2009-02-12 07:00:00 CET
2009-02-12 07:00:10 CET
REGULATED INFORMATION
Pohjola Pankki Oyj - Financial Statement Release
Pohjola Bank plc Financial Statements Bulletin for 1 January-31 December 2008 with President and CEO's Comments
Pohjola Bank plc Company Release 12 February 2009, at 8.00 am, Release category: Financial Statements Bulletin Pohjola Bank plc Financial Statements Bulletin for 1 January-31 December 2008 with President and CEO's Comments President and CEO's comments: The Group's customer business made good progress in the fourth quarter and during 2008 as a whole. Banking showed strong growth in the loan and guarantee portfolio, net interest income and market share. Within Non-life Insurance, insurance premium revenue continued its vigorous growth, the balance on technical account was excellent and our market position as Finland's largest non-life insurer continued to strengthen further. Although the investment market turbulence led to a reduction in assets managed by Asset Management, we strengthened our market position. Despite the favourable development in our customer business, the Group's earnings for 2008 were markedly lower than in 2007, with the fourth quarter showing only a slight profit. The Group's earnings for the fourth quarter and the financial year were eroded by the global financial crisis coming to a head, and the weaker real economy. As a result, investment income at fair value from Non-life Insurance was negative and impairment charges rose. The global economic outlook has become bleaker apace. Economic growth has come to a standstill and the USA, major EU countries and Finland are in recession in 2009. This is expected to slow down business growth and increase both payment defaults and impairments, despite our good-quality loan portfolio. The Group has strong capital adequacy and good liquidity, and short-term funding has performed well despite the difficult market situation. Since we are engaged in both the banking and non-life insurance business, this will spread recession-related risks. Although risk management plays a more vital role in the current economic situation, the Group will, thanks to its high capital adequacy, have potential to capitalise on any new business opportunities and strengthen its position as Finland's leading financial services provider. Helsinki, 12 February 2009 Mikael Silvennoinen President and CEO Pohjola Bank plc Financial Statements Bulletin for 1 January-31 December 2008 January-December 2008 1) - Earnings before tax amounted to EUR 119 million (288) and loss before tax at fair value to EUR 133 million (earnings of EUR 234 million). - Return on equity at fair value was -5.6% (9.3). - Earnings per share stood at EUR 0.44 (1.04), while equity per share was EUR 8.07 (9.19). - Within Banking, the loan portfolio increased by 23% to EUR 11.6 billion (9.4), the corporate loan portfolio's average margin rose by 0.13 percentage points to 0.94% and net interest income improved by 28% to EUR 158 million (124). Earnings were eroded by impairments of EUR 18 million (1) and net trading income of EUR -20 million (+18). - Within Asset Management, assets under management shrank to EUR 25.3 billion (31.5), owing to money-market fund redemptions and bearish equity markets. Asset Management strengthened its market share and posted earnings of EUR 17 million (21) before tax. - Within Non-life Insurance, insurance premium revenue rose by 8% (8) and the balance on technical account, excluding changes in reserving bases, was the best ever reported, EUR 78 million (54). The combined ratio stood at 94.7% (92.9) and the operating combined ratio, excluding changes in reserving bases and amortisation on intangible assets related to company acquisition, was 91.5% (93.8). Non-life Insurance return on investments at fair value stood at -7.0% (4.8). - The Group's liquidity position remained strong and funding operations performed well despite the financial crisis. Credit ratings for Pohjola Bank plc were confirmed and Moody's upgraded Pohjola Insurance Ltd's credit rating to A1. Negative mark-to-market valuations recognised in the income statement from liquidity reserves totalled EUR 74 million (-57). - Tier 1 ratio stood at 9.6% (11.6), without taking account of transitional provisions, and at 9.4% (10.7), based on transitional provisions. - In line with the valid dividend policy according to which dividend payout accounts for 51% of earnings, the Board of Directors proposes that a per-share dividend of EUR 0.23 be paid on Series A shares and EUR 0.20 on Series K shares. October-December 2008 1) - Earnings before tax amounted to EUR 5 million (67) and loss before tax at fair value to EUR 66 million (earnings of EUR 33 million). - Return on equity at fair value was -11.1% (5.1). - Earnings per share were EUR 0.03 (0.24). - Banking recognised EUR 11 million (-1) in impairments and the Group Functions EUR 10 million (0). - Insurance premium revenue rose by 5% (3). Non-life Insurance reported a combined ratio of 100.5% (83.53) and an operating combined ratio of 96.1% (95.9). Non-life Insurance return on investment at fair value stood at -4.3% (0.2). 1) Comparatives deriving from the income statement are based on figures reported for the corresponding period a year ago. Unless otherwise specified, balance-sheet and other cross-sectional figures on 31 December 2007 are used as comparatives. -------------------------------------------------------------------------------- | Key indicators | Q4/ | Q4/ | Q1-4/ | Q1-4/ | | | 2008 | 2007 | 2008 | 2007 | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Earnings before tax, EUR | 5 | 67 | 119 | 288 | | million | | | | | -------------------------------------------------------------------------------- | Profit for the period, EUR | 6 | 49 | 89 | 212 | | million | | | | | -------------------------------------------------------------------------------- | Return on equity, % | -11.1 | 5.1 | -5.6 | 9.3 | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Balance sheet total, EUR | | | 32.4 | 25.9 | | billion | | | | | -------------------------------------------------------------------------------- | Risk-weighted assets, EUR | | | 13.1 | 11.7 | | billion | | | | | -------------------------------------------------------------------------------- | Loan portfolio, EUR billion | | | 11.6 | 9.4 | -------------------------------------------------------------------------------- | Assets under management, EUR | | | 25.3 | 31.5 | | billion | | | | | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Capital adequacy, % | | | 11.7 | 11.2 | -------------------------------------------------------------------------------- | Tier 1 ratio, % | | | 9.4 | 10.7 | -------------------------------------------------------------------------------- | Proportion of doubtful | | | 0.3 | 0.1 | | receivables, % | | | | | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Earnings per share, EUR | 0.03 | 0.24 | 0.44 | 1.04 | -------------------------------------------------------------------------------- | Earnings per share, incl. | -0.23 | 0.12 | -0.48 | 0.85 | | change in fair value, EUR | | | | | -------------------------------------------------------------------------------- | Equity per share, EUR | | | 8.07 | 9.19 | -------------------------------------------------------------------------------- | Market capitalisation (A+K | | | 1,983 | 2,658 | | shares), EUR million | | | | | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Average personnel | 3,053 | 3,058 | 2,986 | 3,006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Consolidated earnings | 2008 | 2007 | 2008 | 2007 | -------------------------------------------------------------------------------- | EUR million | Q4 | Q4 | Q1-4/ | Q1-4/ |-------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Net interest income | 54 | 30 | 174 | 115 | -------------------------------------------------------------------------------- | Impairments of receivables | 21 | -1 | 28 | 1 | -------------------------------------------------------------------------------- | Net interest income after | 33 | 31 | 146 | 114 | | impairments | | | | | -------------------------------------------------------------------------------- | Net income from Non-life Insurance | 74 | 123 | 353 | 433 | -------------------------------------------------------------------------------- | Net commissions and fees | 29 | 32 | 108 | 115 | -------------------------------------------------------------------------------- | Net trading income | -9 | -27 | -81 | -34 | -------------------------------------------------------------------------------- | Net investment income | -3 | 1 | 6 | 28 | -------------------------------------------------------------------------------- | Other operating income | 14 | 20 | 56 | 71 | -------------------------------------------------------------------------------- | Total net income | 139 | 179 | 589 | 728 | -------------------------------------------------------------------------------- | Personnel costs | 47 | 43 | 178 | 166 | -------------------------------------------------------------------------------- | IT expenses | 13 | 11 | 46 | 43 | -------------------------------------------------------------------------------- | Depreciation and amortisation | 20 | 16 | 69 | 61 | -------------------------------------------------------------------------------- | Other expenses | 53 | 41 | 178 | 170 | -------------------------------------------------------------------------------- | Total expenses | 134 | 112 | 470 | 440 | -------------------------------------------------------------------------------- | Earnings before tax | 5 | 67 | 119 | 288 | -------------------------------------------------------------------------------- | Change in fair value reserve | -71 | -34 | -252 | -54 | -------------------------------------------------------------------------------- | Earnings/loss before tax at fair | -66 | 33 | -133 | 234 | | value | | | | | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Income tax expense | -1 | 18 | 31 | 76 | -------------------------------------------------------------------------------- | Profit for the period | 6 | 49 | 89 | 212 | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Tax on change in fair value reserve | -18 | -9 | -65 | -14 | -------------------------------------------------------------------------------- | Earnings/loss for the period at | -47 | 24 | -99 | 172 | | fair value | | | | | -------------------------------------------------------------------------------- Consolidated earnings January-December Pohjola Group's earnings before tax fell to EUR 119 million (288) and loss before tax at fair value came to EUR 133 million (earnings of EUR 234). Earnings per share were EUR 0.44 (1.04), while equity per share was EUR 8.07 (9.19). Return on equity at fair value stood at -5.6% (9.3). Net interest income rose by over 50% to EUR 174 million (115) while net commissions and fees remained almost at the previous year's level, standing at EUR 108 million (115). However, consolidated net income fell by 19% to EUR 589 million (728), due to negative mark-to-market valuations of liquidity reserves and Non-life Insurance investments. As a result of Lehman Brothers Holdings Inc.'s bankruptcy, net trading income decreased by EUR 9 million and impairments of receivables increased by EUR 10 million. Other impairments of receivables totalled EUR 18 million. Negative mark-to-market valuations of liquidity reserves totalled EUR 74 million. Expenses rose by 7% to EUR 470 million (440), with EUR 7 million attributable to growth in depreciation on leases. Excluding this depreciation, expenses increased by 5%. Group expenses include EUR 6 million in expenses related to the ICT service system integration. As a result of testing Group goodwill for any impairment, an impairment charge of EUR 3 million was recognised related to the Seesam brand. There was no need for impairments of other goodwill. As a result of a drastic fall in equity prices and widening credit spreads, the fair value reserve before tax decreased by EUR 252 million. The Group reported EUR 133 million in loss before tax at fair value (earnings of EUR 234 million) and annualised return on equity stood at -5.6% (9.3). On 31 December, the capital adequacy ratio stood at 11.7% (11.2) and Tier 1 ratio at 9.4% (10.7). Despite the challenging market situation, the customer business of both Banking and Non-life Insurance made good progress, with the loan portfolio, net interest income and lending margins showing favourable development and non-life insurance premium revenue and the number of loyal customer householder rising according to targets. Pohjola strengthened its market position in all of its business lines: Banking, Non-life Insurance and Asset Management. October-December Earnings before tax came to EUR 5 million (67) and loss before tax at fair value to EUR 66 million (earnings of EUR 33 million). Earnings per share were EUR 0.03 (0.24) and annualised return on equity stood at -11.1% (5.1). The earnings reported year ago included changes in reserving bases within Non-life Insurance, improving earnings by EUR 32 million. Net interest income continued to grow strongly, totalling EUR 54 million (30). Impairments of receivables had a EUR 21 million effect on earnings (-1). The reclassification of notes and bonds in September mitigated the effects of the financial crisis on the financial result: net trading income was EUR -9 million (-27) as against EUR -81 million (-34) reported for 2008. Operating environment The global financial market got into a serious crisis in 2008. Problems originating from the US housing market spread to other countries and other sectors, resulting in falling GDP figures in many countries. Finland is not immune to this contagious global recession and the economic outlook for 2009 is even bleaker. The global financial crisis came to a head in autumn 2008 when Lehman Brothers, an investment bank, filed for Chapter 11 protection, bringing down the liquidity in financial markets, and the lack of confidence increased short-term market rates and intensified equity and currency market swings. To attempt to combat the crisis, national central banks took considerable measures to support the financial markets, such as increasing market liquidity to prevent a loan slump, and also reducing their benchmark interest rates to exceptionally low. Many countries also put in place significant stimulus packages. Many financial institutions in various countries suffered massive losses and had to rely on state support, which led to a number of restructuring measures in the financial sector. In October 2008, the Finnish government alongside the other EU governments agreed to guarantee interbank lending, if necessary, and make fixed-term capital investments in banks. The support actions taken by central banks and governments alleviated the acute crisis, with the short-term market rates being cut and interbank trading picking up a little. The long-term effects, however, are difficult to predict. Finland drifting into recession in 2009 behind the US and EU The global financial crisis has weakened economic outlooks everywhere. Both the US and major EU countries have veered into recession and emerging economies too are experiencing slowing growth, for weaker export prospects will be only partly offset by sustained domestic demand. Finland's economic outlook deteriorated rapidly in the latter half of 2008, bringing GDP growth to a standstill and resulting in a downturn of exports as a result of the global recession. Growth in consumer spending slowed down as households became more and more wary in the wake of dismal economic and business news. Incomes continued their upward trend, but so did unemployment. Capital spending was up for most of the year, as construction projects started earlier were completed, but the number of building permits applied gives reason to believe that capital spending will be falling sharply. It would appear that Finland alongside other industrial countries is drifting into a recession in 2009, with industry and especially construction showing a drastic downturn, while the service sector is expected to fare better than other sectors. Consumer confidence is as weak as it was during the slump in the 1990s, and the only thing people have faith in is that they will be able to save up money. In 2008, the inflation rate was 4.1% at its highest, due mostly to higher food prices and housing costs. The stagnating economy is expected to decrease the inflation rate markedly in 2009. Interest rates may fall further Owing to lack of confidence in financial markets, the Euribor rates rose until autumn 2008. Moreover, the European Central Bank (ECB) raised its benchmark interest rate further in July to 4.25%, basing its decision on high inflation. As the financial crisis came to a head in the autumn, the ECB cut its benchmark interest rate three times by the end of 2008, coming to 2.5%, and once in January 2009 standing at 2.0%., bringing the Euribor rates down in its wake. With the euro area in recession and the lower inflation rate, interest rates may fall further in 2009. Loans and deposits continued to grow briskly in the banking market in 2008, and the growth rate of the loan portfolio of financial institutions remained the same as in the previous year, 11.7%. Because the financial markets were jammed up, the growth rate of corporate loans in particular rose to 19.0%, whereas the home mortgage growth rate slowed down to 8.7% despite the falling interest rates and housing prices in the latter half of the year. However, households' loan portfolio increased faster than their income, resulting in higher indebtedness. The deposit growth rate rose to a record 12.9% in 2008, as many savings were channelled to deposits due to the steep fall in the equity market. Banking market growth is forecast to slow down in 2009. Slower growth in household income and lower income from term deposits as a result of lower interest rates are expected to dampen growth in deposits. A rise in home loans is also expected to slow down, although the average interest rates of new home loans will fall. In 2008, capital market performance was exceptionally poor and stock performance was one of the worst ever experienced, with the OMX Helsinki Cap index - a measure of stock prices in Finland - falling by 50.0%. Mutual fund assets shrank by 37.4% owing to redemptions and negative mark-to-market valuations. Despite the weaker economy, non-life insurance premiums written rose by 4.2% in 2008. The non-life insurance business is not so badly affected, because statutory insurance accounts for such a high percentage of the policies. On the other hand, the stagnating economy is expected to slow down growth in claims expenditure. Integration The integration process related to OKO Bank's acquisition of Non-life Insurance operations in 2005 is proceeding according to plan. The results so far support earlier estimates of annual revenue synergies coming to EUR 17 million by the end of 2010 and cost synergies reaching 35 million by the end of 2009. Savings based on decisions on streamlining measures underway during 2005-08 will amount to an estimated EUR 33 million during the current year. From 2009, savings from the integration are expected to reach an annual level of EUR 36 million. The revenue synergies resulting from growth in the number of loyal customer households by the end of the reporting period have reached an annual level of EUR 12 million and the management is targeting EUR 17 million by the end of 2010. Integration costs related to the Pohjola acquisition totalled EUR 33 million between September 2005 and December 2008. In May, Pohjola Bank's parent institution, OP-Pohjola Group Central Cooperative, and TietoEnator signed an agreement to integrate and reorganise OP-Pohjola Group's ICT services. Integrating all of Pohjola Bank Group's ICT services within this joint venture will result in major efficiency gains of an annual estimated EUR 3 million from 2009. The related integration costs paid in advance by Pohjola in December came to EUR 6 million. The number of loyal customer households within Non-life Insurance increased by 7,300 during October-December and by 34,400 during 2008, totalling almost 390,000 on 31 December 2008. The Group's strategic aim is to increase this number to 450,000 by the end of 2010. Customer service took a major step in November 2007 when OP-Pohjola Group enhanced loyal customer benefits, related to the Pohjola integration, in such a way that customers have also been able to use OP bonuses earned through banking transactions to pay Pohjola insurance premiums. This represents a major benefit to the year-end number of 993,000 OP-Pohjola Group loyal customers who have concentrated their purchases of banking and insurance services. In 2008, bonuses used to pay insurance premiums totalled EUR 18 million. Pohjola Insurance Ltd and a number of OP-Pohjola Group member cooperative banks adopted a new operating model for banking and non-life insurance product sales to private customers. According to this plan, Pohjola Insurance's field staff for private customers (around 294 employees) joined the payroll of local cooperative banks on 1 October 2008. This new operating model enables improved customer service, especially in the field of cross-selling banking and non-life insurance services. The majority of these employees worked on the premises of the cooperative bank branches, bearing in mind that these branches and Pohjola Insurance has operated under the same roof almost everywhere in Finland. This reorganisation did not involve any staff reductions. Agency operations, corporate and institutional customer sales or the operations of other Pohjola Insurance's service channels did not undergo any changes. Group restructuring OKO Bank plc's Extraordinary General Meeting made the decision on changing the company's corporate name to Pohjola Bank plc as of 1 March 2008. In marketing communication and when used together with the logo, 'Pohjola' is used for short. As of the same date, the corporate names of subsidiaries with the OKO prefix also changed to begin with 'Pohjola'. The parent company Pohjola Bank plc and its subsidiaries together form Pohjola Group. Based on an agreement signed by Pohjola Bank plc and Kesko Corporation on 21 December 2007, Pohjola Bank plc bought all of the shares of K-Finance Ltd, a Kesko Corporation subsidiary, for around EUR 30 million, of which goodwill accounted for roughly EUR 12 million. On 31 January 2008, Pohjola Bank plc became the owner of all of K-Finance Ltd shares and the company was renamed Pohjola Finance Ltd. The Boards of Directors of Pohjola Bank plc and Pohjola Finance Ltd have approved a plan, whereby Pohjola Finance Ltd will merge with its parent company by the end of September 2009. This merger is aimed at simplifying the Group's corporate structure, streamlining operations and reducing administrative costs. Since the transaction represents a subsidiary merger, no merger consideration will be paid. On 22 August 2008, the Helsinki District Court issued its verdict in the redemption dispute between Pohjola Bank plc's and Pohjola Group plc's minority shareholders, confirming the redemption price of one Pohjola Group plc share at EUR 13.35. This concerned some 2.1% of the company's shares (about 3.4 million shares). The redemption dispute has been submitted to the Court of Appeal, for the special representative of Pohjola Group plc's minority shareholders and some individual minority shareholders have appealed against the Helsinki District Court's decision. Pohjola Bank plc has also appealed against this decision, pertaining to legal expenses sentenced to be paid by the adverse parties, interest confirmed on the redemption price and some matters related to legal proceedings. The legal process began with an Arbitral Tribunal in 2006 once the Bank had acquired over 90% of Pohjola Group plc shares. The redemption price bid by Pohjola Bank plc for Pohjola Group plc shares held by minority shareholders was EUR 13.35. In May 2007, the Arbitral Tribunal set the redemption price at EUR 14.35. Personnel On 31 December, the Group had a staff of 2,913, down by 145 from 31 December 2007. As a result of K-Finance Ltd's acquisition, 21 employees joined the Group's payroll. Pohjola Insurance's field staff for private customers (around 294 employees) joined the payroll of local cooperative banks on 1 October 2008. A total of 613 employees (549) worked for Banking, 154 (154) for Asset Management, 1,745 employees (2,023) for Non-life Insurance in Finland and 273 (224) abroad, and 129 employees (108) for the Group Functions. Capital expenditure Gross capital expenditure for 2008 totalled EUR 21 million (19), EUR 4 million allocated to Banking, EUR 1 million to Asset Management, EUR 13 million to Non-life Insurance and EUR 3 million to the Group Functions. Investments in IT systems accounted for EUR 17 million of all capital expenditure. Capital adequacy The capital adequacy ratio continued to remain strong, despite vigorous growth in the loan portfolio and the financial-market turbulence. The first quarter saw a particularly vigorous growth in the loan portfolio, which began to level off after that period. The capital adequacy ratio stood at 12.0% (12.2), without taking account of transitional provisions, and at 11.7% (11.2) adjusted for transitional provisions, as against the statutory minimum requirement of 8%. Tier 1 ratio stood at 9.6% (11.6), without