Earnings before tax EUR 785 million – net interest income and net insurance

OP Financial Group
Financial Statements Bulletin 1 January–31 December 2020
10 February 2021 09.00 am EET

OP Financial Group’s Financial Statements Bulletin for 1 January–31 December 2020: Earnings before tax EUR 785 million – net interest income and net insurance income increased in an uncertain business environment

• Earnings before tax amounted to EUR 785 million (838).

• In customer business, net interest income increased by 4% to EUR 1,284 million (1,241) and net insurance income by 36% to EUR 572 million (421). Net commissions and fees totalled EUR 931 million (936).

• The effects of the Covid-19 pandemic on capital market developments weakened investment income, particularly in the first quarter. Investment income fell by 58% year on year, to EUR 181 million (425).

• Total income decreased by 3% to EUR 3,103 million (3,181).

• Total expenses decreased by 3% to EUR 1,839 million (1,903). The transfer of the remaining statutory earnings-related pension liability to Ilmarinen Mutual Pension Insurance Company at the end of 2020 reduced OP Financial Group’s pension costs by EUR 96 million. Excluding the transfer, total expenses increased by 2% to EUR 1,935 million.

• Impairment loss on receivables was EUR 225 million (87), accounting for 0.23% (0.09) of the loan and guarantee portfolio. Impairment loss on receivables was increased by the effects of the Covid-19 pandemic on the loan portfolio quality and by the adoption of the new definition of default based on a regulatory change.

• OP Financial Group’s loan portfolio grew year on year by 2% to EUR 94 billion (91) and deposits by 11% to EUR 71 billion (64).

• The CET1 ratio was 18.9% (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 51% to EUR 115 million (235). Net interest income increased by EUR 3 million and net commissions and fees decreased by EUR 10 million. Impairment loss on receivables increased by EUR 136 million to EUR 172 million (36). The loan portfolio increased by 2% and deposits by 9% year on year.

• Corporate Banking earnings before tax increased by 13% to EUR 349 million (311). Net interest income increased by 3%, net commissions and fees by 22% and net investment income by 20%. Impairment loss on receivables totalled EUR 53 million (51). The loan portfolio grew by 1% year on year.

• Insurance earnings before tax decreased by 7% to EUR 348 million (373). Net insurance income grew by 35% to EUR 582 million (431). Investment income decreased by EUR 247 million to EUR 84 million (331). The operating combined ratio improved to 87.8% (92.7). The transfer of statutory earnings-related pension liability reduced pension costs by EUR 85 million.

• Other Operations earnings before tax were EUR 3 million (–37). The sale of the Vallila property on 31 January 2020 improved earnings by EUR 96 million. OP Financial Group continues operating in the property under a long-term lease agreement.

• In 2020, OP Financial Group invested a total of EUR 282 million (313) in business development and improving customer experience.

• New OP bonuses accrued to owner-customers totalled EUR 255 million (254).

• The number of owner-customers in OP cooperative banks totalled 2.0 million (2.0). OP Financial Group had a total of 1.3 million (1.2) joint banking and insurance customers.

• OP Financial Group complies with the recommendation of the European Central Bank (ECB) in its profit distribution. Following the recommendation, the Group discussed the level of profit distribution with the ECB Joint Supervisory Team, and the interest on Profit Shares for 2019 was paid to holders of those shares on 8 February 2021.

• Earnings before tax for 2021 are expected to be lower than in 2020. For more detailed information on the outlook, see “Outlook for 2021”

OP Financial Group’s key indicators

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	Q1–4/2020	Q1–4/2019	Change, %
Earnings before tax, € million	785	838	-6.3
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