Oma Savings Bank Plc’s Half-Year Financial Report

OMA SAVINGS BANK PLC, STOCK EXCHANGE RELEASE 29 JULY 2024 AT 8.30 A.M. EET, HALF-YEAR FINANCIAL REPORT

Oma Savings Bank Plc’s Half-Year Financial Report January-June 2024: Behind is a very exceptional second quarter – an extensive action plan is progressing as planned

This release is a summary of Oma Savings Bank's (OmaSp) January-June 2024 Half-Year Financial Report, which can be read from the pdf file attached to this stock exchange release. In addition, alongside with the Half-Year Financial Report, the Company also publishes Disclosure information on capital adequacy and risk management in accordance with the Pillar III as a separate report, available as an attached pdf file. Both reports are also available on the Company's website at www.omasp.fi.

CEO Sarianna Liiri:
“The beginning of the year, and especially the second quarter, has been a very exceptional period in the history of OmaSp. The non-compliance with the guidelines and the resulting problem entity has required significant resources. In recent weeks, the implementation of the action plan has been in the centre of activities, during which extensive studies have been carried out and the quality of the entire credit portfolio has been ensured in cooperation with external independent experts. The results confirm that the problems are limited to previously identified non-compliance with the guidelines and the rest of the quality of the credit portfolio corresponds to what was previously reported. Nevertheless, the most important thing is that the core business develops well and in line with expectations. The bank's capital adequacy and financial position are strong.

Supported by the interest environment, net interest income increased by 7 percent in the second quarter compared to last year. Fee and commission income and expenses remained at the comparison period's level. Comparable operating income increased by 7 percent. Costs have remained well under control, even though we have made investments, and, among other things, we have increased personnel to risk management and the new branches to be opened in autumn 2024. Comparable operating expenses increased by 4 percent in the second quarter. The comparable cost/income ratio was at an excellent level of 32.9 percent for the second quarter.

The development of the credit portfolio was in line with expectations and remained at the previous year's level. The deposit base decreased by about 7 percent, and the development continues to reflect customers' adjustment to the rise in the cost level and partly because of bank-related news. The good accessibility of services is still reflected in the number of new customer relationships. We have managed to create about a thousand new customer relationships every month throughout the first half of the year.

We announced the non-compliance with the guidelines in lending in April. The Board of Directors initiated extensive measures as a result of serious events in the early part of the year. The Board of Directors and the entire personnel have had a strong will to investigate the events and related problems as efficiently as possible. During the second quarter, the development of risk management and independent operations, among other things, has been subject to a review of the entire credit portfolio carried out in July. During the second quarter, investments have been made, among other things, in the development of risk management and independent operations, and the key measure has been the review of the entire loan portfolio carried out in July. The survey work has gone through the data of the credit portfolio, carried out a documentary check and, in addition, analysed the credit and collateral process. It was important to get external confirmation that the majority of our credit portfolio corresponds to what was previously reported and that the review did not reveal any new problems beyond those already identified. A study confirmed the result of our own internal investigation that this is an individual case. OmaSp recorded EUR 49.5 million discretionary credit loss provisions related to this entity for the entire first half of the year. This is a key explanation for the impairment losses on financial assets in the early part of the year, which amounted to approximately EUR 62.5 million.

The comparable profit before taxes was EUR 31.1 million for the first part of the year and, without additional allowance based on management’s judgement, EUR 80.6 million. The equity was approximately EUR 533 million at the end of June. The bank has a strong solvency position with a total capital (TC) ratio of 16.6%.

Looking ahead
OmaSp's financial position is strong. We will focus on measures that will ensure the continued success of the bank.

The transaction with Handelsbanken Finland will be completed as planned at the turn of August-September and we are preparing to welcome more than 11,000 SME customers and approximately 30 corporate customer business experts to our team. We will continue to strengthen our market position and expand our operations to Vantaa, Kuopio and Vaasa during autumn 2024 as planned.

Despite a very exceptional start to the year, we will continue the current financial year with skilled and committed personnel. We are now starting to build the next phase of OmaSp. Our goal is to continue to provide the best banking service in town every day for both current and future customers.”

