2009-05-07 07:00:00 CEST
2009-05-07 07:01:03 CEST
REGULATED INFORMATION
Pohjola Pankki Oyj - Interim report (Q1 and Q3)
OP-Pohjola Group's January-March 2009
OP-Pohjola Group Central Cooperative Company release 7 May 2009, at 8 am 1 (35) Release category: Interim Report OP-Pohjola Group's January-March 2009 Good first quarter under challenging conditions - pre-tax earnings at last year's level - OP-Pohjola Group's earnings before tax came to EUR 124 million (125). - Of the business segments, Banking improved its pre-tax earnings by 3% to EUR 164 million (160). - Non-life insurance's balance on technical account was good. The operating combined ratio was 91.3%. However, since investment income shrank, pre-tax earnings were zero. - Life insurance results were eroded by impairments, bringing losses before tax to EUR 26 million (0). Lower demand for banking services - market position improved also during slower growth - Growth in the deposit and loan portfolio slowed down clearly in the first quarter. The deposit portfolio's 12-month growth slowed from a record level to 13% - the market share grew by 0.7 percentage points. - The loan portfolio growth was 9.4% and that of home mortgages 10.4% and corporate loans 11%. The market share of credits increased by 0.8 percentage points. - Non-life insurance premium revenue rose by 4.9% and that from private customers by 12%. - The market share of insurance savings fell by 0.4 percentage points. - The market share of mutual fund capital rose by 1.1 percentage points. - In the year to March, the number of joint banking and non-life insurance customers increased by 98,000 to 1,013,000 as a result of cross-selling. Group's high capital adequacy - increasingly important as competitive edge - OP-Pohjola Group's capital adequacy is high. Tier 1 ratio stood at 12.1% (12.6). - Impairments on receivables increased to EUR 29 million (2), but were still very low in relation to the loan and guarantee portfolio. Non-performing loan losses increased by 38% year on year, with their share of the loan and guarantee portfolio standing at 0.5% (0.4). - It is still exceptionally difficult to predict how the financial sector's operating environment will be affected in the future. OP-Pohjola Group's high capital adequacy will act as a stabilising buffer to ensure continuity. Comments by Reijo Karhinen, Executive Chairman "OP-Pohjola Group had a strong start to the year. Despite the difficult economic situation, we made a good result and maintained solid capital adequacy. Our market share continued to grow in our key business divisions. We managed to keep up with our challenging target of cross-selling banking and non-life insurance services. Our rise into the market leader in terms of deposits and loans particularly at a time like this is strong evidence that our long-term work is paying off and that we have our customers' confidence. Thanks to our successful funding, we can continue to finance our customers' viable projects without changes even amid such turbulent economic times. It is promising and encouraging that we are finally seeing some weak positive signs in the economic environment. But Finland is still greatly dependent on exports, and the overall outlook for 2009 is quite poor: the investment environment will continue to be unstable and the market rates will remain exceptionally low. All of these factors together create a challenging environment for the financial sector in terms of financial performance and growth. Credit losses are unavoidable at this stage of the economic cycle, and there is nothing exceptional about rising credit losses, for which OP-Pohjola Group is well prepared. Our strong capital base enables us to cushion the effects of the recession and help our customers over the crisis much better than in the early 1990s." * Changes are based on a year-on-year comparison. OP-Pohjola Group's Interim Report for 1 January-31 March 2009 OP-Pohjola Group's key indicators -------------------------------------------------------------------------------- | | Q1/ | Q1/ | Change* | 2008 | | | 2009 | 2008 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings before tax, EUR | 124 | 125 | -0.4 | 372 | | million | | | | | -------------------------------------------------------------------------------- | Banking and Investment | 164 | 160 | 2.7 | 532 | | Services | | | | | -------------------------------------------------------------------------------- | Non-life Insurance | -1 | 22 | | 55 | -------------------------------------------------------------------------------- | Life insurance | -26 | 0 | | -162 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Bonuses paid to customers | 35 | 31 | 11.5 | 132 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Return on equity (ROE), % | 4.9 | 6.6 | -1.6* | 4.1 | -------------------------------------------------------------------------------- | Return on equity at fair | 2.7 | -3.9 | 6.6* | -6.0 | | value, % | | | | | -------------------------------------------------------------------------------- | Cost/income, % | 52 | 51 | 0 | 54 | | (Banking and Investment | | | | | | Services) | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Average personnel | 12,693 | 12,514 | 1.4 | 12,615 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | 31 Mar | 31 Mar | Change* | 31 Dec | | | 2009 | 2008 | | 2008 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total assets, EUR billion | 75.8 | 70.4 | 7.7 | 75.7 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Capital adequacy ** | 12.1 | 12.8 | -0.7 | 12.7 | -------------------------------------------------------------------------------- | Tier 1 ratio, %** | 12.1 | 12.7 | -0.7 | 12.6 | -------------------------------------------------------------------------------- | Ratio of capital base to | 1.38 | 1.49 | -0.12 | 1.40 | | minimum amount of capital | | | | | | base*** | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Ratio of non-performing loan | 0.5 | 0.4 | 0.1 | 0.4 | | losses to the loan and | | | | | | guarantee portfolio, % | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Market share, % | | | | | -------------------------------------------------------------------------------- | Total loans | 32.2 | 31.4 | 0.8 | 32.1 | -------------------------------------------------------------------------------- | Total deposits | 33.8 | 33.1 | 0.7 | 33.8 | -------------------------------------------------------------------------------- | Capital invested in mutual | 22.1 | 21.0 | 1.1 | 22.5 | | funds | | | | | -------------------------------------------------------------------------------- | Of insurance savings through | 19.3 | 19.7 | -0.4 | 19.4 | | life and pension insurance, | | | | | | % | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | Q1/ | Q1/ | Change* | 2008 | | | 2009 | 2008 | | | -------------------------------------------------------------------------------- | Of premiums written in life | 24.0 | 36.5 | 12.5 | 29.3 | | and pension insurance, % | | | | | -------------------------------------------------------------------------------- * Percentage point change, except for earnings before tax, customer bonuses, total assets and average number of personnel, for which the change is stated in percentages, as well as the ratio of capital resources to the minimum amount of capital resources, for which the change is stated as a change in the ratio. ** Pursuant to the Act on Credit Institutions. *** Pursuant to the Act on the Supervision of Financial and Insurance Conglomerates. Operating environment World economic prospects continued to weaken in the first quarter of 2009. In the USA and Europe, production figures have plummeted, while Asia's economic growth has slowed down substantially. Massive stimulus packages have been put in place, but no improvement is expected until the end of the year at the earliest when the US economy is forecast to move into recovery. Central banks have tried to fight the recession by reducing benchmark interest rates. The European Central Bank reduced its benchmark interest rate to 1.25%, its lowest level since the introduction of the euro. Central banks have also supported the banking system's liquidity through loans. Some unusual measures, such as purchase of companies' and public-sector entities' debt instruments straight from the market, have also been adopted. These measures by the central banks have helped the financial markets over the worst crisis, and it is a sign of improved confidence that risk premiums have become narrower. Finland is also in a deep recession. Exports are falling sharply as world trade is shrinking. The downfall of investments is made worse by the low capacity utilisation rate and dismal construction industry outlook. The spending power of households is rising, but consumption will fall as unemployment rises and people become more cautious. Therefore the forecast for manufacturing, construction and services is bleak. Although interest rates are now lower, people have been less inclined to take out loans and this will continue throughout the year with the current uncertainty of future prospects. Demand for home mortgages has also fallen. Share prices fell in Finland too in the first quarter until they picked up again in April, but a certain amount of equity market instability is still to be expected. The poor investment atmosphere eroded mutual fund capital in the first quarter to a less extent than previously. Premiums written in life insurance have been in decline, and the growth rate of deposits has slowed down. As to non-life insurance, so far the recession has affected it in the form of lower investment income. Premiums written in the sector have not reduced considerably, but a small decline is expected towards the end of the year. Claims paid, however, are expected to fall more than premiums written. OP-Pohjola Group's earnings and total assets January-March Earnings before tax came to EUR 124 million (125)*. Banking and Investment Services earnings before tax were still good despite the challenging market situation, actually improving somewhat year on year. Poor investment performance affected non-life insurance earnings before tax, although the balance on technical account was good. Continued poor return on investment also weakened life insurance results, ending in a loss. The Group's revenues increased by 7.2% to EUR 510 million (476). Net interest income increased by 5.5% to EUR 287 million (272) and other income rose by 9.6% to EUR 223 million (204). Net commissions, totalling EUR 130 million, were higher than last year, despite diminished asset management commissions. The net income of life and non-life operations was still eroded by poor investment markets. Year on year, net investment income from life insurance fell by EUR 12 million and from non-life insurance by EUR 39 million. Year on year, net income from investments by Banking fell by EUR 26 million. Net trading income increased by EUR 86 million, which was partly thanks to impairments of EUR 49 million on the liquidity reserve. During the financial crisis, there has been no properly active market for a number of investment instruments, which has made market price sources less reliable. However, OP-Pohjola Group did not apply any of its own market valuation models. Expenses stood at EUR 319 million (311), up by 2.4% year on year, a significant part of this increase being due to higher personnel costs. The 7.2% rise in personnel costs resulted from an increase in staff numbers and the payroll bill. Bonuses paid to owner-members and OP bonus customers rose by 11% to EUR 35 million (31). Net impairments on loans and receivables increased to EUR 29 million (2.2). New impairments in gross terms totalled EUR 42 million, or up by EUR 30 million from last year. Value readjustments and reversals of impairments totalled EUR 13 million, or 26% more than the year before. Impairments on receivables remained low, at 0.21% of the loan and guarantee portfolio in annual terms. Return on equity stood at 4.9%, down from last year's 6.6%. Earnings before tax came to EUR 85 million (-71). Banking and Investment Services reported a pre-tax profit of EUR 164 million (160). Non-life Insurance recorded a pre-tax loss of EUR 1 million (earnings of EUR 22 million). Non-life Insurance's operating combined ratio improved to 91.3% (98.2). Life Insurance recorded pre-tax losses of EUR 26 million (0). The results of both life and non-life insurance operations were weakened by declining net investment income. The Q1/2009 net interest income contracted by EUR 29 million from Q4/2008. Impairments on receivables were EUR 2 million less than in October-December 2008. Pre-tax earnings were EUR 124 million as opposed to a loss of EUR 15 million in the preceding quarter. Pre-tax earnings at fair value were EUR 85 million as opposed to a loss of EUR 285 in the preceding quarter. * Comparatives for 2008 are given in brackets. For balance sheet and other cross-sectional figures, the point of comparison is the January-March 2008 figure. For balance-sheet and other cross-sectional figures, figures at the end of the previous reporting period (31 December 2008) serve as comparatives. **The combined cost ratio excluding amortisation on intangible assets arising from the Pohjola acquisition and allocated to the business segment without the effect of changes in reserving bases. Earnings analysis -------------------------------------------------------------------------------- | EUR million | Q1/ | Q1/ | Change, | Change, | 2008 | | | 2009 | 2008 | EUR | % | | | | | | million | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings before tax | 124 | 125 | -1 | -0.4 | 372 | -------------------------------------------------------------------------------- | Gross change in fair | -40 | -196 | 156 | -79.8 | -737 | | value reserve | | | | | | -------------------------------------------------------------------------------- | Earnings/loss before tax | 85 | -71 | 156 | | -365 | | at fair value | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Return on equity (ROE), % | 4.9 | 6.6 | | -1.6* | 4.1 | -------------------------------------------------------------------------------- | Return on equity at fair | 2.7 | -3.9 | | 6.6* | -6.0 | | value, % | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Income | | | | | | -------------------------------------------------------------------------------- | Net interest income | 287 | 272 | 15 | 5.5 | 1,189 | -------------------------------------------------------------------------------- | Net income from Non-life | 69 | 89 | -21 | -23.1 | 345 | | Insurance | | | | | | -------------------------------------------------------------------------------- | Net income from Life | -21 | 8 | -28 | | -139 | | Insurance | | | | | | -------------------------------------------------------------------------------- | Net commissions and fees | 130 | 124 | 6 | 4.5 | 433 | -------------------------------------------------------------------------------- | Net trading and | 20 | -40 | 61 | | -99 | | investment income | | | | | | -------------------------------------------------------------------------------- | Other operating income | 25 | 23 | 2 | 8.1 | 93 | -------------------------------------------------------------------------------- | Share of associates' | 0 | 0 | 0 | -97.5 | 1 | | profits/losses | | | | | | -------------------------------------------------------------------------------- | Other income, total | 223 | 204 | 19 | 9.6 | 634 | -------------------------------------------------------------------------------- | Total income | 510 | 476 | 34 | 7.2 | 1,823 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Expenses | | | | | | -------------------------------------------------------------------------------- | Personnel costs | 163 | 152 | 11 | 7.2 | 598 | -------------------------------------------------------------------------------- | Other administrative | 80 | 82 | -2 | -3.0 | 328 | | expenses | | | | | | -------------------------------------------------------------------------------- | Other operating expenses | 76 | 77 | -1 | -1.5 | 312 | -------------------------------------------------------------------------------- | Total expenses | 319 | 311 | 7 | 2.4 | 1,238 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Impairment losses on | 29 | 2 | 27 | | 58 | | receivables | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Returns to owner-members | | | | | | | and OP bonus customers | | | | | | -------------------------------------------------------------------------------- | Bonuses | 35 | 31 | 4 | 11.5 | 132 | -------------------------------------------------------------------------------- | Interest on ordinary and | 3 | 6 | -3 | -46.8 | 22 | | supplementary cooperative | | | | | | | capital | | | | | | -------------------------------------------------------------------------------- | Total returns | 38 | 37 | 1 | 1.9 | 154 | -------------------------------------------------------------------------------- * Percentage points OP-Pohjola Group's total assets amounted to EUR 75.8 billion (75.7) on 31 March 2009. During the review period, receivables from customers stood at EUR 51.9 billion (51.7) and deposits at EUR 34.8 billion (34.5). Debt securities issued to the public declined by 3.6% to EUR 17.5 billion. Equity capital decreased by 0.1% to EUR 5.2 billion (5.2). The fair value reserve, adjusted for deferred tax assets, was EUR 585 million in the negative (minus EUR 556 million). The main reason for the decrease in the fair value reserve during the report period was the dip in securities' market values. The cooperative capital investments and supplementary cooperative capital investments made by the member cooperative banks' owner members totalled EUR 715 million (695) on 31 March 2009. Member banks' interest on the ordinary and supplementary cooperative capital recognised in the 2008 financial statements totalled EUR 22 million. The Annual General Meeting of Pohjola Bank plc decided that the company would pay a dividend of EUR 0.23 for each Series A share and EUR 0.20 for each Series K share for 2008, totalling EUR 45 million (131). Capital adequacy Two sets of capital adequacy ratios are calculated for OP-Pohjola Group. OP-Pohjola Group operates in compliance with the Act on Cooperative Banks and other Cooperative Institutions. Owing to the regulations on joint responsibility and security conditions prescribed in the Act, a minimum amount of capital resources has been set for the amalgamation of the cooperative banks calculated according to the regulations for capital adequacy specified in the Act on Credit Institutions. The amalgamation of the cooperative banks comprises its central institution (OP-Pohjola Group Central Cooperative), the central institution's member credit institutions and companies belonging to their consolidation groups. Although OP-Pohjola Group's insurance companies do not belong to the amalgamation of the cooperative banks, investments made in them have a major impact on capital adequacy calculated in accordance with the capital adequacy regulations for credit institutions. This capital adequacy figure is called the amalgamation of cooperative banks' capital adequacy. OP-Pohjola Group is also a financial and insurance conglomerate, pursuant to the Act on the Supervision of Financial and Insurance Conglomerates. The conglomerate is governed by specific provisions of the capital adequacy requirement. In view of both capital adequacy requirements, OP-Pohjola Group's risk-bearing capacity is strong. OP-Pohjola Group Central Cooperative will publish annually, as part of the