2010-05-05 07:00:00 CEST
2010-05-05 07:00:09 CEST
REGLERAD INFORMATION
Pohjola Pankki Oyj - Interim report (Q1 and Q3)
OP-Pohjola Group's January-March 2010
OP-Pohjola Group Central Cooperative Company Release 5 May 2010 at 8.00 am 1 (42) Release category: Interim Report OP-Pohjola Group's January-March 2010 - Earnings before tax, EUR 128 million, were higher than in Q1/2009 (124) and much higher than in Q4/2009 (70). Year on year, earnings before tax at fair value soared to quadruple figures at EUR 340 million (85). - Income increased by 2% despite 22% lower net interest income. Expenses were lower year on year. - Credit losses, standing at EUR 38 million, increased as expected from last year, but shrank clearly compared with the level on 31 December 2009. - According to the sector's official statistics published in April, OP-Pohjola Group solidified its position further as Finland's leading bank and non-life insurer in 2009. - Compared with 31 March 2009, the Group's market share in loans, mutual funds and life insurance improved, but contracted in deposits. - The Group's risk-bearing capacity is very strong. Tier 1 ratio stood at 12.6%. The financial and insurance conglomerate's capital buffers rose to EUR 2.3 billion. - The Group's full-year earnings for 2010 are expected to be about the same as in 2009. The greatest uncertainty is related to changes in interest rates, the investment environment and credit losses. Comments by Reijo Karhinen, Executive Chairman "We got off to a good start to the year again: our year-on-year earnings improved and were much higher than in the last quarter of 2009. Considering the turbulent markets, we can be extremely pleased with our performance. The exceptionally low interest rates put a pressure on net interest income, but this was fully compensated by high investment income. Other things we can be pleased about are excellent earnings before tax at fair value, Life Insurance's volume and income performance and the fact that we have managed to reduce expenses and credit losses. We seem to be experiencing a turning point in credit loss increase. In the wake of the world's financial and economic crisis, public finances are plummeting and the financial sector is facing a regulatory crisis. If regulation is made much tighter, this poses a risk to Finland where banks form the core of the economy, and the wrong parties may now have to pay the brunt for the financial crisis. Excessive regulation threatens to erode banks' financing capacity and therefore the Finnish economy, which is beginning to show signs of growth. Now Finland has to put in a solid contribution as to what shape regulation will take. Competition on margins and tighter regulation are raising dark clouds especially over retail banking. A situation in which the interest rate for term deposits is higher than for new home mortgages can only be described as unhealthy. It seems that the sector is in this respect repeating the mistakes it made before the financial crisis. Now that competition is becoming increasingly tougher, OP-Pohjola Group's solid finances, excellent competitive advantages and customer promise are more than valuable. We will continue to offer our customers the best loyalty benefits. Thanks to our strategy focusing on long-termism, our financial services group is faring even better in terms of capital adequacy and market position than before the financial crisis. We have what it takes to pull through." OP-Pohjola Group's Interim Report for 1 January-31 March 2010 OP-Pohjola Group's key indicators -------------------------------------------------------------------------------- | | Q1/2010 | Q1/2009 | Change* | 2009 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings before tax, € | 128 | 124 | 3.2 | 464 | | million | | | | | -------------------------------------------------------------------------------- | Banking and Investment | 93 | 160 | -41.9 | 471 | | Services | | | | | -------------------------------------------------------------------------------- | Non-life insurance | 6 | -1 | | 102 | -------------------------------------------------------------------------------- | Life Insurance | 1 | -26 | | -159 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Bonuses paid to customers, € | 37 | 35 | 5.9 | 142 | | million | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Return on equity (ROE), % | 6.2 | 4.9 | 1.2 | 5.9 | -------------------------------------------------------------------------------- | Return on equity at fair | 16.2 | 2.7 | 13.6 | 14.7 | | value, % | | | | | -------------------------------------------------------------------------------- | Cost/income, % | 58 | 52 | 5 | 53 | | (Banking and Investment | | | | | | Services) | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Average personnel | 12,474 | 12,693 | -1.7 | 12,632 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | 31 Mar | 31 Mar | Change* | 31 Dec | | | 2010 | 2009 | | 2009 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total assets, € million | 83.2 | 75.8 | 9.8 | 80.4 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Capital adequacy, %** | 12.6 | 12.1 | 0.5 | 12.6 | -------------------------------------------------------------------------------- | Tier 1 ratio, %** | 12.6 | 12.1 | 0.5 | 12.6 | -------------------------------------------------------------------------------- | Ratio of capital base to | 1.62 | 1.38 | 0.24 | 1.58 | | minimum amount of capital | | | | | | base*** | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Non-performing loan losses | 0.5 | 0.5 | 0.0 | 0.4 | | within loan and guarantee | | | | | | portfolio, % | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Market share, % | | | | | -------------------------------------------------------------------------------- | Total loans | 32.6 | 32.2 | 0.4 | 32.7 | -------------------------------------------------------------------------------- | Total deposits | 32.8 | 33.8 | -1.0 | 33.2 | -------------------------------------------------------------------------------- | Capital invested in mutual | 23.6 | 22.1 | 1.5 | 23.4 | | funds | | | | | -------------------------------------------------------------------------------- | Of insurance savings through | 20.7 | 19.3 | 1.4 | 20.0 | | life and pension insurance | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | Q1/2010 | Q1/2009 | Change* | 2009 | -------------------------------------------------------------------------------- | Of premiums written in life | 38.5 | 24.4 | 14.1 | 25.2 | | and pension insurance, % | | | | | -------------------------------------------------------------------------------- * Percentage point change, 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. Operating environment The world economy continued its gradual but uneven recovery in the first quarter of 2010. In the US, the labour market is already stabilising and economic growth has been brisk. In Europe, on the other hand, recovery has been slower, with the upswing largely hinging on exports, while the emerging markets especially in Asia, spearheaded by China, are recovering at a high rate. The Finnish economy is recovering, too, and both businesses and consumers are showing improved confidence. Strong consumer confidence was witnessed by higher consumer spending and the lively housing market. Capital spending was still low, because there was still much idle production capacity. Although the world economy has turned around, this has not yet reflected in higher export volumes. Housing construction, on the other hand, has a brighter outlook. Central banks' benchmark interest rates were exceptionally low. The European Central Bank is not expected to raise its interest rates until the end of 2010 at the earliest, gradually reducing stimulus packages to support the banking system's liquidity, which will raise the euro area's short-term interest rates that had sunk record-low during the recession. Growth in the sector's loan portfolio increased at a somewhat higher rate in the first quarter of 2010, and corporate loans, which had contracted throughout all of 2009, levelled off in the first months of 2010. Loans to households grew at an annual growth rate of over 5% thanks to low interest rates and the livelier housing market. The higher number of deals made has also kept housing prices on the rise. The investment market remained favourable with the equity market continuing to grow steadily. The increase in value coupled with continuously high net subscriptions increased mutual fund capital especially with regard to equity funds. Deposits grew at a slow rate. Current account growth slowed down in the review period, whereas term deposits, which had experienced strong growth throughout 2009, slowed down. Life Insurance's premiums written rose steeply, while Non-life Insurance's premiums written were still low in the first quarter. The volume of indemnities paid out grew somewhat, because the winter's exceptional snow load caused a lot of damage. OP-Pohjola Group's earnings and total assets January-March Pre-tax earnings were clearly up year on year thanks to continued robust growth of Other operating income, coming to EUR 128 million (124)*. Earnings before tax compared with the previous quarter grew by over 80%. Income increased by 2% despite 22% lower net interest income. Other income increased by a third year on year, and expenses were lower. Thanks to recovering capital markets, earnings before tax at fair value were very good at EUR 340 million (85). The Banking pre-tax earnings was at the same level with Q4/2009, but contracted year on year by 42% as a result of lower net interest income and higher credit losses. Non-life Insurance earnings, thanks to higher investment income, were greater than in the comparison period, although the operating combined ratio** weakened to 95.5% (91.3). Life Insurance earnings made it into the black thanks to improved investment performance, coming to EUR 1 million (minus 26). Life Insurance's investment income at fair value was 4.1% (loss of 1.8). The Group's revenues increased by 2.5% to EUR 523 million (510). Net interest income was EUR 224 million (287), or down by 22% year on year. Other income continued to increase substantially, reaching EUR 298 million (223), up by 34% year on year. Banking's investment and net trading income increased by EUR 16 million, mainly as a result of higher sales profits and lower recognised impairments. Net commissions, totalling EUR 143 million (130), were higher than last year primarily owing to asset management fees. Expenses stood at EUR 317 million (319), down by 0.5% year on year. Expenses fell in several individual categories. The Group's wages and salaries were lower than in the comparison period as staff numbers reduced, but personnel costs as a whole increased by 0.8% because of higher pension expenses. Bonuses paid to owner-members and OP bonus customers rose by 5.9% and totalled EUR 37 million (35). Impairments and fair value changes reducing the earnings were recognised to an amount of EUR 103 million in the report period (122). EUR 17 million of these were recorded under Non-life Insurance net income, EUR 41 million under Life Insurance net income and EUR 8 million under other income. Net impairment losses on loans and receivables increased to EUR 38 million (29). The final credit losses were recognised to an amount of EUR 30 million EUR (5) and impairment losses to EUR 44 million (37). The majority of credit losses derived from corporate exposure. Value readjustments and cancellations of impairment losses totalled EUR 35 million (13). Impairment losses on receivables remained very low, at 0.27% of the loan and guarantee portfolio (0.21%). Pre-tax earnings for January-March were 83% than in the previous quarter. The Q1/2010 net interest income contracted by EUR 21 million from Q4/2009. Impairment charges contracted by EUR 14 million from Q4/2009. Compared with Q4/2009, Life Insurance net income was up by EUR 45 million and net commissions by EUR 18 million. Pre-tax earnings at fair value were EUR 340 million, up by EUR 139 million on Q4/2009. * Comparatives for 2009 are given in brackets. For income-statement and other aggregated figures, January-March 2009 figures serve as comparatives. For balance-sheet and other cross-sectional figures, figures at the end of the previous report period (31 December 2009) serve as comparatives. **The combined cost ratio excluding amortisation on intangible assets arising from the Pohjola acquisition and allocated to the business segment without the effect of changes in calculation bases. Earnings analysis -------------------------------------------------------------------------------- | € million | Q1/2010 | Q1/2009 | Change, | Change, | 2009 | | | | | € | % | | | | | | million | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings before tax | 128 | 124 | 4 | 3.2 | 464 | -------------------------------------------------------------------------------- | Gross change in fair | 212 | -40 | 252 | | 677 | | value reserve | | | | | | -------------------------------------------------------------------------------- | Earnings/loss before tax | 340 | 85 | 256 | | 1,140 | | at fair value | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Return on equity (ROE), | 6.2 | 4.9 | | 1.2* | 5.9 | | % | | | | | | -------------------------------------------------------------------------------- | Return on equity at fair | 16.2 | 2.7 | | 13.6 | 14.7 | | value, % | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Income | | | | | | -------------------------------------------------------------------------------- | Net interest income | 224 | 287 | -63 | -21.8 | 1,070 | -------------------------------------------------------------------------------- | Net income from Non-life | 78 | 69 | 9 | 13.3 | 396 | | Insurance | | | | | | -------------------------------------------------------------------------------- | Net income from Life | 14 | -21 | 35 | | -120 | | Insurance | | | | | | -------------------------------------------------------------------------------- | Net commissions and fees | 143 | 130 | 14 | 10.6 | 496 | -------------------------------------------------------------------------------- | Net trading and | 37 | 21 | 16 | 80.1 | 103 | | investment income | | | | | | -------------------------------------------------------------------------------- | Other operating income | 26 | 25 | 1 | 2.0 | 104 | -------------------------------------------------------------------------------- | Share of associates' | 1 | 0 | 1 | | 1 | | profits/losses | | | | | | -------------------------------------------------------------------------------- | Other income, total | 298 | 223 | 75 | 33.7 | 981 | -------------------------------------------------------------------------------- | Total income | 523 | 510 | 13 | 2.5 | 2,051 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Expenses | | | | | | -------------------------------------------------------------------------------- | Personnel costs | 164 | 163 | 1 | 0.8 | 622 | -------------------------------------------------------------------------------- | Other administrative | 75 | 80 | -5 | -6.5 | 310 | | expenses | | | | | | -------------------------------------------------------------------------------- | Other operating expenses | 78 | 76 | 2 | 3.2 | 316 | -------------------------------------------------------------------------------- | Total expenses | 317 | 319 | -2 | -0.5 | 1,248 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Impairment losses on | 38 | 29 | 9 | 30.1 | 179 | | receivables | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Returns to owner-members | | | | | | | and OP bonus customers | | | | | | -------------------------------------------------------------------------------- | Bonuses | 37 | 35 | 2 | 5.9 | 142 | -------------------------------------------------------------------------------- | Interest on ordinary and | 3 | 3 | -1 | -21.4 | 18 | | supplementary | | | | | | | cooperative capital | | | | | | -------------------------------------------------------------------------------- | Total returns | 39 | 38 | 1 | 3.6 | 160 | -------------------------------------------------------------------------------- * Percentage points OP-Pohjola Group's total assets amounted to EUR 83.2 billion (80.4) on 31 March 2010. Receivables from customers stood at EUR 53.7 billion (53.0) and deposits at EUR 34.4 billion (34.6). Debt securities issued to the public fell by 1.2% to EUR 19.7 billion (19.9). Pohjola Bank plc issued two senior bonds during the report period, with maturities of three and five years, worth a total of EUR 1.5 billion. The Group's capital base increased by 3.1% to EUR 6.4 billion (6.2) mainly owing to the report period's performance and capital appreciation. The fair value reserve, adjusted for deferred tax, was EUR 102 million (minus EUR 54 million). The reserve's growth has been significantly affected by capital appreciation and recognised impairments. Only the value changes in the fair value reserve have been recognised which the management have deemed to fulfil the relevant requirements. Impairments of EUR 62 million (87) were recognised in the report period. On 31 March, the cooperative capital investments and supplementary cooperative capital investments of the member cooperative banks' owner-members totalled EUR 773 million (750). The Annual General Meeting of Pohjola Bank plc decided on 26 March 2010 that the company will pay a dividend of EUR 0.34 for each Series A and EUR 0.31 for each Series K share for 2009, totalling EUR 107 million (45). Capital adequacy Two sets of capital adequacy ratios are calculated for OP-Pohjola Group. OP-Pohjola Group is founded on the principles of the Act on Cooperative Banks and other Cooperative Institutions. Owing to the regulations on joint responsibility and security conditions prescribed in the Act, a minimum amount of capital resources has been set for the amalgamation of the cooperative banks calculated according to the regulations for capital adequacy specified in the Act on Credit Institutions. The amalgamation of the cooperative banks comprises its central institution (OP-Pohjola Group Central Cooperative), the central institution's member credit institutions and companies belonging to their consolidation groups. Although OP-Pohjola Group's insurance companies do not belong to the amalgamation of the cooperative banks, investments made in them have a major impact on capital adequacy calculated in accordance with the capital adequacy regulations for credit institutions. This capital adequacy figure is called the amalgamation of cooperative banks' capital adequacy. OP-Pohjola Group is also a financial and insurance conglomerate, pursuant to the Act on the Supervision of Financial and Insurance Conglomerates. The conglomerate is governed by specific provisions of the capital adequacy requirement. In view of both capital adequacy requirements, OP-Pohjola Group's risk-bearing capacity is strong. In its calculation of capital requirement for credit risk, OP-Pohjola Group will phase in the Internal Rating-based Approach (IRBA). OP-Pohjola Group uses the Internal Ratings Based Approach (IRBA) in its capital adequacy measurement for corporate and institutional customers' credit risks. Otherwise the capital requirement is calculated using the Standardised Approach. The use of internal ratings reduces the Group's capital requirement, but makes it more susceptible to market fluctuations. As to market risks, OP-Pohjola Group will continue to use the Standardised Approach, whereas the introduction of the Standardised Approach is scheduled for 2010 in terms of operational risks. As a result of the financial crisis, banks' capital adequacy requirements will become tighter, in a effort to improve the quality of their capital base and to reduce the cyclic nature of capital requirements and to set quantitative limits to liquidity risk. These changes are only in their preparation stage, planned to be effective in 2012, and it is too early to predict precisely what their effects will be. The European Commission submitted a working paper in February for comments concerning proposed changes to the Capital Requirements Directive. These are mostly in line with proposals issued by the Basel Committee on