OP Mortgage Bank: Interim Report 1 January–30 September 2025

OP Mortgage Bank
Interim Report 1 January–30 September 2025
Stock Exchange Release 28 October 2025 at 10.00 EET

OP Mortgage Bank: Interim Report 1 January–30 September 2025

OP Mortgage Bank (OP MB) is the covered bond issuing entity of OP Pohjola. Together with OP Corporate Bank plc, its role is to raise funding for OP Pohjola from money and capital markets. OP Financial Group changed its name to OP Pohjola on 28 October 2025.

Financial standing

Bonds issued by OP MB totalled EUR 14,800 million (14,800)* at the end of September. All funds received from the bonds have been intermediated in their entirety to 60 OP cooperative banks in the form of intermediary loans.

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 the intermediary loan process on the issue date of a new covered bond.

In April, OP MB issued its first covered bond of the year in the international capital market. The fixed-rate covered bond of EUR 1 billion has a maturity of five years and three months. All proceeds of the bond were intermediated to 38 OP cooperative banks in the form of intermediary loans.

The terms of issue are available on the op.fi website, under Debt investors: https://www.op.fi/en/op-financial-group/debt-investors/issuers/op-mortgage-bank/emtcb-debt-programme-documentation

In September, a fixed-rate covered bond of EUR 1 billion issued by OP MB in June 2018 matured, together with OP cooperative banks’ intermediary loans related to the bond, a total of EUR 1 billion.

Operating profit was EUR 4.3 million (6.4). The company’s financial standing remained stable throughout the reporting period.

* The comparatives for 2024 are given in brackets. For income statement and other aggregated figures, the January–September 2024 figures serve as comparatives. For balance-sheet and other cross-sectional figures, figures at the end of the previous financial year (31 December 2024) serve as comparatives.

Collateralisation of bonds issued to the public

The European covered bonds (premium) issued under the EMTCB programme of EUR 25 billion established on 11 October 2022, in accordance with the Act on Mortgage Credit Banks and Covered Bonds (151/2022), totalled EUR 7,250 million. The cover pool included a total of EUR 8,052 million in loans serving as collateral on 30 September 2025. Overcollateralisation exceeded the minimum requirement under the Act (151/2022).

The covered bonds issued under the Euro Medium Term Covered Note programme (EMTCN) of EUR 20 billion, established on 12 November 2010 in accordance with the Act on Mortgage Credit Banks (Laki kiinnitysluottopankkitoiminnasta, 688/2010), totalled EUR 7,550 million. The cover pool included a total of EUR 8,245 million in loans serving as collateral on 30 September 2025. Overcollateralisation exceeded the minimum requirement under the Act (688/2010).

Capital adequacy

OP MB’s Common Equity Tier 1 (CET1) ratio stood at 377.0% (797.0) on 30 September 2025. The ratio decreased due to an increase in total risk exposure amount based on a regulatory change. The changes in the EU Capital Requirements Regulation (CRR3), which entered into force on 1 January 2025, particularly affected the calculation of total risk exposure amount. The figures for the comparative period have been calculated based on the regulation in force in 2024. 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). OP MB fully covers its capital requirements with CET1 capital, which in practice means that it has a CET1 capital requirement of 10.5%. Estimated profit distribution has been subtracted from earnings for the reporting period.

The capital adequacy requirement for credit risk is measured using the Standardised Approach (SA).

As part of OP Pohjola, OP MB is supervised by the European Central Bank (ECB). OP Pohjola 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 Pohjola also publishes Pillar 3 disclosures.

Own funds and capital adequacy

Total risk exposure amount

* Risks not otherwise covered.

Ratios

Capital requirement

Liabilities under the Resolution Act

Under regulation applied to the resolution of credit institutions and investment firms, the resolution authority is authorised to intervene in the terms and conditions of investment products issued by a bank in a way that affects an investor’s position. The EU’s Single Resolution Board (SRB) based in Brussels is OP Pohjola’s resolution authority. The SRB has confirmed a resolution strategy for OP Pohjola whereby the resolution measures would focus on the OP amalgamation and on the new OP Bank that would be formed in case of resolution. According to the resolution strategy, OP MB would continue its operations as the new OP Bank’s subsidiary.

The SRB has set a Minimum Requirement for Own Funds and Eligible Liabilities (MREL) for OP MB. From March 2025, the MREL is 15.96% of the total risk exposure amount and 18.46% of the total risk exposure amount including a combined buffer requirement, and 5.99% of leverage ratio exposures. The requirement includes a Combined Buffer Requirement (CBR) of 2.5%.

OP MB’s buffer for the MREL requirement was EUR 347 million. The buffer consists of own funds only. OP MB clearly exceeds the MREL requirement. OP MB’s MREL ratio was 377% of the total risk exposure amount.

Joint and several liability of amalgamation

Under the Act on the Amalgamation of Deposit Banks (599/2010), 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 2025, OP Cooperative’s member credit institutions comprised 60 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 Pohjola’s insurance companies do not fall within the scope of joint and several liability.

The creditors of covered bonds issued prior to 8 July 2022 according to section 25 of the Act on Mortgage Credit Banks (688/2010), which was valid at that time, 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, 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 said Act. For mortgage-backed loans included in the total amount of collateral of covered bonds issued prior to 8 July 2022, 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), which entered into force on 8 July 2022, the creditors of bonds 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. A similar priority also applies to creditors of derivative contracts related to covered bonds, including the related management and clearing costs. Interest and yield accruing on the collateral, and any substitute assets, fall within the scope of said priority.

