Oma Savings Bank Plc’s Interim Report 1.1.-30.9.2024: The business developed as expected and the risk management action plan is progressing

OMA SAVINGS BANK PLC, STOCK EXCHANGE RELEASE 28 OCTOBER 2024 AT 8.30 A.M. EET, INTERIM REPORT Q3

Oma Savings Bank Plc’s Interim Report 1.1.-30.9.2024: The business developed as expected and the risk management action plan is progressing

This release is a summary of Oma Savings Bank’s (OmaSp) January-September 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 Sarianna Liiri: The business developed as expected and the risk management action plan is progressing
"OmaSp's business development has continued as expected during the third quarter. The development of both main sources of income was in line with expectations. Significant investments in the development of risk management processes continued and the implementation of an extensive action plan proceeded as planned, which in part increased costs in the third quarter. Despite the investments, the Company's comparable cost/income ratio remained at a good level at approximately 37 percent. Key events during the third quarter were the completion of the acquisition of Svenska Handelsbanken AB's SME businesses in Finland. In the acquisition, approximately 10,000 new customers were transferred to OmaSp. In addition, the product range of the card business expanded, and a new K-Business Credit card was launched for SMEs in cooperation with K Group.

As a result of lower market interest rates, net interest income growth halted as expected in the third quarter and net interest income decreased by 4 percent to the comparison period of the previous year. Net interest income has grown by 16 percent during the beginning of the year. In the third quarter, the level of fee and commission income and expenses remained at the previous year’s level, and for the beginning of the year, the growth amounted to 7 percent compared to the previous year. Comparable operating income decreased by 3 percent during the third quarter.

The credit and deposit stock grew due to volumes transferred from Handelsbanken. In other respects, the development was affected by the continued weak market situation and the Company's focus on implementing the action plan.

During the third quarter, a lot of work has been done to resolve the shortcomings in risk management that emerged in spring. The Company has focused a significant amount of both internal and external resources on improving its risk management and quality processes. The measures will ensure a risk culture and operating practices in accordance with OmaSp's strategy in all operations. Nearly three million euros have been invested in risk management during the third quarter. Comparable operating expenses increased by nearly 22 percent during the third quarter. The Company will continue to make significant investments during the rest of the year. As part of the implementation of the action plan, a controlled winding down of the approximately EUR 240 million credit portfolio related to non-compliance with the guidelines was also initiated.

The impairment losses on financial assets remained high due to non-compliance with the guidelines. In the third quarter, impairment losses on financial assets of EUR 13.3 million were recorded. The growth is explained by reclassifications according to the calculation model, in connection with which EUR 9.2 million has been recorded as impairment losses on financial assets. Impairment losses on financial assets were recorded in total EUR 75.8 million for the entire beginning of the year, of which EUR 49.5 million is discretionary additional allowance.
The comparable profit before taxes was EUR 27.6 million for the third quarter and the comparable return on equity was 16.2 percent. The total capital (TC) ratio was 15.4 percent. The development of the capital adequacy was affected by the transfer of business operations from Handelsbanken.

Customer experience remains at the core
Despite an exceptional year, we continue the current financial year with confidence. OmaSp's financial position is strong. Our operations will expand with the opening of new branches, and we will continue to invest in excellent customer experience and service accessibility. The news of the appointment of the CEO, announced in September, has been received with joy. We look forward to Karri Alameri starting in his position as the bank's new CEO. He brings with him strong expertise in the financial sector and stability, which OmaSp especially needs in this situation.

Our goal is to continue to provide the best banking service in town every day for both current and future customers.”

