Extensive crisis measures and expanded regular operations
EKN’s Interim Report Jan–Aug 2020:
EKN’s regular guarantee operations increased 27 per cent to SEK 52.1 billion year-on-year. Temporary crisis measures with working capital credit guarantees for large corporates amounted to SEK 52.1 billion.
“When Europe started to shut down, we knew that demand for our guarantees would increase and we rapidly introduced crisis solutions. But we were still surprised by the substantial increase in our regular operations in conjunction with the extremely strong demand for our crisis measures,” says Anna-Karin Jatko, Director General of EKN.
The long-term, rising trend for Swedish exports was abruptly halted due to the Covid-19 pandemic. Initially, this resulted in EKN receiving a large number of applications for payment deferment and an increased demand for working capital credit guarantees.
Increased demand for working capital financing
In March, EKN started to offer working capital credit guarantees to large corporates covering 75 per cent of the banks’ risk. By the end of August, EKN had issued a total of 46 offers amounting to SEK 135.6 billion for this product. Of these, 26 guarantees have been issued for a total volume of SEK 52.1 billion.
EKN’s standard offering for SMEs includes a working capital credit guarantee that covers 50 per cent of the lending banks’ risk. The cover was raised to 80 per cent as a crisis measure, to encourage continued lending to SMEs. The number of working capital credit guarantees for SMEs increased 20 per cent over the period.
“The guarantees provide many companies essential support for financing working capital during the crisis. We want to ensure that exporters do not wither away due to lack of external financing, as was the case with far too many companies during the financial crisis,” says Anna-Karin Jatko, Director General of EKN.
Increased need for payment deferment
Due to the crisis, EKN’s guarantee holders have had customers who have been unable to meet their contractual payments and the short-term need for payment deferment has been substantial. During the period, EKN received 290 applications for payment deferment for transactions totalling SEK 4.2 billion, which were attributable to Covid-19.
Raised statutory limit and strong finances
EKN’s statutory limit for issuing guarantees was raised from SEK 450 billion to SEK 500 billion. Utilisation of the statutory limit for the period increased to SEK 370 billion (SEK 272 billion at 31 December 2019). Profit for the period was SEK 199 million, compared with SEK 586 million in 2019. EKN retains its strong financial position and substantial capacity for future export transactions.