Pohjola Pankki Oyj - Interim report (Q1 and Q3)

OP: Strong Q1 performance, new "Putting Finland on a new growth path" openings

OP Financial Group
Stock Exchange Release 29 April 2015 at 8.00 am
Interim Report


OP: Strong Q1 performance, new "Putting Finland on a new growth path" openings

  * Earnings before tax for the first quarter were EUR 320 million (257), year-
    on-year improvement 24%. Total income increased by 8% while expenses
    decreased by almost 3% year on year.
  * Supported by the strong financial performance, the Group's CET1 ratio
    improved to 16.7% (15.1).
  * The strong capital base, therefore, made it possible for its part to
    increase lending at a rate above the market average:
      * The home loan portfolio grew by 2.7% year on year
      * The corporate loan portfolio increased by 6.1%
      * The total loan portfolio increased by 4.4% and the number of loans drawn
        down by 7.5%
  *  The home loan repayment grace period offered by the Group was used for over
    62,000 loans by the release date of this report.
  * New customer bonuses for January-March totalled EUR 48 million
  * Each of the three business segments improved its performance:
      * Banking earnings before tax increased by 21% to EUR 192 million (158).
        The cost/income ratio improved by 5 percentage points to 51%. The
        deposit portfolio grew 2.5%. Impairment loss on receivables was at a low
        level of 0.12% of the loan and guarantee portfolio.
      * Earnings before tax by Non-life Insurance increased by 6.5% to EUR 66
        million (62). The operating combined ratio was 87.2%. Insurance premium
        revenue rose by 5%.
      * Wealth Management earnings before tax increased by 34% to EUR 93 million
        (69). Assets under management grew by 24% to EUR 67 billion.
  * Full-year earnings for 2015 are expected to equal or exceed those of 2014.
    For more information, see "Outlook towards the year end".

OP Financial Group's key indicators
-------------------------------------------------------------------------------
                                   Q1/2015       Q1/2014 Change, %         2014
-------------------------------------------------------------------------------
 Earnings before tax, €                320           257      24.3          915
 million

   Banking                             192           158      21.3          570

   Non-Life Insurance                   66            62       6.5          223

   Wealth Management                    93            69      34.0          167



 New accrued customer                   48            46       5.1          189
 bonuses



                             31 March 2015 31 March 2014 Change, % 31 Dec. 2014

 Common Equity Tier 1 (CET1)          16.7          15.5      1.2*         15.1
 ratio, %

 Ratio of capital base to              167           200      -33*          189
 minimum amount of capital
 base (under the Act on the
 Supervision of Financial
 and Insurance
 Conglomerates), %

 Ratio of receivables more            0.42          0.42     0.00*         0.37
 than 90 days overdue to
 loan and guarantee
 portfolio, %

 Joint banking and                   1,604         1,535       4.5        1,590
 insurance customers
 (1,000)
-------------------------------------------------------------------------------
* Change in ratio

Comments by Reijo Karhinen, President and Group Executive Chairman

OP Financial Group's performance for the first quarter of 2015 made good
progress according to our plans and targets. We have taken determined steps to
implement our reform programme that has extended to the core of our business. At
the same time, we showed excellent business performance. Our earnings that
increased to a record level strengthened our capital base. Our solid capital
base enabled us to again increase the volume of home and corporate loans faster
than our competitors. Wealth Management showed the strongest growth, where
assets under management increased by as much as a quarter.

It was gratifying to see the significant improvement in our first-quarter
financial performance and how it was built on a steady, positive development
shown on almost every line in our income statement. Income increased and
expenses decreased in line with our strategy. Income grew at a brisk rate
although growth in net interest income slowed down as expected. The prolonged
low and an almost zero interest rate environment will present challenging
conditions for all our business segments. Slow economic growth combined with low
interest rates and the fast-spreading digitisation with new investments will
require very strict cost control in the future too.

Our return to a financial services group wholly owned by customers culminated in
our plan announced in the reporting period to change Helsinki OP Bank Plc to a
cooperative bank at the beginning of 2016 that allows customer ownership. Our
unified ownership base will create clarity, consistency and new efficiency for
our operations. The bases for our management and goal-setting will also sharpen.
In our business role we create prosperity that we utilise in our social role for
the benefit of our customer-owners and operating environment.

Customer ownership combined with our core values obliges us to use our results
to strengthen our capital base, develop our services further and, for example,
for new "#PuttingFinland on new growth path" openings. In our social role, we
launched in the first quarter two large #PuttingFinland on new growth path
projects related to our businesses. Our launch of the home loan repayment grace
period and a single financing process model for SMEs is aimed at increasing
economic activity nationwide by providing solutions and creating a more positive
mood for economic debate.  Great interest has been shown in our new openings.

OP Financial Group's success and ability to be a strong partner with its
customers depend substantially in the long run on Finnish economic development.
In this respect, the outlook is still weak. A large number of economic problems
are, however, self-inflicted ones and, thus, Finland also has to solve them
itself.