Section 44, subsection 3 of the Act on Mortgage Credit Banks and Covered Bonds includes provisions on the creditor’s priority claim regarding cover pool liquidity support. According to said subsection, the creditor has the right to receive payment against the funds contained in the cover pool after claims based on the principal and interest of covered bonds secured by the cover assets included in the cover pool, obligations based on derivatives contracts associated with covered bonds, as well as administration and liquidation costs.

Sustainability and corporate responsibility

As of 2024, OP Pohjola has reported on its sustainability and corporate responsibility in accordance with the European Sustainability Reporting Standards (ESRS) under the EU’s Corporate Sustainability Reporting Directive (CSRD).

Sustainability and corporate responsibility is embedded in OP Pohjola’s business and strategy. OP Pohjola’s operations are guided by a sustainability programme built around three themes: Climate and the environment, People and communities, and Corporate governance. For more information about the sustainability programme, see OP Pohjola’s website at op.fi.

OP Pohjola is committed to complying not only with all applicable laws and regulations, but also with a number of international initiatives that guide operations. OP Pohjola is 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. OP Pohjola is a Founding Signatory of the Principles for Responsible Banking under the United Nations Environment Programme Finance Initiative (UNEP FI). Furthermore, OP Pohjola is committed to complying with the UN Principles for Responsible Investment and the UN Principles for Sustainable Insurance.

OP Pohjola’s biodiversity roadmap includes measures to promote biodiversity. OP Pohjola aims to grow its nature positive handprint by 2030. ‘Nature positive’ means that OP Pohjola’s operations will have a net positive impact (NPI) on nature.

OP Pohjola has drawn up a Human Rights Statement and Human Rights Policy. OP Pohjola respects all recognised human rights. The Human Rights Statement includes the requirements and expectations that OP Pohjola has set for itself and actors in its value chains. OP Pohjola is committed to perform remediation actions if its operations have adverse human rights impacts.

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

The annual Green Covered Bond report on the allocation and impact of green covered bonds is available in the debt investors section at op.fi: https://www.op.fi/en/op-financial-group/debt-investors/green-bonds/green-covered-bonds. The environmental impacts allocated to the green covered bonds in 2024 were 58,000 MWh of energy use avoided per year and 5,500 tonnes of CO2-equivalent emissions avoided per year.

Personnel

At the end of the reporting period, OP MB had six employees. OP MB has been digitising its operations and purchases all key support services from OP Cooperative and its subsidiaries, reducing the need for its own personnel.

Governing body members

The Board composition is as follows:

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 has a strong capital base, capital buffers and risk-bearing capacity.

OP MB’s most significant risks are related to the quality of collateral and to 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. OP MB uses interest rate swaps to hedge against its interest rate risk. Interest rate swaps have been used to swap 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.

The liquidity buffer for OP Pohjola is centrally managed by OP Corporate Bank and therefore exploitable by OP MB. At the end of the reporting period, OP Pohjola’s Liquidity Coverage Ratio (LCR) was 193% and the Net Stable Funding Ratio (NSFR) was 131%. OP MB monitors its cash flows on a daily basis to secure funding liquidity and its structural funding risk on a regular basis as part of the company’s internal capital adequacy assessment process (ICAAP).

An analysis of OP MB’s risk exposure should always take account of OP Pohjola’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 Pohjola analyses the business environment as part of its ongoing risk assessment activities and strategy process. Megatrends and worldviews behind OP Pohjola’s strategy reflect driving forces that affect the daily activities, conditions and future of OP Pohjola and its customers. At present, global factors identified as particularly shaping the business environment include geopolitics and trade policy, climate, biodiversity loss, and scientific and technological innovations. In addition to these, factors emphasised in Finland include the demographic and regional development and growing public debt. OP Pohjola provides customers with advice and tailored services that promote their sustainable financial success and security, while managing its own risk profile on a longer-term basis. The use of data plays an important role in OP Pohjola’s operations because advice for customers, risk-based service sizing and pricing and contract lifecycle management are based on correct and comprehensive information about the customer. Reporting for management purposes is also based on accurate and comprehensive data.

Highlights of the reporting period

In April, OP MB issued its first covered bond of the year in the international capital market. The fixed-rate covered bond of EUR 1 billion has a maturity of five years and three months. All proceeds of the bond were intermediated to 38 OP cooperative banks in the form of intermediary loans.

The terms of issue are available on the op.fi website, under Debt investors: https://www.op.fi/en/op-financial-group/debt-investors/issuers/op-mortgage-bank/emtcb-debt-programme-documentation

In September, a fixed-rate covered bond of EUR 1 billion issued by OP MB in June 2018 matured, together with OP cooperative banks’ intermediary loans related to the bond, a total of EUR 1 billion.

Outlook

Economic confidence has increased since trade policy uncertainty has diminished. On the other hand, the higher tariffs will impact negatively on the economic outlook in the near future. The escalation of geopolitical crises or a rise in trade barriers may affect capital markets and the economic environment of OP Pohjola and its customers.

A full-year earnings estimate for 2025 will be provided solely for OP Pohjola in OP Pohjola’s financial statements bulletin and in its interim and half-year financial reports.

OP MB’s capital adequacy is expected to remain strong and its risk exposure favourable. This enables issuance of new covered bonds.

Financial reporting

Schedule for financial reports for 2025:

Schedule for financial reports for 2026:

Helsinki, 28 October 2025

OP Mortgage Bank
Board of Directors

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

DISTRIBUTION:
LSE London Stock Exchange
Euronext Dublin (Irish Stock Exchange)
OAM (Officially Appointed Mechanism)
Major media
www.op.fi