2011-02-09 07:00:00 CET
2011-02-09 07:01:04 CET
REGULATED INFORMATION
Pohjola Pankki Oyj - Financial Statement Release
Pohjola Bank plc Financial Statements Bulletin for 1 January-31 December 2010
Pohjola Bank plc Company Release, 9 February 2011, 8.00 am Release category: Annual financial statement Pohjola Bank plc Financial Statements Bulletin for 1 January-31 December 2010 January-December - Year on year, consolidated earnings before tax improved to EUR 308 million (265). Earnings before tax without non-recurring items amounted to EUR 322 million. Earnings include EUR 104 million (129) in impairment charges on receivables. Earnings before tax at fair value were EUR 291 million (508) and return on equity at fair value stood at 9.3% (19.2). - Banking posted earnings before tax of EUR 133 million (117), with impairment charges on receivables eroding its earnings by EUR 105 million (117). The operating cost/income ratio stood at 35% (35). - Excluding changes in reserving bases and amortisation on intangible assets arising from company acquisition, Non-life Insurance's operating combined ratio stood at 89.7% (87.7). Within Non-life Insurance, return on investments at fair value was 5.1% (10.7). - Asset Management reported earnings before tax of EUR 31 million (21), which included EUR 6 million in net non-recurring income related to corporate transactions. Assets under management increased to EUR 35 billion (33.1). - Capital gains on notes and bonds improved earnings before tax posted by the Group Functions. - The Board of Directors proposes that a per-share dividend of EUR 0.40 (0.34) be paid on Series A shares and EUR 0.37 (0.31) on Series K shares. This means a dividend payout ratio of 55%. - Outlook: Consolidated earnings before tax in 2011 are expected to be higher than in 2010. For more detailed information on outlook, see "Outlook for 2011" below). October-December - Consolidated earnings before tax amounted to EUR 66 million (55). Excluding non-recurring items (an increase in technical provisions of EUR -35 million due to higher life expectancy, removal of EUR 15 million provision for the joint guarantee system and net income of EUR 6 million from corporate transactions within Asset Management), earnings before tax were EUR 80 million. Earnings before tax at fair value came to EUR 18 million (84). - Banking earnings before tax amounted to EUR 40 million (18) and impairment charges on receivables were EUR 15 million (33). - Non-life Insurance's operating combined ratio stood at 93.1% (90.9). Within Non-life Insurance, return on investments at fair value was -0.1% (1.6). - Asset Management reported earnings before tax of EUR 14 million (11), which included EUR 6 million in net non-recurring income related to corporate transactions. +---------------------------------+----+----+---------+----+----+---------+ |Earnings before tax, € million | | | |Q4/ |Q4/ | | | |2010|2009|Change, %|2010|2009|Change, %| +---------------------------------+----+----+---------+----+----+---------+ |Banking | 133| 117| 14| 40| 18| 128| | | | | | | | | |Non-life Insurance | 83| 102| -19| -2| 13| | | | | | | | | | |Asset Management | 31| 21| 47| 14| 11| 27| | | | | | | | | |Group Functions | 61| 25| 148| 13| 13| -1| +---------------------------------+----+----+---------+----+----+---------+ |Total | 308| 265| 16| 66| 55| 20| | | | | | | | | |Change in fair value reserve | -17| 243| | -47| 30| | +---------------------------------+----+----+---------+----+----+---------+ |Earnings before tax at fair value| 291| 508| -43| 18| 84| -78| +---------------------------------+----+----+---------+----+----+---------+ +-----------------------------------------------+-----+-----+-----+-----+------+ | | | | Q4/ | Q4/ | | |Key indicators |2010 |2009 |2010 |2009 |Target| +-----------------------------------------------+-----+-----+-----+-----+------+ |Earnings before tax, € million | 308| 265| 66| 55| | | | | | | | | |Profit for the period, € million | 229| 194| 50| 39| | | | | | | | | |Return on equity at fair value, % | 9.3| 19.2| 2.5| 10.8| 13.0| | | | | | | | |Balance sheet total, € billion | 36.2| 35.5| | | | | | | | | | | |Shareholders' equity, € billion | 2.4| 