In 2012, the stock of housing loans granted by Finnish MFIs grew by 5.6% to stand at EUR 86 bn at the end of the year. Deterioration of the prospects of the real economy in Finland was reflected in the latter half of 2012 as a slowdown in the annual growth of housing loans, which had remained very steady since 2010.  In the early part of the year, new housing loans were drawn at the same pace as in 2011, but in the autumn, draw-downs were smaller than a year ago.
Households linked their housing loans primarily to Euribor rates, the popularity of which continued to increase further in 2012. Their popularity reflected the continuous decline of the Euribor rates throughout 2012. The decline in market rates has not been channelled entirely to the customers’ benefit, since banks increased the margins on new housing loan contracts on average by 0.5 percentage points during the year. In December, the average interest rate on new housing loans stood at 1.84%.  
Growth of the corporate loan stock slowed down during 2012 but continued, however, to be faster than in other euro area countries. Large non-financial corporations in particular raised funding from the bond markets, which contributed to the decrease in the need for bank finance. The stock of loans to industrial corporations decreased towards the end of the year. Corporate loans were drawn primarily for operating capital needs and for financial restructuring arrangements. The average interest rate on new loans to non-financial corporations decreased by 0.8 percentage points in 2012 to 2.11%. Banks also increased margins on corporate loans.
Growth of the deposit stock remained brisk in 2012 although it slowed down somewhat towards the end of the year. Households are the most important depositor sector: households’ deposits comprise over a half of all non-MFI deposits. The low level of market interest rates reduced the attractiveness of deposits, and the popularity of new deposits with agreed maturity diminished on the back of declining interest rates. At the same time, households invested their assets in other investments, such as investment funds and equities.
At the end of 2012, the aggregated balance sheet of Finnish MFIs stood at EUR 600 bn, EUR 44 bn less than a year earlier. Contraction of the balance sheet was primarily due to decreases in derivatives and central bank deposits in the latter half of the year, when uncertainty in the international financial markets eased somewhat. To some extent, the decrease seen in derivatives also reflected a change in accounting practices.
The assets in domestic investment funds grew by EUR 11 bn in 2012 but failed to reach the record levels seen in 2007. The growth was largely based on an increase in securities prices. New capital flowed into investment funds throughout the year from all investor sectors. Households’ net investment in investment funds also turned positive after two negative years. In Finland, increase in the stock of investment fund assets was more pronounced than in the euro area on average.  Fund returns were primarily strong.
This information is based on the Financial Statistics 2012 – Annual Review published today by the Bank of Finland.
For further information, please contact:
Essi Tamminen, Economist, essi.tamminen(at), tel. +358 10 831 2395 (monetary financial institutions)
Johanna Honkanen, Economist, johanna.honkanen(at), tel. +358 10 831 2992 (investment funds)​