OP sees half-year profit plunge due to pandemic

Due to the COVID-19 pandemic, OP Financial Group (OP) saw its half-year profit plunge by around 28 percent, although income from customer business grew, the firm announced in its half-year report published on Tuesday, reported Xinhua.

Between January and June this year, OP's earnings before tax amounted to 287 million euros, down by around 28 percent from 396 million euros in the corresponding period in 2019.

The biggest drop was seen in OP's retail banking operations, whose profit before taxes sank by 70 percent to 28 million euros. The profits of corporate banking operations and insurance operations decreased by 26 percent and 32 percent respectively year on year.

The effects of the COVID-19 pandemic on capital market developments weakened the group's investment income, especially in the first quarter, the company stated.

The total investment income fell from 152 million euros in January-June 2019 to 61 million euros in the first half of 2020.

However, between January and June, the income from customer business increased, despite the uncertain situation. The net interest income from customer business grew by 7.0 percent to 646 million euros.

According to OP's President and CEO Timo Ritakallio, the COVID-19 pandemic affected the company's operations in various ways in January-June this year.

"For the time being, the economic outlook continues to be characterized by large uncertainty. In spring, we managed to avoid the worst economic implications of the COVID-19 pandemic, but worldwide the pandemic is not over yet. The performance of the export market may still weaken more than anticipated, and the pandemic may tighten its grip again in Finland, too," said Ritakallio in the financial report.

The economic outlook is still exceptionally uncertain despite the tentative recovery. If customers' financial difficulties continue, a recession caused by the pandemic may have lagged effects on banks and insurance companies, OP warned.

The exceptional uncertainty caused by the pandemic increases impairment loss on receivables and cuts investment income of OP Financial Group. Therefore, profits for the whole year of 2020 will be lower than in 2019, the group forecasted.

Headquartered in Helsinki, OP Financial Group is Finland's largest financial services group, with two million owner-customers and 12,000 employees. It provides a comprehensive range of banking and insurance services for private and corporate customers.