This report fulfills the disclosure obligation pursuant to Section 7:5§ of
the Securities Market Act.
Report of the Board of Directors
and Financial Statements 2022
Report of the Board of Directors 1 Janua-
ry–31 December 2021
In brief
MuniFin Group in 2022
In brief:
• The Group’s net operating profit excluding unrealised fair value changes
amounted to EUR 170 million (EUR 213 million). As expected, it decreased
from the comparison year’s exceptionally good result and was 20.0% lower
than in the year before (8.0% growth in 2021). This drop was influenced
by the change in credit terms applied in late 2021 for the benefit of the
Group’s customers. The Group’s net interest income totalled EUR 241 million
(EUR 280 million) in January–December. Costs in the financial year amounted
to EUR 73 million (EUR 72 million). Costs excluding non-recurring items
totalled EUR 69 million (EUR 61 million) making the figure 12.2% greater
than in the previous year. The costs increased the most in fees collected by
authorities.
• The net operating profit amounted to EUR 215 million (EUR 240 million).
Unrealised fair value changes amounted to EUR 45 million (EUR 27 million) in
the financial year.
• The Group’s leverage ratio was 11.6% (12.8%) at the end of December.
The reduction in the leverage ratio is mostly explained by the Group
redeeming its only AT1 capital loan in April, which decreased Tier 1 capital by
EUR 347 million.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
• At the end of December, the Group’s CET1 capital ratio was very strong at 97.6% (95.0%).
CET1 capital ratio exceeded the total requirement of 13.8% by over seven times, with capital
buffers accounted for. The repayment of the AT1 capital loan decreased Tier 1 and total
capital ratio to 97.6% (118.4%), bringing them currently on a par with the CET1 capital ratio.
• Russia’s invasion of Ukraine has not had a significant negative effect on the Group’s
operations. Despite the market turbulence, the Group continued to acquire funding without
interruption during the year. Because of the uncertainty arising from the war and the inflation
outlook, the Group has nevertheless maintained larger than normal liquidity buffers as a
precaution. The market interest rates that have risen due to the accelerating inflation have
had a positive effect on the Group’s net interest income.
• Long-term customer financing (long-term loans and leased assets) excluding fair value
changes totalled EUR 30,660 million (EUR 29,063 million) at the end of December and saw
an increase of 5.5% (5.6%). Long-term customer financing decreased by 0.2% (4.3%) due to
the unrealised fair value changes. New long-term customer financing in January–December
amounted to EUR 4,375 million (EUR 3,671 million). Short-term customer financing increased
by 33.8% (previous year’s drop was 16.9%) and reached EUR 1,457 million (EUR 1,089
million).
• Of all long-term customer financing, the amount of green finance aimed at environmentally
sustainable investments totalled EUR 3,251 million (EUR 2,328 million) and the amount of
social finance aimed at investments promoting equality and communality EUR 1,734 million
(EUR 1,161 million) at the end of December. Green and social finance have been extremely
well received by customers, and the total amount of this financing increased by 42.9%
(46.9%) from the previous year.
• In 2022, new long-term funding reached EUR 8,827 million (EUR 9,395 million). At the end of
December, the total funding was EUR 40,210 million (EUR 40,712 million), of which long-term
funding made up EUR 35,560 million (EUR 36,893 million). The amount of total funding
decreased due to the growth in unrealised fair value changes which was caused by the
increase on the market rates.
• The Group’s total liquidity is very strong, and it was EUR 11,506 million (EUR 12,222 million) at
the end of the financial year. The Liquidity Coverage Ratio (LCR) stood at 257% (335%) and
the Net Stable Funding Ratio (NSFR) at 120% (124%) at the end of the year.
• The Board of Directors proposes to the Annual General Meeting to be held in spring 2023
a dividend of EUR 1.73 per share for 2022, totalling EUR 67,580,370.54. The total dividend
payment in 2022 was EUR 40,235,711.94.
• Outlook for 2023: The Group expects its net operating profit excluding unrealised fair value
changes to remain at the same level as in the previous year. The Group expects its capital
adequacy ratio and leverage ratio to remain strong. The valuation principles set in the IFRS
framework may cause significant but temporary unrealised fair value changes, some of
which increase the volatility of net operating profit and make it more difficult to estimate. A
more detailed outlook is presented in the section Outlook for 2023.
Comparison figures deriving from the income statement and figures describing the change
during the financial year are based on figures reported for the corresponding period in 2021.
Comparison figures deriving from the balance sheet and other cross-sectional items are based
on the figures of 31 December 2021 unless otherwise stated.
In brief
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Jan–Dec 2022 Jan–Dec 2021 Change, %
Net operating profit excluding unrealised fair value changes (EUR million)* 170 213 -20.0
Net operating profit (EUR million)* 215 240 -10.3
Net interest income (EUR million)* 241 280 -13.9
New long-term customer financing (EUR million)* 4,375 3,671 19.2
New long-term funding (EUR million)* 8,827 9,395 -6.0
31 Dec 2022 31 Dec 2021 Change, %
Long-term customer financing (EUR million)* 29,144 29,214 -0.2
Balance sheet total (EUR million) 47,736 46,360 3.0
CET1 capital (EUR million) 1,482 1,408 5.2
Tier 1 capital (EUR million) 1,482 1,756 -15.6
Total own funds (EUR million) 1,482 1,756 -15.6
CET1 capital ratio, % 97.6 95.0 2.7
Tier 1 capital ratio, % 97.6 118.4 -17.6
Total capital ratio, % 97.6 118.4 -17.6
Leverage ratio, % 11.6 12.8 -9.5
Return on equity (ROE), %* 9.9 10.7 -7.9
Cost-to-income ratio* 0.2 0.2 10.1
Personnel 175 164 6.7
* Alternative performance measure.
Key figures (Group)
The calculation formulas for
all key figures can be found on
pages 38–45. All figures
presented in the Report of the
Board of Directors are those
of MuniFin Group, unless
otherwise stated.
Key figures
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Liikevoitto ilman realisoitumattomia arvostuksia
0
40
80
120
160
200
240
20222021202020192018
190
190
186
186
197
197
213
213
170
170
0
5
10
15
20
25
30
35
20222021202020192018
23
23
25
25
28
28
29
29 2929
0.0
20.0
40.0
60.0
80.0
100.0
120.0
20222021202020192018
66.3
66.3
83.1
83.1
104.3
104.3
95.0
95.0
97.697.6
0.0
1.0
2.0
3.0
4.0
5.0
6.0
20222021202020192018
3.2
3.2
3.5
3.5
5.2
5.2
3.7
3.7
4.4
4.4
Net operating profit excluding unrealised fair value changes, EUR million*
Long-term customer financing, EUR billion* New long-term customer financing, EUR billion*
CET1 capital ratio, %
* Alternative performance measure.
The calculation formulas for all key figures can be found on pages 38–45. All figures presented in the Report of the Board of Directors are those of MuniFin Group, unless otherwise stated.
Key figures
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Report of the Board of Directors
1 January–31 December 2022
Report of the Board of Directors
for 2022
6 Report of the Board of Directors for 2022
38 Note 1. Key figures
46 Note 2. Group’s capital adequacy position
55 Note 3. Parent Company’s capital adequacy position
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Operating environment in 2022
The outlook in world economy changed dramatically when
Russia invaded Ukraine in February 2022. The economic
sanctions imposed by Western countries and Russia’s
reaction to them reflected heavily on trade with Russia and
the price of both energy and raw materials. During the year,
cost pressures spread to consumer prices across the board
and further accelerated inflation, which had already started
picking up speed in the previous year. In many countries,
inflation reached its highest level in almost 40 years.
Confidence in the economy dimmed especially in Europe,
where countries had to rapidly reduce their dependence
on Russian fossil fuels. In addition to concerns related to
the availability of energy, the outlook in Europe was also
shadowed by security policy risks and the refugee crisis
brought on by the war.
Despite the rapidly rising cost of living, Finland’s economic
growth remained stronger than expected, especially in the
first half of the year. Lifted COVID restrictions, the release
of pent-up household demand and the gradual clearing of
supply chain bottlenecks all boosted GDP growth. Towards
the end of the year, however, diminishing consumer buying
power and rapid interest rate hikes began to cool off the
economy significantly.
Before the Russian invasion, central banks had been
underestimating the risks associated with persistent
inflation, so they did not start tightening their monetary policy
properly until in the spring and summer of 2022. Because the
monetary policy was tightened belatedly, it had to be done in
quick and long strides. The US Federal Reserve has raised its
key interest rate by more than four percentage points since
March 2022, taking it to a targeted range between 4.25% and
4.5%. The European Central Bank (ECB) waited until July to
start its interest rate hikes, but then raised its deposit facility
rate by 2.5 percentage points in the second half of 2022,
taking it from -0.5% to 2.0%. The ECB also tightened the
conditions of its targeted longer-term refinancing operations
(TLTRO) that provide financing to credit institutions.
The effects of Russia’s war against Ukraine hit the Finnish
economy slower than feared. Although Finland’s trade
balance sunk into deficit in the spring when Russian trade
dried up and the terms of trade weakened, domestic demand
still sustained positive growth. The employment situation
remained surprisingly strong throughout the year. In the
second half of the year, however, the surging cost of food,
energy and housing started to significantly erode consumers’
confidence and purchasing power. In the housing market,
prices and the number of sales both took a downward turn.
The persistent inflation and the sharp U-turn in monetary
policy set the tone in the interest rate markets in 2022.
The 12-month Euribor rate rose from the -0.5% of the
beginning of the year by almost 3.8 percentage points
to 3.3%. Long-term interest rates also saw a rapid rise.
Germany’s 10-year bond yield went up from -0.2% to 2.6%,
while Finland’s corresponding rate went from 0.1% to 3.1%.
Operating environment in 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Effects of the health and social services
reform on MuniFin Group
On 1 January 2023, Finland’s long-prepared health and social
services reform became effective and the new wellbeing
services counties began their operations. The operative
work of the wellbeing services counties is being largely
funded by the central government, but the counties have
government authorisation to acquire long-term funding for
their investments. The counties can also independently seek
short-term funding.
In terms of financing, the legislation adopted in the summer
of 2021 allows MuniFin to continue to act as a lender and
counterparty to the loans and other liabilities that were
transferred to the counties at the start of 2023. These
totalled about four billion euros. MuniFin’s financing contracts
and other commitments were transferred automatically from
hospital districts and special care districts to the wellbeing
services counties on 1 January 2023, whereas the transfer
of financing contracts and other commitments from joint
municipal authorities and voluntary joint municipal authorities
for health and social services to the wellbeing services
counties required a separate decision whereby the counties
accepted these commitments.
The amendments to the Act on the Municipal Guarantee
Board passed by the Finnish Parliament in April 2022 allow
MuniFin to also finance new investments and other new
financing needs by the wellbeing services counties.
In January 2022, the Finnish Financial Supervisory Authority
(FIN-FSA) decided that like the central government and
municipalities, wellbeing services counties will also fall in the
zero-risk category in the capital adequacy regulation of credit
institutions. This decision simplifies the counties’ financing
arrangements because it means that government guarantees
are not required.
At this stage, wellbeing services counties are not liable
for the guarantees for MuniFin’s funding, because unlike
municipalities, wellbeing services counties are not members
of the Municipal Guarantee Board (MGB). For this reason, the
MGB has decided to set an annual limit to the amount of new
financing MuniFin can grant to wellbeing services counties.
In 2023, the MGB’s limit for MuniFin’s long-term loans to
wellbeing services counties is EUR 400 million. MuniFin
estimates the wellbeing services counties’ financing needs
and government-authorised borrowing powers in 2023 to be
considerably larger than the limit.
The MGB’s limit for MuniFin’s new short-term financing
to wellbeing services counties, i.e. commercial papers to
wellbeing services counties, is EUR 900 million in 2023.
In 2022, the limit for the short-term financing for wellbeing
services counties was also EUR 900 million.
The long-term financial effects of the health and social
services reform remain difficult to estimate. MuniFin’s
financing volumes will be affected by the wellbeing services
counties’ future level of investment, the limits set by the MGB
and the fact that the operating expenses of the wellbeing
services counties are covered from the central government’s
budget. In MuniFin’s current financing operations, lending
related to health and social services does not play such a role
that changes in it would have a material impact on the Group’s
financial position in the near future.
Effects of the health and social services reform on MuniFin Group
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Information on the Group results
CONSOLIDATED INCOME STATEMENT
(EUR million) 1–12/2022 1–12/2021 Change, %
Net interest income 241 280 -13.9
Other income 2 4 -48.8
Income excluding unrealised fair value changes 243 285 -14.5
Commission expenses -6 -5 9.1
Personnel expenses -19 -18 6.4
Other items in administrative expenses -19 -17 8.9
Depreciation and impairment on tangible and intangible assets -10 -16 -35.7
Other operating expenses -20 -16 27.0
Costs -73 -72 2.1
Credit loss and impairments on financial assets 0 0 <-100
Net operating profit excluding unrealised fair value changes 170 213 -20.0
Unrealised fair value changes 45 27 67.1
Net operating profit 215 240 -10.3
Income tax expense -43 -48 -10.5
Profit for the financial year 172 192 -10.2
The sum of individual results may differ from the displayed total due rounding.
Changes of more than 100% are shown as >100% or <-100%.
The Group’s net operating profit excluding unrealised fair
value changes
MuniFin Group’s core business operations remained
strong in 2022. The Group’s net operating profit excluding
unrealised fair value changes shrank by 20.0% and totalled
EUR 170 million (EUR 213 million). Income excluding
unrealised fair value changes was EUR 243 million
(EUR 285 million) and shrank by 14.5%.
In 2021, MuniFin decided to change the credit terms of
negative interest rates in its long-term customer loans,
enabled by the change in the banking regulation. This change
began to gradually lower customers’ loan expenses as of
October 2021. Non-recurring expenses from an IT project
terminated in 2022 have been recorded in the results of 2021
and 2022. The result for 2022 was weakened by the growth
in fees collected by authorities. The COVID pandemic and
Russia’s invasion of Ukraine only had a minor effect on the
results both in the reporting period and in the comparison
period. The increased market rate levels, as a result of
accelerated inflation, has a positive overall impact on the
Group’s net interest income.
Information on the Group results
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Net interest income totalled EUR 241 million (EUR 280 million)
in January–December 2022. Net interest income was
positively affected by growing business volumes and the
continued low cost of funding, as well as the positive effect
that rising market interest rates have had on interest income
through equity.
On 1 April, the Group redeemed its only AT1 capital loan
(EUR 350 million), included in its Tier 1 capital. The Group’s
net interest income does not recognise the interest expenses
of EUR 4 million (EUR 16 million) of the AT1 capital instrument
for the financial year 2022, as the capital loan is treated as an
equity instrument in the consolidated accounts. The interest
expenses of the capital loan are treated similarly to dividend
distribution; that is, as a decrease in retained earnings under
equity upon realisation of interest payment on an annual
basis.
Other income fell from the previous year to EUR 2 million
(EUR 4 million). Other income includes commission income,
net income from foreign exchange transactions, net income
on financial assets at fair value through other comprehensive
income, and other operating income. In addition, the turnover
of MuniFin’s subsidiary company, Financial Advisory Services
Inspira, is included in other income. At 0.9% (1.6%), other
income relative to income excluding unrealised fair value
changes forms only a minor part of the Group’s income.
The Group’s costs were EUR 73 million (EUR 72 million),
rising by 2.1% from the year before. Costs were negatively
affected by the discontinuation of a major IT project for a loan
lifecycle management system, which the Group launched
in late 2019. The project was terminated in spring 2022, and
a total of EUR 5 million (EUR 10.5 million) of non-recurring
expenses were recorded in depreciation and impairment
on tangible and intangible assets. The termination did not
have an effect on customer business. Expenses were also
increased by higher fees collected by authorities; especially
the higher contribution to the Single Resolution Fund, which
grew by 36.3% to EUR 9 million (EUR 7 million).
Commission expenses totalled EUR 6 million (EUR 5 million)
and consisted primarily of paid guarantee fees, custody fees
and funding programme update fees.
Administrative expenses reached EUR 37 million
(EUR 35 million) and grew by 7.6% (5.2%). Of this, personnel
expenses comprised EUR 19 million (EUR 18 million) and
other administrative expenses EUR 19 million (EUR 17 million).
Employee numbers grew during the financial year, and the
average number of employees in the Group was 172 (162).
Other items in administrative expenses grew by 8.9% (11.6%)
during the financial year. The growth is mainly due to the
increased costs of maintaining and developing information
systems. The improved COVID situation has also slightly
increased travelling expenses and other types of running
costs.
During the financial year, depreciation and impairment
of tangible and intangible assets reached EUR 10 million
(EUR 16 million). The termination of aforementioned IT
project was reflected in the amount of depreciation and
impairment, both in 2022 and 2021.
Other operating expenses increased by 27.0% (6.6%) to
EUR 20 million (EUR 16 million). Of these, fees collected
by authorities comprised EUR 12 million (EUR 9 million),
increasing by 26.6% (23.0%) from the comparison period.
The growth in fees was mainly due to the higher contribution
to the Single Resolution Fund as described above. These
fees excluded, other operating expenses totalled
EUR 8 million (EUR 6 million), growing by 27.6% (-10.3%).
Information on the Group results
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
The amount of expected credit losses (ECL), calculated
according to IFRS 9, amounted to EUR 0.1 million
(EUR -0.1 million). MuniFin Group continued in 2022 its IT
and model development for the calculation of expected
credit losses and finished it during the second half of the
year. With the development, changes have been made to
the assessment criteria for significant increase in credit
risk (SICR), probability of default (PD) and loss given
default (LGD). Hence, there was no need for the additional
discretionary provision of EUR 0.9 million recognised at the
end of 2021 and increased in June 2022, and the Group’s
management decided to remove the provision at the end
of 2022. In addition, macro scenarios were updated at the
end of financial year to take into account forward-looking
information.
The Group’s overall credit risk position has remained low.
According to the management’s assessment, all receivables
from customers will be fully recovered. The receivables
are from Finnish municipalities, joint municipal authorities
or wellbeing services counties, or accompanied by a
securing municipal, joint municipal authority or wellbeing
services counties guarantee or a state deficiency guarantee
supplementing real estate collateral, and therefore no final
credit losses will arise. During the Group’s history of more
than 30 years, it has never recognised any final credit losses
in its customer financing.
At the end 2022, the Group had a total of EUR 4 million
(EUR 19 million) of guarantee receivables from public sector
entities due to customer insolvency, which is less than
0.01% (0.06%) of total customer exposure. Non-performing
exposures were EUR 7 million (EUR 128 million). The credit
risk of the liquidity portfolio has remained at a low level, its
average credit rating being AA+ (AA+). More information on
the credit risks of financial assets and other commitments
is available in Note 26 to the Consolidated Financial
Statements.
The Group’s profit and unrealised fair value changes
The Group’s net operating profit was EUR 215 million
(EUR 240 million). Unrealised fair value changes improved
the Group’s net operating profit by EUR 45 million
(EUR 27 million). In January–December, net income from
hedge accounting amounted to EUR 36 million
(EUR 5 million) and unrealised net income from securities
transactions to EUR 8 million (EUR 22 million).
The Group’s effective tax rate during the financial year was
20.0% (20.1%). Taxes in the consolidated income statement
amounted to EUR 43 million (EUR 48 million). After taxes,
the Group’s profit for the financial year was EUR 172 million
(EUR 192 million). The Group’s full-year return on equity
(ROE) was 9.9% (10.7%). Excluding unrealised fair value
changes, the ROE was 7.8% (9.6%).
The Group’s other comprehensive income includes
unrealised fair value changes of EUR -21 million (EUR
-3 million). During the financial year, the most significant
item affecting the other comprehensive income was the
cost-of-hedging, totalling EUR -15 million (EUR -3 million).
The net change in fair value due to changes in own credit risk
on financial liabilities designated at fair value through profit
or loss amounted EUR -0.2 million (EUR 0.4 million).
On the whole, unrealised fair value changes net of deferred
tax affected the Group’s equity by EUR 19 million
(EUR 19 million) and CET1 capital net of deferred tax in
capital adequacy by EUR 16 million (EUR 19 million).
The cumulative effect of unrealised fair value changes
on the Group’s own funds in capital adequacy calculations
was EUR 47 million (EUR 31 million).
Unrealised fair value changes reflect the temporary impact
of market conditions on the valuation levels of financial
instruments at the time of reporting. The value changes
may vary significantly from one reporting period to another,
causing volatility in profit, equity and own funds in capital
adequacy calculations. The effect on individual contracts will
be removed by the end of the contract period. In the financial
year, unrealised fair value changes were influenced in
particular by changes in interest rate expectations and credit
risk spreads in the Group’s main funding markets.
Information on the Group results
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
In accordance with its risk management principles, MuniFin
Group uses derivatives to financially hedge against interest
rate, exchange rate and other market and price risks.
Cash flows under agreements are hedged, but due to the
generally used valuation methods, changes in fair value
differ between the financial instrument and the respective
hedging derivative. Changes in the shape of the interest rate
curve and credit risk spreads in different currencies affect
the valuations, which cause the fair values of hedged assets
and liabilities and hedging instruments to behave in different
ways. In practice, the changes in valuations are not realised
on a cash basis because the Group primarily holds financial
instruments and their hedging derivatives almost always
until the maturity date. Changes in credit risk spreads are not
expected to be materialised as credit losses for the Group,
because the Group’s liquidity reserve has been invested in
instruments with low credit risk.
The Parent Company’s result
MuniFin’s net interest income at year-end was EUR 237
million (EUR 264 million), and its net operating profit
stood at EUR 211 million (EUR 223 million). The profit after
appropriations and taxes was EUR 138 million (EUR 137
million). In April 2022, MuniFin redeemed its AT1 capital loan
of face value at EUR 350 million included in Additional Tier 1
capital in capital adequacy calculation. The interest expenses
of this loan for 2022 totalled EUR 4 million (EUR 16 million). In
the Parent Company, the AT1 capital loan had been recorded
under the balance sheet item Subordinated liabilities.
Subsidiary Inspira
In 2022, the turnover of MuniFin’s subsidiary company,
Financial Advisory Services Inspira Ltd, was EUR 1.6 million
(EUR 1.7 million), and its net operating profit amounted to
EUR 0.0 million (EUR 0.1 million).
Information on the Group results
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Information on the Consolidated
Statement of Financial Position
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
(EUR million) 31 Dec 2022 31 Dec 2021 Change, %
Cash and balances with central banks 0 8,399 -100.0
Loans and advances to credit institutions 9,625 1,417 >100
Loans and advances to the public and public
sector entities 29,144 29,214 -0.2
Debt securities 4,787 4,841 -1.1
Derivative contracts 2,707 2,000 35.4
Other items included in the assets 1,473 489 >100
Total assets 47,736 46,360 3.0
Liabilities to credit institutions 2,333 2,801 -16.7
Liabilities to the public and public sector entities 2,530 3,325 -23.9
Debt securities issued 35,592 35,328 0.7
Derivative contracts 4,616 2,224 >100
Other items included in the liabilities 1,052 821 28.2
Total equity 1,614 1,862 -13.3
Total liabilities and equity 47,736 46,360 3.0
The sum of individual results may differ from the displayed total due rounding.
Changes of more than 100% are shown as >100% or <-100%.
MuniFin Group’s consolidated statement of financial position totalled EUR 47,736 million
(EUR 46,360 million) and saw a growth of 3.0% (5.3%). Loans and advances to
credit institutions increased substantially in 2022 because the central bank deposits
previously recorded under Cash and balances with central banks have been made as
overnight deposits since September 2022 and are now recorded under Loans and
advances to credit institutions. Loans and advances to the public and public sector
entities increased during the year, but their amount in the consolidated statement of
financial position decreased due to unrealised changes in fair value caused by the
rising interest rates. The increase in total assets was mainly due to fair value changes
in derivative contracts and cash collateral to central counterparties included in other
items. In liabilities, the largest change is due to fair value changes in derivative contracts.
At the end of 2022, the Group’s equity stood at EUR 1,614 million (EUR 1,862 million).
The comparison figure includes the AT1 capital loan of EUR 347 million, redeemed in
April 2022. With the AT1 capital loan redemption considered, the Group’s equity grew by
6.6%. The profit of the financial year increased the Group’s equity, but on the other hand,
fair value reserve of investments, own credit revaluation reserve and cost-of-hedging
reserve decreased it by EUR 17 million. In the consolidated accounts, interest expenses
amounting to EUR 13 million (EUR 13 million) net of deferred tax on the AT1 capital
instrument were deducted from the equity upon the realisation of the interest payment
in April, as were the dividends of EUR 40 million (EUR 20 million) for the 2021 financial
year, paid to MuniFin’s shareholders in April 2022.
The Parent Company’s balance sheet at the end of the year was EUR 47,736 million
(EUR 46,359 million).
Information on the Consolidated Statement of Financial Position
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Financing and other services for customers
MuniFin Group’s customers include municipalities, joint munic-
ipal authorities, wellbeing services counties, joint county au-
thorities for wellbeing services, corporate entities under their
control, and non-profit housing organisations and non-profit
housing projects nominated by the Housing Finance and
Development Centre of Finland (ARA). The Group is by far the
largest single provider of financing for its customer segment,
offering diverse financing services and extensive support in
investment planning and financial management.
When Russia attacked Ukraine in February 2022, the Group’s
customers faced an operating environment that was turbulent
in a whole new way, even compared to the exceptional
circumstances of the pandemic years. Characteristic of this
upended operating environment in terms of the economy were
accelerating inflation, rising interest rates and preparation for
the growing energy crisis.
Despite the general uncertainty, the Group’s business devel-
oped steadily. Even though the unstable situation made cus-
tomers more cautious in acquiring finance, the Group was
able to further solidify its market position among its custom-
er groups. In 2022, the demand for the Group’s services was
affected by Finland’s health and social services reform, which
was to be fully implemented in the beginning of 2023 and
required the Group’s customers to make preparations. Joint
municipal authorities and hospital districts prepared for future
investments by acquiring finance especially in early 2022. The
Group’s own operations were also marked by preparations for
the transfer of financing contracts and other commitments from
hospital districts, special care districts and voluntary joint mu-
nicipal authorities for health and social services to the well being
services counties. At the beginning of 2023, about four billion
euros’ worth of MuniFin’s loans and other commitments were
transferred to the wellbeing services counties.
In October, the European Commission approved a subsidised
loan and guarantee scheme that allows MuniFin to finance
Finnish municipal energy companies under the EU State Aid
Temporary Crisis Framework. This arrangement ensures the
continuity of municipal energy companies’ operations and
strengthens Finland’s security of supply, and financing under
the scheme can only be used towards collateral requirements
in the electricity derivatives market. MuniFin’s customers had
little demand for this type of financing during 2022. In Decem-
ber, the Commission authorised the continuation of this aid
scheme until the end of 2023, extending its scope to also cov-
er other financing needs arising from possible energy crisis sit-
uations in energy companies, such as higher liquidity require-
ments related to working capital financing and investments.
Long-term loan portfolio by customer type
31 Dec 2022, %
Housing corporations
Municipalities
Municipalities-controlled entities
Joint municipal authorities
10%
11%
31%
48%
Financing and other services for customers
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
The amount of finance granted grew by 19.2% (-28.8%)
compared to the previous year. New long-term customer
financing totalled EUR 4,375 million (EUR 3,671 million), of
which EUR 4,074 million (EUR 3,275 million) consisted of
loans and EUR 301 million (EUR 395 million) of leased assets.
Long-term customer financing at year-end amounted to EUR
29,144 million (EUR 29,214 million), of which long-term loan
portfolio totalled EUR 27,841 million (EUR 27,880 million) and
leased assets EUR 1,303 million (EUR 1,334 million). Long-term
customer financing (loans and leased assets) excluding
unrealised fair value changes was at the end of December
EUR 30,660 million (EUR 29,063 million), and it grew by 5.5%
(5.6%). Short-term customer financing (commercial papers
to municipalities and municipal companies) totalled EUR 1,457
million (EUR 1,089 million) at the end of 2022.
MuniFin’s subsidiary company Inspira specialises in financial
advisory services for the municipal sector. In 2022, Inspira’s
turnover was EUR 1.6 million (EUR 1.7 million). The most popular
services were services that help analyse the financial effects
of the health and social services reform as well as services for
planning the finances and investments of the new wellbeing
services counties.
Partner in building sustainable finance solutions
MuniFin Group’s vision is to be the best financing partner
for its customers. In 2022, the Group continued to invest in
developing its service processes and offering even more
extensive sustainable solutions for its customers. The Group
started to provide short-term customer financing in the form of
commercial papers to municipalities and municipal companies
on a real-time digital service platform in the spring and piloted
the platform to also include long-term financing in the second
half of the year. The digital service makes the process easier
for customers and increases the transparency of pricing.
MuniFin Group supports and encourages its customers
to manage their finances in a sustainable way and to make
sustainable investment decisions. Through its advisory
services, MuniFin’s subsidiary company Inspira assists
municipalities and wellbeing services counties in analysing
their finances, planning their investments and reorganising
their holdings or service production, for example. The Group
also offers training for its digital services and economic reports
to support decision-making.
The Group offers its customers green and social finance
for their sustainable investments. Green finance is aimed at
environmentally friendly investments that produce clear and
measurable environmental benefits, whereas social finance is
aimed at investments that produce widespread social benefits.
The demand for the Group’s sustainable finance products was
strong in 2022, especially for green finance. The Group updat-
ed its Green Bond Framework, which sets the criteria for fi-
nance granting, project evaluation and reporting. Thanks to the
updates, the evaluation criteria are now more transparent and
ambitious, and the evaluation process is more straightforward.
At the end of 2022, the Group’s long-term customer financing
portfolio included 246 green and 76 social projects. The
amount of green finance aimed at environmentally sustainable
investments totalled EUR 3,251 million (EUR 2,328 million) and
the amount of social finance aimed at investments promoting
equality and communality EUR 1,734 million (EUR 1,161 million)
at the end of December.. The impacts of sustainable finance
are discussed in more detail in the Green and Social Impact
Reports separate from this Report of the Board of Directors
and Financial Statements.
The Group uses green and social finance to encourage its
customers to make environmentally and socially sustainable
investments. A margin discount is granted for eligible projects,
which encourages customers to assess the impacts of their
investments more extensively and make choices that are more
sustainable for the environment and society.
In 2022, the Group organised an event series entitled ‘Climate
& municipalities’, sharing practical experiences and examples
of climate investments by municipalities and housing sector
organisations. The Group was also preparing for an ESG
application, which enables municipal sector customers to
monitor and compare their ESG indicators.
The Group continued the work to measure the emissions of
both its own operations and the projects that it finances in
2022. The goal of this work is to systematically reduce the
Group’s own carbon footprint, offer customers more support
with emission reductions and better manage the climate and
environmental risks related to the Group’s operations. The
Group also invested in improving the assessment of the ESG
risks related to its operations and customers.
Financing and other services for customers
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Funding and liquidity management
MuniFin Group’s funding strategy is to diversify its funding
sources to ensure access to funding under all market
conditions. This long-standing strategy has proved highly
successful during the upheaval of monetary and security
policies: the Group had strong access to capital markets
throughout the year, and the average cost of funding
remained at a low level.
MuniFin Group acquires its funding primarily from the
international capital markets as standardised issuances
under debt programmes. The Group issued three benchmark
bonds in 2022: two denominated in euros and one in US
dollars. All three were met with strong demand. The Group
also made several increases to previously issued bonds. In
addition to the strategic benchmark bonds, the Group also
conducted a variety of other funding operations on account
of the increased market volatility. The Group was particularly
active in the markets for pounds sterling and Norwegian
krone but reduced its funding volume in the Japanese
Uridashi market.
In 2022, new long-term funding was EUR 8,827 million (EUR
9,395 million). A total of 180 (208) funding arrangements
were made in 13 (13) different currencies. The Group uses
derivatives to hedge against market risks related to its
funding issuances.
At the end of 2022, the Group’s total funding amounted to
EUR 40,210 million (EUR 40,712 million), of which the ECP
programme totalled EUR 4,650 million (EUR 3,819 million).
Of total funding, 48.5% (49.0%) were denominated in euros
and 51.5% (51.0%) in foreign currencies.
DEBT PROGRAMMES USED BY MUNIFIN
Medium Term Note (MTN) programme EUR 45,000 million
Euro Commercial Paper (ECP) programme EUR 10,000 million
AUD debt programme (Kangaroo) AUD 2,000 million
MuniFin’s funding is guaranteed by the Municipal Guarantee
Board (MGB), a public law institution whose members
consists of all the municipalities in mainland Finland. The
members are responsible for the liabilities of the MGB
in proportion to their population. The MGB has granted
guarantees for both the debt programmes and funding
arrangements outside the programmes. Based on this, debt
instruments issued by MuniFin are classified as zero-risk
when calculating the capital adequacy of credit institutions
and solvency of insurance companies, and as Level 1 liquid
assets in liquidity calculation in the EU.
Funding and liquidity management
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Investor interest in sustainable finance products continues
to increase, and regulation is also steering markets towards
a more sustainable direction. The Group is committed to
issuing new green and social bonds regularly. In 2022, the
Group issued a highly successful green bond that was
many times oversubscribed despite the challenging market
backdrop. As many as 80% of the participating investors
were dedicated ESG investors. For the second time in a row,
Environmental Finance chose MuniFin as the winner of the
highly competitive ‘Green Bond of the Year’ award in the local
authority or municipality category. The Group did not issue a
social bond in 2022.
Russia’s invasion of Ukraine has made it necessary to revise
MuniFin Group’s liquidity planning in order to ensure financing
for its customers. The Group’s long-term risk appetite
framework specifies that total liquidity must be enough to
cover uninterrupted business with no additional funding for
a survival horizon of at least 12 months, but the Group has
increased its liquidity substantially above this limit because
of the unusual political and market situation. With the amount
held at the end of the year, the Group could uphold all its
commitments with no additional funding for 15 months
(15 months).
Due to the general market uncertainty, the Group increased
during 2022 its average allocation in investments in
central bank deposits. At the end of 2022, the Group’s total
liquidity stood at EUR 11,506 million (EUR 12,222 million).
