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

OP Corporate Bank plc
Interim Report for 1 January-30 September 2016
Stock Exchange Release, 2 November 2016 at 9.00 am EET

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

  • Consolidated earnings before tax were EUR 400 million (514). The return on equity was 11.1% (16.4).
  • Banking earnings before tax decreased to EUR 189 million (259) due to lower net investment income. The loan portfolio grew in the reporting period by 6.4% to EUR 17.4 billion (16.4). Earnings included EUR 13 million (19) in impairment loss on receivables.
  • Non-life Insurance earnings before tax decreased to EUR 199 million (225) due to lower net investment income. Operating combined ratio was 86.5% (86.3).
  • Other Operations earnings before tax were EUR 11 million (28). Liquidity and access to funding remained good.
  • The CET1 ratio was 14.5% (14.1) as against the target of 15%.
  • Unchanged outlook: OP Corporate Bank Group's consolidated earnings before tax are expected to be clearly lower than earnings from continuing operations in 2015.
  Q1-3/2016 Q1-3/ 2015 Change, % Q1-4 /2015
Earnings before tax, EUR million     
  Non-life Insurance199225-11.5267
  Other Operations1128-60.323
Group total 400 514 -22.2 625

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* Q1-3/2016 Q1-3/2015 Q1-4/ 2015 Target
Return on equity, %11.116.414.813
CET1 ratio, %14.513.714.115
Cost/income ratio by Banking, %34.626.727.0< 35
Operating combined ratio by Non-life Insurance, % **86.586.387.3< 92
Operating expense ratio by Non-life Insurance, %17.617.417.718
Non-life Insurance solvency ratio (under Solvency II), %
including the effect of transitional provisions
162   158 
Non-life Insurance solvency ratio (under Solvency II), %
excluding the effect of transitional provisions
AA rating affirmed by two credit rating agencies or credit ratings at least at the main competitors' level2222
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.    


> 50 (30)

* OP Corporate Bank plc's financial 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.

Outlook towards the year end 

Supported by the domestic market, the Finnish economy has recovered slowly during the current year. Consumer spending and construction, in particular, have contributed to economic growth but export performance has remained sluggish. Unemployment has decreased and confidence improved. The world economy is expected to continue its slow growth and exports should not see any quick recovery. The Finnish economy is expected to continue its fairly slow growth, supported in the first place by domestic demand. Unrest in financial markets caused by the UK EU membership referendum eased off at the end of the reporting period but Brexit and many other political and economic risks are still casting a shadow over the outlook. In Finland, the faltering implementation of the economic policy measures already decided may threaten recovery.

Market interest rates that have in part turned negative places a 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, which 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. 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, 2 November 2016

OP Corporate Bank plc
Board of Directors

Financial reporting in 2017

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

Schedule for Financial Statements Bulletin for 2016 and Interim Reports in 2017:

Financial Statements Bulletin 2016              2 February 2017
Interim Report Q1/2017                                27 April 2017
Interim Report H1/2017                                 2 August 2017
Interim Report Q1-Q3/2017                          1 November 2017  

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.

OP Corporate Bank plc Q3 2016

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