2017 in brief




 Earnings before tax


million euros (-5.4%)





Loan portfolio growth


over the previous year





New OP bonuses accrued to owner-customers


million euros (+5.7%)

2017 in brief

This page shows OP Financial Group’s key figures and ratios for 2017 in summary.

Download OP Financial Group's Report by the Executive Board and Financial Statements 2017 here.

Information about non-financial indicators can be found under Corporate Social Responsibility and GRI.


Earnings before tax million euros (-5.4%)



Loan portfolio growth over the previous yea



New OP bonuses accrued to owner-customers million euros (+5.7%)


Earnings before tax over one billion euros for the third year in a row, strong growth in business

  • Earnings before tax amounted to 1,077 million euros (1,138), being 5% lower than the record earnings a year ago.
  • Income increased by a total of 4%. Net interest income increased by 3%, net commissions and fees by 8% and net investment income by 27%. Net insurance income decreased by 14%.
  • Expenses rose by 13%. The rise in expenses stemmed mainly from higher development investments related to the modernisation of the present-day business and from an increase in other expenses related to strategy implementation.
  • Impairment loss on receivables, 48 million euros (77), were low, accounting only for 0.06% of loans and receivables.
  • CET1 ratio was 20.1%, or at the previous year-end level.
  • Banking: The loan portfolio increased by 5% and deposits by 6%. Both net interest income and net commissions and fees increased by 4%. Supported by strong growth in income, earnings before tax increased by 16%.
  • Non-life insurance: Insurance premiums from private customers increased by 2%, while those from corporate customers decreased slightly. Earnings before tax decreased by 14%. The earnings were eroded by a reduction of the discount rate to 1.5% in September and more unfavourable claims development than a year ago.
  • Wealth Management: Assets under management increased by 5%. Earnings before tax increased by 9%, aided by strong improvement in net commissions and fees.
  • Other Operations: Earnings were weakened by higher investments in the development of services and other strategy implementation.
  • Earnings before tax for 2018 are expected to be at about the same level as or lower than in 2017.

Business development and sense of community for the benefit of owner-customers

  • In 2017, development investments worth around 450 million euros focused on ensuring compliance with requirements set by the authorities and legislative requirements, improving operational efficiency and smoothness as well as developing business.
  • In 2017, OP Financial Group opened Pohjola Hospitals in Oulu and Kuopio. The construction of a hospital in Turku is progressing as planned.
  • In the financial year, the number of OP cooperative banks’ owner-customers increased by 86,000 to over 1.8 million and that of OP Financial Group’s joint banking and insurance customers by 40,000 to almost 1.8 million.
  • In November, OP held the biggest electronic voting in Finland. Almost 2,400 owner-customers were elected to Representative Assemblies in 81 OP cooperative banks for the next four years.
  • OP Financial Group had the objective of donating 100 person-years of volunteering in honour of the centenary of Finland’s independence. Volunteer work performed with partners totalled 274 years.
  • OP bonuses increased by 6% to 220 million euros (208).



OP Financial Group’s key figures and ratios

  Q1–4/2017 Q1–4/2016 Change, %
EBT, € million 1,077 1,138 -5.4
Banking 666 574 16.0
Non-life Insurance 210 244 -13.9
Wealth Management 247 226 9.2
Other Operations -45 95  
New OP bonuses accrued to owner-customers 220 208 5.7
  31 Dec. 2017 31 Dec. 2016 Change, %
CET1 ratio, % 20.1 20.1 0.0*
Return on economic capital, % ** 21.3 22.7 -1.4*
Ratio of capital base to minimum amount of capital base (under the Act on the Supervision of Financial and Insurance Conglomerates), % *** 148 170 -22*
Ratio of impairment loss on receivables to loan and guarantee portfolio, % 0.06 0.09 0.0*
Owner-customers (1,000) 1,833 1,747 4.9

Comparatives deriving from the income statement are based on figures reported for the corresponding period in 2016. Unless otherwise specified, balance sheet and other cross-sectional figures on 31 December 2016 are used as comparatives
* Change in ratio
** 12-month rolling
*** The FiCo ratio has been calculated for insurance companies using transition provisions included in solvency regulation.








Financial sector









Financial sector in the face of major transformation

The financial sector is facing a major and fast digital transformation. In 2018, regulation will result in ever-increasing competition and open up banks’ customer data to third parties. New competitors from non-financial industries are entering the sector.

With intensifying and globalising competition, customers are demanding from Finnish players as smooth and easy service experience as they are accustomed when using the services provided by the best-of-breed international firms. OP no longer competes with traditional banks and insurance companies; financial services are also being provided by international technology giants and new players in the sector.

