Information  X 
Enter a valid email address

OP Mortgage Bank (70ZM)

  Print   

Thursday 06 August, 2009

OP Mortgage Bank

Half Yearly Report

RNS Number : 9793W
OP Mortgage Bank
06 August 2009
 

OP MORTGAGE BANK                                                    INTERIM REPORT JANURY-JUNE 2009


                                                                                          6 August 2009, at 8.30 am Finnish time (GMT+3)




OP Mortgage Bank's (OPA) loan portfolio decreased from EUR 2,980 million on 31 December 2008 to EUR 2,799 million on 30 June 2009. During the reporting period, OPA neither issued covered bonds nor purchased housing loans from OP-Pohjola Group member banks.


Earnings Development

 

EUR thousand

Q1-Q2/2009

Q1-Q2/2008

Q2/2009

Q2/2008

2008







Income






Net interest income

5,901

6,421

2,803

3,888

13,497

Net commissions and fees

-3,950

-,2,912

-1,993

-,1,692

-6,686

Net income from trading

0

7

0

0

7

Net income from investments

1

1

-

-

1

Other operating income

3

-

3

-

0

Total

1,954

3,518

813

2,196

6,819







Expenses






Personnel costs

129

137

62

70

288

Other administrative expenses

420

343

190

191

737

Other operating expenses

352

609

219

513

877

Total

901

1,089

472

774

1,902







Earnings before tax

1,054

2,428

341

1,422

4,917



The net interest income for January-June totalled EUR 5,901 thousand (6,421). Earnings before tax decreased to EUR 1,054 thousand (1,005). The decline in market rates decreased net interest income and earnings before tax to the extent that the loan portfolio is financed with the shareholders' equity. Net commissions and fees were negative, as in the previous year, with commission income increasing to EUR 841 thousand (294) and commission expenses to EUR 4,789 thousand (3,205). Commission expenses stem mainly from commissions paid to OP-Pohjola Group member banks for servicing housing loans. The bank's expenses amounted to EUR 901 thousand (1,089). OPA did not recognise any loan losses for the first six months.  


Net interest income for April-June decreased to EUR 2,803 thousand (3,888) and earnings before taxes to EUR 341 thousand (1 422). The bank's expenses decreased to EUR 472 thousand (774). OPA didn't issue new covered bonds in April-June period, which accounts for the decline in other operating expenses.  

  


   

Balance Sheet and Off-balance Sheet Commitments


OPA's balance sheet total amounted to EUR 2,942 million on 30 June (EUR 3,149 million) .  


Change in Major Asset and Liability Items

 

EUR Million 

30 June 2009

31 March 2009

31 Dec. 2008

30 June 2008






Balance Sheet

2,942

3,116

3,149

2,769

Receivables from customers

2,799

2,899

2,980

2,703

Receivables from financial institutions

34

27

32

47

Debt securities issued to the public

2,091

2,100

2,087

1,998

Liabilities to financial institutions

720

800

870

605

Shareholders' equity

88

88

87

86

Off-balance sheet commitments

16

28

19

19


OPA did not purchase any new housing loans from member banks in January-June. The loan portfolio decreased from EUR 2,980 million on 31 December 2008 to EUR 2,799 million on 30 June 2009, since the amount of new housing loans granted directly from OPA's balance sheet to customers was lower than the total amount of repaid loans. 


On 30 June, households accounted for 98 % (98) of the loan portfolio and housing corporations for 2 % (2). The bank's non-performing loans increased but remained at low levels totalling EUR 0,4 million (0,2) on June 2009. No impairment losses on loans were recognised. 


The carrying amount of bonds issued to the public totalled EUR 2,091 million (2,087) on 30 June. In addition to bonds, other funding was based on financing loans granted by Pohjola Bank plc (Pohjola). On 30 June, financing loans totalled EUR 720 million (870). 


Shareholders' equity rose to EUR 88.1 million (87,3). Retained earnings amounted to EUR 8.1 million (7.3) at the end of the review period.  


