EN OP-Asuntoluottopankki Oyj toimintakertomus ja tilinpäätös

OP Mortgage Bank's Report by the Board of Directors and Financial Statements 2024 | 2

Report by the Board of Directors

OP Mortgage Bank (OP MB) is the covered bond issuing entity of OP Financial Group.

Together with OP Corporate Bank plc, its role is to raise funding for OP Financial Group

from money and capital markets.

The intermediary loans and loan portfolio of OP MB totalled EUR 14,800 million (16,988)*

on 31 December 2024. Bonds issued by OP MB totalled EUR 14,800 million (14,915) at

the end of December.

OP MB's covered bonds after 8 July 2022 are issued under the Euro Medium Term

Covered Bond (Premium) programme (EMTCB), pursuant to the Finnish Act on Mortgage

Credit Banks and Covered Bonds (151/2022). The collateral is added to the EMTCB cover

pool from the member cooperative banks' balance sheets via the intermediary loan

process on the issue date of a new covered bond.

In January, OP MB issued its first covered bond of the year in the international capital

market. The fixed-rate covered bond worth EUR 1 billion has a maturity of seven years

and six months. All proceeds of the bond were intermediated to 63 OP cooperative banks

in the form of intermediary loans.

In March, a fixed-rate covered bond worth EUR 1 billion issued by OP MB in March 2017

matured. At the same time, OP cooperative banks' intermediary loans worth EUR 1 billion

related to the bond in question matured.

In October, OP MB issued its second covered bond of the year in the international capital

market. The fixed-rate covered bond worth EUR 1 billion has a maturity of five years. All

proceeds of the bond were intermediated to 48 OP cooperative banks in the form of

intermediary loans.

The terms of issue are available on the op.fi website, under Debt investors: https://

www.op.fi/en/op-financial-group/debt-investors/issuers/op-mortgage-bank/emtcb-debt-

programme-documentation

In November, OP MB sold a loan portfolio with a nominal value of EUR 1,825 million back

to 85 OP cooperative banks. A capital loss of EUR 7.9 million was recognised on the sale in

other operating expenses, and at the same time, income of EUR 5.0 million was

recognised in net interest income consisting of income of EUR 7.7 million from the

unwinding of hedge accounting items and an expense of EUR 2.7 million from the

unwinding of loan EIF amortisations. In addition, EUR 4.5 million was recognised as

expected credit loss on the sold loans. Net effect on operating profit was EUR 1.7 million.

Previously, OP MB has purchased loans from OP cooperative banks as collateral for the

bonds. Currently, OP MB operates on an intermediary loan model in which loans are

tagged as collateral for bonds directly in OP cooperative banks' balance sheets.

In November, a fixed-rate registered bond (Namensschuldverschreibung) worth EUR 115

million issued by OP MB in November 2012 also matured. Additionally, a fixed-rate

covered bond worth EUR 1 billion issued by OP MB in November 2014 matured in

November together with OP cooperative banks' intermediary loans related to the bond

worth EUR 1 billion.

At the end of December, 92 OP cooperative banks had a total of EUR 14,800 million

(14,800) in intermediary loans from OP MB.

Impairment loss on receivables related to loans in OP MB's balance sheet totalled EUR 2.5

million (-0.3). Loss allowance was EUR 0.0 million (2.6) following the sale of the loan

portfolio.

Operating profit was EUR 4.4 million (9.3). The company's financial standing remained

stable throughout the reporting period.

* The comparatives for 2023 are given in brackets. For income statement and other aggregated figures,

January–December 2023 figures serve as comparatives. For balance-sheet and other cross-sectional figures,

figures at the end of the previous financial year (31 December 2023) serve as comparatives.

OP Mortgage Bank's Report by the Board of Directors and Financial Statements 2024 | 3

Collateralisation of bonds issued to the public

The European covered bonds (premium) issued under the EMTCB programme worth EUR

25 billion established on 11 October 2022, in accordance with the Act on Mortgage Credit

Banks and Covered Bonds (151/2022), totalled EUR 6,250 million. The cover pool

included a total of EUR 6,882 million in loans serving as collateral on 31 December 2024.

Overcollateralisation exceeded the minimum requirement under the Act (151/2022).

The covered bonds issued under the Euro Medium Term Covered Note programme worth

EUR 20 billion established on 12 November 2010, in accordance with the Act on Mortgage

Credit Banks (Laki kiinnitysluottopankkitoiminnasta, 688/2010), totalled EUR 8,550

million. The cover pool included a total of EUR 9,451 million in loans serving as collateral

on 31 December 2024. Overcollateralisation exceeded the minimum requirement under

the Act (688/2010).

Joint and several liability of amalgamation

Under the Act on the Amalgamation of Deposit Banks (599/2010), the amalgamation of

cooperative banks comprises the organisation's central cooperative (OP Cooperative), the

central cooperative's member credit institutions and the companies belonging to their

consolidation groups, as well as credit and financial institutions and service companies in

which the above together hold more than half of the total votes. This amalgamation is

supervised on a consolidated basis. On 31 December 2024, OP Cooperative’s member

credit institutions comprised 93 OP cooperative banks, OP Corporate Bank plc, OP

Mortgage Bank and OP Retail Customers plc.

The central cooperative is responsible for issuing instructions to its member credit

institutions concerning their internal control and risk management, their procedures for

securing liquidity and capital adequacy, and for compliance with harmonised accounting

policies in the preparation of the amalgamation’s consolidated financial statements.

As a support measure referred to in the Act on the Amalgamation of Deposit Banks, the

central cooperative is liable to pay any of its member credit institutions the amount

necessary to preventing the credit institution from being placed in liquidation. The central

cooperative is also liable for the debts of a member credit institution which cannot be paid

using the member credit institution's assets.

