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OP Mortgage Bank: Interim Report 1 January–30 September 2023


OP Mortgage Bank
Interim Report 1 January–30 September 2023
25 October 2023 at 10.00 EEST

OP Mortgage Bank: Interim Report 1 January–30 September 2023

OP Mortgage Bank (OP MB) is the covered bond issuing entity of OP Financial Group. Together with OP Corporate Bank plc, its role is to raise funding for OP from money and capital markets.  

Financial standing

The intermediary loans and loan portfolio of OP MB totalled EUR 16,119 million (19,639)* on 30 September 2023. Bonds issued by OP MB totalled EUR 13,915 million (18,165) at the end of September.

OP MB's covered bonds after 8 July 2022 are issued under the Euro Medium Term Covered Bond (Premium) programme (EMTCB), pursuant to the Finnish Act on Mortgage Credit Banks and Covered Bonds (151/2022). The collateral is added to the EMTCB cover pool from the member cooperative banks' balance sheets via intermediary loan process on the issue date of a new covered bond.

In January, OP MB issued a covered bond in the international capital market. The fixed-rate covered bond is worth EUR 1 billion and has a maturity of seven years. All proceeds of the bond were intermediated to 55 OP cooperative banks in the form of intermediary loans.

In April, OP MB issued a new covered bond in the international capital market. The fixed-rate covered bond is worth EUR 1 billion and has a maturity of five years and six months. All proceeds of the bond were intermediated to 65 OP cooperative banks in the form of intermediary loans. 

The terms of issue are available on the website, under Debt investors:

On 30 September 2023, 103 OP cooperative banks had a total of EUR 13,800 million (16,833) in intermediate loans from OP MB.

Impairment loss on receivables related to loans on OP MB’s balance sheet totalled EUR 0.2 million (-0.4). Loss allowance was EUR 2.5 million (2.4).

Operating profit was EUR 8.3 million (6.0). The company’s financial standing remained stable throughout the financial year.

*) The comparatives for 2022 are given in brackets. For income statement and other aggregated figures, January–September 2022 figures serve as comparatives. For balance-sheet and other cross-sectional figures, figures at the end of the previous financial year (31 December 2022) serve as comparatives.

Collateralisation of bonds issued to the public

On 30 September 2023, loans as collateral in security of the covered bonds EUR 3,250 million issued under the EMTCB programme worth EUR 25 billion established on 11 October 2022, in accordance with the Act on Mortgage Credit Banks and Covered Bonds (151/2022), totalled EUR 3,581 million. Loans as collateral in security of the covered bonds, totalling EUR 10,665 million, issued under the Euro Medium Term Covered Note programme worth EUR 20 billion established on 12 November 2010 in accordance with the Act on Mortgage Credit Banks (Laki kiinnitysluottopankkitoiminnasta 688/2010) totalled EUR 13,562 million.

Capital adequacy

OP MB’s Common Equity Tier 1 (CET1) ratio stood at 39.6% (32.5) on 30 September 2023. The ratio was improved by the decrease in home loans on OP MB's balance sheet and the resulting reduction in capital requirement for credit risk. The minimum CET1 capital requirement is 4.5% and the requirement for the capital conservation buffer is 2.5%. The minimum total capital requirement is 8% (or 10.5% with the increased capital conservation buffer). Because OP MB covers capital requirements in their entirety with CET1 capital, the CET1 capital requirement is 10.5%. Profit for the period was not included in CET1 capital.

OP MB uses the Standardised Approach (SA) to measure its capital adequacy requirement for credit risk. A year ago, OP MB used the Internal Ratings Based Approach (IRBA) to obtain its capital adequacy requirement and increased it by the risk-weighted assets (RWA) floor based on the Standardised Approach. The Standardised Approach is used to measure the capital requirement for operational risks.

OP MB belongs to OP Financial Group. As part of the Group, OP MB is supervised by the ECB. OP Financial Group presents capital adequacy information in its financial statements bulletins and interim and half-year financial reports in accordance with the Act on the Amalgamation of Deposit Banks. OP Financial Group also publishes Pillar III disclosures.

