Q2/2024

Oma Savings Bank Group Half-Year Financial Report 30 June 2024

Half-Year Financial Report 30 June 2024 is a translation of the original Finnish version "Puolivuosikatsaus 30.6.2024". If discrepancies occur, the Finnish version is dominant.

Oma Savings Bank Group´s Half-Year Financial Report Jan–Jun 2024

Jarmo Salmi, Chairman of the Board of Directors, left his position in May and Jaakko Ossa was elected as the new Chairman of the Board.
The Company's long-term CEO Pasi Sydänlammi left his position in June and deputy CEO Sarianna Liiri was appointed as interim CEO.
In January–June, net interest income grew 28.5% compared to the previous year. Net interest income totalled EUR 109.8 (85.5) million. In the second quarter, net interest income increased by 6.5% compared to the comparison period.
Home mortgage portfolio increased by 2.0% during the previous 12 months. Corporate loan portfolio increased by 0.6% during the previous 12 months.
Deposit base decreased by 6.7% over the past 12 months, most of which is due to a decrease in corporate customers' deposits.
In January-June, fee and commission income and expenses (net) increased due to volume growth by 10.7%. In the second quarter, fee and commission income and expenses (net) remained almost on level with the comparison period and was EUR 12.7 (12.6) million.
In January–June, total operating income grew by 24.3% compared to the comparison period. Comparable total operating income grew by 6.9% during the second quarter and were EUR 67.1 (62.8) million.
Total operating expenses remained almost at the same level with the comparison period and grew in January-June in total by 4.5%. Comparable operating expenses grew by 4.2% during the second quarter and were EUR -22.0 (-21.1) million.
For January-June the impairment losses on financial assets were in total EUR -62.5 (-4.3) million. The

impairment losses on financial assets were in total EUR -39.4 (-2.7) million for the second quarter. In the first quarter, the Company recognised an additional allowance based on the management's judgement of EUR 19.5 million for certain customer entities whose credit risk position was identified as having changed. The change was due to non-compliance with the Company's guidelines and its impact on the weakening credit risk position. As a result of events, the Company initiated extensive measures and a review of its loan portfolio, which are described in more detail on page 23 of the Half-Year Financial Report. In relation to ongoing measures, the Company recognised an additional EUR 35.7 million of additional allowance based on the management's judgement and impairment losses for these entities during the second quarter.

For January-June, profit before taxes was in total EUR 29.2 (62.0) million. For the second quarter, profit before taxes was in total EUR 4.5 (38.7) million.
In January-June, comparable profit before taxes was in total EUR 31.1 (63.0) million. For the second quarter, comparable profit before taxes was in total EUR 5.5 (38.8) million.
In January-June, cost/income ratio was 35.0 (41.6)%. In the second quarter, cost/income ratio was 34.8 (34.4)%. In January-June comparable cost/income ratio was 33.5 (40.0)%. For the second quarter, comparable cost/income ratio was 32.9 (33.7)%.
In January-June, comparable return on equity (ROE) was 9.3 (24.1)%. For the second quarter, comparable return on equity (ROE) was 3.2 (27.3)%.
Total capital (TC) ratio remained at a good level and was 16.6 (16.5)%.

Outlook for the financial year 2024 (updated 24 July 2024)

The profitable development of the Company's business continues, supported by the investments made in the customer experience and service network. The Company will continue to invest extensively in the development of risk management and quality processes in the second half of 2024. The SME customer business to be acquired from Handelsbanken will improve the Company's profitability from the second half of 2024 onwards.

We estimate the Group's comparable profit before taxes to be EUR 80–100 million for the financial year 2024 (comparable profit before taxes was EUR 143.6 million in financial year 2023).

