Report of the Board
of Directors and
Financial Statements
2024
This report fulfills the disclosure obligation pursuant to
Section 7:5§ of the Securities Market Act.
Financial Statements 1 January–31 December 2024
Report of the Board of Directors
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Report of the Board of Directors
1 January–31 December 2024
In brief: MuniFin Group in 2024 3
Key figures (Group) 5
Operating environment in 2024 7
Information on the Group results 8
Information on the Consolidated statement of financial position 11
Financing and other services for customers 12
Funding and liquidity management 14
MuniFin’s credit ratings 16
Capital adequacy 17
MuniFin Group’s strategy and financial objectives 24
Risk management 26
Governance 30
Share capital and shareholders 32
Events after the reporting period 33
Outlook for 2025 34
The Board’s proposal concerning the use of the profit shown in
the balance sheet and the distribution of dividends 36
Development of the Group’s key figures in 2020–2024 37
Notes to the Report of the Board of Directors 39
Note 1. Key figures 39
Note 2. The Group's capital adequacy position 48
Note 3. The Parent Company's capital adequacy position 58
• The Group’s net operating profit excluding unrealised fair value changes* increased by
2.9% (3.2%) in January–December and amounted to EUR181million (EUR176million). Net
interest income* was at the same level as in the year before and totalled EUR260million
(EUR259million). Net operating profit excluding unrealised fair value changes was boosted
by lower expenses and increased other income compared to the previous period.
• Net operating profit* amounted to EUR166million (EUR139million). Unrealised fair value
changes amounted to EUR-16million (EUR-37million) in the financial year. Unrealised fair
value changes were influenced in particular by changes in interest rates and credit risk
spreads in the Group’s main funding markets.
• Costs* in the financial year amounted to EUR81million (EUR82million).
• The Group’s leverage ratio remained at a strong level, standing at 12.3% (12.0%) at the end
of December.
• At the end of December, the Group’s CET1 capital ratio was very strong at 107.7% (103.4%).
CET1 capital ratio was over seven times the required minimum of 15.0% (13.9%), taking
capital buffers into account.
• Long-term customer financing (long-term loans and leased assets) excluding unrealised
fair value changes* totalled EUR35,787million (EUR32,948million) at the end of December
and saw an increase of 8.6% (7.5%). New long-term customer financing* increased by 17.1%
(0.0%) in January–December 2024 and amounted to EUR5,056million (EUR4,319million).
Short-term customer financing* totalled EUR1,825million (EUR1,575million).
• Of all long-term customer financing, the amount of green finance* aimed at environmentally
sustainable investments totalled EUR6,817million (EUR4,795million), and the amount
of social finance* aimed at investments promoting equality and communality totalled
EUR2,536million (EUR2,234million) at the end of December. The total amount of this
financing increased by 33.1% (41.0%) from the previous year. The ratio of green and social
finance to long-term customer financing excluding unrealised fair value changes* grew by
4.8% percentage points to 26.1% (21.3%).
• In 2024, new long-term funding* reached EUR8,922million (EUR10,087million). At the
end of December, the total funding* was EUR46,737million (EUR43,320million), of which
long-term funding* made up EUR43,328million (EUR39,332million).
In brief: MuniFin Group in 2024
In brief: MuniFin Group in 2024
In brief: MuniFin Group in 2024
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
• The Group’s total liquidity* is very strong, standing at EUR11,912million (EUR11,633million)
at the end of the financial year. The Liquidity Coverage Ratio (LCR) stood at 339% (409%)
and the Net Stable Funding Ratio (NSFR) at 124% (124%) at the end of the year.
• In early 2024, MuniFin reviewed the future and development potential of the consulting
services offered by its subsidiary company Financial Advisory Services Inspira Plc (Inspira)
and decided to discontinue Inspira’s consulting services in summer 2024.
• The Board of Directors proposes to the Annual General Meeting to be held in spring 2025
a dividend of EUR1.86 per share, totalling EUR72.7 million. The total dividend payment in
2024 was EUR1.69 per share, totalling EUR66.0 million.
• Outlook for 2025: The Group expects its net operating profit excluding unrealised fair value
changes to be at the same level or lower in 2025 as in 2024. 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 2025.
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 2023.
Comparison figures deriving from the balance sheet and other cross-sectional items are based
on the figures of 31 December 2023 unless otherwise stated.
* Alternative performance measure.
The calculation formulas for all key figures can be found on pages 39–47. All figures presented in the Report of the Board of Directors are those of MuniFin Group, unless otherwise stated.
In brief: MuniFin Group in 2024
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Key figures (Group)
Key figures (Group)
The calculation formulas for
all key figures can be found
on pages 39–47. All figures
presented in the Report of the
Board of Directors are those
of MuniFin Group, unless
otherwise stated.
Key figures (Group)
Jan–Dec 2024 Jan–Dec 2023 Change, %
Net operating profit excluding unrealised fair value changes (EUR million)* 181 176 2.9
Net operating profit (EUR million)* 166 139 19.5
Net interest income (EUR million)* 260 259 0.3
New long-term customer financing (EUR million)* 5,056 4,319 17.1
New long-term funding (EUR million)* 8,922 10,087 -11.6
Cost-to-income ratio, %* 27.7 32.2 -14.0**
Return on equity (ROE), %* 7.2 6.6 9.3**
31 Dec 2024 31 Dec 2023 Change, %
Long-term customer financing (EUR million)* 35,173 32,022 9.8
Green and social finance (EUR million)* 9,353 7,029 33.1
Balance sheet total (EUR million) 53,092 49,736 6.7
CET1 capital (EUR million) 1,646 1,550 6.2
Tier 1 capital (EUR million) 1,646 1,550 6.2
Total own funds (EUR million) 1,646 1,550 6.2
CET1 capital ratio, % 107.7 103.4 4.2**
Tier 1 capital ratio, % 107.7 103.4 4.2**
Total capital ratio, % 107.7 103.4 4.2**
Leverage ratio, % 12.3 12.0 2.5**
Personnel 178 185 -3.8
* Alternative performance measure.
** Change in ratio.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
* Alternative performance measure.
The calculation formulas for all key figures can be found on pages 39–47. All figures presented in the Report of the Board of Directors are those of MuniFin Group, unless otherwise stated.
Key figures (Group)
0
40
80
120
160
200
240
20242023202220212020
197
197
213
213
170
170
176
176
181
181
Liikevoitto ilman realisoitumattomia arvostuksia
0
5
10
15
20
25
30
35
40
20242023202220212020
28
28
29
29 2929
32
32
35
35
104.3104.3
95.0
95.0
97.6
97.6
103.4103.4
107.7107.7
0.0
20.0
40.0
60.0
80.0
100.0
120.0
20242023202220212020
0.0
1.0
2.0
3.0
4.0
5.0
6.0
20242023202220212020
5.1
5.1
3.6
3.6
4.3
4.3 4.34.3
5.1
5.1
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, %
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Operating environment in 2024
Operating environment in 2024
The year 2024 began promisingly in the global economy
as the peak interest rate era seemed to be over and growth
expectations grew stronger. After the summer, however, the
economic outlook weakened again, especially in Europe. The
atmosphere was shadowed by the geopolitical crises in the
Middle East and Ukraine and the political deadlocks in France
and Germany. Donald Trump and the Republican Party
winning the US election introduced even more uncertainty
into the world economy.
In Finland, extensive early-year labour disputes weakened
growth potential. Despite the challenges, the Finnish
economy remained above the late-2023 trough, and Finland’s
GDP started to grow again in 2024. Because of the low
starting point, the GDP growth for 2024 is nevertheless likely
to remain slightly in the negative. Employment weakened
more than projected, and the trend of the unemployment rate
rose to 9% at the end of the year.
After a few exceptionally good years, municipalities fell into a
significantly larger funding deficit as the effects of temporary
non-recurring benefits faded out, operating costs increased
and investment levels remained high. Wellbeing services
counties were also pushed much deeper into deficit than
expected by the steep growth of operational expenditure.
Affordable social housing production remained on a growth
track in 2024, but the construction sector as a whole
continued to suffer from recession.
Growth concerns and plummeted inflation expectations
caused central banks to expedite their interest rate cuts in the
second half of the year. The European Central Bank (ECB)
lowered its deposit facility rate by a total of one percentage
points in 2024. At the end of the year, the deposit facility rate
stood at 3.0%. Also, the US Federal Reserve started lowering
its key interest rate in September by one percentage points,
bringing it to a targeted range of 4.25–4.50%.
Expectations of monetary policy easing sent short-term
market interest rates to a clear decline. The 12-month
Euribor rate fell from 3.51% to 2.46% during the year and the
3-month Euribor from 3.91% to 2.71%. In contrast, long-term
government bond yields in the euro area rose. Due to the
ECB’s reduced bond holdings and the large financing needs
in government finances, the credit risk premiums of euro area
sovereigns widened in the second half of the year. Germany’s
10-year bond yield went up from 2.02% at the beginning of the
year to 2.36% in December, while Finland’s corresponding
rate rose from 2.56% to 2.82%.
The euro weakened significantly against the US dollar
following Trump’s election victory. At the end of 2024, the
euro-to-dollar exchange rate stood at 1.04, down from
approximately 1.11 at the beginning of the year.
Credit risk premiums increased significantly across the euro
area SSA (Sovereigns, Supranationals, Agencies) issuers,
to which MuniFin also belongs. The increase in credit risk
premiums stems from a change in the balance of supply
and demand in the capital markets: euro area governments
continue to have high borrowing needs, but the demand
for government bonds is decreasing because the ECB is
discontinuing its asset purchase programmes.
MuniFin’s customers had high demand for financing in 2024,
and the Group maintained its solid position as its customers’
main financing partner. Demand increased because of the
municipal sector’s high investment needs and its financial
situation, which weakened after several exceptionally
strong years, and the positive trend in affordable social
housing production, which stemmed partly from increased
government interest subsidy loan authorisations.
MuniFin’s financing to wellbeing services counties continued
to be restricted by the MGB’s limit for MuniFin’s long-term
customer financing to wellbeing services counties, which
was EUR400million in 2024. Wellbeing services counties’
financing needs and government-authorised borrowing
powers were considerably higher than this limit.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Operating environment in 2024
Information on the Group results
The Group’s net operating profit excluding
unrealised fair value changes
MuniFin Group’s core business operations remained strong in
2024. The Group’s net operating profit excluding unrealised
fair value changes increased by 2.9% (3.2%) and amounted to
EUR181million (EUR176million). The growth was influenced
both by an increase in other income and a decrease in costs
as net interest income remained at the level of previous year.
The Group’s income excluding unrealised fair value changes
was EUR262million (EUR259million) and grew by 1.1%
(6.5%). Net interest income grew by 0.3% (7.5%), totalling
EUR260million (EUR259million). Net interest income
was positively affected by growing business volumes. The
increase in funding costs due to the market conditions and
the shape of the yield curve slowed the growth of net interest
income.
Other income totalled EUR2.0million (EUR0.1million). It
consisted mainly of the billing of MuniFin’s digital services and
the turnover of the subsidiary company Inspira from the early
part of the year. In the previous year, negative realised FX rate
changes reduced other income. At 0.8% (0.1%), other income
relative to income excluding unrealised fair value changes
forms only a minor part of the Group’s income.
Consolidated income statement
(EUR million) Jan–Dec 2024 Jan–Dec 2023 Change, %
Net interest income 260 259 0.3
Other income 2 0 >100
Income excluding unrealised fair value changes 262 259 1.1
Commission expenses -17 -16 8.2
HR expenses -21 -20 2.0
Other items in administrative expenses -23 -20 12.4
Depreciation and impairment on tangible and intangible assets -6 -7 -7.8
Other operating expenses -14 -19 -27.0
Costs -81 -82 -1.9
Credit loss and impairments on financial assets 0 -1 -72.9
Net operating profit excluding unrealised fair value changes 181 176 2.9
Unrealised fair value changes -16 -37 -58.4
Net operating profit 166 139 19.5
Income tax expense -33 -28 17.3
Profit for the financial year 133 111 20.1
The sum of individual results may differ from the displayed total due to rounding.
Changes of more than 100% are shown as >100.
Information on the Group results
Information on the Group results
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
The Group’s costs were EUR81million (EUR82million),
down by 1.9% from the year before (+12.4%). The reduction
in expenses was due to the fact that no contribution fee was
collected for the Single Resolution Fund in 2024.
Commission expenses totalled EUR17million (EUR16million),
of which EUR14million (EUR13million) consisted of the
guarantee commission collected by the Municipal Guarantee
Board for guaranteeing MuniFin’s funding.
HR and administrative expenses grew by 7.2% (9.0%) and
reached EUR44million (EUR41million). HR expenses
comprised EUR21million (EUR20million) and other
administrative expenses EUR23million (EUR20million).
The average number of employees in the Group was 187
(183) during the financial year. Other items in administrative
expenses grew by 12.4% (8.8%), mainly due to the increased
costs of maintaining and developing information systems.
During the financial year, depreciation and impairment
of tangible and intangible assets totalled EUR6million
(EUR7million).
Other operating expenses were EUR14million
(EUR19million). The main reason for this decrease is that
there was no contribution fee to the Single Resolution
Fund in 2024. Other operating expenses excluding fees
collected by authorities grew by 22.1% (9.9%) to EUR11million
(EUR9million).
Credit loss and impairments on financial assets were
EUR0.3million (EUR1.2million). This item consists of
expected credit losses (ECL). The Group updated the
model used to estimate the probability of default and the
forward-looking macro scenarios during the financial year.
The Group’s management has assessed the impact of general
cost inflation and increased interest rates on customer
financing receivables and credit risk and decided to release
the additional discretionary provision in full at the end of 2024
(the amount of the additional discretionary provision was
EUR 0.6 million at the end of 2023, and in June 2024, EUR 0.4
million of the additional provision was released). The update
of the probability of default model increased expected credit
losses by EUR 0.9 million euros, as the amount of exposures
that moved from stage 1 to stage 2 increased. Most of the
transferred exposures were subject to the previous additional
discretionary provision. Therefore, the Group’s management
considered that there is no longer a basis for recording a
group-specific additional provision.
The Group’s overall credit risk position has remained
low. The amount of forborne loans was EUR561million
(EUR497million), while non-performing exposures amounted
to EUR292million (EUR142million) at the end of the year.
These non-performing exposures represented 0.8% (0.4%)
of total customer exposures. At the end of December, the
Group had EUR13million in receivables due to the insolvency
of customers, for which the collateral realisation process
is ongoing, or the credit receivable is due for payment by
the guarantor (there were no such receivables at the end
of 2023). All the Group’s customer financing receivables
are from Finnish municipalities, joint municipal authorities,
wellbeing services counties or joint county authorities,
or accompanied by a securing municipal, joint municipal
authority, wellbeing services county or joint county authority
guarantee or a state deficiency guarantee supplementing real
estate collateral, and therefore no final credit losses will arise.
According to the management’s assessment, all receivables
from customers will be fully recovered. During the Group’s
history of 35 years, it has never recognised any final credit
losses in its customer financing.
The credit risk of the Group’s liquidity portfolio has likewise
remained at a low level, and the average credit rating of the
debt securities in the portfolio is AA+ (AA+). More information
on the credit risks of financial assets and other commitments
is available in Note 25 to the Consolidated Financial
Statements.
Information on the Group results
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
The Group’s profit and unrealised fair value changes
The Group’s net operating profit was EUR166million
(EUR139million). Unrealised fair value changes decreased
the Group’s net operating profit by EUR16million (in 2023:
decreased by EUR37million). In January–December,
unrealised fair value changes in hedge accounting amounted
to EUR-12million (EUR-27million) and unrealised net result
on financial assets and liabilities through profit or loss to
EUR-4million (EUR-10million).
The Group’s effective tax rate in the financial year was
19.9% (20.2%). Taxes in the Consolidated income statement
amounted to EUR33million (EUR28million). After taxes,
the Group’s profit for the financial year was EUR133million
(EUR111million).
The Group’s full-year return on equity (ROE) was 7.2% (6.6%).
Excluding unrealised fair value changes, the ROE was 7.9%
(8.4%).
The Group’s other comprehensive income includes
unrealised fair value changes of EUR169million
(EUR109million). During the financial year, the most
significant item affecting the other comprehensive income
was net change in fair value due to changes in own credit
risk of financial liabilities designated at fair value through
profit or loss totalling EUR137million (EUR75million). The
cost-of-hedging amounted to EUR30million (EUR25million).
Net change in fair value of financial assets at fair value
through other comprehensive income was EUR2million
(EUR8million).
On the whole, unrealised fair value changes net of
deferred tax affected the Group’s equity by EUR122million
(EUR57million) and CET1 capital net of deferred tax in capital
adequacy by EUR13million (EUR-3million). The cumulative
effect of unrealised fair value changes on the Group’s own
funds in capital adequacy calculations was EUR58million
(EUR45million).
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 rates and credit risk spreads
in the Group’s main funding markets.
In accordance with its risk management principles, the 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 holds financial instruments and
their hedging derivatives almost always until the maturity
date. The counterparty credit risk related to derivatives
is comprehensively covered by collateral management.
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 and subsidiary company
Inspira’s results
In 2024, MuniFin’s net interest income amounted to
EUR260million (EUR259million) and net operating profit to
EUR166million (EUR139million).
The turnover of MuniFin’s subsidiary company, Financial
Advisory Services Inspira Ltd, was EUR0.4million
(EUR1.4million), and its net operating result amounted to
EUR-0.5million (EUR0.0million). The Group discontinued
Inspira’s advisory services in the spring. In the future, the
subsidiary company will provide some of the digital added
value services MuniFin offers to its customers.
Information on the Group results
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Information on the Consolidated statement of financial position
Consolidated income statement
(EUR million) 31 Dec 2024
Adjusted*
31 Dec 2023 Change, %
Cash and balances with central banks 0 0 -2.4
Loans and advances to credit institutions 8,567 9,193 -6.8
Loans and advances to the public and public sector entities 35,377 32,225 9.8
Debt securities 5,879 5,170 13.7
Derivative contracts 2,324 2,036 14.1
Other items included in the assets 946 1,112 -14.9
Total assets 53,092 49,736 6.7
Liabilities to credit institutions 884 216 >100
Liabilities to the public and public sector entities 2,464 2,623 -6 .1
Debt securities issued 44,534 40,873 9.0
Derivative contracts 2,562 3,497 -26.7
Other items included in the liabilities 703 785 -10.5
Total equity 1,945 1,744 11.6
Total liabilities and equity 53,092 49,736 6.7
The sum of individual results may differ from the displayed total due to rounding.
Changes of more than 100% are shown as >100.
* The Group has updated the presentation of the balance sheet. Previously, financial instruments’ interest accrued and interest
payables presented in Accrued income and prepayments (Other items included in the assets) as well as in Accrued expenses and
deferred income (Other items included in the liabilities) have been transferred to the balance sheet item of the respective financial
instrument. The comparative period has been adjusted.
MuniFin Group’s Consolidated statement of financial position
exceeded EUR50billion in the financial year and totalled
EUR53,092million (EUR49,736million) at the end of
December. The Group’s Consolidated statement of financial
position saw 6.7% (4.2%) of growth from year-end 2023. The
growth in assets was mainly due to the increase in the long-
term loan portfolio in loans and advances to the public and
public sector entities as well as increase in debt securities.
In liabilities, the largest change was in new issuances in debt
securities issued.
At the end of the financial year, the Group’s equity stood at
EUR1,945million (EUR1,744million). The Group’s equity was
increased by the financial year’s profit of EUR133million
(EUR111million) and the changes in own credit revaluation
reserve, fair value reserve of investments and cost-of-
hedging reserve totalling EUR135million (EUR87million).
In the consolidated accounts, dividends of EUR66million
(EUR68million) for the financial year 2023, paid to MuniFin’s
shareholders in May 2024, were deducted from the equity.
The Parent Company’s balance sheet at the end of the year
was EUR53,092million (EUR49,735million).
Information on the Consolidated statement of financial position
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 2024
Financing and other services for customers
Financing and other services for customers
MuniFin Group’s customers include municipalities, joint
municipal authorities, wellbeing services counties, corporate
entities under their control, and non-profit organisations and
projects nominated by the Housing Finance and Development
Centre of Finland (Ara).
The Group’s new long-term customer financing grew by 17.1%
(no change in 2023). The Group’s new long-term customer
financing totalled EUR5,056million (EUR4,319million),
of which EUR4,839million (EUR4,103million) consisted
of loans and EUR217million (EUR216million) of leased
assets. In total, long-term customer financing amounted
to EUR35,173million (EUR32,022million) at year-end, of
which loans totalled EUR33,610million (EUR30,580million)
and leased assets EUR1,563million (EUR1,442million). Of
the long-term loan portfolio, 49% (48%) is held by housing
corporations, 42% (42%) by municipalities, joint municipal
authorities and corporate entities under their control, and 9%
(10%) by wellbeing services counties. Long-term customer
financing excluding unrealised fair value changes amounted
to EUR35,787million (EUR32,948million) at the end of
December, growing by 8.6% (7.5%). Short-term customer
financing in commercial papers totalled EUR1,825 million
(EUR1,575million) at the end of the year.
In 2024, MuniFin focused even more decidedly on its core
mandate: ensuring that municipalities, wellbeing service
counties and affordable social housing organisations have
access to affordable financing under all market conditions.
As a result, MuniFin decided to divest its subsidiary company
Financial Advisory Services Inspira Ltd. When a negotiated
asset deal fell through in the spring, MuniFin decided to
discontinue the provision of Inspira’s advisory services in
May. Before closing down, Inspira generated a turnover of
EUR0.4million in 2024.
In 2024, MuniFin continued to devote significant resources to
making its customer financing processes even more effective
and convenient. The application process for commercial
papers in short-term customer financing is already fully digital,
and even most long-term financing applications are submitted
online. In 2024, MuniFin expanded its digital services to also
cover leasing offering process.
Financing and other services for customers
Loan portfolio by customer type,
31 Dec 2024
Housing corporations
(incl. housing corporations controlled by
municipalities)
Wellbeing services counties
Municipalities
Joint municipal authorities
Municipalities-controlled entities
(excl. housing corporations controlled by
municipalities)
49%
9%
30%
1%
11%
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Financing and other services for customers
Financing encourages sustainable investments
MuniFin offers its customers green and social finance for
their sustainable investments. In late 2024, the Group piloted
a new sustainable development loan, which will be made
available to customers in 2025. This product can be offered
for municipalities that have a climate plan demonstrating their
commitments to actions aimed at reducing greenhouse gas
emissions.
MuniFin is committed to systemically reducing the carbon
footprint of the projects it finances, offering customers
support with emission reductions and better managing the
climate and environmental risks associated with the Group’s
operations. The goal of MuniFin’s sustainability agenda is to
increase the proportion of sustainable finance and thus also
reduce financed emissions from buildings. The goal is for
green finance to account for at least 25% and social finance
for at least 8% of the Group’s long-term customer financing
by 2030. At the end of 2024, green finance accounted for
19.0% (14.6%) and social finance for 7.1% (6.8%) of long-term
customer financing excluding unrealised fair value changes.
The financed emissions goal set in the sustainability agenda
aims for financed emissions from buildings to have an
emissions intensity of 8 kgCO₂e/m² by 2035. Based on
2023 data, the emissions intensity of the Group’s portfolio is
10.8kgCO₂e/m² (12 kgCO₂e/m² in 2022).
At the end of 2024, there were 576 (411) green projects and
green finance totalled EUR 6,817 million (EUR 4,795 million).
The amount of social projects was 152 (123) and the social
finance totalled EUR 2,536 million (EUR 2,234 million).
MuniFin publishes annual green and social impact reports on
its website. In 2024, the Group also published its first report
on the emissions of its financed projects and investments,
covering the years 2020–2022.
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Municipality Finance Plc • Annual Report 2024
Funding and liquidity management
Funding and liquidity management
MuniFin Group acquires its funding mainly from the
international capital markets as standardised issuances
under debt programmes. The funding strategy relies on
wide diversification into multiple currencies, maturities,
geographical areas and investor groups to secure access to
funding under all market conditions.
The Group’s strategy has proved highly successful amidst
the turmoil in monetary and security policy that continued
in 2024, driven by events such as the war in Ukraine, the
escalating unrest in the Middle East and the US presidential
elections. The Group retained strong access to capital
markets throughout the year, and its benchmark bonds were
met with excellent demand. In 2024, the Group issued five
benchmark bonds, including a five-year benchmark bond of
USD1.5billion, which attracted record-breaking subscriptions
of USD4.4billion.
Investor interest in sustainable finance products continues to
grow, and regulation is also steering markets towards a more
sustainable direction. The Group is committed to issuing new
green and social bonds regularly. In 2024, the Group issued
a record annual volume of green bonds and, for the first time
ever, also issued three green bonds within a single year. The
USD1billion bond issued in October marked the Group’s
tenth green bond. In February, the Group issued a social bond
of NOK2billion.
Credit risk premiums increased markedly across the euro
area SSA (Sovereigns, Supranationals, Agencies) issuers.
In 2024, the Group’s new long-term funding totalled
EUR8,922million (EUR10,087million). A total of 70 (87)
long-term funding arrangements were made in 9 (12) different
currencies. The Group uses derivatives to hedge against
market risks in funding.
Funding and liquidity management
New long-term funding Jan–Dec 2024
by funding class
EUR and USD Benchmarks
Other public market bonds
Private placements
67%18%
15%
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Municipality Finance Plc • Annual Report 2024
At the end of 2024, the Group’s total funding amounted
to EUR46,737million (EUR43,320million), of which the
Euro Commercial Papers (ECP) totalled EUR3,409million
(EUR3,987million). Of total funding, 50.5% (54.0%)
was denominated in euros and 49.5% (46.0%) in foreign
currencies.
Debt programmes used by MuniFin
Medium Term Note (MTN) programme EUR 50,000 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 consist
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.
MuniFin Group’s long-term risk appetite framework specifies
that total liquidity must cover uninterrupted business for
a survival horizon of at least 12 months. With the amount
held at the end of the year, the Group could uphold all its
commitments with no additional funding for almost 15 months
(16 months).
Because of the general market uncertainty, the Group
continued to keep its largest allocations in central bank
deposits also in 2024. At the end of the year, the Group’s
total liquidity stood at EUR11,912million (EUR11,633million).
