29.8.2008
Interim Report Bulletin January 1st - June 30th, 2008

Municipality Finance continues to grow

The first half of the current financial year has continued briskly and successfully for Municipality Finance Plc. This year, funding has been livelier than ever before, and the market share of lending has grown. Municipalities’ funding needs remained on the same level as in the past few years.

Growth in all sectors

The loan portfolio of Municipality Finance Plc grew by 6.8% from the end of last year and 14.7% compared to the corresponding period in the previous financial year. The long-term loan portfolio totalled EUR 6,245 million at the end of June, the corresponding figure a year earlier being EUR 5,444 million. The parent company acquired a total of EUR 2,171 million in long-term funding over the first two quarters (January 1 – June 30, 2007: EUR 1,068 million).

The Municipality Finance Group’s net operating profit underwent a slight decrease during the period, concluding with EUR 5.9 million. Last year’s corresponding figure was EUR 7.1 million. The Group’s balance sheet totalled EUR 9,609 million at the end of June, the corresponding figure a year earlier being EUR 7,519 million.

Record-breaking funding in several markets

Municipality Finance Plc acquired a total of EUR 2,171 million in long-term funding in several markets over the first half of the year (January 1 – June 30, 2007: EUR 1,068 million). The parent company's total funding at the end of June amounted to EUR 8,149 million (June 30, 2007: EUR 6,293 million). The increase in this period’s funding has been unprecedented, because the company has benefited from having the best possible credit rating in an unfortunately unstable economic situation. Funding over the first half of the year has equalled the total of the previous financial year, both in the amount of money acquired and in the number of new debt instruments.

Success in fierce competition

”The company has done extremely well in very tight competition, as its market share at the end of June 2008 clearly exceeded that at the end of 2007 (65%). Over the first two quarters of the financial year, the unstable economic situation has translated into a significant increase in the loan margins of various financial institutions. However, Municipality Finance has managed to keep its margins unchanged for the time being. The situation indicates that the system, created for securing lending to municipalities, is working in accordance with its objectives”, says CEO Pekka Averio.