OP-liikemerkki heijastuu ikkunasta.

OP Financial Group

OP Financial Group ("Group") is the largest financial services group in Finland, offering banking, non-life insurance and wealth management services for over four million customers.

The Group began its operations in its present form as the amalgamation of the Member Cooperative Banks as provided for in the Act on Cooperative Banks and Other Credit Institutions in the Form of a Cooperative (laki osuuspankeista ja muista osuuskuntamuotoisista luottolaitoksista 1504/2001)("Cooperative Bank Act") in 1997.

In accordance with the Act on Deposit Bank Amalgamations (Laki talletuspankkien yhteenliittymästä 599/2010) (the "Amalgamations Act"), OP Financial Group comprises: (a) OP Cooperative as OP Financial Group's central institution; (b) the companies belonging to the consolidation groups of OP Cooperative; and (c) the Member Credit Institutions of OP Cooperative, which consist of OP Corporate Bank plc as the central bank of OP Financial Group, OP Mortgage Bank (OP-Asuntoluottopankki Oyj in Finnish), Helsinki Area Cooperative Bank, OP Card Company Plc and 147 member cooperative banks (together the "Member Credit Institutions"). The Group is supervised on a consolidated basis. The Member Credit Institutions and the Central Cooperative are liable for each other's debts and commitments.

The member cooperative banks are independent, local deposit banks that are engaged in retail banking. OP Cooperative is the Group's strategic owner institution, which is owned by the member cooperative banks. As a central institution, it is in charge of Group steering and control. Product and service development as well as support functions have been centralised in OP Cooperative's subsidiary OP-Services Ltd.



 

OP Financial Group comprises OP Cooperative and its subsidiaries such as OP Corporate Bank plc, OP Mortgage Bank and OP Life Assurance Company Ltd as well as 147 OP member cooperative banks. OP Financial Group is the leading financial services group in Finland and it has over four million customers.

OP Financial Group seeks funding in the international markets through its issuing entities, OP Corporate Bank plc and OP Mortgage Bank.

OP Financial Group's segment structure

OP Financial Group's company structure (incl. OP Cooperative's main subsidiaries)

OP Cooperative and the member credit institutions are liable for each other's debts and commitments. OP Financial Group's credit institution activities are monitored on a consolidated basis and directly supervised by the ECB.

Under the Act on the Amalgamation of Deposit Banks (Laki talletuspankkien yhteenliittymästä 599/2010), OP Cooperative and the member credit institutions are jointly liable for each others’ debts.

The member credit institutions include OP Corporate Bank plc, Helsinki Area Cooperative Bank, OP Mortgage Bank, OP Card Company Plc and the member cooperative banks. Insurance companies or other group entities do not fall within the scope of joint liability.

  • If a creditor has not received payment from a member credit institution on a due debt, the creditor may demand payment from OP Cooperative.
  • The member credit institutions must pay proportionate shares of the amount OP Cooperative has paid, and upon insolvency of OP Cooperative they have an unlimited liability to pay the debts of OP Cooperative.
  • OP Cooperative and the member credit institutions are under an obligation to take support actions to prevent a member credit institution’s liquidation.

Further information on the joint liability available in the Base Prospectuses of OP Corporate Bank plc and OP Mortgage Bank.

OP Financial Group's Financial Statements Bulletin FY/2019

Earnings before tax EUR 838 million – income increased by 10% and comparable expenses decreased