Of this, central bank deposits totalled EUR7,809million
(EUR7,989million) and investments in liquid, low-risk
securities EUR4,016million (EUR3,570million), with the
average credit rating of AA+ (AA+) and average maturity of
3.2 years (2.9 years). In addition to this, the Group’s money
market deposits in credit institutions totalled EUR88million
(EUR74million). 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 liquidity investments are steered by the goal of
low credit risk, high liquidity and sustainability. The Group
monitors the sustainability of its investments through their
ESG (Environmental, Social and Governance) score.
At the end of 2024, the Group’s liquidity investments had
an average ESG score of 7.70 (7.59), above the benchmark
index of 7.51 (7.41). The Group held a total of EUR870million
(EUR635million) in socially responsible investments (SRIs),
which is 21.5% (17.4%) of all the Group’s investments in
securities. The ratio of socially responsible investments to the
Group’s own green and social funding was 14.9% (14.0%).
Funding and liquidity management
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
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
MuniFin’s credit ratings
MuniFin’s credit ratings
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Capital adequacy
Capital adequacy
Capital adequacy
MuniFin Group’s own funds and capital adequacy
MuniFin Group’s capital adequacy is very strong. The Group’s
CET1 capital ratio was 107.7% (103.4%), which corresponds to
its Tier 1 capital ratio and total capital ratio at the end of both
2024 and 2023 because the Group only had CET1 capital at
the time. The Group’s CET1 capital ratio is over seven times
the required minimum of 15.0% (13.9%), taking capital buffers
into account.
%
EUR million
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
12/2020 12/2021 12/2022 12/2023 12/2024
132.7
118.4
104.3
95.0
97.6
103.4
1,6241,624
1,75 6
1,75 6
1,482
1,482
1,550
1,550
1,646
1,646
107.7
30
50
70
90
110
130
150
Own funds (EUR million)
CET1 capital ratio, %
Total capital ratio, %
MuniFin Group’s own funds and capital adequacy
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Municipality Finance Plc • Annual Report 2024
Capital adequacy
At the end of the year, the Group’s CET1 capital totalled
EUR1,646million (EUR1,550million). The Group had no
Additional Tier 1 instruments or Tier 2 capital at the end of
the financial year, so its CET1 capital was therefore equal
to its Tier 1 capital and total own funds, EUR1,646million
(EUR1,550million).
The CET1 capital includes profit for the financial year. This
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). The Board’s 2024
dividend proposal of EUR72.7million (EUR66.0million) has
been deducted from the Group’s own funds.
Consolidated own funds
(EUR million) 31 Dec 2024 31 Dec 2023
Common Equity Tier 1 before regulatory adjustments 1,873 1,678
Regulatory adjustments to Common Equity Tier 1 -227 -128
Common Equity Tier 1 (CET1) 1,646 1,550
Additional Tier 1 capital before regulatory adjustments - -
Regulatory adjustments to Additional Tier 1 capital - -
Additional Tier 1 capital (AT1) - -
Tier 1 capital (T1) 1,646 1,550
Tier 2 capital before regulatory adjustments - -
Regulatory adjustments to Tier 2 capital - -
Tier 2 capital (T2) - -
Total own funds 1,646 1,550
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Municipality Finance Plc • Annual Report 2024
625
0
453
450
573
0
500
427
Total risk exposure amount 12/2024
EUR 1,528 million
EUR million EUR million
Total risk exposure amount 12/2023
EUR 1,500 million
Capital adequacy
The Group’s total risk exposure amount increased by
1.9% from the end of 2023, totalling EUR1,528million
(EUR1,500million) at the end of the financial year.
The risk exposure amount for credit and counterparty credit
risk increased by EUR52million from the end of 2023 to
EUR 625 million (EUR 573 million). 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) increased to EUR453million
(EUR427million). The risk exposure amount of operational
risk was EUR450million (EUR500million).
Credit and counterparty credit risk
Market risk
Credit valuation adjustment risk
Operational risk
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Capital adequacy
The principles of capital adequacy management and detailed
key figures on the capital adequacy are provided in the Notes
to this Report.
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
103.4%103.4%
-3.5%
-3.5%
0.0%
0.0%
3.2%3.2%
6.3%
6.3% 107.7%107.7%
-1.7%
-1.7%
CET1 capital ratio changes, %
CET1
capital ratio
12/2023
Credit and
counterparty
credit risk
Market risk CVA VaR Operational
risk
CET1
capital
CET1
capital ratio
12/2024
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Municipality Finance Plc • Annual Report 2024
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%. An additional capital requirement for other systemically
important credit institutions (O-SII buffer) is 0.5% for MuniFin
Group. At the end of June 2024, the Finnish Financial
Supervisory Authority (FIN-FSA) gave its yearly decision on
O-SII buffers and kept MuniFin Group’s buffer unchanged at
0.5%.
Starting from 1 April 2024, the FIN-FSA imposed a
requirement to maintain a systemic risk buffer (SyRB) covered
by Common Equity Tier 1 (CET1) capital and amounting to
1.0% on MuniFin. This requirement also applies to other
Finnish credit institutions at the same level.
Capital adequacy
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
4.5%4.5%
2.5%
2.5%
1.0%
1.0%
0.5%
0.5%
1.0%
1.0% 9.5%9.5%
3 .5%
3 .5% 13.0 %13.0 %
2.0%
2.0% 15.0%15.0%
The Group's minimum capital requirements and capital buffers, %
CET1-
capital re-
quirement
Capital
conservati-
on buer
Counter-
cyclical
capital
buer
O-SII
require-
ment
Systemic
risk
buer
CET1-
minimum
Tier 1 and
Tier 2
capital re-
quirement
Minimum
capital requi-
rement
P2R Minimum
capital requi-
rement
+ P2R
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Municipality Finance Plc • Annual Report 2024
In December 2024, the FIN-FSA decided to keep the
countercyclical capital buffer requirement unchanged
at the baseline level of 0%. For MuniFin Group, the credit
institution-specific countercyclical capital buffer requirement
that is imposed based on the geographical distribution of
exposures is 1.0% (0.9%). The Group therefore has a minimum
requirement of 9.5% (8.4%) for its CET1 capital ratio and
13.0% (11.9%) 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). The total SREP capital
requirement ratio (TSCR) was 10.0% (10.0%) at the end of
December 2024.
The minimum level of total capital ratio was 15.0% (13.9%)
including P2R and other additional capital buffers.
Leverage ratio, liquidity coverage ratio and net
stable funding ratio
At the end of December, MuniFin Group’s leverage ratio was
12.3% (12.0%). MuniFin fulfils the CRRII definition of a public
development credit institution and may therefore deduct all
credit receivables from municipalities, wellbeing services
counties and the central government in the calculation of
its leverage ratio. The amount of credit receivables from
municipalities, wellbeing services counties and the central
government was EUR38,604million (EUR35,251million)
at the end of the year. After the deduction, the Group’s
leverage ratio exposures totalled EUR13,340million
(EUR12,877million). The minimum required leverage ratio is
3%.
At the end of the year, MuniFin Group’s Liquidity Coverage
Ratio (LCR) was 338.8% (409.1%) and its Net Stable Funding
Ratio (NSFR) was 123.7% (124.1%). 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) and the Finnish Financial Stability
Authority (FFSA). In November 2024, the SRB and the FFSA
removed MuniFin’s binding minimum requirement for own
funds and eligible liabilities (MREL) as a result of changes
to the European Bank Recovery and Resolution Directive
(BRRD) and corresponding national legislation.
Under the revised framework, the MREL requirement no
longer applies to credit institutions subject to simplified
obligations. Before the MREL requirement was lifted,
MuniFin’s own funds and eligible liabilities exceeded it multiple
times, so this change will not have a significant effect on the
Group’s operations.
Capital adequacy
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Changes in banking regulation
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/
CRD IV). 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.
MuniFin is undertaking a project to implement the changes
introduced by the CRR III regulation. According to the Group’s
current estimate, the changes in regulation will result in
increased capital requirements related to derivatives and
the operational risk. The increase in the derivatives and
operational risk exposure amounts are estimated to weaken
the Group’s capital ratios by approximately 10 percentage
points. The Group’s capital adequacy will nonetheless remain
at a very high level. Other than that, the changes are only
expected to have a minor impact on capital adequacy.
The impact assessment entails some uncertainty because
these regulatory changes are not yet interpreted in an
established way. The Group nevertheless expects to exceed
the minimum regulatory capital requirements many times
over due to its strong capital position, also in the future. The
regulatory changes are not expected to impact MuniFin’s
leverage ratio.
Sustainability-related reporting requirements are growing in
the financial sector, increasingly obliging MuniFin Group and
its customers to document the impacts of their operations
in more detail. In response, the Group has started to prepare
for the Corporate Sustainability Reporting Directive (CSRD),
approved by the European Parliament in November 2022, and
the corresponding national legislation. The implementation of
the CSRD into national legislation was approved at the end of
2023. The Group conducted a double materiality assessment
and an assessment of regulatory changes in early 2024 and
launched a sustainability reporting implementation project in
autumn 2024. The reporting requirement applies to MuniFin
from 2025, and the first report will be published in the first half
of 2026.
MuniFin has continued to incorporate its ESG risk reporting
into its Pillar III Disclosure Report in accordance with CRR
Article 449a. The Group disclosed the phase 2 information
on the Green Asset Ratio (GAR) as part of its 2023 Pillar
III Disclosure Report in the first half of 2024 and scope 3
financed emissions in the summer 2024. The Group has also
prepared for the disclosure of the phase 3 information on the
Banking Book Taxonomy Alignment Ratio (BTAR) as of the
end of 2024.
The Group has also continued to prepare for the financial
sector’s Digital Operational Resilience Act (DORA), which
took effect from January 2025. To comply with DORA, the
Group has updated its ICT agreements, the processes of
maintaining information systems and the comprehensive
risk management of information systems and information
security both internally in the Group and with its IT vendors.
The regulation contains requirements aimed at improving
the resilience of the financial sector to withstand failures and
disruptions in information systems.
Capital adequacy
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MuniFin Group’s strategy and financial objectives
MuniFin Group’s strategy and financial objec-
tives
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MuniFin Group’s strategy and financial objectives
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Risk management
Risk management
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Risk management
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Risk management
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Municipality Finance Plc • Annual Report 2024
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,
which also includes MuniFin’s Corporate Governance
Statement for 2024, pursuant to chapter 7, section 7 of the
Finnish Securities Market Act. The statement 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.
During the financial year, MuniFin’s shares were incorporated
into Finland’s book-entry system in accordance with the
mandate granted by the 2023 Annual General Meeting.
The book-entry system modernises the share register’s
maintenance and reduces the operational risks associated
with it.
No material changes to MuniFin Group’s governance took
place during the financial year.
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 Plc.
The subsidiary company Inspira’s change of name to
Kuntarahoituksen digitaaliset palvelut Oy was registered in
early 2025. Inspira is fully owned by MuniFin. No changes to
the Group or ownership structure took place in the reporting
period.
General meeting
The Annual General Meeting (AGM) of MuniFin was held on
17May2024. The AGM confirmed the Financial Statements
for 2023 and discharged the members of the Board of
Directors, the CEO and the Deputy CEO from liability for
the financial year 2023. In addition, in accordance with the
proposal of the Board of Directors, the AGM authorised
a dividend of EUR1.69 per share to be paid, totalling
EUR66.0million. The amount of distributable funds on
the Group’s balance sheet on 31December2023 was
EUR365.6million.
Based on the proposal of the Shareholders’ Nomination
Committee, the AGM decided to appoint eight Board
members for the 2024–2025 term, lasting from the 2024
AGM to the end of the subsequent AGM. The AGM also
confirmed the Shareholders’ Nomination Committee’s
proposal on the remuneration of Board members.
Governance
Governance
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Municipality Finance Plc • Annual Report 2024
In accordance with the Board’s proposal, the AGM elected
PricewaterhouseCoopers Oy as MuniFin’s auditor, with APA
Jukka Paunonen as the principal auditor. Until the 2024 AGM,
MuniFin’s auditor was KPMG Oy Ab (KPMG), with APA Tiia
Kataja as the principal auditor. KPMG could no longer be
re-elected for the 2024–2025 term due to the mandatory
audit firm rotation requirement.
The AGM’s resolutions are published on MuniFin’s website.
Board of Directors
The Shareholders’ Nomination Committee made a proposal
to the AGM held on 17May 2024 regarding the members to be
elected for the term that began at the end of the 2024 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,
Tuomo Mäkinen, Denis Strandell, Elina Stråhlman, Leena
Vainiomäki and Arto Vuojolainen. 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.
From the 2023 AGM to the 2024 AGM, the members of the
Board of Directors were Kari Laukkanen (Chair), Maaria
Eriksson (Vice Chair), Markku Koponen, Tuomo Mäkinen,
Minna Smedsten, Denis Strandell, Leena Vainiomäki and
Arto Vuojolainen. Minna Smedsten was not available for the
Board’s 2024–2025 term.
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), Tuomo Mäkinen, Denis Strandell and Elina
Stråhlman as the members of the Audit Committee. In the Risk
Committee, the Board selected Leena Vainiomäki (Chair),
Maaria Eriksson, Kari Laukkanen and Arto Vuojolainen.
In the Remuneration Committee, the Board selected Kari
Laukkanen (Chair), Leena Vainiomäki and Maaria Eriksson.
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 2024, MuniFin Group had 178 (185)
employees. 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. Salaries
and remuneration paid across the Group amounted to
EUR17million (EUR17million).
For more information on salaries and remuneration, refer to
Note 43 Remuneration of key management personnel in the
Consolidated Financial Statements.
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 manual
operations and IT systems and that the risks associated with
the operations are adequately managed.
Governance
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Share capital and shareholders
Share capital and shareholders
At the end of the 2024 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 2024, MuniFin had 276 (276) shareholders.
10 largest shareholders 31 Dec 2024 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
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Municipality Finance Plc • Annual Report 2024
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
Events after the reporting period
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Municipality Finance Plc • Annual Report 2024
Outlook for 2025
Europe’s economy is starting 2025 off from a weaker
position than anticipated. Business cycle expectations are
subdued, and the global operating environment is fraught
with uncertainty. Donald Trump’s presidential administration
is expected to pursue protectionist trade policies, which
could, at worst, severely slow down the euro area’s economic
recovery. However, if Europe is exempted from the planned
universal tariff on all US imports and the euro continues
to weaken, businesses in the euro area could even find
new opportunities to expand their market share in the US.
Europe could also suffer negative economic effects if capital
needed to improve productivity is increasingly allocated
to strengthening military defence and supply security. The
political turmoil in France and Germany adds another layer of
uncertainty into the euro area economy.
To counterbalance the growing economic uncertainty, the
European Central Bank is expected to continue brisk interest
rate cuts in 2025. Short-term market rates are projected to
come down to about two per cent or even slightly below that
by mid-year.
The sharp interest rate cuts will be the most crucial booster
for the Finnish economy in 2025. Although the overall tone
of the economic turnround is still relatively subdued, the
simultaneous recovery of demand drivers could boost
annual GDP growth to surprisingly strong figures. Even so,
macroeconomic forecasts continue to be very uncertain.
Finland’s two most important export markets, the US and
Germany, both entail considerable risks, and a sharper-
than-expected decline in employment casts a shadow over
the recovery of the domestic market. From the Group’s
perspective, the 2024 rise in credit risk spreads is expected
to push up the cost of funding, weakening the Group’s net
interest income in 2025.
Municipalities are undergoing sizeable adjustment
programmes, but their financing deficit is nevertheless
expected to grow again in 2025. Municipal finances are
strained by several factors: central government transfer cuts
resulting from the balancing of health and social services
reform transfers, increased net investments, health and social
services facilities that are left unused by wellbeing services
counties but continue to incur maintenance, conversion and
demolition costs, as well as uncertainty surrounding the
actual costs of the employment services reform. In addition,
the weakened employment outlook poses a serious risk to tax
revenues.
Outlook for 2025
Outlook for 2025
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Privately funded housing production is expected to take an
upward turn in 2025, but its volume will nevertheless remain
well below normal levels. The housing market is starting to
gradually pick up, and housing prices are expected to start
rising moderately from 2025 onwards. In contrast, state-
subsidised housing production will see fewer building starts
due to reductions on interest subsidy loan authorisations. In
March 2025, the Housing Finance and Development Centre
of Finland (Ara) will cease to operate as an independent
government agency and its operations will instead be
integrated under the Ministry of the Environment. This
change does not mean the end of state-subsidised housing
production; rather, it aims to improve the administration of
affordable social housing production. According to MuniFin’s
analysis, the integration will not have a direct effect on
MuniFin’s business. Interest subsidy loans will continue to
be granted to state-subsidised housing production, but the
related processes will be administered at the Ministry of the
Environment. MuniFin will monitor the practical implications
closely. With the managing authority changing, the Company
may need to make changes to some of its processes in
response.
Considering the above-mentioned circumstances, the Group
expects its net operating profit excluding unrealised fair value
changes to be at the same level or lower in 2025 as in 2024.
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 2025
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
The Board’s proposal concerning the use of the profit shown in the balance sheet and the distribution of dividends
The Board’s proposal concerning the use of
the profit shown in the balance sheet and the
distribution of dividends
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Development of the Group’s key figures in 2020–2024
Development of the Group’s key figures in 2020–2024
Development of the Group’s key figures in
2020–2024
Jan–Dec 2024 Jan–Dec 2023 Jan–Dec 2022 Jan–Dec 2021 Jan–Dec 2020
Turnover (EUR million)* 2,239 1,862 759 535 532
Net interest income (EUR million)* 260 259 241 280 254
% of turnover 11.6 13.9 31.8 52.4 47.7
Net operating profit (EUR million)* 166 139 215 240 194
% of turnover 7.4 7.4 28.3 44.8 36.5
Unrealised fair value changes (EUR million)* -16 -37 45 27 -3
Net operating profit excluding unrealised fair value changes (EUR million)* 181 176 170 213 197
Cost-to-income ratio, %* 27.7 32.2 23.9 21.7 21.5
Cost-to-income ratio excluding unrealised fair value changes, %* 26.0 27.3 28.4 23.8 21.2
Return on equity (ROE), %* 7.2 6.6 9.9 10.7 9.4
Return on equity (ROE) excluding unrealised fair value changes, %* 7.9 8.4 7.8 9.6 9.6
Return on assets (ROA), %* 0.3 0.2 0.4 0.4 0.4
Return on assets (ROA) excluding unrealised fair value changes, %* 0.3 0.3 0.3 0.4 0.4
New long-term customer financing (EUR million)* 5,056 4,319 4,317 3,594 5,081
New long-term funding (EUR million)* 8,922 10,087 8,827 9,395 10,966
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Development of the Group’s key figures in 2020–2024
31 Dec 2024 31 Dec 2023 31 Dec 2022 31 Dec 2021 31 Dec 2020
Long-term customer financing (EUR million)* 35,173 32,022 29,144 29,214 28,022
Green finance (EUR million)* 6,817 4,795 3,251 2,328 1,786
Social finance (EUR million)* 2,536 2,234 1,734 1,161 589
Total funding (EUR million)* 46,737 43,320 40,210 40,712 38,139
Equity (EUR million) 1,945 1,744 1,614 1,862 1,705
Total balance sheet (EUR million) 53,092 49,736 47,736 46,360 44,042
Total liquidity (EUR million)* 11,912 11,633 11,505 12,222 10,089
Liquidity Coverage Ratio (LCR), % 338.8 4 09.1 256.7 334.9 264.4
Net Stable Funding Ratio (NSFR), % 123.7 124.1 120.3 123.6 116.4
Equity ratio, %* 3.7 3.5 3.4 4.0 3.9
CET1 capital (EUR million) 1,646 1,550 1,482 1,408 1,277
Tier 1 capital (EUR million) 1,646 1,550 1,482 1,756 1,624
Total own funds (EUR million) 1,646 1,550 1,482 1,756 1,624
CET1 capital ratio, % 107.7 103.4 97.6 95.0 104.3
Tier 1 capital ratio, % 107.7 103.4 97.6 118.4 132.7
Total capital ratio, % 107.7 103.4 97.6 118.4 132.7
Leverage ratio, %** 12.3 12.0 11.6 12.8 3.9
Personnel 178 185 175 164 165
* 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, wellbeing services counties and the central
government in the calculation of its leverage ratio. CRR II Regulation entered into force in June 2021.
The calculation formulas for all key figures can be found on pages 39–47. All figures presented in the Report of the Board of Directors are those of MuniFin Group, unless otherwise stated.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 1. Key figures
Note 1. Key figures
Note 1. Key figures
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).
The calculation formulas of key ratios have been adjusted to take into account presentation
changes made to the Consolidated income statement and the Consolidated statement
of financial position during the financial year 2024. The Group updated the presentation
of Interest and similar income as well as Interest and similar expense. In addition, the Group
updated the presentation of the balance sheet formula so that previously reported Accrued
income and prepayments as well as Accrued expenses and deferred income related to financial
instruments have been transferred to the respective balance sheet item of the financial
instrument. The comparative period has been adjusted. More information about this change is
available in Note 1 to the Consolidated Financial Statements.
Notes to the Report of the Board of Directors
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 1. Key figures
Alternative
Performance Measure Definition / Explanation Reconciliation Jan–Dec 2024 Jan–Dec 2023
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 income at effective interest method 1,933 1,583
Other interest income 319 317
Interest expense at effective interest method -1,420 -1,098
Other interest expense -572 -541
Net interest income 260 259
Unrealised fair value
changes
According to the IFRS 9 standard, part of the
Group’s 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. Items in
the calculation formula are from Consolidated
income statement’s line item Net result on financial
instruments at fair value through profit or loss.
Net result on financial assets and liabilities through profit or loss, unrealised fair value changes -4 -1 0
Net result on hedge accounting -12 -27
Unrealised fair value changes -16 -37
Net operating profit Net operating profit describes the Group’s
operating profit before taxes.
Net operating profit 166 139
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 166 139
- Unrealised fair value changes 16 37
Net operating profit excluding unrealised fair value changes 181 176
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 260 259
Commission income 1 2
Net result on financial instruments at fair value through profit or loss -15 -39
Net result on financial assets at fair value through other comprehensive income 0 0
Other operating income 0 0
Income 247 222
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 1. Key figures
Alternative
Performance Measure Definition / Explanation Reconciliation Jan–Dec 2024 Jan–Dec 2023
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 247 222
- Unrealised fair value changes 16 37
Income excluding unrealised fair value changes 262 259
Other income Other income includes all other income of the
Group except net interest income and unrealised
fair value changes.
Commission income 1 2
Net result on financial assets and liabilities through profit or loss, realised 0 0
Net result on FX differences 0 -2
Net result on financial assets at fair value through other comprehensive income 0 0
Other operating income 0 0
Other income 2 0
Costs Costs, which describe the Group’s total costs,
is used e.g. as a numerator (excl. Commission
expenses) in Cost-to-income ratio.
Commission expenses 17 16
HR and administrative expenses 44 41
Depreciation and impairment on tangible and intangible assets 6 7
Other operating expenses 14 19
Costs 81 82
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) 64 67
÷ Income (incl. Net commission income) 230 206
Cost-to-income ratio, % 27.7 % 32.2%
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) 64 67
÷ (Income (incl. Net commission income) 230 206
- Unrealised fair value changes) 16 37
Cost-to-income ratio excluding unrealised fair value changes, % 26.0% 27.3%
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Alternative
Performance Measure Definition / Explanation Reconciliation Jan–Dec 2024 Jan–Dec 2023
EUR million
The effect of unrealised
fair value changes on
other comprehensive
income and equity net
of tax
Key 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 -16 -37
Taxes related to the unrealised fair value changes through PnL 3 7
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 110 60
Change in Cost-of-Hedging, net of tax 24 20
Change in fair value of financial assets at fair value through other comprehensive income, net of tax 1 6
Change in expected credit loss of financial assets at fair value through other comprehensive
income, net of tax 0 0
The effect of unrealised fair value changes on other comprehensive income
and equity net of tax
122 57
New long-term customer
financing
Key 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 4,839 4,103
New leased assets 217 216
New long-term customer financing 5,056 4,319
Ratio of net operating
profit excluding
unrealised fair value
changes to volume of
long-term and short-term
customer financing, %
Key indicator used in management reporting to
describe MuniFin Group’s profit earnings.
(Net operating profit excluding unrealised fair value changes 181 176
÷ Long-term customer financing excluding unrealised fair value changes and short-term customer
financing (average of values at the beginning and end of the period)) x100
36,067 33,320
Ratio of net operating profit excluding unrealised fair value changes to volume of long-term
and short-term customer financing, %
0.50% 0.53%
New long-term funding Key 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 8,922 10,087
Note 1. Key figures
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Alternative
Performance Measure Definition / Explanation Reconciliation Jan–Dec 2024 Jan–Dec 2023
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.
((Net operating profit 166 139
- Taxes) -33 -28
÷ Equity and non-controlling interest (average of values at the beginning and end of the period)) x100 1,845 1,679
Return on Equity (ROE), % 7.2% 6.6%
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.
((Net operating profit excluding unrealised fair value changes 181 176
- Taxes) -36 -36
÷ Equity and non-controlling interest (average of values at the beginning and end of the period)) x100 1,845 1,679
Return on Equity (ROE) excluding unrealised fair value changes, % 7.9% 8.4%
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.
((Net operating profit 166 139
- Taxes) -33 -28
÷ Average balance sheet total (average of values at the beginning and end of the period)) x100 51,414 48,736
Return on Assets (ROA), % 0.3% 0.2%
Return on Assets (ROA)
excluding unrealised fair
value changes, %
Excluding the unrealised changes in fair values
increases comparability of ROA between
reporting periods.
((Net operating profit excluding unrealised fair value changes 181 176
- Taxes) -36 -36
÷ Average balance sheet total (average of values at the beginning and end of the period)) x100 51,414 48,736
Return on Assets (ROA) excluding unrealised fair value changes, % 0.3% 0.3%
Turnover Turnover is not presented as a separate item in
the Consolidated income statement, which is why
the Group presents the calculation formula and
reconciliation in the key figures table.
Interest income at effective interest method 1,933 1,583
Other interest income 319 317
Commission income 1 2
Net result on financial instruments at fair value through profit or loss -15 -39
Net result on financial assets at fair value through other comprehensive income 0 0
Other operating income 0 0
Turnover 2,239 1,862
Note 1. Key figures
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Alternative
Performance Measure Definition / Explanation Reconciliation 31 Dec 2024 31 Dec 2023
EUR million
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 1,945 1,744
÷ Balance sheet total) x100 53,092 49,736
Equity ratio, % 3.7% 3.5%
Long-term loan portfolio Key indicator used in management reporting to
describe MuniFin Group’s business volume. The
loan portfolio consists of long-term loans with an
original maturity of at least 1 year. The key figure
does not take into account interest accrued on
long-term loan portfolio.