As customers are faced with a growing number of options and switching a service provider is easy, they require financially smarter and more proactive service – 24/7. Customers and other stakeholder groups also expect companies to demonstrate more transparency and responsibility by emphasising their own values in making choices.

The financial sector is also challenged by large-scale social changes in the operating environment, which involves, for example, ageing population and transformation in the employment landscape. Transition from ownership to the right of possession is challenging a number of traditional practices in the financial sector.The financial sector has potential in finding new sources of growth in a role of safeguarding prosperity, providing healthcare services and creating new economic activity.

The underlying megatrends and phenomena are intertwined in a diverse way. OP monitors proactively changes in the operating environment and seeks growth opportunities in the transforming financial landscape according to its strategy. We aim to rise to the challenges presented by the operating environment and to seize the opportunities it provides.









OP Financial Group's strategy – reinventing business for the benefit of customers

OP Financial Group’s strategy is based on utilising the potential provided by the transformation in the operating environment to boldly modernise business and services for the benefit of our owners and customers. Our aim is to gradually change from a financial services group to a diversified services company of a digital era with strong financial services expertise.

We create value for our owners by modernising our existing businesses and by developing brand new customer-focused service packages and new innovative services. We will branch out into businesses that we find natural and where it enhances customer experience while creating significant synergies relative to our existing businesses.

We will innovate and develop services together with our customers and the best partners in the world. We will exploit the latest technologies, customer insight based on extensive research data and close interaction as well as the best development and design expertise in the sector. At the same time, we will in an exemplary manner bear responsibility for the reliability of our basic services and their nationwide availability as well as for the stability of the financing system and the functioning of the insurance system.

Customer ownership guides our operations

Based on our mission, we create sustainable prosperity, security and wellbeing for our owner-customers and in our operating region by means of our strong capital base and efficiency. A People-first Approach, Responsibility, and Prospering Together form the basis of our operations. Based on our customer promise “We exist to serve our customers”, customer interests guide all we do. Our customers own us and can have their say in our decisions and the development of our activities. Moreover, a considerable part of business earnings are returned to our owner-customers.

In our development activities, we specifically focus on areas that create significant, new customer value and benefit for the society around us. We can also flexibly move from a producer to a service integrator if this is how we can reach the targeted benefits for customers faster and more securely.

Financial services to be modernised through large-scale projects

We provide our customers with the most diversified package of service channels available in the market that involves the most extensive branch network in Finland, flexible telephone services, advanced online and mobile services and an extensive network of external partners. In addition, we are also building completely new digital business models and services for Banking, Non-life Insurance and Wealth Management to respond to greater demand and the threat of new competition.

OP Financial Group annually invests more than 400 million euros in the development of new products and services and in technology modernisation. Currently, roughly 95% of this goes to the further development of the existing businesses, or financial services, and about 5% to new businesses.

The 2017 highlights in financial services modernisation included developing digital services, digitising and automating business processes, making service processes faster and smoother as well as upgrading a number of key technology platforms and basic systems.

Customer-focused service packages represent a breakaway from the conventional approach

As customer behaviour changes at an accelerating pace, financial-sector solutions do not meet customers’ true needs in all respects. This means that the risk of losing customer trust and loyalty is apparent. Transition from a traditional product-focused philosophy to a customer-focused design approach is at the core of OP Financial Group’s strategic renewal, where in-depth customer insight and ongoing operational improvement in close dialogue with customers form the basis for all development work.

The new philosophy at the strategic level is crystallised in customer-focused service packages that the Group has defined to be four thus far: Housing-related Services, Mobility Services, Health and Wellbeing, and Management of Finances. The purpose of the service packages is to help identify new potential growth areas while directing the development of the existing businesses that pleases customers and coordinating development to enable synergies. Among the above service concepts involving areas new to OP, the most advanced are Health and Wellbeing, and Mobility Services.



Good strategy implementation on a wide front

The greatest achievements made so far during the strategy period include strong financial performance, strongly improved corporate image and customer experience, numerous new and significant initiatives by businesses and the early-stage success of hospital business, strong growth in the use of mobile services and success of back-office centralisation.

Meanwhile, the greatest challenges are associated with the implementation of the efficiency programme schedule, delays in some major basic information projects, development work agility and productivity, as well as competence update required for business transformation.

When reviewing strategy implementation through strategic indicators (see table below), OP Financial Group has lagged behind several key strategic targets but strategic achievements have proved good considering the wide scope of the strategy. The greatest deviations relate to the strategy period targets set for cost development and the number of owner-customers.

