Report of the Board
of Directors and
Financial Statements
2025
Financial Statements 1 January–31 December 2025
Report of the Board of Directors
This report fulfills the disclosure obligation pursuant to
Section 7:5§ of the Securities Market Act.
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
In brief: MuniFin Group in 2025 3
Key figures (Group) 5
Operating environment in 2025 7
Information on the Group results 8
Information on the consolidated statement of financial position 12
Financing and other services for customers 13
Funding and liquidity management 15
MuniFin’s credit ratings 17
Capital adequacy 18
MuniFin Group’s financial objectives 25
Risk management 27
Governance 31
Share capital and shareholders 33
Events after the reporting period 34
Outlook for 2026 35
The Board’s proposal concerning the use of the profit shown in
the balance sheet and the distribution of dividends 37
Development of the Group’s key figures in 2021–2025 38
Notes to the Report of the Board of Directors 40
Note 1. Key figures 40
Note 2. Group’s capital adequacy position 49
Note 3. Parent Company’s capital adequacy position 59
Report of the Board of Directors
1 January–31 December 2025
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
In brief: MuniFin Group in 2025
In brief: MuniFin Group in 2025
In brief: MuniFin Group in 2025
• The Group’s net operating profit excluding unrealised fair value changes* decreased by
1.5% (+2.9%) in January–December and amounted to EUR 178 million (EUR 181 million).
Net interest income* was at the same level as in the year before and totalled
EUR 260 million (EUR 260 million). Higher expenses compared to the comparison period
weakened the net operating profit excluding unrealised fair value changes.
• Net operating profit* amounted to EUR 193 million (EUR 166 million). Unrealised fair value
changes amounted to EUR 14 million (EUR -16 million) in the financial year. Unrealised fair
value changes were influenced in particular by changes in market rates and credit risk
spreads in the Group’s main funding markets.
• Costs* in the financial year amounted to EUR 86 million (EUR 81 million). Expenses
increased mainly due to the rise in HR and administrative costs as well as in commission fee
expenses.
• The Group’s leverage ratio remained at a strong level, standing at 13.1% (12.3%) at the
end of December.
• At the end of December, the Group’s CET1 capital ratio was very strong at 94.0% (107.7%).
The ratio was pulled down by the new CRR III regulation that was applied on 1 January
2025, resulting in a decline in the capital ratio approximately by 10 percentage points,
mainly due to the increase in credit valuation adjustment risk (CVA VaR). The Group’s
CET1 capital ratio was nevertheless over six times the required minimum of 15.1% (15.0%),
taking capital buffers into account.
• Long-term customer financing (long-term loans and leased assets) excluding fair value
changes* totalled EUR 38,510 million (EUR 35,787 million) at the end of December and
saw an increase of 7.6% (8.6%). New long-term customer financing* increased by 0.6%
(17.1%) in January–December 2025 and amounted to EUR 5,088 million (EUR 5,056 million).
Short-term customer financing* totalled EUR 1,895 million (EUR 1,825 million).
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
• Of all long-term customer financing, the amount of green finance* aimed at environmentally
sustainable investments totalled EUR 9,111 million (EUR 6,817 million) and the amount
of social finance* aimed at investments promoting equality and communality totalled
EUR 2,775 million (EUR 2,536 million) at the end of December. The amount of the newly
introduced sustainability-linked loan totalled EUR 710 million (EUR 38 million). The total
amount of sustainable finance increased by 34.1% (33.6%) from the previous year. The
ratio of sustainable finance to long-term customer financing excluding unrealised fair value
changes* grew by 6.5 percentage points to 32.7% (26.2%).
• In 2025, new long-term funding* reached EUR 10,019 million (EUR 8,922 million). At the
end of December, the total funding* was EUR 49,117 million (EUR 46,737 million), of which
long-term funding* made up EUR 45,042 million (EUR 43,328 million).
• The Group’s total liquidity* is very strong, standing at EUR 11,636 million (EUR 11,912 million)
at the end of the financial year. The Liquidity Coverage Ratio (LCR) stood at 225% (339%)
and the Net Stable Funding Ratio (NSFR) at 121% (124%) at the end of the year.
• MuniFin’s Board of Directors proposes to the Annual General Meeting to be held in spring
2026 a dividend of EUR 1.83 per share, totalling EUR 71.5 million. The total dividend
payment in 2025 was EUR 1.86 per share, totalling EUR 72.7 million.
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 2024.
Comparison figures deriving from the balance sheet and other cross-sectional items are based
on the figures of 31 December 2024 unless otherwise stated.
* Alternative performance measure.
The calculation formulas for all key figures can be found on pages 40–48. All figures presented in the Report of the Board of Directors are those of MuniFin Group, unless otherwise stated
In brief: MuniFin Group in 2025
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Key figures (Group)
Key figures (Group)
The calculation formulas for
all key figures can be found
on pages 40–48. All figures
presented in the Report of the
Board of Directors are those
of MuniFin Group, unless
otherwise stated.
Key figures (Group)
Jan–Dec 2025 Jan–Dec 2024 Change, %
Net operating profit excluding unrealised fair value changes (EUR million)* 178 181 -1.5
Net operating profit (EUR million)* 193 166 16.3
Net interest income (EUR million)* 260 260 0.0
New long-term customer financing (EUR million)* 5,088 5,056 0.6
New long-term funding (EUR million)* 10,019 8,922 12.3
Cost-to-income ratio, %* 25.9 27.7 -6.5**
Return on equity (ROE), %* 7.9 7.2 10.3**
31 Dec 2025 31 Dec 2024 Change, %
Long-term customer financing (EUR million)* 37,909 35,173 7.8
Sustainable finance (EUR million)* 12,595 9,391 34.1
Balance sheet total (EUR million) 55,634 53,092 4.8
CET1 capital (EUR million) 1,706 1,646 3.6
Tier 1 capital (EUR million) 1,706 1,646 3.6
Total own funds (EUR million) 1,706 1,646 3.6
CET1 capital ratio, %*** 94.0 107.7 -12.7**
Tier 1 capital ratio, %*** 94.0 107.7 -12.7**
Total capital ratio, %*** 94.0 107.7 -12.7**
Leverage ratio, % 13.1 12.3 6.0**
Personnel 185 178 3.9
* Alternative performance measure.
** Change in ratio.
*** The capital ratios at 31 December 2025 have been calculated in accordance with the CRR III regulation. The figures for the comparative periods have not been adjusted.
* Alternative performance measure.
** The capital ratios at 31 December 2025 have been calculated in accordance with the CRR III regulation. The figures for the comparative periods have not been adjusted.
The calculation formulas for all key figures can be found on pages 40–48. 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
20252024202320222021
213
213
170
170
176
176 181181 178178
Liikevoitto ilman realisoitumattomia arvostuksia
0
5
10
15
20
25
30
35
40
20252024202320222021
29
29 2929
32
32
35
35
3838
0.0
20.0
40.0
60.0
80.0
100.0
120.0
20252024202320222021
95.0
95.0
97.697.6
103.4
103.4
107.7107.7
94.0
94.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
20252024202320222021
3.6
3.6
4.3
4.3 4.3
4.3
5.1
5.1 5.15.1
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, %**
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Operating environment in 2025
Operating environment in 2025
MuniFin Group raises the funds required to finance its
customers from the international capital markets. For this
reason, developments in global politics and their impacts
on the markets can also have a material effect on MuniFin’s
funding. In addition, MuniFin’s funding is critically dependent
on investors’ confidence in the Finnish economy and, by
extension, in the public sector’s ability to service its debt.
Changes in interest rates have a direct impact on MuniFin’s
funding costs and consequently also on the price of
customer financing. The Group therefore actively monitor
all these factors that have a material effect on its operating
environment.
In the first half of the year, economic confidence began to
waver globally as the import tariffs pursued by Donald Trump
following his return to the US presidency proved higher than
expected. Other aspects of US politics also saw greater
changes than initially anticipated. As the year progressed,
sentiment in the economy and the markets nevertheless
stabilised, as the immediate impacts of Trump’s tariff policy
appeared to remain relatively moderate. In Europe, economic
growth forecasts were even revised upwards in the latter half
of the year. Towards the end of the year, the main economic
concerns shifted away from trade policy tensions to the
economic outlook in the US and the potential overheating of
artificial intelligence investments and equity markets.
The recovery of the Finnish economy started promisingly
in 2024 but came to a halt in 2025. Investments began to
increase also in Finland, but subdued domestic consumer
demand and a weakening in public demand weighed on GDP
growth, leaving it clearly below forecasts. The economic
outlook was further darkened by rising unemployment. The
trend of the unemployment rate rose to above ten per cent in
the latter half of the year.
The lack of growth undermined tax revenues and kept benefit
expenditures high. Public sector indebtedness continued to
rise sharply, with Finland’s debt-to-GDP ratio approaching
90%. Despite the challenges in the operating environment,
municipal finances proved more resilient than expected
in 2025. Municipalities made fiscal adjustment efforts and
prioritised investments, which helped curb the growth of
their funding deficit. The finances of wellbeing services
counties also balanced out more than expected. Affordable
social housing production contracted slightly from the
previous year due to cuts to government interest subsidy loan
authorisations.
Central banks continued to ease monetary policy in 2025.
The European Central Bank (ECB) lowered its deposit facility
rate by a total of one percentage point. At the end of the year,
the deposit facility rate stood at 2.00%. In the US, rate cuts by
the central bank were restrained by inflation remaining above
the target level, even though employment figures weakened
significantly, which would have supported faster rate
reductions. In the end, the US Federal Reserve lowered its key
interest rate by only 0.75 percentage points in 2025, bringing
it to a targeted range of 3.50–3.75%.
Due to the ECB’s rate cuts, euro area money market rates
came down in 2025. The 12-month Euribor rate fell from
2.46% to 2.24% and the 3-month Euribor rate from 2.71% to
2.03%. The interest rate curve steepened as Europe’s large
investment needs increased the demand for capital, putting
upward pressure on long-term borrowing rates. Germany’s
10-year bond yield went up from 2.36% in January to 2.85%
in December, while Finland’s corresponding rate rose from
2.82% to 3.16%. Trump’s protectionist trade policies were
expected to strengthen the dollar, but the euro unexpectedly
appreciated by over 13% over the year, rising from 1.04 to 1.18
against the dollar.
Operating environment in 2025
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Information on the Group results
The Group’s net operating profit excluding
unrealised fair value changes
MuniFin Group’s core business operations continued to be
stable in 2025. New long-term customer financing remained
on the previous year’s level. The Group’s financial standing
remained strong.
The Group’s net operating profit excluding unrealised fair
value changes decreased by 1.5% (+2.9%) and amounted to
EUR 178 million (EUR 181 million). The decrease was caused
by increased expenses.
The Group’s income excluding unrealised fair value changes
was EUR 265 million (EUR 262 million) and grew by 1.2%
(1.1%). Net interest income remained on the previous year’s
level, totalling EUR 260 million (EUR 260 million).
Consolidated income statement
(EUR million) Jan–Dec 2025 Jan–Dec 2024 Change, %
Net interest income 260 260 0.0
Other income 5 2 >100
Income excluding unrealised fair value changes 265 262 1.2
Commission expenses -18 -17 7.4
HR expenses -23 -21 10.5
Other items in administrative expenses -26 -23 15.8
Depreciation on tangible and intangible assets -4 -6 -34.1
Other operating expenses -14 -14 2.6
Costs -86 -81 6.6
Credit loss and impairments on financial assets -1 0 >100
Net operating profit excluding unrealised fair value changes 178 181 -1.5
Unrealised fair value changes 14 -16 >100
Net operating profit 193 166 16.3
Income tax expense -39 -33 17.2
Profit for the financial year 154 133 16.1
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 2025
Other income totalled EUR 5.3 million (EUR 2.0 million). It
consisted mainly of income from MuniFin’s digital services,
net result from FX differences and net result on unwinding
derivatives in hedge accounting. Net result from FX
differences was EUR -1.5 million (EUR 0.5 million) in the
reporting period. Realised income from derivative contracts
amounted to EUR 4.8 million. There were none in the
comparison period. At 2.0% (0.8%), other income relative to
income excluding unrealised fair value changes forms only a
minor part of the Group’s income.
The Group’s expenses totalled EUR 86 million
(EUR 81 million), up by 6.6% (-1.9%) from the year before.
Expenses increased mainly due to the rise in HR and
administrative costs as well as in commission fee expenses.
Commission expenses increased by 7.4% (8.2%) and totalled
EUR 18 million (EUR 17 million), of which EUR 16 million (EUR
14 million) consisted of the guarantee commission fees to
the Municipal Guarantee Board for guaranteeing MuniFin’s
funding.
MuniFin Group’s commission fee expenses may increase
significantly in 2026 based on the decision made in 2025 by
the Municipal Guarantee Board to raise the guarantee fee
payable to the Board. The guarantee fee is paid on MuniFin’s
funding that is guaranteed by the Board. The Municipal
Guarantee Board has decided to increase the guarantee
fee to more than three times its previous level, calculated
on the amount of guaranteed funding. MuniFin does not
consider the increase reasonable, and the matter requires
further clarification. The risks related to MuniFin’s operations
have not changed; the Group’s risk position remains stable,
and it has excellent financial buffers to withstand potential
disruptions in the operating environment. There have also
been no changes in the credit rating agencies’ assessments
of the Company.
HR and administrative expenses grew by 13.2% (7.2%) and
reached EUR 49 million (EUR 44 million) Of this, personnel
expenses comprised EUR 23 million (EUR 21 million)
and other administrative expenses EUR 26 million
(EUR 23 million). The average number of employees in the
Group was 185 (187) during the financial year. Other items
in administrative expenses grew by 15.8% (12.4%), mainly
due to the increased costs of maintaining and developing
information systems.
During the financial year, depreciation on tangible and
intangible assets totalled EUR 4.0 million (EUR 6.0 million) and
they decreased by 34.1% (-7.8%).
Other operating expenses increased by 2.6% (-27.0%)
and were EUR 14 million (EUR 14 million). Other operating
expenses excluding fees collected by authorities were
EUR 11 million (EUR 11 million).
Credit losses and impairments on financial assets were
EUR 0.9 million (EUR 0.3 million) in the income statement.
This item consists of expected credit losses (ECL). The
Group updated its forward-looking macro scenarios during
the financial year. At the end of June 2025, the Group’s
management assessed the need for an ECL management
overlay, as some housing sector customers were still
experiencing cash flow issues due to the oversupply and
regional underutilisation of premises. The management
decided to recognise an EUR 0.1 million additional
discretionary provision based on the group-specific
assessment. At the end of 2025, the management
reassessed the situation and decided to release the previous
provision and recognised a new additional discretionary
provision of EUR 0.2 million based on the group-specific
assessment, grounded in the evaluation of customers’ cash
flow sufficiency in 2026.
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 2025
The Group’s overall credit risk position in customer financing
has remained low. The amount of forborne loans was
EUR 658 million (EUR 561 million), while non-performing
exposures amounted to EUR 454 million (EUR 292 million)
at the end of the year. These non-performing exposures
represented 1.1% (0.8%) of total customer exposures.
At the end of December, the Group had EUR 133 million
(EUR 13 million) 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. Individual housing sector customers have
encountered serious financial difficulties. However, due to the
collateral and guarantee arrangements securing MuniFin’s
receivables, no credit losses are expected from these
exposures.
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 over 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 debt
securities in the portfolio is AA+ (AA+). More information on
the credit risks of financial assets and other commitments is
available in Note 22 to the Consolidated Financial Statements.
The Group’s profit and unrealised fair value changes
The Group’s net operating profit was EUR 193 million
(EUR 166 million). Unrealised fair value changes increased
the Group’s net operating profit by EUR 14 million (in 2024:
decreased by EUR 16 million). In January–December,
unrealised fair value changes in hedge accounting amounted
EUR -5.6 million to (EUR -12 million) and unrealised net result
on financial assets and liabilities through profit or loss to
EUR 20 million (EUR -3.8 million).
The Group’s effective tax rate in the financial year was
20.0% (19.9%). Taxes in the consolidated income statement
amounted to EUR 39 million (EUR 33 million). After taxes,
the Group’s profit for the financial year was EUR 154 million
(EUR 133 million).
The Group’s full-year return on equity (ROE) was 7.9% (7.2%).
Excluding unrealised fair value changes, the ROE was 7.4%
(7.9%).
The Group’s other comprehensive income includes unrealised
fair value changes of EUR -113 million (EUR 169 million). 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 EUR -78 million
(EUR 137 million). The cost-of-hedging amounted to EUR -34
million (EUR 30 million). Net change in fair value of financial
assets at fair value through other comprehensive income was
EUR -1.2 million (EUR 1.7 million).
On the whole, unrealised fair value changes net of
deferred tax affected the Group’s equity by EUR -79 million
(EUR 122 million) and CET1 capital net of deferred tax in
capital adequacy by EUR -18 million (EUR 13 million). The
cumulative effect of unrealised fair value changes on the
Group’s own funds in capital adequacy calculations was
EUR 40 million (EUR 58 million).
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 2025
Information on the Group results
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’s results
In 2025, MuniFin’s net interest income amounted to
EUR 260 million (EUR 260 million) and net operating profit to
EUR 193 million (EUR 166 million).
The turnover of MuniFin’s subsidiary company,
Kuntarahoituksen digitaaliset palvelut Oy, was EUR 0.3 million
(EUR 0.4 million), and its net operating result amounted
to EUR 0.0 million (EUR -0.5 million). The subsidiary was
formerly called Financial Advisory Services Inspira Plc and
used to offer advisory services to MuniFin’s customers.
The Group discontinued these services in 2024, and the
subsidiary company now provides some of the digital value-
added services MuniFin offers to its customers.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2025
Information on the consolidated statement of financial position
Consolidated statement of financial position
(EUR million) 31 Dec 2025
Adjusted
31 Dec 2024 Change, %
Cash and balances with central banks 5,169 7,777 -33.5
Loans and advances to credit institutions 1,990 790 >100
Loans and advances to the public and public sector entities 38,083 35,377 7.6
Debt securities 8,061 5,879 37.1
Derivative contracts 1,487 2,324 -36.0
Other items included in the assets 844 946 -10.7
Total assets 55,634 53,092 4.8
Liabilities to credit institutions 196 884 -77.8
Liabilities to the public and public sector entities 2,315 2,464 -6.1
Debt securities issued 47,127 44,534 5.8
Derivative contracts 3,368 2,562 31.5
Other items included in the liabilities 692 703 -1.5
Total equity 1,936 1,945 -0.5
Total liabilities and equity 55,634 53,092 4.8
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 balances with central banks. The balances with central banks are now presented in Cash
and balances with central banks instead of in Loans and advances to credit institutions. The minimum reserve deposit in the central bank
has been recorded under Loans and advances to credit institutions. Comparative information has been adjusted accordingly.
MuniFin Group’s consolidated statement of financial position
exceeded EUR 55 billion in the financial year and totalled
EUR 55,634 million (EUR 53,092 million) at the end of
December. The Group’s consolidated statement of financial
position saw 4.8% (6.7%) of growth from year-end 2024. 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, in debt securities and in cash collateral
for derivatives. 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
EUR 1,936 million (EUR 1,945 million). The Group’s equity
was increased by the financial year’s profit of EUR 154 million
(EUR 133 million) and decreased by the changes in own credit
revaluation reserve and cost-of-hedging reserve totalling
EUR 91 million (in 2024: increased by EUR 134 million). In
the consolidated accounts, dividends of EUR 73 million
(EUR 66 million) for the financial year 2024, paid to MuniFin’s
shareholders in April 2025, were deducted from the equity.
The Parent Company’s balance sheet at the end of the year
was EUR 55,635 million (EUR 53,092 million).
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 2025
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 Centre for State-Subsidised Housing Construction.
In 2025, the Group’s new long-term customer financing totalled
EUR 5,088 million (EUR 5,056 million), of which EUR 4,929 million
(EUR 4,839 million) consisted of loans and EUR 159 million
(EUR 217 million) of leased assets.
The Group’s total long-term customer financing amounted to
EUR 37,909 million (EUR 35,173 million) at year-end, of which
loans totalled EUR 36,284 million (EUR 33,610 million) and leased
assets EUR 1,635 million (EUR 1,563 million). Of the long-term loan
portfolio, 52% (49%) is held by housing corporations, 39% (42%)
by municipalities, joint municipal authorities and corporate entities
under their control, and 9% (9%) by wellbeing services counties. Of
the long-term loan portfolio to housing corporations, 46% consists
of municipality-owned companies and 54% of non-profit housing
organisations. Long-term customer financing excluding unrealised
fair value changes amounted to EUR 38,510 million (EUR 35,787
million) at the end of December, growing by 7.6% (8.6%). Short-term
customer financing in commercial papers totalled EUR 1,895 million
(EUR 1,825 million) at the end of the year.
Financing and other services for customers
52%
10%
29%
0%
9%
Long-term loan portfolio by customer type
31 Dec 2025, %
Housing corporations
(incl. housing corporations controlled
by municipalities)
Municipalities
Wellbeing services counties
Municipalities-controlled entities
(excl. housing corporations controlled
by municipalities)
Joint municipal authorities
Long-term loan portfolio of housing corporations
31 Dec 2025, %
Municipally owned companies
Non-profit housing organisations
46%54%
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2025
Financing and other services for customers
In 2025, MuniFin Group continued to devote significant
resources to making its customer financing processes even
more effective and convenient. The Group has expanded
its digital services rapidly in recent years, and the majority
of financing applications are now submitted digitally.
Consistent improvements in the quality of digital services aim
to ensure an even more seamless customer experience and
communication.
Financing encourages sustainable investments
MuniFin Group offers its customers green and social
finance for their sustainable investments. In 2025, MuniFin
introduced more broadly a new sustainability-linked loan to
its range of sustainable finance products. This loan is offered
for municipalities that have a climate plan demonstrating
their commitment to reducing greenhouse gas emissions.
Municipalities receive a margin discount on their loan every
year they achieve the emission reduction targets set for them.
MuniFin Group 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 the Group’s sustainability agenda is to
increase the proportion of sustainable finance and thus also
reduce financed emissions from buildings. In 2025, MuniFin
Group prepared a new and even more ambitious sustainability
agenda, which was approved in December and published
in January 2026. According to the new agenda, the goal is
for sustainable finance to account for 50% of the Group’s
long-term customer financing by 2035 (at the end of 2025,
the realised figure was 32.7%).
In 2025, the Group revised its green and social finance
frameworks, which set the parameters for granting
sustainable finance, project assessment and reporting.
Of the two, the green finance framework underwent a more
significant overhaul, with tighter eligibility criteria reflecting
anticipated legislative changes and the addition of new
project categories supporting biodiversity and climate
change adaptation.
At the end of 2025, green finance accounted for 23.7%
(19.0%), social finance for 7.2% (7.1%) and the sustainability-
linked loan launched in 2025 for 1.8% (0.1%) of long-term
customer financing excluding unrealised fair value changes.
Under the new sustainability agenda, the goal is to reduce
the emission intensity of municipal budget loans by 50%
from the 2023 level by 2035. With financed emissions from
buildings, the goal is to decrease the emission intensity
of the portfolio by more than 70% by 2035, bringing it to a
maximum of 4.3 kg CO₂e/m² for residential buildings and of
8.4 kg CO₂e/m² for other buildings. Based on 2024 data, the
portfolio’s emission intensity was 14.2 kg CO₂e/m² (2023:
14.7 kg CO₂e/m²).
At the end of the year, the Group had financed 712 (576) green
finance projects, and the outstanding amount of green finance
was EUR 9,111 million (EUR 6,817 million). The number of social
finance projects was 174 (152), and the outstanding amount of
social finance was EUR 2,775 million (EUR 2,536 million). The
outstanding amount of the new sustainability-linked loan was
EUR 710 million (EUR 38 million).