Loans and advances to the public and public sector entities 35,377 32,225
- Interest accrued on long-term loan portfolio -204 -204
- Leasing -1,563 -1,442
Long-term loan portfolio 33,610 30,580
Long-term customer
financing
Key indicator used in management reporting
to describe MuniFin Group’s business volume.
Long-term customer financing consists of long-
term loan portfolio and leased assets. The key
figure does not take into account interest accrued
on long-term loan portfolio.
Loans and advances to the public and public sector entities 35,377 32,225
- Interest accrued on long-term loan portfolio -204 -204
Long-term customer financing 35,173 32,022
Long-term customer
financing excluding
unrealised fair value
changes
Key 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. The key
figure does not take into account interest accrued
on long-term loan portfolio.
Loans and advances to the public and public sector entities 35,377 32,225
- Interest accrued on long-term loan portfolio -204 -204
- Unrealised fair value changes 614 926
Long-term customer financing excluding unrealised fair value changes 35,787 32,948
Note 1. Key figures
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Alternative
Performance Measure Definition / Explanation Reconciliation 31 Dec 2024 31 Dec 2023
EUR million
Ratio of green finance
and social finance to
long-term customer
financing excluding
unrealised fair value
changes, %
Key indicator used in management reporting to
describe MuniFin Group’s business volume.
Green finance 6,817 4,795
Social finance 2,536 2,234
(Total of green and social finance 9,353 7,029
÷ Long-term customer financing excluding unrealised fair value changes) x100 35,787 32,948
Ratio of green finance and social finance to long-term customer financing excluding
unrealised fair value changes, %
26.1% 21.3%
Short-term customer
financing
Key indicator used in management reporting
to describe MuniFin Group’s business volume.
Short-term customer financing consists of money
market papers bought from customers, which
have original maturity of 1 year or less.
Debt securities, commercial papers from customers 1,825 1,575
Short-term customer financing 1,825 1,575
Total funding Key indicator used in management reporting to
describe MuniFin Group’s funding volume. Total
funding consists of long-term and short-term
funding. The key figure does not take into account
interest payable on long-term funding.
Liabilities to credit institutions 884 216
Liabilities to the public and public sector entities 2,464 2,623
Debt securities issued 44,534 40,873
Tot a l 47,882 43,711
- Interest payable on long-term funding -429 -307
- CSA collateral (received) -716 -82
- Liabilities to credit institutions, payable on demand - -2
Total funding 46,737 43,320
Long-term funding Key indicator used in management reporting to
describe MuniFin Group’s funding volume.
Total funding 46,737 43,320
- Short-term issued funding (ECP) -3,409 -3,987
Long-term funding 43,328 39,332
Note 1. Key figures
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Alternative
Performance Measure Definition / Explanation Reconciliation 31 Dec 2024 31 Dec 2023
EUR million
Total liquidity Key indicator used in management reporting to
describe MuniFin Group’s liquidity position. The
key indicator does not take into account accrued
interest.
Debt securities 5,879 5,170
- Interest accrued on investment bonds -38 -25
- Short-term customer financing -1,825 -1,575
Investments in securities total 4,016 3,570
Cash and balances with central banks 0 0
Deposits 7,897 8,065
- Interest accrued on deposits 0 -2
Other investments total 7,897 8,065
Total liquidity 11,912 11,633
Ratio of socially
responsible investments
to all investment bonds,
%
Key indicator used in management reporting for
social responsilibity area. The ratio is calculated
based on the nominal values of securities
investments.
(Socially responsible investments (SRI), nominal 870 635
÷ Investment bonds, nominal) x100 4,038 3,653
Ratio of socially responsible investments to all investment bonds, % 21.5% 17.4%
Ratio of socially
responsible investments
to MuniFin Group’s own
green and social funding,
%
Key indicator used in management reporting for
social responsilibity area.
(Socially responsible investments 870 635
÷Green and social funding) x100 5,824 4,523
Ratio of socially responsible investments to MuniFin Group's own green and social funding, % 14.9% 14.0%
Note 1. Key figures
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Other measures Definition Reconciliation 31 Dec 2024 31 Dec 2023
EUR million
Liquidity Coverage Ratio
(LCR), %
Defined in CRR. (Liquid assets 11,170 10,909
÷ (Liquidity outflows - liquidity inflows in a stress situation)) x100 3,297 2,667
Liquidity Coverage Ratio (LCR), % 338.8% 409.1%
Net Stable Funding Ratio
(NSFR), %
Defined in CRR. (Available Stable Funding (ASF) 39,298 36,279
÷ Required Stable Funding (RSF)) x100 31,757 29,244
Net Stable Funding Ratio (NSFR), % 123.7% 124.1%
CET1 capital ratio, % Defined in CRR. (Common Equity Tier 1 (CET1) capital 1,646 1,550
÷ Risk exposure amount) x100 1,528 1,500
CET1 capital ratio, % 107.7% 103.4%
Tier 1 capital ratio, % Defined in CRR. (Tier 1 capital 1,646 1,550
÷ Risk exposure amount) x100 1,528 1,500
Tier 1 capital ratio, % 107.7% 103.4%
Total capital ratio, % Defined in CRR. (Total own funds 1,646 1,550
÷ Risk exposure amount) x100 1,528 1,500
Total capital ratio, % 107.7% 103.4%
Leverage ratio, % Defined in CRR. (Tier 1 capital 1,646 1,550
÷ Total exposure) x100 13,340 12,877
Leverage ratio, % 12.3% 12.0%
Note 1. Key figures
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 2. The Group's capital adequacy position
Note 2. The Group's capital adequacy position
Note 2. The Group's capital adequacy position
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Capital adequacy management principles
MuniFin Group’s objectives regarding equity in relation to
risk-taking and the operating environment are defined as part
of the annual planning. The planning horizon extends to at
least the following three years, in order to be able to predict
the business performance trend and the sufficiency of own
funds with respect to the increasing capital requirements
arising from changing regulation and to be able to react to
potential needs for additional capitalisation in sufficient time.
The Board of Directors approves the capital adequacy plan
and monitors it. The Group updates its capital adequacy
plan at least annually and follows implementation of the plan
quarterly.
The aim for the capital adequacy management is to monitor
the capital adequacy and to confirm that the Group’s
capital adequacy fulfills its targets and requirements set by
financial authorities to ensure the continuity of operations.
Controlling capital adequacy is continuous and an essential
part of the Group’s strategic planning process, which covers
setting strategic goals, specifying development projects
and making financial forecasts for the following years.
This is done in cooperation with the Management and the
Board. The Board of the Parent Company approves the final
strategy. Management ensures that the operative measures
of the Group correspond with the principles determined in
the strategy approved by the Board. As part of the annual
planning, the management prepares a business plan for the
coming year and business forecasts for the years that follow.
The Group’s risk position and its effect on the Group’s
financial status are also evaluated. Regular risk analyses as
well as various stress test scenarios are used for evaluating
and measuring risks. Based on these, the capital adequacy
plan is updated annually, and actions needed to strengthen
own funds are determined. The adequacy of own funds is also
monitored through monthly business analyses.
The Group calculates its capital adequacy based on the EU
Capital Requirements Regulation ((EU) No 575/2013) and its
amending regulation ((EU) No 876/2019) as well as Directive
(2013/36/EU). The capital adequacy requirement for credit
risk is calculated using the standardised approach, and the
capital adequacy requirement for operational risks using the
basic indicator approach. As the Group has neither a trading
book nor share and commodity positions, only currency risks
are taken into account in the capital adequacy calculations
for market risk. MuniFin Group’s FX risk is hedged by using
derivative contracts to swap all funding and investments
denominated in foreign currency into euros. The Group’s
lending and other customer financing are 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.
The credit ratings given by Standard & Poor’s, Moody’s
Investor Service and Fitch Ratings are used for determining
the risk weights used in the capital adequacy calculations.
The aforementioned companies are credit rating institutions
approved by the Finnish Financial Supervisory Authority
for capital adequacy calculations. In capital adequacy
calculations for the credit risk, the Group uses methods
for reducing the credit risk such as guarantees provided
by municipalities as well as deficiency guarantees given by
the State of Finland. For derivatives, netting agreements,
collateral agreements (ISDA/Credit Support Annex) and
guarantees granted by the Municipal Guarantee Board (MGB)
are used for reducing the capital adequacy requirement
related to the counterparty risk of derivative counterparties.
Note 2. The Group's capital adequacy position
Table 1. Minimum capital requirements and capital buffers
Minimum capital requirements and capital buffers, %
31 Dec 2024
Capital
requirement
Capital
conservation
buffer
1)
Countercyclical
buffer
2)
O-SII
3)
Systemic risk
buffer
4)
Total capital
buffers Total
Common Equity Tier 1 (CET1) capital 4.50% 2.50% 1.04% 0.50% 1.00% 5.04% 9.54%
Tier 1 (T1) Capital 6.00% 2.50% 1.04% 0.50% 1.00% 5.04% 11.04%
Total own funds 8.00% 2.50% 1.04% 0.50% 1.00% 5.04% 13.04%
Minimum capital requirements and capital buffers (EUR 1,000)
31 Dec 2024
Capital
requirement
Capital
conservation
buffer
1)
Countercyclical
buffer
2)
O-SII
3)
Systemic risk
buffer
4)
Total capital
buffers Total
Common Equity Tier 1 (CET1) capital 68,774 38,208 15,839 7,642 15,283 76,971 145,745
Tier 1 (T1) Capital 91,698 38,208 15,839 7,642 15,283 76,971 168,669
Total own funds 122,265 38,208 15,839 7,642 15,283 76,971 199,235
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 2. The Group's capital adequacy position
Minimum capital requirements and capital buffers, %
31 Dec 2023
Capital
requirement
Capital
conservation
buffer
1)
Countercyclical
buffer
2)
O-SII
3)
Systemic risk
buffer
4)
Total capital
buffers Total
Common Equity Tier 1 (CET1) capital 4.50% 2.50% 0.92% 0.50% 0.00% 3.92% 8.42%
Tier 1 (T1) Capital 6.00% 2.50% 0.92% 0.50% 0.00% 3.92% 9.92%
Total own funds 8.00% 2.50% 0.92% 0.50% 0.00% 3.92% 11.92%
Minimum capital requirements and capital buffers (EUR 1,000)
31 Dec 2023
Capital
requirement
Capital
conservation
buffer
1)
Countercyclical
buffer
2)
O-SII
3)
Systemic risk
buffer
4)
Total capital
buffers Total
Common Equity Tier 1 (CET1) capital 67,480 37,489 13,850 7,498 0 58,837 126,316
Tier 1 (T1) Capital 89,973 37,489 13,850 7,498 0 58,837 148,810
Total own funds 119,964 37,489 13,850 7,498 0 58,837 178,801
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
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 17 Dec 2024 (19
Dec 2023), 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 1.04% (0.92%).
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 26 Jun 2024,
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). At the end of March
2023, the FIN-FSA decided on a systemic risk buffer (SyRB) requirement of 1% for MuniFin
Group. This decision is effective as of 1 April 2024 and corresponds to the requirement set
for other Finnish credit institutions at the same time. Prior to April 2024, the systemic risk
buffer is set at 0%.
In addition to the above, the 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 10.0% (10.0%) at the end of December 2024. The minimum level of total capital ratio was
15.04% (13.92%) including P2R and other additional capital buffers.
Note 2. The Group's capital adequacy position
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
(EUR 1,000) 31 Dec 2024 31 Dec 2023
Share capital 42,583 42,583
Reserve for invested non-restricted equity 40,366 40,366
Retained earnings 1,643,155 1,576,480
Fair value reserve 219,053 84,111
Other reserves 277 277
Foreseeable dividend -72,659 -66,018
Common Equity Tier 1 (CET1) capital before regulatory adjustments 1,872,776 1,677,800
Intangible assets -2,720 -6,311
Deferred tax assets that rely on future profitability and do not arise from temporary differences -10 -9
Deductions due to prudential filters on Common Equity Tier 1 capital -223,916 -121,670
Common Equity Tier 1 (CET1) capital 1,646,129 1,549,809
Instruments included in Additional Tier 1 capital - -
Additional Tier 1 (AT1) capital - -
Tier 1 (T1) capital 1,646,129 1,549,809
Tier 2 (T2) capital - -
Total own funds 1,646,129 1,549,809
Table 3. Consolidated key figures for capital adequacy
31 Dec 2024 31 Dec 2023
CET1 capital ratio, % 107.71 103.35
Tier 1 capital ratio, % 107.71 103.35
Total capital ratio, % 107.71 103.35
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).
Note 2. The Group's capital adequacy position
Table 2. Own Funds
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 2. The Group's capital adequacy position
(EUR 1,000)
31 Dec 2024 31 Dec 2023
Capital
requirement
Risk exposure
amount
Capital
requirement
Risk exposure
amount
Credit and counterparty credit risk, standardised approach
1
50,021 625,265 45,826 572,829
Exposures to central governments or central banks 0 0 0 0
Exposures to regional governments or local authorities 260 3,255 430 5,372
Exposures to public sector entities 455 5,686 441 5,507
Exposures to multilateral development banks 0 0 0 0
Exposures to international organisations 0 0 0 0
Exposures to institutions 31,771 397,134 29,511 368,890
Exposures to corporates 2,178 27,229 1,850 23,130
Exposures secured by mortgages on immovable property 0 0 0 0
Exposures in default 0 0 0 0
Exposures in the form of covered bonds 12,402 155,020 10,630 132,874
Other items 2,955 36,941 2,964 37,056
Market risk
2
- - - -
Credit valuation adjustment risk (CVA VaR), standard method
3
36,245 453,066 34,154 426,924
Operational risk, basic indicator approach 35,998 449,976 39,984 499,797
Tot a l 122,265 1,528,307 119,964 1,499,550
Table 4. Consolidated minimum requirement for own funds
1
The capital requirement for counterparty credit risk is EUR
3,719 thousand (EUR 3,047 thousand).
2
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 2024, the FX net
position was EUR 10.4 million (EUR 4.7 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.
3
Guarantees granted by the Municipal Guarantee Board for
certain derivative counterparties are not taken into account
in credit valuation adjustment risk.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
31 Dec 2024
(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 8,030,004 - - 8,030,004 8,649,562 0
Exposures to regional governments or local authorities 17,548,491 642,180 40,326 18,230,998 17,386,278 3,255
Exposures to public sector entities 320,099 - - 320,099 261,250 5,686
Exposures to multilateral development banks 150,733 - - 150,733 121,392 0
Exposures to international organisations 162,349 - - 162,349 141,632 0
Exposures to institutions 1,458,444 - 759,894 2,218,338 2,131,068 397,134
Exposures to corporates 6,646,827 2,301,332 84,415 9,032,575 8,785,556 27,229
Exposures secured by mortgages on immovable property 13,074,089 - - 13,074,089 12,607,019 0
Exposures in default 290,525 - - 290,525 181,162 0
Exposures in the form of covered bonds 1,531,432 - - 1,531,432 1,436,912 155,020
Other items 54,293 - - 54,293 43,814 36,941
Tot a l 49,267,289 2,943,513 884,635 53,095,437 51,745,646 625,265
Note 2. The Group's capital adequacy position
Table 5. Consolidated exposure by class
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 2. The Group's capital adequacy position
31 Dec 2023
(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 8,149,371 - - 8,149,371 7,904,436 0
Exposures to regional governments or local authorities 16,153,608 704,628 31,379 16,889,615 16,202,529 5,372
Exposures to public sector entities 225,075 - - 225,075 243,318 5,507
Exposures to multilateral development banks 93,031 - - 93,031 95,351 0
Exposures to international organisations 127,234 - - 127,234 116,637 0
Exposures to institutions 1,432,518 - 577,401 2,009,919 1,963,686 368,890
Exposures to corporates 6,093,478 2,366,584 76,786 8,536,848 7,878,379 23,130
Exposures secured by mortgages on immovable property 11,779,567 - - 11,779,567 11,431,067 0
Exposures in default 141,215 - - 141,215 71,014 0
Exposures in the form of covered bonds 1,328,736 - - 1,328,736 1,237,797 132,874
Other items 59,852 - - 59,852 42,629 37,056
Tot a l 45,583,684 3,071,212 685,567 49,340,463 47,186,842 572,829
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Consolidated leverage ratio
(EUR 1,000) 31 Dec 2024 31 Dec 2023
Tier 1 (T1) capital 1,646,129 1,549,809
Total exposure 13,340,479 12,876,965
Leverage ratio, % 12.34 12.04
Consolidated exposures
(EUR 1,000) 31 Dec 2024 31 Dec 2023
On-balance sheet exposures (excl. derivatives and intangible assets) 49,602,289 45,899,684
Derivatives exposure 940,510 777,859
Off-balance sheet exposure 1,402,129 1,450,415
Excluded exposures of public development credit institutions (promotional loans) -38,604,448 -35,250,993
Tot a l 13,340,479 12,876,965
Note 2. The Group's capital adequacy position
Table 6. Leverage ratio
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Breakdown of consolidated on-balance sheet exposure (excluding derivatives and exempted exposures)
(EUR 1,000)
31 Dec 2024 31 Dec 2023
Leverage ratio
exposure value
Leverage ratio
exposure value
Covered bonds 1,531,432 1,328,736
Exposures treated as sovereigns 8,928,720 8,868,248
Exposures to regional governments, multilateral development banks, international organisations and public sector entities not treated as sovereigns 44,702 54,397
Institutions 1,458,444 1,432,518
Secured by mortgages of immovable properties 0 0
Corporate 382,377 355,355
Exposures in default 0 0
Other exposures 57,024 66,163
Tot a l 12,402,700 12,105,417
Note 2. The Group's capital adequacy position
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 3. The Parent Company's capital adequacy position
Note 3. The Parent Company's capital adequa-
cy position
Note 3. The Parent Company's capital adequacy position
Table 1. Own funds
(EUR 1,000) 31 Dec 2024 31 Dec 2023
Share capital 43,008 43,008
Reserve for invested non-restricted equity 40,743 40,743
Retained earnings 1,642,780 1,575,567
Fair value reserve 219,053 84,111
Other reserves 277 277
Foreseeable dividend -72,659 -66,018
Common Equity Tier 1 (CET1) capital before regulatory adjustments 1,873,203 1,677,688
Intangible assets -2,720 -6,314
Deferred tax assets that rely on future profitability and do not arise from temporary differences -10 -8
Deductions due to prudential filters on Common Equity Tier 1 capital -223,916 -121,670
Common Equity Tier 1 (CET1) capital 1,646,556 1,549,695
Instruments included in Additional Tier 1 capital - -
Additional Tier 1 (AT1) capital - -
Tier 1 (T1) capital 1,646,556 1,549,695
Tier 2 (T2) capital - -
Total own funds 1,646,556 1,549,695
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).
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
31 Dec 2024 31 Dec 2023
CET1 capital ratio, % 107.94 104.32
Tier 1 capital ratio, % 107.94 104.32
Total capital ratio, % 107.94 104.32
Table 2. Key figures for capital adequacy
Note 3. The 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 2024
31 Dec 2024 31 Dec 2023
(EUR 1,000)
Capital
requirement
Risk exposure
amount
Capital
requirement
Risk exposure
amount
Credit and counterparty credit risk, standardised approach
1
50,149 626,859 45,906 573,825
Exposures to central governments or central banks 0 0 0 0
Exposures to regional governments or local authorities 260 3,255 430 5,372
Exposures to public sector entities 455 5,686 441 5,507
Exposures to multilateral development banks 0 0 0 0
Exposures to international organisations 0 0 0 0
Exposures to institutions 31,767 397,088 29,494 368,671
Exposures to corporates 2,178 27,229 1,850 23,130
Exposures secured by mortgages on immovable property 0 0 0 0
Exposures in default 0 0 0 0
Exposures in the form of covered bonds 12,402 155,020 10,630 132,874
Equity exposure 131 1,639 131 1,639
Other items 2,955 36,941 2,931 36,631
Market risk
2
- - - -
Credit valuation adjustment risk
(CVA VaR), standard method
3
36,245 453,066 34,154 426,924
Operational risk, basic indicator approach 35,642 445,522 38,781 484,758
Tot a l 122,036 1,525,446 118,841 1,485,507
Table 3. Minimum requirement for own funds
Note 3. The Parent Company's capital adequacy position
1
The capital requirement for counterparty credit risk is EUR
3,719 thousand (EUR 3,047 thousand).
2
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, MuniFin’s foreign exchange position is very small.
On 31 December 2024, the FX net position was EUR 10.4
million (EUR 4.7 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.
3
Guarantees granted by the Municipal Guarantee Board for
certain derivative counterparties are not taken into account
in credit valuation adjustment risk.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 3. The Parent Company's capital adequacy position
31 Dec 2024
(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 8,030,004 - - 8,030,004 0
Exposures to regional governments or local authorities 17,548,491 642,180 40,326 18,230,998 3,255
Exposures to public sector entities 320,099 - - 320,099 5,686
Exposures to multilateral development banks 150,733 - - 150,733 0
Exposures to international organisations 162,349 - - 162,349 0
Exposures to institutions 1,458,215 - 759,894 2,218,109 397,088
Exposures to corporates 6,646,827 2,301,332 84,415 9,032,575 27,229
Exposures secured by mortgages on immovable property 13,074,089 - - 13,074,089 0
Exposures in default 290,525 - - 290,525 0
Exposures in the form of covered bonds 1,531,432 - - 1,531,432 155,020
Equity exposures 656 - - 656 1,639
Other items 54,293 - - 54,293 36,941
Tot a l 49,267,716 2,943,513 884,635 53,095,863 626,859
Table 4. Exposure by class
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
31 Dec 2023
(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 8,149,364 - - 8,149,364 0
Exposures to regional governments or local authorities 16,153,608 704,628 31,379 16,889,615 5,372
Exposures to public sector entities 225,075 - - 225,075 5,507
Exposures to multilateral development banks 93,031 - - 93,031 0
Exposures to international organisations 127,234 - - 127,234 0
Exposures to institutions 1,431,423 - 577,401 2,008,825 368,671
Exposures to corporates 6,093,478 2,366,584 76,786 8,536,848 23,130
Exposures secured by mortgages on immovable property 11,779,567 - - 11,779,567 0
Exposures in default 141,215 - - 141,215 0
Exposures in the form of covered bonds 1,328,736 - - 1,328,736 132,874
Equity exposures 656 - - 656 1,639
Other items 59,428 - - 59,428 36,631
Tot a l 45,582,814 3,071,212 685,567 49,339,594 573,825
Note 3. The 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 2024
Municipality Finance Group
Consolidated Financial Statements
1.1.–31.12.2024
Consolidated Financial Statements (IFRS) 64
Consolidated income statement 65
Consolidated statement of comprehensive income 66
Consolidated statement of financial position 67
Consolidated statement of changes in equity 69
Consolidated statement of cash flows 71
Notes to the Consolidated Financial Statements 72
Parent Company’s Financial Statements (FAS) 239
Parent Company’s income statement 240
Parent Company’s Balance sheet 241
Parent Company’s Statement of Cash Flows 244
Notes to the Parent Company’s Financial Statements 245
Signatures to the Report of the Board of Directors and
the Financial Statements 357
Auditor’s Report 359
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Consolidated
Financial Statements
Consolidated Financial
Statements (IFRS)
Consolidated Financial Statements
(EUR 1,000) Note Jan–Dec 2024
Adjusted
Jan–Dec 2023
Interest income at effective interest rate method (3) 1,933,354 1,582,543
Other interest income (3) 319,120 316,518
Interest expense at effective interest rate method (3) -1,420,337 -1,098,438
Other interest expense (3) -571,980 -541,369
Net interest income 260,156 259,253
Commission income (4) 1,465 2,275
Commission expense (4) -16,917 -15,638
Net result on financial instruments at fair value through profit and loss (5) -15,086 -39,461
Net result on financial assets at fair value through other comprehensive income (6) 3 -257
Other operating income (8) 31 139
HR and administrative expenses (9) -43,624 -40,711
Depreciation and impairment on tangible and intangible assets (10) -6,031 -6,543
Other operating expenses (11) -14,064 -19,271
Credit losses on financial assets recognised at amortised cost and at fair value through other comprehensive income (12) -326 -1,203
Net operating profit 165,606 138,583
Income tax expense (13) -32,913 -28,058
Profit for the financial year 132,693 110,526
The accompanying notes are an integral part of the Financial Statements.
Consolidated income statement
Consolidated income
statement
Consolidated income statement
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
(EUR 1,000) Note Jan–Dec 2024 Jan–Dec 2023
Profit for the financial year 132,693 110,526
Components of other comprehensive income
Items not to be reclassified to income statement in subsequent periods
Change in fair value due to changes in own credit risk on financial liabilities designated at fair value through profit or loss (5) 137,202 75,401
Tax on change in fair value due to changes in own credit risk on financial liabilities designated at fair value through profit or loss -27,440 -15,080
Change in Cost-of-Hedging (24) 29,866 25,417
Tax on change in Cost-of-Hedging -5,973 -5,083
Items to be reclassified to income statement in subsequent periods
Change in fair value of financial assets at fair value through other comprehensive income (6) 1,732 7,851
Change in expected credit loss of financial assets at fair value through other comprehensive income (25) 2 -2
Tax on change in fair value of financial assets at fair value through other comprehensive income -347 -1,570
Amount reclassified to the income statement on the sales of financial assets at fair value through other comprehensive income (6) -124 287
Tax on amount reclassified to the income statement on the sales of financial assets at fair value through other comprehensive income 25 -57
Total components of other comprehensive income 134,942 87,163
Total comprehensive income for the financial year 267,635 197,689
The accompanying notes are an integral part of the Financial Statements.
