After the restructuring undertaken by the end of 2018, the Finnish financial sector is growing and banks continue to increase their profits despite the poor economic predictions that circulate this year.
According to Statistics Finland, in the second quarter of 2019 the net income from financial operations of credit institutions engaged in banking in Finland amounted to 1,069 million euros and their operating profit to 616 million euros.
Source: Statistics Finland.
Interest income and expenses
In the second quarter of 2019, credit institutions engaged in banking in Finland accumulated 1,397 million euros in interest income. Their interest expenses, in turn, amounted to 327 million euros.
The net income from financial operations calculated as the difference between these was 1,069 million. Compared to the respective quarter in 2018, net income from financial operations of Finnish commercial banks increased considerably.
In terms of foreign banks, their net income from financial operations decreased compared to the same quarter in the year before. This was significantly 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 1.3 billion euros in the second quarter. Compared to the corresponding quarter last year, administrative expenses increased by 514 million euros.
The share of wages and salaries in administrative expenses grew to 65.3%, while they had been 50.7% in the first quarter of 2019. Because of a significant company restructuring, the administrative expenses after the fourth quarter of 2018 are not really comparable with earlier quarters
Operating profit
The operating profit, or profit from continuing operations before taxes, was 616 million euros in the second quarter of 2019. Compared to the corresponding quarter in 2018, the operating profit is almost double. The operating profit grew particularly due to interest and commission income.
However, once again figures are not fully comparable with previous states due to the restructuring process undertaken recently.
Balance sheet
The aggregate value of the balance sheets of banks was some 717 billion euros. Of this, the share of equity was around 43 billion euros which is, on average, 6% of the balance sheet total.
Cooperative banks belonging to OP Financial Group had the biggest share of equity in the balance sheet, around 12.2%.
Foreign banks, in turn, had the lowest share of equity in the balance sheet, around 0.4%. On average, the share of equity in the aggregate of the balance sheets for all banks operating in Finland rose by 1.8 percentage points from one year back.
The large restructuring made in the Finnish banking sector also had a considerable effect on banks’ balance sheet total and own equity.