Every year, MuniFin Group publishes on its website impact
reports on its green and social finance, as well as a financed
emissions report required under the Partnership for Carbon
Account Financials standard, disclosing the greenhouse
gas emissions associated with its lending and investment
portfolios.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2025
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 against
the backdrop of recent years’ turmoil in monetary and security
policy, which continued in 2025. From the perspective of
MuniFin’s funding, the year was highly successful: investor
demand was even stronger than expected and benchmark
bonds and other funding arrangements proved successful,
which resulted in the cost of funding decreasing by the end of
the year from the elevated level of the year beginning.
The year once again included a number of successful
benchmark bond issuances. The five-year EUR 1.25 billion
benchmark bond broke previous records with an order book
of EUR 7.1 billion, and the seven-year EUR 1.0 billion green
bond was nearly five times oversubscribed. MuniFin Group
aims to issue new green and social bonds on a regular basis.
In 2025, the Group’s new long-term funding totalled EUR
10,019 million (EUR 8,922 million). A total of 101 (70) long-
term funding arrangements were made in 10 (9) different
currencies. In 2025, the Group’s funding activities extended
beyond the euro and US dollar markets, with a large portion of
new funding raised in British pounds, Norwegian kroner and
Swedish kronor. The Group uses derivatives to hedge against
market risks in funding.
Funding and liquidity management
51%35%
14%
New long-term funding Jan–Dec 2025
by funding class, %
EUR and USD Benchmarks
Other public market bonds
Private placements
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2025
At the end of 2025, the Group’s total funding amounted
to EUR 49,117 million (EUR 46,737 million), of which the
Euro Commercial Papers (ECP) totalled EUR 4,075 million
(EUR 3,409 million). Of total funding, 50.4% (50.5%)
was denominated in euros and 49,6% (49.5%) in foreign
currencies.
MuniFin’s debt programmes
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 over 12 months
(15 months).
In 2025, the Group increased its allocation to bonds. The
focus remained on low-risk investments that support
operational stability, while also seeking improved returns.
Tighter margins also supported an increase in the market
values of the investment portfolio. At the end of the year, the
Group’s total liquidity stood at EUR 11,636 million (EUR 11,912
million). Of this, central bank deposits totalled EUR 5,207
million (EUR 7,809 million) and investments in liquid, low-risk
securities EUR 6,099 million (EUR 4,016 million), with the
average credit rating of AA+ (AA+) and average maturity of 3.6
years (3.2 years). In addition to this, the Group’s money market
deposits in credit institutions totalled EUR 330 million (EUR
88 million). The Group’s liquidity investments are hedged with
interest rate swaps. Changes in interest rates therefore do not
have a direct impact on profit and loss.
The Group’s 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 the year, the Group’s liquidity investments had
an average ESG score of 7.56 (7.70), above the benchmark
index of 7.51 (7.51). The Group held a total of EUR 1,349 million
(EUR 870 million) in direct socially responsible investments
(SRIs), which is 22.0% (21.5%) of all the Group’s investments
in securities. The ratio of SRIs to the Group’s own green and
social funding was 19.2% (14.9%).
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 2025
MuniFin’s credit ratings
MuniFin’s credit ratings
Long-term fundingRating agency
Moody’s Investors Service
Standard & Poor’s
P-1
A-1+
Short-term funding
Stable
Stable
Outlook
MuniFin’s credit ratings correspond to those of the Government of Finland. The credit ratings
did not change during the financial year. The Municipal Guarantee Board, which guarantees
MuniFin Group’s funding, also has the corresponding ratings.
MuniFin’s credit ratings
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Capital adequacy
Capital adequacy
Capital adequacy
MuniFin Group’s own funds and capital adequacy
The amendments to the EU Capital Requirements Regulation
(CRR III) applicable to credit institutions entered into force
at the beginning of 2025. MuniFin Group’s capital adequacy
remains very strong also under the new regulation. The
Group’s Common Equity Tier 1 (CET1) capital ratio was 94.0%
(107.7%), which corresponds to both its Tier 1 capital ratio and
total capital ratio at the end of 2025 because the Group only
had CET1 capital at the time. The decline in capital adequacy
ratios was influenced by the implementation of CRR III
regulation, as well as by the Group’s allocation changes in
liquidity portfolio. The impact of CRR III regulation on capital
adequacy ratios was approximately -10 percentage points,
mainly due to the adoption of the basic method for credit
valuation adjustment risk. Due to the Group’s small amount of
risk-weighted assets and strong capital adequacy, the impact
of regulatory changes on capital ratios can be significant
without having a material impact on the Group’s capital
position. The Group’s CET1 capital ratio was over six times the
required minimum of 15.1% (15.0%), taking capital buffers into
account.
%
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
12/2021 12/2022 12/2023 12/2024 12/2025
118.4
95.0
97.6
103.4
107.7
94.0
1,7561,756
1,4821,482
1,550
1,550
1,646
1,646
1,706
1,706
30
50
70
90
110
130
150
EUR million
Own funds (EUR million)
CET1 capital ratio, %
Total capital ratio, %
MuniFin Group’s own funds and capital adequacy
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2025
Capital adequacy
At the end of the year, the Group’s CET1 capital totalled
EUR 1,706 million (EUR 1,646 million). 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.
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 CRR.
The Board’s 2025 dividend proposal of EUR 71.5 million (EUR
72.7 million) has been deducted from the Group’s own funds.
The Group’s total risk exposure amount increased by 18.8%
from the end of 2024, totalling EUR 1,815 million (EUR 1,528
million) at the end of the financial year. The risk exposure
amount for credit and counterparty credit risk increased
by EUR 163 million from the end of 2024 to EUR 788 million
(EUR 625 million). Due to the changes in the interest rate
environment, the Group has continued to gradually allocate
liquidity to low-risk long-term securities during the year, which
has increased the amount of credit risk. Counterparty credit
risk remained at the same level as at the end of 2024.
Consolidated own funds
(EUR million) 31 Dec 2025 31 Dec 2024
Common Equity Tier 1 before regulatory adjustments 1,865 1,873
Regulatory adjustments to Common Equity Tier 1 -159 -227
Common Equity Tier 1 (CET1) 1,706 1,646
Additional Tier 1 capital before regulatory adjustments - -
Regulatory adjustments to Additional Tier 1 capital - -
Additional Tier 1 capital (AT1) - -
Tier 1 capital (T1) 1,706 1,646
Tier 2 capital before regulatory adjustments - -
Regulatory adjustments to Tier 2 capital - -
Tier 2 capital (T2) - -
Total own funds 1,706 1,646
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2025
788
0
573
454
625
0
453
450
Total risk exposure amount 12/2025
EUR 1,815 million
Credit and counterparty credit risk
Market risk
Credit valuation adjustment risk
Operational risk
EUR million EUR million
Total risk exposure amount 12/2024
EUR 1,528 million
Capital adequacy
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 CRR III regulation changed the calculation of the credit
valuation adjustment (CVA VaR), increasing the total risk
exposure amount by 26.4% to EUR 573 million (EUR 453
million).
The risk exposure amount of operational risk was EUR
454 million (EUR 450 million). MuniFin Group has utilised
the so-called Prudential Boundary Approach (PBA) for the
financial component in the calculation of operational risk,
based on the European Banking Authority’s no-action letter
(dated 12 Aug 2024) related to the postponement of the
implementation of the Fundamental Review of the Trading
Book (FRTB) regulation.
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2025
Capital adequacy
The postponement of the FRTB regulation’s implementation
has created a situation where derivative contracts that hedge
market risks in banking operations would be classified in
the trading book without their impact being netted with the
hedged item in the calculation of operational risk requirement.
According to MuniFin Group’s assessment, the Group does
not have trading activities, so it has decided to utilise the
PBA method in the capital adequacy calculation for 2025.
The Group believes that after the removal of the temporal
differences related to the regulation, the approach can be
applied in 2027, and applying the approach already in 2025
provides an accurate picture of MuniFin Group’s capital
adequacy. The impact of the PBA method is estimated to
be approximately 21 percentage points. Without the PBA
method, the Group’s CET1 capital ratio was almost five times
the required minimum capital, taking capital buffers into
account.
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%
107.7%107.7%
-10.4%
-10.4%
0.0%
0.0%
-0.2%-0.2%
3.3%
3.3% 94.0%94.0%
-6.4%
-6.4%
CET1 capital ratio changes, %
CET1
capital ratio
12/2024
Credit and
counterparty
credit risk
Market risk CVA VaR Operational
risk
CET1
capital
CET1
capital ratio
12/2025
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2025
The Group’s minimum capital requirements
and capital buffers
The minimum capital requirement is 8.0% 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 2025, 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%.
The FIN-FSA has imposed a requirement to maintain a
systemic risk buffer (SyRB) covered by CET1 capital and
amounting to 1.0% on MuniFin. This requirement also applies
to other Finnish credit institutions at the same level. In its
June 2025 decision, the FIN-FSA decided to keep the SyRB
requirement unchanged at 1.0% (effective from 1 July 2026).
In December 2025, the FIN-FSA also 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 1.1% (1.0%). The Group therefore has a minimum
requirement of 9.6% (9.5%) for its CET1 capital ratio and 13.1%
(13.0%) for its total capital ratio.
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%
1.1%
1.1%
0.5%
0.5%
1.0%
1.0% 9.6%9.6%
3 .5%
3 .5% 13.1%13.1%
2.0%
2.0% 15.1%15.1%
The Group’s minimum capital requirements and capital buffers, %
CET1
capital
requirement
Capital
conservation
buer
Counter-
cyclical
buer
O-SII buer Systemic
risk buer
CET1
minimum
Tier 1 and
Tier 2 capital
requirement
Minimum
capital
requirements
P2R Minimum
capital
requirements
+ P2R
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2025
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 2025.
The minimum level of total capital ratio was 15.1% (15.0%),
including P2R and other additional capital requirements.
Leverage ratio, liquidity coverage ratio and net
stable funding ratio
At the end of December, MuniFin Group’s leverage ratio was
13.1% (12.3%). MuniFin fulfils the CRR 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 these credit receivables was
EUR 41,610 million (EUR 38,604 million) at the end of the
financial year. Overall, the Group’s leverage ratio exposures
totalled EUR 13,043 million (EUR 13,340 million).
The CRR III regulation that became applicable on 1 January
2025 did not introduce significant changes to MuniFin
Group’s leverage ratio calculation. The minimum required
leverage ratio is 3.0%.
At the end of December, MuniFin Group’s Liquidity Coverage
Ratio (LCR) was 224.6% (338.8%) and its Net Stable Funding
Ratio (NSFR) was 121.4% (123.7%). Both have a minimum
requirement of 100%.
Liabilities under the Act on the Resolution of Credit
Institutions and Investment Firms
MuniFin’s resolution authorities are 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.
Changes in banking regulation
The European Commission published its proposal for the
implementation of the final Basel III banking regulatory
standards in the EU (CRR III/CRD IV) at the end of October
2021, and the majority of the new CRR rules took effect on
1 January 2025. This reform has affected banks’ capital
adequacy calculation, especially in the context of credit,
market and operational risks, credit valuation adjustment
(CVA VaR) and leverage ratio. It also introduced a new
output floor. MuniFin Group’s business model is based on
zero-risk-weighted customer financing, which did not change
with the implementation of the CRR III. The reform has,
however, affected MuniFin’s capital adequacy calculations
and reporting methods. During the financial year, MuniFin has
undertaken a project to implement the changes introduced
by the CRR III regulation. The effects of the changes are
explained in more detail in the section MuniFin Group’s own
funds and capital adequacy.
Capital adequacy
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2025
During the early part of the year, the Group continued to
prepare for the Corporate Sustainability Reporting Directive
(CSRD), approved by the European Parliament in November
2022, and the corresponding national legislation. In February
2025, the European Commission published the Omnibus I
simplification package with the aim of reducing administrative
burden for businesses by streamlining sustainability reporting
requirements. The package included proposals to postpone
the application of the CSRD and to reduce the scope of
reporting companies. The postponement was approved by
the European Parliament and Council in April 2025, and the
related national legislation entered into force on 1 December
2025. The law may also be applied to financial years
beginning on 1 January 2025 or thereafter. Consequently,
MuniFin Group’s sustainability reporting obligation was
postponed by two years, until the end of 2027.
In December 2025, the amendment directive proposal was
also approved by the European Parliament. As a result, once
the directive enters into force, the sustainability reporting
obligation will apply only to companies with more than EUR
450 million in net turnover and more than 1,000 employees.
Therefore, MuniFin Group would be entirely excluded
from the sustainability reporting obligation. The national
implementation of the amendment directive is still ongoing,
and MuniFin is monitoring the progress of the national
legislative process.
The Group has also continued to incorporate its ESG risk
reporting into its Pillar III Disclosure Report in accordance
with CRR Article 449a. In the first half of 2025, the Group
disclosed its phase 3 information on the Banking Book
Taxonomy Alignment Ratio (BTAR) as of the end of 2024.
The EBA Guidelines on the management of ESG risks (EBA/
GL/2025/01) were published in January 2025 and entered
into force in January 2026. The guidelines complement
the requirements of the CRD VI Directive for identifying,
measuring, managing, and monitoring ESG risks, for example
through ESG data and materiality analysis requirements.
MuniFin Group has prepared for the entry into force of the
guidelines during the 2025 financial year.
The financial sector’s Digital Operational Resilience Act
(DORA) took effect from January 2025. The Group has
carried out a project to prepare for and comply with DORA. As
part of the project, 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.
The Group has also prepared for the new European Market
Infrastructure Regulation (EMIR 3.0). The EMIR 3.0 framework
introduced new requirements for EU market participants
operating in the derivatives market. EMIR 3.0 requires
market participants to maintain an active account with an EU
central counterparty and clear a representative number of
their euro-denominated interest rate swaps through that EU
central counterparty. In the financial year, MuniFin prepared
for clearing interest rate swaps denominated in euro in the
EU central counterparty EUREX Clearing AG. The first swaps
were cleared successfully in June.
MuniFin Group is also carrying out a multiyear RDARR
implementation program in relation to the ECB’s guidance on
risk data aggregation and risk reporting for credit institutions
(ECB Guide on effective risk data aggregation and risk
reporting), published in May 2024.
Capital adequacy
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2025
MuniFin Group’s strategy emphasises the Group’s core
mandate: ensuring that its limited customer base, which is
assigned to carry out public duties, has access to affordable
financing under all market conditions. This core mandate
necessitates keeping MuniFin’s capital quantity and quality
and liquidity at levels that exceed even the strictest regulatory
requirements at all times, thus enabling the continuation of
normal business operations even during financially difficult
times. MuniFin has conservative risk management policies
and maintains a strong risk-bearing capacity in both quantity
and quality.
Due to its specialised business model, the Group’s strictest
regulatory capital requirement is the leverage ratio, unlike
in most credit institutions. The leverage ratio requirement
is a prudential tool defined under the Capital Requirements
Regulation (CRR) that complements minimum capital
adequacy requirements. Its purpose is to prevent credit
institutions from building up excessive leverage. The leverage
ratio is calculated as a ratio between the institution’s Tier 1
capital and total exposure calculated based on the assets
and off-balance sheet items as described in the regulatory
framework. MuniFin fulfils the CRR 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. After the deduction, the most significant factor
affecting MuniFin’s leverage ratio is the size of its liquidity
portfolio, which safeguards the Group’s liquidity.
MuniFin’s aim is for the Group’s Common Equity Tier 1 (CET1)
capital to always surpass 7%, which is the sum of the minimum
requirement set in CRR regulation (3%) and the capital
buffers set by the management (4%). The Group uses these
capital buffers to prepare for events and changes that have
an adverse effect on its capital position. These can include
realised business risks or regulatory changes. The capital
requirement for business risk is based on a strict stress test,
and it mostly results from unrealised fair value changes, which
are temporary in nature.
Capital exceeding the Group’s minimum target covers
fluctuation in capital requirements caused by changes in the
total liquidity amount and safeguards the Group’s continuity of
operations and ability to pay dividends. The Group’s long-term
target is a leverage ratio of 7–10%, which enables the Group to
carry out its core mandate and ensure sufficient liquidity in all
market conditions. At the end of December 2025, the Group’s
leverage ratio calculated with CET1 capital was 13.1% (12.3%).
Because MuniFin’s objective as a public development credit
institution under the CRR is not to maximise profits, the Group
aims at a result that will ensure the Group’s ability to carry
out its core mandate in the long term. The Group’s objective
is to achieve at least a result that is sufficient to cover any
increases in capital requirements arising from increased
business operations and satisfy the shareholders’ expected
yield in the long term. MuniFin uses long-term pricing
strategies and other measures to maximise its customer
benefits while also ensuring the continuity of its operations
and the yield expectation of its shareholders.
MuniFin Group’s financial objectives
MuniFin Group’s financial objectives
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2025
The net operating profit excluding unrealised fair value
changes generated from MuniFin’s core business has
remained relatively stable in recent years, totalling about
EUR 170–210 million. However, relative to the volume of
core business, i.e. customer financing, the net operating
profit excluding unrealised fair value changes has dropped
significantly in recent years, which has been in line with
the Group’s plans as a credit institution that does not seek
to maximise profits. Between 2018 and 2024, profitability
relative to the volume of customer financing decreased from
0.83% to 0.50%. In 2025, the comparable ratio continued
to decrease and was 0.46%. In the coming years, MuniFin’s
goal is to maintain a level of total profit that guarantees the
continuity of the Group’s operations.
MuniFin aims to constantly improve the efficiency of its
operations, generating growing added value to its customers
and shareholders. MuniFin’s long-term goal is to gradually
decrease the ratio of the costs and development investments
over which the Group has influence to its customer business.
According to MuniFin’s dividend policy, MuniFin’s strong
capital position allows it to aim to pay 30–60% of the Group’s
financial year’s profit in dividends, as long as it does not
jeopardise the Parent Company’s solvency, liquidity or ability
to meet its commitments. When drafting the annual dividend
proposal and deciding on the distribution of profits, the
following factors influencing the Group’s capital position are
taken into account on a broad spectrum:
• Uncertainties and changes in the operating environment
and regulation
• Assessments of the Group’s financial situation in the future
• The Group’s funding position and liquidity
• Changes to the Group’s risk position
• Unrealised fair value changes affecting the Group’s
own funds
• Assessments of the Group’s liquidity development
• Views of supervisory authorities and credit rating agencies
• Accruals of possible AT1 capital instruments not
recognised in profit and loss.
MuniFin Group’s financial objectives
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2025
MuniFin Group’s operations require adequate risk
management mechanisms to ensure that its risk position
remains within the limits set by the Parent Company’s
Board of Directors. The Group applies conservative risk
management principles. The aim is to keep the Group’s overall
risk profile at such a low level that the MuniFin’s credit rating
remains the best possible in relation to the credit rating of the
Government of Finland.
The relevant risk types associated with the Group’s
operations include credit and counterparty risk, market risk,
liquidity risk and operational risks, including IT and compliance
risks. All business operations also involve strategic risks and
ESG risks, such as environmental and climate risks.
The Group’s risks are described in more detail in Note 2 Risk
management principles and the Group’s risk position to the
Consolidated Financial Statements.
The Group’s risk position
There were no material changes in MuniFin Group’s
risk position in 2025, and risks remained within the risk
appetite limits set by the Board of Directors. The continued
geopolitical tensions and market volatility did not affect the
Group’s performance during the financial year. Credit risk
spreads remained at a high level due to an unusually high
degree of market uncertainty in the SSA sector (Sovereigns,
Supranationals, Agencies). Despite the market volatility, the
Group retained uninterrupted access to capital markets
and continued its funding operations in the usual manner
during the financial year. Because of the uncertainties in
the operating environment, the Group has nevertheless
maintained strong liquidity buffers as a precaution. The
geopolitical instability mainly affects the Group indirectly
through market conditions. Despite the changes in the
operating environment, the Group’s risk position remained
stable and at a moderate level during the financial year.
In 2025, the Group participated in the Single Supervisory
Mechanism (SSM) stress test carried out by the ECB,
covering the years 2025–2027. Its results were published in
the beginning of August. The Group’s capital adequacy clearly
exceeds the level required under the stress test scenario.
Credit risks
The Group is exposed to credit risks as part of its business,
but due to the nature of its customer base, these risks are
low. The Group’s credit risks emerge almost exclusively
from its customer financing, liquidity portfolio investments
and derivatives portfolio. The Group also offers derivative
products for its customers for hedging their interest rate
positions. These products are covered with offsetting
contracts from the market. The Group uses derivatives only
for hedging against market risks.
Risk management
Risk management
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Municipality Finance Plc • Annual Report 2025
In view of its credit risk mitigation techniques (mortgage
collateral and guarantees received) and the exemptions set
out in CRR Article 400 related to the calculation of large
exposures, MuniFin Group is not exposed to the customer
risk referred to in the regulation in its customer financing,
and thus the customer risk of any individual customer does
not exceed 10% of the Group’s own funds. Credit loss and
impairments on financial assets in the income statement
were EUR 0.9 million (EUR 0.3 million). This item consists of
expected credit losses (ECL). The amount of forborne loans
was EUR 658 million (EUR 561 million), while non-performing
exposures amounted to EUR 454 million (EUR 292 million)
at the end of the year. For these non-performing exposures,
MuniFin has absolute guarantees by municipalities or
by wellbeing services counties, or real estate collateral
and state deficiency guarantee, and these exposures are
therefore not expected to carry the risk of a final credit loss.
Non-performing exposures represented 1.1% (0.8%) of total
customer exposures.
MuniFin’s credit risk position remained stable and at a low
level during the year. It is expected to remain stable and in line
with the Group’s credit risk strategy also in the future.
Market risks
Market risks include interest rate risk, exchange rate risk and
other market and price risks. The Group uses derivatives to
hedge against market risks. Derivatives can only be used for
hedging purposes as the Group does not engage in trading
activities. Interest rate risk mainly arises from the differences
in reference rates applicable to the assets and liabilities in the
balance sheet. In addition, the Group may create a strategic
mismatch portfolio, i.e. leave fixed-rate exposures unhedged,
to achieve its objective of earnings stabilisation. The strategic
mismatch portfolio can include both fixed- and revisable-rate
loans as well as fixed-rate investments in the liquidity portfolio.
Derivatives are not used in the creation of the strategic
mismatch.
The Group actively monitors and hedges its interest rate risk.
Ten scenarios are used in the calculation of the net interest
income (NII) risk, of which the least favourable outcome is
considered. At the end of December, one-year NII risk was
EUR -38 million, and the least favourable scenario was a
short rate shock up (at the end of 2024, the least favourable
scenario was a short rate shock up, EUR -44 million). Several
scenarios are also used in the calculation of the economic
value of equity (EVE), of which the least favourable outcome
is considered. At the end of December, the least favourable
scenario was a parallel shock of +200 basis points, resulting
in EVE of EUR -134 million (at the end of 2024, the least
favourable scenario was a parallel shock of +200 basis points,
EUR -120 million).
The Group mitigates its foreign exchange (FX) risk by using
derivative contracts to swap all funding and investments
denominated in foreign currency into euros. The Group’s
customer financing is denominated in euros, and the Group
has no significant open FX positions. In practice, a small
temporary exchange rate risk may occasionally arise due
to cash collateral management (USD) in the clearing of
derivatives by central counterparties, but this risk is actively
monitored and hedged. Derivatives are also used to hedge
against other market and price risks.
The Group has also determined valuation risk as a significant
risk for its business. During the financial year, unrealised
fair value changes of financial instruments increased the
Group’s earnings volatility. The unrealised fair value changes
were influenced in particular by changes in interest rate
expectations and credit risk spreads in the Group’s main
funding markets. The Group continuously monitors and
analyses the volatility arising from valuations and prepares for
any impacts this may have on its profit and capital adequacy.
