Report of the Board of Directors

During the early 2014, expectations for the global economy turned into disappointments, with the exception of the upswing in the U.S. economy towards the end of the year. China’s growth fell short of the pace of the past few years, nor was any light visible in the economies of the other BRIC countries. Europe struggled not only with the prolonged impacts of the credit crisis but also with the consequences of the Ukrainian crisis and the decline of the Russian economy. No hoped-for turn for the better was seen in Finland, either, despite some encouraging investment plans in the forest industry.

The Finnish financial market was marked by diffuse economic prospects and the effects of tightening bank regulation, which were felt, in particular, in the credit terms and credit margins of the weakest borrowers. Demand for financing focused heavily on working capital, and there were very few investment projects. In the public debate, problems in the availability of credit were given as the reason for the sluggishness of the economy, but it is evident that at least equally important reasons were the weakened competitiveness of enterprises and the low levels of demand and investments. Owing to these circumstances, many requirements were set for the smooth functioning of public financing.

During the past year, Finnvera worked hard to develop its services. The Government introduced significant increases in the maximum sums regulating Finnvera’s financing, and added the company’s potential for risk-taking. Important initiatives included a number of new forms of financing that support domestic investments aiming for exports, speed up the development of bond markets and also channel long-term financing to enterprises larger than SMEs. Finnvera’s strategic priority, i.e. financing for growth, competitiveness and internationalisation, constitutes the core of all new initiatives.

Finnvera revised its business model and organisation in order to accelerate the effective implementation of its strategy. The regional organisation was revised and new national functions were established: the Service Centre, the Team for Growth and Internationalisation Financing, and the Credit Decision Unit. The business model revolves around three themes: measures to strengthen active customer work; more efficient service processes; and raising the services for growing and internationalising enterprises to the front line. The reform is one of the most important development steps in the company’s history. 

Finnvera intensified cooperation with the Team Finland network at various levels in the sphere of financing for enterprises seeking growth through internationalisation. The ‘We Got Courage’ event organised by Finnvera, Finpro, Tekes and the Ministry for Foreign Affairs toured in over ten localities. The aim of the tour was to give enterprises a comprehensive account of the range of services provided by these actors so that enterprises would know how to utilise these services if needed. The search for joint premises was an important project: In autumn 2016, Finpro, Finnvera and Tekes will move to a property located in Ruoholahti, Helsinki.

Finnvera received new tasks

On 12 June 2014, the Government authorised Finnvera to subscribe bonds issued by enterprises meeting the EU’s definition of an SME, between 1 July 2014 and 31 December 2017. In late 2014, this authorisation was expanded, and since the beginning of 2015, Finnvera has been able to finance enterprises that are larger than the EU’s definition of an SME, up to a turnover of EUR 300 million. The subscriptions are implemented at market price, and their total maximum sum is EUR 600 million.

Large Finnish industrial enterprises will be able to receive export credit guarantees for long-term credits granted by banks for domestic investments in machinery or equipment. The projects must create export industry or bring benefit to it. The legislative amendment entered into force on 1 September 2014. Finnvera can now participate in financing arrangements for investments made in Finland and benefiting exports. This improves Finnish companies’ equal competitive standing when offering their products for export-industry investments implemented in Finland.

As of the beginning of 2015, Finnvera can also finance enterprises larger than SMEs.  There are market failures in the financing of medium-sized enterprises as well, and it is important from the perspective of industrial policy that enterprises grow bigger.

Authority was raised

Finnvera received substantially more authority for export financing during the period under review. The maximum amount of export credit guarantees rose to EUR 17 billion and the maximum amount for financing export credits to EUR 7 billion. The amendments entered into force on 1 July 2014. Owing to the raised authority, Finnvera has better possibilities to supplement the private financial markets with respect to financing arrangements for both SMEs and export transactions requiring long-term financing.

The maximum amount of the State guarantee related to Finnvera’s acquisition of funds was raised from EUR 5 billion to EUR 9 billion.

