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2012-05-03 07:00:00 CEST 2012-05-03 07:01:37 CEST REGULATED INFORMATION Pohjola Pankki Oyj - Interim report (Q1 and Q3)Pohjola Bank Plc Interim Report for January-March 2012Pohjola Bank plc Stock exchange release 3 May 2012, 8.00 am (UT +3) Interim Report Pohjola Bank Plc Interim Report for January-March 2012 - Consolidated earnings before tax came to EUR 104 million (95) and earnings before tax at fair value were EUR 337 million (74). Return on equity at fair value stood at 43.9% (10.0). - Earnings before tax recorded by Banking improved to EUR 66 million (53). These included EUR 8 million (16) in impairment charges for receivables. The loan portfolio increased by 3% from its level on 31 December 2011 and by 9% in the year to March. The average corporate loan portfolio margin stood at 1.38% (1.34). - Within Non-life Insurance, insurance premium revenue rose by 9%. The combined ratio was 102.1% (102.6). Excluding the changes in reserving bases and amortisation on intangible assets arising from company acquisition, the operating combined ratio stood at 100.1% (100.5). Return on investments at fair value was 4.8% (0.5). - Earnings before tax posted by Asset Management amounted to EUR 6 million (6) and assets under management were EUR 32.0 billion (31.3) at the end of the reporting period. - Earnings before tax recorded by the Group Functions amounted to EUR 17 million (17). - Unchanged outlook: Consolidated earnings before tax for 2012 are expected to be markedly higher than in 2011. For more detailed information on outlook, see"Outlook for the rest of 2012" below. Comparatives deriving from the income statement are based on figures reported for the corresponding period a year ago. Unless otherwise specified, balance- sheet and other cross-sectional figures on 31 December 2011 are used as comparatives. As a result of change in the recognition of defined benefit pension plans, the comparatives have been restated. Earnings before tax, EUR million Q1/ Q1/ Change, % 2012 2011 2011 ------------------------------------------------------------------------------- Banking 66 53 24 198 Non-life Insurance 15 19 -19 8 Asset Management 6 6 -10 27 Group Functions 17 17 3 24 Total 104 95 10 258 Change in fair value reserve 233 -21 -180 Earnings before tax at fair value 337 74 357 78 Earnings per share, EUR 0.25 0.23 0.67 Equity per share, EUR 7.62 7.17 7.22 Average personnel 3,403 3,023 3,189 ------------------------------------------------------------------------------- Q1/ Q1/ Financial targets 2012 2011 2011 Target ------------------------------------------------------------------------------- Return on equity at fair value, % 43.9 10.0 3.1 13.0 Tier 1 ratio, % 11.9 12.2 10.6 >9.5 Core Tier 1 ratio, % 10.1 10.4 10.3 Operating cost/income ratio by Banking, % 34 34 35 <40 Operating combined ratio, % 100.1 100.5 89.8 92.0 Operating expense ratio, % 23.9 21.9 21.8 <20 Solvency ratio, % 85 84 77 70 Operating cost/income ratio by Asset Management. % 53 50 49 <50 AA rating affirmed by at least two credit rating agencies 2 3 2 > 2 Dividend payout ratio a minimum of 50%, provided that Tier 1 > 9.5% 60 >50 ------------------------------------------------------------------------------- President and CEO Mikael Silvennoinen: The year 2012 started on a good note. The ECB's support measures enhanced confidence in the euro-area economy. As a result of the ECB's decisions, banks' market-based funding showed recovery and market rates came down. Thanks to an improved operating environment and strong growth in our customer business, our first-quarter earnings before tax reached a record level of EUR 104 million. Lower interest rates, higher stock prices and narrower credit spreads improved the fair value reserve by over EUR 200 million. Banking reported excellent financial results. The loan portfolio grew by 3% from its level at the turn of the year. The performance improvement was due to a strong increase in net interest income and a reduction of 50% in impairment charges. Within Non-life Insurance, insurance premium revenue increased by 9%, showing a growth rate that was still above the market average. Claims expenditure increased less than insurance premium revenue. However, claims expenditure was high among corporate customers. Enhancing resources in sales and customer service in 2011 and an increase in sales commissions due to favourable developments in sales increased operating expenses. As a result, the operating combined ratio was at the same level as a year ago. Because more personnel were hired and ICT investments made last year, the Group's expenses increased vigorously during the first quarter. Investments in sales and customer service will make it possible to increase income in future too. The growth of expenses will flatten out during the rest of 2012. Outlook for the rest of 2012 Within Banking, the loan portfolio is expected to continue to grow during the rest of 2012, albeit not as strongly as in 2011. The average corporate loan margin is expected to remain at least at its current level. The operating environment for the corporate sector will remain challenging. The greatest uncertainties related to Banking's financial