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OP CorporateBank plc (31VN)

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Wednesday 03 August, 2016

OP CorporateBank plc

OP Corporate Bank plc's Interim Report for 1 January-30 June 2016

OP Corporate Bank plc's Interim Report for 1 January-30 June 2016

OP Corporate Bank plc
Interim report for 1 January-30 June 2016
3 August 2016 at 9.00 am EEST

OP Corporate Bank plc's Interim Report for 1 January-30 June 2016

- Consolidated earnings before tax were EUR 233 million (348). The return on equity was 10.0% (17.0).
- Earnings reported by Banking decreased to EUR 113 million (175) due to lower net investment income. The loan portfolio grew in the reporting period by 5.5% to EUR 17.3 billion (16.4). Earnings included EUR 7 million (18) in impairment loss on receivables.
- Non-life Insurance earnings before tax decreased to EUR 116 million (145) due to lower net investment income. Return on investments at fair value was 3.1 % (1.3). Operating combined ratio was 88.2% (87.8).
- Other Operations earnings before tax were EUR 3 million (28). Liquidity and access to funding remained good.
- The CET1 ratio was 14.2% (14.1) as against the target of 15%.
- In June, the Supervisory Board of OP Financial Group's central cooperative confirmed OP Financial Group's strategy and Group-level strategic goals. OP Corporate Bank's strategic goals will be updated by the end of the year.
- Change in the outlook: OP Corporate Bank Group's consolidated earnings before tax are expected to be clearly lower than earnings from continuing operations in 2015 (previously: "lower than earnings from continuing operations in 2015".)

  Q1-2/2016Q1-2/2015Change, %Q1-4/2015
Earnings before tax, EUR million        
  Banking 113 175 -35.4 334
  Non-life Insurance 116 145 -19.5 267
  Other Operations 3 28 -88.2 23
Group total233348-33.1625

Comparatives deriving from the income statement are based on figures reported for continuing operations for the corresponding period a year ago. Unless otherwise specified, balance-sheet and other cross-sectional figures on 31 December 2015 are used as comparatives.

Financial targets*Q1-2/2016Q1-2/2015Q1-4/2015Target
Return on equity, % 10.0 17.0 14.8 13
CET1 ratio, % 14.2 13.8 14.1 15
Cost/income ratio by Banking, % 38.1 26.5 27.0 < 35
Operating combined ratio by Non-life Insurance, % ** 88.2 87.8 87.3 < 92
Operating expense ratio by Non-life Insurance, % 18.4 18.2 17.7 18
Non-life Insurance solvency ratio (under Solvency II), %*** 158   158  
Non-life Insurance solvency ratio (under Solvency II), %**** 140 137 139 120
AA rating affirmed by two credit rating agencies or credit ratings at least at the main competitors' level 2 2 2 2
Dividend payout ratio at least 50%, provided that CET 1 ratio is at least 15%. Dividend payout ratio is 30% until CET1 ratio of 15% has been achieved.      

 

30
 

 

> 50 (30)

* OP Corporate Bank plc's strategic targets will be updated by the end of the year.
** Operating ratios exclude changes in reserving bases and amortisation on intangible assets arising from the corporate acquisition.
*** Including the effect of transitional provisions.
**** Excluding the effect of transitional provisions.

Outlook towards the year end

The Finnish economy has begun a slight rebound in the first half of the year. This has been based on a recovery in the domestic market, especially construction. Weak world economic growth has not been sufficient to stimulate Finnish exports. A number of major uncertainties are threatening the fragile economic growth in the euro area and Finland: Brexit, the situation in the Italian banking sector, economic slowdown in emerging countries and greater political instability. In addition, the slow progress of structural reforms in the Finnish economy will slow down Finnish economic recovery. On the whole, the Finnish economy is expected, however, to continue its recovery although risks of growth coming to a halt have mounted during the summer.   

The continued reduction in market interest rates that have in part turned negative places a further burden on the net interest income of banks and erodes the investment income of insurance institutions. Then again, low interest rates support customers' loan repayment capacity, which has kept banking impairment loss low despite the prolonged period of slow economic growth. Digitisation in the financial sector, upgrading fragmented information system infrastructures and change in customer behaviour will require significant development investments in the sector in the next few years that will increase expenses and weaken profitability in the short term. Changes in the operating environment will highlight the role of operational efficiency and profitability as well as a strong capital base.    

OP Corporate Bank Group's consolidated earnings before tax are expected to be clearly lower than earnings from continuing operations in 2015 (previously: "lower than earnings from continuing operations in 2015".) The most significant uncertainties affecting earnings relate to the rate of business growth, impairment loss on receivables, developments in bond and capital markets, the effect of large claims on claims expenditure and to the discount rate applied to insurance liabilities.

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, 3 August 2016

OP Corporate Bank plc
Board of Directors

Financial reporting in 2016

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

Schedule for Interim Reports in 2016:
Interim Report Q1-3/2016                            2 November 2016

DISTRIBUTION
NASDAQ Helsinki Ltd
London Stock Exchange
SIX Swiss Exchange
Major media
www.op.fi, www.pohjola.com

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.




This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX 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

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