Exporter demand for EDC services tapers off in 2012, but foreign investment and emerging market financing up

OTTAWA, March 6, 2013 /CNW/ - Overall demand for Export Development Canada's (EDC) services from Canadian exporters and investors tapered off from last year's record highs. Still, the corporation saw demand rise in key areas of its business.

"EDC's overall results reflect the low export growth that Canada experienced in 2012 coupled with increased commercial financial capacity being available for Canadian companies," said Stephen Poloz, President and CEO of EDC.  "The increasing financial market strength is a good news story for the Canadian economy, and for Canadian companies."

A core indicator by which EDC measures its operational success is its Net Promoter Score (NPS), which assesses the degree of EDC's customer satisfaction and loyalty. The NPS is determined by collecting data on how well EDC is meeting the needs of Canadian exporters and investors that use its services, with a focus on key indicators related to referrals, loyalty and retention.

In 2012, EDC's NPS score was 72 (up from 71.2 in 2011), which places EDC well above most business-to-business financial institutions and demonstrates that the majority of customers would be likely to refer EDC to partners and associates.

EDC also measures its operational success through the revenues it earns for its products and services. EDC earned more than $1.2 billion in revenue from its loans, investments, and loan guarantee fees in 2012 (up from $1.1 billion in 2011). On the insurance side, EDC earned $196 million in premiums and insurance guarantee fees (down from $234 million in 2011) and paid out $358 million in claims, in contrast to $55 million in 2011. The increase in claims was mainly in our political risk insurance program due to turmoil in North Africa and the Middle East.

"We were especially pleased to see that Canadian exporters are continuing to grow their foreign investments and taking on more business in emerging markets that required financing, and that EDC was able to help them do more of it in 2012," said Mr. Poloz. "This trend also holds true for SME exporters, who used EDC's services to do even more export business in 2012 despite counting fewer of them as customers this year.  At 78 per cent of EDC's customer base, they remain a critical part of Canada's export growth potential, and an important priority for EDC."

Key Performance and Financial Results

• Overall, EDC reported that more than 7,400 Canadian exporters used EDC services to facilitate $87 billion of their international business activities in 2012, compared to the record high of $102.5 billion in 2011.
  
• By business line, EDC customers used almost $54 billion of credit insurance to protect their international sales ($63 billion in 2011), $14.6 billion in financing ($14.6 billion in 2011), more than $9.2 billion in financial institutions insurance ($13.9 billion in 2011), nearly $6.6 billion in bonding ($8.2 billion in 2011), and more than $2.8 billion in political risk insurance ($2.8 billion in 2011) to help protect their foreign investments.
• EDC's customers signed 892 financing transactions with a value of $14.6 billion, consistent with 2011, with 90 per cent of these transactions undertaken in partnership with private-sector financial institutions.
• More than 5,700 Canadian companies insured over $72 billion in export contracts with EDC, covering nearly 75,000 buyers in nearly 190 foreign markets.
• A key area of mandate focus, providing Canadian companies with a variety of financial and insurance services that help them develop, protect and/or grow their foreign operations, increased by 12 per cent in 2012, reaching nearly $6.6 billion.
• Lending that facilitated Canadian business in emerging markets reached $4.4 billion in 2012, a 30 per cent increase.
• One of EDC's operating principles is a partnership-preferred philosophy, whereby it seeks to collaborate with private-sector financial institutions to share risk and create greater capacity for Canadian trade transactions. Partnership business remained relatively stable compared to its 4-year average, declining to approximately $36 billion in 2012 from a record high of nearly $43 billion last year.
• Under EDC's temporary domestic powers, EDC provided $2.2 billion in commercial solutions in Canada for 316 Canadian exporting companies in 2012; including $1.7 billion in direct financing, more than $238 million in domestic bonding and $283 million in domestic credit insurance. We continued to participate as a reinsurer to private insurers, bringing additional capacity to the market for more than 233 small Canadian companies. This brings the total amount of business facilitated by EDC in Canada to $11.2 billion since March 2009, working with 819 Canadian exporting companies.
• Overall, EDC's 2012 financial results were virtually a repeat of 2011 with income of $943 million when excluding the impact of EDC's provision for credit losses and claims-related expenses.  After taking into account these two items, EDC finished the year with net income of $1.3 billion, an increase of $676 million over 2011. EDC recorded reversals of provision for credit losses and claims-related recoveries of $378 million in 2012, as opposed to a provision charge and claims-related expenses totaling $372 million in 2011.
• EDC's Board of Directors approved the payment of a $500 million dividend to the Government of Canada during the 2012 calendar year based on the 2011 results. The payment was made under EDC's Capital Adequacy Policy, which allows the Board of Directors to consider a dividend payment when the Corporation's capital exceeds its forecast needs. Dividends paid by EDC to the Government of Canada now total $1.57 billion.
  
  

All figures are CAD unless otherwise noted.

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 7,400 Canadian companies and their global customers in nearly 190 markets worldwide each year. EDC is financially self-sustaining and a recognized leader in financial reporting and economic analysis.

SOURCE: Export Development Canada

Media contacts:

Phil Taylor
Export Development Canada
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