financial statements, the full information required by Pillar III of the capital adequacy framework and the Financial Supervisory Authority standards. In its calculation of capital requirement for credit risk, OP-Pohjola Group will phase in the Internal Rating-based Approach (IRBA). The Financial Supervisory Authority granted OP-Pohjola Group permission to use IRBA in its calculation of capital adequacy requirements for credit risks as of 30 September 2008. This permission concerns liabilities granted to Pohjola Bank plc's corporate and institutional customers. Otherwise the capital requirement is calculated using the Standardised Approach. The adoption of IRBA will reduce OP-Pohjola Group's capital requirement, but is expected to make the requirement more susceptible to market fluctuations. As to market risks, OP-Pohjola Group will continue to use the Standardised Approach. The capital requirement for operational risks will be calculated using the Basic Indicator Approach (BIA), with the objective of adopting the Standardised Approach in 2010. Capital adequacy of the amalgamation of cooperative banks At the end of March, OP-Pohjola Group's capital adequacy according to the Act on Credit Institutions and Tier 1 ratio was 12.1%. Capital adequacy ratio according to the 31 December 2008 financial statements stood at 12.7%, while Tier 1 ratio was 12.6%. -------------------------------------------------------------------------------- | Capital base | | | | | | -------------------------------------------------------------------------------- | EUR million | 31 Mar | 31 Dec | Change, | Change, | 31 Mar | | | 2009 | 2008 | EUR | % | 2008 | | | | | million | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Capital base | | | | | | -------------------------------------------------------------------------------- | Tier 1 capital | 4,804 | 4,884 | -79 | -1.6 | 5,006 | -------------------------------------------------------------------------------- | Tier 2 capital | 0 | 0 | | | 34 | -------------------------------------------------------------------------------- | Tier 3 capital | 34 | 47 | -12 | -26.2 | | -------------------------------------------------------------------------------- | Total capital base | 4,839 | 4,931 | -92 | -1.9 | 5,040 | -------------------------------------------------------------------------------- Tier 1 capital amounted to EUR 4,804 million on 31 March. The result for the report period less the estimated dividend payout is included in Tier 1 capital. OP-Pohjola Group's Tier 1 capital fell by 1.6% during the report period. Tier 2 capital came to zero following allowances for the item during the report period. Any allowances in excess of Tier 2 capital were made from Tier 1 capital. At the end of the report period, the capital base was reduced by the consolidation group's fair value reserve that was EUR 87 million in the red. On 31 December 2008, the comparable fair value reserve reduced the consolidation group's capital resources by EUR 84 million. On 31 March, insurance company investments, deducted in equal proportions from Tier 1 and 2 capital, came to EUR 2,329 million (2,159). On the basis of the exemptions granted by the Financial Supervisory Authority, investments by OP-Pohjola Group entities in venture capital funds, managed by Pohjola Capital Partners, are treated in the capital adequacy calculation in the same way as investments in shares in business or industrial corporations. On 31 March, the ratio of hybrid capital to Tier 1 capital before allowances was 3.5% (3.6). Tier 1 capital does not include equity capital growth resulting from the IFRS-compliant measurement of pension liabilities and the assets covering them, and from the measurement at fair value of investment property. -------------------------------------------------------------------------------- | Capital adequacy | | | | | | -------------------------------------------------------------------------------- | EUR million | 31 Mar | 31 Dec | Change, | Change. | 31 Mar | | | 2009 | 2008 | EUR | % | 2008 | | | | | mill. | | | -------------------------------------------------------------------------------- | Risk-weighted | 39,858 | 38,746 | 1,113 | 2.9 | 39,329 | | assets, total | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Minimum capital | | | | | | | requirement | | | | | | -------------------------------------------------------------------------------- | Credit and | 2,877 | 2,832 | 45 | 1.6 | 2,883 | | counterparty risk | | | | | | -------------------------------------------------------------------------------- | Market risk | 34 | 47 | -12 | -26.2 | 42 | -------------------------------------------------------------------------------- | Operational risks | 277 | 221 | 56 | 25.3 | 221 | -------------------------------------------------------------------------------- | Total | 3,189 | 3,100 | 89 | 2.9 | 3,146 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Capital adequacy | 12.1 | 12.7 | | -0.6 | 12.8 | | ratio, % | | | | | | -------------------------------------------------------------------------------- | Tier 1 ratio, % | 12.1 | 12.6 | | -0.6 | 12.7 | -------------------------------------------------------------------------------- Capital adequacy under the Act on the Supervision of Financial and Insurance Conglomerates OP-Pohjola Group's capital adequacy pursuant to the Act on the Supervision of Financial and Insurance Conglomerates is calculated using the consolidation method, whereby assets included in the capital base but not included in equity capital, under the regulations for the banking or insurance industry, are added to the equity capital in the conglomerate's balance sheet. The capital base may not include items not available for covering the losses of other companies belonging to the conglomerate. At the end of On 31 March, OP-Pohjola Group's capital base, calculated according to the Act on the Supervision of Financial and Insurance Conglomerates, exceeded the minimum regulatory capital specified in the Act by EUR 1,335 million (1, 406). The insurance companies' equalisation provision is not included in the financial and insurance conglomerate's capital base. On 31 March 2009, the combined equalisation provision less the non-life and life insurance tax liabilities stood at EUR 486 million. The equalisation provision acts as a buffer for insurance companies in case of years with heavy losses and is therefore part of the financial services group's actual buffer against losses. Capital adequacy under the Act on the Supervision of Financial and Insurance Conglomerates -------------------------------------------------------------------------------- | EUR million | 31 Mar | 31 Dec | Change. | Change. | 31 Mar | | | 2009 | 2008 | EUR | % | 2008 | | | | | mill. | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | OP-Pohjola Group's | 5,208 | 5,215 | -7 | -0.1 | 5,506 | | equity capital | | | | | | -------------------------------------------------------------------------------- | Business-segment-spec | 1,928 | 1,873 | 55 | 2.9 | 1,792 | | ific items | | | | | | -------------------------------------------------------------------------------- | Goodwill and | -1,101 | -1,106 | 5 | -0.4 | -1,125 | | intangible assets | | | | | | -------------------------------------------------------------------------------- | Equalisation | -486 | -481 | -5 | 1.0 | -449 | | provision | | | | | | -------------------------------------------------------------------------------- | Other items included | -673 | -619 | -54 | 8.7 | -448 | | in equity capital and | | | | | | | business-segment-spec | | | | | | | ific items, but not | | | | | | | included in the | | | | | | | conglomerate's | | | | | | | capital base | | | | | | -------------------------------------------------------------------------------- | Conglomerate's | 4,875 | 4,882 | -6 | -0.1 | 5,276 | | capital base, total | | | | | | -------------------------------------------------------------------------------- | Regulatory capital | 3,175 | 3,115 | 60 | 1.9 | 3,170 | | requirement for | | | | | | | credit institutions | | | | | | -------------------------------------------------------------------------------- | Regulatory capital | 366 | 361 | 5 | 1.4 | 362 | | requirement for | | | | | | | insurance operations | | | | | | -------------------------------------------------------------------------------- | Total minimum amount | 3,541 | 3,476 | 65 | 1.9 | 3,531 | | of conglomerate's | | | | | | | capital base | | | | | | -------------------------------------------------------------------------------- | Conglomerate's | 1,335 | 1,406 | -71 | -5.1 | 1,745 | | capital adequacy | | | | | | -------------------------------------------------------------------------------- | Conglomerate's | 1.38 | 1.40 | | -0.03* | 1.49 | | capital adequacy | | | | | | | ratio (capital | | | | | | | base/minimum | | | | | | | regulatory capital | | | | | | | base) | | | | | | -------------------------------------------------------------------------------- * Change in ratio Capital adequacy management and risk exposure OP-Pohjola Group's credit risk status is stable and credit risks low, although the fact that recession has hit Finland and affected our customers' financial situation. Non-performing and zero-interest receivables came to EUR 282 million (203) on 31 March, which was 0.5% (0.4) of the loan and guarantee portfolio. The ratio of non-performing and zero-interest receivables increased by 38% in the year to March, but remained low in proportion to the loan and guarantee portfolio. Customers' poorer liquidity also increased the volume of impairments of receivables. Gross impairment losses of EUR 42 million (12) were recorded in the report period, which was 0.31% (0.10) of the loan and guarantee portfolio. OP-Pohjola Group's financial position and liquidity remained strong despite the market situation. Short-term funding has performed well and long-term funding markets have also shown signs of recovery. The liquidity reserve maintained by Pohjola Bank plc amounted to EUR 8.8 billion on 31 March 2009. Thanks to OP-Pohjola Group's high liquidity reserve, the entire Group's wholesale funding maturities can be covered for some 24 months. On 31 March, life insurance investment assets amounted to EUR 3.9 billion (3.9). The allocation of investments in Non-life Insurance has remained almost unchanged during the first quarter. Fixed-income instruments accounted for 75% (73%) of the investment assets. Some 79% (77%) of fixed-income investments belonged to the top three rating categories. The average maturity of the fixed-income portfolio was 3.5 years (3.6) and the return on investment in the report period was -1.8% (-2.7). Owing to uncertainty in the financial markets, credit spread became exceptionally wide, reducing the value of fixed-income investments. There has been no significant change in non-life insurance's investment portfolio during the first quarter. The fixed-income portfolio by credit rating remained healthy, considering that 82% of the fixed-income instruments were rated at least A-. The average residual maturity of the fixed-income portfolio was 4.6 years and the duration 3.4 years (4.3). The January-March loss on investments was 0.4% (loss of 0.6). Credit ratings Of the international credit rating agencies, Fitch Ratings provides a rating for both OP-Pohjola Group and its central bank, Pohjola Bank plc. OP-Pohjola Group's financial position also has a considerable impact on credit ratings issued for Pohjola Bank plc alone. The credit ratings are as follows: -------------------------------------------------------------------------------- | Rating agency | Short-term debt | Long-term debt | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Fitch Rating | F1+ | AA- | | (OP-Pohjola Group and | | | | Pohjola Bank plc) | | | -------------------------------------------------------------------------------- | Standard & Poor's (Pohjola | A-1+ | AA- | | Bank) | | | -------------------------------------------------------------------------------- | Moody's (Pohjola Bank) | P-1 | Aa1 | -------------------------------------------------------------------------------- Both Fitch and Standard & Poor's forecast a stable credit rating outlook for OP-Pohjola Group and Pohjola Bank plc, but Moody's has put Pohjola Bank on its watchlist. OP-Pohjola Group's long-term financial targets OP-Pohjola Group's business strategy adopted in June 2006 describes the Group's long-term financial targets for risk-bearing capacity, profitability, risk appetite and efficiency. Due to the fall in financial instruments' market values, OP-Pohjola Group did not reach its long-term profitability target. The cost/income efficiency weakened from last year's 51% to 52%. The values for risk-bearing capacity and risk appetite were higher than the target levels. Long-term performance indicators -------------------------------------------------------------------------------- | | Indicator | Target | 31 Mar 2009 | 31 Mar 2008 | -------------------------------------------------------------------------------- | Risk-bearing | Non-current | Min. | 1.05 | 1.13 | | capacity | own | 1.0 | | | | | funds/economic | | | | | | capital | | | | -------------------------------------------------------------------------------- | | Indicator | Target | Q1/ | Q1/ | | | | | 2009 | 2009 | -------------------------------------------------------------------------------- | Profitability | Return on | Min. | 7.2% | 19.5% | | | economic | 17% | | | | | capital | | | | -------------------------------------------------------------------------------- | Risk appetite | Impairment | Max. | 0.21% | 0.02% | | | losses on | 0.25% | | | | | receivables/lo | | | | | | an and | | | | | | guarantee | | | | | | portfolio | | | | -------------------------------------------------------------------------------- | Efficiency | Cost/income,% | Max. | 52% | 51% | | (Banking and | | 50% | | | | Investment | | | | | | Services) | | | | | -------------------------------------------------------------------------------- Changes in OP-Pohjola Group's structure OP-Pohjola Group's consolidated financial statements include 227 member cooperative banks, OP-Pohjola Group Central Cooperative Consolidated and OP Bank Group Mutual Insurance Company. Kuusjoen Osuuspankki, Kiikalan Rekijoen Osuuspankki, Kiskon Osuuspankki, Perniön Osuuspankki and Salon Seudun Osuuspankki merged to create Salon Osuuspankki. In another combination merger, Lieksan Osuuspankki, Nurmeksen Osuuspankki and Valtimon Osuuspankki became Pielisen Osuuspankki. The mergers were entered in the Trade Register on 30 April 2009. Following the mergers, member cooperative banks number 221. In December 2008, OP-Pohjola Group Central Cooperative offered its member cooperative banks to subscribe to its supplementary cooperative capital. The subscription period ended on 2 February 2009, resulting in new capital totalling EUR 444 million. The Boards of Directors of Pohjola Bank plc and Pohjola Finance Ltd have approved a plan whereby Pohjola Finance Ltd is expected to merge with its parent company by the end of 2009. Owner-members and customers On 31 March, the cooperative member banks had 1,262,000 owner-members, up by 50,000 year on year. On the same date, Group member banks and Helsinki OP Bank Plc, which operates in the Greater Helsinki Metropolitan Area, had a total of 1,066,000 OP bonus customers. Loyal customer bonuses earned by OP bonus customers totalled EUR 35 million, up by 11% on the previous year. Bonuses earned by owner-members are stated in OP-Pohjola Group's income statement under 'Returns to owner-members'. OP bonus customers used a total of EUR 20 million (13) in bonuses on banking services in the January-March period. Bonuses can also be used to pay for Pohjola's non-life insurance products. In January-March, bonuses worth EUR 16 million were used to pay for insurance premiums. OP-Pohjola Group had a total of 4,143,000 customers in Finland at the end of March, or 56,000 more than a year earlier. There were 3,740,000 private customers, up by 40,000 year on year, and 407,400 corporate customers, up by 12,400. In addition, OP-Pohjola Group has approximately 200,000 non-life insurance customers in the Baltic countries. In the year from March 2008, the number of joint banking and non-life insurance customers increased by 98,000 to 1,013,000 as a result of cross-selling. The number of Pohjola's loyal customer households totalled 395,000, up by 31,800 in the year to 31 March 2009. Personnel and incentive system On 31 March, OP-Pohjola Group had a staff of 12,724, or 28 less than on 31 December 2008 and 150 more than on 31 March 2008. About 94% of OP-Pohjola Group's personnel are members in the Group's Personnel Fund. A management incentive scheme is also in place within the Group. Central Cooperative's corporate governance OP-Pohjola Group Central Cooperative is the central institution of the amalgamation of the cooperative banks, the parent company of OP-Pohjola Group Central Cooperative Consolidated and the company heading the financial and insurance conglomerate formed by OP-Pohjola Group. Acting as a development and service centre for OP-Pohjola Group and as a strategic owner institution, the Central Cooperative plays a pivotal role in developing and steering OP-Pohjola Group's business. The Annual Cooperative Meeting of OP-Pohjola Group Central Cooperative was held on 27 March 2009. The new members elected to the Supervisory Board for 2009-2012 were as follows: Kari Manninen, Managing Director; Jarmo Partanen, Professor; Jorma Vierula, Forest Officer; Tomi Korpisaari, Managing Director; Paavo Pelkonen, Professor; Jorma Pitkälä, maakuntaneuvos (Finnish honorary title); and Jarmo Tuovinen, Managing Director. The Meeting elected Leif Laine, Managing Director, to replace Jari Laaksonen, Managing Director, until 2011. The Supervisory Board comprises 34 members. At is first meeting after the Annual Cooperative Meeting, Supervisory Board elected Paavo Haapakoski Chairman. Jaakko Pehkonen, Professor in economics, and President Jukka Hulkkonen were elected as Vice Chairmen. The Annual Cooperative Meeting re-elected KPMG Oy Ab, a firm of authorised public accountants, the auditor of OP-Pohjola Group Central Cooperative and OP-Pohjola Group for the financial year 2009. Capital expenditure The Central Cooperative, together with its subsidiaries, is responsible for developing OP-Pohjola Group's services. ICT investments and related specifications make up a significant portion of costs of developing these services. ICT procurement capitalised in the balance sheet totalled EUR 14 million (10). Of these investments, EUR 9 million (5) was allocated to banking and investment operations, EUR 3 million (2) to non-life insurance operations and EUR 2 million (3) to life insurance operations. Joint responsibility and joint security Under the Act on Cooperative Banks and Other Cooperative Credit Institutions, the amalgamation of the cooperative banks comprises the organisation's central institution (OP-Pohjola Group Central Cooperative), the Central Cooperative's member credit institutions and the companies belonging to their consolidation groups. This amalgamation is monitored on a consolidated basis. The Central Cooperative and its member banks are ultimately responsible for each other's liabilities and commitments. The Central Cooperative's members at the end of the report period comprised OP-Pohjola Group's 227 member banks as well as Pohjola Bank plc, Helsinki OP Bank Plc, OP Mortgage Bank and OP-Kotipankki Oyj. OP-Pohjola Group's insurance companies do not fall