OPA has hedged against the interest-rate risk associated with its housing loan portfolio through interest-rate swaps, i.e. base rate cash flows from housing loans to be hedged are swapped to short-term Euribor cash flows. OPA has also swapped the fixed interest rates of the bonds it has issued to short-term variable rates. OPA's interest-rate derivative portfolio totalled EUR 4,794 million (4,997). All derivative contracts have been concluded for hedging purposes. Pohjola is the counterparty to all derivative contracts.


Development of Capital Adequacy OPA's capital adequacy ratio stood at 10,4 % on 30 June. Since the beginning of 2008, OPA has calculated its capital adequacy in compliance with Basel II. Credit risk is calculated according to the standardised approach and the capital requirement for operational risk is calculated using the basic approach.  



OWN FUNDS, EUR thousand 

Basel II

Basel II

Basel II

Basel II


30 June 2009

31 March

2009

31 Dec

2008

30 June 2008

Tier I

86,890

86,824

86,394

84,758

  of which capital loans



-

-

Tier II

20,000

20,000

20,000

20,000

Decreases





Total

106,890

106,824

106,394

104,758






Risk-weighted receivables, investments and off-balance sheet commitments

1,032,313

1,074,236


1,094,191


1,027,388






Capital adequacy ratio, %

10,4

9,9

9,7

10,2






Tier I ratio to risk-weighted receivables, investments and off-balance sheet commitments 

8,4

8,1

7,9

8,2


The increase in shareholders' equity arising from the measurement of pension liabilities and the assets covering them, under IFRS, is not considered own funds. Furthermore, intangible assets was also deducted from own funds. 



Basel II

Basel II

Basel II

Basel II

Risk-weighted receivables, investments and off balance-sheet commitments, EUR thousand

30 June 2009

31 March 2009

31 Dec

2008

  30 June 2008






 Receivables and investments

1,019,096

1,056,923

1,082,926

1,016,463

  Off-balance-sheet items

,5,092

9,188

6,704

6,364

 Market risk

-

-

-

-

 Operational risks

8,125,

8,125

4,561

4,561

Risk-weighted receivables, investments and off balance-sheet commitments, total



1,032,313



1,074,236



1,094,191

1,027,388



The decrease in the amount of risk-weighted receivables was due to an decreased loan portfolio. 


Joint Responsibility and Joint Security 

    

OPA is a member of OP-Pohjola Group Central Cooperative, which is the central institution of the amalgamation of OP-Pohjola Group. Within the amalgamation, the resources of OP-Pohjola Group secure the operations of all member banks since, according to Chapter 2, Section 3 of the Act on Cooperative Banks and Other Cooperative Credit Institutions, the Central Cooperative and its member credit institutions are jointly and severally responsible for each other's liabilities and commitments that cannot be paid from the funds of the Central Cooperative or the member credit institution in question. 



In addition to OPA, Central Cooperative members at the end of the review period included 221 cooperative banks, Pohjola Bank plc, Helsinki OP Bank plc, and OP-Kotipankki Oyj.


Central Cooperative provides its member banks with instructions governing operations to secure liquidity, capital adequacy and risk management, as well as shared accounting policies.


However, pursuant to Section 17 of the Act on Mortgage Credit Banks, the holder of a bond with mortgage collateral shall, notwithstanding the liquidation or bankruptcy of a mortgage credit bank, have the right to receive payment, before other claims, for the entire loan period of the bond, in accordance with the contract terms, from the funds entered as collateral for the bond.



Personnel

On 30 June, OPA had four employees. It purchases all key support services from Central Cooperative and its Group companies, which reduces the need for more staff.


Administration 

The Annual General Meeting held in March confirmed the composition of the new Board of Directors. Mr. Jari Himanen was elected as a new member of the Board of Directors, after which the composition of the Board of Directors is as follows:

 

Chairman                            Harri Nummela            Executive Vice President, OP Pohjola           
                                                                                Group Central Cooperative

Vice Chairman                    Mikko Hyttinen             Senior Vice President, OP-Pohjola Group                             
                                                                                Central Cooperative

Members                             Sakari Haapakoski      Bank Manager, Oulun Osuuspankki

                                            Jari Himanen               Managing Director, Etelä-Karjalan Osuuspankki 

       Hanno Hirvinen           Executive Vice President, Pohjola Bank plc

                                             Heikki Kananen           Managing Director, Mäntsälän Osuuspankki

                                             Risto Korpela              Managing Director, Turun Seudun Osuuspankki 

                                             Matti Nykänen             Senior Vice President, OP-Pohjola Group                             
                                                                                Central Cooperative

            


Mr. Lauri Iloniemi acted as OPA's Managing Director.