Consolidated statement of comprehensive income
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 2024
(EUR 1,000) Note 31 Dec 2024
Adjusted
31 Dec 2023
Adjusted
1 Jan 2023
Assets
Cash and balances with central banks (18) 2 2 2
Loans and advances to credit institutions (19) 8,566,611 9,192,948 9,656,547
Loans and advances to the public and public sector entities (20, 21) 35,376,909 32,225,422 29,231,462
Debt securities (22) 5,878,912 5,170,005 4,799,060
Derivative contracts (17, 23) 2,323,708 2,036,212 2,794,554
Intangible assets (26, 28) 2,720 6,311 8,831
Tangible assets (27, 28) 8,236 9,648 5,062
Other assets (29) 915,913 1,075,207 1,235,325
Accrued income and prepayments (30) 18,797 20,595 4,687
Deferred tax assets (31) 10 9 763
Total assets (14, 15, 16) 53,091,818 49,736,359 47,736,293
Liabilities and equity
Consolidated statement of financial position
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 2024
(EUR 1,000) Note 31 Dec 2024
Adjusted
31 Dec 2023
Adjusted
1 Jan 2023
Liabilities
Liabilities to credit institutions (32, 35) 883,694 215,552 2,333,738
Liabilities to the public and public sector entities (33, 35) 2,463,874 2,622,551 2,561,084
Debt securities issued (34, 35) 44,534,306 40,872,798 35,730,888
Derivative contracts (17, 23) 2,561,718 3,496,553 4,584,364
Other liabilities (36) 285,181 418,445 593,938
Accrued expenses and deferred income (37) 45,485 43,128 26,856
Deferred tax liabilities (31) 372,126 323,517 291,717
Total liabilities (14, 15, 16) 51,146,383 47,992,542 46,122,584
Equity
Share capital (38) 42,583 42,583 42,583
Reserve fund (38) 277 277 277
Fair value reserve of investments (38) 3,340 2,052 -4,457
Own credit revaluation reserve (38) 169,999 60,238 -83
Cost-of-Hedging reserve (38) 45,714 21,821 1,488
Reserve for invested non-restricted equity (38) 40,366 40,366 40,366
Retained earnings (38) 1,643,155 1,576,480 1,533,535
Total equity attributable to Parent Company equity holders 1,945,435 1,743,817 1,613,709
Total equity 1,945,435 1,743,817 1,613,709
Total liabilities and equity 53,091,818 49,736,359 47,736,293
The accompanying notes are an integral part of the Financial Statements.
Consolidated statement of financial position
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Consolidated statement of changes in equity
(EUR 1,000)
Total equity attributable to Parent Company equity holders
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 To t a l
Equity at 31 December 2022 42,583 277 -4,457 -83 1,488 40,366 1,533,535 1,613,709 1,613,709
Dividends paid for 2022 - - - - - - -67,580 -67,580 -67,580
Profit for the financial year - - - - - - 110,526 110,526 110,526
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 - - - 60,320 - - - 60,320 60,320
Net change in Cost-of-Hedging - - - - 20,334 - - 20,334 20,334
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 - - 6,281 - - - - 6,281 6,281
Net amount reclassified to the income statement on the sales of financial assets at
fair value through other comprehensive income - - 230 - - - - 230 230
Net change in expected credit loss of financial assets at fair value through other
comprehensive income - - -2 - - - - -2 -2
Equity at 31 December 2023 42,583 277 2,052 60,238 21,821 40,366 1,576,480 1,743,817 1,743,817
Consolidated statement of
changes in equity
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 2024
(EUR 1,000)
Total equity attributable to Parent Company equity holders
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 To t a l
Dividends paid for 2023 - - - - - - -66,018 -66,018 -66,018
Profit for the financial year - - - - - - 132,693 132,693 132,693
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 - - - 109,762 - - - 109,762 109,762
Net change in Cost-of-Hedging - - - - 23,892 - - 23,892 23,892
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 - - 1,386 - - - - 1,386 1,386
Net amount reclassified to the income statement on the sales of financial assets at
fair value through other comprehensive income - - -100 - - - - -100 -100
Net change in expected credit loss of financial assets at fair value through other
comprehensive income - - 2 - - - - 2 2
Equity at 31 December 2024 42,583 277 3,340 169,999 45,714 40,366 1,643,155 1,945,435 1,945,435
The accompanying notes are an integral part of the Financial Statements.
Consolidated statement of changes in equity
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Consolidated statement
of cash flows
Consolidated statement of cash flows
(EUR 1,000) Jan–Dec 2024 Jan–Dec 2023
Cash flow from operating activities 66,648 84,900
Net change in long-term funding 2,848,288 2,782,391
Net change in short-term funding -796,013 -719,460
Net change in long-term loans -2,880,469 -2,305,076
Net change in short-term loans -249,895 -107,788
Net change in investments -204,315 2,566
Net change in collaterals 1,115,556 166,962
Interest on assets 2,097,968 1,517,912
Interest on liabilities -1,814,456 -1,196,347
Other income 46,480 62,955
Payments of operating expenses -79,625 -84,091
Taxes paid -16,871 -35,125
Cash flow from investing activities -590 -545
Acquisition of tangible assets -386 -7
Proceeds from sale of tangible assets 19 138
Acquisition of intangible assets -223 -676
Cash flow from financing activities -67,775 -69,765
Dividend paid -66,018 -67,580
Total cash flow from leases -1,757 -2,185
Change in cash and cash equivalents -1,717 14,590
Cash and cash equivalents at 1 Jan 63,214 48,624
Cash and cash equivalents at 31 Dec 61,496 63,214
Consolidated statement of cash flows
The accompanying notes are an integral part of the Financial
Statements.
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Notes to the Consolidated
Financial Statements
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Note 1. Summary of material accounting policies and
corrections to previous Financial Statements
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 result on financial instruments at fair value
through profit and loss
Note 6. Net result on financial assets at fair value
through other comprehensive income
Note 7. Net result on hedge accounting
Note 8. Other operating income
Note 9. HR and administrative expenses
Note 10. Depreciation and impairment on tangible and
intangible assets
Note 11. Other operating expenses
Note 12. Credit losses on financial assets recognised at
amortised cost and at fair value through other
comprehensive income
Note 13. Income tax expense
Notes to the statement of financial position
Note 14. Financial assets and liabilities
Note 15. Fair values of financial assets and liabilities
Note 16. Breakdown of financial assets and liabilities at
carrying amount by maturity
Note 17. Osetting financial assets and liabilities
Note 18. Cash and cash equivalents
Note 19. Loans and advances to credit institutions
Note 20. Loans and advances to the public and
public sector entities
Note 21. Finance lease receivables
Note 22. Debt securities
Note 23. Derivative contracts
Note 24. Hedge accounting
Note 25. Credit risks of financial assets and other
commitments
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
Note 32. Liabilities to credit institutions
Note 33. Liabilities to the public and public sector entities
Note 34. Debt securities issued
Note 35. Reconciliation of the carrying amount of
the issued debt
Note 36. Other liabilities
Note 37. Accrued expenses and deferred income
Note 38. Equity
Note 39. Contingent assets and liabilities
Note 40. Collateral given
Note 41. O-balance-sheet commitments
Note 42. Related-party transactions
Note 43. Remuneration of key management personnel
Note 44. Events after the reporting period
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BOARD OF DIRECTORS
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Notes to the income statement
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Notes to the statement of financial position
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Parent Company's
Financial Statements
Parent Company’s Financial
Statements (FAS)
Parent Company’s Financial Statements
Parent Company's income statement
Parent Company’s
income statement
During the financial year 2024, MuniFin has updated the
presentation of net interest income of derivative contracts
that are not designated in hedge accounting.
In the income statement, where applicable, the Finnish
Financial Supervisory Authority’s amendments to the
Regulations and Guidelines 2/2016 (valid from 1 Jan 2023)
have been taken into account for certain items in the income
statement.
The accompanying notes are an integral part of the Financial
Statements.
(EUR 1,000) Note Jan–Dec 2024
Adjusted
Jan–Dec 2023
Interest income (2) 2,201,328 1,860,393
Net income from leasing operations (3) 51,123 38,640
Interest expense (2) -1,992,315 -1,639,803
Net interest income 260,135 259,230
Commission income (5) 1,064 977
Commission expense (5) -16,912 -15,634
Net income on financial instruments at fair value through profit and loss (6) -15,086 -39,461
Net income on financial assets at fair value through fair value reserve (7) 3 -257
Other operating income (8) 45 171
HR and administrative expenses -42,772 -39,522
Personnel expenses (44) -20,073 -19,381
Salaries and fees -16,755 -16,037
Personnel-related costs -3,318 -3,344
Pension costs -2,904 -2,752
Other personnel-related costs -414 -591
Other administrative expenses -22,700 -20,141
Depreciation and impairment on tangible and intangible assets and on shares (9) -5,970 -6,398
Other operating expenses (10) -14,037 -19,350
Credit loss and impairments on financial assets (11) -326 -1,203
Net operating profit 166,144 138,552
Appropriations -74,367 -53,855
Income taxes -18,039 -17,281
Profit for the financial year 73,737 67,416
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Parent Company's Balance sheet
Parent Company’s
Balance sheet
(EUR 1,000) Note 31 Dec 2024
Adjusted
31 Dec 2023
Assets
Cash and balances with central banks (14) 2 2
Cash 2 2
Central bank receivables payable on demand 0 0
Debt securities eligible for central bank refinancing (17) 3,600,100 3,163,801
Other 3,600,100 3,163,801
Loans and advances to credit institutions (15) 8,566,382 9,191,853
Payable on demand 61,265 62,117
Other 8,505,117 9,129,736
Loans and advances to the public and public sector entities (16) 33,813,849 30,783,736
Leased assets (18) 1,563,060 1,441,686
Debt securities (17) 2,278,812 2,006,203
From public sector entities 1,599,851 1,317,913
From others 678,961 688,291
Shares and participations in Group companies (20) 656 656
Derivative contracts (21) 2,323,708 2,036,212
Intangible assets (23, 25) 2,720 6,314
Tangible assets (24, 25) 8,236 9,354
Other tangible assets 8,236 9,354
Other assets (26) 915,913 1,075,087
Accrued income and prepayments (27) 18,797 20,578
Deferred tax assets (28) 10 8
Total assets (13, 33, 34, 36, 37) 53,092,244 49,735,492
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
(EUR 1,000) Note 31 Dec 2024
Adjusted
31 Dec 2023
Liabilities and equity
Liabilities
Liabilities to credit institutions and central banks 883,694 215,552
To central banks - -
To credit institutions 883,694 215,552
Payable on demand - 2,177
Other 883,694 213,375
Liabilities to the public and public sector entities 2,463,874 2,622,551
Other liabilities 2,463,874 2,622,551
Other 2,463,874 2,622,551
Debt securities issued (29) 44,534,306 40,872,798
Bonds 41,125,457 36,885,471
Other 3,408,849 3,987,327
Derivative contracts (21) 2,561,718 3,496,553
Other liabilities (30) 285,181 418,053
Other liabilities 285,181 418,053
Accrued expenses and deferred income (31) 45,485 42,764
Deferred tax liabilities (28) 54,763 21,028
Total liabilities (13, 33, 34, 36, 37) 50,829,021 47,689,297
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
(EUR 1,000) Note 31 Dec 2024
Adjusted
31 Dec 2023
Appropriations
Depreciation difference 110,133 91,765
Taxation based provisions 1,476,680 1,420,680
Total appropriations 1,586,813 1,512,445
Equity (38, 39, 40)
Share capital 43,008 43,008
Other restricted reserves 219,330 84,388
Reserve fund 277 277
Fair value reserve 219,053 84,111
Change in fair value 219,053 84,111
Non-restricted reserves 40,743 40,743
Reserve for invested non-restricted equity 40,743 40,743
Retained earnings 299,593 298,194
Profit for the financial year 73,737 67,416
Total equity 676,411 533,750
Total liabilities and equity 53,092,244 49,735,492
Off-balance sheet commitments
Irrevocable commitments given in favour of customer 2,935,231 3,071,228
Other (43) 2,935,231 3,071,228
MuniFin has updated the presentation of the balance sheet during the financial year 2024. Comparative information has been adjusted accordingly.
More detailed information about the change can be found in Note 1 Significant accounting policies and corrections to previous Parent Company’s Financial Statements.
The accompanying notes are an integral part of the Financial Statements.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Parent Company’s
Statement of Cash Flows
Parent Company's Statement of Cash Flows
(EUR 1,000) Jan–Dec 2024 Jan–Dec 2023
Cash flow from operating activities 67,450 84,680
Net change in long-term funding 2,848,288 2,782,391
Net change in short-term funding -796,013 -719,460
Net change in long-term loans -2,880,469 -2,305,076
Net change in short-term loans -249,895 -107,788
Net change in investments -204,315 2,566
Net change in collaterals 1,115,556 166,962
Interest on assets 2,097,945 1,517,884
Interest on liabilities -1,814,456 -1,196,347
Other income 45,961 61,460
Payments of operating expenses -78,282 -82,793
Taxes paid -16,871 -35,120
Cash flow from investing activities -590 -545
Acquisition of tangible assets -386 -7
Proceeds from sale of tangible assets 19 138
Acquisition of intangible assets -223 -676
Cash flow from financing activities -67,712 -69,622
Dividends paid -66,018 -67,580
Total cash flow from leases -1,694 -2,042
Change in cash and cash equivalents -852 14,513
Cash and cash equivalents at 1 January 62,119 47,606
Cash and cash equivalents at 31 December 61,267 62,119
The accompanying notes are an integral part of the Financial Statements.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Notes to the Parent
Company’s Financial
Statements
Notes to the Parent Company's Financial Statements
Notes to the Parent Company's accounting policies
Note 1. Significant accounting policies and corrections
to previous Parent Company's Financial
Statements
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 on financial instruments at fair value
through profit and loss
Note 7. Net income on financial assets at fair value
through fair value reserve
Note 8. Other operating income
Note 9. Depreciation and impairment on tangible and
intangible assets and on shares
Note 10. Other operating expenses
Note 11. Credit losses and impairments on financial
assets
Note 12. Information on business areas and
geographical market
Notes to the balance sheet
Note 13. Financial assets and liabilities
Note 14. Cash and cash equivalents
Note 15. Loans and advances to credit institutions
Note 16. Loans and advances to the public and
public sector entities
Note 17. Debt securities
Note 18. Finance lease receivables
Note 19. Credit risks of financial assets and other
commitments
Note 20. Shares and participations
Note 21. Derivative contracts
Note 22. Hedge accounting
Note 23. Intangible assets
Note 24. Tangible assets
Note 25. Changes in intangible and tangible assets during
the financial year
Note 26. Other assets
Note 27. Accrued income and prepayments
Note 28. Deferred tax assets and liabilities
Note 29. Debt securities issued
Note 30. Other liabilities
Note 31. Accrued expenses and deferred income
Note 32. Act on the Resolution of Credit Institutions
(1194/2014)
Note 33. Breakdown of financial assets and liabilities at
carrying amount by maturity
Note 34. Breakdown of balance sheet items into
domestic and foreign currency
Note 35. Repurchase agreements
Note 36. Fair values and carrying amounts of financial
assets and liabilities
Note 37. Fair value hierarchy of financial assets and
liabilities
Note 38. Equity
Note 39. Share capital
Note 40. Largest shareholders
Notes on collateral and contingent liabilities
Note 41. Collateral given
Note 42. Pension liabilities
Note 43. O-balance sheet commitments
Notes on personnel and management
Note 44. Personnel
Related party transactions
Note 45. Loans and other financial receivables from the
related parties
Holdings in other companies
Note 46. Holdings in other companies
Other notes
Note 47. Audit and other fees paid to the audit firm
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 1. Significant accounting policies and corrections to previous Parent Company's
Financial Statements
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, MuniFin,
correspond to the accounting policies of the Consolidated
Financial Statements (Note 1) with the exceptions described
below.
Change in the presentation of the Parent Company’s
financial position:
The Parent Company has corrected the presentation of the
balance sheet during the second half of 2024.
The changes have been made retrospectively to the year end
of 2023. Amendment was made to transfer accrued interest
from line items Accrued income and prepayments/ Accrued
expenses and deferred income to the line item where accrued
interest arises.
Changes correspond to the accounting policies of the
Consolidated Financial Statements (Note 1) with the
exceptions described below.
Unreceived interest from Debt securities is presented in the
following line items in the Parent Company’s financial position:
• Debt securities eligible for central bank refinancing, Other
EUR 22,029 thousand
• Debt securities, from others EUR 3,013 thousand
Unreceived interest from Loans and advances to credit
institutions is presented in the following line item in the Parent
Company’s financial position:
• Loans and advances to credit institutions, Other EUR 5,876
thousand
Unpaid interest from Liabilities to credit institutions is
presented in the following line item in the Parent Company’s
financial position:
• Liabilities to credit institutions and central banks, To credit
institutions, Other EUR 1,857 thousand
Unpaid interest from Liabilities to the public and public sector
entities is presented in the following line item in the Parent
Company’s financial position:
• Liabilities to the public and public sector entities, Other EUR
34,276 thousand
Unpaid interest from Debt securities issued is presented in the
following line item in the Parent Company’s financial position:
• Debt securities issued, bonds EUR 271,151 thousand
Change in the presentation of the Parent Company’s
income statement
MuniFin has updated the presentation of net interest income
of derivative contracts that are not designated in hedge
accounting during financial year 2024. Starting from 2024,
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
net interest income of derivative contracts is presented on a
same line item.
The changes made in the presentation of the income
statement for the reporting period ended at 31 Dec 2023 are
as following:
Income statement
(EUR 1,000) Jan–Dec 2023 Adjustment
Adjusted
Jan–Dec 2023
Interest income 2,678,852 -818,459 1,860,393
Net income from
leasing operations 38,640 - 38,640
Interest expense -2,458,262 818,459 -1,639,803
Net interest income 259,230 0 259,230
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, are classified as finance
leases in the Parent Company. The finance lease agreements
are recognised in the balance sheet as a finance lease
receivable at an amount corresponding to the MuniFin’s
net investment in the lease. The proceeds from the leases
are divided into repayments and interest. Finance lease
agrements are presented on line Leased assets. Income
related to leasing operations is presented under the income
statement item Net income from leasing operations.
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 Consolidated 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 §).
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 Note
1 Summary of material accounting policies and corrections to
previous Financial Statements 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.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 2. Interest income and expense
Notes to the income statement
(EUR 1,000)
Jan–Dec 2024 Adjusted Jan–Dec 2023
Interest income Interest expense Net Interest income Interest expense Net
Assets
Amortised cost
Loans and advances to credit institutions 357,963 -133 357,831 317,637 -29 317,608
Loans and advances to the public and public sector entities 1,036,790 - 1,036,790 779,143 - 779,143
Debt securities 55,143 - 55,143 46,110 -23 46,087
Other assets 40,375 - 40,375 45,861 - 45,861
Fair value through fair value reserve
Debt securities 11,326 - 11,326 6,982 - 6,982
Designated at fair value through profit or loss
Loans and advances to the public and public sector entities 261 - 261 348 - 348
Debt securities 52,616 - 52,616 27,395 - 27,395
Mandatorily at fair value through profit or loss
Loans and advances to the public and public sector entities 1,320 - 1,320 1,033 - 1,033
Fair value through profit or loss
Derivative contracts at fair value through profit or loss 124,346 -38,258 86,088 124,222 -31,056 93,166
Derivative contracts in hedge accounting 389,970 - 389,970 356,190 - 356,190
Leased assets 51,123 - 51,123 38,640 - 38,640
Interest on non-financial other assets 4 - 4 2 - 2
Interest on assets 2,121,238 -38,391 2,082,847 1,743,563 -31,108 1,712,454
, of which interest income/expense according to the effective interest method 1,891,567 -133 1,195,733 -52
, of which other interest income/expense 229,670 -38,258 547,830 -31,056
The Company has not combined any items in the income statement under Chapter 2, Section 14(4), of the Ministry of Finance Decree.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
(EUR 1,000)
Jan–Dec 2024 Adjusted Jan–Dec 2023
Interest income Interest expense Net Interest income Interest expense Net
Liabilities
Amortised cost
Liabilities to credit institutions - -10,578 -10,578 - -26,276 -26,276
Liabilities to the public and public sector entities - -35,540 -35,540 - -37,557 -37,557
Debt securities issued - -736,334 -736,334 - -466,008 -466,008
Other liabilities - -13,271 -13,271 - -17,102 -17,102
Designated at fair value through profit or loss
Liabilities to credit institutions - -1,696 -1,696 - -1,005 -1,005
Liabilities to the public and public sector entities - -38,283 -38,283 - -37,034 -37,034
Debt securities issued - -400,207 -400,207 - -369,060 -369,060
Fair value through profit or loss
Derivative contracts at fair value through profit or loss 131,213 -93,536 37,677 155,470 -103,215 52,255
Derivative contracts in hedge accounting - -624,479 -624,479 - -551,439 -551,439
Interest on liabilities 131,213 -1,953,925 -1,822,712 155,470 -1,608,695 -1,453,225
, of which interest income/expense according to the effective interest method - -1,420,203 - -546,943
, of which other interest income/expense 131,213 -533,722 155,470 -1,061,752
Total interest income and expense 2,252,451 -1,992,315 260,135 1,899,033 -1,639,803 259,230
, of which interest income from leasing operations 51,123 - - 38,640 - -
Total interest income excluding interest income from leasing operations 2,201,328 - - 1,860,393 - -
MuniFin has updated the presentation of net interest income of derivative contracts that are not designated in hedge accounting during financial year 2024. More detailed information about the
change in presentation can be found in Note 1 Significant accounting policies and corrections to previous Parent Company’s Financial Statements.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Interest income on stage 3 financial assets in the expected credit loss (ECL) calculations
totalled EUR 3,758 thousand (EUR 1,726 thousand) during the financial year. These are
included in the line items Loans and advances to the public and public sector entities.
Interest expense on other liabilities includes EUR 114 thousand (EUR 48 thousand) of interest
on lease liabilities recognised in accordance with IFRS 16 Leases standard.
Interest expenses on financial assets at amortised cost on loans and advances to credit
institutions consisted of interest paid on cash collateral receivables. Interest expenses on
debt securities consist of interest paid on short-term lending in money market instruments.
Interest expenses on derivative contracts at fair value through profit or loss consist of interest
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 derivative contracts at fair value through profit or loss consists of interest
on derivatives that are not included in hedge accounting. Derivative contracts 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.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 3. Net income from leasing operations
Note 4. Income from equity investments
(EUR 1,000) Jan–Dec 2024 Jan–Dec 2023
Leasing income 139,158 121,158
Depreciation on leased assets according to plan -88,051 -82,518
Capital gains on leased assets 15 0
Tot a l 51,123 38,640
The Company has not received dividend income from its subsidiary in financial years 2024 and 2023.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 5. Commission income and expense
(EUR 1,000) Jan–Dec 2024 Jan–Dec 2023
Commission income
Digital services 1,055 971
Other operations 8 6
Tot a l 1,064 977
Commission expense
Commission fees paid -324 -260
Guarantee fees paid -14,413 -13,411
Other -2,175 -1,963
Tot a l -16,912 -15,634
Net commission income -15,848 -14,657
In commission expense line item Other includes i.e. paid custody fees and funding programme update costs.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 6. Net income on financial instruments at fair value through profit and loss
Jan–Dec 2024 (EUR 1,000)
Capital gains and
losses (net) Changes in fair value To t a l
Derivative contracts at fair value through profit or loss -356 -3,163 -3,519
Designated at fair value through profit or loss 377 -822 -445
Mandatorily at fair value through profit or loss - 145 145
Day 1 gain or loss - 41 41
Net result on financial assets and liabilities through profit or loss 21 -3,798 -3,777
Net result from FX differences 4,002 -3,548 455
Net result on hedge accounting - -11,763 -11,763
Tot a l 4,023 -19,109 -15,086
Jan–Dec 2023 (EUR 1,000)
Capital gains and
losses (net) Changes in fair value To t a l
Derivative contracts at fair value through profit or loss -88 252,443 252,354
Designated at fair value through profit or loss - -261,961 -261,961
Mandatorily at fair value through profit or loss - -827 -827
Day 1 gain or loss - 42 42
Net result on financial assets and liabilities through profit or loss -88 -10,303 -10,391
Net result from FX differences 6,086 -8,009 -1,923
Net result on hedge accounting -260 -26,887 -27,147
Tot a l 5,738 -45,199 -39,461
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Financial assets and liabilities designated at fair value through profit or loss
(EUR 1,000)
Nominal value
31 Dec 2024
Carrying amount
31 Dec 2024
Nominal value
31 Dec 2023
Adjusted
Carrying amount
31 Dec 2023
Financial assets
Loans and advances to the public and public sector entities 30,000 30,940 30,000 30,497
Debt securities 3,670,119 3,676,021 3,284,881 3,219,979
Total financial assets* 3,700,119 3,706,961 3,314,881 3,250,476
Financial liabilities
Liabilities to credit institutions 79,000 79,315 44,000 43,971
Liabilities to the public and public sector entitities 1,456,192 1,334,136 1,449,753 1,322,866
Debt securities issued 9,546,266 9,198,104 9,870,880 9,530,487
Total financial liabilities 11,081,458 10,611,555 11,364,633 10,897,323
During the financial year MuniFin corrected the presentation of accrued interest. More detailed information about the change in presentation can be found in Note 1 Significant accounting policies
and corrections to previous Parent Company’s Financial Statements.
* 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 2024 and 31 Dec 2023.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Change in fair value of financial assets designated at fair value through profit or loss
(EUR 1,000)
31 Dec 2024 1 Jan 2024
Fair value change
recognised in the
income statement
Jan–Dec 2024
, of which due to
credit risk
, of which due to
market risk
Financial assets
Loans and advances to the public and public sector entities -6,847 -7,988 1,142 96 1,046
Debt securities -29,152 -94,789 65,637 -12,116 77,753
Total financial assets -35,999 -102,777 66,778 -12,020 78,799
Financial assets that MuniFin has designated at fair value through profit or loss include debt
securities in the liquidity portfolio and some lending agreements of which the interest rate risk
is hedged with interest rate. 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 and lending
agreements at amortised cost based on the IFRS 9 business model. MuniFin does not have
credit derivatives hedging these financial assets.
During the financial year 2024, the fair value change of debt securities was EUR 65,637
thousand (EUR 120,709 thousand). This was affected by a decrease in EUR market interest
rates. The general increase in the markets credit spreads had a negative impact on valuations,
but the impact of lower interest rates was greater and thus the change in the fair value change
was clearly positive for 2024. Considering the change in the fair value of hedging instruments
of EUR -77,753 thousand euros (EUR -127,202 thousand), the change in the fair value for 2024
is EUR -12,116 thousand (EUR -6,494 thousand).
