Bli medlem
Bli medlem

Du är här


OP Financial Group's Interim Report for 1 January-30 September 2016: Earnings and growth in the number of new customers at record levels

OP Financial Group

Interim report for 1 January-30 September 2016
2 November 2016 at 9.00 am EET

OP Financial Group's Interim Report for 1 January-30 September 2016: Earnings
and growth in the number of new customers at record levels

January-September earnings were the second best ever recorded by the Group and
new home loans drawn down were 11% higher than a year ago

* Earnings before tax were EUR 921 million (926) and profitability was at the
targeted level based on the strategy.
* July-September earnings before tax, EUR 306 million (299), were the best
third-quarter figure ever recorded by the Group.
* Net interest income increased by 4% and net insurance income by 5% but net
commissions and fees decreased by 2%. Expenses rose by 3% due mainly to
higher development expenditure.
* Equity capital exceeded EUR 10 billion.
* The CET1 ratio was 19.7% (19.5) on 30 September 2016. Based on the results
of the stress test conducted by the European Banking Authority, the Group's
capital adequacy clearly exceeded regulatory requirements also in an
operating environment of an extremely adverse scenario.
* Home and corporate loans as well as deposits increased by 5% in the year to
September. Home loans drawn down rose by 11%.
* Non-life Insurance recorded an operating combined ratio of 86.5% (86.3).
Insurance premium revenue rose by 2%.
* Assets managed by Wealth Management increased by 12% over the previous
* Full-year earnings for 2016 are expected to be of about the same size as
the record earnings reported in 2015.

120,000 new OP Financial Group banking customers and almost 230,000 new

* OP Financial Group got 120,000 new banking customers, or 22% more than a
year ago. Growth was concentrated on the second and third quarter. The
number of owner-customers increased by almost 230,000 to over 1.7 million.
* New OP bonuses totalled over EUR 154 million, up by almost 5% year on year.
* Contrary to the general trend in the sector, customer satisfaction with the
Group and reputation have improved according to the surveys published
during the reporting period (Pankki ja rahoitus 2016 survey by EPSI Rating
and Luottamus&Maine survey by T-media).
* In June, OP Financial Group confirmed an updated strategy aimed at
broad-based renewal. The implementation of the new strategy has started on
a wide front. During the reporting period, the Group opened a new Pohjola
Hospital in Tampere. OP Financial Group supplemented its strategic targets
with a new customer experience metric in the autumn.

OP Financial Group's key indicators

| Q1-3/2016 Q1-3/2015 Change, % Q1-4/2015 |
| Earnings before tax, EUR 921 926 -0.6 1,101 |
|million |
| Banking 467 531 -12.0 642 |
| Non-life Insurance 200 218 -8.5 259 |
| Wealth Management 191 168 13.9 213 |
| New OP bonuses accrued to owner-customers 154 147 4.8 197 |
| 30 Sept. 2016 30 Sept. 2015 Change, % 31 Dec. 2015 |
| Common Equity Tier 1 (CET1) ratio, % 19.7 18.6 1.0* 19.5 |
| Return on economic capital, % ** 22.2 21.2 1.0* 21.5 |
| Ratio of capital base to minimum amount of capital base (under the Act on the 164 180 -16* 191 |
|Supervision of Financial and Insurance Conglomerates), % *** |
| Ratio of impairment loss on receivables to loan and guarantee portfolio, % 0.06 0.08 0.0* 0.10 |
| Joint banking and insurance customers (1,000) 1,720 1,637 5.1 1,656 |
| |
Comparatives deriving from the income statement are based on figures reported
for the corresponding period in 2015. Unless otherwise specified,
balance-sheet and other cross-sectional figures on 31 December 2015 are used
as comparatives.

* Change in ratio

** 12-month rolling, change in percentage

*** The FiCo ratio has been calculated under Solvency II transitional
provisions and the comparatives have been adjusted

Comments by Reijo Karhinen, President and Group Executive Chairman

Along with our new strategy, the solid financial basis and attractiveness of
OP Financial Group that is boldly reinventing itself are excellent and
strengthening further. We have managed to make choices that our customers
appreciate. Research results show that customer satisfaction with us has
improved contrary to the general trend in the sector and the influx of new
customers has been extraordinarily heavy. Our above the market average growth
on a wide front and our earnings performance that has remained at record
level are clearly some of our successes this year.

