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OP Corporate Bank plc's Financial Statements Bulletin for 1 January-31 December 2017

08.02.2018 klo 08:00


OP Corporate Bank plc
Stock Exchange Release, 8 February 2018 at 9.00 am EET
Financial Statements Bulletin

OP Corporate Bank plc's Financial Statements Bulletin for 1 January-31 December 2017

  • Consolidated earnings before tax were EUR 535 million (504). The return on equity was 10.6% (10.4).
  • Banking earnings before tax increased to EUR 344 million (260) due to higher net investment income and net interest income. The loan portfolio increased by 9.5% to EUR 20.1 billion. The cost/income ratio was 31.4% (32.8).
  • Non-life Insurance earnings before tax decreased to EUR 193 million (231). Reduction of the discount rate weakened net insurance income and the operating combined ratio, which was 96.1% (87.6). Net return on investments at fair value totalled EUR 135 million (85).
  • Other Operations earnings before tax were EUR -2 million (13). Liquidity and access to funding remained good.
  • The CET1 ratio was 16.0% (14.9), while the target is 15%.
  • Jouko Pölönen will resign from his position as President and CEO of OP Corporate Bank plc on 30 April 2018.
  • Outlook for 2018: OP Corporate Bank Group's consolidated earnings before tax are expected to be about the same as in 2017.
  Q1-4/2017 Q1-4/2016 Change, %
Earnings before tax, EUR million      
  Banking 344 260 32.2
  Non-life Insurance 193 231 -16.7
  Other Operations -2 13  
Group total 535 504 6.0

Comparatives deriving from the income statement are based on figures reported for the corresponding period a year ago. Unless otherwise specified, balance-sheet and other cross-sectional figures on 31 December 2016 are used as comparatives.

Financial targets 31 Dec. 2017 31 Dec. 2016 Target
Customer experience, NPS (-100-+100) 69 58 70, over time 90
Common Equity Tier 1 (CET1) ratio, % 16.0 14.9 15
Return on economic capital, % 17.8 17.0 22
 

Expenses of present-day business*, EUR million
534 471 Expenses in 2020 lower than in 2015
(475)
Dividend payout ratio, % ** 49.7 50.4 50

*Excluding expenses of the health and wellbeing business. Rolling 12-month.
**Board proposal

Outlook for 2018

Last year, the euro-area economy reached its best growth rate recorded during the current decade. Nevertheless, inflation remained moderate and the European Central Bank's monetary policy accommodative. Economic growth in Finland continued swiftly and on a broad basis. Fixed investments increased strongly and business profitability improved. Consumer confidence remained high and growth in employment sped up. Favourable economic development is expected to continue in the near future, both in Finland and the rest of the euro area. The monetary policy is expected to tighten in 2018 but short-term rates are anticipated to rise moderately. The largest risks in the near future are associated with greater uncertainty in financial markets and with the political environment. A longer-term risk is that economic growth will remain modest if Finland is not able to restructure its economy to a sufficient extent when the population is ageing and digitisation is proceeding.

The financial sector has adjusted very well to the new type of low interest rate environment. While low interest rates have retarded growth in banks' net interest income and eroded insurance institutions' income from fixed income investments, they also have improved customers' repayment capacity. Impairment losses have remained low despite the slow growth that has lasted for several years now. The most significant strategic risks in the financial sector are currently associated with changing customer behaviour, operating environment digitisation and more complex regulation. Industry disruption is threatening to slow down growth and erode income generation in the years to come. In the next few years, the financial sector will be faced with a strong need to reinvent itself. Changes in the operating environment will emphasise the necessity of reinvention with a long-term approach as well as the role of the management of profitability and capital adequacy.

OP Corporate Bank Group's consolidated earnings before tax are expected to be about the same as in 2017. The most significant uncertainties affecting earnings relate to changes in the interest rate and investment environment, impairment loss on receivables, the rate of business growth and the effect of large claims on claims expenditure.

All forward-looking statements in this Financial Statements Bulletin expressing the management's expectations, beliefs, estimates, forecasts, projections and assumptions are based on the current view of the future development in the operating environment and the future financial performance of OP Corporate Bank Group and its various functions, and actual results may differ materially from those expressed in the forward-looking statements.

Helsinki, 8 February 2018

OP Corporate Bank plc
Board of Directors

Financial reporting in 2018

OP Corporate Bank plc publishes the following financial information pursuant to the regular disclosure obligation of a securities issuer:


Time of publication of 2017 reports:

OP Corporate Bank's Report by the Executive Board and Financial Statements for 2017 Week 9
OP Corporate Bank's Corporate Governance Statement 2017 Week 9
OP Financial Group's Report by the Executive Board and Financial Statements for 2017 Week 9
OP Financial Group's Corporate Governance Statement 2017 Week 9
OP Financial Group's Annual Review 2017 (incl. CSR Report) Week 9

Schedule for Interim Reports in 2018:                                               

Interim Report Q1/2018 3 May 2018
Interim Report H1/2018 1 August 2018
Interim Report Q1-3/2018 31 October 2018

Distribution
Nasdaq Helsinki Oy
London Stock Exchange
SIX Swiss Exchange
Major media
www.op.fi

For additional information, please contact
Jouko Pölönen, President and CEO, tel. +358 (0)10 253 2691
Carina Geber-Teir, Executive Vice President, Corporate Communications, tel. +358 (0)10 252 8394

OP Corporate Bank is part of the leading Finnish customer-owned financial services group, OP Financial Group. OP Corporate Bank and OP Mortgage Bank are responsible for OP's funding in money and capital markets. As laid down in the applicable law, OP Corporate Bank, OP Mortgage Bank and their parent company OP Cooperative and other OP Financial Group member credit institutions are ultimately jointly and severally liable for each other's debts and commitments. OP Corporate Bank acts as OP's central bank.

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