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Change in fair value of financial liabilities designated at fair value through profit or loss
(EUR 1,000) 31 Dec 2024 1 Jan 2024
Fair value change
recognised in the
income statement
Jan–Dec 2024
Change in own
credit risk recognised
in fair value reserve
Jan–Dec 2024
Total fair value
change in
Jan–Dec 2024
Financial liabilities
Liabilities to credit institutions -652 495 -1,147 1,099 -48
Liabilities to the public and public sector entitities 130,527 169,099 -38,572 52,862 14,290
Debt securities issued 397,708 425,589 -27,881 83,240 55,360
Total financial liabilities 527,583 595,183 -67,600 137,202 69,602
During the financial year 2024, the change in fair value of financial liabilities designated at fair value through profit of EUR -67,600 thousand (EUR -385,262 thousand) was particularly affected by
the decrease in EUR market interest rates. The change in the fair value of hedging instruments was EUR 77,900 thousand (EUR 397,646 thousand). The change in own credit risk amounted to
EUR 137,202 thousand (EUR 75,401 thousand) during the financial year. The change was affected by an increase in MuniFin’s funding costs due to a general increase in market credit spreads.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Net change in fair value in Net result on financial assets and liabilities through profit or loss
(EUR 1,000)
Cumulative change
in fair value
31 Dec 2024
Fair value change
recognised in the
income statement
Jan–Dec 2024
Financial liabilities designated at fair value through profit or loss 527,583 -67,600
Derivative contracts at fair value through profit or loss hedging financial liabilities -514,225 77,900
Net change in fair value 13,358 10,300
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 contract and the financial liability. Financial liabilities
designated at fair value through profit or loss consist of
financial liabilities, which have been hedged according to the
Group’s risk management policy, but which are not subject
to IFRS 9 standard’s 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 a change of the Own credit
revaluation reserve, is presented in the PnL in Net income on
financial instruments at fair value through profit or loss.
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.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Change in fair value of financial assets designated at fair value through profit or loss
( EUR 1,000)
31 Dec 2023 1 Jan 2023
Fair value change
recognised in the
income statement
Jan–Dec 2023
, of which due
to credit risk
, of which due
to market risk
Financial assets
Loans and advances to the public and public sector entities -7,988 -10,581 2,592 151 2,441
Debt securities -94,789 -215,498 120,709 -6,493 127,202
Total financial assets -102,777 -226,078 123,301 -6,342 129,643
Change in fair value of financial liabilities designated at fair value through profit or loss
(EUR 1,000) 31 Dec 2023 1 Jan 2023
Fair value change
recognised in the
income statement
Jan–Dec 2023
Change in own
credit risk recognised
in fair value reserve
Jan–Dec 2023
Total fair value
change in
Jan–Dec 2023
Financial liabilities
Liabilities to credit institutions 495 1,708 -1,212 514 -698
Liabilities to the public and public sector entitities 169,099 245,483 -76,384 30,218 -46,167
Debt securities issued 425,589 733,254 -307,666 44,669 -262,997
Total financial liabilities 595,183 980,445 -385,262 75,401 -309,862
Net change in fair value in Net result on financial assets and liabilities through profit or loss
(EUR 1,000)
Cumulative change
in fair value
31 Dec 2023
Fair value change
recognised in the
income statement
Jan–Dec 2023
Financial liabilities designated at fair value through profit or loss 595,183 -385,262
Derivative contracts at fair value through profit or loss hedging financial liabilities -592,125 397,646
Net change in fair value 3,058 12,384
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Net result on hedge accounting
(EUR 1,000) Jan–Dec 2024 Jan–Dec 2023
Net result on hedging instruments 195,714 589,385
Net result on hedged items -207,478 -616,271
IBOR reform related compensations* - -260
Tot a l -11,763 -27,147
* 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 from hedged items 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 on line item Net income from FX differences. A specification of the net income from hedge accounting is presented in Note 22 Hedge
accounting.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 7. Net income on financial assets at fair value through fair value reserve
(EUR 1,000) Jan–Dec 2024 Jan–Dec 2023
Capital gains from financial assets - 30
Capital losses from financial assets -122 -
Unrealised gains transferred from fair value reserve 124 -
Unrealised losses transferred from fair value reserve - -287
Tot a l 3 -257
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 8. Other operating income
(EUR 1,000) Jan–Dec 2024 Jan–Dec 2023
Other income from credit institution operations 45 171
Tot a l 45 171
Note 9. Depreciation and impairment on tangible and intangible assets and on shares
(EUR 1,000) Jan–Dec 2024 Jan–Dec 2023
Depreciation
Depreciation on tangible assets -2,137 -2,935
Depreciation on intangible assets -3,833 -3,463
Total depreciation -5,970 -6,398
Total depreciation and impairment -5,970 -6,398
MuniFin does not have depreciation or impairments on shares at 31 Dec 2024 or 31 Dec 2023.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 10. Other operating expenses
(EUR 1,000) Jan–Dec 2024 Jan–Dec 2023
Regulatory expenses
Contributions to the Single Resolution Fund - -7,353
Other administrative and supervisory fees -2,974 -2,832
Rental expenses -316 -442
External services -8,089 -6,835
Credit rating fees -862 -905
Audit fees* -729 -463
Insurances -905 -834
Other expenses from credit institution operations -163 315
Tot a l -14,037 -19,350
* Paid fees to the auditor (PricewaterhouseCoopers Oy) in 2024 totalled EUR 455 thousand
and EUR 299 thousand for other services. PricewaterhouseCoopers Oy has been the
auditor of MuniFin since the Annual General Meeting held on 17 May 2024.
Paid fees to the auditor (KPMG Oy Ab) in 2024 totalled EUR 273 thousand (EUR 450
thousand) for audit, EUR 11 thousand (EUR 9 thousand) for tax services and EUR 223
thousand (EUR 211 thousand) for other services. Assigments as referred to in chapter 1,
section 1, subsection 1, paragraph 2 of the Auditing Act in 2024 totalled EUR 8 thousand
(EUR 14 thousand). KPMG Oy AB has been the auditor of MuniFin until 17 May 2024.
Audit and other fees paid to the audit firm are specified in Note 47.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 11. Credit losses and impairments on financial assets
Credit losses and impairments
Jan–Dec 2024 (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
Loans and advances to credit institutions -50 63 12 - - -
Loans and advances to the public and public sector entities -1,518 1,164 -354 - - -
Finance lease receivables -2 22 20 - - -
Debt securities -1 1 0 - - -
Cash collateral to CCPs in Other assets -1 2 1 - - -
Total expected credit losses on financial assets at amortised cost -1,572 1,251 -321 - - -
Expected credit losses and impairments on other financial assets
Debt securities at fair value through fair value reserve -13 10 -2 - - -
Total expected credit losses and impairments on other financial assets -13 10 -2 - - -
Credit commitments (off-balance sheet) -14 11 -3 - - -
Tot a l -1,599 1,273 -326 - - -
MuniFin has assessed the impact of general cost inflation and increased interest rates on
customer financing receivables and credit risk. As a result, MuniFin recorded the additional
discretionary provision based on a group-specific assessment. Part of the previous additional
discretionary provision was realised as transitions to stages 2 and 3 during the first half of
2024, leading to a release of EUR 375 thousand of the provision during the first half of the
year. At the end of June 2024, the group-specific additional discretionary provision was EUR
250 thousand. During the financial year, MuniFin updated the model used for estimating
the probability of default, which increased the amount of expected credit losses. Most
of the contracts subject to the additional discretionary provision were realised as stage
2 transfers due to the model change, so the additional discretionary provision was fully
released at the end of December 2024. The release of the additional provision is reflected in
larger subtractions in receivables from the public and public sector entities compared to the
previous year. The negative impact on the results remained low.
MuniFin’s credit risks are described in the Consolidated Financial Statements Note 2 Risk management principles and the Group’s risk position in Section 6. 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.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Credit losses and impairments
Jan–Dec 2023 (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
Loans and advances to credit institutions -10 46 36 - - -
Loans and advances to the public and public sector entities -1,559 123 -1,436 - - -
Finance lease receivables -18 17 -1 - - -
Debt securities -1 1 0 - - -
Cash collateral to CCPs in Other assets - 197 197 - - -
Total expected credit losses on financial assets at amortised cost -1,589 385 -1,204 - - -
Expected credit losses and impairments on other financial assets
Debt securities at fair value through fair value reserve -25 27 2 - - -
Total expected credit losses and impairments on other financial assets -25 27 2 - - -
Credit commitments (off-balance sheet) -13 11 -2 - - -
Tot a l -1,627 423 -1,203 - - -
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 12. Information on business areas and geographical market
Municipality Finance Plc’s operating segment is credit institution operations and the market for lending is Finland.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 13. Financial assets and liabilities
Notes to the balance sheet
Financial assets
31 Dec 2024 (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 Tot a l Fair value
Cash and balances with central banks 2 - - - - 2 2
Loans and advances to credit institutions 8,566,382 - - - - 8,566,382 8,566,382
, of which unreceived interest 1,741 - - - - 1,741
Loans and advances to the public and public sector entities 33,757,873 - 30,940 25,036 - 33,813,849 35,826,784
, of which unreceived interest 203,433 - 169 191 - 203,793
Debt securities 1,825,411 377,480 3,676,021 - - 5,878,912 5,879,660
, of which unreceived interest 9,451 5,352 32,616 - - 47,419
Shares and participations in Group companies - - - 656 - 656 656
Derivative contracts at fair value through profit or loss - - - - 451,480 451,480 451,480
, of which unreceived interest - - - - 56,465 56,465
Derivative contracts in hedge accounting - - - - 1,872,228 1,872,228 1,872,228
, of which unreceived interest - - - - 175,755 175,755
Other assets* 889,682 - - - - 889,682 889,682
, of which unreceived interest 868 - - - - 868
Tot a l 45,039,350 377,480 3,706,961 25,692 2,323,708 51,473,191 53,486,874
* Line item includes cash collateral given to central counterparties.
The Company has not combined any items on the balance sheet under Chapter 2, Section 14(4), of the Ministry of Finance Decree.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Financial liabilities
31 Dec 2024 (EUR 1,000) Amortised cost
Designated at
fair value through
profit or loss
Fair value through
profit or loss To t al Fair value
Liabilities to credit institutions 804,380 79,315 - 883,694 883,627
, of which unpaid interest 2,417 1,278 - 3,694
Liabilities to the public and public sector entities 1,129,737 1,334,136 - 2,463,874 2,475,335
, of which unpaid interest 19,873 12,250 - 32,123
Debt securities issued 35,336,202 9,198,104 - 44,534,306 44,345,120
, of which unpaid interest 325,887 105,270 - 431,157
Derivative contracts at fair value through profit or loss - - 1,073,936 1,073,936 1,073,936
, of which unpaid interest - - 60,451 60,451
Derivative contracts in hedge accounting - - 1,487,782 1,487,782 1,487,782
, of which unpaid interest - - 33,126 33,126
Other liabilities* 267,449 - - 267,449 267,449
, of which unpaid interest 42 - - 42
Tot a l 37,537,768 10,611,555 2,561,718 50,711,041 50,533,249
* Line item includes EUR 259,850 thousand of cash collateral received from central counterparties and EUR 7,599 thousand of lease liabilities in accordance with IFRS 16 standard.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Adjusted
Financial assets
31 Dec 2023 (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 Tot a l Fair value
Cash and balances with central banks 2 - - - - 2 2
Loans and advances to credit institutions 9,191,853 - - - - 9,191,853 9,191,853
, of which unreceived interest 5,876 - - - - 5,876
Loans and advances to the public and public sector entities 30,725,576 - 30,497 27,663 - 30,783,736 32,605,180
, of which unreceived interest 203,353 - 170 181 - 203,705
Debt securities 1,574,954 375,072 3,219,979 - - 5,170,005 5,170,117
, of which unreceived interest 8,410 5,402 19,639 - - 33,451
Shares and participations in Group companies - - - 656 - 656 656
Derivative contracts at fair value through profit or loss - - - - 353,731 353,731 353,731
, of which unreceived interest - - - - 40,775 40,775
Derivative contracts in hedge accounting - - - - 1,682,481 1,682,481 1,682,481
, of which unreceived interest - - - - 138,668 138,668
Other assets* 1,049,735 - - - - 1,049,735 1,049,735
, of which unreceived interest 1,322 - - - - 1,322
Tot a l 42,542,120 375,072 3,250,476 28,319 2,036,212 48,232,199 50,053,755
* Line item includes cash collateral given to central counterparties.
During the financial year, MuniFin corrected the presentation of accrued interest. More detailed information about the change in presentation can be found in Note 1 Significant accounting policies
and corrections to previous Parent Company’s Financial Statements.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Adjusted
Financial liabilities
31 Dec 2023 (EUR 1,000) Amortised cost
Designated at fair
value through profit
or loss
Fair value through
profit or loss To t al Fair value
Liabilities to credit institutions 171,581 43,971 - 215,552 215,510
, of which unpaid interest 875 981 - 1,857
Liabilities to the public and public sector entities 1,299,685 1,322,866 - 2,622,551 2,635,500
, of which unpaid interest 22,584 11,691 - 34,276
Debt securities issued 31,342,311 9,530,487 - 40,872,798 40,837,530
, of which unpaid interest 213,051 58,100 - 271,151
Derivative contracts at fair value through profit or loss - - 1,194,531 1,194,531 1,194,531
, of which unpaid interest - - 37,389 37,389
Derivative contracts in hedge accounting - - 2,302,023 2,302,023 2,302,023
, of which unpaid interest - - 86,650 86,650
Other liabilities* 400,885 - - 400,885 400,885
, of which unpaid interest 170 - - 170
Tot a l 33,214,462 10,897,323 3,496,553 47,608,338 47,585,978
* Line item includes EUR 392,342 thousand of cash collateral received from central counterparties and EUR 8,837 thousand of lease liabilities in accordance with IFRS 16 standard.
During the financial year MuniFin corrected the presentation of accrued interest. More detailed information about the change in presentation can be found in Note 1 Significant accounting policies
and corrections to previous Parent Company’s Financial Statements.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 14. 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 2024 31 Dec 2023
Cash and balances with central banks 2 2
Loans and advances to credit institutions payable on demand 61,265 62,117
Total cash and cash equivalents 61,267 62,119
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 15. Loans and advances to credit institutions
31 Dec 2024 (EUR 1,000)
Payable on demand
Other than payable
on demand Expected credit losses To t al
Receivables from central bank - 7,808,867 0 7,808,867
Domestic credit institutions 59,704 199,245 -50 258,900
Foreign credit institutions 1,561 497,066 -11 498,616
Tot a l 61,265 8,505,178 -61 8,566,382
Adjusted
31 Dec 2023 (EUR 1,000) Payable on demand
Other than payable
on demand Expected credit losses To t al
Receivables from central bank - 7,990,560 -1 7,990,560
Domestic credit institutions 60,458 224,948 -49 285,357
Foreign credit institutions 1,659 914,301 -23 915,937
Tot a l 62,117 9,129,809 -73 9,191,853
During the financial year, MuniFin corrected the presentation of accrued interest. More detailed information about the change in presentation can be found in Note 1 Significant accounting policies
and corrections to previous Parent Company’s Financial Statements.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 16. Loans and advances to the public and public sector entities
31 Dec 2024
Adjusted
31 Dec 2023
(EUR 1,000) Tot a l
, of which expected
credit losses To t a l
, of which expected
credit losses
Enterprises and housing corporations 18,586,481 -2,350 16,495,443 -2,051
Public sector entities 14,877,043 -117 13,941,191 -136
Non-profit organisations 350,325 -95 347,102 -20
Tot a l 33,813,849 -2,561 30,783,736 -2,207
During the financial year, MuniFin corrected the presentation of accrued interest. More detailed information about the change in presentation can be found in Note 1 Significant accounting policies
and corrections to previous Parent Company’s Financial Statements.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 17. Debt securities
Debt securities issued by public sector entities
31 Dec 2024 (EUR 1,000) Publicly quoted Other To t a l
Expected
credit losses*
Amortised cost - 1,599,849 1,599,849 -1
Commercial papers - 1,599,849 1,599,849 -1
Fair value through fair value reserve 25,773 - 25,773 -1
Bonds issued by other public sector entities 25,773 - 25,773 -1
Designated at fair value through profit or loss 1,673,477 - 1,673,477 -
Government bonds 221,193 - 221,193 -
Bonds issued by other public sector entities 1,452,284 - 1,452,284 -
Tot a l 1,699,250 1,599,849 3,299,099 -2
, of which eligible for central bank refinancing 1,524,558 - 1,524,558 -1
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Debt securities issued by other than public sector entities
31 Dec 2024 (EUR 1,000) Publicly quoted Other To t a l
Expected
credit losses*
Amortised cost - 225,562 225,562 0
Commercial papers - 225,562 225,562 0
Fair value through fair value reserve 351,707 - 351,707 -44
Bank bonds 351,707 - 351,707 -44
Designated at fair value through profit or loss 2,002,544 - 2,002,544 -
Bank bonds 2,002,544 - 2,002,544 -
Tot a l 2,354,251 225,562 2,579,813 -44
, of which eligible for central bank refinancing 2,075,542 - 2,075,542 -42
31 Dec 2024 (EUR 1,000) Publicly quoted Other To t a l
Expected
credit losses*
Debt securities total 4,053,501 1,825,411 5,878,912 -46
* 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 2024, the Company has given debt securities as
collateral to central counterparty, in total nominal value of EUR 100,000 thousand (EUR 70,000
thousand).
At the financial statement date 31 Dec 2024 or at the comparison date, MuniFin has no debt
securities measured mandatorily at fair value through profit or loss.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Adjusted
Debt securities issued by public sector entities
31 Dec 2023 (EUR 1,000) Publicly quoted Other Tot al
Expected
credit losses
Amortised cost - 1,317,912 1,317,912 1
Commercial papers - 1,317,912 1,317,912 1
Fair value through fair value reserve 15,513 - 15,513 0
Bonds issued by other public sector entities 15,513 - 15,513 0
Designated at fair value through profit or loss 1,453,782 - 1,453,782 -
Government bonds 158,819 - 158,819 -
Bonds issued by other public sector entities 1,294,963 - 1,294,963 -
Tot a l 1,469,295 1,317,912 2,787,207 1
, of which eligible for central bank refinancing 1,286,423 - 1,286,423 0
Adjusted
Debt securities issued by other than public sector entities
31 Dec 2023 (EUR 1,000) Publicly quoted Other Tot al
Expected
credit losses
Amortised cost - 257,042 257,042 0
Commercial papers - 257,042 257,042 0
Fair value through fair value reserve 359,559 - 359,559 42
Bank bonds 359,559 - 359,559 42
Designated at fair value through profit or loss 1,766,198 - 1,766,198 -
Bank bonds 1,766,198 - 1,766,198 -
Tot a l 2,125,756 257,042 2,382,798 42
, of which eligible for central bank refinancing 1,877,378 - 1,877,378 37
Adjusted
31 Dec 2023 (EUR 1,000) Publicly quoted Other Tot al
Expected
credit losses
Debt securities total 3,595,051 1,574,954 5,170,005 43
During the financial year MuniFin corrected the presentation of accrued interest. More detailed information about the change in presentation can be found in Note 1 Significant accounting policies
and corrections to previous Parent Company’s Financial Statements.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 18. Finance lease receivables
(EUR 1,000) 31 Dec 2024 31 Dec 2023
Breakdown of finance lease receivables by maturity
0–12 months 179,285 173,842
1–2 years 141,780 127,442
2–3 years 113,546 127,178
3–4 years 108,772 96,520
4–5 years 98,506 92,364
Over 5 years 1,404,030 1,293,083
Future cashflows 2,045,919 1,910,430
Unearned finance income (-) -482,859 -468,744
Carrying amount 1,563,060 1,441,686
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 19. Credit risks of financial assets and other commitments
MuniFin’s credit risks are described in the Consolidated Financial Statements’ Note 2 Risk management principles and the Group’s risk position in Section 6. 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 2024
(EUR 1,000)
Not credit-impaired Credit-impaired
Tot al
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
Loans and advances to credit institutions at amortised cost 8,566,443 -61 - - - - 8,566,443 -61
Loans and advances to the public and public sector entities at amortised cost 31,381,806 -142 2,086,923 -2,103 291,705 -316 33,760,434 -2,561
Finance lease receivables at amortised cost 1,561,931 -9 1,139 0 - - 1,563,069 -9
Debt securities at amortised cost 1,824,426 -1 986 0 - - 1,825,412 -1
Debt securities at fair value through fair value reserve 377,480 -45 - - - - 377,480 -45
Cash collateral to CCPs in Other assets at amortised cost 889,687 -5 - - - - 889,687 -5
Credit commitments (off-balance sheet) 2,864,012 -16 71,219 -2 - - 2,935,231 -18
Tot a l 47,465,785 -280 2,160,266 -2,105 291,705 -316 49,917,756 -2,701
* MuniFin has collateral and guarantee arrangements that fully cover the stage 3 receivables as described in Note 2 Risk management principles and the Group’s risk position in Section 6. 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 1,926 thousand (EUR 2,031 thousand)
of originated credit impaired receivables (Purchased or Originated Credit Impaired, POCI). Expected credit losses for the POCI receivables amount to EUR 3 thousand (EUR 3 thousand). The
increase in stage 3 receivables during the financial year was mainly due to the transition of one medium-sized entity to stage 3.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Adjusted
Exposures by asset groups and impairment stages
31 Dec 2023
(EUR 1,000)
Not credit-impaired Credit-impaired
Tot al
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
Loans and advances to credit institutions at amortised cost 9,186,050 -73 - - - - 9,186,050 -73
Loans and advances to the public and public sector entities at amortised cost 29,024,906 -122 1,560,904 -1,872 141,974 -214 30,727,784 -2,207
Finance lease receivables at amortised cost 1,420,170 -8 21,546 -21 - - 1,441,715 -29
Debt securities at amortised cost 1,573,803 -1 1,152 0 - - 1,574,955 -1
Debt securities at fair value through fair value reserve 375,072 -42 - - - - 375,072 -42
Cash collateral to CCPs in Other assets at amortised cost 1,049,741 -6 - - - - 1,049,741 -6
Credit commitments (off-balance sheet) 3,017,822 -15 53,406 0 - - 3,071,212 -15
Tot a l 45,647,565 -267 1,637,008 -1,894 141,974 -214 47,426,531 -2,375
During the financial year MuniFin corrected the presentation of accrued interest. More detailed information about the change in presentation can be found in Note 1 Significant accounting policies
and corrections to previous Parent Company’s Financial Statements.
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Municipality Finance Plc • Annual Report 2024
Total expected credit losses by impairment stages
(EUR 1,000)
Not credit-impaired Credit-impaired
Tot al
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL ECL
Opening balance 1 Jan 2024 -267 -1,894 -214 -2,375
New assets originated or purchased -92 -92 -69 -253
Assets derecognised or repaid (excluding write-offs) 93 121 67 282
Transfers to Stage 1 -2 361 - 359
Transfers to Stage 2 4 -158 - -154
Transfers to Stage 3 0 1 -65 -64
Additional provision (Management overlay) - 625 - 625
Changes to contractual cash flows due to modifications not resulting in derecognition - - - -
Changes to models* and inputs** used for ECL calculations -16 -1,070 -35 -1,122
Write-offs - - - -
Recoveries - - - -
Total 31 Dec 2024 -280 -2,105 -316 -2,701
* Represents changes in the model.
** Represents changes to model parameters (e.g. GDP rates, unemployment rates).
The following table presents summary of total changes and reconciliation of expected credit losses by impairment stages during the financial year.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
MuniFin updated the macroeconomic scenarios quarterly to
take into account forward-looking information. Additionally,
the Company revised its probability of default model for
calculating the customer finance exposures. Previously
30-day payment delay was the indicator for customer’s
inability to pay. The model was updated so that the indicator
for insolvency observation is either the official definition of
default or if customer’s exposures are transferred to stage
3. The amount of expected credit losses increased by EUR
1,122 thousand due to changes made in the models and
parameters.
The Company has assessed the impact of general cost
inflation and increased interest rates on customer financing
receivables and credit risk. At the end of December 2023,
MuniFin’s management assessed that some customers
may face challenges in the sufficiency of cash flows during
the first half of 2024 and decided to increase the additional
discretionary provision recognised in June 2023 up to EUR
625 thousand.
At the end of June 2024, the Company’s management
assessed that the increased interest rate levels have
impacted customers especially within the housing sector, and
a slightly larger than normal amount of payment delays and
forbearances have been observed during the first half of the
year. According to the management’s judgement, a smaller
number of customers may continue to face challenges in the
sufficiency of cash flows in the latter part of the year. Part
of the previous additional discretionary provision has been
realised during the first half of 2024 as transfers to levels 2
and 3. Thus MuniFin’s management decided to decrease it
by EUR 375 thousand, making the additional discretionary
provision based on a group-specific assessment EUR 250
thousand at the end of June 2024.
At the end of December 2024, MuniFin’s management
assessed again the need of additional discretionary provision
and decided to release the provision in full. The model update
in the calculation of probability of default and the resulting
increase in expected credit losses and stage transfers
are estimated to take into account the previous additional
provision for receivables with increased credit risk. Based
on the Company’s assessment, some customers may face
challenges in the sufficiency of cash flows in 2025, which may
cause further payment delays and forbearances for MuniFin.
However, the declining interest rate environment is expected
to gradually ease the financial situation of customers.
The total credit risk of MuniFin has remained low, and the
amount of expected credit losses is still at low level. The rising
interest rate levels and inflation weakened the housing sector
customers’ ability to pay, which showed a slight increase in
payment delays, forbearance measures and in the weakening
of creditworthiness. MuniFin’s customer exposures have
zero risk weight in the capital adequacy calculation as they
are from Finnish municipalities, joint municipal authorities,
wellbeing services counties, or involve a municipality, joint
municipal authority, wellbeing services county’s guarantee or
a state deficiency guarantee supplementing the real estate
collateral. The Company’s management estimates that all
receivables will be recovered in full and therefore no final
credit loss will arise. On 31 December 2024, MuniFin had
EUR 13,449 thousand in receivables due to the insolvency
of customers, for which the collateral realisation process is
ongoing or where credit receivables are due for payment
by the guarantor (at the end of 2023 there were no such
receivables). Credit risk of the liquidity portfolio has remained
on a good quality level and the average rating of debt
securities in the portfolio was AA+ (AA+).