The Group’s market risk has remained stable despite the
market changes.
Risk management
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Municipality Finance Plc • Annual Report 2025
Liquidity risks
MuniFin Group manages its refinancing risk by limiting the
average maturity between financial assets and liabilities.
In addition, the Group manages its liquidity risk by setting a
limit for the minimum adequacy of the available short-term
and long-term liquidity. The Group’s survival horizon was
12 months (15 months) at the end of the year. The Group’s
liquidity remained good.
The Group’s liquidity coverage ratio (LCR) was 224.6%
(338.8%) at the end of the financial year. The availability of
long-term funding is monitored via the net stable funding
ratio (NSFR), which stood at 121.4% (123.7%). The availability
of funding remained good throughout the year, and the
Group issued EUR 10,019 million (EUR 8,922 million) in
long-term funding.
Risk management
The following table details the Group’s high-quality liquid assets (HQLA) as defined in the LCR regulation.
Liquid assets, HQLA
(EUR million) 31 Dec 2025 % 31 Dec 2024 %
Level 1 9,480 72% 10,413 77%
Level 2a 1,433 11% 1,040 7%
Level N* 2,202 17% 2,133 16%
Tot al 13,115 100% 13,586 100%
* Includes short-term customer financing granted as money market investments amounting to EUR 1,895 million (EUR 1,825 million).
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Municipality Finance Plc • Annual Report 2025
Operational risks
At the beginning of 2025, monitoring and reporting methods
related to ICT risk management were adopted as part of
the DORA regulation that entered into force. The Group
carried out a broad reform of supplier management, in which
the Risk Management and Compliance function supports
the identification of risks related to suppliers, systems, and
services, and objectively assess the suppliers’ risk levels.
In addition, the role of risk management in overseeing
development and projects has been formalised.
MuniFin Group’s operational risks are estimated to be at
a moderate level, and there were no material losses from
operational risks in 2025.
ESG risks
ESG risks include environmental, social and governance risks.
As part of the Group’s ESG risk management, the Group’s
emissions reduction targets and related indicators are set out
in MuniFin’s sustainability programme and transition plan.
There have been no material changes in ESG risks during
the financial year. According to the Group’s assessment, its
exposure to climate and environmental risks is low. As per the
Group’s business model, customer receivables originate from
the Finnish municipal sector and wellbeing services counties
or from the State of Finland after credit mitigation (state
deficiency guarantee).
MuniFin Group recognises that its customers may be
exposed to both physical risk caused by climate change and
transition risk related to climate change mitigation. The Group
can also be exposed to these risks through its customers.
Identified risks are related to real estate collateral, but given
the existing guarantee arrangements, even the materialisation
of a climate or environmental risk is not expected to cause
final credit losses.
The Group’s investment counterparties are governments,
central banks, SSA sector entities and credit institutions.
According to the Group’s assessment, the impact of climate
and environmental risks on these operators for the Group is
minor. MuniFin Group only invests in counterparties whose
risks it considers to be low. This also applies to the Group’s
derivative counterparties.
According to the Group’s assessment, environmental and
climate risks are unlikely to manifest substantially in the short
term, but they may have an adverse economic effect on the
Group’s customers in the medium and long term. Although
the Group assesses its climate and environmental risks to
be low, it recognises that as climate change progresses, the
risks and uncertainty associated with it will increase. For this
reason, MuniFin Group assesses its exposure to climate and
environmental risks at least once a year.
In addition to climate and environmental risks, the Group
acknowledges that it may be exposed also to social and
governance risks through its own or its customers’ activities.
The probability of these risks materialising is nevertheless
considered low.
The Group monitors the governance of its customers and
investment counterparties through an ESG scoring model,
which it uses to evaluate their reported governance and
other ESG factors. The Group also monitors that its service
providers meet the minimum ESG requirements set for all
partners.
Risk management
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Municipality Finance Plc • Annual Report 2025
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 2025, 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.
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 Kuntarahoituksen digitaaliset palvelut Oy.
The change of name of the subsidiary company Financial
Advisory Services Inspira Plc to Kuntarahoituksen digitaaliset
palvelut Oy was registered in early 2025. Kuntarahoituksen
digitaaliset palvelut Oy 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 25 March 2025. The AGM confirmed the Financial
Statements for 2024 and discharged the members of the
Board of Directors, the CEO and the Deputy CEO from
liability for the financial year 2024. In addition, in accordance
with the proposal of the Board of Directors, the AGM
authorised a dividend of EUR 1.86 per share to be paid,
totalling EUR 72.7 million. The amount of distributable funds
on the Group’s balance sheet on 31 December 2024 was
EUR 373 million.
Based on the proposal of the Shareholders’ Nomination
Committee, the AGM decided to appoint nine Board members
for the 2025–2026 term, lasting from the 2025 AGM to the
end of the subsequent AGM. The AGM also confirmed the
Shareholders’ Nomination Committee’s proposal on the
remuneration of Board members.
In accordance with the Board’s proposal, the AGM elected
PricewaterhouseCoopers Oy as MuniFin’s auditor, with
APA Jukka Paunonen as the principal auditor. The AGM
also elected PricewaterhouseCoopers Oy as MuniFin’s
sustainability reporting auditor, with Tiina Puukkoniemi as the
principal sustainability reporting auditor. However, the AGM
also noted that the European Commission proposed changes
to sustainability reporting requirements at the end of February
2025. If MuniFin is no longer required to report under the
amended legislation, MuniFin will also no longer be subject to
the sustainability reporting auditing requirement.
The AGM’s resolutions are published on MuniFin’s website.
Governance
Governance
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Municipality Finance Plc • Annual Report 2025
Board of Directors
The Shareholder’s Nomination Committee made a proposal
to the AGM held on 25 March 2025 regarding the members
to be elected for the term that began at the end of the 2025
AGM and will conclude at the end of the subsequent AGM.
The AGM elected the following members to the Board
of Directors: Maaria Kettunen (formerly Eriksson), Liisa
Harjula, Kari Laukkanen, Juho Malmberg, Tuomo Mäkinen,
Henrik Rainio, 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 Kettunen as the Vice Chair.
From the 2024 AGM to the 2025 AGM, the members of the
Board of Directors were Kari Laukkanen (Chair), Maaria
Kettunen (Vice Chair), Markku Koponen, Tuomo Mäkinen,
Elina Stråhlman, Denis Strandell, Leena Vainiomäki and Arto
Vuojolainen. Markku Koponen and Denis Strandell were no
longer available for the Board’s 2025–2026 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 Elina
Stråhlman (Chair), Liisa Harjula, Kari Laukkanen and Henrik
Rainio as the members of the Audit Committee. In the Risk
Committee, the Board selected Leena Vainiomäki (Chair),
Maaria Kettunen, Juho Malmberg and Arto Vuojolainen.
In the Remuneration Committee, the Board selected Kari
Laukkanen (Chair), Maaria Kettunen, Tuomo Mäkinen and
Leena Vainiomäki.
The operations of the MuniFin Board of Directors and
its committees are described in more detail on MuniFin’s
website.
Personnel, salaries and remuneration
At the end of December 2025, MuniFin Group had 185 (178)
employees. The President and CEO of MuniFin is Esa Kallio,
with Mari Tyster, Executive Vice President, acting as deputy
to the President and CEO. At the end of the year, the MuniFin
Executive Management Team also included Executive Vice
Presidents Aku Dunderfelt, Erika Fredman, Toni Heikkilä,
Joakim Holmström, Minna Piitulainen and Juha Volotinen.
During the financial year, Executive Vice President of Finance
and Executive Management Team member Harri Luhtala
left MuniFin. Luhtala’s position was filled by Erika Fredman,
who started as the Executive Vice President of Finance on 1
November 2025. Fredman is also a member of the Executive
Management Team.
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
EUR 19 million (EUR 17 million).
For more information on salaries and remuneration, refer to
Note 37 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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Municipality Finance Plc • Annual Report 2025
Share capital and shareholders
Share capital and shareholders
At the end of the 2025 financial year, MuniFin had paid share capital registered in the Trade
Register to the amount of EUR 43,008,044.20, 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 2025, MuniFin had 276 (276) shareholders.
10 largest shareholders 31 Dec 2025 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 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
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 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Outlook for 2026
The euro area economic outlook for 2026 has strengthened
over the past six months. Despite uncertainties in global trade
and geopolitics, strong momentum in the service sectors has
kept unemployment low and private consumption on the rise.
The ECB’s interest rate cuts have also given investments a
tailwind, with activity turning towards an upward trend.
Even so, Europe’s economy is facing a multitude of risks.
The geopolitical environment remains unstable, and the
ultimate effects of Donald Trump’s trade policy are still highly
uncertain. The US economy is at something of a crossroads,
where a normal slowdown in growth could turn into a deeper-
than-expected downturn. China, in turn, is grappling with
increasingly severe structural challenges in its economy. In
addition to challenges in the external operating environment,
Europe is burdened by mounting public debt, a weak
competitive position in technological transitions and security
risks that are driving a much higher share of resources into
defence than before.
Euro area monetary policy is not expected to undergo any
major changes next year. Economic recovery is continuing
at a moderate – if uncertain – pace, with inflation returning
close to the ECB’s target. Markets are expecting the ECB’s
key interest rates to remain stable in 2026. Public projects
aimed at strengthening defence, security of supply and
infrastructure are increasing governments’ borrowing needs,
which may continue to exert some upward pressure on long-
term interest rates. A potential start to the reconstruction of
Ukraine would have a similar effect. As the cyclical recovery
continues, monetary policy may tighten moderately from
2027 onwards, a development that market interest rates may
begin to anticipate in 2026.
Finland’s economic turnaround has been slower than
expected, but 2026 is expected to bring more growth-
supporting factors. The decline in employment is expected to
halt and domestic consumption to pick up gradually. A further
growth boost is coming from green transition investment
projects and major cruise ship and icebreaker deals. At the
same time, public deficit is slowly coming down.
Despite municipalities’ determined fiscal adjustment
measures, their funding deficit is likely to grow considerably in
2026. Municipal finances are strained by central government
transfer cuts resulting from the balancing of health and social
services reform transfers, personnel costs increased by rises
in wages and the sizeable investment needs of larger cities.
High unemployment is also driving up employment-related
costs and putting a strain on tax revenues.
The housing market and construction sector remain weak
spots in the economy, likely to offer little lift in 2026. Privately
financed new construction is unlikely to pick up substantially,
as the number of vacant rentals and unsold homes remains
exceptionally high. State-subsidised housing production is
set to decline sharply due to a significant reduction in interest
subsidy loan authorisations.
Outlook for 2026
Outlook for 2026
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2025
MuniFin Group’s commission expenses may increase
significantly in 2026 based on the decision made in 2025 by
the Municipal Guarantee Board (MGB) to raise the guarantee
fee payable to the MGB. The guarantee fee is paid for
MuniFin’s funding that is guaranteed by the MGB. The MGB
has decided to increase the guarantee fee more than three
times calculated from the guaranteed funding.
The Group’s risk position is expected to remain stable. Also,
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 2026
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Municipality Finance Plc • Annual Report 2025
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
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Development of the Group’s key figures in 2021–2025
Development of the Group’s key figures in 2021–2025
Development of the Group’s key figures in
2021–2025
Jan–Dec 2025 Jan–Dec 2024 Jan–Dec 2023 Jan–Dec 2022 Jan–Dec 2021
Turnover (EUR million)* 1,713 2,239 1,862 759 535
Net interest income (EUR million)* 260 260 259 241 280
% of turnover 15.2 11.6 13.9 31.8 52.4
Net operating profit (EUR million)* 193 166 139 215 240
% of turnover 11.2 7.4 7.4 28.3 44.8
Unrealised fair value changes (EUR million)* 14 -16 -37 45 27
Net operating profit excluding unrealised fair value changes (EUR million)* 178 181 176 170 213
Cost-to-income ratio, %* 25.9 27.7 32.2 23.9 21.7
Cost-to-income ratio excluding unrealised fair value changes, %* 27.4 26.0 27.3 28.4 23.8
Return on equity (ROE), %* 7.9 7.2 6.6 9.9 10.7
Return on equity (ROE) excluding unrealised fair value changes, %* 7.4 7.9 8.4 7.8 9.6
Return on assets (ROA), %* 0.3 0.3 0.2 0.4 0.4
Return on assets (ROA) excluding unrealised fair value changes, %* 0.3 0.3 0.3 0.3 0.4
New long-term customer financing (EUR million)* 5,088 5,056 4,319 4,317 3,594
New long-term funding (EUR million)* 10,019 8,922 10,087 8,827 9,395
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Municipality Finance Plc • Annual Report 2025
Development of the Group’s key figures in 2021–2025
31 Dec 2025 31 Dec 2024 31 Dec 2023 31 Dec 2022 31 Dec 2021
Long-term customer financing (EUR million)* 37,909 35,173 32,022 29,144 29,214
Green finance (EUR million)* 9,111 6,817 4,795 3,251 2,328
Social finance (EUR million)* 2,775 2,536 2,234 1,734 1,161
Sustainability-linked loan (EUR million)* 710 38 - - -
Total funding (EUR million)* 49,117 46,737 43,320 40,210 40,712
Equity (EUR million) 1,936 1,945 1,744 1,614 1,862
Total balance sheet (EUR million) 55,634 53,092 49,736 47,736 46,360
Total liquidity (EUR million)* 11,636 11,912 11,633 11,505 12,222
Liquidity Coverage Ratio (LCR), % 224.6 338.8 409.1 256.7 334.9
Net Stable Funding Ratio (NSFR), % 121.4 123.7 124.1 120.3 123.6
Equity ratio, %* 3.5 3.7 3.5 3.4 4.0
CET1 capital (EUR million) 1,706 1,646 1,550 1,482 1,408
Tier 1 capital (EUR million) 1,706 1,646 1,550 1,482 1,756
Total own funds (EUR million) 1,706 1,646 1,550 1,482 1,756
CET1 capital ratio, %*** 94.0 107.7 103.4 97.6 95.0
Tier 1 capital ratio, %*** 94.0 107.7 103.4 97.6 118.4
Total capital ratio, %*** 94.0 107.7 103.4 97.6 118.4
Leverage ratio, %** 13.1 12.3 12.0 11.6 12.8
Personnel 185 178 185 175 164
* Alternative performance measure.
** MuniFin fulfils the CRR 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.
*** The capital ratios at 31 December 2025 have been calculated in accordance with the CRR III regulation. The figures for the comparative periods have not been adjusted.
The calculation formulas for all key figures can be found on pages 40–48. All figures presented in the Report of the Board of Directors are those of MuniFin Group, unless otherwise stated.
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Municipality Finance Plc • Annual Report 2025
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).
Notes to the Report of the Board of Directors
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 1. Key figures
Alternative
Performance Measure Definition/Explanation Reconciliation Jan–Dec 2025 Jan–Dec 2024
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 rate method 1,387 1,933
Other interest income 307 319
Interest expense at effective interest rate method -975 -1,420
Other interest expense -459 -572
Net interest income 260 260
Unrealised fair value
changes
According to 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 20 -4
Net result on hedge accounting, unrealised fair value changes -6 -12
Unrealised fair value changes 14 -16
Net operating profit Net operating profit describes the Group’s
operating profit before taxes.
Net operating profit 193 166
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 193 166
- Unrealised fair value changes -14 16
Net operating profit excluding unrealised fair value changes 178 181
Income Income, which describes the Group’s total income
including net interest income, is used e.g. as a
denominator (incl. Commission expenses) in
Cost-to-income ratio.
Net interest income 260 260
Commission income 1 1
Net result on financial instruments at fair value through profit or loss 17 -15
Net result on financial assets at fair value through other comprehensive income 1 0
Other operating income 0 0
Income 280 247
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Alternative
Performance Measure Definition/Explanation Reconciliation Jan–Dec 2025 Jan–Dec 2024
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 280 247
- Unrealised fair value changes -14 16
Income excluding unrealised fair value changes 265 262
Other income Other income includes all other income of the
Group except net interest income and unrealised
fair value changes.
Commission income 1 1
Net result from hedge accounting, realised 5 0
Net result on financial assets and liabilities through profit or loss, realised 0 0
Net result on FX differences -1 0
Net result on financial assets at fair value through other comprehensive income 1 0
Other operating income 0 0
Other income 5 2
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 18 17
HR and administrative expenses 49 44
Depreciation on tangible and intangible assets 4 6
Other operating expenses 14 14
Costs 86 81
Cost-to-income ratio Cost-to-income ratio is an established key ratio in
the banking sector for assessing the relationship
between expenses and income. The ratio gives
investors a comparative view of MuniFin Group’s
cost-effectiveness.
(Costs (excl. Commission expenses) 68 64
÷ Income (incl. Net commission income)) x100 261 230
Cost-to-income ratio, % 25.9% 27.7%
Cost-to-income ratio
excluding unrealised fair
value changes
Cost-to income ratio excluding unrealised fair
value changes gives a more precise picture of
MuniFin Group’s operative effectiveness as it
excludes the income volatility of unrealised fair
value changes. It improves comparability of
operative effectiveness between companies and
reporting periods.
(Costs (excl. Commission expenses) 68 64
÷ (Income (incl. Net commission income) 261 230
- Unrealised fair value changes)) x100 -14 16
Cost-to-income ratio excluding unrealised fair value changes, % 27.4% 26.0%
Note 1. Key figures
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Alternative
Performance Measure Definition/Explanation Reconciliation Jan–Dec 2025 Jan–Dec 2024
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 14 -1 6
Taxes related to the unrealised fair value changes through PnL -3 3
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 -62 110
Change in Cost-of-Hedging, net of tax -27 24
Change in fair value of financial assets at fair value through other comprehensive income, net of tax -1 1
Change in expected credit loss of financial assets at fair value through other comprehensive
income, net of tax -1 0
The effect of unrealised fair value changes on other comprehensive income
and equity net of tax
-79 122
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 4,929 4,839
New leased assets 159 217
New long-term customer financing 5,088 5,056
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 178 181
÷ 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
39,009 36,067
Ratio of net operating profit excluding unrealised fair value changes to volume of long-term
and short-term customer financing, %
0.46% 0.50%
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 10,019 8,922
Note 1. Key figures
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Alternative
Performance Measure Definition/Explanation Reconciliation Jan–Dec 2025 Jan–Dec 2024
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 193 166
- Taxes) -39 -33
÷ Equity and non-controlling interest (average of values at the beginning and end of the period)) x100 1,941 1,845
Return on Equity (ROE), % 7.9% 7.2 %
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 178 181
- Taxes) -36 -36
÷ Equity and non-controlling interest (average of values at the beginning and end of the period)) x100 1,941 1,845
Return on Equity (ROE) excluding unrealised fair value changes, % 7.4% 7.9%
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 193 166
- Taxes) -39 -33
÷ Average balance sheet total (average of values at the beginning and end of the period)) x100 54,363 51,414
Return on Assets (ROA), % 0.3% 0.3%
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 178 181
- Taxes) -36 -36
÷ Average balance sheet total (average of values at the beginning and end of the period)) x100 54,363 51,414
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 rate method 1,387 1,933
Other interest income 307 319
Commission income 1 1
Net result on financial instruments at fair value through profit or loss 17 -15
Net result on financial assets at fair value through other comprehensive income 1 0
Other operating income 0 0
Turnover 1,713 2,239
Note 1. Key figures
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Alternative
Performance Measure Definition/Explanation Reconciliation 31 Dec 2025 31 Dec 2024
EUR million
Equity ratio, % Equity ratio is 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 1,936 1,945
÷ Balance sheet total) x100 55,634 53,092
Equity ratio, % 3.5% 3.7%
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 indicator does not take into account interest
accrued on long-term loan portfolio.
Loans and advances to the public and public sector entities 38,083 35,377
- Interest accrued on long-term loan portfolio -1 74 -204
- Leased assets -1,625 -1,563
Long-term loan portfolio 36,284 33,610
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
indicator does not take into account interest
accrued on long-term loan portfolio.
Loans and advances to the public and public sector entities 38,083 35,377
- Interest accrued on long-term loan portfolio -1 74 -204
Long-term customer financing 37,909 35,173
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 indicator does not take into account interest
accrued on long-term loan portfolio.
Loans and advances to the public and public sector entities 38,083 35,377
- Interest accrued on long-term loan portfolio -1 74 -204
- Unrealised fair value changes 601 614
Long-term customer financing excluding unrealised fair value changes 38,510 35,787
Note 1. Key figures
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 1. Key figures
Alternative
Performance Measure Definition/Explanation Reconciliation 31 Dec 2025 31 Dec 2024
EUR million
Ratio of sustainable
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 9,111 6,817
Social finance 2,775 2,536
Sustainability-linked loan 710 38
(Total of sustainable finance 12,595 9,391
÷ Long-term customer financing excluding unrealised fair value changes) x100 38,510 35,787
Ratio of sustainable finance to long-term customer financing excluding unrealised fair value
changes, %
32.7% 26.2%
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 1,895 1,825
Short-term customer financing 1,895 1,825
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 indicator does not take into
account interest payable on long-term funding.
Liabilities to credit institutions 196 884
Liabilities to the public and public sector entities 2,315 2,464
Debt securities issued 47,127 44,534
Tot al 49,638 47,882
- Interest payable on long-term funding -498 -429
- Cash collateral received (CSA) -22 -716
- Liabilities to credit institutions, payable on demand - -
Total funding 49,117 46,737
Long-term funding Key indicator used in management reporting to
describe MuniFin Group’s funding volume.
Total funding 49,117 46,737
- Short-term issued funding (ECP) -4,075 -3,409
Long-term funding 45,042 43,328
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 1. Key figures
Alternative
Performance Measure Definition/Explanation Reconciliation 31 Dec 2025 31 Dec 2024
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 8,061 5,879
- Interest accrued on investment bonds -67 -38
- Short-term customer financing -1,895 -1,825
Investments in securities total 6,099 4,016
Cash and balances with central banks 5,169 7,777
Deposits 368 120
Other investments total 5,538 7,896
Total liquidity 11,636 11,912
Ratio of socially
responsible
investments to all
investments, %
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 1,349 870
÷ Investment CPs and bonds, nominal) x100 6,122 4,038
Ratio of SRI securities to all investments, % 22.0% 21.5%
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 1,349 870
÷Green and social funding) x100 7,035 5,824
Ratio of socially responsible investments to MuniFin Group's own green and social funding, % 19.2% 14.9%
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 1. Key figures
Other measures Definition Reconciliation 31 Dec 2025 31 Dec 2024
EUR million
Liquidity Coverage Ratio
(LCR), %
Defined in CRR. (Liquid assets 10,552 11,170
÷ (Liquidity outflows - liquidity inflows in a stress situation)) x100 4,699 3,297
Liquidity Coverage Ratio (LCR), % 224.6% 338.8%
Net Stable Funding Ratio
(NSFR), %
Defined in CRR. (Available Stable Funding (ASF) 41,450 39,298
÷ Required Stable Funding (RSF)) x100 34,154 31,757
Net Stable Funding Ratio (NSFR), % 121.4% 123.7%
CET1 capital ratio, % Defined in CRR. (Common Equity Tier 1 (CET1) capital 1,706 1,646
÷ Risk exposure amount) x100 1,815 1,528
CET1 capital ratio, % 94.0% 107.7%
Tier 1 capital ratio, % Defined in CRR. (Tier 1 capital 1,706 1,646
÷ Risk exposure amount) x100 1,815 1,528
Tier 1 capital ratio, % 94.0% 107.7%
Total capital ratio, % Defined in CRR. (Total own funds 1,706 1,646
÷ Risk exposure amount) x100 1,815 1,528
Total capital ratio, % 94.0% 107.7%
Leverage ratio, % Defined in CRR. (Tier 1 capital 1,706 1,646
÷ Total exposure) x100 13,043 13,340
Leverage ratio, % 13.1% 12.3%
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 2. Group's capital adequacy position
Note 2. Group’s capital adequacy position
Note 2. Group’s capital adequacy position
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2025
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
semiannually.
