CEO’s review: A year of development

2018 was a good year for MuniFin and its customers. Demand for financing was growing and our performance in funding was excellent. With our revamped customer strategy we aim to provide even more suitable solutions.

Finland’s economy continued to grow in 2018, although the pace slowed down towards the end of the year. Investment needs among our customers remained high, and thus we saw continued strong demand for our financing, both among municipalities and in state-subsidised housing production. Migration to growth centres maintained the need for affordable rental housing.

The postponement of the regional government, health and social services reform causes further uncertainty among municipalities and hospital districts. While they wait for decisions to be made, they have to keep their services running and implement vital investments. Even if the reform will be carried out and the municipal social and healthcare obligations removed, we estimate that the investment needs of municipalities will decline by only 10-15 per cent as rural-urban migration, extensive new investments such as into infrastructure and the maintenance backlog will maintain the need for financing. Accordingly, we expect that demand for financing will remain stable in 2019 as well.

The international economy was filled with uncertainties in 2018. These include the growing tension between major world powers, the threat of a trade war, Brexit turmoil and Italy’s worrying debt situation, all of which will also have an impact on the capital markets in 2019. Despite the instability, we performed extremely well in our funding activities – we were successful in the timing of our benchmark bond issuances and saw great demand among international investors.
In addition, we were praised for our long-term work in the international capital markets. In the early months of 2018, we won the Green Bond of the Year Award from Environmental Finance magazine, and in October the UK-based market data provider mtn-i selected MuniFin as the best Uridashi Issuer of the Year in the Japanese capital markets. In May, MuniFin became the first issuer of sustainable bonds in the Finnish market with two green bonds when Nasdaq Helsinki opened its new Sustainable Bond Market.

In 2018, we sharpened our customer strategy and continued our work to develop digital solutions.

Solutions for changing needs

Our strategy was revamped in 2017 and it extends until 2022. Our vision is to be the best possible financial expert for our customers in an ever-changing world. With this goal in mind, we polished our values and sharpened our customer strategy this year.

Our strategy is built on rock-solid foundations. In the future, we will continue to focus on financing the diverse needs of municipalities and state-subsidised housing production. Our customers live in the midst of change. In particular, migration within Finland from sparsely populated areas to growing urban centres affects all our customers in some way.

With our new customer service model, we seek to find solutions that are an even better fit for our customers’ changing needs. We feel that our responsibility as a builder of an affluent society extends over the entire lifecycle of financing. We want to get involved in the investment planning phase to come up with optimal solutions for our customers – and to still be on board later when the investment is being examined in our customers’ balance sheets.
One of the greatest ongoing changes in our own operating environment is the stricter regulation of the finance industry. This has been going on for several years. We have responded to this challenge by recruiting more experts and investing in information systems.

In 2019, we will launch a centralised data warehouse that will ­improve data availability and transparency as well as boost operational efficiency. In addition, it will enable all our experts to have better access to our wide range of information to benefit our customers. By harnessing technology, we also seek to free up our experts’ time so they can provide even better, more insightful customer service. We will continue to focus on the development of digital solutions for both in-house and customer use in 2019 and during the entire strategy period up to 2022.

Investments in expertise

MuniFin’s number of personnel grew again in 2018, however the increase was more moderate than in the previous year. More employees were hired particularly in the areas of risk management, reporting and business development.

The growth in personnel has also required us to develop our own operations. Experts who enjoy their work are our major success factor, and therefore, we intend to provide them with opportunities for growth and development also in the future.

MuniFin’s operating model is based on partnership. I would like to take the opportunity to thank our customers for our excellent ­cooperation, constantly developed together along the lines of the customers’ ­expectations. MuniFin’s own experts have worked throughout the year with strong commitment and I owe this year’s good result for them.

Esa Kallio
President and CEO
Municipality Finance Plc