EDC business volumes in emerging markets up 28 per cent over 2009

OTTAWA, Sept. 20 /CNW/ - Export Development Canada (EDC) today announced that its business volumes in emerging markets reached $10.8 billion (all figures Canadian) in the first half of 2010, an increase of $2.4 billion, or 28 per cent, over the same period last year.

"Emerging markets attracted Canadian exporters and investors looking for the best opportunities for growth during the first half, a positive trend for Canadian trade," said Eric Siegel, President and CEO of EDC.

"While some of this increase is influenced by continued slow growth in the U.S., EDC is encouraged because the types of transactions we're seeing demonstrates a longer-term interest in emerging market business."

Mr. Siegel added that EDC's total business volume for the first half ending June 30, 2010 was $37.5 billion compared to $38.2 billion for the same period last year. Total business volume represents the sum of transactions supported throughout all of EDC's business lines, including financing, guarantees, insurance, bonding and others.

"EDC'S business volumes are on par with the same period last year and on track to meet our forecast for year-end. These volumes are driven by Canadian companies expanding their relationships abroad, a positive trend as we slowly emerge from the global recession," Mr. Siegel said.

By country, EDC's business volumes in emerging markets were led by China at $1.5 billion for the first half of 2010, Brazil ($868 million), India ($767 million), and Mexico ($537 million).  In the first half, the infrastructure and environment sector led all export sectors with 36 per cent of the total emerging market business volume.

EDC facilitated $2.5 billion in Canadian direct investment abroad transactions, where Canadian companies invest in foreign markets by setting up a local office, manufacturing facility or joint venture.

Under Canada's Economic Action Plan, EDC was given additional flexibility to help increase access to credit for Canadian companies by participating in transactions with Canadian private sector financial and insurance institutions, along with Business Development Bank of Canada.

In the first half of 2010, EDC undertook $1.5 billion in new commercial solutions for 62 Canadian exporting companies for their global business needs, which were transacted in partnership with the Canadian private sector.

"This brings to $4 billion in domestic support that EDC has provided to Canadian companies for their global business needs since March 2009, demonstrating the important role that EDC continues to play domestically. This considerable volume attests to the continued demand from financial institutions for EDC's participation and capacity even as the global recovery takes shape," said Mr. Siegel.

Transactions undertaken in partnership with private sector institutions reached $11.4 billion, more than double that of the same period last year and already 68 per cent of forecast for the year.

Regionally, companies in Ontario accounted for $14.4 billion of EDC's total business volume, or 39 per cent, followed by Western Canada at $11 billion (29 per cent), Quebec at $10.4 billion (28 per cent), and Atlantic Canada at $1.3 billion (4 per cent).

EDC's net income for the first half of 2010 was $689 million compared to a net loss of $144 million for the same period in 2009. EDC's results for the first half of 2009 were impacted by the increased risk in both the loans and insurance portfolios as a result of the global economic environment.  Both the provision requirements and claims related expenses were higher in 2009 to reflect increases in the allowance for loan related losses and the allowance for insurance claims.

Other key financial results at June 30, 2010 include:

• Total assets were $31.4 billion, a 7.1 per cent decrease from the same point in 2009.  The decline can be attributed to a stronger Canadian dollar in June 2010 (the majority of EDC's transactions are in U.S. dollars);
• Total paid-in capital, retained earnings, and allowances were $10.3 billion;
• The total allowance for loan-related losses and insurance claims was $2.9 billion compared to $3.6 billion at June 30, 2009;
• Impaired loans as a percentage of gross loans receivable remained constant with the June 30, 2009 level of 3.4 per cent; and
• The number of insurance claims paid decreased by 28 per cent to 900 from 1,246.  The dollar value of those claims was $79 million, compared to $76 million for the same period last year.

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 8,400 Canadian companies and their global customers in up to 200 markets worldwide each year. EDC is financially self-sustaining, a recognized leader in financial reporting and economic analysis, and has been recognized as one of Canada's Top 100 Employers for nine consecutive years.

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Phil Taylor   
Export Development Canada
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