Finnvera’s risk-taking was increased

The Government raised the State’s share of Finnvera’s potential credit and guarantee losses. On 1 July 2014 the compensation outside assisted areas I and II, or mostly in Southern Finland, increased from the previous 40 per cent to 55 per cent. This change enables Finnvera to increase its risk-taking in the financing of enterprises located outside the assisted areas.

Credit and guarantee policies were revised

On the basis of the changes made to legislation and authority, Finnvera revised its credit and guarantee policies to be increasingly better equipped to meet enterprises’ financing needs. Finnvera can increase risk-taking, particularly in the financing of starting, growing and internationalising enterprises. Whenever necessary, Finnvera can participate in the financing of enterprises’ investments by applying repayment periods that are longer than a bank’s maturity. In certain situations, Finnvera can also grant completely unsecured financing to enterprises. Enterprise projects that create innovations or bring export revenues may receive larger shares of their financing from Finnvera; it is hoped that this will encourage them to revitalise and grow their business. The guarantee policy also takes growing and internationalising enterprises into account better than before. In projects undertaken by these enterprises, Finnvera can stress their importance to the SME exporter at the same time as it assesses the risk arisen from the counterparty.

The Group’s financial trend 

The Finnvera Group in January–December 2014

The Finnvera Group’s profit for the year 2014 was EUR 101 million, or 27 million euros more than the year before (75 million). The main factor improving the performance was the decrease of 47 per cent in impairment losses on receivables and in guarantee losses, totalling EUR 34 million (64 million). In addition, financial performance was improved by the reduction of administrative expenses by 5 per cent, to EUR 41 million (43 million) and the increase of 3 per cent in the net value of fee and commission income and expenses, totalling EUR 138 million (134 million). Correspondingly, the performance was encumbered, among other factors, by the lower net interest income, EUR 52 million (56 million), due to a fall in interest levels and in the amount of outstanding credits in SME financing. Moreover, losses on venture capital investments and on the recognition of derivatives and liabilities at fair value totalled EUR 10 million (2 million).

The Group’s operating profit amounted to EUR 102 million (75 million) and was broken down as follows: EUR 6 million for SME financing (7 million) and EUR 104 million for export financing (74 million). The operating profit from venture capital investments was EUR 7 million in the red (5 million). The operating profit from the financing of export credits accounted for EUR 10 million of the operating profit for export financing (0.6 million).

Within the past few years, Finnvera’s outstanding commitments and their risk levels have risen significantly. However, in 2014 the outstanding commitments for SME financing fell and the risk level did not rise any longer. The outstanding commitments for export financing increased in 2014 but, as in the case of SME financing, the risk level did not rise. Nevertheless, the risk levels are still high, as evidenced by the considerable impairment losses and guarantee losses in SME financing in recent years, even though the impairment losses on receivables and guarantee losses in 2014 were below the figures for 2013. In export financing, no major losses have been recorded in recent years or in 2014. The estimated provisions for losses in export financing were reduced in 2014 when compared against the provisions for losses in the financial statements for 2013.

The impact of the parent company, the subsidiaries and the associated companies on financial performance

The financial performance of export financing and SME financing by the parent company, Finnvera plc, in 2014 came to EUR 94 million, or EUR 25 million more than the year before (69 million). The improvement was mainly due to a rise of 4 per cent in fee and commission income, to EUR 137 million (133 million), a reduction of 4 per cent in administrative expenses, to EUR 39 million (40 million), and a decrease of 47 per cent in impairment losses on receivables and guarantee losses, to EUR 33 million (62 million). Correspondingly, the profit was reduced by a decrease in net interest income to EUR 47 million (53 million) and an increase in losses carried at fair value to EUR one million (-2 million). In addition, an impairment loss of EUR 9 million (9 million) entered on the investments made by the subsidiaries had an impact on the parent company’s profit.

The subsidiaries and associated companies had an impact of EUR 7 million on the Group’s profit (6 million). Venture capital investments by Veraventure Ltd and Seed Fund Vera Ltd accounted for EUR -6 million (-4 million) of this impact. Interest equalisation, lending, and financing of export credits by Finnish Export Credit Ltd accounted for EUR 5 million (2 million). In addition, the elimination of the impairment loss entered on the subsidiaries’ investments had an impact on the Group’s profit. 

