Positive Result for Municipality Finance Plc
Municipality Finance Plc's loan portfolio increased by 29% in 2008, totalling
EUR 7,567 million at the end of the year (Dec. 31, 2007: EUR 5,849 million).
New loans granted amounted to EUR 1,682 million, hitting a new record (Dec. 31,
2007: EUR 1,314 million).
“In the history of Municipality Finance Plc, the financial year 2008 will be
regarded as exceptional. The core business of the company performed well, and
the consolidated balance sheet increased a total of 40%. However, the company's
capital adequacy was decreased by this solid growth. Our position in the
markets was further reinforced as the other financial institutions practically
withdrew from financing the municipal sector,” says CEO Pekka Averio. In
addition, the first financial year of the subsidiary Financial Advisory
Services Inspira Ltd resulted in positive figures.
The consolidated balance sheet total of the Municipality Finance Group stood at
an unprecedented EUR 12,512 million on December 31, 2008 (Dec. 31, 2007: EUR
8,913 million). The company's capital adequacy was 13.6% at the end of 2008
(Dec. 31, 2007: 23.8%). The net operating profit for the financial year before
appropriations and provisions stood at EUR 2.7 million (Dec. 31, 2007: EUR 8.8
million).
Despite the extremely challenging competitive situation, the company continued
to improve its position as a financier for municipalities and municipal
federations. During the financial year, Municipality Finance received requests
for tender worth a total of EUR 2,736 million, of which it won EUR 1,708
million, i.e., 76% of all its competitive bidding.
Record-breaking funding
Funding continued actively for Municipality Finance. The parent company raised
a total of EUR 4,527 million (2007: EUR 2,145 million) in long-term funding.
During the financial year, a total of 324 funding arrangements were made in the
international markets. In the domestic market, 11 Municipal Bonds were issued.
The Asian market continued to be the most significant source of funding for
Municipality Finance, with Japan still being the single most important market.
Apart from Asia, Municipality Finance concluded arrangements in Australia, not
to mention making its first arrangements in the New Zealand market.
Particularly significant European markets included Germany and Switzerland,
where the parent company was a very prominent issuer. In the Nordic countries,
a considerable amount of funds were acquired in Norway and Sweden.
The best credit ratings
The two important credit rating agencies, Standard & Poor's and Moody's,
confirmed the best possible credit ratings for Municipality Finance Plc during
the financial year. Municipality Finance Plc is the only Finnish credit
institution with the same ratings as the Republic of Finland.
Capital increase planned
“In the current economic situation, demand for funding in municipalities will
increase even further. This requires strengthening the company's capital
structure. Raising increase is necessary in order to meet the municipalities'
increasing funding needs in the future, as well. The Finnish government has
decided to participate in the share issue with an investment of EUR 20 million,
meaning that the municipal sector would have to place a minimum investment of
EUR 9 million. Our position and the competitiveness of our funding in the
international capital markets are reinforced by the best possible credit
ratings confirmed for Municipality Finance Plc and the Municipal Guarantee
Board by both Moody's and S & P. Together these credit ratings represent unique
creditworthiness,” says CEO Pekka Averio.
The full financial statements for 2008 will be published on March 5, 2009.
Municipality Finance Plc
Further information:
CEO Pekka Averio, tel. +358 (0)9 6803 6211, +358 (0)500 406 856
Executive Vice President Esa Kallio, tel. +358 (0)9 6803 6231, +358 (0)50 337
7953
Municipality Finance Plc is a local government credit institution owned by
Finnish municipalities and the Local Government Pensions Institution and is the
parent company of the Municipal Finance Group. The company's mission is to
ensure top-value financial services for the municipal sector, to be efficient
and to grow profitably. The Group's balance sheet totalled EUR 12,512 million
on December 31, 2008. The company offers market-based funding to municipalities
and municipal federations, to municipality-controlled entities and non-profit
housing corporations. The company's funding, which is guaranteed by the
Municipal Guarantee Board, is obtained from international capital markets and
domestic investors. Funding provided by the company goes into social and
non-profit service projects, such as schools, housing and hospitals. The Group
includes Financial Advisory Services Inspira Ltd, which offers financial
advisory services for investments, financial and asset arrangements, asset
management and various analysis services.
