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OP Corporate Bank plc's Interim Report for 1 January-30 June 2017

02.08.2017 klo 09:00

OP Corporate Bank plc
Interim Report for 1 January-30 June 2017
2 August 2017 at 9.00 am EEST

OP Corporate Bank plc's Interim Report for 1 January-30 June 2017

  • Consolidated earnings before tax were EUR 280 million (233). The return on equity was 11.6% (10.0).
  • Banking earnings before tax increased to EUR 167 million (113) due to higher net investment income and net interest income. The loan portfolio increased in the year to June by 10.9% to EUR 19.2 billion. The cost/income ratio was 30.8% (38.1).
  • Non-life Insurance earnings before tax decreased to EUR 98 million (116). Non-life Insurance earnings were eroded particularly by weaker claims development than in the year before. The operating combined ratio was 92.5% (88.2). Net return on investments at fair value totalled EUR 78 million (-11).
  • Other Operations earnings before tax were EUR 16 million (3). Liquidity and access to funding remained good.
  • The CET1 ratio was 14.6% (14.9), while the target is 15%.
  • Unchanged outlook: OP Corporate Bank Group's consolidated earnings before tax are expected to be about the same as or lower than in 2016.
  Q1-2/2017 Q1-2/2016 Change, % Q1-4/2016
Earnings before tax, EUR million        
  Banking 167 113 47.5 260
  Non-life Insurance 98 116 -16.0 231
  Other Operations 16 3   13
Group total 280 233 20.4 504

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 30 June 2017 31 Dec. 2016 Target
Customer experience, NPS (-100-+100) 66 58 70, over time 90
Common Equity Tier 1 (CET1) ratio, % 14.6 14.9 15
Return on economic capital, % 18.7 17.0 22
Expenses of present-day business, EUR million 495 471 Expenses in 2019 lower than in 2015
(475)
Dividend payout ratio, % - 50.4 50

Outlook towards the year end

Both the world economy and the euro-area economy developed favourably in the first half of the year. Economic growth in Finland was strong and broad-based: exports and the home market rebounded, the housing market picked up and confidence in the Finnish economy strengthened. Tailwinds in the Finnish economy are estimated to continue for the second half of the year too. If realised, political risks and uncertainties both in Finland and in the export markets can, however, weaken the outlook. A threat to the Finnish economy's positive long-term development is posed by many structural problems that still remain unresolved.

The financial sector has adjusted very well to the new type of low interest rate environment. While low market 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 or lower than in 2016. 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 report 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, 2 August 2017

OP Corporate Bank plc
Board of Directors

Financial reporting in 2017

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

Schedule for Interim Reports in 2017:

Interim Report Q1-Q3/2017                          1 November 2017  

DISTRIBUTION
Nasdaq Helsinki Ltd
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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