Separate result and transfers to the reserves on the balance sheet

Finnvera’s balance sheet has separate reserves for domestic operations and for export and special guarantee operations. Each year, operating profits are entered into these reserves after the completion of the annual financial statements. Correspondingly, losses from domestic operations are covered from the reserve for domestic operations, while losses from export credit guarantees and special guarantees are covered from the reserve for export financing.

The separate result of export credit guarantee and special guarantee activities accounted for EUR 100 million of the parent company Finnvera plc’s total profit for 2014 (78 million). This sum is transferred to the reserve for export credit guarantees and special guarantees. The result for SME financing and venture capital investments during the financial period, and the sum entered into the reserve for domestic operations, is EUR -7 million (-9 million). In addition, the following items are transferred to the reserve for domestic operations: a subordinated loan that had been granted by the State and subsequently cancelled because of the loss shown by Seed Fund Vera Ltd in 2013, which had been entered directly into retained earnings; the non-applied portion of the forgiven subordinated loan from 2012; and an item arisen from the revaluation of benefit-based pensions, in total EUR 7 million (7 million).

The Finnvera Group in October–December 2014

The Finnvera Group’s profit for the last quarter of 2014 was EUR 25 million, or clearly less than for the third quarter (42 million).

The main factors affecting the smaller profit were the impairment losses on receivables and guarantee losses, which nearly doubled and were EUR 19 million more than in the third quarter. The increase in the impairment losses on receivables and guarantee losses between the two quarters was partly due to the reduction of loss provisions in export financing done by the parent company, Finnvera plc, in the third quarter. Other factors affecting the smaller profit included the net interest income, which was nearly one third, or EUR 5 million less than in the previous quarter, and administrative expenses that had risen by EUR 3 million and were at the same level as the year before. However, owing to the accrual practices applied to personnel expenses and the timing of certain expenses for external services near the end of the year, administrative expenses were over 35 per cent more than the figure for the third quarter of 2014. The financial performance was improved by the fee and commission income, which was higher in the last quarter, and the profits on items carried at fair value.

Analysis of the Finnvera Group’s financial performance in January–December 2014

The Group’s revenues in 2014 were 4 per cent higher than the year before. The factors having the  impact on revenues were the rise of 5 per cent in fee and commission income from the parent company’s SME financing and export financing, the fall of 40 per cent in the fee and commission income of Finnish Export Credit Ltd, and the reduction of 7 per cent in the Group’s net interest income. The Group’s expenses were nearly 9 per cent less than the year before, the main reason for this being the decrease in personnel expenses. At the end of the year, the Group’s cost-to-income ratio was excellent, 25.7 per cent.

Interest income and expenses and interest subsidies

In January–December, the Group’s net interest income amounted to EUR 52 million, or EUR 4 million less than the year before (56 million). The factors contributing to the lower net interest income included the fall in interest levels and in the outstanding credits of SME financing, as well as the adjustment made in interest income in the last quarter.

The interest subsidies paid by the State and by the European Regional Development Fund (ERDF) and passed on directly to clients totalled EUR 6 million (9 million). Owing to a reduction in outstanding credits involving interest subsidies, the interest subsidies paid totalled 27 per cent less than in 2013. In particular, the decision to discontinue the granting of interest-subsidised financing as from the start of 2014 decreased the amount of outstanding credits involving interest subsidies.

Fee and commission income and expenses

The net value of the Group’s fee and commission income and expenses came to EUR 138 million (134 million). This was 3 per cent more than during the same period in 2013. Underlying the increase were some individual major export credit guarantees that came into effect and the general rise in risk premiums on the market, which in part also affected Finnvera.

The gross sum of fee and commission income increased by 5 per cent, to EUR 146 million (140 million). Of this, commission income from export credit guarantees and special guarantees accounted for 74 per cent, or EUR 108 million (104 million), while SME financing accounted for 26 per cent, or EUR 37 million (34 million). Finnish Export Credit Ltd’s fee and commission income from interest equalisation, lending and export credit financing amounted to EUR 1 million (2 million).