Finland must return its economy to a sustainable growth path and rebalance its
public finances. A solution-seeking and confidence-enhancing atmosphere must be
created in the entire society. While the economy of the rest of the euro area
shows signs of slight recovery thanks to the robust monetary policy measures
taken by the ECB, our threat is a divergence from the euro area core with
potentially fatal consequences and leaving without support from the others.
Finland needs to focus the most important corrective measures on improving its
external competitiveness. This is the only way the Finnish economy can return to
the growth path. Near future will see whether our key policymakers can show
genuine responsibility and the appropriate crisis awareness. Confidence in the
future is created only through acts.

Financial performance in the report period

Earnings before tax for the first quarter were the highest ever recorded for a
quarter. Earnings before tax increased by 24% to EUR 320 million (257), this
improvement being due especially to strong growth in income. Net income from
Life Insurance and Non-life Insurance increased the most, due to better
insurance profitability and higher investment income. Net commissions and fees
also increased during the reporting period.

Total expenses decreased by 2.7%, being EUR 11 million lower than a year ago. A
non-recurring provision recognised for personnel costs of EUR 9 million related
to the reorganisation of the central cooperative consolidated announced in
February. Higher personnel costs are also explained by social expenses rising by
EUR 8 million. Statutory contributions to the Deposit Guarantee Fund and the
bank levy (EUR 18 million) plus the non-recurring expenses incurred due to the
purchase of Pohjola Bank plc shares (EUR 8 million) increased other operating
expenses in the first quarter a year ago.

OP Financial Group's fair value reserve before tax totalled EUR 683 million
(531) on 31 March. Earnings before tax at fair value amounted to EUR 479 million
(253).

Equity capital amounted to EUR 7.7 billion (7.2) on 31 March. The Group's
earnings and the issuance of Profit Shares added to equity capital. On 31 March,
EUR 1.8 billion (1.6) in Profit Shares were included in equity.

Outlook towards the year end

There are first signs of economic recovery in Europe. Despite the ECB's
expansionary monetary policy measures, the economic growth rate is, however,
expected to remain modest this year. The Finnish economy is also expected to
remain sluggish. International political tensions will continue to cause
uncertainty to the Finnish economic development.

Weak economic growth will undermine growth expectations in the financial sector.
The continued reduction in interest rates places a further burden on the net
interest income of banks and erode the investment income of insurance
institutions. Then again, low interest rates support customers' loan repayment
capacity that has remained stable despite the prolonged period of slow growth.
Capital adequacy and profitability have come to play an ever-increasing role
because of the unstable operating environment and the tighter regulatory
framework.

In spite of the challenging operating environment, OP Financial Group expects
its earnings before tax to equal or exceed those in 2014. The most significant
uncertainties associated with the earnings estimate are related to the effects
of low interest rates, impairment loss on receivables and unfavourable changes
in the investment 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 developments in the economy, and actual results may
differ materially from those expressed in the forward-looking statements.

Press conference
OP Financial Group's financial performance will be presented to the media by
Executive Chairman and CEO Reijo Karhinen in a press conference on 29 April
2015 at 12 noon at Vääksyntie 4, Vallila, Helsinki.

Pohjola Bank plc will publish its own Interim Report.

Financial reporting in 2015
Schedule for Interim Reports in 2015:
Interim Report H1/2015: 5 August 2015
Interim Report Q1-3/2015:28 October 2015

OP Cooperative
Executive Board


ADDITIONAL INFORMATION
Reijo Karhinen, President and Group Executive Chairman, tel. +358 (0)10 252 4500
Harri Luhtala, CFO, tel. +358 (0)10 252 2433
Carina Geber-Teir, Executive Vice President, Corporate Communications, tel.
+358 (0)10 252 8394

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


OP Financial Group is Finland's leading financial services group providing a
unique range of banking, wealth management and insurance services. OP's mission
is to promote the sustainable prosperity, security and wellbeing of its
customer-owners, customers and operating regions. Its objective is to offer the
best and most versatile package of loyal customer benefits on the market. OP
Financial Group consists of about 180 member cooperative banks, its central
institution OP Cooperative, and the latter's subsidiaries and affiliates. The
Group has a staff of 12,000. OP Financial Group has 4.3 million customers.

As laid down in the applicable law, OP Cooperative and its member credit
institutions are ultimately jointly and severally liable for each other's debts
and commitments. The joint liability in the OP Financial Group is prescribed by
the Act on the Amalgamation of Deposit Banks. Pohjola Bank plc and OP Mortgage
Bank are responsible for OP's funding operations on money and capital markets.
www.op.fi

[HUG#1916232]

Bifogade filer:

OP Financial Group Interim Report Q1 2015.pdf

OP Group Q1 2015 Background Material.pdf