OP Mortgage Bank
Stock Exchange Release 28 April 2021 at 10.00am EEST
OP Mortgage Bank’s Interim Report for 1 January–30 March 2021
OP Mortgage Bank (OP MB) is part of OP Financial Group and its role is to raise, together with OP Corporate Bank plc, funding for OP from money and capital markets. OP MB is responsible for the Group’s funding for the part of covered bond issuance.
The intermediary loans and loan portfolio of OP MB totalled EUR 15,597 million (15,326)* on 31 March 2021. In March, OP MB issued Finland’s first green covered bond in the international capital market. The fixed-rate EUR 750-million covered bond had a maturity of 10 years. Out of the proceeds of the bond, EUR 520 million was intermediated to 42 OP cooperative banks in the form of intermediary loans.
On 31 March 2021, 122 OP cooperative banks had a total of EUR 11,310 million (10,790) in intermediary loans from OP MB.
Earnings before tax totalled EUR 1.2 million (1.8). The company’s financial standing remained stable throughout the reporting period.
Impairment loss on receivables totalled EUR 0.4 million (0.7). A year ago, customers actively applied for repayment holidays on their loans as a result of the Covid-19 crisis. Combined with the changes in macroeconomic parameters applied in the calculation of expected credit losses, this increased the amount of expected credit losses. A year ago, the adoption of the new definition of default also increased the amount of expected credit losses.
*The comparatives for 2020 are given in brackets. For income statement and other aggregated figures, January–March 2020 figures serve as comparatives. For balance-sheet and other cross-sectional figures, figures at the end of the previous financial year (31 December 2020) serve as comparatives.
Collateralisation of bonds issued to the public
On 31 March 2021, loans as collateral in security of the covered bonds issued under the Euro Medium Term Covered Note programme worth EUR 20 billion established on 12 November 2010 under the Act on Mortgage Credit Banks (Laki kiinnitysluottopankkitoiminnasta (688/2010)) totalled EUR 15,984 million.
OP MB’s Common Equity Tier 1 (CET1) ratio stood at 68.5% (61.8) on 31 March 2021. The decrease in exposures improved the CET1 ratio. The minimum CET1 capital requirement is 4.5% and the requirement for the capital conservation buffer is 2.5%, i.e. the total CET1 capital requirement is 7%. The minimum total capital requirement is 8% and 10.5% with increased capital conservation buffer. Earnings for the financial year were not included in CET1 capital.
OP MB uses the Internal Ratings Based Approach (IRBA) to measure its capital adequacy requirement for credit risk. OP MB uses the Standardised Approach to measure its capital adequacy for operational risk.