  • Earnings before tax amounted to EUR 838 million (959).
  • Net interest income increased by 5% to EUR 1,241 million and net commissions and fees by 6% to EUR 936 million. Net insurance income decreased by 26% to EUR 421 million.
  • Investment income rose year on year by EUR 214 million, to EUR 425 million.
  • Income increased by a total of 10% (by 6% including the overlay approach).
  • Total expenses increased by 13% to EUR 1,903 million. OP Financial Group transferred the management of the majority of the personnel’s statutory earnings-related pension insurance and the related portfolio to Ilmarinen Mutual Pension Insurance Company at the end of 2018, which lowered expenses by EUR 286 million in that year’s income statement. In view of this, comparable expenses decreased by 3% to EUR 1,903 million.
  • Impairment loss on receivables was EUR 87 million (46).
  • OP Financial Group’s loan portfolio grew by 5% to EUR 91 billion and the deposit portfolio by 4% to EUR 64 billion.
  • The CET1 ratio was strong at 19.5% (20.5). The planned adoption of a new definition of default in March 2020 is expected to weaken the CET1 ratio by 1.3 percentage points.
  • Retail Banking earnings before tax decreased by 44% to EUR 235 million. Excluding the effect of the transfer of earnings-related pension liability, earnings before tax increased by 6%. Net interest income increased by 4% and net commissions and fees by 5%. Net investment income decreased by EUR 26 million. The loan portfolio increased by 5% and deposits by 7%.
  • Corporate Banking earnings before tax decreased by 24% to EUR 311 million. Excluding the effect of the transfer of earnings-related pension liability, earnings before tax decreased by 17%. Net interest income increased by 10%, but net commissions and fees decreased by 3% and net investment income fell by 28%. The lower net investment income is explained by changes in Credit Valuation Adjustment (CVA) in derivatives owing to market changes and by changes in the valuation models of derivatives made at the beginning of the year. The loan portfolio increased by 6%.
  • Insurance earnings before tax increased by 43% to EUR 373 million. Net insurance income decreased by 26% to EUR 431 million. The reduction in the discount rate for insurance liability reduced net insurance income by EUR 136 million. Investment income rose by EUR 239 million to EUR 331 million. The operating combined ratio was 92.7% (92.0).
  • Other Operations earnings before tax were EUR –37 million (–64).
  • In 2019, OP Financial Group invested EUR 313 million (384) in business development and improving customer experience.
  • OP bonuses totalled EUR 254 million.
  • In 2019, OP Financial Group achieved its strategic target of 2 million owner-customers in OP cooperative banks. The Group had a total of 1.2 million joint banking and insurance customers.
  • On 31 January 2020, OP Cooperative, OP Financial Group’s central cooperative, sold the Vallila property to a South Korean-Finnish consortium. The sale of the property will improve OP Financial Group’s CET1 ratio by some 0.2 percentage points.
  • Earnings before tax for 2020 are expected to be at about the same level as in 2019.

Comments by President and Group Executive Chair Timo Ritakallio

Our customer business continued to develop favourably in 2019. Income increased by 10% year on year, and our market share developed positively in home loans and corporate loans as well as in the non-life insurance business. Our loan portfolio grew by 5% to EUR 91 billion and deposit portfolio by 4% to EUR 64 billion. Investment income was excellent, thanks to favourable market developments.

 

We have also managed to cut down our expenses. Comparable expenses decreased by 3% year on year. Impairment loss on receivables increased clearly in 2019 but still remained low.

 

Earnings before tax for 2019 amounted to EUR 838 million, which was EUR 121 million lower than the year before. In 2018, earnings were higher due to the transfer of the statutory earnings-related pension liability to Ilmarinen. In comparable terms, excluding the effect of the pension liability transfer, the earnings for 2019 increased by EUR 165 million.

 

Our capital ratio (CET1) remained strong at 19.5%.

 

At the end of 2019, the number of OP Financial Group’s owner-customers exceeded two million. During the year, we got 92,000 new owner-customers. In the future, we aim to ensure that we provide our owner-customers with the best benefits in banking and insurance services.

 

We have taken determined steps to improve customer experience and managed to shorten response times in our telephone services and to improve customer satisfaction. More than one million of our customers have adopted the Mobile key, a secure identification method. In January 2020, the use of the Mobile key was extended to op.fi.

 

At OP Financial Group’s central cooperative, we have implemented a more self-directed way of working. The purpose of this change is to achieve better customer and employee experience and cost savings. This has required us to revise job descriptions in all of our business segments. At the end of the year, we completed the Information and Consultation of Employees process in centres of excellence and in the service centre. Approximately 1,900 employees worked in the functions affected by the process. As a result, around 460 roles ceased to exist and some 190 new roles were created. The negotiations were held in good cooperation with employee representatives.

 

In 2020, cost management will be our challenge. Banks’ results will be under pressure due to low interest rates and tightening banking regulation. This year, we expect our earnings to be at about the same level as in 2019.

 

In 2019, political uncertainty had a negative impact on the world economy and global trade suffered from the expanding trade war. In financial markets, sentiments varied sharply, but eventually the year was favourable for investors. Measures taken by central banks supported financial markets and bolstered confidence in the world economy.

 

Economic growth in Finland decelerated only slightly, thanks to the favourable development of the service sector. The overall economic picture remained relatively positive, although consumer confidence declined during the year.

 

Economic risks have decreased since last year’s gloomiest sentiment. However, the outlook is subdued, and we can expect slow growth. There is no favourable economic situation to boost economic policy. Many long-term challenges remain to be solved, and new ones arise due to issues such as climate change. This is a challenging operating environment, both for governments and businesses.