OTTAWA – March 05, 2009 – Export Development Canada (EDC) today reported a record increase in demand for its products and services, which led to record business volumes for the Corporation in 2008.
As access to credit tightened substantially around the world, EDC's combined financing and insurance volumes reached $85.8 billion in 2008 while serving 8,312 Canadian companies. These figures represent the highest annual levels of total business volume and customers in the Corporation's 64-year history, with 23 per cent and 11 per cent growth compared to 2007, respectively.
"Meeting this increased customer demand drew on all of EDC's expertise and resources," said Eric Siegel, President and CEO of EDC. "Our prudent risk management allowed us to continue to be there for Canadian companies when they needed us most, which meant that EDC was able to respond to their needs by facilitating $16 billion more in new business compared to last year."
The government of Canada provided EDC with greater operational and financial flexibility in 2008, including an increase in the Corporation's borrowing authority announced in the fall and a capital injection of $350 million announced in November. The changes were designed to meet the growing needs of its customers and to help support EDC's efforts in highly impacted sectors like automotive and manufacturing.
In 2008, EDC provided a total of $4.2 billion in support to the auto sector through its financing and insurance products and services. EDC remains committed to the sector in 2009, having already offered more than $250 million in new insurance coverage so far this year and creating a $200 million high-risk financing pool for auto parts suppliers and toolers.
"The Government has provided EDC with much greater financial flexibility to be a strong contributor in responding to the credit needs of Canadian companies," continued Mr. Siegel. "EDC's focus leading into 2008 had been on adding value for the customer, efficiency and making it easier for companies to access the full range of our services and knowledge. As a result, EDC was ready with the latest and most relevant information, our best advice and timely, effective delivery of services and products."
In 2008, EDC's response to increased credit demand complemented the efforts of Canada's financial institutions through the sharing of transactional risks. EDC's business undertaken in partnership with financial institutions increased by 20 per cent in 2008, for a total of $14.1 billion in support of 4,450 transactions.
EDC's business volume in emerging markets grew by 31 per cent over 2007, reaching nearly $22 billion or 25.6 per cent of EDC's overall business. Brazil, Russia and the Commonwealth of Independent States (CIS), India, China and Mexico remained the priority emerging markets for Canadian companies, and EDC business volumes in those markets totalled $11 billion, a 45 per cent increase over 2007.
EDC increased the number of its transactions in support of Canadian direct investment abroad by 16 per cent in 2008.
More than 82 per cent of EDC's customers in 2008 were small- and medium-sized enterprises, and the value of their business through EDC reached $17.8 billion.
EDC's net income for 2008 was $206 million, a decrease of $267 million from 2007. The lower net income was primarily due to an increased provision for credit losses and higher claims-related expenses. These increases reflect the impact of the global economic crisis on EDC's financing and insurance portfolios.
EDC's provision for credit losses was $346 million in 2008, an increase of $150 million over 2007.
Claims-related expenses of $222 million were $90 million higher than 2007. The increase was primarily due to higher claim payments and an increased allowance for claims on insurance policies at the end of the year, particularly within the automotive and retail sectors, as well as growth in EDC's portfolio.
Other key results include:
• EDC's assets increased by 52.7 per cent to $35.3 billion from December 31, 2007, partly the result of a weaker Canadian dollar;
• The total allowance for loan-related losses and insurance claims was $3.3 billion at December 31, 2008;
• Total paid-in capital, retained earnings (including other accumulated comprehensive income) and allowances at December 31, 2008 were $9.4 billion;
• Impaired loans as a percentage of gross loans receivable decreased slightly from 3.1 per cent at the end of 2007 to 2.9 per cent at December 31, 2008.
• The number of insurance claims paid was 1,467, a 9 per cent increase from 2007. The dollar value of those claims was $104 million compared to $60 million in 2007;
• Administrative expenses increased by 10 per cent to $240 million from $219 million in 2007.
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 more than 8,300 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 has been recognized as one of Canada's Top 100 Employers for eight consecutive years.
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Media contact:
Phil Taylor
Corporate Communications
Export Development Canada
(613) 598-2904
ptaylor@edc.ca
