Municipality Finance Plc Financial Statements Bulletin 1 January–31 December 2025

Core Insights - MuniFin Group's net operating profit excluding unrealised fair value changes decreased by 1.5% to EUR 178 million in 2025, primarily due to increased expenses [3][11] - The Group's net operating profit increased by 16.3% to EUR 193 million, influenced by unrealised fair value changes of EUR 14 million [3][23] - Sustainable finance initiatives saw significant growth, with total sustainable finance increasing by 34.1% to EUR 12,595 million [3][4] Financial Performance - Net interest income remained stable at EUR 260 million, while new long-term customer financing increased slightly by 0.6% to EUR 5,088 million [3][4] - Total costs rose by 6.6% to EUR 86 million, driven by higher HR and administrative expenses [14][17] - The cost-to-income ratio improved to 25.9%, down from 27.7% in the previous year [4] Capital and Leverage - The Group's CET1 capital ratio was very strong at 94.0%, although it decreased from 107.7% due to new regulatory requirements [3][4] - The leverage ratio improved to 13.1%, up from 12.3% [4] - Total funding reached EUR 49,117 million, with long-term funding comprising EUR 45,042 million [3][4] Customer Financing - Long-term customer financing, excluding fair value changes, increased by 7.6% to EUR 38,510 million [3][4] - The amount of green finance aimed at sustainable investments rose to EUR 9,111 million, while social finance reached EUR 2,775 million [3][4] - New long-term funding increased by 12.3% to EUR 10,019 million [4] Market Outlook - The economic outlook for 2026 is cautiously optimistic, with expectations of growth supported by green transition investments and recovery in domestic consumption [36][39] - However, challenges remain, including potential funding deficits for municipalities due to central government transfer cuts and rising personnel costs [40][41] - The housing market is expected to remain weak, with limited recovery in privately financed construction [41]