The fee and commission expenses nearly doubled on the previous year and totalled EUR 8 million (5 million). The fee and commission expenses consisted mainly of reinsurance costs paid by the parent company, Finnvera plc.

Gains/losses from items carried at fair value

The Group’s losses from items carried at fair value totalled EUR 10 million (2 million). Of this loss, the change in the fair value of venture capital investments accounted for EUR 7 million (3 million), and the change in the fair value of liabilities and interest rate and currency swaps accounted for EUR 4 million (-1 million). Exchange rate differences decreased the losses on items carried at fair value by EUR 0.3 million (0.3 million).

Other income

In 2014, net income from investments and other operating income totalled EUR 3 million for the Group (2 million). Net income from investments include net income from shares, holdings and debt securities. Other operating income includes rental income and the management fee paid by the State Guarantee Fund to Finnvera for managing the ‘old liability’ for export credit guarantees and special guarantees.

Impairment losses on receivables, guarantee losses

The impairment losses on the Group’s loans, domestic guarantees, export guarantees and special guarantees, as well as the guarantee losses recorded, totalled EUR 98 million (112 million). After the compensation for credit losses by the State, the Finnvera Group’s liability for the impairment and losses in the period under review was EUR 34 million (64 million).

Impairments, losses and provisions on loans and domestic guarantees totalled EUR 105 million (101 million). The compensation for credit losses paid by the State and the European Regional Development Fund totalled EUR 64 million (48 million), or 53 per cent of the losses materialised (57).

Losses and provisions for losses on export credit guarantees and special guarantees amounted to EUR -8 million (11 million) during the period under review. This was because the estimated loss provisions were reduced during 2014 from the amount in the financial statements for 2013.

In its financial statements for 2014, Finnvera adopted a method for calculating doubtful receivables that has been harmonised at the EU level. Calculated according to this method, the net amount of doubtful and zero-interest receivables stood at EUR 251 million at the end of December. When the impairment losses recognised are taken into account, doubtful zero-interest receivables accounted for 10.0 per cent of the total outstanding commitments. When the State’s compensation for losses – a reducing element in SME financing – is also taken into account in the ratio, their amount in relation to the total outstanding commitments was 2.9 per cent at the end of 2014. 

Other expenses

The Group’s administrative expenses, including personnel expenses and other expenses, were EUR 41 million (43 million). Administrative expenses decreased by 5 per cent, or EUR 2 million, on the corresponding period last year. Personnel expenses accounted for 69 per cent (70) of administrative expenses.

Other operating expenses came to EUR 5 million (7 million). Other operating expenses include depreciation and costs associated with real property.

Long-term economic self-sustainability

According to the goal of economic self-sustainability set for Finnvera’s operations, the income received from the company’s operations must, in the long run, cover the company’s operating expenses. In SME financing, the period for reviewing self-sustainability is 10 years while in export financing it is 20 years.

Self-sustainability in Finnvera’s SME financing has been attained over a period of ten years when the cumulative result is calculated up to the end of December 2014. Correspondingly, export financing has been economically self-sustainable during Finnvera’s history of more than 15 years of operation. If the payment-based result of Finnvera’s predecessor, the Finnish Guarantee Board, for its last years of operation is taken into account when reviewing the self-sustainability of export financing, economic self-sustainability is also realised over a 20-year period.

The extent and risk level of Finnvera’s outstanding commitments will have a significant impact on its financial performance and long-term economic self-sustainability in the coming years. In examining the financial performance, it is important to note that, at the end of December 2014, Finnvera’s total commitments for export credit guarantees and special guarantees amounted to EUR 12.6 billion and the commitments for credits and guarantees in SME financing, as well as guarantee receivables, stood at EUR 2.4 billion. Seen against these commitments, the net profit building a loss buffer on the balance sheet is now about 0.7 per cent at the annual level and the equity 6 per cent.