Each member bank is liable to pay a proportion of the amount which the central

cooperative has paid to either another member bank as a support measure or to a

creditor of such a member bank in payment of an overdue amount which the creditor has

not received from the member bank. Furthermore, if the central cooperative defaults, a

member bank has unlimited refinancing liability for the central cooperative’s debts as

referred to in the Co-operatives Act.

Each member bank’s liability for the amount the central cooperative has paid to the

creditor on behalf of a member bank is divided between the member banks in proportion

to their last adopted balance sheets. OP Financial Group’s insurance companies do not fall

within the scope of joint and several liability.

According to section 25 of the Act on Mortgage Credit Banks (688/2010), which was valid

at that time, the creditors of covered bonds issued prior to 8 July 2022 have the right to

receive payment, before other claims, for the entire term of the bond, in accordance with

the terms and conditions of the bond, out of the funds entered as collateral, without this

being prevented by OP MB's liquidation or bankruptcy. A similar and equal priority also

applies to derivative contracts entered in the register of bonds, and to marginal lending

facilities referred to in section 26, subsection 4 of said Act. For mortgage-backed loans

issued prior to 8 July 2022 and included in the total amount of collateral of covered

bonds, the priority of the covered bond holders' payment right is limited to the amount of

loan that, with respect to home loans, corresponds to 70% of the value of shares or

property serving as security for the loan and entered in the bond register at the time of

the issuer's liquidation or bankruptcy declaration.

Under section 20 of the Act on Mortgage Credit Banks and Covered Bonds (151/2022),

which entered into force on 8 July 2022, the creditors of bonds issued after 8 July 2022,

including the related management and clearing costs, have the right to receive payment

from the collateral included in the cover pool, before other creditors of OP MB or the OP

cooperative bank which is the debtor of an intermediary loan. A similar priority also applies

to creditors of derivative contracts related to covered bonds, including the related

management and clearing costs. Interest and yield accruing on the collateral, and any

substitute assets, fall within the scope of said priority.

Section 44, subsection 3 of the Act on Mortgage Credit Banks and Covered Bonds includes

provisions on the creditor’s priority claim regarding cover pool liquidity support. According

to said subsection, the creditor has the right to receive payment against the funds

contained in the cover pool after claims based on the principal and interest of covered

OP Mortgage Bank's Report by the Board of Directors and Financial Statements 2024 | 4

bonds secured by the cover assets included in the cover pool, obligations based on

derivatives contracts associated with covered bonds, as well as administration and

liquidation costs.

Profit performance

OP MB's key financial indicators in 2024 are shown below:


TEUR	Q1–4/2024	Q1–4/2023
Net interest income	30,007	35,680
Impairment loss on receivables	2,500	-256
Net commissions and fees	-11,118	-16,389
Other operating income	5	3
Personnel costs	-703	-672
Other operating expenses	-16,245	-9,115
Operating profit	4,445	9,250

Impairment loss on receivables related to loans in OP MB's balance sheet totalled EUR 2.5

million (-0.3).

The company's financial standing remained stable throughout the reporting period. Full-

year earnings before tax came to EUR 4,445 thousand (9,250).

Balance sheet

OP MB's balance sheet total was EUR 15,415 million (17,498) on 31 December 2024. The

table below shows the development of key assets and liabilities.


		Adjusted
€ million	31 Dec 2024	31 Dec 2023
Balance sheet	15,415	17,498
Receivables from member credit institutions	14,957	15,017
Receivables from customers	0	2,113
Liabilities to member credit institutions	0	2,012
Debt securities issued to the public	14,458	14,256
Equity capital	368	372

The bank's intermediary loans and loan portfolio decreased to EUR 14,800 million

(16,988) in January–December.

As a result of the sale of OP MB's loan portfolio, households accounted for 0% (99.9) of the

loan portfolio and institutional customers for 0% (0.1) on 31 December 2024. On 31

December 2024, OP MB's doubtful receivables totalled EUR 0 million (177).

The carrying amount of bonds issued to the public was EUR 14,458 million (14,256) at

the end of the year. In addition to bonds, OP MB financed its operations through debt

financing from OP Corporate Bank plc. At the end of the financial year, the amount of debt

financing came to EUR 0 million (2,012).

OP MB has hedged its loan portfolio against interest rate risk by means of interest rate

swaps. Interest rate swaps are used to swap base rate cash flows of hedged loans to

Euribor cash flows. OP MB has also changed the fixed rates of the bonds it has issued to

short-term market rates. OP MB’s interest rate derivative portfolio totalled EUR 15,134

million (17,357). OP MB has concluded all derivative contracts for hedging purposes, with

OP Corporate Bank plc being their counterparty.

Capital adequacy

OP MB's Common Equity Tier 1 (CET1) ratio stood at 797.0% (41.8) on 31 December

2024. The ratio was improved by the sale of the loan portfolio back to OP cooperative

banks and the resulting reduction in capital requirement for credit risk. The minimum

CET1 capital requirement is 4.5% and the requirement for the capital conservation buffer

is 2.5%. The minimum total capital requirement is 8% (or 10.5% with the increased capital

conservation buffer). OP MB fully covers its capital requirements with CET1 capital, which

in practice means that it has a CET1 capital requirement of 10.5%. Estimated profit

distribution has been subtracted from earnings for the reporting period.

OP MB uses the Standardised Approach (SA) to measure its capital adequacy requirement

for credit risk. The Standardised Approach is also used to measure the capital requirement

for operational risks.