The Group's key figures (1,000 euros)	1-6/2024	1-6/2023	Δ %	1-12/2023	2024 Q2	2023 Q2	Δ %
Net interest income	109,810	85,459	28%	197,045	52,442	49,236	7%
Fee and commission income and expenses, net	25,465	23,007	11%	47,421	12,699	12,555	1%
Total operating income	141,576	113,878	24%	247,067	67,497	63,181	7%
Total operating expenses	-49,389	-47,242	5%	-90,550	-23,432	-21,674	8%
Impairment losses on financial assets, net	-62,535	-4,309	1,351%	-17,126	-39,423	-2,714	1,353%
Profit before taxes	29,171	61,996	-53%	138,048	4,504	38,699	-88%
Cost/income ratio, %	35.0%	41.6%	-16%	36.9%	34.8%	34.4%	1%
Balance sheet total	7,284,410	7,014,730	4%	7,642,906	7,284,410	7,014,730	4%
Equity	533,259	470,229	13%	541,052	533,259	470,229	13%
Return on assets (ROA) %	0.6%	1.5%	-59%	1.6%	0.2%	1.7%	-89%
Return on equity (ROE) %	8.7%	23.7%	-63%	24.3%	2.6%	27.2%	-90%
Earnings per share (EPS), EUR	0.70	1.57	-55%	3.49	0.10	0.93	-89%
Total capital (TC) ratio %	16.6%	16.0%	4%	16.5%	16.6%	16.0%	4%
Common Equity Tier 1 (CET1) capital ratio %	15.2%	14.1%	7%	14.9%	15.2%	14.1%	7%
Comparable profit before taxes	31,136	62,979	-51%	143,609	5,510	38,822	-86%
Comparable cost/income ratio, %	33.5%	40.0%	-16%	35.1%	32.9%	33.7%	-2%
Comparable return on equity (ROE) %	9.3%	24.1%	-62%	25.3%	3.2%	27.3%	-88%

Comparable profit before taxes EUR 31.1 million for the beginning of the year

CEO's review

Behind is a very exceptional second quarter – an extensive action plan is progressing as planned

The beginning of the year, and especially the second quarter, has been a very exceptional period in the history of OmaSp. The non-compliance with the guidelines and the resulting problem entity has

required significant resources. In recent weeks, the implementation of the action plan has been in the centre of activities, during which extensive studies have been carried out and the quality of the entire credit portfolio has been ensured in cooperation with external independent experts. The results confirm that the

Comparable cost/income ratio 33.5% for the beginning of the year

Supported by the interest environment, net interest income increased by 7 percent in the second quarter compared to last year. Fee and commission income and expenses remained at the comparison period's level. Comparable

operating income increased by 7 percent. Operating expenses increased by 8 percent in the second quarter. Costs have remained well under control, even though we have made investments, and, among other things, we have increased personnel to risk management and to the new branches to be opened in autumn 2024. Comparable operating expenses increased by 4 percent in the

second quarter. The comparable cost/income ratio was at an excellent level of 32.9 percent for the second quarter.

The development of the credit portfolio was in line with expectations and remained at the previous year's level. The deposit base decreased by about 7 percent, and the

problems are limited to previously identified non-compliance with the guidelines and the rest of the quality of the credit portfolio corresponds to what was previously reported. Nevertheless, the most important thing is that the core business develops well and in line with expectations. The bank's capital adequacy and financial position are strong.

development continues to reflect customers' adjustment to the rise in the cost level and partly because of bankrelated news. The good accessibility of services is still reflected in the number of new customer relationships. We have managed to create about a thousand new customer relationships every month throughout the first half of the year.

We announced the non-compliance with the guidelines in lending in April. The Board of Directors initiated extensive measures as a result of serious events in the early part of the year. The Board of Directors and the entire personnel have had a strong will to investigate the events and

related problems as efficiently as possible. During the second quarter, investments have been made, among other things, in the development of risk management and independent operations, and the key measure has been the review of the entire loan portfolio carried out in July. The survey work has gone through the data of the credit portfolio, carried out a documentary check and, in addition,

analysed the credit and collateral process. It was important to get external confirmation that the majority of our credit portfolio corresponds to what was previously reported and that the review 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. OmaSp recorded EUR 49.5 million discretionary credit loss provisions related to this entity for the entire first half of the year. This is a key explanation for the impairment losses on financial assets

Total capital (TC) ratio 16.6% for the beginning of the year

in the early part of the year, which amounted to approximately EUR 62.5 million.

