Municipality Finance Plc

MuniFin Group’s Half Year Report January–June 2025 is published

Municipality Finance Plc
Half Year Report
4 August 2025 at 2:00 pm (EEST)

MuniFin Group’s Half Year Report January–June 2025 is published

This release is a summary of MuniFin Group’s Half Year Report published on 4 August 2025. The complete Half Year Report with tables is attached to this release and available at www.munifin.fi.

MuniFin Group will also publish its Pillar III Half Year Disclosure Report 2025 in accordance with Regulation (EU) No 575/2013 and Directive 2013/36/EU during the calendar week 33. The report will be available at MuniFin’s website.

In brief: MuniFin Group in the first half of 2025

• The Group’s net operating profit excluding unrealised fair value changes* decreased by 11.9% (+9.6%) in January–June and amounted to EUR 79 million (EUR 89 million). Net interest income* fell by 3.6% (+3.4%) and totalled EUR 124 million (EUR 129 million). Net operating profit excluding unrealised fair value changes was also brought down by higher expenses than in the comparison period.
• Net operating profit* amounted to EUR 78 million (EUR 105 million). Unrealised fair value changes amounted to EUR -0.6 million (EUR 16 million) in the reporting period. Despite the market fluctuations during the reporting period, the net impact of unrealised fair value changes in profit and loss remained very small.
• Costs* in the reporting period amounted to EUR 44 million (EUR 41 million). They were particularly driven up by the maintenance and development costs of IT systems.
• The Group’s leverage ratio remained at a strong level, standing at 11.4% (12.3%) at the end of June.
• At the end of June, the Group’s CET1 capital ratio continued to be very strong at 89.4% (107.7%). The ratio was pulled down by the new CRR III rules that were applied on 1 January 2025, resulting in a decline in the capital ratio by 10 percentage points, mainly due to the increase in credit valuation adjustment risk (CVA VaR). The CET1 capital ratio was nevertheless almost six times the required minimum of 15.1% (15.0%), taking capital buffers into account.
• Long-term customer financing (long-term loans and leased assets) excluding unrealised fair value changes* totalled EUR 37,101 million (EUR 35,787 million) at the end of June and saw an increase of 3.7% (4.0%) in the reporting period. New long-term customer financing* in January–June remained at the same level as in the comparison period and amounted to EUR 2,411 million (EUR 2,416 million). Short-term customer financing* totalled EUR 1,511 million (EUR 1,825 million).
• Of all long-term customer financing, the amount of green finance* aimed at environmentally sustainable investments totalled EUR 7,892 million (EUR 6,817 million), and the amount of social finance* aimed at investments promoting equality and communality totalled EUR 2,609 million (EUR 2,536 million) at the end of June. The total amount of this financing increased by 12.3% (15.7%) during the reporting period. The ratio of green and social finance to long-term customer financing excluding unrealised fair value changes* grew by 2.2 percentage points to 28.3% (26.1%).
• In January–June, new long-term funding* reached EUR 7,345 million (EUR 4,942 million). At the end of June, the total funding* was EUR 48,853 million (EUR 46,737 million), of which long-term funding* made up EUR 45,098 million (EUR 43,328 million).
• The Group’s total liquidity* is very strong, standing at EUR 13,025 million (EUR 11,912 million) at the end of June. The Liquidity Coverage Ratio (LCR) stood at 390% (339%) and the net stable funding ratio (NSFR) at 128% (124%) at the end of June.
• Outlook for the second half of 2025: MuniFin Group’s net operating profit excluding unrealised fair value changes for January–June 2025 was 12% lower than in the previous year. It is expected to be at the same level or lower in the second half of 2025 compared to the previous year. Therefore, the net operating profit excluding unrealised fair value changes for the entire year is expected to be at the same level or lower than in the previous year. The Group expects its capital adequacy ratio and leverage ratio to remain strong.
  
  Comparison figures deriving from the income statement and figures describing the change during the reporting period are based on figures reported for the corresponding period in 2024. Comparison figures deriving from the balance sheet and other cross-sectional items are based on the figures of 31 December 2024 unless otherwise stated.

* Alternative performance measure.

President and CEO of MuniFin, Esa Kallio:

“MuniFin's business is strongly connected to international capital markets through the company's funding. Investors' assessment of MuniFin is also influenced by the development of Finland's economy as part of European economic development. The year 2025 was expected to bring instability, but the fast pace and extreme unpredictability of the economic and political changes during Donald Trump’s second presidency have nevertheless managed to take most of us by surprise in the first half of the year. The new situation has also changed our perception of economic risk.

But in the midst of uncertainty lies opportunity. Europe has come to realise that we must reduce our military and economic dependence on the US and build the future on our own strengths. Driving growth across an economic area with nearly 500 million people opens ample opportunities for Finland and Europe as a whole. In the era of increasing globalisation, there was strong trust in the efficiency of multinational supply chains, but recent events have underscored the need to strengthen self-sufficiency across as many industries as possible, including the defence industry.

In MuniFin’s business operations, the first half of the year was stable and in line with our expectations. In the affordable social housing sector, the demand for our financing was even slightly stronger than we anticipated. With private construction still in the slump and housing demand continuing to exceed supply in growth centres, this was a welcome development.

Our impact on society and the environment comes through the projects we finance, which is why we place particular emphasis on the steering impact of our financing. In recent years, more than half of the new customer financing we have granted has been either green or social finance. To complement these sustainable finance products, we launched in January a sustainability-linked loan for municipalities, which is aimed at supporting climate work at the local level and has been met with an enthusiastic welcome. Municipalities will receive a margin discount on their loan every year they achieve or surpass their emission reduction targets.

Our values include responsibility, customer centricity and transparency. In line with these values, we are committed to predictable and transparent operations in the long term. Our customers can rely on us and our work in every situation. We are ensuring the availability of financing for our customers also – and especially – even when external circumstances change. And right now, those changes are frequent and unpredictable.”

Group’s key figures

* Alternative performance measure.
** Change in ratio.
*** The capital ratios at 30 June 2025 have been calculated in accordance with the CRR III regulation. The figures for the comparative periods have not been adjusted.
**** The comparable figure of personnel in the Parent Company as of 30 June 2024, was 185. There were 11 employees working MuniFin’s subsidiary at the end of June 2024.

MUNICIPALITY FINANCE PLC

Further information:

Esa Kallio
President and CEO
tel. +358 50 337 7953

Harri Luhtala
CFO
tel. +358 50 592 9454

MuniFin (Municipality Finance Plc) is one of Finland’s largest credit institutions. The owners of the company include Finnish municipalities, the public sector pension fund Keva and the State of Finland. The Group’s balance sheet totals over EUR 55 billion. 

MuniFin’s customers include municipalities, joint municipal authorities, wellbeing services counties, corporate entities under their control, and affordable social housing organisations. Lending is used for environmentally and socially responsible investment targets such as public transportation, sustainable buildings, hospitals and healthcare centres, schools and day care centres, and homes for people with special needs. 

MuniFin’s customers are domestic, but the company operates in a completely global business environment. The company is an active Finnish bond issuer in international capital markets and the first Finnish green and social bond issuer. The funding is exclusively guaranteed by the Municipal Guarantee Board.  

Read more: www.munifin.fi 

Attachment

• MuniFin Half Year Report 2025