January – June 2024

Jarmo Salmi, Chairman of the Board of Directors, left his position in May and Jaakko Ossa was elected as the new Chairman of the Board.
The Company's long-term CEO Pasi Sydänlammi left his position in June and deputy CEO Sarianna Liiri was appointed as interim CEO.
In January–June, net interest income grew 28.5% compared to the previous year. Net interest income totalled EUR 109.8 (85.5) million. In the second quarter, net interest income increased by 6.5% compared to the comparison period.
Home mortgage portfolio increased by 2.0% during the previous 12 months. Corporate loan portfolio increased by 0.6% during the previous 12 months.
Deposit base decreased by 6.7% over the past 12months, most of which is due to a decrease in corporate customers' deposits.
In January-June, fee and commission income and expenses (net) increased due to volume growth by 10.7%. In the second quarter, fee and commission income and expenses (net) remained almost on level with the comparison period and was EUR 12.7 (12.6) million.
In January–June, total operating income grew by 24.3% compared to the comparison period. Comparable total operating income grew by 6.9% during the second quarter and were EUR 67.1 (62.8) million.
Total operating expenses remained almost at the same level with the comparison period and grew in January-June in total by 4.5%. Comparable operating expenses grew by 4.2% during the second quarter and were EUR -22.0 (-21.1) million.
For January-June the impairment losses on financial assets were in total EUR -62.5 (-4.3) million.
The impairment losses on financial assets were in total EUR -39.4 (-2.7) million for the second quarter. In the first quarter, the Company recognised an additional allowance based on the management’s judgement of EUR 19.5 million for certain customer entities whose credit risk position was identified as having changed. The change was due to non-compliance with the Company’s guidelines and its impact on the weakening credit risk position. As a result of events, the Company initiated extensive measures and a review of its loan portfolio, which are described in more detail on page 23 of the Half-Year Financial Report. In relation to ongoing measures, the Company recognised an additional EUR 35.7 million of additional allowance based on the management’s judgement and impairment losses for these entities during the second quarter.
For January-June, profit before taxes was in total EUR 29.2 (62.0) million. For the second quarter, profit before taxes was in total EUR 4.5 (38.7) million.
In January-June, comparable profit before taxes was in total EUR 31.1 (63.0) million. For the second quarter, comparable profit before taxes was in total EUR 5.5 (38.8) million.
In January-June, cost/income ratio was 35.0 (41.6)%. In the second quarter, cost/income ratio was 34.8(34.4)%. In January-June comparable cost/income ratio was 33.5 (40.0)%. For the second quarter comparable cost/income ratio was 32.9 (33.7)%.
In January-June, comparable return on equity (ROE) was 9.3 (24.1)%. For the second quarter, comparable return on equity (ROE) was 3.2 (27.3)%.
Total capital (TC) ratio remained at a good level and was 16.6 (16.5)%.

The Group's key figures (1,000 euros)	1–6/2024	1–6/2023	Δ %	2024 Q2	2023 Q2	Δ %
Net interest income	109,810	85,459	28%	52,442	49,236	7%
Fee and commission income and expenses, net	25,465	23,007	11%	12,699	12,555	1%
Total operating income	141,576	113,878	24%	67,497	63,181	7%
Total operating expenses	-49,389	-47,242	5%	-23,432	-21,674	8%
Impairment losses on financial assets, net	-62,535	-4,309	1,351%	-39,423	-2,714	1,353%
Profit before taxes	29,171	61,996	-53%	4,504	38,699	-88%
Cost/income ratio, %	35.0%	41.6%	-16%	34.8%	34.4%	1%
Balance sheet total	7,284,410	7,014,730	4%	7,284,410	7,014,730	4%
Equity	533,259	470,229	13%	533,259	470,229	13%
Return on assets (ROA) %	0.6%	1.5%	-59%	0.2%	1.7%	-89%
Return on equity (ROE) %	8.7%	23.7%	-63%	2.6%	27.2%	-90%
Earnings per share (EPS), EUR	0,70	1,57	-55%	0,10	0,93	-89%
Total capital (TC) ratio %	16.6%	16.0%	4%	16.6%	16.0%	4%
Common Equity Tier 1 (CET1) capital ratio %	15.2%	14.1%	7%	15.2%	14.1%	7%

Comparable profit before taxes	31,136	62,979	-51%	5,510	38,822	-86%
Comparable cost/income ratio, %	33.5%	40.0%	-16%	32.9%	33.7%	-2%
Comparable return on equity (ROE) %	9.3%	24.1%	-62%	3.2%	27.3%	-88%

Outlook for the financial year 2024 (updated 24 July 2024)
The profitable development of the Company's business continues, supported by the investments made in the customer experience and service network. The Company will continue to invest extensively in the development of risk management and quality processes in the second half of 2024. 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 80-100 million for the financial year 2024 (comparable profit before taxes was EUR 143.6 million in financial year 2023).

Oma Savings Bank Plc
Board of Directors

Additional information:

Sarianna Liiri, CEO, tel. +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 a solvent and profitable Finnish 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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