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 continuity of the 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 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 capital adequacy in accordance with
the EU Capital Requirements Regulation (EU No. 575/2013),
amended by CRR II (2019/876) and CRR III (2024/1623)
and the Capital Requirements Directive (2013/36/EU),
amended by CRD V (2019/878) and CRD VI (2024/1619).
Capital requirements for credit and counterparty risk are
calculated using the standardised approaches. In the
calculation of the capital requirement for operational risk,
the Group applies the so called PBA method (Prudential
Boundary Approach). In the capital calculation for market risk,
only foreign exchange risks are taken into account, as the
Group has no trading book or equity or commodity positions.
Foreign exchange risk is hedged by converting all funding and
investments denominated in foreign currencies into euros
through derivative contracts. All customer financing in the
Group is denominated in euros. The Group has no significant
open foreign currency positions. However, the collateral
management associated with the central counterparty
clearing of derivatives may result in temporary minor foreign
exchange risk. This risk is actively monitored and hedged.
Credit valuation adjustment (CVA) risk is calculated using the
basic approach.
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.
Table 1. Minimum capital requirements and capital buffers
Minimum capital requirements and capital buffers, %
31 Dec 2025
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% 1.11% 0.50% 1.00% 5.11% 9.61%
Tier 1 (T1) Capital 6.00% 2.50% 1.11% 0.50% 1.00% 5.11% 11.11%
Total own funds 8.00% 2.50% 1.11% 0.50% 1.00% 5.11% 13.11%
Minimum capital requirements and capital buffers (EUR 1,000)
31 Dec 2025
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 81,677 45,376 20,180 9,075 18,151 92,782 174,459
Tier 1 (T1) Capital 108,903 45,376 20,180 9,075 18,151 92,782 201,685
Total own funds 145,204 45,376 20,180 9,075 18,151 92,782 237,986
Note 2. Group’s capital adequacy position
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
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
Note 2. Group’s capital adequacy position
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
1)
Act on Credit Institutions (610/2014), Chapter 10, Section 3, and the EU Capital
Requirements Regulation (575/2013; CRR) amended by CRR II (2019/876) and CRR III
(2024/1623) and Directive (2013/36/EU; CRD IV) amended by CRD V (2019/878) and CRD
VI (2024/1619). 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) amended by CRR II (2019/876) and CRR III (2024/1623) and
Directive (2013/36/EU; CRD IV) amended by CRD V (2019/878) and CRD VI (2024/1619).
On 17 Dec 2025 (17 Dec 2024), 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 1.11%
(1.04%).
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) amended by CRR II (2019/876) and CRR III (2024/1623) and Directive (2013/36/
EU; CRD IV) amended by CRD V (2019/878) and CRD VI (2024/1619). Additional capital
requirement (O-SII) for MuniFin Group is 0.5% (0.5%). The decision of the Board of FIN-FSA
on 26 Jun 2025, effective immediately.
4)
Act on Credit Institutions (610/2014) Sect 10:6a § and the EU Capital Requirements
Regulation (575/2013; CRR) amended by CRR II (2019/876) and CRR III (2024/1623) and
Directive (2013/36/EU; CRD IV) amended by CRD V (2019/878) and CRD VI (2024/1619).
The FIN-FSA has imposed a requirement to maintain a systemic risk buffer (SyRB) covered
by CET1 capital and amounting to 1.0% on MuniFin. This requirement also applies to other
Finnish credit institutions at the same level. In its June 2025 decision, the FIN-FSA decided
to keep the SyRB requirement unchanged at 1.0% (effective from 1 July 2026).
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 2025. The minimum level of total capital ratio was
15.11% (15.04%) including P2R and other additional capital buffers.
Note 2. Group’s capital adequacy position
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
(EUR 1,000) 31 Dec 2025 31 Dec 2024
Share capital 42,583 42,583
Reserve for invested non-restricted equity 40,366 40,366
Retained earnings 1,724,554 1,643,155
Fair value reserve 128,379 219,053
Other reserves 277 277
Foreseeable dividend -71,487 -72,659
Common Equity Tier 1 (CET1) capital before regulatory adjustments 1,864,673 1,872,776
Intangible assets -836 -2,720
Deferred tax assets that rely on future profitability and do not arise from temporary differences - -10
Deductions due to prudential filters on Common Equity Tier 1 capital -157,907 -223,916
Common Equity Tier 1 (CET1) capital 1,705,929 1,646,129
Instruments included in Additional Tier 1 capital - -
Additional Tier 1 (AT1) capital - -
Tier 1 (T1) capital 1,705,929 1,646,129
Tier 2 (T2) capital - -
Total own funds 1,705,929 1,646,129
Table 3. Consolidated key figures for capital adequacy
31 Dec 2025 31 Dec 2024
CET1 capital ratio, % 93.99 107.71
Tier 1 capital ratio, % 93.99 107.71
Total capital ratio, % 93.99 107.71
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).
Table 2. Own Funds
Note 2. Group’s capital adequacy position
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2025
(EUR 1,000)
31 Dec 2025 31 Dec 2024
Capital
requirement
Risk exposure
amount
Capital
requirement
Risk exposure
amount
Credit and counterparty credit risk, standardised approach
1
63,035 787,932 50,021 625,265
Exposures to central governments or central banks 0 0 0 0
Exposures to regional governments or local authorities 473 5,914 260 3,255
Exposures to public sector entities 815 10,193 455 5,686
Exposures to multilateral development banks 0 0 0 0
Exposures to international organisations 0 0 0 0
Exposures to institutions 40,150 501,872 31,771 397,134
Exposures to corporates 4,307 53,841 2,178 27,229
Exposures secured by mortgages on immovable property
and ADC exposures 0 0 0 0
Exposures in default 0 0 0 0
Exposures in the form of covered bonds 13,951 174,382 12,402 155,020
Other items 3,338 41,730 2,955 36,941
Market risk
2
- - - -
Credit valuation adjustment risk (CVA VaR), basic approach
3
45,816 572,696 36,245 453,066
Operational risk 36,354 454,423 35,998 449,976
Tot al 145,204 1,815,051 122,265 1,528,307
Table 4. Consolidated minimum requirement for own funds
1
The capital requirement for counterparty credit risk is
EUR 3,453 thousand (EUR 3,719 thousand).
2
When calculating thoute 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 2025, the FX net
position was EUR 12.0 million (EUR 10.4 million), which
is less than 2% of total own funds. There was no capital
requirement for market risk since the FX net position did not
exceed 2% of the total own funds (CRR 575/2013 Art. 351)
at the end of financial year or comparison period.
3
Guarantees granted by the Municipal Guarantee Board for
certain derivative counterparties are not taken into account
in credit valuation adjustment risk.
Note 2. Group’s capital adequacy position
/
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2025
31 Dec 2025
(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 5,717,217 - - 5,717,217 8,130,867 0
Exposures to regional governments or local authorities 18,059,188 6,868,623 22,346 24,950,157 24,479,718 5,914
Exposures to public sector entities 608,841 - - 608,841 443,081 10,193
Exposures to multilateral development banks 381,509 - - 381,509 234,539 0
Exposures to international organisations 340,087 - - 340,087 230,927 0
Exposures to institutions 2,365,240 - 723,571 3,088,812 2,787,972 501,872
Exposures to corporates 5,553,204 332,399 84,871 5,970,475 6,143,020 53,841
Exposures secured by mortgages on immovable property and ADC exposures 16,522,234 1,493,436 - 18,015,670 17,449,732 0
Exposures in default 451,911 - - 451,911 363,484 0
Exposures in the form of covered bonds 1,725,280 - - 1,725,280 1,726,073 174,382
Other items 43,473 - - 43,473 42,817 41,730
Tot al 51,768,185 8,694,457 830,789 61,293,432 62,032,229 787,932
Table 5. Consolidated exposure by class
Note 2. Group’s capital adequacy position
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
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 al 49,267,289 2,943,513 884,635 53,095,437 51,745,646 625,265
Note 2. Group’s capital adequacy position
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Consolidated leverage ratio
(EUR 1,000) 31 Dec 2025 31 Dec 2024
Tier 1 (T1) capital 1,705,929 1,646,129
Total exposure 13,042,867 13,340,479
Leverage ratio, % 13.08 12.34
Consolidated exposures
(EUR 1,000) 31 Dec 2025 31 Dec 2024
On-balance sheet exposures (excl. derivatives and intangible assets) 52,109,815 49,602,289
Derivatives exposure 936,788 940,510
Off-balance sheet exposure 1,606,488 1,402,129
Excluded exposures of public development credit institutions (promotional loans) -41,610,224 -38,604,448
Tot al 13,042,867 13,340,479
Note 2. Group’s capital adequacy position
Table 6. Leverage ratio
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Breakdown of consolidated on-balance sheet exposure (excluding derivatives and exempted exposures)
(EUR 1,000)
31 Dec 2025 31 Dec 2024
Leverage ratio
exposure value
Leverage ratio
exposure value
Covered bonds 1,725,280 1,531,432
Exposures treated as sovereigns 7,389,808 8,928,720
Exposures to regional governments, multilateral development banks, international organisations and public sector entities not treated as sovereigns 80,532 44,702
Institutions 2,365,240 1,458,444
Secured by mortgages of immovable properties 0 0
Corporate 501,745 382,377
Exposures in default 0 0
Other exposures 44,309 57,024
Tot al 12,106,915 12,402,700
Note 2. Group’s capital adequacy position
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 3. Parent Company's capital adequacy position
Note 3. Parent Company’s capital adequacy
position
Note 3. Parent Company’s capital adequacy position
Table 1. Own funds
(EUR 1,000) 31 Dec 2025 31 Dec 2024
Share capital 43,008 43,008
Reserve for invested non-restricted equity 40,743 40,743
Retained earnings 1,724,183 1,642,780
Fair value reserve 128,379 219,053
Other reserves 277 277
Foreseeable dividend -71,487 -72,659
Common Equity Tier 1 (CET1) capital before regulatory adjustments 1,865,104 1,873,203
Intangible assets -836 -2,720
Deferred tax assets that rely on future profitability and do not arise from temporary differences - -10
Deductions due to prudential filters on Common Equity Tier 1 capital -157,907 -223,916
Common Equity Tier 1 (CET1) capital 1,706,360 1,646,556
Instruments included in Additional Tier 1 capital - -
Additional Tier 1 (AT1) capital - -
Tier 1 (T1) capital 1,706,360 1,646,556
Tier 2 (T2) capital - -
Total own funds 1,706,360 1,646,556
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 2025
31 Dec 2025 31 Dec 2024
CET1 capital ratio, % 94.02 107.94
Tier 1 capital ratio, % 94.02 107.94
Total capital ratio, % 94.02 107.94
Table 2. Key figures for capital adequacy
Note 3. Parent Company’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 2025
31 Dec 2025 31 Dec 2024
(EUR 1,000)
Capital
requirement
Risk exposure
amount
Capital
requirement
Risk exposure
amount
Credit and counterparty credit risk, standardised approach
1
63,160 789,500 50,149 626,859
Exposures to central governments or central banks 0 0 0 0
Exposures to regional governments or local authorities 473 5,914 260 3,255
Exposures to public sector entities 815 10,193 455 5,686
Exposures to multilateral development banks 0 0 0 0
Exposures to international organisations 0 0 0 0
Exposures to institutions 40,145 501,814 31,767 397,088
Exposures to corporates 4,307 53,841 2,178 27,229
Exposures secured by mortgages on immovable property
and ADC exposures 0 0 0 0
Exposures in default 0 0 0 0
Exposures in the form of covered bonds 13,951 174,382 12,402 155,020
Equity exposure 131 1,639 131 1,639
Other items 3,337 41,717 2,955 36,941
Market risk
2
- - - -
Credit valuation adjustment risk (CVA VaR), basic approach
3
45,816 572,696 36,245 453,066
Operational risk 36,219 452,742 35,642 445,522
Tot al 145,195 1,814,938 122,036 1,525,446
Table 3. Minimum requirement for own funds
Note 3. Parent Company’s capital adequacy position
1
The capital requirement for counterparty credit risk is
EUR 3,453 thousand (EUR 3,719 thousand).
2
When calculating the capital requirements for market
risk, only foreign exchange risk is taken into account as
the company 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 2025, the FX net position
was EUR 12.0 million (EUR 10.4 million), which is less than
2% of total own funds. There was no capital requirement for
market risk since the FX net position did not exceed 2% of
the total own funds (CRR 575/2013 Art. 351) at the end of
financial year or comparison period.
3
Guarantees granted by the Municipal Guarantee Board for
certain derivative counterparties are not taken into account
in credit valuation adjustment risk.
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2025
Note 3. Parent Company’s capital adequacy position
31 Dec 2025
(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 5,717,217 - - 5,717,217 0
Exposures to regional governments or local authorities 18,059,188 6,868,623 22,346 24,950,157 5,914
Exposures to public sector entities 608,841 - - 608,841 10,193
Exposures to multilateral development banks 381,509 - - 381,509 0
Exposures to international organisations 340,087 - - 340,087 0
Exposures to institutions 2,364,949 - 723,571 3,088,520 501,814
Exposures to corporates 5,553,204 332,399 84,871 5,970,475 53,841
Exposures secured by mortgages on immovable property and ADC exposures 16,522,234 1,493,436 - 18,015,670 0
Exposures in default 451,911 - - 451,911 0
Exposures in the form of covered bonds 1,725,280 - - 1,725,280 174,382
Equity exposures 656 - - 656 1,639
Other items 43,454 - - 43,454 41,717
Tot al 51,768,531 8,694,457 830,789 61,293,777 789,500
Table 4. Exposure by class
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc • Annual Report 2025
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 al 49,267,716 2,943,513 884,635 53,095,863 626,859
Note 3. Parent Company’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 2025
Consolidated Financial Statements (IFRS) 65
Consolidated income statement 66
Consolidated statement of comprehensive income 67
Consolidated statement of financial position 68
Consolidated statement of changes in equity 70
Consolidated statement of cash flows 72
Notes to the Consolidated Financial Statements 73
Parent Company’s Financial Statements (FAS) 225
Parent Company’s income statement 226
Parent Company’s Balance sheet 227
Parent Company’s Statement of Cash Flows 230
Notes to the Parent Company’s Financial Statements 231
Signatures to the Report of the Board of Directors and
the Financial Statements 325
Auditor’s Report 327
Municipality Finance Group
Consolidated Financial Statements
1 January–31 December 2025
Municipality Finance Plc • Annual Report 2025
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Consolidated
Financial Statements
Consolidated Financial
Statements (IFRS)
Consolidated Financial Statements
(EUR 1,000) Note Jan–Dec 2025 Jan–Dec 2024
Interest income at effective interest rate method (3) 1,387,135 1,933,354
Other interest income (3) 306,823 319,120
Interest expense at effective interest rate method (3) -975,160 -1,420,222
Other interest expense (3) -458,674 -572,096
Net interest income 260,124 260,156
Commission income (4) 1,166 1,465
Commission expense (4) -18,175 -16,917
Net result on financial instruments at fair value through profit and loss (5) 17,367 -15,086
Net result on financial assets at fair value through other comprehensive income (6) 811 3
Other operating income 86 31
HR and administrative expenses (7) -49,403 -43,624
Depreciation on tangible and intangible assets (23) -3,975 -6,031
Other operating expenses (8) -14,430 -14,064
Credit losses on financial assets recognised at amortised cost and at fair value through other comprehensive income (9) -941 -326
Net operating profit 192,630 165,606
Income tax expense (10) -38,572 -32,913
Profit for the financial year 154,058 132,693
The accompanying notes are an integral part of the Financial Statements.
Consolidated income statement
Consolidated income
statement
Consolidated income statement
Municipality Finance Plc • Annual Report 2025
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
(EUR 1,000) Note Jan–Dec 2025 Jan–Dec 2024
Profit for the financial year 154,058 132,693
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) -77,669 137,202
Tax on change in fair value due to changes in own credit risk on financial liabilities designated at fair value through profit or loss 15,534 -27,440
Change in Cost-of-Hedging (21) -33,794 29,866
Tax on change in Cost-of-Hedging 6,759 -5,973
Items to be reclassified to income statement in subsequent periods
Change in fair value of financial assets at fair value through other comprehensive income -1,160 1,732
Change in expected credit loss of financial assets at fair value through other comprehensive income (22) 9 2
Tax on change in fair value of financial assets at fair value through other comprehensive income 230 -347
Amount reclassified to the income statement on the sales of financial assets at fair value through other comprehensive income (6) -728 -124
Tax on amount reclassified to the income statement on the sales of financial assets at fair value through other comprehensive income 146 25
Total components of other comprehensive income -90,674 134,942
Total comprehensive income for the financial year 63,384 267,635
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
Municipality Finance Plc • Annual Report 2025
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
(EUR 1,000) Note 31 Dec 2025
Adjusted
31 Dec 2024
Adjusted
1 Jan 2024
Assets
Cash and balances with central banks (15) 5,169,257 7,776,888 7,953,642
Loans and advances to credit institutions (16) 1,989,943 789,725 1,239,307
Loans and advances to the public and public sector entities (17, 18) 38,082,843 35,376,909 32,225,422
Debt securities (19) 8,061,264 5,878,912 5,170,005
Derivative contracts (14, 20) 1,486,616 2,323,708 2,036,212
Intangible assets (23) 836 2,720 6,311
Tangible assets (23) 8,941 8,236 9,648
Other assets (24) 831,484 915,913 1,075,207
Accrued income and prepayments (25) 3,077 2,220 2,499
Current tax assets 37 16,577 18,095
Deferred tax assets (26) 29 10 9
Total assets (11, 12, 13) 55,634,327 53,091,818 49,736,359
Consolidated statement of financial position
Consolidated statement
of financial position
Consolidated statement of financial position
Municipality Finance Plc • Annual Report 2025
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
(EUR 1,000) Note 31 Dec 2025
Adjusted
31 Dec 2024
Adjusted
1 Jan 2024
Liabilities and equity
Liabilities
Liabilities to credit institutions (27) 196,077 883,694 215,552
Liabilities to the public and public sector entities (29) 2,314,539 2,463,874 2,622,551
Debt securities issued (28, 29) 47,127,029 44,534,306 40,872,798
Derivative contracts (14, 20) 3,368,357 2,561,718 3,496,553
Other liabilities (30) 275,161 285,181 418,445
Accrued expenses and deferred income (31) 47,312 45,485 43,128
Deferred tax liabilities (26) 369,693 372,126 323,517
Total liabilities (11, 12, 13) 53,698,168 51,146,383 47,992,542
Equity
Share capital (32) 42,583 42,583 42,583
Reserve fund (32) 277 277 277
Fair value reserve of investments (32) 1,837 3,340 2,052
Own credit revaluation reserve (32) 107,864 169,999 60,238
Cost-of-Hedging reserve (32) 18,679 45,714 21,821
Reserve for invested non-restricted equity (32) 40,366 40,366 40,366
Retained earnings (32) 1,724,554 1,643,155 1,576,480
Total equity attributable to Parent Company equity holders 1,936,160 1,945,435 1,743,817
Total equity 1,936,160 1,945,435 1,743,817
Total liabilities and equity 55,634,327 53,091,818 49,736,359
The accompanying notes are an integral part of the Financial Statements.
Consolidated statement of financial position
Municipality Finance Plc • Annual Report 2025
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
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 Tot al
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
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
Consolidated statement of
changes in equity
Consolidated statement of changes in equity
Municipality Finance Plc • Annual Report 2025
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
(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 Tot al
Dividends paid for 2024 - - - - - - -72,659 -72,659 -72,659
Profit for the financial year - - - - - - 154,058 154,058 154,058
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 - - - -62,135 - - - -62,135 -62,135
Net change in Cost-of-Hedging - - - - -27,035 - - -27,035 -27,035
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 - - -928 - - - - -928 -928
Net amount reclassified to the income statement on the sales of financial assets at
fair value through other comprehensive income - - -582 - - - - -582 -582
Net change in expected credit loss of financial assets at fair value through other
comprehensive income - - 7 - - - - 7 7
Equity at 31 December 2025 42,583 277 1,837 107,864 18,679 40,366 1,724,554 1,936,160 1,936,160
The accompanying notes are an integral part of the Financial Statements.
Consolidated statement of changes in equity
Municipality Finance Plc • Annual Report 2025
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Consolidated statement
of cash flows
Consolidated statement of cash flows
Consolidated statement of cash flows
(EUR 1,000) Note Jan–Dec 2025
Adjusted
Jan–Dec 2024
Cash flow from operating activities -2,549,264 -110,222
Net change in long-term funding 3,229,283 2,848,288
Net change in short-term funding 841,068 -796,013
Net change in long-term loans -2,811,703 -2,930,342
Net change in short-term loans -75,033 -249,895
Net change in investments -2,314,164 -381,070
Net change in collaterals -1,584,031 1,115,556
Interest on assets 1,501,813 2,097,968
Interest on liabilities -1,337,771 -1,814,572
Other income 80,234 88,312
Payments of operating expenses -77,143 -71,584
Taxes paid -1,819 -16,871
Cash flow from investing activities -2,453 -590
Acquisition of tangible assets -2,350 -386
Proceeds from sale of tangible assets - 19
Acquisition of intangible assets -103 -223
Proceeds from sale of intangible assets 0 -
Cash flow from financing activities -73,993 -67,660
Dividend paid -72,659 -66,018
Amortisation of lease liability -1,334 -1,642
Change in cash and cash equivalents -2,625,710 -178,472
Cash and cash equivalents at 1 Jan (15) 7,838,383 8,016,855
Cash and cash equivalents at 31 Dec (15) 5,212,673 7,838,383
The accompanying notes are an integral part of the Financial Statements.
Municipality Finance Plc • Annual Report 2025
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Notes to the Consolidated
Financial Statements
Notes to the Consolidated Financial Statements
Notes to the Group's accounting policies and
risk management
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. HR and administrative expenses
Note 8. Other operating expenses
Note 9. Credit losses on financial assets recognised
at amortised cost and at fair value through
other comprehensive income
Note 10. Income tax expense
Notes to the statement of financial position
Note 11. Financial assets and liabilities
Note 12. Fair values of financial assets and liabilities
Note 13. Breakdown of the Groups assets and liabilities
between current and non-current items
Note 14. Osetting financial assets and liabilities
Note 15. Cash and cash equivalents
Note 16. Loans and advances to credit institutions
Note 17. Loans and advances to the public
and public sector entities
Note 18. Finance lease receivables
Note 19. Debt securities
Note 20. Derivative contracts
Note 21. Hedge accounting
Note 22. Credit risks of financial assets
and other commitments
Note 23. Intangible and tangible assets
Note 24. Other assets
Note 25. Accrued income and prepayments
Note 26. Deferred tax
Note 27. Liabilities to credit institutions
Note 28. Debt securities issued
Note 29. Reconciliation of the carrying
amount of the issued debt
Note 30. Other liabilities
Note 31. Accrued expenses and deferred income
Note 32. Equity
Note 33. Contingent assets and liabilities
Note 34. Collateral given
Note 35. O-balance-sheet commitments
Note 36. Related-party transactions
Note 37. Remuneration of key management personnel
Note 38. Events after the reporting period
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Notes to the Group's accounting policies and risk management
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BOARD OF DIRECTORS
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3. Stress testing
MuniFin Group constantly conducts stress testing related to
its business in accordance with the stress testing program
approved by the Board of Directors. The annual ICAAP
and ILAAP processes include stress testing on group-level
solvency and liquidity adequacy. Risk management,
independent of the Group’s business, is responsible for
designing stress scenarios in cooperation with business units.
