Pohjola Pankki Oyj - Interim report (Q1 and Q3)

Pohjola Group Performance for January-March 2014

Pohjola Bank plc
Stock exchange release 29 April 2014, at 8.00 am
Interim Report

Pohjola Group Performance for January-March 2014
- Consolidated earnings before tax amounted to EUR 159 million (132) and
consolidated earnings before tax at fair value to EUR 163 million (114). The
return on equity was 16.5% (14.5).
-The Common Equity Tier 1 (CET1) ratio was 12.0% (11.9*).
-Strong growth in income improved Banking earnings. The loan portfolio remained
at the year-end level and increased by 3% in the year to March. The average
margin on the corporate loan portfolio was 1.54% (1.57). Earnings included EUR
4 million (6) in impairment loss on receivables.
- Within Non-life Insurance, insurance premium revenue increased by 8% (10). The
combined ratio improved to 91.0% (94.2). Excluding changes in reserving bases
and amortisation on intangible assets arising from company acquisition, the
operating combined ratio was 89.3% (92.4). Return on investments at fair value
was 1.4% (1.1).
- Within Asset Management, assets under management increased by 3% from their
year-end level, amounting to EUR 39.2 billion (37.9).
- Total income increased by 11% and expenses by 4%. Cost savings out of the EUR
12 million estimated for 2014 based on the efficiency-enhancement programme
amounted to EUR 1 million.
-Pohjola's Board of Directors confirmed Pohjola Group's updated financial
targets on 17 March 2014. It increased the capital adequacy target from 11%
(Core Tier 1) to 15% (Common Equity Tier 1) as a result of tightening regulation
and decreased the dividend payout ratio from 50% to 30% until Pohjola has
achieved its new CET1 target.
-OP-Pohjola Group Central Cooperative Consolidated executed a public voluntary
bid for Pohjola Bank plc shares. After the end of the extra offer period, OP-
Pohjola Group Central Cooperative's ownership increased to approximately 98.41%
of the shares and to approximately 99.14% of the votes conferred by the shares.
On 11 April 2014, OP-Pohjola Group Central Cooperative initiated a squeeze-out
procedure under the Limited Liability Companies Act for the remaining shares in
Pohjola.
- Unchanged outlook: Consolidated earnings before tax for 2014 are expected to
be higher than in 2013. For more detailed information on the outlook, see"Outlook towards the year end" below.

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 2013 are used as
comparatives.  Comparative figures have been restated as a result of the
adoption of IFRS 10 Consolidated Financial Statements.
*) In accordance with the EU capital requirements regulation (EU 575/2013) (CRR)
that entered into force on 1 January 2014.
**) Estimate; Solvency II regulations are still in progress.

 Earnings before tax, € million             Q1/2014 Q1/2013 Change, %      2013
-------------------------------------------------------------------------------
   Banking                                       83      54        55       251

   Non-life Insurance                            62      56        12       166

   Asset Management                               6       5        31        24

   Group Functions                                8      18       -58        39

 Total                                          159     132        21       479

 Change in fair value reserve                     4     -18                 -16

 Earnings before tax at fair value              163     114        41       463



 Earnings per share, €                         0.39    0.31                1.33

 Equity per share, €                           9.25    8.48                9.54

 Average personnel                            2 593   2 688               2 632
-------------------------------------------------------------------------------


 Financial targets                          Q1/2014 Q1/2013      2013    Target
-------------------------------------------------------------------------------
 Return on equity, %                           16.5    14.5      14.4        13

 Common Equity Tier 1 ratio (CET1), % *)       12.0              11.9        15

 Operating cost/income ratio by Banking, %       33      40        36      < 35

 Operating combined ratio by Non-life
 Insurance, %                                  89.3    92.4      86.9      < 92

 Operating expense ratio by Non-life
 Insurance, %                                  18.5    19.9      18.7        18

 Non-life Insurance solvency ratio (under
 Solvency II framework), % **)                  134     115       125       120

 Operating cost/income ratio by Asset
 Management, %                                   51      58        53      < 45

 Total expenses in 2015 at the same level
 as at the end of 2012                          151     145       581       569

 AA rating affirmed by at least two credit
 rating agencies or credit ratings at
 least at the main competitors' level             2       2         2         2

 Dividend payout ratio at least 50%,
 provided that CET 1 ratio is at least
 15%. Dividend payout ratio is 30% until
 CET1 ratio of 15% has been achieved.                              50 > 50 (30)
-------------------------------------------------------------------------------

President and CEO Jouko Pölönen:

Consolidated earnings before tax improved by EUR 27 million to EUR 159 million
and the return on equity was 16.5%. Banking and Non-life Insurance, in
particular, improved their earnings.

The Banking loan portfolio increased year on year. During the reporting period,
demand for loans was weak and the loan portfolio remained at the 2013-end level.
Income from Banking increased as a result of higher net interest income, net
commissions and fees as well as net trading income. The quality of the loan
portfolio remained good and impairment loss on receivables was lower than a year
ago.

Within Non-life Insurance, insurance premium revenue continued to grow strongly.
As a result of the unusually mild winter, claims incurred increased more slowly
than insurance premium revenue, and the balance on technical account improved.
Return on investments at fair value was better than a year ago due to lower
interest rates.

Within Asset Management, assets under management increased from their 2013-end
level. Asset Management earnings improved as a result of higher net commissions
and fees.

Total income increased by 11% and expenses by 4%. Our expenses were above the
target and we will have to improve our operational efficiency further.

