Financial sector’s capital position as at 30 September 2019: Finnish financial sector’s capital position remains good
Banking sector capital ratios bolstered by non-recurring items – capital position remains stronger than the European average
The Finnish banking sector’s capital ratios strengthened in July–September 2019 and returned close to levels at the end of 2018. The higher capital ratios compared with the previous quarter are mainly due to non-recurring items related to changes in business plans as well as corporate restructuring, which increased the banking sector’s Common Equity Tier 1 (CET1) capital and decreased the amount of risk-weighted assets. The Finnish banking sector’s CET1 capital ratio and total capital ratio are some 2 percentage points higher than the European average.
Pension institutions’ solvency position slightly stronger
Pension institutions’ pension assets relative to technical provisions, i.e. the solvency ratio, improved in the third quarter and remained solid. Pension institutions’ return on investment was 8.6%, i.e. higher than the return requirement, fuelled by return on equity and fixed-income investments. The share of the largest investment class, i.e. equities, in the total investment allocation continued to rise and reached 46% in the third quarter.
The risk-based solvency ratio decreased slightly in the third quarter, as the solvency limit increased at a higher rate than solvency capital.
Life insurance companies’ solvency strengthened despite the low level of interest rates
The solvency position of the life insurance sector improved slightly on the previous quarter and was solid. Solvency was boosted particularly by growth in Tier 2 capital and favourable returns on fixed-income investments. Life insurance companies decreased the share of higher-risk assets in their investment portfolio, as a result of which the solvency capital requirement remained unchanged – despite the growth in investment assets. In the period January–September, the return on investments was 7.7%.
Non-life insurance companies’ solvency weakened by lower interest rates and higher equity risk
The non-life insurance sector’s solvency position weakened compared to the record levels in 2018. The solvency position continued to decline in July–September, compared to the end-June situation, but remained solid. In January-June, solvency was eroded by an increase in the solvency capital requirement for equity risk, which was due to, for example, the rise in the market prices of equities. In addition, the fall in interest rates increased the amount of technical provisions and weakened the solvency position. The impact of the decline in interest rates was most pronounced in the third quarter.
Return on equity and fixed-income investments was boosted by the rise in equity prices and decline in interest rates, as well as narrower risk margins. In January–September, the return on investment was 7.6%, but it was not sufficient to compensate for the impact on the solvency position of the increase in the solvency capital requirement and the growth in technical provisions.
Keywords
Contacts
Further information
Samu Kurri, Head of Department, Digitalisation and Analysis. Requests for interviews are coordinated by FIN-FSA Communications, tel. +358 9 183 5250, weekdays 9.00–16.00.
Links
- Capital position of banking sector and financial and insurance conglomerates as at 30 September 2019 (Excel)
- Solvency position of life and non-life insurance companies as at 30 September 2019 (Excel)
- Solvency position of pension companies, pension funds and the employee pension sector as at 30 September 2019 (Excel)
About Finanssivalvonta
Finanssivalvonta, or the Financial Supervisory Authority (FIN-FSA), is the authority for supervision of Finland’s financial and insurance sectors. The entities supervised by the authority include banks, insurance and pension companies as well as other companies operating in the insurance sector, investment firms, fund management companies and the Helsinki Stock Exchange. We foster financial stability and confidence in the financial markets and enhance protection for customers, investors and the insured.
Subscribe to releases from Finanssivalvonta
Subscribe to all the latest releases from Finanssivalvonta by registering your e-mail address below. You can unsubscribe at any time.
Latest releases from Finanssivalvonta
Finansinspektionens tematiska bedömning: organisationer inom den finansiella sektorn använder artificiell intelligens i sina interna processer, användningen i kundgränssnittet ökar27.6.2025 11:00:00 EEST | Pressmeddelande
Största delen av företagen i den finansiella sektorn uppger att de antingen redan använder AI-lösningar eller att de planerar att införa dem. Största delen av AI-lösningarna används för närvarande i aktörernas interna processer, men tillämpningen i kundgränssnittet kommer att öka under de närmaste åren.
Finanssivalvonnan teema-arvio: finanssisektorin organisaatiot käyttävät tekoälyä sisäisissä prosesseissaan, hyödyntäminen asiakasrajapinnassa lisääntyy27.6.2025 11:00:00 EEST | Tiedote
Suurin osa finanssisektorin yrityksistä kertoo joko jo käyttävänsä tekoälyratkaisuja tai suunnittelevansa sen aloittamista. Valtaosa tekoälyratkaisuista on tällä hetkellä käytössä toimijoiden sisäisissä prosesseissa, mutta soveltaminen asiakasrajapinnassa kasvaa lähivuosina.
FIN-FSA thematic review: financial sector organisations use AI in internal processes, utilisation in the customer interface increases27.6.2025 11:00:00 EEST | Press release
The majority of financial sector companies reported either already using or planning to start using artificial intelligence (AI) solutions. Most of the AI solutions are currently used in the entities’ internal processes, but application in the customer interface is going to increase over the following years.
Den finansiella sektorn i Finland är fortsatt kapitalstark - osäkerheten kastar en skugga över de ekonomiska utsikterna11.6.2025 09:10:00 EEST | Pressmeddelande
Läget i den finansiella sektorn i Finland har varit fortsatt stabilt under början av året, fastän USA:s tullar, hotet om en avmattning i den ekonomiska tillväxten och andra geopolitiska spänningar har gått hårt åt finansmarknaden och det allmänna förtroendet. I fråga om cyberhoten har läget i Finland varit huvudsakligen lugnt, men bedrägerier och nätfiske av bankkoder har ökat, vilket framhäver behovet av vaksamhet hos både de finansiella aktörerna och kunderna. Det osäkra ekonomiska och geopolitiska läget påverkar omvärlden också framöver.
Suomen finanssisektorin vakavaraisuus säilynyt vahvana – epävarmuus varjostaa talousnäkymiä11.6.2025 09:10:00 EEST | Tiedote
Suomen finanssisektorin tilanne on pysynyt alkuvuonna vakaana, vaikka Yhdysvaltain asettamat tullit, talouskasvun hidastumisen uhka ja muut geopoliittiset jännitteet ovat riepotelleet rahoitusmarkkinoita ja yleistä luottamusta. Kyberuhkien osalta tilanne on säilynyt pääosin Suomessa rauhallisena, mutta huijaukset ja pankkitunnusten kalastelu ovat lisääntyneet, mikä korostaa tarvetta sekä finanssisektorin toimijoiden että asiakkaiden valppaudelle. Epävarma taloudellinen ja geopoliittinen tilanne vaikuttaa toimintaympäristöön myös jatkossa.
In our pressroom you can read all our latest releases, find our press contacts, images, documents and other relevant information about us.
Visit our pressroom