Of this, central bank deposits totalled EUR 8,144 million
(EUR 8,435 million) and investments in liquid, low-risk
securities EUR 3,330 million (EUR 3,753 million), with the
average credit rating of AA+ (AA+) and average maturity
of 2.6 years (2.6 years). In addition to this, money market
deposits in credit institutions totalled EUR 32 million
(EUR 34 million). The Group’s liquidity investments are
hedged with interest rate swaps. Changes in interest rates
therefore do not have a direct impact on profit and loss.
The Group’s Sustainable Investment Framework summarises
the sustainability principles, processes and responsibilities
of the Group’s investment operations. In addition to low
credit risk and high liquidity, sustainability is a key factor
in the Group’s liquidity investments. The Group monitors
the sustainability of its investments through their ESG
(Environmental, Social and Governance) score, calculated
quarterly by an external service provider. The service
provider changed in 2022. The ESG score takes into account
what the most significant ESG risks and opportunities facing
the issuer and its industry are, how exposed the issuer is to
those risks and opportunities, how well the issuer manages
key risks and opportunities, what the overall picture for the
issuer is and how does it compare to its global peer group.
These are evaluated using ten different ESG themes and
the end result is ESG score in scale 0–10, in which 10 is
the best score.
At the end of 2022, the Group’s liquidity investments had
an average ESG score of 7.65 on a scale of 0 to 10, above
the benchmark index of 7.43. The Group held a total of
EUR 498 million (EUR 456 million) in direct socially
responsible investments (SRIs), which is 15.0% (12.1%) of all
the Group’s investments in securities. The ratio of sustainable
investments was higher than the market benchmark of 8.1%
(5.0%). The ratio of socially responsible investments to the
Group’s own green and social funding was 14.5% (15.6%).
Funding and liquidity management
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
MuniFin’s credit ratings
Long-term fundingRATING AGENCY
Moody’s Investors Service
Standard & Poor’s
P-1
A-1+
Short-term funding
Stable
Stable
Outlook
MuniFin’s credit ratings correspond to those of the Government of Finland. The credit ratings did
not change during the financial year. The Municipal Guarantee Board, which guarantees MuniFin
Group’s funding, also has the corresponding ratings.
MuniFin’s credit ratings
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
MuniFin Group’s own funds and capital adequacy
MuniFin Group’s capital adequacy is very strong. The CET1
capital ratio was 97.6% (95.0%), which corresponds to its Tier
1 capital ratio and total capital ratio at the end of December
2022 (118.4%) because the Group only had CET1 capital at
the time. The total capital ratio fell due to the redemption
of the AT1 capital loan in April 2022, which reduced the
total capital ratio at the end of the year by 23.0 percentage
points. The Group’s CET1 capital ratio is over seven times the
required minimum, taking capital buffers into account.
Capital adequacy
%EUR million
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
30
50
70
90
110
130
150
12/2018 12/2019 12/2020 12/2021 12/2022
88.0
107. 9
132.7
118.4
66.3
83.1
104.3
95.0
97.6
1,413
1,413
1,510
1,510
1,624
1,624
1,756
1,756
1,482
1,482
Own funds (EUR million)
CET1 capital ratio, %
Total capital ratio, %
MuniFin Group’s own funds and capital adequacy
Capital adequacy
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
At the end of the year, the Group’s CET1 capital totalled
EUR 1 482 million (EUR 1,408 million). The Group no longer
had any Additional Tier 1 instruments at the end of financial
year, and its CET1 capital was therefore equal to its Tier 1
capital, EUR 1,482 million (EUR 1,756 million). The redemption
of the AT1 capital loan diminished the Group’s Tier 1 capital by
EUR 347 million. The Group had no Tier 2 capital. The Group’s
own funds totalled EUR 1,482 million (EUR 1,756 million).
The CET1 capital includes profit for the financial year.
The profit has been subject to a financial review by auditors
and can therefore be included in CET1 capital based on
the permission granted by the ECB in accordance with the
Capital Requirements Regulation (CRR).
CONSOLIDATED OWN FUNDS
(EUR 1,000) 31 Dec 2022 31 Dec 2021
Common Equity Tier 1 before regulatory adjustments 1,546,129 1,464,442
Regulatory adjustments to Common Equity Tier 1 -64,519 -56,172
Common Equity Tier 1 (CET1) 1,481,610 1,408,270
Additional Tier 1 capital before regulatory adjustments - 347,454
Regulatory adjustments to Additional Tier 1 capital - -
Additional Tier 1 capital (AT1) - 347,454
Tier 1 capital (T1) 1,481,610 1,755,723
Tier 2 capital before regulatory adjustments - -
Regulatory adjustments to Tier 2 capital - -
Tier 2 capital (T2) - -
Total own funds 1,481,610 1,755,723
Capital adequacy
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
The Group’s total risk exposure amount increased by 2.4%
from the end of 2021, totalling EUR 1,518 million
(EUR 1,482 million) at the end of the financial year.
The risk exposure amount for credit and counterparty
credit risk decreased by EUR 10 million from the end of
2021. There was no capital requirement for market risk
at the end of the financial year or in the comparison year,
because the currency position was less than 2% of the
Group’s own funds, and, based on Article 351 of the CRR,
the own funds requirement for market risk has therefore not
been calculated. The credit valuation adjustment (CVA VaR)
decreased to EUR 471 million (EUR 494 million). The risk
exposure amount of operational risk was EUR 526 million
(EUR 457 million), and the growth was due to the increase in
profit indicators at the end of 2022.
Capital adequacy
526
471
522
457
494
532
Credit and counterparty credit risk
Credit Valuation Adjustment risk
Operational risk
EUR million EUR million
Total risk exposure amount 12/2022
EUR 1,518 million
Total risk exposure amount 12/2021
EUR 1,482 million
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Detailed key figures on the capital adequacy of both MuniFin
Group and the Parent Company are provided in the Notes to
this Report. The principles of capital adequacy management
are described in Note 2 to the Consolidated Financial
Statements, Risk management principles and the Group’s
risk position. Concurrently with this Report of the Board
of Directors and the Financial Statements, MuniFin Group
publishes a separate Pillar III Disclosure Report on capital
adequacy, risk management and remuneration, which is
available in English on MuniFin’s website.
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
95.0%95.0% 0.6%0.6% 0.0%0.0% 1.6%1.6%
-4.4%-4.4%
4.8%4.8% 97.6%97.6%
The Group’s CET1 capital ratio changes, %
CET1
capital ratio
12/2021
Credit risk Market risk CVA VaR Operational
risk
CET1
capital
CET1
capital ratio
12/2022
Capital adequacy
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
The Group’s minimum capital requirements
and capital buffers
The minimum capital requirement is 8% for total capital
adequacy and 4.5% for CET1 capital adequacy. Under the Act
on Credit Institutions, the capital conservation buffer is 2.5%
and, for MuniFin Group, the additional capital requirement
for other systemically important credit institutions (O-SII)
is 0.5%. At the end of June 2022, the Finnish Financial
Supervisory Authority (FIN-FSA) gave its annual decision on
the O-SII buffers and kept MuniFin Group’s buffer unchanged
at 0.5%. The FIN-FSA has not imposed a systemic risk buffer
for MuniFin Group. The systemic risk buffer and the O-SII
buffer are parallel buffers, of which only the greater is applied.
In December 2022, the FIN-FSA decided not to impose
a countercyclical capital buffer requirement, which is
decided on a quarterly basis. For MuniFin Group, the credit
institution-specific countercyclical capital buffer requirement
that is imposed based on the geographical distribution
of exposures is 0.8% (0.1%). The Group therefore has a
minimum requirement of 8.3% (7.6%) for its CET1 capital ratio
and 11.8% (11.1%) for its total capital ratio.
In addition to the abovementioned requirements, the ECB has
imposed a bank-specific Pillar 2 Requirement (P2R) of 2.0%
on MuniFin Group as part of the annual Supervisory Review
and Evaluation Process (SREP). This requirement decreased
by 0.25 percentage points during the financial year. Including
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
4.50 %4.50 %
2.50 %
2.50 %
0.81 %
0.81 %
0.50 %
0.50 % 8.31 %8.31 %
2.00 %2.00 %
3.50 %
3.50 % 13.81 %13.81 %
The Group’s minimum capital requirements and capital buffers, %
CET1
capital
requirement
Capital
conservation
buffer
Counter-
cyclical
buffer
O-SII and
systemic
risk buffer
(max)
CET1
minimum
P2R Tier 1 and
Tier 2 capital
requirement
Minimum total
capital
requirements
with buffers
Capital adequacy
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
this P2R requirement, the total SREP capital requirement
ratio (TSCR) was 10% (10.25%) at the end of the year.
The minimum level of total capital ratio was 13.8% (13.4%)
including P2R and other additional capital buffers.
Leverage ratio, liquidity coverage ratio and
net stable funding ratio
At the end of the year, MuniFin Group’s leverage ratio
was 11.6% (12.8%). Muniin fulfils the CRR II definition of a
public development credit institution and may therefore
deduct all credit receivables from municipalities and the
central government in the calculation of its leverage ratio.
The amount of credit receivables from municipalities
and the central government was EUR 31 853 million
(EUR31,568million) at the end of the year. The reduced
leverage ratio is explained by the redemption of the AT1 loan,
which reduced the amount of the Group’s own funds. The
minimum required leverage ratio is 3%.
At the end of the year, MuniFin Group’s liquidity coverage
ratio (LCR) was 256.7% (334.9%) and its net stable funding
ratio (NSFR) was 120.3% (123.6%). Both have a minimum
requirement of 100%.
Liabilities under the Act on the Resolution of
Credit Institutions and Investment Firms
MuniFin’s crisis resolution authority is the EU’s Single
Resolution Board (SRB). The SRB has imposed on MuniFin
a binding minimum requirement for own funds and eligible
liabilities (MREL). The size of the MREL requirement is 10% of
the total risk exposure amount and 3% of the leverage ratio
exposure. The MREL requirement takes into account the
SRB’s decision on the simplified resolution strategy being
applied to MuniFin.
The MREL requirement will take effect on 1 January 2024,
but MuniFin has had to fully comply with the final MREL
target levels, which equal the capital and leverage ratio
requirements, from January 2022 onwards. MuniFin’s own
funds and eligible liabilities currently exceed multiple times
the MREL requirement, and there is no present need for
MuniFin to issue Tier 3 instruments.
Changes in banking regulation
During the financial year, MuniFin Group prepared for the
implementation of the European Commission’s delegated
regulation (2016/2251) regarding the use of securities as
initial margin in over-the-counter derivatives, which will enter
into force in phases. The initial margin requirement became
binding for MuniFin in September 2022, and MuniFin reached
the readiness to use securities for this purpose by the end of
the month.
In 2022, the Group also developed its disclosure of ESG
risks and prepared to disclose them in accordance with CRR
Article 449a, while taking into account the requirements of
the technical standard EBA/ITS/2022/01 of the European
Banking Authority. This information is available in a separate
Pillar III Disclosure Report, published in English concurrently
with this Report of the Board of Directors and the Financial
Statements on MuniFin’s website.
At the end of October 2021, the European Commission
published its proposal for the implementation of the final
Basel III banking regulatory standards in the EU (‘CRR III
package’). This reform will affect banks’ solvency calculation,
especially in the context of credit, market and operational
risks, credit valuation adjustment (CVA VaR), and leverage
ratio. It also introduces a new output floor. MuniFin Group’s
business model is based on zero-risk-weighted customer
financing, which will not change with the implementation
of the Basel III package. The reform will, however, affect
MuniFin’s capital adequacy calculations and reporting
methods. The Group will specify its impact assessments later
as it prepares for the CRR III’s entry into force.
In November 2022, the European Parliament approved
the Corporate Sustainability Reporting Directive (CSRD)
proposed by the Commission in April 2021. MuniFin Group
will prepare over the next few years for CSRD-compliant
sustainability reporting, which will be adopted for the financial
year 2025.
Capital adequacy
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
MuniFin Group’s financial objectives
MuniFin’s core mandate is to ensure that its limited customer
base, which is assigned to carry out public duties, has access
to affordable financing under all market conditions. This
core mandate necessitates MuniFin to keep both its capital
quantity and quality as well as its liquidity at levels that exceed
even the strictest regulatory requirements at all times, thus
enabling the continuation of normal business operations even
during financially difficult times. MuniFin has conservative
risk management policies and maintains a strong risk-bearing
capacity in both quantity and quality.
Due to its exceptional business model, the Group’s strictest
regulatory capital requirement is the leverage ratio, unlike
in most credit institutions. The leverage ratio requirement
is a prudential tool defined under the Capital Requirements
Regulation (CRR) that complements minimum capital
adequacy requirements. Its purpose is to prevent credit
institutions from building up excessive leverage. The leverage
ratio is calculated as a ratio between the institution’s Tier 1
capital and total exposure calculated based on the assets
and off-balance sheet items as described in the regulatory
framework. MuniFin fulfils the CRR II (Regulation (EU)
2019/876) definition of a public development credit institution
and may therefore deduct all credit receivables from
municipalities and the central government in the calculation
of its leverage ratio. After the deduction, the most significant
factor affecting MuniFin’s leverage ratio is the size of its
liquidity portfolio, which safeguards its liquidity.
MuniFin’s aim is for the Group’s Common Equity Tier 1
(CET1) capital to always surpass 7%, which is the sum of the
minimum requirement set in regulation (3%) and the capital
buffers set by the management (4%). The Group uses these
capital buffers to prepare for events and changes that have
an adverse effect on its capital position. These can include
realised business risks or regulatory changes. The capital
requirement for business risk is based on a strict stress test,
and it mostly results from unrealised fair value changes,
which are temporary in nature.
At the end of 2022, the Group’s CET1 leverage ratio was
11.6%. Capital exceeding the Group’s minimum target covers
fluctuation in capital requirements caused by changes in the
total liquidity amount and safeguards the Group’s continuity
of operations and ability to pay dividends.
MuniFin Group’s financial objectives
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Considering that MuniFin’s objective as a public development
credit institution is not to maximise profits, the Group aims at
a result that will ensure the Group’s ability to carry out its core
mandate in the long-term. The Group’s objective is to achieve
at least a result that is sufficient to cover any increases
in capital requirements arising from increased business
operations and satisfy the shareholders’ expected yield in
the long term. MuniFin uses long-term pricing strategies
and other measures to maximise its customer benefits while
also ensuring the continuity of its operations and the yield
expectation of its shareholders.
The MuniFin Board of Directors has made a dividend policy
proposal to the Annual General Meeting (AGM). The policy
proposal is published in full as an appendix to the notice of
the AGM. The proposed dividend policy is for MuniFin to pay
30–60% of the Group’s financial year’s profit in dividends.
Dividend distribution must not jeopardize MuniFin’s
solvency, liquidity or its ability to meet the commitments.
MuniFin Group’s financial objectives
When drafting the dividend proposal and deciding on the distribution
of profits one should take into account factors that affect the Group’s
capital position on a broad spectrum, including the following:
• Uncertainties and changes in the operating environment and regulation
• Assessments of the Group’s financial situation in the future
• The Group’s funding position and liquidity
• Changes to the Group’s risk position
• Unrealised fair value changes affecting the Group’s own funds
• Assessments of the Group’s liquidity development
• Views of supervisory authorities and credit rating agencies
• Accruals of possible AT1 capital instrument not recognised in PnL.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Risk management
MuniFin Group’s operations require adequate risk
management mechanisms to ensure that its risk position
remains within the limits set by the Parent Company’s Board
of Directors. To preserve its strong credit rating, the Group
applies conservative risk management principles and aims to
keep the overall risk status low.
The relevant risk types associated with MuniFin Group’s
operations include credit and counterparty risk, market
risk and liquidity risk. All business operations also involve
strategic risks, ESG risks and operational risks, including
compliance risk.
The Group’s risks are described in more detail in in Note 2 to
the Consolidated Financial Statements, Risk management
principles and the Group’s risk position. Concurrently with
this Report of the Board of Directors and the Financial
Statements, MuniFin Group publishes a separate Pillar III
Disclosure Report on capital adequacy, risk management
and remuneration, which is available in English on
MuniFin’s website.
The Group’s risk position
There were no material changes in MuniFin Group’s risk
position during 2022, and risks remained within the risk
appetite limits set by the Board of Directors. Russia’s invasion
of Ukraine has had little effect on the Group’s financial
position and results. Despite the market turbulence, the
Group’s funding continued in the usual manner during the
year. Because of the uncertainty arising from the war and
the inflation outlook, the Group has nevertheless maintained
larger than normal liquidity buffers as a precaution. Russia’s
invasion of Ukraine mainly affects the Group’s risks indirectly
through market conditions. Cyberattacks targeted at the
Group could also affect its risks, but the Group has carefully
prepared for these.
Despite the changes in the operational environment, the
Group’s risk position remained stable and at a low level
during the reporting period. Unrealised fair value changes of
financial instruments caused typical earnings volatility during
the year. The Group continuously monitors and analyses the
volatility arising from valuations and prepares for any impacts
this may have on its profit and capital adequacy.
The Group is exposed to credit risks as part of its business.
Due to the nature of its customer base, credit risks are low.
The Group’s credit risks emerge almost exclusively from the
customer financing, the liquidity portfolio investments and the
derivatives portfolio. MuniFin also offers derivative products
for its customers for hedging their interest rate positions.
These products are covered with offsetting contracts from
the market. The Group only uses derivatives for hedging
against market risks.
Risk management
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
In view of its credit risk mitigation techniques (real estate
collateral and guarantees received) and the exemptions set
out in CRR II Article 400 related to the calculation of large
exposures, MuniFin Group is not exposed to customer risk
in its customer financing referred in the regulation, and thus
the customer risk of any individual customer does not exceed
10% of the Group’s own funds. The amount of expected credit
losses was EUR0.1million (EUR-0.1million) recognised in
the income statement for the financial year. The amount of
forborne loans was EUR80million (EUR88million), while
non-performing exposures amounted to EUR7 million
(EUR128million) at the end of the year. For these non-
performing exposures, MuniFin has absolute guarantees by
municipalities or real estate collateral and state deficiency
guarantee, and these exposures are therefore not expected
to carry the risk of a final credit loss. Non-performing
exposures represented 0.02% (0.4%) of total customer
exposures.
MuniFin’s credit risk position remained stable and at a low
level during the year. It is expected to remain stable and in line
with the Group’s credit risk strategy also in the future.
Market risks include interest rate risk, exchange rate risk and
other market and price risks. The Group uses derivatives to
hedge against market risks. Derivatives can only be used
for hedging purposes as the Group does not engage in
trading activities. Interest rate risk mainly arises from the
differences in reference rates applicable to the assets and
liabilities in the balance sheet. The Group actively monitors
and hedges its interest rate risk. Eight scenarios are used in
the calculation of the net interest income (NII) risk, of which
the least favourable outcome is considered. One-year NII
risk at the end of December was EUR-25million with least
favourable scenario being a decrease of 200 basis points
in the whole interest curve (at the end of 2021, the least
favourable scenario was a rise of 50 basis points in the
whole interest curve, EUR0million). Several scenarios are
also used in the calculation of the Economic Value of Equity
(EVE), of which the least favourable outcome is considered.
At the end of the year, the least favourable scenario was a rise
of 200 basis points in the whole interest curve, when EVE
was EUR-34million (at the end of 2021, the least favourable
scenario was a rise of 50 basis points in the whole interest
curve, EUR-13million).
MuniFin Group’s foreign exchange (FX) risk is hedged
by using derivative contracts to swap all funding and
investments denominated in foreign currency into euros.
The Group’s customer financing is denominated in euros.
The Group has no significant open FX positions. In practice,
a small temporary exchange rate risk may arise due to
collateral management in the clearing of derivatives by
central counterparties. This exchange rate risk is actively
monitored and hedged. Derivatives are also used to hedge
against other market and price risks.
The Group has also determined valuation risk as a significant
risk for its business. During the reporting period, unrealised
fair value changes of financial instruments caused typical
earnings volatility for the Group. Unrealised fair value
changes were influenced in particular by changes in interest
rate expectations and credit risk spreads in the Group’s main
funding markets. The Group continuously monitors and
analyses the volatility arising from valuations and prepares for
any impacts this may have on its profit and capital adequacy.
The Group’s market risk has remained stable despite the
turbulent markets.
Risk management
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
MuniFin Group manages its refinancing risk by limiting the
average maturity between financial assets and liabilities.
In addition, the Group manages its liquidity risk by setting a
limit for the minimum adequacy of the available short-term
and long-term liquidity. The Group revised its calculation
method for the survival horizon in 2022, and the figure stood
at 15months (15months) at the end of the year, calculated
with the new method. The Group’s liquidity remained
good, with the liquidity coverage ratio (LCR) being 256,7%
(334.9%) at the end of the year. The availability of long-term
funding is monitored via the net stable funding ratio (NSFR),
which stood at 120.3% (123.6%) at the end of the year.
The availability of funding remained good throughout the
year, and the Group issued EUR8,827million (EUR9,395
million) in long-term funding.
MuniFin Group’s operational risks are estimated to be at
a moderate level, and there were no material losses from
operational risks during 2022. The Group’s operating
practices have changed with remote work arrangements, but
the Group’s business operations have continued normally.
ESG risks include environmental, social and governance
risks. There have been no material changes in ESG
risks during the year. According to the Group’s estimate,
it is currently not exposed to any substantial social or
governance risks, and environmental and climate risks are
also unlikely to manifest substantially in the short term. In
the medium and long term, climate risks may nevertheless
have an adverse economic effect on the Group’s customers.
In 2022, the Group made substantial investments into
building its environmental and climate risk framework in line
with regulatory requirements and feedback received from the
ECB. This work will continue in 2023 and 2024.
MuniFin Group took part in the ECB’s climate stress test
in the first half of 2022. The results were published in
July. The stress test concluded that the Group’s potential
exposure to transition risks caused by climate change is
lower than the average of all participating banks. During the
financial year 2022, the Group continued to further develop
its ESG risk management. More information related to the
Group’s ESG risks is published in a Pillar III Disclosure Report,
which is separate from this Report of the Board of Directors
and the Financial Statements. The Report is available in
English on MuniFin’s website.
Risk management
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Governance
In addition to corporate legislation, MuniFin complies with
the governance requirements of the Finnish Act on Credit
Institutions and supervisory guidelines. The governance
policy is described in more detail on MuniFin’s website.
Upon the publication of the Annual Report, MuniFin Group
also publishes a Corporate Governance Statement on its
website, pursuant to chapter 7, section 7 of the Finnish
Securities Market Act. The statement is separate from
the Annual Report and includes a description of the main
features of the internal audit and risk management systems
pertaining to the financial reporting process. The statement
also includes the governance descriptions required by the
Act on Credit Institutions as well as information on how
MuniFin complies with the Finnish Corporate Governance
Code for listed companies published by the Finnish
Securities Market Association. This code applies to Finnish
listed companies, i.e. companies whose shares are listed
on Nasdaq Helsinki Ltd (Helsinki Stock Exchange). Since
MuniFin is exclusively an issuer of listed bonds and its shares
are not subject to public trading, this code does not apply
directly to MuniFin.
Group structure
Municipality Finance Group (MuniFin Group or the Group)
consists of Municipality Finance Plc (MuniFin or the Parent
Company) and Financial Advisory Services Inspira Ltd
(Inspira). Inspira is fully owned by MuniFin. No changes to the
group structure took place during the reporting period.
General meeting
The Annual General Meeting (AGM) of MuniFin was held
on 24March2022. The AGM confirmed the Financial
Statements for 2021 and discharged the members of the
Board of Directors, the CEO and the Deputy to the CEO from
liability for the financial year 2021. In addition, in accordance
with the proposal of the Board of Directors, the AGM decided
on a dividend payment of EUR1.03 per share, totalling
EUR40,235,711.94. The amount of distributable funds
on the Group’s balance sheet on 31December2021 was
EUR267,949,619.07.
Based on the proposal of the Shareholders’ Nomination
Committee, the AGM decided to appoint eight Board
members for the 2022–2023 term, lasting from the 2022
AGM to the end of the subsequent AGM. The AGM also
confirmed the Shareholders’ Nomination Committee’s
proposal on the remuneration of Board members.
In addition, the meeting re-elected KPMG Oy Ab as MuniFin’s
auditor, with APA Tiia Kataja as the principal auditor. Kataja
acted as the principal auditor during the previous term as
well.
The AGM also decided, based on the proposal of the
Shareholders’ Nomination Committee, that the Committee
will be supplemented by a fifth member representing the
municipal sector. MuniFin’s three largest shareholders –
public sector pension provider Keva, State of Finland and the
City of Helsinki – as well as the Association of Finnish Local
and Regional Authorities have each nominated one member
to the Committee. The fifth member will be appointed by a
joint decision between the next five largest shareholders.
The AGM’s resolutions are published on MuniFin’s website.
Governance
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Board of Directors
The Shareholders’ Nomination Committee made a proposal
to the AGM held on 24March 2022 regarding the members
to be elected for the term that began at the end of the 2022
AGM and will conclude at the end of the subsequent AGM.
The AGM elected the following members to the Board
of Directors: Maaria Eriksson, Markku Koponen,
Kari Laukkanen, Vivi Marttila, Tuomo Mäkinen,
Minna Smedsten, Denis Strandell and Leena Vainiomäki.
As per the Committee’s proposal, the MuniFin Board
nominated Kari Laukkanen as the Chair of the Board and
Maaria Eriksson as the Vice Chair.
MuniFin has statutory audit, risk and remuneration
committees established by the Board of Directors.
The committees act as assisting and preparatory
bodies to the Board of Directors. The MuniFin Board
selected Markku Koponen (Chair), Vivi Marttila, Minna
Smedsten and Denis Strandell as the members of the
Audit Committee. In the Risk Committee, the Board
selected Leena Vainiomäki (Chair), Maaria Eriksson,
Kari Laukkanen and Tuomo Mäkinen. In the Remuneration
Committee, the Board selected Kari Laukkanen
(Chair), Leena Vainiomäki and Maaria Eriksson.
From the 2021 AGM to the 2022 AGM, the members
of the Board of Directors were Kari Laukkanen (Chair),
Maaria Eriksson (Vice Chair), Markku Koponen, Vivi Marttila,
Tuomo Mäkinen, Minna Smedsten, Denis Strandell,
Leena Vainiomäki and Kimmo Viertola. Viertola was not
available for the Board’s 2022–2023 term.
The operations of the MuniFin Board of Directors and
its committees are described in more detail on MuniFin’s
website.
Personnel
At the end of December 2022, MuniFin Group had 175
(164) employees, of which 165 (153) worked for the Parent
Company. Salaries and remuneration paid across the Group
amounted to EUR15.5million (EUR14.6million).
The President and CEO of MuniFin is Esa Kallio, with Mari
Tyster, Executive Vice President, acting as deputy to the
CEO. In addition, the MuniFin Executive Management Team
includes Executive Vice Presidents Aku Dunderfelt, Toni
Heikkilä, Joakim Holmström, Harri Luhtala, Minna Piitulainen
and Juha Volotinen.
Salaries and remuneration
The remuneration paid to MuniFin Group’s management
and employees consists of fixed remuneration (base salary
and fringe benefits) and a variable element based on the
conditions of the remuneration scheme. The principles
of the remuneration scheme are confirmed by the Parent
Company’s Board of Directors, and they are reviewed on
an annual basis. The Remuneration Committee advises the
Board of Directors on remuneration-related matters. For
more information on salaries and remuneration, refer to Note
44 Salaries and remuneration in the Consolidated Financial
Statements. Concurrently with this Report of the Board of
Directors and the Financial Statements, MuniFin Group is
publishing a separate Pillar III Disclosure Report on capital
adequacy, risk management and remuneration, which is
available in English on MuniFin’s website.
Internal audit
The purpose of MuniFin Group’s internal audit is to monitor
the reliability and accuracy of the Group’s information on
finances and other management. It also ensures that MuniFin
Group has sufficient and appropriately organised operations,
way of working and IT systems and that the risks associated
with the operations are adequately managed.
Governance
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Share capital and shareholders
At the end of the 2022 financial year, MuniFin had paid share capital registered in the
Trade Register to the amount of EUR43,008,044.20, and the number of shares was
39,063,798. The Company has two series of shares (A and B), with equal voting and dividend
rights. Each share confers one vote at the Annual General Meeting.
At the end of 2022, MuniFin had 276 (276) shareholders.
10 LARGEST SHAREHOLDERS 31 Dec 2022 No. of shares Per cent
1. Keva 11,975,550 30.7%
2. Republic of Finland 6,250,000 16.0%
3. City of Helsinki 4,066,525 10.4%
4. City of Espoo 1,547,884 4.0%
5. VAV Asunnot Oy (City of Vantaa) 963,048 2.5%
6. City of Tampere 919,027 2.4%
7. City of Oulu 903,125 2.3%
8. City of Turku 763,829 2.0%
9. City of Kuopio 592,028 1.5%
10. City of Lahti 537,926 1.4%
The number of shares presented in the above table do not include any shares owned by
the Group companies of the listed shareholders.
MuniFin is not aware of any material changes in the holdings of major shareholders during
the year.
Share capital and shareholders
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Events after the reporting period
The MuniFin Board of Directors is not aware of any events having taken place after the end of
the financial year that would have a material effect on the Group’s financial standing.
Events after the reporting period
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Outlook for 2023
The economic outlook has deteriorated markedly in all
MuniFin’s main economic areas. In the United States, the main
reason for the slowdown in growth is the rapidly tightening
monetary policy, and in the euro area, the energy crisis and
the surge in the cost of living. In China, the growth outlook
is weighed down by the country’s COVID-19 situation and
property sector crisis. The euro area is expected to slide into
a recession in early 2023, but the downturn in economy is
projected to be relatively short-lived and shallow because
businesses have adjusted to the energy crisis faster than
expected, and many households still have some extra savings
accumulated during the pandemic.
Inflation continues to pose the biggest challenge in global
macroeconomy. The fastest rise in consumer prices is
likely to calm down during the coming winter months, but
it may take a few years for inflation to return to the central
banks’ target level. Interest rate hikes will probably continue
throughout the first half of 2023, other contractive monetary
policy measures for much longer. Central bank key interest
rates are predicted to rise to about 5% in the United States
and over 3% in the euro area.
The Finnish economy is also sinking into a mild recession
as real incomes are being eroded and businesses are more
cautious in their investment decisions. The outlook has
deteriorated especially in retail business and construction.
General economic uncertainty and rising interest rates
are a difficult combination for the housing market. Trends
in building permits indeed suggest that the number of
residential building projects will fall clearly in 2023.
It is to be expected that the cooling economic cycle will
eventually also affect the labour market: employment
growth will halt, and the unemployment rate will turn to a
moderate rise. However, many sectors are currently facing
such extensive labour shortages that strong growth in
unemployment seems unlikely.
Finland’s public finances will continue to show a significant
deficit in the coming years. Due to new cost pressures,
especially the central government will run into much more
debt than was previously estimated. Municipal finances,
however, are looking exceptionally strong in 2023.
Municipalities will not bear the full burden of the tax cuts
introduced by the health and social services reform until
in 2024, but they will experience the relief of their health
and social services spending being eliminated immediately
at the start of 2023. Thanks to the temporary tax benefit,
the financial position of Finnish municipalities is expected
to show a surplus of more than EUR1 billion. The main
uncertainties in municipal finances stem from the general
economic development, the energy crisis and the yet
unknown true cost of municipalities’ new responsibilities,
such as the local government pilots on employment and the
extension of compulsory education.
Considering the above-mentioned circumstances, the Group
expects its net operating profit excluding unrealised fair value
changes to be at the same level as in the previous year. The
Group expects its capital adequacy ratio and leverage ratio
to remain strong. The valuation principles set in the IFRS
framework may cause significant but temporary unrealised
fair value changes, some of which increase the volatility of net
operating profit and make it more difficult to estimate.
These estimates are based on a current assessment of
the development of MuniFin Group’s operations and the
operating environment.
Outlook for 2023
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Municipality Finance Plc has distributable funds of EUR365,774,616.34, of which the profit for
the financial year totalled EUR138,060,709.21.
The Board of Directors proposes to the Annual General Meeting that based on the confirmed
balance sheet EUR1.73 per share to be paid in dividend, totalling EUR67,580,370.54 .
MuniFin’s profit for the financial year was very good. The Board of Directors considers
the payment of this dividend to be well justified. MuniFin clearly fulfils all the prudential
requirements set for it. No events have taken place since the end of the financial year that
would have a material effect on the Company’s financial position. In the Board’s opinion, the
proposed distribution of profits does not place the fulfilment of the capital requirements or the
Company’s liquidity in jeopardy or the proposal do not conflict with the binding legislation.
Dividends will be paid to shareholders who are recorded in the Company’s list of shareholders
on 4 April 2023. The Board of Directors proposes that the dividends be paid on 13 April 2023.