The comparable profit before taxes was EUR 31.1 million for the first part of the year and, without additional allowance based on management's judgement, EUR 80.6 million. The equity was approximately EUR 533 million at the end of June. The bank has a strong solvency position with a total capital (TC) ratio of 16.6%.

Looking ahead

OmaSp's financial position is strong. We will focus on measures that will ensure the continued success of the bank.

The transaction with Handelsbanken Finland will be completed as planned at the turn of August-September and we are preparing to welcome more than 11,000 SME customers and approximately 30 corporate customer business experts to our team. We will continue to strengthen our market position and expand our operations to Vantaa, Kuopio and Vaasa during autumn 2024 as planned.

Despite a very exceptional start to the year, we will continue the current financial year with skilled and committed personnel. We are now starting to build the next phase of OmaSp. Our goal is to continue to provide the best banking service in town every day for both current and future customers.

Sarianna Liiri CEO

Solvent and profitable Finnish bank

Profit before taxes, EUR mill.

Return on equity (ROE) %

Balance sheet total, EUR mill.

Investment assets

Loans and receivables to credit institutions

Loans and receivables to the public and public sector entities

Cash and cash equivalents

Total operating income, EUR mill.

Negative goodwill

Other operating income

Fee and commission income and expenses

Net income on financial assets and liabilities

Net interest income

Significant events during the period

On 24 July 2024, the Company issued a negative profit warning, published preliminary information on the second quarter result and updated its guidance due to a significant additional allowance based on the management's judgement in the second quarter. According to the updated guidance, the Company estimates that the Group's comparable profit before taxes to be EUR 80–100 million for the financial year 2024.
On 24 July 2024, the Company announced the completion of the review of the credit portfolio. The quality of the entire loan portfolio was verified by external, independent experts. The results confirmed that the problems are limited to previously identified non-compliance with the guidelines, and the quality of the rest of the credit portfolio (approximately EUR 6 billion) corresponds to what was previously reported. In light of the latest information, customer entities accounted for approximately 4% of the Company's EUR 6 billion credit portfolio. Based on the results, the Company reassessed the credit risk position of the customer entities in question and recognised EUR 35.7 million additional allowance based on the management's judgement and impairment losses for the second quarter. 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.
On 19 June 2024, the Company announced that the Company's Board of Directors and CEO Pasi Sydänlammi had agreed that Sydänlammi will leave his position as CEO immediately. At the same time, the Board of Directors announced that it will immediately commence the search process to select a new CEO. Deputy CEO Sarianna Liiri was appointed as interim CEO and Head of Service Network Markus Souru was elected as deputy CEO. At the same time, the Company announced that it has continued its internal study announced in April regarding non-

compliance with the guidelines in lending and has submitted a request for investigation to the police. The non-compliance with the guidelines is targeted to a limited part of the loan portfolio, and the quality of the loans granted has been studied internally. It was also decided to verify the internal report by external quality assurance. The Company also announced that it has initiated extensive measures to improve its risk management processes and other control processes. More about ongoing measures on page 23 of the Half-Year Financial Report.

On 23 May 2024, Jarmo Salmi, Chairman of the Board of Directors, left his position and Jaakko Ossa became Chairman of the Board. Jyrki Mäkynen continued as Vice Chairman. After the change, the Company's Board of Directors will have six members. At the same time, the Board of Directors decided to establish an Audit Committee. More detailed information on the composition of the Company's Board of Directors is available on the Company's website.
On 16 April 2024, the Company provided preliminary information on the result for the first quarter and updated its guidance based on the management's judgement related to a significant additional allowance recognised for the first quarter. As a result of its own monitoring processes, the Company detected noncompliance with the guidelines, as a result of which the Company's credit risk position deteriorated materially for certain customer entities. The event was due to non-compliance of the Company's lending guidelines, as a result of which individual customer entities were consciously formed incorrectly. The weakening of the collateral position due to non-compliance with the guidelines combined with the prevailing general weak economic situation increased the Company's credit risk from what was previously reported. Due to the change in the risk position, additional allowance of EUR 19.5 million was

recognised based on the management's judgement for the first quarter. The Company updated its guidance and comparable profit before taxes was estimated to be EUR 120-140 million in the financial year 2024.

