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2020-10-22

OP Financial Group’s Interim Report for 1 January–30 September 2020: Earnings before tax EUR 526 million – net interest income and net insurance income increased in an uncertain business environment

OP Financial Group
Interim Report 1 January–30 September 2020
Stock Exchange Release 22 October 2020 09.00 am EEST

OP Financial Group’s Interim Report for 1 January–30 September 2020: Earnings before tax EUR 526 million – net interest income and net insurance income increased in an uncertain business environment

  • Earnings before tax amounted to EUR 526 million (676).
  • In customer business, net interest income increased by 4% to EUR 960 million (923) and net insurance income by 16% to EUR 476 million (412). Net commissions and fees, EUR 679 million, were at the previous year’s level (679).
  • The effects of the COVID-19 pandemic on capital market developments weakened investment income particularly in the first quarter. Investment income fell by 64% year on year, to EUR 76 million (208).
  • Total income decreased by 3% to EUR 2,268 million (2,328) (including the overlay approach, income increased by 2%).
  • Total expenses rose by 4% to EUR 1,414 million (1,365) due to higher ICT costs, ICT depreciation and amortisation and charges of financial authorities.
  • Impairment loss on receivables, EUR 183 million (36), accounted for 0.25% (0.05) of loans and receivables. Impairment loss on receivables was increased by the effects of the COVID-19 pandemic on the loan portfolio quality and by the adoption of the new definition of default based on a regulatory change.
  • In the year to September, OP Financial Group’s loan portfolio grew by 4% to EUR 94 billion (91) and deposits by 13% to EUR 71 billion (63). 
  • The CET1 ratio was 18.3% (19.5). The lower ratio was affected by the increase in the loan portfolio and the adoption of the new definition of default.
  • Retail Banking earnings before tax decreased by 48% to EUR 100 million (193). Net interest income increased by 1% and net commissions and fees decreased by 3%. Impairment loss on receivables increased by EUR 93 million to EUR 118 million (25). The loan portfolio increased by 3% and deposits by 9% in the year to September.
  • Corporate Banking earnings before tax decreased by 4% to EUR 221 million (232). Net interest income increased by 6%, net commissions and fees by 19% and net investment income by 45%. Impairment loss on receivables increased by EUR 55 million to EUR 66 million (11). The loan portfolio grew by 4% in the year to September.
  • Insurance earnings before tax decreased by 30% to EUR 195 million (278). Net insurance income rose by 15% to EUR 485 million (421). Investment income decreased by EUR 145 million to EUR 8 million (153). The operating combined ratio was 86.0% (91.8).
  • Other Operations earnings before tax were EUR 39 million (3). The sale of the Vallila property on 31 January 2020 improved earnings by EUR 96 million. OP Financial Group will continue operating in the property under a long-term lease agreement.
  • In January–September, OP Financial Group invested a total of EUR 208 million (219) in business development and improving customer experience.
  • New OP bonuses accrued to owner-customers totalled EUR 194 million (191).
  • The number of owner-customers in OP cooperative banks totalled 2.0 million (2.0). The number of OP Financial Group’s joint banking and insurance customers totalled 1.3 million (1.2).
  • OP Financial Group’s earnings before tax for 2020 are expected to be lower than in 2019. "Outlook towards the year end" describes the outlook in greater detail.

OP Financial Group’s key indicators

  Q1–3/2020 Q1–3/2019 Change, % Q1–4/2019
Earnings before tax, € million 526 676* -22.2 838
   Retail Banking 100 193 -47.9 235
   Corporate Banking 221 232 -4.4 311
   Insurance 195 278 -30.1 373
   Other Operations 39 3 - -37
New OP bonuses accrued to owner-customers -194 -191 1.8 -254
         
Return on equity (ROE), % 4.4 6.0 -1.6** 5.5
Return on equity, excluding OP bonuses, %

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