On 15 December 2020, the ECB issued an updated recommendation where it urged banks to exercise extreme prudence in profit distribution or to refrain altogether from profit distribution until 30 September 2021. According to the recommendation, banks can distribute profit if the total amount of profit distributed is below 15% of cumulated 2019–2020 earnings after tax.
Based on the recommendation currently in force, we can pay interest on Profit Shares for 2020 at the earliest in October 2021, unless the ECB extends the validity of its recommendation or amends its content. We will issue more detailed information on the interest payment status as soon as the recommendation of the ECB allows it.
The purpose of the ECB’s recommendation is to safeguard the ability of banks to support the real economy by providing funding to businesses and households to alleviate the effects of the Covid-19 crisis. We are one of Europe’s strongest banks in terms of capital adequacy – our CET1 ratio was strong at 18.3% at the end of September 2020. As a responsible player, we comply with the ECB’s recommendations.
We paid interest for 2019 on 8 February 2021
We paid interest on Profit Shares for 2019 to our customers holding those shares on 8 February 2021. In profit distribution, we comply with the recommendation of the European Central Bank (ECB), and the amount of interest (97 million euros) paid on Profit Shares did not exceed the ECB’s recommendation on the maximum limits of profit distribution. The interest payable was in line with the original return target of 3.25%.
OP cooperative bank’s Profit Share
Profit Shares are long-term equity contributions made by OP cooperative banks’ owner-customers to their local OP cooperative banks. A return target is set annually on Profit Shares. For 2020, this target was 3.25%.