The year 2019 was good for the banking sector in Finland. After the restructuring carried out at the end of 2018 and despite the poor economic forecasts which were circulating, Finnish banks ended the year again with huge profits.
According to the latest figures published by Statistics Finland, in the fourth quarter of 2019, the net income from financial operations of credit institutions engaged in banking in Finland amounted to 1.1 billion euros and their operating profit was 1.6 billion euros.
This is less than a year earlier, but the reason for the decline is not in a drop in business. It has to be found in the restructuring of the sector in the fourth quarter of 2018, which makes the figures for the quarters after this are not fully comparable with previous quarters.
Source: Statistics Finland.
Interest income and expenses
In the fourth quarter of 2019, credit institutions engaged in banking in Finland accumulated 2 billion euros in interest income. Their interest expenses amounted to 0.9 billion euros .
The net income from financial operations calculated as the difference between these was 1.1 billion euros . Compared to the respective quarter in 2018, the net income from financial operations grew by 8%, around 84 million euros.
Interest income for the whole year 2019 totaled 8.1 billion euros. The increase from the year before was 16.3%.
Banks’ total interest expenses amounted to 3.8 billion euros in 2019, having been 4.2 billion euros in the previous year.
Compared to the previous year, the net income from financial operations grew especially for Finnish commercial banks. This was affected by the company restructuring made in the Finnish banking sector in the fourth quarter of 2018.
Administrative expenses
Administrative expenses are a significant expense item for banks operating in Finland.
Banks’ administrative expenses amounted to 1.4 billion euros in the fourth quarter. The share of wages and salaries in administrative expenses was 53.7% or around 768 million euros.
There was no change in the share of wages and salaries compared to the corresponding quarter of the previous year.
Operating profit/loss
The operating profit, or profit from continuing operations before taxes, was 1,596 million euros in the fourth quarter of 2019.
The operating profit of banks decreased by 14.2%, or around EUR 265 million, compared to the corresponding period of the previous year.
Because of the significant company restructuring, the operating profit of periods after the fourth quarter of 2018 is poorly comparable with the operating profit of earlier periods.
Balance sheet
The aggregate value of the balance sheets of banks was 677 billion euros at the end of 2019. The aggregate value of the balance sheets increased by 2.4%, or around 16 billion euros, from the previous year.
The share of own equity in the total of the balance sheets was 6.6%, on average, corresponding to around 44 billion euros.
On average, the share of equity in the total of the balance sheets for all banks operating in Finland fell by 0.1 percentage points from one year back.