within the scope of joint responsibility. Deposit banks belonging to OP-Pohjola Group, i.e. its member cooperative banks, Pohjola Bank plc, Helsinki OP Bank Plc and OP-Kotipankki Oyj, are regarded as a single bank with respect to deposit protection. Under legislation governing the Investor Compensation Fund, OP-Pohjola Group is also considered a single entity for purposes of compensation protection. Events after the balance sheet date On the basis of the authorisation given by the Annual General Meeting, the Board of Directors of Pohjola Bank plc, a subsidiary of OP-Pohjola Group Central Cooperative, arranged a rights offering of EUR 308 million between 7 and 24 April 2009, which was eventually oversubscribed. Accordingly, the Central Cooperative did not have to underwrite the issue. The issue further strengthened Pohjola's capital base and its capacity to secure its customer companies' funding. Outlook towards the year end The operating environment during the first quarter of 2009 was still burdened by unstable financial markets, major asset price fluctuations, steep fall of short-term market rates and the fact that the costs for long-term funding seem to remain high. The negative effects of the financial crisis are also affecting the real economy more and more. It is exceptionally difficult to predict how the financial sector's operating environment will be affected in the future, but what seems sure is that it will become more and more challenging. Market instability will continue in the months to come, with the financial sector growth slowing down even more, and credit losses increasing on last year. Interest rates are likely to remain exceptionally low throughout 2009, which will affect banks' net interest income. As trends in the operating environment are so difficult to predict, so will any prediction on OP-Pohjola Group's performance in 2009. Nevertheless, the Group's high capital adequacy forms a sound basis to develop our business even under these circumstances. Our strong capital base will also act as a buffer against any credit losses brought about by the recession. All forward-looking statements in this Interim Report expressing the management's expectations, beliefs, estimates, forecasts, projections and assumptions are based on the current view of the future financial performance of OP-Pohjola Group and its various functions, and actual results may differ materially from those expressed in the forward-looking statements. Operations and earnings by business segment OP-Pohjola Group's business segments are Banking and Investment Services, Non-life Insurance and Life Insurance. Non-segment operations are presented in 'Other Operations'. OP-Pohjola Group's segment reporting is based on accounting policies applied in its financial statements. Amortisation on intangible assets arising from the Pohjola acquisition is allocated to the business segments. Companies within the Banking and Investment Services segment are the member banks, Helsinki OP Bank Plc, OP-Kotipankki Oyj, OP Mortgage Bank, OP Fund Management Company Ltd, Pohjola Asset Management Limited, Pohjola Corporate Finance Ltd, Pohjola Capital Partners Ltd, as well as certain smaller companies supporting banking and investment services in their entirety. Pohjola Group's banking and asset management segments are also included in the Banking and Investment Services segment as are the operations of OP-Pohjola Group Mutual Insurance Company, because most of the company's business consists of credit insurance granted to the Group's retail banks. The Non-life Insurance segment encompasses the operations of OP-Pohjola Group's non-life insurance companies, i.e. Pohjola Insurance Ltd, Eurooppalainen Insurance Company Ltd, A-Insurance Ltd, the Seesam companies operating in the Baltic countries, as well as the operations of service companies supporting non-life insurance. The Life Insurance segment comprises OP Life Assurance Company Ltd engaged in the Group's life and pension insurance business. Other Operations includes operations that support all business segments, particularly the operations of OP-Pohjola Group Central Cooperative and Pohjola's Group management. Up until May 2008, FD Finanssidata was included as well. Costs of the services for the business segments are allocated to the segments in the form of internal service charges. The allocation of own capital to the business segments is carried out through an internal bank under Other Operations, which means that any positive results in excess of the target level will be shown under Other Operations. Summary of performance by business segment -------------------------------------------------------------------------------- | EUR million | Incom | Expens | Other | Earnings/ | Earnings/ | Earnings/ | | | e | es | items | loss | loss | loss | | | | | | before | before | before | | | | | | tax | tax | tax | | | | | | Q1/2009 | Q1/2008 | 2008 | -------------------------------------------------------------------------------- | Banking and | 457 | 236 | -58 | 164 | 160 | 532 | | Investment | | | | | | | | Services | | | | | | | -------------------------------------------------------------------------------- | Non-life | 75 | 76 | 0 | -1 | 22 | 55 | | Insurance | | | | | | | -------------------------------------------------------------------------------- | Life insurance | -12 | 13 | 0 | -26 | 0 | -162 | -------------------------------------------------------------------------------- | Other | 88 | 88 | -9 | -9 | -39 | -24 | | Operations | | | | | | | -------------------------------------------------------------------------------- | Eliminations | -97 | -94 | 0 | -3 | -18 | -29 | -------------------------------------------------------------------------------- | Total | 511 | 319 | -67 | 124 | 125 | 372 | -------------------------------------------------------------------------------- Banking and Investment Services The investment environment of Banking and Investment Services was more challenging in the report period. The effects of the financial crisis were becoming more pronounced, as more and more customers suffered from weakened liquidity and declining growth. Low interest rate levels erode net interest income. OP-Pohjola Group's market position has been reinforced in such conditions. OP-Pohjola Group's March-end loan portfolio stood at EUR 51.2 billion (51.0), and the guarantee portfolio totalled EUR 3.1 billion (3.0). The loan portfolio expanded by 9.4% (13.8) in the year to Q1 and by 0.5% in January-March 2009. The market share of the loan portfolio increased year on year by 0.8 percentage points to 32.2%. The rise in credit margins accelerated in January-March. The margins of new home mortgages have grown clearly since summer 2008, chiefly as a result of the higher price of long-term funding. Margins are expected to spread even further. The percentage of fixed-rate home mortgages of all home mortgages remained low at 2.4% (2.4). The portfolio of home mortgages at the end of March amounted to EUR 24.4 billion (24.2). During the past year, home mortgages increased by 10.4% (12.1) and in the report period by 1.2%. OP-Pohjola Group held 36.0% of the home mortgage portfolio on 31 March 2009, up by 1.0 percentage point year on year. On 31 March, the consumer credit portfolio amounted to EUR 3.7 billion (3.7), showing an increase of 8.5% (11) year on year and 0.8% in the report period (2.8). The corporate loan portfolio at the end of March stood at EUR 13.7 billion (13.8), and the guarantee portfolio totalled EUR 2.8 billion (2.6). The corporate loan portfolio rose by 11% year on year, but shrank by 0.9% (8.8) during the report period. Demand for corporate loans slowed down clearly in the first quarter of 2009 as a result of lower customer company investments. On the other hand, guarantees and other off-balance-sheet commitments increased in the report period by 2.1%.March-end market share of corporate loans was 26.7%, or 0.4 percentage points higher than a year ago. On 31 March, deposits totalled EUR 34.8 billion (34.5), up by 13% year on year, and 0.6% during the first quarter. The growth took place mainly in investment deposits, which shot up by 20% to EUR 19.0 billion (19.0). The Group's market share of deposits was 33.8% on 31 March, or 0.7 percentage points higher year on year. On 31 March, OP-Pohjola Group was also the largest financial services group measured in terms of deposits. Capital invested in OP-Pohjola Group's mutual funds stood at EUR 9.0 billion (9.3) billion. The amount of capital fell with the market trends by 3.6% during the report period and by 27% year on year. On 31 March, OP-Pohjola Group held a 22.1% market share of the capital of mutual funds registered in Finland, up by 1.1 percentage points year on year. Net subscriptions to OP-Pohjola Group's mutual funds totalled EUR 7.9 million (minus 1,089). Pohjola's Asset Management managed a total of EUR 24.9 billion at the end of March (25.3), of which capital in OP-Pohjola Group's mutual funds accounted for EUR 8.2 billion (8.5). OP-Pohjola Group companies accounted for EUR 6.5 billion of managed assets. Assets managed in accordance with the OP-Private operating model totalled EUR 2.8 billion (2.7). Stockbroking for households totalled some 211,000 trades during the report period, or up by 44.6% year on year. Earnings and risk exposure Banking and Investment Services reported earnings of EUR 164 million before tax for January-March, showing a 2.7% increase on last year (160). Bonuses given out in the first quarter of 2009 rose by 11% to EUR 35 million (31). Net interest income increased by 3.4% to EUR 274 million and net commissions and fees by 8.2% to EUR 139 million, the net interest income increase stemming from business growth. Net trading and investment income totalled EUR 26 million (2). Trading income in the report period developed extremely favourably, but on the other hand, revaluation losses were recorded of securities from the comparison period. The report period's return of investments was burdened by EUR 10 million impairment losses related to available-for-sale investments. Personnel costs rose by 12.2% and other expenses by 10.7%. A quarter of the rise in personnel costs was the result of the insurance sales personnel joining the payroll of Group member banks on 1 October 2008. On the other hand, insurance sales bonuses are included under net commissions and fees. The cost/income ratio stood at 51.6% (51.5). Impairment losses on receivables came to EUR 20 million (3), the increase being the result of a clear fall in the real economy compared with last year. The amount of impairment losses was still moderate in relation to the business volumes, and below the maximum target the Group set itself. The Group's non-performing and zero-interest receivables increased but remained low, totalling EUR 282 million on 31 March 2009, up by 38% on 31 December 2008. Non-performing and zero-interest loans are stated net of impairments of specific receivables and groups of receivables, which amounted to EUR 109 million (85). The ratio of non-performing and zero-interest receivables to the loan and guarantee portfolio was 0.5%, or slightly higher than a year ago (0.4). Banking and Investment Services: key figures -------------------------------------------------------------------------------- | EUR million | Q1/2009 | Q1/2008 | Change, % | 2008 | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Net interest income | 274 | 265 | 3.4 | 1,121 | -------------------------------------------------------------------------------- | Impairment losses on | 20 | 3 | | 48 | | receivables | | | | | -------------------------------------------------------------------------------- | Other income | 183 | 147 | 25.0 | 489 | -------------------------------------------------------------------------------- | Personnel costs | 106 | 94 | 12.2 | 381 | -------------------------------------------------------------------------------- | Other expenses | 130 | 117 | 10.7 | 494 | -------------------------------------------------------------------------------- | Returns to | 38 | 37 | 1.9 | 154 | | owner-members and OP | | | | | | bonus customers | | | | | -------------------------------------------------------------------------------- | Earnings before tax | 164 | 160 | 2.7 | 532 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR million | Q1/2009 | Q1/2008 | Change, % | 2008 | -------------------------------------------------------------------------------- | Home mortgages drawn | 1,308 | 1,690 | -22.6 | 7,041 | | down | | | | | -------------------------------------------------------------------------------- | Corporate loans drawn | 1,591 | 2,127 | -25.2 | 8,271 | | down | | | | | -------------------------------------------------------------------------------- | Net subscriptions to | 8 | -1,089 | | -2,308 | | mutual funds | | | | | -------------------------------------------------------------------------------- | No. of brokered | 2,988 | 3,916 | -23.7 | 14,569 | | property transactions | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR billion | 31 Mar | 31 Mar | Change, % | 31 Dec | | | 2009 | 2008 | | 2008 | -------------------------------------------------------------------------------- | Outstanding credit | | | | | -------------------------------------------------------------------------------- | Home loans | 24 | 22 | 10.4 | 24 | -------------------------------------------------------------------------------- | Other loans to | 10 | 9 | 6.4 | 10 | | households | | | | | -------------------------------------------------------------------------------- | Corporate loans | 14 | 12 | 11.0 | 14 | -------------------------------------------------------------------------------- | Other loans | 3 | 3 | 4.4 | 3 | -------------------------------------------------------------------------------- | Total | 51 | 47 | 9.4 | 51 | -------------------------------------------------------------------------------- | Guarantee portfolio | 3.1 | 2.5 | 24.1 | 3 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Deposits | | | | | -------------------------------------------------------------------------------- | Total current and | | | | | | payment transfer | | | | | -------------------------------------------------------------------------------- | Households | 10 | 10 | 1.2 | 10 | -------------------------------------------------------------------------------- | Companies | 4 | 3 | 20.1 | 4 | -------------------------------------------------------------------------------- | Others | 2 | 2 | 4.2 | 2 | -------------------------------------------------------------------------------- | Total current and | 16 | 15 | 5.4 | 16 | | payment transfer | | | | | | Total | | | | | -------------------------------------------------------------------------------- | Investment deposits | 19 | 16 | 20.2 | 19 | -------------------------------------------------------------------------------- | Total deposits | 35 | 31 | 13.0 | 35 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Mutual funds | | | | | -------------------------------------------------------------------------------- | Equity and hedge funds | 2.0 | 3.6 | -44.1 | 2.1 | -------------------------------------------------------------------------------- | Balanced funds | 1.2 | 1.8 | -30.4 | 1.3 | -------------------------------------------------------------------------------- | Long-term bond funds | 4.3 | 3.9 | 10.5 | 4.0 | -------------------------------------------------------------------------------- | Money market funds | 1.4 | 3.1 | -54.4 | 1.9 | -------------------------------------------------------------------------------- | Total value of mutual | 8.9 | 12.3 | -27.4 | 9.3 | | funds | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Market share, % | 31 Mar | 31 Mar | Change, | 31 Dec | | | 2009 | 2008 | percentage | 2008 | | | | | points | | -------------------------------------------------------------------------------- | Total loans | 32.2 | 31.4 | 0.8 | 32.0 | -------------------------------------------------------------------------------- | Home mortgages | 36.0 | 35.0 | 1.0 | 35.9 | -------------------------------------------------------------------------------- | Corporate loans | 26.7 | 26.3 | 0.4 | 26.8 | -------------------------------------------------------------------------------- | Total deposits | 33.8 | 33.1 | 0.7 | 33.8 | -------------------------------------------------------------------------------- | Capital invested in | 22.1 | 21.0 | 1.1 | 22.5 | | mutual funds | | | | | -------------------------------------------------------------------------------- | EUR million | | | | | -------------------------------------------------------------------------------- | Non-performing and | | | Change, % | | | zero-interest | | | | | | receivables | | | | | -------------------------------------------------------------------------------- | Households | 169 | 127 | 33.4 | 122 | -------------------------------------------------------------------------------- | Companies and housing | 88 | 64 | 36.8 | 63 | | associations | | | | | -------------------------------------------------------------------------------- | Other | 26 | 13 | 92.3 | 18 | -------------------------------------------------------------------------------- | Total non-performing | 282 | 204 | 38.3 | 203 | | and zero-interest | | | | | | receivables | | | | | -------------------------------------------------------------------------------- | Non-performing and | 0.5 | 0.4 | 0.1 | 0.4 | | zero-interest | | | | | | receivables within loan | | | | | | and guarantee | | | | | | portfolio, % | | | | | -------------------------------------------------------------------------------- * Percentage points Non-life Insurance The non-life insurance business improved well in the report period. On 31 March, the number of loyal customer households within the Non-life Insurance segment totalled 395,000, showing a year-on-year increase of 9%. Insurance premium revenue rose by 5% to EUR 230 million (220). Insurance premium revenue from Private Customers improved by 12% to EUR 98 million. Insurance sales to private customers were transferred to Group member banks in October 2008 with good results: non-life insurance sales in Q1/2009 were 17% higher than in Q1/2008 when the policies were sold in Pohjola Insurance branch offices. In 2009 at least 17 new member banks will begin to sell non-life insurance policies independently. The recession slowed down growth in the corporate customer sector and insurance premium revenue remained at the previous year's level, amounting to EUR 118 million. In the Baltic States, insurance premium revenue rose by 2% to EUR 15 million (14). Pohjola Insurance is the non-life insurance market leader in Finland with a 27.8% market share, its market share increasing in 2008 by 0.5 percentage points. More than 50% of Pohjola's loyal customer households have also concentrated their banking transactions in OP-Pohjola Group member cooperative banks. OP bonuses obtained through bank transactions were used for the payment of insurance premiums to a total of EUR 16 million in January-March 2009 (8). Bonuses were used for the payment of 200,000 bills, with over 72,000 bills paid with bonuses alone. Earnings and risk exposure Non-life Insurance recorded a pre-tax loss of EUR 1 million (earnings of EUR 22 million) in the report period. The balance on technical account during the report period was better than last year. Insurance premium revenue totalled EUR 230 million (220) and indemnities EUR 147 million (156). Net investment losses recognised under earnings/loss came to EUR 2 million, or down