The roller coaster effect coloured 2012
Overview of Finnvera’s operations in 2012
Fluctuations in the operating environment were reflected in companies’ business, and in their financing needs, during the past year. Among SMEs, demand for Finnvera’s financing focused on working capital and delivery security for trading more than on investments. The volume of financing granted to SMEs was less than the year before. Demand for export financing, especially export credits, was brisk. International financing arrangements between several financiers became more difficult to organise. This clearly increased the number of applications for export credit guarantees.
“As in the previous year, the euro crisis and uncertainty in the world economy characterised 2012. The roller coaster effect is an apt description for the two-fold year: during the first six months, the situation looked better than the year before in some sectors, but signs of uncertainty increased again in the second half of the year. In most cases, the Finnish banking market still functioned well, but owing to the regulation of banks, stricter requirements for issuing new credits could be discerned both at home and internationally. We are closely monitoring trends in the financing provided by banks for SMEs. Working together with banks, our goal is to ensure that financing can be arranged for the development and growth of companies’ business”, says CEO Pauli Heikkilä.
In 2012, Finnvera provided EUR 853 million in financing for enterprises’ domestic operations; this was 13 per cent less than the year before.
The volume of new venture capital investments increased slightly on the previous year, totalling EUR 17 million (15 million).
The uncertain economy increased offers for export credit guarantees
Offers given for export credit guarantees and special guarantees totalled EUR 5.4 billion; this was 41 per cent more than in 2011. In total, 83 per cent of the guarantees offered concerned the traditional sectors of Finnish capital goods exports, such as telecommunications and the energy, forest and shipbuilding industries. Besides Finland, the most guarantees were offered for exports to the United States and Russia.
“Apart from seasonal variation in competitive bidding for individual capital goods transactions, another reason underlying the increase in offers for export credit guarantees was the uncertain situation on the international financing market. In particular, it has become more difficult to obtain large export credits; this increased demand for both export credit guarantees and export credits.”
The permanent system for funding export credits was launched
Through its subsidiary, Finnish Export Credit, Finnvera helps to arrange financing for foreign customers who purchase Finnish capital goods. The system for funding export credits, based on Finnvera’s own acquisition of funds, was taken into use during the year under review. Finnvera acquires the funds needed for export credits and SME credits from the market. The funds are obtained using an EMTN (Euro Medium Term Note) loan programme, which is guaranteed by the State and has the highest credit ratings. The first bonds under the programme were floated on the international capital market in October.
In Finnvera’s view, 2013 will continue to be challenging in many respects. If problems persist in the euro zone, the situation will be more serious and difficult to predict. It is therefore expected that the period of slow growth will continue in Finland in 2013.
Sluggish economic growth and banks’ stricter lending practices owing to regulation make it challenging for many companies to arrange financing. SMEs still need financing for working capital, while export companies need more sources of funds for arranging long-term export credits. The low level of investments reduces the demand for financing; on the other hand, banks hope to see Finnvera participating increasingly often in financing projects, to share risks with them.
Finnvera’s financial statements and online annual report for 2012 will be published on the company’s website www.finnvera.fi on 15 March 2013.
Pauli Heikkilä, Chief Executive Officer, tel. +358 29 460 2400
Annamarja Paloheimo, Senior Vice President, tel. +358 29 460 2539