OP MB belongs to OP Financial Group. As part of the Group, OP MB is supervised by the

European Central Bank. OP Financial Group presents capital adequacy information in its

financial statements bulletins and interim and half-year financial reports in accordance

with the Act on the Amalgamation of Deposit Banks. OP Financial Group also publishes

Pillar 3 disclosures.

OP Mortgage Bank's Report by the Board of Directors and Financial Statements 2024 | 5

Own funds and capital adequacy


TEUR	31 Dec 2024	31 Dec 2023
Equity capital	368,122	372,160
Common Equity Tier 1 (CET1) before deductions	368,122	372,160
Excess funding of pension liability		-13
Proposed profit distribution	-3,466
Share of unaudited profits		-7,490
Insufficient coverage for non-performing exposures		-2,856
CET1 capital	364,656	361,800

Tier 1 capital (T1)	364,656	361,800

Tier 2 capital (T2)
Total own funds	364,656	361,800

Total risk exposure amount


TEUR	31 Dec 2024	31 Dec 2023
Credit and counterparty risk	18,581	812,205
Operational risk (Standardised Approach)	26,636	25,140
Other risks*	538	27,336
Total risk exposure amount	45,755	864,682

* Risks not otherwise covered.

Ratios


Ratios, %	31 Dec 2024	31 Dec 2023
CET1 capital ratio	797.0	41.8
Tier 1 capital ratio	797.0	41.8
Capital adequacy ratio	797.0	41.8

Capital requirement


Capital requirement, TEUR	31 Dec 2024	31 Dec 2023
Own funds	364,656	361,800
Capital requirement	4,804	90,829
Buffer for capital requirements	359,852	270,971

Liabilities under the Resolution Act

Under regulation applied to the resolution of credit institutions and investment firms, the

resolution authority is authorised to intervene in the terms and conditions of investment

products issued by a bank in a way that affects an investor's position. The EU's Single

Resolution Board (SRB) based in Brussels is OP Financial Group's resolution authority. The

SRB has confirmed a resolution strategy for OP Financial Group whereby the resolution

measures would focus on the OP amalgamation and on the new OP Corporate Bank that

would be formed in case of resolution. According to the resolution strategy, OP Mortgage

Bank would continue its operations as the new OP Corporate Bank's subsidiary.

The SRB has set a Minimum Requirement for Own Funds and Eligible Liabilities (MREL)

for OP MB. From May 2024, the MREL is 16% of the total risk exposure amount and

18.5% of the total risk exposure amount including a combined buffer requirement, and 6%

of leverage ratio exposures. The requirement entered into force on 15 May 2024. The

requirement includes a Combined Buffer Requirement (CBR) of 2.5%.

OP MB's buffer for the MREL requirement was EUR 356 million. The buffer consists of

own funds only. OP MB clearly exceeds the MREL requirement. OP MB's MREL ratio was

797% of the total risk exposure amount.

OP Mortgage Bank's Report by the Board of Directors and Financial Statements 2024 | 6

Formulas for key figures and ratios


Key figure or ratio	Formula		Description

Capital adequacy ratio, %	Total own funds	x 100	The ratio describes a credit institution’s capital adequacy and shows the ratio of own funds to the total risk exposure amount.
Capital adequacy ratio, %	Total risk exposure amount	x 100

Tier 1 ratio, %	Tier 1 capital	x 100	The ratio describes a credit institution’s capital adequacy and shows the ratio of Tier 1 capital to the total risk exposure amount.
Tier 1 ratio, %	Total risk exposure amount	x 100

Common Equity Tier 1 (CET1) capital ratio, %	CET1 capital	x 100	The ratio describes a credit institution’s capital adequacy and shows the ratio of CET1 capital to the total risk exposure amount.
Common Equity Tier 1 (CET1) capital ratio, %	Total risk exposure amount	x 100

Financial indicators


Key figures and ratios	2024	2023	2022
Return on equity (ROE), %	0.9	2.0	1.8
Return on assets (ROA), %	0.02	0.04	0.03
Equity ratio, %	2.39	2.13	1.78
Cost/income ratio, %	90	51	56

OP Mortgage Bank's Report by the Board of Directors and Financial Statements 2024 | 7

Formulas for Alternative Performance Measures

The alternative performance measures are presented to illustrate the financial performance of business operations and to improve comparability between reporting periods. Formulas for

the alternative performance measures used are presented below.


Key figure or ratio	Formula		Description

Return on equity (ROE), %	Financial performance for the reporting period x (days of financial year/days of reporting period)	x 100	The ratio describes how much return is generated on equity capital as a percentage of equity during the reporting period.
Return on equity (ROE), %	Equity (average at beginning and end of period)	x 100

Return on assets (ROA), %	Financial performance for the reporting period x (days of financial year/days of reporting period)	x 100	The ratio describes how much return is generated on capital tied up on business during the reporting period.
Return on assets (ROA), %	Average balance sheet total (average at beginning and end of period)	x 100

Equity ratio, %	Equity capital	x 100	The ratio describes what proportion of the company's assets is financed with equity capital
Equity ratio, %	Balance sheet total	x 100

Cost/income ratio, %	Total expenses	x 100	The ratio describes the ratio of expenses to income. The lower that ratio, the better.
Cost/income ratio, %	Total income	x 100

OP Mortgage Bank's Report by the Board of Directors and Financial Statements 2024 | 8

Risk management and capital adequacy management

OP Financial Group's core values, strategic goals and financial targets form the basis for

OP MB’s risk management and capital adequacy management. In OP Financial Group’s risk

policy, the central cooperative's Board of Directors confirms annually risk-management

principles, actions, objectives and limits to be applied by the Group and its entities that are

used to guide business to implement the policies confirmed in the Group's strategy and the

principles of the Risk Appetite Framework (RAF).

