- The Finnish financial sector’s capital position remained good across all sectors also in the third quarter of 2021, reports the Finnish Financial Supervisory Authority (FIN-FSA).
- The banking sector’s capital ratio decreased slightly but performance remained good.
- Employee pension companies’ solvency ratio continued to strengthen, reaching a record level of 135% at the end of September.
- Life and non-life insurance companies’ solvency ratios also continued to grow in the third quarter of 2021.
The Finnish financial sector’s capital position remained good across all sectors also in the third quarter of 2021, reports the FIN-FSA. The banking sector’s capital ratios decreased slightly, whereas in the employee pension, life and non-life insurance sectors solvency strengthened. The FIN-FSA points out that the risks in the operating environment relate particularly to the COVID-19 pandemic, as insufficient vaccination coverage and new virus variants mean continued uncertainty.
Employee pension companies’ solvency ratio was particularly strong, reaching 135% at the end of September. This is the highest level in their history. The companies’ return on investment also rose to 11.3%, from 9.2% at the end of June.
“Strong solvency is an indicator of a solid employee pension sector that is able to operate efficiently despite realised risks and uncertainties”, notes Finance Finland’s (FFI) Deputy Managing Director Esko Kivisaari.
Regardless of the slight decrease, the Finnish banking sector’s capital ratios remained stronger than the European average. The average Common Equity Tier 1 (CET1) capital ratio of EU banks was 16.1% and the total capital ratio is 19.4%. The Finnish sector’s CET1 ratio was 17.9% and the total capital ratio was 21.4%.
“The COVID-19 crisis is revving up again, and it’s important to maintain low credit losses and stable markets. We should steer clear of any new regulatory projects that may burden banks and thus weaken their capacity to support their customers and the society”, says FFI’s Head of Banking Regulation Olli Salmi.