OP Corporate Bank plc's Interim Report for 1 January-30 June 2018
GlobeNewswire
OP Corporate Bank plc Stock Exchange Release, 1 August 2018 at 9.00 am EEST Interim Report 1 January-June 2018
OP Corporate Bank plc`s Interim Report for 1 January-30 June 2018
Consolidated earnings before tax were EUR 244 million (280). The return on equity was 9.7% (11.6). Return on assets was 0.60% (0.75).
Banking earnings before tax increased to EUR 183 million (167). The loan portfolio increased in the year to June by 9.3% to EUR 21 billion. The cost/income ratio was 35.1% (30.8).
Non-life Insurance earnings before tax decreased to EUR 60 million (98). The operating combined ratio was 91.9% (92.5). Net return on investments at fair value totalled EUR 14 million (78).
Other Operations earnings before tax were EUR 1 million (16). Liquidity and access to funding remained good.
The CET1 ratio was 15.6% (16.0), while the target is 15%.
Katja Keitaanniemi, Lic.Sc. (Tech.), was appointed OP Corporate Bank`s new President and CEO. She will take up her new duties on 6 August 2018.
Unchanged outlook: OP Corporate Bank Group`s consolidated earnings before tax are expected to be about the same as in 2017.
Earnings before tax, EUR million
Q1-2/2018
Q1-2/2017
Change, %
Q1-4/2017
Banking
183
167
9.6
344
Non-life Insurance
60
98
-39.0
193
Other Operations
1
16
-92.0
-2
Group total
244
280
-13.1
535
Return on equity (ROE), %
9.7
11.6
-1.9*
10.6
Return on assets (ROA), %
0.60
0.75
-0.1*
0.67
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 2017 are used as comparatives. On 1 January 2018, OP Corporate Bank adopted IFRS 9 Financial Instruments. Comparatives deriving from the income statement are based on figures under IAS 39 reported for the corresponding period in 2017. Unless otherwise specified, balance sheet and other cross-sectional figures under IAS 39 on 31 December 2017 are used as comparatives.
* Change in ratio
Financial targets
30 June 2018
31 Dec. 2017
Target
Customer experience, NPS (-100-+100)
70
69
70, over time 90
CET1 ratio, %
15.6
16.0
15
Return on economic capital, %
16.2
17.8
22
Expenses of present-day business*, EUR million
566
534
Expenses in 2020 lower than in 2015 (475)
Dividend payout ratio, %
49.7
50
*Excluding expenses of the health and wellbeing business. Rolling 12-month.
Outlook towards the year-end
The world economic and euro area economic outlook still look favourable although the euro area economic growth slightly fell short of expectations during the second quarter. Owing to strong economic growth, the European Central Bank is gradually normalising its monetary policy. Finnish economic development has been favourable as well. Economic growth has been strong and built on a broad basis, employment has improved, the current account has shown surplus and the economic confidence index has been high.
Economic growth is expected to continue in the near future as well, although the Finnish economic growth rate is anticipated to slow down. 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 as the population is ageing and digitisation is proceeding.
The operating environment in the financial sector on the whole has been quite favourable. 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 are very low. The most significant strategic risks in the financial sector are currently associated with changing customer behaviour, operating environment digitisation, competition from outside of the traditional financial sector 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, market growth rate, changes in the competitive situation and the effect of large claims on claims expenditure. IFRS 9 adopted at the beginning of 2018 is expected to increase short-term earnings volatility and decrease investment income soon after its adoption.
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, 1 August 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.
Schedule for Interim Reports in 2018:
Interim Report Q1-3/2018
31 October 2018
Distribution Nasdaq Helsinki Oy Euronext Dublin (Irish Stock Exchange) LSE London Stock Exchange SIX Swiss Exchange Major media www.op.fi
For additional information, please contact: Hannu Jaatinen, Acting President and CEO, tel. +358 (0)10 252 2874 Carina Geber-Teir, Executive Vice President, Corporate Communications, tel. +358 (0)10 252 8394
OP Corporate Bank plc 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.
This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein. Source: OP Yrityspankki Oyj via GlobeNewswire HUG#2208384