Balance sheet 31 December 2014

At the end of December, the consolidated balance sheet total was EUR 6,629 million (4,603 million), while the balance sheet total of the parent company, Finnvera plc, came to EUR 4,132 million (2,423 million). The consolidated balance sheet total increased by 44 per cent, or nearly EUR 2.0 billion, during 2014. The main reasons for this increase were the refinancing granted by Finnish Export Credit Ltd based on the State’s acquisition of funds, and the financing of export credits based on the acquisition of funds by the parent company, Finnvera plc. At the end of December, the balance sheet total of the subsidiary Finnish Export Credit Ltd was EUR 3,425 million (2,305 million).

At the end of December, the Group’s outstanding credits came to EUR 4,593 million (3,650 million). The Group’s outstanding credits increased by 26 per cent, or EUR 943 million, during the year. The credits granted by the subsidiary Finnish Export Credit for export financing had the greatest effect on this increase. The outstanding credits of the parent company, Finnvera plc, came to EUR 2,193 million (1,540 million), of which the receivables from the subsidiaries totalled EUR 928 million (131 million).

The parent company’s outstanding domestic guarantees decreased by 6 per cent during 2014 and totalled EUR 988 million on 31 December (1,047 million).

The outstanding commitments, as defined in the Act on the State’s Export Credit Guarantees, totalled EUR 10,755 million at the end of December (9,761 million). Outstanding commitments arising from export credit guarantees and special guarantees (current commitments and offers given, including export guarantees) totalled EUR 12,600 million (11,004 million).

The parent company’s long-term liabilities as per 31 December totalled EUR 2,650 million (1,148 million). Of this sum, EUR 2,564 million (1,060 million) consisted of bonds. The liabilities include subordinated loans of EUR 36 million received by Finnvera from the State for investment in the share capitals of Seed Fund Vera Ltd and Veraventure Ltd (38 million), and a subordinated loan of EUR 50 million granted by the State for strengthening capital adequacy (50 million).

At the end of the period under review, the Group’s non-restricted reserves contained a total of EUR 703 million (595 million), of which the reserve for domestic operations accounted for EUR 135 million (137 million), the reserve for export credit guarantees and special guarantees EUR 436 million (358 million), the reserve for venture capital investments EUR 17 million (17 million) and retained profits for EUR 116 million (83 million).

Acquisition of funds

In January–December, the Group’s long-term acquisition of funds totalled EUR 2,036 million (1 611 million). EUR 529 million in long-term loans was paid back (576 million).

Capital adequacy

According to the goal set by State of Finland, the owner of Finnvera, the Group’s capital adequacy ratio should be at least 12.0 per cent. At the end of December, the Group’s capital adequacy ratio stood at 18.6 per cent (16.9) while the capital adequacy of the parent company, Finnvera plc, was 17.8 per cent (16.8). For September, capital adequacy has been calculated according to the Basel III standard method.

The Act on Finnvera (443/1998) stipulates that domestic operations must be kept separate from export credit guarantee and special guarantee operations. Losses from domestic operations are covered from the reserve for domestic operations, while losses from export credit guarantees and special guarantees are covered from the reserve for export credit guarantee and special guarantee operations. According to the Act on the State Guarantee Fund (444/1998), the State is responsible for export credit guarantees and special guarantees. Should the reserve for export credit guarantee and special guarantee operations not have sufficient assets to cover the losses incurred in the respective operations, the losses are covered from assets in the State Guarantee Fund, which are supplemented, whenever necessary, by an appropriation from the State Budget. The above separation provided by law, and the State’s responsibility for export credit guarantees, explain why Finnvera calculates its capital adequacy, i.e. the ratio between its commitments and assets, only for domestic operations.

The Finnvera Group’s risk-weighted receivables totalled EUR 2,349 million at the end of December (2,607 million). Of these, loans and guarantees involving actual business operations amounted to EUR 1,926 million (2,117 million), or 82 per cent of risk-weighted receivables. Most of the remaining receivables were associated with the acquisition of funds and the investment of cash assets. About 50 per cent of loans and guarantees consisted of a large number of individual commitments of under one million euros. Calculated according to the standard method, their risk weight is 75 per cent. The risk weight of other loans and guarantees is 100 per cent. 

Group structure and its changes

On 31 December 2014, apart from the parent company, the Finnvera Group comprised two companies owned 100 per cent by Finnvera: Finnish Export Credit Ltd and Veraventure Ltd. In addition, the Group included Seed Fund Vera Ltd, in which Finnvera’s holding is 93.89 per cent.

