OTTAWA -- March 08, 2006 -- Export Development Canada (EDC) today announced it extended a record $57.4 billion in trade finance and risk management services in 2005, a 4.6 per cent increase over 2004. Exports and investments in emerging markets totaled $13.3 billion, a 14.6 per cent increase.
"This has been a very successful year for EDC thanks to the strong performance of Canadian exporters and investors in 2005, with emerging markets being more important than ever," said President and CEO Rob Wright. "EDC provided commercial solutions for 6,828 Canadian exporters and investors in 171 markets, with 91 per cent of them being small- and medium-sized enterprises (SME). In addition, our Customer Value Index, the measure of overall customer satisfaction registered its highest level ever."
The business volume facilitated by EDC for SMEs has continued to increase year over year, and in 2005 reached $15.5 billion, a substantial 31.3 per cent increase from the previous record of $11.8 billion in 2004. The SME segment represented 27 per cent of EDC's total business volume in 2005.
EDC participated in approximately 12 per cent per cent of Canada's exports in goods, services and investments last year. That participation rate climbed to more than 30 per cent of Canadian exports in goods, services and investments to emerging markets. In particular, EDC-supported trade with China increased by 35.6 per cent in 2005.
The $57.4 billion in transactions facilitated by EDC in 2005 are estimated to have supported $37.4 billion of Canada's GDP or 3.2 to 3.4 per cent of the total. This export and investment activity was also associated with sustaining more than 457,000 jobs, approximately 2.8 per cent of national employment.
In 2005, EDC's operating income declined by 7.1 per cent to $822 million (a reduction of $63 million). Excluding the impact of sovereign loan prepayments, the decline was actually 17.7%. The decrease is primarily due to an overall reduction of interest earning assets, higher funding costs and a stronger Canadian dollar. Slowdowns in the forestry, automotive and aircraft production sectors led to lower financing volumes in these key portfolios. As well, the buoyant domestic and global credit conditions in 2005 meant that Canadian exporters and investors enjoyed greater access to private financing and therefore EDC's available lending portfolio was not fully utilized. This in turn led to a reduction in the provisions that EDC sets aside to cover potential loan losses as well as unexpected prepayments on existing loans.
EDC's net income rose to $1.29 billion compared with $1.24 billion in 2004. Of the 2005 net income, $513 million resulted from a release of provisions for credit losses compared to a $214 million release of provisions in 2004. Provision requirements decreased as a result of the reduced loans portfolio, improving credit conditions, unexpected prepayments on existing loans, and the purchase of risk mitigation insurance on a portion of the aerospace portfolio. Despite lowering provisions significantly, EDC remained appropriately provisioned to manage the portfolio. Net income also included $94 million resulting from an unprecedented amount of sovereign loan prepayments in 2005.
"Strong credit conditions have left us with a very healthy balance sheet, but economic conditions are cyclical and EDC expects a more challenging financing environment in 2006 for Canadian exporters and investors," continued Mr. Wright. "Looking ahead, EDC's capital strength leaves us well-positioned to facilitate more exports and investments and use our balance sheet to meet the stronger demand we anticipate from Canadian business in 2006."
Mr. Wright also stated that EDC will find new ways to connect to existing and new customers, including SMEs, with new products and services that meet industry-specific needs and by taking on greater levels of risk, particularly in emerging markets. The corporation will also continue to advance integrative trade by developing commercial solutions related to Canadian direct investment abroad and equity investments, which will assist Canadian companies in establishing global supply and distribution chains.
Other key results include:
- EDC's assets decreased to $19.7 billion from December 31, 2004 largely as a result of loan repayments exceeding disbursements in 2005 as well as the appreciation of the Canadian dollar since most of EDC's assets are denominated in U.S. dollars.
- The total allowance for loan-related losses and insurance claims was $2.9 billion at December 31, 2005;
- Total paid-in capital, retained earnings, and allowances at December 31, 2005 were $7.7 billion;
- Impaired loans as a percentage of gross loans receivable increased from 11.1 per cent at the end of 2004 to 18.4 per cent at December 31, 2005 reflecting additional impairment that occurred in 2005 primarily within the aerospace portfolio. EDC was already adequately provisioned in its aerospace portfolio and these impairments did not result in a charge to the income statement as no additional provisions were required to be taken.
- EDC's aerospace gross loans receivable and loan guarantees totaled $5.6 billion at year end, a decrease of 10 per cent in comparison to $6.2 billion in 2004. Of this amount, 63 per cent was classified as performing. EDC has implemented a number of portfolio management activities to manage the evolving needs surrounding its aerospace portfolio including the purchase earlier in the year of risk mitigation insurance on a portion of the portfolio which resulted in lower provision requirements.
- The number of insurance claims paid was 1,317, an 18.1 per cent decrease from 2004. The dollar value of those claims was $44 million compared to $64 million in 2004;
- Costs paid in 2005 for business travel and promotion by the 15-member Board of Directors, as well as meeting expenses for the Board and Committees, totaled $158,320, in comparison to $161,175 recorded in 2004, and $287,217 in 2003 (all figures being exclusive of the expenses of the President). For the President and Acting President, expenses for business travel, promotion and conference fees were $60,160 compared to $59,339 in 2004, and $91,072 in 2003;
- The number of employees at December 31, 2005 was 1,017, an increase from 997 in 2004; and
- While business volume increased by 5 per cent, administrative expenses increased by only 2.2 per cent to $182 million from $178 million in 2004, or 20.5 per cent of net revenue compared to 18.5 per cent in 2004.
EDC's business activities were strong across all regions of Canada. Regionally, western Canada led the country for the first time, accounting for 35 per cent of EDC's total business volume followed by Ontario (32 per cent), Quebec (29 per cent), Atlantic provinces (2 per cent) and Other (2 per cent).
EDC is Canada's export credit agency, offering innovative commercial solutions to help Canadian exporters and investors expand their international business. EDC's knowledge and partnerships are used by 7,000 Canadian companies and their global customers in up to 200 markets worldwide each year. EDC is financially self-sustaining and is a recognized leader in financial reporting, economic analysis and human resource managements.
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Media contact: Phil TaylorEDC Public Affairs(613) 598-2904ptaylor@edc.ca