In May 2023, Oma Savings Bank Plc and Svenska Handelsbanken AB agreed on an arrangement whereby the Company acquires Handelsbanken's SME enterprise operations in Finland. Authority approval for the transaction was received on 24 July 2023. The plan is that the transaction will be completed at the turn of August and September 2024. The SME enterprise operations to be purchased are geographically located all over Finland. In connection with the transaction, the Company will open new branches in Vaasa, Vantaa and Kuopio. The size of the deposit base transferring to the Company was approximately EUR 630 million and the lending volume was approximately EUR 560 million in the situation on 30 June 2024. In the business transaction, over 11,000 customers will be transferred to the Company. At the same time, 31 people from Handelsbanken will transfer to the Company as old employees. The acquisition of the business is estimated to increase the Company's profit before taxes by approximately EUR 8–12 million annually. More about the transaction in the Half-Year Financial Report on page 24.
On 17 June 2024, S&P Global Ratings (S&P) confirmed that the Company's short-term and long-term borrowing remain unchanged and is at BBB+/A-2. At the same time, S&P changed the outlook for the Company's credit rating from stable to negative.
On 1 June 2024, the representatives of the five largest shareholders have been appointed to the Shareholders' Nomination Committee according to the shareholders' register:
- o Raimo Härmä, appointed by the Etelä-Karjala's Savings Bank Foundation
- o Ari Lamminmäki, appointed by the Parkano's Savings Bank Foundation
o Jouni Niuro, appointed by the Lieto's Savings Bank Foundation
o Aino Lamminmäki, appointed by the Töysä's Savings Bank Foundation
o Simo Haarajärvi, appointed by the Kuortane's Savings Bank Foundation
On 23 May 2024, the Board of Directors decided to establish an Audit Committee to support the supervisory duties of the Board of Directors. When appointing the members of the Audit Committee, the Board of Directors has taken into account the expertise and experience required for the position. The Board of Directors has elected Jyrki Mäkynen, Jaakko Ossa and Jaana Sandström as members of the Audit Committee.
In May, the Company issued EUR 250 million covered bond increase (tap issue). The bond was issued on the same terms and conditions as the bond issued by OmaSp on 8 February 2023 and maturing on 15 June 2028.
On 3 May 2024, the Company announced the Finnish Financial Supervisory Authority (FIN-FSA) has submitted a pre-trial investigation request to the police for securities market crimes related to the Company. At the same time, the FIN-FSA announced that it was investigating the need to impose administrative sanctions on the Company.
At the Annual General Meeting of Oma Savings Bank Plc on 26 March 2024, Aila Hemminki, Aki Jaskari, Jyrki Mäkynen, Jaakko Ossa, Jarmo Salmi and Jaana Sandström were re-elected as members of the Board of Directors and Essi Kautonen as a new member.
On 5 March 2024, the Deputy CEO and Head of Corporate Customer Business, Pasi Turtio, left the Company.
In February, The Board of Directors of the Company decided to establish an employee share savings plan OmaOsake for the employees. By encouraging employees to acquire and own

shares in the Company, the Company seeks to align the objectives of shareholders and employees in order to increase the value of the Company in the long term. The aim is also to support employee motivation and commitment as well as the Company's corporate culture. The OmaOsake consists of annually commencing plan periods, each with a 12-month savings period followed by a holding period of approximately two years. The first savings period started on 1 April 2024.

• In February, The Board of Directors of the Company decided on a new performance period for the share based incentice scheme for key employees for the financial years 2024–2025. The target group of the performance period 2024–2025 consists of approximately 45 key employees, including the Company's CEO and members of the Management Team. The potential reward for the performance period will be mainly based on the comparable cost-income ratio, customer and personnel satisfaction and quality of the credit portfolio. The rewards to be paid from the performance period correspond to the value of an approximate maximum of 405,000 Oma Savings Bank Plc shares in total, including the proportion to be paid in cash.

