2011-05-04 07:00:00 CEST
2011-05-04 07:00:55 CEST
REGULATED INFORMATION
Pohjola Pankki Oyj - Interim report (Q1 and Q3)
Strong start to 2011 by OP-Pohjola Group: best quarter in over three years
OP-Pohjola Group Company Release 4 May 2011, 08.00 am Release category: Interim Report Strong start to 2011 by OP-Pohjola Group: best quarter in over three years - The Group's pre-tax earnings shot up by 62% to EUR 208 million (128) - each business segment improved its performance. - Growth in income was 11 percentage points higher than that in expenses. Net interest income increase by 6% and Other income by 24%, while expenses increased by 6%. - Impairment losses on receivables shrank by 38% year on year, amounting to 0.16% of the loan and guarantee portfolio. - OP-Pohjola Group's joint banking and insurance customers increased in the report period by 25,000 (19,000). - Growth was stable, and in our strategic focus area, that is, integration and corporate financing, we proceeded well. - The Group's risk exposure is stable and the capital adequacy is solid, Tier 1 ratio being 12.7%. - The Group's performance for 2011 is expected to be better than in 2010. The greatest risks are related to changes in international capital and financial markets. OP-Pohjola Group's key indicators -------------------------------------------------------------------------------- Q1/2011 Q1/2010 Change, % 2010 -------------------------------------------------------------------------------- Earnings before tax, € million 208 128 61.9 575 Banking 133 93 43.2 367 Non-life Insurance 19 6 83 Life Insurance 37 1 43 Returns to owner-members and OP 42 39 7.0 163 bonus customers 31 Mar 2011 31 Mar 2010 Change, % 31 Dec 2010 Ratio of capital base to minimum 1.67 1.62 0.05* 1.70 amount of capital base (under the Act on the Supervision of Financial and Insurance Conglomerates) Tier I ratio, % 12.7 12.6 0.1* 12.8 Non-performing loan losses within 0.4 0.5 -0.1* 0.3 loan and guarantee portfolio, % Joint banking and insurance 1,222 1,117 9,4 1,197 customers, 1,000 -------------------------------------------------------------------------------- * Change in ratio Comments by Reijo Karhinen, Executive Chairman Our first quarter saw improved earnings and a bold investment in developing improved services to our customers. Despite a number of uncertainties, we have been able to continue our success story, and I expect this to continue during the rest of the year. The quarter that just ended boasted the best earnings in over three years. This was the result of several factors that manifested our Group's strengths: All divisions improved their financial performance. Net interest income improved well and growth of Other income continued to be strong. The growth in income was triple that of the rise in expenses. Credit losses kept on contracting, reaching their lowest level in over two years. Although competition has been tough, our volume increase has been steady. Thanks to our solid capital adequacy, we can continue to implement our growth strategy with determination. Our decision to establish a development unit in Oulu that will focus on eBusiness and mobile applications for financial services in particular is a concrete example of OP-Pohjola Group's desire and ability to take on a new course and to lay new foundations for growth. Nokia's strategy change provided us with a window of opportunity to tap into a fresh pool of resources and to create new eBusiness. We are now moving boldly forward to create what we believe will be solutions that provide a better customer experience. I believe this move will turn out to be one of the Group's major turning points, a similar one being 1996 when we were the first in Europe to introduce online banking. Our good earnings performance is a reflection of the growth base of the Finnish economy, as indeed Finland is our primary market area. Our solid performance is good news to our customers. Banks are there for their customers and owners, and in our case the owners and the customers are the same people. Our cooperative base not only gives us the opportunity but also obligates us to channel our profits to long-term development projects. Finnish prosperity is only ensured by having sufficient growth. This country needs companies that have the courage to invest into the future even during difficult periods. OP-Pohjola Group is not only providing the framework for investments by our customers but also setting an example on how to build for the future. By boldly investing into new things, by emphasising growth and by increasing our personnel we are in the forefront of Finnish growth companies. Financial performance in the report period The Group's earnings before tax grew by 62% to EUR 208 million (128). This was the result of lower impairment charges, higher net commissions and fees and, as a consequence of higher market rates, growing net interest income. Bonuses to owner-members and OP bonus customers that were recognised in the profit and loss grew by 7.6% year-on-year to EUR 40 million. All three business segments improved their performance. Following the recession, the financial services group's profitability is reaching it long-term average target level. Earnings before tax at fair value shrank owing to jittery investment markets and, as a consequence of higher long-term interest rates, falling market prices. The Group's fair value reserve shrank by EUR 61 million, while a year ago it increased by EUR 156 million. Outlook World economic growth is forecast to remain strong in 2011, although slowing down somewhat compared to last year, and the Finnish economy is expected to develop favourably, too. As the economy is recovering, short-term interest rates are again expected to rise towards the end of the year. The greatest risks that may overshadow the economic outlook are caused by public finance crises in certain euro countries and the consequent financial market jitters. OP-Pohjola Group's 2011 earnings before taxes are expected to be better than in 2010, the expected increase being attributed to climbing net interest income and net commissions and fees, and lower impairment charges related to banking and insurance operations. The greatest uncertainty is related to developments in international investment and financial markets. 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 actual results may differ materially from those expressed in the forward-looking statements. Press conference OP-Pohjola Group's financial performance will be presented to the media by Executive Chairman Reijo Karhinen in a press conference on 4 May 2011 at 12 noon at Teollisuuskatu 1 b, Vallila, Helsinki. Financial reporting in 2011 Schedule for Interim Reports in 2011: Interim Report H1/2011: 3 August 2011 Interim Report Q1-3/2011: 2 November 2011 ADDITIONAL INFORMATION Executive Chairman Reijo Karhinen, tel. +358 (0)10 252 4500 Harri Luhtala, CFO, tel. +358 (0)10 252 2433 Carina Geber-Teir, Chief Communications Officer, tel. +358 (0)10 252 8394 [HUG#1512106]
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