OMA SAVINGS BANK PLC, STOCK EXCHANGE RELEASE 29 APRIL 2024 AT 8.30 A.M. EET, INTERIM REPORT Q1
Oma Savings Bank Plc’s Interim Report 1.1.-31.3.2024: Profit growth continues despite a significant additional allowance – comparable profit before taxes was EUR 25.6 million and increased 6.1 percent
This release is a summary of Oma Savings Bank’s (OmaSp) January-March 2024 Interim Report, which can be read from the pdf file attached to this stock exchange release and on the Company’s web pages www.omasp.fi
CEO Pasi Sydänlammi: Profit growth continues despite a significant additional allowance – comparable profit before taxes was EUR 25.6 million and increased 6.1 percent
“In the first quarter, OmaSp's business continued to develop better than expected despite the challenging economic environment. Both main sources of income continued strong growth. Comparable profit before taxes increased for the 16th time in a row in relation to the comparison period, even though a significant one-off additional allowance was recorded for the quarter.
The interest rate environment has continued to support the development of net interest income and during the early part of the year the growth was 58% compared to the previous year. The growth in customer numbers has also remained steady and fee and commission income and expenses increased by 22% compared to the previous year.
When looking at the credit portfolio as a whole, the quality of the credit portfolio has remained at the expected level, taking into account cyclical development. At the end of the first quarter, the Company detected non-compliance with the guidelines. The weakening of the collateral position due to non-compliance combined with the prevailing general weak economic situation increases credit risk from previously reported. As a result, we recorded an additional allowance based on management’s judgement of EUR 19.5 million for the quarter. According to our estimate, the additional allowance covers possible credit losses that may be realised in the future of customers related to the settlement. The investigation has revealed that the bank's lending guidelines have been significantly violated. It is a single case where the credit risk status of the customers has been concealed by deliberately creating customer groups incorrectly and with incomplete information. The properties are located nationwide around Finland and target the real estate sector. Based on extensive investigations, it has been possible to ensure that non-compliance with the guidelines targets approximately 3% of OmaSp's EUR 6 billion credit portfolio. What has happened is taken very seriously and it is clear that we have failed when that chain of events has emerged. We have taken extensive concrete measures to be able to minimise the risk of anything like that happening in the future.
Profit before taxes for the first quarter was EUR 24.7 million and comparable profit before taxes was EUR 25.6 million, an increase of 6% in both. The comparable return on equity (ROE%) for the early part of the year has remained at a good level despite the additional allowance recorded for the early part of the year and was 15.5%. Due to good earnings, the Common Equity Tier 1 capital strengthened by almost 0.5 percentage points. Operational efficiency is among the best in the industry and the comparable cost/income ratio was 34.1%. The annual authority fees burden the bank's first quarter results. The comparable cost/income ratio without authority fees was 30.4%.
We are determined to build the foundation for future success
In December 2023, we adopted a revised operating model with the aim of streamlining the organisational structure. The measures taken are already visible in our everyday life and raise the level of the bank's operations even further. In addition, early in the year, we launched an OmaOsake share savings program for all personnel. 60% of the personnel signed up for the first program period, which reflects OmaSp's corporate culture and employees' commitment to increasing the value of the bank.
OmaSp continues the financial year with confidence
Despite the exceptional early part of the year, we continue the financial year with confidence due to our profit-making ability and strong capital buffers. Development work and investments to improve operational efficiency and customer experience will continue. OmaSp was last year the most profitable company on the Helsinki Stock Exchange and there is a strong will to continue on that path. We are currently preparing for the onboarding of Handelsbanken's Finnish SME business at the turn of August-September, which will improve the annual profit before taxes by approximately EUR 8–12 million. According to our guidance, the comparable profit before taxes for the financial year 2024 is estimated to be EUR 120–140 million.”
January-March 2024
• In January–March, net interest income grew 58.4% compared to the previous year. Net interest income totalled EUR 57.4 (36.2) million. Net interest income was increased by the rise of market interest rates, and in addition, the volumes that have increased with the acquisition of Liedon Savings Bank's business since March 2023.
• Home mortgage portfolio increased by 0.8% during the previous 12 months. Corporate loan portfolio decreased by 1.6% during the previous 12 months.
• Deposit base decreased by 6.4% over the previous 12 months.
• In the first quarter, fee and commission income and expenses (net) item increased due to volume growth by 22.1%.
• In January–March, total operating income grew by 46.1% compared to the comparison period.
• Total operating expenses remained almost at the same level with the comparison period and grew in January-March in total by 1.5%. The authority fees decreased from the comparison period because no EU stability fee is recorded for the financial year 2024.
• The impairment losses on financial assets were in total EUR -23.1 (-1.6) million for the first quarter. The Company recorded an additional allowance based on the management’s judgement of EUR 19.5 million due to a change of credit risk position for certain customers. The change was due to non-compliance with the Company’s guidelines and its impact on the weakening credit risk position.
• For the first quarter, profit before taxes grew and was in total EUR 24.7 (23.3) million. The growth was 5.9% compared to the previous year.
• Comparable profit before taxes grew 6.1% compared to the comparison period and was in total EUR 25.6 (24.2) million.
• Cost/income ratio improved and was 35.2 (50.7)%. Comparable cost/income ratio improved and was 34.1 (47.9)%.
• Comparable return on equity (ROE) decreased and was 15.5 (19.3)% compared to the comparison period.
| The Group's key figures (1,000 euros) | 1–3/2024 | 1–3/2023 | Δ% | 1–12/2023 |
| Net interest income | 57,369 | 36,224 | 58% | 197,045 |
| Fee and commission income and expenses, net | 12,766 | 10,453 | 22% | 47,421 |
| Total operating income | 74,080 | 50,697 | 46% | 247,067 |
| Total operating expenses | -25,958 | -25,568 | 2% | -90,550 |
| Impairment losses on financial assets, net | -23,112 | -1,595 | 1,349% | -17,126 |
| Profit before taxes | 24,668 | 23,296 | 6% | 138,048 |
| Cost/income ratio, % | 35.2% | 50.7% | -31% | 36.9% |
| Balance sheet total | 7,531,291 | 7,298,953 | 3% | 7,642,906 |
| Equity | 527,426 | 437,357 | 21% | 541,052 |
| Return on assets (ROA) % | 1.0% | 1.1% | -7% | 1.6% |
| Return on equity (ROE) % | 14.9% | 18.6% | -20% | 24.3% |
| Earnings per share (EPS), EUR | 0.60 | 0.59 | 2% | 3.49 |
| Total capital (TC) ratio % | 16.9% | 15.5% | 9% | 16.5% |
| Common Equity Tier 1 (CET1) capital ratio % | 15.4% | 13.6% | 13% | 14.9% |
| Comparable profit before taxes | 25,626 | 24,157 | 6% | 143,609 |
| Comparable cost/income ratio, % | 34.1% | 47.9% | -29% | 35.1% |
| Comparable return on equity (ROE) % | 15.5% | 19.3% | -20 | 25.3% |
Outlook for the financial year 2024 (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.
We estimate the Group's comparable profit before taxes to be EUR 120-140 million in the financial year 2024 (comparable profit before taxes was EUR 143.6 million in financial year 2023).
Oma Savings Bank Plc
Additional information:
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.
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