Oma Savings Bank Group's key figures

(1,000 euros)	1-6/2024	1-6/2023	Δ %	1-12/2023	2024 Q2	2024 Q1	2023 Q4	2023 Q3	2023 Q2
Net interest income	109,810	85,459	28%	197,045	52,442	57,369	56,907	54,679	49,236
Fee and commission income and expenses, net	25,465	23,007	11%	47,421	12,699	12,766	12,188	12,226	12,555
Total operating income	141,576	113,878	24%	247,067	67,497	74,080	67,190	65,999	63,181
Total operating expenses	-49,389	-47,242	5%	-90,550	-23,432	-25,958	-23,483	-19,824	-21,674
¹⁾ Cost/income ratio, %	35.0 %	41.6%	-16%	36.9%	34.8%	35.2 %	35.4%	30.1%	34.4%
Impairment losses on financial assets, net	-62,535	-4,309	1,351%	-17,126	-39,423	-23,112	-7,269	-5,548	-2,714
Profit before taxes	29,171	61,996	-53%	138,048	4,504	24,668	35,546	40,506	38,699
Profit/loss for the accounting period	23,338	49,541	-53%	110,051	3,439	19,899	28,185	32,325	30,870
Balance sheet total	7,284,410	7,014,730	4%	7,642,906	7,284,410	7,531,291	7,642,906 7,071,703		7,014,730
Equity	533,259	470,229	13%	541,052	533,259	527,426	541,052	505,290	470,229
¹⁾ Return on assets (ROA) %	0.6%	1.5%	-59%	1.6%	0.2%	1.0%	1.5%	1.8%	1.7%
¹⁾ Return on equity (ROE) %	8.7%	23.7%	-63%	24.3%	2.6%	14.9%	21.5%	26.5%	27.2%
¹⁾ Earnings per share (EPS), EUR	0.70	1.57	-55%	3.49	0.10	0.60	0.85	0.97	0.93
¹⁾ Equity ratio %	7.3%	6.7%	9%	7.1%	7.3%	7.0%	7.1%	7.1%	6.7%
¹⁾ Total capital (TC) ratio %	16.6%	16.0%	4%	16.5%	16.6%	16.9%	16.5%	16.6%	16.0%
¹⁾ Common Equity Tier 1 (CET1) capital ratio %	15.2%	14.1%	7%	14.9%	15.2%	15.4%	14.9%	14.8%	14.1%
¹⁾ Tier 1 (T1) capital ratio %	15.2%	14.1%	7%	14.9%	15.2%	15.4%	14.9%	14.8%	14.1%
¹⁾ 3) Liquidity coverage ratio (LCR) %	199.1%	149.9%	33%	248.9%	199.1%	154.6%	248.9%	153.6%	149.9%
¹⁾ 2) Net Stable Funding Ratio (NSFR) %	118.7%	121.0%	-2%	117.8%	118.7%	117.3%	117.8%	115.3%	119.8%
Average number of employees	485	419	16%	445	499	470	463	476	464
Employees at the end of the period	511	482	6%	464	511	471	464	463	482

Alternative performance measures excluding items affecting comparability:

31,136	62,979	-51%	143,609	5,510	25,626	38,790	41,840	38,822
33.5%	40.0%	-16%	35.1%	32.9%	34.1%	32.8%	29.2%	33.7%
0.75	1.59	-53%	3.63	0.13	0.62	0.93	1.01	0.93
9.3%	24.1%	-62%	25.3%	3.2%	15.5%	23.5%	27.4%	27.3%

1) Calculation principles of alternative performance measures and key figures are presented in Note 17 of the Half-Year Financial Report. Comparable profit calculation is presented in the Income Statement.

2) NSFR calculation adjusted retrospectively as of 30 June 2023, and 30 September 2023.