by EUR 39 million year on year (income of EUR 38 million). Investment income included EUR 16 million writedowns of available-for-sale securities. The non-life insurance segment's expenses grew by 2% to EUR 76 million (75). Personnel costs were reduced as staff selling insurance policies to private customers moved to work for Group member banks. This arrangement had no significant effect on overall costs. Owing to a favourable development in losses, claims incurred were smaller than last year, although the wider insurance portfolio increased the number of losses. The efficiency of claims settlement and the successful utilisation of partnerships, for instance in the form of referral to treatment and cost control, contributed to this favourable development. The risk ratio was 62.7 (70.0). The limit for major or medium-sized loss is EUR 0.1 million for non-life insurance and EUR 0.5 million for pension liabilities. There were 50 (50) such losses in January-March 2009, with their claims incurred retained for own account totalling EUR 22 million (20). Major losses of over EUR 2 million numbered 3 (2), with the claims incurred retained for Pohjola's account totalling EUR 7 million (7). Operating expenses and loss adjustment expenses grew to EUR 63 million (60), due mainly to higher sales costs. The cost ratio was 28.6 (28.2). Profitability improved significantly within insurance operations. The operating combined ratio stood at 91.3 (98.2). No major changes have taken place in insurance risk exposure. The solvency capital of Non-life Insurance amounted to EUR 627 million (608) at the end of March. The ratio between solvency capital and insurance premium revenue (solvency ratio) was 67% (66). Pohjola Bank plc capitalised the insurance companies it owns with EUR 20 million in January-March. Non-life Insurance's investment portfolio totalled EUR 2.5 billion (2.4) on 31 March, with bonds and bond funds accounting for 83% (82) and equities 7% (8). The average remaining maturity of the fixed-income portfolio was 4.6 years and the duration 3.4 years (4.3). Due to unfavourable developments in the equity market, return on investment at fair value stood at -0.4% (-0.6). Non-life Insurance: key figures -------------------------------------------------------------------------------- | EUR million | Q1/2009 | Q1/2008 | Change. | 2008 | | | | | % | | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Insurance premium revenue | 230 | 220 | 4.9 | 923 | -------------------------------------------------------------------------------- | Insurance claims and | 147 | 156 | -5.5 | 591 | | benefits | | | | | -------------------------------------------------------------------------------- | Net investment income | -2 | 38 | -104.9 | 59 | -------------------------------------------------------------------------------- | Unwinding of discount and | -12 | -10 | 16.8 | -40 | | other items included in | | | | | | net income | | | | | -------------------------------------------------------------------------------- | Net income from Non-life | 70 | 92 | -23.7 | 352 | | Insurance | | | | | -------------------------------------------------------------------------------- | Other income | 4 | 5 | -17.0 | 20 | -------------------------------------------------------------------------------- | Personnel costs | 26 | 27 | -2.2 | 111 | -------------------------------------------------------------------------------- | Other expenses | 50 | 48 | 3.6 | 206 | -------------------------------------------------------------------------------- | Earnings/loss before tax | -1 | 22 | -106.7 | 55 | -------------------------------------------------------------------------------- | Gross change in fair value | 2 | -55 | -104.0 | -214 | | reserve | | | | | -------------------------------------------------------------------------------- | Earnings/loss before tax | 1 | -32 | -102.1 | -159 | | at fair value | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR million | Q1/2009 | Q1/2008 | Change. | 2008 | | | | | % | | -------------------------------------------------------------------------------- | Insurance premium revenue | | | | | -------------------------------------------------------------------------------- | Private Customers | 98 | 87 | 11.8 | 380 | -------------------------------------------------------------------------------- | Corporate Customers | 118 | 118 | 0.1 | 485 | -------------------------------------------------------------------------------- | Baltic States | 15 | 15 | 2.2 | 58 | -------------------------------------------------------------------------------- | Total insurance premium | 230 | 220 | 4.9 | 923 | | revenue | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR billion | 31 Mar | 31 Mar | Change. | 31 Dec | | | 2009 | 2009 | % | 2008 | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Insurance contract | | | | | | liabilities | | | | | -------------------------------------------------------------------------------- | Discounted insurance | 1.3 | 1.2 | 2.4 | 1.3 | | contract liabilities | | | | | -------------------------------------------------------------------------------- | Other insurance contract | 1.1 | 1.0 | 6.6 | 0.8 | | liabilities | | | | | -------------------------------------------------------------------------------- | Total | 2.3 | 2.2 | 4.3 | 2.1 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Investment portfolio | | | | | -------------------------------------------------------------------------------- | Bonds and bond funds | 1.7 | 1.8 | -1.9 | 1.7 | -------------------------------------------------------------------------------- | Money market instruments | 0.4 | 0.1 | 181.3 | 0.3 | -------------------------------------------------------------------------------- | Equities and equity funds | 0.2 | 0.4 | -48.6 | 0.2 | -------------------------------------------------------------------------------- | Real property investment | 0.1 | 0.1 | 9.1 | 0.1 | | *) | | | | | -------------------------------------------------------------------------------- | Alternative investments | 0.1 | 0.2 | -35.5 | 0.1 | -------------------------------------------------------------------------------- | Total | 2.5 | 2.6 | -0.7 | 2.4 | -------------------------------------------------------------------------------- *) Includes real estate funds Life insurance The first quarter of 2009 continued to be unfavourable to life insurance operations. The uncertainty of the investment markets weakened demand for savings products, and the premiums written of the domestic life insurance market fell 5.2% short of last year. Year on year, OP-Pohjola Group's premiums written in life and pension insurance decreased by 35% to EUR 151 million (232). The 2008 comparison data contains EUR 36 million of exceptional premiums written as a result of group insurance portfolio transfer. Premiums written in endowment insurance declined by 33%, and premiums written of personal pension plans increased by 48%. Unit-linked premiums written accounted for 52%. On 31 March 2009, OP-Pohjola Group had a market share of 24%, down by 5.4% from 31 December 2008. Life insurance claims paid by OP-Pohjola Group totalled EUR 142 million (197), of which surrenders accounted for EUR 51 million (119). EUR 14 million in pensions (11) was paid out in the report period. OP-Pohjola Group's market share of insurance savings through life and pension insurance policies stood at 19.3% (19.4). Earnings and risk exposure Life Insurance's pre-tax loss came to EUR 26 million (0). During the comparison period, a provision worth EUR 10 million for future supplementary benefits was reversed. The fair value reserve change before tax stood at EUR -40 million (-120) during the report period. Net losses from Life Insurance were EUR 15 million (income of EUR 9 million). Net loss from investment assets other than those covering unit-linked insurance stood at EUR 4 million (profit of EUR 4 million). Investment income includes EUR 61 million impairment loss of available-for-sale securities. Personnel costs increased by 2% to EUR 2 million, while other expenses decreased by 17% to EUR 11 million (13). Other expenses include EUR 7.5 million (7.2) in commissions paid to the sales network. At the end of March, total insurance contract liabilities within life insurance operations stood at EUR 5.3 billion (5.3), down by 0.6% from the level of 31 December 2008. Interest-bearing contract liabilities accounted for 71.2% and unit-linked 28.8% of the total liabilities. Life insurance investment assets, excluding assets covering unit-linked insurance, amounted to EUR 3.9 billion (3.9). The investment environment remained challenging and the report period's investment losses stood at 1.8% (losses of 2.7%). Owing to the instability of the investment market, OP-Pohjola Group Central Cooperative, being the chief owner, increased OP Life Assurance Company's operating capital during the report period by means EUR 150 million invested in a reserve for invested non-restricted equity. Life Insurance: key figures -------------------------------------------------------------------------------- | EUR million | Q1/2009 | Q1/2008 | Change, % | 2008 | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Premiums written | 151 | 232 | -35.0 | 717 | -------------------------------------------------------------------------------- | Unit-linked | 65 | 86 | -24.4 | 299 | -------------------------------------------------------------------------------- | Other | 85 | 145 | -41.2 | 418 | -------------------------------------------------------------------------------- | Net investment income | -62 | -199 | -68.8 | -802 | -------------------------------------------------------------------------------- | Unit-linked | -58 | -203 | -71.4 | -708 | -------------------------------------------------------------------------------- | Other | -4 | 4 | | -94 | -------------------------------------------------------------------------------- | Change in insurance contract | -37 | -171 | -78.1 | -590 | | liabilities | | | | | -------------------------------------------------------------------------------- | Unit-linked | -50 | -252 | -80.3 | -758 | -------------------------------------------------------------------------------- | Other | 12 | 82 | -84.8 | 168 | -------------------------------------------------------------------------------- | Claims incurred | 142 | 197 | -27.9 | 643 | -------------------------------------------------------------------------------- | Other items | 1 | 3 | -72.2 | 12 | -------------------------------------------------------------------------------- | Net income from Life | -15 | 9 | | -126 | | Insurance | | | | | -------------------------------------------------------------------------------- | Other income | 2 | 6 | -57.0 | 16 | -------------------------------------------------------------------------------- | Personnel costs | 2 | 2 | 4.1 | 5 | -------------------------------------------------------------------------------- | Other expenses | 11 | 13 | -16.7 | 48 | -------------------------------------------------------------------------------- | Earnings/loss before tax | -26 | 0 | | -162 | -------------------------------------------------------------------------------- | Gross change in fair value | -40 | -120 | -66.4 | -403 | | reserve | | | | | -------------------------------------------------------------------------------- | Earnings/loss before tax at | -66 | -120 | -45.0 | -565 | | fair value | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR million | Q1/2009 | Q1/2008 | Change, % | 2008 | -------------------------------------------------------------------------------- | Premiums written | | | | | -------------------------------------------------------------------------------- | Endowment insurance | 89 | 133 | -32.9 | 382 | -------------------------------------------------------------------------------- | Pension insurance | 39 | 75 | -48.4 | 279 | -------------------------------------------------------------------------------- | Term life insurance | 16 | 19 | -19.5 | 73 | -------------------------------------------------------------------------------- | Other | 1 | 4 | -80.0 | 33 | -------------------------------------------------------------------------------- | Total premiums written | 145 | 232 | -37.7 | 766 | -------------------------------------------------------------------------------- | of which unit-linked | 66 | 90 | -27.1 | 317 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Market share of premiums | 24.0 | 36.5 | -12.5 | 29.3 | | written in life and pension | | | | | | insurance, % | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR billion | 31 Mar | 31 Mar | Change. | 31 Dec | | | 2009 | 2008 | % | 2008 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Insurance savings | | | | | -------------------------------------------------------------------------------- | Endowment insurance | 3.7 | 4.1 | -11.4 | 3.7 | -------------------------------------------------------------------------------- | Pension insurance | 1.5 | 1.5 | 0.1 | 1.5 | -------------------------------------------------------------------------------- | Capital redemption contracts | 0.1 | 0.1 | -28.0 | 0.1 | -------------------------------------------------------------------------------- | Total insurance savings | 5.3 | 5.8 | -8.7 | 5.4 | -------------------------------------------------------------------------------- | of which unit-linked | 1.6 | 2.1 | -26.5 | 1.6 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Investment portfolio | | | | | -------------------------------------------------------------------------------- | Bonds and bond funds | 2.2 | 2.5 | -10.3 | 2.3 | -------------------------------------------------------------------------------- | Money market instruments | 0.7 | 0.1 | | 0.6 | -------------------------------------------------------------------------------- | Equities and equity funds | 0.2 | 0.7 | -77.1 | 0.2 | -------------------------------------------------------------------------------- | Real property investment **) | 0.3 | 0.3 | 3.5 | 0.3 | -------------------------------------------------------------------------------- | Alternative investments | 0.5 | 0.6 | -7.0 | 0.5 | -------------------------------------------------------------------------------- | Total investment portfolio | 3.9 | 4.1 | -4.5 | 3.9 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Market share of insurance | 19.3 | 19.7 | -0.4 | 19.4 | | savings in life and pension | | | | | | insurance, % | | | | | -------------------------------------------------------------------------------- * Percentage points ** Includes real estate funds Other Operations Other Operations' pre-tax result for January-March was EUR 30 million better than last year, ending in a loss of EUR 9 million (loss of EUR 39 million). Impairments on the liquidity reserves eroded the result by EUR 49 million. In the latter half of 2008, OP-Pohjola Group revised its liquidity strategy, and reclassified the securities included in the liquidity reserve in terms of accounting. This means that changes in fair value are no longer recognised through profit or loss under Net trading income. EUR 9 million impairment losses from these securities have been recorded under Impairments of receivables. Net investment income was EUR 8 million (4), net trading income EUR 1 million (loss of EUR 42 million) and the net investment losses EUR 6 million (income of EUR 2 million). Most of the other income in Other Operations came from within the Group as internal service charges, which are recorded as business segment expenses. Of the Other Operations expenses, EUR 29 million (29) were personnel costs and EUR 59 million (54) other costs. Other Operations: key figures -------------------------------------------------------------------------------- | EUR million | Q1/2009 | Q1/2008 | Change, % | 2008 | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Net interest income | 8 | 4 | 74.8 | 39 | -------------------------------------------------------------------------------- | Net trading income | 1 | -42 | -101.9 | -61 | -------------------------------------------------------------------------------- | Net investment income | -6 | 2 | -388.1 | 10 | -------------------------------------------------------------------------------- | Other income | 94 | 85 | 10.5 | 373 | -------------------------------------------------------------------------------- | Expenses | 88 | 84 | 4.0 | 337 | -------------------------------------------------------------------------------- | Impairment losses on | 9 | -1 | | 10 | | receivables | | | | | -------------------------------------------------------------------------------- | Earnings/loss before tax | -9 | -39 | -76.3 | -24 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR billion | 31 Mar | 31 Mar | Change, % | | | | 2009 | 2008 | | | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Receivables from | 6.4 | 4.7 | 37.2 | 6.3 | | financial institutions | | | | | -------------------------------------------------------------------------------- | Financial assets held for | 1.2 | 3.5 | -66.7 | 2.1 | | trading | | | | | -------------------------------------------------------------------------------- | Investment assets | 3.9 | 2.4 | 64.4 | 2.5 | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Liabilities to credit | 2.7 | 3.6 | -24.0 | 3.4 | | institutions | | | | | -------------------------------------------------------------------------------- | Debt securities issued to | 16.0 | 12.9 | 23.9 | 17.1 | | the public | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | FINANCIAL STATEMENTS AND NOTES | -------------------------------------------------------------------------------- | Income statement | -------------------------------------------------------------------------------- | Statement of comprehensive income | -------------------------------------------------------------------------------- | Key figure, ratios and definitions | -------------------------------------------------------------------------------- | Financial performance by quarter | -------------------------------------------------------------------------------- | Balance sheet | -------------------------------------------------------------------------------- | Statement of changes in equity | -------------------------------------------------------------------------------- | Cash flow statement | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Notes: | -------------------------------------------------------------------------------- | Note 1. Accounting policies | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Notes to the income statement and balance sheet: | -------------------------------------------------------------------------------- | Note 2. Net interest income | -------------------------------------------------------------------------------- | Note 3. Impairments of receivables | -------------------------------------------------------------------------------- | Note 4. Net income from Non-life Insurance | -------------------------------------------------------------------------------- | Note 5. Net income from Life Insurance | -------------------------------------------------------------------------------- | Note 6. Net commissions and fees | -------------------------------------------------------------------------------- | Note 7. Net trading income | -------------------------------------------------------------------------------- | Note 8. Net investment income | -------------------------------------------------------------------------------- | Note 9. Other operating income | -------------------------------------------------------------------------------- | Note 10. Personnel costs | -------------------------------------------------------------------------------- | Note 11. Other administrative expenses | -------------------------------------------------------------------------------- | Note 12. Other operating expenses | -------------------------------------------------------------------------------- | Note 13. Returns to owner-members | -------------------------------------------------------------------------------- | Note 14. Classification of financial instruments | -------------------------------------------------------------------------------- | Note 15. Reclassified notes and bonds | -------------------------------------------------------------------------------- | Note 16. Non-life Insurance assets | -------------------------------------------------------------------------------- | Note 17. Life Insurance assets | -------------------------------------------------------------------------------- | Note 18. Debt securities issued to the public | -------------------------------------------------------------------------------- | Note 19. Fair value reserve after income tax | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Other notes: | -------------------------------------------------------------------------------- | Note 20. Collateral given | -------------------------------------------------------------------------------- | Note 21. Off-balance-sheet commitments | -------------------------------------------------------------------------------- | Note 22. Derivative contracts | -------------------------------------------------------------------------------- | Note 23. Related-party transactions | -------------------------------------------------------------------------------- OP-Pohjola Group income statement -------------------------------------------------------------------------------- | EUR million | Q1/ | Q1/ | Change, | 2008 | | | 2009 | 2008 | % | | -------------------------------------------------------------------------------- | Interest income | 1,003 | 1,113 | -10 | 4,853 | -------------------------------------------------------------------------------- | Interest expenses | 716 | 841 | -15 | 3,664 | -------------------------------------------------------------------------------- | Net interest income (Note 2) | 287 | 272 | 5 | 1,189 | -------------------------------------------------------------------------------- | Impairments of receivables (Note | 29 | 2 | | 58 | | 3) | | | | | -------------------------------------------------------------------------------- | Net interest income after | 258 | 270 | -4 | 1,131 | | impairments | | | | | -------------------------------------------------------------------------------- | Net income from Non-life | 69 | 89 | -23 | 345 | | Insurance operations | | | | | | (Note 4) | | | | | -------------------------------------------------------------------------------- | Net income from Life Insurance | -21 | 8 | | -139 | | operations (Note 5) | | | | | -------------------------------------------------------------------------------- | Net commissions and fees (Note | 130 | 124 | 4 | 433 | | 6) | | | | | -------------------------------------------------------------------------------- | Net trading income (Note 7) | 28 | -58 | | -125 | -------------------------------------------------------------------------------- | Net investment income (Note 8) | -8 | 18 | | 25 | -------------------------------------------------------------------------------- | Other operating income (Note 9) | 25 | 23 | 8 | 93 | -------------------------------------------------------------------------------- | Personnel costs (Note 10) | 163 | 152 | 7 | 598 | -------------------------------------------------------------------------------- | Other administrative expenses | 80 | 82 | -3 | 328 | | (Note 11) | | | | | -------------------------------------------------------------------------------- | Other operating expenses (Note | 76 | 77 | -2 | 312 | | 12) | | | | | -------------------------------------------------------------------------------- | Returns to owner-members (Note | 38 | 37 | 2 | 154 | | 13) | | | | | -------------------------------------------------------------------------------- | Share of associates' | 0 | 0 | -97 | 1 | | profits/losses | | | | | -------------------------------------------------------------------------------- | Earnings before tax for the | 124 | 125 | 0 | 372 | | period | | | | | -------------------------------------------------------------------------------- | Income tax expense | 61 | 34 | 78 | 151 | -------------------------------------------------------------------------------- | Profit for the period | 63 | 91 | -30 | 221 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Profit attributable to: | | | | | -------------------------------------------------------------------------------- | OP-Pohjola Group's owners | 63 | 91 | -30 | 221 | -------------------------------------------------------------------------------- | Minority interest | 0 | 0 | | 0 | -------------------------------------------------------------------------------- | Total | 63 | 91 | -30 | 221 | -------------------------------------------------------------------------------- OP-Pohjola Group statement of comprehensive income -------------------------------------------------------------------------------- | EUR million | Q1/ | Q1/ | Change, | 2008 | | | 2009 | 2008 | % | | -------------------------------------------------------------------------------- | Profit for the period | 63 | 91 | -30 | 221 | -------------------------------------------------------------------------------- | Change in fair value reserve | -40 | -196 | -80 | -737 | -------------------------------------------------------------------------------- | Translation differences | 0 | 0 | -46 | 0 | -------------------------------------------------------------------------------- | Income tax on other | 10 | 51 | -80 | 191 | | comprehensive income | | | | | -------------------------------------------------------------------------------- | Total comprehensive income for | 34 | -54 | | -324 | | the period | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total comprehensive income | 34 | -54 | | -324 | | attributable to: | | | | | -------------------------------------------------------------------------------- | OP-Pohjola Group's owners | - | - | | - | -------------------------------------------------------------------------------- | Minority interest | 34 | -54 | | -324 | -------------------------------------------------------------------------------- | Total | | | | | -------------------------------------------------------------------------------- | Key figures and ratios | Q1/ | Q1/ | | 2008 | | | 2009 | 2008 | | | -------------------------------------------------------------------------------- | Return on equity, % | 4.9 | 6.6 | | 4.1 | -------------------------------------------------------------------------------- | Return on equity at fair value, | 2.7 | -3.9 | | -6.0 | | % | | | | | -------------------------------------------------------------------------------- | Return on assets, % | 0.34 | 0.54 | | 0.31 | -------------------------------------------------------------------------------- | Cost/income ratio, % | 62 | 65 | | 68 | -------------------------------------------------------------------------------- | Average personnel | 12,693 | 12,514 | | 12,615 | -------------------------------------------------------------------------------- | Full-time | 11,490 | 11,303 | | 11,464 | -------------------------------------------------------------------------------- | Part-time | 1,203 | 1,211 | | 1,151 | -------------------------------------------------------------------------------- Definition of key figures and ratios Return on equity (ROE) = Profit for the period / Equity capital (average of the beginning and end of the period) x 100 Return on equity at fair value, % = Profit for the period + change in fair value reserve less deferred tax liability / equity capital (average of the beginning and end of the period) x 100 Return on assets (ROA) = Profit for the period / Balance sheet total (average of the beginning and end of the period) x 100 Cost/income ratio, % = (Personnel costs + other administrative expenses + other operating expenses) / (Net interest income + net income from Non-life Insurance operations + net income from Life Insurance operations + net commissions and fees + net trading income + net investment income + other operating income + share of associates' profits/losses) x 100 Combined ratio (excl. unwinding of discount) Loss ratio+expense ratio Risk ratio+cost ratio Loss ratio (exc. unwinding of discount) Claims and loss adjustment expenses / Net insurance premium revenue x 100 Expense ratio Operating expenses + Amortisation/adjustment of intangible assets related to company acquisition / Net insurance premium revenue x 100 Risk ratio (excl. unwinding of discount) Claims excl. loss adjustment expenses / Net insurance premium revenue x 100 Cost ratio Operating expenses and loss adjustments expenses / Net insurance premium revenue x 100 OP-Pohjola Group quarterly performance -------------------------------------------------------------------------------- | | 2008 | 2009 | -------------------------------------------------------------------------------- | EUR million | Q1 | Q2 | Q3 | Q4 | Q1 | -------------------------------------------------------------------------------- | Interest income | 1,113 | 1,140 | 1,257 | 1,343 | 1,003 | -------------------------------------------------------------------------------- | Interest expenses | 841 | 844 | 952 | 1,026 | 716 | -------------------------------------------------------------------------------- | Net interest income | 272 | 296 | 305 | 316 | 287 | -------------------------------------------------------------------------------- | Impairments of | 2 | 7 | 18 | 31 | 29 | | receivables | | | | | | -------------------------------------------------------------------------------- | Net interest income | 270 | 289 | 287 | 285 | 258 | | after impairments | | | | | | -------------------------------------------------------------------------------- | Net income from | 89 | 89 | 96 | 72 | 69 | | Non-life Insurance | | | | | | | operations | | | | | | -------------------------------------------------------------------------------- | Net income from Life | 8 | -7 | -91 | -49 | -21 | | Insurance operations | | | | | | -------------------------------------------------------------------------------- | Net commissions and | 124 | 107 | 100 | 102 | 130 | | fees | | | | | | -------------------------------------------------------------------------------- | Net trading income | -58 | 1 | -37 | -30 | 28 | -------------------------------------------------------------------------------- | Net investment | 18 | 13 | 10 | -16 | -8 | | income | | | | | | -------------------------------------------------------------------------------- | Other operating | 23 | 23 | 22 | 25 | 25 | | income | | | | | | -------------------------------------------------------------------------------- | Personnel costs | 152 | 158 | 130 | 158 | 163 | -------------------------------------------------------------------------------- | Other administrative | 82 | 86 | 61 | 97 | 80 | | expenses | | | | | | -------------------------------------------------------------------------------- | Other operating | 77 | 72 | 80 | 84 | 76 | | expenses | | | | | | -------------------------------------------------------------------------------- | Returns to | 37 | 40 | 42 | 35 | 38 | | owner-members | | | | | | -------------------------------------------------------------------------------- | Share of associates' | 0 | 0 | 0 | 0 | 0 | | profits/losses | | | | | | -------------------------------------------------------------------------------- | Earnings before tax | 125 | 158 | 74 | 15 | 124 | | for the period | | | | | | -------------------------------------------------------------------------------- | Income tax expense | 34 | 44 | 28 | 45 | 61 | -------------------------------------------------------------------------------- | Profit for the | 91 | 114 | 46 | -30 | 63 | | period | | | | | | -------------------------------------------------------------------------------- | Other comprehensive | | | | | | | income | | | | | | -------------------------------------------------------------------------------- | Change in fair value | -196 | -108 | -133 | -299 | -40 | | reserve | | | | | | -------------------------------------------------------------------------------- | Translation | 0 | 0 | 0 | 0 | 0 | | differences | | | | | | -------------------------------------------------------------------------------- | Income tax on other | 51 | 28 | 34 | 78 | 10 | | comprehensive income | | | | | | -------------------------------------------------------------------------------- | Total comprehensive | -54 | 34 | -52 | -251 | 34 | | income for the | | | | | | | period | | | | | | -------------------------------------------------------------------------------- OP-Pohjola Group balance sheet -------------------------------------------------------------------------------- | EUR million | 31 March | 31 March | Change, | 31. Dec | | | 2009 | 2008 | % | 2008 | -------------------------------------------------------------------------------- | Cash and cash equivalents | 1,028 | 1,112 | -8 | 2,393 | -------------------------------------------------------------------------------- | Receivables from credit | 2,332 | 386 | | 2,450 | | institutions | | | | | -------------------------------------------------------------------------------- | Financial assets at fair value | 2,153 | 5,390 | -60 | 3,313 | | through profit or loss (Note | | | | | | 13) | | | | | -------------------------------------------------------------------------------- | Derivative contracts | 1,594 | 651 | | 1,470 | -------------------------------------------------------------------------------- | Receivables from customers | 51,943 | 46,860 | 11 | 51,708 | -------------------------------------------------------------------------------- | Non-life Insurance assets (Note | 3,070 | 3,055 | 0 | 2,670 | | 14) | | | | | -------------------------------------------------------------------------------- | Life Insurance assets (Note 15) | 5,075 | 6,118 | -17 | 5,093 | -------------------------------------------------------------------------------- | Investment assets (Note 16) | 4,182 | 2,630 | 59 | 2,441 | -------------------------------------------------------------------------------- | Investments in associates | 16 | 25 | -37 | 17 | -------------------------------------------------------------------------------- | Intangible assets | 1,206 | 1,237 | -3 | 1,211 | -------------------------------------------------------------------------------- | Property, plant and equipment | 765 | 738 | 4 | 762 | | (PPE) | | | | | -------------------------------------------------------------------------------- | Other assets | 2,027 | 1,973 | 3 | 1,814 | -------------------------------------------------------------------------------- | Tax assets | 425 | 200 | | 403 | -------------------------------------------------------------------------------- | Total assets | 75,816 | 70,375 | 8 | 75,746 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Liabilities to credit | 760 | 2,681 | -72 | 693 | | institutions | | | | | -------------------------------------------------------------------------------- | Financial liabilities at fair | 198 | 367 | -46 | 138 | | value through profit or loss | | | | | -------------------------------------------------------------------------------- | Derivative contracts | 1,690 | 751 | | 1,565 | -------------------------------------------------------------------------------- | Liabilities to customers | 37,155 | 33,517 | 11 | 37,082 | -------------------------------------------------------------------------------- | Non-life Insurance liabilities | 2,676 | 2,559 | 5 | 2,238 | | (Note 17) | | | | | -------------------------------------------------------------------------------- | Life Insurance liabilities | 5,370 | 5,921 | -9 | 5,413 | | (Note 18) | | | | | -------------------------------------------------------------------------------- | Debt securities issued to the | 17,515 | 13,803 | 27 | 18,164 | | public (Note 19) | | | | | -------------------------------------------------------------------------------- | Provisions and other | 2,327 | 2,586 | -10 | 2,393 | | liabilities | | | | | -------------------------------------------------------------------------------- | Tax liabilities | 1,013 | 927 | 9 | 971 | -------------------------------------------------------------------------------- | Cooperative capital | 590 | 585 | 1 | 570 | -------------------------------------------------------------------------------- | Subordinated liabilities (Note | 1,315 | 1,182 | 11 | 1,304 | | 20) | | | | | -------------------------------------------------------------------------------- | Total liabilities | 70,608 | 64,880 | 9 | 70,531 | -------------------------------------------------------------------------------- Equity capital -------------------------------------------------------------------------------- | Share of OP-Pohjola Group's | | | | | | owners | | | | | -------------------------------------------------------------------------------- | Share and cooperative capital | 361 | 359 | 1 | 362 | -------------------------------------------------------------------------------- | Fair value reserve (Note 19) | -585 | -155 | | -556 | -------------------------------------------------------------------------------- | Other reserves | 2,381 | 2,293 | 4 | 2,375 | -------------------------------------------------------------------------------- | Retained earnings | 3,050 | 2,996 | 2 | 3,034 | -------------------------------------------------------------------------------- | Minority interest | 0 | 3 | | 0 | -------------------------------------------------------------------------------- | Total equity capital | 5,208 | 5,495 | -5 | 5,215 | -------------------------------------------------------------------------------- | Total liabilities and equity | 75,816 | 70,375 | 8 | 75,746 | | capital | | | | | -------------------------------------------------------------------------------- Statement of changes in equity capital -------------------------------------------------------------------------------- | EUR million | Share | Fair | Other | Retain | Minorit | Total | | | and | value | reserv | ed | y | equity | | | cooper | reserv | es | earnin | interes | capital | | | ative | e | | gs | t | | | | capita | | | | | | | | l | | | | | | -------------------------------------------------------------------------------- | Balance at 1 January | 359 | -10 | 2,235 | 3,052 | 3 | 5,638 | | 2008 | | | | | | | -------------------------------------------------------------------------------- | Increase of share | - | - | - | - | - | - | | capital | | | | | | | -------------------------------------------------------------------------------- | Transfer of | 1 | - | - | - | - | 1 | | cooperative capital | | | | | | | | to equity capital | | | | | | | -------------------------------------------------------------------------------- | Transfer of reserves | - | - | 57 | -57 | - | - | -------------------------------------------------------------------------------- | Profit distribution | - | - | - | -80 | - | -80 | -------------------------------------------------------------------------------- | Total comprehensive | - | -145 | - | 91 | 