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…
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