The Board’s proposal concerning the profit shown in balance sheet
and deciding on the distribution of dividends
The Board’s proposal concerning the profit shown in balance sheet and deciding on the distribution of dividends
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Jan–Dec 2022 Jan–Dec 2021 Jan–Dec 2020 Jan–Dec 2019 Jan–Dec 2018
Turnover (EUR million) 759 535 532 718 714
Net interest income (EUR million)* 241 280 254 240 236
% of turnover 31.8 52.4 47.7 33.5 33.1
Net operating profit (EUR million)* 215 240 194 131 190
% of turnover 28.3 44.8 36.5 18.3 26.6
Unrealised fair value changes (EUR million)* 45 27 -3 -54 0
Net operating profit excluding unrealised fair value changes (EUR million)* 170 213 197 186 190
Cost-to-income ratio* 0.2 0.2 0.2 0.3 0.2
Cost-to-income ratio excluding unrealised fair value changes* 0.3 0.2 0.2 0.2 0.2
New long-term customer financing (EUR million)* 4,375 3,671 5,157 3,486 3,226
New long-term funding (EUR million)* 8,827 9,395 10,966 7,385 7,436
The Group's development
The Group’s development
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
31 Dec 2022 31 Dec 2021 31 Dec 2020 31 Dec 2019 31 Dec 2018
Return on equity (ROE), %* 9.9 10.7 9.4 6.8 10.8
Return on equity (ROE) excluding unrealised fair value changes, %* 7.8 9.6 9.6 9.6 10.7
Return on assets (ROA), %* 0.4 0.4 0.4 0.3 0.4
Return on assets (ROA) excluding unrealised fair value changes, %* 0.3 0.4 0.4 0.4 0.4
Long-term customer financing (EUR million)* 29,144 29,214 28,022 24,798 22,968
Total funding (EUR million)* 40,210 40,712 38,139 33,929 30,856
Equity (EUR million) 1,614 1,862 1,705 1,594 1,486
Total balance sheet (EUR million) 47,736 46,360 44,042 38,934 35,677
Total liquidity (EUR million)* 11,506 12,222 10,089 9,882 8,722
Liquidity Coverage Ratio (LCR), % 256.7 334.9 264.4 430.2 176.7
Net Stable Funding Ratio (NSFR), % 120.3 123.6 116.4 116.3 -
Equity ratio, %* 3.4 4.0 3.9 4.1 4.2
CET1 capital (EUR million) 1,482 1,408 1,277 1,162 1,065
Tier 1 capital (EUR million) 1,482 1,756 1,624 1,510 1,413
Total own funds (EUR million) 1,482 1,756 1,624 1,510 1,413
CET1 capital ratio, % 97.6 95.0 104.3 83.1 66.3
Tier 1 capital ratio, % 97.6 118.4 132.7 107.9 88.0
Total capital ratio, % 97.6 118.4 132.7 107.9 88.0
Leverage ratio, %** 11.6 12.8 3.9 4.0 4.1
Personnel 175 164 165 167 151
* Alternative performance measure.
** MuniFin fulfils the CRR II definition of a public development credit institution, and may therefore deduct all the credit receivables from municipalities and the central government in the calculation of
leverage ratio. CRR II Regulation entered into force in June 2021.
The calculation formulas for all key figures can be found on pages 38–45. All figures presented in the Report of the Board of Directors are those of MuniFin Group, unless otherwise stated.
The Group’s development
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
MuniFin Group defines the Alternative Performance Measures (APMs) to be financial
measures that have not been defined in the IFRS standards or the capital requirements
regulation (CRD/CRR). The APMs improve comparability between companies in the same
sector and between reporting periods and provide valuable information to the readers of
the financial reports. The APMs provide a more consistent basis for comparing the results of
financial periods and for assessing MuniFin Group’s performance. They are also an important
aspect of the way in which the Group’s management defines operating targets and monitors
performance.
The APMs are presented in MuniFin Group’s financial reports in accordance with the
guidelines for Alternative Performance Measures issued by the European Securities and
Markets Authority (ESMA).
Note 1. Key figures
Tunnusluvut alku
Note 1. Key figures
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
ALTERNATIVE
PERFORMANCE MEASURE DEFINITION / EXPLANATION CALCULATION FORMULA / RECONCILIATION 1 Jan–31 Dec 2022 1 Jan–31 Dec 2021
EUR million
Net interest income Interest income and expense from financial assets
and liabilities are recognised in net interest income.
A significant part of the Group’s revenues consists
of net interest income.
Interest and similar income (incl. Leasing) 712 504
interest and similar expense -471 -223
Net interest income 241 280
Unrealised fair value changes According to IFRS 9 standard, part of financial
instruments are measured at fair value through profit
and loss which increases PnL volatility. To enhance
comparability of business performance between periods
and companies, it is often necessary to exclude the PnL
effect of the unrealised fair value changes.
Net income from securities transactions, unrealised fair value changes 8 22
Net income from hedge accounting 36 5
Unrealised fair value changes 45 27
Net operating profit Net operating profit describes the Group’s operating
profit before taxes.
Net operating profit 215 240
Net operating profit excluding
unrealised fair value changes
Net operating profit excluding unrealised fair value
changes as an APM is of interest for showing MuniFin
Group’s underlying earnings capacity.
Net operating profit 215 240
- Unrealised fair value changes 45 27
Net operating profit excluding unrealised fair value changes 170 213
Income Income, which describes the Group's total income
including net interest income, is used e.g. as a
denominator (excl. Commission expenses) in Cost-to-
income ratio.
Net interest income 241 280
Commission income 2 2
Net income from securities and foreign exchange transactions 8 24
Net income on financial assets at fair value through other comprehensive income 0 -
Net income from hedge accounting 36 5
Other operating income 0 0
Income 288 311
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
ALTERNATIVE
PERFORMANCE MEASURE DEFINITION / EXPLANATION CALCULATION FORMULA / RECONCILIATION 1 Jan–31 Dec 2022 1 Jan–31 Dec 2021
EUR million
Income excluding unrealised fair
value changes
Income excluding unrealised fair value changes reflects
the Group’s operating income, of which the most
significant is net interest income.
Income 288 311
- Unrealised fair value changes 45 27
Income excluding unrealised fair value changes 243 285
Other income Other income includes all other income of the Group
except net interest income and unrealised fair value
changes of net income from securities transactions and
hedge accounting.
Commission income 2 2
Net income from securities transactions, realised 0 1
Net income from foreign exchange transactions 0 1
Net income on financial assets at fair value through other comprehensive income 0 -
Other operating income 0 0
Other income 2 4
Costs Costs, which describes the Group's total costs,
is used e.g. as a numerator (excl. Commission expenses)
in Cost-to-income ratio.
Commission expenses 6 5
Administrative expenses 37 35
Depreciation and impairment on tangible and intangible assets 10 16
Other operating expenses 20 16
Costs 73 72
Costs excluding the
non-recurring item
Costs excluding the non-recurring item reflects the
amount of costs comparable between financial periods.
Costs 73 72
Non-recurring item (expenses on terminated IT system implementation) -5 -10
Costs excluding the non-recurring item 69 61
Cost-to-income ratio Cost-to-income ratiois an established key ratio in the
banking sector for assessing the relationship between
expenses and income. Theratiogives investors a
comparative view of MuniFin Group’s cost-effectiveness.
Costs (excl. Commission expenses) 68 66
÷ Income (incl. Net commission income) 283 306
Cost-to-income ratio 0.2 0.2
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
ALTERNATIVE
PERFORMANCE MEASURE DEFINITION / EXPLANATION CALCULATION FORMULA / RECONCILIATION 1 Jan–31 Dec 2022 1 Jan–31 Dec 2021
EUR million
Cost-to-income ratio excluding
unrealised fair value changes
Cost-to income ratio excluding unrealised fair value
changes gives a more precise picture of MuniFin Group’s
operative effectiveness as it excludes the income
volatility of unrealised fair value changes. It improves
comparability of operative effectiveness between
companies and reporting periods.
Costs (excl. Commission expenses) 68 66
÷ (Income (incl. Net commission income) 283 306
- Unrealised fair value changes) 45 27
Cost-to-income ratio excluding unrealised fair value changes 0.3 0.2
The effect of unrealised
fair value changes on other
comprehensive income and
equity net of tax
Key performance indicator used in management
reporting to describe the effect of unrealised fair value
changes during the reporting period on the Group’s
comprehensive income and equity net of tax.
Unrealised fair value changes through PnL 45 27
Taxes related to the unrealised fair value changes through PnL -9 -5
Net change in fair value due to changes in own credit risk on financial liabilities
designated at fair value through profit or loss, net of tax
0 0
Net change in Cost-of-Hedging, net of tax -12 -2
Net change in fair value of financial assets at fair value through other
comprehensive income, net of tax
-5 -1
The effect of unrealised fair value changes on other comprehensive
income and equity net of tax
19 19
New long-term customer
financing
Key performance indicator used in management
reporting to describe MuniFin Group’s business volume
during the reporting period. The indicator includes the
amount of new loans excluding unrealised fair value
changes and new leased assets excluding unrealised fair
value changes.
New lending 4,074 3,275
New leased assets 301 396
New long-term customer financing 4,375 3,671
New long-term funding Key performance indicator used in management
reporting to describe MuniFin Group’s funding activity
during the reporting period. The indicator includes the
amount of new funding (over 1 year) issued excluding
unrealised fair values changes.
New long-term funding 8,827 9,395
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
ALTERNATIVE
PERFORMANCE MEASURE DEFINITION / EXPLANATION CALCULATION FORMULA / RECONCILIATION 31 Dec 2022 31 Dec 2021
EUR million
Return on Equity (ROE), % ROE measures the efficiency of MuniFin Group’s capital
usage. It is a commonly used performance measure and
as an APM improves comparability between companies.
The key figure is reported annualised.
((Net operating profit 215 240
- Taxes) -43 -48
÷ Equity and non-controlling interest (average of values at the beginning and
end of the period)) x100
1,738 1,783
Return on Equity (ROE), % 9.9% 10.7%
Return on Equity (ROE)
excluding unrealised fair value
changes, %
MuniFin Group’s strategy indicator.
Excluding the unrealised changes in fair values
increases comparability between reporting periods.
The key figure is reported annualised.
((Net operating profit excluding unrealised fair value changes 170 213
- Taxes) -34 -43
÷ Equity and non-controlling interest (average of values at the beginning and
end of the period)) x100
1,738 1,783
Return on Equity (ROE) excluding unrealised fair value changes, % 7.8% 9.6%
Return on Assets (ROA), % ROA measures the efficiency of MuniFin Group’s
investments. It is a commonly used performance
measure and as an APM improves comparability between
companies. The key figure is reported annualised.
((Net operating profit 215 240
- Taxes) -43 -48
÷ Average balance sheet total (average of values at the beginning and end of
the period)) x100
47,048 45,201
Return on Assets (ROA), % 0.4% 0.4%
Return on Assets (ROA)
excluding unrealised fair value
changes, %
Excluding the unrealised changes in fair values
increases comparability of ROA between reporting
periods. The key figure is reported annualised.
((Net operating profit excluding unrealised fair value changes 170 213
- Taxes) -34 -43
÷ Average balance sheet total (average of values at the beginning and end of
the period)) x100
47,048 45,201
Return on Assets (ROA) excluding unrealised fair value changes, % 0.3% 0.4%
Equity ratio, % Equity ratiois an investment leverage and solvency ratio
that measures the amount of assets that are financed by
equity. It is a commonly used performance measure and
as an APM improves comparability between companies.
(Equity and non-controlling interest 1,614 1,862
÷ Balance sheet total) x100 47,736 46,360
Equity ratio, % 3.4% 4.0%
Long-term loan portfolio Key performance indicator used in management
reporting to describe MuniFin Group’s business volume.
Loans and advances to the public and public sector entities 29,144 29,214
- Leasing 1,303 1,334
Long-term loan portfolio 27,841 27,880
Long-term customer financing Key performance indicator used in management
reporting to describe MuniFin Group’s business volume.
Loans and advances to the public and public sector entities 29,144 29,214
Long-term customer financing 29,144 29,214
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
ALTERNATIVE
PERFORMANCE MEASURE DEFINITION / EXPLANATION CALCULATION FORMULA / RECONCILIATION 31 Dec 2022 31 Dec 2021
EUR million
Long-term customer financing
excluding unrealised fair value
changes
Key performance indicator used in management
reporting to describe MuniFin Group’s business volume.
In this indicator the unrealised fair value changes have
been excluded to enhance comparability of business
performance between periods.
Loans and advances to the public and public sector entities 29,144 29,214
- Unrealised fair value changes 1,516 -151
Long-term customer financing excluding unrealised fair value changes 30,660 29,063
Short-term customer financing Key performance indicator used in management
reporting to describe MuniFin Group’s business volume.
Debt securities, commercial papers (municipalities and municipal companies) 1,457 1,089
Short-term customer financing 1,457 1,089
Total funding Key performance indicator used in management
reporting to describe MuniFin Group’s funding volume.
Liabilities to credit institutions 2,333 2,801
Liabilities to the public and public sector entities 2,530 3,325
Debt securities issued 35,592 35,328
Tot al 40,454 41,453
- CSA collateral (received) -244 -741
Total funding 40,210 40,712
Long-term funding Key performance indicator used in management
reporting to describe MuniFin Group’s funding volume.
Total funding 40,210 40,712
- Short-term issued funding (ECP) -4,650 -3,819
Long-term funding 35,560 36,893
Total liquidity Key performance indicator used in management
reporting to describe MuniFin Group’s liquidity position.
Debt securities 4,787 4,841
- Short-term customer financing -1,457 -1,089
Shares and participations - -
Investments in securities total 3,330 3,753
Cash and balances with central banks - 8,399
Other deposits 8,176 70
Other investments total 8,176 8,469
Total liquidity 11,506 12,222
Ratio of socially responsible
investments to MuniFin Group's
own green and social funding
Key performance indicator used in management
reporting for social responsilibity area.
(Socially responsible investments 498 456
÷ Green and social funding) x100 3,430 2,930
Ratio of socially responsible investments to MuniFin Group's own green
and social funding
14.5% 15.6%
Vaihtoehtoiset tunnusluvut loppu
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
OTHER MEASURES DEFINITION CALCULATION FORMULA / RECONCILIATION 1 Jan–31 Dec 2022 1 Jan–31 Dec 2021
EUR million
Turnover Defined in IFRS (IAS 1). Turnover is not disclosed in
MuniFin Group’s income statement so the formula for
turnover should be given even though it is not considered
to be an APM.
Interest and similar income (incl. Leasing) 712 504
Commission income 2 2
Net income from securities and foreign exchange transactions 8 24
Net income on financial assets at fair value through other comprehensive income 0 -
Net income from hedge accounting 36 5
Other operating income 0 0
Turnover 759 535
31 Dec 2022 31 Dec 2021
Liquidity Coverage Ratio
(LCR), %
Defined in CRR. (Liquid assets 10,882 11,564
÷ (Liquidity outflows - liquidity inflows in a stress situation)) x100 4,240 3,453
Liquidity Coverage Ratio (LCR), % 256.7% 334.9%
Net Stable Funding Ratio
(NSFR), %
Defined in CRR. (Available Stable Funding (ASF) 31,966 33,638
÷ Required Stable Funding (RSF)) x100 26,583 27,221
Net Stable Funding Ratio (NSFR), % 120.3% 123.6%
CET1 capital ratio, % Defined in CRR. (Common Equity Tier 1 (CET1) capital 1,482 1,408
÷ Risk exposure amount) x100 1,518 1,482
CET1 capital ratio, % 97.6% 95.0%
Muut tunnusluvut alku
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
OTHER MEASURES DEFINITION CALCULATION FORMULA / RECONCILIATION 1 Jan–31 Dec 2022 1 Jan–31 Dec 2021
EUR million
Tier 1 capital ratio, % Defined in CRR. (Tier 1 capital 1,482 1,756
÷ Risk exposure amount) x100 1,518 1,482
Tier 1 capital ratio, % 97.6% 118.4%
Total capital ratio, % Defined in CRR. (Total own funds 1,482 1,756
÷ Risk exposure amount) x100 1,518 1,482
Total capital ratio, % 97.6% 118.4%
Leverage ratio, % Defined in CRR. (Tier 1 capital 1,482 1,756
÷ Total exposure) x100 12,779 13,716
Leverage ratio, % 11.6% 12.8%
Muut tunnusluvut loppu
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 2. Group's capital adequacy position
Table 1. Minimum capital requirements and capital buffers
MINIMUM CAPITAL REQUIREMENTS AND
CAPITAL BUFFERS,
31 Dec 2022
Capital
requirement
Capital
conservation
buffer
1)
Countercyclical
buffer
2)
O-SII
3)
Systemic
risk buffer
4)
Total capital
buffers Tota l
Common Equity Tier 1 (CET1) capital 4.50% 2.50% 0.81% 0.50% 0.00% 3.81% 8.31%
Tier 1 (T1) Capital 6.00% 2.50% 0.81% 0.50% 0.00% 3.81% 9.81%
Total own funds 8.00% 2.50% 0.81% 0.50% 0.00% 3.81% 11.81%
MINIMUM CAPITAL REQUIREMENTS AND
CAPITAL BUFFERS (EUR 1,000)
31 Dec 2022
Capital
requirement
Capital
conservation
buffer
1)
Countercyclical
buffer
2)
O-SII
3)
Systemic
risk buffer
4)
Total capital
buffers Tota l
Common Equity Tier 1 (CET1) capital 68,312 37,951 12,320 7,590 0 57,861 126,173
Tier 1 (T1) Capital 91,082 37,951 12,320 7,590 0 57,861 148,943
Total own funds 121,443 37,951 12,320 7,590 0 57,861 179,304
Note 2. Group’s capital adequacy position
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
MINIMUM CAPITAL REQUIREMENTS AND
CAPITAL BUFFERS,
31 Dec 2021
Capital
requirement
Capital
conservation
buffer
1)
Countercyclical
buffer
2)
O-SII
3)
Systemic
risk buffer
4)
Total capital
buffers Tota l
Common Equity Tier 1 (CET1) capital 4.50% 2.50% 0.15% 0.50% 0.00% 3.15% 7.65%
Tier 1 (T1) Capital 6.00% 2.50% 0.1 5% 0.50% 0.00% 3.15% 9.15%
Total own funds 8.00% 2.50% 0.1 5% 0.50% 0.00% 3.15% 11.15%
MINIMUM CAPITAL REQUIREMENTS
AND CAPITAL BUFFERS (EUR 1,000)
31 Dec 2021
Capital
requirement
Capital
conservation
buffer
1)
Countercyclical
buffer
2)
O-SII
3)
Systemic
risk buffer
4)
Total capital
buffers Tota l
Common Equity Tier 1 (CET1) capital 66,712 37,062 2,217 7,412 0 46,692 113,404
Tier 1 (T1) Capital 88,950 37,062 2,217 7,412 0 46,692 135,642
Total own funds 118,600 37,062 2,217 7,412 0 46,692 165,292
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
1)
Act on Credit Institutions (610/2014), Sect 10:3 §, and the EU Capital Requirements
Regulation (575/2013; CRR) and Directive (2013/36/EU; CRD IV). Valid from 1 January 2015.
2)
Act on Credit Institutions (610/2014) Sect 10:4-6 § and the EU Capital Requirements
Regulation (575/2013; CRR) and Directive (2013/36/EU; CRD IV). On 16 December 2022
(16 December 2021), the Board of Financial Supervisory Authority (FIN-FSA) decided not to
set countercyclical capital buffer requirement for credit exposures allocated to Finland. The
institution-specific countercyclical capital buffer requirement is determined on the basis of
the geographical distribution of the exposures. For MuniFin Group it is 0.81% (0.15%).
3)
Other Systemically Important Institutions additional capital requirements: Act on Credit
Institutions (610/2014) Sect 10:8 § and the EU Capital Requirements Regulation (575/2013;
CRR) and Directive (2013/36/EU; CRD IV). Additional capital requirement (O-SII) for MuniFin
Group is 0.5% (0.5%). The decision of the Board of FIN-FSA on 27 June 2022, effective
immediately.
4)
Act on Credit Institutions (610/2014) Sect 10:6a § and the EU Capital Requirements
Regulation (575/2013; CRR) and Directive (2013/36/EU; CRD IV). On 6 April 2020, the
FIN-FSA made a decision to remove the additional capital requirement determined on the
basis of the structural characteristics of the financial system (systemic risk buffer) from
Finnish credit institutions. The aim of the decision was to mitigate the negative effects of
the COVID-19 pandemic on the stability of the financial markets and to promote the ability
of credit institutions to finance the economy. The decision entered into force immediately.
By the end of the financial year, the FIN-FSA had not imposed a new systemic risk buffer for
the MuniFin Group. The systemic risk buffer and the O-SII additional capital requirement are
parallel buffers, of which the greater is applied.
ECB has imposed a bank-specific Pillar 2 Requirement (P2R) of 2% on MuniFin Group as
part of the annual Supervisory Review and Evaluation Process (SREP). Including this P2R
requirement, the total SREP capital requirement ratio (TSCR) was 10% (10.25%) at the end of
December 2022. The minimum level of total capital ratio was 13.81% (13.40%) including P2R
and other additional capital buffers.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Table 2. Own Funds
(EUR 1,000) 31 Dec 2022 31 Dec 2021
Share capital 42,583 42,583
Reserve for invested non-restricted equity 40,366 40,366
Retained earnings 1,533,535 1,416,916
Fair value reserve -3,052 13,994
Other reserves 277 277
Foreseeable dividend -67,580 -40,236
Accrued interest net of deferred taxes of AT1 capital loan treated as equity - -9,459
Common Equity Tier 1 (CET1) capital before regulatory adjustments 1,546,129 1,464,442
Intangible assets -8,831 -12,296
Deferred tax assets that rely on future profitability and do not arise from temporary differences -763 -
Deductions due to prudential filters on Common Equity Tier 1 capital -54,925 -43,876
Common Equity Tier 1 (CET1) capital 1,481,610 1,408,270
Instruments included in Additional Tier 1 capital - 347,454
Additional Tier 1 (AT1) capital - 347,454
Tier 1 (T1) capital 1,481,610 1,755,723
Tier 2 (T2) capital - -
Total own funds 1,481,610 1,755,723
Common Equity Tier 1 capital includes the profit for the
financial year, which has been subject to a financial review
by the external auditor, and therefore can be included in
CET1 capital on the basis of permission granted by the ECB
in accordance with the Capital Requirements Regulation.
Deductions due to prudential filters on CET1 capital are made
up of MuniFin’s debt value adjustment (DVA) and additional
valuation adjustment (AVA). In addition, the amount of
foreseeable dividend has been deducted from CET1 capital.
Change in own credit risk is not included in the own funds
(CRR Art. 33).
MuniFin Group redeemed its Additional Tier 1 capital
instrument in April 2022. The repayment decreased Tier 1
capital by EUR 347 million. A more detailed description of
AT1 capital instrument is included in the Parent Company’s
Financial Statements in Note 35 Subordinated liabilities.
Table 3. Consolidated key figures for capital adequacy
31 Dec 2022 31 Dec 2021
CET1 capital ratio, % 97.60 94.99
Tier 1 capital ratio, % 97.60 118.43
Total capital ratio, % 97.60 118.43
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
The capital requirement for credit risk is calculated using the
standardised approach.
When calculating the capital requirements for market risk,
only foreign exchange risk is taken into account as the
Group does not have a trading book nor share or commodity
positions. As foreign exchange risk is hedged by swapping
all currency denominated funding and investments into
euros, the Group’s foreign exchange position is very small.
On 31 December 2022, the FX net position was EUR
4.8 million (EUR 1.4 million), which is less than 2% of total
own funds. There was no capital requirement for market risk
since the FX net position did not exceed 2% of the total own
funds (CRR 575/2013 Art. 351) at the end of financial year or
comparison period.
Guarantees granted by the Municipal Guarantee Board for
certain derivative counterparties are not taken into account in
credit valuation adjustment risk.
The capital requirement for operational risk is calculated
using the basic indicator approach.
31 Dec 2022 31 Dec 2021
(EUR 1,000) Capital requirement Risk exposure amount Capital requirement Risk exposure amount
Credit and counterparty risk, standardised approach 41,727 521,592 42,524 531,547
Exposures to central governments or central banks - 0 - 0
Exposures to regional governments or local authorities 419 5,240 451 5,634
Exposures to public sector entities 639 7,983 705 8,807
Exposures to multilateral development banks - 0 - 0
Exposures to institutions 26,800 335,004 23,422 292,771
Exposures to corporates 3,297 41,210 6,038 75,471
Exposures in the form of covered bonds 8,723 109,041 9,734 121,670
Other items 1,849 23,113 2,176 27,194
Market risk - - - -
Credit valuation adjustment risk (CVA VaR), standard method 37,644 470,552 39,549 494,362
Operational risk, basic indicator approach 42,071 525,892 36,527 456,587
Tot al 121,443 1,518,036 118,600 1,482,496
The capital requirement for counterparty risk is EUR 5,640 thousand (EUR 4,727 thousand).
Table 4. Consolidated minimum requirement for own funds
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Table 5. Consolidated exposure by class
31 Dec 2022
(EUR 1,000)
EXPOSURE CLASSES
On-balance
sheet exposure
Off-balance
sheet exposure
Derivatives
exposure Total exposure
Average exposure
amount over
the period
Risk exposure
amount
Exposures to central governments or central banks 8,294,139 - - 8,294,139 9,206,789 0
Exposures to regional governments or local authorities 14,615,347 845,466 22,881 15,483,694 15,456,426 5,240
Exposures to public sector entities 293,300 - - 293,300 317,351 7,983
Exposures to multilateral development banks 108,801 - - 108,801 124,784 0
Exposures to international organisations 121,432 - - 121,432 127,218 0
Exposures to institutions 1,278,256 - 635,051 1,913,306 1,892,380 335,004
Exposures to corporates 5,600,553 1,618,498 89,662 7,308,714 7,621,870 41,210
Exposures secured by mortgages on immovable property 10,874,824 - - 10,874,824 10,570,175 0
Exposures in default 7,092 - - 7,092 79,266 0
Exposures in the form of covered bonds 1,090,411 - - 1,090,411 1,042,511 109,041
Other items 26,304 - - 26,304 26,725 23,113
Tot al 42,310,459 2,463,964 747,594 45,522,018 46,465,494 521,592
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
31 Dec 2021
(EUR 1,000)
EXPOSURE CLASSES
On-balance
sheet exposure
Off-balance
sheet exposure
Derivatives
exposure Total exposure
Average exposure
amount over
the period
Risk exposure
amount
Exposures to central governments or central banks 8,636,433 - - 8,636,433 8,503,878 0
Exposures to regional governments or local authorities 14,297,717 906,117 323,486 15,527,320 15,431,645 5,634
Exposures to public sector entities 342,672 - - 342,672 390,671 8,807
Exposures to multilateral development banks 152,387 - - 152,387 153,403 0
Exposures to international organisations 143,579 - - 143,579 147,620 0
Exposures to institutions 1,285,401 - 547,272 1,832,673 1,821,127 292,771
Exposures to corporates 6,457,680 1,682,251 279,398 8,419,329 8,544,959 75,471
Exposures secured by mortgages on immovable property 10,208,300 - - 10,208,300 9,837,166 0
Exposures in default 130,053 4,506 - 134,559 142,628 0
Exposures in the form of covered bonds 1,216,705 - - 1,216,705 1,305,877 121,670
Other items 27,232 - - 27,232 26,675 27,194
Tot al 42,898,158 2,592,873 1,150,157 46,641,188 46,305,650 531,547
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Table 6. Leverage ratio
CONSOLIDATED LEVERAGE RATIO
(EUR 1,000) 31 Dec 2022 31 Dec 2021
Tier 1 (T1) capital 1,481,610 1,755,723
Total exposure 12,777,216 13,715,604
Leverage ratio, % 11.60 12.80
CONSOLIDATED EXPOSURES
(EUR 1,000) 31 Dec 2022 31 Dec 2021
On-balance sheet exposures (excl. derivatives and intangible assets) 42,601,459 42,875,215
Derivatives exposure 864,243 1,181,445
Off-balance sheet exposure 1,164,571 1,227,349
Excluded exposures of public development credit institutions (promotional loans) -31,853,057 -31,568,405
Tot al 12,777,216 13,715,604
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
BREAKDOWN OF CONSOLIDATED ON-BALANCE SHEET EXPOSURE EXCLUDING DERIVATIVES AND EXEMPTED EXPOSURES
(EUR 1,000)
31 Dec 2022
Leverage ratio
exposure value
31 Dec 2021
Leverage ratio
exposure value
Covered bonds 1,090,411 1,216,705
Exposures treated as sovereigns 9,116,446 9,618,861
Exposures to regional governments, multilateral development banks, international organisations and public sector entities not treated as sovereigns 66,117 72,202
Institutions 1,278,256 1,285,401
Secured by mortgages of immovable properties - -
Corporate 335,439 336,701
Exposures in default - -
Other exposures 35,135 16,585
Tot al 11,921,804 12,546,455
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 3. Parent Company's capital adequacy position
Common Equity Tier 1 capital includes the profit for the
financial year, which has been subject to a financial review
by the external auditor, and therefore can be included in
CET1 capital on the basis of permission granted by the ECB
in accordance with the Capital Requirements Regulation.
Deductions due to prudential filters on CET1 capital are
made up of MuniFin’s debt value adjustment (DVA) and
additional valuation adjustment (AVA). In addition, the amount
of foreseeable dividend has been deducted from CET1
capital.
Change in own credit risk is not included in the own funds
(CRR Art. 33).
MuniFin Group redeemed its Additional Tier 1 capital
instrument in April 2022. The repayment decreased Tier 1
capital by EUR 350 million. A more detailed description of
AT1 capital instrument is included in the Parent Company’s
Financial Statements in Note 35 Subordinated liabilities.
Note 3. Parent Company’s capital adequacy
position
Table 1. Own funds
(EUR 1,000) 31 Dec 2022 31 Dec 2021
Share capital 43,008 43,008
Reserve for invested non-restricted equity 40,743 40,743
Retained earnings 1,532,647 1,404,148
Fair value reserve -3,052 13,994
Other reserves 277 277
Foreseeable dividend -67,580 -40,236
Common Equity Tier 1 (CET1) capital before regulatory adjustments 1,546,042 1,461,934
Intangible assets -8,837 -12,305
Deferred tax assets that rely on future profitability and do not arise from temporary differences -763 -
Deductions due to prudential filters on Common Equity Tier 1 capital -54,925 -43,876
Common Equity Tier 1 (CET1) capital 1,481,518 1,405,753
Instruments included in Additional Tier 1 capital - 349,878
Additional Tier 1 (AT1) capital - 349,878
Tier 1 (T1) capital 1,481,518 1,755,631
Tier 2 (T2) capital - -
Total own funds 1,481,518 1,755,631
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Table 2. Key figures for capital adequacy
31 Dec 2022 31 Dec 2021
CET1 capital ratio, % 99.21 97.00
Tier 1 capital ratio, % 99.21 121.14
Total capital ratio, % 99.21 121.14
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
31 Dec 2022 31 Dec 2021
(EUR 1,000) Capital requirement Risk exposure amount Capital requirement Risk exposure amount
Credit and counterparty risk, standardised approach 41,811 522,644 42,604 532,547
Exposures to central governments or central banks - 0 - 0
Exposures to regional governments or local authorities 419 5,240 451 5,634
Exposures to public sector entities 639 7,983 705 8,807
Exposures to multilateral development banks - 0 - 0
Exposures to institutions 26,784 334,800 23,410 292,622
Exposures to corporates 3,297 41,210 6,038 75,471
Exposures in the form of covered bonds 8,723 109,041 9,734 121,670
Equity exposure 131 1,639 131 1,639
Other items 1,818 22,729 2,136 26,704
Market risk - - - -
Credit valuation adjustment risk (CVA VaR), standardised method 37,644 470,552 39,549 494,362
Operational risk, basic indicator approach 40,014 500,171 33,788 422,344
Tot al 119,469 1,493,367 115,940 1,449,252
The capital requirement for counterparty risk is EUR 5,640 thousand (EUR 4,727 thousand).
Table 3. Minimum requirement for own funds
The capital requirement for credit risk is calculated using the
standardised approach.
When calculating the capital requirements for market risk,
only foreign exchange risk is taken into account as MuniFin
does not have a trading book nor share or commodity
positions. As foreign exchange risk is hedged by swapping
all currency denominated funding and investments into
euros, the Company’s foreign exchange position is very
small. On 31 December 2022, the FX net position was
EUR 4.8 million (EUR 1.4 million), which is less than 2% of total
own funds. There was no capital requirement for market risk
since the FX net position did not exceed 2% of the total own
funds (CRR 575/2013 Art. 351) at the end of financial year or
comparison period.
Guarantees granted by the Municipal Guarantee Board for
certain derivative counterparties are not taken into account in
credit valuation adjustment risk.
The capital requirement for operational risk is calculated
using the basic indicator approach.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Table 4. Exposure by class
31 Dec 2022
(EUR 1,000)
EXPOSURE CLASSES
On-balance
sheet exposure
Off-balance
sheet exposure
Derivatives
exposure Total exposure
Risk exposure
amount
Exposures to central governments or central banks 8,294,139 - - 8,294,139 0
Exposures to regional governments or local authorities 14,615,347 845,466 22,881 15,483,694 5,240
Exposures to public sector entities 293,300 - - 293,300 7,983
Exposures to multilateral development banks 108,801 - - 108,801 0
Exposures to international organisations 121,432 - - 121,432 0
Exposures to institutions 1,277,238 - 635,051 1,912,288 334,800
Exposures to corporates 5,600,553 1,618,498 89,662 7,308,714 41,210
Exposures secured by mortgages on immovable property 10,874,824 - - 10,874,824 0
Exposures in default 7,092 - - 7,092 0
Exposures in the form of covered bonds 1,090,411 - - 1,090,411 109,041
Equity exposures 656 - - 656 1,639
Other items 25,912 - - 25,912 22,729
Tot al 42,309,706 2,463,964 747,594 45,521,265 522,644
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
31 Dec 2021
(EUR 1,000)
EXPOSURE CLASSES
On-balance
sheet exposure
Off-balance
sheet exposure
Derivatives
exposure Total exposure
Risk exposure
amount
Exposures to central governments or central banks 8,636,433 - - 8,636,433 0
Exposures to regional governments or local authorities 14,297,717 906,117 323,486 15,527,320 5,634
Exposures to public sector entities 342,672 - - 342,672 8,807
Exposures to multilateral development banks 152,387 - - 152,387 0
Exposures to international organisations 143,579 - - 143,579 0
Exposures to institutions 1,284,655 - 547,272 1,831,927 292,622
Exposures to corporates 6,457,680 1,682,251 279,398 8,419,329 75,471
Exposures secured by mortgages on immovable property 10,208,300 - - 10,208,300 0
Exposures in default 130,053 4,506 - 134,559 0
Exposures in the form of covered bonds 1,216,705 - - 1,216,705 121,670
Equity exposures 656 - - 656 1,639
Other items 26,706 - - 26,706 26,704
Tot al 42,897,542 2,592,873 1,150,157 46,640,572 532,547
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Municipality Finance Group
Consolidated Financial Statements
1 January–31 December 2022
61 Consolidated Financial Statements (IFRS)
62 Consolidated Income Statement
63 Consolidated Statement of Comprehensive Income
64 Consolidated Statement of Financial Position
66 Consolidated Statement of Changes in Equity
68 Consolidated Statement of Cash Flows
69 Notes to the Consolidated Financial Statements
223 Parent Company’s Financial Statements (FAS)
224 Parent Company’s Income Statement
225 Parent Company’s Balance Sheet
228 Parent Company’s Statement of Cash Flows
229 Notes to the Parent Company’s Financial Statements
339 Signatures to the Report of the Board of Directors and the Financial Statements
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Konsernitilinpäätös
Consolidated
Financial Statements
Consolidated Financial
Statements (IFRS)
Consolidated Income Statement
Consolidated Income
Statement
(EUR 1,000) Note Jan–Dec 2022 Jan–Dec 2021
Interest and similar income (3) 711,740 503,536
Interest and similar expense (3) -470,585 -223,339
Net interest income 241,155 280,197
Commission income (4) 2,302 2,126
Commission expense (4) -5,517 -5,056
Net income from securities and foreign exchange transactions (5) 8,140 24,095
Net income on financial assets at fair value through other comprehensive income (7) -149 -
Net income from hedge accounting (8, 25) 36,444 4,823
Other operating income (10) 90 95
Administrative expenses (11) -37,361 -34,722
Depreciation and impairment on tangible and intangible assets (12) -10,423 -16,208
Other operating expenses (13) -19,774 -15,568
Credit loss and impairments on financial assets (14) 118 -104
Net operating profit 215,024 239,678
Income tax expense (15) -43,023 -48,073
Profit for the financial year 172,001 191,605
The accompanying notes are an integral part of the Financial Statements.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
(EUR 1,000) Note Jan–Dec 2022 Jan–Dec 2021
Profit for the financial year 172,001 191,605
Components of other comprehensive income
Items not to be reclassified to income statement in subsequent periods
Net change in fair value due to changes in own credit risk on financial liabilities designated at fair value through profit or loss (6) -184 400
Net change in Cost-of-Hedging (25) -15,166 -2,504
Items to be reclassified to income statement in subsequent periods
Net change in fair value of financial assets at fair value through other comprehensive income (7) -5,961 -672
Net change in expected credit loss of financial assets at fair value through other comprehensive income (26) 3 0
Taxes related to components of other comprehensive income 4,262 555
Total components of other comprehensive income -17,046 -2,222
Total comprehensive income for the financial year 154,955 189,383
The accompanying notes are an integral part of the Financial Statements.
