Pohjola Pankki Oyj - Financial Statement Release

OP-Pohjola Group's pre-tax earnings EUR 518 million - Banking's result improved markedly

OP-Pohjola Group
Stock Exchange Release 8 February 2012 at 8.00 am (EET)
Financial Statements Release

OP-Pohjola Group's pre-tax earnings EUR 518 million - Banking's result improved
markedly

- The Group's earnings before tax amounted to EUR 518 million.
- Earnings in Q4 were eroded by the changes in reserving bases of technical
provisions concerning insurance operations that were already reported earlier.
Excluding these items, the Group's full-year earnings before tax would have been
somewhat better than the year before (575).
- Banking's earnings before tax grew strongly and were 30% higher year on year.
Results for Non-life and Life Insurance segments shrank clearly.
- Net interest income continued on a good growth path and was 12%, while
expenses increased by 6%.
- Impairment losses on receivables shrank by EUR 47 million, amounting to 0.16%
of the loan and guarantee portfolio.
- Deposits increased notably faster than the market average. Non-life
Insurance's premiums written and both home mortgage and corporate loan
portfolios grew at a rate higher than the market average.
- Good progress was made in the strategic focus areas: OP-Pohjola Group's joint
banking and insurance customers increased in the report period by 102,000,
corporate deposits by 22% and the corporate loan portfolio by 11%.
- OP-Pohjola Group was for the first time chosen as the primary intermediary of
the Finnish state's payment transfers, effective as of 1 December 2012.
- OP-Pohjola Group's capital adequacy is very strong. The Core Tier 1 ratio
stood at 14.0%. The Group's capital base exceeded the statutory minimum by EUR
2.5 billion.
- Subject to there being no material weakening of the operating environment and
no new turn for the worse in the management of the debt crisis in the euro area,
OP-Pohjola Group's 2012 results are expected to be at the same or even a better
level than the year before.

OP-Pohjola Group's key indicators
--------------------------------------------------------------------------------
                                                      2011        2010 Change, %
--------------------------------------------------------------------------------
Earnings before tax, EUR million                       518         575      -9.9

   Banking                                             478         367      30.0

   Non-life Insurance                                    8          83     -90.5

   Life Insurance                                       10          43     -76.4



Returns to owner-members
and OP bonus customers                                 176         163       8.1

                                               31 Dec 2011 31 Dec 2010 Change, %

Ratio of capital base to minimum amount of
capital base (under the Act on the Supervision
of Financial and Insurance Conglomerates)             1.80        1.70     0.10*

Tier I ratio, %
Core Tier 1, %                                        14.0        12.6      1.4*

Non-performing receivables within loan and
guarantee portfolio, %                                0.47        0.34     0.13*

Joint banking and
insurance customers  (1,000)                         1,299       1,197       8.5
--------------------------------------------------------------------------------
* Change in ratio


Comments by Reijo Karhinen, Executive Chairman

The euro area crisis has not deteriorated OP-Pohjola Group's form. We are going
against the current. Our solid capital adequacy and good funding has been a
winning combination amid this crisis.

OP-Pohjola Group continued in 2011 on a steady path in an extremely demanding
market environment. Thanks to a major improvement in earnings by Banking, the
whole Group's earnings reached 518 million euros - which is a good result. We
are pleased to record an improvement in net interest income while being able to
reduce credit losses.

While Banking did well, the entire Group's performance was nevertheless eroded
by previously reported major technical provisions concerning insurance
operations in the fourth quarter.

The fact that our deposits increased markedly under such conditions is a clear
indication that we have our customer's trust. There is a heated debate in Europe
about capitalisation by banks and about tighter capital adequacy limits.
Meanwhile, we decided on our own to raise our capital adequacy target to 15 per
cent, which is well over the statutory requirement. We want to continue to
provide a safe haven in the financial sector.

We must not exaggerate the effect of the euro area sovereign debt crisis on the
personal finances of ordinary Finns. It is my estimate that demand for financial
services will remain high in 2012. For most households in Finland, 2012 will be
financially better than 2011. Low interest rates will favour housing sales, and
as households have more money available, there will be more demand for savings
and investment services.

In the middle of all this market turmoil, we at OP-Pohjola Group nevertheless
see a bright future ahead. Last year we started an exceptional number of major
investments. We set up a development unit of mobile services in Oulu, started
the Vallila 2015 office premises project that will last over four years, and
created more than 700 jobs around Finland.

