OP-Pohjola's second-quarter profit surges, signaling customer financial health

Finnish financial group OP-Pohjola saw a robust second quarter, with operating profit soaring to 670 million euros, a notable increase from 566 million euros in the same period last year. This strong performance helped offset a challenging first quarter, where profits had plummeted over 60% due to sharp declines in investments linked to Middle Eastern conflicts.

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The company anticipates that its full-year operating profit will be lower than last year, though it is expected to remain at a healthy level.

Despite the second-quarter rebound, OP-Pohjola's overall operating profit for the first half of the year fell by 16% to 831 million euros, down from 990 million euros in the previous year. The company anticipates that its full-year operating profit will be lower than last year, though it is expected to remain at a healthy level.

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According to OP-Pohjola, its customers' ability to service loans has remained strong.

The financial group's results suggest a positive financial standing among its customers. OP-Pohjola reported that its customers' ability to service loans has remained strong, with a continued decrease in requests for payment holidays and modified payment plans. The proportion of non-performing loans also declined to 1.9% of total exposures, with impairment write-downs at a low 0.07% of the credit and guarantee portfolio. Final credit losses amounted to 38 million euros against a credit portfolio of 101 billion euros at the end of June.

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The number of requests for payment holidays and modified payment plans from customers continued to decrease.

While customer business revenue saw only a modest increase of less than 1%, driven by a shrinking net interest margin and rising expenses, the insurance services segment experienced significant growth, with profits up over 50% in the first half. The popularity of mutual fund savings also surged, with 126,000 new savings agreements opened, pushing OP-Pohjola's managed assets to a record 115 billion euros. This indicates sustained interest in investments despite a weak economic climate. Additionally, the amount of new OP bonuses accumulated by owner-customers grew by over a quarter to 206 million euros, reflecting increased bonus accrual from a wider range of services.

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Impairment write-downs were 0.07 percent of the credit and guarantee portfolio.