“The first quarter was strongly characterised by uncertainty in the financial market. Despite the market conditions, we managed to develop our operations in the right direction and strengthen our market position, particularly as a home loan provider for customers in Uusimaa,” said Olli Lehtilä, Managing Director of OP Uusimaa.
OP Uusimaa’s key indicators for January–March 2023:
• OP Uusimaa’s earnings before tax were EUR 40.1 million (15.8).
• Financing operations (loans from own balance sheet and mediated loans) increased by 2% to EUR 16.8 billion.
• Customer assets (deposits, insurance assets, mutual fund units, Profit Shares and index-linked bonds) decreased by 1.6% to EUR 17.9 billion.
• At the end of March 2023, OP Uusimaa had 353,306 owner-customers, which is 9,475 more than a year earlier.
• Owner-customers earned a total of EUR 13 million (10) in OP bonuses.
• The NPS that measures customer experience was very good at 76.
• Common Equity Tier 1 (CET1) capital ratio stood at 17.1% on 31 December 2022.
• Non-performing exposures remained low at 1.6% of total exposures.
OP Uusimaa further strengthened its market share in home loans
In January–March, home loan drawdowns were 34.8% lower than a year ago. However, the housing market started to pick up in the first quarter: the amount of home loans applied for grew by 24% from the end of 2022.
In January–March, OP Uusimaa’s home loan portfolio grew by 0.1%, totalling EUR 10.8 billion at the end of March. On 31 March, OP Uusimaa accounted for 35.1% (33.2) of new home loans granted by OP Financial Group, and 14.9% (13.6) of all new home loans in Finland.
“Despite the slackening housing market, we managed to grow in terms of home loans: OP Uusimaa’s market share of Finland’s total home loan portfolio increased to 10.0%,” Olli Lehtilä says.
The bank is also expecting growing demand for housing company loans, but some housing companies are hesitating about whether to start new projects.
“Housing companies should not allow a backlog of repairs to accumulate. Now that the construction market is cooling down, this can be an exceptionally good time to go ahead with renovation projects,” Lehtilä says.
Businesses are cautious to invest
OP Uusimaa’s corporate and institutional loan portfolio remained almost unchanged in January–March, showing a growth of 0.7%. New corporate and institutional loans drawn down were 19.4% lower than a year ago. At the end of March, the corporate loan portfolio totalled EUR 4.5 billion.
“There are signs that businesses are reflecting and holding back new investments in these uncertain times. It’s important for companies to make sure that they don’t accumulate a too large backlog of investments,” Olli Lehtilä emphasises.
The loan servicing capacity of OP Uusimaa’s customers has remained good. Non-performing exposures remained low at 1.6% of total exposures. Personal customers’ requests for a change in their repayment plan have remained at a moderate level.
Customers in Uusimaa increased their investments
Despite the challenging economic environment, households increased their investments by EUR 93 million in January–March. Meanwhile, the deposit portfolio of OP Uusimaa’s personal customers decreased by 0.8% from the beginning of 2023.
In January–March, OP Uusimaa’s owner-customers subscribed for Profit Shares worth EUR 28.8 million. At the beginning of May, OP Uusimaa launched a new Profit Share issue. The return target of Profit Shares is 4.5%.
“Despite the uncertain economic situation, customers in Uusimaa have continued investing and saving with a long horizon. Due to the rise in living costs, some of our customers have been forced to use part of their deposits to cover their daily expenses,” Olli Lehtilä states.
OP Uusimaa paid EUR 13 million in OP bonuses in January–March 2023
At the end of March, OP Uusimaa had 353,306 owner-customers, an increase of 2,984 from the end of 2022.
In October 2022, OP Financial Group decided to pay a 30% increase on OP bonuses in 2023. In January–March 2023, OP Uusimaa paid a total of EUR 13 million in OP bonuses to its owner-customers. The bank estimates that it will pay a total amount of EUR 60 million in OP bonuses during 2023.
“We are using part of our profitability improvement in accordance with our mission, to support the daily lives of our owner-customers in these financially challenging times,” Olli Lehtilä concluded.