OP Mortgage Bank Semi-Annual Financial Report January 1 – June 30, 2021



OP Mortgage Bank
Publication of the stock exchange July 28, 2021, 10.00 EEST
Semi-annual financial report

OP Mortgage Bankwith Half-year Financial report for January 1 – June 30, 2021

OP Mortgage Bank (OP MB) is part of OP Financial Group, and its role is to raise, together with OP Corporate Bank plc, financing for OP from money and capital markets. OP MB is responsible for financing the Group in terms of the issue of covered bonds.

Financial position

The intermediary loans and loan portfolio of OP MB at 30 June 2021 amounted to EUR 18 344 million (15 326) *. In March, OP MB issued the first Finnish green-lined bond on the international capital market. The covered bond with a fixed interest rate of 750 million euros had a maturity of 10 years. Of the proceeds from the bond, € 520 million was provided to 42 OP cooperative banks in the form of intermediary loans.

In May, OP MB issued three floating rate secured bonds worth € 1 billion each with a maturity of two years. The proceeds from the bonds were fully transferred to 113 OP cooperative banks. In May, the bond issue was carried out as an internal issue within the OP Financial Group.

As of June 30, 2021, 125 OP cooperative banks received a total of € 14,310 million (10,790) in intermediary loans from OP MB.

Profit before tax was € 2.6 million (4.0). The financial position of the company in the reporting period remained stable.

The impairment loss on receivables amounted to € 0.7 million (1.3). A year ago, clients were actively applying for a loan repayment vacation due to the Covid-19 crisis. This, combined with changes in the macroeconomic parameters used in calculating expected credit losses, increased the amount of expected credit losses. A year ago, the adoption of a new definition of default also increased expected credit losses.

* Comparative figures for 2020 are shown in brackets. For the income statement and other aggregates, the data for January – June 2020 serves as a comparison. For balance sheet and other cross-sectional figures, the data at the end of the previous financial year (December 31, 2020) serve as comparative figures.

Security bonds issued to the public

At 30 June 2021, loans as collateral for secured bonds issued under the Euro 20 billion Eurobond program established on 12 November 2010 under the Law on Mortgage Credit Banks (Laki kiinnitysluottopankkitoiminnasta 688/2010) amounted to 15,814 million euros. … On the same day, loans as collateral for secured bonds issued under the Euro 10 billion Euro Medium-Term Held Secured Notes program, established on 15 June 2020, amounted to € 3,575 million.

Capital adequacy

OP MB’s Tier 1 Total Capital Ratio (CET1) was 76.2% (61.8) as of June 30, 2021. The risk reduction improved the CET1 ratio. The CET1 minimum capital requirement is 4.5% and the capital retention buffer requirement is 2.5%, meaning the total CET1 capital requirement is 7%. The minimum total capital requirement is 8% and 10.5% is increased by the capital preservation buffer. Profit for the financial year has not been included in CET1 equity.

OP MB uses an Internal Rating Based Approach (IRBA) to measure capital adequacy requirements for credit risk. OP MB uses a standardized approach to measure capital adequacy to cover operational risk.

OP MB is owned by OP Financial Group. As part of the Group, OP MB is controlled by the ECB. OP Financial Group provides information on capital adequacy in its financial statements, interim and semi-annual financial statements in accordance with the Law on the Consolidation of Depository Banks. OP Financial Group also publishes Pillar III disclosures.

OP MB presented its capital base and capital adequacy in accordance with the EU Capital Regulation (EU 575/2013).

Capital base and capital adequacy, TEUR

June 30, 2021

31 years December Feb 2020




Tier 1 Ordinary Capital (CET1) before deductions



Overfunding of pension liabilities



Share of unaudited profits



Deficit of expected losses less expected losses


-3 448

General Capital Level 1 (CET1)

360 932


Level Capital 1 (T1)

360 932


Total capital base

360 932


Total risk contact amount



Credit and counterparty risk

30 130


Operational risk

473 358



Key ratios,%

Capital Ratio CET1



Tier 1 capital ratio



Capital Adequacy Ratio



Capital requirement

Capital base

360 932


Capital requirement


61 414

Buffer for capital requirements

311 230


Joint and several liability in the event of a merger

In accordance with the Law on the Consolidation of Depository Banks, the consolidation of cooperative banks includes the central cooperative of the organization (OP Cooperative), credit institutions-members of the central cooperative and companies belonging to their consolidation groups, as well as credit and financial institutions and service companies in which together they have more than half of the total number of votes. This consolidation is controlled on a consolidated basis. As of June 30, 2021, OP Cooperative member credit institutions included 132 OP cooperative banks, as well as OP Corporate Bank plc, OP MB and OP Retail Customers plc.