taking account of transitional provisions, and at 9.4% (10.7) adjusted for transitional provisions. Together with the Financial Supervisory Authority, the Group specified the treatment of insurance companies in capital adequacy (solvency) measurement under the Act on Credit Institutions. For the year-end capital adequacy measurement, only the carrying amount of insurance company investments applies and this amount is deducted from Tier 1 capital and Tier 2 capital on a fifty-fifty basis. Comparatives have been changed correspondingly. In March, Pohjola Bank plc issued a EUR 170-million debenture loan, classified as lower Tier 2 capital, with a maturity of ten years, and in June a EUR 50-million subordinated bond included in Tier 1 capital. With the Financial Supervisory Authority's permission, the loan may be called in at the earliest in June 2013. In December, Pohjola issued a EUR 100-million debenture loan with a maturity of five years, of which EUR 80 million was included in lower Tier 2 capital and EUR 20 million in Tier 3. In June, Pohjola Insurance Ltd issued a perpetual capital bond of EUR 50 million, which may be called in at the earliest in June 2013 with the Insurance Supervisory Authority's permission. The bond will not be taken into account in the capital adequacy measurement under the Act on Credit Institutions but the bond, included in the solvency margin, can be fully utilised in the capital adequacy measurement of the insurance company. Capital resources increased from EUR 1,313 million to EUR 1,530, due to the reported earnings and the abovementioned issues. Tier 1 capital came to EUR 1,228 million (1,247), hybrid capital accounting for EUR 274 million, or 13.8% (11.4). The minimum regulatory capital requirement to cover market risk amounted to EUR 47 million (46). On 31 December, the fair value reserve stood at EUR -22 million (-3). On 31 December, risk-weighted assets totalled EUR 12,784, without taking account of transitional provisions, as against EUR 10,745 a year earlier. This change was due mainly to the larger loan and guarantee portfolio Adjusted for transitional provisions, risk-weighted assets came to EUR 13,120 (11,705). The Financial Supervision Authority granted permission to OP-Pohjola Group to use the Internal Ratings Based Approach (IRBA) in its capital adequacy measurement for credit risks as of 30 September 2008. This applies to exposures to corporate and institutional customers, accounting for around two-thirds of Pohjola Bank's minimum capital requirement. With respect to other exposure classes, Pohjola aims to phase in the Internal Ratings Based Approach in such a way that the approach will next apply to retail exposures. The Financial Statements 2007 figures have been converted into comparable ones. Since the same date, the capital adequacy requirement for operational risks has been calculated using the Basic Indicator Approach (BIA) and that for market risks using the Standardised Approach (SA). Risk exposure The financial crisis began to affect the real economy at the end of the year. The effects of the crisis in the fourth quarter were still mainly felt in the mark-to-market valuations of the Group's liquidity reserves and investment income generated by Non-life Insurance. Because of this market disruption, determining the fair value of assets reliably has become a problem on a global scale. On 31 December 2008, financial assets included in OP-Pohjola Group's liquidity reserves totalled EUR 9,835 million (5,749) and EUR 3.8-billion-worth notes and bonds within these assets were reclassified as of 1 July 2008, in accordance with Commission Regulation (EC). Determining the value of financial assets is based on mark-to-market quotes and the Group has not applied its own valuation models, despite the illiquid market. Nor has the Group measured any debt securities issued to the public at fair value. The positive mark-to-market valuations of liquidity reserves recognised in the income statement during the fourth quarter totalled EUR 19 million, EUR 1 million in negative valuation recognised in the income statement and EUR 21 million in positive valuation in the fair value reserve. The negative mark-to-market valuation for 2008 totalled EUR 88 million, EUR 74 million of which was recognised in the income statement. Negative value changes will be reversed during the residual term to maturity if the notes and bonds are not sold before their maturity and their issuer is not declared insolvent. Despite the financial crisis, the financial position and liquidity remained at a healthy level, because the financial position was boosted by the EUR 1-billion bond issued in August by Pohjola Bank plc and growth in OP-Pohjola Group member banks' deposit portfolio. These liquidity reserves plus items included in OP-Pohjola Group's balance sheet comprise the liquidity reserve eligible for central bank refinancing, which can be used to cover OP-Pohjola Group's wholesale funding maturities for some 24 months. Sharply falling equity prices and widening credit spreads affected Non-life Insurance investment income: investment income at fair value amounted to EUR -88 million (4) in the fourth quarter, or -4.3% (0.2), and EUR -167 million (122) in 2008, or -7.0% (4.8). The Group reduced equity allocation in the portfolio in the fourth quarter. The Group's credit risk exposure continued to remain on a sound basis although the effects of the financial crisis spreading to the real economy is beginning to be felt in customer businesses. Credit ratings remained at good levels with respect to both the total exposure and corporate exposure, but exposures with lower ratings increased as a result of lower customer credit ratings. Past due payments and doubtful receivables increased during the fourth quarter but remained at lower levels relative to the loan and guarantee portfolio. With a net effect of EUR 21 million (-1) on earnings in the fourth quarter and EUR 28 million (1) in 2008, impairments increased with respect to corporate loans and notes and bonds and as a result of the failure of Lehman Brothers. The failure of Lehman Brothers eroded Group earnings by EUR -19 million, EUR 10 million recognised as impairments and EUR 9 million in net trading income. Despite the exceptional market situation, the Group's risk exposure remained favourable. The effects of the market disruption originating from the global financial crisis have begun to be felt in the real economy, and the USA and euro area, Finland included, have shown a rapid slowdown in their economic growth, these economies now experiencing an economic downturn. Risk exposure by Banking Despite the greater financial-market uncertainty and strong growth in total exposure, risk exposure by Banking remained favourable. During the fourth quarter, total exposure increased by EUR 0.6 billion to EUR 21.5 billion, due mainly to growth in the corporate loan portfolio. Total exposure grew by EUR 3.6 billion from the beginning of 2008. Credit rating by total exposure and corporate exposure remained almost unchanged during the fourth quarter. The ratio of investment-grade corporate exposure - i.e. ratings 1-5 - to total exposure stood at 60% (65) and the share of the two lowest rating categories came to 0.7% (0.6), or EUR 110 million (70). Significant customer exposure rose to EUR 4.4 billion (3.6) in the fourth quarter. The ratio of doubtful receivables to the loan and guarantee portfolio continued to remain low, standing at 0.3% (0.1). The effects of the financial market disruption spreading to the real economy was mainly reflected in an increase in the exposure of the lowest rating categories as a result of customer companies' lower credit rating. In net terms, loan and guarantee losses pulled down earnings by EUR 11 million in the fourth quarter and by EUR 18 million in 2008. The Group kept interest rate risks at moderate levels throughout the financial year and covered market risks, arising from the issuance of structured bonds, using derivative contracts corresponding to the bonds' structure of returns. Overnight currency exposure and the associated risk remained low throughout the year. On 31 December, net currency exposure amounted EUR 18 million (-15). Risk exposure by Asset Management Weaker investment markets reduced assets managed by Asset Management, which was partly reflected in accrued net commissions and fees. In other respects, risk exposure by Asset Management remained favourable. Risk exposure by Non-life Insurance On 31 December 2008, Non-life Insurance solvency capital stood at EUR 608 million (613), accounting for 66% (72) of insurance premium revenue. The financial market turbulence reduced the fair value of investment reflected in lower solvency. In order to enhance its solvency, Pohjola Insurance Ltd issued a EUR 50-million perpetual capital bond and Pohjola Bank plc capitalised non-life insurers by a total of EUR 65 million. Moody's upgraded credit rating for Pohjola Insurance Ltd, Pohjola's subsidiary engaged in non-life insurance operations, from A2 to A1. According to Moody's, this change reflects the successful integration of Pohjola Insurance with Pohjola Bank. In Non-life Insurance, the fourth quarter saw 60 (62) major or medium-sized losses (in excess of EUR 0.1 million), with their claims incurred retained for own account totalling EUR 27 million (39), while their total number for 2008 came to 204 (229) and their claims incurred retained for own account totalled EUR 84 million (101). On 31 December 2008, the investment portfolio of Non-life Insurance totalled EUR 2,415 million as against EUR 2,511 million a year ago, bonds accounting for 70% (69) and equities and venture-capital investments for 8% (16). Non-life Insurance investment portfolio by allocation -------------------------------------------------------------------------------- | Allocation | Fair value | % | Fair value | % | | | on 31 Dec | | on 31 Dec | | | | 2008, | | 2007, EUR | | | | EUR million | | million | | -------------------------------------------------------------------------------- | Money market | 279 | 12 | 51 | 2 | -------------------------------------------------------------------------------- | Bonds and bond funds | 1,690 | 70 | 1,722 | 69 | -------------------------------------------------------------------------------- | Equities and | 190 | 8 | 413 | 16 | | venture-capital | | | | | | investments | | | | | -------------------------------------------------------------------------------- | Alternative investments | 111 | 5 | 188 | 7 | -------------------------------------------------------------------------------- | Real property | 145 | 6 | 138 | 5 | -------------------------------------------------------------------------------- | Total | 2,415 | 100 | 2,511 | 100 | -------------------------------------------------------------------------------- The fixed-income portfolio by credit rating remained healthy. The average credit rating of the fixed-income portfolio, in accordance with Standard & Poor's, was AA-, the same as a year earlier. The average residual maturity of the fixed-income portfolio was 6.6 years (5.4) and the duration 4.3 years (3.8). On 31 December, the fixed-income portfolio's current interest rate was 5.3% (4.8). Sharply falling equity prices and widening credit spreads affected Non-life Insurance investment income, with the related return at fair value standing at -4.3% (0.2) in the fourth quarter and at -7.0% (4.8) in 2008. Risk Exposure by Group Functions The Group Functions exposure totalled EUR 13.8 billion, consisting of the liquidity reserve and receivables from OP-Pohjola Group member banks. Almost all of the exposure was based on investment-grade counterparties. The Group Functions maintains the liquidity reserve in order to secure OP-Pohjola Group's liquidity. Liquidity reserves amounted to EUR 9.8 billion (5.7), invested primarily in notes and bonds issued by governments, municipalities, financial institutions and companies all showing good credit ratings, and in securitised assets. On 31 December, the market value of equity and venture-capital funds came to EUR 43 million, of which venture-capital funds with their investment commitments accounted for EUR 34 million (30). Capital tied to property holdings came to EUR 24 million. Net credit losses and negative mark-to-market valuations totalled EUR 1 million (-32) in the fourth quarter and EUR 74 million (-54) in 2008, of which Lehman Brothers accounted for EUR 12 million. Financial assets included in liquidity reserves by balance sheet item -------------------------------------------------------------------------------- | EU | | | | | | | | | | | 31 | 31 | | R | | | | | | | | | | | Dec | Dec | | mi | | | | | | | | | | | 2008 | 2007 | | ll | | | | | | | | | | | | | | io | | | | | | | | | | | | | | n | | | | | | | | | | | | | -------------------------------------------------------------------------------- | Deposits | | | | | | | 2,258 | 446 | -------------------------------------------------------------------------------- | Short-term notes and bonds | | | | | 2,191 | 1,581 | -------------------------------------------------------------------------------- | Long-term notes and bonds | | | | | | | -------------------------------------------------------------------------------- | | Financial assets held | | | | | 1,269 | 638 | | | for trading | | | | | | | -------------------------------------------------------------------------------- | | Financial assets at fair value through profit | | 43 | 2,481 | | | or loss | | | | -------------------------------------------------------------------------------- | | Available-for-sale | | | | | 56 | 603 | | | financial assets | | | | | | | -------------------------------------------------------------------------------- | | Held-to-maturity investments | | | | 1,103 | | -------------------------------------------------------------------------------- | | Loans and other | | | | | | 2,916 | | | | receivables | | | | | | | | -------------------------------------------------------------------------------- | Total liquidity reserves | | | | | 9,835 | 5,749 | -------------------------------------------------------------------------------- The residual maturity of liquidity reserves averaged 2.4 years. Internally rated financial assets consist mainly of bonds issued by Finnish companies and institutions. Credit ratings Pohjola Bank's credit ratings are as follows: -------------------------------------------------------------------------------- | Rating agency | Short-term debt | Long-term debt | -------------------------------------------------------------------------------- | Standard & Poor's | A-1+ | AA- | -------------------------------------------------------------------------------- | Moody's | P-1 | Aa1 | -------------------------------------------------------------------------------- | Fitch | F1+ | AA- | -------------------------------------------------------------------------------- All of the credit rating agencies have confirmed a stable rating outlook for Pohjola Bank. Shares and shareholders On 31 December 2008, the number of Pohjola Bank's Series A shares quoted on the NASDAQ OMX Helsinki totalled 159.6 million, accounting for 78.5% of all Pohjola Bank shares and 42.2% of votes. The number of Series K shares totalled around 43.8 million. On 31 December, Series A share closed at EUR 9.75 against EUR 13.07 a year earlier. In 2008, the share price reached a high of EUR 14.05 and a low of EUR 7.77. Last year, Pohjola's share performance was the best among large Finnish companies listed on the NASDAQ OMX Helsinki, with some 119 million shares changing hands as against 147 million a year ago. On 31 December, Pohjola Bank had 30,592 shareholders, increasing by 320 from the beginning of the year, private individuals accounting for around 95% of all shareholders. The holdings of major shareholders did not undergo any significant changes. The largest shareholder was OP-Pohjola Group Central Cooperative, representing 29.9% of Pohjola Bank shares and 57.0% of votes. On 31 December, nominee-registered shares accounted for 17.4% (18.0) of all Series A shares. Decisions by the Annual General Meeting Pohjola Bank plc's Annual General Meeting (AGM) of 27 March 2008 adopted the Financial Statements for 2007, discharged those accountable from liability and decided to distribute a dividend of EUR 0.65 per Series A share and EUR 0.62 per Series K share. The AGM confirmed the number of members of the Board of Directors at eight and approved the proposal by the Board of Directors for the alteration of the Articles of Association. KPMG Oy Ab, Authorised Public Accountants, with Mr Sixten Nyman, Authorised Public Accountant, (as reported by KPMG) as the chief auditor, and Mr Raimo Saarikivi, Authorised Public Accountant, were elected the company's auditors. Management The AGM elected the following members to the Board of Directors until the closing of the next AGM: Ms Merja Auvinen, Managing Director; Mr Eino Halonen, rahoitusneuvos (Finnish honorary title); Mr Simo Kauppi, Deputy Managing Director; Ms Satu Lähteenmäki, Professor; Mr Markku Vesterinen, President and CEO; and Mr Tom von Weymarn. Mr Vesterinen is a new Board member. In addition to the abovementioned Board members, Mr Reijo Karhinen, Chairman of the Executive Board of OP-Pohjola Group Central Cooperative, the parent institution, acts as the Chairman of the Board of Directors and Mr Tony Vepsäläinen, President of the Central Cooperative and Vice Chairman of the Executive Board of the Central Cooperative, as Vice Chairman, in accordance with the Articles of Association. At its organising meeting held after the AGM of 27 March 2008, the Board of Directors of Pohjola Bank plc elected members to the Board's committees. Members of the Remuneration Committee: Mr Reijo Karhinen, Executive Chairman (Chairman); Mr Tony Vepsäläinen, President (Vice Chairman); and Ms Satu Lähteenmäki, Professor. Members of the Risk Management Committee: Mr Tony Vepsäläinen, President (Chairman); Mr Simo Kauppi, Deputy Managing Director (Vice Chairman); Mr Eino Halonen, rahoitusneuvos (Finnish honorary title). Members of the Audit Committee: Mr Tom von Weymarn (Chairman); Ms Merja Auvinen, Managing Director (Vice Chairman); and Mr Markku Vesterinen, President and CEO. The Board of Directors has assessed the independence of its members and concluded that Ms Satu Lähteenmäki and Mr Tom von Weymarn are non-executive members independent of the company and its major shareholders. On 6 May, Pohjola Bank plc's Board of Directors decided to reorganise the Group into three business segments - Banking, Asset Management and Non-life Insurance - supported by the Group Functions. Reima Rytsölä, Master of Social Sciences, was appointed Executive Vice President, Banking, and member of the Group Executive Committee. Previously, he acted as Head of Corporate Banking. Mikko Koskimies, M.Sc. (Econ. & Bus. Adm.), was appointed Executive Vice President, Asset Management. He sits on the Group Executive Committee and previously acted as Head of Asset Management. Tomi Yli-Kyyny, M.Sc. (Tech.), will continue as Executive Vice President, Non-life Insurance, and as President of Pohjola Insurance Ltd. The Group Functions comprise Finance, Risk Management, Corporate Communications and HR Services. A new area of responsibility specified for Ilkka Salonen, CFO and M.Sc. (Econ. & Bus. Adm.), covers Finance, Actuarial Function, Corporate Planning, Central Banking and Group Treasury, and Investor Relations. He has also acted as Deputy CEO since 1 June 2008. CRO Jouko Pölönen, M.Sc. (Econ. & Bus. Adm.) and eMBA, was appointed member of the Group Executive Committee, with risk management within his remit. He reports to the President and CEO. Timo Ritakallio, Deputy CEO of the Group, joined another company's payroll on 1 August 2008. Effective from 1 January 2009, Pohjola Insurance Ltd adopted a modernised organisational structure that better meets the needs of its current business model. As part of this change, Helena Walldén, Senior Executive Vice President of Corporate Customers and member of Pohjola Bank plc's Group Executive Committee, submitted a letter of resignation on 23 September 2008. Her service contract with the company will terminate in the spring of 2009. Pohjola Bank's CFO Ilkka Salonen departed from the company on 31 December 2008, succeeded by Jouko Pölönen who took up his duties as CFO on 1 January 2009. As a result of these changes, the Group Executive Committee comprises President and CEO Mikael Silvennoinen (Chairman), Mikko Koskimies, Jouko Pölönen, Reima Rytsölä and Tomi Yli-Kyyny. Events after the reporting period Petri Viertiö (46), M.Sc. (Tech.), was appointed Pohjola Group's Chief Risk Officer (CRO) and an Executive Committee member, effective as of 2 March 2009. He will be reporting to Pohjola Group's President and CEO Mikael Silvennoinen. On 16 January 2009, the Financial Supervisory Authority (FSA) issued a statement of raising the maximum proportion of subordinated loans and hybrid instruments included in Tier 1 capital. This statement is in conformity with the principles and the terms and conditions incorporated into pending amendments to the Capital Requirements Directive. According to the amendments to the Capital Requirements Directive, hybrid capital instruments may represent a maximum of 50% of Tier 1 capital on the basis of their type. In addition to this 50% ceiling, specific maximum limits apply to various hybrid instruments. Hybrid instruments, whose provisions provide for a moderate incentive to redeem the instrument, may not exceed 15% of Tier 1 capital. Such an incentive may include a step-up in the interest rate no earlier than ten years from the issue date. Hybrid instruments, which do not provide for such an incentive to redeem the instrument, may not exceed 35% of Tier 1 capital. Hybrid instruments that are convertible into common stock may not exceed 50% of Tier 1 capital. All hybrid instruments are redeemable no earlier than five years from the date of their issue. The FSA's statement will increase Pohjola Group's opportunities to use subordinated loans included in Tier 1 capital by EUR 1.4 billion, in comparison with the year-end 2008 status. On 27 January 2009, the Cabinet Committee on Economic Policy issued a proposal it had recommended and the related terms and conditions governing the state guarantee to the refunding of banks and capital investment in banks. On the basis of this proposal, the amount of state guarantee that OP-Pohjola Group and Pohjola Bank plc as its central financial institution could use, at will, in its funding totals EUR 10 billion. OP-Pohjola Group could make use of government capital investments of some EUR 770 million, Pohjola accounting for around EUR 260 million, if it chooses to do so. At its meeting on12 February 2009, Pohjola's Board of Directors decided on measures to be taken to strengthen the company's capital base. Accordingly, this capital increase would be implemented through a rights issue in spring 2009 of around EUR 300 million for the existing shareholders, subject to a Board authorisation issued by the Annual General Meeting. The proposed rights issue would further raise the Pohjola's year-end 2008 Tier 1 ratio to 11.9% (pro forma), without taking account of the transitional rules. Pohjola Group's capital adequacy is strong. However, Pohjola has the goal of strengthening its capital base in order to secure the ability to provide credit to its clients in a market where the availability of financing has significantly decreased and many foreign players have withdrawn from the Finnish market. Pohjola Bank plc's Board of Directors has decided that the Annual General Meeting be held in the Helsinki Fair Centre on Friday, 27 March 2009, starting at 2.00 pm. Notice of the Meeting will be published as a company release on 2 March 2009, after which it will appear in Helsingin Sanomat, Hufvudstadsbladet and Kauppalehti. Thereafter, the notice will also be available at www.pohjola.fi. . Prospects for 2009 The global economic outlook has deteriorated apace. The US and major EU countries have already drifted into a recession and the Finnish economy too is expected to do so in 2009. Falling GDP, exports and capital spending are expected to slow down growth in the loan portfolio experienced in 2008 and increase corporate payment defaults, bankruptcies and unemployment. Central banks and governments are expected to continue with their revival measures, which are anticipated to enhance the performance of financial markets and the supply of finance in comparison with the fourth quarter of 2008. However, mounting national, financial institutions' and corporate debt is anticipated to reflect in credit ratings. Uncertainty is expected to continue in the global financial market and maintain average credit spreads above the average level of previous years. Uncertainty is also expected to continue in capital markets, which maintains high price volatility in credit risk, equity, bond, currency and commodity markets. On the basis of the economic outlook, growth in the Banking loan and guarantee portfolio is expected to slow down relative to 2008 and the average margin on corporate loans to rise. Corporate payment defaults, doubtful receivables and impairment charges are expected to increase from their 2008 levels, despite the current loan portfolio's good quality, but their amounts are difficult to predict. The greatest uncertainties in Banking's financial performance in 2009 are associated