January-September 2024
• The Company’s Board of Directors appointed Karri Alameri, B.Sc. (Econ.), CEFA as the Company’s new CEO on 30 September 2024. Alameri will start his position no later than 1 April 2025. The Finnish Financial Supervisory Authority (FIN-FSA) has no objections to the appointment. Interim CEO Sarianna Liiri will continue in her position until Karri Alameri starts.
• On 1 September 2024, the Company completed the acquisition of Svenska Handelsbanken AB’s SME business in Finland as planned. The transferred deposit portfolio to the Company amounts to approximately EUR 440 million and the loan portfolio approximately EUR 500 million. According to preliminary calculations, goodwill of EUR 14.9 million was recognised from the acquisition. Approximately 10,000 customers transferred to the Company in the acquisition, and at the same time 30 people were transferred to the Company as old employees.
• During the second quarter, the Company launched an extensive risk management action plan (the "Noste"), which has been implemented according to plan.
• In January–September, net interest income grew 15.7% compared with the same period last year. Net interest income totalled EUR 162.2 (140.1) million. In the third quarter, net interest income decreased by 4.2% compared to the comparison period.
• Home mortgage portfolio increased by 6.4% during the previous 12 months. Corporate loan portfolio increased by 9.9% during the previous 12 months.
• Deposit base increased by 3.5% over the past 12 months.
• In January-September, fee and commission income and expenses (net) increased due to volume growth by 6.8%. In the third quarter, fee and commission income and expenses (net) remained almost on level with the comparison period and was EUR 12.2 (12.2) million.
• In January–September, total operating income grew by 14.3% compared to the comparison period. Comparable total operating income decreased by 3.2% during the third quarter and was EUR 64.9 (67.1) million.
• In January-September, total operating expenses grew in total by 14.9%. The growth is mainly explained by expenses arising from business arrangements as well as from extensive risk management development projects and investigation costs related to non-compliance with the guidelines. Comparable operating expenses grew by 21.5% during the third quarter and were EUR 23.8 (19.6) million, of which the development costs of the risk management action plan (the "Noste") amounted to EUR 2.8 million.
• For January-September, the impairment losses on financial assets were in total EUR -75.8 (-9.9) million. The increase is mainly explained by significant discretionary allowances recognised in the first and second quarters, totalling EUR 49.5 million. The allowances were due to non-compliance with the Company’s guidelines and its impact on the weakening credit risk position. As a result of the events, the Company initiated extensive measures and a review of its loan portfolio. Impairment losses on financial assets amounted to EUR -13.3 (-5.5) million in the third quarter. The growth is explained by reclassifications made during the reporting period in accordance with the calculation model, in connection with which the Company has recorded EUR 9.2 million impairment losses on financial assets.
• For January-September, profit before taxes was EUR 52.0 (102.5) million. For the third quarter, profit before taxes was EUR 22.8 (40.5) million.
• In January-September, comparable profit before taxes was EUR 58.7 (104.8) million. For the third quarter, comparable profit before taxes was EUR 27.6 (41.8) million.
• In January-September, cost/income ratio was 37.6 (37.4)%. In the third quarter, cost/income ratio was 43.4 (30.1)%. In January-September, comparable cost/income ratio was 34.5 (36.0)%. For the third quarter, comparable cost/income ratio was 36.8 (29.2)%.
• In January-September, comparable return on equity (ROE) was 11.4 (25.7)%. For the third quarter, comparable return on equity (ROE) was 16.2 (27.4)%.
• Total capital (TC) ratio was 15.4 (16.5)%.

The Group's key figures (1,000 euros)	1–9/2024	1–9/2023	? %	2024 Q3	2023 Q3	? %
Net interest income	162,184	140,138	16%	52,374	54,679	-4%
Fee and commission income and expenses, net	37,641	35,234	7%	12,176	12,226	0%
Total operating income	205,687	179,877	14%	64,111	65,999	-3%
Total operating expenses	-77,087	-67,066	15%	-27,697	-19,824	40%
Impairment losses on financial assets, net	-75,807	-9,857	669%	-13,272	-5,548	139%
Profit before taxes	52,007	102,501	-49%	22,836	40,506	-44%
Cost/income ratio, %	37.6%	37.4%	1%	43.4%	30.1%	44%
Balance sheet total	7,775,086	7,071,703	10%	7,775,086	7,071,703	10%
Equity	557,950	505,290	10%	557,950	505,290	10%
Return on assets (ROA) %	0.7%	1.7%	-57%	1.0%	1.8%	-47%
Return on equity (ROE) %	10.1%	25.1%	-60%	13.4%	26.5%	-49%
Earnings per share (EPS), EUR	1.26	2.59	-51%	0.55	0.97	-43%
Total capital (TC) ratio %	15.4%	16.6%	-7%	15.4%	16.6%	-7%
Common Equity Tier 1 (CET1) capital ratio %	14.2%	14.8%	-4%	14.2%	14.8%	-4%
Comparable profit before taxes	58,711	104,819	-44%	27,575	41,840	-34%
Comparable cost/income ratio, %	34.5%	36.0%	-4%	36.8%	29.2%	26%
Comparable return on equity (ROE) %	11.4%	25.7%	-56%	16.2%	27.4%	-41%

Outlook for the financial year 2024 (updated 24 July 2024)
The profitable development of the Company's business continues, supported by the investments made in customer experience and service network. The Company will continue to invest extensively in the development of risk management and quality processes in the second half of 2024. The SME customer business to be acquired from Handelsbanken will improve the Company’s profitability from the second half of 2024 onwards.

We estimate the Group's comparable profit before taxes to be EUR 80-100 million for the financial year 2024 (comparable profit before taxes was EUR 143.6 million in the financial year 2023).

Oma Savings Bank Plc

Additional information:
Sarianna Liiri, CEO, tel. +358 40 835 6712, sarianna.liiri@omasp.fi
Minna Sillanpää, CCO, tel. +358 50 66592, minna.sillanpaa@omasp.fi

DISTRIBUTION
Nasdaq Helsinki Ltd
Major media
www.omasp.fi

OmaSp is a solvent and profitable Finnish bank. About 500 professionals provide nationwide services through OmaSp’s 46 branch offices and digital service channels to over 200,000 private and corporate customers. OmaSp focuses primarily on retail banking operations and provides its clients with a broad range of banking services both through its own balance sheet as well as by acting as an intermediary for its partners’ products. The intermediated products include credit, investment and loan insurance products. OmaSp is also engaged in mortgage banking operations.

OmaSp core idea is to provide personal service and to be local and close to its customers, both in digital and traditional channels. OmaSp strives to offer premium level customer experience through personal service and easy accessibility. In addition, the development of the operations and services is customer-oriented. The personnel is committed and OmaSp seeks to support their career development with versatile tasks and continuous development. A substantial part of the personnel also own shares in OmaSp.

Attachment

• OmaSp Interim Report 1.1.-30.9.2024