Prospects for the rest of the year

The macroeconomic development in Finland has during the spring deteriorated at a speed exceeding what was generally expected at the beginning of the year. This has led to increased unemployment rates and increased bankruptcy levels. The overall quality of OPA's credit portfolio is expected to remain strong in spite of the deteriorating economic outlook. 


The earnings before taxed for 2009 are forecasted to fall below the earnings of 2008 due to the more expensive funding costs and the decline in market rates. The decline in market rates will decrease the bank's net interest income and profit only to the extent that the loan portfolio is financed with the shareholders' equity.





Income Statement


EUR thousand

Q1-Q2/2009

Q1-Q2/2008

Q2/2009

Q2/2008

2008







Interest income

43,592

51,760

17,730

31,805

121,827

Interest expenses

37,691

45,339

14,927

27,917

108,330

Net interest income

5,901

6,421

2,803

3,888

13,497

Net commissions and fees

-3,949

-2,912

-1,993

-1,692

-6,686

Net income from trading

0

7

0

0

7

Net income from investments

1

1

0

0

1

Other operating income

3

0

3

0

0

Personnel costs

129

137

62

70

288

Other administrative expenses

420

343

190

191

736

Other operative expenses

352

610

219

513

878

Earnings before tax

1,054

2,428

341

1,422

4,917

Income taxes

275

585

87

328

1,282

Profit for the period

779

1,843

254

1,094

3,634



Key Ratios



Q1-Q2/2009

Q1-Q2/2008

Q2/2009

Q2/2008

2008

Return on equity (ROE), %

1.8

4.9

1.2

5.8

4.8

Cost/income ratio, %

46

31

58

35

28



Calculation of key ratios


Return on equity, % = Annualised profit for the period / Equity capital (average equity capital at the beginning and end of the period) × 100


Cost/income ratio, % = Personnel costs + Other administrative expenses + Other operating expenses / Net interest income + Net commission income + Net income from trading + Total net income from investments + Other operating income × 100


Balance Sheet


EUR thousand

30 June 2009

31 March 2009

31 Dec 2008

30 June 2008






Receivables from financial institutions

34,431

27,347

32,255

46,829

Derivative contracts

94,114

103,233

74,075

3,019

Receivables from customers

2,799,055

2,898,547

2,979,704

2,702,650

Investments assets

17

17

17

17

Intangible assets

923

750

643

482

Tangible assets

2

1

1

1

Other assets

13,517

85,827

62,397

15,732

Tax receivables

121

2


-3

Total assets

2,942,179

3,115,722

3,149,091

2,768,728


 