The central cooperative is in charge of the OP Financial Group level risk and capital

adequacy management. OP MB is responsible for its own risk and capital adequacy

management in accordance with the nature and extent of its operations.

OP MB’s Board of Directors makes decisions on its risk and capital adequacy management

in line with the principles adopted by the central cooperative’s Board of Directors. In

addition, OP MB’s Board of Directors deals with, in terms of quality and extent, far-

reaching and important matters in principle from the perspective of the company’s

operations, and any unusual matters. The Board of Directors decides on principles and

procedures to ensure that the company operates in compliance with external regulation

and OP Cooperative’s guidelines.

The Managing Director is responsible for the implementation of risk and capital adequacy

management according to the principles and guidelines that have been agreed on, and

reports regularly on the company’s business and financial standing.

OP MB's risk and capital adequacy management tasks are centralised within OP Financial

Group's Risk Management. Risk and capital adequacy management falls under internal

control. Its purpose is to ensure OP MB's risk-taking competence and liquidity and,

thereby, ensure business continuity. Risk-taking competence is made up of effective risk

management that is proportionate to the extent and complexity of operations and of

adequate capital resources and liquidity based on profitable business operations.

Risk and capital adequacy management has been made an integral part of the company’s

business and management. OP MB focuses on carrying out its role according to its service

capabilities and risk-taking competence in accordance with shared business models. OP

MB has a moderate attitude towards risk-taking.

Credit risk exposure

OP MB's loan portfolio totalled EUR 0 million (2,188)* at the end of the financial year.

Doubtful receivables totalled EUR 0 million (177). Doubtful receivables refer to receivables

that are more than 90 days past due, other receivables classified as risky and forborne

exposure due to the customer's financial difficulties. Forbearance measures consist of

concessions, agreed on the customer’s initiative, regarding the original repayment plan to

enable the customer to surmount temporary payment difficulties. OP cooperative banks

make every effort to identify ways of solving customers' temporary financial difficulties.

Loan modifications due to reasons other than the customer's financial difficulties are not

classified as doubtful receivables.

* The loan portfolio excludes changes in the fair value of loans in hedge accounting as of 1 January 2023.

Comparatives have been adjusted to correspond to the current definition.

Forborne exposures and non-performing exposures


	Performing forborne exposures (gross)		Non-performing exposures (gross)		Doubtful receivables (gross)
TEUR	31 Dec 2024	31 Dec 2023	31 Dec 2024	31 Dec 2023	31 Dec 2024	31 Dec 2023
More than 90 days past due				12,680		12,680
Unlikely to be paid				11,637		11,637
Forborne exposures		124,470		28,688		153,158
Total		124,470		53,005		177,475

As receivables more than 90 days past due, OP MB reports the remaining principal of

receivables whose interest or principal amount has been overdue and outstanding for over

three months. Other receivables categorised as risky are reported as contracts unlikely to

be paid. Forborne loans include receivables that have been modified due to the customer's

financial difficulties by, for example, granting a repayment holiday of 6 to 12 months.

OP Mortgage Bank's Report by the Board of Directors and Financial Statements 2024 | 9


Key figures and ratios	31 Dec 2024	31 Dec 2023
Doubtful receivables, € thousand		177,475
Ratio of doubtful receivables to exposures, %		7.60
Ratio of non-performing exposures to exposures, %		2.27
Ratio of performing forborne exposures to exposures, %		5.33
Ratio of performing forborne exposures to doubtful receivables, %		70.13
Ratio of loss allowance to doubtful receivables, %		1.40

The company does not have any group of connected clients with the total amount of

customer risk exceeding the limit set in the Act on Credit Institutions of 25% of the bank's

capital base. Thanks to the loan portfolio's diversity and hard collateral, OP MB's credit risk

exposure is highly stable.

Market risks and liquidity risk

Market risks include the following risks both on and off the balance sheet: interest rate

risk, price risks and market liquidity risk. The company’s products and market instruments,

funding and investment principles and applied risk monitoring methods have been defined

in the market risk management guidelines confirmed by the Risk Management Committee.

Interest rate risk means the effect of changing market interest rates on the company's

earnings, profitability and capital adequacy. The interest rate risk in 2024 arose mainly

from the differences in the bases of interest rates for the loan portfolio available as

collateral for bonds, and its funding, the differences in interest rate caps associated with

loans and derivatives designated as their hedging instruments, as well as the company’s

equity. In November, OP MB sold a loan portfolio with a nominal value of EUR 1,825

million back to 85 OP cooperative banks, and from now on, OP MB operates on an

intermediary loan model in which loans are tagged as collateral for bonds directly in OP

cooperative banks' balance sheets. In the intermediary loan model, loan receivables, or

risks related to them, are not transferred to OP MB. In future, interest rate risk arises

mainly from equity and issued bonds, intermediary loans, and interest rate swaps hedging

them. OP Corporate Bank plc is the counterparty to all derivative contracts.

The purpose of liquidity risk management is to secure the company's ability to fulfil its

payment obligations without endangering business continuity, profitability or capital

adequacy. OP MB monitors its cash flows on a daily basis to secure funding liquidity and

its structural funding risk on a regular basis as part of the company's internal capital

adequacy assessment process (ICAAP).

OP MB's Board of Directors monitors regularly that the company's interest rate and

funding risk exposure remain within the limits set in internal risk policies and applicable

legislation.