2.3| | | | | | | | | | | |Tier 1 ratio, % | 12.5| 11.8| | | >9.5| | | | | | | | |Earnings per share, € | 0.72| 0.66| 0.16| 0.12| | | | | | | | | |Earnings per share, incl. change in fair value,| | | | | | |€ | 0.68| 1.27| 0.05| 0.19| | | | | | | | | |Equity per share, € | 7.44| 7.09| | | | | | | | | | | |Average personnel |3,005|2,966|3,036|2,979| | +-----------------------------------------------+-----+-----+-----+-----+------+ Deputy President and CEO Jouko Pölönen: Our consolidated earnings before tax in 2010 improved markedly year on year, totalling over EUR 300 million. Fourth-quarter earnings before tax were also better than a year ago although they were eroded by non-recurring items totalling EUR 14 million. It was gratifying to see strong growth in net interest income, especially from Corporate Banking. In line with our expectations, our impairment charges on receivables were lower than in 2009 and were markedly lower in the second half than a year ago. The investment environment was highly volatile during 2010, which is why consolidated earnings before tax at fair value were lower than the record figure reported in the previous year. Greater demand for corporate loans led to a 6% increase in our corporate loan portfolio. Thanks to this increase and the higher average margin on the corporate loan portfolio, net interest income showed strong growth. Tougher competition put an end to the trend of the rising average corporate loan margin and sent the margin on new loans down in the second half. The Markets division reported good financial performance and client trading volumes were on the rise. Banking showed a marked improvement in its earnings. Within Non-life Insurance, the balance on technical account remained good despite the claims filed in the aftermath of the bad winter conditions and the late summer storms. Insurance premium revenue grew and its growth above market average among private customers in particular remained strong throughout the year. We had set a strategic target in 2005 of serving 450,000 loyal customer households by the end of 2010, but reached it already in August, and this growth remained vigorous in the fourth quarter too. Non-life Insurance posted lower earnings before tax than the year before. Excluding non-recurring items, its earnings were, however, at the previous year's excellent level. Within Asset Management, assets under management increased to EUR 35 billion and earnings before tax were better than a year ago. Earnings included EUR 6 million in net income from corporate transactions, related mainly to the internationalisation of the private equity fund business. The Finnish economy is expected to continue its recovery in 2011, which will also provide growth potential in the financial sector. As specified in our strategy, we aim to strengthen our market position. Our strong capital base, good profitability and extensive service offering will provide good opportunities to meet this aim. Financial targets and actuals +------------------------------------------------------------+-----+----+------+ |Financial targets |2010 |2009|Target| +------------------------------------------------------------+-----+----+------+ |Group | | | | | | | | | |Return on equity at fair value, % | 9.3|19.2| 13| | | | | | |Tier 1 ratio, % | 12.5|11.8| >9.5| | | | | | |Banking | | | | | | | | | |Operating cost/income ratio, % | 35| 35| <40| | | | | | |Non-life Insurance | | | | | | | | | |Operating combined ratio, % | 89.7|87.7| 92| | | | | | |Operating expense ratio, % | 21.3|22.2| <20| | | | | | |Solvency ratio, % | 86| 88| 70| | | | | | |Asset Management | | | | | | | | | |Operating cost/income ratio, % |53 1)| 53| <50| | | | | | |Rating | | | | | | | | | |AA rating affirmed by at least two credit rating agencies | 3| 3| >2| | | | | | |Dividend policy | | | | | | | | | |Dividend payout ratio a minimum of 50%, provided that Tier | | | | |1 a minimum of 9.5%. | 55| 51| >50| +------------------------------------------------------------+-----+----+------+ 1) Excl. items related to corporate transaction The financial targets are set over the economic cycle. Outlook for 2011 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 trend of the rising average corporate loan margin has come to an end 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 in 2011. The greatest uncertainties related to Banking's financial performance in 2011 are associated with future impairment charges recognised on the loan portfolio. Insurance premium revenue is expected to continue to increase at an above-the- market-average rate among private customers and that from corporate customer is anticipated to rebound. 