The main objective of the stress testing conducted in 2025
was to analyse the development of MuniFin Group’s solvency
and profitability in 2025–2028. Business, market, credit and
operational risks and their estimated economic impact under
different circumstances were tested. In addition, the liquidity
adequacy of the Group was tested with several different
stress scenarios. As in previous years, the results of the stress
tests showed that with the current capital requirements, the
level of equity in the Group during the period under review
is sufficient even under very unfavourable conditions. In
addition, the Group’s total own funds also fulfilled the 3%
minimum leverage ratio requirement. In terms of liquidity,
stress tests showed that the liquidity of the Group is sufficient
even under very unfavourable conditions.
The Group participated in 2025 in the ECB’s stress test (SSM
Stress Test) assessing the financial resilience of supervised
institutions, which covered the years 2025–2027. The stress
test results were published at the beginning of August. The
capital position of the MuniFin Group remained strong even
under the adverse scenario of the stress test, and the Group’s
capital clearly exceeded the capital requirement set by the
test.
Municipality Finance Plc • Annual Report 2025
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Notes to the income statement
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Note 4. Fee and commission income and expense
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Note 5. Net result on financial instruments at fair value through profit and loss
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Note 6. Net result on financial assets at fair value through other comprehensive income
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Note 7. HR and administrative expenses
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Note 8. Other operating expenses
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Note 9. Credit losses on financial assets recognised at amortised cost and at fair value
through other comprehensive income
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Note 10. Income tax expense
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Note 11. Financial assets and liabilities
Notes to the statement of financial position
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Accounting policies
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Note 12. Fair values of financial assets and liabilities
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Note 13. Breakdown of the Groups assets and liabilities between current and non-current items
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Note 14. Offsetting financial assets and liabilities
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Note 15. Cash and cash equivalents
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Note 16. Loans and advances to credit institutions
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Note 17. Loans and advances to the public and public sector entities
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Note 18. Finance lease receivables
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Note 19. Debt securities
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Note 20. Derivative contracts
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Note 21. Hedge accounting
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Note 22. Credit risks of financial assets and other commitments
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Note 23. Intangible and tangible assets
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Note 24. Other assets
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Note 25. Accrued income and prepayments
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Note 26. Deferred tax
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Note 27. Liabilities to credit institutions
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Note 28. Debt securities issued
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Note 29. Reconciliation of the carrying amount of the issued debt
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Note 30. Other liabilities
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Note 31. Accrued expenses and deferred income
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Note 32. Equity
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Note 34. Collateral given
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Note 35. Off-balance-sheet commitments
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Note 36. Related-party transactions
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Note 37. Remuneration of key management personnel
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Note 38. Events after the reporting period
The MuniFin’s 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.
Municipality Finance Plc • Annual Report 2025
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Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
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
(EUR 1,000) Note Jan–Dec 2025 Jan–Dec 2024
Interest income (2) 1,642,208 2,201,328
Net income from leasing operations (2, 3) 51,745 51,123
Interest expense (2) -1,433,834 -1,992,315
Net interest income 260,119 260,135
Commission income (4) 909 1,064
Commission expense (4) -18,172 -16,912
Net income on financial instruments at fair value through profit and loss (5) 17,367 -15,086
Net income on financial assets at fair value through fair value reserve (6) 811 3
Other operating income 125 45
HR and administrative expenses -49,186 -42,772
Personnel expenses -23,081 -20,073
Salaries and fees -19,168 -16,755
Personnel-related costs -3,913 -3,318
Pension costs -3,333 -2,904
Other personnel-related costs -579 -414
Other administrative expenses -26,105 -22,700
Depreciation on tangible and intangible assets and on shares (20) -3,975 -5,970
Other operating expenses (7) -14,423 -14,037
Credit loss and impairments on financial assets (8) -941 -326
Net operating profit 192,634 166,144
Appropriations -101,179 -74,367
Income taxes -18,336 -18,039
Profit for the financial year 73,118 73,737
The accompanying notes are an integral part of the Financial Statements.
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Parent Company's Balance sheet
Parent Company’s
Balance sheet
(EUR 1,000) Note 31 Dec 2025
Adjusted
31 Dec 2024
Assets
Cash and balances with central banks (11) 5,169,257 7,776,888
Cash 2 2
Central bank receivables payable on demand 5,169,255 7,776,886
Debt securities eligible for central bank refinancing (14) 5,383,966 3,600,100
Other 5,383,966 3,600,100
Loans and advances to credit institutions (12) 1,989,652 789,496
Payable on demand 43,124 61,265
Other 1,946,528 728,231
Loans and advances to the public and public sector entities (13) 36,458,068 33,813,849
Leased assets (15) 1,624,775 1,563,060
Debt securities (14) 2,677,298 2,278,812
From public sector entities 1,669,063 1,599,851
From others 1,008,235 678,961
Shares and participations in Group companies (17) 656 656
Derivative contracts (18) 1,486,616 2,323,708
Intangible assets (20) 836 2,720
Tangible assets (20) 8,941 8,236
Other tangible assets 8,941 8,236
Other assets (21) 831,484 915,913
Accrued income and prepayments (22) 3,096 18,797
Deferred tax assets (23) 29 10
Total assets (10, 28, 29, 30) 55,634,673 53,092,244
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
(EUR 1,000) Note 31 Dec 2025
Adjusted
31 Dec 2024
Liabilities and equity
Liabilities
Liabilities to credit institutions 196,077 883,694
To credit institutions 196,077 883,694
Other 196,077 883,694
Liabilities to the public and public sector entities 2,314,539 2,463,874
Other liabilities 2,314,539 2,463,874
Other 2,314,539 2,463,874
Debt securities issued (24) 47,127,029 44,534,306
Bonds 43,051,906 41,125,457
Other 4,075,123 3,408,849
Derivative contracts (18) 3,368,357 2,561,718
Other liabilities (25) 275,162 285,181
Other liabilities 275,162 285,181
Accrued expenses and deferred income (26) 47,226 45,485
Deferred tax liabilities (23) 32,095 54,763
Total liabilities (10, 28, 29, 30) 53,360,484 50,829,021
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
(EUR 1,000) Note 31 Dec 2025
Adjusted
31 Dec 2024
Appropriations
Depreciation difference 123,312 110,133
Taxation based provisions 1,564,680 1,476,680
Total appropriations 1,687,992 1,586,813
Equity
Share capital 43,008 43,008
Other restricted reserves 128,656 219,330
Reserve fund 277 277
Fair value reserve 128,379 219,053
Change in fair value 128,379 219,053
Non-restricted reserves 40,743 40,743
Reserve for invested non-restricted equity 40,743 40,743
Retained earnings 300,672 299,593
Profit for the financial year 73,118 73,737
Total equity (31, 32, 33) 586,197 676,411
Total liabilities and equity 55,634,673 53,092,244
Off-balance sheet commitments
Irrevocable commitments given in favour of customer 2,430,658 2,935,231
Other (36) 2,430,658 2,935,231
The Parent Company has updated the presentation of balances with central banks. Comparative information has been adjusted accordingly.
The accompanying notes are an integral part of the Financial Statements.
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Parent Company’s
Statement of Cash Flows
Parent Company's Statement of Cash Flows
(EUR 1,000) Note Jan–Dec 2025
Adjusted
Jan–Dec 2024
Cash flow from operating activities -2,549,327 -109,420
Net change in long-term funding 3,229,283 2,848,288
Net change in short-term funding 841,068 -796,013
Net change in long-term loans -2,811,703 -2,930,342
Net change in short-term loans -75,033 -249,895
Net change in investments -2,314,164 -381,070
Net change in collaterals -1,584,031 1,115,556
Interest on assets 1,501,808 2,097,945
Interest on liabilities -1,337,771 -1,814,572
Other income 80,234 87,793
Payments of operating expenses -77,206 -70,241
Taxes paid -1,813 -16,871
Cash flow from investing activities -2,453 -590
Acquisition of tangible assets -2,350 -386
Proceeds from sale of tangible assets - 19
Acquisition of intangible assets -103 -223
Proceeds from sale of intangible assets 0 -
Cash flow from financing activities -73,993 -67,596
Dividend paid -72,659 -66,018
Amortisation of lease liability -1,334 -1,578
Change in cash and cash equivalents -2,625,773 -177,606
Cash and cash equivalents at 1 Jan (11) 7,838,154 8,015,760
Cash and cash equivalents at 31 Dec (11) 5,212,381 7,838,154
The accompanying notes are an integral part of the Financial Statements.
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
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. Commission income and expense
Note 5. Net income on financial instruments at fair value
through profit and loss
Note 6. Net income on financial assets at fair value
through fair value reserve
Note 7. Other operating income and expenses
Note 8. Credit losses and impairments on financial
assets
Note 9. Information on business areas and geographical
market
Notes to the balance sheet
Note 10. Financial assets and liabilities
Note 11. Cash and cash equivalents
Note 12. Loans and advances to credit institutions
Note 13. Loans and advances to the public and public
sector entities
Note 14. Debt securities
Note 15. Finance lease receivables
Note 16. Credit risks of financial assets and other
commitments
Note 17. Shares and participations
Note 18. Derivative contracts
Note 19. Hedge accounting
Note 20. Intangible and tangible assets
Note 21. Other assets
Note 22. Accrued income and prepayments
Note 23. Deferred tax assets and liabilities
Note 24. Debt securities issued
Note 25. Other liabilities
Note 26. Accrued expenses and deferred income
Note 27. Act on the Resolution of Credit Institutions
(1194/2014)
Note 28. Breakdown of financial assets and liabilities at
carrying amount by maturity
Note 29. Breakdown of balance sheet items into
domestic and foreign currency
Note 30. Fair value hierarchy of financial assets and
liabilities
Note 31. Equity
Note 32. Share capital
Note 33. Largest shareholders
Notes on collateral and contingent liabilities
Note 34. Collateral given
Note 35. Pension liabilities
Note 36. O-balance sheet commitments
Notes on personnel and management
Note 37. Personnel
Related party transactions
Note 38. Loans and other financial receivables from
the related parties
Holdings in other companies
Note 39. Holdings in other companies
Other notes
Note 40. Audit and other fees paid to the audit firm
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Notes to the Parent Company's accounting policies
Municipality Finance Plc (MuniFin or the Company) prepares its Financial Statements in
accordance with the Act on Credit Institutions, the Ministry of Finance Decree on Credit
Institutions and the Financial Supervisory Authority Regulations and Guidelines 2/2016.
The Company reports regularly on its operations to the European Central Bank, the Finnish
Financial Supervisory Authority, the Bank of Finland, the Municipal Guarantee Board and
Statistics Finland. Municipality Finance Plc is the Parent Company of Municipality Finance
Group (MuniFin Group). The significant accounting policies and the presentation of the
Financial Statements of the Parent Company, Municipality Finance Plc, correspond to the
accounting policies of the Consolidated Financial Statements (Note 1) with the exceptions
described below.
Change in the presentation of the Parent Company’s financial position
The Parent Company has corrected the presentation of balance sheet during the second half
of 2025. The changes have been made retrospectively to the year end of 2024. Amendment
was made to transfer overnight deposits with central banks of EUR 7,777 million to line item
Cash and balances with central banks from Loans and advances to credit institutions.
Change in the presentation of the cash flows
The Parent Company has changed the presentation of cash flows during the second half
of 2025. Also, the interest proportions of lease liabilities have been reclassified and will
be presented in line item Interest on liabilities. In addition, the presentation of Net change
in long-term loans, Other income and Payments of operating expenses under Cash flow
from operating acitivities have been revised. These changes have been described in the
following table.
Note 1. Significant accounting policies and corrections to previous Parent Company's
Financial Statements
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Municipality Finance Plc • Annual Report 2025
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(EUR 1,000) Jan–Dec 2024 Adjustment
Adjusted
Jan–Dec 2024
Cash flow from operating activities 67,450 -176,870 -109,420
Net change in long-term loans -2,880,469 -49,873 -2,930,342
Net change in investments -204,315 -176,754 -381,070
Interest on liabilities -1,814,456 -116 -1,814,572
Other income 45,961 41,832 87,793
Payments of operating expenses -78,282 8,041 -70,241
Cash flow from financing activities -67,712 116 -67,596
Total cash flow from leases* -1,694 116 -1,578
Change in cash and cash equivalents -852 -176,754 -177,606
Cash and cash equivalents at 1 Jan 62,119 7,953,641 8,015,760
Cash and cash equivalents at 31 Dec 61,267 7,776,887 7,838,154
* As of 31 December 2025, line item has been renamed according to its content as Amortisation of lease liability.
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Change in the presentation of disclosures
The change in the presentation of central bank balances is
reflected in Note 2 Net interest income and expense where
interest income from overnight deposits with central banks
are now presented in row Cash and balances with central
banks instead of row Loans and advances to credit institutions.
Interest income of EUR 319,073 thousand in the comparison
period has been adjusted correspondingly. The change didn’t
have an impact on the Parent Company’s Income statement.
During the financial year, the Parent Company has changed
the presentation of lease liabilities so that lease liabilities will
no longer be presented in the Notes on financial liabilities.
Lease liabilities are presented in Note 25 Other liabilities,
which provides further information on the corresponding
balance sheet line item. The Notes to the comparison period
have been amended correspondingly, EUR 7,599 thousand
has been removed from the Notes that give information on
financial liabilities. In Note 2 Net interest income and expense,
this change is illustrated between lines Other liabilities and
Interest on non-financial other liabilities. Interest expense of
EUR 114 thousand on lease liability in the comparison period
has been adjusted correspondingly. The change didn’t have
an impact on the Parent Company’s Income statement.
The Parent Company doesn’t have repurchase agreements
on reporting date or on a comparative period.
Balances with central banks
Minimum reserve with central bank is presented in the Parent
Company’s Financial Statements under balance sheet item
Loans and advances to credit institutions (other than payable
on demand).
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.
Current tax assets and tax liabilities
Current tax assets and tax liabilities are presented in the
Parent Company’s Financial Statements under balance sheet
items Accrued income and prepayments or Accrued expenses
and deferred income.
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 Statement of financial position 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.
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
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 in 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.
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 2. Interest income and expense
Notes to the income statement
Jan–Dec 2025
Adjusted
Jan–Dec 2024
(EUR 1,000) Interest income Interest expense Net Interest income Interest expense Net
Assets
Amortised cost
Cash and balances with central banks 179,420 - 179,420 319,073 - 319,073
Loans and advances to credit institutions 33,121 -240 32,882 38,891 -133 38,758
Loans and advances to the public and public sector entities 874,921 - 874,921 1,036,790 - 1,036,790
Debt securities 35,782 - 35,782 55,143 - 55,143
Other assets 17,313 - 17,313 40,375 - 40,375
Fair value through fair value reserve
Debt securities 17,402 - 17,402 11,326 - 11,326
Designated at fair value through profit or loss
Loans and advances to the public and public sector entities 348 - 348 261 - 261
Debt securities 89,538 - 89,538 52,616 - 52,616
Mandatorily at fair value through profit or loss
Loans and advances to the public and public sector entities 1,322 - 1,322 1,320 - 1,320
Fair value through profit or loss
Derivative contracts at fair value through profit or loss 55,323 -34,923 20,400 124,346 -38,258 86,088
Derivative contracts in hedge accounting 183,498 - 183,498 389,970 - 389,970
Leased assets 51,745 - 51,745 51,123 - 51,123
Interest on non-financial other assets 4 - 4 4 - 4
Interest on assets 1,539,735 -35,162 1,504,573 2,121,238 -38,391 2,082,847
, of which interest income/expense according to the effective interest rate method 1,341,456 -240 1,891,567 -133
, of which other interest income/expense 198,279 -34,923 229,670 -38,258
The Company has not combined any items in the income statement under Chapter 2, Section 14(4), of the Ministry of Finance Decree.
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Jan–Dec 2025
Adjusted
Jan–Dec 2024
(EUR 1,000) Interest income Interest expense Net Interest income Interest expense Net
Liabilities
Amortised cost
Liabilities to credit institutions - -7,453 -7,453 - -10,578 -10,578
Liabilities to the public and public sector entities - -33,111 -33,111 - -35,540 -35,540
Debt securities issued - -914,597 -914,597 - -736,334 -736,334
Other liabilities - -5,427 -5,427 - -13,157 -13,157
Designated at fair value through profit or loss
Liabilities to credit institutions - -2,467 -2,467 - -1,696 -1,696
Liabilities to the public and public sector entities - -37,529 -37,529 - -38,283 -38,283
Debt securities issued 38 -296,983 -296,945 - -400,207 -400,207
Fair value through profit or loss
Derivative contracts at fair value through profit or loss 154,180 -86,519 67,661 131,213 -93,536 37,677
Derivative contracts in hedge accounting - -14,333 -14,333 - -624,479 -624,479
Interest on non-financial other liabilities - -254 -254 - -114 -114
Interest on liabilities 154,218 -1,398,672 -1,244,454 131,213 -1,953,925 -1,822,712
, of which interest income/expense according to the effective interest rate method - -974,920 - -1,420,089
, of which other interest income/expense 154,218 -423,752 131,213 -533,836
Total interest income and expense 1,693,953 -1,433,834 260,119 2,252,451 -1,992,315 260,135
, of which interest income from leasing operations 51,745 - 51,745 51,123 -
51,123
Total interest income excluding interest income from leasing operations 1,642,208 - 1,642,208 2,201,328 - 2,201,328
During the financial year, MuniFin corrected the presentation of receivables from central bank and lease liability. 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.
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
In the above table, interest expenses on financial assets at amortised cost consisted of
interest paid on cash collateral receivables. The derivative contracts under hedge accounting
presented under assets are hedging line items Loans and advances to the public and public
sector entities and Finance lease receivables. Interest income and expense, presented
under assets, 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. In addition, this
line item includes derivative contracts that are made to hedge currency risk arising from
currency denominated cash collateral.
Interest income on stage 3 financial assets in the expected credit loss (ECL) calculations
totalled EUR 10,728 thousand (EUR 3,758 thousand) during the financial year. These are
included in the line items Loans and advances to the public and public sector entities.
Derivative contracts in hedge accounting that are presented under liabilities, are used as
hedges for line items Liabilities to credit institutions, Liabilities to the public and public sector
entities and Debt securities issued. Interest income on derivative contracts at fair value through
profit or loss that are presented under liabilities, 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.
Interest expense on other liabilities includes EUR 254 thousand (EUR 114 thousand) of
interest on lease liabilities recognised in accordance with IFRS 16 Leases standard.
The Parent Company has no interest income or expenses from intra-group companies during
the reporting or comparison period.
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 3. Net income from leasing operations
(EUR 1,000) Jan–Dec 2025 Jan–Dec 2024
Leasing income 145,347 139,158
Depreciation on leased assets according to plan -93,596 -88,051
Capital gains on leased assets -6 15
Tot al 51,745 51,123
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 4. Commission income and expense
(EUR 1,000) Jan–Dec 2025 Jan–Dec 2024
Commission income
Digital services 867 1,055
Other operations 41 8
Tot al 909 1,064
Commission expense
Commission fees paid -302 -324
Guarantee fees paid -15,538 -14,413
Other -2,332 -2,175
Tot al -18,172 -16,912
Net commission income -17,264 -15,848
In commission expense line item Other includes i.e. paid custody fees and funding programme update costs.
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 5. Net income on financial instruments at fair value through profit and loss
Jan–Dec 2025 (EUR 1,000)
Capital gains and
losses (net)
Changes in
fair value Total
Derivative contracts at fair value through profit or loss -165 -259,918 -260,083
Designated at fair value through profit or loss 34 280,511 280,544
Mandatorily at fair value through profit or loss - -894 -894
Day 1 gain or loss - 41 41
Net result on financial assets and liabilities through profit or loss -131 19,740 19,609
Net result from FX differences -2,035 583 -1,451
Net result from hedge accounting* 4,770 -5,561 -790
Tot al 2,604 14,763 17,367
* A specification of the net income from hedge accounting is presented in Note 19 Hedge accounting.
Jan–Dec 2024 (EUR 1,000)
Capital gains and
losses (net)
Changes in
fair value Total
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 from hedge accounting - -11,763 -11,763
Tot al 4,023 -19,109 -15,086
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
The following tables present carrying amounts of financial assets and liabilities designated at fair value through profit or loss and their fair value changes recognised during the reporting period in
the income statement under Net income on financial instruments at fair value through profit or loss and in the fair value reserve due to changes in own credit risk on financial liabilities designated at
fair value through profit or loss.
Financial assets and liabilities designated at fair value through profit or loss
(EUR 1,000)
Nominal value
31 Dec 2025
Carrying amount
31 Dec 2025
Nominal value
31 Dec 2024
Carrying amount
31 Dec 2024
Financial assets
Loans and advances to the public and public sector entities 30,000 29,473 30,000 30,940
Debt securities 5,558,325 5,592,956 3,670,119 3,676,021
Total financial assets* 5,588,325 5,622,429 3,700,119 3,706,961
Financial liabilities
Liabilities to credit institutions 79,000 77,400 79,000 79,315
Liabilities to the public and public sector entitities 1,483,405 1,238,790 1,456,192 1,334,136
Debt securities issued 11,519,951 11,084,432 9,546,266 9,198,104
Total financial liabilities 13,082,356 12,400,622 11,081,458 10,611,555
* 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 2025 and 31 Dec 2024.
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Change in fair value of financial assets designated at fair value through profit or loss
(EUR 1,000) 31 Dec 2025 1 Jan 2025
Fair value change
recognised in the
income statement
Jan–Dec 2025
, of which due to
credit risk
, of which due to
market risk
Financial assets
Loans and advances to the public and public sector entities -7,616 -6,847 -770 37 -807
Debt securities -21,149 -29,152 8,004 26,068 -18,064
Total financial assets -28,765 -35,999 7,234 26,105 -18,871
During the financial year 2025, the fair value change of debt securities was EUR 8,004 thousand (EUR 65,637 thousand). This was affected by the general decline in credit spreads in the markets,
which improved valuations. Although the rise in long-term euro market interest rates pushed valuations downwards, the positive impact of the decline in credit spreads was greater. Therefore, the
change in the value of debt securities remained positive in the financial year 2025.
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
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Change in fair value of financial liabilities designated at fair value through profit or loss
(EUR 1,000) 31 Dec 2025 1 Jan 2025
Fair value change
recognised in the
income statement
Jan–Dec 2025
Change in own
credit risk recognised
in fair value reserve
Jan–Dec 2025
Total fair value
change in
Jan–Dec 2025
Financial liabilities
Liabilities to credit institutions 2,184 -652 2,836 -697 2,139
Liabilities to the public and public sector entitities 248,156 130,527 117,629 -20,634 96,995
Debt securities issued 550,519 397,708 152,812 -56,338 96,474
Total financial liabilities 800,860 527,583 273,277 -77,669 195,608
During the financial year 2025, the change in fair value of financial liabilities designated at fair value through profit or loss of EUR 273,277 thousand (EUR -67,600 thousand) was particularly
affected by the increase in EUR market interest rates. The change in own credit risk amounted to EUR -77,669 thousand (EUR 137,202 thousand) during the financial year. The change was affected
by decrease in the Parent Company’s funding costs due to a general decrease in market credit spreads.
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
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
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 2025
Fair value change
recognised in
the income statement
Jan–Dec 2025
Financial liabilities designated at fair value through profit or loss 800,860 273,277
Derivative contracts at fair value through profit or loss hedging financial liabilities -800,821 -286,596
Net change in fair value 38 -13,320
Net change in fair value in Net results 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
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 6. Net income on financial assets at fair value through fair value reserve
(EUR 1,000) Jan–Dec 2025 Jan–Dec 2024
Capital gains from financial assets 83 -
Capital losses from financial assets - -122
Unrealised gains transferred from fair value reserve 728 124
Unrealised losses transferred from fair value reserve - -
Tot al 811 3
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 7. Other operating income and expenses
(EUR 1,000) Jan–Dec 2025 Jan–Dec 2024
Other income from credit institution operations 125 45
Total other income 125 45
(EUR 1,000) Jan–Dec 2025 Jan–Dec 2024
Regulatory expenses
Other administrative and supervisory fees -3,364 -2,974
Rental expenses -410 -316
External services -8,305 -8,089
Credit rating fees -910 -862
Audit fees* -570 -729
Insurances -817 -905
Other expenses from credit institution operations -47 -163
Total other expenses -14,423 -14,037
* Audit and other fees paid to the audit firm are specified in Note 40.