Operational risks

Operational risk is a consequential risk caused by all business operations that may result

from insufficient or incorrect practices, processes, systems or external factors. Operational

risk includes ICT and security risks. Operational risk may materialise in the form of

financial losses or other harmful consequences, such as deterioration or loss of reputation

or trust. Operational risks are managed by identifying and analysing them and by ensuring

that controls and management tools are appropriate and adequate. The bank assesses

operational risks regularly and reports its risk status to the Board of Directors once a year.

Operational risk management is aimed at ensuring that no unforeseeable operational risks

materialise in operations.

Compliance risk forms part of operational risk. Compliance activities are aimed at ensuring

that OP MB complies with laws, regulatory instructions and regulations, self-regulation of

markets, and internal guidelines, policies and instructions of OP Financial Group and OP

MB. Compliance also ensures that customer relationship management complies with

appropriate and ethically sound principles and practices.

Sustainability and corporate responsibility

Responsible business is one of OP Financial Group's strategic priorities. OP Financial

Group's sustainability programme guides the Group's actions and is built around three

themes: Climate and the environment, People and communities, and Corporate

governance. Read more about the sustainability programme at www.op.fi/en/op-financial-

group/corporate-social-responsibility/corporate-social-responsibility-programme.

At OP Financial Group, sustainability and corporate responsibility are guided by a number

of principles and policies. OP Financial Group is committed to complying not only with all

applicable laws and regulations, but also with a number of international initiatives. The

Group is committed to complying with the ten principles of the UN Global Compact

initiative in the areas of human rights, labour rights, the environment and anti-corruption.

OP Mortgage Bank's Report by the Board of Directors and Financial Statements 2024 | 10

OP Financial Group is a Founding Signatory of the Principles for Responsible Banking

under the United Nations Environment Programme Finance Initiative (UNEP FI).

Furthermore, OP Financial Group is committed to complying with the UN Principles for

Responsible Investment and the UN Principles for Sustainable Insurance.

As of the reporting year 2024, OP Financial Group reports on its sustainability and

corporate responsibility in accordance with the European Sustainability Reporting

Standards (ESRS) under the EU's Corporate Sustainability Reporting Directive (CSRD). OP

Financial Group's Report by the Board of Directors and Financial Statements 2024,

including CSRD reporting, will be published in March 2025.

OP Financial Group's sustainability report is prepared on a consolidated basis for the entire

OP Financial Group, on the same grounds and restrictions as OP Financial Group's

Financial Statements. OP Financial Group consists of OP cooperative banks and the central

cooperative (OP Cooperative), as well as a number of subsidiaries and affiliates. OP

Mortgage Bank is a member credit institution, under the Act on the Amalgamation of

Deposit Banks, which is permanently affiliated to a central cooperative as provided for in

the Act. According to the Accounting Act's rules on the scope of application of sustainability

reporting, a member credit institution can determine that the rules in section 7 of the Act

do not apply in its case. OP Mortgage Bank has decided that sustainability information

regarding the company will be included in OP Financial Group's sustainability report, and

will not be reported separately.

OP Financial Group's biodiversity roadmap includes measures to promote biodiversity. OP

Financial Group aims to grow its nature positive handprint by 2030. 'Nature positive'

means that OP Financial Group's operations will have a net positive impact (NPI) on

nature.

OP Financial Group has drawn up a Human Rights Statement and Human Rights Policy.

The Group respects all recognised human rights. The Human Rights Statement includes

the requirements and expectations that OP Financial Group has set for itself and actors in

its value chains. OP Financial Group is committed to perform remediation actions if its

operations have adverse human rights impacts.

In March 2024, OP MB published a Green Covered Bond Report on the allocation and

impacts of Finland’s first green covered bonds issued in March 2021 and April 2022.

Under OP MB’s Green Covered Bond Framework, the proceeds from the bonds have been

allocated to mortgages with energy-efficient residential buildings as collateral.

The environmental impacts allocated to the green covered bonds in 2023 were 59,000

MWh of energy use avoided per year and 8,800 tonnes of CO2-equivalent emissions

avoided per year.

Personnel and remuneration schemes

At the end of the reporting period, OP MB had six employees. OP MB has been digitising

its operations and purchases all key support services from OP Cooperative and its

subsidiaries, reducing the need for its own personnel.

Variable remuneration applied by OP Financial Group in 2024 consists of the

performance-based bonus scheme covering all personnel, and the personnel fund.

Company-specific targets based on the annual plan and the Group-level strategic targets

are taken into account in the metrics used for the performance-based bonus scheme and

the personnel fund. In drawing up the remuneration schemes, OP has taken account of

the regulations applying to such schemes in the financial sector. More detailed information

on variable remuneration is available on OP Financial Group’s website.

OP MB belongs to OP Financial Group’s OP Personnel Fund which forms a long-term

remuneration scheme for employees. The company pays the Personnel Fund profit-based

bonuses in accordance with pre-agreed principles. Members of the Fund may withdraw

fund units on the grounds specified in Fund Rules.

Governing body members

Board of Directors

The Board of Directors manages OP MB's business. According to the Articles of

Association, the Board of Directors is responsible for the company's administration and

appropriate organisation of operations. The Board of Directors has general authority to

decide on all issues related to the governance and other matters that, by law, are not the

responsibility of the Annual General Meeting or the Managing Director. The Board of

Directors decides on the strategy and key business goals. The Board of Directors' duty is

to ensure that supervision of the accounting and financial management have been

organised appropriately.

OP Mortgage Bank's Report by the Board of Directors and Financial Statements 2024 | 11

The Board composition is as follows:


Chair	Mikko Timonen	Chief Financial Officer, OP Cooperative
Members	Satu Nurmi	Business Lead, SME Financing, OP Retail Customers plc
	Mari Heikkilä	Head of Group Treasury & ALM, OP Corporate Bank plc

According to the Articles of Association, OP MB’s Board of Directors comprises a minimum

of three and a maximum of eight members. Currently, the Board has three members.

