Pohjola Pankki Oyj - Annual Financial Report

OP-Pohjola Group's Financial Statements Bulletin 2010

OP-Pohjola Group Central Cooperative
Company Release 9 February 2011 at 8.00 am 1(3)
Release category: Annual financial statement


OP-Pohjola Group's Financial Statements Bulletin 2010

  * The Group's performance was enjoying robust growth:  Earnings before tax
    grew by 24% to EUR 575 million (464). Last-quarter earning doubled year on
    year.
  * Income increased by 6%. Net interest income bottomed out and began to grow
    again in the fourth quarter. Growth of Other income was very strong.
    Expenses increased by 3%.
  * Impairments of receivables contracted by 17% to EUR 149 million (179).
  * OP-Pohjola Group's joint banking and insurance customers increased in 2010
    by more than ever before, bringing the growth during the last five years to
    65%.
  * OP-Pohjola Group's market share improved considerably in life insurance,
    increased in credit, remained unchanged in mutual funds, and declined in
    deposits. Strong growth of private customers' premiums written continued in
    non-life insurance.
  * The Group's capital adequacy improved further: Tier 1 ratio stood at 12.8%
    (12.6). This boosts the Group's competitive edge as the financial sector has
    to cope with tighter regulation.
  * The economic outlook has clearly improved. The Group's full-year earnings
    for 2011 are expected exceed those of 2010, with the greatest uncertainty
    related to developments in international investment and financial markets.


OP-Pohjola Group's key indicators

+----------------------------------------------+-----------+-----------+-------+
|                                              |       2010|       2009|Change*|
+----------------------------------------------+-----------+-----------+-------+
|Earnings before tax, € million                |        575|        464|   24.0|
+----------------------------------------------+-----------+-----------+-------+
|    Banking and Investment Services           |        367|        471|  -22.0|
+----------------------------------------------+-----------+-----------+-------+
|    Non-life Insurance                        |         83|        102|  -19.4|
+----------------------------------------------+-----------+-----------+-------+
|    Life insurance                            |         43|       -159|       |
+----------------------------------------------+-----------+-----------+-------+
|Bonuses paid to customers, € million          |        151|        142|    6.3|
+----------------------------------------------+-----------+-----------+-------+
|Return on equity (ROE), %                     |        6.8|        5.9|    0.9|
+----------------------------------------------+-----------+-----------+-------+
|Return on equity at fair value, %             |        9.4|       14.7|   -5.3|
+----------------------------------------------+-----------+-----------+-------+
|Cost/income, %                                |           |           |       |
|(Banking and Investment Services)             |         57|         53|    4.4|
+----------------------------------------------+-----------+-----------+-------+
|Average personnel                             |     12,468|     12,632|   -1.3|
+----------------------------------------------+-----------+-----------+-------+

+----------------------------------------------+-----------+-----------+-------+
|                                              |31 Dec 2010|31 Dec 2009|Change*|
+----------------------------------------------+-----------+-----------+-------+
|Total assets, € billion                       |       84.0|       80.4|    4.4|
+----------------------------------------------+-----------+-----------+-------+
|Capital adequacy, %**                         |       12.8|       12.6|    0.2|
+----------------------------------------------+-----------+-----------+-------+
|Tier 1 ratio, %**                             |       12.8|       12.6|    0.2|
+----------------------------------------------+-----------+-----------+-------+
|Ratio of capital base to minimum amount of    |           |           |       |
|capital base***                               |       1.70|       1.58|   0.12|
+----------------------------------------------+-----------+-----------+-------+
|Non-performing  loan  losses  within  loan and|           |           |       |
|guarantee portfolio, %                        |        0.3|        0.4|   -0.1|
+----------------------------------------------+-----------+-----------+-------+

* The change is presented as a percentage point, 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.