with impairments within the loan portfolio. In 2008, assets in money-market funds were transferred to deposit accounts and prices in the equity market fell sharply. As a result, Asset Management experienced a decrease in assets under its management. Assets under management are not expected to decline in 2009 at the same rate as witnessed in 2008. How interest rates will develop and how the investment market will perform will have an effect on the amount of assets under management. Asset Management's earnings before tax in 2009 will be largely dependent on the amount of assets under management and the actual performance-based fees tied to the success of investments. Despite the weaker economy, Non-life Insurance improved its insurance premium revenue by 8% in 2008. Premium revenue is expected to grow at above-the-market-average rate in 2009, based on growth in the number of loyal customers, but to grow less than in 2008, especially with respect to corporate customers. The recession has historically slowed down growth in Non-life Insurance claims expenditure. In Non-life Insurance, the operating combined ratio is expected to vary between 90% and 95% in 2009 if the number of major losses is not much larger than in 2008. Long-term returns on investment within Non-life Insurance stand at 5.4%. In 2008, returns on investment stood at -7.0% and returns for 2009 will largely depend on developments in investment markets. The reclassification of long-term notes and bonds, included in liquidity reserves, in the second half of 2008 mitigated the effects of the financial crisis on the financial result of the Group Functions. The key determinants affecting the Group Functions' result include net interest income arising from liquidity reserves and any changes in the mark-to-market valuations recognised in the income statement on notes and bonds included in liquidity reserves. There is great uncertainty about economic prospects and the operating environment. Should the forward-looking statements and assumptions about the near-term outlook come true, the main risks involved are associated with developments in credit spreads, interest rates, share prices, impairments and funding costs, as well as the general operating environment. Although developments in the general operating environment are beyond the Group management's control, the management may contribute to the effects of interest-rate changes and the equity market on investment and trading by carefully selecting investment assets, diversifying risks, promoting its personnel's professional skills and managing risks effectively. In addition, the management may contribute to the appropriate selection and pricing of customer-specific risk and, consequently, the Group's financial performance. All forward-looking statements in this report expressing the management's expectations, beliefs, estimates, forecasts, projections and assumptions are based on the current view of the future financial performance of Pohjola Group and its various functions, and actual results may differ materially from those expressed in the forward-looking statements. Board's proposal for profit distribution On 31 December 2008, Pohjola Bank plc's distributable shareholders' equity totalled 64,397,653.06. The Board of Directors proposes that the company's distributable funds be distributed as follows: EUR 0.23 per share payable on 159,564,128 Series A shares, totalling EUR 36,699,749.44, and EUR 0.20 per share payable on 43,786,772 Series K shares, totalling EUR 8,757,354.40, i.e. the proposed total dividend distribution amounts to EUR 45,457,103.84. Pohjola Bank's balance sheet contains EUR 380 million in voluntary provisions and reversal of these provisions enables Pohjola to increase its distributable funds by EUR 281 million. The company's financial position has not undergone any material changes after the financial year. The company's liquidity is good and will not be jeopardised by the proposed profit distribution, in the Board of Directors' view. The Board of Directors proposes that the dividend be paid to shareholders who have been entered in the Shareholder Register, maintained by Finnish Central Securities Depository Ltd, by the dividend record date on 1 April 2009 and that the dividend be paid within the book-entry securities system on 9 April 2009. Earnings by business line The Group adopted a new organisational structure in May with the result that its financial reporting follows the new business segments. Its organisation currently comprises the following three business segments and the Group Functions: Banking, Asset Management and Non-life Insurance. -------------------------------------------------------------------------------- | Financial targets and key | Q4/ | Q4/ | Q1-4/ | Q1-4/ | Target | | figures and ratios | 2008 | 2007 | 2008 | 2007 | by end | | | | | | | 2010 | -------------------------------------------------------------------------------- | Group | | | | | | -------------------------------------------------------------------------------- | Earnings before tax, EUR | 5 | 67 | 119 | 288 | | | million | | | | | | -------------------------------------------------------------------------------- | Earnings/loss before tax at | -66 | 33 | -133 | 234 | | | fair value, EUR million | | | | | | -------------------------------------------------------------------------------- | Return on equity, % | -11.1 | 5.1 | -5.6 | 9.3 | 15.0 | -------------------------------------------------------------------------------- | Tier 1 ratio, % | | | 9.4 | 10.7 | >8.5 | -------------------------------------------------------------------------------- | | | | | | | -------------------------------------------------------------------------------- | Banking | | | | | | -------------------------------------------------------------------------------- | Earnings before tax, EUR | 17 | 38 | 105 | 136 | | | million | | | | | | -------------------------------------------------------------------------------- | Operating return on equity | 7.5 | 16.1 | 10.1 | 15.1 | > 14 | | (ROE), % | | | | | | -------------------------------------------------------------------------------- | Operating cost/income ratio, | 51.1 | 38.7 | 46.4 | 39.6 | < 40 | | % | | | | | | -------------------------------------------------------------------------------- | | | | | | | -------------------------------------------------------------------------------- | Asset Management | | | | | | -------------------------------------------------------------------------------- | Earnings before tax, EUR | 7 | 8 | 17 | 21 | | | million | | | | | | -------------------------------------------------------------------------------- | Operating cost/income ratio, | 50.6 | 45.9 | 56.8 | 50.9 | < 50 | | % | | | | | | -------------------------------------------------------------------------------- | | | | | | | -------------------------------------------------------------------------------- | Non-life Insurance | | | | | | -------------------------------------------------------------------------------- | Earnings/loss before tax, EUR | -18 | 56 | 55 | 181 | | | million | | | | | | -------------------------------------------------------------------------------- | Earnings/loss before tax at | -104 | 24 | -171 | 143 | | | fair value, EUR million | | | | | | -------------------------------------------------------------------------------- | Operating return on equity | -51.9 | 18.5 | -20.3 | 25.2 | > 20 | | (ROE), % | | | | | | -------------------------------------------------------------------------------- | Operating combined ratio, % | 96.1 | 95.9 | 91.5 | 93.8 | 92 | -------------------------------------------------------------------------------- | Operating expense ratio, % | 25.7 | 20.8 | 21.9 | 21.2 | < 20 | -------------------------------------------------------------------------------- | Solvency ratio, % | | | 66 | 72 | 70 | -------------------------------------------------------------------------------- More detailed segment information can be found in the table section below. Banking Banking consists of Corporate Banking, Markets and Baltic Banking. January-December Earnings before tax amounted to EUR 105 million (136). The loan portfolio increased by EUR 2.2 billion, or by 23%, totalling EUR 11.6 billion (9.4) on 31 December. The market share of euro-denominated corporate loans was 19.0% (17.3) on 31 December. Year on year, the average level of corporate loan portfolio's margins rose by 0.13 percentage points, standing at 0.94%. Despite the challenging operating environment, the basic Banking business developed favourably, the loan portfolio showing vigorous growth almost throughout the year and the related average margins rising towards the end of the year in particular. Payment services and cash management services attracted new, major customers and client trading in derivatives showed growth. The Group strengthened its market position as a corporate and investment bank in line with its strategy. As a result of the greater economic uncertainty and weaker market liquidity, income from trading fell during the latter half in particular. Banking earnings were also eroded by growth in impairments of receivables and the credit loss of EUR 7 million resulting from Lehman Brothers Holdings Inc.'s derivative receivables. Operating return on equity stood at 10.1% (15.1) and the cost/income ratio at 46.4% (39.6). Year on year, net interest income rose by 28% to EUR 158 million (124), due mainly to the larger loan portfolio and higher margins. As the financial crisis spread to the real economy, the latter half of the year saw an increase of impairments of receivables, totalling EUR 18 million (1) in net terms. Net commissions and fees remained at the same level as a year ago, totalling EUR 63 million. Net commissions and fees related to loans and guarantees improved by a total of EUR 5 million and those related to the derivatives business rose by almost EUR 4 million, whereas those related to securities brokerage and issuance fell by EUR 8 million. As a result of the financial crisis, credit spreads widened substantially and market liquidity faded. Net trading loss was EUR 20 million as against net trading income of EUR 18 million posted a year earlier. Other operating income increased to EUR 28 million (19), with EUR 8 million stemming from higher lease income. Expenses rose to EUR 106 million (90). Year on year, the number of employees within Banking increased by 63, 34 of whom were hired by Baltic Banking. Rising by EUR 1 million, personnel costs accounted for 37% (42) of total operating expenses. IT costs and depreciation/amortisation grew by almost EUR 13 million, due mainly to heavy investments in systems development and growth of EUR 7 million in depreciation on leases. With the acquisition of K-Finance, Pohjola started up finance-company operations in the Baltic region, the focus in 2008 being on integration of operations and process standardisation. October-December Earnings before tax came to EUR 17 million (38). Wider credit spreads and weaker market liquidity reduced income from trading. In addition, impairments of receivables amounted to EUR 11 million, whereas a year ago they improved earnings by EUR 1 million. Operating return on equity stood at 7.5% (16.1) and the cost/income ratio at 51.1% (38.7). Growth in the loan portfolio slowed down in the fourth quarter, showing an increase of 2% against 5% reported during the third quarter. The average corporate loan portfolio margin rose by 8 basis points. Year on year, net interest income improved by 18% to EUR 41 million (35). Net commissions and fees remained almost at the same level as a year ago. Commission income from loans and guarantees declined by one million euros while income from securities brokerage and issuance fell by less than EUR 2 million. Commission income from the derivatives business was over one million euros higher than a year ago. Other operating income increased to EUR 9 million (6), due largely to higher lease income. Expenses rose by 22% to EUR 29 million (24). Excluding deprecation on leases, expenses increased by 16%. Asset Management January-December Earnings before tax in 2008 amounted to EUR 17 million (21). Net commissions and fees were 9% lower than the year before, due to a reduction in assets under management. Expenses grew by 4% to EUR 29 million (28). The operating cost/income ratio stood at 57% (51). Owing to money-market fund redemptions and bearish equity markets, assets under management shrank, standing at EUR 25.3 billion (31.5) on 31 December, down by a total of EUR 6.2 billion. Of the assets under management, institutional clients accounted for EUR 16.0 billion (17.5), OP mutual funds for EUR 8.5 billion (13.1) and Pohjola Private for EUR 0.7 billion (0.9). The State Pension Fund (VER) outsourced its investment portfolio management service and systems management to Pohjola Asset Management, based on a competitive tender procedure in the spring. October-December Earnings before tax amounted to EUR 7 million (8). In 2008 too, this higher figure vis-à-vis previous quarters was due to management fees. The operating cost/income ratio stood at 51% (46). Assets under management diminished by EUR 2.0 billion as a result of market value changes and fund redemptions. Non-life Insurance January-December Earnings Earnings before tax came to EUR 55 million (181). The balance on technical account before amortisation on intangible assets stood at EUR 78 million (86), with the operating balance showing a marked improvement. A year ago, changes in reserving bases reduced provisions for previous years by EUR 32 million in net terms and improved the balance on technical account. Net investment income totalled EUR 59 million (161). Other income reported a year ago included EUR 6 million in capital gains on the sale of the marine hull insurance portfolio. Operating return on equity was -20.3% (25.2). Insurance operations Insurance premium revenue rose by 8% to EUR 923 million (850), showing above-market-average growth. Therefore, it is estimated that the market position has strengthened. Growth remained strong within the Private Customers division, based on cooperation within OP-Pohjola Group. The number of loyal customer households increased by 34,387, or by almost 10%. Like-for-like insurance premium revenue from Private Customers improved by 12% to EUR 380 million. All lines of insurance showed strong growth. Within the Corporate Customers division, insurance premium revenue amounted to EUR 485 million, up by 5% on a like-for-like basis. Revenue increased in all of the main lines, with the exception of statutory workers' compensation insurance whose revenue fell due to favourable claims developments in insurance retained for own account. Premium revenue generated by the Baltic business increased by 4% to EUR 58 million. The recession slowed down growth in the Baltic business. In Estonia, premium revenue fell by 7% relating to the reorganisation of sales channels. Claims incurred increased moderately although strong growth in the insurance portfolio added to the number of losses. Claims incurred (excl. loss adjustment expenses) totalled EUR 483 million, up by 3% adjusted for changes in reserving bases a year ago. The risk ratio stood at 63.4 (66.3). In particular, developments were favourable in the claims incurred due to severe traffic and industrial accidents, and pension liabilities increased less than a year ago. The efficiency of claims settlement and the successful utilisation of partnerships, for instance in the form of early referral to treatment and cost control, contributed to this favourable development. The number of major and medium-sized losses for 2008 came to 204 (229) and their claims incurred retained for own account totalled EUR 94 million (101). Operating expenses and loss adjustment expenses rose to EUR 262 million (235), due not only to higher sales costs but also costs arising from information system development and non-recurring expenses of EUR 5 million related to ICT system integration. The cost ratio was 28.4 (27.5). Sustained strong growth and the favourable claims trend improved the operating balance on technical account adjusted for changes in reserving bases. Profitability based on the balance on technical account improved within insurance operations so as to achieve the target level specified in the strategy. The operating combined ratio stood at 91.5 (93.8). Investment On December 31, the fair value of Non-life Insurance investments amounted to EUR 2.4 billion (2.5), with equities and venture-capital investments accounting for 8% (16), bonds and bond funds for 70% (69), money market instruments for 12% (2) and other investments for 11% (12). Owing to the market situation, investment income was considerably lower than a year ago. Net investment income recognised in the income statement amounted to EUR 59 million (161). Net investment income at fair value reached EUR -167 million (122). Return on these investments at fair value stood at -7.0% (4.8). October-December Earnings Loss before tax came to EUR 18 million (earnings of EUR 56 million). The balance on technical account before amortisation on intangible assets amounted to EUR 9 million (41), with the operating balance remaining at the previous year's level. A year ago, changes in reserving bases reduced provisions for previous years by EUR 32 million in net terms and improved the balance on technical account. Operating return on equity was -51.9% (18.5). Insurance operations Insurance premium revenue rose by 8% to EUR 227 million (211). Growth remained vigorous within Private Customers, like-for-like insurance premium revenue improving by 12% to EUR 92 million. The number of loyal customer households increased by 7,300. Like-for-like insurance premium revenue from Corporate Customers rose by 1% to EUR 120 million. This growth in revenue was restrained by the periodisation of foreign reinsurance differing from that a year ago and a fall in revenue from statutory workers' compensation insurance. Within statutory workers' compensation insurance, the favourable claims developments in insurance retained for own account decreased these contracts' level of premium. Insurance premium revenue reported by the Baltic business remained at the previous year's level, amounting to EUR 15 million. Favourable claims developments continued during the fourth quarter. Claims incurred (excl. loss adjustment expenses) amounted to EUR 142 million, down by 4% adjusted for changes in reserving bases a year ago. The risk ratio stood at 62.4 (68.5). The number of major and medium-sized losses came to 60 (62) and their claims incurred retained for own account totalled EUR 27 million (39). Operating expenses and loss adjustment expenses were EUR 76 million (59) and the loss ratio stood at 33.7 (27.4). Non-recurring expenses of EUR 5 million related to information system integration, in particular, were behind the increase in the fourth quarter expenses. The operating combined ratio stood at 96.1 (95.9). Investment Net investment income recognised in the income statement amounted to EUR -2 million (35). Net investment income at fair value reached EUR -88 million (4). Return on these investments at fair value stood at -4.3% (0.2). Group Functions The Group Functions comprise Finance, Risk Management, Corporate Communications and HR Services. January-December Pre-tax loss was EUR 58 million (loss of EUR 50 million). The earnings performance was eroded by an impairment charge of EUR 9 million recognised on bond receivables from Lehman Brothers Holdings Inc., a credit loss of EUR 3 million recognised on derivative receivables and the EUR 62-million negative mark-to-market valuations (-54) of liquidity reserves. OP Mortgage Bank strengthened its position as the financier of OP-Pohjola Group's retail banks, and its one-billion-euro mortgage-backed bond issued in May and sold to European investors was a success. Due to this stronger role and growth in OP-Pohjola Group retail banks' deposits, the retail banks' need for financing from Pohjola Bank plc decreased, with the result that Pohjola Bank plc's net liabilities to OP-Pohjola Group's retail banks totalled EUR 0.2 billion on 31 December, as against EUR 2.3 billion a year earlier. Growth in the loan portfolio was mainly funded from debt markets and the liquidity position strengthened by EUR 1.4 billion in January-December, based on long-term funding. In order to secure this growth, the Group also strengthened its capital base. Pohjola Bank plc issued in March a EUR 170-million debenture loan, classified as lower Tier 2 capital, which will mature in 2018, and in December a EUR 100-million debenture loan, which will mature in 2013. Debt securities issued to the public totalled EUR 16.6 billion (12.9). In June, Pohjola Bank plc issued a perpetual capital bond of EUR 50 million, subscribed by OP-Pohjola Group Central Cooperative in its entirety. Earnings in the first quarter a year ago were burdened by the liquidated damages ruled by the Arbitral Tribunal concerning the shareholder agreement dispute over Nooa Savings Bank Ltd, this lowering effect amounting to EUR 10 million. October-December Pre-tax loss totalled EUR 1 million (loss of 34). The recognised EUR 17-million price difference of reclassified notes and bonds was included in net interest income. Negative mark-to-market valuations of EUR 1 million (-32) in liquidity reserves were recognised in the Group Functions' results and the fair value reserve increased by EUR 16 million (-3). Changes in accounting policies Since 1 January 2008, Pohjola Group has applied IFRS 8 Operating Segments. Financial information serves as the basis of defining operating segments under IFRS 8, which the executive in charge monitors regularly. The Group has adopted segment reporting in accordance with the new organisation, based on the decision made by Pohjola Bank plc's Board of Directors on 6 May 2008. These operating segments comprise Banking, Asset Management, Non-life Insurance and the Group Functions. As a result of the IFRS 8 adoption, the Group discloses information on its operating segments as required by the standard. In accordance with management reporting, as supplementary information the Group discloses the key indicators of its business divisions under the operating segments. Comparatives have been changed correspondingly. During the latter half of the year, Pohjola reclassified some of the notes and bonds included in the liquidity reserve and some of the corporate loan portfolio of Non-life Insurance, with a view to providing a clearer picture of the actual purpose of notes and bonds. This reclassification was enabled by Commission Regulation (EC) No. 1004/2008 of 15 October 2008 applying to IAS 39 and IFRS 7 and the Regulation is aimed at making it easier to reclassify certain financial instruments in rare circumstances. The underlying reason for adopting this Regulation lay in the current financial turmoil which is why reliable market prices were not available to all financial instruments on 30 September. Companies have been allowed to reclassify certain financial instruments since 1 July 2008. Reclassifying financial instruments is based on their fair values on 1 July 2008. The carrying amount of the reclassified notes and bonds totalled EUR 4.2 million. A total of EUR 2.2 billion in financial assets at fair value through profit or loss was subject to reclassification and EUR 2.0 billion in available-for-sale financial assets. The notes and bonds within the Financial assets at fair value through profit or loss category were upon initial recognition classified as financial assets held for trading. With a view to providing clearer financial statements information, in the financial statements for 2007 these notes were reclassified out of the Financial assets held for trading category into the Financial assets at fair value through profit or loss at inception category, under which they have been presented in the interim reports published thereafter. The reclassification was implemented in such a way that EUR 1.2 billion in financial assets held for trading was reclassified into the Loans and other receivables category, EUR 0.9 billion into the Financial assets held to maturity category and EUR 0.1 billion into the Available-for-sale financial assets category. Financial assets of EUR 2.0 billion were reclassified out of the Available-for-sale financial assets category into the Loans and other receivables category. Financial assets held to maturity comprise notes and bonds and the Group has the intention and ability to hold them until maturity. Notes and bonds reclassified as Loans and other receivables comprise other long-term debt instruments with fixed or determinable cash flows and any fair value is not available to them in an active market. Notes and bonds classified as Loans and other receivables or Financial assets held to maturity are recognised at cost. Available-for-sale financial assets are recognised at fair value in the balance sheet, and any subsequent changes in the fair value are recognised in the fair value reserve under shareholders' equity. If there is objective evidence of an impaired note or bond, a reclassified note or bond must be tested for impairment in accordance with Pohjola Group's risk management principles. As a result of the reclassification, results before tax grew by EUR 125 million and the fair value reserve by EUR 49 million. The parent company has complied with the aforementioned accounting policies in its financial statements. The reclassification has no effect on the results recorded for previous periods. Formulae for key ratios Return on equity (ROE) at fair value Profit for the period + Change in fair value reserve after tax / Shareholders' equity (average of the beginning and end of period) x 100 Cost/income ratio, % Personnel costs + Other administrative expenses + Other operating expenses / (Net interest income + Net income from Non-life Insurance + Net commissions and fees + Net trading income + Net investment income + Other operating income) x 100 Earnings/share (EPS) Profit for the period attributable to equity holders of the Parent / Average share-issue adjusted number of shares during the period Earnings/share (EPS), diluted The denominator is the average share-issue adjusted number of shares during the financial period plus the number of shares which will be obtained if all stock options are converted into shares, less the number of shares obtained through the exercise of all stock options multiplied by the share subscription price and divided by the average share price during the financial period. Earnings/share (EPS) at fair value (Profit for the period attributable to equity holders of the Parent + Change in fair value reserve) / Average share-issue adjusted number of shares during the period Equity/share Shareholders' equity / Share-issue adjusted number of shares on the balance sheet date Market capitalisation Number of shares x closing price on the balance sheet date Capital adequacy, % Capital resources / Risk-weighted assets x 100 Tier 1 ratio, % Tier 1 capital / Risk-weighted assets x 100 Key ratios for Non-life Insurance The key ratio formulae for Non-life Insurance are based on regulations issued by the Insurance Supervisory Authority, using the corresponding IFRS sections to the extent applicable. The ratios are calculated using expenses by function applied by non-life insurance companies, which are not presented on the same principle as in the Consolidated Income Statement. Loss ratio (excl. 