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Total expected credit losses by impairment stages
(EUR 1,000)
Not credit-impaired Credit-impaired
Tot al
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL ECL
Opening balance 1 Jan 2023 -464 -686 -21 -1,171
New assets originated or purchased -60 -65 0 -126
Assets derecognised or repaid (excluding write-offs) 87 31 18 136
Transfers to Stage 1 -1 88 - 87
Transfers to Stage 2 2 -40 - -38
Transfers to Stage 3 - 0 -65 -65
Additional provision (Management overlay) - -625 - -625
Changes to contractual cash flows due to modifications not resulting in derecognition - - - -
Changes to models and inputs used for ECL calculations 168 -596 -145 -573
Write-offs - - - -
Recoveries - - - -
Total 31 Dec 2023 -267 -1,894 -214 -2,375
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
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 al
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL ECL
Opening balance 1 Jan 2024 -73 - - -73
New assets originated or purchased -50 - - -50
Assets derecognised or repaid (excluding write-offs) 63 - - 63
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 2024 -61 - - -61
The following tables present changes and reconciliation of expected credit losses by impairment stages and asset groups during the financial year.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
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 al
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL ECL
Opening balance 1 Jan 2023 -109 - - -109
New assets originated or purchased -4 - - -4
Assets derecognised or repaid (excluding write-offs) 46 - - 46
Transfers to Stage 1 - - - -
Transfers to Stage 2 - - - -
Transfers to Stage 3 - - - -
Changes to models and inputs used for ECL calculations -6 - - -6
Total 31 Dec 2023 -73 - - -73
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
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 al
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL ECL
Opening balance 1 Jan 2024 -122 -1,872 -214 -2,207
New assets originated or purchased -1 6 -90 -69 -175
Assets derecognised or repaid (excluding write-offs) 6 121 67 194
Transfers to Stage 1 -2 340 - 338
Transfers to Stage 2 4 -157 - -154
Transfers to Stage 3 0 1 -65 -64
Additional provision (Management overlay) - 625 - 625
Changes to contractual cash flows due to modifications not resulting in derecognition - - - -
Changes to models and inputs used for ECL calculations -13 -1,070 -35 -1,119
Write-offs - - - -
Total 31 Dec 2024 -142 -2,103 -316 -2,561
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
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 al
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL ECL
Opening balance 1 Jan 2023 -89 -662 -21 -772
New assets originated or purchased -20 -65 0 -85
Assets derecognised or repaid (excluding write-offs) 3 12 18 34
Transfers to Stage 1 -1 87 - 86
Transfers to Stage 2 2 -38 - -36
Transfers to Stage 3 0 0 -65 -65
Additional provision (Management overlay) - -625 - -625
Changes to contractual cash flows due to modifications not resulting in derecognition - - - -
Changes to models and inputs used for ECL calculations -18 -582 -145 -745
Write-offs - - - -
Total 31 Dec 2023 -122 -1,872 -214 -2,207
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Expected credit losses on Finance lease receivables at amortised cost by impairment stages
(EUR 1,000)
Not credit-impaired Credit-impaired
Tot al
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL ECL
Opening balance 1 Jan 2024 -8 -21 - -29
New assets originated or purchased -1 0 - -1
Assets derecognised or repaid (excluding write-offs) 0 0 - 0
Transfers to Stage 1 - 21 - 21
Transfers to Stage 2 0 0 - 0
Transfers to Stage 3 - - - -
Changes to models and inputs used for ECL calculations -1 0 - -1
Total 31 Dec 2024 -9 0 - -9
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Expected credit losses on Finance lease receivables at amortised cost by impairment stages
(EUR 1,000)
Not credit-impaired Credit-impaired
Tot al
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL ECL
Opening balance 1 Jan 2023 -6 -22 0 -28
New assets originated or purchased -1 0 - -1
Assets derecognised or repaid (excluding write-offs) 0 16 0 16
Transfers to Stage 1 - 1 - 1
Transfers to Stage 2 0 -2 - -2
Transfers to Stage 3 - - - -
Changes to models and inputs used for ECL calculations -1 -14 0 -15
Total 31 Dec 2023 -8 -21 0 -29
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Expected credit losses on Debt securities at amortised cost by impairment stages
(EUR 1,000)
Not credit-impaired Credit-impaired
Tot al
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL ECL
Opening balance 1 Jan 2024 -1 0 - -1
New assets originated or purchased -1 0 - -1
Assets derecognised or repaid (excluding write-offs) 1 0 - 1
Transfers to Stage 1 - - - -
Transfers to Stage 2 - - - -
Transfers to Stage 3 - - - -
Changes to models and inputs used for ECL calculations 0 0 - 0
Total 31 Dec 2024 -1 0 - -1
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Expected credit losses on Debt securities at amortised cost by impairment stages
(EUR 1,000)
Not credit-impaired Credit-impaired
Tot al
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL ECL
Opening balance 1 Jan 2023 -1 - - -1
New assets originated or purchased -1 0 - -1
Assets derecognised or repaid (excluding write-offs) 1 - - 1
Transfers to Stage 1 - - - -
Transfers to Stage 2 - - - -
Transfers to Stage 3 - - - -
Changes to models and inputs used for ECL calculations 0 - - 0
Total 31 Dec 2023 -1 0 - -1
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
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 al
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL ECL
Opening balance 1 Jan 2024 -42 - - -42
New assets originated or purchased -12 - - -12
Assets derecognised or repaid (excluding write-offs) 10 - - 10
Transfers to Stage 1 - - - -
Transfers to Stage 2 - - - -
Transfers to Stage 3 - - - -
Changes to models and inputs used for ECL calculations 0 - - 0
Total 31 Dec 2024 -45 - - -45
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 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 2024
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 al
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL ECL
Opening balance 1 Jan 2023 -44 - - -44
New assets originated or purchased -22 - - -22
Assets derecognised or repaid (excluding write-offs) 27 - - 27
Transfers to Stage 1 - - - -
Transfers to Stage 2 - - - -
Transfers to Stage 3 - - - -
Changes to models and inputs used for ECL calculations -3 - - -3
Total 31 Dec 2023 -42 - - -42
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
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 al
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL ECL
Opening balance 1 Jan 2024 -6 - - -6
New assets originated or purchased 0 - - 0
Assets derecognised or repaid (excluding write-offs) 2 - - 2
Transfers to Stage 1 - - - -
Transfers to Stage 2 - - - -
Transfers to Stage 3 - - - -
Changes to models and inputs used for ECL calculations 0 - - 0
Total 31 Dec 2024 -5 - - -5
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
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 al
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL ECL
Opening balance 1 Jan 2023 -203 - - -203
New assets originated or purchased - - - -
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 197 - - 197
Total 31 Dec 2023 -6 - - -6
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Expected credit losses on Credit commitments (off-balance sheet) by impairment stages
(EUR 1,000)
Not credit-impaired Credit-impaired
Tot al
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL ECL
Opening balance 1 Jan 2024 -15 0 - -15
New assets originated or purchased -12 -2 - -14
Assets derecognised or repaid (excluding write-offs) 11 0 - 11
Transfers to Stage 1 0 0 - 0
Transfers to Stage 2 0 0 - 0
Transfers to Stage 3 - - - -
Changes to models and inputs used for ECL calculations 0 0 - 0
Total 31 Dec 2024 -16 -2 - -18
The loss allowance on credit commitments is recognised under Other liabilities. More details regarding 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 2024
Expected credit losses on Credit commitments (off-balance sheet) by impairment stages
(EUR 1,000)
Not credit-impaired Credit-impaired
Tot al
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL ECL
Opening balance 1 Jan 2023 -11 -2 - -14
New assets originated or purchased -12 0 - -12
Assets derecognised or repaid (excluding write-offs) 9 2 - 11
Transfers to Stage 1 0 0 - 0
Transfers to Stage 2 0 0 - 0
Transfers to Stage 3 - - - -
Changes to models and inputs used for ECL calculations 0 0 - 0
Total 31 Dec 2023 -15 0 - -15
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
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
as follows:
Scenario
31 Dec 2024 31 Dec 2023
2025 2026 2027 2024 2025 2026
Adverse 40% 40% 40% 40% 40% 40%
Base 50% 50% 50% 50% 50% 50%
Optimistic 10% 10% 10% 10% 10% 10%
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
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
rates, 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 2024 31 Dec 2023
2025 2026 2027 2024 2025 2026
10Y Fin Government rate, %
Adverse 5.0 4.2 3.5 3.8 3.7 3.7
Base 2.8 2.8 2.8 3.5 3.5 3.4
Optimistic 3.2 3.2 3.1 3.3 3.2 3.2
Residential Real Estate
(selling price, YoY change), %
Adverse -10.0 0.0 4.0 -13.0 -2.0 3.0
Base 4.0 3.0 2.0 -1.0 4.0 2.5
Optimistic 4.0 2.5 2.5 2.5 4.0 2.5
Unemployment rate, %
Adverse 10.8 10.2 9.2 9.9 9.6 8.5
Base 8.3 7.5 6.9 7.7 7.4 7.0
Optimistic 6.5 6.0 5.7 7.1 6.1 5.8
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Scenario descriptions
Base scenario
The global macroeconomic environment remains challenging.
The significant tightening of monetary policy in 2022–2023
continues to negatively impact demand factors. In the United
States, the controlled cooling of the economy has been
successful so far, but Donald Trump’s inflationary economic
policy could complicate the implementation of monetary
policy. Growth in the euro area is gradually recovering, but
the recovery is slow, particularly due to severe structural
problems in Germany’s industrial sector. In China, the trend
of slowing growth continues. The potential for a trade war
between major powers and the escalating risk of regional
military conflicts heighten economic uncertainty.
Inflation has significantly slowed down during 2024. As
a result, both the U.S. Federal Reserve and the European
Central Bank have been able to start easing monetary
policy. In 2025, the main focus of central banks will shift from
combating inflation to supporting economic growth. The ECB
is expected to lower the deposit rate to 2.00% by the end of
2025, which will also be the bottom level of the rate-cutting
cycle.
Finland has particularly suffered from past interest rate hikes
and has gone through a rather deep recession. Conversely,
Finland’s economy will benefit from interest rate cuts more
than average. Finland’s GDP is expected to still contract by
0.3% in 2024. Cyclical recovery will accelerate economic
growth to 2% in 2025–2026, after which the economy will
grow according to its long-term potential. Average yearly
unemployment rate is expected to peak at 8.4% in 2024 and
remain elevated at 8.3% in 2025.
The prices of owner-occupied apartments in major cities,
on average, are still expected to decrease by 3.0% in 2024.
The recovery of the real estate market begins in 2025. Both
residential and commercial real estate markets are expected
to see price increases in 2025.
Optimistic scenario
In the optimistic scenario, the economy is expected to
recover faster than in the baseline scenario. The Finnish
GDP is projected to grow 3.5% in 2025 and 2.5% in 2026.
Unemployment is expected to begun declining by the end
of 2024 and fall below 7% already in 2025. Consumer price
inflation cools down to 2.0% in 2024 and remains at or just
below 2% over the subsequent three years. Housing demand
is seen to recover towards the end of 2024. Home price
inflation is anticipated to accelerate to 4.0% in 2025, followed
by a moderation to a 2.5% level in annual price gains. Due to
the faster-than-expected recovery in aggregate demand,
the ECB is anticipated to lower interest rates much more
gradually than in our baseline scenario.
Adverse scenario
The adverse scenario describes a situation where
geopolitical tensions escalate due to the conflict between
China and Taiwan. Trade relations between the USA and
the EU with China deteriorate, and global supply chains are
disrupted, leading to a significant increase in the cost of
industrial raw materials and intermediate goods. The volatile
situation in the Middle East expands into a conflict between
Israel and Iran, causing strong upward pressure on energy
prices.
Inflation begins to accelerate sharply again. The ECB is forced
to halt its rate-cutting cycle and raise rates above 4%. The
difficulties in the private sector lead to a significant increase in
banks’ credit losses. Risk premiums in financial markets widen
considerably.
The abrupt slowdown of foreign trade and the new rise in
interest rates push Finland’s economy back into a deep
recession. GDP contracts by 3.5% in 2025 and only begins to
gradually recover in late 2026. Unemployment rises sharply
and remains above 10% even in 2026. The USA’s hesitation in
defending Taiwan also calls NATO’s security guarantees into
question, significantly widening the risk premiums on Finnish
government bonds. The rise in living costs and interest rates
deepens the distress of Finnish households. The slump in the
housing market and construction continues, and the decline in
housing prices intensifies.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
The following table presents the sensitivity of the expected credit losses to the forward-looking information assuming 100% weight for adverse scenario until 2025 (2024).
31 Dec 2024 31 Dec 2023
Sensitivity analysis
(EUR 1,000) Weighted scenario
Adverse scenario
(100%)
Excluding weighted
scenario Weighted scenario
Adverse scenario
(100%)
Excluding weighted
scenario
ECL 2,701 4,765 2,578 1,750 2,414 1,618
Proportion of the exposure in Stage 2 and 3 5.21% 11.26% 5.17% 3.94% 5.10% 3.78%
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 2024
Non-performing and forborne exposures
31 Dec 2024 (EUR 1,000)
Performing exposures
(gross)
Non-performing
exposures (gross)
Total exposures
(gross)
Total expected
credit losses
Total exposures
(net)
Over 90 days past due - 8,535 8,535 -85 8,451
Unlikely to be paid - 152,231 152,231 -137 152,094
Forborne exposures 430,479 130,939 561,418 -352 561,066
Tot a l 430,479 291,705 722,184 -573 721,610
Adjusted
Non-performing and forborne exposures
31 Dec 2023 (EUR 1,000)
Performing exposures
(gross)
Non-performing
exposures (gross)
Total exposures
(gross)
Total expected credit
losses
Total exposures
(net)
Over 90 days past due - 7,676 7,676 -36 7,639
Unlikely to be paid - 19,266 19,266 -59 19,207
Forborne exposures 382,211 115,032 497,243 -570 496,673
Tot a l 382,211 141,974 524,185 -666 523,519
During the financial year MuniFin corrected the presentation of accrued interest. More detailed information about the change in presentation can be found in Note 1 Significant accounting policies
and corrections to previous Parent Company’s Financial Statements.
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.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Forbearances are concessions to the original contractual payment terms agreed upon at the
customer’s initiative, aimed at helping the customer cope with temporary payment difficulties.
Performing forborne exposures are those that have recovered from non-performing status
during the trial period or forbearance measures made into a performing loan. All performing
forborne exposures are classified on stage 2. Loan modifications due to reasons other than
the customer’s financial difficulties are not classified as forborne exposures. Such receivables
are classified on stage 1. MuniFin considers a loan forborne when such concessions
or modifications are provided because of the borrower’s present or expected financial
difficulties, and MuniFin would not have agreed to them if the borrower had been in good
financial condition. All such receivables are classified on stage 3.
In 2024, loan forbearance measures were granted particularly to customers in the housing
sector, whose underutilisation of the premises has increased because of intensified
competition for tenants. Forbearance measures were also granted due to the increased
interest rate level. As a result of the granted repayment deferrals, the unpaid installments have
mostly been deferred to the end of the loan maturity, to be paid with the final installment, or to
the current 5-year period if the loan is a state deficiency guaranteed interest subsidised loan.
Forbearance measures were not applied to leasing receivables.
Geopolitical uncertainties have had no direct impact on MuniFin’s customers or receivables.
The inflation and rising interest rate levels appeared, and may continue to appear as
increased forbearance measures, payment delays and as a deterioration of the customers’
creditworthiness.
Realised credit losses
MuniFin has not had any final realised credit losses during the financial year or the
comparison year.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 20. Shares and participations
31 Dec 2024 (EUR 1,000) Publicly quoted Other To t a l , of which in credit institutions
Shares and participations in Group companies - 656 656 -
Tot a l - 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 2023 (EUR 1,000) Publicly quoted Other Tot al , of which in credit institutions
Shares and participations in Group companies - 656 656 -
Tot a l - 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 2024
Note 21. Derivative contracts
31 Dec 2024 (EUR 1,000)
Nominal value of underlying instrument
Fair value
Remaining maturity
Less than 1 year 1–5 years Over 5 years To t al Positive Negative
Derivative contracts in hedge accounting
Interest rate derivatives
Interest rate swaps 2,227,956 15,950,911 18,107,614 36,286,482 987,920 -1,262,963
, of which cleared by the central counterparty 2,128,956 15,899,304 17,428,936 35,457,197 963,973 -1,250,839
Currency derivatives
Cross currency interest rate swaps 3,250,510 13,479,274 369,119 17,098,903 884,308 -224,818
Total derivative contracts in hedge accounting 5,478,466 29,430,185 18,476,733 53,385,385 1,872,228 -1,487,782
Derivative contracts at fair value through profit or loss
Interest rate derivatives
Interest rate swaps 8,364,980 9,253,147 4,885,876 22,504,004 220,007 -797,908
, of which cleared by the central counterparty 6,584,200 6,806,285 1,909,901 15,300,387 119,869 -122,927
Currency derivatives
Cross currency interest rate swaps 1,107,136 2,491,716 64,207 3,663,059 100,100 -268,552
Forward exchange contracts 2,840,260 - - 2,840,260 131,373 -761
Equity derivatives 12,572 - - 12,572 - -6,715
Total derivative contracts at fair value through profit or loss 12,324,948 11,744,863 4,950,083 29,019,895 451,480 -1,073,936
Total derivative contracts 17,803,414 41,175,049 23,426,816 82,405,280 2,323,708 -2,561,718
Derivative contracts at fair value through profit or loss contains 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.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Adjusted
31 Dec 2023 (EUR 1,000)
Nominal value of underlying instrument
Fair value
Remaining maturity
Less than 1 year 1–5 years Over 5 years To t al Positive Negative
Derivative contracts in hedge accounting
Interest rate derivatives
Interest rate swaps 4,082,331 11,468,301 18,991,507 34,542,139 1,244,663 -1,692,231
, of which cleared by the central counterparty 3,967,376 11,288,451 18,280,451 33,536,278 1,207,369 -1,676,456
Currency derivatives
Cross currency interest rate swaps 1,838,537 10,963,203 479,835 13,281,574 437,818 -609,792
Total derivative contracts in hedge accounting 5,920,868 22,431,503 19,471,342 47,823,713 1,682,481 -2,302,023
Derivative contracts at fair value through profit or loss
Interest rate derivatives
Interest rate swaps 4,387,178 11,024,261 4,300,134 19,711,573 294,754 -892,723
, of which cleared by the central counterparty 3,211,225 8,099,203 1,540,172 12,850,600 173,241 -32,697
Currency derivatives
Cross currency interest rate swaps 335,671 2,845,363 69,179 3,250,213 56,183 -193,110
Forward exchange contracts 3,890,874 - - 3,890,874 2,770 -87,375
Equity derivatives 85,340 - - 85,340 24 -21,323
Total derivative contracts at fair value through profit or loss 8,699,063 13,869,624 4,369,313 26,938,000 353,731 -1,194,531
Total derivative contracts 14,619,930 36,301,128 23,840,655 74,761,713 2,036,212 -3,496,553
During the financial year MuniFin corrected the presentation of accrued interest. More detailed information about the change in presentation can be found in Note 1 Significant accounting policies
and corrections to previous Parent Company’s Financial Statements.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 22. Hedge accounting
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’
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.
Hedge accounting
31 Dec 2024 (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 11,209,584 10,633,372 10,573,458 59,914 -
Finance lease receivables 421,960 423,793 - 423,793 -
Total assets 11,631,544 11,057,166 10,573,458 483,708 -
Liabilities
Liabilities to credit institutions 95,000 88,243 - 88,243 -
Liabilities to the public and public sector entities 1,107,710 1,129,737 - 1,129,737 -
Debt securities issued 35,414,736 34,570,729 - 17,595,169 16,975,560
Total liabilities 36,617,446 35,788,709 - 18,813,149 16,975,560
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Adjusted
Hedge accounting
31 Dec 2023 (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 11,843,871 10,963,049 10,902,352 60,696 -
Finance lease receivables 395,417 389,403 - 389,403 -
Total assets 12,239,288 11,352,451 10,902,352 450,099 -
Liabilities
Liabilities to credit institutions 95,000 87,488 - 87,488 -
Liabilities to the public and public sector entities 1,287,710 1,299,685 - 1,299,685 -
Debt securities issued 32,537,103 31,054,516 - 18,047,332 13,007,184
Total liabilities 33,919,813 32,441,689 - 19,434,505 13,007,184
During the financial year MuniFin corrected the presentation of accrued interest. More detailed information about the change in presentation can be found in Note 1 Significant accounting policies
and corrections to previous Parent Company’s Financial Statements.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
The figures presented in the following 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. Due to the above mentioned reason, the total amount of the hedging
instruments does not correspond to the fair value presented in Note 21 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 on financial instruments at fair value through profit or
loss. The ineffective portion of the hedging relationship is thus shown on this line in the income
statement. Net income on financial instruments at fair value through profit or loss is specified
in Note 6.
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.
Net result from hedge accounting from the financial year was EUR -11,763 thousand
(EUR -27,147 thousand). Change in net result from hedge accounting was mainly due to
changes in EUR interest rate curves.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Value of hedged risk
(EUR 1,000)
31 Dec 2024 1 Jan 2024
Recognised in the
income statement
Jan–Dec 2024 31 Dec 2023 1 Jan 2023
Recognised in the
income statement
Jan–Dec 2023
Assets
IAS 39 portfolio hedge accounting
Loans and advances to the public and public sector entities -604,957 -907,319 302,362 -907,319 -1,476,553 569,233
Derivative contracts in hedge accounting 658,479 969,754 -311,275 969,754 1,549,315 -579,561
Accumulated fair value accrual from the termination of hedge accounting -1,411 -1,652 240 -1,652 -1,721 69
IAS 39 portfolio hedge accounting, net 52,111 60,783 -8,672 60,783 71,041 -10,258
IFRS 9 fair value hedge accounting
Loans and advances to the public and public sector entities 2,214 1,829 385 1,829 -595 2,424
Finance lease receivables -4,427 -12,251 7,825 -12,251 -28,808 16,557
Derivative contracts in hedge accounting 828 9,060 -8,232 9,060 28,548 -19,488
IFRS 9 fair value hedge accounting, net -1,385 -1,362 -23 -1,362 -855 -507
Liabilities
IFRS 9 fair value hedge accounting
Liabilities to credit institutions 7,357 8,111 -754 8,111 10,108 -1,997
Liabilities to the public and public sector entities -7,263 4,425 -11,688 4,425 54,570 -50,145
Debt securities issued 901,690 1,407,537 -505,847 1,407,537 2,559,950 -1,152,413
Derivative contracts in hedge accounting -927,435 -1,442,656 515,221 -1,442,656 -2,631,089 1,188,433
IFRS 9 fair value hedge accounting, net -25,651 -22,583 -3,068 -22,583 -6,461 -16,122
IBOR reform related compensations* -3,603 -3,603 0 -3,603 -3,343 -260
Total hedge accounting 21,471 33,235 -11,763 33,235 60,382 -27,147
* 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.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
The following 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 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 2024 1 Jan 2024
Impact on
Cost-of-Hedging
reserve
Cost-of-Hedging
Derivative contracts in hedge accounting 45,714 21,821 23,892
Tot a l 45,714 21,821 23,892
Hedging impact on equity
(EUR 1,000) 31 Dec 2023 1 Jan 2023
Impact on
Cost-of-Hedging
reserve
Cost-of-Hedging
Derivative contracts in hedge accounting 21,821 1,488 20,334
Tot a l 21,821 1,488 20,334
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
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 2024 (EUR 1,000)
Gains/losses attributable to the hedged risk
Hedge
ineffectivenessHedged item Hedging instrument Hedged items Hedging instruments
Assets
IAS 39 portfolio hedge accounting
Fixed rate and revisable rate loans Interest rate derivatives -604,957 658,479 53,522
IFRS 9 fair value hedge accounting
Structured lending Interest rate derivatives 2,214 -2,132 82
Fixed rate and revisable rate leased assets Interest rate derivatives -4,427 2,960 -1,467
Assets total -607,170 659,307 52,137
Liabilities
IFRS 9 fair value hedge accounting
Financial liabilities denominated in EUR Interest rate derivatives 653,000 -685,882 -32,882
Financial liabilities denominated in foreign currencies
Currency derivatives (cross
currency interest rate swaps)
Interest rate derivatives 248,784 -241,553 7,231
Liabilities total 901,784 -927,435 -25,651
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Effectiveness of hedge accounting
31 Dec 2023 (EUR 1,000)
Gains/losses attributable to the hedged risk
Hedge
ineffectivenessHedged item Hedging instrument Hedged items Hedging instruments
Assets
IAS 39 portfolio hedge accounting
Fixed rate and revisable rate loans Interest rate derivatives -907,319 969,754 62,435
IFRS 9 fair value hedge accounting
Structured lending Interest rate derivatives 1,829 -1,608 222
Fixed rate and revisable rate leased assets Interest rate derivatives -12,251 10,668 -1,584
Assets total -917,742 978,814 61,072
Liabilities
IFRS 9 fair value hedge accounting
Financial liabilities denominated in EUR Interest rate derivatives 1,105,788 -1,132,380 -26,592
Financial liabilities denominated in foreign currencies
Currency derivatives (cross
currency interest rate swaps)
Interest rate derivatives 314,285 -310,277 4,009
Liabilities total 1,420,073 -1,442,656 -22,583
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 23. Intangible assets
Note 24. Tangible assets
(EUR 1,000) 31 Dec 2024 31 Dec 2023
IT systems 2,720 6,311
Other intangible assets - 2
Tot a l 2,720 6,314
Intangible assets do not include other development costs or goodwill.
