Finland's Financial Supervisory Authority reports Finnish financial sector capital remains strong while reviewing banks’ controls against scams and payment fraud

The Finnish Financial Supervisory Authority (FIN-FSA) published an update on conditions in the Finnish financial sector, concluding that the sector has remained stable and well capitalised despite heightened economic and geopolitical uncertainty and early‑year market volatility. While cyber threats have remained largely calm domestically, FIN-FSA flagged an increase in fraud and phishing for bank credentials and said it is assessing what measures banks have in place to prevent scams and payment fraud and how they have followed earlier recommendations. In the banking sector, capital ratios were expected to weaken slightly in the first quarter of 2025 but remain strong, while operating profit fell year on year as net interest income continued to decline. Growth in non-performing loans levelled off in both corporate and household portfolios, liquidity remained stable, and funding costs declined, particularly for deposit funding, despite a brief rise in market-based funding risk premiums in April. The employee pension sector’s solvency ratio weakened to 128.7% as solvency capital fell by EUR 0.8 billion, with a 0.0% overall investment return in the quarter, while life and non-life insurers’ solvency ratios remained good at 222.1% and 246.3% respectively, alongside a -0.3% investment return and a 106.9% combined ratio in non-life. FIN-FSA noted that, due to CRR3/CRD6 banking capital requirement changes that took effect at the start of 2025, banks have been granted additional time to report capital adequacy data and FIN-FSA will publish more detailed first-quarter 2025 capital adequacy information separately at a later date.