Comments by Reijo Karhinen, Executive Chairman

2010 was another year when OP-Pohjola Group showed what a strong financial
services group it is. The entire Group's performance improved significantly,
more so than we had forecast, and this was possible because our business
segments complemented each other so well. Life Insurance's investment income was
particularly good. Another thing worth noting is that the fourth-quarter result
almost doubled year on year.

This bodes well for 2011, too, as the net interest income that took an upward
swing, the strong growth of 'Other income', the expected contraction of credit
losses, and recent years' moderate expense development look set to steer us
towards another set of good figures.

As a long-term and responsibility actor, we balanced in 2010 between short-term
growth targets and healthy long-term growth that ensures continued
profitability. I am very pleased with our achievement: profit development
continued to go up and at the same time we avoided going over the top in the
price competition. We maintained a steady market position. Over a century of
growth has taken us to the top. Today OP-Pohjola Group is a market leader in
almost all of our business areas.

I am particularly delighted in how our strategic projects have proceeded. The
annual growth of customers using both banking and insurance services provided by
our Group reached record figures, and the bonuses we pay out reached the EUR
150 million mark for the first time. Finnish ownership, the country's most
extensive service network and the genuine, customer-comes-first approach that
stems from our corporate structure make us a unique financial services group.

We also took big strides in reorganising the Group's structure. We created a
number of stronger member banks capable of providing better services, and also
made changes in how the central institution is organised. 2010 will be
remembered as a major turning point in terms of structural change.

The early months of 2011 have shown signs of being brighter than 2010: forecasts
predict good economic both globally and in Finland. However, we must be prepared
for surprises. Challenges in the euro area and in Finland must be taken
seriously.

OP-Pohjola Group's earnings

Earnings before tax increased by 24% and came to EUR 575 million (464).* The
Group's income increased by 6% despite a 14% contraction of net interest income.
The fall in net interest income bottomed out late in 2010 and began growing at a
slow rate. Earnings before tax at fair value contracted to EUR 800 million
(1,140), but it was still the Group's second-highest figure of all times.

The Banking pre-tax earnings contracted year on year by 22% mainly as a result
of lower net interest income. Impairments of receivables fell by 17% on the
report period and came to EUR 149 million (179). OP-Pohjola Group's non-life
insurance pre-tax earnings contracted to EUR 83 million (102) as a result of a
technical provision made because of higher life expectancy. The operating
combined ratio** was 89.7%, which is still good, although not as good as in the
comparison period (87.7%). Life Insurance earnings increased, even after higher
future supplementary benefits, by over EUR 200 million to EUR 43 million (loss
of EUR 159 million), thanks to a good return of investments.

Outlook for 2011

World economic growth is forecast to slow down but nevertheless remain strong,
and the Finnish economy is expected to develop favourably, too. In the wake of
economic recovery, short-term market rates are set to rise somewhat to their
current level until the end of the year. The greatest risks that may overshadow
the economic outlook are caused by public finance crises in certain euro
countries and the consequent financial market jitters.

Financial sector performance will be boosted in 2011 by what is likely to be a
moderate increase in interest rates from an already low level, and a probable
contraction of credit losses. OP-Pohjola Group's 2011 earnings before taxes are
expected to be better than in 2010. The greatest uncertainty is related to
developments in international investment and financial markets.

All forward-looking statements in this Financial Statements Bulletin 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.

New disclosure procedure

OP-Pohjola Group 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 op.fi.

Press Conference

OP-Pohjola Group's financial performance will be presented to the media by
Executive Chairman Reijo Karhinen in a press conference on 9 February 2011 at
12 noon at Teollisuuskatu 1 b, Vallila, Helsinki.


Helsinki, 9 February 2011

OP-Pohjola Group Central Cooperative
Executive Board



ADDITIONAL INFORMATION
Executive Chairman 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
Major media
op.fi and pohjola.fi



[HUG#1486689]

Attachments:

OP-Pohjola Group s Financial Statements Bulletin 2010.pdf