Banking Supervision in December 2009. The Committee of European Banking Supervisors carried out an effect analysis in all the member countries concerning the overall effects of the proposed changes. The changes, if implemented, may cause major challenges to the sector and slow down economic growth. OP-Pohjola Group participated in both commenting the draft and the effect analysis. However, OP-Pohjola Group's high capital adequacy provides a solid protection against even major legislation changes. Capital adequacy of the amalgamation of cooperative banks On 31 March, OP-Pohjola Group's capital adequacy ratio under the Credit Institutions Act and the Tier 1 ratio stood at 12.6%, that is, at the same level as on 31 December 2009. The minimum capital adequacy ratio prescribed by law is 8%. -------------------------------------------------------------------------------- | Capital structure | | | | | | | and capital | | | | | | | adequacy | | | | | | -------------------------------------------------------------------------------- | € million | 31 Mar | 31 Dec | Change, | Change, | 31 Mar | | | 2010 | 2009 | € | % | 2009 | | | | | million | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Capital base | | | | | | -------------------------------------------------------------------------------- | Tier 1 capital | 5,298 | 5,227 | 72 | 1.4 | 4,804 | -------------------------------------------------------------------------------- | Tier 2 capital | - | - | | | - | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total capital base | 5,298 | 5,227 | 72 | 1.4 | 4,804 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Risk-weighted | 42,090 | 41,480 | 611 | 1.5 | 39,858 | | assets, total | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Minimum capital | | | | | | | requirement | | | | | | -------------------------------------------------------------------------------- | Credit and | 3,039 | 3,005 | 33 | 1.1 | 2,877 | | counterparty risk | | | | | | -------------------------------------------------------------------------------- | Market risk | 46 | 36 | 10 | 29.1 | 34 | -------------------------------------------------------------------------------- | Operational risk | 282 | 277 | 5 | 1.8 | 277 | -------------------------------------------------------------------------------- | Total | 3,367 | 3,318 | 49 | 1.5 | 3,189 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Capital adequacy | 12.6 | 12.6 | | 0.0* | 12.1 | | ratio, % | | | | | | -------------------------------------------------------------------------------- | Tier 1 ratio, % | 12.6 | 12.6 | | 0.0* | 12.1 | -------------------------------------------------------------------------------- * Percentage points Tier 1 capital at the end of March amounted to EUR 5,298 million (5,227). The result for the report period less the estimated dividend payout is included in Tier 1 capital. OP-Pohjola Group's Tier 1 capital increased by 1.4% during the report period. On 31 March, the ratio of hybrid capital to Tier 1 capital before adjustments was 3.1% (3.2). Tier 1 capital does not include equity capital growth resulting from the IFRS-compliant measurement of pension liabilities and the assets covering them, and from the measurement at fair value of investment property. Tier 2 capital came to zero following deductions from the item at the end of the report period. Any deductions in excess of Tier 2 capital were made from Tier 1 capital. At the end of the report period, capital resources included the consolidation group's fair value reserve that was EUR 19 million (14). At the end of the report period, insurance company investments, deducted in equal proportions from Tier 1 and 2 capital, came to EUR 2,316 million (2,341). EUR 183 million have been deducted from equity capital as a shortfall of expected losses and impairments. On the basis of the exemptions granted by the Financial Supervisory Authority, investments by OP-Pohjola Group entities in venture capital funds, managed by Pohjola Capital Partners, are treated in the capital adequacy calculation in the same way as investments in shares in business or industrial corporations. The minimum capital requirement was EUR 3,367 million on 31 March (3,318), increasing by 1.5% in the report period. The most significant factor that contributed to this growth was the higher capital requirement concerning the loan and guarantee portfolio. Capital adequacy under the Act on the Supervision of Financial and Insurance Conglomerates OP-Pohjola Group's capital adequacy pursuant to the Act on the Supervision of Financial and Insurance Conglomerates is calculated using the consolidation method, whereby assets included in capital resources but not included in equity capital, under the regulations for the banking or insurance industry, are added to the equity capital in the conglomerate's balance sheet. Capital resources may not include items not available for covering the losses of other companies belonging to the conglomerate. The financial and insurance conglomerate's minimum capital requirement consists of the credit institutions' consolidated minimum capital requirement and the insurance companies' joint minimum operating capital. On 31 March, OP-Pohjola Group's capital base, calculated according to the Act on the Supervision of Financial and Insurance Conglomerates, exceeded the minimum amount specified in the Act by EUR 2,306 million (2,121). The insurance companies' equalisation provision is not included in the financial and insurance conglomerate's capital resources. On 31 March 2010, the combined equalisation provision less the non-life and life insurance tax liabilities stood at EUR 525 million. The equalisation provision acts as a buffer for insurance companies in case of years with heavy losses and is therefore part of the financial services group's actual buffer against losses. Capital adequacy under the Act on the Supervision of Financial and Insurance Conglomerates: -------------------------------------------------------------------------------- | € million | 31 Mar | 31 Dec | Change, | Change, | 31 Mar | | | 2010 | 2009 | € | % | 2009 | | | | | million | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | OP-Pohjola Group's | 6,376 | 6,187 | 189 | 3.1 | 5,208 | | equity capital | | | | | | -------------------------------------------------------------------------------- | Business-segment-speci | 1,864 | 1,843 | 21 | 1.2 | 1,928 | | fic items | | | | | | -------------------------------------------------------------------------------- | Goodwill and | -1,077 | -1,084 | 7 | -0.7 | -1,101 | | intangible assets | | | | | | -------------------------------------------------------------------------------- | Equalisation provision | -525 | -527 | 3 | -0.6 | -486 | -------------------------------------------------------------------------------- | Other items included | -599 | -627 | 27 | -4.4 | -673 | | in equity capital and | | | | | | | business-segment-speci | | | | | | | fic items, but not | | | | | | | included in the | | | | | | | conglomerate's capital | | | | | | | resources | | | | | | -------------------------------------------------------------------------------- | Conglomerate's capital | 6,040 | 5,792 | 248 | 4.3 | 4,875 | | base, total | | | | | | -------------------------------------------------------------------------------- | Regulatory capital | 3,348 | 3,300 | 48 | 1.5 | 3,175 | | requirement for credit | | | | | | | institutions | | | | | | -------------------------------------------------------------------------------- | Regulatory capital | 386 | 371 | 15 | 3.9 | 366 | | requirement for | | | | | | | insurance operations | | | | | | -------------------------------------------------------------------------------- | Total minimum amount | 3,734 | 3,671 | 63 | 1.7 | 3,541 | | of conglomerate's | | | | | | | capital base | | | | | | -------------------------------------------------------------------------------- | Conglomerate's capital | 2,306 | 2,121 | 185 | 8.7 | 1,335 | | adequacy | | | | | | -------------------------------------------------------------------------------- | Conglomerate's capital | 1.62 | 1.58 | | 0.04* | 1.38 | | adequacy ratio | | | | | | | (capital | | | | | | | resources/minimum of | | | | | | | capital resources) | | | | | | -------------------------------------------------------------------------------- * Change in ratio Risk exposure OP-Pohjola Group retained its strong risk-bearing capacity. Credit risks rose somewhat as the recession hit customers' liquidity. The Group's liquidity, however, is strong. Favourable developments in the capital market increased investment income. OP-Pohjola Group's credit risk status remained relatively stable. Credit losses increased, but they were still rather low in relation to the loan and guarantee portfolio. Net impairment losses were 0.27% of the loan and guarantee portfolio (0.21). The gross ratio of impairment losses to the loan and guarantee portfolio was 0.35% in the report period. The ratio of non-performing and zero-interest loans to the loan and guarantee portfolio was about the same as a year ago. OP-Pohjola Group's non-performing and zero-interest receivables came to EUR 296 million (223) on 31 March, which was 0.5% (0.4) of the loan and guarantee portfolio. 49% (49) of OP-Pohjola Group's exposures fell into the top five credit portfolio categories (out of 12 categories), also known as investment grade. OP-Pohjola Group's financial and liquidity position remained solid throughout the report period with both short-term and long-term funding performing well. Pohjola strengthened its financial position by issuing two senior bonds with a maturity of three and five years in the first quarter, worth a total of EUR 1.5 billion. OP-Pohjola Group's assets included in the liquidity reserve amounted to EUR 13.0 billion (13.9) on 31 March 2010. The liquidity reserve and the means included in OP-Pohjola Group's liquidity management strategy ensure the Group's liquidity for at least 24 months. Market risk within non-life and life insurance is composed of the price, interest rate and currency risk. When market risks are assessed, we focus on those related to investments and technical provisions, primarily interest rate risk. On 31 March, Non-life Insurance's investment assets totalled EUR 3.0 billion (2.9) and that of Life Insurance EUR 4.5 billion EUR (4.1). Insurance operations' technical provisions and the distribution of and profits from investment assets are covered in more detail in the sections dealing with individual business segments. OP-Pohjola Group's fixed-income portfolio contained notes and bonds issued by the Greek government to a total of EUR 137 million, of which EUR 57 million is in non-life insurance, EUR 59 million in life insurance and EUR 21 million in the Group's liquidity portfolio under Other operations. The credit ratings are as follows: -------------------------------------------------------------------------------- | Rating agency | Short-term debt | Long-term debt | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Fitch Ratings | F1+ | AA- | | (OP-Pohjola Group and | | | | Pohjola Bank plc) | | | -------------------------------------------------------------------------------- | Standard & Poor's (Pohjola | A-1+ | AA- | | Bank) | | | -------------------------------------------------------------------------------- | Moody's (Pohjola Bank) | P-1 | Aa2 | -------------------------------------------------------------------------------- Fitch Ratings provides a rating for both OP-Pohjola Group and Pohjola Bank plc. OP-Pohjola Group's financial position also has a considerable impact on credit ratings issued for Pohjola Bank plc alone. Pohjola's credit rating outlook issued by Standard & Poor's is stable. Fitch Rating has issued a negative outlook for the long-term debt ratings of Pohjola and Moody's Investor Service has affirmed negative outlook on Pohjola's credit rating. The main reason for the negative outlook is the rapid deterioration of the Finnish economy and its potential effects on Pohjola and OP-Pohjola Group mainly operating in Finland. OP-Pohjola Group's long-term financial targets At Group level, objectives have been set for long-term risk-bearing capacity, profitability and efficiency. OP-Pohjola Group's long-term financial targets have been defined so as to ensure the Group's operational capacity. These have not been adapted to the existing financial operating environment. OP-Pohjola Group's success indicators: -------------------------------------------------------------------------------- | | 3/2010 | 3/2009 | Target | -------------------------------------------------------------------------------- | Capital adequacy (under | 1.62 | 1.38 | 1.5 | | the Act on the Supervision | | | | | of Financial and Insurance | | | | | Conglomerates) | | | | -------------------------------------------------------------------------------- | Return on economic capital | 13.1% | 9.0% | 17% | | (12-month rolling) | | | | -------------------------------------------------------------------------------- | Growth differential | 11.0 | -22.6 | > 0 | | between income and | | | | | expenses, percentage | | | | | points | | | | | (12-month rolling) | | | | -------------------------------------------------------------------------------- Changes in OP-Pohjola Group's structure OP-Pohjola Group's consolidated financial statements include 220 member cooperative banks (220), OP-Pohjola Group Central Cooperative Consolidated and OP Bank Group Mutual Insurance Company. Kiukaisten Osuuspankki and Hinnerjoen Osuuspankki have decided to merge with Euran Osuuspankki. The planned date for the merger is 30 May 2010. Kuopion Osuuspankki, Iisalmen Osuuspankki and Varkauden Osuuspankki have decided to create Pohjois-Savon Osuuspankki through a combination merger. The merger will be entered in the Trade Register on 31 December 2010. In another combination merger, Nilsiän Osuuspankki and Koillis-Savon Osuuspankki will become Koillis-Savon Osuuspankki, to be entered in the Trade Register no later than 30 November 2010. Owner-members and customers On 31 March, the cooperative member banks had 1,275,000 owner-members, up by 35,800 year on year. On the same date, Group member banks and Helsinki OP Bank Plc, which operates in the Greater Helsinki Metropolitan Area, had a total of 1,103,000 OP bonus customers. Loyal customer bonuses earned by OP bonus customers totalled EUR 37 million, up by 5.9% on the previous year. Bonuses earned by owner-members are stated in OP-Pohjola Group's income statement under 'Returns to owner-members'. In January-March, OP bonus customers used a total of EUR 21 million (20) of bonuses on banking services and EUR 13 million (16) on Pohjola non-life insurance premiums. Bonuses were used for the payment of over 264,000 insurance premium bills, and 18% of these were paid using solely OP bonuses. OP-Pohjola Group had 4,133,000 customers in Finland at the end of March. The number of private customers totalled 3,717,000 and that of corporate customers 416,000. In addition, OP-Pohjola Group has approximately 200,000 non-life insurance customers in the Baltic countries. In the year from March 2009, the number of joint banking and non-life insurance customers increased by 73,300 to 1,087,000 as a result of cross-selling. At the end of March, Pohjola's loyal customer households numbered 433,000, increasing in the past twelve months by 38,200. More than half of Pohjola's loyal customer households have also concentrated their banking transactions in OP-Pohjola Group member cooperative banks. Personnel and incentive system At the end of March, the Group had 12,502 employees (12,504). About 94% of OP-Pohjola Group's personnel are members in the Group's Personnel Fund. A long-term management incentive scheme is also in place within the Group. Central Cooperative's corporate governance OP-Pohjola Group Central Cooperative is the central institution of the amalgamation of the cooperative banks, the parent company of OP-Pohjola Group Central Cooperative Consolidated and the company heading the financial and insurance conglomerate formed by OP-Pohjola Group. Acting as OP-Pohjola Group's development and service centre and strategic owner institution, the Central Cooperative is also the central institution in charge of Group control and monitoring. The Annual Cooperative Meeting of OP-Pohjola Group Central Cooperative was held on 26 March 2010. The Meeting re-elected the following Supervisory Boar members, who were due to resign, for the term ending in 2013: Pekka Ahvenjärvi, Attorney; Ola Eklund, Product Director; Paavo Haapakoski, liikuntaneuvos (Finnish honorary title); and Bo Storsjö, farmer. The new members elected to the Supervisory Board were as follows: Hannu Simi, planner; and Mervi Väisänen, Senior Lecturer. In addition, the Meeting elected Matti Pulkkinen, Director of the Northern Savo Hospital District, for the term ending in 2012. The Supervisory Board comprises 33 members. At is first meeting after the Annual Cooperative Meeting, Supervisory Board re-elected Paavo Haapakoski Chairman. Professor Jaakko Pehkonen and President Jukka Hulkkonen were elected as Vice Chairmen. The Annual Cooperative Meeting re-elected KPMG Oy Ab, a firm of authorised public accountants, the auditor of OP-Pohjola Group Central Cooperative and OP-Pohjola Group for the financial year 2010. Capital expenditure and service development The Central Cooperative, together with its subsidiaries, is responsible for developing OP-Pohjola Group's services. ICT investments and related specifications make up a significant portion of costs of developing these services. EUR 7 million (14) of these expenses consisted of ICT procurement capitalised in the balance sheet in the report period. Of these investments, EUR 5 million (9) was allocated to banking and investment operations, EUR 2 million (3) to non-life insurance operations and EUR 1 million (2) to life insurance operations. Joint responsibility and joint security Under the Act on Cooperative Banks and Other Cooperative Credit Institutions, the amalgamation of the cooperative banks comprises the organisation's central institution (OP-Pohjola Group Central Cooperative), the Central Cooperative's member credit institutions and the companies belonging to their consolidation groups. This amalgamation is supervised on a consolidated basis. The Central Cooperative and its member banks are ultimately responsible for each other's liabilities and commitments. The Central Cooperative's members at the end of the report period comprised OP-Pohjola Group's 220 member banks as well as Pohjola Bank plc, Helsinki OP Bank Plc, OP Mortgage Bank and OP-Kotipankki Oyj. OP-Pohjola Group's insurance companies do not fall within the scope of joint responsibility. Deposit banks belonging to OP-Pohjola Group, i.e. its member cooperative banks, Pohjola Bank plc, Helsinki OP Bank Plc and OP-Kotipankki Oyj, are regarded as a single bank with respect to deposit protection. Under legislation governing the Investors' Compensation Fund, OP-Pohjola Group is also considered a single entity for purposes of compensation protection. Outlook towards the year end The Finnish economy took a moderate upswing in late 2009 along with the rest of the world. Although estimates of growth in the coming years have been confirmed in the first quarter, economic growth is expected to be more moderate than the period prior to the financial crisis. Growth still rests on fragile foundations. Bank regulation, especially proposed changes relating to capital adequacy, creates a significant uncertainty to banks' operating capacity and economic growth at large. The economy may have turned for the better and the financial markets stabilised, but predicting financial development is still difficult. Profit performance in the financial sector in 2010 will be weakened by exceptionally low interest rates, persistently high credit losses and slower growth. OP-Pohjola Group's 2010 result before taxes is expected to be at about the same level as in 2009. The greatest uncertainty in these estimates is related to changes in interest rates, the investment environment and credit losses. All forward-looking statements in this Interim Report 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. Operations and