OP Corporate Bank plc's Interim Report for 1 January-31 March 2016

OP Corporate Bank plc
Stock Exchange Release 27 April 2016 at 9.00 EEST
Interim Report for January 1-31 March 2016

OP Corporate Bank plc's Interim Report for 1 January-31 March 2016   

- Pohjola Bank plc's business name was changed to OP Corporate Bank plc on 4 April 2016.
- Consolidated earnings before tax were EUR 111 million (153) and consolidated earnings before tax at fair value EUR 116 million (252). The return on equity was 9.7% (15.3).
- Earnings reported by Banking decreased to EUR 51 million (83) due to lower net trading income. The loan portfolio grew in the reporting period by 1% to EUR 16.5 billion (16.4). Earnings included EUR 8 million (14) in impairment loss on receivables.
- Non-life Insurance earnings decreased to EUR 59 million (70) due to lower return on investments. Return on investments at fair value was 1.7 % (2.6). Operating combined ratio was 88.6% (87.2).
- Other Operations earnings were at the previous year's level, EUR 1 million (0). Liquidity and access to funding remained good.
- The Common Equity Tier 1 (CET1) ratio was 14.2% (14.1) as against the target of 15%.
- Unchanged outlook: OP Corporate Bank Group's consolidated earnings before tax are expected to be lower than earnings from continuing operations in 2015. 

  Q1/2016 Q1/ 2015 Change, % Q1-4/2015
Earnings before tax, EUR million     
  Non-life Insurance5970-16267
  Other Operations10 23
Group total 111 153 -27 625
Change in fair value reserve599 -141
Earnings before tax at fair value 116 252 -54 483
Equity per share, EUR11.1110.55 11.38
Average personnel2,3012,483 2,446

Comparatives deriving from the income statement are based on figures reported for continuing operations for the corresponding period a year ago. Unless otherwise specified, balance-sheet and other cross-sectional figures on 31 December 2015 are used as comparatives.

Financial targets Q1/2016 Q1/2015 2015 Target
Return on equity, %9.715.314.813
Common Equity Tier 1 (CET1) ratio, %*14.213.514.115
Operating cost/income ratio by Banking, %382727< 35
Operating combined ratio by Non-life Insurance, %88.687.287.3< 92
Operating expense ratio by Non-life Insurance, %18.117.917.718
Non-life Insurance solvency ratio (under Solvency II), %**160 158 
Non-life Insurance solvency ratio (under Solvency II), %***137109139120
AA rating affirmed by two credit rating agencies or credit ratings at least at the main competitors' level2222
Dividend payout ratio at least 50%, provided that CET 1 ratio is at least 15%. Dividend payout ratio is 30% until CET1 ratio of 15% has been achieved.    




> 50 (30)

* Operating ratios exclude changes in reserving bases and amortisation on intangible assets arising from the corporate acquisition.
** Including the effect of transitional provisions.
*** Excluding the effect of transitional provisions.

Outlook towards the year end

World and euro-area economic growth is not expected to significantly speed up Finnish economic growth during the current year. The anticipated fragile Finnish economic growth is largely based on a minor recovery in the domestic market. Despite growth, the overall outlook of the Finnish economy and the Finnish financial-sector operating environment is weak. The probability of a deceleration in economic growth is greater than its acceleration. A historically low interest rate environment, a possible British exit from the EU and other threats challenging the EU's structures and policies as well as the slow progress of structural reforms in the Finnish economy create uncertainty for Finnish economic development.

The continued reduction in market interest rates that have in part turned negative places a further burden on the net interest income of banks and erodes the investment income of insurance institutions. Then again, low interest rates support customers' loan repayment capacity, which has kept impairment loss low despite the prolonged period of slow economic growth. Weak economic growth, industry transformation resulting from the digitising financial sector and change in customer behaviour as well as tightening regulation will highlight the role of operational efficiency, profitability and a strong capital base.

OP Corporate Bank Group's consolidated earnings before tax are expected to remain lower than earnings from continuing operations before tax in 2015. The most significant uncertainties affecting earnings relate to the rate of business growth, impairment loss on receivables, developments in bond and capital markets, the effect of large claims on claims expenditure and to the discount rate applied to insurance liabilities.

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

Helsinki, 27 April 2016

OP Corporate Bank plc
Board of Directors

Financial reporting in 2016
OP Corporate Bank plc publishes the following financial information pursuant to the regular disclosure obligation of a securities issuer:

Schedule for Interim Reports in 2016:

Interim Report H1/2016                           3 August 2016
Interim Report Q1-3/2016                       2 November 2016

NASDAQ Helsinki Ltd
London Stock Exchange
SIX Swiss Exchange
Major media
www.pohjola.com, www.op.fi

For additional information, please contact
Jouko Pölönen, President and CEO, tel. +358 (0)10 253 2691
Carina Geber-Teir, Executive Vice President, Corporate Communications, tel. +358 (0)10 252 8394

OP Corporate Bank is part of the leading Finnish customer-owned financial services group, 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's central bank.

OP Corporate Bank plc's Interim Report Q1 2016

This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.

The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.

Source: OP Yrityspankki Oyj via GlobeNewswire