Consolidated Statement of Comprehensive Income
Consolidated Statement of
Comprehensive Income
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
(EUR 1,000) Note 31 Dec 2022 31 Dec 2021
Assets
Cash and balances with central banks (20) 2 8,399,045
Loans and advances to credit institutions (21) 9,625,488 1,417,310
Loans and advances to the public and public sector entities (22) 29,144,361 29,214,043
Debt securities (23) 4,786,768 4,841,428
Shares and participations - -
Derivative contracts (19, 24) 2,707,103 1,999,676
Intangible assets (27, 29) 8,831 12,296
Tangible assets (28, 29) 5,062 7,491
Other assets (30) 1,234,810 256,117
Accrued income and prepayments (31) 223,104 212,655
Deferred tax assets (32) 763 -
Total assets (16, 17, 18) 47,736,293 46,360,060
Consolidated Statement of Financial Position
Consolidated Statement
of Financial Position
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
(EUR 1,000) Note 31 Dec 2022 31 Dec 2021
Liabilities and equity
Liabilities
Liabilities to credit institutions (33, 36) 2,332,623 2,801,016
Liabilities to the public and public sector entities (34, 36) 2,529,585 3,324,685
Debt securities issued (35, 36) 35,592,065 35,327,525
Derivative contracts (19, 24) 4,616,111 2,224,294
Provisions and other liabilities (37) 593,848 349,331
Accrued expenses and deferred income (38) 166,635 181,732
Deferred tax liabilities (32) 291,717 289,887
Total liabilities (16, 17, 18) 46,122,584 44,498,470
Equity
Share capital (39) 42,583 42,583
Reserve fund (39) 277 277
Fair value reserve of investments (39) -4,457 309
Own credit revaluation reserve (39) -83 64
Cost-of-Hedging reserve (39) 1,488 13,621
Reserve for invested non-restricted equity (39) 40,366 40,366
Retained earnings (39) 1,533,535 1,416,916
Total equity attributable to Parent Company equity holders 1,613,709 1,514,136
Other equity instruments issued (39) - 347,454
Total equity 1,613,709 1,861,590
Total liabilities and equity 47,736,293 46,360,060
The accompanying notes are an integral part of the Financial Statements.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Consolidated Statement of Changes in Equity
(EUR 1,000)
Total equity attributable to Parent Company equity holders
Other equity
instruments
issued
Total
equity
Share
capital
Reserve
fund
Fair value
reserve of
investments
Own
credit
revaluation
reserve
Cost-of-
Hedging
reserve
Reserve for
invested
non-restricted
equity
Retained
earnings Tot a l
Equity at 31 December 2020 42,583 277 847 -255 15,624 40,366 1,258,224 1,357,666 347,454 1,705,120
Interest paid on Additional Tier 1 capital instrument - - - - - - -12,600 -12,600 - -12,600
Dividends paid for 2020 - - - - - - -20,313 -20,313 - -20,313
Profit for the financial year - - - - - - 191,605 191,605 - 191,605
Components of other comprehensive income net of tax
Items not to be reclassified to income statement in subsequent
periods
Net change in fair value due to changes in own credit risk on
financial liabilities designated at fair value through profit or loss - - - 320 - - - 320 - 320
Net change in Cost-of-Hedging - - - - -2,004 - - -2,004 - -2,004
Items to be reclassified to income statement in subsequent periods
Net change in fair value of financial assets at fair value through other
comprehensive income - - -538 - - - - -538 - -538
Net change in expected credit loss of financial assets at fair value
through other comprehensive income - - 0 - - - - 0 - 0
Equity at 31 December 2021 42,583 277 309 64 13,621 40,366 1,416,916 1,514,136 347,454 1,861,590
Consolidated Statement of
Changes in Equity
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
(EUR 1,000)
Total equity attributable to Parent Company equity holders
Other equity
instruments
issued
Total
equity
Share
capital
Reserve
fund
Fair value
reserve of
investments
Own
credit
revaluation
reserve
Cost-of-
Hedging
reserve
Reserve for
invested
non-restricted
equity
Retained
earnings Tot a l
Redemption of Additional Tier 1 capital instrument - - - - - - -2,546 -2,546 -347,454 -350,000
Interest paid on Additional Tier 1 capital instrument - - - - - - -12,600 -12,600 - -12,600
Dividends paid for 2021 - - - - - - -40,236 -40,236 - -40,236
Profit for the financial year - - - - - - 172,001 172,001 - 172,001
Components of other comprehensive income net of tax
Items not to be reclassified to income statement in subsequent
periods
Net change in fair value due to changes in own credit risk on
financial liabilities designated at fair value through profit or loss - - - -147 - - - -147 - -147
Net change in Cost-of-Hedging - - - - -12,133 - - -12,133 - -12,133
Items to be reclassified to income statement in subsequent periods
Net change in fair value of financial assets at fair value through other
comprehensive income - - -4,769 - - - - -4,769 - -4,769
Net change in expected credit loss of financial assets at fair value
through other comprehensive income - - 2 - - - - 2 - 2
Equity at 31 December 2022 42,583 277 -4,457 -83 1,488 40,366 1,533,535 1,613,709 - 1,613,709
The accompanying notes are an integral part of the Financial Statements.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Consolidated Statement of Cash Flows
(EUR 1,000) Jan–Dec 2022 Jan–Dec 2021
Cash flow from operating activities -7,975,442 2,750,437
Net change in long-term funding 2,063,033 3,085,073
Net change in short-term funding 1,103,027 -354,008
Net change in long-term loans -1,637,350 -1,580,112
Net change in short-term loans -368,992 224,130
Net change in investments -7,919,967 667,724
Net change in collaterals -1,332,255 480,083
Interest on assets 97,307 16,875
Interest on liabilities 93,906 221,595
Other income 54,080 74,355
Payments of operating expenses -61,490 -88,798
Taxes paid -66,742 3,518
Cash flow from investing activities -3,550 -7,747
Acquisition of tangible assets -16 -3
Proceeds from sale of tangible assets 149 226
Acquisition of intangible assets -3,684 -7,970
Cash flow from financing activities -407,887 -37,866
Redemption of AT1 capital instrument -350,000 -
Paid interest on AT1 capital instrument -15,750 -15,750
Dividend paid -40,236 -20,313
Total cash flow from leases -1,902 -1,803
Change in cash and cash equivalents -8,386,879 2,704,824
Cash and cash equivalents at 1 Jan 8,435,504 5,730,680
Cash and cash equivalents at 31 Dec 48,624 8,435,504
Consolidated Statement of Cash Flows
The accompanying notes are an integral part of the Financial Statements.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Notes to the Consolidated
Financial Statements
Notes to the accounting policies and risk management
Note 1. Summary of significant accounting policies
Note 2. Risk management principles and
the Group’s risk position
Notes to the income statement
Note 3. Interest income and expense
Note 4. Fee and commission income and expense
Note 5. Net income from securities and
foreign exchange transactions
Note 6. Financial assets and liabilities designated
at fair value through profit or loss
Note 7. Net income on financial assets at fair value
through other comprehensive income
Note 8. Net income from hedge accounting
Note 9. Impact of the reclassified financial
assets and liabilities
Note 10. Other operating income
Note 11. Administrative expenses
Note 12. Depreciation and impairment on
tangible and intangible assets
Note 13. Other operating expenses
Note 14. Credit losses and impairments on financial assets
Note 15. Income tax expense
Notes to the statement of financial position
Note 16. Financial assets and liabilities
Note 17. Fair values of financial assets and liabilities
Note 18. Breakdown of financial assets and liabilities
at carrying amount by maturity
Note 19. Offsetting financial assets and liabilities
Note 20. Cash and cash equivalents
Note 21. Loans and advances to credit institutions
Note 22. Loans and advances to the public
and public sector entities
Note 23. Debt securities
Note 24. Derivative contracts
Note 25. Hedge accounting
Note 26. Credit risks of financial assets
and other commitments
Note 27. Intangible assets
Note 28. Tangible assets
Note 29. Changes in intangible and tangible
assets during the financial year
Note 30. Other assets
Note 31. Accrued income and prepayments
Note 32. Deferred tax
Note 33. Liabilities to credit institutions
Note 34. Liabilities to the public and public sector entities
Note 35. Debt securities issued
Note 36. Reconciliation of the carrying
amount of the issued debt
Note 37. Provisions and other liabilities
Note 38. Accrued expenses and deferred income
Note 39. Equity
Note 40. Contingent assets and liabilities
Note 41. Collateral given
Note 42. Off-balance-sheet commitments
Note 43. Related-party transactions
Note 44. Salaries and remuneration
Note 45. Events after the reporting period
Notes to the Consolidated Financial Statements
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
BOARD OF DIRECTORS
EMT &
MANAGERS
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Parent Company's
Financial Statements
Parent Company’s Financial Statements
(FAS)
Emoyhtiön tilinpäätös
(EUR 1,000) Note Jan–Dec 2022 Jan–Dec 2021
Interest income (2) 701,563 497,170
Net income from leasing operations (3) 10,177 6,366
Interest expense (2) -474,631 -239,571
Net interest income 237,109 263,965
Commission income (5) 870 978
Commission expense (5) -5,514 -5,053
Net income from securities and foreign exchange transactions (6) 8,140 24,095
Net income from securities 8,288 22,707
Net income from foreign exchange transactions -148 1,388
Net income on financial assets at fair value through fair value reserve (8) -149 -
Net income from hedge accounting (9, 25) 36,444 4,823
Other operating income (11) 126 132
Administrative expenses -36,071 -33,493
Personnel expenses (48) -17,558 -16,490
Salaries and fees -14,527 -13,671
Personnel-related costs -3,031 -2,820
Pension costs -2,526 -2,208
Other personnel-related costs -505 -612
Other administrative expenses -18,512 -17,003
Depreciation and impairment on tangible and intangible assets (12) -10,299 -16,091
Other operating expenses (13) -19,833 -15,876
Expected credit losses on financial assets at amortised cost (14) 120 -105
Expected credit losses and impairments on other financial assets (14) -3 0
Net operating profit 210,941 223,376
Appropriations -38,342 -52,193
Income taxes -34,538 -34,374
Profit for the financial year 138,061 136,809
The accompanying notes are an integral part of the Financial Statements.
Parent Company's Income Statement
Parent Company’s Income
Statement
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Parent Company’s Balance
Sheet
(EUR 1,000) Note 31 Dec 2022 31 Dec 2021
Assets
Cash and balances with central banks (17) 2 8,399,045
Cash 2 2
Central bank receivables payable on demand - 8,399,043
Debt securities eligible for central bank refinancing (20) 2,890,174 3,312,054
Other 2,890,174 3,312,054
Loans and advances to credit institutions (18) 9,624,470 1,416,564
Payable on demand 47,604 35,712
Other 9,576,866 1,380,851
Loans and advances to the public and public sector entities (19) 27,841,267 27,879,897
Leased assets (21) 1,303,094 1,334,146
Debt securities (20) 1,896,594 1,529,374
From public sector entities 1,246,326 930,252
From others 650,267 599,122
Shares and participations (23) - -
Shares and participations in Group companies (23) 656 656
Derivative contracts (24) 2,707,103 1,999,676
Intangible assets (26, 28) 8,837 12,305
Tangible assets (27, 28) 4,835 7,188
Other tangible assets 4,835 7,188
Other assets (29) 1,234,662 255,938
Accrued income and prepayments (30) 223,088 212,612
Deferred tax assets (31) 763 -
Total assets (16, 37, 38, 40) 47,735,546 46,359,453
Parent Company's Balance Sheet
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
(EUR 1,000) Note 31 Dec 2022 31 Dec 2021
Liabilities and equity
Liabilities
Liabilities to credit institutions and central banks 2,332,623 2,801,016
To central banks 2,000,000 2,000,000
To credit institutions 332,623 801,016
Other 332,623 801,016
Liabilities to the public and public sector entities 2,529,585 3,324,685
Other liabilities 2,529,585 3,324,685
Debt securities issued (32) 35,592,065 35,327,525
Bonds 30,942,233 31,508,271
Other 4,649,832 3,819,254
Derivative contracts (24) 4,616,111 2,224,294
Other liabilities (33) 593,547 349,014
Other liabilities 593,101 348,568
Provisions 446 446
Accrued expenses and deferred income (34) 166,274 193,323
Subordinated liabilities (35) - 349,878
Deferred tax liabilities (31) - 3,499
Total liabilities (16, 37, 38, 40) 45,830,205 44,573,233
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
(EUR 1,000) Note 31 Dec 2022 31 Dec 2021
Appropriations
Depreciation difference 62,910 27,718
Taxation based provisions 1,395,680 1,392,530
Total appropriations 1,458,590 1,420,248
Equity (42, 43, 44)
Share capital 43,008 43,008
Other restricted reserves -2,775 14,271
Reserve fund 277 277
Fair value reserve -3,052 13,994
Change in fair value -3,052 13,994
Non-restricted reserves 40,743 40,743
Reserve for invested non-restricted equity 40,743 40,743
Retained earnings 227,714 131,141
Profit for the financial year 138,061 136,809
Total equity 446,750 365,972
Total liabilities and equity 47,735,546 46,359,453
Off-balance sheet commitments (47)
Irrevocable commitments given in favour of customer 2,463,978 2,592,877
The accompanying notes are an integral part of the Financial Statements.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Parent Company’s
Statement of Cash Flows
Parent Company's Statement of Cash Flows
(EUR 1,000) Jan–Dec 2022 Jan–Dec 2021
Cash flow from operating activities -7,991,589 2,734,814
Net change in long-term funding 2,063,033 3,085,073
Net change in short-term funding 1,103,027 -354,008
Net change in long-term loans -1,637,350 -1,580,112
Net change in short-term loans -368,992 224,130
Net change in investments -7,919,967 667,724
Net change in collaterals -1,332,255 480,083
Interest on assets 97,307 16,879
Interest on liabilities 78,156 205,845
Other income 52,430 72,778
Payments of operating expenses -60,259 -87,158
Taxes paid -66,720 3,579
Cash flow from investing activities -3,550 -7,747
Acquisition of tangible assets -16 -3
Proceeds from sale of tangible assets 149 226
Acquisition of intangible assets -3,684 -7,970
Cash flow from financing activities -392,012 -22,116
Change in subordinated liabilities -350,000 -
Dividends paid -40,236 -20,313
Total cash flow from leases -1,776 -1,803
Change in cash and cash equivalents -8,387,151 2,704,951
Cash and cash equivalents at 1 January 8,434,757 5,729,806
Cash and cash equivalents at 31 December 47,606 8,434,757
The accompanying notes are an integral part of the Financial Statements.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Notes to the Parent Company's accounting policies
Note 1. Significant accounting policies of the Parent
Company's Financial Statements, FAS
Notes to the income statement
Note 2. Interest income and expense
Note 3. Net income from leasing operations
Note 4. Income from equity investments
Note 5. Commission income and expense
Note 6. Net income from securities and
foreign exchange transactions
Note 7. Financial assets and liabilities designated
at fair value through profit or loss
Note 8. Net income on financial assets at fair
value through fair value reserve
Note 9. Net income from hedge accounting
Note 10. Impact of the reclassified financial
assets and liabilities
Note 11. Other operating income
Note 12. Depreciation and impairment on
tangible and intangible assets
Note 13. Other operating expenses
Note 14. Credit losses and impairments
on financial assets
Note 15. Information on business areas
and geographical market
Notes to the balance sheet
Note 16. Financial assets and liabilities
Note 17. Cash and cash equivalents
Note 18. Loans and advances to credit institutions
Note 19. Loans and advances to the public
and public sector entities
Note 20. Debt securities
Note 21. Leased assets
Note 22. Credit risks of financial assets
and other commitments
Note 23. Shares and participations
Note 24. Derivative contracts
Note 25. Hedge accounting
Note 26. Intangible assets
Note 27. Tangible assets
Note 28. Changes in intangible and tangible
assets during the financial year
Note 29. Other assets
Note 30. Accrued income and prepayments
Note 31. Deferred tax assets and liabilities
Note 32. Debt securities issued
Note 33. Other liabilities
Note 34. Accrued expenses and deferred income
Note 35. Subordinated liabilities
Note 36. Act on the Resolution of Credit
Institutions (1194/2014)
Note 37. Breakdown of financial assets and
liabilities at carrying amount by maturity
Note 38. Breakdown of balance sheet items
into domestic and foreign currency
Note 39. Repurchase agreements
Note 40. Fair values and carrying amounts of
financial assets and liabilities
Note 41. Fair value hierarchy of financial
assets and liabilities
Note 42. Equity
Note 43. Share capital
Note 44. Largest shareholders
Notes on collateral and contingent liabilities
Note 45. Collateral given
Note 46. Pension liabilities
Note 47. Off-balance sheet commitments
Notes on personnel and management
Note 48. Personnel
Related party transactions
Note 49. Loans and other financial receivables
from the related parties
Holdings in other companies
Note 50. Holdings in other companies
Other notes
Note 51. Audit and other fees paid to the audit firm
Notes to the Parent
Company’s Financial
Statements
Notes to the Parent Company's Financial Statements
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 1. Significant accounting policies of the Parent Company's Financial Statements, FAS
Notes to the Parent Company's accounting policies
Municipality Finance Plc (MuniFin) prepares its Financial
Statements in accordance with the Act on Credit Institutions,
the Ministry of Finance Decree on Credit Institutions and the
Financial Supervisory Authority Regulations and Guidelines
2/2016. The Company reports regularly on its operations
to the European Central Bank, the Finnish Financial
Supervisory Authority, the Bank of Finland, the Municipal
Guarantee Board and Statistics Finland. Municipality
Finance Plc is the Parent Company of Municipality Finance
Group (MuniFin Group). The significant accounting policies
and the presentation of the Financial Statements of the
Parent Company, Municipality Finance Plc, correspond
to the accounting policies of the Consolidated Financial
Statements (Note 1) with the exceptions described below.
Debt securities
Debt securities are presented in the Parent Company’s
Financial Statements under two balance sheet items: Debt
securities eligible for central bank refinancing and Debt
securities, so that Debt securities eligible for central bank
refinancing, contains, as the name implies, debt securities
eligible for central bank refinancing.
Leases
Leases in which MuniFin acts as the lessee are treated in the
Parent Company in accordance with the accounting policies
described in the Consolidated Financial Statements. Leases
in which MuniFin is a lessor, have been classified as finance
leases in the Financial Statements of both the Group and the
Parent Company. The accounting treatment of finance leases
does not differ from Group to Parent Company, but the leased
assets are presented on line Loans and advances to the
public and public sector entities in the Consolidated Financial
Statements. In the Parent Company, they are presented on
line Leased assets. Income related to leasing operations is
presented under the income statement item Net income from
leasing operations. In the Consolidated Financial Statements,
this income is presented under Interest and similar income.
Other long-term expenses
Other long-term expenses include expenses intended
to generate income in several financial years that are not
objects, separately transferable rights or other assets.
MuniFin’s other long-term expenses consist of renovation
expenses for leased premises. These items are presented
in the Parent Company’s Financial Statements as part of
Intangible assets under item Other intangible assets and in the
Consolidated Financial Statements as part of Tangible assets
under item Office renovation expenses. The depreciation
period for the renovation expenses of the leased premises is
consistent with the lease term.
Appropriations
The difference between the depreciation according to plan
and the depreciation of assets in taxation (Depreciation
difference), and the voluntary credit loss provision (Taxation
based provisions) are presented under Total appropriations
in the balance sheet of the Parent Company. In the income
statement, the change in depreciation difference and credit
loss provision is shown on line Appropriations. The voluntary
credit loss provision and depreciation difference recognised
under the Finnish Accounting Standards do not meet the
recognition criteria set out in IAS 37 Provisions, Contingent
Liabilities and Contingent Assets, and the credit loss provision
and depreciation difference are thus released in the Consoli-
dated Financial Statements into equity and deferred tax liability
in accordance with IAS 12 Income Tax. The Parent Company’s
credit loss provisions are recognised in accordance with tax
law (Act on the Taxation of Business Income 46§).
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Fair value reserve
According to the Act on Credit Institutions certain fair
value changes are required to be recorded in the fair value
reserve within equity. The fair value reserve corresponds
to term other comprehensive income used in IFRS 9 and
in the accounting policies of the Consolidated Financial
Statements. The following fair value changes are presented
in fair value reserve: fair value changes of financial assets at
fair value through other comprehensive income, changes
in fair value due to changes in own credit risk of financial
liabilities designated at fair value through profit or loss
and Cost-of-Hedging from fair value hedge accounting,
consisting of cross currency basis spread which has been
separated and excluded from the hedge relationship.
AT1 capital loan
MuniFin redeemed its EUR 350 million Perpetual Fixed rate
Resettable Additional Tier 1 Securities originally issued
on 1 October 2015. The redemption date was 1 April 2022,
which was the first repayment date of the Securities in
accordance with the terms and conditions thereof. The
Securities were redeemed at 100% of the aggregate
nominal amount together with accrued and unpaid interest
until the redemption date. The loan terms and conditions
are disclosed in Note 35 Subordinated liabilities. In the
Parent Company’s Financial Statements the AT1 capital
loan is recognised as debt under the balance sheet item
Subordinated liabilities. Interest paid on the AT1 capital loan is
recognised in the income statement under Interest expense.
AT1 capital loan is recognised as equity in the Consolidated
Financial Statements. Interest payments are recognised
in the Consolidated Financial Statements as a deduction
from equity in accordance with the issuer’s interest payment
decisions.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Notes to the income statement
The Company has not combined any items in the income statement under Chapter 2, Section 14(4), of the Ministry of Finance Decree.
Note 2. Interest income and expense
(EUR 1,000)
Jan–Dec 2022 Jan–Dec 2021
Interest and
similar income
Interest and
similar expense Net
Interest and
similar income
Interest and
similar expense Net
Assets
Amortised cost
Cash and balances with central banks 30,304 -26,828 3,475 - -38,619 -38,619
Loans and advances to credit institutions 8,290 -8,346 -56 46 -7,841 -7,796
Loans and advances to the public and public sector entities 220,905 - 220,905 188,484 - 188,484
Debt securities 5,345 -3,206 2,140 9 -5,335 -5,326
Other assets 8,019 - 8,019 1,121 - 1,121
Fair value through fair value reserve
Debt securities 9 - 9 - -589 -589
Designated at fair value through profit or loss
Loans and advances to the public and public sector entities 348 - 348 236 - 236
Debt securities 9,436 - 9,436 8,422 - 8,422
Mandatorily at fair value through profit or loss
Loans and advances to the public and public sector entities 827 - 827 933 - 933
Debt securities - - - - - -
Fair value through profit or loss
Derivative contracts at fair value through profit or loss 92,225 -87,665 4,560 76,104 -99,734 -23,630
Derivative contracts in hedge accounting -34,804 - -34,804 -93,724 - -93,724
Leased assets 10,177 - 10,177 6,366 - 6,366
Interest on non-financial other assets 6 - 6 8 - 8
Interest on assets 351,089 -126,045 225,044 188,005 -152,119 35,886
, of which interest income/expense according to the effective interest method 272,870 -38,380 189,660 -52,385
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
(EUR 1,000)
Jan–Dec 2022 Jan–Dec 2021
Interest and
similar income
Interest and
similar expense Net
Interest and
similar income
Interest and
similar expense Net
Liabilities
Amortised cost
Liabilities to credit institutions 11,575 -12,570 -995 20,118 -949 19,169
Liabilities to the public and public sector entities - -44,838 -44,838 - -51,503 -51,503
Debt securities issued 778 -263,148 -262,370 1,711 -219,984 -218,273
Subordinated liabilities - -4,049 -4,049 - -16,240 -16,240
Other liabilities - -4,282 -4,282 - -2,177 -2,177
Designated at fair value through profit or loss
Liabilities to credit institutions - -54 -54 - -30 -30
Liabilities to the public and public sector entities - -34,195 -34,195 - -32,726 -32,726
Debt securities issued - -157,748 -157,748 14 -78,466 -78,452
Fair value through profit or loss
Derivative contracts at fair value through profit or loss 348,298 -139,384 208,915 293,688 -96,628 197,061
Derivative contracts in hedge accounting - 311,682 311,682 - 411,252 411,252
Interest on liabilities 360,651 -348,586 12,066 315,531 -87,452 228,079
, of which interest income/expense according to the effective interest method 12,355 -328,887 21,829 -290,854
Total interest income and expense 711,740 -474,631 237,109 503,536 -239,571 263,965
, of which interest income from leasing operations 10,177 6,366
Total interest income and expense excluding interest income from leasing operations 701,563 497,170
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Interest income on stage 3 financial assets in the expected
credit loss (ECL) calculations totalled EUR 743 thousand
(EUR 951 thousand) during the financial year. These are
included in the line items Loans and advances to the public
and public sector entities and Leased assets.
Interest expense on other liabilities includes EUR 47
thousand (EUR 66 thousand) of interest on lease liabilities
recognised in accordance with IFRS 16 Leases standard.
Interest expenses on financial assets at amortised cost on
cash and balances with central banks consists of interest
paid on central bank deposits and interest on loans and
advances to credit institutions of interest on cash collateral
receivables. Interest expenses on debt securities consists
of interest paid on short-term lending. Negative interest
arises on debt securities at fair value through fair value
reserve due to the premium / discount amortisation of debt
securities and commercial papers. Interest expenses on
derivative contracts at fair value through profit or loss consist
of negative interest income on derivative contracts that are
not included in hedge accounting. The derivative contracts
contained in this line item hedge financial assets which are
designated at fair value through profit or loss, derivative
contracts with municipalities and derivative contracts
hedging derivatives with municipalities, in addition to
derivative contracts used for hedging interest rate risk of the
balance sheet, for which no hedged item has been specified.
Derivative contracts in hedge accounting hedge line items
Loans and advances to the public and public sector entities
and Leased assets.
Interest income on financial liabilities at amortised cost
to credit institutions consists of interest received on cash
collateral liabilities as well as on TLTRO III debt and interest
income on debt securities issued consists of interest
received on ECPs. Interest income on derivative contracts at
fair value through profit or loss consists of positive interest
expense on derivatives that are not included in hedge
accounting. The derivatives contained in this line item hedge
financial liabilities which are designated at fair value through
profit or loss. Derivative contracts in hedge accounting are
used as hedges for line items Liabilities to credit institutions,
Liabilities to the public and public sector entities and Debt
securities issued.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 3. Net income from leasing operations
Note 4. Income from equity investments
(EUR 1,000) Jan–Dec 2022 Jan–Dec 2021
Leasing income 88,343 71,463
Depreciation on leased assets according to plan -78,590 -65,111
Capital gains on leased assets 425 15
Tot al 10,177 6,366
The Company has not received dividend income from its subsidiary in financial years 2022 and 2021.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 5. Commission income and expense
(EUR 1,000)
COMMISSION INCOME Jan–Dec 2022 Jan–Dec 2021
From other operations 870 978
Tot al 870 978
COMMISSION EXPENSE
Commission fees paid -269 -248
Other -5,245 -4,805
Tot al -5,514 -5,053
Net commission income -4,644 -4,075
In commission expense line item Other includes i.e. paid guarantee fees, custody fees and funding programme update costs.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 6. Net income from securities and foreign exchange transactions
Jan–Dec 2022 (EUR 1,000)
Capital gains and
losses (net)
Changes in
fair value Tot al
Derivative contracts at fair value through profit or loss 205 -304,568 -304,363
Designated at fair value through profit or loss - 313,783 313,783
Mandatorily at fair value through profit or loss - -976 -976
Day 1 gain or loss - -156 -156
Total net income from securities transactions 205 8,083 8,288
Net income from foreign exchange transactions -11,124 10,976 -148
Tot al -10,918 19,058 8,140
Jan–Dec 2021 (EUR 1,000)
Capital gains and
losses (net)
Changes in
fair value Tot al
Derivative contracts at fair value through profit or loss 910 -204,471 -203,560
Designated at fair value through profit or loss - 229,029 229,029
Mandatorily at fair value through profit or loss -23 -2,532 -2,554
Day 1 gain or loss - -208 -208
Total net income from securities transactions 888 21,819 22,707
Net income from foreign exchange transactions 53 1,336 1,388
Tot al 940 23,155 24,095
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 7. Financial assets and liabilities designated at fair value through profit or loss
FINANCIAL ASSETS AND LIABILITIES DESIGNATED
AT FAIR VALUE THROUGH PROFIT OR LOSS
(EUR 1,000)
Nominal value
31 Dec 2022
Carrying amount
31 Dec 2022
Nominal value
31 Dec 2021
Carrying amount
31 Dec 2021
Financial assets
Loans and advances to the public and public sector entities 30,000 28,432 30,000 38,941
Debt securities 3,355,906 3,162,034 3,484,223 3,539,074
Total financial assets * 3,385,906 3,190,465 3,514,223 3,578,015
Financial liabilities
Liabilities to credit institutions 5,000 3,291 5,000 4,787
Liabilities to the public and public sector entitities 1,495,567 1,318,658 1,445,202 1,548,394
Debt securities issued 11,505,250 10,842,676 10,680,831 10,008,299
Total financial liabilities 13,005,818 12,164,626 12,131,032 11,561,479
* Financial assets designated at fair value through profit or loss are exposed to credit risk up to the carrying amounts of those securities at 31 Dec 2022 and 31 Dec 2021.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
CHANGE IN FAIR VALUE OF FINANCIAL ASSETS DESIGNATED
AT FAIR VALUE THROUGH PROFIT OR LOSS
(EUR 1,000) 31 Dec 2022 1 Jan 2022
Fair value change
recognised in the
income statement
Jan–Dec 2022
, of which due
to credit risk
, of which due
to market risk
Financial assets
Loans and advances to the public and public sector entities -10,581 -769 -9,812 196 -10,008
Debt securities -215,498 20,226 -235,724 -9,088 -226,635
Total financial assets -226,078 19,457 -245,535 -8,892 -236,643
CHANGE IN FAIR VALUE OF FINANCIAL LIABILITIES DESIGNATED
AT FAIR VALUE THROUGH PROFIT OR LOSS
(EUR 1,000) 31 Dec 2022 1 Jan 2022
Fair value change
recognised in the
income statement
Jan–Dec 2022
Change in own credit
risk recognised
in the own credit
revaluation reserve
Jan–Dec 2022
Total fair value
change in
Jan–Dec 2022
Financial liabilities
Liabilities to credit institutions 1,708 187 1,521 -25 1,496
Liabilities to the public and public sector entitities 245,483 -152,113 397,597 -12,269 385,327
Debt securities issued 733,254 573,054 160,201 12,111 172,311
Total financial liabilities 980,445 421,127 559,318 -184 559,134
Financial assets that MuniFin has designated at fair value through profit or loss include debt
securities in the liquidity portfolio of which the interest rate risk is hedged with interest rate
and cross currency interest rate swaps. The designation is made as it significantly reduces
accounting mismatch which would otherwise arise from measuring the derivative contract
at fair value through profit or loss and the debt security at fair value through fair value reserve
based on the IFRS 9 business model. The Company does not have credit derivatives hedging
these financial assets.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
MuniFin has designated short-term debt instruments denominated in foreign currencies,
which have been hedged with FX swaps at fair value through profit or loss. The designation
reduces accounting mismatch which would otherwise arise between the measurement of the
derivative and financial liability. The financial liabilities designated at fair value through profit or
loss consist of financial liabilities, which have been hedged according to the Company’s risk
management policy, but which are not subject to IFRS 9 standard fair value hedge accounting.
The fair value changes of the financial liabilities impact the income statement, but as they have
been hedged, the expected profit or loss is restricted to interest. The table above describes the
net impact of these financial liabilities and their hedges on the income statement.
When a financial liability is designated at fair value through profit or loss, the fair value change,
with exception to MuniFin’s own credit risk that is presented as change of the Own credit
revaluation reserve, is presented in Net income from securities transactions.
