Annual Report 2020: More diverse portfolio and greener profile in a challenging year

Nearly half of all GIEK’s new guarantee liabilities in 2020, amounting to NOK 7.6 billion (EUR 722 million), were linked to extensive Norwegian exports to offshore wind farms around the world. GIEK also implemented three emergency finance schemes in response to the Covid-19 pandemic, and adopted new measures to contain growing risk in its offshore oil and gas portfolio.

Further to offshore wind, GIEK supported several other key industries in 2020, including furniture and medicinal products, environmentally friendly ships, maritime technology and fish farming. The wider range of enterprises and regions making use of GIEK guarantees means our portfolio is now more diversified and risk is spread more evenly around the country.

The largest business segments in 2020 were suppliers of offshore wind technologies from the counties of Rogaland and Oslo and Viken; shipyards and maritime equipment suppliers from Møre og Romsdal, and fish farming companies in Vestland, Trøndelag and Troms og Finnmark.

Meanwhile, GIEK is busy preparing for our impending merger with Export Credit Norway on 1 July 2021.

High activity despite pandemic

GIEK issued 127 new guarantees totaling NOK 15 billion (EUR 1.4 billion) in 2020, compared to 178 guarantees and NOK 22 billion (EUR 2.2 billion) in 2019. Total operating income was NOK 1.9 billion (EUR 180 million), an increase from NOK 1.7 billion (EUR 172 million) in 2019. Outstanding guarantee liabilities totaled NOK 75 billion (EUR 7,1 billion), down from NOK 89 billion (EUR 9 billion) in 2019. Taking into account the increased loss provisions and impairments, GIEK had an operating loss of NOK 11.4 billion (EUR 1.08 billion).

Wenche Nistad

“In a challenging year for Norwegian export industry, GIEK contributed NOK 15 billion in risk capacity through our state guarantees. These supported jobs nationwide highlighting the significance of our guarantee schemes for growth industries such as renewable energy and fish farming,” said GIEK CEO Wenche Nistad.

“In the shipbuilding industry, our guarantees contributed to the building of new ferries, live fish carriers and equipment deliveries to shipyards overseas. But other parts of the industry continue to experience difficult market conditions,” she added.

In addition to securing between 5,000 and 10,000 jobs in Norway, economic activity resulting from GIEK’s guarantees led to a value creation of NOK 14 billion, according to analysis by Menon Economics.

GIEK as a governmental tool for crisis management

The outbreak of Covid-19 was a major challenge for Norwegian businesses. GIEK was requested at short notice to implement three emergency financing schemes: a loan guarantee scheme, an airline guarantee scheme, and a new scheme for short-term credit insurance that is especially important for seafood exporters. A list of companies that have benefited from the first scheme was published online and quickly became GIEK’s most visited web page in 2020.

Pandemic and low oil price weaken oil service companies and affect GIEK’s balance sheet

The combined effects of the pandemic and a lower oil price weakened market demand for offshore oil and gas services. As a result, GIEK increased its loss provisions in this sector in line with Nordic lenders. Loss provisions as at 31 December 2020 totaled NOK 19.9 billion (EUR 1.89 billion), a NOK 9.9 billion (EUR 1 billion) increase since 2019.

“GIEK participated in complex financial restructurings of shipowning companies within the oil and gas sector. The largest shipyards are also operating in a difficult environment. Financial restructurings, loss mitigation and close dialogue with financially distressed companies will remain a high priority going forward,” said CEO Wenche Nistad.

Export Finance Norway: a simpler and more effective government agency

In a demanding economic situation, Norwegian exporters and their customers will soon be able to partner a simpler and more accessible agency for export-related financing. GIEK and Export Credit Norway will merge to form Export Finance Norway (Eksfin) on 1 July 2021. The Norwegian government will continue to back Eskfin’s AAA-rated guarantees, and our entire product range will remain on offer after the merger.

The Annual Report for 2020 is available in English here.