OMA SAVINGS BANK PLC, STOCK EXCHANGE RELEASE 29 JULY 2024 AT 8.30 A.M. EET, HALF-YEAR FINANCIAL REPORT
Oma Savings Bank Plc’s Half-Year Financial Report January-June 2024: Behind is a very exceptional second quarter – an extensive action plan is progressing as planned
This release is a summary of Oma Savings Bank’s (OmaSp) January-June 2024 Half-Year Financial Report, which can be read from the pdf file attached to this stock exchange release. In addition, alongside with the Half-Year Financial Report, the Company also publishes Disclosure information on capital adequacy and risk management in accordance with the Pillar III as a separate report, available as an attached pdf file. Both reports are also available on the Company’s website at www.omasp.fi.
CEO Sarianna Liiri:
“The beginning of the year, and especially the second quarter, has been a very exceptional period in the history of OmaSp. The non-compliance with the guidelines and the resulting problem entity has required significant resources. In recent weeks, the implementation of the action plan has been in the centre of activities, during which extensive studies have been carried out and the quality of the entire credit portfolio has been ensured in cooperation with external independent experts. The results confirm that the problems are limited to previously identified non-compliance with the guidelines and the rest of the quality of the credit portfolio corresponds to what was previously reported. Nevertheless, the most important thing is that the core business develops well and in line with expectations. The bank’s capital adequacy and financial position are strong.
Supported by the interest environment, net interest income increased by 7 percent in the second quarter compared to last year. Fee and commission income and expenses remained at the comparison period’s level. Comparable operating income increased by 7 percent. Costs have remained well under control, even though we have made investments, and, among other things, we have increased personnel to risk management and the new branches to be opened in autumn 2024. Comparable operating expenses increased by 4 percent in the second quarter. The comparable cost/income ratio was at an excellent level of 32.9 percent for the second quarter.
The development of the credit portfolio was in line with expectations and remained at the previous year’s level. The deposit base decreased by about 7 percent, and the development continues to reflect customers’ adjustment to the rise in the cost level and partly because of bank-related news. The good accessibility of services is still reflected in the number of new customer relationships. We have managed to create about a thousand new customer relationships every month throughout the first half of the year.
We announced the non-compliance with the guidelines in lending in April. The Board of Directors initiated extensive measures as a result of serious events in the early part of the year. The Board of Directors and the entire personnel have had a strong will to investigate the events and related problems as efficiently as possible. During the second quarter, the development of risk management and independent operations, among other things, has been subject to a review of the entire credit portfolio carried out in July. During the second quarter, investments have been made, among other things, in the development of risk management and independent operations, and the key measure has been the review of the entire loan portfolio carried out in July. The survey work has gone through the data of the credit portfolio, carried out a documentary check and, in addition, analysed the credit and collateral process. It was important to get external confirmation that the majority of our credit portfolio corresponds to what was previously reported and that the review did not reveal any new problems beyond those already identified. A study confirmed the result of our own internal investigation that this is an individual case. OmaSp recorded EUR 49.5 million discretionary credit loss provisions related to this entity for the entire first half of the year. This is a key explanation for the impairment losses on financial assets in the early part of the year, which amounted to approximately EUR 62.5 million.
The comparable profit before taxes was EUR 31.1 million for the first part of the year and, without additional allowance based on management’s judgement, EUR 80.6 million. The equity was approximately EUR 533 million at the end of June. The bank has a strong solvency position with a total capital (TC) ratio of 16.6%.
Looking ahead
OmaSp’s financial position is strong. We will focus on measures that will ensure the continued success of the…
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