Finnish financial sector remained stable in 2020 - Risks in the operating environment mean continued uncertainty in the sector


The Finnish financial sector coped well in 2020. In 2021, preparedness will still be required due to the uncertainty surrounding the economic outlook, pricing on the financial markets and the continuation of support measures. The capital position of the Finnish financial sector, however, provides a good basis for coping with risks.

The coronavirus pandemic and its prolongation have not significantly weakened the profitability of the Finnish financial sector. The outlook for and structure of the economy in the short and longer term are, however, subject to heightened uncertainty.

‘Society has supported businesses in many ways during the pandemic. However, the financial difficulties of companies caused by the prolongation of the pandemic increase the risk of a materialisation of loan losses. The uncertainty may also lead to rapid adverse changes in financial market pricing. The solid capital position of the Finnish financial sector, however, provides a buffer against these risks’, notes Anneli Tuominen, Director General of the Financial Supervisory Authority.

The Finnish banking sector's situation has remained strong, despite the economic uncertainty caused by the coronavirus pandemic.

The economic recession caused by the coronavirus pandemic has not resulted in a significant increase in the total amount of nonperforming loans, but the quality of and developments in the credit stock differ considerably between business sectors. Nonperforming loans increase and loan losses materialise typically with a lag during economic downturns.

There are already signs of an increase in credit risks in the sectors that have suffered most from the pandemic. The bulk of the support measures have been in these sectors. The ending of support measures increases the risk of growth in nonperforming loans.

Despite the heightened risk of loan losses, the Finnish banking sector is well positioned for supporting the sound and sustainable recovery of the economy, thanks to its strong capital buffers. The banking sector's capital position and possibilities to grant credit are better than the European average.

Non-life insurance companies’ solvency was strengthened by both the positive results of investment activity as well as the improvements in insurance business profitability. In all the investment classes, returns turned positive in the fourth quarter. The improvement in insurance business profitability reflected the decrease in claims expenditure. Claims expenditure decreased particularly in occupational accident and occupational disease insurance, which was most affected by the pandemic containment measures and the weakening of economic activity.

Many non-life insurance companies have had shortcomings in the handling of claims, particularly in compliance with the handling times of claims in statutory insurance, such as motor liability insurance, occupational accident and occupational disease insurance. The Parliamentary Ombudsman has received several complaints on the matter and has issued condemnatory decisions in regard to these.

‘The shortcomings show weaknesses in the companies’ governance, internal control and compliance functions. The FIN-FSA has taken supervisory measures in the matter,’ notes Anneli Tuominen.

Pension sector solvency weakened significantly during the first quarter of 2020, due to the decline in the value of investments. Solvency did, however, improve towards the end of the year. This reflected, in particular, the increase in the value of equity investments as growth expectations were boosted by support measures by central banks and governments.

Life insurance sector solvency remained good, despite a decline compared with a year earlier. Life insurance companies’ return on investment recovered in 2020 and was clearly positive at the end of the year. Premiums written on life insurance, however, began to decline again from the exceptional levels recorded in 2019. Premiums written decreased particularly in the case of new insurance policies.

The Financial Supervisory Authority describes also 2020 in its annual report just published.


Financial position and risks of supervised entities page on the website (in Finnish)

Key financial figures page on the website

Financial Supervisory Authority Annual Report 2020 (in Finnish)



Samu Kurri, Head of Department, Digitalisation and Analysis.

Requests for interviews are coordinated by FIN-FSA Communications, tel. +358 9 183 5030, weekdays 9.00-16.00.

About Finanssivalvonta

PL 103, Snellmaninkatu 6
00100 Helsinki

09 183 51

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

Room for development remains in UCITS liquidity management8.4.2021 10:50:00 EEST | Press release

The Financial Supervisory Authority (FIN-FSA) considers that there remains room for improvement in procedures related to UCITS liquidity management. Management companies are responsible for ensuring an adequate level of liquidity risk management for UCITS, both in normal and extraordinary market conditions. The purpose of liquidity management is to ensure that the fund is able to pay, at a predetermined date, redemption orders made by investors to the fund. Finnish UCITS, however, did not experience significant shortcomings in their liquidity during the market conditions caused by the coronavirus pandemic in spring 2020.

Placeringsfondernas likviditetshantering behöver ännu utvecklas8.4.2021 10:50:00 EEST | Tiedote

Finansinspektionen bedömer att förfarandena i anslutning till placeringsfondernas likviditetshantering ytterligare behöver förbättras. Fondbolagen ansvarar för att placeringsfondernas likviditetsrisk-hantering är på tillräcklig nivå både under normala förhållanden och i exceptionella marknadslägen. Syftet med likviditetshanteringen är att säkerställa att fonden kan sköta de inlösningsorder som investerarna i fonden begär vid en på förhand utlovad tidpunkt. Finansinspektionen observerade emellertid inte några betydande brister i de finländska fondernas likviditet i det marknadsläge som orsakades av coronapandemin på våren 2020.

Sijoitusrahastojen likviditeetinhallinnassa vielä kehitettävää8.4.2021 10:50:00 EEST | Tiedote

Finanssivalvonta arvioi, että sijoitusrahastojen likviditeetinhallintaan liittyvissä menettelytavoissa on vielä parannettavaa. Rahastoyhtiöiden vastuulla on, että sijoitusrahastojen likviditeettiriskin hallinta on riittävällä tasolla sekä tavanomaisissa että poikkeuksellisissa markkinatilanteissa. Likviditeetinhallinnan tarkoituksena on varmistaa, että rahasto voi maksaa sijoittajille rahastoon tehdyt lunastuspyynnöt ennalta luvattuna hetkenä. Suomalaisilla rahastoilla ei kuitenkaan ilmennyt merkittäviä puutteita likviditeetissä keväällä 2020 koronapandemian aiheuttamassa markkinatilanteessa.

Macroprudential decision: FIN-FSA will not tighten macroprudential requirements but will closely monitor mortgage lending18.3.2021 15:15:00 EET | Press release

The Financial Supervisory Authority (FIN-FSA) is closely monitoring the housing market and household indebtedness and urges banks to take particular care when assessing borrowers’ ability to pay, especially in the case of large and long-term loans. For now, the maximum loan-to-collateral (LTC) ratio, i.e. the loan cap, and banks’ capital requirements will remain unchanged.

Makrotillsynsbeslut: Finansinspektionen skärper inte makrotillsynskraven men följer noga utvecklingen inom bostadsutlåningen18.3.2021 15:15:00 EET | Tiedote

Finansinspektionen följer noga utvecklingen på bostadsmarknaden och i hushållens skuldsättning och uppmanar bankerna att göra en särskilt noggrann bedömning av låntagarnas betalningsförmåga i synnerhet vid stora lån och lån med en lång återbetalningstid. I nuläget hålls den maximala belåningsgraden, dvs. lånetaket, och bankernas buffertkrav oförändrade.

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