OP Corporate Bank plc’s Interim Report for 1 January–30 September 2022

OP Corporate Bank plc
Interim Report 1 January–30 September 2022
Stock Exchange Release 26 October 2022 at 9.00am EEST

OP Corporate Bank plc’s Interim Report for 1 January–30 September 2022

• OP Corporate Bank plc’s earnings before tax were EUR 141 million (176).
• Total income decreased by 10% to EUR 367 million (409). Net interest income increased by 37% to EUR 316 million (231) but net investment income fell by 90% to EUR 13 million (128). Net commissions and fees decreased by EUR 13 million to EUR 13 million (26).
• Total expenses of EUR 209 million were at the previous year’s level.
• Impairment loss on receivables decreased by EUR 8 million to EUR 16 million (25).
• The loan portfolio grew in the year to September by 14% to EUR 28.4 billion (24.8). The deposit portfolio decreased by 8% to EUR 14.3 billion (15.5).
• The Corporate Banking and Capital Markets segment’s earnings before tax decreased to EUR 57 million (174). Total income decreased by 46% to EUR 152 million (279). Net interest income increased by 9% to EUR 172 million (158). Net investment income fell by 91% to EUR 12 million (125). Total expenses increased by 3% to EUR 94 million (92). Impairment loss on receivables totalled EUR 1 million. A year ago, impairment loss on receivables came to EUR 13 million.
• The Asset and Sales Finance Services and Payment Transfers segment’s earnings before tax increased to EUR 90 million (78). Total income increased by 8% to EUR 180 million (168). Net interest income increased by 9% to EUR 126 million (115) and net commissions and fees by 6% to EUR 46 million (43). Total expenses increased by 3% to EUR 80 million (77). Impairment loss on receivables decreased to EUR 10 million (13).
• The Baltics segment’s consolidated earnings before tax rose to EUR 18 million (12). Total income increased to EUR 44 million (27). Net interest income increased to EUR 37 million (21) and net commissions and fees to EUR 8 million (6). Total expenses increased to EUR 21 million (16). Impairment loss on receivables totalled EUR 5 million. A year ago, impairment loss on receivables reversed came to EUR 1 million.
• The Group Functions segment’s earnings before tax amounted to EUR –24 million (–88). Net interest income, in particular, improved over the previous year. Financial position and liquidity remained strong.
• OP Corporate Bank plc’s CET1 ratio was 12.3% (15.4), which exceeds the minimum regulatory requirement by 3.8 percentage points. OP Financial Group adopted a risk-weighted assets (RWA) floor, based on the Standardised Approach, in the second quarter. This decreased OP Corporate Bank’s CET1 ratio by 2.4 percentage points.
• On 30 September 2022, OP Financial Group filed an application with the European Central Bank (ECB) on the use of the Standardised Approach in capital adequacy calculation, instead of the internal models (IRBA) and the currently applied risk-weighted assets floor based on the Standardised Approach. Transfer to the Standardised Approach is estimated to have no essential effect on OP Corporate Bank’s capital adequacy or risk exposure.

Comparatives deriving from the income statement are based on figures for the corresponding periods a year ago. Unless otherwise specified, balance-sheet and other cross-sectional figures on 31 December 2021 are used as comparatives.
*Change in ratio

Outlook towards the year end

The economic outlook dimmed during the third quarter. Nevertheless, the financial situation among households and companies still remained good.

Market interest rates have risen exceptionally fast in recent months, as central banks have raised their key interest rates. Central banks are expected to continue to tighten their monetary policy in the months to come. Uncertainty in the financial market has increased considerably, credit spreads have widened and stock prices fallen. Uncertainty related to the economic outlook remains exceptionally high. Economic growth is anticipated to slow down, as demand in the home market and export demand go down.

Full-year earnings estimates for 2022 will only be provided at the OP Financial Group level, in its financial statements bulletin and interim and half-year financial reports.

The most significant uncertainties affecting earnings performance due to the war in Ukraine and inflation relate to changes in the interest rate and investment environment and to the developments in impairment loss on receivables. In addition, future earnings performance will be affected by the market growth rate and the change in the competitive situation.

All forward-looking statements in this Interim Report expressing the management’s expectations, beliefs, estimates, forecasts, projections and assumptions are based on the current view of the future development in the business environment and the future financial performance of OP Corporate Bank plc’s and its various functions, and actual results may differ materially from those expressed in the forward-looking statements.

Schedule for Financial Statements Bulletin 2022 and Interim Reports and Half-year Financial Report in 2023:

Helsinki, 26 October 2022

OP Corporate Bank plc
Board of Directors

For additional information, please contact:
Katja Keitaanniemi, Chief Executive Officer, tel. +358 (0)10 252 1387
Anni Hiekkanen, Chief Communications Officer, tel. +358 (0)10 252 1989

DISTRIBUTION
Nasdaq Helsinki Oy
Euronext Dublin (Irish Stock Exchange)
LSE London Stock Exchange
Major media
op.fi

OP Corporate Bank plc is part of OP Financial Group. OP Corporate Bank and OP Mortgage Bank are responsible for OP's funding in money and capital markets. As laid down in the applicable law, OP Corporate Bank, OP Mortgage Bank and their parent company OP Cooperative and other OP Financial Group member credit institutions are ultimately jointly and severally liable for each other's debts and commitments. OP Corporate Bank acts as OP Financial Group's central bank.