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, the upward trend in assets under management is expected to continue, 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. Pohjola Bank plc's Board proposal for the allocation of distributable funds On 31 December 2010, the shareholders' equity of Pohjola Bank plc totalled EUR 1,605,505,584.07, EUR 490,106,196.36 of which represented distributable equity. The following funds are at the AGM's disposal for profit distribution: € Profit for 2010 193,705,180.62 Retained earnings 1,899,747.73 Reserve for invested non-restricted equity 307,931,364.75 Other non-restricted reserves 23,449,472.31 less negative fair value reserve -36,879,569.05 Total 490,106,196.36 The Board of Directors proposes that the Company's distributable funds be distributed as follows: EUR 0.40 per share payable on 251,169,770 Series A shares, totalling EUR 100,467,908.00, and EUR 0.37 per share payable on 68,381,645 Series K shares, totalling EUR 25,301,208.65, i.e. the proposed total dividend distribution amounts to EUR 125,769,116.65. The Board of Directors proposes that EUR 125,769,116.65 out of the profit for 2010 be allocated to dividend distribution. Accordingly, EUR 364,337,079.71 remains in the Company's distributable equity. The Board of Directors proposes that the dividend be paid to shareholders who have been entered in the Shareholder Register, maintained by Euroclear Finland Ltd, by the dividend record date on 1 April 2011 and that the dividend be paid within the book-entry securities system on 12 April 2011. New disclosure procedure Pohjola Bank plc will adopt a new disclosure procedure, enabled by Standard 5.2b issued by the Finnish Financial Supervisory Authority, and publish its Financial Statements Bulletin as PDF file attached to this company announcement. The Financial Statements Bulletin will also be available at pohjola.fi. Helsinki, 9 February 2011 Pohjola Bank plc Board of Directors This Financial Statements Bulletin is available at www.pohjola.fi/english > Media > Material Service. Background information on the Bulletin can also be found at the same address. Analyst meeting, conference call and live webcast Pohjola will hold a collective briefing in English for analysts and investors on Pohjola Asset Management Ltd premises in Helsinki on February 9 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 Jouko Pölönen, Pohjola Bank plc's Deputy President and CEO, will present the financial results in a press conference on OP-Pohjola Group premises (Teollisuuskatu 12.00 b, Vallila, Helsinki), on 9 February, starting at noon. Annual General Meeting Pohjola Bank plc will hold its Annual General Meeting (AGM) in the Congress Wing of the Helsinki Exhibition & Convention Centre on Tuesday 29 March 2011, starting at 2.00 pm. Proposals by the Board of Directors to the AGM will be published as a company release on 9 February 2011 and notice of the Meeting on 21 February 2011, after which the notice will appear in Helsingin Sanomat and Hufvudstadsbladet. Thereafter, the Report by the Board of Directors and the Financial Statements and other AGM documentation will also be available on the company's website at www.pohjola.fi. Financial reporting in 2011 Schedule for Interim Reports in 2011: Interim Report Q1/2011 4 May 2011 Interim Report H1/2011 3 August 2011 Interim Report Q1-3/2011 2 November 2011 For additional information, please contact Jouko Pölönen, Deputy President and CEO, tel. +358 (0)10 253 2671 Tarja Ollilainen, Senior Vice President, Investor Relations, tel. +358 (0)10 252 4494 DISTRIBUTION NASDAQ OMX Helsinki Ltd London Stock Exchange Major media www.pohjola.fi, www.op.fi [HUG#1486672]
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