Pohjola Pankki Oyj - Interim report (Q1 and Q3)

OP: solid earnings to build tomorrow's Finland

OP Financial Group
Stock Exchange Release
5 February 2015 at 8.00 am
Financial Statements Bulletin

OP: solid earnings to build tomorrow's Finland
  * Earnings before tax for 2014 were EUR 915 million (701), year-on-year
    improvement 31%.
  * Group total income increased by 8%, while expenses decreased.
  * Impairment loss on receivables totalled EUR 88 million (84), that is, at a
    low level of 0.12% of the loan and guarantee portfolio.
  * The Group's owner-members and OP bonus customers received bonuses and income
    from equity investments in 2014 to an estimated total of EUR 216 million
    (193).
  * The Group's taxes for the financial year were EUR 337 million (120).
  * Each of the three business segments improved its performance markedly.

      * Banking earnings before tax increased by 45% to EUR 587million (404).
        The cost/income ratio improved by 6 percentage points to 56%. The loan
        portfolio grew by 3.8% and deposits by 3.0% during the year.
      * Earnings before tax by Non-life Insurance increased by 34% to EUR 223
        million (166). The operating combined ratio reached a record level of
        84.7%. Premiums written increased in the financial year by 5%.
      * Wealth Management earnings before tax increased by 43% to EUR 161
        million (113). Mutual fund assets increased during the year by 21% and
        unit-linked insurance savings by 21%.
      * The number of joint banking and non-life insurance customers increased
        by 72,000 to 1,590,000.
  * During 2014, OP Financial Group redeemed Pohjola Bank plc shares held by
    shareholders outside the Group by EUR 2.4 billion, and Pohjola Bank plc's
    shares were delisted from Helsinki Stock Exchange on 30 September 2014.
  * Despite the purchase of Pohjola Bank plc shares, the Group's capital
    adequacy is strong. On 31 December, Common Equity Tier 1 (CET1) was 15.1%
    (17.1). Profit shares that support CET1 were issued by the end of the year
    for EUR 1,561 million.
  * Earnings before tax in 2015 are expected to be equal or higher than in
    2014. For more information, see "Outlook for 2015".

OP Financial Group's key indicators
                                              Q1-Q4/2014  Q1-Q4/2013  Change, %
-------------------------------------------------------------------------------
 Earnings before tax, EUR million             915         701         30.6

   Banking                                    587         404         45.1

   Non-Life Insurance                         223         166         34.4

   Wealth Management                          161         113         42.5



 Returns to owner- members and OP bonus       195         193         0.7
 customers

                                              31 Dec 2014 31 Dec 2013 Change, %

 Common Equity Tier 1 (CET1) ratio, %**       15.1        17.1        -2.0*

 Ratio of capital base to minimum amount of
 capital base (under the Act on the           1.89        2.19        -0.3*
 Supervision of Financial and Insurance
 Conglomerates)**

 Ratio of receivables more than 90 days       0.38        0.42        -0.04*
 overdue to loan and guarantee portfolio, %

 Joint banking and insurance customers        1,590       1,518       4.7
 (1,000)
-------------------------------------------------------------------------------
* Change in ratio  ** The comparatives are presented based on the regulatory
framework that came into effect on 1 January 2014.


Comments by Reijo Karhinen, Executive Chairman and CEO
Within OP Financial Group 2014 involved big decisions, new initiatives and many
successes. Our transformation into a genuine financial group owned by its
customers has proceeded according to plan not only in terms of our values and
but also from legal and operational perspectives. Our transforming group
structure will more clearly support our mission. We exist to serve our
customers. In addition to reporting good financial results, how we use our
annual earnings is also essential.

In our business role, we continued to manage to improve our earnings
significantly. Total income showed a strong increase and total expenses were
lower than a year ago. Our profit target will be demanding in the future too.
The new regulatory framework requires a sound business basis and a strong
capital base of a financial services provider. As a financial group owned by
customers, we will continue to fulfil the tightening capital adequacy
requirements to a significant extent just by showing good results.

Supported by our strong capital base, we continued to implement our mission
successfully to fulfil our customers' financing needs. Not only our corporate
financing business but also home loans increased at a higher rate than the
market average. Our good performance figures in Wealth Management and Non-life
Insurance give an indication of our improved market positions and of the
competitiveness of our products and services.