Board members are elected for a period of one year. Their term begins upon closing of

the Annual General Meeting that elected them and ends upon closing of the Annual

General Meeting that elects the new Board. A Board member must resign after they reach

the age of 65 at the latest. The Board of Directors has a quorum when more than half of

its members are present. The Board of Directors held 13 meetings in the financial year.

Managing Director

OP MB's Managing Director must advance the company's interests carefully and manage

the bank's daily operations according to laws and the guidelines and regulations issued by

the Board of Directors. The Managing Director may take measures which, considering the

extent and nature of the company’s operations, are unusual or far-reaching in nature only

if duly authorised by the Board of Directors, or if the Board of Director’s decision cannot

be awaited without causing material harm to the company’s operations. It is the statutory

duty of the Managing Director to ensure that the company’s accounting is in compliance

with the applicable law and that the bank’s treasury is managed in a reliable manner.

OP MB's Managing Director is Sanna Eriksson. The Deputy Managing Director is Tuomas

Ruotsalainen, Senior Covered Bonds Manager at OP MB.

OP MB's Corporate Governance Statement is available at www.op.fi.

Audit

Based on the shareholder’s written decision of 2 April 2024, PricewaterhouseCoopers Oy,

an audit firm, was elected as the company's auditor with Lauri Kallaskari, Authorised

Public Accountant, acting as the chief auditor.

OP Cooperative’s Internal Audit is in charge of the company’s internal audit.

Events after the financial year

The changes in the EU Capital Requirements Regulation (CRR3), which implement the final

elements of Basel III within the EU, are expected to reduce the capital adequacy of OP MB,

nevertheless, capital adequacy remains at a very strong level. These changes took effect

on 1 January 2025.

Outlook

Finland's economy contracted in 2024. However, the economy began to recover as the

year progressed and preliminary figures suggest that GDP grew in the second half

compared to the same period in 2023. Slower inflation and lower interest rates provide a

basis for the recovery to continue. Risks associated with the economic outlook are still

higher than usual. The escalation of geopolitical crises or a rise in trade barriers may affect

capital markets and the economic environment.

OP MB's capital adequacy is expected to remain strong and its risk exposure favourable.

This enables issuance of covered bonds in the future.

Proposal by the Board of Directors for profit distribution

As shown in the financial statements of 31 December 2024, the company’s distributable

funds, which include EUR 3,466,300.33 in profit for the financial year, totalled EUR

63,122,322.54. The company’s distributable funds totalled EUR 308,122,322.54.

The Board of Directors proposes that a dividend of EUR 45.25 per share be distributed,

totalling EUR 3,465,788.00, and that following dividend distribution, the remaining

amount of EUR 512.33 be recognised in retained earnings.

The company's financial position has not undergone any material changes since the end of

the financial year 2024. The company’s liquidity is good and will not be jeopardised by the

proposed profit distribution, in the Board of Directors' view.

OP Mortgage Bank's Report by the Board of Directors and Financial Statements 2024 | 12

FINANCIAL STATEMENTS

Income statement


			Adjusted
TEUR	Note	2024	2023
Interest income		679,781	594,819
Interest expenses		-649,775	-559,138
Net interest income	3	30,007	35,680
Impairment loss on receivables	4	2,500	-256
Commission income		86	100
Commission expenses		-11,204	-16,489
Net commissions and fees	5	-11,118	-16,389
Other operating income		5	3
Personnel costs	6	-703	-672
Other operating expenses	7	-16,245	-9,115
Operating profit (loss)		4,445	9,250
Income tax	8	-978	-1,760
Profit for the financial year		3,466	7,490

Statement of comprehensive income


			Adjusted
TEUR	Note	2024	2023
Profit for the period		3,466	7,490
Items that will not be reclassified to profit or loss
Gains/(losses) arising from remeasurement of defined benefit plans		17	14
Income tax
On gains/(losses) arising from remeasurement of defined benefit plans		-3	-3
Total comprehensive income for the financial year		3,480	7,501

OP MB changed the official income statement and balance sheet format of the financial statements at the beginning of 2024. The changes are described in Note 2. Changes in

accounting policies and presentation.

OP Mortgage Bank's Report by the Board of Directors and Financial Statements 2024 | 13

Balance sheet


			Adjusted	Adjusted
TEUR	Note	31 Dec 2024	31 Dec 2023	1 Jan 2023
Assets
Cash and cash equivalents	10	343,002	291,681	137,989
Receivables from member credit institutions	11	14,956,610	15,016,633	17,940,673
Receivables from customers	12	0	2,113,114	2,690,039
Derivative contracts	13	114,221	72,680	31,189
Other assets	14	41	1,081	877
Deferred tax assets	15	1,476	2,430	98
Total assets		15,415,350	17,497,619	20,800,866

Liabilities to member credit institutions	16	0	2,012,380	2,253,869
Derivative contracts	13	589,194	854,869	1,220,509
Debt securities issued to the public	17	14,457,644	14,256,146	16,952,566
Provisions and other liabilities	18	390	2,000	2,377
Deferred tax liabilities	15	0	63	234
Total liabilities		15,047,227	17,125,459	20,429,555


Equity capital	19
Share capital		60,000	60,000	60,000
Reserve for invested unrestricted equity		245,000	245,000	245,000
Retained earnings		63,122	67,160	66,311
Total equity		368,122	372,160	371,311
Total liabilities and equity		15,415,350	17,497,619	20,800,866

OP MB changed the official income statement and balance sheet format of the financial statements at the beginning of 2024. The changes are described in Note 2. Changes in

accounting policies and presentation.