OP Financial Group’s strategic targets

  31 Dec. 2017 Target 2019
Customer experience, NPS (-100–+100)    
Brand 21.5 25
Service 58 70, over time 90
CET1 ratio, % 20.1 22
Return on economic capital, % (12-month rolling) 21.3 22
Expenses of present-day business (12-month rolling), € million 1,661 Expenses for 2020 at 2015 level (1,500)
Owner-customers, million 1.8 2.1 (2019)

Dedicated and proactive efforts to update competencies

OP Financial Group has recognised that the financial sector now amid transformation and the Group’s own business reinvention will require enormous competence updates promptly in the next few years. In response to this, the Group has started to create an unparalleled proactive Competence update model with a view to preparing for transformation in employment ahead of us. With the operating model, we want to act responsibly based on our values, to enhance the labour market value of an individual employee and to find new, unconventional models for creating job opportunities and updating competencies. The model will particularly be used to support employees whose job will change considerably or be automated. Through personal support, we aim to find training opportunities and new jobs for people either within the Group or outside of the Group.








Value creation


Value creation

As a cooperative Group, our operations have a wide effect on various stakeholder groups in Finland, both on a local and nationwide basis. Our operations are guided by our dual role – business role and social role. Our overall success is measured against how we succeed in both roles.








Risk management


Risk Management

OP Financial Group’s operations are based on cooperative values, a strong capital base and capable risk management. OP Financial Group’s mission and core values as well as strategic and financial targets form the basis for risk management.

Risk management helps to achieve the targets set in the strategy by controlling that risks are proportional to risk capacity. In the long term within moderate risk-taking, the Group seeks above-market-average growth. This requires controlled risk-taking relying on strong risk management.

Integral part of daily business and corporate culture

Risk management is part and parcel of daily business and its management. Risk awareness and a moderate risk-taking approach are reflected in every business decision and form an integral part of corporate culture. OP manages customer relationships on a long-term basis and responsibly from the perspective of risk management.

An example of the role of risk management in Banking is that a borrower’s repayment capacity is a key prerequisite for loan approval. Robust risk management is in the interests of both customers and OP Financial Group.

A major player faces a variety of risks

Risks associated with OP Financial Group’s business segments differ in terms of weight. Credit risks, structural interest rate and funding risks and funding liquidity risks play a major role in Banking. Meanwhile, interest rate and other market risks are highlighted in Non-life Insurance and life insurance market risks in Wealth Management. As services go digital, operational risks and the resulting escalating reputational risks are highlighted in all businesses, including new businesses. With regulation becoming more complex and supervision tightening, compliance risk management is highlighted in all business segments.

The extent of OP Financial Group provides significant risk diversification benefits. Meanwhile, however, the role of various concentration risks will increase.

According to its strategy, OP will invest in creating new types of service packages and business models in the years to come. Before the company launches any products or services or adopts new operating models or systems, it assesses their risks using procedures as laid down by the central cooperative’s Risk Management. OP Financial Group offers only products to customers and applies business models that have been approved at Group level.

The significant business risks affecting OP Financial Group and their most common management tools are detailed in the table below.

Strategic risks

  Risk description Risk management tool
Strategic risks

Risk caused by changes in the competitive environment, slow reaction to changes in the business environment or customer behaviour, poor choice of strategy or poor strategy implementation.

The Group assesses strategic risks as part of the strategy process while identifying related control measures and assessing their effects, for example, on the Group’s overall risk exposure and economic capital requirement. The Group takes account of risks associated with its operating environment by implementing proactive risk management and systematically monitoring its operating and competitive environment. Strategic risk is reduced by regular planning, based on analyses and forecasts of customer future needs, developments in different sectors and market areas, and of competition.

Operational risks

Risk of financial loss or other detrimental consequences caused by inadequate or failed processes, inadequate or flawed procedures or systems or some external factor. Operational risks also include ICT, security, data security, procedural and model risks.

The key area of operational risk management involves identifying and assessing risks and assessing the effectiveness and adequacy of risk control and management tools. Risks that may disrupt business continuity are prepared against by means of business continuity planning in key business divisions.

Compliance risk

Risks caused by non-compliance with external regulation, internal policies, appropriate procedures or ethical principles governing customer relationships.

Managing compliance risks forms part of internal control and good corporate governance practices and, as such, an integral part of business management duties and the corporate culture. Compliance risk management tools include monitoring legislative developments, providing the organisation concerned with guidelines, training and consultation in respect of observing practices based on regulation as well as supervising the regulatory compliance with procedures applied within the organisation.

