Finnvera Investor Presentation - Finland's Export Credit and SME Financing Agency August 2019
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Finnvera Investor Presentation Finland’s Export Credit and SME Financing Agency August 2019
Disclaimer IMPORTANT: YOU ARE ADVISED TO READ THE FOLLOWING CAREFULLY BEFORE READING, ACCESSING OR MAKING ANY OTHER USE OF THE MATERIALS THAT FOLLOW. These materials have been prepared by and are the sole responsibility of Finnvera (the “Issuer”) and have not been verified, approved or endorsed by any lead manager, bookrunner or underwriter retained by the Issuer. No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. These materials are provided for information purposes only and do not constitute, or form part of, any offer to sell, purchase or otherwise acquire or dispose of, or any solicitation in respect of, any debt or other securities of the Issuer (“securities”). These materials are not intended to provide the basis for any credit or any other third party evaluation of the Issuer or such securities. Any offer, sale or invitation in respect of securities will be done pursuant to separate and distinct prospectus, offering circular or other equivalent document (a "prospectus") and any decision to purchase or subscribe for any securities should be made solely on the basis of such prospectus and not these materials. These materials may contain projections and forward looking statements. Any such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Issuer’s actual performance or achievements to be materially different from any future performance or achievements expressed or implied by such forward-looking statements. Any forward-looking statements will be based upon assumptions of future events which may not prove to be accurate. Any such forward-looking statements in these materials will speak only as at the date of these materials and the Issuer assumes no obligation to update or provide any additional information in relation to such forward-looking statements. These materials must not be reproduced, redistributed or passed on to any other person or published, in whole or in part, for any purpose without the prior written consent of the Issuer. These materials are not intended for distribution to, or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. In particular, these materials are for distribution in the United Kingdom only to persons who meet the following criteria: 1. (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (ii) persons falling within Article 49(2)(a) to (d) (“high net worth companies, unincorporated associations etc”) of the Order or 2. persons to whom these materials may otherwise be directed without contravention of section 21 of the Financial Services and Markets Act 2000 (all such persons being referred to as “relevant persons”). These materials must not be acted or relied on by persons who are not relevant persons. In member states of the European Economic Area, these materials are only directed at persons who are “qualified investors” within the meaning of Article 2(1)(e) of Directive 2003/71/EC. These materials are only being provided to persons outside the United States in connection with offshore transactions in reliance on Regulation S under the US Securities Act of 1933 (the "US Securities Act") . By reading these materials the recipient warrants and acknowledges that it falls within the category of persons referred to above. 2
Contents Finnvera in Brief Business Review Funding Appendices Contact Details 3
Finnvera in Brief
Finnvera’s Role
Finnvera promotes the exports and
internationalisation of enterprises and Finnvera’s clients are Finnish micro-
the SME sector enterprises and SMEs operating on the
Finnish market or seeking growth through
Finnvera supplements the financial internationalisation.
services provided by the private sector
Our clients also include large Finnish
Finnvera is: corporations engaged in the export trade,
– The official Export Credit Agency (ECA) their foreign customers, and domestic and
of Finland foreign banks providing financing for
exports.
– The State-backed financier of Finland’s
SME sector
5Finnvera Group in Brief
June 30, 2019
Credit and Guarantee Exposure
(EUR billion)
Specialised financing company
owned 100% by the Republic of
Finland 22.9
Large Corporates 23.3
Debt obligations explicitly
guaranteed by the Republic of Finland SMEs and midcaps 2.3
Rating of debt obligations the same 2.5
0 5 10 15 20 25
as Finland’s – Aa1 by Moody’s and
AA+ by Standard & Poor’s
CLIENTS TOTAL ASSETS PROFIT H1/2019