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 8. Credit losses and impairments on financial assets
MuniFin’s credit risks are described in the Consolidated Financial Statements Note 2 Risk management principles and the Group’s risk position in Section 6. Credit and counterparty credit risk.
The accounting policies of the expected credit loss calculations and impairment stages are described in the Consolidated Financial Statements Note 22 Credit risks of financial assets and other
commitments.
Credit losses and impairments
Jan–Dec 2025 (EUR 1,000)
Expected credit losses
Additions Subtractions
Recognised in the
income statement
Expected credit losses on financial assets at amortised cost
Cash and balances with central banks - 0 0
Loans and advances to credit institutions -65 30 -36
Loans and advances to the public and public sector entities -1,693 798 -895
Finance lease receivables -2 1 -1
Debt securities -2 1 0
Cash collateral to CCPs in Other assets -1 1 0
Total expected credit losses on financial assets at amortised cost -1,762 831 -931
Expected credit losses and impairments on other financial assets
Debt securities at fair value through fair value reserve -38 29 -9
Total expected credit losses and impairments on other financial assets -38 29 -9
Credit commitments (off-balance sheet) -15 15 0
Tot al -1,815 874 -941
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Adjusted
Credit losses and impairments
Jan–Dec 2024 (EUR 1,000)
Expected credit losses
Additions Subtractions
Recognised in the
income statement
Expected credit losses on financial assets at amortised cost
Cash and balances with central banks - 0 0
Loans and advances to credit institutions -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 1,252 -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 al -1,599 1,273 -326
During the financial year, MuniFin corrected the presentation of receivables from central bank. 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 9. Information on business areas and geographical market
Municipality Finance Plc’s operating segment is credit institution operations and the market for lending is Finland.
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 10. Financial assets and liabilities
Notes to the balance sheet
Financial assets
31 Dec 2025 (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 To t a l Fair value
Cash and balances with central banks 5,169,257 - - - - 5,169,257 5,169,257
Loans and advances to credit institutions 1,989,652 - - - - 1,989,652 1,989,652
, of which unreceived interest 3,787 - - - - 3,787
Loans and advances to the public and public sector entities 36,407,260 - 29,473 21,335 - 36,458,068 38,424,391
, of which unreceived interest 173,827 - 170 166 - 174,163
Debt securities 1,895,434 572,874 5,592,956 - - 8,061,264 8,061,646
, of which unreceived interest - 7,011 60,053 - - 67,064
Shares and participations in Group companies - - - 656 - 656 656
Derivative contracts at fair value through profit or loss - - - - 283,343 283,343 283,343
, of which unreceived interest - - - - 31,016 31,016
Derivative contracts in hedge accounting - - - - 1,203,273 1,203,273 1,203,273
, of which unreceived interest - - - - 171,332 171,332
Other assets 803,833 - - - - 803,833 803,833
, of which unreceived interest 482 - - - - 482
Tot al 46,265,435 572,874 5,622,429 21,991 1,486,616 53,969,345 55,936,049
The Company has not combined any items on the balance sheet under Chapter 2, Section 14(4), of the Ministry of Finance Decree.
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Financial liabilities
31 Dec 2025 (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 118,677 77,400 - 196,077 196,557
, of which unpaid interest 932 1,502 - 2,434
Liabilities to the public and public sector entities 1,075,749 1,238,790 - 2,314,539 2,324,328
, of which unpaid interest 19,719 12,535 - 32,254
Debt securities issued 36,042,597 11,084,432 - 47,127,029 47,134,838
, of which unpaid interest 390,372 73,153 - 463,525
Derivative contracts at fair value through profit or loss - - 1,359,406 1,359,406 1,359,406
, of which unpaid interest - - 20,537 20,537
Derivative contracts in hedge accounting - - 2,008,951 2,008,951 2,008,951
, of which unreceived interest - - -84,694 -84,694
Other liabilities 256,330 - - 256,330 256,330
, of which unpaid interest 27 - - 27
Tot al 37,493,353 12,400,622 3,368,357 53,262,331 53,280,410
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Adjusted
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 To t a l Fair value
Cash and balances with central banks 7,776,888 - - - - 7,776,888 7,776,888
Loans and advances to credit institutions 789,496 - - - - 789,496 789,496
, 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 - - 47,41 9
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 al 45,039,350 377,480 3,706,961 25,692 2,323,708 51,473,191 53,486,874
During the financial year, MuniFin corrected the presentation of receivables from central bank. 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.
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Adjusted
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 259,850 - - 259,850 259,850
, of which unpaid interest 42 - - 42
Tot al 37,530,169 10,611,555 2,561,718 50,703,442 50,525,650
During the financial year, MuniFin corrected the presentation of lease liability. 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.
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 11. 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 2025
Adjusted
31 Dec 2024
Cash and balances with central banks 5,169,257 7,776,888
Loans and advances to credit institutions, payable on demand 43,124 61,265
Total cash and cash equivalents 5,212,381 7,838,154
During the financial year, MuniFin corrected the presentation of receivables from central bank. 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.
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 12. Loans and advances to credit institutions
31 Dec 2025 (EUR 1,000)
Payable on demand
Other than payable
on demand
Expected
credit losses Tota l
Central bank - 38,207 0 38,207
Domestic credit institutions 41,727 175,798 -49 217,475
Foreign credit institutions 1,397 1,732,619 -47 1,733,970
Tot al 43,124 1,946,624 -96 1,989,652
Adjusted
31 Dec 2024 (EUR 1,000) Payable on demand
Other than payable
on demand
Expected
credit losses Tota l
Central bank - 31,981 0 31,981
Domestic credit institutions 59,704 199,245 -50 258,900
Foreign credit institutions 1,561 497,066 -11 498,616
Tot al 61,265 728,292 -61 789,496
During the financial year, MuniFin corrected the presentation of receivables from central bank. 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.
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 13. Loans and advances to the public and public sector entities
(EUR 1,000)
31 Dec 2025 31 Dec 2024
Total
, of which expected
credit losses To t a l
, of which expected
credit losses
Enterprises and housing corporations 20,564,245 -3,158 18,586,481 -2,350
Public sector entities 15,474,274 -159 14,877,043 -117
Non-profit organisations 419,550 -139 350,325 -95
Tot al 36,458,068 -3,456 33,813,849 -2,561
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 14. Debt securities
Debt securities issued by public sector entities
31 Dec 2025 (EUR 1,000) Publicly quoted Other To t a l
Expected
credit losses
Amortised cost - 1,669,062 1,669,062 -1
Commercial papers - 1,669,062 1,669,062 -1
Fair value through fair value reserve 97,619 - 97,619 -14
Bonds issued by other public sector entities 97,619 - 97,619 -14
Designated at fair value through profit or loss 3,341,683 - 3,341,683 -14
Government bonds 509,785 - 509,785 -
Bonds issued by other public sector entities 2,831,898 - 2,831,898 -
Tot al 3,439,303 1,669,062 5,108,364 -16
, of which eligible for central bank refinancing 3,019,417 - 3,019,417 -14
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Debt securities issued by other than public sector entities
31 Dec 2025 (EUR 1,000) Publicly quoted Other To t a l
Expected
credit losses
Amortised cost - 226,372 226,372 0
Commercial papers - 226,372 226,372 0
Fair value through fair value reserve 475,255 - 475,255 -40
Bank bonds 475,255 - 475,255 -40
Designated at fair value through profit or loss 2,251,273 - 2,251,273 -
Bank bonds 2,251,273 - 2,251,273 -
Tot al 2,726,527 226,372 2,952,900 -40
, of which eligible for central bank refinancing 2,364,549 - 2,364,549 -38
31 Dec 2025 (EUR 1,000) Publicly quoted Other To t a l
Expected
credit losses
Debt securities total 6,165,830 1,895,434 8,061,264 -56
At the Financial Statement date 31 Dec 2025, the Company has given debt securities as collateral to central counterparty, in total nominal value of EUR 152,000 thousand (EUR 100,000 thousand).
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Debt securities issued by public sector entities
31 Dec 2024 (EUR 1,000) Publicly quoted Other Tota 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 al 1,699,250 1,599,849 3,299,099 -2
, of which eligible for central bank refinancing 1,524,558 - 1,524,558 -1
Debt securities issued by other than public sector entities
31 Dec 2024 (EUR 1,000) Publicly quoted Other Tota 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 al 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 Tota l
Expected
credit losses
Debt securities total 4,053,501 1,825,411 5,878,912 -46
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 15. Finance lease receivables
(EUR 1,000) 31 Dec 2025 31 Dec 2024
Prepayments 183,033 262,438
Machinery and equipment 214,531 239,079
Fixed assets and buildings 1,227,156 1,061,429
Other assets 65 124
Expected credit losses -10 -9
Tot al 1,624,775 1,563,060
(EUR 1,000) 31 Dec 2025 31 Dec 2024
Breakdown of finance lease receivables by maturity
0–12 months 181,572 179,285
1–2 years 131,458 141,780
2–3 years 125,172 113,546
3–4 years 112,941 108,772
4–5 years 104,170 98,506
Over 5 years 1,579,738 1,404,030
Future cashflows 2,235,052 2,045,919
Unearned finance income (-) -610,277 -482,859
Carrying amount 1,624,775 1,563,060
Interest income from finance lease receivables is presented in Note 2 Interest income and expenses on row Leased assets. During the financial year 2025 and in 2024, there were no capital gains
or losses from finance lease agreements.
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 16. Credit risks of financial assets and other commitments
MuniFin’s credit risks are described in the Consolidated Financial Statements’s Note 2 Risk management principles and the Group’s risk position in Section 6. Credit and counterparty credit risk. The
expected credit loss calculation method and impairment stages are described in Note 22 Credit risk of financial assets and other commitments in the Consolidated Financial Statements.
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 2025
(EUR 1,000)
Not credit-impaired Credit-impaired
Total
Stage 1 Stage 2 Stage 3*
Gross carrying
amount
12-month
ECL
Gross carrying
amount
Lifetime
ECL
Gross carrying
amount
Lifetime
ECL
Gross carrying
amount
Expected
credit losses
Cash and balances with central banks at amortised cost 5,169,257 0 - - - - 5,169,257 0
Loans and advances to credit institutions at amortised cost 1,989,748 -96 - - - - 1,989,748 -96
Loans and advances to the public and public sector entities at amortised cost 33,772,455 -153 2,184,392 -2,648 453,869 -655 36,410,716 -3,456
Finance lease receivables at amortised cost 1,613,040 -10 11,577 -1 168 0 1,624,785 -1 0
Debt securities at amortised cost 1,892,658 -2 2,778 0 - - 1,895,436 -2
Debt securities at fair value through fair value reserve 572,874 -54 - - - - 572,874 -54
Cash collateral to CCPs in Other assets at amortised cost 803,838 -5 - - - - 803,838 -5
Credit commitments (off-balance sheet) 2,333,463 -13 97,195 -5 - - 2,430,658 -19
Tot al 48,147,333 -333 2,295,941 -2,654 454,036 -655 50,897,311 -3,642
* MuniFin has collateral and guarantee arrangements that fully cover the stage 3 receivables as described in Note 2 Risk management principles and MuniFin’s risk position in Section 6. Credit
and counterparty credit risk. MuniFin’s management expects that all the stage 3 receivables will be recovered and no final credit loss will emerge. Stage 3 receivables include EUR 2,286 thousand
(EUR 1,926 thousand) of originated credit impaired receivables (Purchased or Originated Credit Impaired, POCI). Expected credit losses for the POCI receivables amount to EUR 2 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.
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Adjusted
Exposures by asset groups and impairment stages
31 Dec 2024
(EUR 1,000)
Not credit-impaired Credit-impaired
Total
Stage 1 Stage 2 Stage 3
Gross carrying
amount
12-month
ECL
Gross carrying
amount
Lifetime
ECL
Gross carrying
amount
Lifetime
ECL
Gross carrying
amount
Expected
credit losses
Cash and balances with central banks at amortised cost 7,776,889 0 - - - - 7,776,889 0
Loans and advances to credit institutions at amortised cost 789,785 -61 - - - - 789,785 -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 al 47,466,016 -280 2,160,266 -2,105 291,705 -316 49,917,988 -2,701
During the financial year, MuniFin corrected the presentation of receivables from central bank. 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.
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
The following table presents summary of total changes and reconciliation of expected credit losses by impairment stages during the financial year.
Total expected credit losses by impairment stages
(EUR 1,000)
Not credit-impaired Credit-impaired
Total
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL ECL
Opening balance 1 Jan 2025 -280 -2,105 -316 -2,701
New assets originated or purchased -136 -445 -173 -754
Assets derecognised or repaid (excluding write-offs) 87 487 93 667
Transfers to Stage 1 -1 133 - 132
Transfers to Stage 2 2 -548 - -546
Transfers to Stage 3 0 73 -257 -184
Additional provision (Management overlay) - -242 - -242
Changes to models and inputs* used for ECL calculations -5 -7 -1 -1 4
Total 31 Dec 2025 -333 -2,654 -655 -3,642
* Represents changes to model parameters (e.g. GDP rates, unemployment rates)
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
MuniFin updated the macroeconomic scenarios quarterly to
take into account forward-looking information. The amount of
expected credit losses increased by EUR 14 thousand due to
changes made in the parameters.
MuniFin has assessed the impact of general macroeconomic
situation to customer financing receivables and credit risk. At
the end of December 2024, MuniFin’s management assessed
again the need of additional discretionary provision and
decided to release additional provision in full. It is assessed
that the update to the model used in estimating the probability
of default — and the resulting increase in expected credit
losses and stage transfers — already captures the need
previously covered by the additional provision for receivables
with significant increase in credit risk.
In June 2025, while the annual credit rating process was
still ongoing, MuniFin’s management assessed that despite
the decline in interest rates, some customers in the housing
sector were still experiencing difficulties with cash flow
sufficiency due to factors such as oversupply and higher
vacancy rates of the premises. MuniFin’s management
decided to make an additional discretionary provision of EUR
130 thousand based on a group level assessment.
At the end of December 2025, MuniFin’s management
reassessed the need for an additional discretionary provision
and decided to release the earlier group level provision and
record a new additional discretionary provision of EUR 242
thousand. The decision was based on the completion of
the 2025 credit rating updates and the assessment formed
regarding customers’ cash flow sufficiency for 2026. The
change in the additional discretionary provision was also
influenced by the update to the probability of default matrices
used in estimating default risk.
The additional discretionary provision relates to the balance
sheet item Loans and advances to the public and public sector
entities. The additional discretionary provision has not been
allocated to the contract level.
The total credit risk of MuniFin has remained low and
the amount of expected credit losses is still at low level.
Despite the decline in interest rates, some customers
in the housing sector continue to have difficulties in the
sufficiency of cash flow due to oversupply and a regional
underutilisation of the premises, among other things.
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. MuniFin’s
management estimates that all receivables will be recovered
in full and therefore no final credit loss will arise. On 31
December 2025, MuniFin had EUR 132,620 thousand (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. 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+).
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Total expected credit losses by impairment stages
(EUR 1,000)
Not credit-impaired Credit-impaired
Total
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 models and inputs used for ECL calculations -1 6 -1,070 -35 -1,122
Total 31 Dec 2024 -280 -2,105 -316 -2,701
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
The following table presents the reconciliation of the expected credit losses by impairment stages from the opening balance sheet to the end of financial year for the asset group that forms the
most substantial part of the expected credit losses on the balance sheet date. For the other asset groups, expected credit losses have not changed significantly during the reporting period and
have been at an immaterial level throughout the period.
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
Total
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL ECL
Opening balance 1 Jan 2025 -142 -2,103 -316 -2,561
New assets originated or purchased -20 -440 -173 -633
Assets derecognised or repaid (excluding write-offs) 13 485 93 591
Transfers to Stage 1 -1 133 - 132
Transfers to Stage 2 2 -547 - -545
Transfers to Stage 3 0 73 -257 -184
Additional provision (Management overlay) - -242 - -242
Changes to models and inputs used for ECL calculations -4 -7 -1 -1 3
Total 31 Dec 2025 -153 -2,648 -655 -3,456
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
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
Total
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 -16 -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 models and inputs used for ECL calculations -13 -1,070 -35 -1,119
Total 31 Dec 2024 -142 -2,103 -316 -2,561
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Forward-looking information
In the assessment of whether the credit risk of an
instrument has significantly increased (SICR) and in the
measurement of expected credit losses, forward-looking
information and macroeconomic scenarios are included
in the model. These macroeconomic projections cover
a period of 3 years and as no reliable macroeconomic
projections exceeding a three-year time horizon are
available, forward-looking adjustment will be limited
to a three-year period. Mainly three scenarios are
used; base, optimistic and adverse. Scenarios include
probability weights. The scenario probability weightings
are described in the adjacent table.
Scenario
31 Dec 2025 31 Dec 2024
2026 2027 2028 2025 2026 2027
Adverse 30% 30% 30% 40% 40% 40%
Base 50% 50% 50% 50% 50% 50%
Optimistic 20% 20% 20% 10% 10% 10%
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
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
following table presents the macroeconomic variables and
their forecasts over the three-year forecast period.
Macroeconomic variables
31 Dec 2025 31 Dec 2024
Scenario 2026 2027 2028 2025 2026 2027
Government of Finland long-term
interest rates, %
Adverse 5.0 4.5 4.3 5.0 4.2 3.5
Base 3.2 3.2 3.3 2.8 2.8 2.8
Optimistic 3.3 3.3 3.4 3.2 3.2 3 .1
Residential Real Estate
(selling price, YoY change), %
Adverse -10.0 0.0 2.5 -10.0 0.0 4.0
Base 1.5 3.0 2.0 4.0 3.0 2.0
Optimistic 4.5 3.5 2.0 4.0 2.5 2.5
Unemployment rate, %
Adverse 11.5 11.0 10.0 10.8 10.2 9.2
Base 8.8 8.0 7.7 8.3 7.5 6.9
Optimistic 8.2 7.0 6.5 6.5 6.0 5.7
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Scenario descriptions
Base scenario
Growth forecasts for the global economy have been slightly
revised upwards, as the impact of trade tensions is more
moderate than previously anticipated. The cyclical recovery
and the stability of the inflation outlook support the view that
the ECB has already reached the bottom of its rate-cutting
cycle ie. where ECB deposit facility rate is at 2.0%. Germany’s
infrastructure investments, along with significant euro
area-wide efforts in defense and security, are expected
to strengthen economic growth as the forecast period
progresses. Moderate monetary tightening is anticipated to
begin in 2027.
Large investment needs are increasing the demand for capital
and keeping government borrowing requirements high,
which is putting upward pressure on long-term interest rates.
The yield curve is expected to steepen in 2026. However,
due to monetary tightening and rising short-term rates, the
yield curve is expected to begin flattening again from 2027
onwards.
The recovery of Finland’s economy has been delayed, which
is reflected in weaker GDP growth in 2025, slower inflation,
higher unemployment, and faster public sector indebtedness
compared to earlier estimates. However, the significant
recovery in exports and investments is already supporting
growth, and the expected rebound in private consumption has
improved Finland’s growth outlook for 2026–2028. Cyclical
recovery along with investments in the green transition are
seen to accelerate GDP growth to 2% in 2026–2027, after
which the economy converges to its long-term growth
trajectory. Average yearly unemployment rate is expected
to peak at 9.4% in 2025 and remain elevated above 8% in
2026–2027.
The ratio of the public sector deficit to GDP will gradually
decline, but it will remain above 3% throughout the
forecast period. The government’s fiscal balance goals are
complicated by increasing defense spending and rising
interest expenses. Finland’s public debt ratio is expected to
reach 90% already at the end of the forecast period. In the
municipal sector, adjustment measures have taken effect
faster than anticipated, resulting in a smaller deficit than
previously estimated for 2025–2026. High personnel costs,
rising employment-related expenses, and weak revenue
growth are expected to slightly increase the deficit towards
the end of the forecast period. The forecast for wellbeing
services counties’ indebtedness has improved, likely reducing
their need for additional financing.
In the housing market, transaction volumes have already
increased, but prices have not yet begun to rise. Private-
sector new construction is unlikely to recover before 2027.
State-supported housing production will be constrained
in 2026–2027 by substantial cuts to interest subsidy loan
authorisations.
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
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 3.0% in 2026 and 2.8% in 2027.
Unemployment will start to decline in 2026 and fall to 7% in
2027. Consumer price inflation remains close to 2% over
the forecast period. Home price inflation is anticipated to
accelerate to 4.5% in 2026, followed by a 3.5% annual gain in
2027. Due to the faster-than-expected recovery in aggregate
demand, the ECB is anticipated to start raising interest rates
already in 2026.
Adverse scenario
In the adverse scenario, Europe’s security situation
remains uncertain, weakening consumers confidence and
investments. Geopolitical tensions in the Baltic Sea region
intensify, causing disruptions in land, sea, and air transport,
which in turn increases Finland’s country risk.
The ECB is forced to raise short-term interest rates as
inflation accelerates, driven by the end of Russian fossil
energy imports and increased European’s investments in
defense and border security. In nearly energy self-sufficient
Finland, inflation turns negative due to weak consumer
demand and government spending cuts.
Short-term interest rates rise due to inflation expectations.
Long-term rates increase as investors are concerned about
country risk and reduce their positions, but the direction of
rates reverses quickly as the outlook improves. The euro
weakens when markets focus on country risk and a potential
energy crisis and strengthens when the discussion shifts to
inflation and interest rate expectations.
The following table presents the sensitivity of the expected
credit losses to the forward-looking information assuming
100% weight for adverse scenario until 2026 (2025).
Sensitivity analysis
(EUR 1,000)
31 Dec 2025 31 Dec 2024
Weighted scenario
Adverse scenario
(100%)
Excluding weighted
scenario Weighted scenario
Adverse scenario
(100%)
Excluding weighted
scenario
ECL 3,642 5,307 3,217 2,701 4,765 2,578
Proportion of the exposure in Stage 2 and 3 5.65% 11.23% 5.50% 5.21% 11.26% 5.17%
The sensitivity analysis does not include the additional discretionary provisions (management overlay).
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements 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.
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 as stage 2.
Loan modifications due to reasons other than the customer’s
financial difficulties are not classified as forborne exposures;
such receivables are classified as 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 as stage 3.
Non-performing and forborne exposures
31 Dec 2025 (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 - 9,372 9,372 -17 9,356
Unlikely to be paid - 194,519 194,519 -287 194,232
Forborne exposures 407,413 250,147 657,560 -551 657,009
Tot al 407,413 454,038 861,451 -854 860,597
In 2025, 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. Payment delays were also observed in the same sectors. 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 or ESG related risks have had no direct impact on MuniFin’s customers or receivables.
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
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 al 430,479 291,705 722,184 -573 721,610
Realised credit losses
MuniFin has not had any final realised credit losses during the financial year or the comparison year.
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 17. Shares and participations
31 Dec 2025 (EUR 1,000) Publicly quoted Other To t a l
, of which in credit
institutions
Shares and participations in Group companies - 656 656 -
Tot al - 656 656 -
, of which at acquisition cost - 656 656 -
MuniFin does not have equity instruments valued at fair value through fair value reserve. MuniFin does not have shares and participations subject to securities lending.
