Operating environment

World economic growth remained sluggish in 2015 when growth in emerging economies stumbled. Commodity prices fell and the inflation rate decelerated on a global scale. The euro-area economy picked up, growing at a moderate rate.

The European Central Bank (ECB) intensified its accommodative monetary policy measures as the inflation rate decelerated. In March, the ECB began buying government bonds, resulting in pushing the short-term market interest rates negative. In December, the ECB announced new measures. It cut the deposit rate and extended the bond buying programme until March 2017. Market interest rates continued to decrease slightly.

The Finnish economic picture remained grim. Total output remained stagnant and unemployment increased. Capital expenditure was down and exports continued its downward trend. On the positive side, household spending rose. Construction picked up towards the year end. The housing market became slightly livelier but home prices decreased by less than one per cent.

The world economy is expected to continue to grow at a rate below the long-term average. The euro-area economy should continue to grow at a moderate pace. The Euribor rates are expected to remain lower than at the end of 2015. In Finland, household spending and a recovery in fixed investments are anticipated to maintain some economic growth.

During the financial year, new home loans drawn down were about ten per cent higher than a year ago. At the same time, the growth rate of total consumer home loan volumes increased to almost three per cent and the average loan term for new home loans lengthened to slightly less than 19 years. The total volume of corporate and housing corporation loans increased by six per cent. A slightly positive mood for demand for loans is expected to continue.

The total volume of deposits showed growth throughout the year, aided by growth in deposits by corporations and public-sector-entities, whereas growth in total household deposits was weaker. The total term-deposit volume continued to decline as a result of extremely low interest rates.

Domestic mutual fund assets and insurance savings climbed notably thanks to favourable market developments and greater net asset inflows. Some 70 per cent of the growth in mutual fund assets came from net asset inflows.

According to the statistics by the Federation of Finnish Financial Services, non-life insurance premiums written were 2.1 per cent lower than in the previous year. Claims paid out decreased by 3.1 per cent.