earnings by business segment OP-Pohjola Group's business segments are Banking and Investment Services, Non-life Insurance and Life Insurance. Non-segment operations are presented in 'Other Operations'. OP-Pohjola Group's segment reporting is based on accounting policies applied in its financial statements. Amortisation on intangible assets arising from the Pohjola acquisition in 2005 is allocated to the business segments. Companies within the Banking and Investment Services segment are the member banks, Helsinki OP Bank Plc, OP-Kotipankki Oyj, OP Mortgage Bank, OP Fund Management Company Ltd, Pohjola Asset Management Limited, Pohjola Corporate Finance Ltd, Pohjola Capital Partners Ltd, as well as certain smaller companies supporting banking and investment services in their entirety. Pohjola Group's banking and asset management segments are also included in the Banking and Investment Services segment as are the operations of OP-Pohjola Group Mutual Insurance Company, because most of the company's business consists of credit insurance granted to the Group's retail banks. The Non-life Insurance segment encompasses the operations of OP-Pohjola Group's non-life insurance companies, i.e. Pohjola Insurance Ltd, Eurooppalainen Insurance Company Ltd, A-Insurance Ltd, the Seesam companies operating in the Baltic countries, as well as the operations of service companies supporting non-life insurance. The Life Insurance segment comprises OP Life Assurance Company Ltd engaged in the Group's life and pension insurance business. Other Operations includes operations that support all business segments, particularly the operations of OP-Pohjola Group Central Cooperative and Pohjola's Group management. Costs of the services for the business segments are allocated to the segments in the form of internal service charges. The allocation of own capital to the business segments is carried out through an internal bank under Other Operations, which means that any positive results in excess of the target level will be shown under Other Operations. Summary of performance by business segment -------------------------------------------------------------------------------- | € million | Income | Expense | Others | Earnings/lo | Earnings/lo | | | | s | items | ss | ss | | | | | | before | before | | | | | | tax | tax | | | | | | Q1/2010 | Q1/2009 | -------------------------------------------------------------------------------- | Banking and | 400 | 230 | -77 | 93 | 160 | | Investment | | | | | | | Services | | | | | | -------------------------------------------------------------------------------- | Non-life Insurance | 82 | 76 | 0 | 6 | -1 | -------------------------------------------------------------------------------- | Life Insurance | 24 | 23 | 0 | 1 | -26 | -------------------------------------------------------------------------------- | Other Operations | 114 | 83 | 0 | 31 | -9 | -------------------------------------------------------------------------------- | Eliminations | -97 | -95 | 0 | -2 | 1 | -------------------------------------------------------------------------------- | Total | 523 | 317 | -77 | 128 | 124 | -------------------------------------------------------------------------------- Banking and Investment Services - Mutual fund assets increased by 55%. The Group's market share of the value of the mutual funds rose by 1.5 percentage points to 23.6%. - The Group's market share of loans increased by 0.4 percentage points to 32.6% but as to deposits fell by 1.0 percentage points to 32.8%. - Earnings before tax equalled those in Q4/2009, but compared with Q1/2009 shrank by 42% to EUR 93 million as a result of lower net interest income and higher credit losses. - Impairment losses on receivables fell by 27% from the previous quarter. Within Banking and Investment Services, the report period was divided: on the one hand, the economic recession had caused impairment losses on credit to be higher year on year; credit and deposit growth were also sluggish as a result of the recession. On the other hand, the quick and strong recovery of the investment market continued and increased investment volumes and demand for asset management services; and the extremely low interest rates sent the net interest income on a steep downward trend vis-à-vis the comparison period. According to the sector's official statistics published in April, OP-Pohjola Group solidified its position further as Finland's leading bank in 2009. Compared with March 2009, the Group's market share in credits and fund capital improved further, but contracted in deposits. OP-Pohjola Group's March-end loan portfolio stood at EUR 53.3 billion (52.6), and the guarantee portfolio totalled EUR 2.9 billion (3.0). The loan portfolio expanded by 4.0% (9.4) in the year to March and by 1.3% in the report period. The market share of the loan portfolio increased year on year by 0.4 percentage points to 32.6%. The portfolio of home mortgages at the end of March amounted to EUR 25.9 billion (25.7). In the year to March, home mortgages increased by 6.1% (10.4). OP-Pohjola Group held 35.9% of the home mortgage portfolio on 31 March, down by 0.1 percentage points year on year. The housing market improved clearly year on year. The number of housing deals brokered by OP-Kiinteistökeskus real estate agents was a quarter higher than in the comparison period. The average margin on new home mortgages in January-March was 0.2 percentage points higher than a year ago. Compared with the last quarter of 2009, the margin of new home mortgages fell by 0.1 percentage points. The consumer credit portfolio totalled EUR 3.7 billion (3.7) at the end of the report period, increasing in the year to March by 1.4% (8.5). The corporate loan portfolio at the end of March stood at EUR 13.5 billion (13.4), and the guarantee portfolio totalled EUR 2.7 billion (2.7). The corporate loan portfolio shrank by 0.9% during the year (increase of 11%) but increased in the report period by 0.8%. The market share of corporate loans stood at 28.7% on 31 March, up by 2.0 percentage points year on year. On 31 March, deposits totalled EUR 34.4 billion (34.6), down by 1.1% year on year and by 0.7% in the report period. Competition was tough for customers' deposit assets in the report period. The pricing of term deposits, in particular, showed some unhealthy signs. The fact that assets were channelled to emerging capital markets reduced deposits. Investment deposits shrank by 12.0% in the year to March (20.2), while current accounts increased by 11.9% (5.7). The Group's market share of corporate loans stood at 32.8% on 31 March, down by 1.0 percentage points year on year. Capital invested in OP-Pohjola Group's mutual funds stood at EUR 13.9 billion (12.7). The amount of capital rose with the market trends by 55% year on year and by 9.4% in the report period. On 31 March, OP-Pohjola Group held a 23.6% market share of the capital of mutual funds registered in Finland, or 1.5 percentage points higher year on year. Net subscriptions to OP-Pohjola Group's mutual funds totalled EUR 575 billion (8). On 31 March, assets managed by Pohjola Bank's Asset Management were worth EUR 34.9 billion (33.1), of which EUR 12.0 billion (11.4) was invested in OP-Pohjola Group's mutual funds. OP-Pohjola Group companies accounted for EUR 8.6 billion of assets managed by Pohjola Bank. Assets managed in accordance with the OP-Private operating model totalled EUR 4 billion (3.6). Stockbroking for households totalled 276,000 trades during the report period, or 30.8% more than a year earlier. Earnings and risk exposure Banking and Investment Services reported earnings of EUR 93 million before tax, that is, same is in the previous quarter. This was, however, down by 42% year on year (160). Bonuses given out in the report period rose by 5.9% to EUR 37 million (35). Net interest income decreased by 23% to EUR 208 million (270). Net commissions and fees increased by 12% to EUR 155 million (139) especially owing to higher commissions from mutual funds. The fall in net interest income was caused by exceptionally low interest rates. Net trading and investment income totalled EUR 24 million (26). The growth of investment income was boosted by lower impairments on available-for-sale investments and by higher sales profits. Net trading income had been exceptionally high in the comparison period (Q1/2009) but was now lower. Personnel costs decreased by 0.8% other expenses by 3.8%. The cost/income ratio stood at 58% (52). Impairments on receivables came to EUR 38 million (20), Impairments losses increased from the comparison period by EUR 18 million, but compared with Q4/2009, impairment losses on receivables shrank by EUR 14 million, or 27%. Impairment losses on receivables come with a delay of general economic development, and lower impairment losses is one sign that the trends are changing. The amount of impairment losses was still fairly moderate considering the business volumes and current trends. The Group's non-performing and zero-interest receivables increased but remained low, totalling EUR 296 million on 31 March, up by 4.7% year on year. Businesses' non-performing loan losses increased in the most. Non-performing and zero-interest receivables are stated net of impairment losses on specific receivables and groups of receivables, which amounted to EUR 155 million (131). The ratio of non-performing and zero-interest receivables to the loan and guarantee portfolio was about the same as last year at 0.5%. Banking and Investment Services, key figures -------------------------------------------------------------------------------- | € million | Q1/2010 | Q1/2009 | Change, % | 2009 | -------------------------------------------------------------------------------- | Net interest income | 208 | 270 | -22.8 | 981 | -------------------------------------------------------------------------------- | Impairment losses on | 38 | 20 | 93.1 | 167 | | receivables | | | | | -------------------------------------------------------------------------------- | Other income | 192 | 183 | 4.5 | 720 | -------------------------------------------------------------------------------- | Personnel costs | 105 | 106 | -0.8 | 396 | -------------------------------------------------------------------------------- | Other expenses | 125 | 130 | -3.8 | 507 | -------------------------------------------------------------------------------- | Returns to owner-members | 39 | 38 | 3.6 | 160 | | and OP bonus customers | | | | | -------------------------------------------------------------------------------- | Earnings/loss before tax | 93 | 160 | -41.9 | 471 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | € million | Q1/2010 | Q1/2009 | Change, % | 2009 | -------------------------------------------------------------------------------- | Home mortgages drawn | 1,313 | 1,308 | 0.4 | 5,723 | | down | | | | | -------------------------------------------------------------------------------- | Corporate loans drawn | 1,636 | 1,591 | 2.8 | 6,325 | | down | | | | | -------------------------------------------------------------------------------- | Net subscriptions to | 575 | 8 | | 1,618 | | mutual funds | | | | | -------------------------------------------------------------------------------- | No. of brokered property | 3,757 | 2,988 | 25.7 | 15,303 | | transactions | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | € billion | 31 Dec | 31 Dec | Change, % | 31 Dec | | | 2009 | 2009 | | 2009 | -------------------------------------------------------------------------------- | Outstanding credit | | | | | -------------------------------------------------------------------------------- | Home loans | 26 | 24 | 6.1 | 26 | -------------------------------------------------------------------------------- | Other loans to | 10 | 10 | 2.2 | 10 | | households | | | | | -------------------------------------------------------------------------------- | Corporate loans | 14 | 14 | -0.9 | 13 | -------------------------------------------------------------------------------- | Other loans | 4 | 3 | 14.7 | 4 | -------------------------------------------------------------------------------- | Total | 53 | 51 | 4.0 | 53 | -------------------------------------------------------------------------------- | Guarantee portfolio | 3 | 3 | -4.8 | 3 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Deposits | | | | | -------------------------------------------------------------------------------- | Total current and | | | | | | payment transfer | | | | | -------------------------------------------------------------------------------- | Households | 12 | 10 | 15.1 | 12 | -------------------------------------------------------------------------------- | Companies | 4 | 4 | 0.1 | 4 | -------------------------------------------------------------------------------- | Others | 2 | 2 | 17.6 | 2 | -------------------------------------------------------------------------------- | Total current and | 18 | 16 | 11.9 | 18 | | payment transfer | | | | | -------------------------------------------------------------------------------- | Investment deposits | 17 | 19 | -12.0 | 17 | -------------------------------------------------------------------------------- | Total deposits | 34 | 35 | -1.1 | 35 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Mutual funds | | | | | -------------------------------------------------------------------------------- | Equity and hedge funds | 4.5 | 2.0 | 127.5 | 3.9 | -------------------------------------------------------------------------------- | Balanced funds | 1.6 | 1.2 | 25.5 | 1.5 | -------------------------------------------------------------------------------- | Long-term bond funds | 5.6 | 4.3 | 30.0 | 5.0 | -------------------------------------------------------------------------------- | Money market funds | 2.2 | 1.4 | 58.0 | 2.3 | -------------------------------------------------------------------------------- | Total value of mutual | 13.9 | 8.9 | 55.5 | 12.7 | | funds | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Market share, % | 31 Mar | 31 Mar | Change, | 31 Dec | | | 2010 | 2009 | % points | 2009 | -------------------------------------------------------------------------------- | Total loans | 32.6 | 32.2 | 0.4 | 32.7 | -------------------------------------------------------------------------------- | Home mortgages | 35.9 | 36.0 | -0.1 | 35.9 | -------------------------------------------------------------------------------- | Corporate loans | 28.7 | 26.7 | 2.0 | 28.7 | -------------------------------------------------------------------------------- | Total deposits | 32.8 | 33.8 | -1.0 | 33.2 | -------------------------------------------------------------------------------- | Capital invested in | 23.6 | 22.1 | 1.5 | 23.4 | | mutual funds | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | € million | | | | | -------------------------------------------------------------------------------- | Non-performing and | | | Change, % | | | zero-interest receivables | | | | | -------------------------------------------------------------------------------- | Households | 201 | 205 | -2.0 | 175 | -------------------------------------------------------------------------------- | Companies and housing | 132 | 105 | 25.5 | 92 | | associations | | | | | -------------------------------------------------------------------------------- | Others | 8 | 13 | -33.3 | 3 | -------------------------------------------------------------------------------- | Collectively assessed | -46 | -41 | , | -47 | | impairments | | | | | -------------------------------------------------------------------------------- | Total non-performing and | 296 | 282 | 4.7 | 223 | | zero-interest receivables | | | | | -------------------------------------------------------------------------------- | Non-performing and | 0.5 | 0.5 | 0.0 | 0.4 | | zero-interest receivables | | | | | | within loan and guarantee | | | | | | portfolio, % | | | | | -------------------------------------------------------------------------------- * Percentage points Non-life Insurance - Total insurance premium revenue was down by 1.3%. Insurance premium revenue from private customers increased by 9.3%, but the recession cut revenues from corporate customers. - The number of loyal customer households increased by 2%, reaching 433,000 at the end of March. - Non-life Insurance's earnings before tax improved to EUR 6 million (-1). The operating combined ratio stood at 95.5% (91.3). - Return on investments at fair value was 3.2% (-0.4). The non-life insurance business improved well in the report period, as expected. On 31 March, the number of loyal customer households within the Non-life Insurance segment totalled 433,000, showing a year-on-year increase of 2%. Insurance premium revenue fell by 1.3% to EUR 227 million (230) as the recession reduced corporate customers' premiums written. The particularly harsh winter increased the number of reported losses within motor liability and motor vehicle insurance. Insurance premium revenue from private customers increased by 9% to EUR 107 million (98). Group member banks further solidified their position as the primary sales channel of insurance to private customers as evidenced by an increase of 11% in their insurance policy sales. OP-Pohjola Group member banks already account for more than one-third of policies sold to private customers and the majority of new loyal customer households come through them. The recession continued to affect the corporate sector, reducing insurance premiums paid by corporate customers. Insurance premium revenue from corporate customers fell by 8% to EUR 109 million (118). The most drastic fall was seen in statutory workers' compensation insurance, considering that payroll bills which determine insurance premiums were on the decrease. The change from the comparison period was even more pronounced because the effects of the recession on premium revenue were felt only in the following quarters. In the Baltic States, insurance premium revenue decreased by 17% to EUR 12 million (15). The economic recession has strongly affected the insurance market in the Baltic region with the result that the total market in the region shrank by over one quarter during the report period. Pohjola Insurance is the non-life insurance market leader in Finland in terms of premiums written. More than half of Pohjola's loyal customer households have also concentrated their banking transactions in OP-Pohjola Group member cooperative banks. OP bonuses obtained through bank transactions were used for the payment of insurance premiums to a total of EUR 13 million in the report period (16). Bonuses were used for the payment of 264,000 bills, with over 47,000 bills paid with bonuses alone. Earnings and risk exposure Pre-tax earnings from Non-life Insurance amounted to EUR 6 million (-1). Balance on technical account fell as expected from last year's record-high level. The operating combined ratio stood at 95.5% (91.3). Insurance premium revenue totalled EUR 227 million (230) and indemnities EUR 154 million (147). Earnings before tax at fair value came to EUR 75 million (1). Net investment income recognised under earnings came to EUR 16 million (-2), or EUR 18 million higher year on year. Investment income included EUR 17 million writedowns of available-for-sale securities (16). Claims incurred rose due to growth in the private customer insurance portfolio and losses reported within motor liability and motor vehicle insurance. The number of reported losses within motor liability and motor vehicle insurance increased by 35%. The loss ratio deteriorated to 73.7% (69.5) and the risk ratio (excl. loss adjustment expenses) stood at 66.4% (62.7). The reported number of major or medium-sized losses (in excess of EUR 0.1 million and over EUR 0.5 million in pension liabilities) came to 51 (50) in January-March, with their claims incurred retained for own account totalling EUR 26 million (22). Non-life Insurance's expenses were EUR 76 million, at the same level as in the comparison period. Personnel costs rose by EUR 4.1%. Operating expenses as specified in the insurance company's profit and loss account remained at the same level as in the comparison period, standing at EUR 50 million (50). The expense ratio was 21.8 (21.8). The cost