3) LCR calculation adjusted retrospectively as of 31 March 2024

Operating environment

The Finnish economy is recovering from the recession and according to the Bank of Finland's forecast, growth in the economy will gather pace in the immediate years ahead as the economic environment improves both in Finland and its export markets. Inflation is low and an improvement in the purchasing power of households is supporting a recovery in private consumption. (1 The year-on-year change in consumer prices calculated by Statistics Finland was 1.3% in June. The change in inflation compared to a year ago was influenced, among other things, by a rise in the average interest rate on housing loans and consumer credits as well as by reductions in the prices of electricity and real estate. (3

Inflation has slowed, and the European Central Bank seeks to ensure that inflation returns to its 2% target in a timely manner. In July, the European Central Bank decided to keep the three key ECB interest rates unchanged. (2 During the first half of the year, the interest rates have fallen slightly compared to the levels from the previous year. During January–June, the quotation of the 12-month Euribor rate has risen by approximately 0.07 percentage points. (10

The sharp increase in economic uncertainty during the past few years has contributed to the growth of the Finnish economy. According to the Bank of Finland's preliminary calculations, the GDP is projected to decrease by 0.5% in 2024 and increase by 1.2% in 2025. In 2026, the GDP is projected to grow by 1.7%. (1

The seasonally adjusted saving rate of households increased by 0.5 percentage point compared to the previous quarter and was 0.1% in January–March. In the first quarter of 2024, the disposable income of households grew slightly compared to the previous quarter and consumption expenditure remained, in practice, at the level of the previous quarter. The adjusted disposable income of households grew by 1.7%, and adjusted for price changes, income increased by 0.2% compared to the quarter one year ago.

The investment rate decreased slightly from the previous quarter and was 9.8%. Majority of the investments of households is directed in housing investments. The corporate investment rate decreased by 1.0 percentage points compared to the previous quarter. (4

According to Statistics Finland, the number of employed people aged 15 to 74 was 35,000 lower in May and the number of unemployed was 33,000 higher than a year ago. In May 2024, the employment rate was 77.8% (20 to 64 years) and the average unemployment rate was 10.2% (15 to 74 years). (5

According to Statistics Finland's preliminary data, prices of old dwellings in housing companies decreased in the whole country by 2.8% in May from one year ago. Prices of old dwellings in housing companies fell by 3.2% in the six biggest cities, and by 2.2% in the rest of Finland in May from one year ago. At the same time, the number of sales of old dwellings in blocks of flats and terraced houses made through real estate agents increased by 4.3% from the comparison period. (6

In May 2024, an exceptionally low amount of housing loans was drawn down, in total EUR 1.1 billion, which is 8.8% less than a year ago and an average of 33% less than in May in 2011–2023. The annual growth of all loans for households decreased by 0.7% and the annual growth of mortgage stock by 1.0%. The number of corporate loans rose 1.5% over the same period. The average interest rate on new mortgages was 4.35% in May. Over the 12-month period, the number of household deposits reduced by a total of 1%. (7

In June 2024, the 12-month moving annual change in enterprises that filed for bankruptcy was 17%. (8 During February-April 2024, the cubic volume of granted permits for newbuilding decreased by 5% compared to the previous year and was 7.8 million cubic meters. (9

1) Bank of Finland, Finland's economy gradually moving out of recession. Published on 11 June 2024.

2) Bank of Finland, European Central Bank's monetary policy decisions. Published on 18 July 2024.

3) Statistics Finland, Inflation 1.3% in June 2024. Published on 15 July 2024.

4) Statistics Finland, Households' saving rate was close to zero in the first quarter of 2024. Published on 19 June 2024.

5) Statistics Finland, Fewer employed persons and more unemployed persons in May 2024 compared to one year ago. Published on 26 June 2024.

6) Statistics Finland, Prices of old dwellings in housing companies decreased by 2.8% in May 2024 from one year ago. Published on 27 June 2024.

7) Bank of Finland, MFI balance sheet (loans and deposits) and interest rates, Housing loan drawdowns down from a year earlier in May. Published on 28 June 2024.

8) Statistics Finland, Altogether 252 bankruptcies were instigated in June 2024. Published on 12 July 2024.

9) Statistics Finland, Cubic volume of granted building permits decreased in February to April 2024 by 5% year-on-year. Published on 18 June 2024. 10) Bank of Finland, Euribor interest rates tables. Published on 1 July 2024.