MuniFin applies the income approach of IFRS 13 standard to the separation of fair value
changes related to changes in own credit risk from the fair value changes of the financial
liability. For the majority of financial liabilities designated at fair value through profit or loss,
no market price is available as there is no active secondary market. The methodology for
separation of own credit risk utilises MuniFin’s benchmark curves, cross currency basis
spreads and credit spreads of MuniFin’s issued debt securities on the primary market as
input. Based on the aforementioned inputs, valuation curves can be constructed for various
reporting periods for valuing financial liabilities designated at fair value through profit or loss.
By comparing fair values calculated using the trade date and reporting date, the impact of
change in own credit risk on the fair value of the financial liability can be determined.
Financial liabilities designated at fair value through profit or loss are not traded.
NET CHANGE IN FAIR VALUE IN NET INCOME FROM SECURITIES TRANSACTIONS
(EUR 1,000)
Cumulative change in fair value
31 Dec 2022
Fair value change recognised in
the income statement
Jan–Dec 2022
Financial liabilities designated at fair value through profit or loss 980,445 559,318
Derivative contracts at fair value through profit or loss hedging financial liabilities -989,771 -554,212
Net change in fair value -9,325 5,106
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
CHANGE IN FAIR VALUE OF FINANCIAL ASSETS DESIGNATED
AT FAIR VALUE THROUGH PROFIT OR LOSS
(EUR 1,000) 31 Dec 2021 1 Jan 2021
Fair value change
recognised in the
income statement
Jan–Dec 2021
, of which due
to credit risk
, of which due
to market risk
Financial assets
Loans and advances to the public and public sector entities -769 - -769 13 -782
Debt securities 20,226 69,859 -49,633 4,434 -54,067
Total financial assets 19,457 69,859 -50,402 4,446 -54,849
CHANGE IN FAIR VALUE OF FINANCIAL LIABILITIES DESIGNATED
AT FAIR VALUE THROUGH PROFIT OR LOSS
(EUR 1,000) 31 Dec 2021 1 Jan 2021
Fair value change
recognised in the
income statement
Jan–Dec 2021
Change in own credit
risk recognised
in the own credit
revaluation reserve
Jan–Dec 2021
Total fair value
change in
Jan–Dec 2021
Financial liabilities
Liabilities to credit institutions 187 418 -231 26 -205
Liabilities to the public and public sector entitities -152,113 -244,146 92,032 1,729 93,761
Debt securities issued 573,054 385,424 187,630 -1,356 186,274
Total financial liabilities 421,127 141,696 279,431 400 279,831
NET CHANGE IN FAIR VALUE IN NET INCOME FROM SECURITIES TRANSACTIONS
(EUR 1,000)
Cumulative change in fair value
31 Dec 2021
Fair value change recognised in
the income statement
Jan–Dec 2021
Financial liabilities designated at fair value through profit or loss 421,127 279,431
Derivative contracts at fair value through profit or loss hedging financial liabilities -435,559 -267,712
Net change in fair value -14,432 11,719
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 8. Net income on financial assets at fair value through fair value reserve
Note 9. Net income from hedge accounting
(EUR 1,000) Jan–Dec 2022 Jan–Dec 2021
Capital gains from financial assets - -
Capital losses from financial assets -149 -
Unrealised gains transferred from fair value reserve - -
Unrealised losses transferred from fair value reserve - -
Tot al -149 -
(EUR 1,000) Jan–Dec 2022 Jan–Dec 2021
Net income from hedging instruments -1,448,952 -474,604
Net income from hedged items 1,485,395 480,729
IBOR reform related compensations * - -1,302
Tot al 36,444 4,823
* Compensations relate to the IBOR reform of which more information is presented in the accounting policies of the Consolidated Financial Statements (Note 1) in Section 23. IBOR reform.
Unrealised gains and losses include fair value of the risks to which fair value hedge accounting is applied and which are measured at fair value. The foreign exchange difference of both hedging
instruments and hedged items are presented under item Net income from foreign exchange transactions in Note 6. A specification of the net income from hedge accounting is presented in Note 25.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 10. Impact of the reclassified financial assets and liabilities
RECLASSIFICATION OF FINANCIAL ASSETS
(EUR 1,000)
Original measurement
category under IAS 39
New measurement
category under IFRS 9
Fair value
31 Dec 2022
Fair value gain or loss
for the financial year *
EIR determined as at
1 Jan 2018 **
Interest revenue
recognised during
Jan–Dec 2022
Loans and advances to the public and public sector entities Fair value option Amortised cost 91,834 -983 0.14% 478
* The fair value gain or loss that would have been recognised in the income statement during the financial year if the financial assets had not been reclassified.
** Effective interest rate determined on the date of initial application.
RECLASSIFICATION OF FINANCIAL ASSETS
(EUR 1,000)
Original measurement
category under IAS 39
New measurement
category under IFRS 9
Fair value
31 Dec 2021
Fair value gain or loss
for the financial year
EIR determined as at
1 Jan 2018
Interest revenue
recognised during
Jan–Dec 2021
Loans and advances to the public and public sector entities Fair value option Amortised cost 99,253 -1,589 0.14% 422
The following table shows the impact of reclassification of financial assets in the implementation of IFRS 9 standard (as of 1 Jan 2018) from at fair value through profit or loss under IAS 39 standard
into amortised cost under IFRS 9 standard. MuniFin did not reclassify any financial liabilities from fair value through profit or loss into amortised cost in the implementation of IFRS 9 standard.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 11. Other operating income
Note 12. Depreciation and impairment on tangible and intangible assets
(EUR 1,000) Jan–Dec 2022 Jan–Dec 2021
Other income from credit institution operations 126 132
Tot al 126 132
(EUR 1,000) Jan–Dec 2022 Jan–Dec 2021
Depreciation
Depreciation on tangible assets -2,843 -2,826
Depreciation on intangible assets -2,894 -2,783
Total depreciation -5,737 -5,609
Impairment
Impairment on intangible assets * -4,562 -10,482
Total impairment -4,562 -10,482
Total depreciation and impairment -10,299 -16,091
* Line item includes a non-recurring item of EUR 4,562 thousand (EUR 10,482 thousand), which consists of impairment on a significant terminated IT system implementation.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 13. Other operating expenses
(EUR 1,000) Jan–Dec 2022 Jan–Dec 2021
Regulatory expenses
Contributions to the Single Resolution Fund -9,185 -6,737
Other administrative and supervisory fees -2,324 -2,352
Rental expenses -414 -133
External services -5,590 -4,368
Credit rating fees -748 -753
Audit fees * -503 -422
Insurances -897 -575
Other expenses from credit institution operations -172 -535
Tot al -19,833 -15,876
* Paid fees to the auditor (KPMG Oy Ab) in 2022 totalled EUR 503 thousand (EUR 422 thousand) for audit, EUR 28 thousand (EUR 21 thousand) for tax services and EUR 189 thousand
(EUR 181 thousand) for other services. Assigments as referred to in section 1, subsection 1, paragraph 2 of the Auditing Act in 2022 totalled EUR 16 thousand (EUR 0 thousand).
Audit and other fees paid to the audit firm are specified in Note 51.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 14. Credit losses and impairments on financial assets
MuniFin’s credit risks are described in the Consolidated Financial Statements’ Note 2 Risk management principles and the Group’s risk position in Section 7. Credit Risk. The accounting policies of
the expected credit loss calculations and impairment stages are described in the accounting policies of the Consolidated Financial Statements (Note 1) in Section 9. Impairment of financial assets.
CREDIT LOSSES AND IMPAIRMENTS
Jan–Dec 2022 (EUR 1,000)
Expected credit losses Realised credit losses
Additions Subtractions
Recognised
in the income
statement Additions Subtractions
Recognised
in the income
statement
Expected credit losses on financial assets at amortised cost
Cash and balances with central banks - 0 0 - - -
Loans and advances to credit institutions -88 62 -27 - - -
Loans and advances to the public and public sector entities -1,011 1,386 375 - - -
Leased assets * -29 2 -26 - - -
Debt securities -1 0 -1 - - -
Cash collateral to CCPs in Other assets -190 - -190 - - -
Credit commitments (off-balance sheet) -15 5 -10 - - -
Total expected credit losses on financial assets at amortised cost -1,335 1,455 120 - - -
Expected credit losses and impairments on other financial assets
Debt securities at fair value through fair value reserve -29 26 -3 - - -
Guarantee receivables from the public and public sector entities in Other assets - - - - - -
Total expected credit losses and impairments on other financial assets -29 26 -3 - - -
Tot al -1,364 1,481 118 - - -
* Expected credit losses on Leased assets include also the expected credit loss on assets not classified as financial assets according to IFRS 9 standard.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
CREDIT LOSSES AND IMPAIRMENTS
Jan–Dec 2021 (EUR 1,000)
Expected credit losses Realised credit losses
Additions Subtractions
Recognised
in the income
statement Additions Subtractions
Recognised
in the income
statement
Expected credit losses on financial assets at amortised cost
Cash and balances with central banks 0 0 0 - - -
Loans and advances to credit institutions -53 14 -39 - - -
Loans and advances to the public and public sector entities -713 655 -58 - - -
Leased assets 0 1 0 - - -
Debt securities 0 0 0 - - -
Cash collateral to CCPs in Other assets -9 0 -9 - - -
Credit commitments (off-balance sheet) -2 3 1 - - -
Total expected credit losses on financial assets at amortised cost -778 674 -105 - - -
Expected credit losses and impairments on other financial assets
Debt securities at fair value through fair value reserve -18 19 0 - - -
Guarantee receivables from the public and public sector entities in Other assets - - - - - -
Total expected credit losses and impairments on other financial assets -18 19 0 - - -
Tot al -797 692 -104 - - -
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 15. Information on business areas and geographical market
Municipality Finance Plc’s operating segment is credit institution operations and the market for lending is Finland.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 16. Financial assets and liabilities
Notes to the balance sheet
The Company has not combined any items on the balance sheet under Chapter 2, Section 14(4), of the Ministry of Finance Decree.
FINANCIAL ASSETS
31 Dec 2022 (EUR 1,000)
Amortised
cost
Fair value through
fair value reserve
Designated at
fair value through
profit or loss
Mandatorily at
fair value through
profit or loss
Fair value through
profit or loss Tota l Fair value
Cash and balances with central banks 2 - - - - 2 2
Loans and advances to credit institutions 9,624,470 - - - - 9,624,470 9,624,470
Loans and advances to the public and public sector entities 27,781,745 - 28,432 31,090 - 27,841,267 29,451,798
Leased assets * 274,053 - - - - 274,053 288,092
Debt securities 1,457,098 167,636 3,162,034 - - 4,786,768 4,786,383
Shares and participations - - - - - - -
Shares and participations in Group companies - - - 656 - 656 656
Derivative contracts at fair value through profit or loss - - - - 504,097 504,097 504,097
Derivative contracts in hedge accounting - - - - 2,203,006 2,203,006 2,203,006
Other assets ** 1,219,541 - - - - 1,219,541 1,219,541
Tot al 40,356,910 167,636 3,190,465 31,746 2,707,103 46,453,861 48,078,045
* Line item includes leased assets for which MuniFin applies fair value hedge accounting. Unhedged leased assets are not presented in this table of financial assets and liabilities as leased assets
are not regarded as financial assets under IFRS 9 standard (classification).
** Line item includes cash collateral given to central counterparties.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
FINANCIAL LIABILITIES
31 Dec 2022 (EUR 1,000) Amortised cost
Designated at fair value
through profit or loss
Fair value through
profit or loss Tot a l Fair value
Liabilities to credit institutions 2,329,332 3,291 - 2,332,623 2,332,609
Liabilities to the public and public sector entities 1,210,927 1,318,658 - 2,529,585 2,543,548
Debt securities issued 24,749,389 10,842,676 - 35,592,065 35,650,001
Derivative contracts at fair value through profit or loss - - 1,562,525 1,562,525 1,562,525
Derivative contracts in hedge accounting - - 3,053,586 3,053,586 3,053,586
Other liabilities * 573,969 - - 573,969 573,969
Subordinated liabilities - - - - -
Tot al 28,863,617 12,164,626 4,616,111 45,644,353 45,716,238
* Line item includes EUR 570,922 thousand of cash collateral received from central counterparties and EUR 3,046 thousand of lease liabilities in accordance with IFRS 16 standard.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
FINANCIAL ASSETS
31 Dec 2021 (EUR 1,000) Amortised cost
Fair value through fair
value reserve
Designated at
fair value through
profit or loss
Mandatorily at
fair value through
profit or loss
Fair value through
profit or loss Tota l Fair value
Cash and balances with central banks 8,399,045 - - - - 8,399,045 8,399,045
Loans and advances to credit institutions 1,416,564 - - - - 1,416,564 1,416,564
Loans and advances to the public and public sector entities 27,805,752 - 38,941 35,204 - 27,879,897 30,045,876
Leased assets 242,936 - - - - 242,936 255,907
Debt securities 1,088,888 213,466 3,539,074 - - 4,841,428 4,841,792
Shares and participations - - - - - - -
Shares and participations in Group companies - - - 656 - 656 656
Derivative contracts at fair value through profit or loss - - - - 761,023 761,023 761,023
Derivative contracts in hedge accounting - - - - 1,238,653 1,238,653 1,238,653
Other assets * 238,930 - - - - 238,930 238,930
Tot al 39,192,115 213,466 3,578,015 35,860 1,999,676 45,019,131 47,198,446
* Line item includes cash collateral given to central counterparties.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
FINANCIAL LIABILITIES
31 Dec 2021 (EUR 1,000) Amortised cost
Designated at fair value
through profit or loss
Fair value through
profit or loss Tot a l Fair value
Liabilities to credit institutions 2,796,230 4,787 - 2,801,016 2,800,913
Liabilities to the public and public sector entities 1,776,291 1,548,394 - 3,324,685 3,344,334
Debt securities issued 25,319,226 10,008,299 - 35,327,525 35,434,600
Derivative contracts at fair value through profit or loss - - 1,114,003 1,114,003 1,114,003
Derivative contracts in hedge accounting - - 1,110,291 1,110,291 1,110,291
Other liabilities * 337,526 - - 337,526 337,526
Subordinated liabilities 349,878 - - 349,878 354,683
Tot al 30,579,151 11,561,479 2,224,294 44,364,925 44,496,351
* Line item includes EUR 333,295 thousand of cash collateral received from central counterparties and EUR 4,231 thousand of lease liabilities in accordance with IFRS 16 standard.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 17. Cash and cash equivalents
Cash and cash equivalents include the following balance sheet items:
Cash and balances with central banks and Loans and advances to credit institutions payable on demand.
(EUR 1,000) 31 Dec 2022 31 Dec 2021
Cash and balances with central banks 2 8,399,045
Loans and advances to credit institutions payable on demand 47,604 35,712
Total cash and cash equivalents 47,606 8,434,757
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 18. Loans and advances to credit institutions
31 Dec 2022 (EUR 1,000) Payable on demand
Other than payable
on demand
Expected
credit losses Total
Receivables from central bank - 8,143,541 0 8,143,541
Domestic credit institutions 29,027 154,000 -47 182,979
Foreign credit institutions 18,578 1,279,434 -61 1,297,950
Tot al 47,604 9,576,975 -109 9,624,470
31 Dec 2021 (EUR 1,000) Payable on demand
Other than payable
on demand
Expected
credit losses Total
Receivables from central bank - 35,984 0 35,984
Domestic credit institutions 12,382 34,300 -8 46,674
Foreign credit institutions 23,330 1,310,650 -74 1,333,906
Tot al 35,712 1,380,934 -82 1,416,564
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 19. Loans and advances to the public and public sector entities
(EUR 1,000)
31 Dec 2022 31 Dec 2021
Tot a l
, of which expected
credit losses Total
, of which expected
credit losses
Enterprises and housing corporations 14,862,774 -595 14,675,547 -1,002
Public sector entities 12,635,898 -173 12,847,172 -88
Non-profit organisations 342,595 -3 357,179 -57
Tot al 27,841,267 -772 27,879,897 -1,147
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 20. Debt securities
DEBT SECURITIES ISSUED BY PUBLIC SECTOR ENTITIES
31 Dec 2022 (EUR 1,000) Publicly quoted Other To t al
Expected
credit losses *
Amortised cost - 1,246,325 1,246,325 -1
Municipal commercial papers - 1,246,325 1,246,325 -1
Fair value through fair value reserve 58,487 - 58,487 0
Bonds issued by other public sector entities 58,487 - 58,487 0
Designated at fair value through profit or loss 1,438,177 - 1,438,177 -
Government bonds 120,539 - 120,539 -
Bonds issued by other public sector entities 1,317,638 - 1,317,638 -
Tot al 1,496,664 1,246,325 2,742,990 -1
, of which eligible for central bank refinancing 1,286,322 - 1,286,322 0
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
DEBT SECURITIES ISSUED BY OTHER THAN PUBLIC SECTOR ENTITIES
31 Dec 2022 (EUR 1,000) Publicly quoted Other To t al
Expected
credit losses *
Amortised cost - 210,773 210,773 0
Commercial papers - 210,773 210,773 0
Fair value through fair value reserve 109,149 - 109,149 -44
Bank bonds 109,149 - 109,149 -44
Designated at fair value through profit or loss 1,723,856 - 1,723,856 -
Bank bonds 1,723,856 - 1,723,856 -
Tot al 1,833,005 210,773 2,043,778 -44
, of which eligible for central bank refinancing 1,603,853 - 1,603,853 -31
31 Dec 2022 (EUR 1,000) Publicly quoted Other To t al
Expected
credit losses *
Debt securities total 3,329,670 1,457,098 4,786,768 -45
* The expected credit losses have been recognised on debt securities, which have been
classified at fair value through fair value reserve. Therefore, the expected credit loss is not
recognised as a deduction from the gross carrying amount of the debt securities in the balance
sheet, but from fair value reserve as described in the accounting policies of the Consolidated
Financial Statements (Note 1) in Section 9.4 Presentation of allowance for ECL in the statement
of financial position.
At the financial statement date 31 Dec 2022, debt securities contain a security, notional value
of EUR 10,000 thousand, that is given as collateral for reverse repo agreement. In addition, the
Company has given debt securities as collateral to central counterparty, in total nominal value
of EUR 25,000 thousand.
At the financial statement date 31 Dec 2022, MuniFin has no debt securities measured
mandatorily at fair value through profit or loss.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
DEBT SECURITIES ISSUED BY PUBLIC SECTOR ENTITIES
31 Dec 2021 (EUR 1,000) Publicly quoted Other To ta l
Expected
credit losses
Amortised cost - 930,252 930,252 0
Municipal commercial papers - 930,252 930,252 0
Fair value through fair value reserve 74,959 - 74,959 -1
Bonds issued by other public sector entities 74,959 - 74,959 -1
Designated at fair value through profit or loss 1,703,953 - 1,703,953 -
Government bonds 180,437 - 180,437 -
Bonds issued by other public sector entities 1,523,516 - 1,523,516 -
Tot al 1,778,912 930,252 2,709,164 -1
, of which eligible for central bank refinancing 1,572,169 - 1,572,169 0
DEBT SECURITIES ISSUED BY OTHER THAN PUBLIC SECTOR ENTITIES
31 Dec 2021 (EUR 1,000) Publicly quoted Other To ta l
Expected
credit losses
Amortised cost - 158,636 158,636 0
Commercial papers - 158,636 158,636 0
Fair value through fair value reserve 138,506 - 138,506 -41
Bank bonds 138,506 - 138,506 -41
Designated at fair value through profit or loss 1,835,121 - 1,835,121 -
Bank bonds 1,835,121 - 1,835,121 -
Tot al 1,973,627 158,636 2,132,263 -41
, of which eligible for central bank refinancing 1,739,885 - 1,739,885 -30
31 Dec 2021 (EUR 1,000) Publicly quoted Other To ta l
Expected
credit losses
Debt securities total 3,752,539 1,088,888 4,841,428 -41
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 21. Leased assets
(EUR 1,000) 31 Dec 2022 31 Dec 2021
Prepayments 317,076 500,763
Machinery and equipment 252,030 267,337
Fixed assets and buildings 733,744 565,732
Other assets 274 315
Expected credit losses -28 -2
Tot al 1,303,094 1,334,146
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 22. Credit risks of financial assets and other commitments
MuniFin’s credit risks are described in the Consolidated Financial Statements’s Note 2 Risk management principles and the Group’s risk position in Section 7. Credit Risk. The expected credit loss
calculation method and impairment stages are described in the accounting policies of the Consolidated Financial Statements (Note 1) in Section 9. Impairment of financial assets.
The following table presents exposures under expected credit loss calculations by asset groups and impairment stages.
EXPOSURES BY ASSET GROUPS AND IMPAIRMENT STAGES
31 Dec 2022
(EUR 1,000)
Not credit-impaired Credit-impaired
Tot a l
Stage 1 Stage 2 Stage 3 *
Gross carrying
amount
12-month
ECL
Gross carrying
amount
Lifetime
ECL
Gross carrying
amount
Lifetime
ECL
Gross carrying
amount
Expected
credit losses
Cash and balances with central banks at amortised cost 2 - - - - - 2 -
Loans and advances to credit institutions at amortised cost 9,624,470 -109 - - - - 9,624,470 -109
Loans and advances to the public and public sector entities at amortised cost 27,277,326 -89 497,729 -662 6,690 -21 27,781,745 -772
Leased assets at amortised cost 1,283,297 -6 19,655 -22 142 0 1,303,094 -28
Debt securities at amortised cost 1,457,098 -1 - - - - 1,457,098 -1
Debt securities at fair value through fair value reserve 167,636 -44 - - - - 167,636 -44
Cash collateral to CCPs in Other assets at amortised cost 1,219,541 -203 - - - - 1,219,541 -203
Guarantee receivables from the public and public sector entities in Other assets - - - - - - - -
Credit commitments (off-balance sheet) 2,447,573 -1 1 16,392 -2 - - 2,463,964 -14
Tot al 43,476,943 -464 533,776 -686 6,832 -21 44,017,551 -1,171
* MuniFin has collateral and guarantee arrangements that fully cover the stage 3 receivables as described in the Consolidated Financial Statements’ Note 2 Risk management principles and
the Group’s risk position in Section 7. Credit risk. MuniFin’s management expects that all the stage 3 receivables will be recovered and no final credit loss will emerge. Stage 3 receivables include
EUR 2,144 thousand (EUR 2,345 thousand) of originated credit impaired receivables (purchased or originated credit impaired, POCI). Expected credit losses for the POCI receivables amount to
EUR 8 thousand (EUR 7 thousand).
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
EXPOSURES BY ASSET GROUPS AND IMPAIRMENT STAGES
31 Dec 2021
(EUR 1,000)
Not credit-impaired Credit-impaired
Tot a l
Stage 1 Stage 2 Stage 3
Gross carrying
amount
12-month
ECL
Gross carrying
amount
Lifetime
ECL
Gross carrying
amount
Lifetime
ECL
Gross carrying
amount
Expected
credit losses
Cash and balances with central banks at amortised cost 8,399,045 0 - - - - 8,399,045 0
Loans and advances to credit institutions at amortised cost 1,416,564 -82 - - - - 1,416,564 -82
Loans and advances to the public and public sector entities at amortised cost 27,457,506 -23 220,730 -578 127,517 -546 27,805,752 -1,147
Leased assets at amortised cost 1,333,987 -2 - - 159 - 1,334,146 -2
Debt securities at amortised cost 1,079,338 0 9,550 0 - - 1,088,888 0
Debt securities at fair value through fair value reserve 213,466 -41 - - - - 213,466 -41
Cash collateral to CCPs in Other assets at amortised cost 238,930 -13 - - - - 238,930 -13
Guarantee receivables from the public and public sector entities in Other assets 1,752 - - - - - 1,752 -
Credit commitments (off-balance sheet) 2,585,201 -4 3,167 0 4,506 0 2,592,873 -4
Tot al 42,725,787 -166 233,447 -578 132,182 -546 43,091,415 -1,289
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
The following table presents a summary of total changes and reconciliation of expected credit losses by impairment stages during the financial year.
TOTAL EXPECTED CREDIT LOSSES BY IMPAIRMENT STAGES
(EUR 1,000)
Not credit-impaired Credit-impaired
Tot a l
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL ECL
Gross carrying
amount
Opening balance 1 Jan 2022 -166 -578 -546 -1,289 43,091,415
New assets originated or purchased -361 357 -1 -5 17,324,241
Assets derecognised or repaid (excluding write-offs) 95 7 77 179 -16,398,049
Transfers to Stage 1 -1 496 - 496 496
Transfers to Stage 2 1 -575 18 -556 -556
Transfers to Stage 3 0 - 0 0 0
Additional provision (Management overlay) - - 430 430 430
Changes to contractual cash flows due to modifications not resulting in derecognition - - - - -
Changes to models * and inputs ** used for ECL calculations -32 -394 0 -426 -425
Write-offs - - - - -
Recoveries - - - - -
Total 31 Dec 2022 -464 -686 -21 -1,171 44,017,551
* Represents changes in the model.
** Represents changes to model parameters (e.g. GDP rates, unemployment rates)
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
MuniFin finished ECL IT and model development during the second half of the year
2022. With the development, changes have been made to the assessment criteria for
significant increase in credit risk (SICR), and to the models of probability of default (PD)
and loss given default (LGD). In addition, macro scenarios were updated to take into
account forward-looking information at the end of financial year. Expected credit losses
increased by EUR 426 thousand due to the changes in models and parameters.
MuniFin recorded an additional discretionary provision (management overlay) at the
end of 2021 to take into account IT and model changes that will take place in 2022. The
amount of additional discretionary provision was increased at the end of June 2022. The
additional discretionary provision based on a group-specific assessment and decided
by MuniFin’s management was EUR 916 thousand. Since the IT and model development
were finished in the second half of the 2022, the additional discretionary provision
based on the group-specific assessment was removed. The addiotional provision
was recognised under the balance sheet item Loans and advances to the public and
public sector entities. The additional provision was not allocated to contract level.
MuniFin total credit risk has still remained low and the amount of ECL remains low.
Municipalities’ tax development was positive during 2022. The year 2023 is estimated to
be remarkably strong for the local government finances, despite the weakened economic
outlook, as the tax revenue-cutting effect of the health and social services reform will only
be seen in full impact on 2024. During 2022, the ongoing energy crisis, rising interest rates
and inflation have not yet had a significant effect on MuniFin’s customers’ ability to pay
or creditworthiness. MuniFin’s customer exposures have zero risk weight in the capital
adequacy calculation because they are from Finnish municipalities, joint municipal authorities
or wellbeing services counties, or involve a municipal, joint municipal authority or wellbeing
services county guarantee or a state deficiency guarantee supplementing the real estate
collateral as described in the Consolidated Financial Statements in Note 2 Risk management
principles and the Group’s risk position under Section 7. Credit risk. The management
estimates that all receivables will be recovered in full and therefore no final credit loss will
arise. On 31 December 2022, MuniFin had total of EUR 4 million (EUR 19 million) in guarantee
receivables from the public sector due to the insolvency of customers. Credit risk of the
liquidity portfolio has remained on a good quality level with the average rating of AA+ (AA+).
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
TOTAL EXPECTED CREDIT LOSSES BY IMPAIRMENT STAGES
(EUR 1,000)
Not credit-impaired Credit-impaired
Tot a l
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL ECL
Gross carrying
amount
Opening balance 1 Jan 2021 -126 -835 -224 -1,184 39,716,876
New assets originated or purchased -41 56 -13 3 9,637,333
Assets derecognised or repaid (excluding write-offs) 46 101 55 203 -6,262,486
Transfers to Stage 1 0 18 - 18 18
Transfers to Stage 2 0 -203 60 -143 -143
Transfers to Stage 3 0 1 -1 1 1
Additional provision (Management overlay) - 340 -430 -90 -90
Changes to contractual cash flows due to modifications not resulting in derecognition - - - - -
Changes to models and inputs used for ECL calculations -46 -56 6 -96 -94
Write-offs - - - - -
Recoveries - - - - -
Total 31 Dec 2021 -166 -578 -546 -1,289 43,091,415
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
In 2021, MuniFin made changes to macro scenarios and loss given default parameters in
expected credit loss calculations, which increased ECL by EUR 96 thousand. There were no
changes in the ECL model.
At the end of 2021, MuniFin recorded an additional discretionary provision (management
overlay) of EUR 430 thousand to take into account ECL model changes that will take place in
2022. The assessment of the need for additional provision was based on the fact that MuniFin’s
management estimated that due to the model changes, part of the exposures would transfer
to stage 2 in the expected credit loss calculations when ECL is calculated for the lifetime of the
contract instead of a 12-month ECL, or in some cases LGD would increase. In addition, model
changes were expected to have an effect on the amount of ECL in stage 3. Since the IT and
model development were finished in the second half of the 2022, the additional dicreationary
provision based on the group-specific assessment was removed in the financial year 2022.
The additional provision related to the balance sheet line item Loans and advances to the public
and public sector entities. The additional provision was not allocated to contract level.
The following tables present changes and reconciliation of expected credit losses by
impairment stages and asset groups during the financial year.
