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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 141 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 141 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 Half-year Financial Report H1/2020

Earnings before tax EUR 287 million – income from customer business increased in an uncertain business environment

  • Earnings before tax amounted to EUR 287 million (396).

  • Income from customer business increased: net interest income increased by 7% to EUR 646 million (602), net insurance income by 8% to EUR 295 million (274) and net commissions and fees by 1% to EUR 455 million (450).

  • The effects of the COVID-19 pandemic on capital market developments weakened investment income particularly in the first quarter. Investment income fell by 59% year on year, to EUR 61 million (152).

  • Total income decreased by 6% to EUR 1,481 million (1,579) (including the overlay approach, income increased by 4%).

  • Total expenses rose by 4% to EUR 993 million (953) due to higher ICT costs, ICT depreciation and amortisation and charges of financial authorities.

  • Impairment loss on receivables, EUR 166 million (39), accounted for 0.34% (0.08) of loans and receivables. Impairment loss on receivables was increased by effects of the COVID-19 pandemic on the loan portfolio and the adoption of the new definition of default.

  • In the year to June, OP Financial Group’s loan portfolio grew by 5% to EUR 94 billion (90) and deposits by 9% to EUR 69 billion (63).

  • The CET1 ratio was 17.7% (19.5). The lower ratio was affected by the increase in the loan portfolio and the adoption of the new definition of default.

  • Retail Banking earnings before tax decreased by 70% to EUR 28 million (94). Net interest income increased by 1% and net commissions and fees decreased by 1%. Impairment loss on receivables increased by EUR 73 million to EUR 99 million (26). The loan portfolio increased by 3% and deposits by 6% in the year to June.

  • Corporate Banking earnings before tax fell by 26% to EUR 103 million (139). Net interest income increased by 9%, net commissions and fees by 16% and net investment income by 15%. Impairment loss on receivables increased by EUR 54 million to EUR 68 million (14). The loan portfolio grew by 7% in the year to June.

  • Insurance earnings before tax decreased by 32% to EUR 130 million (192). Net insurance income rose by 7% to EUR 302 million (283). Investment income decreased by EUR 77 million to EUR 34 million (111). The operating combined ratio was 89.3% (92.5).

  • Other Operations earnings before tax were EUR 43 million (–10). The sale of the Vallila property on 31 January 2020 improved earnings by EUR 96 million. OP Financial Group will continue operating in the property under a long-term lease agreement.

  • In January–June, OP Financial Group invested a total of EUR 154 million (157) in business development and improving customer experience.

  • New OP bonuses accrued to owner-customers totalled EUR 129 million (129).

  • The number of owner-customers in OP cooperative banks totalled 2.0 million (2.0). The number of OP Financial Group’s joint banking and insurance customers totalled 1.2 million (1.2).

  • OP Financial Group’s earnings before tax for 2020 are expected to be lower than in 2019. "Outlook towards the year end" in the Half-year Financial Report describes the outlook in greater detail.

  • On 27 April 2020, OP Cooperative’s Board of Directors decided that OP Financial Group’s long-term strategic target for the CET1 ratio be at least the CET1 capital adequacy requirement plus four percentage points. The CET1 target calculated by applying the June-end capital adequacy requirement was 13.7%.

Comments by President and Group Executive Chair Timo Ritakallio

Our customer business developed favourably in January–June despite the challenging market conditions. Our net interest income, net insurance income and net commissions and fees increased clearly year on year. Investment income fell sharply year on year due to the economic uncertainty caused by the COVID-19 pandemic and the fluctuations in fixed-income and equity markets. In April–June, however, net investment income recovered and grew on a year-on-year basis.

In the year to June, OP Financial Group’s loan portfolio grew by 5% to EUR 94 billion and deposits by 9% to EUR 69 billion.

In January–June, OP Financial Group’s expenses rose by 4%. This resulted mainly from higher ICT costs, development costs, regulation-related costs and personnel costs. Our ICT costs for 2020 are increased by a one-off investment in the IT environment.

The COVID-19 pandemic weakens the economic outlook and the credit risk outlook. As a result of this, impairment loss on receivables increased clearly, by EUR 127 million to EUR 166 million. In addition to the COVID-19 crisis, regulatory changes increased the amount of impairment loss.

OP Financial Group’s earnings before tax for January–June amounted to EUR 287 million, which was EUR 109 million lower than a year earlier. Earnings were reduced in particular by higher impairment loss on receivables and the steep decline in investment income.

In June, our capital ratio (CET1) remained strong at 17.7%.

In January–June, the COVID-19 pandemic affected OP Financial Group’s operations in many ways. The Group offered households the opportunity to get repayment holidays of up to 12 months on their loans. As many as 120,000 households applied for a repayment holiday, but the number of applications fell to a normal level at the end of June. Meanwhile, 20,000 corporate customers applied for changes in their loan repayment plans, but the number of these applications also began to decline by the end of June.

In the Insurance segment, property claims expenditure increased due to event interruptions and interruptions caused by the epidemic, as well as travel insurance claims submitted due to interrupted or cancelled journeys. Meanwhile, a halt in travel, a significant decline in driving and lower activity in general reduced the number of claims by up to 25% from the normal level in April–June. At the end of June, the claims trend normalised. Based on current estimates, the total effect of the COVID-19 pandemic on net insurance income will remain minor.

Economic development was weak during the second quarter. In the Finnish market, the general activity in service industries plunged dramatically, but the situation began to improve surprisingly quickly in early summer. A similar trend was seen in the housing market. Finland’s industry and construction did not suffer from COVID-19-related restrictions as much as those of many other countries.

In financial markets, the crisis peaked already in March. Determined stimulus measures taken by central banks calmed down the markets, and credit spreads narrowed significantly in fixed-income markets. Stock prices rebounded quickly, too.

For the time being, the economic outlook continues to be characterised by large uncertainty. In spring, we managed to avoid the worst economic implications of the COVID-19 pandemic, but worldwide the pandemic is not over yet. The performance of the export market may still weaken more than anticipated, and the pandemic may tighten its grip again in Finland, too. Towards the end of the year, we must ensure a return towards normal life where people feel safe about using services and public transport and returning to workplaces. OP Financial Group participates in efforts aimed at returning this confidence, which we consider vital for the recovery of the Finnish economy and the functioning of our society.

Economic policy has played an important role in supporting businesses to get beyond the worst phase of the crisis. Now efforts should focus on measures that support economic recovery and a favourable economic development in the long term. Particular attention should be paid to ensuring that the competitiveness of our export companies will not decline due to the crisis. Structural reforms are necessary for Finland's long-term economic resilience, and it is high time to get them through.