Inside information: The review of Oma Savings Bank Plc’s loan portfolio has been completed and the problem is limited to identified non-compliance with guidelines – will recognise a significant additional allowance

OMA SAVINGS BANK PLC STOCK EXCHANGE RELEASE, 24 JULY 2024 AT 20:15 P.M EET, INSIDE INFORMATION

Inside information: The review of Oma Savings Bank Plc’s loan portfolio has been completed and the problem is limited to identified non-compliance with guidelines – will recognise a significant additional allowance

Oma Savings Bank Plc (OmaSp or the Company) announced the non-compliance with the guidelines in its lending in April. The Company’s Board of Directors initiated extensive measures as a result of serious events in the early part of the year. One of these measures has been to ensure the quality of the Company’s entire credit portfolio by external, independent experts. Their study was completed today on 24 July 2024. 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 (approximately 6 billion euro) corresponds to what was previously reported. Based on the results, the Company has reassessed the credit risk position of the relevant customer groups and will recognise a significant additional allowance based on management’s judgement for the second quarter.

An extensive study carried out by external parties confirmed that the problems are limited to previously identified non-compliance with the guidelines. In other respects, the quality of OmaSp’s credit portfolio corresponds to what was previously reported. The analysis also concludes that the collateral values for OmaSp’s entire credit portfolio in relation to market values are conservative and the collateral assessment process is functional. In the light of more detailed information, the customer groups related to non-compliance with the guidelines announced in April, account for approximately four percent of OmaSp’s six billion euro credit portfolio. Due to the change in the risk position, the Company already reconised a credit loss provision of EUR 19.5 million in identified customer groups in the first quarter. The Company will recognise an additional EUR 35.7 million of additional allowance based on management’s judgement and impairment losses in the second quarter. Of this, EUR 5.7 million are credit loss write-offs and EUR 30.0 million is discretionary credit loss provision. The increase is based on specified customer groups and a more detailed assessment of credit risk based on further studies carried out by the Company’s internal and external experts.

CEO Sarianna Liiri:
” I am very pleased that we were able to carry out a review of the credit portfolio in cooperation with external, independent experts within such a short timeframe. The analysis of the credit portfolio was carried out in two different expert organisations: one focused on data analysis and the other on document, credit and collateral processes. It was important to get external confirmation that the majority of our credit portfolio corresponds to what was previously reported and that the reviews 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 where the credit risk position of customers has been concealed by forming customer groups consciously with incorrect and incomplete information. In addition, we received confirmation that the non-compliance with guidelines is limited to approximately EUR 240 million of our credit portfolio. With the additional allowance, we prepare in advance for possible impairment losses, although we still continue our work to limit credit losses.

OmaSp is solvent and the bank has a strong financial position. Basic business is developing steadily and in line with expectations. We will report in more detail on the study carried out and development measures in next week’s results release.”

OmaSp will publish its second quarter result on 29 July 2024 at approximately 8:30 am and will have a webcast in Finnish starting at 10:00 am. The webcast link can be accessed here. Due to the silent period, we do not comment on the preliminary results before the publication of the Interim Report.

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

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OmaSp is a solvent and profitable Finnish bank. About 500 professionals provide nationwide services through OmaSp’s 45 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.