There were two associated companies, one of which is a real-estate company for Finnvera’s premises.

The Finnvera Group’s risk position

At the end of 2014, outstanding commitments for SME financing, monitored by risk management, totalled EUR 2.7 billion. The outstanding commitments shrank by about EUR 230 million during the year. The main reason for this was the low demand for financing for investments. Companies paid off their old loans, and new loans were not withdrawn at the same rate. The credit losses recognized also diminished the outstanding commitments.

The risk level of the outstanding commitments decreased somewhat during the year, but the overall risk level is still markedly higher than it was in 2008, before the financial crisis and the subsequent recession. In particular, the risk level is affected by the weak and uncertain general economic situation. Commitments in weaker risk categories diminished in 2014 mostly because of impairment losses. Similarly, commitments in the best risk categories have also diminished because Finnvera has a small role in the financing of these enterprises. Most commitments are in risk categories B1, B2 and B3. At year’s end, owing to individual factors, commitments in risk category D were higher than normally. Appropriate impairment losses have been recognized for these commitments, either in the financial year 2014 or earlier.

Credit and guarantee losses and impairment losses totalled EUR 105 million. Losses rose by EUR 5 million on the previous year. The decrease in impairment losses stemmed from the anticipated impairment losses on some major commitments that were entered in the previous year but did not exist to the same extent in 2014.

At the end of 2014, outstanding commitments for export financing, monitored by risk management, totalled EUR 12.4 billion. The ‘old liability’ under the State Guarantee Fund’s direct responsibility accounted for no more than EUR 5 million of this sum. Outstanding commitments increased by EUR 1.5 billion during the year. At year’s end, a significant share of the current guarantees and binding offers was in the country risk categories 0 and 3. Most of the guarantees granted during the year were also entered into these categories.

The volume of enterprises’ commercial commitments, associated with export guarantees and special guarantees, rose by about EUR 1.7 billion during 2014, to EUR 11.2 billion at year’s end. The sectors with the highest commitments were telecommunications, shipping companies, shipyards, and the forest industry. These sectors accounted for a total of 90 per cent of corporate commitments. Altogether 47 per cent of the commitments were in category B1, which is close to investment grade, or in better categories. New risks were mostly taken in categories B1–B2.

No guarantee losses arose in 2014. Owing to the cancellations made for previous years, the net effect was positive by EUR 7 million.

Among the subsidiaries, the outstanding commitments for export credits financed by Finnish Export Credit Ltd totalled EUR 3.3 billion at year’s end; this was EUR 1.1 billion more than at the start of the year. The outstanding commitments include export credits financed both under the so-called temporary system and the permanent system launched in 2012. The credit risks are fully covered by means of export credit guarantees granted by the parent company, Finnvera plc.

Finnvera’s gross investments in subsidiaries engaged in venture capital investments totalled EUR 192 million at year’s end. Additional investments totalling EUR 10.3 million were made in Seed Fund Vera Ltd using appropriations from the State Budget and from ERDF funds left unused in previous years. Seed Fund Vera Ltd makes direct investments in portfolio companies, while Veraventure Ltd has invested in regional fund companies. Investments are distributed among numerous companies. This reduces the risk arising from the operations to the Finnvera Group. Owing to policy decisions made on venture capital investments, Veraventure Ltd exited from several investments in 2014.

Attainment of industrial policy and ownership policy goals

Finnvera’s operations are steered by the legislation on the company and by the industrial and ownership policy goals determined by the owner.

When determining the annual industrial policy goals, attention is paid to the Finnish Government Programme, the corporate strategy and policy objectives of the Ministry of Employment and the Economy, and the goals of EU programmes.

Out of the ten goals set for the company for 2014, Finnvera attained seven.

Corporate Governance

Personnel

At the end of the financial period, the Group had 394 employees (399). Finnvera plc had 376 employees (382), of whom 358 (361) held a permanent post and 18 (21) a fixed-term post.