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 Combined ratio (excl. unwinding of discount) Loss ratio + expense ratio Risk ratio + cost ratio Operating key ratios Operating return on equity (ROE), % Banking: (+ Profit for the period + Change in fair value reserve after tax) / (+ 7% of risk-weighted commitments - Subordinated loans allocated to the business line (average of the beginning and end of period) x 100 Non-life Insurance: (+ Profit for the period + Amortisation and write-downs on intangible assets and goodwill related to the acquisition of non-life insurance business, and their tax effect + Change in fair value reserve after tax) / (+ 70% solvency ratio - Subordinated loans allocated to the business line (average of the beginning and end of period) or minimum capital requirement set by the authorities, if this is larger) x 100 Operating cost/income ratio (+ Personnel costs + Other administrative expenses + Other operating expenses excl. amortisation and write-downs on intangible assets and goodwill related to Pohjola acquisition) / (+ Net interest income + Net income from Non-life Insurance + Net commissions and fees + Net trading income + Net investment income + Other operating income) x 100 Operating loss ratio Claims incurred, excl. changes in reserving bases/ Insurance premium revenue, excl. net changes in reserving bases x 100 Operating expense ratio Operating expenses / Net insurance premium revenue x 100 Operating combined ratio Loss ratio + operating expense ratio -------------------------------------------------------------------------------- | Earnings | | | | | | | | | | performance by | | | | | | | | | | quarter | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | 2007 | 2008 | | -------------------------------------------------------------------------------- | EUR million | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | -------------------------------------------------------------------------------- | | | | | | | | | | -------------------------------------------------------------------------------- | Net interest | 26 | 32 | 27 | 30 | 35 | 40 | 45 | 54 | | income | | | | | | | | | -------------------------------------------------------------------------------- | Impairments of | 0 | 1 | 1 | -1 | -2 | -1 | 11 | 21 | | receivables | | | | | | | | | -------------------------------------------------------------------------------- | Net interest | 26 | 31 | 26 | 31 | 37 | 42 | 34 | 33 | | income after | | | | | | | | | | impairments | | | | | | | | | -------------------------------------------------------------------------------- | Net income | 94 | 113 | 103 | 123 | 91 | 90 | 98 | 74 | | from Non-life | | | | | | | | | | Insurance | | | | | | | | | -------------------------------------------------------------------------------- | Net | 28 | 31 | 24 | 32 | 28 | 27 | 24 | 29 | | commissions | | | | | | | | | | and fees | | | | | | | | | -------------------------------------------------------------------------------- | Net trading | 7 | 3 | -16 | -27 | -44 | -2 | -26 | -9 | | income | | | | | | | | | -------------------------------------------------------------------------------- | Net investment | 10 | 13 | 5 | 1 | 5 | 3 | 0 | -3 | | income | | | | | | | | | -------------------------------------------------------------------------------- | Other | 13 | 24 | 15 | 20 | 15 | 13 | 14 | 14 | | operating | | | | | | | | | | income | | | | | | | | | -------------------------------------------------------------------------------- | Total net | 17 | 214 | 156 | 179 | 133 | 173 | 145 | 139 | | income | 9 | | | | | | | | -------------------------------------------------------------------------------- | Personnel | 41 | 45 | 37 | 43 | 45 | 47 | 38 | 47 | | costs | | | | | | | | | -------------------------------------------------------------------------------- | IT expenses | 11 | 11 | 10 | 11 | 12 | 12 | 9 | 13 | -------------------------------------------------------------------------------- | Depreciation | 15 | 16 | 15 | 16 | 16 | 16 | 17 | 20 | | and | | | | | | | | | | amortisation | | | | | | | | | -------------------------------------------------------------------------------- | Other expenses | 47 | 43 | 38 | 41 | 42 | 44 | 38 | 53 | -------------------------------------------------------------------------------- | Total expenses | 11 | 114 | 100 | 112 | 115 | 119 | 102 | 134 | | | 4 | | | | | | | | -------------------------------------------------------------------------------- | Earnings | 65 | 100 | 56 | 67 | 17 | 54 | 43 | 5 | | before tax | | | | | | | | | -------------------------------------------------------------------------------- | Change in fair | 14 | -25 | -10 | -34 | -66 | -33 | -82 | -71 | | value reserve | | | | | | | | | -------------------------------------------------------------------------------- | Earnings/loss | 79 | 75 | 46 | 33 | -48 | 20 | -39 | -66 | | before tax at | | | | | | | | | | fair value | | | | | | | | | -------------------------------------------------------------------------------- | | | | | | | | | | -------------------------------------------------------------------------------- | Income tax | 15 | 27 | 16 | 18 | 4 | 14 | 13 | -1 | | expense | | | | | | | | | -------------------------------------------------------------------------------- | Profit for the | 50 | 73 | 40 | 49 | 13 | 39 | 30 | 6 | | period | | | | | | | | | -------------------------------------------------------------------------------- | | | | | | | | | | -------------------------------------------------------------------------------- | Tax on change | 4 | -7 | -2 | -9 | -17 | -9 | -21 | -18 | | in fair value | | | | | | | | | | reserve | | | | | | | | | -------------------------------------------------------------------------------- | Earnings/loss | 61 | 54 | 33 | 24 | -35 | 14 | -31 | -47 | | for the period | | | | | | | | | | at fair value | | | | | | | | | -------------------------------------------------------------------------------- | | | | | | | | | | -------------------------------------------------------------------------------- | Return on | 13 | 12.2 | 7.1 | 5.1 | -8.0 | 3.4 | -7.2 | -11 | | equity (ROE), | .7 | | | | | | | .1 | | % | | | | | | | | | -------------------------------------------------------------------------------- | | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Segment | | | | | | | | information | | | | | | | -------------------------------------------------------------------------------- | Q4 earnings | | | | | | | -------------------------------------------------------------------------------- | EUR million | Banking | Asset Management | Non-life Insurance | -------------------------------------------------------------------------------- | | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | -------------------------------------------------------------------------------- | Net interest | 41 | 35 | -1 | -1 | -3 | -2 | | income | | | | | | | -------------------------------------------------------------------------------- | Impairments of | 11 | -1 | | | | | | receivables | | | | | | | -------------------------------------------------------------------------------- | Net interest | 30 | 36 | -1 | -1 | -3 | -2 | | income after | | | | | | | | impairments | | | | | | | -------------------------------------------------------------------------------- | Net income from | | | | | 71 | 123 | | Non-life Insurance | | | | | | | -------------------------------------------------------------------------------- | Net commissions | 16 | 17 | 15 | 16 | 1 | 1 | | and fees | | | | | | | -------------------------------------------------------------------------------- | Net trading income | -9 | 3 | | | | | -------------------------------------------------------------------------------- | Net investment | 0 | 0 | | | | | | income | | | | | | | -------------------------------------------------------------------------------- | Other operating | 9 | 6 | 1 | 1 | 2 | 6 | | income | | | | | | | -------------------------------------------------------------------------------- | Total net income | 46 | 62 | 15 | 16 | 71 | 128 | -------------------------------------------------------------------------------- | Personnel costs | 10 | 9 | 5 | 4 | 30 | 27 | -------------------------------------------------------------------------------- | IT expenses | 6 | 4 | 1 | 1 | 4 | 3 | -------------------------------------------------------------------------------- | Amortisation on | | | 1 | 1 | 8 | 8 | | intangible assets | | | | | | | | related to company | | | | | | | | acquisitions | | | | | | | -------------------------------------------------------------------------------- | Other | 7 | 5 | 0 | 0 | 4 | 1 | | depreciation/amort | | | | | | | | isation | | | | | | | | and | | | | | | | | impairments | | | | | | | -------------------------------------------------------------------------------- | Other expenses | 7 | 6 | 1 | 2 | 43 | 33 | -------------------------------------------------------------------------------- | Total expenses | 29 | 24 | 8 | 8 | 89 | 72 | -------------------------------------------------------------------------------- | Earnings before | 17 | 38 | 7 | 8 | -18 | 56 | | tax | | | | | | | -------------------------------------------------------------------------------- | Change in fair | 4 | 0 | | | -86 | -31 | | value reserve | | | | | | | -------------------------------------------------------------------------------- | Earnings/loss | 21 | 38 | 7 | 8 | -104 | 24 | | before tax | | | | | | | | at | | | | | | | | fair value | | | | | | | -------------------------------------------------------------------------------- | | | | | | | | -------------------------------------------------------------------------------- | Capital | 2 | 2 | 0 | 1 | 4 | 2 | | expenditure, EUR | | | | | | | | million | | | | | | | -------------------------------------------------------------------------------- | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Q4 earnings | | | | | | | -------------------------------------------------------------------------------- | EUR million | Group functions | Eliminations | Group total | -------------------------------------------------------------------------------- | | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | -------------------------------------------------------------------------------- | Net interest | 16 | -2 | 1 | 0 | 54 | 30 | | income | | | | | | | -------------------------------------------------------------------------------- | Impairments of | 10 | | | | 21 | -1 | | receivables | | | | | | | -------------------------------------------------------------------------------- | Net interest | 6 | -2 | 1 | 0 | 33 | 31 | | income after | | | | | | | | impairments | | | | | | | -------------------------------------------------------------------------------- | Net income from | | -1 | 2 | 1 | 74 | 123 | | Non-life Insurance | | | | | | | -------------------------------------------------------------------------------- | Net commissions | 0 | 0 | -3 | -1 | 29 | 32 | | and fees | | | | | | | -------------------------------------------------------------------------------- | Net trading income | 0 | -31 | 0 | | -9 | -27 | -------------------------------------------------------------------------------- | Net investment | -3 | 1 | | | -3 | 1 | | income | | | | | | | -------------------------------------------------------------------------------- | Other operating | 5 | 10 | -2 | -3 | 14 | 20 | | income | | | | | | | -------------------------------------------------------------------------------- | Total net income | 9 | -23 | -2 | -3 | 139 | 179 | -------------------------------------------------------------------------------- | Personnel costs | 3 | 2 | | | 47 | 43 | -------------------------------------------------------------------------------- | IT expenses | 3 | 4 | 0 | -1 | 13 | 11 | -------------------------------------------------------------------------------- | Amortisation on | | | | | 9 | 9 | | intangible assets | | | | | | | | related to company | | | | | | | | acquisitions | | | | | | | -------------------------------------------------------------------------------- | Other | 0 | 1 | | | 11 | 7 | | depreciation/amort | | | | | | | | isation | | | | | | | | and | | | | | | | | impairments | | | | | | | -------------------------------------------------------------------------------- | Other expenses | 4 | 3 | -2 | -2 | 53 | 41 | -------------------------------------------------------------------------------- | Total expenses | 9 | 11 | -2 | -3 | 134 | 112 | -------------------------------------------------------------------------------- | Earnings before | -1 | -34 | 0 | 0 | 5 | 67 | | tax | | | | | | | -------------------------------------------------------------------------------- | Change in fair | 11 | -3 | | | -72 | -34 | | value reserve | | | | | | | -------------------------------------------------------------------------------- | Earnings/loss | 10 | -37 | | | -66 | 33 | | before tax | | | | | | | | at | | | | | | | | fair value | | | | | | | -------------------------------------------------------------------------------- | | | | | | | | -------------------------------------------------------------------------------- | Capital | 0 | 1 | | | 6 | 6 | | expenditure, EUR | | | | | | | | million | | | | | | | -------------------------------------------------------------------------------- | | | | | | | | -------------------------------------------------------------------------------- | Earnings per | | | | | 0.03 | 0.24 | | share, EUR | | | | | | | -------------------------------------------------------------------------------- | Return on equity | | | | | -11.1 | 5.1 | | at fair value, % | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Q1-4 earnings | | | | | | | -------------------------------------------------------------------------------- | EUR million | Banking | Asset Management | Non-life Insurance | -------------------------------------------------------------------------------- | | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | -------------------------------------------------------------------------------- | Net interest | 158 | 124 | -2 | -3 | -11 | -7 | | income | | | | | | | -------------------------------------------------------------------------------- | Impairments of | 18 | 1 | | | | | | receivables | | | | | | | -------------------------------------------------------------------------------- | Net interest | 140 | 123 | -2 | -3 | -11 | -7 | | income after | | | | | | | | impairments | | | | | | | -------------------------------------------------------------------------------- | Net income from | | | | | 352 | 435 | | Non-life Insurance | | | | | | | -------------------------------------------------------------------------------- | Net commissions | 63 | 64 | 46 | 51 | 5 | 6 | | and fees | | | | | | | -------------------------------------------------------------------------------- | Net trading income | -20 | 18 | | | | | -------------------------------------------------------------------------------- | Net investment | 0 | 1 | 0 | 0 | | | | income | | | | | | | -------------------------------------------------------------------------------- | Other operating | 28 | 19 | 2 | 1 | 15 | 30 | | income | | | | | | | -------------------------------------------------------------------------------- | Total net income | 211 | 225 | 46 | 50 | 360 | 464 | -------------------------------------------------------------------------------- | Personnel costs | 39 | 38 | 17 | 16 | 111 | 103 | -------------------------------------------------------------------------------- | IT expenses | 20 | 15 | 3 | 3 | 11 | 10 | -------------------------------------------------------------------------------- | Amortisation on | | | 3 | 3 | 33 | 33 | | intangible assets | | | | | | | | related to company | | | | | | | | acquisitions | | | | | | | -------------------------------------------------------------------------------- | Other | 24 | 16 | 1 | 1 | 6 | 3 | | depreciation/amort | | | | | | | | isation | | | | | | | | and | | | | | | | | impairments | | | | | | | -------------------------------------------------------------------------------- | Other expenses | 24 | 21 | 6 | 6 | 144 | 133 | -------------------------------------------------------------------------------- | Total expenses | 106 | 90 | 29 | 28 | 306 | 284 | -------------------------------------------------------------------------------- | Earnings before | 105 | 136 | 17 | 21 | 55 | 181 | | tax | | | | | | | -------------------------------------------------------------------------------- | Change in fair | -2 | -1 | | | -226 | -38 | | value reserve | | | | | | | -------------------------------------------------------------------------------- | Earnings/loss | 103 | 135 | 17 | 21 | -171 | 143 | | before tax | | | | | | | | at | | | | | | | | fair value | | | | | | | -------------------------------------------------------------------------------- | | | | | | | | -------------------------------------------------------------------------------- | Average personnel | 613 | 549 | 153.9 | 154 | 2,018 | 2,247 | -------------------------------------------------------------------------------- | Capital | 4 | 5 | 1 | 2 | 13 | 9 | | expenditure, EUR | | | | | | | | million | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Q1-4 earnings | | | | | | | -------------------------------------------------------------------------------- | EUR million | Group functions | Eliminations | Group total | -------------------------------------------------------------------------------- | | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | -------------------------------------------------------------------------------- | Net interest | 25 | -2 | 4 | 3 | 174 | 115 | | income | | | | | | | -------------------------------------------------------------------------------- | Impairments of | 10 | | | | 28 | 1 | | receivables | | | | | | | -------------------------------------------------------------------------------- | Net interest | 15 | -2 | 4 | 3 | 146 | 114 | | income after | | | | | | | | impairments | | | | | | | -------------------------------------------------------------------------------- | Net income from | | -2 | 2 | 1 | 353 | 433 | | Non-life Insurance | | | | | | | -------------------------------------------------------------------------------- | Net commissions | 0 | 0 | -6 | -5 | 108 | 115 | | and fees | | | | | | | -------------------------------------------------------------------------------- | Net trading income | -61 | -52 | 0 | | -81 | -34 | -------------------------------------------------------------------------------- | Net investment | 6 | 27 | | | 6 | 28 | | income | | | | | | | -------------------------------------------------------------------------------- | Other operating | 21 | 34 | -8 | -14 | 56 | 71 | | income | | | | | | | -------------------------------------------------------------------------------- | Total net income | -19 | 4 | -9 | -15 | 589 | 728 | -------------------------------------------------------------------------------- | Personnel costs | 11 | 9 | | | 178 | 166 | -------------------------------------------------------------------------------- | IT expenses | 12 | 16 | 0 | -1 | 46 | 43 | -------------------------------------------------------------------------------- | Amortisation on | | | | | 36 | 36 | | intangible assets | | | | | | | | related to company | | | | | | | | acquisitions | | | | | | | -------------------------------------------------------------------------------- | Other | 2 | 4 | | | 33 | 25 | | depreciation/amort | | | | | | | | isation | | | | | | | | and | | | | | | | | impairments | | | | | | | -------------------------------------------------------------------------------- | Other expenses | 14 | 24 | -9 | -14 | 178 | 170 | -------------------------------------------------------------------------------- | Total expenses | 39 | 53 | -9 | -15 | 470 | 440 | -------------------------------------------------------------------------------- | Earnings before | -58 | -50 | 0 | 0 | 119 | 288 | | tax | | | | | | | -------------------------------------------------------------------------------- | Change in fair | -25 | -15 | | | -252 | -54 | | value reserve | | | | | | | -------------------------------------------------------------------------------- | Earnings/loss | -83 | -64 | | | -133 | 234 | | before tax | | | | | | | | at | | | | | | | | fair value | | | | | | | -------------------------------------------------------------------------------- | | | | | | | | -------------------------------------------------------------------------------- | Average personnel | 129 | 108 | | | 2,913 | 3,058 | -------------------------------------------------------------------------------- | Capital | 3 | 4 | | | 21 | 19 | | expenditure, EUR | | | | | | | | million | | | | | | | -------------------------------------------------------------------------------- | | | | | | | | -------------------------------------------------------------------------------- | Earnings per | | | | | 0.44 | 1.04 | | share, EUR | | | | | | | -------------------------------------------------------------------------------- | Return on equity | | | | | -5.6 | 9.3 | | at fair value, % | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Balance sheet | | | | | | | -------------------------------------------------------------------------------- | EUR million | Banking | Asset Management | Non-life Insurance | -------------------------------------------------------------------------------- | | 30 | 31 Dec | 30 | 31 Dec | 30 | 31 | | | Sep | 2007 | Sep | 2007 | Sep | Dec | | | 20 | | 20 | | 200 | 2007 | | | 08 | | 08 | | 8 | | -------------------------------------------------------------------------------- | Receivables from | 11,776 | 9,253 | 0 | | | | | customers | | | | | | | -------------------------------------------------------------------------------- | Receivables from | 423 | 270 | 7 | 6 | | | | financial | | | | | | | | institutions | | | | | | | -------------------------------------------------------------------------------- | Financial assets | 1,128 | 1,352 | | | | | | at fair value | | | | | | | | through profit or | | | | | | | | loss | | | | | | | -------------------------------------------------------------------------------- | Non-life Insurance | | | | | 2,798 | 2,842 | | assets | | | | | | | -------------------------------------------------------------------------------- | Investment assets | 2 | 25 | 21 | 23 | 0 | 0 | -------------------------------------------------------------------------------- | Investments in | | | | | 2 | 2 | | associates | | | | | | | -------------------------------------------------------------------------------- | Other assets | 2,224 | 1,486 | 127 | 134 | 854 | 875 | -------------------------------------------------------------------------------- | Total assets | 15,553 | 12,385 | 154 | 163 | 3,654 | 3,719 | -------------------------------------------------------------------------------- | Liabilities to | 1,070 | 462 | | | | | | customers | | | | | | | -------------------------------------------------------------------------------- | Liabilities to | 590 | 261 | | | 0 | | | financial | | | | | | | | institutions | | | | | | | -------------------------------------------------------------------------------- | Non-life Insurance | | | | | 2,238 | 2,140 | | liabilities | | | | | | | -------------------------------------------------------------------------------- | Debt securities | | | | | | | | issued to the | | | | | | | | public | | | | | | | -------------------------------------------------------------------------------- | Subordinated | | | | | 50 | | | liabilities | | | | | | | -------------------------------------------------------------------------------- | Other liabilities | 2,010 | 1,578 | 14 | 17 | 52 | 100 | -------------------------------------------------------------------------------- | Total liabilities | 3,671 | 2,301 | 14 | 17 | 2,340 | 2,241 | -------------------------------------------------------------------------------- | Shareholders' | | | | | | | | equity | | | | | | | -------------------------------------------------------------------------------- | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Balance sheet | | | | | | | -------------------------------------------------------------------------------- | EUR million | Group functions | Eliminations | Group total | -------------------------------------------------------------------------------- | | 30 | 31 | 30 | 31 | 30 | 31 | | | Sep | Dec | Sep | Dec | Sep | Dec | | | 20 | 20 | 20 | 200 | 200 | 2007 | | | 08 | 07 | 08 | 7 | 8 | | -------------------------------------------------------------------------------- | Receivables from | 749 | 48 | | -13 | 12,279 | 9,288 | | customers | | | | | | | -------------------------------------------------------------------------------- | Receivables from | 6,258 | 5,409 | -43 | -19 | 6,644 | 5,665 | | financial | | | | | | | | institutions | | | | | | | -------------------------------------------------------------------------------- | Financial assets | 2,127 | 3,349 | | | 3,255 | 4,701 | | at fair value | | | | | | | | through profit or | | | | | | | | loss | | | | | | | -------------------------------------------------------------------------------- | Non-life Insurance | | | -53 | -33 | 2,745 | 2,809 | | assets | | | | | | | -------------------------------------------------------------------------------- | Investment assets | 1,270 | 685 | -8 | -8 | 1,285 | 725 | -------------------------------------------------------------------------------- | Investments in | | | | | 2 | 2 | | associates | | | | | | | -------------------------------------------------------------------------------- | Other assets | 3,041 | 301 | -8 | -63 | 6,238 | 2,732 | -------------------------------------------------------------------------------- | Total assets | 13,446 | 9,792 | -358 | -137 | 32,448 | 25,922 | -------------------------------------------------------------------------------- | Liabilities to | 2,483 | 2,324 | -45 | -48 | 3,508 | 2,738 | | customers | | | | | | | -------------------------------------------------------------------------------- | Liabilities to | 3,304 | 2,480 | -251 | -2 | 3,643 | 2,739 | | financial | | | | | | | | institutions | | | | | | | -------------------------------------------------------------------------------- | Non-life Insurance | | | | | 2,238 | 2,140 | | liabilities | | | | | | | -------------------------------------------------------------------------------- | Debt securities | 16,481 | 12,879 | -56 | -24 | 16,425 | 12,856 | | issued to the | | | | | | | | public | | | | | | | -------------------------------------------------------------------------------- | Subordinated | 1,272 | 950 | | | 1,322 | 950 | | liabilities | | | | | | | -------------------------------------------------------------------------------- | Other liabilities | 1,603 | 998 | -7 | -63 | 3,672 | 2,630 | -------------------------------------------------------------------------------- | Total liabilities | 25,142 | 19,631 | -358 | -137 | 30,808 | 24,053 | -------------------------------------------------------------------------------- | Shareholders' | | | | | 1,640 | 1,869 | | equity | | | | | | | -------------------------------------------------------------------------------- | | | | | | | | -------------------------------------------------------------------------------- | Capital adequacy | | | | | 11.7 | 11.2 | | ratio, % | | | | | | | -------------------------------------------------------------------------------- | Tier 1 ratio, % | | | | | 9.4 | 10.7 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Banking | -------------------------------------------------------------------------------- | | -------------------------------------------------------------------------------- | | Net income | Earnings | Net income | Earnings/loss | | | | before tax | | before tax | -------------------------------------------------------------------------------- | | Q4/ | Q4/ | Q4/ | Q4/ | Q1-4 | Q1-4/ | Q1-4/ | Q1-4/ | | | 2 | 2 | 2008 | 2007 | / | 2007 | 2008 | 2007 | | | 008 | 007 | | | 20 | | | | | | | | | | 08 | | | | -------------------------------------------------------------------------------- | Corporate | 41 | 47 | 21 | 30 | 172 | 163 | 99 | 103 | | Banking | | | | | | | | | -------------------------------------------------------------------------------- | Markets | 4 | 16 | -3 | 8 | 36 | 63 | 9 | 33 | -------------------------------------------------------------------------------- | Baltic Banking | 1 | 0 | -1 | 0 | 3 | 0 | -3 | -1 | | Services | | | | | | | | | -------------------------------------------------------------------------------- | Total | 46 | 62 | 17 | 38 | 211 | 225 | 105 | 136 | -------------------------------------------------------------------------------- | | | | | | | | | | -------------------------------------------------------------------------------- | | Q4/ | Q4/ | Q1-4 | Q1-4 | | | | | | | 2 | 2 | / | / | | | | | | | 008 | 007 | 20 | 20 | | | | | | | | | 08 | 07 | | | | | -------------------------------------------------------------------------------- | Operating | 7.5 | 16.1 | 10.1 | 15.1 | | | | | | return on | | | | | | | | | | equity (ROE) | | | | | | | | | | p.a., % | | | | | | | | | -------------------------------------------------------------------------------- | Operating | 51.1 | 38.7 | 46.4 | 39.6 | | | | | | cost/income | | | | | | | | | | ratio, % | | | | | | | | | -------------------------------------------------------------------------------- | | | | | | | | | | -------------------------------------------------------------------------------- | | 31 | 31 | | | | | | | | | Dec | Dec | | | | | | | | | 2 | 2007 | | | | | | | | | 008 | | | | | | | | -------------------------------------------------------------------------------- | Receivables | 11.8 | 9.3 | | | | | | | | from customers, | | | | | | | | | | EUR billion | | | | | | | | | -------------------------------------------------------------------------------- | Market share of | 19.0 | 17.3 | | | | | | | | corporate | | | | | | | | | | loans, % | | | | | | | | | -------------------------------------------------------------------------------- | Proportion of | 0.3 | 0.1 | | | | | | | | doubtful | | | | | | | | | | receivables to | | | | | | | | | | receivables | | | | | | | | | | from customers | | | | | | | | | | and guarantees, | | | | | | | | | | % | | | | | | | | | -------------------------------------------------------------------------------- | Margin on | 0.94 | 0.81 | | | | | | | | corporate loan | | | | | | | | | | portfolio, % | | | | | | | | | -------------------------------------------------------------------------------- | Margin on | 0.3 | 0.23 | | | | | | | | institutional | | | | | | | | | | loan portfolio, | | | | | | | | | | % | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Asset Management | | | -------------------------------------------------------------------------------- | | 31 Dec | 31 Dec | | | 2008 | 2007 | -------------------------------------------------------------------------------- | | | | -------------------------------------------------------------------------------- | Assets under management, | 25.3 | 31.5 | | EUR billion | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Non-life | Earnings before tax | | | | | | Insurance, EUR | | | | | | | million | | | | | | -------------------------------------------------------------------------------- | | Q4/ | Q4/ | Q1-4/ | Q1-4/ | | | | | | | 2 | 20 | 2008 | 2007 | | | | | | | 008 | 07 | | | | | | | -------------------------------------------------------------------------------- | Insurance | 227 | 211 | 923 | 850 | | | | | | premium | | | | | | | | | | revenue | | | | | | | | | -------------------------------------------------------------------------------- | Claims | -160 | -125 | -643 | -583 | | | | | | incurred | | | | | | | | | -------------------------------------------------------------------------------- | Operating | -58 | -45 | -202 | -182 | | | | | | expenses | | | | | | | | | -------------------------------------------------------------------------------- | Amortisation | -10 | -6 | -30 | -26 | | | | | | adjustment of | | | | | | | | | | intangible | | | | | | | | | | assets | | | | | | | | | -------------------------------------------------------------------------------- | Balance on | -1 | 35 | 49 | 60 | | | | | | technical | | | | | | | | | | account | | | | | | | | | -------------------------------------------------------------------------------- | Investment | -2 | 35 | 59 | 161 | | | | | | income/expense | | | | | | | | | | s | | | | | | | | | -------------------------------------------------------------------------------- | Other income | -15 | -14 | -53 | -41 | | | | | | and expenses | | | | | | | | | -------------------------------------------------------------------------------- | Earnings | -18 | 56 | 55 | 181 | | | | | | before tax | | | | | | | | | -------------------------------------------------------------------------------- | | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | -------------------------------------------------------------------------------- | | -------------------------------------------------------------------------------- | | Insurance | Balance on | Insurance | Balance on | | | prem | technical | p | technical | | | ium revenue | account | remium | account | | | | | revenue | | -------------------------------------------------------------------------------- | | Q4/ | Q4/ | Q4/ | Q4/ | Q1-4 | Q1-4 | Q1-4 | Q1-4 | | | 2 | 20 | 20 | 2 | / | / | / | / | | | 008 | 07 | 08 | 007 | 20 | 20 | 20 | 20 | | | | | | | 08 | 07 | 08 | 07 | -------------------------------------------------------------------------------- | Private | 92 | 78 | -4 | 14 | 380 | 345 | 31 | 34 | | Customers | | | | | | | | | -------------------------------------------------------------------------------- | Corporate | 120 | 117 | 11 | 26 | 485 | 449 | 40 | 48 | | Customers | | | | | | | | | -------------------------------------------------------------------------------- | Baltic States | 15 | 15 | 2 | 1 | 58 | 56 | 7 | 4 | -------------------------------------------------------------------------------- | Amortisation | | | -10 | -6 | | | -30 | -25 | | adjustment of | | | | | | | | | | intangible | | | | | | | | | | assets | | | | | | | | | -------------------------------------------------------------------------------- | Total | 227 | 211 | -1 | 35 | 923 | 850 | 49 | 60 | -------------------------------------------------------------------------------- | | | | | | | | | | -------------------------------------------------------------------------------- | | Q4/ | Q4/ | Q1-4/ | Q1-4/ | | | | | | | 2 | 20 | 2008 | 2007 | | | | | | | 008 | 07 | | | | | | | -------------------------------------------------------------------------------- | Operating | -51.9 | 18.5 | -20.3 | 25.2 | | | | | | return on | | | | | | | | | | equity (ROE), | | | | | | | | | | % | | | | | | | | | -------------------------------------------------------------------------------- | Operating loss | 70.4 | 75.2 | 69.7 | 72.6 | | | | | | ratio, % | | | | | | | | | -------------------------------------------------------------------------------- | Operating | 25.7 | 20.8 | 21.9 | 21.2 | | | | | | expense ratio, | | | | | | | | | | % | | | | | | | | | -------------------------------------------------------------------------------- | Operating | 96.1 | 95.9 | 91.5 | 93.8 | | | | | | combined | | | | | | | | | | ratio, % | | | | | | | | | -------------------------------------------------------------------------------- | Return on | -4.3 | 0.2 | -7 | 4.8 | | | | | | investment, % | | | | | | | | | -------------------------------------------------------------------------------- | | | | | | | | | | -------------------------------------------------------------------------------- | No. of losses | 27.2 | 38.7 | 84.3 | 100.9 | | | | | | in excess | | | | | | | | | | of | | | | | | | | | | EUR 0.1 | | | | | | | | | | million | | | | | | | | | -------------------------------------------------------------------------------- | | 31 | 31 Dec | | | | | | | | | Dec | 2007 | | | | | | | | | 2008 | | | | | | | | -------------------------------------------------------------------------------- | No. of loyal | 389 | 355 | | | | | | | | customer | | | | | | | | | | house | | | | | | | | | | holds, 1,000 | | | | | | | | | -------------------------------------------------------------------------------- | | | | | | | | | | -------------------------------------------------------------------------------- | Discounted | 1,268 | 1,244 | | | | | | | | insurance | | | | | | | | | | contract | | | | | | | | | | liabilities | | | | | | | | | -------------------------------------------------------------------------------- | Other | 848 | 773 | | | | | | | | insurance | | | | | | | | | | contract | | | | | | | | | | liabilities | | | | | | | | | -------------------------------------------------------------------------------- | | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Line of insurance | -------------------------------------------------------------------------------- | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | Insurance | Balance on | | | | prem | technical | | | | ium revenue | account | | -------------------------------------------------------------------------------- | | Q4/ | Q4/ | Q1-4/ | Q1-4/ | | | | | | | 2 | 20 | 2008 | 2007 | | | | | | | 008 | 07 | | | | | | | -------------------------------------------------------------------------------- | Statutory | 185 | 188 | 41 | 39 | | | | | | workers' | | | | | | | | | | compensation | | | | | | | | | | insurance | | | | | | | | | -------------------------------------------------------------------------------- | Other accident | 84 | 66 | -1 | 9 | | | | | | and health | | | | | | | | | | insurance | | | | | | | | | -------------------------------------------------------------------------------- | Liability | 35 | 32 | 3 | -2 | | | | | -------------------------------------------------------------------------------- | Motor vehicle | 166 | 158 | 11 | 20 | | | | | | liability | | | | | | | | | | insurance | | | | | | | | | -------------------------------------------------------------------------------- | Ground | 142 | 132 | -3 | -2 | | | | | | vehicles | | | | | | | | | -------------------------------------------------------------------------------- | Cargo | 27 | 29 | 8 | 5 | | | | | -------------------------------------------------------------------------------- | Fire and | 161 | 139 | 21 | 8 | | | | | | property | | | | | | | | | -------------------------------------------------------------------------------- | Other | 36 | 32 | 7 | 3 | | | | | -------------------------------------------------------------------------------- | Total domestic | 837 | 775 | 87 | 79 | | | | | | direct | | | | | | | | | | insurance | | | | | | | | | -------------------------------------------------------------------------------- | Foreign | 84 | 79 | -8 | 8 | | | | | | insurance | | | | | | | | | -------------------------------------------------------------------------------- | Domestic | 2 | 2 | -1 | -1 | | | | | | reinsurance | | | | | | | | | -------------------------------------------------------------------------------- | Total other | 86 | 81 | -9 | 7 | | | | | -------------------------------------------------------------------------------- | Total | 923 | 855 | 78 | 86 | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Group functions | Q4/ | Q4/ | Q1-4/ | Q1-4/ | | | 2008 | 2007 | 2008 | 200 | | | | | | 7 | -------------------------------------------------------------------------------- | Central Banking | 5 | 6 | 15 | 20 | | earnings | | | | | | before tax, EUR | | | | | | million | | | | | -------------------------------------------------------------------------------- | | 31 Dec | 31 Dec | | | | | 2008 | 2007 | | | -------------------------------------------------------------------------------- | Receivables from | 4,437 | 5,072 | | | | OP-Pohjola Group | | | | | | entities, EUR million | | | | | -------------------------------------------------------------------------------- | Liabilities to OP-Pohjola | 3,692 | 2,217 | | | | Group entities, EUR | | | | | | million | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Consolidated income | | | | | | | statement | | | | | | -------------------------------------------------------------------------------- | EUR million | | | Q4/ | Q4/ | Q1-4/ | Q1-4/ | -------------------------------------------------------------------------------- | | | | | 08 | 07 | 08 | 07 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest income | | | 893 | 668 | 3,153 | 2,234 | -------------------------------------------------------------------------------- | Interest expenses | | | 839 | 637 | 2,979 | 2,119 | -------------------------------------------------------------------------------- | Net interest income (Note | | 54 | 30 | 174 | 115 | | 1) | | | | | | -------------------------------------------------------------------------------- | Impairments of receivables | | 21 | -1 | 28 | 1 | | (Note 2) | | | | | | -------------------------------------------------------------------------------- | Net interest income after | 33 | 31 | 146 | 114 | | impairments | | | | | -------------------------------------------------------------------------------- | Net income from Non-life Insurance | 74 | 123 | 353 | 433 | | (Note 3) | | | | | -------------------------------------------------------------------------------- | Net commissions and fees | | 29 | 32 | 108 | 115 | | (Note 4) | | | | | | -------------------------------------------------------------------------------- | Net trading income (Note | | -9 | -27 | -81 | -34 | | 5) | | | | | | -------------------------------------------------------------------------------- | Net investment income | | -3 | 1 | 6 | 28 | | (Note 6) | | | | | | -------------------------------------------------------------------------------- | Other operating income | | 14 | 20 | 56 | 71 | | (Note 7) | | | | | | -------------------------------------------------------------------------------- | Total income | | | 139 | 179 | 589 | 728 | -------------------------------------------------------------------------------- | Personnel costs (Note 8) | | 47 | 43 | 178 | 166 | -------------------------------------------------------------------------------- | Other administrative expenses (Note | 44 | 38 | 144 | 145 | | 9) | | | | | -------------------------------------------------------------------------------- | Other operating expenses | | 42 | 31 | 149 | 129 | | (Note 10) | | | | | | -------------------------------------------------------------------------------- | Total expenses | | | 134 | 112 | 470 | 440 | -------------------------------------------------------------------------------- | Earnings before tax | | | 5 | 67 | 119 | 288 | -------------------------------------------------------------------------------- | Income tax expense | | | -1 | 18 | 31 | 76 | -------------------------------------------------------------------------------- | Profit for the period | | | 6 | 49 | 89 | 212 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Basic earnings per share, | | | | | | | EUR | | | | | | -------------------------------------------------------------------------------- | Series A | | | | 0.04 | 0.24 | 0.44 | 1.04 | -------------------------------------------------------------------------------- | Series K | | | | 0.01 | 0.24 | 0.41 | 1.03 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Consolidated balance sheet | | | | -------------------------------------------------------------------------------- | EUR million | | | 31 Dec 2008 | 31 Dec 2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash and cash equivalents | | 2,260 | 448 | -------------------------------------------------------------------------------- | Receivables from financial institutions | 6,644 | 5,217 | -------------------------------------------------------------------------------- | Financial assets at fair value through profit or | | | | loss (Note 11) | | | -------------------------------------------------------------------------------- | Financial assets held for trading | | 3,213 | 2,220 | -------------------------------------------------------------------------------- | Financial assets at fair value through profit or | 43 | 2,481 | | loss at inception | | | -------------------------------------------------------------------------------- | Derivative contracts | | | 1,486 | 528 | -------------------------------------------------------------------------------- | Receivables from customers | | 12,279 | 9,288 | -------------------------------------------------------------------------------- | Non-life Insurance assets (Note 12) | | 2,745 | 2,809 | -------------------------------------------------------------------------------- | Investment assets (Note 13) | | 1,285 | 725 | -------------------------------------------------------------------------------- | Investment in associates | | 2 | 2 | -------------------------------------------------------------------------------- | Intangible assets (Note 14) | | 987 | 999 | -------------------------------------------------------------------------------- | Property, plant and equipment (PPE) | | 127 | 97 | -------------------------------------------------------------------------------- | Other assets | | | 1,281 | 1,090 | -------------------------------------------------------------------------------- | Tax assets | | | | 98 | 18 | -------------------------------------------------------------------------------- | Total assets | | | 32,448 | 25,922 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Liabilities to financial | | 3,643 | 2,739 | | institutions | | | | -------------------------------------------------------------------------------- | Financial liabilities at fair value through | | | | profit or loss | | | -------------------------------------------------------------------------------- | Financial assets held for trading | | 138 | 52 | -------------------------------------------------------------------------------- | Derivative contracts | | | 1,644 | 548 | -------------------------------------------------------------------------------- | Liabilities to customers | | | 3,508 | 2,738 | -------------------------------------------------------------------------------- | Non-life Insurance liabilities (Note 15) | 2,238 | 2,140 | -------------------------------------------------------------------------------- | Debt securities issued to the public (Note 16) | 16,425 | 12,856 | -------------------------------------------------------------------------------- | Provisions and other liabilities | | 1,522 | 1,659 | -------------------------------------------------------------------------------- | Tax liabilities | | | 368 | 371 | -------------------------------------------------------------------------------- | Subordinated liabilities (Note 17) | | 1,322 | 950 | -------------------------------------------------------------------------------- | Total liabilities | | | 30,808 | 24,053 | -------------------------------------------------------------------------------- | Shareholders' equity | | | | | -------------------------------------------------------------------------------- | Capital and reserves attributable to equity | | | | holders of the Parent | | | -------------------------------------------------------------------------------- | Share capital | | | 428 | 428 | -------------------------------------------------------------------------------- | Reserves | | | 615 | 757 | -------------------------------------------------------------------------------- | Retained earnings | | | 597 | 685 | -------------------------------------------------------------------------------- | Total shareholders' equity | | 1,640 | 1,869 | -------------------------------------------------------------------------------- | Total liabilities and shareholders' equity | 32,448 | 25,922 | ---------------------------------------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | | | Attributable to equity holders of Pohjola | | | | | Bank Group | -------------------------------------------------------------------------------- | | | | Share | Fair | Other | Retained | | | | | capital | value | reserves | earnings | | | | | | reserve | | | -------------------------------------------------------------------------------- | | Minori | Total | | | ty | equity | | | intere | | | | st | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Balance at 1 January | 428 | 47 | 747 | 607 | 0 | 1,828 | | 2007 | | | | | | | -------------------------------------------------------------------------------- | Available-for-sale | | | | | | | | financial assets | | | | | | | -------------------------------------------------------------------------------- | Fair value gains and | | -48 | | | | -48 | | losses | | | | | | | -------------------------------------------------------------------------------- | Amount transferred | | -6 | | | | -6 | | to income statement | | | | | | | -------------------------------------------------------------------------------- | Deferred taxes | | | 14 | | | | 14 | -------------------------------------------------------------------------------- | Net income | | -40 | | | | -40 | | recognised in | | | | | | | | shareholders' equity | | | | | | | -------------------------------------------------------------------------------- | Profit for the | | | | | 212 | 0 | 212 | | period | | | | | | | | -------------------------------------------------------------------------------- | Total recognised | | -40 | | 212 | 0 | 172 | | income and expenses | | | | | | | | for the period | | | | | | | -------------------------------------------------------------------------------- | Dividends paid | | | | | | | | | on | | | | | | | | -------------------------------------------------------------------------------- | Series A share | | | | | -104 | | -104 | -------------------------------------------------------------------------------- | Series K share | | | | | -27 | | -27 | -------------------------------------------------------------------------------- | Transfer of | | | | 4 | -4 | | | | reserves | | | | | | | | -------------------------------------------------------------------------------- | Equity-settled | | | | 0 | | 0 | | share-based | | | | | | | | transactions | | | | | | | -------------------------------------------------------------------------------- | Balance at 31 | 428 | 7 | 750 | 685 | 0 | 1,869 | | December 2007 | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | | | Attributable to equity holders of Pohjola | | | | | Bank Group | -------------------------------------------------------------------------------- | | | | Share | Fair value | Other | Retained | | | | | capital | reserve | reserves | earnings | -------------------------------------------------------------------------------- | | Minori | Total | | | ty | equity | | | intere | | | | st | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Balance at 1 January | 428 | 7 | 750 | 685 | 0 | 1,869 | | 2008 | | | | | | | -------------------------------------------------------------------------------- | Available-for-sale | | | | | | | | financial assets | | | | | | | -------------------------------------------------------------------------------- | Fair value gains and | | -270 | | | | -270 | | losses | | | | | | | -------------------------------------------------------------------------------- | Amount transferred to | | 18 | | | | 18 | | income statement | | | | | | | -------------------------------------------------------------------------------- | Deferred taxes | | | 65 | | | | 65 | -------------------------------------------------------------------------------- | Net income recognised | | -187 | | 0 | | -187 | | in shareholders' | | | | | | | | equity | | | | | | | -------------------------------------------------------------------------------- | Profit for the | | | | | 89 | 0 | 88 | | period | | | | | | | | -------------------------------------------------------------------------------- | Total recognised | | | | 89 | 0 | -98 | | income and expenses | | | | | | | | for the period | | | | | | | -------------------------------------------------------------------------------- | Dividends paid | | | | | | | | | on | | | | | | | | -------------------------------------------------------------------------------- | Series A share | | | | | -104 | | -104 | -------------------------------------------------------------------------------- | Series K share | | | | | -27 | | -27 | -------------------------------------------------------------------------------- | Transfer of | | | | 45 | -45 | | | | reserves | | | | | | | | -------------------------------------------------------------------------------- | Equity-settled | | | | 0 | | 0 | | share-based | | | | | | | | transactions | | | | | | | -------------------------------------------------------------------------------- | Balance at 31 December | 428 | -180 | 795 | 597 | 0 | 1,640 | | 2008 | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Capital resources and capital adequacy | | | -------------------------------------------------------------------------------- | EUR million | | | 31 Dec | 31 Dec 2007 | | | | | 2008 | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Capital resources | | | | | -------------------------------------------------------------------------------- | Equity capital*) | | | 1,906 | 2,028 | -------------------------------------------------------------------------------- | Minority interest | | | 0 | 0 | -------------------------------------------------------------------------------- | Hybrid capital | | | 274 | 224 | | **) | | | | | -------------------------------------------------------------------------------- | Intangible assets | | | -144 | -129 | -------------------------------------------------------------------------------- | Fair value reserve, excess funding of pension | -8 | -27 | | liability, change in equalisation provision and | | | | change in fair value of investment property | | | -------------------------------------------------------------------------------- | Dividend distribution proposed by Board of | -45 | -131 | | Directors | | | -------------------------------------------------------------------------------- | Insurance company investments 50% | -705 | -685 | -------------------------------------------------------------------------------- | Impairments - expected losses 50% | -50 | -33 | -------------------------------------------------------------------------------- | Tier 1 capital | | | 1,228 | 1,247 | -------------------------------------------------------------------------------- | Fair value | | | -22 | -3 | | reserve | | | | | -------------------------------------------------------------------------------- | Subordinated liabilities included in upper Tier 2 | 299 | 299 | -------------------------------------------------------------------------------- | Subordinated liabilities included in lower Tier 2 | 734 | 488 | -------------------------------------------------------------------------------- | Insurance company investments 50% | -705 | -686 | -------------------------------------------------------------------------------- | Impairments - expected losses 50% | -50 | -33 | -------------------------------------------------------------------------------- | Tier 2 | | | 256 | 66 | | capital***) | | | | | -------------------------------------------------------------------------------- | Tier 3 capital | | | 46 | | -------------------------------------------------------------------------------- | Total capital | | 1,530 | 1,313 | | resources ****) | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Risk-weighted assets, excl. transitional | 12,784 | 10,745 | | provisions | | | -------------------------------------------------------------------------------- | Risk-weighted assets according to transitional | 13,120 | 11,705 | | provisions | | | -------------------------------------------------------------------------------- | Ratios, excl. transitional provisions: | | | -------------------------------------------------------------------------------- | Capital adequacy ratio, % | 12.0 | 12.2 | -------------------------------------------------------------------------------- | Tier 1 ratio, % | 9.6 | 11.6 | -------------------------------------------------------------------------------- | Capital adequacy ratio under the Act on | 1,29 | 1.49 | | Supervision of Financial and Insurance | | | | Conglomerates | | | -------------------------------------------------------------------------------- | Ratios according to transitional provisions: | | | -------------------------------------------------------------------------------- | Capital adequacy | | 11.7 | 11.2 | | ratio, % | | | | -------------------------------------------------------------------------------- | Tier 1 ratio, % | 9.4 | 10.7 | -------------------------------------------------------------------------------- | Capital adequacy ratio under the Act on | 1.26 | 1.38 | | Supervision of Financial and Insurance | | | | Conglomerates | | | -------------------------------------------------------------------------------- *) Consolidation group's equity from which the effect of insurance companies on the Group's shareholders' equity has been removed. Capital resources and capital adequacy measurement is based on approaches under Basel II. Pohjola Bank has used the Internal Ratings Based Approach for corporate exposures. Figures for previous periods have been converted into comparable ones. OP-Pohjola Group's capital adequacy ratio under the Act on Credit Institutions stood at 12.7% and Tier 1 ratio at 12.6%. OP-Pohjola Group's capital adequacy ratio calculated using the consolidation method, under the Act on the Supervision of Financial and Insurance Conglomerates, was 1.40. **) Pohjola Bank plc has five loans under hybrid capital classified as Tier 1 capital: Hybrid capital of 10 billion Japanese yen of which EUR 74 million has been classified as Tier 1 capital. The loan carries a fixed interest rate of 4.23% until 2034 and thereafter a variable 6-month Yen LIBOR + 1.58%. If interest cannot be paid for a given interest period, the obligation to pay interest will lapse. The loan may be called in at the earliest in 2014. Hybrid capital of EUR 50 million, which is a perpetual loan without interest rate step-ups, but with an 8% interest rate cap. Issued on 31 March 2005, the loan carries an interest rate of 6.5% for the first year. Thereafter, the interest rate will be CMS 10 years + 0.1%, payable on an annual basis. If interest cannot be paid for a given interest period, the obligation to pay interest will lapse. Subject to authorisation by the Financial Supervision Authority, the loan may be called in at the earliest in 2010. Hybrid capital of EUR 60 million, which is a perpetual loan. Issued on 30 November 2005, the loan carries a variable interest rate based on 3-month Euribor + 0.65% until 2015 and thereafter variable 3-month Euribor + 1.65%, payable on a quarterly basis. If interest cannot be paid for a given interest period, the obligation to pay interest will lapse. Subject to authorisation by the Financial Supervision Authority, the loan may be called in at the earliest in 2015. Hybrid capital of EUR 40 million, which is a perpetual loan. Issued on 30 November 2005, the loan carries a variable interest rate based on 3-month Euribor + 1.25%, payable on a quarterly basis. If interest cannot be paid for a given interest period, the obligation to pay interest will lapse. Subject to authorisation by the Financial Supervision Authority, the loan may be called in at the earliest in 2010. Tier 1 perpetual bond of EUR 50 million. Issued on 17 June 2008, the bond carries a variable interest rate based on 3-month Euribor + 3.05%, payable on a quarterly basis. If interest cannot be paid for a given interest period, the obligation to pay interest will lapse. Subject to authorisation by the Financial Supervision Authority, the bond may be called in at the earliest in 2013. Pohjola Insurance Ltd's perpetual capital bond of EUR 50 million. Issued on 17 June 2008, the bond carries a variable interest rate based on 3-month Euribor + 3.05%, payable on a quarterly basis. Interest which cannot be paid on the interest payment date and interest which Pohjola Insurance Ltd could not have paid for previous interest payment dates constitute 'Unpaid interest'. Interest will accrue on unpaid interest in accordance with the interest rate applicable to the bonds and this additional interest accrued until each interest payment date will be added to unpaid interest on the interest payment date in question. The issuer agrees not to distribute dividends or other profit or to buy back own shares until unpaid interest has been paid in its entirety. The bond may be called in at the earliest in 2013 and its principal can be paid back only if the statutory terms and conditions are fulfilled. The bond will not be taken into account in the capital adequacy measurement under the Act on Credit Institutions but can be fully utilised in the capital adequacy measurement of the insurance company. ***) On 25 March 2008, the Group issued a 10-year debenture loan worth EUR 170 million classified as Tier 2 capital. The loan carries a variable interest based on 3-month Euribor + 1.90% until 2013 and thereafter 3-month Euribor + 1.50%. Subject to authorisation by the Financial Supervision Authority, the loan may be called in at the earliest in 2013. ***) On 3 March 2008, the Group issued a 5-year debenture loan worth EUR 3,5 million classified as Tier 2 capital and its subscription period expired on 25 April 2008. The loan is subject to equal annual payments and will expire on 3 March 2013. The loan carries a fixed interest of 4.10%. ***) On 23 December 2008, the Group issued a 5-year debenture loan worth EUR 100 million classified as Tier 2 capital. The loan carries a variable interest based on 12-month Euribor + 2.25% until 2013 when the loan may be called in for the first time with the Financial Supervision Authority's permission. A total EUR 80 million of the loan is included in Tier 2 capital and EUR 20 million in Tier 3 capital. ****) Based on special permission given by the Financial Supervision Authority in accordance with subsection 5, section 75 of the Credit Institutions Act, the following investments in venture capital funds, totalling EUR 5 million and managed by Pohjola Capital Partners Ltd, have not been deducted from capital resources: Promotion Equity I Ky, Promotion Capital I Ky, Promotion Bridge I Ky, Suomi Välirahoitusrahasto I Ky and Suomi Yritysjärjestelyrahasto I Ky. -------------------------------------------------------------------------------- | Risk exposure by Banking | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total exposure by rating category*, EUR billion | -------------------------------------------------------------------------------- | Rating | 31 Dec 2008 | 31 Dec 2007 | Change | | category | | | | -------------------------------------------------------------------------------- | 1-2 | 2.8 | 2.8 | 0.1 | -------------------------------------------------------------------------------- | 3-5 | 11.2 | 9.2 | 1.9 | -------------------------------------------------------------------------------- | 6-7 | 4.3 | 3.2 | 1.1 | -------------------------------------------------------------------------------- | 8-9 | 1.9 | 1.6 | 0.3 | -------------------------------------------------------------------------------- | 10 | 0.1 | 0.0 | 0.1 | -------------------------------------------------------------------------------- | 11-12 | 0.1 | 0.1 | 0.0 | -------------------------------------------------------------------------------- | Non-rated | 0.5 | 0.6 | 0.0 | -------------------------------------------------------------------------------- | Total | 20.9 | 17.3 | 3.5 | -------------------------------------------------------------------------------- | *) excl. private customers | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Sensitivity analysis of | | | | | | | market risk | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Banking, EUR | Risk parameter | Change | 31 Dec | 31 Dec | | million | | | 2008 | 2007 | -------------------------------------------------------------------------------- | Interest-rate | Interest | 1 percentage | 5 | 3 | | risk | | point | | | -------------------------------------------------------------------------------- | Currency risk | Market value | 20 percentage | 4 | 1 | | | | points | | | -------------------------------------------------------------------------------- | Volatility risk | | | | | | -------------------------------------------------------------------------------- | Interest-rate | Volatility | 20 percentage | 1 | 2 | | volatility | | points | | | -------------------------------------------------------------------------------- | Currency | Volatility | 10 percentage | 2 | 1 | | volatility | | points | | | -------------------------------------------------------------------------------- | Credit risk | Credit risk | 0.1 percentage | 4 | 1 | | premium *) | margin | point | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Sensitivity figures have been calculated as the sum of the | | | currencies' intrinsic value. | | -------------------------------------------------------------------------------- | *) The credit risk premium has been calculated on notes and bonds | | | at fair value through profit or loss and available for sale, | | | included in liquidity reserves. | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Risk exposure by Non-life | | | | | | Insurance | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Risk | | Total | Change in | Effect on | Effect on | | parameter | | amount 31 | risk | combined ratio | shareholders' | | | | Dec 2008, | parameter | | equity, EUR | | | | EUR | | | million | | | | million | | | | -------------------------------------------------------------------------------- | Insurance | 923 | Up 1% | Up 1 | 9 | | portfolio or | | | percentage | | | insurance | | | point | | | premium | | | | | | revenue | | | | | -------------------------------------------------------------------------------- | Claims | -643 | Up 1% | Down 1 | -6 | | incurred | | | percentage | | | | | | point | | -------------------------------------------------------------------------------- | Major loss of | | 1 loss | Down 1 | -5 | | over EUR 5 | | | percentage | | | million | | | point | | -------------------------------------------------------------------------------- | Personnel | -111 | Up 8% | Down 1 | -9 | | costs | | | percentage | | | | | | point | | -------------------------------------------------------------------------------- | Expenses by | -254 | Up 4% | Down 1 | -10 | | function*) | | | percentage | | | | | | point | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | *) Expenses by function in Non-life Insurance excluding expenses for | | investment management and expenses for other services rendered | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Risk parameter | Change in risk | Effect on shareholders' equity, | | | parameter | EUR million | -------------------------------------------------------------------------------- | Inflation rate | +0.25 percentage | | -3 | | | points | | | -------------------------------------------------------------------------------- | Life expectancy | + 1 year | | -29 | -------------------------------------------------------------------------------- | Discount rate | -0.1 percentage point | | -15 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Non-life Insurance investment portfolio by allocation | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR million | | | | | -------------------------------------------------------------------------------- | Portfolio allocation | Fair value | % | Fair value | % | | | 31 Dec 2008 | | 31 Dec 2007 | | -------------------------------------------------------------------------------- | Money market | 279 | 12 | 51 | 2 | | instruments | | | | | -------------------------------------------------------------------------------- | Bonds and bond funds | 1,690 | 70 | 1,722 | 69 | -------------------------------------------------------------------------------- | Equities | | 190 | 8 | 413 | 16 | -------------------------------------------------------------------------------- | Alternative | 111 | 5 | 188 | 7 | | investments | | | | | -------------------------------------------------------------------------------- | Real property | 145 | 6 | 138 | 5 | -------------------------------------------------------------------------------- | Total | | 2,415 | 100 | 2,511 | 100 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Non-life Insurance fixed-income portfolio by maturity and credit | | | rating on 31 December 2008 | | -------------------------------------------------------------------------------- | EUR million | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Year(s) | 0-1 | 1-3 | 3-5 | 5-7 | 7-10 | 10- | Total | % | -------------------------------------------------------------------------------- | AAA | 38 | 121 | 76 | 61 | 94 | 216 | 607 | 33 | -------------------------------------------------------------------------------- | AA | 108 | 100 | 114 | 14 | 27 | 23 | 386 | 21 | -------------------------------------------------------------------------------- | A | 38 | 188 | 161 | 46 | 39 | 85 | 556 | 30 | -------------------------------------------------------------------------------- | BBB | 31 | 71 | 84 | 9 | 4 | 7 | 206 | 11 | -------------------------------------------------------------------------------- | BB+ or lower | 35 | 24 | 10 | 7 | 5 | 10 | 92 | 5 | -------------------------------------------------------------------------------- | Internally | 4 | 6 | 4 | 3 | 0 | 1 | 18 | 1 | | rated | | | | | | | | | -------------------------------------------------------------------------------- | Total | 254 | 512 | 449 | 139 | 170 | 342 | 1,865 | 100 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | The table below shows the sensitivity of investment risks and their effect | | on shareholders' equity: | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Non-life | Risk parameter | | Change | Effect on | | Insurance | | | | shareholders' | | | | | | equity, EUR million | -------------------------------------------------------------------------------- | | | | | | | 31 Dec | 31 Dec | | | | | | | | 2008 | 2007 | -------------------------------------------------------------------------------- | Bonds and | | Interest | | 1 | 82 | 69 | | bond funds1) | | rate | | percentage | | | | | | | | point | | | -------------------------------------------------------------------------------- | Equities | | | Market | | 20 | 33 | 78 | | 2) | | | value | | percentage | | | | | | | | | points | | | -------------------------------------------------------------------------------- | Venture | | Market | | 20 | 18 | 23 | | capital funds | | value | | percentage | | | | and unquoted | | | | points | | | | equities | | | | | | | -------------------------------------------------------------------------------- | Commodities | | Market | | 20 | 2 | 5 | | | | value | | percentage | | | | | | | | points | | | -------------------------------------------------------------------------------- | Real property | | Market | | 10 | 15 | 14 | | | | value | | percentage | | | | | | | | points | | | -------------------------------------------------------------------------------- | Currency | | | Value of | | 20 | 12 | 20 | | | | | currency | | percentage | | | | | | | | | points | | | -------------------------------------------------------------------------------- | Credit risk | | Credit | | 0.1 | 3 | 4 | | premium 3) | | risk | | percentage | | | | | | margin | | point | | | -------------------------------------------------------------------------------- | Derivatives | | Volatilit | | 20 | 0 | 0 | | 4) | | y | | percentage | | | | | | | | points | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 1) Include money-market investments, convertible bonds and | | | interest-rate derivatives | | -------------------------------------------------------------------------------- | 2) Include hedge funds and equity derivatives | | | | | -------------------------------------------------------------------------------- | 3) Includes bonds and money-market investments, excluding government bonds | | issued by developed countries | -------------------------------------------------------------------------------- | 4) 20 percentage points for equity derivatives, 10 percentage points for | | interest-rate derivatives and 5 percentage points for currency derivatives. | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Risk exposure by Group Function | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total exposure by rating category*, EUR billion | -------------------------------------------------------------------------------- | Rating category | 31 Dec 2008 | 31 Dec 2007 | Change | -------------------------------------------------------------------------------- | 1-2 | 12.0 | 9.2 | 2.8 | -------------------------------------------------------------------------------- | 3-5 | 1.8 | 1.2 | 0.6 | -------------------------------------------------------------------------------- | 6-7 | 0.0 | 0.0 | 0.0 | -------------------------------------------------------------------------------- | 8-9 | 0.0 | 0.0 | 0.0 | -------------------------------------------------------------------------------- | 10 | 0.0 | 0.0 | 0.0 | -------------------------------------------------------------------------------- | 11-12 | 0.0 | 0.0 | 0.0 | -------------------------------------------------------------------------------- | Non-rated | 0.0 | 0.0 | 0.0 | -------------------------------------------------------------------------------- | Total | 13.8 | 10.4 | 3.4 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Sensitivity analysis of | | | | | | | market risk | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Group | Risk parameter | Change | 31 Dec | 31 Dec | | Functions, | | | 2008 | 2007 | | EUR | | | | | | million | | | | | -------------------------------------------------------------------------------- | Interest-rate | Interest rate | 1 percentage | 11 | 15 | | risk | | point | | | -------------------------------------------------------------------------------- | Interest-rate | Volatility | 20 percentage | 0 | 0 | | volatility | | points | | | -------------------------------------------------------------------------------- | Credit risk | Credit risk | 0.1 percentage | 0 | 10 | | premium *) | margin | point | | | -------------------------------------------------------------------------------- | Price risk | | | | | | -------------------------------------------------------------------------------- | Equity | Market value | 20 percentage | 2 | 3 | | portfolio | | points | | | -------------------------------------------------------------------------------- | Private equity | Market value | 20 percentage | 7 | 6 | | funds | | points | | | -------------------------------------------------------------------------------- | Property risk | Market value | 10 percentage | 2 | 3 | | | | points | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Sensitivity figures have been calculated as the sum of the | | | currencies' intrinsic value. | | -------------------------------------------------------------------------------- | *) The credit risk premium has been calculated on notes and bonds at fair | | value through profit or loss and available for sale, included in liquidity | | reserves. | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Financial assets included in liquidity reserve by maturity and credit rating | | on 31 December 2008 | -------------------------------------------------------------------------------- | EUR | | | | | | | | | | milli | | | | | | | | | | on | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Year | 0-1 | 1-3 | 3-5 | 5-7 | 7-10 | 10- | Total | % | -------------------------------------------------------------------------------- | AAA | 2,564 | 724 | 707 | 287 | 385 | 180 | 4,847 | 49 | -------------------------------------------------------------------------------- | AA | 2,140 | 937 | 370 | 109 | 17 | 2 | 3,576 | 36 | -------------------------------------------------------------------------------- | A | 188 | 169 | 211 | 0 | 55 | 0 | 622 | 6 | -------------------------------------------------------------------------------- | BBB | 314 | 66 | 19 | 3 | 0 | 0 | 402 | 4 | -------------------------------------------------------------------------------- | BB+ | 0 | 1 | 0 | 19 | 0 | 0 | 20 | 0 | | or | | | | | | | | | | lower | | | | | | | | | -------------------------------------------------------------------------------- | Inter | 31 | 159 | 146 | 21 | 11 | 0 | 368 | 4 | | nally | | | | | | | | | | rated | | | | | | | | | -------------------------------------------------------------------------------- | Total | 5,237 | 2,056 | 1,454 | 439 | 468 | 182 | 9,835 | 100 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Consolidated cash flow statement | | | | -------------------------------------------------------------------------------- | EUR million | | | Q1-4/ | Q1-4/ | -------------------------------------------------------------------------------- | | | | | 08 | 07 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flow from operating activities | | | | -------------------------------------------------------------------------------- | Profit for the period | | | 88 | 212 | -------------------------------------------------------------------------------- | Adjustments to profit for the period | | 225 | 111 | -------------------------------------------------------------------------------- | Increase (-) or decrease (+) in operating assets | -3,775 | -2,100 | -------------------------------------------------------------------------------- | Receivables from financial institutions | 689 | 384 | -------------------------------------------------------------------------------- | Financial assets at fair value through profit or | -746 | 81 | | loss | | | -------------------------------------------------------------------------------- | Derivative contracts | | | -75 | -62 | -------------------------------------------------------------------------------- | Receivables from customers | | -2,171 | -1,430 | -------------------------------------------------------------------------------- | Non-life Insurance assets | | -226 | -79 | -------------------------------------------------------------------------------- | Investment assets | | | -994 | -506 | -------------------------------------------------------------------------------- | Other assets | | | -251 | -488 | -------------------------------------------------------------------------------- | Increase (+) or decrease (-) in operating | 1,594 | 1,860 | | liabilities | | | -------------------------------------------------------------------------------- | Liabilities to financial | | 725 | 348 | | institutions | | | | -------------------------------------------------------------------------------- | Financial liabilities at fair value through profit | 86 | 52 | | or loss | | | -------------------------------------------------------------------------------- | Derivative contracts | | | 106 | 66 | -------------------------------------------------------------------------------- | Liabilities to customers | | | 773 | 745 | -------------------------------------------------------------------------------- | Non-life Insurance liabilities | | 68 | 0 | -------------------------------------------------------------------------------- | Provisions and other liabilities | | -164 | 650 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Income tax paid | | | -38 | -55 | -------------------------------------------------------------------------------- | Dividends received | | | 33 | 70 | -------------------------------------------------------------------------------- | A. Net cash from operating activities | -1,872 | 98 | -------------------------------------------------------------------------------- | Cash flow from investing activities | | | | -------------------------------------------------------------------------------- | Increases in held-to-maturity financial assets | -161 | | -------------------------------------------------------------------------------- | Decreases in held-to-maturity financial assets | 0 | | -------------------------------------------------------------------------------- | Acquisition of subsidiaries, net of cash acquired | -51 | -10 | -------------------------------------------------------------------------------- | Disposal of subsidiaries, net of cash disposed | 9 | 12 | -------------------------------------------------------------------------------- | Purchase of PPE and intangible assets | -32 | -19 | -------------------------------------------------------------------------------- | Proceeds from sale of PPE and intangible assets | 6 | 20 | -------------------------------------------------------------------------------- | B. Net cash used in investing activities | -230 | 2 | -------------------------------------------------------------------------------- | Cash flow from financing activities | | | | -------------------------------------------------------------------------------- | Increases in subordinated | | 505 | 153 | | liabilities | | | | -------------------------------------------------------------------------------- | Decreases in subordinated liabilities | -132 | -126 | -------------------------------------------------------------------------------- | Increases in debt securities issued to the public | 45,207 | 29,383 | -------------------------------------------------------------------------------- | Decreases in debt securities issued to the public | -41,622 | -29,777 | -------------------------------------------------------------------------------- | Dividends paid | | | -131 | -131 | -------------------------------------------------------------------------------- | C. Net cash used in financing activities | 3,828 | -498 | -------------------------------------------------------------------------------- | Net increase/decrease in cash and cash equivalents | 1,726 | -397 | | (A+B+C) | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash and cash equivalents at period-start | 710 | 1,107 | -------------------------------------------------------------------------------- | Cash and cash equivalents at period-end | 2,435 | 710 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest received | | | 3,536 | 2,040 | -------------------------------------------------------------------------------- | Interest paid | | | -2,862 | -1,919 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Adjustments to profit for the period | | | | -------------------------------------------------------------------------------- | Non-cash transactions | | | | -------------------------------------------------------------------------------- | Impairments of receivables | | 29 | 4 | -------------------------------------------------------------------------------- | Unrealised net earnings in Non-life Insurance | 85 | 48 | -------------------------------------------------------------------------------- | Change in fair value for trading | | 56 | 55 | -------------------------------------------------------------------------------- | Unrealised net gains on foreign exchange | -31 | -46 | | operations | | | -------------------------------------------------------------------------------- | Change in fair value of investment property | 5 | -13 | -------------------------------------------------------------------------------- | Planned amortisation /depreciation | 69 | 61 | -------------------------------------------------------------------------------- | Share of associates' profits | | 0 | 0 | -------------------------------------------------------------------------------- | Other | | | | 11 | 7 | -------------------------------------------------------------------------------- | Items presented outside cash flow from operating | | | | activities | | | -------------------------------------------------------------------------------- | Capital gains, share of cash flow from investing | -1 | -4 | | activities | | | -------------------------------------------------------------------------------- | Capital losses, share of cash flow from investing | | -1 | | activities | | | -------------------------------------------------------------------------------- | Total adjustments | | | 225 | 111 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Notes | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 1) Net interest | | | | | | | | income | | | | | | | -------------------------------------------------------------------------------- | EUR million | | | Q4/ | Q4/ | Q1-4/ | Q1-4/ | -------------------------------------------------------------------------------- | | | | | 08 | 07 | 08 | 07 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest income | | | | | | | -------------------------------------------------------------------------------- | Receivables from financial | 77 | 69 | 264 | 270 | | institutions | | | | | -------------------------------------------------------------------------------- | Receivables from | | 238 | 121 | 667 | 415 | | customers | | | | | | -------------------------------------------------------------------------------- | Other | | | | 577 | 478 | 2,222 | 1,549 | -------------------------------------------------------------------------------- | Total | | | | 893 | 668 | 3,153 | 2,234 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest | | | | | | | | expenses | | | | | | | -------------------------------------------------------------------------------- | Liabilities to financial | | 41 | 30 | 174 | 94 | | institutions | | | | | | -------------------------------------------------------------------------------- | Liabilities to customers | | 31 | 23 | 108 | 82 | -------------------------------------------------------------------------------- | Other | | | | 767 | 584 | 2,697 | 1,943 | -------------------------------------------------------------------------------- | Total | | | | 839 | 637 | 2,979 | 2,119 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total net interest income | | 54 | 30 | 174 | 115 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 2) Impairments of | | | | | | | receivables | | | | | | -------------------------------------------------------------------------------- | EUR million | | | Q4/ | Q4/ | Q1-4/ | Q1-4/ | -------------------------------------------------------------------------------- | | | | | 08 | 07 | 08 | 07 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Receivables eliminated as loan or | 4 | 1 | 16 | 5 | | guarantee losses | | | | | -------------------------------------------------------------------------------- | Recoveries from receivables | 0 | -3 | -1 | -3 | | eliminated as loan or guarantee | | | | | | losses | | | | | -------------------------------------------------------------------------------- | Increase in impairment | | 18 | 3 | 21 | 6 | | provisions | | | | | | -------------------------------------------------------------------------------- | Decrease in impairment | | -2 | -2 | -9 | -7 | | provisions | | | | | | -------------------------------------------------------------------------------- | Total impairments of | | 21 | -1 | 28 | 1 | | receivables | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 3) Net income from Non-life | | | | | | Insurance | | | | | -------------------------------------------------------------------------------- | EUR million | | | Q4/ | Q4/ | Q1-4/ | Q1-4/ | -------------------------------------------------------------------------------- | | | | | 08 | 07 | 08 | 07 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net insurance premium revenue | | | | | | -------------------------------------------------------------------------------- | Premiums written | | | 144 | 146 | 991 | 944 | -------------------------------------------------------------------------------- | Insurance premiums ceded to | -1 | -4 | -42 | -49 | | reinsurers | | | | | -------------------------------------------------------------------------------- | Change in provision for unearned | 95 | 75 | -24 | -43 | | premiums | | | | | -------------------------------------------------------------------------------- | Reinsurers' share | | | -10 | -6 | -1 | -2 | -------------------------------------------------------------------------------- | Total | | | | 227 | 211 | 923 | 850 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net Non-life Insurance claims | | | | | | -------------------------------------------------------------------------------- | Claims paid | | | 156 | 149 | 602 | 556 | -------------------------------------------------------------------------------- | Insurance claims recovered from | -5 | -8 | -14 | -14 | | reinsurers | | | | | -------------------------------------------------------------------------------- | Change in provision for unpaid | 2 | -34 | 30 | -10 | | claims | | | | | -------------------------------------------------------------------------------- | Reinsurers' share | | | -9 | 6 | -27 | 5 | -------------------------------------------------------------------------------- | Total | | | | 144 | 113 | 591 | 536 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net investment income, Non-life | | | | | | Insurance | | | | | -------------------------------------------------------------------------------- | Interest income | | | 19 | 17 | 74 | 69 | -------------------------------------------------------------------------------- | Net realised gains and realised fair | | | | | | value gains and losses | | | | | -------------------------------------------------------------------------------- | Notes and bonds | | | 1 | -5 | -16 | -39 | -------------------------------------------------------------------------------- | Shares and participations | | -27 | 3 | -27 | 49 | -------------------------------------------------------------------------------- | Investment property | | | 0 | 0 | 2 | 3 | -------------------------------------------------------------------------------- | Other | | | | -6 | 10 | -10 | 13 | -------------------------------------------------------------------------------- | Unrealised fair value gains and | | | | | | losses | | | | | -------------------------------------------------------------------------------- | Notes and bonds | | | -1 | 0 | -4 | 0 | -------------------------------------------------------------------------------- | Shares and participations | | 5 | -1 | 4 | -1 | -------------------------------------------------------------------------------- | Investment property | | | 2 | 1 | 3 | 2 | -------------------------------------------------------------------------------- | Other | | | | -1 | -3 | 1 | 0 | -------------------------------------------------------------------------------- | Dividend income | | | 5 | 13 | 26 | 61 | -------------------------------------------------------------------------------- | Total | | | | -3 | 35 | 54 | 157 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Unwinding of discount | | | -11 | -10 | -42 | -39 | -------------------------------------------------------------------------------- | Other | | | | 4 | -1 | 9 | 2 | -------------------------------------------------------------------------------- | Total net income from Non-life | 74 | 123 | 353 | 433 | | Insurance | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 4) Net commissions and | | | | | | | fees | | | | | | -------------------------------------------------------------------------------- | EUR million | | | Q4/ | Q4/ | Q1-4/ | Q1-4/ | -------------------------------------------------------------------------------- | | | | | 08 | 07 | 08 | 07 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Commission income | | | | | | | -------------------------------------------------------------------------------- | Lending | | | | 6 | 7 | 24 | 22 | -------------------------------------------------------------------------------- | Payment transfers | | | 3 | 3 | 13 | 12 | -------------------------------------------------------------------------------- | Securities brokerage | | | 5 | 6 | 19 | 26 | -------------------------------------------------------------------------------- | Securities issuance | | | 1 | 1 | 3 | 6 | -------------------------------------------------------------------------------- | Asset management and legal services | 13 | 17 | 48 | 56 | -------------------------------------------------------------------------------- | Insurance operations | | | 1 | 1 | 5 | 6 | -------------------------------------------------------------------------------- | Guarantees | | | 3 | 2 | 9 | 6 | -------------------------------------------------------------------------------- | Other | | | | 3 | 2 | 11 | 8 | -------------------------------------------------------------------------------- | Total commission income | | 35 | 39 | 132 | 142 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Commission expenses | | | | | | | -------------------------------------------------------------------------------- | Payment transfers | | | 0 | 1 | 0 | 3 | -------------------------------------------------------------------------------- | Securities brokerage | | | 2 | 2 | 6 | 10 | -------------------------------------------------------------------------------- | Securities issuance | | | 2 | 1 | 5 | 4 | -------------------------------------------------------------------------------- | Asset management and legal services | 1 | 2 | 7 | 9 | -------------------------------------------------------------------------------- | Other | | | | 1 | 0 | 5 | 2 | -------------------------------------------------------------------------------- | Total commission expenses | | 6 | 7 | 24 | 27 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total net commissions and | | 29 | 32 | 108 | 115 | | fees | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 5) Net trading | | | | | | | | income | | | | | | | -------------------------------------------------------------------------------- | EUR million | | | Q4/ | Q4/ | Q1-4/ | Q1-4/ | -------------------------------------------------------------------------------- | | | | | 08 | 07 | 08 | 07 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Financial assets and liabilities | | | | | | held for trading | | | | | -------------------------------------------------------------------------------- | Capital gains and losses and | | | | | | realised changes in fair value | | | | | -------------------------------------------------------------------------------- | Notes and bonds | | | 13 | 0 | 2 | -8 | -------------------------------------------------------------------------------- | Shares and participations | | 0 | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Derivatives | | | -68 | 1 | -49 | 3 | -------------------------------------------------------------------------------- | Unrealised changes in | | | | | | | fair value | | | | | | -------------------------------------------------------------------------------- | Notes and bonds | | | 27 | 1 | 26 | 2 | -------------------------------------------------------------------------------- | Shares and participations | | 0 | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Derivatives | | | 21 | -1 | 19 | 23 | -------------------------------------------------------------------------------- | Financial assets and liabilities at | | | | | | fair value through profit or loss | | | | | -------------------------------------------------------------------------------- | Capital gains and losses and | | | | | | realised changes in fair value | | | | | -------------------------------------------------------------------------------- | Notes and bonds | | | -11 | 0 | -16 | 0 | -------------------------------------------------------------------------------- | Unrealised changes in | | | | | | | fair value | | | | | | -------------------------------------------------------------------------------- | Notes and bonds | | | 4 | -32 | -65 | -67 | -------------------------------------------------------------------------------- | Net income from foreign exchange | | | | | | operations | | | | | -------------------------------------------------------------------------------- | Currency swaps | | | 174 | 3 | 25 | 45 | -------------------------------------------------------------------------------- | Other | | | | -169 | 0 | -23 | -32 | -------------------------------------------------------------------------------- | Total net trading income | | -9 | -27 | -81 | -34 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 6) Net investment income | | | | | | -------------------------------------------------------------------------------- | EUR million | | | Q4/ | Q4/ | Q1-4/ | Q1-4/ | -------------------------------------------------------------------------------- | | | | | 08 | 07 | 08 | 07 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Available-for-sale | | | | | | | financial assets | | | | | | -------------------------------------------------------------------------------- | Capital gains and losses | | | | | | -------------------------------------------------------------------------------- | Notes and bonds | | | 0 | | 0 | | -------------------------------------------------------------------------------- | Shares and participations | | | | 1 | 16 | -------------------------------------------------------------------------------- | Dividend income | | | 0 | 1 | 7 | 9 | -------------------------------------------------------------------------------- | Impairments | | | -4 | -1 | -4 | 0 | -------------------------------------------------------------------------------- | Total | | | | -3 | 0 | 4 | 26 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Investment property | | | 1 | 0 | 2 | 3 | -------------------------------------------------------------------------------- | Total net investment | | -3 | 1 | 6 | 28 | | income | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 7) Other operating income | | | | | | -------------------------------------------------------------------------------- | EUR million | | | Q4/ | Q4/ | Q1-4/ | Q1-4/ | -------------------------------------------------------------------------------- | | | | | 08 | 07 | 08 | 07 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Central banking service | | 2 | 2 | 9 | 9 | | fees | | | | | | -------------------------------------------------------------------------------- | Realisation of | | 0 | 0 | 0 | 1 | | repossessed items | | | | | | -------------------------------------------------------------------------------- | Rental income from assets rented | 6 | 4 | 22 | 14 | | under operating lease | | | | | -------------------------------------------------------------------------------- | Other | | | | 6 | 13 | 25 | 48 | -------------------------------------------------------------------------------- | Total | | | | 14 | 20 | 56 | 71 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 8) Personnel | | | | | | | | costs | | | | | | | -------------------------------------------------------------------------------- | EUR million | | | Q4/ | Q4/ | Q1-4/ | Q1-4/ | -------------------------------------------------------------------------------- | | | | | 08 | 07 | 08 | 07 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Wages and | | | 37 | 34 | 143 | 135 | | salaries | | | | | | | -------------------------------------------------------------------------------- | Pension costs | | | 8 | 7 | 24 | 21 | -------------------------------------------------------------------------------- | Other social | | | 3 | 3 | 10 | 10 | | expenses | | | | | | | -------------------------------------------------------------------------------- | Total personnel | | | 47 | 43 | 178 | 166 | | costs | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 9) Other administrative | | | | | | | expenses | | | | | | -------------------------------------------------------------------------------- | EUR million | | | Q4/ | Q4/ | Q1-4/ | Q1-4/ | -------------------------------------------------------------------------------- | | | | | 08 | 07 | 08 | 07 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Office expenses | | | 19 | 16 | 54 | 61 | -------------------------------------------------------------------------------- | IT expenses | | | 13 | 11 | 46 | 43 | -------------------------------------------------------------------------------- | Telecommunication | | 3 | 3 | 11 | 10 | | expenses | | | | | | -------------------------------------------------------------------------------- | Marketing | | | 4 | 4 | 14 | 14 | | expenses | | | | | | | -------------------------------------------------------------------------------- | Other administrative | | 5 | 4 | 19 | 17 | | expenses | | | | | | -------------------------------------------------------------------------------- | Total other administrative expenses | 44 | 38 | 144 | 145 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 10) Other operating | | | | | | | expenses | | | | | | -------------------------------------------------------------------------------- | EUR million | | | Q4/ | Q4/ | Q1-4/ | Q1-4/ | -------------------------------------------------------------------------------- | | | | | 08 | 07 | 08 | 07 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Expenses for property and business | 6 | 7 | 25 | 26 | | premises in own use | | | | | -------------------------------------------------------------------------------- | Expenses from realisation of | 0 | 1 | 1 | 2 | | repossessed items | | | | | -------------------------------------------------------------------------------- | Non-life Insurance credit | | 2 | 2 | 7 | 9 | | losses | | | | | | -------------------------------------------------------------------------------- | Planned amortisation and | | | | | | depreciation | | | | | -------------------------------------------------------------------------------- | Amortisation on intangible assets | 9 | 9 | 36 | 36 | | related to company acquisition | | | | | -------------------------------------------------------------------------------- | Other | | | | 8 | 6 | 30 | 24 | -------------------------------------------------------------------------------- | Other*) | | | | 17 | 5 | 50 | 32 | -------------------------------------------------------------------------------- | Total other operating | | 42 | 31 | 149 | 129 | | expenses | | | | | | -------------------------------------------------------------------------------- *) The item includes EUR 10 million in liquidated damages, including interest and expenses, paid by the then OKO to savings banks on the basis of an arbitral award. The liquidated damages were due to the termination of cooperation between Pohjola and savings banks as a result of combining the operations of OP Bank Group and Pohjola. *) The item includes EUR 24 million in insurance business sales commissions paid to OP-Pohjola Group member banks. -------------------------------------------------------------------------------- | 11) Financial assets at fair value through profit or loss | | -------------------------------------------------------------------------------- | EUR million | | | 31 Dec | 31 Dec | | | | | 2008 | 2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Financial assets held for | | | | | trading | | | | -------------------------------------------------------------------------------- | Notes and bonds | | | 3,213 | 2220 | -------------------------------------------------------------------------------- | Shares and participations | | 0 | 0 | -------------------------------------------------------------------------------- | Financial assets at fair value through | | | | profit or loss at inception | | | -------------------------------------------------------------------------------- | Notes and | | | 43 | 2481 | | bonds | | | | | -------------------------------------------------------------------------------- | Total | | | | 3,255 | 4701 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 12) Non-life Insurance assets | | | | -------------------------------------------------------------------------------- | EUR million | | | 31 Dec | 31 Dec | | | | | 2008 | 2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Investments | | | | | -------------------------------------------------------------------------------- | Loans and other receivables | | 418 | 57 | -------------------------------------------------------------------------------- | Equities | | | | 318 | 444 | -------------------------------------------------------------------------------- | Property | | | | 81 | 85 | -------------------------------------------------------------------------------- | Notes and bonds | | | 1,153 | 1,447 | -------------------------------------------------------------------------------- | Other | | | | 419 | 451 | -------------------------------------------------------------------------------- | Total | | | | 2,389 | 2,485 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Other assets | | | | | -------------------------------------------------------------------------------- | Prepayments and accrued income | 33 | 28 | -------------------------------------------------------------------------------- | Other | | | | | | -------------------------------------------------------------------------------- | From direct insurance | | 218 | 210 | -------------------------------------------------------------------------------- | From reinsurance | | | 100 | 74 | -------------------------------------------------------------------------------- | Cash in hand and at bank | | 4 | 12 | -------------------------------------------------------------------------------- | Total | | | | 355 | 325 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total Non-life insurance | | 2,745 | 2,809 | | assets | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 13) Investment | | | | | | property | | | | | -------------------------------------------------------------------------------- | EUR million | | | 31 Dec | 31 Dec | | | | | 2008 | 2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Available-for-sale | | | | | financial assets | | | | -------------------------------------------------------------------------------- | Notes and bonds | | | 68 | 618 | -------------------------------------------------------------------------------- | Shares and participations | | 87 | 83 | -------------------------------------------------------------------------------- | Investments held to | | | | | maturity | | | | -------------------------------------------------------------------------------- | Notes and bonds | | | 1,103 | | -------------------------------------------------------------------------------- | Investment | | | 27 | 24 | | property | | | | | -------------------------------------------------------------------------------- | Total | 1,285 | 725 | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 14) Intangible | | | | | | assets | | | | | -------------------------------------------------------------------------------- | EUR million | | | 31 Dec 2008 | 31 Dec | | | | | | 2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Goodwill | | | | 516 | 504 | -------------------------------------------------------------------------------- | Brands | | | | 176 | 179 | -------------------------------------------------------------------------------- | Customer | | | 226 | 250 | | relationships | | | | | -------------------------------------------------------------------------------- | Other | | | | 68 | 66 | -------------------------------------------------------------------------------- | Total | | | | 987 | 999 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 15) Non-life Insurance | | | | | liabilities | | | | -------------------------------------------------------------------------------- | EUR million | | | 31 Dec | 31 Dec | | | | | 2008 | 2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Insurance contract | | | | | liabilities | | | | -------------------------------------------------------------------------------- | Provision for unearned | | 346 | 318 | | premiums | | | | -------------------------------------------------------------------------------- | Provision for unpaid claims | | 1,770 | 1,699 | -------------------------------------------------------------------------------- | Total | | | | 2,115 | 2,017 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Other | | | | 122 | 123 | -------------------------------------------------------------------------------- | Total | | | | 2,238 | 2,140 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 16) Debt securities issued to the | | | | public | | | -------------------------------------------------------------------------------- | EUR million | | | 31 Dec | 31 Dec | | | | | 2008 | 2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Bonds | | | | 6,185 | 7,107 | -------------------------------------------------------------------------------- | Certificates of | | | 10,033 | 5,640 | | deposit | | | | | -------------------------------------------------------------------------------- | Other | | | | 208 | 109 | -------------------------------------------------------------------------------- | Total | | | | 16,425 | 12,856 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 17) Subordinated liabilities | | | | -------------------------------------------------------------------------------- | EUR million | | | 31 Dec | 31 Dec | | | | | 2008 | 2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Subordinated loans | | | 310 | 193 | -------------------------------------------------------------------------------- | Other | | | | 1,012 | 757 | -------------------------------------------------------------------------------- | Total | | | | 1,322 | 950 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Collateral given | | | | | -------------------------------------------------------------------------------- | EUR million | | | 31 Dec | 31 Dec | | | | | 2008 | 2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Given on behalf of own liabilities and | | | | commitments | | | -------------------------------------------------------------------------------- | Mortgages | | | 1 | 1 | -------------------------------------------------------------------------------- | Pledges | | | | 4,134 | 2,631 | -------------------------------------------------------------------------------- | Other | | | | 400 | 123 | -------------------------------------------------------------------------------- | Total collateral | | | 4,534 | 2,755 | | given | | | | | -------------------------------------------------------------------------------- | Total collateralised | | 614 | 564 | | liabilities | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Off-balance-sheet | | | | | commitments | | | | -------------------------------------------------------------------------------- | EUR million | | | 31 Dec | 31 Dec | | | | | 2008 | 2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Guarantees | | | 1,133 | 570 | -------------------------------------------------------------------------------- | Other guarantee liabilities | | 1,476 | 1,489 | -------------------------------------------------------------------------------- | Loan commitments | | | 3,149 | 3,456 | -------------------------------------------------------------------------------- | Commitments related to short-term trade | 152 | 145 | | transactions | | | -------------------------------------------------------------------------------- | Other | | | | 416 | 506 | -------------------------------------------------------------------------------- | Total off-balance-sheet commitments | 6,328 | 6,167 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Accounts receivable and payable from sale or purchase of assets on behalf of | | customers | -------------------------------------------------------------------------------- | EUR million | | | 31 Dec | 31 Dec | | | | | 2008 | 2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Accounts | | | 60 | 86 | | receivable | | | | | -------------------------------------------------------------------------------- | Accounts payable | | | 61 | 88 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Derivative contracts on 31 December 2008 | -------------------------------------------------------------------------------- | EUR million | | | | | | | -------------------------------------------------------------------------------- | | | Nominal values/residual | Total | Fair values | | | | term to maturity | | | -------------------------------------------------------------------------------- | | | <1 year | 1-5 | >5 | | Assets | Liabili | | | | | years | years | | | ties | -------------------------------------------------------------------------------- | Interest rate | 30,212 | 50,776 | 11,910 | 92,897 | 1,111 | 1,129 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Currency | 12,902 | 1,128 | 1,037 | 15,067 | 426 | 747 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Equity and index | 127 | 525 | | 652 | 21 | 2 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Credit | 188 | 179 | | 367 | 4 | 21 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Other derivatives | | 16 | | 16 | 1 | | -------------------------------------------------------------------------------- | Total derivatives | 43,429 | 52,625 | 12,947 | 109,000 | 1,563 | 1,899 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Derivative contracts on 31 December | | | | | | 2007 | | | | | -------------------------------------------------------------------------------- | EUR million | | | | | | | -------------------------------------------------------------------------------- | | | Nominal values/residual | Total | Fair values | | | | term to maturity | | | -------------------------------------------------------------------------------- | | | <1 year | 1-5 | >5 | | Assets | Liabili | | | | | years | years | | | ties | -------------------------------------------------------------------------------- | Interest rate | 44,391 | 39,021 | 8,818 | 92,230 | 388 | 378 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Currency | 9,131 | 1,650 | 995 | 11,775 | 77 | 342 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Equity and | 14 | 264 | 58 | 335 | 51 | 0 | | index | | | | | | | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Credit | 71 | 125 | 0 | 196 | 0 | 1 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Other | 8 | 6 | 0 | 14 | 2 | 0 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Total | 53,615 | 41,067 | 9,870 | 104,551 | 518 | 720 | | derivatives | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Other contingent liabilities and | | | | | | commitments | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | On 31 December 2008, Pohjola Bank's commitments to venture capital funds | | amounted to EUR 18 million and Pohjola Non-Life's commitments to EUR 62 | | million. They are included in the section 'Off-balance-sheet commitments'. | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Related-party | | | | | | | transactions | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Pohjola Bank Group's related parties comprise its parent company, associates | | and administrative personnel and other related-party companies. Pohjola Bank | | Group's Parent Company is OP-Pohjola Group Central Cooperative. | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Pohjola Bank Group's associates were Autovahinkokeskus Oy and Vahinkopalvelu | | Oy on 31 December 2008 and on 31 December 2007. | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Pohjola Bank Group's administrative personnel comprises Pohjola Bank's | | President and CEO, his deputy, members and deputy members of the Board of | | Directors and their close family members. | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Normal loan terms and conditions apply to loans granted to the management. | | Tied to generally used reference rates, these loans with normal collateral | | are repaid according to the agreed repayment schedule. | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Other related-party entities include OP Pension Fund, OP Pension Foundation | | and sister companies within OP-Pohjola Group Central Cooperative | | Consolidated. | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Related-party transactions by 31 December 2008 | | -------------------------------------------------------------------------------- | EUR million | | | | | -------------------------------------------------------------------------------- | | | | Parent | Admini-str | Others | | | | | company | ative | | | | | | | personnel | | -------------------------------------------------------------------------------- | Loans | | | 50 | | 2,167 | -------------------------------------------------------------------------------- | Other receivables | | 62 | | 92 | -------------------------------------------------------------------------------- | Deposits | | | 56 | | 395 | -------------------------------------------------------------------------------- | Other liabilities | | 1 | | 447 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest income | | 8 | | 288 | -------------------------------------------------------------------------------- | Interest expenses | | 11 | | 218 | -------------------------------------------------------------------------------- | Dividend income | | 0 | | 5 | -------------------------------------------------------------------------------- | Other Non-life Insurance income | 4 | | | -------------------------------------------------------------------------------- | Commission income | | 1 | 0 | 24 | -------------------------------------------------------------------------------- | Commission expenses | | 2 | 0 | 3 | -------------------------------------------------------------------------------- | Trading income | | | | 58 | -------------------------------------------------------------------------------- | Trading expenses | | | | 91 | -------------------------------------------------------------------------------- | Other operating income | | 9 | | 14 | -------------------------------------------------------------------------------- | Operating expenses | | 86 | | 7 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Off-balance-sheet commitments | | | | -------------------------------------------------------------------------------- | Guarantees | | | | 68 | -------------------------------------------------------------------------------- | Irrevocable commitments | 8 | | 1 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Salaries and other short-term | | | | | benefits, and performance-based pay | | | | -------------------------------------------------------------------------------- | Salaries and short-term benefits | | 1 | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Related-party holdings | | | | | -------------------------------------------------------------------------------- | Number of shares | 60,825,897 | 63,421 | 4,205,946 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Related-party transactions by 31 December 2007 | | -------------------------------------------------------------------------------- | EUR million | | | | | -------------------------------------------------------------------------------- | | | | Parent | Admini-str | Others | | | | | company | ative | | | | | | | personnel | | -------------------------------------------------------------------------------- | Loans | | | 4 | | 1,325 | -------------------------------------------------------------------------------- | Other receivables | | 64 | | 486 | -------------------------------------------------------------------------------- | Deposits | | | | | 420 | -------------------------------------------------------------------------------- | Other liabilities | | 2 | | 230 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest income | | 2 | | 172 | -------------------------------------------------------------------------------- | Interest expenses | | 6 | | 102 | -------------------------------------------------------------------------------- | Dividend income | | | | 4 | -------------------------------------------------------------------------------- | Other Non-life Insurance income | 3 | | 2 | -------------------------------------------------------------------------------- | Commission income | | 1 | | 27 | -------------------------------------------------------------------------------- | Commission expenses | | 2 | | 3 | -------------------------------------------------------------------------------- | Trading income | | | | 3 | -------------------------------------------------------------------------------- | Trading expenses | | | | 4 | -------------------------------------------------------------------------------- | Other operating income | | 6 | | 11 | -------------------------------------------------------------------------------- | Operating expenses | | 59 | | 5 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Off-balance-sheet commitments | | | | -------------------------------------------------------------------------------- | Guarantees | | 8 | | 45 | -------------------------------------------------------------------------------- | Irrevocable commitments | | | 77 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Salaries and other short-term | | | | | benefits, and performance-based pay | | | | -------------------------------------------------------------------------------- | Salaries and short-term benefits | | 1 | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Related-party holdings | | | | | -------------------------------------------------------------------------------- | Number of shares | | 60,825,897 | 72,278 | 4,220,946 | -------------------------------------------------------------------------------- The Financial Statements Bulletin for 1 January-31 December 2008 was prepared according to IAS 34 (Interim Financial Reporting), as approved by the EU. The Financial Statements 2008 contain a description of the accounting policies applied by Pohjola Group. The Financial Statements Bulletin is based on unaudited information. Since all figures in this bulletin are rounded off, the sum of single figures may differ from the presented sum total. -------------------------------------------------------------------------------- | Financial reporting in 2009 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Schedule for Interim Reports in 2009 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interim Report Q1 | 7 May | -------------------------------------------------------------------------------- | Interim Report Q2 | 6 August | -------------------------------------------------------------------------------- | Interim Report Q3 | 5 November | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Helsinki, 12 February 2009 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Pohjola Bank | | | | | | | | plc | | | | | | | -------------------------------------------------------------------------------- | Board of | | | | | | | | Directors | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | The Financial Statements Bulletin is available at www.pohjola.fi/english > | | Media. Background information on the report can also be found at the same | | address. | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Meeting for | | | | | | | | analysts | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | A meeting for analysts will be held in Finnish at 10.00 am on 12 February | | 2008 and a conference call in English on the same day at 3.30 pm. Those | | wishing to participate in the conference call must register for the event in | | advance by email, anne.hasso@pohjola.fi, or by telephone, +358 252 2569 Anne | | Hasso. At the same time, they will receive a PIN code required for the | | conference call. | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Pohjola Bank plc | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Markku Koponen | | -------------------------------------------------------------------------------- | Senior Vice President | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | DISTRIBUTION | | -------------------------------------------------------------------------------- | NASDAQ OMX Helsinki Ltd | -------------------------------------------------------------------------------- | London Stock Exchange | -------------------------------------------------------------------------------- | SWX Swiss Exchange | | -------------------------------------------------------------------------------- | Major media | | -------------------------------------------------------------------------------- | www.pohjola.fi | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | For additional information, please | | | | | contact | | | | -------------------------------------------------------------------------------- | Mr Mikael Silvennoinen, President and CEO, tel. +358 (0)10 252 | | | 2549 | | -------------------------------------------------------------------------------- | Mr Jouko Pölönen, CFO, tel. +358 (0)10 252 3405 | | | -------------------------------------------------------------------------------- | Ms Tarja Ollilainen, Senior Vice President, Investor Relations, tel. +358 | | (0)10 252 4494 | --------------------------------------------------------------------------------
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