performance in 2012 are associated with future impairment loss on the loan portfolio. Insurance premium revenue is expected to increase at an above-the-market-average rate. The operating combined ratio is estimated to vary between 89% and 94% in 2012, if the number of large claims is not much higher than in 2011. Expected investment returns are largely dependent on developments in the investment environment. The most significant uncertainties related to Pohjola Insurance's financial performance in 2012 pertain to the investment environment, the discount rate applied to technical provisions and the effect of large claims on claims expenditure. The greatest uncertainties related to Asset Management's financial performance in 2012 are associated with the actual performance-based fees tied to the success of investments and the amount of assets under management. The key determinants affecting the Group Functions' financial performance include net interest income arising from assets in the liquidity buffer, any capital gains or losses on notes and bonds and any impairment charges that may be recognised on notes and bonds in the income statement. Consolidated earnings before tax in 2012 are expected to be markedly higher than in 2011. The treatment of insurance company investments in capital adequacy measurement has a major effect on Pohjola Group's capital adequacy. The related regulatory framework, based on the CRD IV, which is currently being revised, is expected to be specified during 2012. There is still great uncertainty about the economic outlook and the operating environment. A major risk that may undermine the economic outlook is the exacerbation of the fiscal crisis in certain euro countries. The crisis with its repercussions may have a significant impact on the entire financial sector's operating environment. All forward-looking statements in this report expressing the management's expectations, beliefs, estimates, forecasts, projections and assumptions are based on the current view of the future development in the operating environment and the future financial performance of Pohjola Group and its various functions, and actual results may differ materially from those expressed in the forward- looking statements. Helsinki, 3 May 2012 Pohjola Bank plc Board of Directors This Interim Report is available at www.pohjola.com > Media > Releases, where background information on the Bulletin can also be found. Analyst meeting, conference call and live webcast Pohjola will hold a briefing in English for analysts and investors on 3 May starting at 3.00 pm Finnish time, EET (2.00 pm CET, 1.00 pm UK time, 8am US EST). The briefing is a combined analyst meeting, conference call and live webcast. Analysts and investors may attend the briefing in one of the following two ways: 1) By viewing the briefing as live webcast via the internet. The link will be available on the IR website before the briefing begins. Questions on the internet are welcome via a question button available in the webcast window. An on-demand webcast of the briefing can be viewed via the IR website afterwards. 2) By dialling one of the regional conference call numbers shown below. Questions are welcome by telephone in the Q&A session according to instructions. To participate via a conference call, please dial in 5-10 minutes before the beginning of the event: UK, International +44 203 043 24 36 US +1 866 458 40 87 FIN +358 923 101 527 Password: Pohjola Press conference Mikael Silvennoinen, Pohjola Bank plc's President and CEO, will present the financial results in a press conference on OP-Pohjola Group's premises (Teollisuuskatu 1b, Vallila, Helsinki), on 3 May, starting at noon. Financial reporting in 2012 Schedule for Interim Reports in 2012: Interim Report H1/2012:1 August Interim Report Q1-3/2012: 31 October DISTRIBUTION NASDAQ OMX Helsinki Ltd London Stock Exchange SIX Swiss Exchange Major media www.pohjola.com, www.op.fi For additional information, please contact: Mikael Silvennoinen, President and CEO, tel. +358 (0)10 252 2549 Vesa Aho, CFO, tel. +358 (0)10 252 2336 Niina Pullinen, Senior Vice President, Investor Relations, tel. +358 (0)10 252 4494 Pohjola Bank plc is a Finnish financial services group which provides its customers with banking, non-life insurance and asset management services. Our mission is to promote the prosperity, security and wellbeing of our customers. Profitable growth and an increase in company value form our key objectives. Pohjola Group serves corporate customers in Finland and abroad by providing an extensive range of financial, investment, cash-management and non-life insurance services. We offer non-life insurance and private banking services to private customers. Pohjola Series A shares have been listed on the Large Cap List of the NASDAQ OMX Helsinki since 1989. The number of shareholders totals around 34,000. Pohjola's consolidated earnings before tax came to 258 million euros in 2011 and the balance sheet total amounted to 41 billion euros on 31 December 2011. Pohjola is part of OP-Pohjola Group, the leading financial services group in Finland with over four million customers. www.pohjola.com [HUG#1608226] |
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