OP Mortgage Bank's Report by the Board of Directors and Financial Statements 2024 | 14

Statement of changes in equity


TEUR	Share capital	Reserve for invested unrestricted equity	Retained earnings	Total equity
Equity capital 1 January 2024	60,000	245,000	67,160	372,160
Profit for the financial year	0	0	3,466	3,466
Other comprehensive income for the period	0	0	-14	-14
Dividends	0	0	-7,490	-7,490
Equity capital 31 December 2024	60,000	245,000	63,122	368,122


TEUR	Share capital	Reserve for invested unrestricted equity	Retained earnings	Total equity
Equity capital 1 January 2023	60,000	245,000	66,311	371,311
Profit for the financial year	0	0	7,490	7,490
Other comprehensive income for the period	0	0	-11	-11
Dividends	0	0	-6,631	-6,631
Equity capital 31 December 2023	60,000	245,000	67,160	372,160

OP Mortgage Bank's Report by the Board of Directors and Financial Statements 2024 | 15

Cash flow statement


		Adjusted
TEUR	2024	2023
Cash flow from operating activities
Profit for the period	3,466	7,490
Adjustments to profit for the period
Expected credit losses	-2,493	277
Accruals of derivatives and hedge accounting	-10,210	-3,031
Valuation items related to derivatives	-12	-419
Income tax	978	1,760
Amortisation of effective interest rate	7,831	-13,745
Other	1,824	74
Total adjustments	-2,082	-15,083
Increase (-) or decrease (+) in operating assets	2,309,991	3,513,393
Receivables from member credit institutions, increases	-2,000,000	-3,000,000
Receivables from member credit institutions, decreases	1,841,819	6,058,374
Receivables from customers	2,346,366	508,914
Derivative contracts	120,765	-53,560
Other assets	1,040	-335
Increase (+) or decrease (-) in operating liabilities	-2,129,092	-76,760
Liabilities to member credit institutions	-2,012,380	-241,489
Derivative contracts	-156,289	125,085
Provisions and other liabilities	39,576	39,643
Income tax paid	-83	-4,260
Dividends received	2	2
A. Net cash from operating activities	182,201	3,424,782

OP Mortgage Bank's Report by the Board of Directors and Financial Statements 2024 | 16


Cash flow from financing activities
Increases in debt securities issued to the public	1,991,610	2,985,540
Decreases in debt securities issued to the public	-2,115,000	-6,250,000
Dividends	-7,490	-6,631
B. Net cash used in financing activities	-130,880	-3,271,091


Net change in cash and cash equivalents (A+B)	51,321	153,691
Cash and cash equivalents at period start	291,681	137,989
Cash and cash equivalents at period end	343,002	291,681


Interest received	715,800	669,939
Interest paid	-687,752	-246,005

OP Mortgage Bank's Report by the Board of Directors and Financial Statements 2024 | 17

Notes


Note 20. Recurring fair value measurements by valuation technique	59

Other notes
Note 21. Funding structure	61
Note 22. Financial assets and liabilities by residual term to maturity	62
Note 23. Risk Management	63
Note 24. Related party transactions	70
Note 25. Transactions with OP cooperative banks	73
Note 25. Events after the balance sheet date	74

Statement concerning the financial statements	75
Auditor's note	76

OP Mortgage Bank's Report by the Board of Directors and Financial Statements 2024 | 18

Note 1. Accounting policies

Introduction

OP Mortgage Bank (OP MB) is a credit institution engaged in mortgage banking in Finland.

The Act on Mortgage Credit Banks and Covered Bonds (Laki kiinnitysluottopankeista ja

katetuista joukkolainoista 151/2022) entered into force on 8 July 2022. The law

implemented a directive concerning covered bonds and it revoked the Act on Mortgage

Credit Banks (Laki kiinnitysluottopankkitoiminnasta 688/2010). On 30 June 2022, the

Finnish Financial Supervisory Authority granted OP MB a licence to engage in mortgage

credit bank operations in accordance with section 8 of the Act on Mortgage Credit Banks

and Covered Bonds (Laki kiinnitysluottopankeista ja katetuista joukkolainoista).

The company is part of an amalgamation of cooperative banks (OP Financial Group).

Ultimately, OP Cooperative and its member credit institutions are liable for each other’s

debts and commitments. OP Cooperative acts as the entire OP Financial Group’s strategic

owner institution and as a central cooperative in charge of Group control and supervision.

OP MB is domiciled in Helsinki and the address of its registered office is Gebhardinaukio 1,

FI-00510 Helsinki.

A copy of OP MB’s financial statements is available at www.op.fi or the company’s office at

Gebhardinaukio 1, FI-00510 Helsinki.

OP MB belongs to OP Financial Group, and OP MB’s accounts are included in its

consolidated financial statements. A copy of OP Financial Group's consolidated financial

statements is available at www.op.fi or the Group's office at Gebhardinaukio 1, FI-00510

Helsinki.

The Board of Directors of OP MB approved the financial statements bulletin for issue on 6

February 2025, and the Board of Directors approved the financial statements on 6

February 2025.

Basis of preparation

OP MB’s financial statements have been prepared in accordance with the International

Financial Reporting Standards (IFRS), applying IASs, IFRSs and SIC and IFRIC

interpretations effective on 31 December 2024. The International Financial Reporting

Standards refer to standards and their interpretations adopted in accordance with

Regulation (EU) No. 1606/2002 of the European Parliament and of the Council. OP MB’s

notes also conform to the requirements of Finnish accounting and company legislation

that complement IFRS regulations.