Credit rating and liquidity

In June 2024, S&P Global Ratings confirmed that Oma Savings Bank Plc's rating for long-term borrowing will remain unchanged at BBB+ and rating for short-term borrowing will remain at level A-2. The credit rating agency does not consider that the additional allowance announced in the first quarter will cause significant reputational damage and states that the immediate financial impact will be well manageable. However, the case has highlighted areas for administrative and risk management developments, as a result of which S&P has changed the outlook for its long-term credit rating from stable to negative. In addition, S&P Global Ratings has confirmed an AAA- rating for the Company's bond program.

	30 Jun 2024	31 Dec 2023
LCR	199.1%	248.9%
NSFR	118.7%	117.8%

The Group's Liquidity Coverage Ratio (LCR) remained at a good level, standing at 199.1% at the end of the second quarter. Also the Net Stable Funding Ratio (NSFR) remained at a stable level and was 118.7%.

According to the Bank of Finland, the domestic economy is expected to recover from the recession in the next few years. Interest rates remaining at a higher level than expected at the beginning of the year and, at the same time, sluggish inflation and the slow recovery of households' purchasing power will curb the recovery. (1 The high level of interest rates is also reflected in the competitive bidding of domestic deposits as banks continue to offer high deposit rates to customers. The changes in the interest rate environment can be seen especially in the increased costs of funding.

Despite the general economic uncertainty and news about the Company, the Company's liquidity has remained stable in the second quarter. In addition, the Company has strengthened its liquidity position and reduced financing risk by implementing a EUR 250 million covered bond increase (tap issue) in May as part of the Company's financing plan for 2024.

(1 Bank of Finland: Finland's economy gradually moving out of recession. Published on 11 June 2024.

Related party disclosures

Related party is defined as key persons in a leading position at Oma Savings Bank Plc and their family members, subsidiaries, associated companies and joint ventures, joint operations and companies in which a key person in a leading position has control or significant influence, and organizations that have significant influence in Oma Savings Bank Plc. Key persons are members of the Board of Directors, the CEO and deputy to the CEO and the rest of the management team. Loans and guarantees have been granted with conditions that are applied to similar loans and guarantees granted to customers.

More detailed information on related parties is given in Note G31 of the 2023 Financial Statements.

More detailed information on the share-based remuneration scheme for the management is given in Note G32 of the Financial Statements and in Note 14 of the Half-Year Financial Report.

Financial statements

The corresponding period last year has been used as the year under comparison in income statement items, and the date of 31 December 2023 as the comparison period for the balance sheet and capital adequacy.

Result 4–6 / 2024

For the second quarter, the Group's profit before taxes was EUR 4.5 (38.7) million and the profit for the period was EUR 3.4 (30.9) million. The cost/income ratio was 34.8 (34.4)%.

Comparable profit before taxes amounted to EUR 5.5 (38.8) million in the second quarter and the comparable cost/income ratio was 32.9 (33.7)%. The comparable profit has been adjusted for the net income on financial assets and liabilities as well as the one-off expenses related to the acquisitions.

Income

Total operating income was EUR 67.5 (63.2) million. Total operating income increased 6.8% compared to the comparable period. Other operating income includes a positive fair value change of EUR 2.6 million from the revaluation of joint debt recorded in connection with the Eurajoen Savings Bank's and Liedon Savings Bank's business transactions during the reporting period. Comparable operating income was EUR 67.1 (62.8) million,

an increase of 6.9% compared to the previous year. Net income on financial assets and liabilities of EUR 0.4 (0.4) million has been adjusted from the operating income as an item affecting comparability.

Net interest income grew by 6.5%, totalling EUR 52.4 (49.2) million. During the review period, interest income grew by 11.4%, totalling EUR 87.2 (78.3) million. The growth in interest income can be explained by the increase in market interest rates. The impact on hedges related to interest rate risk management reduced interest income and interest expenses. During the second quarter, net interest income from hedging the interest rate risk was EUR -3.5 million. During the reporting period, the average margin of the loan portfolio has remained almost unchanged.

Interest expenses were EUR 34.8 (29.0) million in the second quarter. The growth of interest expenses has been influenced by the increased interest rates on issued bonds due to the rise in market interest rates. The average interest on deposits paid to the Company's customers was 0.99 (0.61)% at the end of the period.