Capital base and capital adequacy, TEUR30 Sep 202331 Dec 2022
Equity capital 371,244 371,311
Excess funding of pension liability -24 -24
Share of unaudited profits -6,563 -6,631
Impairment loss – shortfall of expected losses -1,822
Insufficient coverage for non-performing exposures

CET1 capital362,979362,835
Tier 1 capital (T1)362,979362,835
Total own funds362,979362,835
Total risk exposure amount
Credit and counterparty risk 860,595 241,732
Operational risk 25,140 26,908
Other risks * 31,341 848,865
Total 917,077 1,117,505
Ratios, %
CET1 ratio 39.6 32.5
Tier 1 capital ratio 39.6 32.5
Capital adequacy ratio 39.6 32.5
Capital requirement
Capital base 362,979 362,835
Capital requirement 96,332 117,364
Buffer for capital requirements 266,647 245,471

* Risks not otherwise covered. A year ago, the risk-weighted assets (RWA) floor based on the Standardised Approach.

Joint and several liability of amalgamation

Under the Act on the Amalgamation of Deposit Banks, the amalgamation of cooperative banks comprises the organisation’s central cooperative (OP Cooperative), the central cooperative's member credit institutions and the companies belonging to their consolidation groups, as well as credit and financial institutions and service companies in which the above together hold more than half of the total votes. This amalgamation is supervised on a consolidated basis. On 30 September 2023, OP Cooperative’s member credit institutions comprised 104 OP cooperative banks, OP Corporate Bank plc, OP Mortgage Bank and OP Retail Customers plc.

The central cooperative is responsible for issuing instructions to its member credit institutions concerning their internal control and risk management, their procedures for securing liquidity and capital adequacy, and for compliance with harmonised accounting policies in the preparation of the amalgamation’s consolidated financial statements.

As a support measure referred to in the Act on the Amalgamation of Deposit Banks, the central cooperative is liable to pay any of its member credit institutions the amount necessary to preventing the credit institution from being placed in liquidation. The central cooperative is also liable for the debts of a member credit institution which cannot be paid using the member credit institution's assets.

Each member bank is liable to pay a proportion of the amount which the central cooperative has paid to either another member bank as a support measure or to a creditor of such a member bank in payment of an overdue amount which the creditor has not received from the member bank. Furthermore, if the central cooperative defaults, a member bank has unlimited refinancing liability for the central cooperative’s debts as referred to in the Co-operatives Act.

Each member bank’s liability for the amount the central cooperative has paid to the creditor on behalf of a member bank is divided between the member banks in proportion to their last adopted balance sheets. OP Financial Group’s insurance companies do not fall within the scope of joint and several liability.

According to section 25 of the Act on Mortgage Credit Banks (688/2010), the creditors of covered bonds issued prior to 8 July 2022 have the right to receive payment, before other claims, for the entire term of the bond, in accordance with the terms and conditions of the bond, out of the funds entered as collateral for the bond, without this being prevented by OP MB’s liquidation or bankruptcy. A similar and equal priority also applies to derivative contracts entered in the register of bonds, and to marginal lending facilities referred to in section 26, subsection 4 of the said Act. For mortgage-backed loans included in the total amount of collateral of covered bonds, the priority of the covered bond holders’ payment right is limited to the amount of loan that, with respect to home loans, corresponds to 70% of the value of shares or property serving as security for the loan and entered in the bond register at the time of the issuer’s liquidation or bankruptcy declaration.

Under section 20 of the Act on Mortgage Credit Banks and Covered Bonds (151/2022), the creditors of bonds and derivative contracts issued after 8 July 2022, including the related management and clearing costs, have the right to receive payment from the collateral included in the cover pool, before other creditors of OP MB or the OP cooperative bank which is the debtor of an intermediary loan. Interest and yield accruing on the collateral, and any substitute assets, fall within the scope of the said priority. Section 44, subsection 3 of the said Act includes provisions on the creditor’s priority related to marginal lending facility of the cover pool.

Sustainability and corporate responsibility

Sustainability and corporate responsibility form an integral part of OP Financial Group’s business and strategy, and responsible business is one of OP Financial Group’s strategic priorities. OP Financial Group published its new sustainability programme in August 2022. The programme and its policy priorities implement OP Financial Group’s strategy, and guide its sustainability and corporate responsibility actions. OP Financial Group’s sustainability programme is built around three themes: Climate and the environment, People and communities and Corporate governance.

At OP Financial Group, sustainability and corporate responsibility are guided by a number of principles and policies. OP Financial Group is committed to complying not only with all applicable laws and regulations, but also with a number of international initiatives and standards guiding our operations. It is also committed to complying with the ten principles of the UN Global Compact initiative in the areas of human rights, labour rights, the environment and anti-corruption. Furthermore, OP Financial Group is committed to complying with the UN Principles for Responsible Investment and is a Founding Signatory of the Principles for Responsible Banking under the United Nations Environment Programme Finance Initiative (UNEP FI).