31 Dec 2024 (EUR 1,000) Publicly quoted Other To t al
, of which in credit
institutions
Shares and participations in Group companies - 656 656 -
Tot al - 656 656 -
, of which at acquisition cost - 656 656 -
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 18. Derivative contracts
31 Dec 2025 (EUR 1,000)
Nominal value of underlying instrument Fair value
Remaining maturity
Positive NegativeLess than 1 year 1–5 years Over 5 years Tot al
Derivative contracts in hedge accounting
Interest rate derivatives
Interest rate swaps 3,220,780 18,769,216 16,068,885 38,058,880 883,575 -1,166,959
, of which cleared by the central counterparty 3,185,280 18,752,851 15,435,987 36,985,118 854,731 -1,143,740
Currency derivatives
Cross currency interest rate swaps 3,297,394 12,388,102 754,571 16,440,067 319,697 -841,992
Total derivative contracts in hedge accounting 6,518,174 31,157,318 16,823,456 54,498,947 1,203,273 -2,008,951
Derivative contracts at fair value through profit or loss
Interest rate derivatives
Interest rate swaps 9,840,177 12,067,683 5,567,231 27,475,091 231,688 -1,050,133
, of which cleared by the central counterparty 8,301,061 9,141,785 2,464,314 19,907,159 139,170 -82,217
Currency derivatives
Cross currency interest rate swaps 1,245,445 3,244,298 47,622 4,537,365 47,598 -290,276
Forward exchange contracts 3,337,001 - - 3,337,001 4,056 -18,997
Equity derivatives - - - - - -
Total derivative contracts at fair value through profit or loss 14,422,624 15,311,981 5,614,853 35,349,458 283,343 -1,359,406
Total derivative contracts 20,940,798 46,469,298 22,438,309 89,848,405 1,486,616 -3,368,357
Line item Derivative contracts at fair value through profit or loss contains all derivatives of MuniFin 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 municipal sector and
all derivative contracts hedging derivatives with municipal sector. 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. In addition this line item includes derivative contracts that are made to hedge currency risk arising from currency denominated cash collateral.
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
31 Dec 2024 (EUR 1,000)
Nominal value of underlying instrument Fair value
Remaining maturity
Positive NegativeLess than 1 year 1–5 years Over 5 years Tot al
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
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 19. 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
Group’s hedging strategy is to mainly hedge all material
foreign exchange and interest risks of financial assets and
liabilities with maturities exceeding one year. As a result,
foreign currency denominated items are translated into
euros and 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.
Company applies fair value hedge accounting to:
• Financial assets and liabilities and lease agreements
denominated in euros, where the plain-vanilla interest rate
of the hedged item has been swapped to a floating rate
using derivatives.
• Foreign currency denominated financial liabilities with fixed
interest rates, which have been hedged by exchanging the
principal into euros and the interest rate into a floating rate.
The Company applies fair value hedge accounting according
to IFRS 9 (one-to-one hedging or group of items hedging)
and according to IAS 39 (portfolio hedge accounting). The
Company does not apply cash flow hedge accounting. The
Company has documented the hedge relationships within
hedge accounting, and they comply with the Group’s risk
management objectives and strategy.
Accounting policies related to hedge accounting
are described in the Note 21 Hedge accounting in the
Consolidated Financial Statements.
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.
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Hedge accounting
31 Dec 2025 (EUR 1,000) Nominal value
Fair value hedge
accounting total
Hedged item:
lending receivables
Hedged item:
lease and lending
receivables and euro
denominated debt
Hedged item: currency
denominated debt
Assets
Loans and advances to the public and public sector entities 10,506,527 9,957,100 9,901,678 55,422 -
Finance lease receivables 415,681 411,307 - 411,307 -
Total assets 10,922,208 10,368,407 9,901,678 466,729 -
Liabilities
Liabilities to credit institutions 109,000 96,347 - 96,347 -
Liabilities to the public and public sector entities 1,099,710 1,075,749 - 1,075,749 -
Debt securities issued 35,679,523 35,110,255 - 18,419,609 16,690,646
Total liabilities 36,888,233 36,282,351 - 19,591,704 16,690,646
Hedge accounting
31 Dec 2024 (EUR 1,000) Nominal value
Fair value hedge
accounting total
Hedged item:
lending receivables
Hedged item:
lease and lending
receivables and euro
denominated debt
Hedged item: currency
denominated debt
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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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Value of hedged risk
(EUR 1,000)
31 Dec 2025 1 Jan 2025
Recognised
in the income
statement
Jan–Dec 2025 31 Dec 2024 1 Jan 2024
Recognised
in the income
statement
Jan–Dec 2024
Assets
IAS 39 portfolio hedge accounting
Loans and advances to the public and public sector entities -576,717 -604,957 28,241 -604,957 -907,319 302,362
Derivative contracts in hedge accounting 615,184 658,479 -43,296 658,479 969,754 -311,275
Accumulated fair value accrual from the termination of hedge accounting -6,107 -1,411 -4,696 -1,411 -1,652 240
IAS 39 portfolio hedge accounting, net 32,360 52,111 -19,751 52,111 60,783 -8,672
IFRS 9 fair value hedge accounting
Loans and advances to the public and public sector entities -1,093 2,214 -3,306 2,214 1,829 385
Finance lease receivables -10,265 -4,427 -5,839 -4,427 -12,251 7,825
Derivative contracts in hedge accounting 9,312 828 8,484 828 9,060 -8,232
IFRS 9 fair value hedge accounting, net -2,046 -1,385 -661 -1,385 -1,362 -23
Liabilities
IFRS 9 fair value hedge accounting
Liabilities to credit institutions 13,555 7,357 6,198 7,357 8,111 -754
Liabilities to the public and public sector entities 39,688 -7,263 46,951 -7,263 4,425 -11,688
Debt securities issued 761,349 901,690 -140,341 901,690 1,407,537 -505,847
Derivative contracts in hedge accounting -825,392 -927,435 102,043 -927,435 -1,442,656 515,221
IFRS 9 fair value hedge accounting, net -10,800 -25,651 14,851 -25,651 -22,583 -3,068
Realised income 4,770 - 4,770 - - -
Total hedge accounting 24,284 25,075 -790 25,075 36,838 -11,763
Net result from hedge accounting from the financial year was EUR -790 thousand (EUR - 11,763 thousand). Change in net result from hedge accounting was mainly due to changes in EUR interest
rate curves.
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
The following table presents the impact of Cost-of-Hedging of cross currency derivatives on equity in the Cost-of-Hedging reserve.
Hedging impact on equity after taxes
(EUR 1,000) 31 Dec 2025 1 Jan 2025
Impact on
Cost-of-Hedging reserve
Cost-of-Hedging
Derivative contracts in hedge accounting 18,679 45,714 -27,035
Tot al 18,679 45,714 -27,035
Hedging impact on equity after taxes
(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 al 45,714 21,821 23,892
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
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 2025 (EUR 1,000)
Hedging instruments
Gains/(losses) attributable to the hedged risk
Hedge
ineffectivenessHedged item Hedged items Hedging instruments
Assets
IAS 39 portfolio hedge accounting
Fixed rate and revisable rate loans Interest rate derivatives -576,717 615,184 38,467
IFRS 9 fair value hedge accounting
Structured lending Interest rate derivatives -1,093 941 -152
Fixed rate and revisable rate leased assets Interest rate derivatives -10,265 8,371 -1,894
Assets total -588,075 624,496 36,421
Liabilities
IFRS 9 fair value hedge accounting
Financial liabilities denominated in EUR Interest rate derivatives 849,410 -859,589 -10,179
Financial liabilities denominated in foreign currencies
Currency derivatives (cross
currency interest rate swaps)
Interest rate derivatives -34,818 34,197 -621
Liabilities total 814,592 -825,392 -10,800
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Effectiveness of hedge accounting
31 Dec 2024 (EUR 1,000)
Hedging instruments
Gains/(losses) attributable to the hedged risk
Hedge
ineffectivenessHedged item 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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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 20. Intangible and tangible assets
Intangible assets
(EUR 1,000)
31 Dec 2025 31 Dec 2024
IT systems 836 2,720
, of which assets not yet available for use 106 -
Tot al 836 2,720
Intangible assets do not include other development costs or goodwill. The intangible assets not yet available for use consists of ongoing development projects of IT systems.
During the financial year, depreciation of intangible assets amounted to EUR 1,989 thousand (EUR 3,833 thousand).
Tangible assets
(EUR 1,000)
31 Dec 2025 31 Dec 2024
Right-of-use assets 6,472 7,548
Other tangible assets 2,468 688
Tot al 8,941 8,236
MuniFin does not have investment properties. During the financial year, depreciation of tangible assets amounted to EUR 1,986 thousand (EUR 2,137 thousand).
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Intangible assets Tangible assets
Jan–Dec 2025 (EUR 1,000) Total IT systems Other tangible assets Right-of-use assets Tot a l
30,813 5,574 8,532 14,105
+ Additions 106 2,350 369 2,719
- Disposals -2,048 -3,945 -368 -4,314
Acquisition cost 31 Dec 28,871 3,978 8,532 12,511
Accumulated depreciation 1 Jan 28,093 4,885 984 5,869
- Accumulated depreciation on disposals -2,048 -3,945 -340 -4,285
+ Depreciation for the financial year 1,989 570 1,416 1,986
Accumulated depreciation 31 Dec 28,034 1,510 2,060 3,570
Carrying amount 31 Dec 836 2,468 6,472 8,941
Intangible assets Tangible assets
Jan–Dec 2024 (EUR 1,000) Total IT systems Other tangible assets Right-of-use assets To t a l
Acquisition cost 1 Jan 30,574 5,217 14,616 19,832
+ Additions 239 386 655 1,041
- Disposals - -29 -6,739 -6,768
Acquisition cost 31 Dec 30,813 5,574 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 2,720 688 7,548 8,236
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 21. Other assets
Note 22. Accrued income and prepayments
(EUR 1,000) 31 Dec 2025 31 Dec 2024
Invoiced leasing 24,115 23,305
Given cash collateral to CCPs 803,833 889,682
Other 3,536 2,925
Tot al 831,484 915,913
MuniFin did not have receivables related to payment transfers as at 31 Dec 2025 or 31 Dec 2024.
(EUR 1,000) 31 Dec 2025 31 Dec 2024
Tax income 32 16,577
Prepayments 3,064 2,220
Tot al 3,096 18,797
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 23. Deferred tax assets and liabilities
Deferred tax assets
(EUR 1,000) 1 Jan 2025
Recognised in the
income statement
Recognised
in equity
Paid during the
financial year 31 Dec 2025
On right-of-use assets 10 19 - - 29
Tot al 10 19 - - 29
Deferred tax liabilities
(EUR 1,000) 1 Jan 2025
Recognised in the
income statement
Recognised
in equity
Paid during the
financial year 31 Dec 2025
On fair value reserve 54,763 - -22,668 - 32,095
Tot al 54,763 - -22,668 - 32,095
Voluntary credit loss provision and depreciation difference include EUR 337,598 thousand ( EUR 317,363 thousand) in non-recognised deferred tax liabilities.
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
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 right-of-use assets 8 2 - - 10
Tot al 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 al 21,028 - 33,736 - 54,763
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 24. Debt securities issued
31 Dec 2025 31 Dec 2024
(EUR 1,000) Carrying amount Nominal value Carrying amount Nominal value
Bonds 43,051,906 44,046,472 41,125,457 42,306,455
Other* 4,075,123 4,086,001 3,408,849 3,421,647
Tot al 47,127,029 48,132,474 44,534,306 45,728,102
* Line item contains short-term funding issued by MuniFin.
Benchmark issuances during the year 2025 based on their settlement date Value date Maturity date Interest-% Nominal value (1,000) Currency
Fixed rate benchmark bond, issued under the MTN programme 28 Jan 2025 14 Dec 2029 2.625% 1,250,000 EUR
Fixed rate benchmark bond, issued under the MTN programme 31 Mar 2025 1 Apr 2030 4.250% 1,000,000 USD
Fixed rate benchmark bond, issued under the MTN programme 10 Jun 2025 14 Jun 2032 2.625% 1,000,000 EUR
Fixed rate benchmark bond, issued under the MTN programme 30 Sep 2025 6 Oct 2028 3.625% 1,500,000 USD
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
2025 2024
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 167,558 2,463,874 44,534,306 131,458 2,622,551 40,872,798
Cash flow changes from operating activities
Additions to issued debt securities Bonds 28,997 84,222 9,871,536 51,008 30,713 9,131,597
Additions to debt securities issued Other - - 36,381,162 - - 19,510,198
Additions total 28,997 84,222 46,252,698 51,008 30,713 28,641,795
Deductions to issued debt securities Bonds -14,372 -99,387 -6,638,120 -15,346 -207,008 -5,754,758
Deductions to debt securities issued Other - - -35,714,889 - - -20,088,676
Deductions total -14,372 -99,387 -42,353,009 -15,346 -207,008 -25,843,434
Cash flow changes from operating activities in total 14,626 -15,165 3,899,689 35,662 -176,295 2,798,361
Changes in the balance sheet value including valuations
and FX revaluations -8,437 -134,170 -1,306,966 437 17,618 863,147
Carrying amount 31 Dec 173,747 2,314,539 47,127,029 167,558 2,463,874 44,534,306
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 25. Other liabilities
(EUR 1,000) 31 Dec 2025 31 Dec 2024
Other liabilities
Lease liabilities* 6,618 7,599
Cash collateral taken from CCPs 256,330 259,850
Other 12,213 17,732
Tot al 275,162 285,181
* Based on lease contracts, the Parent Company will pay rents within one year EUR 1,281 thousand, within 1 to 5 years EUR 4,557 thousand and after 5 years EUR 781 thousand.
Note 26. Accrued expenses and deferred income
(EUR 1,000) 31 Dec 2025 31 Dec 2024
Accrued expenses 13,181 12,496
Deferred income* 34,044 32,989
Tot al 47,226 45,485
* Item consists mainly of leasing prepayments.
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 27. Act on the Resolution of Credit Institutions (1194/2014)
MuniFin’s crisis resolution authority is the EU’s Single Resolution Board (SRB) and 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 change did not have a significant effect on
MuniFin’s operations.
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 28. Breakdown of financial assets and liabilities at carrying amount by maturity
Financial assets
31 Dec 2025 (EUR 1,000) 0–3 months 3–12 months 1–5 years 5–10 years Over 10 years To t al
Cash and balances with central banks 5,169,257 - - - - 5,169,257
Debt securities eligible for central bank refinancing 271,836 446,906 3,371,640 1,293,584 - 5,383,966
Loans and advances to credit institutions 1,934,387 38,209 17,056 - - 1,989,652
Loans and advances to the public and public sector entities 668,988 1,854,966 8,507,026 8,439,570 16,987,518 36,458,068
Debt securities 1,595,337 401,241 517,675 163,045 - 2,677,298
Shares and participations in Group companies - - - - 656 656
Derivative contracts 135,798 30,141 609,518 369,495 341,662 1,486,616
Other assets 803,833 - - - - 803,833
Tot al 10,579,436 2,771,463 13,022,915 10,265,694 17,329,836 53,969,345
Financial liabilities
31 Dec 2025 (EUR 1,000) 0–3 months 3–12 months 1–5 years 5–10 years Over 10 years To t al
Liabilities to credit institutions 27,505 - 120,511 23,901 24,161 196,077
Liabilities to the public and public sector entities 329,021 77,953 673,797 607,221 626,546 2,314,539
Debt securities issued 7,065,130 4,216,017 28,299,475 6,736,940 809,468 47,127,029
Derivative contracts 186,012 165,724 1,609,683 1,002,537 404,401 3,368,357
Other liabilities 256,330 - - - - 256,330
Tot al 7,863,998 4,459,695 30,703,465 8,370,599 1,864,575 53,262,331
Liabilities and hedging derivatives that may be called before maturity have been classified in the maturity class corresponding to the first possible call date. The Company estimates it will call
10–30% of its callable liabilities in 2026. In 2025, the Company called 42% of its callable liabilities.
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Adjusted
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 al
Cash and balances with central banks 7,776,888 - - - - 7,776,888
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 736,849 38,140 14,507 - - 789,496
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 al 12,075,979 2,496,791 11,739,344 9,168,275 15,992,802 51,473,191
During the financial year, MuniFin corrected the presentation of receivables from central bank. 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.
Adjusted
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 al
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 259,850 - - - - 259,850
Tot al 5,936,354 6,537,575 27,473,904 7,876,394 2,879,214 50,703,442
During the financial year, MuniFin corrected the presentation of lease liability. 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.
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 29. Breakdown of balance sheet items into domestic and foreign currency
Assets
31 Dec 2025 (EUR 1,000) Domestic currency Foreign currency Tot a l , of which intra-group
Cash and balances with central banks 5,169,257 - 5,169,257 -
Debt securities eligible for central bank refinancing 5,383,966 - 5,383,966 -
Loans and advances to credit institutions 1,946,701 42,950 1,989,652 -
Loans and advances to the public and public sector entities 36,458,068 - 36,458,068 -
Finance lease receivables 1,624,775 - 1,624,775 -
Debt securities 2,677,298 - 2,677,298 -
Derivative contracts 1,432,394 54,221 1,486,616 -
Other assets 845,042 - 845,042 656
Tot al 55,537,502 97,171 55,634,673 656
Liabilities and equity
31 Dec 2025 (EUR 1,000) Domestic currency Foreign currency Tot a l , of which intra-group
Liabilities to credit institutions 196,077 - 196,077 -
Liabilities to the public and public sector entities 2,294,776 19,763 2,314,539 -
Debt securities issued 22,538,932 24,588,097 47,127,029 -
Derivative contracts 3,286,871 81,486 3,368,357 -
Other liabilities including appropriations and equity 2,597,747 30,924 2,628,671 -
Tot al 30,914,403 24,720,270 55,634,673 -
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Adjusted
Assets
31 Dec 2024 (EUR 1,000) Domestic currency Foreign currency To t a l , of which intra-group
Cash and balances with central banks 7,776,888 - 7,776,888 -
Debt securities eligible for central bank refinancing 3,600,100 - 3,600,100 -
Loans and advances to credit institutions 729,246 60,249 789,496 -
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 845,051 101,281 946,332 656
Tot al 52,687,840 404,404 53,092,244 656
During the financial year, MuniFin corrected the presentation of receivables from central bank. 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.
Liabilities and equity
31 Dec 2024 (EUR 1,000) Domestic currency Foreign currency To t 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 al 29,481,194 23,611,050 53,092,244 -
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 30. Fair value hierarchy of financial assets and liabilities
Valuation framework
MuniFin has implemented a framework for the arrangements,
activities and procedures related to the MuniFin’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)
• 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. Fair
value explanation process consists of a daily analysis and
explanation of the changes in fair values by Risk Management.
The independent price verification is performed monthly as a
part of MuniFin’s IPV process by a third party service provider.
The results of the counterparty valuation control, the fair value
explanation and independent price verifcation control are
reported monthly to the CFO and quarterly to the Finance
Management Team. The independent model validation is
performed annually for a subset of MuniFin’s valuation models
by a third-party service provider. The results of the model
validation are reported to the Finance Management Team.
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Accounting policies requiring management
judgement and key uncertainty factors
related to estimates
The key assumptions made by the Company concern
key uncertainty factors pertaining to the future and the
estimates at the financial statement date which relate to
the determination of fair value. The level of management
judgement required in establishing fair value of financial
instruments for which there is a quoted price in an active
market is usually minimal. For the valuation of financial
instruments where prices quoted in active markets are not
available, the Company uses valuation techniques to establish
fair value. These valuation techniques involve some level of
management judgement, the degree of which will depend on
the observability of the input parameters and the instrument’s
complexity. The Company has estimated that the most
material management judgement to determination of fair
value relates to:
• the choice of valuation parameters and modelling
techniques in order to derive the fair value of financial
instruments
• determing the hierarchy level to which a financial
instrument should be classified, when the valuation is
determined by a number of inputs, of which some are
observable, and others are unobservable.
In addition the Company has defined key estimates related to
determination of fair value as following:
• judgement on which market parameters are observable
• applying the input data, assumptions and modelling
techniques in particular, where data is obtained from
infrequent market transactions
• the fair value adjustments incorporating relevant risk
factors.
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
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. A market is deemed to be functioning if price
quotations are readily and consistently available, and they
reflect real market transactions executed in a consistent
manner between independent parties. If a quoted price in
an active market is not available for a financial instrument,
the Company uses valuation techniques standard across
the industry and for which sufficient information is available
to determine the fair value. The chosen valuation technique
should include all factors that market participants would
consider in pricing the financial instrument. Observable inputs
are used as widely as possible in the valuation technique and
the use of unobservable inputs minimised.
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.
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
does not use the cost approach for the valuation of any of its
financial instruments.
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
The Company classifies fair values using a fair value hierarchy
which is divided into level 1, 2 and 3 inputs, which reflects the
significance of the inputs used in the fair valuation.
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 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 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, it will be defined as a level 3 valuation input as
these types of inputs are per definition unobservable.
The Company uses the market approach for the valuation of
investment bonds of the liquidity portfolio. Level 1 instruments
mainly contain the Company’s investments in debt securities.
For all level 1 assets, the Company uses market prices
of identical assets. The Company does not use prices of
comparable assets.
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
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
• Hybrid instruments.
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 decribed more detailed in section Sensitivity
analysis of unobservable inputs.
The Company uses the income approach for many of its
financial instruments. Level 2 instruments comprise mainly
OTC derivatives, the Company’s issued plain-vanilla financial
liabilities and the Company’s lending agreements. Level 3
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.
Separation of fair value changes related to changes
in own credit risk
For the separation of fair value changes related to changes
in own credit risk, the Company applies income approach.
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
• 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.
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Credit valuation adjustments
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 CVA that measures counterparty
credit risk and MuniFin’s own DVA are both taken into
account when calculating credit risk exposures arising
from derivative counterparties. The CVA is estimated for
each derivative counterparty by calculating the Company’s
expected positive exposure throughout the maturity of the
derivative portfolio, taking into account the probability of
default and the estimated amount of loss in the possible event
of default. Input data for the calculation is based on the terms
of CSA agreements, generally accepted assumptions in the
markets on the loss given default and expected probabilities
calculated based on credit default swaps (CDS). Similarly,
the DVA is determined on the basis of MuniFin’s expected
negative exposures, taking into account the probability of
MuniFin’s own default and the loss given default, in addition
the Company calculates Funding Valuation Adjustment (FVA)
for those derivative contracts that do not hold cash collateral
arrangements (derivatives with MuniFin’s customers).
Initial recognisition
The best evidence of the fair value of a financial instrument
on initial recognition is usually the transaction price. If the fair
value on initial recognition differs from the transaction price
and the fair value is determined based on unobservable inputs
with significant impact on the valuation, then the financial
instrument is initially measured at fair value and adjusted by
the difference between the fair value on initial recognition
and the transaction price (Day 1 gain or loss). The difference
is amortised on a straight-line basis throughout the lifetime of
the contract. Day 1 gain or loss for MuniFin’s is presented in
the table below.
Day 1 gain or loss (EUR 1,000) Jan–Dec 2025 Jan–Dec 2024
Opening balance in the beginning of the reporting period -309 -350
Recognised in the income statement during the year 41 41
Deferred gain or loss on new transactions - -
Total at the end of the reporting period -268 -309
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
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 the fair value reserve.
The following table presents financial instruments at fair value categorised by fair value hierarchy level.
