OP MORTGAGE BANK FINANCIAL STATEMENTS BULLETIN FOR 2009

Transcription

1 OP MORTGAGE BANK FINANCIAL STATEMENTS BULLETIN FOR OP Mortgage Bank's (OPA) loan portfolio grew to EUR 4,360 million in the January December period (EUR 2,980 million at the end of 2008) 1. The bank increased its loan portfolio significantly in October when it purchased housing loans from OP-Pohjola Group member cooperative banks. OPA launched a covered bond issue at a nominal value of EUR 1,25 billion in November. Earnings Development EUR thousand Q4/ Q4/ Income Net interest income 4,675 3,628 14,030 13,497 Net commissions and fees -2,127-1,862-7,970-6,686 Net income from trading Net income from investments Other operating income Total 2,544 1,767 6,086 6,819 Expenses Personnel costs Other administrative expenses Other operating expenses Total ,145 1,902 Earnings before tax 1,801 1,296 3,941 4,917 Earnings before tax for October December increased to EUR 1,801 thousand (1,296). The net interest income amounted to EUR 4,675 thousand (3,628). Improvements in net interest income and earnings were due to the growth in the loan portfolio. Net commissions and fees were negative, as in the previous year, with commission income increasing to EUR 596 thousand (252) and commission expenses to EUR 2,723 thousand (2,114). Commission expenses stem mainly from commissions paid to OP-Pohjola Group member banks for servicing housing loans. The bank's expenses amounted to EUR 743 thousand (470). Earnings before tax for January December amounted to EUR 3,941 thousand (4,917). Net interest income rose to EUR 14,030 thousand (13,497) due to the growth of the loan portfolio. The decline in market rates decreased net interest income and earnings before tax to the extent that the loan portfolio is financed with the shareholders' equity. The bank's expenses increased to EUR 2,145 thousand (1,902). Growth in expenses derived largely from the development and operating services of the information systems. OPA did not recognise any loan losses in. 1 For balance sheet and other cross-sectional figures, the point of comparison is the figure at the end of Comparatives deriving from the income statement are based on figures reported for the corresponding period a year ago. 1

2 Balance Sheet and Off-balance Sheet Commitments OPA's balance sheet total amounted to EUR 4,555 million on ember (EUR 3,149 million). Change in Major Asset and Liability Items EUR Million 30 Sep 30 June 31 March 2008 Balance Sheet 4,555 2,862 2,942 3,116 3,149 Receivables from customers 4,360 2,704 2,799 2,899 2,980 Receivables from financial institutions Debt securities issued to the public 3,311 2,087 2,091 2,100 2,087 Liabilities to financial institutions 1, Shareholders' equity Off-balance sheet commitments The bank's loan portfolio grew to EUR 4,360 million (2,980) 2. OPA increased its loan portfolio in the January December period when it purchased housing loans from OP-Pohjola-Group member banks for EUR 1,788 million. On December, households accounted for 99 per cent (98) of the loan portfolio and housing corporations for 1 per cent (2). The bank's non-performing loans increased but remained at low levels totalling EUR 0,8 million (0,2) on December. No impairment losses on loans were recognised. The carrying amount of the bonds issued to the public totalled EUR 3,311 million (2,087) on 31 December. OPA issued its third covered bond at a nominal value of EUR 1,25 billion on international capital markets in November. Moody's Investor Services and Standard & Poor's Rating Services have given the bond their highest credit ratings of Aaa and AAA. In addition to bonds, OPA funded its operations through financing loans taken out with Pohjola Bank plc. On 30 December, financing loans totalled EUR million (870). Shareholders' equity increased to EUR 140 million (87). Shareholders' equity increased by EUR 50 million after OP-Pohjola Group Central Cooperative made an additional investment in the company in October. Retained earnings amounted to EUR 10,2 million (7,3) on ember. OPA has hedged against the interest-rate risk associated with its housing loan portfolio through interest-rate swaps, i.e. base rate cash flows from housing loans to be hedged are swapped to short-term Euribor cash flows. OPA has also swapped the fixed interest rates of the bonds it has issued to short-term variable rates. OPA's interest-rate derivative portfolio totalled EUR 7,832 million (4,997). All derivative contracts have been concluded for hedging purposes. Pohjola Bank plc is the counterparty to all derivative contracts. 2 For balance sheet and other cross-sectional figures, the point of comparison is the figure at the end of Comparatives deriving from the income statement are based on figures reported for the corresponding period a year ago. 2

