OMA SAVINGS BANK PLC STOCK EXCHANGE RELEASE, 16 APRIL 2024 AT 8:45 A.M EET, INSIDE INFORMATION
Inside information, negative profit warning: Oma Savings Bank Plc publishes preliminary information on the result for the first quarter
Oma Savings Bank Plc (OmaSp or the Company) publishes preliminary information on the preliminary result for the first quarter of 2024 due to an additional allowance based on management's judgement to be recognised for the period. The Company updates its guidance and comparable profit before taxes is expected to be EUR 120–140 million for the financial year 2024.
OmaSp's business development has continued to exceed expectations during the first quarter despite the challenging economic operating environment. Both main sources of income, net interest income and fee and commission income and expenses, have continued strong growth. At the end of the first quarter, the Company detected non-compliance with the guidelines as a result of its own monitoring processes, as a result of which the Company's credit risk position deteriorated materially for certain customer entities. The reason behind the event is a violation of the guidelines related to the Company's lending, as a result of which individual customer entities were deliberately formed incorrectly. Upon discovering what had happened, the Company immediately launched an extensive investigation.
The weakening of the collateral position due to non-compliance combined with the prevailing general weak economic situation increases the Company's credit risk from previously reported. Due to the change in risk position, an additional allowance based on management’s judgement of EUR 19.5 million will be recognised in the first quarter. According to the Company's estimate, the additional allowance covers possible credit losses realised in the future due to changes in the credit risk position.
Based on unaudited and preliminary data, OmaSp's first quarter net interest income will increase by 58% and fee and commission income and expenses by 22% compared to the comparison period. Impairment losses on financial assets total EUR 23.1 million, including the additional allowance based on management’s judgement of EUR 19.5 million. OmaSp's comparable profit before taxes is approximately EUR 25.6 million for the first quarter, an increase of 6% compared to the comparison period. Comparable profit before taxes excluding additional allowance based on management’s judgement is approximately EUR 45.1 million. The comparable cost/income ratio remains at an excellent level of approximately 34%.
CEO Pasi Sydänlammi:
"We take what has happened very seriously. However, the event demonstrates the effectiveness of the bank's internal processes and risk control. Non-compliance was detected as part of the Company's own processes and work to limit possible credit losses is ongoing. In addition, we have taken concrete steps to minimise the risk that anything similar could happen in the future.
Due to strong capital buffers and good profit-making ability, OmaSp will continue to operate as planned. We are currently preparing for the onboarding of Handelsbanken's SME businesses, the impact of which we will tell more about in our Q1 release. A small cause for rejoicing is that the comparable profit before taxes is estimated to have increased again despite a significant additional allowance. This would be the 16th time that OmaSp's result is increasing relative to the comparison period."
New outlook and guidance (updated 16 April 2024)
The Company's profitable growth will continue driven by investments in customer experience and service network. The SME customer business to be acquired from Handelsbanken will improve the Company’s profitability from the second half of 2024 onwards.
Oma Savings Bank Plc provides earnings guidance on comparable profit before taxes for 2024. Earnings guidance is based on the forecast for the entire year, which takes into account the current market and business situation. Forecasts are based on the management’s insight into the Group’s business development.
We estimate the Group's comparable profit before taxes to be EUR 120–140 million for the financial year 2024 (the comparable profit before taxes was EUR 143.6 million in the financial year 2023).
Previous outlook and guidance (published in the Financial Statements Release on 5 February 2024):
The Company's profitable growth will continue driven by investments in customer experience and service network. The SME customer business to be acquired from Handelsbanken will improve the Company’s profitability from the second half of 2024 onwards.
Oma Savings Bank Plc provides earnings guidance on comparable profit before taxes for 2024. A verbal description is used to make a comparison with the comparative period. Earnings guidance is based on the forecast for the entire year, which takes into account the current market and business situation. Forecasts are based on the management’s insight into the Group’s business development.
We estimate the Group's comparable profit before taxes to remain at the current excellent level in the financial year 2024 (comparable profit before taxes was EUR 143.6 million in financial year 2023).
OmaSp will publish its first quarter result on 29 April 2024 at approximately 8:30 am and will have a webcast in Finnish starting at 11:00 am. The webcast link can be accessed here.
Oma Savings Bank Plc
Additional information (the Company is running a silent period from 15 to 28 April 2024):
Pasi Sydänlammi, CEO, puh +358 45 657 5506, pasi.sydanlammi@omasp.fi
Sarianna Liiri, CFO, puh. +358 40 835 6712, sarianna.liiri@omasp.fi
Minna Sillanpää, CCO, tel. +358 50 66592, minna.sillanpaa@omasp.fi
DISTRIBUTION
Nasdaq Helsinki Ltd
Major media
www.omasp.fi
OmaSp is the fastest growing in the Nordic countries and Finland’s most profitable bank. About 500 professionals provide nationwide services through OmaSp’s 45 branch offices and digital service channels to over 200,000 private and corporate customers. OmaSp focuses primarily on retail banking operations and provides its clients with a broad range of banking services both through its own balance sheet as well as by acting as an intermediary for its partners’ products. The intermediated products include credit, investment and loan insurance products. OmaSp is also engaged in mortgage banking operations.
OmaSp core idea is to provide personal service and to be local and close to its customers, both in digital and traditional channels. OmaSp strives to offer premium level customer experience through personal service and easy accessibility. In addition, the development of the operations and services is customer-oriented. The personnel is committed and OmaSp seeks to support their career development with versatile tasks and continuous development. A substantial part of the personnel also own shares in OmaSp.
