GIEK triggered export for NOK 16.2 billion in 2015

In the first four months of the year GIEK has seen an increased demand from renewable energy and inland industries, while oil and gas face demanding conditions. GIEK has issued new guarantees for NOK 8.2 billion from January to April, which triggered NOK 16.2 billion in export contracts. Meanwhile, GIEK has set aside an additional NOK 0.9 billion in its accounts to cover future losses.

-So far this year there has been increased demand from renewable energy and inland industries. Meanwhile the challenges continue for exporters within oil and gas. GIEK will continue as a stable and competent supporter for the export industries – regardless of business cycles and sectors, says GIEK’s CEO Wenche Nistad.

GIEK’s core mission is to secure new contracts for Norwegian exporters. After the transaction GIEK’s observes the importer’s installments on the loans GIEK guarantees for – for up to 18 years.

Oil and gas: change and increased accruals

GIEK has a total guarantee liability of NOK 93 billion, of which 86 percent is issued within the oil and gas industry. This illustrates the massive exports from this industry in previous years. GIEK has received few new applications from the oil and gas industry so far in 2015. At the same time, buyers of Norwegian exports (primarily shipowners) have lower earnings and in several cases wish to postpone installments on loans that GIEK guarantees for.

-We are in the early phase of a downward-sloping business cycle for the industry. Rates for supply vessel and riggs have dropped, and there are fewer assignments, thus the suppliers’ incomes are decreasing. We maintain close contact with the loan clients and banks and continuously adjust our risk analyses. Due to the current development, we made new accruals for future losses in our accounts for the first four months of the year, Nistad explains. She does not rule out further accruals later this year.

-Many small and medium size sub-suppliers are already in process of adjusting in search for new business.  Some have previously supplied larger Norwegian exporters, and are now bidding for export contracts for the first time. It is important that they make use of the same advantageous financing as their foreign competitors, Nistad underlines, and points at a new joint application for both loan and guarantee targeted at SMEs, and which is offered by GIEK and Export Credit Norway.

Increased demand from renewable energy and inland industries

The number of new applications (74) for a combined application amount of NOK 9.8 billion is stable compared to the same period in 2014. However renewable energy and inland industries are increasing as a share of applications both in numbers and value. This year GIEK had received a total of 86 applications of NOK 30.4 billion by the end of April.

-The changing body of applications is exciting and it gives an indication of what our future exports will be and to which markets. It is satisfying that these growth industries are positioning themselves internationally and are making use of our financing as GIEK has worked to increase exports from these industries. The turnaround in oil and gas has accelerated this development, says Nistad.

The report is currently only available in Norwegian and may be downloaded here, but will shortly be available in English.