The salaries and fees paid to the personnel totalled EUR 23 million for the Group (23 million) and EUR 22 million for the parent company (22 million).

Supervisory Board, Board of Directors and auditor

On 16 April 2014, Finnvera’s Annual General Meeting elected new members to the company’s Supervisory Board. No changes were made in the composition of the Board of Directors.

The new members on the Supervisory Board are Chief Economist Olli Koski and Chairman Timo Saranpää.

Johannes Koskinen, Member of Parliament, continues as Chairman of the Supervisory Board, and Lauri Heikkilä, Member of Parliament, continues as Vice Chairman. The members continuing on the Supervisory Board are: Paula Aikio-Tallgren, Entrepreneur; Kaija Erjanti, Head of Financial Markets; Helena Hakkarainen, Finance Manager; Lasse Hautala, Member of Parliament; Miapetra Kumpula-Natri, Member of Parliament; Leila Kurki, Senior Adviser; Esko Kurvinen, Member of Parliament; Anna Lavikkala, Labour Market Director; Jari Myllykoski, Member of Parliament; Lea Mäkipää, Member of Parliament; Antti Rantakangas, Member of Parliament; Osmo Soininvaara, Member of Parliament; Sofia Vikman, Member of Parliament; and Antti Zitting, Chairman of the Board of Directors.

On 1 October 2014, the Ministry of Employment and the Economy elected Eeva-Johanna Eloranta, Member of Parliament, to replace Mia-Petra Kumpula-Natri, Member of the European Parliament, who had resigned from the Supervisory Board.

Markku Pohjola, B.Sc (Econ.) continues as Chairman of Finnvera’s Board of Directors. Pekka Timonen, Director General, continues as the First Vice Chairman and Marianna Uotinen, Specialist Counsel, as the Second Vice Chairman. The members continuing on the Board are Kirsi Komi, LL.M., Vesa Luhtanen, CEO, Risto Paaermaa, LL.Lic., and Pirkko Rantanen-Kervinen, B.Sc (Econ.).

KPMG Oy Ab was re-elected Finnvera’s regular auditor with Juha-Pekka Mylén, Authorised Public Accountant, as the principal auditor.

In 2015 resources will be targeted at the priorities of the strategy

In line with its strategy and starting already during the period under review, Finnvera targeted its financing more clearly at enterprises that focused on growth, development of competitiveness and internationalisation. This will be continued in 2015. In addition, services directed at start-up enterprises will be improved. At the same time, it will be necessary to have a more reserved attitude to requests for financing from companies that, on the one hand, are already eligible for bank financing or, on the other hand, have permanently unprofitable business. Thus, more consistently than before, Finnvera will act in line with the Government’s industrial policy.

Finnvera has adopted an increasingly active approach towards clients and the whole organisation has been streamlined to support this goal. Active effort is made to spread information about Finnvera’s services more widely to both enterprises and stakeholders.

Events after the period under review

No major events have taken place after the period under review.

Outlook for financing

The U.S. economy has got a foothold on the growth path, but economic growth in the euro area is stagnating. In Russia, the sanctions focusing on the country’s economy, the falling oil prices and the change in the political direction caused financial difficulties for the country in late 2014. 

The situation will affect the demand for Finnvera’s export financing and the company’s risk position in an essential way if the current uncertain political and financial situation continues. Finnvera’s financing plays an increasingly central role in the conclusion of export transactions. Despite this, it is expected that the demand for export financing will decrease further from the previous year, as uncertainty keeps the volume of investments small. Finnvera’s possibilities to provide financing for large enterprises’ domestic projects intended for exports will become concrete when Finnvera can participate in investment projects undertaken by the export industry in Finland.

The slow economic growth and the low investment level will keep the demand for SME financing moderate in 2015. However, according to Finnvera’s estimate, the new mandates received by the company and, for its part, the regulation of banks may increase the overall level of demand. Most financing needs are still associated with working capital.

The uncertainty of the economy makes it difficult to predict financial performance. The materialisation of large individual export credit guarantee claims may considerably weaken the projected situation. According to the current estimate, the Finnvera Group’s financial performance for 2015 is  likely to be somewhat weaker than that for 2014.