In 2024, OP MB adopted the following amendments to standards:

• Amendments to IAS 1 Presentation of Financial Statements, IAS 7 Statement of Cash

Flows, IFRS 16 Leases and IFRS 7 Financial Instruments: Disclosures entered into force

on 1 January 2024. The amendments will not have any major effect on OP MB’s

financial statements.

The figures in financial statements are presented in thousands of euros.

In order to ensure uniformity in the accounting policies of entities within OP Financial

Group, OP Cooperative is obliged to issue guidelines on the preparation of financial

statements to its member credit institutions. According to the Act on Cooperative Banks

and Other Cooperative Institutions and the Act on the Amalgamation of Deposit Banks, the

Board of Directors of OP Cooperative must confirm any applicable accounting policies that

have no directions from IFRS.

Critical accounting judgements

The preparation of the financial statements requires making estimates and assumptions

about the future, and the actual results may differ from these estimates and assumptions.

It also requires the management to exercise its judgement in the process of applying the

accounting policies.

Expected credit losses

The determination of the measurement models for expected credit losses (ECL) involves

management judgement.

The actual measurement of ECL figures is performed using the ECL models based on the

use of observable input data, except if it is mainly the question of a large corporate

exposure in stage 2 or 3 and on the watch list, in which case the ECL is calculated using

the cash flow based ECL method based on expert judgement. Management judgement is

OP Mortgage Bank's Report by the Board of Directors and Financial Statements 2024 | 19

involved in expert judgements concerning, for example, the amount and timing of future

cash flows and the value of collateral.

Management overlay includes either additional provisions made directly to the amount of

ECL or estimates included in PD or LGD risk parameters (so-called post-model

adjustments). These are intended only for temporary use until an unpredictable event

caused by the overlay provision or circumstance could have been taken into account in the

ECL models.

Calculations of loss allowance and the related key uncertainties are presented in Note 12.

Receivables from customers.

Netting

Financial assets and liabilities are offset in the balance sheet if OP MB currently has a

legally enforceable right of set-off in the normal course of business and in the event of

default, insolvency or bankruptcy, and intends to settle the asset and liability on a net

basis.

Segment reporting

OP MB is the covered bond issuing entity of OP Financial Group. The mortgage-backed

loans as collateral for the bonds are tagged from member cooperative banks’ balance

sheets via intermediary loan process. Since all of OP MB’s operations are covered by a

single segment, the company does not prepare segment reporting.

New standards and interpretations

IFRS 18 standard on presentation and disclosure in financial statements

On 9 April 2024, the IASB published the new IFRS 18 (not yet approved in the EU) on

presentation and disclosure in financial statements. The new financial reporting standard

will bring changes to the presentation of the income statement in particular. In addition,

entities must present other items and subtotals, if such presentations are necessary for a

primary financial statement to provide a useful structured summary. The new IFRS 18

requirements will improve the comparability of financial reporting between similar

companies.

IFRS 18 must be applied to reporting periods beginning on or after 1 January 2027 (to be

applied retrospectively to comparative information). IFRS 18 will replace IAS 1. The new

standard will have no effect on the recording or valuation of items in financial statements.

OP Financial Group has launched an analysis on the impacts of the new standard. Based

on current estimates, IFRS 18 will affect the following areas of financial statements:

• income statement structure and new income statement subtotals

• new notes on management-defined performance measures, which are currently

presented in the Report by the Board of Directors

• disclosure of information on extended criteria for aggregation and disaggregation, which

will apply to both primary financial statements and notes to the financial statements

• presentation of exchange rate differences and changes in the fair value of derivatives

used for risk management purposes in the income statement.

Other upcoming amendments

Amendments to the classification and measurement of financial instruments (applies to

IFRS 9 and IFRS 7; published on 30 May 2024, not yet approved in the EU). This

amendment will further specify the recognition and derecognition time of some financial

assets and liabilities when using an electronic payment system. The amendment also

specifies the assessment of the SPPI criteria (such as the ESG target) for financial assets,

and requires new notes for products whose contractual terms and conditions may change

the cash flows (such as the ESG target), and further specifies the notes related to shares

classified at FVOCI.

The amendment must be applied to reporting periods beginning on or after 1 January

2026 (no retrospective application to the year of comparison). OP Financial Group has

launched an analysis on the impacts of the amendment.

IFRS 19 Subsidiaries without Public Accountability: Disclosures (published on 9 May 2024,

not yet approved in the EU). Application of this standard is voluntary. This standard

enables certain subsidiaries to apply IFRS financial reporting standards with reduced

requirements for the disclosure of notes. The standard can be applied to reporting periods

beginning on or after 1 January 2027. OP MB does not expect this to have any significant

effect.

OP Mortgage Bank's Report by the Board of Directors and Financial Statements 2024 | 20

Annual improvements, volume 11 (published on 18 July 2024, not yet approved in the

EU). The amendments apply to the following standards: IFRS 1, IFRS 7, IFRS 9, IFRS 10

and IAS 7. The amendments must be applied to reporting periods beginning on or after 1

January 2026. OP MB does not expect these amendments to have any significant effect.

Contracts Referencing Nature-dependent Electricity will cause amendments to IFRS 9 and

IFRS 7 (published on 18 December 2024, not yet approved in the EU). This will bring

changes to the own use exception in IFRS 9 regarding delivery contracts, and to hedge

accounting requirements. The amendments are effective for reporting periods beginning

on or after 1 January 2026. OP MB does not expect this to have any significant effect.

Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates will enter into

force on 1 January 2025. The amendments will not have any major effect on OP MB’s

financial statements.

January–December highlights