November 30, 2022
CFO insight into Q3: Towards the end of the year
The third quarter of the year was marked by finalisation of Finnfund’s first Sustainability Bond Framework, launched at the beginning of October and followed by an issuance of a EUR 75 million sustainability bond.
In addition, Finnfund’s investments continued to grow also in the third quarter of 2022, reaching a portfolio value of 707 million euros, which is an increase of 49 million euros (+7%) from the year end 2021.
During the first nine months of the year, 21 new investment decisions were made, totalling 218 million euros.
The interest rates increased around the world during the third quarter. This has generated both higher interest income and interest expenses for Finnfund. The total gross interest income increased by +7.5%, compared to Q3/2021 (EUR 17.3 million vs EUR 16.1 million), whereas the interest expenses increased by +69% compared to Q3/2021 (EUR 5.4 million vs. EUR 3.2 million). The main driver of the increased misbalance between interest income and expense development is that year to date a record sum of EUR 11 million of uncertain interest was written down or not recognized as income.
The year to date shows a total net financial income of EUR 14,6 million which is a 17% increase compared to last year (EUR 12,5 million in Q3/2021). This is mainly driven from the net gain from exchange rates, that includes the valuation of interest rate derivatives at fair value.
A clear increase in administration, depreciation, and other operational expenses (+13%) compared to last year is mainly explained by higher staff costs due to new recruitments. Also travel expenses have increased since the last years marked by the COVID-19 pandemic, although still 10% below budget.
The profit before reduction in value of investments and sales gains and losses was 3.9 million euros (EUR 3.0 million).
During the year 2022 the net value changes of the portfolio have been close to zero, resulting only EUR –0,3 million (FY2021 EUR –25.3 million).
The profit for Q3 2022 was 3.6 million euros (EUR –3.2 million).
Despite the ongoing conflicts and crises in the world, we still expect year 2022 to be a turnaround year for Finnfund. So far, the result of this year supports the view, and we anticipate similar development to continue.
Chief Financial Officer, Finnfund
P.S. Interested in knowing more about our work? Read the latest newsletter – and subscribe.