ratio (incl. loss adjustment expenses) stood at 29.1% (28.7). Non-life Insurance solvency capital increased as a result of good investment performance, standing at EUR 852 million (827) on 31 March. The ratio of solvency capital to insurance premium revenue (solvency ratio) was 91% (88). As a result of the weaker balance on technical account, equalisation provisions decreased to EUR 411 million (417). Non-life Insurance's investment portfolio totalled EUR 3.0 billion (2.9) on 31 March, while return on investments at fair value was 3.2% (-0.4). Of the investment portfolio, fixed-income investment accounted for 73.4% (81.5) and listed equities for 13.6% (7.8). The fixed-income portfolio by credit rating was healthy, with investment-grade exposure accounting for x%, and x% of the exposure being receivables in at least the A- category. The average remaining maturity of the fixed-income portfolio was 5.1 years and the duration 3.6 years (3.4). Non-life Insurance: key figures -------------------------------------------------------------------------------- | € million | Q1/2010 | Q1/2009 | Change, % | 2009 | -------------------------------------------------------------------------------- | Insurance premium revenue | 227 | 230 | -1.3 | 943 | -------------------------------------------------------------------------------- | Insurance claims and | 154 | 147 | 4.4 | 560 | | benefits | | | | | -------------------------------------------------------------------------------- | Net investment income | 16 | -2 | - | 61 | -------------------------------------------------------------------------------- | Unwinding of discount and | -11 | -11 | 2.8 | -44 | | other items included in | | | | | | net income | | | | | -------------------------------------------------------------------------------- | Net income from Non-life | 78 | 70 | 11.3 | 400 | | Insurance | | | | | -------------------------------------------------------------------------------- | Other net income | 3 | 4 | -9.2 | 20 | -------------------------------------------------------------------------------- | Personnel costs | 27 | 26 | 4.1 | 110 | -------------------------------------------------------------------------------- | Other expenses | 49 | 50 | -1.1 | 207 | -------------------------------------------------------------------------------- | Earnings/loss before tax | 6 | -1 | 492.0 | 102 | -------------------------------------------------------------------------------- | Gross change in fair value | 69 | 2 | | 188 | | reserve | | | | | -------------------------------------------------------------------------------- | Earnings before tax at | 75 | 1 | | 291 | | fair value | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | € million | Q1/2010 | Q1/2009 | Change, % | 2009 | -------------------------------------------------------------------------------- | Insurance premium revenue | | | | | -------------------------------------------------------------------------------- | Private Customers | 107 | 98 | 9.3 | 424 | -------------------------------------------------------------------------------- | Corporate Customers | 109 | 118 | -8.1 | 461 | -------------------------------------------------------------------------------- | Baltic States | 12 | 15 | -16.9 | 57 | -------------------------------------------------------------------------------- | Total insurance premium | 227 | 230 | -1.3 | 943 | | revenue | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | € billion | 31 Mar | 31 Mar | Change, % | 31 Dec | | | 2010 | 2009 | | 2009 | -------------------------------------------------------------------------------- | Insurance contract | | | , | | | liabilities | | | | | -------------------------------------------------------------------------------- | Discounted insurance | 1.3 | 1.3 | 5.1 | 1.3 | | contract liabilities | | | | | -------------------------------------------------------------------------------- | Other insurance contract | 1.0 | 1.1 | -7.1 | 0.8 | | liabilities | | | | | -------------------------------------------------------------------------------- | Total | 2.3 | 2.3 | -0.5 | 2.1 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Investments portfolio | | | | | -------------------------------------------------------------------------------- | Bonds and bond funds | 2.1 | 1.7 | 22.1 | 2.1 | -------------------------------------------------------------------------------- | Money market instruments | 0.1 | 0.4 | -76.5 | 0.1 | -------------------------------------------------------------------------------- | Equities and equity funds | 0.4 | 0.2 | 122.9 | 0.4 | -------------------------------------------------------------------------------- | Real property investment | 0.2 | 0.1 | 17.7 | 0.2 | | *) | | | | | -------------------------------------------------------------------------------- | Alternative investments | 0.2 | 0.1 | 93.2 | 0.2 | -------------------------------------------------------------------------------- | Total investments | 3.0 | 2.5 | 17.9 | 2.9 | -------------------------------------------------------------------------------- *) Includes real estate funds Life insurance - Market share of premiums written in life and pension insurance rose to 38.5%. - The growth in premiums written focused on unit-linked products, in accordance with our strategy. - The segment's earnings turned positive, and earnings before tax improved to EUR 138 million (-66). - The solvency margin was 3.5-fold the required minimum. The Life Insurance business developed favourably in the report period. Premiums written increased particularly well within corporate group pension insurance schemes. Insurance contract premiums written increased by 51.7% and came to EUR 229 million (151). Investment contracts were made in the report period worth EUR 272 million, most of the having to do with an individual group pension insurance arrangement. When calculating market share, investment contracts are considered equivalent to premiums written. Unit-linked premiums written increased by 104% to EUR 134 million (66). OP-Pohjola Group boosted its market position in terms of life and pension insurance. In terms of premiums written, OP-Pohjola Group is the clear market leader. Our market share was 38.5% (25.2) of premiums written and 20.7% (20) of insurance savings. Our market share of unit-linked premiums written was 19.4% (20.5) and 24.9% (24.6) of unit-linked insurance savings. Earnings and risk exposure Thanks to the favourable investment environment, Life Insurance's earnings at fair value were EUR 204 million better than in the comparison period. Earnings before tax at fair value came to EUR 138 million (-66). Net investment income without the income from unit-linked insurance came to EUR 23 million (-4). The fair value reserve change before tax stood at EUR 138 million (-40). Earnings before tax from Life Insurance were EUR 1 million (-26). These were improved by a contraction of EUR 20 million of impairment losses on available-for-sale investments in the profit and loss, and by higher investment performance. Life insurance investment assets, excluding assets covering unit-linked insurance, amounted to EUR 4.5 billion (4.1). Fixed-income investments accounted for 56.3% (57.5), equity investments for 18.7% (17.2), real property investments 7.5% (8.1) and alternative investments for 17.5% (17.3). Investments under the 'investment grade' accounted for approximately 72% (77) of the fixed-income portfolio. The portfolio's modified duration was 3.9 years (3.6) on 31 March. Return on investments at fair value was 4.1% (-1.8). Sales commissions included under Other expenses increased thanks to higher premiums written and value performance to EUR 13 million (8). As a consequence, Life Insurance's expense ratio deteriorated to 114.8% (95.6). The expense ratio in which sales channel fees are excluded and in which all income to cover business expenses are included as income actually improved to 32.4% (39.7). Life Insurance's solvency improved significantly in the report period. The solvency ratio, meaning the ratio of solvency capital to weighted technical provisions, was 15.5% (13.3). Technical provisions increased by 4.2% and came to EUR 6.2 billion (6.0). Unit-linked technical provisions accounted for 42.5% (39). Life Insurance: key figures -------------------------------------------------------------------------------- | € million | Q1/2010 | Q1/2009 | Change, % | 2009 | -------------------------------------------------------------------------------- | Premiums written | 229 | 151 | 52 | 678 | -------------------------------------------------------------------------------- | Unit-linked | 132 | 65 | 102 | 368 | -------------------------------------------------------------------------------- | Net investment income | 200 | -62 | 423 | 371 | -------------------------------------------------------------------------------- | Unit-linked | 177 | -58 | 405 | 433 | -------------------------------------------------------------------------------- | Change in insurance | 249 | -37 | 765 | 653 | | contract liabilities | | | | | -------------------------------------------------------------------------------- | Unit-linked | 315 | -50 | 733 | 761 | -------------------------------------------------------------------------------- | Claims incurred | 160 | 142 | 13 | 499 | -------------------------------------------------------------------------------- | Other items | -4 | 1 | -685 | -7 | -------------------------------------------------------------------------------- | Net income from Life | 16 | -15 | 208 | -110 | | Insurance | | | | | -------------------------------------------------------------------------------- | Other income | 8 | 2 | 212 | 16 | -------------------------------------------------------------------------------- | Personnel expenses | 2 | 2 | 12 | 9 | -------------------------------------------------------------------------------- | Other expenses | 21 | 11 | 88 | 57 | -------------------------------------------------------------------------------- | Earnings/loss before tax | 1 | -26 | 103 | -159 | -------------------------------------------------------------------------------- | Gross change in fair value | 138 | -40 | 443 | 354 | | reserve | | | | | -------------------------------------------------------------------------------- | Earnings/loss before tax at | 138 | -66 | 310 | 194 | | fair value | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | € billion | 31 Mar | 31 Mar | Change % | 31 Dec | | | 2010 | 2009 | | 2009 | -------------------------------------------------------------------------------- | Assets (excluding assets | | | | | | covering unit-linked | | | | | | insurance) | | | | | -------------------------------------------------------------------------------- | Bonds and bond funds | 2.3 | 2.0 | 18 | 2.2 | -------------------------------------------------------------------------------- | Money market instruments | 0.1 | 0.7 | -89 | 0.2 | -------------------------------------------------------------------------------- | Equities and equity funds | 0.8 | 0.2 | 429 | 0.7 | -------------------------------------------------------------------------------- | Real property investment | 0.3 | 0.3 | -1 | 0.3 | | **) | | | | | -------------------------------------------------------------------------------- | Alternative investments | 0.8 | 0.7 | 11 | 0.7 | -------------------------------------------------------------------------------- | Total investment portfolio | 4.5 | 3.9 | 11.5 | 4.1 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | € million | Q1/2010 | Q1/2009 | Change, % | 2009 | -------------------------------------------------------------------------------- | Premiums written, FAS | | | | | -------------------------------------------------------------------------------- | Endowment insurance, | 110 | 44 | 152 | 270 | | unit-linked | | | | | -------------------------------------------------------------------------------- | Endowment insurance, | 21 | 46 | -55 | 116 | | interest-bearing | | | | | -------------------------------------------------------------------------------- | Pension insurance | 77 | 39 | 97 | 235 | -------------------------------------------------------------------------------- | Term life insurance | 27 | 27 | 1 | 83 | -------------------------------------------------------------------------------- | Others | 272 | 1 | | 69 | -------------------------------------------------------------------------------- | Total premiums written, FAS | 507 | 156 | 225 | 771 | -------------------------------------------------------------------------------- | Unit-linked | 134 | 66 | 104 | 377 | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Market share of premiums | 38.5 | 24.4 | 14.1 | 25.2 | | written in life and pension | | | | | | insurance, % | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | € billion | 31 Mar | 31 Mar | Change, % | 31 Dec | | | 2010 | 2009 | | 2009 | -------------------------------------------------------------------------------- | Insurance savings | | | | | -------------------------------------------------------------------------------- | Endowment insurance, | 1.9 | 1.1 | 69 | 1.7 | | unit-linked | | | | | -------------------------------------------------------------------------------- | Endowment insurance, | 2.2 | 2.5 | -12 | 2.3 | | interest-bearing | | | | | -------------------------------------------------------------------------------- | Pension insurance | 2.0 | 1.5 | 30 | 1.9 | -------------------------------------------------------------------------------- | Others | 0.4 | 0.1 | 323 | 0.2 | -------------------------------------------------------------------------------- | Total insurance savings | 6.5 | 5.3 | 24 | 6.1 | -------------------------------------------------------------------------------- | Unit-linked | 2.7 | 1.6 | 73 | 2.4 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Market share of insurance | 20.7 | 19.3 | 1.4 | 20.0 | | savings in life and pension | | | | | | insurance, % | | | | | -------------------------------------------------------------------------------- * Percentage points ** Includes real estate funds Other Operations Other Operations' pre-tax earnings for January-March were EUR 31 million, that is, EUR 40 million better than in the comparison period (EUR 9 million in the red). Net investment income was EUR 15 million (8), net trading loss EUR 6 million (income of EUR 1 million) and the net investment income EUR 21 million (loss of EUR 6 million). The growth in investment income was mainly due to higher profits from the sale of notes and bonds. Most of the other income in Other Operations came from within the Group as internal service charges, which are recorded as business segment expenses. Of the Other Operations expenses, EUR 30 million (29) were personnel costs and EUR 53 million (59) other costs. The Group's liquidity and availability of funding are continue to be good. During the report period, Pohjola Bank plc issued two senior bonds in international capital markets with a maturity of three and five years and each worth EUR 750 million. The cost of new emissions is higher than that of matured long-term debt. Other Operations: key figures -------------------------------------------------------------------------------- | € million | Q1/2010 | Q1/2009 | Change, % | 2009 | -------------------------------------------------------------------------------- | Net interest income | 15 | 8 | 86.6 | 72 | -------------------------------------------------------------------------------- | Net trading income | -6 | 1 | -785.8 | -7 | -------------------------------------------------------------------------------- | Net investment income | 21 | -6 | -429.7 | -5 | -------------------------------------------------------------------------------- | Other income | 84 | 86 | -1.7 | 336 | -------------------------------------------------------------------------------- | Expenses | 83 | 88 | -5.2 | 333 | -------------------------------------------------------------------------------- | Impairment losses on | 0 | 9 | -100.0 | 12 | | receivables | | | | | -------------------------------------------------------------------------------- | Earnings/loss before tax | 31 | -9 | -439.9 | 51 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | € billion | 31 Mar | 31 Mar | Change, % | 31 Dec | | | 2010 | 2009 | | 2009 | -------------------------------------------------------------------------------- | Receivables from | 7.5 | 6.4 | 17.4 | 7.4 | | financial institutions | | | | | -------------------------------------------------------------------------------- | Financial assets held | 0.3 | 1.2 | -70.2 | 0.4 | | for trading | | | | | -------------------------------------------------------------------------------- | Investment assets | 7.1 | 3.9 | 81.9 | 6.5 | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Liabilities to credit | 4.4 | 2.9 | 53.6 | 4.6 | | institutions | | | | | -------------------------------------------------------------------------------- | Debt securities issued | 17.5 | 16.0 | 9.3 | 17.5 | | to the public | | | | | -------------------------------------------------------------------------------- FINANCIAL STATEMENTS AND NOTES Income statement Statement of comprehensive income Key figures, ratios and definitions Financial performance by quarter Balance sheet Statement of changes in equity Cash flow statement Notes: Note 1. Accounting policies Notes to the income statement and balance sheet: Note 2. Net interest income Note 3. Impairments of receivables Note 4. Net income from Non-life Insurance Note 5. Net income from Life Insurance Note 6. Net commissions and fees Note 7. Net trading income Note 8. Net investment income Note 9. Other operating income Note 10. Personnel costs Note 11. Other administrative expenses Note 12. Other operating expenses Note 13. Returns to owner-members Note 14. Classification of financial instruments Note 15. Balance sheet classification according to valuation technique Note 16. Reclassified notes and bonds Note 17. Non-life Insurance assets Note 18. Life Insurance assets Note 19. Non-life Insurance liabilities Note 20. Life Insurance liabilities Note 21. Debt securities issued to the public Note 22. Fair value reserve after income tax Other notes: Note 23. Collateral given Note 24. Off-balance-sheet commitments Note 25. Derivative contracts Note 26. Related-party transactions OP-Pohjola Group income statement -------------------------------------------------------------------------------- | EUR million | Q1/ | Q1/ | Change, % | 2009 | | | 2010 | 2009 | | | -------------------------------------------------------------------------------- | Interest income | 573 | 1,003 | -43 | 3,072 | -------------------------------------------------------------------------------- | Interest expenses | 349 | 716 | -51 | 2,002 | -------------------------------------------------------------------------------- | Net interest income (Note 2) | 224 | 287 | -22 | 1,070 | -------------------------------------------------------------------------------- | Impairments of receivables | 38 | 29 | 30 | 179 | | (Note 3) | | | | | -------------------------------------------------------------------------------- | Net interest income after | 186 | 258 | -28 | 891 | | impairments | | | | | -------------------------------------------------------------------------------- | Net income from Non-life | 78 | 69 | 13 | 396 | | Insurance operations | | | | | | (Note 4) | | | | | -------------------------------------------------------------------------------- | Net income from Life Insurance | 14 | -21 | | -120 | | operations (Note 5) | | | | | -------------------------------------------------------------------------------- | Net commissions and fees (Note | 143 | 130 | 11 | 496 | | 6) | | | | | -------------------------------------------------------------------------------- | Net trading income (Note 7) | 6 | 28 | -78 | 112 | -------------------------------------------------------------------------------- | Net investment income (Note 8) | 31 | -8 | | -9 | -------------------------------------------------------------------------------- | Other operating income (Note | 26 | 25 | 2 | 104 | | 9) | | | | | -------------------------------------------------------------------------------- | Personnel costs (Note 10) | 164 | 163 | 1 | 622 | -------------------------------------------------------------------------------- | Other administrative expenses | 75 | 80 | -7 | 310 | | (Note 11) | | | | | -------------------------------------------------------------------------------- | Other operating expenses (Note | 78 | 76 | 3 | 316 | | 12) | | | | | -------------------------------------------------------------------------------- | Returns to owner-members (Note | 39 | 38 | 4 | 160 | | 13) | | | | | -------------------------------------------------------------------------------- | Share of associates' | 1 | 0 | | 1 | | profits/losses | | | | | -------------------------------------------------------------------------------- | Earnings before tax for the | 128 | 124 | 3 | 463 | | period | | | | | -------------------------------------------------------------------------------- | Income tax expense | 33 | 61 | -46 | 126 | -------------------------------------------------------------------------------- | Profit for the period | 95 | 63 | 50 | 338 | -------------------------------------------------------------------------------- OP-Pohjola Group statement of comprehensive income -------------------------------------------------------------------------------- | EUR million | Q1/ | Q1/ | Change, % | 2009 | | | 2010 | 2009 | | | -------------------------------------------------------------------------------- | Profit for the period | 95 | 63 | 50 | 338 | -------------------------------------------------------------------------------- | Change in fair value reserve | 212 | -40 | | 677 | -------------------------------------------------------------------------------- | Translation differences | 0 | 0 | -61 | 0 | -------------------------------------------------------------------------------- | Income tax on other | 56 | -10 | | 175 | | comprehensive income | | | | | -------------------------------------------------------------------------------- | Total comprehensive income for | 252 | 34 | | 839 | | the period | | | | | -------------------------------------------------------------------------------- Key figures and ratios -------------------------------------------------------------------------------- | | Q1/ | Q1/ | Change, % | 2009 | | | 2010 | 2009 | | | -------------------------------------------------------------------------------- | Return on equity, % | 6.2 | 4.9 | | 5.9 | -------------------------------------------------------------------------------- | Return on equity at fair | 16.2 | 2.7 | | 14.7 | | value, % | | | | | -------------------------------------------------------------------------------- | Return on assets, % | 0.47 | 0.34 | | 0.4 | -------------------------------------------------------------------------------- | Cost/income ratio, % | 61 | 62 | | 60.8 | -------------------------------------------------------------------------------- | Average personnel | 12,474 | 12,693 | | 12,632.0 | -------------------------------------------------------------------------------- | Full-time | 11,339 | 11,490 | | 11,520.0 | -------------------------------------------------------------------------------- | Part-time | 1,135 | 1,203 | | 1,112.0 | -------------------------------------------------------------------------------- Definition of key figures and ratios Return on equity, % Profit for the period / Equity capital (average of the beginning and end of the period) x 100 Return on equity at fair value, % Profit for the period + change in fair value reserve less deferred tax liability / equity capital (average of the beginning and end of the period) x 100 Return on assets, % Profit for the period / Statement of financial position total (average of the beginning and end of the period) x 100 Cost/income ratio, % (Personnel costs + other administrative expenses + other operating expenses) / (Net interest income + net income from Non-life Insurance operations + net income from Life Insurance operations + net commissions and fees + net trading income + net investment income + other operating income + share of associates' profits/losses) x 100 Combined ratio (excl. unwinding of discount), % Loss ratio+expense ratio Risk ratio+cost ratio Loss ratio (exc. unwinding of discount), % Claims and loss adjustment expenses / Net insurance premium revenue x 100 Expense ratio, % Operating expenses + Amortisation/adjustment of intangible assets related to company acquisition / Net insurance premium revenue x 100 Risk ratio (excl. unwinding of discount), % Claims excl. loss adjustment expenses / Net insurance premium revenue x 100 Cost ratio, % Operating expenses and loss adjustment expenses / Net insurance premium revenue x 100 Operating cost ratio, % Operating expenses before change in deferred acquisitions costs + loss adjustment expenses/ Expense loading x 100 OP-Pohjola Group quarterly performance -------------------------------------------------------------------------------- | | 2009 | 2010 | -------------------------------------------------------------------------------- | EUR million | Q1 | Q2 | Q3 | Q4 | Q1 | -------------------------------------------------------------------------------- | Interest income | 1,003 | 794 | 670 | 605 | 573 | -------------------------------------------------------------------------------- | Interest expenses | 716 | 512 | 414 | 359 | 349 | -------------------------------------------------------------------------------- | Net interest income | 287 | 282 | 256 | 245 | 224 | -------------------------------------------------------------------------------- | Impairments of receivables | 29 | 46 | 52 | 52 | 38 | -------------------------------------------------------------------------------- | Net interest income after | 258 | 235 | 204 | 194 | 186 | | impairments | | | | | | -------------------------------------------------------------------------------- | Net income from Non-life | 69 | 120 | 113 | 94 | 78 | | Insurance operations | | | | | | -------------------------------------------------------------------------------- | Net income from Life | -21 | -8 | -60 | -31 | 14 | | Insurance operations | | | | | | -------------------------------------------------------------------------------- | Net commissions and fees | 130 | 121 | 120 | 125 | 143 | -------------------------------------------------------------------------------- | Net trading income | 28 | 26 | 33 | 25 | 6 | -------------------------------------------------------------------------------- | Net investment income | -8 | 0 | -3 | 2 | 31 | -------------------------------------------------------------------------------- | Other operating income | 25 | 27 | 23 | 28 | 26 | -------------------------------------------------------------------------------- | Personnel costs | 163 | 163 | 142 | 154 | 164 | -------------------------------------------------------------------------------- | Other administrative | 80 | 76 | 67 | 87 | 75 | | expenses | | | | | | -------------------------------------------------------------------------------- | Other operating expenses | 76 | 81 | 71 | 88 | 78 | -------------------------------------------------------------------------------- | Returns to owner-members | 38 | 44 | 39 | 39 | 39 | -------------------------------------------------------------------------------- | Share of associates' | 0 | 0 | 1 | 0 | 1 | | profits/losses | | | | | | -------------------------------------------------------------------------------- | Earnings before tax for | 124 | 157 | 112 | 70 | 128 | | the period | | | | | | -------------------------------------------------------------------------------- | Income tax expense | 61 | 20 | 27 | 18 | 33 | -------------------------------------------------------------------------------- | Profit for the period | 63 | 137 | 85 | 52 | 95 | -------------------------------------------------------------------------------- | Other comprehensive income | | | | | | -------------------------------------------------------------------------------- | Change in fair value | -40 | 217 | 368 | 131 | 212 | | reserve | | | | | | -------------------------------------------------------------------------------- | Translation differences | 0 | 0 | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Income tax on other | -10 | 56 | 95 | 34 | 56 | | comprehensive income | | | | | | -------------------------------------------------------------------------------- | Total comprehensive income | 34 | 298 | 358 | 149 | 252 | | for the period | | | | | | -------------------------------------------------------------------------------- OP-Pohjola Group balance sheet -------------------------------------------------------------------------------- | EUR million | 31 March | 31 March | Change, % | 2009 | | | 2010 | 2009 | | | -------------------------------------------------------------------------------- | Cash and cash equivalents | 3,446 | 1,028 | | 3,235 | -------------------------------------------------------------------------------- | Receivables from credit | 1,483 | 2,332 | -36 | 1,982 | | institutions | | | | | -------------------------------------------------------------------------------- | Financial assets at fair value | 1,306 | 2,153 | -39 | 1,263 | | through profit or loss | | | | | -------------------------------------------------------------------------------- | Derivative contracts | 1,743 | 1,594 | 9 | 1,423 | -------------------------------------------------------------------------------- | Receivables from customers | 53,679 | 51,943 | 3 | 52,992 | -------------------------------------------------------------------------------- | Non-life Insurance assets | 3,412 | 3,070 | 11 | 3,101 | | (Note 17) | | | | | -------------------------------------------------------------------------------- | Life Insurance assets (Note | 6,889 | 5,075 | 36 | 6,331 | | 18) | | | | | -------------------------------------------------------------------------------- | Investment assets | 7,089 | 4,182 | 70 | 6,468 | -------------------------------------------------------------------------------- | Investments in associates | 16 | 16 | 0 | 17 | -------------------------------------------------------------------------------- | Intangible assets | 1,170 | 1,206 | -3 | 1,179 | -------------------------------------------------------------------------------- | Property, plant and equipment | 759 | 765 | -1 | 761 | | (PPE) | | | | | -------------------------------------------------------------------------------- | Other assets | 2,130 | 2,027 | 5 | 1,572 | -------------------------------------------------------------------------------- | Tax assets | 90 | 425 | -79 | 108 | -------------------------------------------------------------------------------- | Total assets | 83,211 | 75,816 | 10 | 80,430 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Liabilities to credit | 2,261 | 760 | | 2,174 | | institutions | | | | | -------------------------------------------------------------------------------- | Financial liabilities at fair | 90 | 198 | -55 | 71 | | value through profit or loss | | | | | -------------------------------------------------------------------------------- | Derivative contracts | 1,637 | 1,690 | -3 | 1,360 | -------------------------------------------------------------------------------- | Liabilities to customers | 38,425 | 37,155 | 3 | 37,606 | -------------------------------------------------------------------------------- | Non-life Insurance liabilities | 2,656 | 2,676 | -1 | 2,279 | -------------------------------------------------------------------------------- | Life Insurance liabilities | 6,683 | 5,370 | 24 | 6,179 | -------------------------------------------------------------------------------- | Debt securities issued to the | 19,708 | 17,515 | 13 | 19,945 | | public (Note 21) | | | | | -------------------------------------------------------------------------------- | Provisions and other | 2,507 | 2,327 | 8 | 1,832 | | liabilities | | | | | -------------------------------------------------------------------------------- | Tax liabilities | 966 | 1,013 | -5 | 925 | -------------------------------------------------------------------------------- | Cooperative capital | 644 | 590 | 9 | 622 | -------------------------------------------------------------------------------- | Subordinated liabilities | 1,257 | 1,315 | -4 | 1,250 | -------------------------------------------------------------------------------- | Total liabilities | 76,835 | 70,608 | 9 | 74,243 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Equity capital | | | | | -------------------------------------------------------------------------------- | Share of OP-Pohjola Group's | | | | | | owners | | | | | -------------------------------------------------------------------------------- | Share and cooperative capital | 357 | 361 | -1 | 358 | -------------------------------------------------------------------------------- | Fair value reserve (Note 22) | 102 | -585 | | -54 | -------------------------------------------------------------------------------- | Other reserves | 2,640 | 2,381 | 11 | 2,604 | -------------------------------------------------------------------------------- | Retained earnings | 3,278 | 3,050 | 7 | 3,280 | -------------------------------------------------------------------------------- | Total equity capital | 6,376 | 5,208 | 22 | 6,187 | -------------------------------------------------------------------------------- | Total liabilities and equity | 83,211 | 75,816 | 10 | 80,430 | | capital | | | | | -------------------------------------------------------------------------------- Statement of changes in equity capital -------------------------------------------------------------------------------- | EUR million | Share | Fair | Other | Retaine | Total | | | and | value | reserve | d | equity | | | coopera | reserve | s | earning | capital | | | tive | | | s | | | | capital | | | | | -------------------------------------------------------------------------------- | Balance at 1 January 2009 | 362 | -556 | 2,375 | 3,034 | 5,215 | -------------------------------------------------------------------------------- | Increase of share capital | - | - | - | - | - | -------------------------------------------------------------------------------- | Transfer of cooperative | 1 | - | - | - | 1 | | capital to equity capital | | | | | | -------------------------------------------------------------------------------- | Transfer of reserves | - | - | 6 | -6 | 0 | -------------------------------------------------------------------------------- | Profit distribution | - | - | - | -29 | -29 | -------------------------------------------------------------------------------- | Total comprehensive | - | -29 | - | 63 | 34 | | income for the period | | | | | | -------------------------------------------------------------------------------- | Equity-settled | | | | | | | share-based transactions | | | | | | -------------------------------------------------------------------------------- | Other | -1 | - | 0 | -12 | -13 | -------------------------------------------------------------------------------- | Balance at 31 March 2009 | 361 | -585 | 2,381 | 3,050 | 5,208 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Balance at 1 January 2010 | 358 | -54 | 2,604 | 3,280 | 6,187 | -------------------------------------------------------------------------------- | Increase of share capital | - | - | - | - | - | -------------------------------------------------------------------------------- | Transfer of cooperative | 1 | - | - | - | 1 | | capital to equity capital | | | | | | -------------------------------------------------------------------------------- | Transfer of reserves | - | - | 33 | -33 | 0 | -------------------------------------------------------------------------------- | Profit distribution | - | - | - | -64 | -64 | -------------------------------------------------------------------------------- | Total comprehensive | - | 156 | - | 95 | 252 | | income for the period | | | | | | -------------------------------------------------------------------------------- | Equity-settled | - | - | - | - | - | | share-based transactions | | | | | | -------------------------------------------------------------------------------- | Other | -2 | - | 3 | - | 1 | -------------------------------------------------------------------------------- | Balance at 31 March 2010 | 357 | 102 | 2,640 | 3,278 | 6,376 | -------------------------------------------------------------------------------- Cash flow statement -------------------------------------------------------------------------------- | EUR million | Q1/ | Q1/ | | | 2010 | 2009 | -------------------------------------------------------------------------------- | Cash flow from operating activities | | | -------------------------------------------------------------------------------- | Profit for the period | 95 | 63 | -------------------------------------------------------------------------------- | Adjustments to profit for the period | 462 | 584 | -------------------------------------------------------------------------------- | Increase (-) or decrease (+) in operating assets | -2,098 | -1,671 | -------------------------------------------------------------------------------- | Receivables from credit institutions | 503 | 64 | -------------------------------------------------------------------------------- | Financial assets at fair value through profit or | -57 | 1,118 | | loss | | | -------------------------------------------------------------------------------- | Derivative contracts | -17 | -7 | -------------------------------------------------------------------------------- | Receivables from customers | -733 | -225 | -------------------------------------------------------------------------------- | Non-life Insurance assets | -277 | -432 | -------------------------------------------------------------------------------- | Life Insurance assets | -332 | -138 | -------------------------------------------------------------------------------- | Investment assets | -647 | -1,814 | -------------------------------------------------------------------------------- | Other assets | -539 | -235 | -------------------------------------------------------------------------------- | Increase (+) or decrease (-) in operating | 1,989 | 306 | | liabilities | | | -------------------------------------------------------------------------------- | Liabilities to credit institutions | 87 | 67 | -------------------------------------------------------------------------------- | Financial liabilities at fair value through | 19 | 59 | | profit or loss | | | -------------------------------------------------------------------------------- | Derivative contracts | 15 | 14 | -------------------------------------------------------------------------------- | Liabilities to customers | 819 | 72 | -------------------------------------------------------------------------------- | Non-life Insurance liabilities | 190 | 244 | -------------------------------------------------------------------------------- | Life Insurance liabilities | 255 | -5 | -------------------------------------------------------------------------------- | Provisions and other liabilities | 603 | -146 | -------------------------------------------------------------------------------- | Income tax paid | -19 | -95 | -------------------------------------------------------------------------------- | Dividends received | 63 | 43 | -------------------------------------------------------------------------------- | A. Net cash from operating activities | 492 | -770 | -------------------------------------------------------------------------------- | Cash flow from investing activities | | | -------------------------------------------------------------------------------- | Increases in held-to-maturity financial assets | -3 | -6 | -------------------------------------------------------------------------------- | Decreases in held-to-maturity financial assets | 69 | 27 | -------------------------------------------------------------------------------- | Acquisition of subsidiaries, net of cash acquired | 0 | 0 | -------------------------------------------------------------------------------- | Disposal of subsidiaries, net of cash disposed | - | - | -------------------------------------------------------------------------------- | Purchase