The central cooperative is responsible for issuing instructions to its member credit institutions with regard to their internal control and risk management, their procedures for ensuring liquidity and capital adequacy, as well as compliance with harmonized accounting policies in preparing the consolidated financial statements of the association.

As a measure of support referred to in the Law on the Consolidation of Depository Banks, the central cooperative is obliged to pay any of its member credit institutions the amount necessary to prevent the liquidation of the credit institution. The central cooperative is also liable for the debts of the member credit institution that cannot be paid out of the assets of the member credit institution.

Each member bank is obliged to pay a portion of the amount that the central cooperative has paid either to another member bank as part of the support or to the creditor of that member bank against the payment of the overdue amount that the creditor did not receive from the member bank. In addition, in the event of a default by a central cooperative, the member bank has an unlimited obligation to refinance the central cooperative’s debts, as specified in the Cooperative Law.

The obligations of each member bank in relation to the amount paid by the central cooperative to the creditor on behalf of the member bank are divided among the member banks in proportion to their most recently approved balance sheets. OP Financial Group insurance companies are not jointly and severally liable.

Pursuant to Section 25 of the Mortgage Credit Banks Act, the holder of a secured bond is entitled to receive payment, before other claims, for the entire life of the bond in accordance with the terms of the contract from the assets deposited as collateral, without liquidation or bankruptcy of OP MB.

Corporate responsibility

OP Financial Group’s core values ​​and principles governing corporate responsibility also guide OP MB.

Corporate responsibility is an integral part of OP Financial Group’s business and strategy. The Group’s goal is to be the forerunner of corporate responsibility in its sector in Finland. OP Financial Group is committed to upholding the Ten Principles of the UN Global Compact Initiative on Human Rights, Labor Rights, Environment and Anti-Corruption. The OP agreed to follow the UN Principles for Responsible Investment. OP Financial Group is a founding member of the Principles for Responsible Banking under the United Nations Environment Program Finance Initiative (UNEP FI).

OP Mortgage Bank issued Finland’s first green-backed bond in March. The EUR 750 million bond has a maturity of 10 years. The bond is intended for responsible international institutional investors and the proceeds from the bonds will go towards OP Financial Group’s housing loans, which have been designated green under the OP Mortgage Bank’s Green Covered Bond Scheme. The sector financed is energy efficient residential buildings (green buildings).


As of June 30, 2021, there were seven employees in the MB OP. OP MB is digitizing its operations and acquiring all the most important support services from OP Cooperative and its group members, reducing the need for its own staff.


The composition of the Council is as follows:


Vesa Aho

Chief Financial Officer of OP Cooperative


Kaisu Christie

Head of Retail and Housing Finance, OP Cooperative

Lauri Iloniemi

Head of Treasury and Group Assets and Liabilities Management, OP Corporate Bank plc

The Managing Director of OP MB is Sanna Eriksson. The Deputy Managing Director is Tuomas Ruotsalainen, Senior Bond Manager OP MB.

Credit risk

At the time of joining in 2021, OP MB had a strong capital base, capital reserves and the ability to bear risks.

The Covid-19 pandemic may continue to affect risks, especially related to lending, liquidity maintenance and business processes. OP MB’s capital base is sufficient to ensure business continuity.

The most significant risks of OP MB are related to the quality of collateral and risks of structural liquidity and interest rate in the balance sheet, for which limits are set in the Banking Risk Policy. The main indicators of credit risk used show that the exposure to OP MB is stable. The liquidity buffer for OP Financial Group operated by OP Corporate Bank can be used by OP MB. OP MB used interest rate swaps to hedge its interest rate risk. Interest rate swaps were used to exchange interest on housing loans, interest on bridging loans and interest on bonds issued for the same base rate. OP MB has entered into all derivative contracts for hedging purposes with OP Corporate Bank plc as their counterparty. The interest rate risk exposure of OP MB is under control and within the established limit.

Forecast for 2021

The economic recovery will continue as the pandemic continues to subside. In the financial markets, expectations are positive. Central bank policies are expected to calm markets and interest rates remain low. However, the Covid-19 pandemic will continue to cause uncertainty about the economic outlook.

The capital adequacy ratio of OP MB is expected to remain at a very high level and the overall quality of the loan portfolio to be good. This will allow the issuance of new covered bonds in the future.

Schedule of interim reports in 2021

Interim Report January 1 – September 30, 2021 October 27, 2021

Helsinki, 28 July 2021

OP Mortgage Bank
Board of Directors

For more information, please contact:
Sanna Ericsson, Managing Director, tel. +358 10 252 2517

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