Finnish Financial Supervisory Authority says financial sector capital stayed strong in the first quarter as bank profits weakened and risks remained high

The Finnish Financial Supervisory Authority published its first-quarter 2026 review showing that Finland’s financial sector remained well capitalized despite a difficult operating environment. Geopolitical uncertainty, weak cyclical conditions and high market volatility continued to weigh on the outlook, while rapid advances in AI models sharpened cybersecurity concerns and reinforced the need for effective risk identification, controls and risk management. In banking, the Common Equity Tier 1 ratio was 18.2% at end-March 2026, little changed from 18.3% at end-2025, and the total capital ratio fell to 21.6% from 22.2%, with both ratios still above the European average and comfortably above requirements. Financial performance weakened as narrower loan-deposit spreads, modest loan growth and subdued net investment income reduced profitability, although non-performing loans stayed moderate and liquidity and funding remained stable despite a temporary rise in market funding risk premia. Outside banking, employee pension sector solvency weakened as solvency capital fell on a -0.2% investment return, taking the solvency ratio to 129.5% and the solvency position to 1.5. Life insurance solvency strengthened to 219% from 212%, while non-life insurance solvency edged down to 250% from 257% but remained strong, with the combined ratio improving to 104%.