(EUR 1,000) 31 Dec 2024 31 Dec 2023
Real estate corporation shares 299 299
Right-of-use assets 7,548 8,500
Other tangible assets 389 555
Tot a l 8,236 9,354
MuniFin does not have investment properties.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 25. Changes in intangible and tangible assets during the financial year
Jan–Dec 2024 (EUR 1,000)
Intangible assets Tangible assets
Tot al Other real estate Other tangible assets Right-of-use assets Tot a l
Acquisition cost 1 Jan 30,574 299 4,918 14,616 19,832
+ Additions 239 - 386 655 1,041
- Disposals - - -29 -6,739 -6,768
Acquisition cost 31 Dec 30,813 299 5,275 8,532 14,105
Accumulated depreciation 1 Jan 24,261 - 4,363 6,116 10,479
- Accumulated depreciation on disposals - - -29 -6,717 -6,746
+ Depreciation for the financial year 3,833 - 552 1,585 2,137
Accumulated depreciation 31 Dec 28,093 - 4,885 984 5,869
Carrying amount 31 Dec 2,720 299 389 7,548 8,236
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Jan–Dec 2023 (EUR 1,000)
Intangible assets Tangible assets
Tot al Other real estate Other tangible assets Right-of-use assets Tot a l
Acquisition cost 1 Jan 29,634 299 5,644 9,174 15,117
+ Additions 940 - 7 7,785 7,792
- Disposals - - -733 -2,344 -3,076
Acquisition cost 31 Dec 30,574 299 4,918 14,616 19,832
Accumulated depreciation 1 Jan 20,798 - 4,087 6,195 10,282
- Accumulated depreciation on disposals - - -715 -2,021 -2,736
+ Depreciation for the financial year 3,463 - 991 1,942 2,933
Accumulated depreciation 31 Dec 24,261 - 4,363 6,116 10,479
Carrying amount 31 Dec 6,314 299 555 8,500 9,354
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 26. Other assets
Note 27. Accrued income and prepayments
(EUR 1,000) 31 Dec 2024
Adjusted
31 Dec 2023
Invoiced leasing 23,305 23,506
Given cash collateral to CCPs* 889,682 1,049,735
Other 2,925 1,846
Tot a l 915,913 1,075,087
(EUR 1,000) 31 Dec 2024
Adjusted
31 Dec 2023
Tax income 16,577 18,089
Prepayments 2,220 2,489
Tot a l 18,797 20,578
During the financial year MuniFin corrected the presentation of accrued interest. More detailed information about the change in presentation can be found in Note 1 Significant accounting policies
and corrections to previous Parent Company’s Financial Statements.
* Cash collaterals include expected credit loss amounting to EUR 5 thousand
(EUR 6 thousand).
During the financial year MuniFin corrected the presentation of accrued interest. More
detailed information about the change in presentation can be found in Note 1 Significant
accounting policies and corrections to previous Parent Company’s Financial Statements.
MuniFin did not have receivables related to payment transfers as at 31 Dec 2024 or
31 Dec 2023.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 28. Deferred tax assets and liabilities
Deferred tax assets
(EUR 1,000) 1 Jan 2024
Recognised in the
income statement Recognised in equity
Paid during the
financial year 31 Dec 2024
On fair value reserve - - - - -
On right-of-use assets 8 2 - - 10
Tot a l 8 2 - - 10
Deferred tax liabilities
(EUR 1,000) 1 Jan 2024
Recognised in the
income statement Recognised in equity
Paid during the
financial year 31 Dec 2024
On fair value reserve 21,028 - 33,736 - 54,763
Tot a l 21,028 - 33,736 - 54,763
Voluntary credit loss provision and depreciation difference include EUR 317,363 thousand in non-recognised deferred tax liabilities.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Deferred tax assets
(EUR 1,000) 1 Jan 2023
Recognised in the
income statement Recognised in equity
Paid during the
financial year 31 Dec 2023
On fair value reserve 763 - -763 - -
On right-of-use assets - 8 - - 8
Tot a l 763 8 -763 - 8
Deferred tax liabilities
(EUR 1,000) 1 Jan 2023
Recognised in the
income statement Recognised in equity
Paid during the
financial year 31 Dec 2023
On fair value reserve - - 21,028 - 21,028
Tot a l - - 21,028 - 21,028
Voluntary credit loss provision and depreciation difference include EUR 302,489 thousand in non-recognised deferred tax liabilities.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 29. Debt securities issued
31 Dec 2024 31 Dec 2023
(EUR 1,000) Carrying amount Nominal value
Adjusted
Carrying amount Nominal value
Bonds 41,125,457 42,306,455 36,885,471 38,680,909
Other* 3,408,849 3,421,647 3,987,327 4,017,074
Tot a l 44,534,306 45,728,102 40,872,798 42,697,983
* Line item contains short-term funding issued by MuniFin.
All funding issued by MuniFin is guaranteed by the Municipal Guarantee Board.
During the financial year MuniFin corrected the presentation of accrued interest. More detailed information about the change in presentation can be found in Note 1 Significant accounting policies
and corrections to previous Parent Company’s Financial Statements.
Benchmark issuances during the year 2024 Value date Maturity date Interest-% Nominal value (1,000) Currency
Fixed rate benchmark bond, issued under the MTN programme 17 Jan 2024 2 Feb 2034 2.750% 1,000,000 EUR
Fixed rate benchmark bond, issued under the MTN programme 31 Jan 2024 31 Jan 2029 4.250% 1,500,000 USD
Fixed rate benchmark bond, issued under the MTN programme 23 Apr 2024 23 Apr 2027 4.875% 1,000,000 USD
Fixed rate benchmark bond, issued under the MTN programme 29 Aug 2024 29 Aug 2029 2.500% 1,000,000 EUR
Fixed rate benchmark bond, issued under the MTN programme 9 Oct 2024 9 Oct 2029 3.625% 1,000,000 USD
In the above table, the benchmark issuances are included by the settlement date.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
2024 Adjusted 2023
Reconciliation of the carrying amount of issued debt
(EUR 1,000)
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 131,458 2,622,551 40,872,798 2,060,128 2,561,084 35,730,888
Cash flow changes from operating activities
Additions to issued debt securities Bonds 51,008 30,713 9,131,597 40,458 26,293 10,160,007
Additions to money market issuances Other - - 19,510,198 - - 24,054,315
Additions total 51,008 30,713 28,641,795 40,458 26,293 34,214,321
Deductions to issued debt securities Bonds -15,346 -207,008 -5,754,758 -1,971,315 -91,944 -5,183,507
Deductions to money market issuances Other - - -20,088,676 - - -24,716,820
Deductions total -15,346 -207,008 -25,843,434 -1,971,315 -91,944 -29,900,327
Cash flow changes from operating activities in total 35,662 -176,295 2,798,361 -1,930,857 -65,651 4,313,995
Changes in the balance sheet value including valuations and FX
revaluations 437 17,618 863,147 2,187 127,118 827,915
Carrying amount 31 Dec 167,558 2,463,874 44,534,306 131,458 2,622,551 40,872,798
During the financial year MuniFin corrected the presentation of accrued interest. More detailed information about the change in presentation can be found in Note 1 Significant accounting policies
and corrections to previous Parent Company’s Financial Statements.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 30. Other liabilities
(EUR 1,000) 31 Dec 2024 Adjusted 31 Dec 2023
Other liabilities
Lease liabilities 7,599 8,542
Cash collateral taken from CCPs 259,850 392,343
Other 17,732 17,168
Tot a l 285,181 418,053
During the financial year MuniFin corrected the presentation of accrued interest. More detailed information about the change in presentation can be found in Note 1 Significant accounting policies
and corrections to previous Parent Company’s Financial Statements.
Note 31. Accrued expenses and deferred income
(EUR 1,000) 31 Dec 2024 Adjusted 31 Dec 2023
Other accrued expenses 12,496 11,372
Deferred income* 32,989 31,392
Tot a l 45,485 42,764
* Item consists mainly of leasing prepayments.
During the financial year MuniFin corrected the presentation of accrued interest. More detailed information about the change in presentation can be found in Note 1 Significant accounting policies
and corrections to previous Parent Company’s Financial Statements.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 32. Act on the Resolution of Credit Institutions (1194/2014)
MuniFin’s crisis resolution authority is the EU’s Single Resolution Board (SRB) and the Finnish
Financial Stability Authority (FFSA). In November 2024, the SRB and the FFSA removed
MuniFin’s binding minimum requirement for own funds and eligible liabilities (MREL) as a
result of changes to the European Bank Recovery and Resolution Directive (BRRD) and
corresponding national legislation.
Under the revised framework, the MREL requirement no longer applies to credit institutions
subject to simplified obligations. Before the MREL requirement was lifted, MuniFin’s own
funds and eligible liabilities exceeded it multiple times, so this change will not have a significant
effect on MuniFin’s operations.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 33. Breakdown of financial assets and liabilities at carrying amount by maturity
Financial assets
31 Dec 2024 (EUR 1,000) 0–3 months 3–12 months 1–5 years 5–10 years Over 10 years To t a l
Cash and balances with central banks 2 - - - - 2
Debt securities eligible for central bank refinancing 274,441 355,261 2,189,388 781,010 - 3,600,100
Loans and advances to credit institutions 8,513,736 38,140 14,507 - - 8,566,382
Loans and advances to the public and public sector entities 627,997 1,774,531 8,023,430 7,734,269 15,653,621 33,813,849
Debt securities 1,617,488 271,427 350,864 39,032 - 2,278,812
Shares and participations in Group companies - - - - 656 656
Derivative contracts 152,633 57,431 1,161,155 613,963 338,525 2,323,708
Other assets* 889,682 - - - - 889,682
Tot a l 12,075,979 2,496,791 11,739,344 9,168,275 15,992,802 51,473,191
* Line item includes cash collateral given to central counterparties.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Financial liabilities
31 Dec 2024 (EUR 1,000) 0–3 months 3–12 months 1–5 years 5–10 years Over 10 years To t a l
Liabilities to credit institutions 716,137 3,486 74,105 56,548 33,419 883,694
Liabilities to the public and public sector entities 38,133 233,195 894,643 595,550 702,353 2,463,874
Debt securities issued 4,757,279 6,110,628 25,545,532 6,494,648 1,626,218 44,534,306
Derivative contracts 164,955 190,266 959,624 729,648 517,223 2,561,718
Other liabilities* 260,177 964 5,531 778 - 267,449
, of which lease liabilities 327 964 5,531 778 - 7,599
Tot a l 5,936,681 6,538,539 27,479,435 7,877,172 2,879,214 50,711,041
* 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
20–40% of its callable liabilities in 2025. In 2024, the Company called 23% of its callable liabilities.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Adjusted
Financial assets
31 Dec 2023 (EUR 1,000) 0–3 months 3–12 months 1–5 years 5–10 years Over 10 years Tot al
Cash and balances with central banks 2 - - - - 2
Debt securities eligible for central bank refinancing 269,979 297,711 2,129,027 467,085 - 3,163,801
Loans and advances to credit institutions 9,137,454 25,051 29,348 - - 9,191,853
Loans and advances to the public and public sector entities 553,220 1,558,950 7,563,119 6,951,263 14,157,184 30,783,736
Debt securities 1,442,083 225,164 305,332 33,625 - 2,006,203
Shares and participations in Group companies - - - - 656 656
Derivative contracts 25,993 66,502 655,747 834,431 453,540 2,036,212
Other assets 1,049,735 - - - - 1,049,735
Tot a l 12,478,466 2,173,377 10,682,573 8,286,403 14,611,379 48,232,199
Adjusted
Financial liabilities
31 Dec 2023 (EUR 1,000) 0–3 months 3–12 months 1–5 years 5–10 years Over 10 years Tot al
Liabilities to credit institutions 84,093 0 56,472 57,009 17,977 215,552
Liabilities to the public and public sector entities 87,266 139,849 984,422 558,808 852,205 2,622,551
Debt securities issued 6,198,915 4,416,282 22,699,700 6,092,857 1,465,043 40,872,798
Derivative contracts 215,477 276,181 1,512,104 904,057 588,733 3,496,553
Other liabilities 392,754 1,067 5,227 1,836 - 400,885
, of which lease liabilities 411 1,067 5,227 1,836 - 8,542
Tot a l 6,978,506 4,833,379 25,257,927 7,614,568 2,923,958 47,608,338
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 2023, the Company called 32% of its
callable liabilities.
During the financial year MuniFin corrected the presentation of accrued interest. More detailed information about the change in presentation can be found in Note 1 Significant accounting policies
and corrections to previous Parent Company’s Financial Statements.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 34. Breakdown of balance sheet items into domestic and foreign currency
Assets
31 Dec 2024 (EUR 1,000) Domestic currency Foreign currency Tot a l
, of which
intra-group
Debt securities eligible for central bank refinancing 3,600,100 - 3,600,100 -
Loans and advances to credit institutions 8,506,133 60,249 8,566,382 -
Loans and advances to the public and public sector entities 33,813,849 - 33,813,849 -
Finance lease receivables 1,563,060 - 1,563,060 -
Debt securities 2,278,812 - 2,278,812 -
Derivative contracts 2,080,834 242,874 2,323,708 -
Other assets including cash and balances in central banks 845,053 101,281 946,334 656
Tot a l 52,687,840 404,404 53,092,244 656
Liabilities and equity
31 Dec 2024 (EUR 1,000) Domestic currency Foreign currency Tot a l
, of which
intra-group
Liabilities to credit institutions 883,694 - 883,694 -
Liabilities to the public and public sector entities 2,442,409 21,465 2,463,874 -
Debt securities issued 21,208,405 23,325,901 44,534,306 -
Derivative contracts 2,298,034 263,684 2,561,718 -
Other liabilities including appropriations and equity 2,648,653 - 2,648,653 -
Tot a l 29,481,194 23,611,050 53,092,244 -
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Adjusted
Assets
31 Dec 2023 (EUR 1,000) Domestic currency Foreign currency To t al
, of which
intra-group
Debt securities eligible for central bank refinancing 3,163,801 - 3,163,801 -
Loans and advances to credit institutions 9,130,306 61,547 9,191,853 -
Loans and advances to the public and public sector entities 30,783,736 - 30,783,736 -
Finance lease receivables 1,441,686 - 1,441,686 -
Debt securities 5,160,117 9,888 5,170,005 -
Derivative contracts 2,036,838 -625 2,036,212 -
Other assets including cash and balances in central banks 1,004,961 107,039 1,111,999 658
Tot a l 52,721,445 177,848 52,899,293 658
Adjusted
Liabilities and equity
31 Dec 2023 (EUR 1,000) Domestic currency Foreign currency To t al
, of which
intra-group
Liabilities to credit institutions 215,552 - 215,552 -
Liabilities to the public and public sector entities 2,601,955 20,595 2,622,551 -
Debt securities issued 20,793,369 20,079,428 40,872,798 -
Derivative contracts 3,273,017 223,536 3,496,553 -
Other liabilities including appropriations and equity 2,528,006 33 2,528,039 5
Tot a l 29,411,899 20,323,593 49,735,492 5
During the financial year MuniFin corrected the presentation of accrued interest. More detailed information about the change in presentation can be found in Note 1 Significant accounting policies
and corrections to previous Parent Company’s Financial Statements.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 35. Repurchase agreements
The Company did not have any receivables or liabilities related to repurchase agreements at 31 Dec 2024 or at 31 Dec 2023.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 36. Fair values and carrying amounts of financial assets and liabilities
Financial assets
(EUR 1,000)
31 Dec 2024 Adjusted 31 Dec 2023
Carrying amount Fair value Carrying amount Fair value
Cash and balances with central banks 2 2 2 2
Debt securities eligible for central bank refinancing 3,600,100 3,600,100 3,163,801 3,163,801
Loans and advances to credit institutions 8,566,382 8,566,382 9,191,853 9,191,853
Loans and advances to the public and public sector entities 33,813,849 35,826,784 30,783,736 32,605,180
Debt securities 2,278,812 2,279,560 2,006,203 2,006,315
Shares and participations in Group companies 656 656 656 656
Derivative contracts 2,323,708 2,323,708 2,036,212 2,036,212
Other assets* 889,682 889,682 1,049,735 1,049,735
Tot a l 51,473,191 53,486,874 48,232,199 50,053,755
* Line item includes cash collateral given to central counterparties.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Financial liabilities
(EUR 1,000)
31 Dec 2024 Adjusted 31 Dec 2023
Carrying amount Fair value Carrying amount Fair value
Liabilities to credit institutions 883,694 883,627 215,552 215,510
Liabilities to the public and public sector entities 2,463,874 2,475,335 2,622,551 2,635,500
Debt securities issued 44,534,306 44,345,120 40,872,798 40,837,530
Derivative contracts 2,561,718 2,561,718 3,496,553 3,496,553
Other liabilities* 267,449 267,449 400,885 400,885
Tot a l 50,711,041 50,533,249 47,608,338 47,585,978
* Line item includes cash collateral received from central counterparties and lease liabilities in accordance with IFRS 16 standard.
During the financial year MuniFin corrected the presentation of accrued interest. More detailed information about the change in presentation can be found in Note 1 Significant accounting policies
and corrections to previous Parent Company’s Financial Statements.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 37. Fair value hierarchy of financial assets and liabilities
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 Risk Management and Compliance
Management Team.
The Finance Management Team acts as a valuation control
group for MuniFin’s fair values and is responsible for the final
approval of the Company’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 Executive Management Team (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. 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 with the purpose to assess 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 explanation of the
changes in fair values by Risk Management and a monthly
fair value explanation report to the CFO and quarterly to the
Finance Management Team. Independent price verification
is performed monthly as a 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. 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.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Determination of fair value
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
best evidence of the fair value of a financial instrument on
initial recognition is normally the transaction price. If the fair
value on initial recognition diers from the transaction price
and the fair value is evidenced, neither by a quoted price in
an active market for an identical asset or liability, nor based
on a valuation technique for which any unobservable inputs
are judged to be insignificant in relation to the measurement,
then the financial instrument is initially measured at fair value
and adjusted to defer the dierence between the fair value on
initial recognition and the transaction price (Day 1 gain or loss).
The dierence is amortized on a straight-line basis throughout
the lifetime of the contract. Day 1 gain or loss for MuniFin is
presented in the adjacent table.
Day 1 gain or loss (EUR 1,000) Jan–Dec 2024 Jan–Dec 2023
Opening balance in the beginning of the reporting period -350 -392
Recognised gain in the income statement - -
Recognised loss in the income statement -452 -470
Deferred gain or loss on new transactions 494 512
Total at the end of the reporting period -309 -350
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
The fair values of financial instruments are determined on the
basis of either price quotations obtained from functioning
markets or, if such markets do not exist, by applying valuation
methods. The Company measures fair values using the fair
value hierarchy by dividing fair value into level 1, 2 and 3 inputs,
which reflects the significance of the inputs used in making
the measurements.
IFRS 13 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.
All valuation models, both complex and simple models,
use market prices and other inputs. These market prices
and inputs comprise for example interest rates, FX rates,
volatilities, correlations. 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. MuniFin’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.
Approach has described in more detail in section Sensitivity
analysis of unobservable inputs.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
MuniFin applies different models in order to derive the fair
values of certain types of instruments. The choice of base
models 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 consist 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.
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). In addition, the Company calculates
Funding Valuation Adjustment (FVA) for those derivative
contracts that do not hold cash collateral arrangements
(derivatives made with MuniFin’s customers).
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
The following table presents financial instruments by the
level of the fair value hierarchy into which the fair value
measurement is categorised. 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, MuniFin’s issued plain-vanilla financial
liabilities and MuniFin’s lending agreements.
Level 3
Level 3 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 the 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.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Financial assets
31 Dec 2024 (EUR 1,000) Carrying amount
Fair value
Level 1 Level 2 Level 3 To t al
At fair value
Fair value through fair value reserve
Debt securities 377,480 357,349 20,131 - 377,480
Designated at fair value through profit or loss
Loans and advances to the public and public sector entities 30,940 - 30,940 - 30,940
Debt securities 3,676,021 3,666,033 9,988 - 3,676,021
Mandatorily at fair value through profit or loss
Loans and advances to the public and public sector entities 25,036 - - 25,036 25,036
Shares and participations in Group companies 656 - - 656 656
Fair value through profit or loss
Derivative contracts at fair value through profit or loss 451,480 - 445,149 6,331 451,480
Derivative contracts in hedge accounting 1,872,228 - 1,871,295 934 1,872,228
Total at fair value 6,433,841 4,023,383 2,377,502 32,957 6,433,841
In fair value hedge accounting
Amortised cost
Loans and advances to the public and public sector entities 10,633,372 - 11,128,949 - 11,128,949
Total in fair value hedge accounting 10,633,372 - 11,128,949 - 11,128,949
At amortised cost
Cash and balances with central banks 2 2 - - 2
Loans and advances to credit institutions 8,566,382 7,957,974 608,408 - 8,566,382
Loans and advances to the public and public sector entities 23,124,500 - 24,641,859 - 24,641,859
Debt securities 1,825,411 - 1,826,159 - 1,826,159
Other assets 889,682 - 889,682 - 889,682
Total at amortised cost 34,405,977 7,957,976 27,966,108 - 35,924,084
Total financial assets 51,473,191 11,981,359 41,472,559 32,957 53,486,874
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Financial liabilities
31 Dec 2024 (EUR 1,000) Carrying amount
Fair value
Level 1 Level 2 Level 3 To t al
At fair value
Designated at fair value through profit or loss
Liabilities to credit institutions 79,315 - 79,315 - 79,315
Liabilities to the public and public sector entities 1,334,136 - 1,293,774 40,363 1,334,136
Debt securities issued 9,198,104 - 9,002,575 195,529 9,198,104
Fair value through profit or loss
Derivative contracts at fair value through profit or loss 1,073,936 - 988,985 84,950 1,073,936
Derivative contracts in hedge accounting 1,487,782 - 1,481,145 6,636 1,487,782
Total at fair value 13,173,273 - 12,845,795 327,478 13,173,273
In fair value hedge accounting
Amortised cost
Liabilities to credit institutions 88,243 - 88,175 - 88,175
Liabilities to the public and public sector entities 1,129,737 - 1,141,199 - 1,141,199
Debt securities issued* 34,570,729 - 34,092,128 289,415 34,381,544
Total in fair value hedge accounting 35,788,709 - 35,321,502 289,415 35,610,917
At amortised cost
Liabilities to credit institutions 716,137 - 716,137 - 716,137
Debt securities issued 765,473 - 765,473 - 765,473
Other liabilities 267,449 - 267,449 - 267,449
Total at amortised cost 1,749,059 - 1,749,059 - 1,749,059
Total financial liabilities 50,711,041 - 49,916,355 616,894 50,533,249
* MuniFin’s fixed-rate benchmark bond issuances are presented on level 2 due to 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.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Adjusted
Financial assets Carrying amount
Fair value
Level 1 Level 2 Level 3 To t al
At fair value
Fair value through fair value reserve
Debt securities 375,072 375,072 - - 375,072
Designated at fair value through profit or loss
Loans and advances to the public and public sector entities 30,497 - 30,497 - 30,497
Debt securities 3,219,979 3,172,048 47,931 - 3,219,979
Mandatorily at fair value through profit or loss
Loans and advances to the public and public sector entities 27,663 - - 27,663 27,663
Shares and participations in Group companies 656 - - 656 656
Fair value through profit or loss
Derivative contracts at fair value through profit or loss 353,731 - 344,696 9,036 353,731
Derivative contracts in hedge accounting 1,682,481 - 1,682,481 - 1,682,481
Total at fair value 5,690,079 3,547,120 2,105,605 37,354 5,690,079
In fair value hedge accounting
Amortised cost
Loans and advances to the public and public sector entities 10,963,049 - 11,491,485 - 11,491,485
Total in fair value hedge accounting 10,963,049 - 11,491,485 - 11,491,485
At amortised cost
Cash and balances with central banks 2 2 - - 2
Loans and advances to credit institutions 9,191,853 8,127,116 1,064,737 - 9,191,853
Loans and advances to the public and public sector entities 19,762,528 - 21,055,535 - 21,055,535
Debt securities 1,574,954 - 1,575,066 - 1,575,066
Other assets 1,049,735 - 1,049,735 - 1,049,735
Total at amortised cost 31,579,071 8,127,119 24,745,072 - 32,872,190
Total financial assets 48,232,199 11,674,238 38,342,162 37,354 50,053,755
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Adjusted
Financial liabilities
31 Dec 2023 (EUR 1,000) Carrying amount
Fair value
Level 1 Level 2 Level 3 To t al
At fair value
Designated at fair value through profit or loss
Liabilities to credit institutions 43,971 - 43,971 - 43,971
Liabilities to the public and public sector entities 1,322,866 - 1,223,599 99,266 1,322,866
Debt securities issued 9,530,487 - 9,234,376 296,110 9,530,487
Fair value through profit or loss
Derivative contracts at fair value through profit or loss 1,194,531 - 1,077,062 117,469 1,194,531
Derivative contracts in hedge accounting 2,302,023 - 2,290,304 11,719 2,302,023
Total at fair value 14,393,876 - 13,869,312 524,564 14,393,876
In fair value hedge accounting
Amortised cost
Liabilities to credit institutions 87,488 - 87,446 - 87,446
Liabilities to the public and public sector entities 1,299,685 - 1,312,634 - 1,312,634
Debt securities issued 31,054,516 - 30,832,056 187,193 31,019,249
Total in fair value hedge accounting 32,441,689 - 32,232,137 187,193 32,419,329
At amortised cost
Liabilities to credit institutions 84,093 - 84,093 - 84,093
Debt securities issued 287,794 - 287,794 - 287,794
Other liabilities 400,885 - 400,885 - 400,885
Total at amortised cost 772,773 - 772,773 - 772,773
Total financial liabilities 47,608,338 - 46,874,221 711,757 47,585,978
During the financial year MuniFin corrected the presentation of accrued interest. More detailed information about the change in presentation can be found in Note 1 Significant accounting policies
and corrections to previous Parent Company’s Financial Statements.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
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.
In order to assess the ‘significance’ of the level 3 valuation
inputs to the fair value of an instrument, MuniFin has defined
a materiality (‘significance’) threshold to the fair value of an
instrument and pre-defined stress levels that is assessed
to be ‘reasonable possible alternative assumption’ to the
valuation input.
In addition, in order to assess the significance, the Company
uses materiality threshold by comparing the impact of the
unobservable input (level 3) to the notional. If the impact is
below threshold, the financial instrument is classified as a
level 2 instrument. The assessment of the fair value hierarchy
classification will be performed using a Waterfall principle
meaning that the input which is assumed to be the most
material valuation input, in combination with the complexity of
the model, will be assessed first. As a result of an assessment,
the Company has designation of level 3 instruments that
has material un-observable input to the fair value of financial
instrument.
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 dependent
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, it will lead to an increase in fair value. A
low correlation between the unobservable inputs will lead to
a decrease in fair value. MuniFin 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 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 dividend 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 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 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.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
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, which are
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 of each
financial instrument. The stochastic models used by the
Company are Hull-White model and Dupire volatility model.
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. 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 2024, these assumptions could have
increased fair values by EUR 13.6 million (EUR 21.2 million) or
decreased fair values by EUR 13.4 million (EUR 21.1 million).