25 000 EUR 12.2 billion EUR 72 million
6Finnish State’s Commitment
Debt obligations are explicitly guaranteed by the Republic of Finland
Finnvera’s guarantee scheme operates under the full faith and credit of
the Republic of Finland
No dividend payments by law
The parent company is not liable to pay income tax
The State compensates Finnvera for part of the credit and guarantee
losses incurred in SME and midcap financing
EUR 3 billion statutory back-up credit authorisation from the State
7Equity and other reserves EUR 2.1 billion
Accumulated buffers against credit losses consist June 30, 2019
of retained earnings (EUR 1.2 billion) and the
State Guarantee Fund (EUR 0.7 billion) Large Corporates
– The fund is administered by the Government and is Reserve for export financing operations
not part of Finnvera EUR 773 million
Finnvera’s obligations stemming from guarantees State Guarantee Fund
EUR 681 million
issued are restricted to the amount carried in
reserves (retained earnings) SMEs and midcaps
The State assumes responsibility for guarantee Reserve for domestic operations
losses exceeding the reserves on Finnvera’s EUR 266 million
balance sheet and the State Guarantee Fund
Retained earnings 6/2019
and other non-restricted equity
EUR 160 million
8Business Review 9
Large Corporates
Finnvera’s export credit guarantees provide Exposure (EUR billion)
Finnish exporters and financiers with solutions June 30, 2019
covering export risk 28
Outstanding guarantees
– Aside from State-backed export credit guarantees, Offers for guarantees
24 Outstanding export credits
ECA financing also includes "special" guarantees,
Credits and commitments
e.g. ship guarantees, environmental guarantees 20
and investment insurance
16
Finnvera provides export credits through its
subsidiary, Finnish Export Credit Ltd 12
In 2018, Finnvera’s export credit guarantees 8
covered 4.8% of Finland’s total exports
4
Losses in export credit guarantee and special
guarantee operations have been minor 0
2015 2016 2017 2018 6/2019
10Large Corporates
Geographic Exposure (EUR billion) Sector Exposure
June 30, 2019 – Top 10 countries June 30, 2019
13 12%
2%
12 2%
11
10 11% EUR
9 23.3
8 55%
Offers billion
7
Outstanding 18%
6
5
4
3
Cruise shipping Telecommunications
2
Pulp and paper Energy
1
Mining and metals Other*
0
*Including other risks such as sovereign and bank risks
11SME and Midcap Financing
Exposure (EUR billion)
As part of the mandate received from the
June 30, 2019
State, Finnvera promotes the Finnish SME
sector 3
Guarantees
Loans and receivables
Focus on start-ups and growth companies
Credit and guarantee losses in SME and 2
midcap financing annually amount to about
2−4% of total exposure
The State compensates part of Finnvera’s 1
losses from domestic operations so that
Finnvera can take greater risks than those
taken by commercial financial institutions
0
2015 2016 2017 2018 6/2019
12Non-performing exposure
Non-performing exposure, In the beginning of 2018 the compensation
% of total exposure
for credit and guarantee losses from the
3%
State was decreased and harmonised to 50
per cent in SME and midcap financing.
In SME and midcap financing non-
2% performing exposure has in recent years
been under 3 per cent of total exposure
when the compensation for credit and
1% guarantee losses is taken into account.
In Large Corporates’ operations non-
0%
performing exposure has been under 1 per
2016 2017 2018 6/2019 cent of total exposure in recent years.
Large corporates SMEs and midcaps
13Funding
Funding
Finnvera Group debt
June 30, 2019 (EUR billion)
12
Finnvera’s balance sheet has grown
10
significantly since 2009 when Finnvera
8
Other debt
started to provide funding for export credit
Loans from the State
State-guaranteed debt
transactions through its subsidiary Finnish
6 Export Credit Ltd (“FEC”)
4
In 2018 FEC prepaid EUR 1.5 bn of debt
back to the State
2
The amount of borrowing is mainly driven by
0
new lending commitments
15Funding
State Guaranteed debt (Finnvera plc)
June 30, 2019 (EUR billion)
16
Since 2012 Finnvera has obtained funding
mainly by issuing debt under a State-
14 State-guarantee authority
guaranteed EMTN program
EMTN program size
12
Outstanding State-guaranteed debt The EMTN program size increased to EUR
10
11 billion in April 2017
The maximum amount of Finnvera’s debt
8
6 obligations that may be guaranteed by the
4 Republic of Finland is currently EUR 15
2
billion
0
16Funding
Maturity of EMTN debt
June 30, 2019 (EUR million)
1 200 The amount to be borrowed in 2019 is
1 000
estimated to be between 2 billion and 2.5
billion EUR.