EXPECTED CREDIT LOSSES ON CASH AND BALANCES WITH CENTRAL BANKS AT
AMORTISED COST BY IMPAIRMENT STAGES
(EUR 1,000)
Not credit-impaired Credit-impaired
Tot a l
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL ECL
Gross carrying
amount
Opening balance 1 Jan 2022 0 - - 0 8,399,045
New assets originated or purchased - - - - -
Assets derecognised or repaid (excluding write-offs) 0 - - 0 -8,399,043
Transfers to Stage 1 - - - - -
Transfers to Stage 2 - - - - -
Transfers to Stage 3 - - - - -
Changes to models and inputs used for ECL calculations - - - - -
Total 31 Dec 2022 - - - - 2
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
EXPECTED CREDIT LOSSES ON LOANS AND ADVANCES TO CREDIT INSTITUTIONS
AT AMORTISED COST BY IMPAIRMENT STAGES
(EUR 1,000)
Not credit-impaired Credit-impaired
Tot a l
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL ECL
Gross carrying
amount
Opening balance 1 Jan 2022 -82 - - -82 1,416,564
New assets originated or purchased -85 - - -85 9,112,062
Assets derecognised or repaid (excluding write-offs) 62 - - 62 -904,152
Transfers to Stage 1 - - - - -
Transfers to Stage 2 - - - - -
Transfers to Stage 3 - - - - -
Changes to models and inputs used for ECL calculations -3 - - -3 -3
Total 31 Dec 2022 -109 - - -109 9,624,470
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
EXPECTED CREDIT LOSSES ON LOANS AND ADVANCES TO THE PUBLIC AND
PUBLIC SECTOR ENTITIES AT AMORTISED COST BY IMPAIRMENT STAGES
(EUR 1,000)
Not credit-impaired Credit-impaired
Tot a l
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL ECL
Gross carrying
amount
Opening balance 1 Jan 2022 -23 -578 -546 -1,147 27,805,752
New assets originated or purchased -42 357 -1 314 3,871,298
Assets derecognised or repaid (excluding write-offs) 2 4 77 84 -3,895,282
Transfers to Stage 1 -1 496 - 496 496
Transfers to Stage 2 0 -573 18 -554 -554
Transfers to Stage 3 0 - 0 0 0
Additional provision (Management overlay) - - 430 430 430
Changes to contractual cash flows due to modifications not resulting in derecognition - - - - -
Changes to models and inputs used for ECL calculations -25 -370 0 -395 -395
Write-offs - - - - -
Total 31 Dec 2022 -89 -662 -21 -772 27,781,745
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
EXPECTED CREDIT LOSSES ON LEASED ASSETS AT AMORTISED COST BY
IMPAIRMENT STAGES
(EUR 1,000)
Not credit-impaired Credit-impaired
Tot a l
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL ECL
Gross carrying
amount
Opening balance 1 Jan 2022 -2 - 0 -2 1,334,146
New assets originated or purchased -5 0 0 -5 242,148
Assets derecognised or repaid (excluding write-offs) 2 - - 2 -273,177
Transfers to Stage 1 - - - - -
Transfers to Stage 2 0 0 - 0 0
Transfers to Stage 3 - - - - -
Changes to models and inputs used for ECL calculations -2 -22 - -23 -23
Total 31 Dec 2022 -6 -22 0 -28 1,303,094
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
EXPECTED CREDIT LOSSES ON DEBT SECURITIES AT AMORTISED COST BY
IMPAIRMENT STAGES
(EUR 1,000)
Not credit-impaired Credit-impaired
Tot a l
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL ECL
Gross carrying
amount
Opening balance 1 Jan 2022 0 0 - 0 1,088,888
New assets originated or purchased -1 - - -1 1,457,098
Assets derecognised or repaid (excluding write-offs) 0 0 - 0 -1,088,888
Transfers to Stage 1 - - - - -
Transfers to Stage 2 - - - - -
Transfers to Stage 3 - - - - -
Changes to models and inputs used for ECL calculations - - - - -
Total 31 Dec 2022 -1 - - -1 1,457,098
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
EXPECTED CREDIT LOSSES ON DEBT SECURITIES AT FAIR VALUE THROUGH FAIR
VALUE RESERVE BY IMPAIRMENT STAGES
(EUR 1,000)
Not credit-impaired Credit-impaired
Tot a l
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL ECL
Gross carrying
amount
Opening balance 1 Jan 2022 -41 - - -41 213,466
New assets originated or purchased -28 - - -28 52,770
Assets derecognised or repaid (excluding write-offs) 26 - - 26 -98,599
Transfers to Stage 1 - - - -
Transfers to Stage 2 - - - -
Transfers to Stage 3 - - - -
Changes to models and inputs used for ECL calculations -1 - - -1
Total 31 Dec 2022 -44 - - -44 167,636
The loss allowance on debt instruments classified at fair value through fair value reserve is recognised in fair value reserve. The accumulated loss allowance is recognised to the profit or loss upon
derecognition of the assets. More details regarding the presentation of allowance for expected credit losses is presented in the accounting policies of the Consolidated Financial Statements (Note
1) in Section 9.4 Presentation of allowance for ECL in the statement of financial position.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
EXPECTED CREDIT LOSSES ON CASH COLLATERAL TO CCPS IN OTHER ASSETS
AT AMORTISED COST BY IMPAIRMENT STAGES
(EUR 1,000)
Not credit-impaired Credit-impaired
Tot a l
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL ECL
Gross carrying
amount
Opening balance 1 Jan 2022 -13 - - -13 238,930
New assets originated or purchased -190 - - -190 980,611
Assets derecognised or repaid (excluding write-offs) - - - - -
Transfers to Stage 1 - - - - -
Transfers to Stage 2 - - - - -
Transfers to Stage 3 - - - - -
Changes to models and inputs used for ECL calculations - - - - -
Total 31 Dec 2022 -203 - - -203 1,219,541
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
EXPECTED CREDIT LOSSES ON GUARANTEE RECEIVABLES FROM THE PUBLIC
AND PUBLIC SECTOR ENTITIES IN OTHER ASSETS BY IMPAIRMENT STAGES
(EUR 1,000)
Not credit-impaired Credit-impaired
Tot a l
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL ECL
Gross carrying
amount
Opening balance 1 Jan 2022 - - - - 1,751,603
New assets originated or purchased - - - - -
Assets derecognised or repaid (excluding write-offs) - - - - -1,751,603
Transfers to Stage 1 - - - - -
Transfers to Stage 2 - - - - -
Transfers to Stage 3 - - - - -
Changes to models and inputs used for ECL calculations - - - - -
Recoveries - - - - -
Total 31 Dec 2022 - - - - -
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
EXPECTED CREDIT LOSSES ON CREDIT COMMITMENTS (OFF-BALANCE SHEET)
BY IMPAIRMENT STAGES
(EUR 1,000)
Not credit-impaired Credit-impaired
Tot a l
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL ECL
Gross carrying
amount
Opening balance 1 Jan 2022 -4 0 0 -4 2,592,873
New assets originated or purchased -9 0 - -9 1,608,254
Assets derecognised or repaid (excluding write-offs) 3 2 0 5 -1,737,157
Transfers to Stage 1 - - - -
Transfers to Stage 2 0 -2 - -2
Transfers to Stage 3 - - - -
Changes to models and inputs used for ECL calculations -1 -2 - -4
Total 31 Dec 2022 -11 -2 - -14 2,463,964
The loss allowance on binding credit commitments is recognised under Other liabilities. More details regarding the presentation of allowance for expected credit losses is presented in the
accounting policies of the Consolidated Financial Statements (Note 1) in Section 9.4 Presentation of allowance for ECL in the statement of financial position.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
EXPECTED CREDIT LOSSES ON CASH AND BALANCES WITH CENTRAL BANKS AT
AMORTISED COST BY IMPAIRMENT STAGES
(EUR 1,000)
Not credit-impaired Credit-impaired
Tot a l
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL ECL
Gross carrying
amount
Opening balance 1 Jan 2021 0 - - 0 5,565,801
New assets originated or purchased 0 - - 0 2,833,244
Assets derecognised or repaid (excluding write-offs) 0 - - 0 0
Transfers to Stage 1 - - - - -
Transfers to Stage 2 - - - - -
Transfers to Stage 3 - - - - -
Changes to models and inputs used for ECL calculations - - - - -
Total 31 Dec 2021 0 - - 0 8,399,045
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
EXPECTED CREDIT LOSSES ON LOANS AND ADVANCES TO CREDIT INSTITUTIONS
AT AMORTISED COST BY IMPAIRMENT STAGES
(EUR 1,000)
Not credit-impaired Credit-impaired
Tot a l
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL ECL
Gross carrying
amount
Opening balance 1 Jan 2021 -43 - - -43 1,840,980
New assets originated or purchased -1 0 - - -10 353,939
Assets derecognised or repaid (excluding write-offs) 14 - - 14 -778,312
Transfers to Stage 1 - - - - -
Transfers to Stage 2 - - - - -
Transfers to Stage 3 - - - - -
Changes to models and inputs used for ECL calculations -43 - - -43 -43
Total 31 Dec 2021 -82 - - -82 1,416,564
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
EXPECTED CREDIT LOSSES ON LOANS AND ADVANCES TO THE PUBLIC AND
PUBLIC SECTOR ENTITIES AT AMORTISED COST BY IMPAIRMENT STAGES
(EUR 1,000)
Not credit-impaired Credit-impaired
Tot a l
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL ECL
Gross carrying
amount
Opening balance 1 Jan 2021 -30 -835 -224 -1,089 26,886,947
New assets originated or purchased -11 56 -13 33 3,238,833
Assets derecognised or repaid (excluding write-offs) 10 101 55 167 -2,319,771
Transfers to Stage 1 0 18 - 18 18
Transfers to Stage 2 0 -203 60 -143 -143
Transfers to Stage 3 - 1 -1 1 1
Additional provision (Management overlay) - 340 -430 -90 -90
Changes to contractual cash flows due to modifications not resulting in derecognition - - - - -
Changes to models and inputs used for ECL calculations 7 -56 6 -44 -44
Write-offs - - - - -
Total 31 Dec 2021 -23 -578 -546 -1,147 27,805,752
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
EXPECTED CREDIT LOSSES ON LEASED ASSETS AT AMORTISED COSTBY
IMPAIRMENT STAGES
(EUR 1,000)
Not credit-impaired Credit-impaired
Tot a l
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL ECL
Gross carrying
amount
Opening balance 1 Jan 2021 -2 0 0 -2 1,090,940
New assets originated or purchased 0 - - 0 310,062
Assets derecognised or repaid (excluding write-offs) 0 - 0 0 -66,857
Transfers to Stage 1 - - - - -
Transfers to Stage 2 - - - - -
Transfers to Stage 3 - - - - -
Changes to models and inputs used for ECL calculations 1 - 0 1 1
Total 31 Dec 2021 -2 0 0 -2 1,334,146
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
EXPECTED CREDIT LOSSES ON DEBT SECURITIES AT AMORTISED COST BY
IMPAIRMENT STAGES
(EUR 1,000)
Not credit-impaired Credit-impaired
Tot a l
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL ECL
Gross carrying
amount
Opening balance 1 Jan 2021 0 0 - 0 1,310,305
New assets originated or purchased 0 0 - 0 1,088,888
Assets derecognised or repaid (excluding write-offs) 0 0 - 0 -1,310,305
Transfers to Stage 1 - - - - -
Transfers to Stage 2 - - - - -
Transfers to Stage 3 - - - - -
Changes to models and inputs used for ECL calculations - - - - -
Total 31 Dec 2021 0 0 - 0 1,088,888
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
EXPECTED CREDIT LOSSES ON DEBT SECURITIES AT FAIR VALUE THROUGH FAIR
VALUE RESERVE BY IMPAIRMENT STAGES
(EUR 1,000)
Not credit-impaired Credit-impaired
Tot a l
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL ECL
Gross carrying
amount
Opening balance 1 Jan 2021 -42 - - -42 423,050
New assets originated or purchased -1 6 - - -16 28,176
Assets derecognised or repaid (excluding write-offs) 19 - - 19 -237,760
Transfers to Stage 1 - - - -
Transfers to Stage 2 - - - -
Transfers to Stage 3 - - - -
Changes to models and inputs used for ECL calculations -2 - - -2
Total 31 Dec 2021 -41 - - -41 213,466
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
EXPECTED CREDIT LOSSES ON CASH COLLATERAL TO CCPS IN OTHER ASSETS
AT AMORTISED COST BY IMPAIRMENT STAGES
(EUR 1,000)
Not credit-impaired Credit-impaired
Tot a l
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL ECL
Gross carrying
amount
Opening balance 1 Jan 2021 -4 - - -4 243,269
New assets originated or purchased -1 - - -1 22,942
Assets derecognised or repaid (excluding write-offs) 0 - - 0 -27,272
Transfers to Stage 1 - - - - -
Transfers to Stage 2 - - - - -
Transfers to Stage 3 - - - - -
Changes to models and inputs used for ECL calculations -8 - - -8 -8
Total 31 Dec 2021 -13 - - -13 238,930
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
EXPECTED CREDIT LOSSES ON GUARANTEE RECEIVABLES FROM THE PUBLIC
AND PUBLIC SECTOR ENTITIES IN OTHER ASSETS BY IMPAIRMENT STAGES
(EUR 1,000)
Not credit-impaired Credit-impaired
Tot a l
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL ECL
Gross carrying
amount
Opening balance 1 Jan 2021 - - - - 1,606
New assets originated or purchased - - - - 145
Assets derecognised or repaid (excluding write-offs) - - - - -
Transfers to Stage 1 - - - - -
Transfers to Stage 2 - - - - -
Transfers to Stage 3 - - - - -
Changes to models and inputs used for ECL calculations - - - - -
Recoveries - - - - -
Total 31 Dec 2021 - - - - 1,752
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
EXPECTED CREDIT LOSSES ON CREDIT COMMITMENTS (OFF-BALANCE SHEET)
BY IMPAIRMENT STAGES
(EUR 1,000)
Not credit-impaired Credit-impaired
Tot a l
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL ECL
Gross carrying
amount
Opening balance 1 Jan 2021 -4 0 0 -4 2,353,978
New assets originated or purchased -2 0 - -2 1,761,104
Assets derecognised or repaid (excluding write-offs) 3 - 0 3 -1,522,209
Transfers to Stage 1 - - - -
Transfers to Stage 2 - - - -
Transfers to Stage 3 - 0 0 0
Changes to models and inputs used for ECL calculations 0 - 0 0
Total 31 Dec 2021 -4 0 0 -4 2,592,873
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Forward-looking information
In the assessment of whether the credit risk of an instrument
has significantly increased (SICR) and in the measurement
of expected credit losses, forward-looking information
and macroeconomic scenarios are included in the model.
These macroeconomic projections cover a period of 3 years
and as no reliable macroeconomic projections exceeding
a three-year time horizon are available, forward-looking
adjustment will be limited to a three-year period. Mainly
three scenarios are used; base, optimistic and adverse.
Scenarios include probability weights. The scenario
probability weightings are described in the adjacent table.
SCENARIO
31 Dec 2022 31 Dec 2021
2023 2024 2025 2022 2023 2024
Adverse 30% 30% 30% 40% 40% 40%
Base 60% 60% 60% 50% 50% 40%
Optimistic 10% 10% 10% 10% 10% 20%
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
MuniFin has identified key drivers of credit losses for each
portfolio that share similar kinds of credit risk characteristics
and estimated the relationship between macroeconomic
variables and credit losses. The ECL model consists
of the following macroeconomic variables for Finnish
counterparties of financial assets: Finnish government
long-term interest rate, the development of residential
housing prices and unemployment rate. For non-Finnish
financial assets, stress test scenarios published by the
European Central Bank are employed in the model and
scenario parameters. Each variable covers an estimate over
a period of three years. The adjacent table presents the
macroeconomic variables and their forecasts over the three-
year forecast period.
MACROECONOMIC VARIABLES Scenario
31 Dec 2022 31 Dec 2021
2023 2024 2025 2022 2023 2024
10Y Fin Government rate, %
Adverse 4.0 3.6 3.4 1.2 0.5 0.3
Base 3.2 3.1 3.2 0.3 0.6 0.8
Optimistic 2.2 1.9 1.8 0.8 1.1 1.2
Residential Real Estate
(selling price, YoY change), %
Adverse -13.0 0.0 2.0 -8.0 -7.0 -2.0
Base -2.0 2.0 1.5 -2.0 -3.0 -1.4
Optimistic 0.0 3.0 2.5 3.5 3.0 1.5
Unemployment rate, %
Adverse 9.5 9.0 8.5 8.7 9.2 8.5
Base 7.4 7.3 6.8 6.9 6.5 6.3
Optimistic 6.5 6.0 5.8 6.5 6.0 5.8
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
The Russian invasion of Ukraine has fundamentally changed the outlook of the Finnish
economy. Not only has consumer confidence weakened, but business expectations have also
taken a clear downward turn. Despite the challenging outlook, however, the Finnish economy
is facing the future from a better position than it did when the COVID-19 pandemic hit. The
service sector has revitalised after COVID restrictions were lifted, and employment rate is still
at its highest level since early 1990’s. The growth outlook is nevertheless bound to deteriorate
because of rising living costs and rapidly tightening monetary policy. MuniFin Group expects
output to contract 0.5% in 2023. From 2024 onwards, the economy will gradually converge
back to its long-term growth path and the annual pace of expansion is around 1.5%. Unemploy-
ment is expected to rise above 7% in 2023–2024. Unemployment rate returns to a moderately
declining trend from 2025 onwards. In the near term, high energy and food prices continue to
contribute to inflationary pressures. In the base scenario, Finnish consumer prices rise 6.7%
in 2022. Annual CPI inflation is expected to decline to 4.0% in 2023 and stabilise around 2% in
2024–2026. To make sure that future inflation expectations remain well anchored, the Euro-
pean Central Bank (ECB) is expected to continue raising interest rates in the first half of 2023.
The pace of monetary tightening slows down, however, as cost pressures gradually ease off.
On the national level, higher interest rates mitigate households’ home buying intentions. Home
prices cease to rise in 2022 and they are expected to contract 2.0% in 2023. For the rest of the
projection period, the annual increase in home prices is expected to settle around 1.5–2.0%.
Compared to the base scenario, MuniFin Group’s upside (optimistic) scenario factors in the
economic impact of the war in Ukraine to be less severe and inflationary pressures to ease
somewhat quicker. As a result, the Finnish GDP would grow faster in the subsequent two years
(1.0% in 2023 and 2.5% in 2024). In the upside scenario, unemployment rate continues its slow
decline during the whole projection period. Consumer price inflation accelerates to 6.0% in
2022 but cools down back to 2.5% already in 2023. Despite rising interest rates, relatively
steady housing demand prevents home prices from contracting in 2023. Thereafter, consumer
and home prices rise at about 2.0–3.0% pace in 2024–2026. As inflation starts declining
sooner, in the optimistic scenario the ECB raises interest rates less in 2023 than in the base
scenario. As a result, market interest rates also rise more slowly.
MuniFin Group’s downside (adverse) scenario represents a deeply stagflationary outcome
where the war in Ukraine leads to more persistent inflation and a contracting real economy.
Economic recession continues well into 2024. Unemployment rises more and remains high
much longer than in the base scenario. Rising energy and food prices trigger a wage inflation
spiral, making it harder for the the ECB to get future inflation expectations under control.
The ECB is forced to raise interest rates much higher than in the base case, deepening the
contraction in GDP. CPI inflation remains well above ECB’s target through 2024. Lack of
demand in the housing market leads to a sharp decline in home prices. Prolonged global
recession creates tensions in financial markets, giving rise to wider risk premia in asset pricing.
The following table presents the sensitivity of the expected credit losses to the forward-
looking information assuming 100% weight for the adverse scenario until 2024 (2023).
SENSITIVITY ANALYSIS
(EUR 1,000)
31 Dec 2022 31 Dec 2021
Weighted
scenario
Adverse
scenario
(100%)
Weighted
scenario
Adverse
scenario
(100%)
ECL 1,171 1,547 859 1,150
Proportion of the exposure in
Stage 2 and 3 1.27% 2.57% 0.86% 1.15%
The sensitivity analysis does not include the additional discretionary provisions
(management overlay).
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Forbearance measures are concessions to original contractual payment terms agreed at the
customers’ initiative to help the customer through temporary payment difficulties. Performing
forborne exposures include forborne exposures reclassified as performing during their
probation period or forbearance measures made into a performing loan. Loan modifications
due to reasons other than the customer’s financial difficulties are not classified as forborne
exposures. MuniFin considers a loan forborne when such concessions or modifications are
provided as a result of the borrower’s present or expected financial difficulties and MuniFin
would not have agreed to them if the borrower had been financially healthy.
The COVID-19 pandemic affected the financial situation and liquidity of MuniFin’s customers.
The Company therefore offered concessions to the payment terms of loans to those
customers whose finances had been temporarily affected by the pandemic. Only a few
individual repayment holidays have been extended during 2022 and 2021. The uncollected
installments were mainly transferred to the end of the loan term to be paid in connection with
the last installment. No lease concessions were granted to MuniFin’s leasing customers.
Realised credit losses
MuniFin has not had any final realised credit losses during the financial year or the comparison
year.
Non-performing and forborne exposures
Non-performing and forborne exposures refer to receivables that are more than 90 days past due, other receivables classified as risky and forborne exposures due to the customer’s financial
difficulties.
NON-PERFORMING AND FORBORNE EXPOSURES
31 Dec 2022 (EUR 1,000) Performing exposures
Non-performing
exposures Total exposures
Total expected
credit losses
Total exposures
(net)
Over 90 days past due - 4,087 4,087 -13 4,074
Unlikely to be paid - 509 509 0 509
Forborne exposures 77,268 2,513 79,780 -478 79,303
Tot a l 77,268 7,110 84,377 -491 83,886
NON-PERFORMING AND FORBORNE EXPOSURES
31 Dec 2021 (EUR 1,000) Performing exposures
Non-performing
exposures Total exposures
Total expected
credit losses
Total exposures
(net)
Over 90 days past due - 16,813 16,813 -82 16,731
Unlikely to be paid - 85,559 85,559 -8 85,551
Forborne exposures 61,862 25,849 87,711 -238 87,473
Tot a l 61,862 128,221 190,083 -328 189,755
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 23. Shares and participations
31 Dec 2022 (EUR 1,000) Publicly quoted Other Tot al , of which in credit institutions
Mandatorily at fair value through profit or loss - - - -
Shares and participations in Group companies - 656 656 -
Tot al - 656 656 -
, of which at acquisition cost - 656 656 -
MuniFin does not have equity instruments valued at fair value through fair value reserve. MuniFin does not have shares and participations subject to securities lending.
31 Dec 2021 (EUR 1,000) Publicly quoted Other Tot a l , of which in credit institutions
Mandatorily at fair value through profit or loss - - - -
Shares and participations in Group companies - 656 656 -
Tot al - 656 656 -
, of which at acquisition cost - 656 656 -
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 24. Derivative contracts
31 Dec 2022 (EUR 1,000)
Nominal value of underlying instrument Fair value
Remaining maturity
Less than 1 year 1–5 years Over 5 years Tota l Positive Negative
Derivative contracts in hedge accounting
Interest rate derivatives
Interest rate swaps 3,087,053 10,930,604 19,669,762 33,687,419 1,608,625 -2,279,032
, of which cleared by the central counterparty 2,897,220 10,592,658 18,932,859 32,422,737 1,546,169 -2,240,748
Currency derivatives
Cross currency interest rate swaps 3,853,324 8,258,495 455,462 12,567,281 594,381 -774,553
Total derivative contracts in hedge accounting 6,940,378 19,189,099 20,125,224 46,254,701 2,203,006 -3,053,586
Derivative contracts at fair value through profit or loss
Interest rate derivatives
Interest rate swaps 5,726,233 8,177,909 4,368,751 18,272,893 411,500 -1,084,554
, of which cleared by the central counterparty 4,157,199 5,759,356 1,501,085 11,417,640 320,535 -7,895
Interest rate options 40,000 - - 40,000 94 -94
Currency derivatives
Cross currency interest rate swaps 1,200,762 2,704,383 78,336 3,983,481 81,658 -226,389
Forward exchange contracts 4,591,665 - - 4,591,665 10,848 -147,174
Equity derivatives 732,900 - - 732,900 -2 -104,314
Total derivative contracts at fair value through profit or loss 12,291,560 10,882,292 4,447,087 27,620,939 504,097 -1,562,525
Total derivative contracts 19,231,938 30,071,391 24,572,311 73,875,640 2,707,103 -4,616,111
Derivative contracts at fair value through profit or loss contain all derivatives of the Company which are not included in hedge accounting, even if they are entered into for risk management
purposes. The category contains derivative contracts used for hedging financial assets and liabilities designated at fair value through profit or loss, all derivative contracts with municipalities and
all derivative contracts hedging derivatives with municipalities. In addition to these, the category contains derivative contracts used for hedging interest rate risk of the balance sheet, for which no
hedged item has been specified.
Interest received or paid from derivative contracts is included in the balance sheet line items Accrued income and prepayments and Accrued expenses and deferred income.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
31 Dec 2021 (EUR 1,000)
Nominal value of underlying instrument Fair value
Remaining maturity
Less than 1 year 1–5 years Over 5 years Tota l Positive Negative
Derivative contracts in hedge accounting
Interest rate derivatives
Interest rate swaps 2,409,728 12,470,328 17,727,331 32,607,387 756,203 -384,289
, of which cleared by the central counterparty 2,233,780 11,834,195 16,946,320 31,014,295 682,416 -308,205
Currency derivatives
Cross currency interest rate swaps 3,437,953 8,396,354 782,448 12,616,756 482,450 -726,003
Total derivative contracts in hedge accounting 5,847,682 20,866,681 18,509,780 45,224,143 1,238,653 -1,110,291
Derivative contracts at fair value through profit or loss
Interest rate derivatives
Interest rate swaps 3,940,682 8,043,879 4,491,216 16,475,777 475,940 -357,092
, of which cleared by the central counterparty 2,864,097 5,372,343 1,578,144 9,814,584 46,821 -163,327
Interest rate options - 40,000 - 40,000 101 -1 01
Currency derivatives
Cross currency interest rate swaps 2,467,039 1,940,380 109,367 4,516,786 133,656 -718,888
Forward exchange contracts 3,354,738 - - 3,354,738 150,723 -
Equity derivatives 816,109 - - 816,109 604 -37,922
Total derivative contracts at fair value through profit or loss 10,578,567 10,024,259 4,600,583 25,203,409 761,023 -1,114,003
Total derivative contracts 16,426,249 30,890,940 23,110,363 70,427,552 1,999,676 -2,224,294
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 25. Hedge accounting
HEDGE ACCOUNTING
31 Dec 2022 (EUR 1,000) Nominal value
Fair value hedge
accounting total
IAS 39 portfolio
hedge accounting
IFRS 9 fair value
hedge accounting
IFRS 9 fair value
hedge accounting
incl. Cost-of-Hedging
Assets
Loans and advances to the public and public sector entities 12,826,877 11,348,612 11,289,353 59,259 -
Leased assets 302,864 274,053 - 274,053 -
Total assets 13,129,741 11,622,665 11,289,353 333,313 -
Liabilities
Liabilities to credit institutions 95,000 84,892 - 84,892 -
Liabilities to the public and public sector entities 1,302,710 1,210,927 - 1,210,927 -
Debt securities issued 27,163,444 24,419,692 - 12,603,372 11,816,320
Total liabilities 28,561,154 25,715,510 - 13,899,190 11,816,320
The interest rate and foreign exchange rate risk of the Company are managed by entering into
derivative transactions. According to the Market Risk Policy, the Company’s hedging strategy
is mainly to hedge all material foreign exchange and interest rate risks of financial assets and
liabilities with maturities exceeding one year. As a result, foreign currency denominated items
are translated into euros, fixed rate and long-term reference rates are swapped to floating
interest rates with shorter terms. The risk management principles related to the Company’s
hedging of market risk are described in more detail in the Consolidated Financial Statements’s
Note 2 Risk Management principles and the Group’s risk position.
The Company applies both fair value hedge accounting according to IFRS 9 standard and fair
value portfolio hedge accounting according to IAS 39 standard. The Company does not apply
cash flow hedge accounting. Accounting policies related to hedge accounting are described in
the accounting polices of the Consolidated Financial Statements (Note 1) in Section 10. Hedge
accounting.
In the following table, the hedged assets and liabilities are presented according to balance
sheet line items divided into IAS 39 standard portfolio hedge accounting and IFRS 9 standard
fair value hedge accounting, which is further subdivided into whether hedging is subject to the
separation of the Cost-of-Hedging.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
The figures presented in the adjacent table contain the
cumulative fair value change at the beginning and end of
the financial year, in addition to the fair value change of the
hedged risk and the hedging instrument during the financial
year. The figures presented in the table do not include the
change in fair value due to foreign exchange differences
of hedging instruments and the hedged items, which are
recognised in the income statement under Net income from
securities and foreign exchange transactions. Due to the
above mentioned reason, the total amount of the hedging
instruments does not correspond to the fair value presented
in Note 24 Derivative contracts on line Total derivative
contracts in hedge accounting. The fair value changes of
the hedged risk of the hedged items and all other fair value
changes of the hedging instruments are recognised in the
income statement under Net income from hedge accounting.
The ineffective portion of the hedging relationship is thus
shown on this line in the income statement. Net income from
securities and foreign exchange transactions is specified in
Note 6 and net income from hedge accounting in Note 9.
In accordance with the market practice and IFRS 13 Fair value
measurement standard, MuniFin discounts hedged items
with the swap curve and the hedging derivatives with the OIS
curve, which causes a significant part of the MuniFin’s hedge
ineffectiveness. In addition, ineffectiveness may also arise to
some extent from differences in notional, day count methods
or timing of the cash flows.
VALUE OF HEDGED RISK
(EUR 1,000) 31 Dec 2022 1 Jan 2022
Recognised in the
income statement
Jan–Dec 2022
Assets
IAS 39 portfolio hedge accounting
Loans and advances to the public and public sector entities -1,476,553 122,505 -1,599,058
Derivative contracts in hedge accounting 1,549,315 -78,911 1,628,226
Accumulated fair value accrual from the termination of hedge accounting -1,721 218 -1,939
IAS 39 portfolio hedge accounting, net 71,041 43,812 27,229
IFRS 9 fair value hedge accounting
Loans and advances to the public and public sector entities -595 25,908 -26,503
Leased assets -28,808 -495 -28,313
Derivative contracts in hedge accounting 28,548 -25,669 54,217
IFRS 9 fair value hedge accounting, net -855 -255 -599
Liabilities
IFRS 9 fair value hedge accounting
Liabilities to credit institutions 10,108 -5,120 15,228
Liabilities to the public and public sector entities 54,570 -340,433 395,003
Debt securities issued 2,559,950 -171,028 2,730,978
Derivative contracts in hedge accounting -2,631,089 500,306 -3,131,395
IFRS 9 fair value hedge accounting, net -6,461 -16,275 9,814
IBOR reform related compensations * -3,343 -3,343 0
Total hedge accounting 60,382 23,938 36,444
* Compensations relate to the IBOR reform of which more information is presented in the accounting policies of the
Consolidated Financial Statements (Note 1) in Section 23. IBOR reform.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
The adjacent table presents the impact of Cost-of-Hedging
of cross currency derivatives on equity in the Cost-of-
Hedging reserve. The figures are presented net of deferred
taxes. For all foreign currency hedge relationships, MuniFin
has elected to utilise Cost-of-Hedging. For each hedge
relationship, when the cross currency swap is designated
as a hedging instrument, the cross currency basis spread is
separated and excluded from the designation and accounted
for as Cost-of-Hedging. The difference between the changes
in fair value of the actual derivative and the designated
portion of the derivative are recorded as Cost-of-Hedging
to the Cost-of-Hedging reserve. Thus, changes in cross
currency basis spreads do not create ineffectiveness in the
hedge relationship.
HEDGING IMPACT ON EQUITY
(EUR 1,000) 31 Dec 2022 1 Jan 2022
Impact on
Cost-of-Hedging reserve
Cost-of-Hedging
Derivative contracts in hedge accounting 1,488 13,621 -12,133
Tot al 1,488 13,621 -12,133
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
The following table presents the cumulative effectiveness of hedge accounting by hedged items. In addition, the table shows the hedging instruments used.
EFFECTIVENESS OF HEDGE ACCOUNTING
31 Dec 2022 (EUR 1,000)
Gains/losses attributable to the hedged risk
Hedge
ineffectivenessHedged item Hedging instruments Hedged items Hedging instruments
Assets
IAS 39 portfolio hedge accounting
Fixed rate and revisable rate loans Interest rate derivatives -1,476,553 1,549,315 72,762
IFRS 9 fair value hedge accounting
Structured lending Interest rate derivatives -595 1,043 449
Fixed rate and revisable rate leased assets Interest rate derivatives -28,808 27,504 -1,304
Assets total -1,505,955 1,577,862 71,907
Liabilities
IFRS 9 fair value hedge accounting
Financial liabilities denominated in EUR Interest rate derivatives 1,967,231 -1,972,437 -5,207
Financial liabilities denominated in foreign currencies
Currency derivatives (cross
currency interest rate swaps)
Interest rate derivatives 657,397 -658,652 -1,255
Liabilities total 2,624,628 -2,631,089 -6,461
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
HEDGE ACCOUNTING
31 Dec 2021 (EUR 1,000) Nominal value
Fair value hedge
accounting total
IAS 39 portfolio
hedge accounting
IFRS 9 fair value
hedge accounting
IFRS 9 fair value
hedge accounting
incl. Cost-of-hedging
Assets
Loans and advances to the public and public sector entities 12,577,902 12,725,453 12,598,775 126,678 -
Leased assets 243,432 242,936 - 242,936 -
Total assets 12,821,333 12,968,390 12,598,775 369,615 -
Liabilities
Liabilities to credit institutions 50,000 55,120 - 55,120 -
Liabilities to the public and public sector entities 1,504,060 1,776,291 - 1,737,750 38,541
Debt securities issued 24,714,983 24,852,845 - 12,207,796 12,645,049
Total liabilities 26,269,043 26,684,256 - 14,000,666 12,683,589
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
VALUE OF HEDGED RISK
(EUR 1,000) 31 Dec 2021 1 Jan 2021
Recognised in the income
statement Jan–Dec 2021
Assets
IAS 39 portfolio hedge accounting
Loans and advances to the public and public sector entities 122,505 464,688 -342,182
Derivative contracts in hedge accounting -78,911 -428,083 349,171
Accumulated fair value accrual from the termination of hedge accounting 218 47 170
IAS 39 portfolio hedge accounting, net 43,812 36,653 7,159
IFRS 9 fair value hedge accounting
Loans and advances to the public and public sector entities 25,908 37,203 -11,294
Leased assets -495 4,221 -4,716
Derivative contracts in hedge accounting -25,669 -42,044 16,375
IFRS 9 fair value hedge accounting, net -255 -620 365
Liabilities
IFRS 9 fair value hedge accounting
Liabilities to credit institutions -5,120 -13,800 8,681
Liabilities to the public and public sector entities -340,433 -481,546 141,113
Debt securities issued -171,028 -859,986 688,958
Derivative contracts in hedge accounting 500,306 1,340,456 -840,150
IFRS 9 fair value hedge accounting, net -16,275 -14,876 -1,399
IBOR reform related compensations -3,343 -2,041 -1,302
Total hedge accounting 23,938 19,115 4,823
HEDGING IMPACT ON EQUITY
(EUR 1,000) 31 Dec 2021 1 Jan 2021
Impact on
Cost-of-Hedging reserve
Cost-of-Hedging
Derivative contracts in hedge accounting 13,621 15,624 -2,004
Tot al 13,621 15,624 -2,004
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
EFFECTIVENESS OF HEDGE ACCOUNTING
31 Dec 2021 (EUR 1,000)
Gains/losses attributable to the hedged risk
Hedge
ineffectivenessHedged item Hedging instruments Hedged items Hedging instruments
Assets
IAS 39 portfolio hedge accounting
Fixed rate and revisable rate loans Interest rate derivatives 122,505 -78,911 43,594
IFRS 9 fair value hedge accounting
Structured lending Interest rate derivatives 25,908 -25,880 28
Fixed rate and revisable rate leased assets Interest rate derivatives -495 211 -283
Assets total 147,919 -104,580 43,339
Liabilities
IFRS 9 fair value hedge accounting
Financial liabilities denominated in EUR Interest rate derivatives -435,365 426,733 -8,633
Financial liabilities denominated in foreign currencies
Currency derivatives (cross
currency interest rate swaps)
Interest rate derivatives -81,215 73,573 -7,642
Liabilities total -516,581 500,306 -16,275
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 26. Intangible assets
Note 27. Tangible assets
(EUR 1,000) 31 Dec 2022 31 Dec 2021
IT systems 8,831 12,296
Other intangible assets 5 9
Tot al 8,837 12,305
Intangible assets do not include other development costs or goodwill.
(EUR 1,000) 31 Dec 2022 31 Dec 2021
Real estate corporation shares 299 299
Right-of-use assets 2,980 4,151
Other tangible assets 1,557 2,738
Tot al 4,835 7,188
MuniFin does not have investment properties.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 28. Changes in intangible and tangible assets during the financial year
2022 (EUR 1,000)
Intangible assets Tangible assets
Tot a l Real estate Other tangible assets Right-of-use assets To t al
Acquisition cost 1 Jan 41,401 299 6,999 8,743 16,041
+ Additions 3,988 - 16 564 579
- Disposals -15,755 - -1,371 -132 -1,503
Acquisition cost 31 Dec 29,634 299 5,644 9,174 15,117
Accumulated depreciation and impairment charges 1 Jan 29,097 - 4,261 4,592 8,853
- Accumulated depreciation on disposals -710 - -1,302 -113 -1,415
+ Depreciation according to plan 2,894 - 1,128 1,715 2,843
+/- Impairment and reversals* -10,482 - - - -
Accumulated depreciation and impairment charges 31 Dec 20,798 - 4,087 6,195 10,282
Carrying amount 31 Dec 8,837 299 1,557 2,980 4,835
* The line item includes a non-recurring item of impairment change of EUR -10,482 thousand on MuniFin’s significant terminated IT system implementation during the review period.
2021 (EUR 1,000)
Intangible assets Tangible assets
Tot a l Real estate Other tangible assets Right-of-use assets To t al
Acquisition cost 1 Jan 33,190 299 7,363 8,570 16,233
+ Additions 8,660 - 3 173 175
- Disposals -449 - -367 - -367
Acquisition cost 31 Dec 41,401 299 6,999 8,743 16,041
Accumulated depreciation 1 Jan 15,831 - 3,271 2,982 6,253
- Accumulated depreciation on disposals - - -226 - -226
+ Depreciation according to plan 2,783 - 1,216 1,610 2,826
+ Impairment * 10,482 - - - -
Accumulated depreciation and impairment charges 31 Dec 29,097 - 4,261 4,592 8,853
Carrying amount 31 Dec 12,305 299 2,738 4,151 7,188
* The line item includes a non-recurring item of impairment of EUR 10,482 thousand on MuniFin Group’s significant on-going IT system implementation.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 29. Other assets
Note 30. Accrued income and prepayments
(EUR 1,000) 31 Dec 2022 31 Dec 2021
Invoiced leasing 11,391 15,084
Given cash collateral to CCPs* 1,219,541 238,930
Other 3,730 1,924
Tot al 1,234,662 255,938
* Cash collaterals include expected credit loss amounting to EUR 203 thousand (EUR 13 thousand).