0 | -54 | | income for the | | | | | | | | period | | | | | | | -------------------------------------------------------------------------------- | Other | -2 | - | 1 | -9 | 0 | -10 | -------------------------------------------------------------------------------- | Balance at 31 March | 359 | -155 | 2,293 | 2,996 | 3 | 5,495 | | 2008 | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Balance at 1 January | 362 | -556 | 2,375 | 3,034 | 0 | 5,215 | | 2009 | | | | | | | -------------------------------------------------------------------------------- | Increase of share | - | - | - | - | - | - | | capital | | | | | | | -------------------------------------------------------------------------------- | Transfer of | 1 | - | - | - | - | 1 | | cooperative capital | | | | | | | | to equity capital | | | | | | | -------------------------------------------------------------------------------- | Transfer of reserves | - | - | 6 | -6 | - | - | -------------------------------------------------------------------------------- | Profit distribution | - | - | - | -29 | 0 | -29 | -------------------------------------------------------------------------------- | Total comprehensive | - | -29 | - | 63 | 0 | 34 | | income for the | | | | | | | | period | | | | | | | -------------------------------------------------------------------------------- | Other | -1 | - | 0 | -12 | 0 | -13 | -------------------------------------------------------------------------------- | Balance at 31 March | 361 | -585 | 2,381 | 3,050 | 0 | 5,208 | | 2009 | | | | | | | -------------------------------------------------------------------------------- Cash flow statement -------------------------------------------------------------------------------- | EUR million | Q1/ | Q1/ | | | 2009 | 2008 | -------------------------------------------------------------------------------- | Cash flow from operating activities | | | -------------------------------------------------------------------------------- | Profit for the period | 63 | 91 | -------------------------------------------------------------------------------- | Adjustments to profit for the period | 475 | 382 | -------------------------------------------------------------------------------- | Increase (-) or decrease (+) in | -1,671 | -4,078 | | operating assets | | | -------------------------------------------------------------------------------- | Receivables from credit institutions | 64 | -97 | -------------------------------------------------------------------------------- | Financial assets at fair value through | 1,118 | -603 | | profit or loss | | | -------------------------------------------------------------------------------- | Derivative contracts | -7 | -13 | -------------------------------------------------------------------------------- | Receivables from customers | -225 | -1,870 | -------------------------------------------------------------------------------- | Non-life Insurance assets | -432 | -362 | -------------------------------------------------------------------------------- | Life Insurance assets | -138 | -128 | -------------------------------------------------------------------------------- | Investment assets | -1,814 | -616 | -------------------------------------------------------------------------------- | Other assets | -235 | -389 | -------------------------------------------------------------------------------- | Increase (+) or decrease (-) in | 306 | 4,399 | | operating liabilities | | | -------------------------------------------------------------------------------- | Liabilities to credit institutions | 67 | 1,553 | -------------------------------------------------------------------------------- | Financial liabilities at fair value | 59 | 315 | | through profit or loss | | | -------------------------------------------------------------------------------- | Derivative contracts | 14 | 8 | -------------------------------------------------------------------------------- | Liabilities to customers | 72 | 2,293 | -------------------------------------------------------------------------------- | Non-life Insurance liabilities | 244 | 214 | -------------------------------------------------------------------------------- | Life Insurance liabilities | -5 | -17 | -------------------------------------------------------------------------------- | Provisions and other liabilities | -146 | 32 | -------------------------------------------------------------------------------- | Income tax paid | 15 | -32 | -------------------------------------------------------------------------------- | Dividends received | 43 | 45 | -------------------------------------------------------------------------------- | A. Net cash from operating activities | -770 | 806 | -------------------------------------------------------------------------------- | Cash flow from investing activities | | | -------------------------------------------------------------------------------- | Increases in held-to-maturity financial | -6 | -16 | | assets | | | -------------------------------------------------------------------------------- | Decreases in held-to-maturity financial | 27 | 7 | | assets | | | -------------------------------------------------------------------------------- | Acquisition of subsidiaries, net of cash | 0 | -29 | | acquired | | | -------------------------------------------------------------------------------- | Disposal of subsidiaries, net of cash | - | 1 | | disposed | | | -------------------------------------------------------------------------------- | Purchase of PPE and intangible assets | -22 | -31 | -------------------------------------------------------------------------------- | Proceeds from sale of PPE and intangible | 1 | 0 | | assets | | | -------------------------------------------------------------------------------- | B. Net cash used in investing activities | 0 | -69 | -------------------------------------------------------------------------------- | Cash flow from financing activities | | | -------------------------------------------------------------------------------- | Increases in subordinated liabilities | 148 | 183 | -------------------------------------------------------------------------------- | Decreases in subordinated liabilities | -138 | -43 | -------------------------------------------------------------------------------- | Increases in debt securities issued to | 12,597 | 8,170 | | the public | | | -------------------------------------------------------------------------------- | Decreases in debt securities issued to | -13,286 | -8,429 | | the public | | | -------------------------------------------------------------------------------- | Increases in cooperative and share | 37 | 28 | | capital | | | -------------------------------------------------------------------------------- | Decreases in cooperative and share | -17 | -13 | | capital | | | -------------------------------------------------------------------------------- | Dividends paid and interest on | -29 | -80 | | cooperative capital | | | -------------------------------------------------------------------------------- | Returns to owner-members | -3 | 0 | -------------------------------------------------------------------------------- | Monetary increases in other equity items | - | 0 | -------------------------------------------------------------------------------- | Other | - | - | -------------------------------------------------------------------------------- | C. Net cash from financing activities | -690 | -183 | -------------------------------------------------------------------------------- | Net change in cash and cash equivalents | -1,460 | 555 | | (A+B+C) | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash and cash equivalents at | 2,538 | 700 | | period-start | | | -------------------------------------------------------------------------------- | Cash and cash equivalents at period-end | 1,078 | 1,255 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest received | 1,021 | 1,113 | -------------------------------------------------------------------------------- | Interest paid | -962 | -841 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Adjustments to profit for the period | | | -------------------------------------------------------------------------------- | Non-cash transactions and other | | | | adjustments | | | -------------------------------------------------------------------------------- | Impairments of receivables | 31 | 3 | -------------------------------------------------------------------------------- | Unrealised net earnings in Non-life | 230 | 206 | | Insurance | | | -------------------------------------------------------------------------------- | Unrealised net earnings in Life | 77 | 58 | | Insurance | | | -------------------------------------------------------------------------------- | Change in fair value for trading | 40 | 88 | -------------------------------------------------------------------------------- | Unrealised net gains on foreign exchange | -7 | -43 | | operations | | | -------------------------------------------------------------------------------- | Change in fair value of investment | 3 | -6 | | property | | | -------------------------------------------------------------------------------- | Depreciation and amortisation | 32 | 32 | -------------------------------------------------------------------------------- | Share of associates' profits/losses | 1 | 0 | -------------------------------------------------------------------------------- | Other | 61 | 37 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Items presented outside cash flow from | | | | operating activities | | | -------------------------------------------------------------------------------- | Capital gains, share of cash flow from | 0 | 0 | | investing activities | | | -------------------------------------------------------------------------------- | Interest on cooperative capital | 3 | 6 | -------------------------------------------------------------------------------- | Other returns to owner-members | 3 | 0 | -------------------------------------------------------------------------------- | Total adjustments | 475 | 382 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash and cash equivalents | | | -------------------------------------------------------------------------------- | Liquid assets | 129 | 170 | -------------------------------------------------------------------------------- | Receivables from credit institutions | 949 | 1,085 | | payable on demand | | | -------------------------------------------------------------------------------- | Total | 1,078 | 1,255 | -------------------------------------------------------------------------------- Notes Note 1. Accounting policies The Financial Statements Bulletin for 1 January-31 March 2009 was prepared according to IAS 34 (Interim Financial Reporting), as approved by the EU. The Financial Statements 2008 contain a description of the accounting policies applied by OP-Pohjola Group. In 2009, OP-Pohjola Group adopted the revised IAS 1 according to which the Group presents the statement of comprehensive income and the statement of changes in equity. The Interim Report is based on unaudited information. Since all figures in this report are rounded off, the sum of single figures may differ from the presented sum total. Summary of presentation of income statement: -------------------------------------------------------------------------------- | Net interest income | Received and paid interest on | | | fixed-income instruments, the | | | recognised difference between the | | | nominal value and acquisition value, | | | interest on interest-rate derivatives | | | and fair value change in fair value | | | hedging | -------------------------------------------------------------------------------- | Net income from Non-life Insurance | Premiums written, change in provision | | operations | for unearned premiums and for unpaid | | | claims, investment income, expenses | | | (interest, dividends, realised capital | | | gains and losses) and impairments | -------------------------------------------------------------------------------- | Net income from Life Insurance | Premiums written, change in provision | | operations | for unearned premiums and for unpaid | | | claims, investment income, expenses | | | (interest, dividends, realised capital | | | gains and losses) and impairments | -------------------------------------------------------------------------------- | Net commissions and fees | Commission income and expenses, and the | | | recognition of Day 1 profit related to | | | illiquid derivatives | -------------------------------------------------------------------------------- | Net trading income | Fair value changes in financial | | | instruments at fair value through | | | profit or loss, excluding accrued | | | interest, and capital gains and losses, | | | as well as dividends | -------------------------------------------------------------------------------- | Net investment income | Realised capital gains and losses on | | | available-for-sale financial assets, | | | impairments, dividends as well as fair | | | value changes in investment property, | | | capital gains and losses, rents and | | | other property-related expenses | -------------------------------------------------------------------------------- | Other operating income | Other operating income | -------------------------------------------------------------------------------- | Personnel costs | Wages and salaries, pension costs, | | | social expenses | -------------------------------------------------------------------------------- | Other administrative expenses | Office expenses, IT costs, other | | | administrative expenses | -------------------------------------------------------------------------------- | Other operating expenses | Depreciation/amortisation, rents and | | | other operating expenses | -------------------------------------------------------------------------------- Notes to the income statement and balance sheet Note 2 Net interest income -------------------------------------------------------------------------------- | EUR million | Q1/ | Q1/ | Change, | 2008 | | | 2009 | 2008 | % | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Loans and other receivables | 598 | 608 | -2 | 2,723 | -------------------------------------------------------------------------------- | Receivables from credit | 31 | 11 | | 73 | | institutions and central banks | | | | | -------------------------------------------------------------------------------- | Notes and bonds | 80 | 84 | -4 | 381 | -------------------------------------------------------------------------------- | Derivatives held for trading | 1 | -1 | | -16 | | (net) | | | | | -------------------------------------------------------------------------------- | Liabilities to credit | -3 | -19 | 0 | -86 | | institutions | | | | | -------------------------------------------------------------------------------- | Liabilities to customers | -185 | -218 | -15 | -1,010 | -------------------------------------------------------------------------------- | Debt securities issued to the | -200 | -193 | 4 | -844 | | public | | | | | -------------------------------------------------------------------------------- | Subordinated debt | -10 | -10 | 0 | -43 | -------------------------------------------------------------------------------- | Hybrid capital | -3 | -2 | 75 | -11 | -------------------------------------------------------------------------------- | Financial liabilities held for | -2 | -1 | | -19 | | trading | | | | | -------------------------------------------------------------------------------- | Other (net) | 4 | 6 | -37 | 17 | -------------------------------------------------------------------------------- | Net interest income before items | 309 | 265 | 17 | 1,166 | | under hedge accounting | | | | | -------------------------------------------------------------------------------- | Derivatives under hedge | -22 | 7 | | 23 | | accounting (net) | | | | | -------------------------------------------------------------------------------- | Total net interest income | 287 | 272 | 5 | 1,189 | -------------------------------------------------------------------------------- Note 3 Impairments of receivables -------------------------------------------------------------------------------- | EUR million | Q1/ | Q1/ | Change, | 2008 | | | 2009 | 2008 | % | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Impairments of receivables | 34 | 9 | | 73 | -------------------------------------------------------------------------------- | Reversals of impairments | -11 | -9 | -25 | -17 | -------------------------------------------------------------------------------- | Payments on impaired receivables | -2 | -1 | -37 | -6 | | amortised from statement of | | | | | | financial position | | | | | -------------------------------------------------------------------------------- | Net change in group-specific | 8 | 3 | | 8 | | impairments | | | | | -------------------------------------------------------------------------------- | Total | 29 | 2 | | 58 | -------------------------------------------------------------------------------- Note 4 Net income from Non-life Insurance -------------------------------------------------------------------------------- | EUR million | Q1/ | Q1/ | Change, | 2008 | | | 2009 | 2008 | % | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net insurance premium revenue | | | | | -------------------------------------------------------------------------------- | Premiums written | 473 | 448 | 6 | 991 | -------------------------------------------------------------------------------- | Insurance premiums ceded to | -41 | -30 | -36 | -42 | | reinsurers | | | | | -------------------------------------------------------------------------------- | Change in provision for unearned | -228 | -217 | -5 | -24 | | premiums | | | | | -------------------------------------------------------------------------------- | Reinsurers' share | 27 | 19 | 41 | -1 | -------------------------------------------------------------------------------- | Total | 230 | 220 | 5 | 923 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net Non-life Insurance claims | | | | | -------------------------------------------------------------------------------- | Claims paid | -157 | -155 | -1 | -602 | -------------------------------------------------------------------------------- | Insurance claims recovered from | 1 | 5 | -76 | 14 | | reinsurers | | | | | -------------------------------------------------------------------------------- | Change in provision for unpaid | 4 | -1 | | -30 | | claims | | | | | -------------------------------------------------------------------------------- | Reinsurers' share | 4 | -5 | | 27 | -------------------------------------------------------------------------------- | Total | -147 | -156 | 6 | -591 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net investment income, Non-life | | | | | | Insurance | | | | | -------------------------------------------------------------------------------- | Interest income | 18 | 17 | 4 | 70 | -------------------------------------------------------------------------------- | Capital gains and losses and | | | | | | realised changes in fair value | | | | | -------------------------------------------------------------------------------- | Notes and bonds | -11 | -4 | | -16 | -------------------------------------------------------------------------------- | Shares and participations | -1 | 2 | | -27 | -------------------------------------------------------------------------------- | Property | 0 | 3 | -99 | 2 | -------------------------------------------------------------------------------- | Other | 10 | 4 | | -10 | -------------------------------------------------------------------------------- | Unrealised changes in fair value | | | | | -------------------------------------------------------------------------------- | Notes and bonds | -1 | 0 | | -4 | -------------------------------------------------------------------------------- | Shares and participations | -23 | 0 | | 4 | -------------------------------------------------------------------------------- | Property | 1 | 3 | -80 | 3 | -------------------------------------------------------------------------------- | Other | 0 | 2 | | 1 | -------------------------------------------------------------------------------- | Dividend income | 3 | 9 | -67 | 26 | -------------------------------------------------------------------------------- | Other | 0 | 0 | | 3 | -------------------------------------------------------------------------------- | Total | -4 | 35 | | 53 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Unwinding of discount | -11 | -10 | -2 | -42 | -------------------------------------------------------------------------------- | Other | 0 | 0 | | 2 | -------------------------------------------------------------------------------- | Net income from Non-life | 69 | 89 | -23 | 345 | | Insurance | | | | | -------------------------------------------------------------------------------- Note 5 Net income from Life Insurance -------------------------------------------------------------------------------- | EUR million | Q1/ | Q1/ | Change, | 2008 | | | 2009 | 2008 | % | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Premiums written | 155 | 240 | -35 | 745 | -------------------------------------------------------------------------------- | Reinsurers' share | -4 | -8 | 45 | -28 | -------------------------------------------------------------------------------- | Net investment income | -68 | -201 | -66 | -816 | -------------------------------------------------------------------------------- | Claims incurred | | | | | -------------------------------------------------------------------------------- | Benefits paid | -143 | -197 | 28 | -645 | -------------------------------------------------------------------------------- | Change in provision for unpaid | -9 | 6 | | -47 | | claims | | | | | -------------------------------------------------------------------------------- | Reinsurers' share | 2 | 0 | | 3 | -------------------------------------------------------------------------------- | Change in insurance contract | | | | | | liabilities | | | | | -------------------------------------------------------------------------------- | Change in life insurance | 41 | 147 | -72 | 602 | | provision | | | | | -------------------------------------------------------------------------------- | Reinsurers' share | 4 | 7 | -43 | 25 | -------------------------------------------------------------------------------- | Other | 1 | 13 | -94 | 22 | -------------------------------------------------------------------------------- | Net income from Life Insurance | -21 | 8 | | -139 | -------------------------------------------------------------------------------- Note 6 Commissions and fees -------------------------------------------------------------------------------- | EUR million | Q1/ | Q1/ | Change, | 2008 | | | 2009 | 2008 | % | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Commission income | | | | | -------------------------------------------------------------------------------- | Lending | 35 | 28 | 24 | 102 | -------------------------------------------------------------------------------- | Deposits | 1 | 1 | -11 | 5 | -------------------------------------------------------------------------------- | Payment transfers | 30 | 29 | 6 | 121 | -------------------------------------------------------------------------------- | Securities brokerage | 4 | 6 | -20 | 20 | -------------------------------------------------------------------------------- | Securities issuance | 2 | 1 | | 4 | -------------------------------------------------------------------------------- | Mutual funds brokerage | 12 | 21 | -41 | 67 | -------------------------------------------------------------------------------- | Asset management and legal | 11 | 13 | -9 | 51 | | services | | | | | -------------------------------------------------------------------------------- | Insurance brokerage | 33 | 28 | 19 | 63 | -------------------------------------------------------------------------------- | Guarantees | 4 | 3 | 41 | 14 | -------------------------------------------------------------------------------- | Other | 10 | 11 | -13 | 46 | -------------------------------------------------------------------------------- | Total | 143 | 140 | 2 | 494 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Commission expenses | | | | | -------------------------------------------------------------------------------- | Total | 13 | 15 | -14 | 61 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net commissions and fees | 130 | 124 | 4 | 433 | -------------------------------------------------------------------------------- Note 7 Net trading income -------------------------------------------------------------------------------- | EUR million | Q1/ | Q1/ | Change, | 2008 | | | 2009 | 2008 | % | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Capital gains and losses | | | | | -------------------------------------------------------------------------------- | Notes and bonds | 23 | 3 | | -15 | -------------------------------------------------------------------------------- | Shares and participations | -1 | 0 | | -2 | -------------------------------------------------------------------------------- | Derivatives | 26 | 8 | | -26 | -------------------------------------------------------------------------------- | Changes in fair value | | | | | -------------------------------------------------------------------------------- | Notes and bonds | -18 | -53 | -65 | -51 | -------------------------------------------------------------------------------- | Shares and participations | 1 | -5 | | -19 | -------------------------------------------------------------------------------- | Derivatives | -6 | -17 | -65 | -11 | -------------------------------------------------------------------------------- | Dividend income | 0 | 0 | -36 | 1 | -------------------------------------------------------------------------------- | Net income from foreign exchange | 3 | 5 | -46 | -1 | | operations | | | | | -------------------------------------------------------------------------------- | Total | 28 | -58 | | -125 | -------------------------------------------------------------------------------- Note 8 Net investment income -------------------------------------------------------------------------------- | EUR million | Q1/ | Q1/ | Change, | 2008 | | | 2009 | 2008 | % | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Available-for-sale financial | | | | | | assets | | | | | -------------------------------------------------------------------------------- | Capital gains and losses | | | | | -------------------------------------------------------------------------------- | Notes and bonds | 0 | 0 | | -5 | -------------------------------------------------------------------------------- | Shares and participations | -6 | 0 | | 1 | -------------------------------------------------------------------------------- | Other | - | - | | - | -------------------------------------------------------------------------------- | Dividend income | 6 | 6 | 1 | 12 | -------------------------------------------------------------------------------- | Impairment losses | -10 | 0 | | -6 | -------------------------------------------------------------------------------- | Total | -10 | 6 | | 3 | -------------------------------------------------------------------------------- | Investment property | | | | | -------------------------------------------------------------------------------- | Rental income | 12 | 13 | -7 | 49 | -------------------------------------------------------------------------------- | Maintenance charges and expenses | -7 | -7 | 1 | -29 | -------------------------------------------------------------------------------- | Changes in fair value, capital | -3 | 6 | | 2 | | gains and losses | | | | | -------------------------------------------------------------------------------- | Other | 0 | 0 | -7 | 1 | -------------------------------------------------------------------------------- | Total | 2 | 12 | -81 | 22 | -------------------------------------------------------------------------------- | Other | - | - | | - | -------------------------------------------------------------------------------- | Net investment income | -8 | 18 | | 25 | -------------------------------------------------------------------------------- Note 9 Other operating income -------------------------------------------------------------------------------- | EUR million | Q1/ | Q1/ | Change, | 2008 | | | 2009 | 2008 | % | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Income from property and | 4 | 3 | 41 | 12 | | business | | | | | | premises in own use | | | | | -------------------------------------------------------------------------------- | Other | 21 | 21 | 4 | 81 | -------------------------------------------------------------------------------- | Total | 25 | 23 | 8 | 93 | -------------------------------------------------------------------------------- Note 10 Personnel costs -------------------------------------------------------------------------------- | EUR million | Q1/ | Q1/ | Change, | 2008 | | | 2009 | 2008 | % | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Wages and salaries | 137 | 130 | 6 | 512 | -------------------------------------------------------------------------------- | Pension costs | 14 | 14 | 2 | 55 | -------------------------------------------------------------------------------- | Other social expenses | 12 | 8 | 40 | 31 | -------------------------------------------------------------------------------- | Total | 163 | 152 | 7 | 598 | -------------------------------------------------------------------------------- Note 11 Other administrative expenses -------------------------------------------------------------------------------- | EUR million | Q1/ | Q1/ | Change, | 2008 | | | 2009 | 2008 | % | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Office expenses | 17 | 17 | 2 | 47 | -------------------------------------------------------------------------------- | IT expenses | 26 | 25 | 4 | 110 | -------------------------------------------------------------------------------- | Telecommunications expenses | 9 | 10 | -11 | 38 | -------------------------------------------------------------------------------- | Marketing expenses | 13 | 14 | -8 | 61 | -------------------------------------------------------------------------------- | Other administrative expenses | 15 | 17 | -9 | 71 | -------------------------------------------------------------------------------- | Total | 80 | 82 | -3 | 328 | -------------------------------------------------------------------------------- Note 12 Other operating expenses -------------------------------------------------------------------------------- | EUR million | Q1/ | Q1/ | Change, | 2008 | | | 2009 | 2008 | % | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Expenses for property and | 19 | 17 | 6 | 74 | | business | | | | | | premises in own use | | | | | -------------------------------------------------------------------------------- | Depreciation | 32 | 32 | 1 | 134 | -------------------------------------------------------------------------------- | Other | 25 | 28 | -9 | 104 | -------------------------------------------------------------------------------- | Total | 76 | 77 | -2 | 312 | -------------------------------------------------------------------------------- Note 13 Returns to owner-members -------------------------------------------------------------------------------- | EUR million | Q1/ | Q1/ | Change, | 2008 | | | 2009 | 2008 | % | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Bonuses | 35 | 31 | 11 | 132 | -------------------------------------------------------------------------------- | Interest on cooperative capital | 3 | 6 | -47 | 22 | -------------------------------------------------------------------------------- | Total | 38 | 37 | 2 | 154 | -------------------------------------------------------------------------------- Note 14. Classification of financial instruments -------------------------------------------------------------------------------- | EUR million | Loans | Invest | Financi | Availab | Hedging | Total | | | and | ments | al | le-for- | derivat | | | | other | held | assets | sale | ives | | | | receiv | to | at fair | financi | | | | | ables | maturi | value | al | | | | | | ty | through | assets | | | | | | | profit | | | | | | | | or | | | | | | | | loss* | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Assets | | | | | | | -------------------------------------------------------------------------------- | Cash and balances | 1,028 | - | - | - | - | 1,028 | | with central banks | | | | | | | -------------------------------------------------------------------------------- | Receivables from | 2,332 | - | - | - | - | 2,332 | | credit | | | | | | | | institutions and | | | | | | | | central banks | | | | | | | -------------------------------------------------------------------------------- | Derivative | - | - | 1,431 | - | 163 | 1,594 | | contracts | | | | | | | -------------------------------------------------------------------------------- | Receivables from | 51,943 | - | - | - | - | 51,943 | | customers | | | | | | | -------------------------------------------------------------------------------- | Non-life Insurance | 920 | - | 89 | 2,061 | - | 3,070 | | assets** | | | | | | | -------------------------------------------------------------------------------- | Life Insurance | 488 | - | 1,849 | 2,737 | - | 5,075 | | assets*** | | | | | | | -------------------------------------------------------------------------------- | Notes and bonds | - | 1,179 | 2,109 | 2,235 | - | 5,524 | -------------------------------------------------------------------------------- | Shares and | - | - | 44 | 299 | - | 342 | | participations | | | | | | | -------------------------------------------------------------------------------- | Other receivables | 4,439 | - | 468 | - | - | 4,908 | -------------------------------------------------------------------------------- | Total 31.3.2009 | 61,151 | 1,179 | 5,990 | 7,331 | 163 | 75,816 | -------------------------------------------------------------------------------- | Total 31.3.2008 | 53,677 | 126 | 8,334 | 8,200 | 38 | 70,375 | -------------------------------------------------------------------------------- | Total 31.12.2008 | 62,545 | 1,198 | 6,661 | 5,224 | 117 | 75,746 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR million | | | Financi | Other | Hedging | Total | | | | | al | liabili | derivat | | | | | | liabili | ties | ives | | | | | | ties at | | | | | | | | fair | | | | | | | | value | | | | | | | | through | | | | | | | | profit | | | | | | | | or | | | | | | | | loss*** | | | | | | | | * | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Liabilities | | | | | | | -------------------------------------------------------------------------------- | Liabilities to | - | - | - | 760 | - | 760 | | credit | | | | | | | | institutions | | | | | | | -------------------------------------------------------------------------------- | Financial | - | - | 198 | - | - | 198 | | liabilities held | | | | | | | | for trading (excl. | | | | | | | | derivatives) | | | | | | | -------------------------------------------------------------------------------- | Derivative | - | - | 1,522 | - | 168 | 1,690 | | contracts | | | | | | | -------------------------------------------------------------------------------- | Liabilities to | - | - | - | 37,155 | - | 37,155 | | customers | | | | | | | -------------------------------------------------------------------------------- | Non-life Insurance | - | - | 3 | 2,673 | - | 2,676 | | liabilities | | | | | | | -------------------------------------------------------------------------------- | Life Insurance | - | - | 1,525 | 3,846 | - | 5,370 | | liabilities | | | | | | | -------------------------------------------------------------------------------- | Debt securities | - | - | - | 17,515 | - | 17,515 | | issued to the | | | | | | | | public | | | | | | | -------------------------------------------------------------------------------- | Subordinated loans | - | - | - | 1,315 | - | 1,315 | -------------------------------------------------------------------------------- | Other liabilities | - | - | - | 3,929 | - | 3,929 | -------------------------------------------------------------------------------- | Total 31.3.2009 | - | - | 3,247 | 67,192 | 168 | 70,608 | -------------------------------------------------------------------------------- | Total 31.3.2008 | - | - | 3,137 | 61,681 | 62 | 64,880 | -------------------------------------------------------------------------------- | Total 31.12.2008 | - | - | 3,145 | 67,257 | 129 | 70,531 | -------------------------------------------------------------------------------- *Assets at fair value through profit or loss include financial assets for trading, financial assets at fair value through profit or loss at inception, and investments and investment property covering unit-linked insurance policies. **Life Insurance assets are specified in Note 17. ****Includes the balance sheet value of technical provisions related to unit-linked insurance policies. Debt securities issued to the public are carried at amortised cost. On 31 March 2009, the fair value of these debt instruments was approximately EUR 42 million lower than their carrying amount, based on information available in markets and employing commonly used valuation techniques. Subordinated liabilities are carried at amortised cost. Their fair value is lower than their carrying amount, but determining fair values reliably is difficult in the current market situation. Note 15. Reclassified notes and bonds The table below shows the carrying amounts and fair values of the reclassified notes and bonds: -------------------------------------------------------------------------------- | 31.3.2009, EUR million | Carrying | Fair value | Effective | Impairments | | | amount | | interest | arising | | | | | rate | from credit | | | | | | risk | -------------------------------------------------------------------------------- | Loans and other | 3,413 | 3,177 | 5.4 | 19 | | receivables | | | | | -------------------------------------------------------------------------------- | Investments held to | 926 | 835 | 4.5 | - | | maturity | | | | | -------------------------------------------------------------------------------- | Available-for-sale | 54 | 54 | 5.1 | - | | financial assets | | | | | -------------------------------------------------------------------------------- | Total | 4,394 | 4,066 | | 19 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 31.12.2008, EUR | Carrying | Fair value | Effective | Impairments | | million | amount | | interest | arising | | | | | rate | from credit | | | | | | risk | -------------------------------------------------------------------------------- | Loans and other | 3,611 | 3,440 | 5.4 | 10 | | receivables | | | | | -------------------------------------------------------------------------------- | Investments held to | 946 | 864 | 4.5 | - | | maturity | | | | | -------------------------------------------------------------------------------- | Available-for-sale | 55 | 55 | 5.1 | - | | financial assets | | | | | -------------------------------------------------------------------------------- | Total | 4,612 | 4,358 | | 10 | -------------------------------------------------------------------------------- If notes and bonds were not reclassified and had been measured using fair values available in the inactive market: -------------------------------------------------------------------------------- | | 1.1.2009-31.3.2009 | 31.12.2008 | -------------------------------------------------------------------------------- | EUR million | Income | Fair | Income | Fair | | | statemen | value | statement | value | | | t | reserve | | reserve | -------------------------------------------------------------------------------- | Banking | -11 | -1 | -21 | -10 | -------------------------------------------------------------------------------- | Non-life Insurance | 1 | -12 | - | -24 | -------------------------------------------------------------------------------- | Life Insurance | 3 | -29 | 0 | -26 | -------------------------------------------------------------------------------- | Group Functions | 2 | 0 | -162 | -15 | -------------------------------------------------------------------------------- | Total | -5 | -42 | -183 | -75 | -------------------------------------------------------------------------------- Interest accrued on notes and bonds in the first quarter totalled EUR 36.8 million. The price difference between the nominal value and acquisition value recognised in net interest income to-talled EUR 8.6 million. Impairments on notes and bonds totalled EUR 10 million. The Group used derivatives to hedge against interest rate risks, applying hedge accounting from 1 October 2008. Note 16 Non-life Insurance assets -------------------------------------------------------------------------------- | EUR million | 31 March | 31 March | Change, | 31. Dec | | | 2009 | 2008 | % | 2008 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Investments | | | | | -------------------------------------------------------------------------------- | Loan and other receivables | 408 | 71 | | 418 | -------------------------------------------------------------------------------- | Shares and participations | 287 | 860 | -67 | 318 | -------------------------------------------------------------------------------- | Property | 82 | 84 | -3 | 81 | -------------------------------------------------------------------------------- | Notes and bonds | 1,327 | 1,575 | -16 | 1,075 | -------------------------------------------------------------------------------- | Other | 455 | 3 | | 423 | -------------------------------------------------------------------------------- | Total | 2,559 | 2,593 | -1 | 2,316 | -------------------------------------------------------------------------------- | Other assets | | | | | -------------------------------------------------------------------------------- | Prepayments and accrued income | 34 | 32 | 9 | 33 | -------------------------------------------------------------------------------- | Other | | | | | -------------------------------------------------------------------------------- | Arising from direct insurance | 326 | 322 | 1 | 218 | | operations | | | | | -------------------------------------------------------------------------------- | Arising from reinsurance | 145 | 99 | 47 | 100 | | operations | | | | | -------------------------------------------------------------------------------- | Cash in hand and at bank | 5 | 10 | -49 | 4 | -------------------------------------------------------------------------------- | Total | 511 | 463 | 10 | 355 | -------------------------------------------------------------------------------- | Non-life Insurance assets | 3,070 | 3,055 | 0 | 2,670 | -------------------------------------------------------------------------------- Note 17 Life Insurance assets -------------------------------------------------------------------------------- | EUR million | 31 March | 31 March | Change, | 31. Dec | | | 2009 | 2008 | % | 2008 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Investments | | | | | -------------------------------------------------------------------------------- | Loan and other receivables | 414 | 33 | | 422 | -------------------------------------------------------------------------------- | Shares and participations | 2,216 | 2,575 | -14 | 2,259 | -------------------------------------------------------------------------------- | Property | 123 | 121 | 1 | 123 | -------------------------------------------------------------------------------- | Notes and bonds | 684 | 1,184 | -42 | 550 | -------------------------------------------------------------------------------- | Other | 0 | 5 | | 0 | -------------------------------------------------------------------------------- | Total | 3,437 | 3,917 | -12 | 3,354 | -------------------------------------------------------------------------------- | Assets covering unit-linked | | | | | | insurance contracts | | | | | -------------------------------------------------------------------------------- | Shares and participations | 1,564 | 2,115 | -26 | 1,614 | -------------------------------------------------------------------------------- | Other assets | | | | | -------------------------------------------------------------------------------- | Prepayments and accrued income | 26 | 27 | -6 | 23 | -------------------------------------------------------------------------------- | Other | | | | | -------------------------------------------------------------------------------- | Arising from direct insurance | 4 | 5 | -7 | 20 | | operations | | | | | -------------------------------------------------------------------------------- | Arising from reinsurance | 43 | 21 | | 38 | | operations | | | | | -------------------------------------------------------------------------------- | Cash in hand and at bank | 2 | 32 | -95 | 44 | -------------------------------------------------------------------------------- | Total | 74 | 85 | -13 | 125 | -------------------------------------------------------------------------------- | Life Insurance assets | 5,075 | 6,118 | -17 | 5,093 | -------------------------------------------------------------------------------- Note 18 Debt securities issued to the public -------------------------------------------------------------------------------- | EUR million | 31 March | 31 March | Change, | 31. Dec | | | 2009 | 2008 | % | 2008 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Bonds | 7,023 | 7,074 | -1 | 7,654 | -------------------------------------------------------------------------------- | Certificates of deposit, | 10,286 | 6,582 | 56 | 10,322 | | commercial papers and ECPs | | | | | -------------------------------------------------------------------------------- | Other | 206 | 147 | 40 | 188 | -------------------------------------------------------------------------------- | Total | 17,515 | 13,803 | 27 | 18,164 | -------------------------------------------------------------------------------- Note 19 Fair value reserve after income tax -------------------------------------------------------------------------------- | EUR million | 31 March | 31 March | Change, | 31. Dec | | | 2009 | 2008 | % | 2008 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Notes and bonds | -81 | -65 | 25 | -84 | -------------------------------------------------------------------------------- | Shares and participations | -504 | -90 | | -472 | -------------------------------------------------------------------------------- | Total | -585 | -155 | | -556 | -------------------------------------------------------------------------------- Other notes Note 20 Collateral given -------------------------------------------------------------------------------- | EUR million | 31 March | 31 March | Change, | 31. Dec | | | 2009 | 2008 | % | 2008 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Given on behalf of own | | | | | | liabilities and commitments | | | | | -------------------------------------------------------------------------------- | Mortgages | 1 | 1 | 0 | 1 | -------------------------------------------------------------------------------- | Pledges | 4,381 | 3,815 | 15 | 4,135 | -------------------------------------------------------------------------------- | Other | 424 | 216 | 96 | 400 | -------------------------------------------------------------------------------- | Total | 4,806 | 4,032 | 19 | 4,536 | -------------------------------------------------------------------------------- Note 21 Off-balance-sheet items -------------------------------------------------------------------------------- | EUR million | 31 March | 31 March | Change, | 31. Dec | | | 2009 | 2008 | % | 2008 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Guarantees | 1,494 | 732 | | 1,241 | -------------------------------------------------------------------------------- | Other guarantee liabilities | 1,641 | 1,795 | -9 | 1,794 | -------------------------------------------------------------------------------- | Pledges | 1 | 1 | 0 | 1 | -------------------------------------------------------------------------------- | Loan commitments | 7,710 | 8,094 | -5 | 7,686 | -------------------------------------------------------------------------------- | Commitments related to | 157 | 180 | -13 | 177 | | short-term | | | | | | trade transactions | | | | | -------------------------------------------------------------------------------- | Other | 535 | 565 | -5 | 485 | -------------------------------------------------------------------------------- | Total off-balance-sheet items | 11,539 | 11,367 | 2 | 11,384 | -------------------------------------------------------------------------------- Note 22 Derivative contracts -------------------------------------------------------------------------------- | | 31 March 2009 | -------------------------------------------------------------------------------- | EUR million | Nominal values / | | Fair values | | | remaining term | | | | | to maturity | | | -------------------------------------------------------------------------------- | | <1 | 1-5 | >5 | Total | Assets | Liabilit | | | year | years | years | | | ies | -------------------------------------------------------------------------------- | Interest rate | 26,929 | 45,670 | 10,952 | 83,551 | 1,390 | 1,299 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Currency | 12,079 | 1,340 | 876 | 14,295 | 249 | 510 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Equity and | 122 | 606 | 20 | 749 | 23 | 6 | | index-linked | | | | | | | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Credit derivatives | 149 | 167 | - | 316 | 4 | 19 | -------------------------------------------------------------------------------- | Other derivatives | 393 | 72 | - | 465 | 1 | 2 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total derivatives | 39,672 | 47,855 | 11,849 | 99,376 | 1,667 | 1,836 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | 31 March 2008 | -------------------------------------------------------------------------------- | EUR million | Nominal values / | | Fair values | | | remaining term | | | | | to maturity | | | -------------------------------------------------------------------------------- | | <1 | 1-5 | >5 | Total | Assets | Liabilit | | | year | years | years | | | ies | -------------------------------------------------------------------------------- | Interest rate | 54,320 | 36,102 | 9,280 | 99,701 | 438 | 422 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Currency | 12,785 | 1,513 | 952 | 15,250 | 209 | 557 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Equity and | 95 | 285 | 80 | 460 | 33 | - | | index-linked | | | | | | | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Credit derivatives | 116 | 230 | 40 | 386 | 3 | 8 | -------------------------------------------------------------------------------- | Other derivatives | - | 6 | - | 6 | 2 | - | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total derivatives | 67,316 | 38,136 | 10,352 | 115,80 | 684 | 987 | | | | | | 3 | | | -------------------------------------------------------------------------------- Note 23 Related-party transactions OP-Pohjola Group's related parties comprise associates, administrative personnel and other related-party companies. The administrative personnel comprises OP-Pohjola Group's Executive Chairman (Chairman of the Executive Board of OP-Pohjola Group Central Cooperative), President of OP-Pohjola Group Central Cooperative, members and deputy members of the Executive and Supervisory Boards and their family members. Other organisations considered as related parties include OP Bank Group Pension Fund and OP Bank Group Pension Foundation. With respect to loans granted to the management, OP-Pohjola Group applies standard terms and conditions for credit. Loans are tied to generally used reference rates. -------------------------------------------------------------------------------- | 31 March 2009 | | | | -------------------------------------------------------------------------------- | EUR million | Associate | Management | Others | | | s | | | -------------------------------------------------------------------------------- | Loans | 90 | 10 | - | -------------------------------------------------------------------------------- | Other receivables | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Deposits | 2 | 12 | 39 | -------------------------------------------------------------------------------- | Other liabilities | - | - | - | -------------------------------------------------------------------------------- | Interest income | 0 | 0 | - | -------------------------------------------------------------------------------- | Interest expenses | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Dividend income | 1 | - | - | -------------------------------------------------------------------------------- | Commission income | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Commission expenses | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Other operating income | - | - | - | -------------------------------------------------------------------------------- | Impairments of loans | - | - | - | -------------------------------------------------------------------------------- | Impairments of loans at the end of the | - | - | - | | period | | | | -------------------------------------------------------------------------------- | Off-balance-sheet items | | | | -------------------------------------------------------------------------------- | Guarantees | - | - | - | -------------------------------------------------------------------------------- | Irrevocable commitments | - | - | - | -------------------------------------------------------------------------------- | Other off-balance-sheet commitments | - | 0 | - | -------------------------------------------------------------------------------- | Wages and salaries | | | | | and | | | | | performance-based pay | | | | -------------------------------------------------------------------------------- | Wages and salaries | - | 1 | - | -------------------------------------------------------------------------------- | Performance-based pay | - | - | - | -------------------------------------------------------------------------------- | Holdings of related parties | | | | -------------------------------------------------------------------------------- | Number of share options | - | - | - | -------------------------------------------------------------------------------- | Number of shares | - | 91,113 | 3,680,793 | -------------------------------------------------------------------------------- | Number of participations | - | 5,020 | - | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 31 March 2008 | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR million | Associate | Management | Others | | | s | | | -------------------------------------------------------------------------------- | Loans | 96 | 4 | - | -------------------------------------------------------------------------------- | Other receivables | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Deposits | 30 | 7 | 37 | -------------------------------------------------------------------------------- | Other liabilities | - | - | - | -------------------------------------------------------------------------------- | Interest income | 0 | 0 | - | -------------------------------------------------------------------------------- | Interest expenses | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Dividend income | 1 | - | - | -------------------------------------------------------------------------------- | Commission income | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Commission expenses | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Other operating income | - | - | - | -------------------------------------------------------------------------------- | Impairments of loans | - | - | - | -------------------------------------------------------------------------------- | Impairments of loans at the end of the | - | - | - | | period | | | | -------------------------------------------------------------------------------- | Off-balance-sheet items | | | | -------------------------------------------------------------------------------- | Guarantees | - | - | - | -------------------------------------------------------------------------------- | Irrevocable commitments | - | - | - | -------------------------------------------------------------------------------- | Other off-balance-sheet commitments | - | 0 | - | -------------------------------------------------------------------------------- | Wages and salaries and | | | | | performance-based pay | | | | -------------------------------------------------------------------------------- | Wages and salaries | - | 1 | - | -------------------------------------------------------------------------------- | Performance-based pay | - | - | - | -------------------------------------------------------------------------------- | Holdings of related parties | | | | -------------------------------------------------------------------------------- | Number of share options | - | - | - | -------------------------------------------------------------------------------- | Number of shares | - | 95,942 | 3,680,793 | -------------------------------------------------------------------------------- | Number of participations | - | 5,442 | - | -------------------------------------------------------------------------------- Pohjola Bank plc will publish its own interim report. Interim reports for six and nine months will be published on 6 August and 5 November 2009, respectively. Helsinki, 7 May 2009. OP-Pohjola Group Central Cooperative Executive Board OP-Pohjola Group Central Cooperative Carina Geber-Teir Senior Vice President (Corporate Communications) FURTHER INFORMATION Reijo Karhinen, Executive Chairman, tel. +358 (0)10 252 4500 Tony Vepsäläinen, President, tel. +358 (0)10 252 4020 Harri Luhtala, CFO, tel. +358 (0)10 252 2433 Carina Geber-Teir, Executive Vice President (Corporate Communications), tel. +358 (0)10 252 8394 DISTRIBUTION NASDAQ OMX Helsinki Ltd London Stock Exchange SWX Swiss Exchange Major media
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