2012-05-03 07:00:00 CEST
2012-05-03 07:01:04 CEST
REGULATED INFORMATION
Pohjola Pankki Oyj - Interim report (Q1 and Q3)
OP-Pohjola Group has good first quarter - earnings before tax were over EUR 200 million
OP-Pohjola Group Stock Exchange Release 3 May 2012 at 8.00 am (UT +3) Interim Report OP-Pohjola Group has good first quarter - earnings before tax were over EUR 200 million, capital adequacy improved further and business growth remained strong - Earnings before tax for the first quarter were EUR 203 million (210), that is, about the same as a year ago. Compared to the previous quarter - which was burdened by non-recurring items (Q4/2011: EUR 37 million) - earnings rose significantly. - Net interest income increased considerably, being 15% higher than a year ago. Total income increased by 5%. - Due to investments in business growth and development, expenses increased by 13%. Impairment loss on receivables came to EUR 11 million, or 55% lower than a year earlier. - The Group's capital adequacy reached a new record level as the Core Tier 1 ratio exceeded the 15% target, standing at 15.1%. - Integration of banking and non-life insurance operations proceeded well. The number of joint customers rose in the report period by 31,000. Growth continued in both business segments at a rate above the market average with the exception of mutual funds. - The Group improved its market position in both home loans and corporate financing. - OP-Pohjola Group's 2012 earnings before tax are expected to be about the same or better than in 2011. For more details, see "Outlook for the rest of 2012". OP-Pohjola Group's key indicators ------------------------------------------------------------------------------- Q1/2012 Q1/2011 Change % Q1-4/2011 ------------------------------------------------------------------------------- Earnings before tax, EUR million 203 210 -3.2 525 Banking 155 134 15.1 483 Non-life Insurance 15 19 -19.4 8 Life Insurance 19 37 -47.6 10 Returns to owner-members and OP bonus customers 44 42 5.4 176 31 Mar 2012 31 Mar 2011 Change % 31 Dec 2011 Ratio of capital base to minimum amount of capital base (under the Act on the Supervision of Financial and Insurance Conglomerates) 2.02 1.67 0.35* 1.80 Tier 1 ratio, % Core Tier 1, % 15.1 12.7 2.5* 14.0 Non-performing receivables within the loan portfolio, % 0.53 0.43 0.10* 0.47 Joint banking and insurance customers, 1,000 1,329 1,222 8.8 1,299 ------------------------------------------------------------------------------- * Change in ratio Comments by Reijo Karhinen, Executive Chairman We got off to a good start to our 110th anniversary. Our first-quarter performance was on the whole the best since the financial crisis: our earnings, capital adequacy and growth performance were at a level that I am very happy with. Despite the sovereign debt crisis, our funding suffered no hiccups. This created stability and a positive feeling, and our financial position is now very strong. Many banks elsewhere in Europe had to cut down on their operations to improve their capital adequacy, but we were going against the current. Our capital adequacy got better and better and actually reached record figures. At the same time, our business growth enjoyed double-figure growth. Our operating profit was at the same level as last year and improved considerably from the last quarter of 2011 that was burdened by extraordinary items. Our earnings were boosted by significantly higher net interest income but eroded by much higher expenses. Both of these were affected by strong business growth. Our expenses grew because we increased our resources for development and customer service. The persistently low interest rates will level off net interest income growth in the course of 2012. It is clear that if we wish to continue to offer competitive prices in the long run, we need to keep our expenses in check. This month we are celebrating our Group's 110th anniversary, and there is reason for celebration as the number customers we attract keeps going up. The number of customers we have who use both our banking and non-life insurance services has increased after the purchase of the Pohjola insurance operations by over 600,000. During the first quarter, this growth continued at a record rate of 31,000 customers. This would not have been possible if we had not been able to keep up with the times. Whenever our customers approach us, I want them to feel that we provide an easy-to-use, personal and caring service. In recent years, economic turbulence has become the norm, and swiftly changing capital markets dominate financial reporting. Predicting the future is still very difficult, but on the other hand businesses that are able to operate within an atmosphere of uncertainty have a definite competitive edge. Although Finland's economic future and recovery from the euro area sovereign debt crisis is uncertain and some setbacks surely lie ahead, we have nevertheless reason to be positive. The difference with the last quarter of 2011 is striking. OP-Pohjola Group has shown excellent resilience in the midst of the financial and sovereign debt crisis. I continue to look into the future with confidence. Financial performance in the report period The Group's earnings before tax amounted to EUR 203 million (210). The reportperiod's profit performance was supported by higher net interest income, lower impairment loss on receivables and the fact that non-life insurance claims expenditure was lower in relation to insurance premiums than a year ago. Earnings were eroded by lower net investment income and asset management commissions and fees than a year earlier, as well as higher expenses. Bonuses to owner-members and OP bonus customers recognised in the income statement grew by 5.9% year on year to EUR 42 million. The Group's fair value reserve increased by EUR 378 million thank to a recovery of the investment environment, while a year ago it decreased by EUR 82 million. Earnings before tax at fair value was record-high - EUR 581 million (128). Outlook for the rest of 2012 The outlook for both the global and Finnish economy has become a little more positive during the first quarter. However, economic growth for 2012 will probably remain sluggish in Finland and in the euro area in general. The European sovereign debt crisis will continue to cause instability to general economic development. The financial sector will also be adversely affected by the extremely low interest rates, jittery capital markets and tighter regulation in the sector. The sovereign debt crisis in the euro area will make it difficult to estimate OP-Pohjola Group's performance for the rest of 2012. OP-Pohjola Group's 2012 results are expected to be at the same or even a better level than the year before, provided that the operating environment will not undergo any major deterioration and the management of the euro-area debt crisis will take no new turn for the worse. All forward-looking statements in this report expressing the management's expectations, beliefs, estimates, forecasts, projections and assumptions are based on the current view on developments in the economy and actual results may differ materially from those expressed in the forward-looking statements. Press conference OP-Pohjola Group's financial performance will be presented to the media by Executive Chairman and CEO Reijo Karhinen in a press conference on 3 May 2012, starting at noon at Teollisuuskatu 1 b, Vallila, Helsinki. Financial reporting in 2012 Interim Report H1/2012 1 August 2012 Interim Report Q1-3/2012 31 October 2012 Helsinki, 3 May 2012 OP-Pohjola Group Central Cooperative Executive Board Additional information Executive Chairman and CEO Reijo Karhinen, tel. +358 (0)10 252 4500 Harri Luhtala, CFO, tel. +358 (0)10 252 2433 Carina Geber-Teir, Chief Communications Officer, tel. +358 (0)10 252 8394 Distribution NASDAQ OMX Helsinki Ltd London Stock Exchange SIX Swiss Exchange Major media op.fi and pohjola.fi [HUG#1608170]
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