MuniFin did not have receivables related to payment transfers as at 31 Dec 2022 or 31 Dec 2021.
(EUR 1,000) 31 Dec 2022 31 Dec 2021
Accrued interest income 218,417 211,067
Other accrued income 0 196
Prepayments 4,671 1,349
Tot al 223,088 212,612
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 31. Deferred tax assets and liabilities
DEFERRED TAX ASSETS
(EUR 1,000) 1 Jan 2022
Recognised in the
income statement
Recognised
in equity
Paid during the
financial year 31 Dec 2022
On fair value reserve - - 763 - 763
Tot al - - 763 - 763
DEFERRED TAX LIABILITIES
(EUR 1,000) 1 Jan 2022
Recognised in the
income statement
Recognised
in equity
Paid during the
financial year 31 Dec 2022
On fair value reserve 3,499 - -3,499 - -
Tot al 3,499 - -3,499 - -
Voluntary credit loss provision and depreciation difference include EUR 291,718 thousand in non-recognised deferred tax liabilities.
DEFERRED TAX LIABILITIES
(EUR 1,000) 1 Jan 2021
Recognised in the
income statement
Recognised
in equity
Paid during the
financial year 31 Dec 2021
On fair value reserve 4,054 - -555 - 3,499
Tot al 4,054 - -555 - 3,499
Voluntary credit loss provision and depreciation difference include EUR 284,050 thousand in non-recognised deferred tax liabilities.
The Company did not have deferred tax assets as at 31 December 2021.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 32. Debt securities issued
31 Dec 2022 31 Dec 2021
(EUR 1,000) Carrying amount Nominal value Carrying amount Nominal value
Bonds 30,942,233 34,330,170 31,508,271 32,041,076
Other* 4,649,832 4,668,524 3,819,254 3,820,738
Tot a l 35,592,065 38,998,694 35,327,525 35,861,814
*Line item contains short-term funding issued by MuniFin.
MuniFin’s funding is guaranteed by the Municipal Guarantee Board.
BENCHMARK ISSUANCES DURING THE YEAR 2022 Value date Maturity date Interest-% Nominal value (1,000) Currency
Fixed rate benchmark bond, issued under the MTN programme 25 Jan 2022 25 Feb 2032 0.250% 1,000,000 EUR
Fixed rate benchmark bond, issued under the MTN programme 17 May 2022 17 May 2029 1.500% 500,000 EUR
Fixed rate benchmark bond, issued under the MTN programme 24 Aug 2022 24 Aug 2027 3.250% 1,000,000 USD
In the above table, the benchmark issuances are included by the settlement date. The offering circular is available in English on the website at www.munifin.fi/investor-relations.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
RECONCILIATION OF THE CARRYING AMOUNT OF
ISSUED DEBT
(EUR 1,000)
2022 2021
Liabilities to credit
institutions
Liabilities to the
public and public
sector entities
Debt securities
issued
Liabilities to credit
institutions
Liabilities to the
public and public
sector entities
Debt securities
issued
Carrying amount 1 Jan 2,059,906 3,324,685 35,327,525 1,343,358 3,884,026 32,911,906
Cash flow changes from operating activities
Additions to issued debt "bonds" 46,609 147,351 7,680,928 761,335 197,473 7,894,520
Additions to debt securities issued "other" - - 25,303,337 - - 13,219,018
Additions total 46,609 147,351 32,984,265 761,335 197,473 21,113,537
Deductions to issued debt "bonds" - -267,534 -5,541,011 -38,567 -587,713 -5,119,486
Deductions to debt securities issued "other" - - -24,472,759 - - -13,295,584
Deductions total - -267,534 -30,013,769 -38,567 -587,713 -18,415,070
Cash flow changes from operating activities in total 46,609 -120,183 2,970,495 722,767 -390,240 2,698,468
Changes in the balance sheet value including valuations and FX
revaluations -18,332 -674,917 -2,705,955 -6,219 -169,101 -282,849
Carrying amount 31 Dec 2,088,183 2,529,585 35,592,065 2,059,906 3,324,685 35,327,525
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 33. Other liabilities
(EUR 1,000) 31 Dec 2022 31 Dec 2021
Mandatory provisions
Restructuring provision - -
Other provisions 446 446
Other liabilities
Lease liabilities 3,046 4,231
Cash collateral taken from CCPs 570,922 333,295
Other 19,132 11,042
Tot al 593,547 349,014
Line item Other provisions relates to a tax interpretation issue for which the Company requested a preliminary ruling and for which the Company is waiting for the financial decision of the Supreme
Administrative Court.
(EUR 1,000)
Restructuring provision Other provisions
2022 2021 2022 2021
Carrying amount in the beginning of the reporting period - 504 446 -
Increase in provisions - - 5,100 446
Provisions used - -504 -5,100 -
Carrying amount at the end of the reporting period - - 446 446
During the financial year 2021, the restructuring provision related to the reorganisation of the Group’s operations in financial year 2020 was fully used. Increase in provisions and provision used in
2022 relate to the IT implementation project, which was terminated in 2022.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 34. Accrued expenses and deferred income
(EUR 1,000) 31 Dec 2022 31 Dec 2021
Accrued interest expenses 139,779 134,880
Other accrued expenses 7,943 41,579
Deferred income * 18,552 16,864
Tot al 166,274 193,323
* Item consists mainly of leasing prepayments.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 35. Subordinated liabilities
31 Dec 2022 (EUR 1,000) Currency Nominal value Book value Interest rate Earliest repayment
AT1 capital loan - - - - -
Tot al - -
31 Dec 2021 (EUR 1,000) Currency Nominal value Book value Interest rate Earliest repayment
AT1 capital loan EUR 350,000 349,388 Fixed 1 April 2022
Tot al 350,000 349,388
MuniFin redeemed its EUR 350 million Perpetual Fixed rate Resettable Additional Tier 1
Securities originally issued on 1 October 2015. The redemption date was 1 April 2022, which
was the first repayment date of the Securities in accordance with the terms and conditions
thereof. The Securities were redeemed at 100% of the aggregate nominal amount together
with accrued and unpaid interest until the redemption date.
Loan terms and conditions:
The loan is an unsecured debenture loan included under Additional Tier 1 capital, with special
terms designed to fulfil the requirements set for so-called AT1 capital loans in the Capital
Requirements Regulation (EU 575/2013). The loan does not have a maturity date. Interest
on the loan may only be paid out of distributable funds in accordance with the terms set in
the Capital Requirements Regulation, and the Company will decide whether interest will be
paid on the interest payment date. The cancellation of interest payments is final and unpaid
interest will not be added to the loan capital. The loan capital will be written off if the proportion
of the Company’s Common Equity Tier 1 (CET1) capital to risk-weighted assets falls below
5.125%. The Company may decide to re-book the loan capital partially or entirely if the Capital
Requirements Regulation permits this based on an improvement in the Company’s finances.
The Company has the right but not the obligation to repay the loan on 1 April 2022 or, after that,
annually on the interest payment date, as long as the buy-back is approved in advance by the
regulatory authority. The regulatory authority may authorise the repayment of the loan also
for particular reasons, for example if legislation or regulatory practice should change in such
a way that the Company loses the right to deduct the interest in full, or if the Company should
be forced to make the additional payments mentioned in the loan terms. The authorities may
also permit repayment of the loan if the loan’s official classification changes in such a way that
the loan would be likely to be excluded from the Company’s own funds, or if it is reclassified as
lower-value funds. The loan capital, interest payments and other repayments shall take lower
priority than all other higher-level debts in case of the Company’s dissolution or bankruptcy.
AT1 capital loan is recognised as equity in the Consolidated Financial Statements. In the Parent
Company’s Financial Statements AT1 capital loan is recognised under balance sheet item
Subordinated liabilities.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 36. Act on the Resolution of Credit Institutions (1194/2014)
MuniFin’s crisis resolution authority is the EU’s Single Resolution Board (SRB). The SRB has
imposed on MuniFin a binding minimum requirement for own funds and eligible liabilities
(MREL). The size of the MREL requirement is 10.00% of the total risk exposure amount and
3.00% of the leverage ratio exposure. The MREL requirement takes into account SRB’s
decision on that the simplified resolution strategy is applied to MuniFin.
The MREL requirement will take effect on 1 January 2024, but MuniFin must fully comply with
the final MREL target levels from 1 January 2022 onwards. MuniFin’s own funds and eligible
liabilities currently fulfil the MREL requirement with multiple times.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 37. Breakdown of financial assets and liabilities at carrying amount by maturity
FINANCIAL ASSETS
31 Dec 2022 (EUR 1,000) 0–3 months 3–12 months 1–5 years 5–10 years Over 10 years Total
Cash and balances with central banks 2 - - - - 2
Debt securities eligible for central bank refinancing 136,726 528,552 2,113,901 110,996 - 2,890,174
Loans and advances to credit institutions 9,592,217 - 32,253 - - 9,624,470
Loans and advances to the public and public sector entities 391,216 1,452,589 6,845,942 6,406,524 12,744,997 27,841,267
Leased assets * 7,465 20,979 76,516 51,821 117,272 274,053
Debt securities 1,240,831 330,065 293,850 31,848 - 1,896,594
Shares and participations - - - - - -
Shares and participations in Group companies - - - - 656 656
Derivative contracts 181,535 138,338 609,483 1,117,589 660,158 2,707,103
Other assets ** 1,219,541 - - - - 1,219,541
Tot al 12,769,533 2,470,523 9,971,945 7,718,778 13,523,082 46,453,861
* Line item includes leased assets for which MuniFin applies fair value hedge accounting. Unhedged leased assets are not presented in this table as leased assets are not regarded as financial
assets under IFRS 9 standard (classification).
** Line item includes cash collateral given to central counterparties.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
FINANCIAL LIABILITIES
31 Dec 2022 (EUR 1,000) 0–3 months 3–12 months 1–5 years 5–10 years Over 10 years Total
Liabilities to credit institutions 2,244,440 - 54,986 15,806 17,391 2,332,623
Liabilities to the public and public sector entities 152,794 77,633 862,967 665,161 771,031 2,529,585
Debt securities issued 7,377,026 3,390,051 18,464,896 4,415,718 1,944,375 35,592,065
Derivative contracts 565,161 263,843 1,753,642 1,160,809 872,656 4,616,111
Other liabilities * 571,370 1,317 1,281 - - 573,969
, of which lease liabilities 448 1,317 1,281 - - 3,046
Subordinated liabilities - - - - - -
Tot al 10,910,791 3,732,844 21,137,772 6,257,493 3,605,452 45,644,353
* Line item includes cash collateral received from central counterparties and lease liabilities in accordance with IFRS 16 standard.
Liabilities and hedging derivatives that may be called before maturity have been classified in the maturity class corresponding to the first possible call date. The Company estimates it will call
10–45% of its callable liabilities in 2023. In 2022, the Company called 19% of its callable liabilities.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
FINANCIAL ASSETS
31 Dec 2021 (EUR 1,000) 0–3 months 3–12 months 1–5 years 5–10 years Over 10 years To t al
Cash and balances with central banks 8,399,045 - - - - 8,399,045
Debt securities eligible for central bank refinancing 247,349 444,766 2,173,184 446,755 - 3,312,054
Loans and advances to credit institutions 1,382,272 - 34,292 - - 1,416,564
Loans and advances to the public and public sector entities 403,975 1,516,197 6,559,458 6,353,153 13,047,114 27,879,897
Leased assets 7,025 18,391 72,819 43,699 101,002 242,936
Debt securities 946,987 199,527 316,595 66,265 - 1,529,374
Shares and participations - - - - - -
Shares and participations in Group companies - - - - 656 656
Derivative contracts 176,162 85,276 652,855 444,830 640,553 1,999,676
Other assets 238,930 - - - - 238,930
Tot al 11,801,746 2,264,157 9,809,202 7,354,702 13,789,324 45,019,131
FINANCIAL LIABILITIES
31 Dec 2021 (EUR 1,000) 0–3 months 3–12 months 1–5 years 5–10 years Over 10 years To t al
Liabilities to credit institutions 1,991,110 750,000 10,613 19,599 29,695 2,801,016
Liabilities to the public and public sector entities 75,992 112,562 1,031,895 856,943 1,247,293 3,324,685
Debt securities issued 4,991,578 5,235,547 18,221,438 4,174,502 2,704,459 35,327,525
Derivative contracts 788,530 584,682 287,038 143,757 420,287 2,224,294
Other liabilities 333,703 1,221 2,602 - - 337,526
, of which lease liabilities 408 1,221 2,602 - - 4,231
Subordinated liabilities - 349,878 - - - 349,878
Tot al 8,180,913 7,033,890 19,553,587 5,194,802 4,401,733 44,364,925
Liabilities and hedging derivatives that may be called before maturity have been classified in the maturity class corresponding to the first possible call date. In 2021, the Company called 47% of its
callable liabilities.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 38. Breakdown of balance sheet items into domestic and foreign currency
ASSETS
31 Dec 2022 (EUR 1,000) Domestic currency Foreign currency Total
, of which
intra-group
Debt securities eligible for central bank refinancing 2,890,174 - 2,890,174 -
Loans and advances to credit institutions 9,577,806 46,663 9,624,470 -
Loans and advances to the public and public sector entities 27,841,267 - 27,841,267 -
Leased assets 1,303,094 - 1,303,094 -
Debt securities 1,867,201 29,392 1,896,594 -
Derivative contracts 2,705,581 1,522 2,707,103 -
Other assets including cash and balances in central banks 1,261,533 211,310 1,472,843 659
Tot al 47,446,658 288,888 47,735,546 659
LIABILITIES AND EQUITY
31 Dec 2022 (EUR 1,000) Domestic currency Foreign currency Total
, of which
intra-group
Liabilities to credit institutions 2,332,623 - 2,332,623 -
Liabilities to the public and public sector entities 2,509,865 19,720 2,529,585 -
Debt securities issued 14,918,101 20,673,964 35,592,065 -
Derivative contracts 4,224,574 391,537 4,616,111 -
Other liabilities including appropriations and equity 2,665,154 7 2,665,161 25
Subordinated liabilities - - - -
Tot al 26,650,317 21,085,228 47,735,546 25
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
ASSETS
31 Dec 2021 (EUR 1,000) Domestic currency Foreign currency Tota l
, of which
intra-group
Debt securities eligible for central bank refinancing 3,312,054 - 3,312,054 -
Loans and advances to credit institutions 1,387,920 28,643 1,416,564 -
Loans and advances to the public and public sector entities 27,879,897 - 27,879,897 -
Leased assets 1,334,146 - 1,334,146 -
Debt securities 1,499,172 30,202 1,529,374 -
Derivative contracts 1,781,439 218,237 1,999,676 -
Other assets including cash and balances in central banks 8,887,743 - 8,887,743 656
Tot al 46,082,371 277,082 46,359,453 656
LIABILITIES AND EQUITY
31 Dec 2021 (EUR 1,000) Domestic currency Foreign currency Tota l
, of which
intra-group
Liabilities to credit institutions 2,801,016 - 2,801,016 -
Liabilities to the public and public sector entities 3,262,800 61,885 3,324,685 -
Debt securities issued 14,636,794 20,690,731 35,327,525 -
Derivative contracts 2,172,656 51,639 2,224,294 -
Other liabilities including appropriations and equity 2,304,767 27,287 2,332,054 78
Subordinated liabilities 349,878 - 349,878 -
Tot al 25,527,910 20,831,542 46,359,453 78
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 39. Repurchase agreements
The Company did have receivables related to repurchase agreements as at 31 Dec 2022.
The receivable contain a repurchase agreement’s pledged security that counterparty
has not delivered to the Company on the maturity date of the repurchase agreement.
The security is presented in it’s carrying amount of EUR 9,580 thousand in Debt securities
that are Designated at fair value through profit or loss. In addition, the Company had
receivable related to given cash collateral on repurchase agreement.
The Company did not have any receivables or liabilities related to repurchase agreements
as 31 Dec 2021.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 40. Fair values and carrying amounts of financial assets and liabilities
FINANCIAL ASSETS
(EUR 1,000)
31 Dec 2022 31 Dec 2021
Carrying amount Fair value Carrying amount Fair value
Cash and balances with central banks 2 2 8,399,045 8,399,045
Debt securities eligible for central bank refinancing 2,890,174 2,890,174 3,312,054 3,312,054
Loans and advances to credit institutions 9,624,470 9,624,470 1,416,564 1,416,564
Loans and advances to the public and public sector entities 27,841,267 29,451,798 27,879,897 30,045,876
Leased assets * 274,053 288,092 242,936 255,907
Debt securities 1,896,594 1,896,208 1,529,374 1,529,739
Shares and participations - - - -
Shares and participations in Group companies 656 656 656 656
Derivative contracts 2,707,103 2,707,103 1,999,676 1,999,676
Other assets ** 1,219,541 1,219,541 238,930 238,930
Tot al 46,453,861 48,078,045 45,019,131 47,198,446
* Line item includes leased assets for which MuniFin applies fair value hedge accounting. Unhedged leased assets are not presented in this table as leased assets are not regarded as financial
assets under IFRS 9 standard (classification).
** Line item includes cash collateral given to central counterparties.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
FINANCIAL LIABILITIES
(EUR 1,000)
31 Dec 2022 31 Dec 2021
Carrying amount Fair value Carrying amount Fair value
Liabilities to credit institutions 2,332,623 2,332,609 2,801,016 2,800,913
Liabilities to the public and public sector entities 2,529,585 2,543,548 3,324,685 3,344,334
Debt securities issued 35,592,065 35,650,001 35,327,525 35,434,600
Derivative contracts 4,616,111 4,616,111 2,224,294 2,224,294
Other liabilities * 573,969 573,969 337,526 337,526
Subordinated liabilities - - 349,878 354,683
Tot al 45,644,353 45,716,238 44,364,925 44,496,351
* Line item includes cash collateral received from central counterparties and lease liabilities in accordance with IFRS 16 standard.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 41. Fair value hierarchy of financial assets and liabilities
Fair value is the price that would be received to sell the
asset or paid to transfer the liability in an orderly transaction
between market participants at the measurement date. The
Company measures fair values using the following fair value
hierarchy, which reflects the significance of the inputs used in
making the fair value measurements:
Level 1
Inputs that are quoted market prices (unadjusted) for
identical instruments in active markets that the Company
can access at the measurement date. The market is
considered to be active if trading is frequent and price data
is regularly available. These quotes (mid) represent the price
for an orderly transaction between parties in the market
on the valuation date. Level 1 instruments comprise mainly
investments in debt securities.
Level 2
Inputs other than quoted prices included within level 1 that
are observable either directly (i.e. as prices) or indirectly (i.e.
derived from prices). This level includes instruments valued
using quoted prices for identical instruments in markets that
are considered less than active or other valuation techniques
in which all significant inputs are directly or indirectly
observable from market data. Level 2 instruments comprise
mainly OTC derivatives, the Company’s issued plain-vanilla
financial liabilities and lending agreements.
Level 3
This level includes all instruments for which the valuation
technique includes inputs that are not observable and
the unobservable inputs have a significant effect on the
instrument’s valuation. Unobservable inputs are used only to
the extent that no relevant observable inputs are available.
If the valuation input is illiquid, extrapolated or based on
historical prices, the valuation input will be defined as a level
3 valuation input as these types of inputs are per definition
unobservable. This level includes financial instruments with
equity and FX structures due to impact of the utilisation of
inputs such as dividend yield on the fair value measurement.
In addition, level 3 contains some interest rate structures with
long maturities (exceeding e.g. 35 years) or in currencies
where the interest rate curve is not considered liquid for all
maturities.
Due to the nature of MuniFin’s funding portfolio (i.e. issued
bonds are hedged back-to-back), if a swap that is hedging an
issued bond is designated as a level 3 instrument, then the
issued bond will also be designated as a level 3 instrument.
Same principle applies to other portfolios and levels of the
hierarchy as well. The Company does not hold other assets
or liabilities which are measured at fair value or assets or
liabilities which are non-recurringly measured at fair value.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
The following table presents financial instruments by the level of the fair value hierarchy into which the fair value measurement is categorised.
FINANCIAL ASSETS
31 Dec 2022 (EUR 1,000) Carrying amount
Fair value
Level 1 Level 2 Level 3 Tota l
At fair value
Fair value through fair value reserve
Debt securities 167,636 137,695 29,941 - 167,636
Designated at fair value through profit or loss
Loans and advances to the public and public sector entities 28,432 - 28,432 - 28,432
Debt securities 3,162,034 3,057,135 104,899 - 3,162,034
Mandatorily at fair value through profit or loss
Loans and advances to the public and public sector entities 31,090 - - 31,090 31,090
Shares and participations in Group companies 656 - - 656 656
Fair value through profit or loss
Derivative contracts at fair value through profit or loss 504,097 - 489,218 14,880 504,097
Derivative contracts in hedge accounting 2,203,006 - 2,202,335 671 2,203,006
Total at fair value 6,096,951 3,194,830 2,854,824 47,297 6,096,951
In fair value hedge accounting
Amortised cost
Loans and advances to the public and public sector entities 11,348,612 - 11,926,267 - 11,926,267
Leased assets 274,053 - 288,092 - 288,092
Total in fair value hedge accounting 11,622,665 - 12,214,359 - 12,214,359
At amortised cost
Cash and balances with central banks 2 2 - - 2
Loans and advances to credit institutions 9,624,470 8,223,397 1,401,072 - 9,624,470
Loans and advances to the public and public sector entities 16,433,133 - 17,466,009 - 17,466,009
Debt securities 1,457,098 - 1,456,713 - 1,456,713
Other assets 1,219,541 - 1,219,541 - 1,219,541
Total at amortised cost 28,734,245 8,223,399 21,543,335 - 29,766,735
Total financial assets 46,453,861 11,418,229 36,612,519 47,297 48,078,045
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
FINANCIAL LIABILITIES
31 Dec 2022 (EUR 1,000) Carrying amount
Fair value
Level 1 Level 2 Level 3 Tota l
At fair value
Designated at fair value through profit or loss
Liabilities to credit institutions 3,291 - 3,291 - 3,291
Liabilities to the public and public sector entities 1,318,658 - 1,166,432 152,227 1,318,658
Debt securities issued 10,842,676 - 9,865,856 976,820 10,842,676
Fair value through profit or loss
Derivative contracts at fair value through profit or loss 1,562,525 - 1,222,013 340,512 1,562,525
Derivative contracts in hedge accounting 3,053,586 - 3,047,585 6,001 3,053,586
Total at fair value 16,780,736 - 15,305,177 1,475,559 16,780,736
In fair value hedge accounting
Amortised cost
Liabilities to credit institutions 84,892 - 84,878 - 84,878
Liabilities to the public and public sector entities 1,210,927 - 1,224,889 - 1,224,889
Debt securities issued * 24,419,692 - 24,420,879 56,749 24,477,627
Total in fair value hedge accounting 25,715,510 - 25,730,646 56,749 25,787,395
At amortised cost
Liabilities to credit institutions 2,244,440 - 2,244,440 - 2,244,440
Debt securities issued 329,698 - 329,698 - 329,698
Other liabilities 573,969 - 573,969 - 573,969
Subordinated liabilities - - - - -
Total at amortised cost 3,148,106 - 3,148,106 - 3,148,106
Total financial liabilities 45,644,353 - 44,183,930 1,532,308 45,716,238
* MuniFin’s fixed-rate benchmark bond issuances are presented on level 2 due the fact that these bonds are in fair value hedge accounting with respect to the hedged risk. Valuation of the hedged
risk is based on the level 2 inputs. In the Notes of the Financial Statements, the Company’s fixed-rate benchmark bonds fair value is adjusted to reflect fair value based on the quoted prices from
Bloomberg. The market price is a level 1 input.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
FINANCIAL ASSETS
31 Dec 2021 (EUR 1,000) Carrying amount
Fair value
Level 1 Level 2 Level 3 Tota l
At fair value
Fair value through fair value reserve
Debt securities 213,466 172,717 40,748 - 213,466
Designated at fair value through profit or loss
Loans and advances to the public and public sector entities 38,941 - 38,941 - 38,941
Debt securities 3,539,074 3,451,809 87,265 - 3,539,074
Mandatorily at fair value through profit or loss
Loans and advances to the public and public sector entities 35,204 - 344 34,861 35,204
Shares and participations in Group companies 656 - - 656 656
Fair value through profit or loss
Derivative contracts at fair value through profit or loss 761,023 - 698,194 62,829 761,023
Derivative contracts in hedge accounting 1,238,653 - 1,238,246 407 1,238,653
Total at fair value 5,827,016 3,624,526 2,103,737 98,752 5,827,016
In fair value hedge accounting
Amortised cost
Loans and advances to the public and public sector entities 12,725,453 - 13,493,603 - 13,493,603
Leased assets 242,936 - 255,907 - 255,907
Total in fair value hedge accounting 12,968,390 - 13,749,511 - 13,749,511
At amortised cost
Cash and balances with central banks 8,399,045 8,399,045 - - 8,399,045
Loans and advances to credit institutions 1,416,564 105,988 1,310,576 - 1,416,564
Loans and advances to the public and public sector entities 15,080,299 - 16,478,128 - 16,478,128
Debt securities 1,088,888 - 1,089,253 - 1,089,253
Other assets 238,930 - 238,930 - 238,930
Total at amortised cost 26,223,725 8,505,033 19,116,886 - 27,621,919
Total financial assets 45,019,131 12,129,559 34,970,134 98,752 47,198,446
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
FINANCIAL LIABILITIES
31 Dec 2021 (EUR 1,000) Carrying amount
Fair value
Level 1 Level 2 Level 3 Tota l
At fair value
Designated at fair value through profit or loss
Liabilities to credit institutions 4,787 - 4,787 - 4,787
Liabilities to the public and public sector entities 1,548,394 - 1,284,601 263,793 1,548,394
Debt securities issued 10,008,299 - 8,248,729 1,759,569 10,008,299
Fair value through profit or loss
Derivative contracts at fair value through profit or loss 1,114,003 - 369,705 744,299 1,114,003
Derivative contracts in hedge accounting 1,110,291 - 1,084,602 25,690 1,110,291
Total at fair value 13,785,774 - 10,992,423 2,793,350 13,785,774
In fair value hedge accounting
Amortised cost
Liabilities to credit institutions 55,120 - 55,016 - 55,016
Liabilities to the public and public sector entities 1,776,291 - 1,795,941 - 1,795,941
Debt securities issued 24,852,845 - 24,873,880 86,040 24,959,920
Total in fair value hedge accounting 26,684,256 - 26,724,837 86,040 26,810,877
At amortised cost
Liabilities to credit institutions 2,741,110 - 2,741,110 - 2,741,110
Debt securities issued 466,381 - 466,381 - 466,381
Other liabilities 337,526 - 337,526 - 337,526
Subordinated liabilities 349,878 - 354,683 - 354,683
Total at amortised cost 3,894,895 - 3,899,701 - 3,899,701
Total financial liabilities 44,364,925 - 41,616,961 2,879,390 44,496,351
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
All valuation models, both complex and simple models,
use market prices and other inputs. These market
prices and inputs comprise interest rates, FX rates,
volatilities, correlations etc. The Company applies
different types of valuation inputs depending on the type
and complexity of the instruments and the related risk
factors and payoff structures. The Company’s defined
categorisation to the fair value hierarchy levels is based
on the analysis performed with regards to the valuation
input, stress testing (reasonable possible alternative
assumption) and model complexity. If the inputs used to
measure fair value are categorised into different levels
on the fair value hierarchy, the fair value measurement is
categorised in its entirety on the level of the lowest level
input that is significant to the entire measurement.
IFRS 13 standard classifies valuation models and techniques
into three different categories: market approach, income
approach and cost approach. The Company applies
the market-based approach when the instrument has
a functioning market and public price quotations are
available. The Company uses the market approach for
the valuation of investment bonds of the liquidity portfolio.
For all level 1 assets, the Company uses market prices
available for identical assets (same ISIN). The Company
does not make use of prices for comparable assets.
Income approach is applied when valuation is based, for
example, on determining the present value of future cash
flows (discounting). Valuation methods take into account
an assessment of the credit risk, discount rates used,
the possibility of early repayment and other factors that
influence the fair value of a financial instrument reliably. The
Company uses the income approach for many of its financial
instruments, for example derivatives, lending and funding.
The Company does not use the cost approach for the
valuation of any of its financial instruments.
The Company uses widely recognised valuation models
to determine the fair value of common and simple financial
instruments, such as interest rate and currency swaps,
that use only observable market data and require little
management judgement and estimation. Observable
prices or model inputs are usually available in the market
for listed debt and equity securities and simple OTC
derivatives such as interest rate swaps. The availability
of observable market prices and model inputs reduces
the need for management judgement and estimation and
reduces the uncertainty associated with determining fair
values. The availability of observable market prices and
inputs varies depending on the products and markets
and is prone to changes based on specific events
and general conditions in the financial markets.
MuniFin applies different models in order to derive the fair
value of a certain type of instrument. The choice of base
model and model calibration depends on the complexity
of the financial instrument and the observability of the
relevant inputs. In line with market practice, the primary
choice of base model is contingent on the underlying
instrument classes. Additionally, instruments are broken
down into different categories granular enough to capture
the most important risk drivers and different kinds of
calibration techniques. The specific combination of base
models and the different assumptions and calibration
techniques are documented. The Company’s fair value
instruments that are subject to mark-to-model valuation
techniques consists out of four asset classes:
• Interest rate instruments,
• FX instruments,
• Equity-linked instruments and
• Hybrid instruments.
Financial instruments under FX, Equity-linked and Hybrid
classes are mainly classified as level 3 instruments.
The fair value of financial instruments is generally calculated
as the net present value of the individual instruments.
This calculation is supplemented by counterparty level
adjustments. The Company incorporates credit valuation
adjustments (CVA) and debit valuation adjustments
(DVA) into derivative valuations. CVA reflects the impact
of the counterparty’s credit risk on fair value and DVA
MuniFin’s own credit quality. The Company uses the same
methodology to compute CVA and DVA. They are both
assessed as the result of three inputs: Loss Given Default
(LGD), Probability of Default (PD, own for DVA and of the
counterparty for CVA) and Expected Exposure (EE).
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Valuation framework
MuniFin has implemented a framework for the arrangements,
activities and procedures with regards to the Company’s
model risk management. The purpose of the model
risk management framework is to ensure the effective
management of model risk and mitigation of fair value
uncertainty, as well as to ensure compliance with external and
internal requirements. The Company ensures that all aspects
of the lifecycle of valuation models (i.e. approval, design
and development, testing and maintenance, monitoring
and execution) are subject to effective governance, clear
roles and responsibilities and effective internal control.
The Company manages and maintains a model
inventory which provides a holistic view of all valuation
models, their business purpose and characteristics
as well as their applications and conditions for use.
All approved valuation models within the model
inventory are subject to annual review and re-approval
by the Executive Management Team (EMT).
The Finance Management Team acts as a valuation
control group for MuniFin’s fair values and is responsible
for the final approval of MuniFin’s fair values for financial
reporting. The Finance Management Team monitors and
controls MuniFin’s valuation process and the performance
of valuation models, decides on the necessary measures
and reports to the EMT. The Finance Management Team
assesses whether the valuation models and valuation
process provide sufficiently accurate information
to be used in financial reporting and, based on the
information received, decides on possible adjustments
to the values generated by the valuation process.
The Company has implemented an efficient control and
performance monitoring framework with regards to its
valuation models, which aims to ensure the accuracy
and appropriateness of model output. The model
performance monitoring consists of four main controls:
• Counterparty valuation control (CVC),
• Fair value explanation,
• Independent price verification (IPV) and
• Independent model validation.
Counterparty valuation control (CVC) is performed daily
by Risk Management, which assesses any deviations in
valuation model output compared to MuniFin’s own earlier
valuations and to counterparty valuations. The results
of the assessment are reported monthly to the CFO and
quarterly to the Finance Management Team. Fair value
explanation process consists of a daily analysis and explain
of the changes in fair values by Risk Management and a
monthly fair value explain report to the CFO and quarterly
to the Finance Management Team. The independent
price verification is performed monthly as part of
MuniFin’s IPV process by a third party service provider.
The results of the control activities are reported monthly
to the CFO and quarterly to the Finance Management
Team. The independent model validation is performed
annually for a subset of MuniFin’s valuation models by
a third-party service provider. The results of the model
validation are reported to the Finance Management Team.
Transfers in the fair value hierarchy
MuniFin assesses the appropriateness and correctness of
the categorisation with regards to the fair value hierarchy
classification at initial recognition and at the end of each
reporting period. This is to determine the initial classification
of a level 1, 2 and 3 instrument and the subsequent potential
transfers between levels within the fair value hierarchy.
A transfer between the fair value hierarchies can occur
for example when a previously assumed observed input
requires an adjustment using an unobservable input. The
procedure is the same for transfers into and out of the fair
value levels. Transfers between the levels are considered to
take place at the end of the quarter during which an event
causes such a transfer or when circumstances change.
