08/14/2018 - 16:00

Municipality Finance Plc Half year report January-June 2018: Steady results progress continued

Municipality Finance Plc
Half year report
14 August 2018 at 4:00pm (EET)

Municipality Finance Plc Half year report January-June 2018: Steady results progress continued

This release is a summary of Municipality Finance's Half year report published on 14 August 2018. The complete Half year report with tables is attached to this release and available at www.munifin.fi.

The first half of 2018 in brief

  • The Group's net interest income grew by 6.7% compared to the previous year reaching EUR 118.0 million (1 January-30 June 2017: EUR 110.6 million).
  • The Group's net operating profit without unrealised fair value changes grew by 4.3% totalling EUR 92.7 million at the end of the reporting period (1 January-30 June 2017: EUR 88.9 million). Including these valuations the net operating profit amounted to EUR 124.4 million (1 January-30 June 2017: EUR 95.9 million).
  • The balance sheet total was EUR 35,521 million (31 December 2017: EUR 34,738 million). The growth compared to the end of 2017 was 2.3%.
  • The Group's capital adequacy remained strong, with the ratio of own funds to risk-weighted assets being 72.41% at the end of June (31 December 2017: 75.51%).
  • At the end of June, the Group's leverage ratio amounted to 3.97% (31 December 2017: 3.84%).
  • The total of new loans withdrawn in January-June amounted to EUR 1,239 million (1 January-30 June 2017: EUR 1,046 million). The lending portfolio stood at EUR 21,508 million (31 December 2017: EUR 21,219 million). Of this amount, EUR 138 million was granted as green finance targeted for environmental-friendly investments during the first half of the year (1 January-30 June 2017: EUR 277 million). At the end of June 2018 the portfolio of reimbursed green finance stood at EUR 917 million (31 December 2017: EUR 803 million).
  • The leasing portfolio stood at EUR 511 million at the end of June 2018 (31 December 2017: EUR 432 million).
  • In January-June, EUR 4,100 million was acquired in long-term funding (1 January-30 June 2017: EUR 5,411 million). A total of EUR 7,994 million was issued in short-term debt instruments under the Euro Commercial paper programme during the first half of the year (1 January-30 June 2017: EUR 4,305 million). The total amount of funding grew to EUR 30,633 million (31 December 2017: EUR 30,153 million).
  • At the end of June, total liquidity was EUR 9,273 million (31 December 2017: EUR 9,325 million).

President and CEO of MuniFin, Esa Kallio:

"Good economic development in Finland continued in the first half of 2018. The situation is looking good from various perspectives. The finances of municipalities seem stable and government-supported construction continues with strong volumes. It would appear that there is a wide societal interest for Finland to support the economic growth that is picking up steam after a long period of slow growth. The conciliatory and fast concluded collective labour agreement rounds were good manifestations of this.

In the first half of the year, MuniFin's market position was strengthened particularly in government-supported housing production. Even with the current large volume of privately financed housing production, there continues to be a steady demand for construction financed by the Housing Finance and Development Centre of Finland. This ensures the availability of moderate-priced housing production, especially in growth centres, which is a prerequisite for continued economic growth.

The supply of financing has remained at a good level. However, MuniFin's efficient funding has enabled us to strengthen our market position: we are still the clear market leader in the financing of both municipal customers and government-supported housing production.  Despite the competition, the company's net interest income and financial result remained at a good level in the first half of the year.

The trends in the international capital markets served MuniFin well in the first half of the year. Despite the customs disputes between the US and the other markets, the increased tension in the relationships between superpowers and the political crisis in Italy, we did extremely well in our funding transactions. Our benchmark bonds were exceptionally sought-after by international investors. This proves that the investors have a strong and continued confidence in us and the Finnish society."

Key figures (group)

  30 June 2018 31 December 2017 30 June 2017
Net interest income (EUR million) 118.0 228.5 110.6
Net operating profit (EUR million) 124.4 198.4 95.9
Net operating profit without unrealised changes in fair value (EUR million) 92.7 187.4 88.9
New loans issued (EUR million) 1,239 2,439 1,046
New funding acquisition (EUR million) 4,100 9,557 5,411
Balance sheet total (EUR million)  35,521 34,738 33,793
Common Equity Tier 1 (CET1) (EUR million) 1,016 946 870
Tier 1 capital (EUR million) 1,363 1,293 1,218
Total own funds (EUR million) 1,363 1,293 1,218
Ratio of Common Equity Tier 1 (CET1) to risk-weighted assets, % 53.95 55.22 51.83
Ratio of Tier 1 capital (T1) to risk-weighted assets, % 72.41 75.51 72.52
Ratio of total own funds to risk-weighted assets (%) 72.41 75.51 72.52
Leverage ratio (%) 3.97 3.84 3.72
Return on equity (ROE) (%) 14.56 12.57 12.57
Cost-to-income ratio 0.17 0.18 0.19
Personnel 147 134 119

MUNICIPALITY FINANCE PLC

Further information:

President and CEO Esa Kallio, tel. +358 50 337 7953
CFO, Executive Vice President Marjo Tomminen, tel. +358 50 386 1764

Measured by the balance sheet, MuniFin (Municipality Finance Plc) is Finland's second largest credit institution: the company's balance sheet exceeds EUR 35 billion. The company is owned by Finnish municipalities, the public sector pension fund Keva and the Republic of Finland.

MuniFin's mission is to build a better future in line with the principles of responsibility and in cooperation with its customers. MuniFin's customers are Finnish municipalities, municipal federations, municipally controlled companies and non-profit housing corporations. Lending is used for environmentally and socially responsible investment targets such as public transportation, sustainable buildings, hospitals and healthcare centres, schools and day care centres, and homes for people with special needs.

MuniFin's customers are domestic but the company operates in a completely global business environment. It is the most active Finnish bond issuer in international capital markets and the first Finnish green bond issuer.  The funding is exclusively guaranteed by the Municipal Guarantee Board.

The Municipality Finance Group also includes the subsidiary company, Financial Advisory Services Inspira Ltd.

Read more: www.munifin.fi