A strong financial performance enables us to also build Finland of tomorrow.  In
our business role we create prosperity that we utilise in our social role
associated with our business owned by customers. We allocated half of our last
year's total earnings to improve our capital adequacy, a fifth for customer
bonuses and interest amounts of our customer-owners' capital contributions. The
rest of the earnings, or around 30%, was paid in taxes.  Last year our income
taxes were record high. Our tax footprint is one of the largest one in Finnish
society.

The operating environment in the financial sector has been undergoing drastic
changes for several years now. This trend is going on and deepening. Economic
growth is slow, interest rates will remain record low, regulation will become
tighter and customer behaviour will change. Digitisation will, however, act as
the most significant change driver that will shake up our business in the next
few years. Particularly mobile services in the financial sector have great
potential and demand for them is on the increase. Amid this revolution,
successful actors will be those which have a solid capital base, are price
competitive and are able to transform themselves and create value in new ways.
We must prepare ourselves for changes and requirements that the digital
revolution will entail. The way of granting loans, for example, will be very
different in a few years' time.

Putting Finland on a new growth path - OP is ready. As the clear market leader
in Finland, we are a remarkable service provider on a nation-wide basis. Our
corporate form not only allows but also obliges us to bear responsibility for
Finland. We are willing and able to support Finnish economic development. The
time is ripe to put an end to the current stagnation and do something new and
different. We will offer our private customers loan repayment grace periods on
an extensive basis during 2015. The planned grace periods have the potential of
giving a stimulus worth about one billion euros in the Finnish economy.

Financial performance in the report period

OP Financial Group's earnings before tax grew by 31% to EUR 915 million (701).
Earnings were boosted especially by an increase in net interest income and Non-
life Insurance's net income. Net commissions and fees and net income from Life
Insurance increased, too. Expenses no longer increased, which improved results
of the entire Group.

Net interest income increased by 14%. The increase in net interest income was
the result of an increase in the average margin and the growth of the balance
sheet. The favourable development of net interest income from capital market
products and the decrease in deposit funding costs also promoted the growth of
net interest income.

The Group's total expenses decreased by 0.4%, being EUR 6 million lower than a
year ago. Other operating expenses were increased in the financial year by non-
recurring expenses incurred by the purchase of Pohjola Bank plc shares,
amounting to a total of EUR 12 million. Without these non-recurring items'
effect on comparability, the decrease in expenses was 1.1%.

OP Financial Group's fair value reserve before tax totalled EUR 531 million
(409) on 31 December. Earnings before tax at fair value were EUR 1,067 million
(662).

Equity capital amounted to EUR 7.2 billion (7.7) on 31 December. The purchase of
Pohjola Bank plc shares in the financial year reduced the Group's equity capital
by EUR 2.4 billion. On the other hand, equity capital was increased by the
Group's earnings and the issuance of Profit shares. On 31 December, EUR 1.6
billion (0) of Profit shares were included in the equity.

Outlook for 2015

The euro area's economy is still growing at a slow rate and is susceptible to
disruptions despite the European Central Bank's easy monetary policy and other
measures taken to support economic growth. Economic growth is also expected to
be weak in Finland, although exports are slowly increasing. Tension in
international politics is still a significant factor of uncertainty for the
Finnish economy, slowing Finland's recovery from recession.

Modest economic development combined with the tensions of international politics
are weakening growth prospects in the financial sector. Historically low
interest rates will erode banks' net interest income and weaken insurance
institutions' investment income. The significance of measures that support
capital adequacy and profitability is heightened by changes in the operating
environment and the tightening of regulation.

Despite the challenging operating environment, OP Financial Group's earnings
before taxes are expected to be equal or higher than in 2014. The greatest
sources of uncertainty relate to the earnings estimate concern the effects of
low interest rates, impairment losses on receivables and unfavourable changes in
the investment environment.

All forward-looking statements in this Financial Statements Bulletin 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.

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 5 February
2015 at 12 noon at Vääksyntie 4, Vallila, Helsinki.

Pohjola Bank plc will publish its own Financial Statements Bulletin.

Financial reporting in 2015

Schedule for Interim Reports in 2015:
Interim Report Q1/2015      29 April 2015
Interim Report H1/2015        5 August 2015
Interim Report Q1-3/2015   28 October 2015

OP Cooperative, Financial Group
Executive Board


ADDITIONAL INFORMATION
Reijo Karhinen, Executive Chairman and CEO, 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.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#1891876]

Attachments:

OP Financial Group Financial Statements 2014.pdf

OP Financial Group background material Q4 2014.pdf