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CEO’s review

A variable and record-breaking year

Compared against the previous year, the world economy gained a little momentum in 2015. However, the economy did not develop steadily; instead, situations and divergent estimates varied throughout the year. In autumn, the European Commission raised its forecast for the growth of the euro area economy slightly.

From the Finnish perspective, economic growth figures were low, partly even negative. Increasingly, Finland failed to keep up with the growth of the rest of the euro area. During the period under review both the growth rate and the volume of investments fell in Finland. Exports were to no avail, either: according to the preliminary customs statistics, exports declined by about 3 per cent when compared against the previous year.

Although bank regulation has affected the availability of financing, it is not a major problem in Finland. In international comparison, Finland has well-functioning financial markets, and good projects receive financing from banks. Admittedly, the definition of a “good project” is more demanding than before: the company must have credible plans, a good balance sheet structure and adequate collateral. Finnvera is needed as a co-financier in projects especially at the start of enterprise activities and in various situations of change. Internationally, the impact of bank regulation is seen the most in demand for Finnvera’s export financing.

Record-high financing volumes

The new tasks assigned to us added momentum to the year and increased the demand for our financing. We granted markedly more financing to SMEs than the year before. This rise was mainly attributable to our new mandates and to a positive trend in changes of ownership. However, investments did not pick up yet; instead, SME financing continued to be needed mainly for working capital.

The total value of offers pertaining to exports was record high. The orders for ships that followed the ownership arrangements of the Turku shipyard, an event important from the point of view of industrial history, were the absolute highlight of the year and were also visible in our export financing. To provide financing for the buyer, export credit guarantees or, possibly, pre-delivery financing are needed in practice almost always for major shipbuilding projects. In consequence, ship financing will account for an exceptionally large share, or about one third, of our current commitments. The shipyard is an important employer in the Turku region and also has several hundreds of sub-contractors giving work to tens of thousands of people.

Our financial performance for the period under review was the best ever. Particularly pleasing was the clearly improved result of SME financing. Our key figures still reflected the losses from Talvivaara but, on the other hand, we succeeded in the turnaround of a few enterprises that had long suffered from difficulties. The structure of our SME portfolio is now balanced. For the above-mentioned reasons, our commitments in export financing have risen to a record-high level. It is therefore necessary that our balance sheet has buffers accumulated for potential future losses.

More new tasks

The previous Government gave us new tasks, and the current Government continued along the same lines in its programme. The single biggest issue is to ensure that our export financing remains at the same level as in our principal competitor countries. The features being planned for SME financing include the adoption of mezzanine financing and utilisation of the European Fund for Strategic Investments (EFSI). For changes of ownership, we are developing a completely new financing programme. The intention is to put both of the above-mentioned instruments into use during early 2016.

We encourage companies to become international

We have constantly developed our operations to be able to meet the needs of our clients in an optimal way. Our goal is to identify growth companies and encourage them to become international. In Team Finland cooperation, the client’s interest comes first. The organisations belonging to the network serve enterprises in a uniform manner, without shifting the responsibility from one organisation to another. The Team Finland actors – Finnvera, Finpro, Tekes, and Finnish Industry Investment Ltd – will move to a joint premises in the Helsinki region. By utilising a common service model, spatial design, synergy benefits, and team play, we will be able to do even more for our clients, in a cost-effective manner.

We want to ensure that Finnish companies get the financing they need for their profitable projects. We are not doing this alone: we share financing risks with banks. We continue our efforts to ensure that the economic impacts of our financing on the Finnish economy are as great as possible and are focused on the most important uses in view of industrial policy. We study and measure these impacts, in particular.

Warmest thanks to our clients, partners, and all our stakeholders as well as government ministries for their excellent cooperation and for the confidence they have shown in us. Thanks also to all our colleagues at Finnvera for the work they have done for our clients. We succeed together so that Finnish companies would be successful in the competition for growth, exports, and internationalisation.

“Not one feasible and profitable project should be left without financing.”

Pauli Heikkilä
CEO

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