By the end of September, Finnvera had financed considerably more company acquisitions than during the same period the year before. During the period under review, Finnvera was involved in over 700 changes of ownership. Finnvera’s total contribution was EUR 106 million, or 80 per cent more than in the corresponding period in 2014. It is estimated that Finnvera is involved in every third company acquisition. The period under review was the first time after 2010 when the number of ownership arrangements showed an upswing.

According to the SME Barometer survey conducted this autumn, investment expectations have improved since last spring. As yet, however, no change is apparent in Finnvera’s financing; as before, SME financing was needed for working capital considerably more than for investments. It is over three years since investments accounted for a larger share of financing offered to SMEs than working capital.

Business operations and the financial trend

During the period under review, the volume of export credit guarantee offers given by Finnvera was 52 per cent greater than in the corresponding period in 2014. As concerns financing offers for export credits, the figure was over two times greater. The volume of loans and guarantees granted to SMEs and enterprises larger than the SME definition applied by the EU was 31 per cent greater than the year before.

Finnvera Group    
  1 Jan-30 Sep 2015
 
1 Jan-30 Sep 2014
 
Offered financing    
    Loans and guarantees 694 MEUR 530 MEUR
    Export credit guarantees and special guarantees 5 733 MEUR 3 767 MEUR
    Export credits   3 601 MEUR 1 516 MEUR
     
  30 Sep 2015 31 Dec 2014
Outstanding commitments    
    Loans and guarantees 2 338 MEUR 2 378 MEUR
    Export credit guarantees and special guarantees 16 628 MEUR 12 600 MEUR
    Export credits 4 263 MEUR 3 319 MEUR
     
  1 Jan-30 Sep 2015
 
1 Jan-30 Sep 2014
 
Operating profit 108 MEUR 75 MEUR
Profit for the period 106 MEUR 76 MEUR
  30 Sep 2015 31 Dec 2014
Equity ratio 13,2 % 14,4 %
Capital adequacy, Tier 2  17,9 % 18,6 %
Cost-income ratio 25,5 % 25,7 %

The Finnvera Group’s profit for the third quarter of 2015 was EUR 51 million, or EUR 23 million better than for the second quarter (28 million). The main factors improving the result were the reduction of EUR 19 million in impairment losses on receivables and guarantee losses, the reduction of EUR 5 million in losses from items carried at fair value, and the decrease of EUR 1 million in administrative expenses.

The Finnvera Group’s profit for January-September totalled EUR 106 million (76 million), or EUR 30 million more than during the corresponding period in 2014. The main factors improving the financial performance for the past nine months were the decrease of EUR 27 million in impairment losses on receivables and guarantee losses, the increase of 5 per cent, or EUR 5 million, in the parent company Finnvera plc’s fee and commission income, as well as the decrease of EUR 6 million in losses from items carried at fair value.

The parent company Finnvera plc’s profit for January-September stood at EUR 108 million (84 million). The Group companies and associated companies had an effect of EUR -2 million on the profit (-9 million). Venture capital investments accounted for EUR -8 million (-9 million) of this effect. Interest equalisation and the financing of export credits by Finnish Export Credit Ltd accounted for EUR 6 million (0.5 million).

When the result is broken down by business sector, both the parent company’s export financing and SME financing showed a profit for January-September: the separate result for export credit guarantees and special guarantees came to EUR 68 million (79 million), while the profit for credits and guarantees in SME financing was EUR 40 million (4 million).

Finnvera Group Q3/2015 Q2/2015 Change Q3/2014 Change 1-9/2015 1-9/2014 Change
Financial performance MEUR MEUR % MEUR % MEUR Meur %
Net interest income 15 15 0 14 3 43 42 2
Fee and commission income and expenses (net) 34 36 -5 33 5 107 103 5
Gains/losses from items carried at fair value -2 -7 -77 -6 -74 -8 -14 -44
Administrative expenses -9 -11 -14 -8 12 -32 -29 8
Impairment losses, guarantee losses 16 -3 -719 10 63 2 -25 -58
   Loans and domestic guarantees 6 -7 -186 -38 -116 -66 -79 76
   Credit loss compensation from the State 9 5 101 23 -59 69 45 162
   Export credit guarantees and special guarantees 1 0 -410 25 -96 -1 9 -86
Operating profit 53 28 86 41 27 108 75 45
Profit for the period 51 28 81 42 22 106 76 40

Outlook for financing

In euros, the demand for SME financing was about one third greater than during the first nine months the year before. The growth was attributable above all to Finnvera’s wider mandates, such as the possibility to finance enterprises larger than SMEs and to subscribe bonds. The volume of SME financing is expected to remain at a high level during the last quarter of the year as well.

Demand for export credit guarantees also continued strong during the third quarter and is expected to remain equally brisk until the end of the year. Country risks are always assessed when guarantee decisions are made; at present, a close eye is kept on economic trends in countries such as Russia and Brazil.  These two countries together account for just under one quarter of all outstanding export credit guarantees.

According to the current estimate, the Finnvera Group’s financial performance for 2015 is likely to be better than in 2014 because there have been fewer new impairment losses and provisions for losses than had been expected. In a similar estimate made early in 2015, the financial performance was expected to fall below that in 2014.  The uncertainty factors associated with economic trends make it difficult to predict financial performance. If more risks materialise than has been anticipated, the situation may weaken considerably from what is projected.

CEO Pauli Heikkilä:

“The number of enterprises will inevitably decline if there is no one to continue ageing entrepreneurs’ work. Both competitive companies on the domestic market and companies engaged in exports should be able to continue their operations by means of ownership changes. Acquiring an operating company is a viable alternative to establishing a new one. For our part, we are actively involved in the financing of various ownership arrangements. Together with the Ministry of Employment and the Economy, we are planning a new programme for financing ownership changes. We are also preparing the adoption of an instrument for mezzanine financing. The aim is to put the new financing tools to use in early 2016.

During the period under review, we completed our biggest acquisition of funds to date: one billion euros. We manage a large liquidity reserve in order to be able to finance, among other things, the coming purchases of ships. Our authorisation to grant export credits is already largely in use and we are currently negotiating about raising it.”

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
London Stock Exchange
Major media
www.finnvera.fi

This Interim Report is available at www.finnvera.fi> Finnvera > Publications > Annual Reviews and Interim Reports. As from the beginning of 2016, Finnvera will publish its interim reports semi-annually.