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Sensitivity analysis of unobservable inputs
31 Dec 2023 (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 25,036 Stochastic model Volatility – Extrapolated or Illiquid 24 -19
Derivative contracts
Equity-linked derivatives -6,715 Stochastic model
Correlation parameters 2 -7
Volatility – Extrapolated or Illiquid 26 -52
Dividend yield 2 -1
FX-linked cross currency and interest rate derivatives -836 Stochastic model
Correlation parameters 116 -87
Volatility – Extrapolated or Illiquid 703 -761
Interest rates – Extrapolated or Illiquid 0 0
Other interest rate derivatives -76,772 Stochastic model
Correlation parameters 0 -1
Volatility – Extrapolated or Illiquid 6,056 -6,097
Interest rates – Extrapolated or Illiquid 969 -969
Debt securities issued and Liabilities to the public and
public sector entities
Equity-linked liabilities 9,373 Stochastic model
Correlation parameters 2 0
Volatility – Extrapolated or Illiquid 51 -34
Dividend yield 1 -1
FX-linked liabilities 82,047 Stochastic model
Correlation parameters 54 -44
Volatility – Extrapolated or Illiquid 624 -608
Interest rates – Extrapolated or Illiquid 0 0
Other liabilities 433,887 Stochastic model
Correlation parameters 1 -1
Volatility – Extrapolated or Illiquid 4,969 -4,737
Interest rates – Extrapolated or Illiquid 21 -21
Tot a l 13,619 -13,440
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Sensitivity analysis of unobservable inputs
31 Dec 2023 (EUR 1,000)
Adjusted
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 27,663 Stochastic model Volatility – Extrapolated or Illiquid -26 -81
Derivative contracts
Equity-linked derivatives -21,298 Stochastic model
Correlation parameters 7 -20
Volatility – Extrapolated or Illiquid 627 -607
Dividend yield 34 -14
FX-linked cross currency and interest rate derivatives 591 Stochastic model
Correlation parameters 125 -111
Volatility – Extrapolated or Illiquid 735 -859
Interest rates – Extrapolated or Illiquid 0 0
Other interest rate derivatives -99,445 Stochastic model
Correlation parameters 0 0
Volatility – Extrapolated or Illiquid 9,267 -9,408
Interest rates – Extrapolated or Illiquid 708 -708
Debt securities issued and Liabilities to the public and
public sector entities
Equity-linked liabilities 80,242 Stochastic model
Correlation parameters 24 8
Volatility – Extrapolated or Illiquid 658 -562
Dividend yield 44 -36
FX-linked liabilities 108,722 Stochastic model
Correlation parameters 80 -73
Volatility – Extrapolated or Illiquid 657 -577
Interest rates – Extrapolated or Illiquid 0 0
Other liabilities 393,605 Stochastic model
Correlation parameters 2 -2
Volatility – Extrapolated or Illiquid 8,277 -8,060
Interest rates – Extrapolated or Illiquid 31 -31
Tot a l 21,250 -21,141
During the financial year MuniFin corrected the presentation of accrued interest. More detailed information about the change in presentation can be found in Note 1 Significant accounting policies
and corrections to previous Parent Company’s Financial Statements.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Level 3 transfers
2024 (EUR 1,000)
Adjusted
1 Jan 2024
Realised gains
and losses in
the income
statement
Unrealised
change in
fair value in
the income
statement
Unrealised
change in
fair value in fair
value reserve
Debt
issuances
and new
derivative
contracts
Matured
contracts Settlements
Transfers
into level 3
Transfers
out of level 3 31 Dec 2024
Financial assets
At fair value
Mandatorily at fair value through profit or loss
Loans and advances to the public and public
sector entities 27,663 - -2,627 - - - - - - 25,036
Shares and participations in Group
companies 656 - - - - - - - - 656
Fair value through profit or loss
Derivative contracts at fair value through
profit or loss 9,036 -202 -2,444 - - -261 202 - - 6,331
Derivative contracts in hedge accounting 0 680 706 - 228 - -680 - - 934
Financial assets in total 37,355 478 -4,365 - 228 -261 -478 - - 32,957
Financial liabilities
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 2024, transfers totalling EUR 9,988 thousand have been made from level 1 to level 2
and EUR 31,470 thousand from level 2 to level 1 in the line item Debt securities. During 2024,
there were no transfers from level 2 to level 3.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Level 3 transfers
2024 (EUR 1,000)
Adjusted
1 Jan 2024
Realised gains
and losses in
the income
statement
Unrealised
change in
fair value in
the income
statement
Unrealised
change in
fair value in fair
value reserve
Debt
issuances
and new
derivative
contracts
Matured
contracts Settlements
Transfers
into level 3
Transfers
out of level 3 31 Dec 2024
At fair value
Designated at fair value through profit or loss
Liabilities to the public and public sector
entities 99,266 -901 1,611 -2,579 - - 901 - -57,935 40,363
Debt securities issued 296,110 -3,997 -1,351 -9,594 - -89,637 3,997 - - 195,529
Fair value through profit or loss
Derivative contracts at fair value through
profit or loss 117,469 -6,555 -5,128 - - -18,480 6,555 - -8,910 84,950
Derivative contracts in hedge accounting 11,719 2,900 -6,357 309 1,703 - -2,900 - -738 6,636
In fair value hedge accounting
Amortised cost
Debt securities issued 187,193 -11,498 12,213 - 101,052 - 11,498 - -11,042 289,415
Financial liabilities in total 711,757 -20,049 987 -11,863 102,754 -108,116 20,049 - -78,625 616,894
Level 3 financial assets and liabilities in total 749,112 -19,571 -3,377 -11,863 102,982 -108,377 19,571 - -78,625 649,850
The Company recognises these gains and losses within the line item Net income on financial instruments at fair value through profit or loss. 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 fair value reserve. The fair value change due to changes in own credit risk of financial liabilities is presented in
Note 5 Net income on financial instruments at fair value through profit or loss. For cross currency swaps in hedge accounting, the cross currency basis spread is separated and excluded from the
designation and accounted for as Cost-of-Hedging in fair value reserve.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
During 2023, transfers totalling EUR 72,008 thousand have been made to level 1 from level 2 in the line item Debt securities. During 2023, total of EUR 2,443 thousand were transferred from level 2
to level 3 financial instruments.
Level 3 transfers
2023 (EUR 1,000)
Adjusted
1 Jan 2023
Realised gains
and losses in
the income
statement
Unrealised
change in
fair value in
the income
statement
Unrealised
change in
fair value in fair
value reserve
Debt
issuances
and new
derivative
contracts
Matured
contracts Settlements
Transfers
into level 3
Transfers
out of level 3 31 Dec 2023
Financial assets
At fair value
Mandatorily at fair value through profit or loss
Loans and advances to the public and public
sector entities 31,219 - -3,556 - - - - - - 27,663
Shares and participations in Group
companies 656 - - - - - - - - 656
Fair value through profit or loss
Derivative contracts at fair value through
profit or loss 15,999 649 -4,041 - - -2,922 -649 - - 9,036
Derivative contracts in hedge accounting 752 - - - - - - - -752 0
Financial assets in total 48,626 649 -7,597 - - -2,922 -649 - -752 37,355
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Level 3 transfers
2023 (EUR 1,000)
Adjusted
1 Jan 2023
Realised gains
and losses in
the income
statement
Unrealised
change in
fair value in
the income
statement
Unrealised
change in
fair value in fair
value reserve
Debt
issuances
and new
derivative
contracts
Matured
contracts Settlements
Transfers
into level 3
Transfers
out of level 3 31 Dec 2023
Financial liabilities
At fair value
Designated at fair value through profit or loss
Liabilities to the public and public sector
entities 152,910 -901 7,594 -3,612 - -57,626 901 - - 99,266
Debt securities issued 982,846 -7,911 -27 -5,883 - -680,825 7,911 - - 296,110
Fair value through profit or loss
Derivative contracts at fair value through
profit or loss 337,031 -4,415 -10,658 - - -208,904 4,415 - - 117,469
Derivative contracts in hedge accounting 5,546 559 628 139 7,411 - -559 640 -2,645 11,719
In fair value hedge accounting
Amortised cost
Debt securities issued 57,413 -2,789 2,915 - 155,169 - 2,789 1,803 -30,107 187,193
Financial liabilities in total 1,535,746 -15,456 452 -9,356 162,580 -947,355 15,456 2,443 -32,753 711,757
Level 3 financial assets and liabilities in total 1,584,372 -14,808 -7,145 -9,356 162,580 -950,277 14,808 2,443 -33,505 749,112
During the financial year MuniFin corrected the presentation of accrued interest. More detailed information about the change in presentation can be found in Note 1 Significant accounting policies
and corrections to previous Parent Company’s Financial Statements.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 38. Equity
2024
(EUR 1,000) Share capital Reserve fund
Fair value
reserve of
investments
Own credit risk
revaluation
reserve
Cost-of-Hedging
reserve
Reserve for
invested non-
restricted equity
Retained
earnings Tot al
Carrying amount 1 Jan 43,008 277 2,052 60,238 21,821 40,743 365,611 533,750
+ Increase - - 1,288 109,762 23,892 - 73,737 208,679
- Decrease - - - - - - -66,018 -66,018
Carrying amount 31 Dec 43,008 277 3,340 169,999 45,714 40,743 373,330 676,411
2023
(EUR 1,000) Share capital Reserve fund
Fair value
reserve of
investments
Own credit risk
revaluation
reserve
Cost-of-Hedging
reserve
Reserve for
invested non-
restricted equity
Retained
earnings Tot al
Carrying amount 1 Jan 43,008 277 -4,457 -83 1,488 40,743 365,775 446,750
+ Increase - - 6,511 60,320 20,334 - 67,416 154,581
- Decrease - - -2 - - - -67,580 -67,582
Carrying amount 31 Dec 43,008 277 2,052 60,238 21,821 40,743 365,611 533,750
Distributable funds 31 Dec 2024 31 Dec 2023
Retained earnings 299,593 298,194
Net profit for the financial year 73,737 67,416
Tot a l 373,330 365,611
At 31 December 2024, the distributable funds totalled EUR 373,330,287.47 (EUR
365,610,693.66). The funds received from MuniFin’s share issue in 2009 have been recorded
in the Reserve for invested non-restricted equity. The Reserve for invested non-restricted
equity, recognised based on the share issue, is considered as a return of capital at the time of
possible distribution of profits, and therefore MuniFin does not count the Reserve for invested
non-restricted equity as an item for distributable funds. Based on Article 4 of CRR, the
Reserve for invested non-restricted equity is also considered a non-distributable item.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 39. Share capital Note 40. 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 2024,
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 into 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 2024 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 2024
Note 41. Collateral given
Notes on collateral and contingent liabilities
Given collaterals on behalf of own liabilities and commitments
(EUR 1,000) 31 Dec 2024
Adjusted
31 Dec 2023
Loans and advances to credit institutions to the counterparties of derivative contracts* 608,408 1,064,737
Loans and advances to credit institutions to the central bank** 31,980 35,152
Loans and advances to the public and public sector entities to the central bank*** 4,814,713 4,615,648
Loans and advances to the public and public sector entities to the Municipal Guarantee Board**** 13,705,743 12,765,959
Debt securities to the central counterparty 101,703 70,901
Other assets to the counterparties of derivative contracts* 889,682 1,049,735
Tot a l 20,152,229 19,602,132
* MuniFin has pledged cash collateral to the counterparties of derivative contracts.
** Item consists of minimum reserve requirement in the central bank.
*** MuniFin is a monetary policy counterparty approved by the central bank and for this
purpose, loans have 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.
During the financial year MuniFin corrected the presentation of accrued interest. More
detailed information about the change in presentation can be found in note 1.Significant
accounting policies and corrections to previous Parent Company’s Financial Statements, FAS.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 42. Pension liabilities
Note 43. 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 2024 31 Dec 2023
Credit commitments 2,935,231 3,071,228
Tot a l 2,935,231 3,071,228
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 44. Personnel
Notes on personnel and management
2024 2023
Average End of year Average End of year
Permanent full-time 168 168 158 158
Permanent part-time 1 1 3 3
Fixed term 12 9 11 13
Tot a l 181 178 172 174
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
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:
Salaries and remuneration (EUR 1,000) Jan–Dec 2024 Jan–Dec 2023
President and CEO -454 -451
Deputy to the CEO -258 -239
Other members of the Executive Management Team in total -1,604 -1,424
Tot a l -2,316 -2,114
Statutory pension contributions (EUR 1,000) Jan–Dec 2024 Jan–Dec 2023
President and CEO -77 -76
Deputy to the CEO -43 -40
Other members of the Executive Management Team in total -270 -239
Tot a l -390 -354
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:
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Remuneration of the Board of Directors
During the term 2024–2025, 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 45,000 for the
Chair of the Board, EUR 29,000 for the Vice Chair, EUR
31,000 for the Chairs of Committees and EUR 25,000 for
the other members of the Board. The remuneration paid for
Board and Committee meetings is EUR 950 per meeting for
the Chair of the Board and the Chairs of Committees and
EUR 600 per meeting for the other members. In addition,
meeting remuneration is paid for the meetings required by the
supervisory authorities.
During the term 2023–2024, the annual remuneration was
EUR 42,000 for the Chair of the Board, EUR 27,500 for
the Vice Chair, EUR 29,500 for the Chairs of Committees
and EUR 24,000 for the other members of the Board. The
remuneration paid for Board and Committee meetings was
EUR 950 per meeting for the Chair of the Board and the
Chairs of Committees and EUR 600 per meeting for the other
members. In addition, meeting remuneration was paid for the
meetings required by the supervisory authorities.
Salaries and remuneration (EUR 1,000)
Members of the Board of Directors Jan–Dec 2024 Jan–Dec 2023
Kari Laukkanen, the Chair -65 -63
Maaria Eriksson, the Vice Chair -43 -42
Markku Koponen -47 -45
Vivi Marttila, member until 28 March 2023 - -9
Tuomo Mäkinen -38 -36
Minna Smedsten, member until 17 May 2024 -14 -36
Denis Strandell -37 -34
Elina Stråhlman, member since 17 May 2024 -23 -
Leena Vainiomäki -49 -46
Arto Vuojolainen, member since 28 March 2023 -38 -27
Tot a l -354 -339
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 45. 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.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 46. Holdings in other companies
Holdings in other companies
(EUR 1,000)
2024 2023
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 a l 100.0 656 100.0 656
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Note 47. Audit and other fees paid to the audit firm
Other notes
(EUR 1,000) Jan–Dec 2024 Jan–Dec 2023
KPMG Oy Ab
Audit -214 -363
Assignments as referred to in chapter 1, section 1, subsection 1, paragraph 2 of the Auditing Act -7 -11
Tax advisory services -8 -7
Other services -179 -170
PricewaterhouseCoopers Oy
Audit -363 -
Assignments as referred to in chapter 1, section 1, subsection 1, paragraph 2 of the Auditing Act - -
Tax advisory services -10 -
Other services -230 -23
Tot a l -1,011 -574
Amounts do not include VAT.
The audit firm KPMG Oy Ab served as an auditor of MuniFin until the Annual General Meeting held on May 17, 2024. The Annual General Meeting appointed the audit firm PricewaterhouseCoopers
Oy as a new auditor starting from May 17, 2024.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
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, 12 February 2025
Municipality Finance Plc
Kari Laukkanen
Chair of the Board
Maaria Eriksson
Vice Chair of the Board
Markku Koponen
Member of the Board
Tuomo Mäkinen
Member of the Board
Denis Strandell
Member of the Board
Elina Stråhlman
Member of the Board
Leena Vainiomäki
Member of the Board
Esa Kallio
President and CEO
Arto Vuojolainen
Member of the Board
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 2024
Auditor’s Note
A report of the audit performed has been issued today.
Helsinki, 12 February 2025
PricewaterhouseCoopers Oy
Jukka Paunonen
Authorized Public Accountant
Auditor’s Note
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Auditor’s Report
(Translation of the Finnish Original)
Opinion
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 IFRS Accounting
Standards 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 to the Audit Committee.
What we have audited
We have audited the financial statements of Municipality Finance Plc (business identity code
1701683-4) for the year ended 31 December 2024. The financial statements comprise:
• the consolidated balance sheet, income statement, statement of comprehensive income,
statement of changes in equity, statement of cash flows and notes, which include material
accounting policy information and other explanatory information
• the parent company’s balance sheet, income statement, cash flow statement and notes.
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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Independence
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 the best of our knowledge and belief, the non-audit services that we have provided to
the parent company and group companies are in accordance with the applicable law and
regulations in Finland and we have not provided non-audit services that are prohibited under
Article 5(1) of Regulation (EU) No 537/2014. The non-audit services that we have provided are
disclosed in note 11 to the Financial Statements.
Auditor’s Report
To the Annual General Meeting of Municipality Finance Plc
Report on the Audit of the Financial Statements
Municipality Finance Plc
Auditor’s Report
for the year ended 31 December 2024
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Our Audit Approach
Overview
• Overall group materiality: € 50 million, which represents 0,10% of total assets
• The group audit scope encompassed all group companies.
Key audit matters:
• Impairment of loans to customers
• Valuation of certain level II and III financial instruments held at fair value
As part of designing our audit, we determined materiality and assessed the risks of material
misstatement in the financial statements. In particular, we considered where management
made subjective judgements; for example, in respect of significant accounting estimates that
involved making assumptions and considering future events that are inherently uncertain.
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed
to obtain reasonable assurance whether the financial statements are free from material
misstatement. Misstatements may arise due to fraud or error. They are considered material
if individually or in aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for
materiality, including the overall group materiality for the consolidated financial statements
as set out in the table below. These, together with qualitative considerations, helped us to
determine the scope of our audit and the nature, timing and extent of our audit procedures
and to evaluate the effect of misstatements on the financial statements as a whole.
Overall group materiality
€ 50 million
How we determined it
0,10% of total assets
Rationale for the materiality
benchmark applied
We chose total assets as the benchmark because, in our
view, key drivers of the business and determinants of the
credit institutions’ profit potential are best reflected in the
balance sheet.
The benchmark determined is within the range of acceptable
quantitative materiality thresholds in auditing standards.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
How we tailored our group audit scope
We tailored the scope of our audit, taking into account the structure of the Municipality
Finance Group, the accounting processes and controls, and the industry in which the group
operates.
We are auditors of both the parent company and the subsidiary.
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.
As in all of our audits, we also addressed the risk of management override of internal controls,
including among other matters consideration of whether there was evidence of bias that
represented a risk of material misstatement due to fraud.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Key audit matter in the audit of the group How our audit addressed the key audit matter
Impairment of loans to customers
Refer to the Note 1 summary of material accounting policies (Expected credit losses), Note 12
Credit losses on financial assets recognised at amortised cost and at fair value through other
comprehensive income, Note 19 Loans and advances to credit institutions and Note 20 Loans
and advances to public and public sector entities in the financial statements
Some level of judgement is involved in determining the appropriate impairment loss to be
recognised.
Expected credit losses (ECL) are calculated as a function of the probability of default, the
exposure at default and the loss given default, as well as the timing of the loss.
MuniFin categorises loans into three stages depending on the level of credit risk or changes in
credit risk for each individual loan. For loans without significant increase in credit risk, stage 1,
expected credit losses are calculated for estimated defaults within 12 months. For loans
where there is a significant increase in credit risk, stage 2, or loans in default, stage 3,
the calculation is based on the lifetime of expected losses.
Our audit included a combination of testing of internal controls over financial reporting and
substantive testing.
We obtained an understanding of the loan origination process, credit risk management and
the impairment allowances for loans and advances to customers.
We assessed the design and effectiveness of governance and controls over the estimation
of ECL.
For ECL model, we involved our modelling specialists to assess the methodology, challenge
the underlying assumptions and to independently reperform the calculation for a sample of
loans.
We have also assessed the disclosures related to impairment of loans.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2024
Key audit matter in the audit of the group How our audit addressed the key audit matter
Valuation of certain level II and III financial instruments held at fair value
Refers to Note 1 - Summary of significant accounting policies, Note 2 - Risk management
principles and the Group’s risk position, Note 3 - Interest income and expense, Note 5 - Net
result on financial instruments at fair value through profit or loss, Note 6 - Net result on financial
assets at fair value through other comprehensive income, Note 7 - Net result from hedge
accounting, Note 14 - Financial assets and liabilities, Note 15 - Fair values of financial assets and
liabilities, Note 17 - Offsetting financial assets and liabilities, Note 23 - Derivative contracts, Note
24 - Hedge accounting.
The share of financial assets and liabilities measured at fair value in the consolidated balance
sheet is significant, and the valuations of financial instruments at fair value hierarchy level
2 and especially level 3 are mainly based on internal valuation methods and unobservable
inputs, which means that the valuations involve management judgment.
Changes in market conditions have a significant impact on the fair value of financial
instruments, highlighting the importance of a well-functioning valuation process. Important
areas in valuation of financial instruments held at fair value relate to:
• The framework and policies relating to valuation and valuation models;
• Internal controls related to fair value price adjustments, the accuracy of data used,
fair value adjustments, fair value hierarchy levels, and the governance and monitoring
of valuation models; and
• Note disclosures relating to financial instruments
We have formed an understanding and tested the appropriateness and functioning of the
valuation process for financial instruments, as well as the controls and valuation models that
are key to the process.
We have assessed the appropriateness of the accounting policies and valuation methods
related to financial instruments.
We have tested the correctness of the valuation of Company’s financial instruments by
performing an independent valuation focusing on significant items measured at fair value
and assessed the appropriateness of the assumptions and management estimates applied
in the valuations.
We have assessed the appropriateness of the note disclosures relating to the valuation of
financial instruments.
We have no key audit matters to report with respect to our audit of the parent company financial statements.
There are no significant risks of material misstatement referred to in Article 10(2c) of Regulation (EU) No 537/2014 with respect to the consolidated financial statements or the parent company
financial statements.
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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 IFRS Accounting Standards 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 to 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 these financial
statements.
As part of an audit in accordance with good auditing practice,
we exercise professional judgment and maintain professional
skepticism 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.
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Municipality Finance Plc • Annual Report 2024
• 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.
• Plan and perform the group audit to obtain sufficient
appropriate audit evidence regarding the financial
information of the entities or business units within the
group as a basis for forming an opinion on the group
financial statements. We are responsible for the direction,
supervision and review of the audit work performed for
purposes of the group audit. We remain solely responsible
for our audit opinion.
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 to 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.
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Municipality Finance Plc • Annual Report 2024
Appointment
We were first appointed as auditors by the annual general
meeting on 17 May 2024. Our appointment represents a total
period of uninterrupted engagement of 1 year.
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
thereon. 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 compliance with the applicable provisions.
In our opinion
• the information in the report of the Board of Directors is
consistent with the information in the financial statements
• the report of the Board of Directors has been prepared in
compliance with the applicable provisions.
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 Statements
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 is in compliance with
the Limited Liability Companies Act. We support that the
Members of the Board of Directors of the parent company
and the Managing Director should be discharged from liability
for the financial period audited by us.
Helsinki 12 February 2025
PricewaterhouseCoopers Oy
Authorised Public Accountants
Jukka Paunonen
Authorised Public Accountant (KHT)
Other Reporting Requirements
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To the Management of Kuntarahoitus Oyj
We have been engaged by the Management of Kuntarahoitus
Oyj (business identity code 1701683-4) (hereinafter also “the
Company”) to perform a reasonable assurance engagement
on the Company’s consolidated IFRS financial statements for
the financial year 1 January – 31 December 2024 in European
Single Electronic Format (“ESEF financial statements”).
Management’s Responsibility for the ESEF
Financial Statements
The Management of Kuntarahoitus Oyj is responsible for
preparing the ESEF financial statements so that they comply
with the requirements as specified in the Commission
Delegated Regulation (EU) 2019/815 of 17 December 2018
(“ESEF requirements”). This responsibility includes the
design, implementation and maintenance of internal control
relevant to the preparation of ESEF financial statements
that are free from material noncompliance with the ESEF
requirements, whether due to fraud or error.
Our Independence and Quality Management
We have complied with the independence and other
ethical requirements of the International Code of Ethics
for Professional Accountants (including International
Independence Standards) issued by the International Ethics
Standards Board for Accountants (IESBA Code), which is
founded on fundamental principles of integrity, objectivity,
professional competence and due care, confidentiality and
professional behaviour.
Our firm applies International Standard on Quality
Management 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 regulatory requirements.
Independent Auditor’s Reasonable Assurance Report on
Kuntarahoitus Oyj’s ESEF Financial Statements
(Translation of the Finnish Original)
367/370
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Municipality Finance Plc • Annual Report 2024
Our Responsibility
Our responsibility is to express an opinion on the ESEF
financial statementsbased on the procedures we have
performed and the evidence we have obtained.
We conducted our reasonable assurance engagement in
accordance with the International Standard on Assurance
Engagements (ISAE) 3000 (Revised) Assurance
Engagements Other than Audits or Reviews of Historical
Financial Information. That standard requires that we plan and
perform this engagement to obtain reasonable assurance
about whether the ESEF financial statements are free from
material noncompliance with the ESEF requirements.
A reasonable assurance engagement in accordance with
ISAE 3000 (Revised) involves performing procedures
to obtain evidence about the ESEF financial statements
compliance with the ESEF requirements. The procedures
selected depend on the auditor’s judgment, including the
assessment of the risks of material noncompliance of the
ESEF financial statements with the ESEF requirements,
whether due to fraud or error. In making those risk
assessments, we considered internal control relevant to the
Company’s preparation of the ESEF financial statements.
We believe that the evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
Opinion
In our opinion, Kuntarahoitus Oyj’s ESEF financial statements
for the financial year ended 31 December 2024 comply, in all
material respects, with the minimum requirements as set out
in the ESEF requirements.
Our reasonable assurance report has been prepared in
accordance with the terms of our engagement. We do not
accept, or assume responsibility to anyone else, except for
Kuntarahoitus Oyj for our work, for this report, or for the
opinion that we have formed.
Helsinki 3 March 2025
PricewaterhouseCoopers Oy
Authorised Public Accountants
Jukka Paunonen
Authorised Public Accountant (KHT)
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Name of reporting entity or
other means of identification
Domicile of entity Finland
Legal form of entity Plc
Country of incorporation Finland
Address of entity’s registered office Jaak onkatu 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
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Municipality Finance Plc • Annual Report 2024
Municipality Finance Plc
Jaakonkatu 3 A, P.O. Box 744
00101 Helsinki
Tel. +358 9 6803 5666
www.munifin.fi
info@munifin.fi