Pohjola Pankki Oyj - Interim report (Q1 and Q3)

Pohjola Bank plc's Interim Report for 1 January-31 March 2011

Pohjola Bank plc
Company Release, 4 May 2011, 8.00 am
Release category: Interim Report

Pohjola Bank plc's Interim Report for 1 January-31 March 2011

- Consolidated earnings before tax improved to EUR 94 million (59). Earnings
before tax at fair value were EUR 74 million (119) and return on equity at fair
value stood at 10.0% (15.9).
- Banking earnings before tax doubled to EUR 53 million (26). These earnings
included EUR 16 million (33) in impairment charges on receivables. The loan
portfolio increased by 3% from its level on 31 December 2010.
- Within Non-life Insurance, insurance premium revenue rose by 8%. Earnings were
eroded by higher claims incurred. Excluding amortisation on intangible assets
arising from company acquisition, the operating combined ratio stood at 100.5%
(95.5). Within Non-life Insurance, return on investments at fair value was 0.5%
(3.2).
- Asset Management increased its earnings by 11% to EUR 6.2 million (5.6) and
assets under management amounted to EUR 34.8 billion (35).
- The Group Functions reported earnings of EUR 17 million (22) before tax.
- Unchanged outlook: Consolidated earnings before tax for 2011 are expected to
be higher than in 2010. For more detailed information on outlook, see "Outlook
towards the year end" below.


Earnings before tax, € million        Q1/   Q1/
                                     2011  2010 Change, %  2010

  Banking                              53    26       106   133

  Non-life Insurance                   19     6       230    83

  Asset Management                      6     6        11    31

  Group Functions                      17    22       -24    61

Total                                  94    59        61   308

Change in fair value reserve          -21    61             -17

Earnings before tax at fair value      74   119       -38   291



Earnings per share, €                0.23  0.14            0.72

Earnings per share at fair value, €  0.18  0.28            0.68

Equity per share, €                  7.22  7.04            7.44

Average personnel                   3,023 2,992           3,005




Financial targets                                           Q1/  Q1/
                                                           2011 2010 2010 Target

Return on equity at fair value, %                          10.0 15.9  9.3     13

Tier 1 ratio, %                                            12.2 12.1 12.5   >9.5

Operating cost/income ratio by Banking, %                    34   35   35    <40

Operating combined ratio, %                               100.5 95.5 89.7     92

Operating expense ratio, %                                 21.9 21.8 21.3    <20

Solvency ratio, %                                            84   91   86     70

Operating cost/income ratio by Asset Management, %           50   54   53    <50

AA rating affirmed by at least two credit rating agencies     3    3    3     >2

Dividend payout ratio a minimum of  50%, provided that
Tier 1 > 9.5%                                                          55    >50



President and CEO Mikael Silvennoinen:"Our consolidated earnings before tax for the first quarter of 2011 were good
and much better than a year ago. Our income grew at more than double the rate of
our expenses. Finnish economic growth remained strong and the corporate sector
has continued to experience a more favourable operating environment buttressed
by brighter export prospects. As a result of the improved operating environment,
our impairment charges for the reporting period were markedly lower than a year
ago although they remained at the previous quarter's level. Interest rates
continued their upward trend and uncertainty persisted in capital markets, with
the result that our consolidated earnings before tax at fair value were lower
than the record level posted a year earlier.

Banking improved its year-on-year earnings markedly, and it was gratifying to
see that all our business lines developed favourably. Demand for corporate loans
has gradually rebounded, and our corporate loan portfolio grew by 3% in the
first quarter. This growth improved net interest income although tougher
competition reduced the average margin on our corporate loan portfolio. The
Markets division reported good financial performance and client trading volumes
were on the rise. Baltic Banking also developed favourably.

Insurance premium revenue continued its strong growth among private customers
and premium revenue from corporate customers also rebounded markedly. Higher
claims expenditure, especially among corporate customers, weakened the operating
combined ratio. Within private customers, our balance on technical account was
almost at the previous year's level despite bad winter weather conditions and
the larger number of claims.

Within Asset Management, assets under management were at their 2010-end level,
and the business line showed improved operating efficiency.

The Finnish economy is expected to continue its strong growth in 2011, which
will provide us with growth potential.  Accordingly, we will strengthen our
customer service resources considerably during the current year. Our strong
capital base and diverse range of services provide us with good opportunities to
meet the growing needs of our customers."

Outlook towards the year end

The economic recovery underway has been reflected in demand for corporate loans,
with the result that the corporate loan portfolio has begun to grow. The average
corporate loan margin has turned down and tougher competition is expected to
send the margin on new loans down. Enabled by the economic recovery, the
operating environment is expected to improve in the corporate sector and
impairment charges to decrease. The greatest uncertainties related to Banking's
financial performance in 2011 are associated with future impairment charges on
the loan portfolio.

Insurance premium revenue is expected to continue to increase at an above-the-
market-average rate among private customers. Insurance premium revenue from
corporate customers has rebounded. In Non-life Insurance, the operating combined
ratio is estimated to vary between 89% and 94% in 2011 if the number of large
claims is not much higher than in 2010. Expected long-term returns on investment
within Non-life Insurance stand at 5.1%. Returns will largely depend on
developments in the investment environment. The most significant uncertainties
related to Non-life Insurance's financial performance in 2011 pertain to the
investment environment and the effect of large claims on claims expenditure.

Within Asset Management, assets under management are expected to increase during
the rest of the year, their amounts being affected by market developments and
the net inflow of assets. The greatest uncertainties related to Asset
Management's financial performance in 2011 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 portfolio, any
capital gains or losses on notes and bonds and any impairment charges recognised
on notes and bonds in the income statement. Capital gains on notes and bonds are
expected to decrease in 2011.

Consolidated earnings before tax in 2011 are expected to be higher than in 2010.

There is still great uncertainty about future economic development and the
overall operating environment, and these factors are beyond the Group
management's control.

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, 4 May 2011

Pohjola Bank plc
Board of Directors

This Interim Report is available at www.pohjola.fi/english > Media. Background
information on the Report can also be found at the same address.

Analyst meeting, conference call and live webcast

Pohjola will hold a briefing in English for analysts and investors on 4 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
interim results in a press conference on OP-Pohjola Group's premises
(Teollisuuskatu 1b, Vallila, Helsinki), on 4 May, starting at noon.

Financial reporting in 2011

Schedule for Interim Reports in 2011:
Interim Report H1/2011      3 August 2011
Interim Report Q1-3/2011  2 November 2011

DISTRIBUTION
NASDAQ OMX Helsinki Ltd
London Stock ExchangeMajor media
www.pohjola.fi, 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
Tarja Ollilainen, Senior Vice President, Investor Relations, tel. +358 (0)10
252 4494


[HUG#1512098]

Attachments:

Pohjola_Bank_plc_Interim_Report_Q1_2011

Background material Q1 2011.pdf