OP Yrityspankki Oyj - Half Year financial report

OP Corporate Bank plc's Interim Report for 1 January-30 June 2016

OP Corporate Bank plc
Interim report for 1 January-30 June 2016
3 August 2016 at 9.00 am EEST

OP Corporate Bank plc's Interim Report for 1 January-30 June 2016

- Consolidated earnings before tax were EUR 233 million (348). The return on
equity was 10.0% (17.0).
- Earnings reported by Banking decreased to EUR 113 million (175) due to lower
net investment income. The loan portfolio grew in the reporting period by 5.5%
to EUR 17.3 billion (16.4). Earnings included EUR 7 million (18) in impairment
loss on receivables.
- Non-life Insurance earnings before tax decreased to EUR 116 million (145) due
to lower net investment income. Return on investments at fair value was 3.1 %
(1.3). Operating combined ratio was 88.2% (87.8).
- Other Operations earnings before tax were EUR 3 million (28). Liquidity and
access to funding remained good.
- The CET1 ratio was 14.2% (14.1) as against the target of 15%.
- In June, the Supervisory Board of OP Financial Group's central cooperative
confirmed OP Financial Group's strategy and Group-level strategic goals. OP
Corporate Bank's strategic goals will be updated by the end of the year.
- Change in the outlook: OP Corporate Bank Group's consolidated earnings before
tax are expected to be clearly lower than earnings from continuing operations in
2015 (previously: "lower than earnings from continuing operations in 2015".)
                                  Q1-2/2016 Q1-2/2015 Change, % Q1-4/2015
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 Earnings before tax, EUR million
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   Banking                              113       175     -35.4       334
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   Non-life Insurance                   116       145     -19.5       267
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   Other Operations                       3        28     -88.2        23
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 Group total                            233       348     -33.1       625
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Comparatives deriving from the income statement are based on figures reported
for continuing operations for the corresponding period a year ago. Unless
otherwise specified, balance-sheet and other cross-sectional figures on 31
December 2015 are used as comparatives.
 Financial targets*                     Q1-2/2016 Q1-2/2015 Q1-4/2015    Target
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 Return on equity, %                         10.0      17.0      14.8        13
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 CET1 ratio, %                               14.2      13.8      14.1        15
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 Cost/income ratio by Banking, %             38.1      26.5      27.0      < 35
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 Operating combined ratio by Non-life
 Insurance, % **                             88.2      87.8      87.3      < 92
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 Operating expense ratio by Non-life
 Insurance, %                                18.4      18.2      17.7        18
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 Non-life Insurance solvency ratio
 (under Solvency II), %***                    158                 158
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 Non-life Insurance solvency ratio
 (under Solvency II), %****                   140       137       139       120
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 AA rating affirmed by two credit
 rating agencies or credit ratings at
 least at the main competitors' level           2         2         2         2
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 Dividend payout ratio at least 50%,
 provided that CET 1 ratio is at least
 15%. Dividend payout ratio is 30%
 until CET1 ratio of 15% has been
 achieved.                                                         30 > 50 (30)
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* OP Corporate Bank plc's strategic targets will be updated by the end of the
year.
** Operating ratios exclude changes in reserving bases and amortisation on
intangible assets arising from the corporate acquisition.
*** Including the effect of transitional provisions.
**** Excluding the effect of transitional provisions.

Outlook towards the year end

The Finnish economy has begun a slight rebound in the first half of the year.
This has been based on a recovery in the domestic market, especially
construction. Weak world economic growth has not been sufficient to stimulate
Finnish exports. A number of major uncertainties are threatening the fragile
economic growth in the euro area and Finland: Brexit, the situation in the
Italian banking sector, economic slowdown in emerging countries and greater
political instability. In addition, the slow progress of structural reforms in
the Finnish economy will slow down Finnish economic recovery. On the whole, the
Finnish economy is expected, however, to continue its recovery although risks of
growth coming to a halt have mounted during the summer.

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 banking impairment
loss low despite the prolonged period of slow economic growth. Digitisation in
the financial sector, upgrading fragmented information system infrastructures
and change in customer behaviour will require significant development
investments in the sector in the next few years that will increase expenses and
weaken profitability in the short term. Changes in the operating environment
will highlight the role of operational efficiency and profitability as well as a
strong capital base.

OP Corporate Bank Group's consolidated earnings before tax are expected to be
clearly lower than earnings from continuing operations in 2015 (previously:
"lower than earnings from continuing operations in 2015".) The most significant
uncertainties affecting earnings relate to the rate of business growth,
impairment loss on receivables, developments in bond and capital markets, the
effect of large claims on claims expenditure and to the discount rate applied to
insurance liabilities.

All forward-looking statements in this report expressing the management's
expectations, beliefs, estimates, forecasts, projections and assumptions are
based on the current view of the future development in the operating environment
and the future financial performance of OP Corporate Bank Group and its various
functions, and actual results may differ materially from those expressed in the
forward-looking statements.

Helsinki, 3 August 2016

OP Corporate Bank plc
Board of Directors

Financial reporting in 2016

OP Corporate Bank plc publishes the following financial information pursuant to
the regular disclosure obligation of a securities issuer:

Schedule for Interim Reports in 2016:
Interim Report Q1-3/2016                            2 November 2016

DISTRIBUTION
NASDAQ Helsinki Ltd
London Stock Exchange
SIX Swiss Exchange
Major media
www.op.fi, www.pohjola.com

For additional information, please contact
Jouko Pölönen, President and CEO, tel. +358 (0)10 253 2691
Carina Geber-Teir, Executive Vice President, Corporate Communications, tel.
+358 (0)10 252 8394

OP Corporate Bank is part of the leading Finnish customer-owned financial
services group, OP Financial Group. OP Corporate Bank and OP Mortgage Bank are
responsible for OP's funding in money and capital markets. As laid down in the
applicable law, OP Corporate Bank, OP Mortgage Bank and their parent company OP
Cooperative and other OP Financial Group member credit institutions are
ultimately jointly and severally liable for each other's debts and commitments.
OP Corporate Bank acts as OP's central bank.


[HUG#2032742]

Attachments:

OP Corporate Bank plc_Q2_2016.pdf