OP Yrityspankki Oyj - Interim report (Q1 and Q3)

OP Financial Group's Interim Report for 1 January-31 March 2016: Good performance in challenging circumstances, significant #Suominousuun (Putting Finland on a new growth path) initiatives

OP Financial Group
Stock Exchange Release 27 April 2016 at 9.00 am EEST
Interim Report for January-March 2016

OP Financial Group's Interim Report for 1 January-31 March 2016: Good
performance in challenging circumstances, significant #Suominousuun (Putting
Finland on a new growth path) initiatives

Strong start for business performance for the new year
  * Earnings before tax were EUR 284 million (320), or the second best first-
    quarter figure ever recorded.
  * Overall profitability remained solid. Earnings were mostly reduced by lower
    investment income and market valuations.
  * Total income decreased by 8% and expenses by 6%, year on year.
  * The CET1 ratio remained unchanged at 19.5% (19.5) on 31 March 2016.
  * The home loan portfolio increased by 4%, the corporate loan portfolio by 7%
    and deposits by 10% in the year to March.
  * Non-life Insurance recorded an operating combined ratio of 88.6% (87.2).
    Insurance premium revenue rose by 3%.
  * Assets managed by Wealth Management were at the same level as a year ago.
  * Full-year earnings for 2016 are expected to be about the same as in 2015.

Several significant #Suominousuun (Putting Finland on a new growth path)
initiatives in the social role
  * With the Invest in Finland opening as part of the initiative, Finnish public
    companies received about 25,000 new shareholders from OP's customers.
  * On 27 April 2016, OP Financial Group announced a new, significant
    #Suominousuun initiative targeted at families with children.
  * In another initiative, OP Financial Group together with the European
    Investment Fund will provide EUR 150 million in financing to spur SME
    innovations and growth.
  * An OP member cooperative bank arrived in the Helsinki Metropolitan Area
    after a 20-year break.  The new OP Helsinki has already over 150,000 owner-
    customers.
  * New customer bonuses totalled EUR 50 million, up 4% year on year.

OP Financial Group's key indicators
                                   Q1/2016       Q1/2015 Change, %    Q1-4/2015

 Earnings before tax, EUR
 million                               284           320     -11.3        1,101
-------------------------------------------------------------------------------
   Banking                             151           192     -21.1          642
-------------------------------------------------------------------------------
   Non-life Insurance                   59            66     -11.3          259
-------------------------------------------------------------------------------
   Wealth Management                    75            93     -19.4          213
-------------------------------------------------------------------------------
 New accrued customer
 bonuses                                50            48       4.3          197
-------------------------------------------------------------------------------
                             31 March 2016 31 March 2015 Change, % 31 Dec. 2015
-------------------------------------------------------------------------------
 Common Equity Tier 1 (CET1)
 ratio, %                             19.5          16.7      2.8*         19.5
-------------------------------------------------------------------------------
 Ratio of capital base to
 minimum amount of capital
 base (under the Act on the
 Supervision of Financial
 and Insurance
 Conglomerates), % **                  160           138       22*          191
-------------------------------------------------------------------------------
 Ratio of impairment loss on
 receivables to loan and
 guarantee portfolio, %               0.05          0.12     -0.1*         0.10
-------------------------------------------------------------------------------
 Joint banking and insurance
 customers (1,000)                   1,668         1,604       4.0        1,656



Comparatives  deriving from the  income statement are  based on figures reported
for  the corresponding period in 2015. Unless otherwise specified, balance-sheet
and other cross-sectional figures on 31 December 2015 are used as comparatives.

* Change in ratio
**  The FiCo ratio has been calculated under Solvency II transitional provisions
and the comparatives have been adjusted


Comments by Reijo Karhinen, President and Group Executive Chairman

The first quarter was a period of dichotomy for OP Financial Group: customer
business profitability continued to make good progress but unstable financial
markets reduced capital gains from investment. This reduction substantially
explains a decrease in other income and, as a result, a slight slip in our
earnings. On the positive side, we posted an increase in net interest income, a
marked decrease in expenses and low loan losses.

We have a strong will to put the Finnish economy on a new growth path, which was
reflected in our new tangible actions during the reporting period. Our loan
portfolio growth figures are still substantial that support economic growth,
especially in corporate financing. Our #Suominousuun (Putting Finland on a
growth path) initiatives proceeded as targeted. With excellent results, we
managed to encourage our customers to invest in Finnish ownership. Together with
the European Investment Bank, we were the first in Finland to launch a new
financing solution for innovative and growth-seeking companies. On the basis of
the initial fervour, I am expecting this to become a new success story. We will
target our next #Suominousuun initiative at unborn children and their families.

Our sound financial position enables us to carry out our social role described
above. In addition to that, we will rely on our strong set of values, mission
and customer promise. We exist to serve our customers. Our stakeholders, not
least our customers, expect us to perform in line with our core values and to be
transparent and open in our communications, among other things. This requirement
is a clearly strengthening trend. It is also challenging us.

During the winter, we have assessed options for future visions in our strategy
update work. These options will provide the basis for OP Financial Group's
revised strategy to be approved in June. In a digital world, the speed of change
is quickening and only actors willing to reinvent themselves can succeed and
create added value in their operating region and to their customers. We need
unconventional strategic approaches explained through the future.

