OP Corporate Bank plc’s Financial Statements Bulletin for 1 January–31 December 2021

OP Corporate Bank plc
Financial Statements Bulletin for 1 January–31 December 2021
Stock Exchange Release 9 February 2022 at 9.00 am EET

OP Corporate Bank plc’s Financial Statements Bulletin for 1 January–31 December 2021

• As a result of the structural arrangements carried out in OP Corporate Bank plc in 2021, OP Corporate Bank plc no longer constitutes a reporting group. OP Corporate Bank plc has changed over to preparing its interim reports and financial statements under IFRS. Data for 2020 has been adjusted to correspond the IFRS regulatory framework.

• OP Corporate Bank plc’s earnings before tax improved to EUR 267 million (228). Total income increased by 26% to EUR 661 million (523). Net interest income increased by 28% to EUR 412 million (322) and net investment income by 12% to EUR 168 million (150). Other operating income amounted to EUR 49 million (29). Net commissions and fees increased by EUR 9 million to EUR 31 million (23) Total expenses increased by 34% to EUR 320 million (240). Impairment loss on receivables increased by EUR 21 million to EUR 74 million (53). The loan portfolio grew in the year to December by 7% to EUR 26.2 billion (24.5). The deposit portfolio grew by 15% to EUR 16.1 billion (13.9).

• OP Corporate Bank plc’s business segments include Corporate Banking and Capital Markets, Asset and Sales Finance Services and Payment Transfers as well as Baltics. Non-business segment operations are presented in the Other Operations segment.

• The Corporate Banking and Capital Markets segment’s earnings before tax improved to EUR 261 million (190). Total income increased by 26% to EUR 420 million (334). Net investment income increased by 21% to EUR 167 million (138). Other operating income amounted to EUR 70 million (8). Net interest income decreased by 4% to EUR 213 million (222). Total expenses increased by 12% to EUR 121 million (108). Higher personnel costs and other operating expenses increased expenses. Impairment loss on receivables totalled EUR 38 million (36).

• The Asset and Sales Finance Services and Payment Transfers segment’s earnings before tax improved to EUR 90 million (79). Total income increased by 22% to EUR 231 million (189). Net interest income increased by 21% to EUR 155 million (129) and net commissions and fees by 13% to EUR 58 million (51). Total expenses increased by 11% to EUR 104 million (93). Expenses were particularly increased by higher other operating expenses. Impairment loss on receivables increased by EUR 23 million to EUR 37 million (14).

• Baltic earnings before tax improved to EUR 20 million (15). Total income increased by 11% to EUR 42 million (38). Net interest income increased by 9% to EUR 33 million (30) and net commissions and fees by 30% to EUR 9 million (7). Total expenses increased by 10% to EUR 22 million (20).

• Other Operations earnings before tax were EUR –105 million (–55). Liquidity remained strong.

• OP Corporate Bank plc’s CET1 ratio was 15.4% (14.1).

• OP Corporate Bank plc’s Baltic subsidiaries OP Finance AS (Estonia), OP Finance SIA (Latvia) and AB OP Finance (Lithuania) merged into their parent company OP Corporate Bank plc on 31 October 2021 through a cross-border subsidiary merger.

• On 29 November 2021, OP Corporate Bank plc implemented a partial demerger in such a way that the shares of Pohjola Insurance Ltd, OP Corporate Bank plc’s subsidiary engaged in non-life insurance business, were transferred to the direct ownership of OP Cooperative.

• On 30 November 2021, OP Corporate Bank plc sold all shares of OP Custody Ltd to OP Cooperative.

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Comparatives deriving from the income statement are based on OP Corporate Bank plc’s figures reported for the corresponding periods in 2020 presented under the IFRS regulatory framework. Unless otherwise specified, balance-sheet and other cross-sectional figures on 31 December 2020 are used as comparatives.
*Change in ratio

Outlook for 2022

In 2021, both the world and Finnish economy recovered from the crisis caused by the Covid-19 pandemic, and economic growth was exceptionally strong due to a weak reference level. In the last quarter of the year, the economy continued to grow strongly although the strongest recovery was over. Energy raw material prices rose clearly during the latter half of the year, which sped up inflation, reaching the fastest rate in decades in many countries. In Finland, inflation accelerated more moderately than in many other countries. Nevertheless, consumer prices rose at the fastest pace in a decade.

In the financial market, stock prices increased strongly during 2021. Towards the end of the year, inflation acceleration and the central bank’s preparation for tightening monetary policy made markets nervous. Short-term interest rates remained low but longer-term rates rose gradually during the year.

The higher number of Covid-19 cases and the resulting restrictions are expected to temporarily slow down economic growth at the beginning of the year. Economic recovery is expected to continue but gradually slow down. An increase in inflation is predicted to level off but remain high throughout the early part of the year. The monetary policy will be gradually tightened but the European Central Bank is not expected to raise its benchmark interest rates during the first half of the year.

Economic uncertainty is expected to remain elevated. The Covid-19 pandemic may unexpectedly slow down economic growth or cause major bottlenecks in production. Even if the economic growth remained sluggish, the inflation period may prove to be longer than anticipated. This may tighten the financing conditions and increase uncertainty in the financial market.

A sudden worsening of the pandemic could affect OP Corporate Bank in three ways: economic uncertainty and uncertainty in the financial and capital markets would increase, a rise in financial difficulties among customers would increase credit risk and decrease the demand for services, and a worsening disease situation could make it more difficult for OP Corporate Bank to run its operations efficiently.

The most significant uncertainties affecting earnings performance due to the Covid-19 pandemic and inflation relate to changes in the interest rate and investment environment and to the developments in impairment losses. In addition, future earnings performance will be affected by the market growth rate and change in the competitive situation.

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.

All forward-looking statements in this financial statements bulletin 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 and its various functions, and actual results may differ materially from those expressed in the forward-looking statements.

Time of publication of 2021 reports:

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

Helsinki, 9 February 2022

OP Corporate Bank plc
Board of Directors

For additional information, please contact

Katja Keitaanniemi, President and CEO, tel. +358 (0)10 252 1387

Anni Hiekkanen, Chief Communications Officer, tel. +358 (0)10 252 1989

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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.