During 2022, transfers totaling EUR 9,270 thousand
have been made between level 1 and level 2. During
2022, there were no transfers from level 2 to level 3.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
LEVEL 3 TRANSFERS
2022 (EUR 1,000) 1 Jan 2022
Change in fair value in
the income statement
Purchases and new
contracts
Sales and matured
contracts
Transfers
into level 3
Transfers
out of level 3 31 Dec 2022
Financial assets
At fair value
Mandatorily at fair value through profit or loss
Loans and advances to the public and public sector entities 34,861 -3,649 - -121 - - 31,090
Shares and participations in Group companies 656 - - - - - 656
Fair value through profit or loss
Derivative contracts at fair value through profit or loss 62,829 -42,509 687 -5,415 - -713 14,880
Derivative contracts in hedge accounting 407 515 66 - - -317 671
Financial assets in total 98,753 -45,643 753 -5,536 - -1,030 47,297
Financial liabilities
At fair value
Designated at fair value through profit or loss
Liabilities to the public and public sector entities 263,793 -46,923 - - - -64,643 152,227
Debt securities issued 1,759,569 -122,696 180,471 -796,670 - -43,855 976,820
Fair value through profit or loss
Derivative contracts at fair value through profit or loss 744,299 150,724 20,607 -569,309 - -5,809 340,512
Derivative contracts in hedge accounting 25,690 -1,179 2,884 -133 - -21,260 6,001
In fair value hedge accounting
Amortised cost
Debt securities issued 86,040 1,491 26,047 -3,066 - -53,764 56,749
Financial liabilities in total 2,879,390 -18,583 230,009 -1,369,177 - -189,331 1,532,308
Level 3 financial assets and liabilities in total * 2,978,143 -64,226 230,762 -1,374,713 - -190,361 1,579,605
* The Company recognises these gains and losses within the line items Net income from securities and foreign exchange transactions and Net income from hedge accounting. The fair value change
due to changes in own credit risk of financial liabilities designated at fair value through profit or loss is recognised in the Own credit revalution reserve.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Sensitivity analysis of unobservable inputs
Sensitivity analysis illustrates the impact of the reasonably possible assumptions on the
fair value of financial instruments for which valuation is dependent on unobservable inputs.
However, it is unlikely in practice that all unobservable inputs would simultaneously move to
extremes of reasonably possible alternatives used in the sensitivity analysis. Hence, the impact
of the sensitivity analysis disclosed in this Note is likely to be greater than the true uncertainty in
the fair values at the financial statement date. Furthermore, the disclosure is neither predictive
nor indicative of future movements in the fair value of financial instruments.
Although the Company believes that its estimates of fair value are appropriate, the use of
different methodologies or assumptions could lead to different measurements of fair value. For
fair value measurements on level 3, changing one or more of the assumptions to the reasonably
possible alternative assumptions would have the following effects: as of 31 December 2022,
these assumptions could have increased fair values by EUR 60.6 million or decreased fair
values by EUR 71.1 million.As of 31 December 2021, these assumptions could have increased
fair values by EUR 60.3 million or decreased fair values by EUR 59.6 million.
SENSITIVITY ANALYSIS OF SIGNIFICANT UNOBSERVABLE INPUTS BY INSTRUMENT TYPE
(EUR 1,000)
Positive range
of fair value
2022
Negative range
of fair value
2022
Positive range
of fair value
2021
Negative range
of fair value
2021
Loans and advances to the public and public sector entities
Loans 249 -273 133 -84
Derivative contracts
Equity-linked derivatives 18,117 -22,052 18,864 -11,446
FX-linked cross currency and interest rate derivatives 834 -1,318 2,644 -1,537
Other interest rate derivatives 11,726 -11,860 13,173 -13,344
Debt securities issued and Liabilities to the public and public sector entities
Equity-linked liabilities 16,927 -23,275 12,350 -18,115
FX-linked liabilities 834 -990 704 -2,233
Other liabilities 11,919 -11,327 12,412 -12,810
Tot al 60,606 -71,095 60,279 -59,570
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
The behaviour of the fair value of the unobservable inputs
on level 3 is not necessarily independent and dynamic
relationships often exist between the unobservable inputs
and the observable inputs. Such relationships, where
material to the fair value of a given instrument, are controlled
via pricing models or valuation techniques. MuniFin uses
stochastic models to generate a distribution of future cash
flows of each financial instrument. The future cash flows
are then discounted back to present to get the fair value for
each financial instrument. The stochastic models used by the
Company are Hull-White model and Dupire volatility model.
The unobservable inputs used by the Company are
described next. The unobservable inputs are used only to
the extent that no relevant observable inputs are available.
Correlation parameters
If the fair value of a financial instrument is impacted by
more than one unobservable input, correlations describe
the relationship between these different underlyings.
For example for equity-linked instruments, correlation has
a significant impact on fair value if the underlying is
dependant on more than one equity. For FX-linked cross
currency and interest rate derivatives, correlations exist
between FX rates of currencies, which impact the fair
value of the financial instrument. If a high correlation exists
between the unobservable inputs, will it lead to an increase
in fair value. A low correlation between the unobservable
inputs will lead to a decrease in fair value. MuniFin Group
has financial instruments, in which correlation is a significant
unobservable input, mainly in funding products and their
hedging instruments.
Volatility (extrapolated or illiquid)
A financial instrument whose value is based on a stochastic
model will typically require the volatility of the underlying
instrument as an input. The Company uses Dupire local
volatility model as its stochastic valuation model. For interest
rate volatilities at-the-money implied volatility is used. For FX
and equity components (both equity indices and single stock
prices), a full volatility surface is used that includes quotes for
different strikes and maturities. The Company uses implied
volatility for the majority of the equity-linked structures. In
some cases no liquid volatility surface exists. In these cases,
a proxy volatility is typically used instead. The majority of
the financial instruments, which use volatility as a significant
unobservable input, are the Company’s funding products and
their hedging instruments.
Dividend yield
The main drivers influencing the fair value of equity-linked
instruments are the dividend yield and volatility of the
underlying equities. Equity-linked instruments require a
dividend parameter as an input to the fair value. The equity
component is modelled using the Dupire local volatility model
where the underlying equity prices are assumed to follow
a random walk. Instruments that have divident yield as a
significant unobservable input, are the Company’s funding
products and their hedging instruments.
Interest rates (extrapolated or illiquid)
The Company uses unobservable inputs in defining the fair
value of complex interest rate structures. The future cash
flows and their fair value is determined by using forward
rates and volatilities of the underlying interest rates using the
Hull-White stochastic model. Financial instruments whose
payoffs are dependent on the value of complex interest rate
structures are categorised on level 3. The majority of these
instruments requiring extrapolated or illiquid interest rates as
input are the Company’s funding products and their hedging
instruments.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
The following table illustrates the effect that changing one or more of the assumptions in the unobservable input (reasonably possible alternative assumptions) could have on the valuations at the
financial statement date:
SENSITIVITY ANALYSIS OF UNOBSERVABLE INPUTS
31 Dec 2022 (EUR 1,000) Fair value Valuation technique Unobservable input
Positive range
of fair value
Negative range
of fair value
Loans and advances to the public and public sector entities
Loans 31,090 Stochastic model Volatility – Extrapolated or Illiquid 249 -273
Derivative contracts
Equity-linked derivatives -104,317 Stochastic model
Correlation parameters -1,743 -1,906
Volatility – Extrapolated or Illiquid 21,290 -1 7,708
Dividend yield -1,430 -2,438
FX-linked cross currency and interest rate derivatives -120,294 Stochastic model
Correlation parameters -11 -121
Volatility – Extrapolated or Illiquid 845 -1,197
Interest rates – Extrapolated or Illiquid 0 0
Other interest rate derivatives -106,351 Stochastic model
Correlation parameters 80 14
Volatility – Extrapolated or Illiquid 11,510 -11,736
Interest rates – Extrapolated or Illiquid 136 -138
Debt securities issued and Liabilities to the public and
public sector entities
Equity-linked liabilities 676,238 Stochastic model
Correlation parameters 569 -194
Volatility – Extrapolated or Illiquid 15,511 -22,611
Dividend yield 847 -470
FX-linked liabilities 170,030 Stochastic model
Correlation parameters -36 -133
Volatility – Extrapolated or Illiquid 870 -857
Interest rates – Extrapolated or Illiquid 0 0
Other liabilities 339,527 Stochastic model
Correlation parameters 0 0
Volatility – Extrapolated or Illiquid 11,876 -11,285
Interest rates – Extrapolated or Illiquid 43 -43
Tot al 60,606 -71,095
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
DAY 1 GAIN OR LOSS (EUR 1,000) Jan–Dec 2022 Jan–Dec 2021
Opening balance 1 Jan -236 -29
Recognised gain in the income statement 498 412
Recognised loss in the income statement -470 -711
Deferred gain or loss on new transactions -184 91
Total 31 Dec -392 -236
The definition and amortisation method for the Day 1 gain or loss is presented in the accounting policies of the Consolidated Financial Statements (Note 1) in Section 13. Determination of fair value.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Transfers in the fair value hierarchy and sensitivity analysis 2021
During 2021, transfers totaling EUR 50,127 thousand have been made between level 1 and level. During 2021, there were no transfers from level 2 to level 3.
LEVEL 3 TRANSFERS
2021 (EUR 1,000) 1 Jan 2021
Change in fair value in
the income statement
Purchases and
new contracts
Sales and matured
contracts
Transfers
into level 3
Transfers
out of level 3 31 Dec 2021
Financial assets
At fair value
Mandatorily at fair value through profit or loss
Loans and advances to the public and public sector entities 43,735 -4,878 - -3,997 - - 34,861
Shares and participations 27 - - -27 - - -
Shares and participations in Group companies 656 - - - - - 656
Fair value through profit or loss
Derivative contracts at fair value through profit or loss 79,452 -14,590 604 -2,636 - - 62,829
Derivative contracts in hedge accounting 572 -366 317 - - -117 407
Financial assets in total 124,443 -19,834 921 -6,660 - -117 98,753
Financial liabilities
At fair value
Designated at fair value through profit or loss
Liabilities to the public and public sector entities 224,413 -8,408 47,787 - - - 263,793
Debt securities issued 2,125,714 -144,658 762,861 -975,731 - -8,617 1,759,569
Fair value through profit or loss
Derivative contracts at fair value through profit or loss 646,293 136,055 38,581 -76,252 - -378 744,299
Derivative contracts in hedge accounting 24,391 6,797 450 - - -5,948 25,690
In fair value hedge accounting
Amortised cost
Debt securities issued 94,048 -1,802 27,162 - - -33,368 86,040
Financial liabilities in total 3,114,859 -12,015 876,840 -1,051,984 - -48,310 2,879,390
Level 3 financial assets and liabilities in total 3,239,302 -31,849 877,761 -1,058,644 - -48,427 2,978,143
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
SENSITIVITY ANALYSIS OF UNOBSERVABLE INPUTS
2021 (EUR 1,000) Fair value Valuation technique Unobservable input
Positive range of
fair value
Negative range of
fair value
Loans and advances to the public and public sector entities
Loans 34,861 Stochastic model Volatility – Extrapolated or Illiquid 133 -84
Derivative contracts
Equity-linked derivatives -37,319 Stochastic model
Correlation parameters 759 653
Volatility - Extrapolated or Illiquid 17,551 -11,504
Dividend yield 554 -595
FX-linked cross currency and interest rate derivatives -647,461 Stochastic model
Correlation parameters 498 -353
Volatility – Extrapolated or Illiquid 2,145 -1,183
Interest rates – Extrapolated or Illiquid 1 -1
Other interest rate derivatives -21,972 Stochastic model
Correlation parameters 7 0
Volatility - Extrapolated or Illiquid 12,870 -13,048
Interest rates – Extrapolated or Illiquid 296 -296
Debt securities issued and Liabilities to the public and
public sector entities
Equity-linked liabilities 741,554 Stochastic model
Correlation parameters 229 -149
Volatility – Extrapolated or Illiquid 11,455 -16,829
Dividend yield 666 -1,137
FX-linked liabilities 785,053 Stochastic model
Correlation parameters 17 -123
Volatility – Extrapolated or Illiquid 677 -2,099
Interest rates – Extrapolated or Illiquid 11 -11
Other liabilities 582,795 Stochastic model
Correlation parameters 1 0
Volatility – Extrapolated or Illiquid 12,313 -12,711
Interest rates – Extrapolated or Illiquid 98 -98
Tot al 60,279 -59,570
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 42. Equity
(EUR 1,000) Share capital Reserve fund
Fair value reserve of
investments
Own credit
revaluation reserve
Cost-of-Hedging
reserve
Reserve for invested
non-restricted equity
Retained
earnings To t al
Carrying amount 1 Jan 2022 43,008 277 309 64 13,621 40,743 267,950 365,972
+ Increase - - 2 - - - 138,061 138,063
- Decrease - - -4,769 -147 -12,133 - -40,236 -57,284
Carrying amount 31 Dec 2022 43,008 277 -4,457 -83 1,488 40,743 365,775 446,750
(EUR 1,000) Share capital Reserve fund
Fair value reserve of
investments
Own credit
revaluation reserve
Cost-of-Hedging
reserve
Reserve for invested
non-restricted equity
Retained
earnings To t al
Carrying amount 1 Jan 2021 43,008 277 847 -255 15,624 40,743 151,454 251,698
+ Increase - - - 320 - - 136,809 137,129
- Decrease - - -538 - -2,004 - -20,313 -22,855
Carrying amount 31 Dec 2021 43,008 277 309 64 13,621 40,743 267,950 365,972
DISTRIBUTABLE FUNDS 31 Dec 2022 31 Dec 2021
Retained earnings 227,714 131,141
Net profit for the financial year 138,061 136,809
Tot al 365,775 267,950
31 December 2022, the distributable funds totalled EUR 365,774,616.34 (EUR 267,949,619.07).
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 43. Share capital Note 44. Largest shareholders
The shares of Municipality Finance Plc are divided into A and B shares. The two types
are equal in terms of voting rights and the distribution of profit. Each share entitles
its holder to one vote. The shares have no nominal value. The acquisition of shares is
restricted through the consent and redemption clauses of the Articles of Association.
At the end of 2022, the Company’s share capital, paid up and recorded in the Trade
Register, amounted to EUR 43,008 thousand (EUR 43,008 thousand). The total
number of shares is 39,063,798 (39,063,798) which is divided to A shares 26,331,646
(26,331,646) and B shares 12,732,152 (12,732,152).
The ten largest shareholders in terms of voting rights and the number of shares held
by them, their portion of all shares in the credit institution and of all votes carried by the
shares as well as the total number of shareholders:
31 Dec 2022 No. of shares Per cent
1. Keva 11,975,550 30.66%
2. Republic of Finland 6,250,000 16.00%
3. City of Helsinki 4,066,525 10.41%
4. City of Espoo 1,547,884 3.96%
5. VAV Asunnot Oy * 963,048 2.47%
6. City of Tampere 919,027 2.35%
7. City of Oulu 903,125 2.31%
8. City of Turku 763,829 1.96%
9. City of Kuopio 592,028 1.52%
10. City of Lahti 537,926 1.38%
* VAV Asunnot Oy is fully owned by City of Vantaa.
The total number of shareholders is 276 (276).
The number of shares in this table does not include possible shares held by the
shareholders’ group companies.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 45. Collateral given
Notes on collateral and contingent liabilities
GIVEN COLLATERALS ON BEHALF OF OWN LIABILITIES AND COMMITMENTS
(EUR 1,000) 31 Dec 2022 31 Dec 2021
Loans and advances to credit institutions to the counterparties of derivative contracts * 1,400,559 1,310,576
Loans and advances to credit institutions to the counterparties of repurchase agreements ** 514 -
Loans and advances to credit institutions to the central bank *** 31,745 35,984
Loans and advances to the public and public sector entities to the central bank *** 3,676,627 4,716,147
Loans and advances to the public and public sector entities to the Municipal Guarantee Board **** 12,101,459 11,474,101
Debt securities to the counterparties of repurchase agreements** 9,580 -
Debt securities to the central counterparty 24,942 -
Other assets to the counterparties of derivative contracts * 1,219,541 238,930
Tot al 18,464,967 17,775,738
* MuniFin has pledged collateral to the counterparties of derivative contracts based on the CSA agreements of the derivative contracts (ISDA/Credit Support Annex).
** MuniFin has pledged collateral to the counterparties of repurchase agreements based on the GMRA (General Master Repurchase Agreement).
*** MuniFin is a monetary policy counterparty approved by the central bank (the Bank of Finland) and for this purpose collateral has been pledged to the central bank
for possible operations related to this counterparty position.
**** MuniFin has pledged loans shown in the table to the Municipal Guarantee Board. The Municipal Guarantee Board guarantees MunFin’s funding and MuniFin places collateral for the
Municipal Guarantee Board’s guarantees as defined in the Act on the Municipal Guarantee Board.
Collateral given is presented at the carrying amounts of the financial statement date.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 46. Pension liabilities
Note 47. Off-balance sheet commitments
Pension coverage has been arranged via an external pension insurance company. Pension plans are classified as defined contribution plans.
(EUR 1,000) 31 Dec 2022 31 Dec 2021
Credit commitments 2,463,978 2,592,877
Tot al 2,463,978 2,592,877
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 48. Personnel
Notes on personnel and management
2022 2021
Average End of year Average End of year
Permanent full-time 147 149 143 144
Permanent part-time 3 4 1 1
Fixed term 12 12 7 8
Tot al 162 165 151 153
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
MuniFin has provided to those members of the EMT
that have been appointed as members (including
CEO and the Deputy to the CEO) before 21 Dec 2017
with a contribution-based group pension insurance.
Those members are entitled to pension from the
insurance after they have turned 63 years.
The Company has paid the following statutory
pension contributions related to the CEO, the
Deputy to the CEO and other members of the EMT,
which are described in the adjacent table.
SALARIES AND REMUNERATION (EUR 1,000) 2022 2021
President and CEO -435 -430
Deputy to the CEO -272 -224
Other members of the Executive Management Team in total -1,436 -1,307
Tot al -2,142 -1,961
STATUTORY PENSION CONTRIBUTIONS (EUR 1,000) 2022 2021
President and CEO -74 -71
Deputy to the CEO -46 -37
Other members of the Executive Management Team in total -244 -216
Tot al -364 -324
Employee benefits for management
Salaries and remuneration paid to the CEO, Deputy
to the CEO and other members of the Executive
Management Team (EMT) subject to withholding
tax are described in the adjacent table.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Remuneration of the Board of Directors
During the term 2022–2023, the members of the Board
of Directors of the Parent Company are paid an annual
remuneration as well as remuneration for each meeting in
accordance with the decision of the Annual General Meeting.
The annual remuneration is EUR 40,000 for the Chair of
the Board, EUR 26,000 for the Vice Chair, EUR 28,000 for
the Chairs of Committees and EUR 23,000 for the other
members of the Board. The remuneration paid for Board and
Committee meetings is EUR 800 per meeting for the Chair
of the Board and the Chairs of Committees and EUR 500
per meeting for the other members. In addition, meeting
remuneration is paid for the meetings required by the
supervisory authorities.
During the term 2021–2022, the annual remuneration was
EUR 35,000 for the Chair of the Board, EUR 23,000 for
the Vice Chair, EUR 25,000 for the Chairs of Committees
and EUR 20,000 for the other members of the Board.
The meeting remuneration has remained at the same level.
These remunerations are valid also in term 2020–2021.
SALARIES AND REMUNERATION (EUR 1,000)
Members of the Board of Directors 2022 2021
Helena Walldén, Chair until 25 March 2021 - -14
Kari Laukkanen, Chair 25 March 2021 onwards -54 -52
Tuula Saxholm, Vice Chair until 25 March 2021 - -9
Maaria Eriksson, Vice Chair 25 March 2021 onwards -35 -32
Markku Koponen -43 -42
Vivi Marttila -33 -31
Tuomo Mäkinen, elected 25 March 2021 -31 -22
Minna Smedsten, elected 25 March 2021 -34 -22
Denis Strandell -34 -31
Leena Vainiomäki, elected 25 March 2021 -40 -30
Kimmo Viertola, Member until 24 March 2022 -7 -28
Tot al -310 -313
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 49. Loans and other financial receivables from the related parties
Related party transactions
MuniFin does not have any loan or financial receivables, or other receivables referred to in Chapter 15 Section 13 (2) of the Act on Credit Institutions from related parties.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 50. Holdings in other companies
Holdings in other companies
(EUR 1,000)
2022 2021
Proportion of
all shares, % Carrying amount
Proportion of
all shares, % Carrying amount
Subsidiaries
Financial Advisory Services Inspira Ltd 100.0 656 100.0 656
Tot al 100.0 656 100.0 656
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Note 51. Audit and other fees paid to the audit firm
Other notes
(EUR 1,000) Jan–Dec 2022 Jan–Dec 2021
Audit -393 -340
Assignments as referred to in Subparagraph 2, Paragraph 1 Section 1 of the Auditing Act -13 -
Tax advisory services -23 -17
Other services -153 -146
Tot al -581 -504
Amounts do not include VAT.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Signatures to the Report of
the Board of Directors and the
Financial Statements
Signatures to the Report of the Board of Directors
and the Financial Statements
Helsinki, 10 February 2023
MUNICIPALITY FINANCE PLC
Kari Laukkanen
Chair of the Board
Maaria Eriksson
Vice Chair of the Board
Markku Koponen
Member of the Board
Vivi Marttila
Member of the Board
Tuomo Mäkinen
Member of the Board
Minna Smedsten
Member of the Board
Denis Strandell
Member of the Board
Esa Kallio
President and CEO
Leena Vainiomäki
Member of the Board
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Auditor’s Report
Municipality Finance Plc
Auditor’s Report
for the year ended 31 December 2022
To the Annual General Meeting of Municipality Finance Plc
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Municipality
Finance Plc (business identity code 1701683-4) for the year
ended 31 December 2022. The financial statements comprise
the consolidated statement of financial position, income
statement, statement of comprehensive income, statement
of changes in equity, statement of cash flows and notes,
including a summary of significant accounting policies, as well
as the parent company’s balance sheet, income statement,
statement of cash flows and notes.
In our opinion
— the consolidated financial statements give a true and fair
view of the group’s financial position, financial performance
and cash flows in accordance with International Financial
Reporting Standards (IFRS) as adopted by the EU
— the financial statements give a true and fair view of the
parent company’s financial performance and financial
position in accordance with the laws and regulations
governing the preparation of financial statements in
Finland and comply with statutory requirements.
Our opinion is consistent with the additional report submitted
to the Audit Committee.
Basis for Opinion
We conducted our audit in accordance with good auditing
practice in Finland. Our responsibilities under good auditing
practice are further described in the Auditor’s Responsibilities
for the Audit of the Financial Statements section of our report.
We are independent of the parent company and of the group
companies in accordance with the ethical requirements that
are applicable in Finland and are relevant to our audit, and we
have fulfilled our other ethical responsibilities in accordance
with these requirements.
To our best knowledge and understanding, the non-audit
services that we have provided to the parent company and
group companies are in compliance with laws and regulations
applicable in Finland regarding these services, and we have
not provided any prohibited non-audit services referred to in
Article 5(1) of regulation (EU) 537/2014. The non-audit services
that we have provided have been disclosed in note 51 to the
parent company’s financial statements.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Materiality
The scope of our audit was influenced by our application
of materiality. The materiality is determined based on our
professional judgement and is used to determine the nature,
timing and extent of our audit procedures and to evaluate
the effect of identified misstatements on the financial
statements as a whole. The level of materiality we set is based
on our assessment of the magnitude of misstatements that,
individually or in aggregate, could reasonably be expected
to have influence on the economic decisions of the users of
the financial statements. We have also taken into account
misstatements and/or possible misstatements that in our
opinion are material for qualitative reasons for the users of the
financial statements.
Key Audit Matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the
financial statements of the current period. These matters
were addressed in the context of our audit of the financial
statements as a whole and in forming our opinion thereon, and
we do not provide a separate opinion on these matters. The
significant risks of material misstatement referred to in the EU
Regulation No 537/2014 point (c) of Article 10(2) are included
in the description of key audit matters below.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
THE KEY AUDIT MATTER HOW THE MATTER WAS ADDRESSED IN THE AUDIT
Financial assets and financial liabilities measured at fair value (notes to group financial statements 1, 2, 3, 5, 6, 7, 16, 17, 24 and 25)
— The carrying amount of financial assets measured at fair value totaled EUR 6.1 billion and
that of financial liabilities measured at fair value EUR 16.8 billion.
— Fair values of financial instruments carried at fair value are determined using either prices
quoted in an active market, or Municipality Finance Plc’s own valuation techniques where
no active market exists. Determining fair values involves management judgements,
especially in respect of those instruments for which market-based data is not available.
— Financial assets and financial liabilities measured at fair value account for a substantial part
of the assets and liabilities in the consolidated statement of financial position. Changes in
market interest rates and foreign exchange rates may have a significant impact on the profit
or loss for the financial year and on equity. Consequently, the accounting for fair-valued
financial assets and liabilities was considered a key audit matter.
— We analysed the appropriateness of the accounting principles and the valuation
methodologies applied by Municipality Finance Plc, as well as tested key controls
over the valuation process.
— In respect of derivative instruments we considered the appropriateness of the accounting
treatment by reference to the IFRS requirements.
— As part of our year-end audit procedures we compared the fair values used in the
measurement of fair-valued financial assets and liabilities with market quotations and
other external price references, and assessed the accuracy of the valuation inputs and
the reasonableness of the assumptions and estimates used.
— Furthermore, we considered the appropriateness of the notes provided on financial assets
and financial liabilities measured at fair value.
— We involved our own IFRS and financial instruments specialists.
We have also addressed the risk of management override of internal controls. This includes
consideration of whether there was evidence of management bias that represented a risk of
material misstatement due to fraud.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Hedge accounting (notes to group financial statements 1, 2, 8, 24 and 25)
— Municipality Finance Plc applies hedge accounting to hedge against interest rate and
currency risks related to financial assets and financial liabilities, and to reduce the
accounting mismatch.
— Municipality Finance Plc applies fair value hedge accounting under IFRS 9 and fair value
portfolio hedge accounting under IAS 39.
— Due to the application of hedge accounting, the carrying amounts of those financial assets
and financial liabilities to which hedge accounting is applied, include unrealised fair value
change related to hedged risks.
— The hedge accounting process includes various accounting phases and hedge accounting
may have a significant impact on the consolidated financial statements. Accordingly, hedge
accounting was considered as key audit matter.
— We evaluated the hedge accounting practices applied for compliance with the relevant
financial reporting standards.
— We assessed the effectiveness of the hedge effectiveness testing and the appropriateness
of the related documentation prepared by Municipality Finance Plc.
— Furthermore, we considered the appropriateness of the notes provided on hedge
accounting.
— We involved our own IFRS and financial instrument specialists.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Responsibilities of the Board of Directors and the
Managing Director for the Financial Statements
The Board of Directors and the Managing Director are
responsible for the preparation of consolidated financial
statements that give a true and fair view in accordance with
International Financial Reporting Standards (IFRS) as adopted
by the EU, and of financial statements that give a true and fair
view in accordance with the laws and regulations governing
the preparation of financial statements in Finland and
comply with statutory requirements. The Board of Directors
and the Managing Director are also responsible for such
internal control as they determine is necessary to enable the
preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors
and the Managing Director are responsible for assessing the
parent company’s and the group’s ability to continue as a going
concern, disclosing, as applicable, matters relating to going
concern and using the going concern basis of accounting. The
financial statements are prepared using the going concern
basis of accounting unless there is an intention to liquidate the
parent company or the group or cease operations, or there is
no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial
Statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with good auditing
practice will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial
statements.
As part of an audit in accordance with good auditing practice,
we exercise professional judgment and maintain professional
scepticism throughout the audit. We also:
— Identify and assess the risks of material misstatement of
the financial statements, whether due to fraud or error,
design and perform audit procedures responsive to
those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
— Obtain an understanding of internal control relevant to
the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the parent
company’s or the group’s internal control.
— Evaluate the appropriateness of accounting policies used
and the reasonableness of accounting estimates and
related disclosures made by management.
— Conclude on the appropriateness of the Board of
Directors’ and the Managing Director’s use of the going
concern basis of accounting and based on the audit
evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant
doubt on the parent company’s or the group’s ability to
continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our
auditor’s report to the related disclosures in the financial
statements or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the
audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause
the parent company or the group to cease to continue as a
going concern.
— Evaluate the overall presentation, structure and content
of the financial statements, including the disclosures, and
whether the financial statements represent the underlying
transactions and events so that the financial statements
give a true and fair view.
— Obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities
within the group to express an opinion on the consolidated
financial statements. We are responsible for the direction,
supervision and performance of the group audit. We
remain solely responsible for our audit opinion.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
We communicate with those charged with governance
regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including
any significant deficiencies in internal control that we identify
during our audit.
We also provide those charged with governance with a
statement that we have complied with relevant ethical
requirements regarding independence and communicate with
them all relationships and other matters that may reasonably
be thought to bear on our independence, and where
applicable, related safeguards.
From the matters communicated with those charged with
governance, we determine those matters that were of most
significance in the audit of the financial statements of the
current period and are therefore the key audit matters. We
describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a
matter should not be communicated in our report because
the adverse consequences of doing so would reasonably
be expected to outweigh the public interest benefits of such
communication.
Other Reporting Requirements
Information on our audit engagement
KPMG Oy Ab was first appointed as the audit firm by the
Annual General Meeting in 2001, and our appointment
represents a total period of uninterrupted engagement of
22 years.
Other Information
The Board of Directors and the Managing Director are
responsible for the other information. The other information
comprises the report of the Board of Directors and the
information included in the Annual Report, but does not include
the financial statements and our auditor’s report therein. We
have obtained the report of the Board of Directors prior to the
date of this auditor’s report, and the Annual Report is expected
to be made available to us after that date. Our opinion on the
financial statements does not cover the other information.
In connection with our audit of the financial statements, our
responsibility is to read the other information identified above
and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our
knowledge obtained in the audit, or otherwise appears to be
materially misstated. With respect to the report of the Board of
Directors, our responsibility also includes considering whether
the report of the Board of Directors has been prepared in
accordance with the applicable laws and regulations.
In our opinion, the information in the report of the Board of
Directors is consistent with the information in the financial
statements and the report of the Board of Directors has
been prepared in accordance with the applicable laws and
regulations.
If, based on the work we have performed on the other
information that we obtained prior to the date of this auditor’s
report, we conclude that there is a material misstatement of
this other information, we are required to report that fact.
We have nothing to report in this regard.
Other Opinion
We support that the financial statements should be adopted.
The proposal by the Board of Directors regarding the use of
the profit shown in the balance sheet and the profit distribution
is in compliance with the Limited Liability Companies Act.
We support that the Members of the Board of Directors and
the Managing Director should be discharged from liability for
the financial period audited by us.
Helsinki 10
th
February 2023
KPMG OY AB
TIIA KATAJA
Authorised Public Accountant, KHT
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
To the Board of Directors of Municipality Finance Plc
We have undertaken a reasonable assurance
engagement in respect of whether the consolidated
financial statements for the year ended 31 December,
2022 included in the digital financial statements
529900HEKOENJHPNN480-2022-12-31-en.zip of
Municipality Finance Plc (Business ID 1701683-4 ) have
been marked up with iXBRL markups in accordance with
the requirements of Article 4 of EU Delegated Regulation
2018/815 (ESEF RTS).
The Responsibility of the Board of Directors and
Managing Director
The Board of Directors and Managing Director are
responsible for preparing the report of the Board of Directors
and financial statements (ESEF financial statements)
that comply with the requirements of ESEF RTS. This
responsibility includes:
— preparation of ESEF financial statements in XHTML
format in accordance with Article 3 of the ESEF RTS
— marking up the primary statements and the notes to the
consolidated financial statements, and the company
identification data included in the ESEF financial
statements with iXBRL tags in accordance with
Article 4 of the ESEF RTS; and
— ensuring consistency between ESEF financial
statements and audited financial statements.
The Board of Directors and the Managing Director are also
responsible for such internal control as they deem necessary
to prepare the ESEF financial statements in accordance with
the requirements of the ESEF RTS.
Auditor’s Independence and Quality Management
We are independent of the company in accordance with the
ethical requirements applicable in Finland, which apply to
the engagement we have performed, and we have fulfilled
our other ethical responsibilities in accordance with these
requirements.
The auditor applies International Standard on Quality
Management ISQM 1, which requires the firm to design,
implement and operate a system of quality management
including policies or procedures regarding compliance with
ethical requirements, professional standards and applicable
legal and regulations requirements.
Auditor’s Responsibility
In accordance with the Engagement Letter our responsibility
is to express an opinion on whether the marking up of the
consolidated financial statements included in the ESEF
financial statements comply in all material respects with the
Article 4 of the ESEF RTS. We conducted our reasonable
assurance engagement in accordance with International
Standard on Assurance Engagements 3000.
Independent Auditor’s Reasonable Assurance Report on
Municipality Finance Plc’s ESEF Financial Statements
This document is an English translation of the Finnish Independent Auditor’s Reasonable Assurance report. Only the Finnish version of the report is legally binding.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
The engagement involves procedures to obtain evidence
whether;
— the primary statements of the consolidated financial
statements included in the ESEF financial statements
are, in all material respects, marked up with iXBRL tags in
accordance with Article 4 of the ESEF RTS, and;
— whether the notes to the consolidated financial
statements and the company identification data included
in the ESEF financial statements data, have been marked
up, in all material respects, with iXBRL tags in accordance
with Article 4 of the ESEF RTS; and
— whether the ESEF financial statements and the audited
financial statements are consistent with each other.
The nature, timing and the extent of procedures selected
depend on practitioner’s judgement. This includes the
assessment of the risks of material departures from the
requirements set out in the ESEF RTS, whether due to fraud
or error.
We believe that the evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
Opinion
In our opinion, the primary statements of the consolidated
financial statements, the notes to the consolidated financial
statements and the company identification data included in
the ESEF financial statements of Municipality Finance Plc
identified as 529900HEKOENJHPNN480-2022-12-31-en.zip
for the year ended 31 December, 2022 are, in all material
respects, marked up in compliance with the ESEF Regulatory
Technical Standard.
Our audit opinion on the audit of the consolidated financial
statements of Municipality Finance Plc for the year ended
31 December, 2022 is set out in our Auditor’s Report dated
10 February, 2023. In this report, we do not express any audit
opinion or other assurance conclusion on the consolidated
financial statements.
Helsinki 6 March, 2023
Tiia Kataja
Authorised Public Accountant, KHT
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2022
Name of reporting entity or
other means of identification
Domicile of entity Helsinki
Legal form of entity Public limited liability company
Country of incorporation Finland
Address of entity’s registered office Jaakonkatu 3 A, 00100 Helsinki
Principal place of business Finland
Description of nature of entity’s
operations and principal activities
Name of parent entity Municipality Finance Plc
Name of ultimate parent of group Municipality Finance Plc
Municipality Finance Plc
Jaakonkatu 3 A, P.O. Box 744
00101 Helsinki
Tel. +358 9 6803 5666
www.munifin.fi
info@munifin.fi