3 Development of Capital Adequacy OPA's capital adequacy ratio stood at 9,8 % on ember. Shareholder's equity increased by EUR 50 million in October when OP-Pohjola Group Central Cooperative made an additional investment in OPA. Since the beginning of 2008, OPA has calculated its capital adequacy in compliance with Basel II. In credit risk is calculated according to the standardised approach and the capital requirement for operational risk is calculated using the basic approach. OWN FUNDS, EUR thousand 30 Sep 30 June 31 March 2008 Tier I 139,067 87,644 86,890 86,824 86,394 of which capital loans - - Tier II 20,000 20,000 20,000 20,000 20,000 Decreases Total 159, , , , ,394 Risk-weighted receivables, investments and off-balance sheet commitments 1,622, ,072 1,032,313 1,074,236 1,094,91 Capital adequacy ratio, % 9,8 10,8 10,4 9,9 9,7 Tier I ratio to risk-weighted receivables, investments and off-balance sheet commitments 8,6 8,8 8,4 8,1 7,9 The increase in shareholders' equity arising from the measurement of pension liabilities and the assets covering them, under IFRS, is not considered own funds. Furthermore, intangible assets was also deducted from own funds. Risk-weighted receivables, investments and off balance-sheet commitments, EUR thousand 30 Sep 30 June 31 March 2008 Receivables and investments 1,610, ,338 1,019,096 1,056,923 1,082,926 Off-balance-sheet items 4,039 5,609,5,092 9,188 6,704 Market risk Operational risks 8,125 8,125 8,125, 8,125 4,561 Risk-weighted receivables, investments and off balance-sheet commitments, total 1,622, ,072 1,032,313 1,074,236 1,094,191 The increase in the amount of risk-weighted receivables was due to an increased loan portfolio. 3

4 Joint Responsibility and Joint Security Under the Act on Cooperative Banks and Other Cooperative Credit Institutions, the amalgamation of the cooperative banks comprises the organisation s central institution (OP-Pohjola Group Central Cooperative), the Central Cooperative s member credit institutions and the companies belonging to their consolidation groups. This amalgamation is monitored on a consolidated basis. The Central Cooperative and its member banks are ultimately responsible for each other's liabilities and commitments. The Central Cooperative's members at the end of the report period comprised OP- Pohjola Group's 220 member banks as well as Pohjola Bank plc, Helsinki OP Bank Plc, OP Mortgage Bank and OP-Kotipankki Oyj. OP-Pohjola Group's insurance companies do not fall within the scope of joint responsibility. Inspite of the joint responsibility and the joint security, pursuant to Section 17 of the Act on Mortgage Credit Banks, the holder of a bond with mortgage collateral shall, notwithstanding the liquidation or bankruptcy of a mortgage credit bank, have the right to receive payment, before other claims, for the entire loan period of the bond, in accordance with the contract terms, from the funds entered as collateral for the bond. Personnel On ember, OPA had five employees (4). It purchases all key support services from Central Cooperative and its Group companies, which reduces the need for more staff. Administration The Annual General Meeting held in March confirmed the composition of the new Board of Directors. Mr Jari Himanen, Managing Director, Etelä-Karjalan Osuuspankki was elected as a new member of the Board of Directors and Mr Jarmo Viitanen, Managing Director, Länsi- Uudenmaan Osuuspankki was left out of the Board of Directors. The board composition is as follows: Chairman Harri Nummela Executive Vice President, OP-Pohjola Group Central Cooperative Vice Chairman Mikko Hyttinen Senior Vice President, OP-Pohjola Group Central Cooperative Members Sakari Haapakoski Bank Manager, Oulun Osuuspankki Jari Himanen Managing Director, Etelä-Karjalan Osuuspankki Hanno Hirvinen Executive Vice President, Pohjola Bank plc Heikki Kananen Managing Director, Mäntsälän Osuuspankki Risto Korpela Matti Nykänen Managing Director, Turun Seudun Osuuspankki Senior Vice President, OP-Pohjola Group Central Cooperative Managing Director Lauri Iloniemi. Outlook The existing issuance programme will make it possible to issue new covered bonds in The overall quality of the credit portfolio is expected to remain strong in spite of the uncertainty about overall economic outlook. 4

5 Income Statement EUR thousand Q4/ Q4/ Interest income 14,005 34,341 68, ,827 Interest expenses 9,330 30,712 54, ,330 Net interest income 4,675 3,628 14,030 13,497 Net commissions and fees -2,127-1,862-7,970-6,686 Net income from trading Net income from investments Other operating income Personnel costs Other administrative expenses Other operative expenses Earnings before tax 1,801 1,296 3,941 4,917 Income taxes ,017 1,282 Profit for the period 1, ,924 3,635 Key Ratios Q4/ Q4/ Return on equity (ROE), % 4,65 4,39 2,57 4,81 Cost/income ratio, % Calculation of key ratios Return on equity, % = Annualised profit for the period / Equity capital (average equity capital at the beginning and end of the period) 100 Cost/income ratio, % = Personnel costs + Other administrative expenses + Other operating expenses / Net interest income + Net commission income + Net income from trading + Total net income from investments + Other operating income 100 5