Pohjola Bank plc's Board of Directors confirmed updated financial targets for
Pohjola Group. It increased the Common Equity Tier 1 (CET1) ratio target to 15%
as a result of tightening regulation and decreased the dividend payout ratio to
30% until Pohjola has achieved its new CET1 target.

OP-Pohjola Group Central Cooperative, Pohjola's parent company, executed the bid
for Pohjola shares announced on 6 February 2014. As a result, its holding in
Pohjola shares has increased to approximately 98.41%. OP-Pohjola Group Central
Cooperative has initiated a squeeze-out procedure under the Limited Liability
Companies Act for the remaining shares in Pohjola.

The planned reorganisation following the bid will make Pohjola's business lines
integrate more closely with the more efficient and more competitive OP-Pohjola
Group wholly owned by its customers. This will create excellent opportunities
for us to provide the entire OP-Pohjola Group's resources for our customers and
to continue to promote their sustainable prosperity, security and wellbeing more
effectively.

Outlook towards the year end

Within Banking, the loan portfolio is expected to grow at the same rate as in
2013. Due to the operating environment, corporate investments are expected to
remain below their normal level. The greatest uncertainties related to Banking's
financial performance are associated with volume developments and future
impairment loss on the loan portfolio. Banking earnings before tax in 2014 are
expected to be at the same level as or higher than in 2013.

Insurance premium revenue is expected to increase at a rate above the market
average. The operating combined ratio is estimated to vary between 87% and 91%
if the number of large claims is not much higher than in 2013. Expected
investment returns are largely dependent on developments in the investment
environment. The most significant uncertainties related to Non-life Insurance's
financial performance pertain to developments in bond and capital markets and to
the effect of large claims on claims expenditure. Non-life Insurance earnings
before tax in 2014 are expected to be higher than in 2013.

The greatest uncertainties related to Asset Management's financial performance
are associated with the actual performance-based commissions and fees tied to
the success of investments and the amount of assets under management. Asset
Management earnings before tax in 2014 are expected to be at the same level as
or higher than in 2013.

The key determinants affecting the Group Functions' financial performance
include net interest income arising from assets in the liquidity buffer, any
capital gains or losses on notes and bonds and any impairment loss that may be
recognised on notes and bonds in the income statement. Group Functions earnings
before tax in 2014 are expected to be lower than in 2013 due to low interest
rates and tighter liquidity regulation.

Consolidated earnings before tax in 2014 are expected to be higher than in 2013.

There is still great uncertainty about the economic outlook and the operating
environment.
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 development in the operating environment
and 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.

Helsinki, 29 April 2014
Pohjola Bank plc
Board of Directors

This Financial Statement Bulletin is available at www.pohjola.com > Media >
Releases, where background information on the Bulletin can also be found.

Analyst meeting, conference call and live webcast

Pohjola will hold a briefing in English for analysts and investors on 29 April
starting at 3.00 pm Finnish time, EET (2.00 pm CET, 1.00 pm UK time, 8 am US
EST). The briefing is a combined analyst meeting, conference call and live
webcast. Because of OP-Pohjola Group Central Cooperative's execution of the bid
for Pohjola shares, this will be the last briefing for analysts and investors on
the issue date of Pohjola's financial report.

Analysts and investors may attend the briefing in one of the following two ways:
1) By viewing the briefing as live webcast via the internet. The link will be
available on the IR website before the briefing begins. Questions on the
internet are welcome via a question button available in the webcast window. An
on-demand webcast of the briefing can be viewed via the IR website afterwards.

2) By dialling one of the regional conference call numbers shown below.
Questions are welcome by telephone in the Q&A session according to instructions.
To participate via a conference call, please dial in 5-10 minutes before the
beginning of the event:
FI: +358 981 710 460
UK: +44 203 364 5374
US: +1 855 753 2230
Password: Pohjola

Press conference

Jouko Pölönen, Pohjola Bank plc's President and CEO, will present the financial
results in a press conference on OP-Pohjola Group's premises (Vääksyntie 4,
Vallila, Helsinki), on 29 April, starting at noon.

Financial reporting in 2014
Schedule for Interim Reports in 2014:

Interim Report H1/2014: 6 August 2014
Interim Report Q1-3/2014: 29 October 2014


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

For additional information, please contact
Jouko Pölönen, President and CEO, tel. +358 (0)10 253 2691
Vesa Aho, CFO, tel. +358 (0)10 252 2336
Niina Pullinen, Senior Vice President, Investor Relations, tel. +358 (0)10
252 4494


Pohjola is a Finnish financial services group that offers its customers banking,
non-life insurance and asset management services. Pohjola's mission is to
promote the prosperity, security and wellbeing of its customers. Key targets
include profitable growth and increasing the company's value. Pohjola Group
serves corporate customers in Finland and abroad by providing an extensive range
of financial, investment, cash management and non-life insurance services. For
private customers, the Group provides non-life insurance and private banking
services. Pohjola Series A shares have been listed on the Large Cap List of the
NASDAQ OMX Helsinki since 1989. Pohjola's consolidated earnings before tax
amounted to 473 million euros in 2013 and the balance sheet total amounted to
44 billion euros on 31 December 2013. Pohjola is part of OP-Pohjola Group, the
leading financial services group in Finland with 4.3 million customers.
www.pohjola.com


[HUG#1780753]

Attachments:

Pohjola Bank plc s Interim Report for 1 January-31 March 2014.pdf

Background material Q1 2014.pdf