of PPE and intangible assets | -22 | -22 | -------------------------------------------------------------------------------- | Proceeds from sale of PPE and intangible assets | 1 | 1 | -------------------------------------------------------------------------------- | B. Net cash used in investing activities | 46 | 0 | -------------------------------------------------------------------------------- | Cash flow from financing activities | | | -------------------------------------------------------------------------------- | Increases in subordinated liabilities | 25 | 148 | -------------------------------------------------------------------------------- | Decreases in subordinated liabilities | -18 | -138 | -------------------------------------------------------------------------------- | Increases in debt securities issued to the public | 12,408 | 12,597 | -------------------------------------------------------------------------------- | Decreases in debt securities issued to the public | -12,699 | -13,286 | -------------------------------------------------------------------------------- | Increases in cooperative and share capital | 41 | 37 | -------------------------------------------------------------------------------- | Decreases in cooperative and share capital | -18 | -17 | -------------------------------------------------------------------------------- | Dividends paid and interest on cooperative | -64 | -29 | | capital | | | -------------------------------------------------------------------------------- | Returns to owner-members | - | -3 | -------------------------------------------------------------------------------- | Increases in invested unrestricted equity | - | - | -------------------------------------------------------------------------------- | Other | - | - | -------------------------------------------------------------------------------- | C. Net cash from financing activities | -325 | -690 | -------------------------------------------------------------------------------- | Net change in cash and cash equivalents (A+B+C) | 213 | -1,460 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash and cash equivalents at period-start | 3,282 | 2,538 | -------------------------------------------------------------------------------- | Cash and cash equivalents at period-end | 3,495 | 1,078 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest received | 574 | 1,021 | -------------------------------------------------------------------------------- | Interest paid | -282 | -962 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Adjustments to profit for the period | | | -------------------------------------------------------------------------------- | Non-cash transactions and other adjustments | | | -------------------------------------------------------------------------------- | Impairments of receivables | 40 | 31 | -------------------------------------------------------------------------------- | Unrealised net earnings in Non-life Insurance | 220 | 230 | -------------------------------------------------------------------------------- | Unrealised net earnings in Life Insurance | 128 | 77 | -------------------------------------------------------------------------------- | Change in fair value for trading | 13 | 40 | -------------------------------------------------------------------------------- | Unrealised net gains on foreign exchange | -4 | -7 | | operations | | | -------------------------------------------------------------------------------- | Change in fair value of investment property | 2 | 3 | -------------------------------------------------------------------------------- | Depreciation and amortisation | 33 | 32 | -------------------------------------------------------------------------------- | Share of associates' profits/losses | 1 | 1 | -------------------------------------------------------------------------------- | Other | 26 | 171 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Items presented outside cash flow from operating | | | | activities | | | -------------------------------------------------------------------------------- | Capital gains, share of cash flow from investing | -1 | 0 | | activities | | | -------------------------------------------------------------------------------- | Interest on cooperative capital | 3 | 3 | -------------------------------------------------------------------------------- | Other returns to owner-members | 0 | 3 | -------------------------------------------------------------------------------- | Total adjustments | 462 | 584 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash and cash equivalents | | | -------------------------------------------------------------------------------- | Liquid assets | 122 | 129 | -------------------------------------------------------------------------------- | Receivables from credit institutions payable on | 3,373 | 949 | | demand | | | -------------------------------------------------------------------------------- | Total | 3,495 | 1,078 | -------------------------------------------------------------------------------- Notes Note 1. Accounting policies Summary of presentation of income statement: -------------------------------------------------------------------------------- | Net interest income | Received and paid interest on fixed-income | | | instruments, the recognised difference between | | | the nominal value and acquisition value, | | | interest on interest-rate derivatives and fair | | | value change in fair value hedging | -------------------------------------------------------------------------------- | Net income from Non-life | Premiums written, claims paid, change in | | Insurance operations | provision for unearned premiums and for unpaid | | | claims, investment income, expenses (interest, | | | dividends, realised capital gains and losses) | | | and impairments | -------------------------------------------------------------------------------- | Net income from Life | Premiums written, claims paid, change in | | Insurance operations | provision for unearned premiums and for unpaid | | | claims, investment income, expenses (interest, | | | dividends, realised capital gains and losses) | | | and impairments | -------------------------------------------------------------------------------- | Net commissions and fees | Commission income and expenses, and the | | | recognition of Day 1 profit related to illiquid | | | derivatives | -------------------------------------------------------------------------------- | Net trading income | Fair value changes in financial instruments at | | | fair value through profit or loss, excluding | | | accrued interest, and capital gains and losses, | | | as well as dividends | -------------------------------------------------------------------------------- | Net investment income | Realised capital gains and losses on | | | available-for-sale financial assets, | | | impairments, dividends as well as fair value | | | changes in investment property, capital gains | | | and losses, rents and other property-related | | | expenses | -------------------------------------------------------------------------------- | Other operating income | Other operating income | -------------------------------------------------------------------------------- | Personnel costs | Wages and salaries, pension costs, social | | | expenses | -------------------------------------------------------------------------------- | Other administrative | Office expenses, IT costs, other administrative | | expenses | expenses | -------------------------------------------------------------------------------- | Other operating expenses | Depreciation/amortisation, rents and other | | | operating expenses | -------------------------------------------------------------------------------- Notes to the income statement and balance sheet Note 2 Net interest income -------------------------------------------------------------------------------- | EUR million | Q1/ | Q1/ | Change, % | 2009 | | | 2010 | 2009 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Loans and other receivables | 318 | 598 | -47 | 1,718 | -------------------------------------------------------------------------------- | Receivables from credit | 15 | 31 | -53 | 93 | | institutions and central banks | | | | | -------------------------------------------------------------------------------- | Notes and bonds | 118 | 80 | 47 | 238 | -------------------------------------------------------------------------------- | Derivatives held for trading | 35 | 1 | | 79 | | (net) | | | | | -------------------------------------------------------------------------------- | Liabilities to credit | -4 | -3 | 8 | -13 | | institutions | | | | | -------------------------------------------------------------------------------- | Liabilities to customers | -64 | -185 | -65 | -472 | -------------------------------------------------------------------------------- | Debt securities issued to the | -136 | -200 | -32 | -430 | | public | | | | | -------------------------------------------------------------------------------- | Subordinated debt | -8 | -10 | -24 | -36 | -------------------------------------------------------------------------------- | Hybrid capital | -1 | -3 | -58 | -11 | -------------------------------------------------------------------------------- | Financial liabilities held for | -1 | -2 | -74 | -5 | | trading | | | | | -------------------------------------------------------------------------------- | Other (net) | -1 | 4 | | 4 | -------------------------------------------------------------------------------- | Net interest income before | 271 | 309 | -12 | 1,165 | | items under hedge accounting | | | | | -------------------------------------------------------------------------------- | Derivatives under hedge | -47 | -22 | | -95 | | accounting (net) | | | | | -------------------------------------------------------------------------------- | Total net interest income | 224 | 287 | -22 | 1,070 | -------------------------------------------------------------------------------- Note 3 Impairments of receivables -------------------------------------------------------------------------------- | EUR million | Q1/ | Q1/ | Change, % | 2009 | | | 2010 | 2009 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Impairments of receivables | 74 | 34 | | 199 | -------------------------------------------------------------------------------- | Reversals of impairments | -33 | -11 | | -22 | -------------------------------------------------------------------------------- | Payments on impaired | -2 | -2 | -49 | -11 | | receivables | | | | | | amortised from | | | | | | statement of financial | | | | | | position | | | | | -------------------------------------------------------------------------------- | Net change in group-specific | -1 | 8 | | 12 | | impairments | | | | | -------------------------------------------------------------------------------- | Total | 38 | 29 | 30 | 179 | -------------------------------------------------------------------------------- Note 4 Net income from Non-life Insurance -------------------------------------------------------------------------------- | EUR million | Q1/ | Q1/ | Change, % | 2009 | | | 2010 | 2009 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net insurance premium revenue | | | | | -------------------------------------------------------------------------------- | Premiums written | 446 | 473 | -6 | 1,005 | -------------------------------------------------------------------------------- | Insurance premiums ceded to | -28 | -41 | 30 | -51 | | reinsurers | | | | | -------------------------------------------------------------------------------- | Change in provision for | -208 | -228 | 9 | -15 | | unearned premiums | | | | | -------------------------------------------------------------------------------- | Reinsurers' share | 18 | 27 | -34 | 4 | -------------------------------------------------------------------------------- | Total | 227 | 230 | -1 | 943 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net Non-life Insurance claims | | | | | -------------------------------------------------------------------------------- | Claims paid | 177 | 157 | 13 | 595 | -------------------------------------------------------------------------------- | Insurance claims recovered | -15 | -1 | | -20 | | from reinsurers | | | | | -------------------------------------------------------------------------------- | Change in provision for unpaid | -30 | -4 | | -30 | | claims | | | | | -------------------------------------------------------------------------------- | Reinsurers' share | 22 | -4 | | 15 | -------------------------------------------------------------------------------- | Total | 154 | 147 | 4 | 560 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net investment income, | | | | | | Non-life Insurance | | | | | -------------------------------------------------------------------------------- | Interest income | 16 | 18 | -11 | 68 | -------------------------------------------------------------------------------- | Dividend income | 17 | 3 | | 7 | -------------------------------------------------------------------------------- | Property | 1 | 1 | 46 | 4 | -------------------------------------------------------------------------------- | Realised changes in fair value | | | | | -------------------------------------------------------------------------------- | Notes and bonds | 31 | -11 | | 7 | -------------------------------------------------------------------------------- | Shares and participations | -20 | -8 | | 15 | -------------------------------------------------------------------------------- | Loans and receivables | -1 | - | 0 | - | -------------------------------------------------------------------------------- | Property | 0 | 0 | | 1 | -------------------------------------------------------------------------------- | Derivatives | -8 | 10 | | -21 | -------------------------------------------------------------------------------- | Unrealised changes in fair | | | | 0 | | value | | | | | -------------------------------------------------------------------------------- | Notes and bonds | 0 | -1 | | 1 | -------------------------------------------------------------------------------- | Shares and participations | -16 | -17 | 7 | -20 | -------------------------------------------------------------------------------- | Loans and receivables | -1 | - | 0 | -3 | -------------------------------------------------------------------------------- | Property | 0 | 1 | -100 | 1 | -------------------------------------------------------------------------------- | Derivatives | -4 | 0 | | -2 | -------------------------------------------------------------------------------- | Other | | | | - | -------------------------------------------------------------------------------- | Total | 15 | -4 | | 58 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Unwinding of discount | -11 | -11 | -5 | -43 | -------------------------------------------------------------------------------- | Other | 0 | 0 | 45 | -1 | -------------------------------------------------------------------------------- | Net income from Non-life | 78 | 69 | 13 | 396 | | Insurance | | | | | -------------------------------------------------------------------------------- Note 5 Net income from Life Insurance -------------------------------------------------------------------------------- | EUR million | Q1/ | Q1/ | Change, % | 2009 | | | 2010 | 2009 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Premiums written | 234 | 155 | 51 | 703 | -------------------------------------------------------------------------------- | Reinsurers' share | -6 | -4 | -35 | -25 | -------------------------------------------------------------------------------- | Total | 229 | 151 | 0 | 678 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Claims incurred | | | | | -------------------------------------------------------------------------------- | Benefits paid | -161 | -143 | -13 | -504 | -------------------------------------------------------------------------------- | Change in provision for unpaid | -21 | -9 | | -13 | | claims | | | | | -------------------------------------------------------------------------------- | Reinsurers' share | 1 | 2 | -41 | 5 | -------------------------------------------------------------------------------- | Change in insurance contract | | | | | | liabilities | | | | | -------------------------------------------------------------------------------- | Change in life insurance | -232 | 41 | | -640 | | provision | | | | | -------------------------------------------------------------------------------- | Reinsurers' share | 2 | 4 | -54 | 11 | -------------------------------------------------------------------------------- | Total | -412 | -104 | | -1,140 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Other | -1 | 1 | | -19 | -------------------------------------------------------------------------------- | Total | -184 | 47 | | -481 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net investment income, Llife | | | | | | Insurance | | | | | -------------------------------------------------------------------------------- | Interest income | 11 | 11 | | 53 | -------------------------------------------------------------------------------- | Dividend income | 35 | 34 | | 40 | -------------------------------------------------------------------------------- | Property | 1 | 0 | | 0 | -------------------------------------------------------------------------------- | Realised changes in fair value | | | | | -------------------------------------------------------------------------------- | Notes and bonds | 2 | -9 | | -8 | -------------------------------------------------------------------------------- | Shares and participations | 18 | 0 | | 28 | -------------------------------------------------------------------------------- | Loans and receivables | 1 | - | | -8 | -------------------------------------------------------------------------------- | Property | 0 | 0 | | 0 | -------------------------------------------------------------------------------- | Derivatives | -24 | 12 | | -12 | -------------------------------------------------------------------------------- | Unrealised changes in fair | | | | | | value | | | | | -------------------------------------------------------------------------------- | Notes and bonds | 3 | -4 | | -3 | -------------------------------------------------------------------------------- | Shares and participations | -29 | -61 | | -150 | -------------------------------------------------------------------------------- | Loans and receivables | -2 | - | | - | -------------------------------------------------------------------------------- | Property | - | - | | -1 | -------------------------------------------------------------------------------- | Other | 0 | 5 | -95 | -15 | -------------------------------------------------------------------------------- | Other | 6 | 1 | | 6 | -------------------------------------------------------------------------------- | Assets serving as cover for | | | | | | unit-linked policies | | | | | -------------------------------------------------------------------------------- | Shares and participations | | | | | -------------------------------------------------------------------------------- | Capital gains and losses | 5 | -9 | | 65 | -------------------------------------------------------------------------------- | Fair value gains and losses | 167 | -52 | | 353 | -------------------------------------------------------------------------------- | Other | 5 | 3 | 60 | 15 | -------------------------------------------------------------------------------- | Total | 199 | -68 | | 362 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net income from Non-life | 14 | -21 | | -120 | | Insurance | | | | | -------------------------------------------------------------------------------- Note 6 Commissions and fees -------------------------------------------------------------------------------- | EUR million | Q1/ | Q1/ | Change, % | 2009 | | | 2010 | 2009 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Commission income | | | | | -------------------------------------------------------------------------------- | Lending | 37 | 35 | 6 | 139 | -------------------------------------------------------------------------------- | Deposits | 1 | 1 | -12 | 5 | -------------------------------------------------------------------------------- | Payment transfers | 35 | 30 | 15 | 132 | -------------------------------------------------------------------------------- | Securities brokerage | 7 | 4 | 62 | 22 | -------------------------------------------------------------------------------- | Securities issuance | 5 | 2 | | 13 | -------------------------------------------------------------------------------- | Mutual funds brokerage | 21 | 12 | 71 | 60 | -------------------------------------------------------------------------------- | Asset management and legal | 15 | 11 | 32 | 54 | | services | | | | | -------------------------------------------------------------------------------- | Insurance brokerage | 22 | 33 | -34 | 73 | -------------------------------------------------------------------------------- | Guarantees | 5 | 4 | 28 | 21 | -------------------------------------------------------------------------------- | Other | 9 | 10 | -6 | 48 | -------------------------------------------------------------------------------- | Total | 157 | 143 | 10 | 567 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Commission expenses | | | | | -------------------------------------------------------------------------------- | Total | 13 | 13 | 1 | 71 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net commissions and fees | 143 | 130 | 11 | 496 | -------------------------------------------------------------------------------- Note 7 Net trading income -------------------------------------------------------------------------------- | EUR million | Q1/ | Q1/ | Change, % | 2009 | | | 2010 | 2009 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Capital gains and losses | | | | | -------------------------------------------------------------------------------- | Notes and bonds | 5 | 23 | -77 | 37 | -------------------------------------------------------------------------------- | Shares and participations | 0 | -1 | | -3 | -------------------------------------------------------------------------------- | Derivatives | -13 | 26 | | 123 | -------------------------------------------------------------------------------- | Changes in fair value | | | | | -------------------------------------------------------------------------------- | Notes and bonds | 5 | -18 | | -9 | -------------------------------------------------------------------------------- | Shares and participations | 3 | 1 | | 17 | -------------------------------------------------------------------------------- | Derivatives | 1 | -6 | | -66 | -------------------------------------------------------------------------------- | Financial assets and | | | | | | liabilities amortised at cost | | | | | -------------------------------------------------------------------------------- | Capital gains and losses | | | | | -------------------------------------------------------------------------------- | Loans and other receivables | - | - | | 0 | -------------------------------------------------------------------------------- | Dividend income | 0 | 0 | | 0 | -------------------------------------------------------------------------------- | Net income from foreign | 4 | 3 | 54 | 12 | | exchange operations | | | | | -------------------------------------------------------------------------------- | Total | 6 | 28 | -78 | 112 | -------------------------------------------------------------------------------- Note 8 Net investment income -------------------------------------------------------------------------------- | EUR million | Q1/ | Q1/ | Change, % | 2009 | | | 2010 | 2009 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Available-for-sale financial | | | | | | assets | | | | | -------------------------------------------------------------------------------- | Capital gains and losses | | | | | -------------------------------------------------------------------------------- | Notes and bonds | 16 | 0 | | 2 | -------------------------------------------------------------------------------- | Shares and participations | 3 | -6 | | 0 | -------------------------------------------------------------------------------- | Financial assets and | | | | | | liabilities amortised at cost | | | | | -------------------------------------------------------------------------------- | Capital gains and losses | | | | | -------------------------------------------------------------------------------- | Loans and other receivables | 4 | - | 0 | - | -------------------------------------------------------------------------------- | Other | - | - | | - | -------------------------------------------------------------------------------- | Dividend income | 10 | 6 | 66 | 9 | -------------------------------------------------------------------------------- | Impairment losses | -5 | -10 | -48 | -28 | -------------------------------------------------------------------------------- | Total | 28 | -10 | | -16 | -------------------------------------------------------------------------------- | Investment property | | | | | -------------------------------------------------------------------------------- | Rental income | 12 | 12 | -4 | 48 | -------------------------------------------------------------------------------- | Maintenance charges and | -7 | -7 | -2 | -30 | | expenses | | | | | -------------------------------------------------------------------------------- | Changes in fair value, capital | -2 | -3 | -40 | -11 | | gains and losses | | | | | -------------------------------------------------------------------------------- | Other | 0 | 0 | -65 | 1 | -------------------------------------------------------------------------------- | Total | 3 | 2 | 17 | 8 | -------------------------------------------------------------------------------- | Other | - | - | | 0 | -------------------------------------------------------------------------------- | Net investment income | 31 | -8 | | -9 | -------------------------------------------------------------------------------- Note 9 Other operating income -------------------------------------------------------------------------------- | EUR million | Q1/ | Q1/ | Change, % | 2009 | | | 2010 | 2009 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Income from property and | 4 | 4 | 14 | 14 | | business | | | | | | premises in own use | | | | | -------------------------------------------------------------------------------- | Other | 21 | 21 | 0 | 90 | -------------------------------------------------------------------------------- | Total | 26 | 25 | 2 | 104 | -------------------------------------------------------------------------------- Note 10 Personnel costs -------------------------------------------------------------------------------- | EUR million | Q1/ | Q1/ | Change, % | 2009 | | | 2010 | 2009 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Wages and salaries | 136 | 137 | -1 | 534 | -------------------------------------------------------------------------------- | Pension costs | 21 | 14 | 50 | 58 | -------------------------------------------------------------------------------- | Other social expenses | 7 | 12 | -42 | 31 | -------------------------------------------------------------------------------- | Total | 164 | 163 | 1 | 622 | -------------------------------------------------------------------------------- Note 11 Other administrative expenses -------------------------------------------------------------------------------- | EUR million | Q1/ | Q1/ | Change, % | 2009 | | | 2010 | 2009 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Office expenses | 17 | 17 | -2 | 66 | -------------------------------------------------------------------------------- | IT expenses | 25 | 26 | -3 | 101 | -------------------------------------------------------------------------------- | Telecommunications expenses | 9 | 9 | -7 | 37 | -------------------------------------------------------------------------------- | Marketing expenses | 11 | 13 | -10 | 53 | -------------------------------------------------------------------------------- | Other administrative expenses | 13 | 15 | -15 | 54 | -------------------------------------------------------------------------------- | Total | 75 | 80 | -7 | 310 | -------------------------------------------------------------------------------- Note 12 Other operating expenses -------------------------------------------------------------------------------- | EUR million | Q1/ | Q1/ | Change, % | 2009 | | | 2010 | 2009 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Expenses for property and | 18 | 19 | -1 | 73 | | business | | | | | | premises in own use | | | | | -------------------------------------------------------------------------------- | Depreciation | 33 | 32 | 2 | 135 | -------------------------------------------------------------------------------- | Other | 27 | 25 | 8 | 107 | -------------------------------------------------------------------------------- | Total | 78 | 76 | 3 | 316 | -------------------------------------------------------------------------------- Note 13 Returns to owner-members -------------------------------------------------------------------------------- | EUR million | Q1/ | Q1/ | Change, % | 2009 | | | 2010 | 2009 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Bonuses | 37 | 35 | 6 | 142 | -------------------------------------------------------------------------------- | Interest on cooperative | 3 | 3 | -21 | 18 | | capital | | | | | -------------------------------------------------------------------------------- | Total | 39 | 38 | 4 | 160 | -------------------------------------------------------------------------------- Note 14. Classification of financial instruments -------------------------------------------------------------------------------- | EUR million | Loans | Invest | Financi | Availa | Hedging | Total | | | and | ments | al | ble-fo | derivat | | | | other | held | assets | r-sale | ives | | | | receiv | to | at fair | financ | | | | | ables | maturi | value | ial | | | | | | ty | through | assets | | | | | | | profit | | | | | | | | or | | | | | | | | loss* | | | | -------------------------------------------------------------------------------- | Assets | | | | | | | -------------------------------------------------------------------------------- | Cash and balances | 3,446 | - | - | - | - | 3,446 | | with central banks | | | | | | | -------------------------------------------------------------------------------- | Receivables from | 1,483 | - | - | - | - | 1,483 | | credit institutions | | | | | | | | and central banks | | | | | | | -------------------------------------------------------------------------------- | Derivative | - | - | 1,544 | - | 198 | 1,743 | | contracts | | | | | | | -------------------------------------------------------------------------------- | Receivables from | 53,679 | - | - | - | - | 53,679 | | customers | | | | | | | -------------------------------------------------------------------------------- | Non-life Insurance | 839 | - | 86 | 2,487 | - | 3,412 | | assets** | | | | | | | -------------------------------------------------------------------------------- | Life Insurance | 523 | - | 2,991 | 3,376 | - | 6,889 | | assets*** | | | | | | | -------------------------------------------------------------------------------- | Notes and bonds | - | 1,098 | 1,235 | 5,116 | - | 7,450 | -------------------------------------------------------------------------------- | Shares and | - | - | 71 | 431 | - | 502 | | participations | | | | | | | -------------------------------------------------------------------------------- | Other receivables | 4,164 | - | 443 | - | - | 4,608 | -------------------------------------------------------------------------------- | Total 31 March 2010 | 64,134 | 1,098 | 6,371 | 11,410 | 198 | 83,211 | -------------------------------------------------------------------------------- | Total 31 March 2009 | 61,151 | 1,179 | 5,990 | 7,331 | 163 | 75,816 | -------------------------------------------------------------------------------- | Total 31 December | 63,125 | 1,163 | 5,757 | 10,229 | 156 | 80,430 | | 2009 | | | | | | | -------------------------------------------------------------------------------- | EUR million | | Financial | Other | Hedging | Total | | | | liabilities at | liabil | derivat | | | | | fair value | ities | ives | | | | | through profit | | | | | | | or loss****** | | | | -------------------------------------------------------------------------------- | Liabilities | | | | | | | -------------------------------------------------------------------------------- | Liabilities to | - | - | - | 2,261 | - | 2,261 | | credit institutions | | | | | | | -------------------------------------------------------------------------------- | Financial | - | - | 90 | - | - | 90 | | liabilities held | | | | | | | | for trading (excl. | | | | | | | | derivatives) | | | | | | | -------------------------------------------------------------------------------- | Derivative | - | - | 1,420 | - | 217 | 1,637 | | contracts | | | | | | | -------------------------------------------------------------------------------- | Liabilities to | - | - | - | 38,425 | - | 38,425 | | customers | | | | | | | -------------------------------------------------------------------------------- | Non-life Insurance | - | - | 4 | 2,652 | - | 2,656 | | liabilities*** | | | | | | | -------------------------------------------------------------------------------- | Life Insurance | - | - | 2,651 | 4,032 | - | 6,683 | | liabilities**** | | | | | | | -------------------------------------------------------------------------------- | Debt securities | - | - | - | 19,708 | - | 19,708 | | issued to the | | | | | | | | public | | | | | | | -------------------------------------------------------------------------------- | Subordinated loans | - | - | - | 1,257 | - | 1,257 | -------------------------------------------------------------------------------- | Other liabilities | - | - | - | 4,117 | - | 4,117 | -------------------------------------------------------------------------------- | Total 31 March 2010 | - | - | 4,165 | 72,453 | 217 | 76,835 | -------------------------------------------------------------------------------- | Total 31 March 2009 | - | - | 3,247 | 67,192 | 168 | 70,608 | -------------------------------------------------------------------------------- | Total 31 December | - | - | 3,601 | 70,476 | 166 | 74,243 | | 2009 | | | | | | | -------------------------------------------------------------------------------- *Assets at fair value through profit or loss include financial assets for trading, financial assets at fair value through profit or loss at inception, and investments and investment property covering unit-linked insurance policies. **Non-life Insurance assets are specified in Note 17. ***Life Insurance assets are specified in Note 18. ****Non-life Insurance liabilities are specified in Note 19. *****Life Insurance liabilities are specified in Note 20. ******Includes the balance sheet value of technical provisions related to unit-linked insurance policies. Debt securities issued to the public are carried at amortised cost. On 31 March 2010, the fair value of these debt instruments was approximately EUR 148 million higher than their carrying amount, based on information available in markets and employing commonly used valuation techniques. Subordinated liabilities are carried at amortised cost. Their fair value are substantially lower than their carrying amount, but determining fair values reliably is difficult in the current market situation. Note 15. Balance sheet classification according to valuation technique -------------------------------------------------------------------------------- | Fair value of assets in EUR | Level 1* | Level 2* | Level 3* | Total | | million on 31March 2010 | | | | | -------------------------------------------------------------------------------- | Recognised at fair value | | | | | | through profit or loss | | | | | -------------------------------------------------------------------------------- | Banking | 693 | 593 | 20 | 1,306 | -------------------------------------------------------------------------------- | Non-life Insurance | - | - | 8 | 8 | -------------------------------------------------------------------------------- | Life Insurance | - | - | 173 | 173 | -------------------------------------------------------------------------------- | Derivative financial | | | | | | instruments | | | | | -------------------------------------------------------------------------------- | Banking | 0 | 1,646 | 97 | 1,743 | -------------------------------------------------------------------------------- | Non-life Insurance | - | 0 | - | 0 | -------------------------------------------------------------------------------- | Life Insurance | - | 0 | - | 0 | -------------------------------------------------------------------------------- | Available-for-sale | | | | | -------------------------------------------------------------------------------- | Banking | 4,992 | 491 | 65 | 5,547 | -------------------------------------------------------------------------------- | Non-life Insurance | 1,749 | 540 | 198 | 2,487 | -------------------------------------------------------------------------------- | Life Insurance | 2,410 | 237 | 729 | 3,376 | -------------------------------------------------------------------------------- | Total | 9,844 | 3,506 | 1,290 | 14,640 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Fair value of assets in EUR | Level 1* | Level 2* | Level 3* | Total | | million on 31December 2009 | | | | | -------------------------------------------------------------------------------- | Recognised at fair value | | | | | | through profit or loss | | | | | -------------------------------------------------------------------------------- | Banking | 536 | 706 | 21 | 1,263 | -------------------------------------------------------------------------------- | Non-life Insurance | - | - | 8 | 8 | -------------------------------------------------------------------------------- | Life Insurance | - | - | 182 | 182 | -------------------------------------------------------------------------------- | Derivative financial | | | | | | instruments | | | | | -------------------------------------------------------------------------------- | Banking | 6 | 1,336 | 81 | 1,423 | -------------------------------------------------------------------------------- | Non-life Insurance | 0 | 0 | - | 0 | -------------------------------------------------------------------------------- | Life Insurance | - | - | - | - | -------------------------------------------------------------------------------- | Available-for-sale | | | | | -------------------------------------------------------------------------------- | Banking | 4,447 | 337 | 65 | 4,849 | -------------------------------------------------------------------------------- | Non-life Insurance | 1,544 | 552 | 193 | 2,290 | -------------------------------------------------------------------------------- | Life Insurance | 2,209 | 251 | 631 | 3,091 | -------------------------------------------------------------------------------- | Total | 8,742 | 3,182 | 1,181 | 13,106 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Fair value of liabilities in | Level 1* | Level 2* | Level 3* | Total | | EUR million on 31March 2010 | | | | | -------------------------------------------------------------------------------- | Recognised at fair value | | | | | | through profit or loss | | | | | -------------------------------------------------------------------------------- | Banking | 90 | - | - | 90 | -------------------------------------------------------------------------------- | Non-life Insurance | - | - | - | - | -------------------------------------------------------------------------------- | Life Insurance | - | - | - | - | -------------------------------------------------------------------------------- | Derivative financial | | | | | | instruments | | | | | -------------------------------------------------------------------------------- | Banking | 2 | 1,628 | 7 | 1,637 | -------------------------------------------------------------------------------- | Non-life Insurance | 1 | 3 | - | 4 | -------------------------------------------------------------------------------- | Life Insurance | 0 | - | - | 0 | -------------------------------------------------------------------------------- | Total | 92 | 1,631 | 7 | 1,731 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Fair value of liabilities in | Level 1* | Level 2* | Level 3* | Total | | EUR million on 31December 2009 | | | | | -------------------------------------------------------------------------------- | Recognised at fair value | | | | | | through profit or loss | | | | | -------------------------------------------------------------------------------- | Banking | 71 | - | - | 71 | -------------------------------------------------------------------------------- | Non-life Insurance | - | - | - | - | -------------------------------------------------------------------------------- | Life Insurance | - | - | - | - | -------------------------------------------------------------------------------- | Derivative financial | | | | | | instruments | | | | | -------------------------------------------------------------------------------- | Banking | 1 | 1,327 | 33 | 1,360 | -------------------------------------------------------------------------------- | Non-life Insurance | - | 0 | - | 0 | -------------------------------------------------------------------------------- | Life Insurance | - | 0 | - | 0 | -------------------------------------------------------------------------------- | Total | 72 | 1,327 | 33 | 1,431 | -------------------------------------------------------------------------------- * This level includes equities listed on major stock exchanges, quoted corporate debt instruments, bonds issued by governments and financial institutions with credit rating of at least A-, and exchange-traded derivatives. The fair value of these instruments is determined on the basis of market quotes. ** Valuation techniques based on observable input parameters. The fair value of the instruments included within this level means value derived from the market price of a financial instrument's components or similar financial instruments; or value which can be determined using commonly used valuation models and techniques if the inputs significant to the fair value measurement are based on observable market data. The fair value hierarchy level at Pohjola Group includes OTC derivatives, treasury bills/notes, debt instruments issued by companies and financial institutions, repo agreements, and securities lent or borrowed. *** Valuation techniques whose input parameters involve special uncertainty. The fair value determination of the financial instruments included within this level contains inputs not based on observable market data (unobservable inputs). This level includes the most complex OTC derivatives, certain private equity investments, and illiquid bonds, structured bonds, including securitised bonds and structured debt securities, and hedge funds. Note 16. Reclassified notes and bonds The table below shows the carrying amounts and fair values of the reclassified notes and bonds: -------------------------------------------------------------------------------- | 31 March 2010, EUR million | Carrying | Fair | Effective | Impairmen | | | amount | value | interest | ts | | | | | rate | arising | | | | | | from | | | | | | credit | | | | | | risk | -------------------------------------------------------------------------------- | Loans and other receivables | 2,335 | 2,371 | 5 | 94 | -------------------------------------------------------------------------------- | Investments held to maturity | 737 | 2,371 | 5 | - | -------------------------------------------------------------------------------- | Available-for-sale financial | - | 2,371 | 5 | - | | assets | | | | | -------------------------------------------------------------------------------- | Total | 3,072 | 3,081 | 0 | 94 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 31 December 2009, EUR million | Carrying | Fair | Effective | Impairmen | | | amount | value | interest | ts | | | | | rate | arising | | | | | | from | | | | | | credit | | | | | | risk | -------------------------------------------------------------------------------- | Loans and other receivables | 2,838 | 2,856 | 5 | 71 | -------------------------------------------------------------------------------- | Investments held to maturity | 798 | 761 | 4 | - | -------------------------------------------------------------------------------- | Available-for-sale financial | - | - | - | - | | assets | | | | | -------------------------------------------------------------------------------- | Total | 0 | 0 | 0 | 0 | -------------------------------------------------------------------------------- Note 17 Non-life Insurance assets -------------------------------------------------------------------------------- | EUR million | 31 March | 31 March | Change, % | 2009 | | | 2010 | 2009 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Investments | | | | | -------------------------------------------------------------------------------- | Loan and other receivables | 400 | 408 | -2 | 379 | -------------------------------------------------------------------------------- | Shares and participations | 434 | 287 | 51 | 391 | -------------------------------------------------------------------------------- | Property | 78 | 82 | -5 | 78 | -------------------------------------------------------------------------------- | Notes and bonds | 1,348 | 1,327 | 2 | 1,381 | -------------------------------------------------------------------------------- | Derivatives | | | | | -------------------------------------------------------------------------------- | Other | 712 | 455 | 57 | 526 | -------------------------------------------------------------------------------- | Total | 2,973 | 2,559 | 16 | 2,755 | -------------------------------------------------------------------------------- | Other assets | | | | | -------------------------------------------------------------------------------- | Prepayments and accrued income | 33 | 34 | -4 | 38 | -------------------------------------------------------------------------------- | Other | | | | | -------------------------------------------------------------------------------- | Arising from direct insurance | 310 | 326 | -5 | 214 | | operations | | | | | -------------------------------------------------------------------------------- | Arising from reinsurance | 92 | 145 | -37 | 89 | | operations | | | | | -------------------------------------------------------------------------------- | Cash in hand and at bank | 3 | 5 | -33 | 4 | -------------------------------------------------------------------------------- | Total | 439 | 511 | -14 | 346 | -------------------------------------------------------------------------------- | Non-life Insurance assets | 3,412 | 3,070 | 11 | 3,101 | -------------------------------------------------------------------------------- Note 18 Life Insurance assets -------------------------------------------------------------------------------- | EUR million | 31 March | 31 March | Change, % | 2009 | | | 2010 | 2009 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Investments | | | | | -------------------------------------------------------------------------------- | Loan and other receivables | 440 | 414 | 6 | 446 | -------------------------------------------------------------------------------- | Shares and participations | 3,038 | 2,216 | 37 | 2,777 | -------------------------------------------------------------------------------- | Property | 119 | 123 | -3 | 122 | -------------------------------------------------------------------------------- | Notes and bonds | 511 | 684 | -25 | 496 | -------------------------------------------------------------------------------- | Other | 0 | 0 | | 0 | -------------------------------------------------------------------------------- | Total | 4,108 | 3,437 | 20 | 3,841 | -------------------------------------------------------------------------------- | Assets covering unit-linked | | | | | | insurance contracts | | | | | -------------------------------------------------------------------------------- | Shares and participations | 2,699 | 1,564 | 73 | 2,381 | -------------------------------------------------------------------------------- | Other assets | | | | | -------------------------------------------------------------------------------- | Prepayments and accrued income | 26 | 26 | 1 | 25 | -------------------------------------------------------------------------------- | Other | | | | | -------------------------------------------------------------------------------- | Arising from direct insurance | 5 | 4 | 18 | 33 | | operations | | | | | -------------------------------------------------------------------------------- | Arising from reinsurance | 51 | 43 | 20 | 50 | | operations | | | | | -------------------------------------------------------------------------------- | Cash in hand and at bank | 0 | 2 | -87 | 1 | -------------------------------------------------------------------------------- | Total | 82 | 74 | 11 | 108 | -------------------------------------------------------------------------------- | Life Insurance assets | 6,889 | 5,075 | 36 | 6,331 | -------------------------------------------------------------------------------- Note 19 Non-life Insurance liabilities -------------------------------------------------------------------------------- | EUR million | 31 March | 31 March | Change, % | 2009 | | | 2010 | 2009 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Provision for unpaid claims | | | | | -------------------------------------------------------------------------------- | Provision for unpaid claims | 1,057 | 1,038 | 2 | 1,057 | | for annuities | | | | | -------------------------------------------------------------------------------- | Other provision for unpaid | 708 | 745 | -5 | 726 | | claims | | | | | -------------------------------------------------------------------------------- | Total | 1,765 | 1,783 | -1 | 1,783 | -------------------------------------------------------------------------------- | Provisions for unearned | 570 | 573 | | 362 | | premiums | | | | | -------------------------------------------------------------------------------- | Other liabilities | 320 | 319 | | 133 | -------------------------------------------------------------------------------- | Total | 2,656 | 2,676 | -1 | 2,279 | -------------------------------------------------------------------------------- Note 20. Life Insurance liabilities -------------------------------------------------------------------------------- | EUR million | 31 March | 31 March | Change, % | 2009 | | | 2010 | 2009 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Technical provisions | 3,584 | 3,762 | -5 | 3,649 | -------------------------------------------------------------------------------- | Insurance contract liabilities | 2,651 | 1,525 | 74 | 2,335 | | for unit-linked insurance | | | | | | policies | | | | | -------------------------------------------------------------------------------- | Other liabilities | 448 | 84 | | 194 | -------------------------------------------------------------------------------- | Total | 6,683 | 5,370 | 24 | 6,179 | -------------------------------------------------------------------------------- Note 21 Debt securities issued to the public -------------------------------------------------------------------------------- | EUR million | 31 March | 31 March | Change, % | 2009 | | | 2010 | 2009 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Bonds | 9,627 | 7,023 | 37 | 9,168 | -------------------------------------------------------------------------------- | Certificates of deposit, | 9,845 | 10,286 | -4 | 10,549 | | commercial papers and ECPs | | | | | -------------------------------------------------------------------------------- | Other | 237 | 206 | 15 | 227 | -------------------------------------------------------------------------------- | Total | 19,708 | 17,515 | 13 | 19,945 | -------------------------------------------------------------------------------- Note 22 Fair value reserve after income tax -------------------------------------------------------------------------------- | EUR million | 31 March | 31 March | Change, % | 2009 | | | 2010 | 2009 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Notes and bonds | 11 | -81 | | 24 | -------------------------------------------------------------------------------- | Shares and participations | 91 | -504 | | -79 | -------------------------------------------------------------------------------- | Total | 102 | -585 | | -54 | -------------------------------------------------------------------------------- The negative fair value reserve may recover by means of asset appreciation and recognised impairments. Only the value changes in the fair value reserve are recognised which the management deem to fulfil the relevant requirements. The fair value reserve before tax amounted to EUR 138 million (-74) and the related deferred tax liability to EUR 36 million (deferred tax asset 19). At the end of the report period, positive mark-to-market valuations of equity instruments in the fair value reserve totalled EUR 270 million (180) million and negative mark-to-market valuations EUR 146 million (265). During 2007-2010, impairments recognised from the fair value reserve in the income statement totalled EUR 429 million, of which EUR 62 million were recognised in 2010. Other notes Note 24 Collateral given -------------------------------------------------------------------------------- | EUR million | 31 March | 31 March | Change, % | 2009 | | | 2010 | 2009 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Given on behalf of own | | | | | | liabilities and commitments | | | | | -------------------------------------------------------------------------------- | Mortgages | 1 | 1 | 0 | 1 | -------------------------------------------------------------------------------- | Pledges | 5,960 | 4,381 | 36 | 5,839 | -------------------------------------------------------------------------------- | Other | 592 | 424 | 40 | 600 | -------------------------------------------------------------------------------- | Total | 6,553 | 4,806 | 36 | 6,440 | -------------------------------------------------------------------------------- Note 25 Off-balance-sheet items -------------------------------------------------------------------------------- | EUR million | 31 March | 31 March | Change, % | 2009 | | | 2010 | 2009 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Guarantees | 1,401 | 1,494 | -6 | 1,391 | -------------------------------------------------------------------------------- | Other guarantee liabilities | 1,583 | 1,641 | -4 | 1,548 | -------------------------------------------------------------------------------- | Pledges | 1 | 1 | -43 | 1 | -------------------------------------------------------------------------------- | Loan commitments | 9,156 | 7,710 | 19 | 8,789 | -------------------------------------------------------------------------------- | Commitments related to | 121 | 157 | -23 | 131 | | short-term | | | | | | trade transactions | | | | | -------------------------------------------------------------------------------- | Other | 850 | 535 | 59 | 785 | -------------------------------------------------------------------------------- | Total off-balance-sheet items | 13,111 | 11,539 | 14 | 12,644 | -------------------------------------------------------------------------------- Note 26 Derivative contracts -------------------------------------------------------------------------------- | | 31 March 2010 | -------------------------------------------------------------------------------- | EUR million | Nominal values / remaining term to | Fair values | | | maturity | | -------------------------------------------------------------------------------- | | <1 | 1-5 | >5 | Total | Assets | Liabili | | | year | years | years | | | ties | -------------------------------------------------------------------------------- | Interest rate | 50,516 | 46,869 | 15,958 | 113,344 | 1,464 | 1,371 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Currency | 12,591 | 2,083 | 497 | 15,171 | 290 | 326 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Equity and | 125 | 835 | 23 | 983 | 105 | - | | index-linked | | | | | | | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Credit derivatives | 30 | 178 | - | 208 | 4 | 2 | -------------------------------------------------------------------------------- | Other derivatives | 3,826 | 284 | - | 4,111 | 4 | 18 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total derivatives | 67,089 | 50,249 | 16,479 | 133,816 | 1,868 | 1,718 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | 31 March 2009 | -------------------------------------------------------------------------------- | EUR million | Nominal values / remaining term to | Fair values | | | maturity | | -------------------------------------------------------------------------------- | | <1 | 1-5 | >5 | Total | Assets | Liabili | | | year | years | years | | | ties | -------------------------------------------------------------------------------- | Interest rate | 26,929 | 45,670 | 10,952 | 83,551 | 1,390 | 1,299 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Currency | 12,079 | 1,340 | 876 | 14,295 | 249 | 510 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Equity and | 122 | 606 | 20 | 749 | 23 | 6 | | index-linked | | | | | | | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Credit derivatives | 149 | 167 | - | 316 | 4 | 19 | -------------------------------------------------------------------------------- | Other derivatives | 393 | 72 | - | 465 | 1 | 2 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total derivatives | 39,672 | 47,855 | 11,849 | 99,376 | 1,667 | 1,836 | -------------------------------------------------------------------------------- Note 26 Related-party transactions The related parties of OP-Pohjola Group include associates, administrative personnel and other related party companies. The administrative personnel comprise OP-Pohjola Group's Executive Chairman (Chairman of the Executive Board of OP-Pohjola Group Central Cooperative), President of OP-Pohjola Group Central Cooperative, members and deputy members of the Executive and Supervisory Boards and their close relatives. Related parties also include companies over which a person among administrative personnel or his close family member exercises significant influence. Other communities considered as related parties include OP Bank Group Pension Fund and OP Bank Group Pension Foundation. Standard terms and conditions for credit are applied to loans granted to the related parties. Loans are tied to generally used reference rates. Related-party transactions have not undergone any substantial changes since 31 December 2009. The Financial Statements for 1 January-31 March 2010 have been prepared in accordance with IAS 34 (Interim Financial Reporting) as approved by the EU. The Financial Statements 2009 contain a description of the accounting policies applied. This Interim Report is based on unaudited figures. Given that all figures have been rounded off, the sum total of individual figures may deviate from the presented sums. Pohjola Bank plc will publish its own interim report. Interim reports for six and nine months will be published on 4 August and 3 November 2010, respectively. OP-Pohjola Group's financial performance will be presented by to the media by Executive Chairman Reijo Karhinen in a press conference on 5 May 2010 at 12 noon at Teollisuuskatu 1 b, Vallila, Helsinki. Helsinki, 5 May 2010. OP-Pohjola Group Central Cooperative Executive Board FURTHER INFORMATION Reijo Karhinen, Executive Chairman, tel. +358 (0)10 252 4500 Tony Vepsäläinen, President, tel. +358 (0)10 252 4020 Harri Luhtala, CFO, tel. +358 (0)10 252 2433 Carina Geber-Teir, Senior Vice President (Corporate Communications), tel. +358 (0)10 252 8394 DISTRIBUTION NASDAQ OMX Helsinki Ltd London Stock Exchange Major media op.fi and pohjola.fi
© 2024 Nasdaq, Inc. All Rights Reserved |