The highly slow reform of our society that has continued for years now or even
non-reform throttles the creation of new Finnish success stories. In the longer
run, the atmosphere encouraging reinvention would create a society that is
substantially more prosperous, supports wellbeing more and is more stable, in
addition to new success stories. Thanks to its really remarkable strengths,
Finland would have every chance of being a greater global achiever than what its
size suggests.

January-March

OP Financial Group's earnings before tax for the first quarter were EUR 284
million (320), or the second best first-quarter figure ever recorded. Earnings
before tax a year ago were the Group's all-time high first-quarter figure.

Net interest income increased by 4.6% to EUR 267 million. Other income, however,
decreased by 14.7% to EUR 452 million. This decrease was mainly due to lower
investment income and reduced market valuations in the unstable market
situation.

Net income from Non-life and Life Insurance was lower than a year ago as a
result of reduced net investment income. Net commissions and fees were reduced
by lower brokerage fees due to the Invest in Finland initiative as part of the
#Suominousuun (Putting Finland on a new growth path) initiative, lower asset
management and non-life insurance fees and higher commission expenses. Net
trading income was reduced by net income from securities trading and increased
by net income from foreign exchange trading. Lower gains on equity trading,
reduced dividend income and lower property values decreased net investment
income.

Total expenses decreased by 5.5%, being EUR 22 million lower than a year ago.
Lower personnel costs were explained by a decrease of EUR 9 million in wages and
salaries. A non-recurring provision recognised in the first quarter a year ago
for personnel costs totalled EUR 9 million, related to the reorganisation of the
central cooperative consolidated. ICT costs increased by 5.5%, being EUR 3
million higher than in the previous year.

Impairment losses recognised under various income statement items that reduced
earnings amounted to EUR 30 million (23), of which EUR 11 million (21) concerned
loans and receivables. Net impairment loss on loans and receivables were low, at
0.05% (0.12) of the loan and guarantee portfolio.

The Group's income tax before change in deferred tax amounted to EUR 51 million
(72). The effective tax rate was 19.1% (19.6).

Earnings before tax at fair value amounted to EUR 355 million (479). OP
Financial Group's fair value reserve before tax totalled EUR 353 million (302)
on 31 March 2016.

Equity capital amounted to EUR 9.4 billion (9.3) on 31 March 2016. This increase
came from Group earnings. On March 31 2016, EUR 2.5 billion (2.5) in Profit
Shares were included in equity, terminated Profit Shares accounting for EUR 0.2
billion.

Outlook towards the year end

World and euro-area economic growth is not expected to significantly speed up
Finnish economic growth during the current year. The anticipated fragile Finnish
economic growth is largely based on a minor recovery in the domestic market.
Despite growth, the overall outlook of the Finnish economy and the Finnish
financial-sector operating environment is weak. The probability of a
deceleration in economic growth is greater than its acceleration. A historically
low interest rate environment, a possible British exit from the EU and other
threats challenging the EU's structures and policies as well as the slow
progress of structural reforms in the Finnish economy create uncertainty for
Finnish economic development.

The continued reduction in market interest rates that have in part turned
negative places a further burden on the net interest income of banks and erodes
the investment income of insurance institutions. Then again, low interest rates
support customers' loan repayment capacity, which has kept impairment loss low
despite the prolonged period of slow economic growth. Weak economic growth,
industry transformation resulting from the digitising financial sector and
change in customer behaviour as well as tightening regulation will highlight the
role of operational efficiency, profitability and a strong capital base.

OP Financial Group expects its earnings before tax for 2016 to be at about the
same level as in 2015. The most significant uncertainties associated with the
earnings estimate are related to unfavourable changes in the interest rate and
investment environment. Uncertainty is also associated with developments in
impairment loss on receivables.

All forward-looking statements in this interim report expressing the
management's expectations, beliefs, estimates, forecasts, projections and
assumptions are based on the current view of developments in the economy, and
actual results may differ materially from those expressed in the forward-looking
statements.

Press conference

OP Financial Group's financial performance will be presented to the media by
President and Group Executive Chairman Reijo Karhinen in a press conference on
27 April 2016 at 11 am at Gebhardinaukio 1, Vallila, Helsinki.

OP Corporate Bank plc will publish its own Financial Statements Bulletin.

Financial reporting in 2016

Schedule for Interim Reports in 2016:

Interim Report H1/2016      3 August 2016
Interim Report Q1-3/2016   2 November 2016

Helsinki, 27 April 2016

OP Cooperative
Executive Board

Additional information:
Reijo Karhinen, President and Group Executive Chairman, tel. +358 (0)10 252 4500
Harri Luhtala, CFO, tel. +358 (0)10 252 2433
Carina Geber-Teir, Executive Vice President, Corporate Communications, tel.
+358 (0)10 252 8394

DISTRIBUTION
Nasdaq Helsinki Ltd
London Stock Exchange
SIX Swiss Exchange
Major media
op.fi and pohjola.fi

OP Financial Group is Finland's largest financial services group whose mission
is to create sustainable prosperity, security and wellbeing for its owner-
customers and in its operating region by means of its strong capital base and
efficiency. OP Financial Group consists of about 180 member cooperative banks,
its central cooperative OP Cooperative, and the latter's subsidiaries and
affiliates. The Group has a staff of 12,000 and 1.6 million owner-customers and
4.3 million customers. www.op.fi

[HUG#2007119]

Attachments:

OP Financial Group Q1 2016 background material.pdf

OP Financial Group s interim report Q1 2016.pdf