Municipality Finance Plc Bulletin of Financial Statements From 1 January to 31 December 2021

At a Glance: MuniFin Group in 2021 Municipality Finance Plc Financial Statements Bulletin January 1–December 31, 2021

Net operating income amounted to 240 million euros (194 million euros). Unrealized changes in fair value amounted to EUR 27 million (EUR -3 million) during the year.

The Group’s net operating income excluding unrealized changes in fair value amounted to EUR 213 million (EUR 197 million) and increased by 8.0% (6.2%). The Group’s net interest income amounted to EUR 280 million (EUR 254 million) and increased by 10.3% (5.8%). Expenses for the year amounted to 72 million euros (58 million euros). Costs excluding non-recurring item increased as expected and increased by 2.6 million euros, or 4.4% more than the previous year.

Changes to the regulations on the capital adequacy of banks (CRR II and CRD V) were applied at the end of June 2021. The Group’s leverage ratio stood at 12.8% (3.9%) at end December. MuniFin meets the CRR II definition of a public development credit institution and can therefore deduct all state and municipal credit claims in the calculation of its leverage ratio. This change explains the growth of the leverage ratio.

At the end of December 2021, the Group’s CET1 capital ratio remained very solid, at 95.0% (104.3%). The Tier 1 and total capital ratio were 118.4% (132.7%). The new CRR II regulation lowered the capital ratio mainly due to changes in the calculation of counterparty credit risk and CVA VaR. The CET1 capital ratio nevertheless exceeded the total requirement of 13.4% by more than seven times, taking into account the capital buffers.

The COVID-19 pandemic that broke out in March 2020 has now lasted nearly two years, although its intensity has varied. Overall, the pandemic had only a minor effect on the Group’s financial situation. During this financial year, the demand for financing in the municipal sector remained below expectations due to surprisingly good economic development and the government’s temporary stimulus measures in 2020.

Long-term customer financing, including both long-term loans and leased assets, amounted to 29,214 million euros (28,022 million euros) and increased by 4.3% (13 .0%) at the end of December. Total new loans from January to December amounted to EUR 3,275 million (EUR 4,764 million). Short-term customer financing decreased by 16.9% (previous year growth was 62.9%) and reached 1,089 million euros (1,310 million euros).

In 2021, new long-term financing reached EUR 9,395 million (EUR 10,966 million). At the end of December, the total amount of financing acquired amounted to 40,712 million euros (38,139 million euros), of which long-term financing represented 36,893 million euros (34,243 million euros). .

Of all long-term customer financing, the amount of green financing for environmentally sustainable investments amounts to €2,328 million (€1,786 million) and the amount of social financing for investments promoting equality and the community amounted to 1,164 million euros (589 million euros) at the end of December. Green and social financings were well received by customers and the amount of these financings increased by 47.0% (88.0%) compared to the previous year.

The Group’s liquidity remained at a very good level. At the end of December, total liquidity amounted to EUR 12,222 million (EUR 10,089 million). The Liquidity Coverage Ratio (LCR) stood at 334.9% (264.4%) at the end of the year and the Net Stable Funding Ratio (NSFR) at 123.6% (116.4%).

The Board of Directors is proposing to the Annual General Meeting to be held in the spring of 2022 a dividend of EUR 1.03 per share for 2021, i.e. a total of EUR 40,235,711.94. The total dividend payment for 2020 amounted to EUR 20,313,174.96.

Outlook for 2022: The Group expects its net operating income excluding unrealized fair value changes to be significantly lower than the previous year, in line with the Group’s long-term profitability objectives and more favorable customer pricing permitted by these objectives. The Group expects its solvency ratio and leverage ratio to remain very strong. The valuation principles set by IFRS 9 may lead to significant but temporary unrealized fair value variations, some of which increase the volatility of net operating income and make it more difficult to estimate it in the short term.

The story continues

Key figures (Group)

Dec 31 2021

Net operating income excluding unrealized changes in fair value (in millions of euros)*

Dec 31 2020

197

213

News Highlights

  • Municipality Finance Plc Bulletin of Financial Statements From 1 January to 31 December 2021
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Marianne R. Winn