Fee and commission income and expenses (net) increased by 1.1% to EUR 12.7 (12.6) million. The total amount of fee and commission income was EUR 15.2 (14.6) million.

Fee and commission income and expenses, net
Net income on financial assets and financial liabilities
- Other operating income

Net fee and commission income from cards and payment transactions was EUR 9.0 (8.7) million, an increase of 3.4% over the previous year. The increase is mainly explained by the increase in customer volume. The amount of commission income from lending was EUR 2.7 (2.7) million.

The net income on financial assets and liabilities were EUR 0.4 (0.4) million during the period. Other operating income was EUR 1.9 (1.0) million.

Expenses

Operating expenses were in total EUR 23.4 (21.7) million and they increased by 8.1% compared to the previous year's corresponding period. For the reporting period, expenses affecting comparability were recorded in total of EUR 1.4 million for the arrangement of the business to be acquired from Handelsbanken. In the comparison period, expenses included EUR 0.5 million related to the acquisition of Liedon Savings Bank's business, so comparable operating expenses were EUR 22.0 (21.1) million. The increase in comparable operating expenses was 4.2%.

Personnel expenses increased by 4.1% and were EUR 8.8 (8.5) million. At the end of the period, the number of employees was 511 (482), of which 85 (102) were fixedterm.

Other operating expenses increased by 12.3% to EUR 12.5 (11.1) million. The item includes authority fees, office, IT, PR and marketing costs and those stemming from the business premises in own use. The increase in costs compared to the comparison period was affected by costs arising from the arrangement of development projects and Handelsbanken's business operations.

Depreciation, amortisation and impairments on tangible and intangible assets were EUR 2.1 (2.1) million.

Impairment losses on financial assets

During the second quarter, impairment losses on financial assets (net) increased compared to the comparative period and were EUR -39.4 million. The impairment losses on financial assets recorded in the comparative period amounted to EUR -2.7 million.

During the second quarter, the amount of expected credit losses (ECL) increased and was EUR 33.0 million, while the expected credit losses were EUR 2.9 million in the comparison period. EUR 30.0 million of the expected credit losses was targeted to receivables from customers and off-balance sheet items.

During the first quarter, an additional allowance of EUR 19.5 million was made based on the management's judgement due to a change in the Company's credit risk position for certain customer entities. During the second quarter, the Company targeted the additional allowance to customer entities as planned. In the second quarter, an additional allowance of EUR 30 million was recognised based on the management's judgement for the customer entities in question due to a study carried out by the Company and an external report commissioned on the quality of the credit portfolio. The additional allowance is targeted to stages 1-3. In addition, the Company made an additional allowance of EUR 2.5 million for an individual customer related to the above-mentioned customer entities. The additional allowance is targeted to stage 2. Impairment losses on financial assets totalling EUR 35.7 million were recognised for the above-mentioned customer entities during the second quarter of which EUR 4.9 million was due to final impairment losses on financial assets.

During the reporting period, the Company recognised a previous additional allowance of EUR 1.0 million based on the management's judgement which was used to prepare for the uncertainty of the economic environment. In addition, the Company targeted a fair value adjustment of EUR 1.2 million to the receivables of loans transferred in the business transaction of Liedon Savings Bank based on the realised development of expected credit losses from the acquired business. At the end of the reporting period, the remaining fair value adjustment is EUR 6.1 million.

The net amount of realised credit losses increased compared to the comparison period and was EUR 6.5 (0.2) million in the second quarter.

At the end of the reporting period, the Company has additional loss allowances based on the management's judgement and fair value adjustments recorded in the balance sheet in total EUR 38.6 million. Additional allowances are targeted to stages 1-3.

Result 1–6 / 2024

The Group's profit before taxes was EUR 29.2 (62.0) million in January-June and the profit for the period was EUR 23.3 (49.5) million. The cost/income ratio was 35.0 (41.6)%.

Comparable profit before taxes amounted to EUR 31.1 (63.0) million for January-June and the comparable cost/income ratio was 33.5 (40.0)%. The comparable profit before taxes has been adjusted for the net income on financial assets and liabilities as well as one-off items related to the acquisitions and the change negotiations.