Financial Sector in Finland Remains Stable Amid Global Uncertainty

The financial sector in Finland has managed to remain stable, despite the uncertainty brought about by US tariffs, the threat of a slowdown in economic growth, and other geopolitical tensions. The Financial Supervisory Authority of Finland reports that the situation regarding cyber threats has remained largely calm, but fraud and phishing for bank credentials have increased, highlighting the need for vigilance by both financial sector entities and customers. The uncertain economic and geopolitical situation is likely to continue affecting the operating environment, with Finland's economy forecast to grow this year, but with considerable uncertainty surrounding the forecasts.

Key Takeaways:

• The banking sector's non-performing loans growth levelled off, and net interest income continued to decline.
• The employee pension sector's solvency ratio weakened to 128.7% in the first quarter of 2025, but remained higher than a year earlier.
• The life and non-life insurance sectors' solvency remained good, with solvency ratios of 222.1% and 246.3% respectively.
• The employee pension sector's overall return on investment in the first quarter was 0.0%.
• The return on equity investments was negative (-0.8%), while the return on fixed income, other investments, and real estate investments was 0.9%, 1.1%, and 0.6% respectively.
• The solvency ratio of the non-life insurance sector decreased due to an increase in non-life technical provisions and a marked increase in the symmetric adjustment of the equity capital charge.
• The Finnish banking sector's capital ratios are expected to have weakened slightly in the first quarter of 2025, but to have remained strong.
• Finnish banks' funding costs continued to decline, particularly in deposit funding.
• The risk premiums of banks' market-based funding rose briefly in April, in line with general market sentiment, but levelled off quickly after the situation calmed down.

Statistics:

• Non-performing loans growth levelled off in the banking sector.
• Net interest income continued to decline in the banking sector.
• Employee pension sector's solvency ratio weakened to 128.7% in the first quarter of 2025.
• Life insurance sector's solvency ratio was 222.1% in the first quarter of 2025.
• Non-life insurance sector's solvency ratio was 246.3% in the first quarter of 2025.
• Employee pension sector's overall return on investment was 0.0% in the first quarter.
• Return on equity investments was negative (-0.8%) in the employee pension sector.
• Return on fixed income, other investments, and real estate investments was 0.9%, 1.1%, and 0.6% respectively in the employee pension sector.
• Non-life insurance sector's combined ratio was 106.9% in the first quarter of 2025.

Sources:

• Financial Supervisory Authority of Finland (June 11)
• [1] Due to changes to banks' capital requirements regulations (CRR3/CRD6 Banking Package), which came into force at the beginning of 2025, banks have been granted additional time to report capital adequacy data. The FIN-FSA will publish separately more detailed first quarter 2025 capital adequacy data for banks at a later date.