Financial assets
31 Dec 2025 (EUR 1,000) Carrying amount
Fair value
Level 1 Level 2 Level 3 Total
At fair value
Fair value through fair value reserve
Debt securities eligible for central bank refinancing 492,956 407,391 85,566 - 492,956
Debt securities 79,918 79,918 - - 79,918
Designated at fair value through profit or loss
Loans and advances to the public and public sector entities 29,473 - 29,473 - 29,473
Debt securities eligible for central bank refinancing 4,891,009 4,838,530 52,479 - 4,891,009
Debt securities 701,946 701,946 - - 701,946
Mandatorily at fair value through profit or loss
Loans and advances to the public and public sector entities 21,335 - - 21,335 21,335
Shares and participations in Group companies 656 - - 656 656
Fair value through profit or loss
Derivative contracts at fair value through profit or loss 283,343 - 282,834 509 283,343
Derivative contracts in hedge accounting 1,203,273 - 1,203,273 - 1,203,273
Total at fair value 7,703,910 6,027,785 1,653,625 22,500 7,703,910
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Financial assets
31 Dec 2025 (EUR 1,000) Carrying amount
Fair value
Level 1 Level 2 Level 3 Total
In fair value hedge accounting
Amortised cost
Loans and advances to the public and public sector entities 9,957,100 - 10,365,154 - 10,365,154
Total in fair value hedge accounting 9,957,100 - 10,365,154 - 10,365,154
At amortised cost
Cash and balances with central banks 5,169,257 5,169,257 - - 5,169,257
Loans and advances to credit institutions 1,989,652 412,594 1,577,058 - 1,989,652
Loans and advances to the public and public sector entities 26,450,159 - 28,008,428 - 28,008,428
Debt securities eligible for central bank refinancing
Debt securities 1,895,434 - 1,895,815 - 1,895,815
Other assets 803,833 - 803,833 - 803,833
Total at amortised cost 36,308,335 5,581,851 32,285,135 - 37,866,985
Total financial assets 53,969,345 11,609,636 44,303,913 22,500 55,936,049
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Financial liabilities
31 Dec 2025 (EUR 1,000) Carrying amount
Fair value
Level 1 Level 2 Level 3 Total
At fair value
Designated at fair value through profit or loss
Liabilities to credit institutions 77,400 - 77,400 - 77,400
Liabilities to the public and public sector entities 1,238,790 - 1,203,983 34,808 1,238,790
Debt securities issued 11,084,432 - 10,955,634 128,798 11,084,432
Fair value through profit or loss
Derivative contracts at fair value through profit or loss 1,359,406 - 1,265,710 93,695 1,359,406
Derivative contracts in hedge accounting 2,008,951 - 1,976,470 32,481 2,008,951
Total at fair value 15,768,979 - 15,479,197 289,782 15,768,979
In fair value hedge accounting
Amortised cost
Liabilities to credit institutions 96,347 - 96,827 - 96,827
Liabilities to the public and public sector entities 1,075,749 - 1,085,538 - 1,085,538
Debt securities issued* 35,110,255 - 34,928,918 189,147 35,118,064
Total in fair value hedge accounting 36,282,351 - 36,111,283 189,147 36,300,429
At amortised cost
Liabilities to credit institutions 22,330 - 22,330 - 22,330
Debt securities issued 932,342 - 932,342 - 932,342
Other liabilities 256,330 - 256,330 - 256,330
Total at amortised cost 1,211,002 - 1,211,002 - 1,211,002
Total financial liabilities 53,262,331 - 52,801,481 478,929 53,280,410
* MuniFin’s fixed-rate benchmark bond issuances are presented on level 2 due the fact that these bonds are in fair value hedge accounting with respect to the hedged risk. Valuation of the hedged
risk is based on the level 2 inputs. In the Notes of the Financial Statements, the Company’s fixed-rate benchmark bonds fair value is adjusted to reflect fair value based on the quoted prices from
Bloomberg. The market price is a level 1 input.
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Adjusted
Financial assets
31 Dec 2024 (EUR 1,000) Carrying amount
Fair value
Level 1 Level 2 Level 3 Total
At fair value
Fair value through fair value reserve
Debt securities eligible for central bank refinancing 344,310 324,179 20,131 - 344,310
Debt securities 33,170 33,170 - - 33,170
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 eligible for central bank refinancing 3,255,790 3,255,790 - - 3,255,790
Debt securities 420,231 410,243 9,988 - 420,231
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
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Adjusted
Financial assets
31 Dec 2024 (EUR 1,000) Carrying amount
Fair value
Level 1 Level 2 Level 3 Total
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 7,776,888 7,776,888 - - 7,776,888
Loans and advances to credit institutions 789,496 181,088 608,408 - 789,496
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
During the financial year, MuniFin corrected the presentation of receivables from central bank. 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.
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Adjusted
Financial liabilities
31 Dec 2024 (EUR 1,000) Carrying amount
Fair value
Level 1 Level 2 Level 3 Total
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 - 987,489 86,447 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 - 12,844,298 328,974 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 259,850 - 259,850 - 259,850
Total at amortised cost 1,741,459 - 1,741,459 - 1,741,459
Total financial liabilities 50,703,442 - 49,907,260 618,390 50,525,650
During the financial year, MuniFin corrected the presentation of lease liability. 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 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
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, the MuniFin has
defined a materiality (significance) threshold to the fair value
of an instrument and pre-defined the stress level that is
assessed to be a ‘reasonable possible alternative assumption’
to the valuation input. In addition, in order to assess the
significance, the Company uses a materiality threshold for
comparing the impact of the unobservable input on the fair
value relative 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 the assessment, the Company
has identified level 3 instruments for which the impact of
unobservable inputs on the fair value is material.
The unobservable inputs used by the Company
The unobservable inputs are used in the valuation only to the
extent that relevant observable inputs are not 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.
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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
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.
During the comparison period, MuniFin had equity-linked
financial instruments in which dividend yield as a significant
unobservable input, within its funding portfolio 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.
The changes in fair value of the unobservable inputs on level
3 is not necessarily independent, and dynamic relationships
often exist between the unobservable inputs and the
observable inputs. Such relationships, where material
to the fair value of a given instrument, are controlled via
pricing models or valuation techniques. The Company 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.
Estimates of fair value are appropriate and applied according
to the Company’s valuation policy but 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 2025, these
assumptions could have increased fair values by EUR 6.4
million (EUR 13.6 million) or decreased fair values by EUR 6.4
million (EUR -13.4 million).
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Sensitivity analysis of unobservable inputs
31 Dec 2025 (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 21,335 Stochastic model Volatility – Extrapolated or Illiquid 0 0
Derivative contracts
Equity-linked derivatives - Stochastic model
Correlation parameters - -
Volatility – Extrapolated or Illiquid - -
Dividend yield - -
FX-linked cross currency and interest rate derivatives -9,715 Stochastic model
Correlation parameters 71 -67
Volatility – Extrapolated or Illiquid 658 -576
Interest rates – Extrapolated or Illiquid - -
Other interest rate derivatives -115,953 Stochastic model
Correlation parameters 1 0
Volatility – Extrapolated or Illiquid 2,485 -2,871
Interest rates – Extrapolated or Illiquid 525 -525
Debt securities issued and Liabilities to the public
and public sector entities
Equity-linked liabilities - Stochastic model
Correlation parameters - -
Volatility – Extrapolated or Illiquid - -
Dividend yield - -
FX-linked liabilities 58,589 Stochastic model
Correlation parameters 38 -32
Volatility – Extrapolated or Illiquid 446 -577
Interest rates – Extrapolated or Illiquid - -
Other liabilities 294,163 Stochastic model
Correlation parameters 0 0
Volatility – Extrapolated or Illiquid 2,170 -1 ,7 75
Interest rates – Extrapolated or Illiquid - -
Tot al 248,420 6,393 -6,423
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Sensitivity analysis of unobservable inputs
31 Dec 2024 (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 -78,268 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 al 13,619 -13,440
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Level 3 transfers
2025 (EUR 1,000) 1 Jan 2025
Realised gains
and losses in
the income
statement
Unrealised
change in
fair value in
the income
statement
Unrealised
fair value
change
through fair
value reserve
Debt
issuances
and new
derivative
contracts
Matured
contracts Settlements
Transfers
out of level 3 31 Dec 2025
Financial assets
At fair value
Mandatorily at fair value through profit or loss
Loans and advances to the public and public sector entities 25,036 - -3,701 - - - - - 21,335
Shares and participations in Group companies 656 - - - - - - - 656
Fair value through profit or loss
Derivative contracts at fair value through profit or loss 6,331 -14 -4,510 - - -1,312 14 - 509
Derivative contracts in hedge accounting 934 - -739 - - - - -195 0
Financial assets in total 32,957 -14 -8,950 - - -1,312 14 -195 22,500
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 2025, transfers totalling EUR 352,290 thousand from level 2 to level 1 in the line item
Debt securities. During 2025, there were no transfers from level 2 to level 3.
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Level 3 transfers
2025 (EUR 1,000) 1 Jan 2025
Realised gains
and losses in
the income
statement
Unrealised
change in
fair value in
the income
statement
Unrealised
fair value
change
through fair
value reserve
Debt
issuances
and new
derivative
contracts
Matured
contracts Settlements
Transfers
out of level 3 31 Dec 2025
Financial liabilities
At fair value
Designated at fair value through profit or loss
Liabilities to the public and public sector entities 40,363 -901 -6,704 1,149 - - 901 - 34,808
Debt securities issued 195,529 -3,374 -27,501 4,071 - -23,400 3,374 -19,901 128,798
Fair value through profit or loss
Derivative contracts at fair value through profit or loss 86,447 -1,075 29,234 - - -9,664 1,075 -12,321 93,695
Derivative contracts in hedge accounting 6,636 3,765 29,317 -58 - - -3,765 -3,414 32,481
In fair value hedge accounting
Amortised cost
Debt securities issued 289,415 -9,642 -23,819 - - - 9,642 -76,450 189,147
Financial liabilities in total 618,390 -11,226 528 5,162 - -33,065 11,226 -112,086 478,929
Level 3 financial assets and liabilities in total 651,347 -11,240 -8,423 5,162 - -34,376 11,240 -112,086 501,429
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Level 3 transfers
2024 (EUR 1,000) 1 Jan 2024
Realised gains
and losses in
the income
statement
Unrealised
change in
fair value in
the income
statement
Unrealised
fair value
change
through fair
value reserve
Debt
issuances
and new
derivative
contracts
Matured
contracts Settlements
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 - 680 706 - 228 - -680 - 934
Financial assets in total 37,355 478 -4,365 - 228 -261 -478 - 32,957
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.
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Level 3 transfers
2024 (EUR 1,000) 1 Jan 2024
Realised gains
and losses in
the income
statement
Unrealised
change in
fair value in
the income
statement
Unrealised
fair value
change
through fair
value reserve
Debt
issuances
and new
derivative
contracts
Matured
contracts Settlements
Transfers
out of level 3 31 Dec 2024
Financial liabilities
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 -6,811 -4,836 - - -18,480 6,811 -7,706 86,447
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 -20,305 1,279 -11,863 102,754 -108,116 20,305 -77,421 618,390
Level 3 financial assets and liabilities in total 749,112 -19,827 -3,085 -11,863 102,982 -108,377 19,827 -77,421 651,347
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 31. Equity
2025
(EUR 1,000) Share capital Reserve fund
Fair value reserve
of investments
Own credit
revaluation
reserve
Cost-of-Hedging
reserve
Reserve for
invested
non-restricted
equity Retained earnings Total
Carrying amount 1 Jan 43,008 277 3,340 169,999 45,714 40,743 373,330 676,411
+ Increase - - 7 - - - 73,118 73,126
- Decrease - - -1,511 -62,135 -27,035 - -72,659 -163,340
Carrying amount 31 Dec 43,008 277 1,837 107,864 18,679 40,743 373,790 586,197
2024
(EUR 1,000) Share capital Reserve fund
Fair value reserve
of investments
Own credit
revaluation
reserve
Cost-of-Hedging
reserve
Reserve for
invested
non-restricted
equity Retained earnings Total
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
Distributable funds
(EUR 1,000) 31 Dec 2025 31 Dec 2024
Retained earnings 300,672 299,593
Net profit for the financial year 73,118 73,737
Tot al 373,790 373,330
On 31 December 2025, the distributable funds totalled EUR 373,789,862.97
(EUR 373,330,287.47). 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.
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 32. Share capital Note 33. 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 2025,
the Company’s share capital, paid up and recorded in the Trade Register, amounted to
EUR 43,008 thousand (EUR 43,008 thousand). The total number of shares is 39,063,798
(39,063,798) which is divided to A shares 26,331,646 (26,331,646) and B shares
12,732,152 (12,732,152).
The ten largest shareholders in terms of voting rights and the number of shares held
by them, their portion of all shares in the credit institution and of all votes carried by the
shares as well as the total number of shareholders:
31 Dec 2025 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.
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 34. Collateral given
Notes on collateral and contingent liabilities
Given collaterals on behalf of own liabilities and commitments
(EUR 1,000) 31 Dec 2025 31 Dec 2024
Loans and advances to credit institutions to the counterparties of derivative contracts 1,577,058 608,408
Loans and advances to credit institutions to the central bank 38,207 31,980
Loans and advances to the public and public sector entities to the central bank 4,538,521 4,814,713
Loans and advances to the public and public sector entities to the Municipal Guarantee Board 14,553,681 13,705,743
Debt securities to the central counterparty (LCH Limited) 154,172 101,703
Other assets to the central counterparties of derivative contracts (LCH Limited and Eurex Clearing AG) 803,833 889,682
Tot al 21,665,471 20,152,229
Collateral given is presented at the carrying amounts of the financial statement date.
Line item Loans and advances to credit institutions includes given cash collateral to the
counterparties of derivative contracts based on the CSA agreements of the derivative
contracts (ISDA/Credit Support Annex) as well as minimum reserve requirement in the central
bank. Cash collateral given to central counterparties in connection with derivative contracts is
presented in line item Other assets. Line item Debt securities includes debt securities that are
pledged to the central counterparty.
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. In addition, MuniFin has pledged loans to the Municipal Guarantee
Board. Pledged loans are presented in line item Loans and advances to the public and public
sector entities.
The Municipal Guarantee Board guarantees MuniFin’s funding and MuniFin places collateral
for the Municipal Guarantee Board’s guarantees as defined in the Act on the Municipal
Guarantee Board.
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 35. Pension liabilities
Note 36. 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 2025 31 Dec 2024
Credit commitments 2,430,658 2,935,231
Tot al 2,430,658 2,935,231
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 37. Personnel
Notes on personnel and management
2025 2024
Average End of year Average End of year
Permanent full-time 172 173 168 168
Permanent part-time 2 3 1 1
Fixed term 11 9 12 9
Tot al 185 185 181 178
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
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 2025 Jan–Dec 2024
President and CEO -442 -454
Deputy to the CEO -279 -258
Other members of the Executive Management Team in total -1,439 -1,604
Tot al -2,160 -2,316
Statutory pension contributions (EUR 1,000) Jan–Dec 2025 Jan–Dec 2024
President and CEO -75 -77
Deputy to the CEO -48 -43
Other members of the Executive Management Team in total -245 -270
Tot al -368 -390
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:
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Remuneration of the Board of Directors
During the term 2025–2026, 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 51,000 for the
Chair of the Board, EUR 33,000 for the Vice Chair, EUR
36,000 for the Chairs of Committees and EUR 28,000 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. These fees are effective as of 25
March 2025.
During the term 2024–2025, the members of the Board
of Directors of the Parent Company were paid an annual
remuneration as well as remuneration for each meeting in
accordance with the decision of the Annual General Meeting.
The annual remuneration was 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 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 2025 Jan–Dec 2024
Kari Laukkanen, the Chair -74 -65
Liisa Harjula, member since 25 March 2025 -31 -
Maaria Kettunen (ex. Eriksson), the Vice Chair -48 -43
Markku Koponen, member until 25 March 2025 -11 -47
Juho Malmberg, member since 25 March 2025 -31 -
Tuomo Mäkinen -37 -38
Henrik Rainio, member since 25 March 2025 -32 -
Minna Smedsten, member until 17 May 2024 - -14
Denis Strandell, member until 25 March 2025 -9 -37
Elina Stråhlman -47 -23
Leena Vainiomäki -53 -49
Arto Vuojolainen -39 -38
Tot al -411 -354
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 38. 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.
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 39. Holdings in other companies
Holdings in other companies
2025 2024
(EUR 1,000)
Proportion of
all shares, % Carrying amount
Proportion of
all shares, % Carrying amount
Subsidiaries
Kuntarahoituksen digitaaliset palvelut Oy 100.0 656 100.0 656
Tot al 100.0 656 100.0 656
The change of name of the subsidiary company Financial Advisory Services Inspira Plc to Kuntarahoituksen digitaaliset palvelut Oy was registered in early 2025. Kuntarahoituksen digitaaliset
palvelut Oy is fully owned by MuniFin. No changes to the Group or ownership structure took place in the reporting period.
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Note 40. Audit and other fees paid to the audit firm
Other notes
(EUR 1,000) Jan–Dec 2025 Jan–Dec 2024
PricewaterhouseCoopers Oy
Audit -444 -363
Assignments as referred to in chapter 1, section 1, subsection 1, paragraph 2 of the Auditing Act -10 -
Tax advisory services - -1 0
Other services -281 -230
KPMG Oy Ab
Audit - -214
Assignments as referred to in chapter 1, section 1, subsection 1, paragraph 2 of the Auditing Act - -7
Tax advisory services - -8
Other services - -179
Tot al -735 -1,011
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.
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Signatures to the Report of the
Board of Directors and the Financial
Statements
Kari Laukkanen
Chair of the Board
Maaria Kettunen
Vice Chair of the Board
Liisa Harjula
Member of the Board
Juho Malmberg
Member of the Board
Tuomo Mäkinen
Member of the Board
Henrik Rainio
Member of the Board
Elina Stråhlman
Member of the Board
Arto Vuojolainen
Member of the Board
Esa Kallio
President and CEO
Leena Vainiomäki
Member of the Board
Signatures to the Report of the Board of Directors and the
Financial Statements
These Financial Statements are prepared in accordance
with the applicable accounting standards and give a true and
fair view of the assets, liabilities, financial position and profit
or loss of both Municipality Finance Plc and the Group of
companies included in its Consolidated Financial Statements.
The report of the Board of Directors includes a fair review of
the development and performance of Municipality Finance
Plc and the Group of companies included in its consolidated
accounts, together with a description of the principal risks
and uncertainties and the financial position of the Company.
Helsinki, 11 February 2026
MUNICIPALITY FINANCE PLC
Signatures to the Report of the Board of Directors
and the Financial Statements
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Auditor’s Note
A report of the audit performed has been issued today.
Helsinki, 11 February 2026
PricewaterhouseCoopers Oy
Jukka Paunonen
Authorised Public Accountant
Auditor’s Note
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Auditor’s Report
Auditor’s Report
(Translation of the Finnish Original)
Municipality Finance Plc
Auditor’s Report
for the year ended 31 December 2025
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 2025. 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 8 to the Financial Statements.
To the Annual General Meeting of Municipality Finance Plc
Report on the Audit of the Financial Statements
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
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:
• 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 (previous year € 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.
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
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.
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
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 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 11 - Financial assets and liabilities, Note 12 - Fair values of financial assets and
liabilities, Note 14 - Offsetting financial assets and liabilities, Note 20 - Derivative contracts,
Note 21 - 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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Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
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 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
• 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 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Other Reporting Requirements
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 2 years.
Other Information
The Board of Directors and the Managing Director are
responsible for the other information. The other information
comprises the report of the Board of Directors and the
information included in the Annual Report, but does not
include the financial statements and our auditor’s report
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 and 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 11 February 2026
PricewaterhouseCoopers Oy
Authorised Public Accountants
Jukka Paunonen
Authorised Public Accountant (KHT)
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
334/337
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
To the Board of Directors of Kuntarahoitus Oyj
We have performed a reasonable assurance
engagement on the financial statements
[529900HEKOENJHPNN480-2025-12-31-1-en.zip] of
Kuntarahoitus Oyj (business identity code 1701683-4)
that have been prepared in accordance with the
Commission’s regulatory technical standard for the
financial year 1 January 2025-31 December 2025.
Responsibilities of the Board of Directors and the
Managing Director
The Board of Directors and the Managing Director are
responsible for the preparation of the company’s report of
the Board of Directors and financial statements (the ESEF
financial statements) in such a way that they comply with
the requirements of the Commission’s regulatory technical
standard. This responsibility includes:
• preparing the ESEF financial statements in XHTML format
in accordance with Article 3 of the Commission’s regulatory
technical standard
• tagging the primary financial statements, notes and
company’s identification data in the consolidated financial
statements that are included in the ESEF financial
statements with iXBRL tags in accordance with Article 4 of
the Commission’s regulatory technical standard and
• ensuring the consistency between the ESEF financial
statements and the audited financial statements.
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 ESEF financial
statements in accordance with the requirements of the
Commission’s regulatory technical standard.
Auditor’s independence and quality management
We are independent of the company in accordance with the
ethical requirements that are applicable in Finland and are
relevant to the engagement we have performed, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements.
The auditor applies International Standard on Quality
Management (ISQM) 1, which requires the firm to design,
implement and operate a system of quality management
including policies or procedures regarding compliance with
ethical requirements, professional standards and applicable
legal and regulatory requirements.
Independent auditor’s report on the ESEF financial statements
of Kuntarahoitus Oyj
(Translation of the Finnish Original)
335/337
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Auditor’s responsibilities
Our responsibility is to, in accordance with Chapter 7,
Section 8 of the Securities Markets Act, provide assurance
on the financial statements that have been prepared in
accordance with the Commission’s regulatory technical
standard. We express an opinion on whether the consolidated
financial statements that are included in the ESEF financial
statements have been tagged, in all material respects,
in accordance with the requirements of Article 4 of the
Commission’s regulatory technical standard.
Our responsibility is to indicate in our opinion to what
extent the assurance has been provided. We conducted
a reasonable assurance engagement in accordance with
International Standard on Assurance Engagements (ISAE)
3000 (Revised).
The engagement includes procedures to obtain evidence on:
• whether the primary financial statements in the
consolidated financial statements that are included in
the ESEF financial statements have been tagged, in all
material respects, with iXBRL tags in accordance with the
requirements of Article 4 of the Commission’s regulatory
technical standard and
• whether the notes and company’s identification data in
the consolidated financial statements that are included
in the ESEF financial statements have been tagged, in all
material respects, with iXBRL tags in accordance with the
requirements of Article 4 of the Commission’s regulatory
technical standard and
• whether there is consistency between the ESEF financial
statements and the audited financial statements.
The nature, timing and extent of the selected procedures
depend on the auditor’s judgment. This includes an
assessment of the risk of a material deviation due to fraud or
error from the requirements of the Commission’s regulatory
technical standard.
We believe that the evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
Opinion
Our opinion pursuant to Chapter 7, Section 8 of the
Securities Markets Act is that the primary financial
statements, notes and company’s identification data in
the consolidated financial statements that are included
in the ESEF financial statements of Kuntarahoitus Oyj
[529900HEKOENJHPNN480-2025-12-31-1-en.zip] for
the financial year 1 January 2025-31 December 2025
have been tagged, in all material respects, in accordance
with the requirements of the Commission’s regulatory
technical standard.
Our opinion on the audit of the consolidated financial
statements of Kuntarahoitus Oyj for the financial year
1 January 2025-31 December 2025 has been expressed
in our auditor’s report dated 11 February 2026. With this
report we do not express an opinion on the audit of the
consolidated financial statements nor express another
assurance conclusion.
Helsinki 3 March 2026
PricewaterhouseCoopers Oy
Authorised Public Accountants
Jukka Paunonen
Authorised Public Accountant (KHT)
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 Jaakonka tu 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
/
Municipality Finance Plc • Annual Report 2025
Report of the Board of Directors Consolidated Financial Statements Parent Company’s Financial Statements
Municipality Finance Plc
Jaakonkatu 3 A, P.O. Box 744
00101 Helsinki
Tel. +358 9 6803 5666
www.munifin.fi
info@munifin.fi