6 Balance Sheet EUR thousand 30 Dec 30 Sep 30 June 31 March 2008 Receivables from financial institutions 55,017 33,000 34,431 27,347 32,255 Derivative contracts 75,934 89,753 94, ,233 74,075 Receivables from customers 4,360,036 2,703,595 2,799,055 2,898,547 2,979,704 Investments assets Intangible assets Tangible assets Other assets 63,177 34,144 13,517 85,827 62,397 Tax receivables Total assets 4,555,128 2,861,519 2,942,179 3,115,722 3,149,091 Liabilities to financial institutions 1,000, , , , ,000 Derivative contracts 11,971 5,843 8,538 10,595 14,893 Debt securities issued to the public 3,310,811 2,087,102 2,091,479 2,100,153 2,086,535 Reserves and other liabilities 71,727 39,526 13,894 96,467 69,682 Tax liabilities Subordinated debt securities 20,000 20,000 20,000 20,000 20,000 Total liabilities 4,414,904 2,772,627 2,854,083 3,027,879 3,061,774 Shareholders equity Share capital 60,000 60,000 60,000 60,000 60,000 Reserve for invested unrestricted. equity 70,000 20,000 20,000 20,000 20,000 Retained earnings 10,224 8,892 8,096 7,843 7,317 Total equity 140,224 88,892 88,096 87,843 87,317 Total liabilities and shareholders equity 4,555,128 2,861,519 2,942,179 3,115,722 3,149,091 Off-balance Sheet Commitments 30 Dec 30 Sep 30 June 31 March EUR thousand 2008 Binding credit commitments 15,108 17,949 16,346 27,973 19,145 6

7 Change Calculation on Shareholders Equity EUR thousand Share capital Other reserves Retained earnings Total equity Shareholders equity 1 Jan ,000-3,681 63,681 Reserve for invested unrestricted equity 20,000 20,000 Profit for the period 3,634 3,634 Other changes 2 2 Shareholders equity ,000 20,000 7,317 87,317 EUR thousand Share capital Other reserves Retained earnings Total equity Shareholders equity 1 Jan 60,000 20,000 7,317 87,317 Reserve for invested unrestricted equity 50,000 50,000 Profit for the period 2,924 2,924 Other changes Shareholders equity 60,000 70,000 10, ,224 Cash Flow Statement EUR thousand 2008 Liquid assets 1 January 18,379 15,266 Cash flow from operations -1,256, ,984 Cash flow from investments Cash flow from financing 1,279, ,319 Liquid assets ember 41,128 18,379 The cash flow statement presents the cash flows for the period on the cash basis, divided into cash flows from operations, investments and financing. Cash flows from operations includes the cash flows generated from day-to-day operations. Cash flow from investments includes payments related to tangible and intangible assets, investments held to maturity and shares that are not considered as belonging to cash flow from operations. Cash flow from financing includes cash flows originating in the financing of operations either on equity or liability terms from money or capital market. Liquid assets include cash in hand and receivables from financial institutions payable on demand. The statement has been prepared using the indirect method. 7

8 Fair values of financial assets and liabilities EUR Thousand Financial assets Loans and receivables Recognised at fair value through profit or loss Available for sale Receivables from financial institutions 55,017 55,017 Derivative contracts 75,934 75,934 Receivables from customers 4,360,036 4,360,036 Equities Other receivables 63,182 63,182 Balance at ember 4,478,235 75, ,554,186 Balance at ember ,074,356 74, ,148,447 Total Recognised at fair value EUR Thousand through profit or loss Other liabilities Total Liabilities to financial institutions - 1,000,000 1,000,000 Derivative contracts - 11,971 11,971 Debt securities issued to the public - 3,310,811 3,310,811 Subordinated liabilities - 20,000 20,000 Other liabilities - 72,122 72,122 Balance at ember - 11,971 4,402,933 4,414,904 Balance at ember ,893 3,046,881 3,061,774 Debt securities issued to the public are carried at amortised cost. On ember, the fair value of these debt instruments was approximately EUR thousand higher than their carrying amount, based on information available in markets and employing commonly used valuation techniques. Subordinated liabilities are carried at amortised cost. Their fair value are substantially lower than their carrying amount, but determining fair values realiably is difficult in the current market situation. 8

9 Derivative Contracts ember EUR thousand Nominal values/the remaining maturity Fair values Less than 1 year 1-5 years More than 5 years Total Assets Liabilities Credit countervalue Interest rate derivatives Hedging 2,227,376 5,605,061-7,832,436 75,934 11, ,431 Trading Total 2,227,376 5,605,061-7,832,436 75,934 11, ,431 Derivative Contracts ember 2008 EUR thousand Nominal values/the remaining maturity Fair values Less than 1 year 1-5 years More than 5 years Total Assets Liabilities Credit countervalue Interest rate derivatives Hedging 32,000 4,964,821-4,996,821 74,075 14, ,396 Trading Total 32,000 4,964,821-4,996,821 74,075 14, ,396 All derivative contracts have been entered into for hedging purposes, regardless of their classification in accounting. The interim report is unaudited. Helsinki, 11 February 2010 OP Mortgage Bank Board of Directors 9