“Banking sector profitability is still at a reasonable level but remains under pressure,” Anneli Tuominen, director general at the Helsinki-based Financial Supervisory Authority, said in a statement. “For insurance sector entities, it’s a challenge to allocate investments profitably, at a controlled risk level.”
The euro area’s recession is hurting Finland’s export-led economy, which gets more than a third of its output from foreign sales. The northernmost euro member entered a recession in the fourth quarter, according to data published by Statistics Finland today.
Banks operating in Finland, including Nordea Bank AB (NDA) and Danske Bank A/S (DANSKE), are struggling to boost income as rates hover close to record lows amid central bank efforts to stimulate demand. The European Central Bank cut its benchmark rate to record-low 0.5 percent last month and Sweden’s Riksbank has reduced its repo rate to 1 percent.
The average core Tier 1 capital ratio among Finland’s banks stood at 15 percent of risk-weighted assets at the end of March, compared with 15.5 percent at the end of last year.
Finland is the only Nordic country to use the single currency.
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