800
Finnvera strives to match the maturity of its
600 liabilities with the maturity of assets, and is
400
planning to be active in both EUR and USD
depending on market conditions
200
EUR debt eligible for the Eurosystem’s
0 Public Sector Purchase Programme (PSPP)
EUR USD SEK AUD
17Funding
EMTN debt by currency Recent EMTN debt issued by
June 30, 2019 Finnvera plc
Issue date Ccy Amount Maturity Dealers
outstanding
SEK
4%
April 2019 EUR 1 000 000 000 Apr 2029 CACIB, Danske, DB, Nordea, TD
USD February 2019 AUD 30 000 000 Aug 2029 TD
28 %
EUR October 2018 EUR 500 000 000 Aug 2028 Citi, DB, HSBC
9.2 bn
June 2018 USD 1 000 000 000 Jun 2023 Citi, GS, HSBC, TD
EUR
Mar 2018 EUR 1 000 000 000 Jul 2033 CACIB, Danske, DB, Nordea
68 %
Sep 2017 USD 1 000 000 000 Oct 2020 CACIB, Citi, HSBC, Nordea
May 2017, June & EUR 1 000 000 000 May 2032 Citi, CACIB, DB, GS
Aug 2017 tap
Debt swapped into floating rate EUR or USD to
match the currency and interest rate basis of assets Dec 2016, SEK 3 500 000 000 Dec 2028 Danske, Nordea
Jan 2017 tap
18Appendices 19
Finland – An Export Oriented Economy
A Nordic country rated Aa1 (stable outlook) by Moody’s, AA+ (stable outlook)
by Standard & Poor’s and AA+ (positive outlook) by Fitch Ratings
Almost 40 percent of Finland’s economy is based on foreign trade
Exports by Regions Finland - Main Economic Indicators
2018
Finland
6%
8% 2017 2018 2019F 2020F
Euro zone
38% GDP at market prices, change in
12% Other EU countries 2.7 2.4 1.6 1.2
volume, %
Asia
Rest of Europe Unemployment rate, % 8.6 7.4 6.6 6.3
15% North America
General government net lending,
Other countries -0.8 -0.7 -0.6 -0.3
% of GDP
22%
General government gross debt, %
61.3 58.9 58.3 57.8
of GDP
Source: Finnish Customs
Source: Ministry of Finance: Economic Survey, published in June 2019
20Finnvera - Key Figures
H1/2019 2018 2017 2016 2015
Finnvera Group
Net interest income and net fee and commission income, EUR million 87 177 174 194 197
Profit for the period, EUR million 72 98 107 70 111
Total assets, EUR million 12,158 11,039 10,337 9,498 8,418
Tier 1 capital ratio, domestic operations, % 28.8 27.2 25.3 22.4 18.1
Expense-income ratio, % 24.6 29.3 27.2 27.0 28.3
Shareholders’ equity, EUR million 1,440 1,358 1,314 1,207 1,121
- of which non-restricted equity, EUR million 1,198 1,126 1,062 955 871
Average number of employees 363 360 383 398 404
SMEs and midcaps
Loans, guarantees and export credit guarantees offered, EUR billion 0.5 0.9 1.0 1.0 1.1
Outstanding exposure, EUR billion 2.3 2.3 2.5 2.6 2.7
- Loans and receivables, EUR billion 0.8 0.9 1.1 1.2 1.3
- Guarantees, EUR billion 1.5 1.4 1.5 1.4 1.5
Large Corporates
Export credit guarantees and special guarantees offered, EUR billion 2.2 3.0 7.5 4.2 6.6
Outstanding exposure, EUR billion 23.3 23.3 22.2 18.1 17.0
- of which funded by Finnish Export Credit Ltd, EUR billion 12.2 13.5 12.5 8.5 8.8
Finnvera plc, clients 25,000 25,700 27,300 27,700 28,400
21Environmental and Social Responsibility
In export financing, the environmental, social and human rights
impacts of projects are considered as part of the overall risk
assessment
Finnvera’s policy for reviewing the environmental and social
impacts of projects is based on the OECD Common Approaches
recommendation for environmental and social due diligence
22Organisational Structure
Finnvera falls under the administrative purview of the
Ministry of Economic Affairs and Employment
– The purpose and activities of Finnvera are defined in the
Act on the State-Owned Specialised Financing Company
(443/1998)
The Supervisory Board of Finnvera consists of Members of
Parliament (10 members) and stakeholder representatives
(8 members)
The Board of Directors consists of seven non-executive
board professionals
23Organization Supervisory Board
Board of Directors
Chairman Pentti Hakkarainen Risk and Quality Management
Chief Risk Officer Merja Välimäki
CEO Legal Affairs and Administration
Credit & Analysis Pauli Heikkilä
Senior Vice President Risto Huopaniemi
Group Chief Credit Officer Tapio Jordan Finance and IT
Venture Capital Investments Senior Vice President, CFO Ulla Hagman
Investment Director Heidi Ahonen Communications and HR
Senior Vice President Tarja Svartström
SMEs Large Corporates
Executive Vice President Juuso Heinilä Executive Vice President Jussi Haarasilta
Regional network Finnish Export Credit Ltd
24Contact Details
Senior Management Contacts Funding Contacts
Mr. Pauli Heikkilä Mr. Jukka-Pekka Holopainen
Chief Executive Officer Head of Treasury
Tel +358 29 460 2400 Tel +358 29 460 2838
Ms. Ulla Hagman Mr. Jari Kautto
Senior Vice President / CFO Senior Manager, Treasury
Tel. +358 29 460 2458 Tel +358 29 460 2697
Please visit www.finnvera.fi/eng for Annual and Interim Reports and news.
25Thank you! Finnvera and its subsidiary Finnish Export Credit are the official ECAs of Finland. We offer export financing solutions and export credit guarantees backed by the full faith and credit of the Republic of Finland in a flexible yet responsible manner. For more information please see www.finnvera.fi.
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