In March 2023, OP MB published a Green Covered Bond Report on the allocation and impacts of Finland’s first green covered bonds issued in March 2021 and April 2022. Under OP MB’s Green Covered Bond Framework, the proceeds from the bonds have been allocated to mortgages with energy-efficient residential buildings as collateral.

The environmental impacts allocated to the green covered bonds in 2022 were 62,000 MWh of energy use avoided per year and 9,300 tonnes of CO2-equivalent emissions avoided per year.


On 30 September 2023, OP MB had seven employees. OP MB has been digitising its operations and purchases all key support services from OP Cooperative and its Group members, reducing the need for its own personnel.


The Board composition is as follows:

Chair Mikko Timonen Chief Financial Officer, OP Cooperative
Members Satu Nurmi Head of Personal Finance and Real Estate Services, OP Retail Customers plc
Mari Heikkilä Head of Group Treasury and Asset and Liability Management, OP Corporate Bank plc

OP MB’s Managing Director is Sanna Eriksson. The deputy Managing Director is Tuomas Ruotsalainen, Senior Covered Bonds Manager at OP MB.

Risk profile

OP MB began 2023 with a strong capital base, capital buffers and risk-bearing capacity.

A downturn is expected in both the Finnish and the euro area economy during 2023. The recessionary outlook may affect lending, liquidity maintenance and business processes. OP MB’s capital base is sufficient to secure business continuity.

OP MB’s most significant risks are related to the quality of collateral and to the structural liquidity and interest rate risks on the balance sheet for which limits have been set in the Banking Risk Policy. The key credit risk indicators in use show that OP MB’s credit risk exposure is stable. The liquidity buffer for OP Financial Group is managed by OP Corporate Bank and therefore exploitable by OP MB. OP MB has used interest rate swaps to hedge against its interest rate risk. Interest rate swaps have been used to swap home loan interest, intermediary loan interest and interest on issued bonds onto the same basis rate. OP MB has concluded all derivative contracts for hedging purposes, applying fair value hedges which have OP Corporate Bank plc as their counterparty. OP MB’s interest risk exposure is under control, and has been within the set limit.

An analysis of OP MB's risk exposure should always take account of OP Financial Group's risk exposure, which is based on the joint and several liability of all its member credit institutions. The member credit institutions are jointly liable for each other's debts. All member banks must participate in support measures, as referred to in the Act on the Amalgamation of Deposit Banks, to support each other's capital adequacy. 

OP Financial Group analyses the business environment as part of the ongoing strategy process. Megatrends and future visions behind the strategy reflect driving forces that affect the daily activities, conditions and future of OP Financial Group and its customers. Such factors shaping the business environment include sustainable development and responsibility (ESG), demographic change in the population, geopolitical factors and fast technological progress.

For example, climate and environmental changes and other factors in the business environment are considered thoroughly, so that their effects on customers’ future success are understood. By means of advice and business decisions, OP Financial Group encourages its customers to develop the sustainable and successful businesses of the future. At the same time, OP Financial Group ensures that its operations are sustainably profitable and in compliance with its values in the long term.


The economy is expected to enter a mild recession and inflation to fall back slowly. An exceptional degree of uncertainty still characterises the business environment. Rising interest rates are weakening the real estate market and construction sector in particular. Combined with the geopolitical situation, developments in global capital markets may abruptly affect the business environment.

OP MB’s capital adequacy is expected to remain strong, risk exposure favourable and the overall quality of the loan portfolio good. This will enable the issuance of new covered bonds in 2023.

Time of publication of 2023 reports

Report by the Board of Directors and Financial Statements 2023 Week 11
Corporate Governance Statement 2023 Week 11

Schedule for Financial Statements Bulletin 2023 and Interim Reports in 2024

Financial Statements Bulletin 1 January‒31 December 2023 7 February 2024
Interim Report 1 January–31 March 2024 8 May 2024
Half-year Financial Report 1 January–30 June 2024 24 July 2024
Interim Report 1 January–30 September 2024 31 October 2024

Helsinki, 25 October 2023

OP Mortgage Bank
Board of Directors

For more information, please contact:

Sanna Eriksson, Managing Director, tel. +358 10 252 2517

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