Our good earnings performance was supported by growth in volumes and the
resulting clear increase in net interest income. At the same time, we could
keep costs moderate although our investments in product and service
development increased substantially. It is worth noting that our loan losses
have remained low. Commission income has shown weak development since the
beginning of the year.

As a result of digitisation, new market entrants and drastic change in
customer behaviour, the financial sector is facing a major turning point. We
at OP Financial Group must ensure that we will not slow down our reinvention
process at the moment of success either. A strong player too must now
reinvent itself and even radical changes will be necessary when adapting to
the realities that the new daily business will involve.

Our new strategy confirmed in June is guiding our choices. Our strong
financial position helps to implement it. Creating a new type of a
diversified services company will necessitate learning plenty of new things
and unlearning old ones at an accelerating pace. Improving agility on a wide
front, creating new revenue generation in the disruptive market and securing
price competitiveness will be our biggest challenges.

Customers are at the core of our strategy. Customer experience and its
continuous improvement have become one of our most important strategic
metrics. Customer expectations and change in customer behaviour will prompt
us to create new, easy-to-understand service packages across industry
boundaries. In the face of a changing operating environment and a fragmenting
world around us, we will need combining forces that help people to control
their daily lives. Pohjola Hospital's high customer satisfaction score is
proof of how a superior customer experience can be created by combining
services and products in an unconventional way.

Finland, which will soon celebrate its 100th anniversary as an independent
nation, deserves and needs courageous forerunners. Future economic growth
requires investments which will not emerge without reinvention. Society is
tasked with creating the settings that support reinvention - the old tools
have largely been used up. The Finnish economy has continued its slow
recovery and consumer confidence has improved slightly. The economic policy
has already taken steps in the right direction, but is the speed then fast
enough? The world is now changing at a pace that the philosophy based on the
four-year government platform cannot recognise. What we now need in every
aspect of society is more agility and innovation. In a digital operating
environment, Finland will have every prospect of a becoming nation with a
bigger success than what its size suggests.


OP Financial Group's earnings before tax were EUR 921 million (926), or the
second best January-September figure ever recorded. A year ago, the Group
recorded its all-time high January-September EBT.

Net interest income increased by 4.2% to EUR 799 million and net insurance
income rose by 5.1% to EUR 418 million. Net commissions and fees decreased by
2.3% to EUR 637 million. Net commissions and fees were reduced by a reduction
of EUR 4 million in brokerage fees due to the Invest in Finland initiative as
part of the #Suominousuun (Putting Finland on a new growth path) initiative,
and to an increase of EUR 7 million in commission expenses.

Net investment income decreased by 23.5% to EUR 282 million. Lower returns on
equity instruments and impairment losses had an effect on a reduced net
income from available-for-sale assets. Income from Life Insurance notes and
bonds measured at fair value was increased by the individual life insurance
portfolio transferred from Suomi Mutual to OP Financial Group at the end of
2015. Net income from securities trading was reduced by negative value
changes in Credit Valuation Adjustment (CVA) in derivatives owing to market
changes. Hedging interest rate risk associated with the insurance liability
of Life Insurance added to income from derivatives.

Other operating income rose by EUR 71 million year on year to EUR 104 million.
This rise resulted from the non-recurring gain of EUR 71 million recognised
on the sale of Visa Europe Ltd.

Total expenses increased by 2.9% to EUR 1,136 million. The Group's major
investments in service development increased other operating expenses by EUR
40 million. Development expenditure totalled EUR 96 million.

A non-recurring provision recognised a year ago for personnel costs totalled
EUR 9 million, related to the reorganisation of the central cooperative
consolidated. In addition, other operating expenses a year ago included the
non-recurring expenses totalling EUR 18 million related to the intra-Group
ownership reorganisation and the reconstruction of the Vallila premises.

Impairment losses recognised under various income statement items that reduce...

Författare Hugin

Tala om vad ni tycker

Tala om vad ni tycker

Ni är just nu inne på en betaversion av nya aktiespararna. Lämna gärna feedback på vad ni tycker i formuläret nedan.