financing decreased from the previous year, the financing granted was still at a higher level than during the pre-pandemic period. A total of EUR 34 million (5) was granted for climate and digital loans, which are intended for green transition and digitalisation projects under the InvestEU Guarantee Programme. The granting of climate and digital loans began in June 2023. As a result of long-term economic uncertainty, the number of payment difficulties faced by domestic financing clients was still high, although the situation is not alarming.

In accordance with Finnvera’s strategy, 92% of domestic financing was allocated to start-ups, SMEs seeking growth and internationalisation, investments, transfers of ownership, export and delivery projects, and  SME guarantee projects.

The importance of exports to the Finnish economy is undeniable, and the improved outlook for exports is currently subject to high expectations, as is the growth and renewal of the entire business field. Demand for Finnvera’s export financing decreased in the first half of the year, with fewer new export credit guarantee offers being submitted than in the previous year. This was mainly due to the focus of Finnish exporters on investment goods and the decline in export demand due to both the economic operating environment and higher interest rates. Between January and June, Finnvera granted EUR 1.8 billion (3.5) in export credit guarantees, export guarantees, and special guarantees. The annual volume of financing is also always affected by the timing of individual large export transactions. The most active sector was telecommunications, where in April Finnvera signed its largest export credit guarantee agreement for the telecommunications sector with Nokia, to finance the creation of India’s 5G network. The demand for export credits remained low, and Finnvera granted EUR 3 million (425) of export credits during the period under review. The financing of export trade is increasingly provided by banks to which Finnvera grants guarantees.

Finnvera’s result during the period under review was strong for all its business operations. The result for January–June was EUR 85 million (148). The results of all business operations, i.e. SME and midcap financing, export credit guarantee and special guarantee operations, and Finnvera’s subsidiary Finnish Export Credit Ltd, were positive. The loss provisions for export credit guarantee and special guarantee operations, which were mainly related to the cruise shipping and shipyard sector and Russia, were kept unchanged. In longer-term comparisons, the result of the review period is excellent, even though it did not reach the result of the previous year. The result of the reference period was exceptional due to the reversal of loss provisions in export credit guarantee operations. However, the credit loss risk of export financing exposure remains high, which may affect Finnvera’s future financial performance and buffer reserves.

Finnvera’s mission is to supplement the financial market and enable future growth. The guarantee-related collaboration agreement that Finnvera signed in May with the European Investment Bank helps share the risk of the financing granted to midcap enterprise-level growth projects and investments. We strive to increase the number of Finnish export companies and enable SME-level exports through our financing. Our new bill of exchange financing is intended for export sales of machinery and equipment worth less than EUR 2 million. Our unsecured SME Guarantee, which was renewed at the turn of the year, can now be used to finance corporate acquisitions. The overall reform of the legislation concerning Finnvera, which is part of the new Government Programme, is crucial for the development of our operations and the competitiveness of our export financing.

At the first half of the year, Finnvera’s NPS index, which is used to measure the willingness of our clients to recommend our services, stood at a stellar level of 86 points. The creation of a good customer experience is also supported by digitalisation. The reform of Finnvera’s online services progressed as planned at the beginning of the year. In accordance with our strategy, we will continue increasing the versatility of our financing for the rest of the year as well.”

Finnvera Group