Reputational risk

Risk of deterioration of reputation or trust caused by negative publicity or realisation of some other risk.

The Group manages reputational risk proactively and on a long-term basis by complying with
regulation, good practices in the financial sector and OP’s principles of good business practice
and by highlighting the transparency of operations and communication. OP adheres to international financial, social and environmental responsibility principles and international commitments.

Credit risks

The Group manages reputational risk proactively and on a long-term basis by complying with
regulation, good practices in the financial sector and OP’s principles of good business practice and by highlighting the transparency of operations and communication.

Credit risk management in banking is based on active customer relationship management, good knowledge of customers, strong professional skills and comprehensive documentation. The day-to-day credit approval process and its effectiveness play a key role in the management of credit risks. OP Financial Group mitigates credit risks by using collateral, financial covenants, central counterparty clearing, netting agreements and exchange-traded products.

Market risks

Risk of loss resulting from interest rate, price, volatility and market liquidity changes in the financial market. Market risks consist of structural market risk associated with the balance sheet (market risks associated with the banking book and insurance liabilities) and market risks associated with trading and long-term investment.

Banking interest rate risk is managed by reducing the difference between floating rate receivables and liabilities as well as through limits and control limits. Moreover, derivatives may be used for hedging purposes.

Managing investment risks is based on diversification through effective allocation. Risks are managed through limits (e.g. VaR limits, allocation, credit rating and country risk limits) and investment plans.

Insurance companies manage market risks associated with investment and insurance liabilities by means of various investment instruments and derivative contracts.

VaR limits are used to limit market risks associated with trading.

Liquidity risks

Liquidity risk comprises funding liquidity risk, structural funding risk and funding concentration risk. Funding liquidity risk refers to the risk that OP Financial Group will not be able to meet its current and future cash flows and collateral needs, both expected and unexpected, without affecting its daily operations or overall financial position.
Structural funding risk refers to uncertainty related to long-term lending, arising from the refinancing risk due to the structure of funding. Funding concentration risk refers to the risk that funding becomes more difficult due, for example, to a transaction related to an individual counterparty, currency, instrument or maturity band.

OP Financial Group manages its liquidity position through the proactive planning of the funding structure, target levels, the monitoring of the liquidity status and a well-balanced liquidity buffer, planning and management of daily liquidity, the business continuity and contingency plan based on emergency preparedness, as well as the effective and ongoing control of the Group’s liquidity status. 

Non-life Insurance risks

Non-life Insurance risks comprise risk of loss or damage, and provision risk. Risk of loss or damage occurs when there are an above-average number of losses or they are exceptionally large. Provision risk arises when the claims incurred due to already-occurred losses are higher than anticipated on the balance sheet date.

Risk selection and pricing, the acquisition of reinsurance cover, the monitoring of claims expenditure and the analysis of insurance liabilities are highlighted in underwriting risk management. 

Life insurance risks

Life Insurance risks comprise biometric risks, cost risk and customer behaviour risks.
Biometric risks occur when claims paid out are higher than expected or for a longer period than expected. Customer behaviour risk means early termination of insurance premium payment or the insurance contract or its change on the basis of the option included in the contract. Expense risk refers to a situation in which incurred insurance contract management expenses differ from those estimated in rating.

Life Insurance underwriting risk management tools include prudent premium rating, careful selection of exposure and reinsurance. Diversifying insurance between different insurance types also reduces risks. Life Insurance reinsures, when necessary, any major individual risks and risk concentrations.
Customer behaviour risk is managed by means of a competitive product range, suitable product structures and incentives and sanctions in the insurance terms and conditions.

Concentration risks

Risks that may arise of a business’s excessive concentration on individual customers, products, lines of business, maturity periods or geographical areas.

The management of concentration risks is closely integrated with other risk management, with the related tools including limits, maximum allocations, diversification and economic capital requirement.

In-depth customer knowledge as the core of risk management

OP Financial Group’s risk management is based on three lines of defence. The first line consists of risk management integrated into business and other operations. It controls risk decisions and monitors risk exposure. Customer knowledge acquired through active customer relationship management ensures that risk-taking is moderate and guarantees the prerequisites for successful risk management.

The second line of defence consists of risk management independent of operational business organisations. In charge of general risks management conditions within OP Financial Group, it controls, supports and supervises the implementation of the risk management principles, confirmed by the Supervisory Board, at OP Financial Group and its entities.

The third line of defence involves centralised Internal Audit, which audits and assesses risk management performed by both the central cooperative and member entities.