The first signs of economic stabilisation are emerging. These will help to
alleviate the worst fears, but we are only beginning a long journey to recover
from the debt crisis. It is still a balancing act, though: we may be cautiously
optimistic, but major setbacks are still possible, depending on how the debt
crisis is handled.

Finnish decision-makers must now quickly focus on Finland and less on Europe. We
have little by little eroded our financial buffers and public debt is growing at
a high rate. At the same time our external competitiveness has weakened.
Decision-makers should now boldly and with determination focus on structural
solutions that support growth. Long-term reforms are vitally important both in
order to retain Finland's credit rating and to boost competitiveness.


Financial performance in the report period

The Group's earnings before tax amounted to EUR 518 million (575). In 2011, the
changes in reservation bases recorded in non-life and life insurance weakened
the Group's earnings by EUR 74 million. In 2010, similar changes in reservation
bases were recorded by EUR 50 million in net terms. Pre-tax earnings adjusted
for changes in reserving bases contracted in the challenging operating
environment by 5.3% year on year.

The result made in the report period was boosted by increased net interest
income and net commissions and fees in Banking as well as by decreased
impairment losses on receivables. Earnings were eroded by falling investment
income and the changes in reserving bases referred to above. Bonuses to owner-
members and OP bonus customers that were recognised in the profit and loss grew
by 7.4% year on year to EUR 163 million.

Earnings before tax at fair value were eroded by falling market prices owing to
the uncertainty in the investment market.


Outlook for 2012

The world economic outlook for 2012 is uneven. Economic growth in the euro area
is likely to remain feeble. The Finnish economic prospects for 2012 also look
weak. Economic growth in the euro area and in Finland is significantly affected
by the euro-area debt crisis, which has a considerable impact on the financial
sector's operating environment, too. Low market rates, the general uncertainty
in investment markets and weak economic growth in combination with tighter
regulation concerning the financial sector increase the uncertainties related to
the outlook.

The uncertainty related to economic growth and the euro-area debt crisis also
significantly hamper any forecasts about OP-Pohjola Group's financial
performance in 2012. Subject to there being no material weakening of the
operating environment and no new turn for the worse in the management of the
debt crisis in the euro area, OP-Pohjola Group's results are expected to be at
the same or even a better level than the year before.

All forward-looking statements in this report expressing the management's
expectations, beliefs, estimates, forecasts, projections and assumptions are
based on the current view on developments in the economy and actual results may
differ materially from those expressed in the forward-looking statements.


Financial reporting in 2012

Schedule for Interim Reports in 2012:

Interim Report Q1/2012        3 May 2012
Interim Report H1/2012        1 August 2012
Interim Report Q1-3/2012        31 October 2012

Helsinki, 8 February 2012.

OP-Pohjola Group Central Cooperative
Executive Board


ADDITIONAL INFORMATION
Executive Chairman Reijo Karhinen, tel. +358 (0)10 252 4500
Harri Luhtala, CFO, tel. +358 (0)10 252 2433
Carina Geber-Teir, Chief Communications Officer, tel. +358 (0)10 252 8394


DISTRIBUTION
NASDAQ OMX Helsinki Ltd
London Stock Exchange
SIX Swiss Exchange
Major media
op.fi and pohjola.fi

OP-Pohjola Group is Finland's leading financial services group providing a
unique range of banking, investment and insurance services. The Group has the
mission of promoting the sustainable prosperity, well-being and security of its
owner-members, customers and operating regions through its local presence. Its
objective is to offer the best and most versatile package of loyal customer
benefits on the market. OP-Pohjola Group consists of some 200 member cooperative
banks and the Group's central institution, OP-Pohjola Group Central Cooperative,
with its subsidiaries and closely-related companies, the largest of which is thelisted company Pohjola Bank plc. With a staff of more than 13,000 OP-Pohjola
Group posted consolidated earnings of 518 million euros before tax in 2011 and
had total assets of 92 billion euros on 31 December 2011. The group has over
four million customers.

www.op.fi


[HUG#1583433]

Attachments:

OP_Pohjola_Background material_Q4.pdf

OP_Pohjola Group s Financial Statements Bulletin.pdf