Liabilities to financial institutions

720,000

800,000

870,000

605,000

Derivative contracts

8,538

10,595

14,893

34,911

Debt securities issued to the public

2,091,479

2,100,153

2,086,535

1,998,403

Reserves and other liabilities

13,894

96,963

70,178

24,312

Tax liabilities

171

168

168

578

Subordinated debt securities

20,000

20,000

20,000

20,000

Total liabilities

2,854,083

3,027,879

3,061,774

2,683,204

Shareholders' equity





  Share capital

60,000

60,000

60,000

60,000

  Reserve for invested unrestricted . equity

20,000

20,000

20,000

20,000

  Retained earnings

8,096

7,843

7,317

5,524

Total equity

88,096

87,843

87,317

85,524

Total liabilities and shareholders' equity

2,942,179

3,115,722

3,149,091

2,768,728


Off-balance Sheet Commitments

EUR thousand

30 June 2009

31 March 2009

31 Dec 2008

30 June 2008

Binding credit commitments

16,346

27,973

19,145

19,452


Change Calculation on Shareholders' Equity


EUR thousand

Share capital

Retained earnings

Total equity

Shareholders' equity 1 January 2008

60,000

3,681

63,681

Distribution of profit

-

-

-

Profit for the period

-

1,843

1,843

Other

20,000

-

20,000

Shareholders' equity 30 June 2008

80,000

5,524

85,524





EUR thousand

Share capital

Retained earnings

Total equity

Shareholders' equity 1 January 2009

60,000

7,317

67,317

Distribution of profit

-

-

-

Profit for the period

779

-

779

Other

20,000

-

20,000

Shareholders' equity 30 June 2009

80,779

7,317

88,096



Cash Flow Statement


EUR thousand

Q1-2/2009

Q1-2/2008




Liquid assets 1 January

18,380

15,266

Cash flow from operations

17,522

-958,598

Cash flow from investments

-341

0

Cash flow from financing

-15,015

970,161

Liquid assets 30 June

20,546

26,829



The cash flow statement presents the cash flows for the period on the cash basis, divided into cash flows from operations, investments and financing. Cash flows from operations includes the cash flows generated from day-to-day operations. Cash flow from investments includes payments related to tangible and intangible assets, investments held to maturity and shares that are not considered as belonging to cash flow from operations. Cash flow from financing includes cash flows originating in the financing of operations either on equity or liability terms from money or capital market. Liquid assets include cash in hand and receivables from financial institutions payable on demand. The statement has been prepared using the indirect method.



Fair values of financial assets and liabilities



EUR 1,000 

Loans and receivables

Recognised at fair value through profit or loss 

Available for sale

Total





Financial assets




Receivables from financial institutions

34,431

-

-

34,431

Derivative contracts

-

94,114

-

94,114

Receivables from customers

2,799,055

-

-

2,799,055

Equities

-

-

17

17

Other receivables

14,563

-

-

14,563

Balance at 30 June 2009

2,848,048

94,114

17

2,942,179

Balance at 30 June 2008

2,765,692

3,019

17

2,768,728

Balance at 31 December 2008

3,075,000

74,075

17

3,149,091





EUR 1,000


Recognised at fair value through profit or loss 

Other 

liabilities

Total

Liabilities to financial institutions

-


720,000

720,000

Derivative contracts

-

8,538

-

8,538

Debt securities issued to the public

-

-

2,091,479

2,091,479

Subordinated liabilities

-

-

20,000

20,000

Other liabilities

-

-

14,065

-

Balance at 30 June 2009

-

8,538

2,845,545

2,854,083

Balance at 30 June 2008

-

34,911

2,648,293

2,683,204

Balance at 31 December 2008

-

14,893

3,046,881

3,061,774


Debt securities issued to the public are carried at amortised cost. On 30 June 2009, the fair value of these debt instruments was approximately EUR 68 220 thousand higher than their carrying amount, based on information available in markets and employing commonly used valuation techniques. Subordinated liabilities are carried at amortised cost. Their fair value are substantially lower than their carrying amount, but determining fair values realiably is difficult in the current market situation. 


Derivative Contracts 30.6.2009


EUR thousand

Nominal values/the remaining maturity

Fair values


Credit counter-value


Less than 1 year

1-5 years

More than 5 years

Total

Assets 

Liabilities

Interest rate derivatives








Hedging

2,003,284

2,790,607

-

4,793,891

94,114

94,023

112,675

Trading

-

-

-

-

-

-

-

Total

2,003,284

2,790,607

-

4,793,891

94,114

94,023

112,675



Derivative Contracts 30.6.2008


EUR thousand

Nominal values/the remaining maturity

Fair values


Credit counter-value


Less than 1 year

1-5 years

More than 5 years

Total

Assets 

Liabilities

Interest rate derivatives








Hedging

75,000

4,705,669

-

4,780,669

3,019

34,594

23,780

Trading

-

-

-

-

-

-

-

Total

75,000

4,705,669

-

4,780,669

3,019

34,594

23,780


All derivative contracts have been entered into for hedging purposes, regardless of their classification in accounting.



The interim report is unaudited.


Helsinki, 6 August 2009


OP Mortgage Bank

Board of Directors



For further information, please contact Mr Lauri Iloniemi, Managing Director, Tel. +358 10 252 3541




This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
IR IIFVETIIRIIA

a d v e r t i s e m e n t