Pohjola Pankki Oyj - Interim report (Q1 and Q3)

OP: Strong financial performance and excellent lending capacity

OP Financial Group
Stock Exchange Release 5 August 2015 at 8.00 am
Interim Report

OP: Strong financial performance and excellent lending capacity

  * The Group's earnings before tax totalled EUR 627 million (488), or 29%
    higher than a year ago and the best ever half-year earnings.
  * Total income increased by 8% while expenses decreased by 3% year on year.
  * Supported by the strong financial performance, the CET1 ratio improved to
    18.1% (15.1). The strong capital base made it possible to increase lending
    faster than the market average.

      * The home loan portfolio grew by 3.0% year on year
      * The corporate loan portfolio increased by 7.5%
      * The total loan portfolio increased by 5.9% and the number of loans drawn
        down by 13%
  * The home loan repayment grace period under the "Putting Finland on a new
    growth path" campaign was used for almost 100,000 loans.
  * New customer bonuses totalled EUR 97 million, up 4.5% year on year.
  * Equity investments by owner-customers increased to EUR 2.4 billion (1.9).
  * Each of the three business segments improved its performance:

      * Banking earnings before tax increased by 23% to EUR 356 million (289).
        The cost/income ratio improved by over 4 percentage points to 52%. The
        deposit portfolio grew by 6.9%. Impairment loss on receivables was low
        at 0.10% of the loan and guarantee portfolio.
      * Earnings before tax by Non-life Insurance increased by 8.1% to EUR 144    million (133). The operating combined ratio was 87.8%. Insurance premium
        revenue rose by 4.6%.
      * Wealth Management earnings before tax increased by 25% to EUR 128
        million (102). Assets under management grew by 16% to EUR 66 billion.
  * Six former POP Group member banks became members of OP Financial Group's
    central cooperative in May.
  * Change in the outlook: Full-year earnings for 2015 are expected to be higher
    than in 2014. (Previous estimate: "to equal or exceed"). For more detailed
    information, see "Outlook towards the year end."

OP Financial Group's key indicators
-------------------------------------------------------------------------------
                                    H1/2015      H1/2014 Change, %         2014
-------------------------------------------------------------------------------
 Earnings before tax, €                 627          488      28.5          915
 million

   Banking                              356          289      23.2          571

   Non-life Insurance                   144          133       8.1          223

   Wealth Management                    128          102      24.9          167



 New accrued customer bonuses            97           93       4.5          189



                               30 June 2015 30 June 2014 Change, % 31 Dec. 2014

 Common Equity Tier 1 (CET1)           18.1         12.8      5.3*         15.1
 ratio, %

 Ratio of capital base to               178          169       10*          189
 minimum amount of capital
 base (under the Act on the
 Supervision of Financial and
 Insurance Conglomerates), %

 Ratio of receivables more             0.42         0.41     0.01*         0.37
 than 90 days past due to loan
 and guarantee portfolio, %

 Joint banking and                    1,618        1,554       4.1        1,590
 insurance customers  (1,000)
-------------------------------------------------------------------------------
Comparatives  deriving from the  income statement are  based on figures reported
for  the corresponding period in 2014. Unless otherwise specified, balance-sheet
and other cross-sectional figures on 31 December 2014 are used as comparatives.
* Change in ratio

Comments by Reijo Karhinen, President and Group Executive Chairman

Achieving the capital adequacy and profitability targets crowned OP Financial
Group's good first-half performance. Achieving our demanding and high capital
adequacy targets ahead of time - only about one year after the purchase of
Pohjola shares that required a significant amount of capital - is a strong
message of our Group's status and performance. Our all-time high half-year
results are explained by our long-term approach. Income increased and expenses
decreased. Our income grew on a wide front, with each key income item increasing
year on year.

We have once again demonstrated our strength. We pay particular attention to our
capital base that we are building primarily through our financial performance in
the long term. Profit Shares have had a significant impact on strengthening our
capital base during the last twelve months. I would like to express my warmest
thanks to our owner-customers for this commitment they have shown.

OP's good results safeguard customers' finances through our excellent lending
capacity. Through concrete action, we have shown our commitment to Finland. Our
home and corporate loan portfolio continued to increase at a rate above the
market average. Our friendly gesture to our home loan customers in terms of the
loan repayment grace period also received a positive reception. Thanks to our
strong capital base, our capacity to provide our customers with financing in
future too is on a firm basis. It is just natural for our role as a major
Finnish player to carry out new "Putting Finland on a new growth path"
campaigns.

OP exists to serve its customers. Following a comprehensive internal strategic
discussion, the Supervisory Board of OP Cooperative updated in June the basic
strategic principles that sharpen the cooperative focus. As specified in its
new, updated mission, the Group creates by means of its strong capital base and
efficiency sustainable prosperity, security and wellbeing for its owner-
customers and in its operating region.  Our being is crystallised in our
customer promise: "We exist to serve our customers". We want to be the world's
best financial services group owned by customers. We measure our success through
customer experience.

The financial sector does not see a day without news reporting on the progress
of digitisation in Finland and elsewhere in the world.

As the year progresses, the signs of the advancement of the digital revolution
has become increasingly clearer, in both the financial sector and in society on
the whole. We are most likely at a turning point from which onwards the slope
related to the visible changes arising from digitisation is strongly becoming
steeper. As a result of changing customer behaviour, customers increasingly use
digital services. We need to learn to look many things with new eyes.

Up to 94% of OP's daily service encounters take already place in digital service
channels. As financial services group owned by customers, we will reform
ourselves on our customers' terms and by listening to them - without forgetting
customers who appreciate the existing transaction opportunities and services. We
need to prepare for significantly increasing our development expenditure and for
continuing to improve our operational efficiency substantially.

The Finnish economy will not rebound on a sustainable basis without bold
decisions that contribute to a pick-up in exports. Not this year either has
economic development in Finland met expectations. The Finnish government has
taken a firm grip on taking fiscal consolidation measures. However, Finland need
to boost its price competitiveness.

In the single currency regime, putting the economy back on a healthy path
requires of the policymakers in charge an unconventional attitude, exceptionally
strong determination and a solution-seeking approach and the ability to focus on
what is essential. We at OP promise, for our part, to assume responsibility for
the availability of financing.

Financial performance in the report period

Earnings before tax increased by 29% to EUR 627 million (488). This was the
Group's best-ever half-year result. This improvement was due especially to
strong growth in income. Life Insurance's and Non-life Insurance's net income
increased the most. Net income posted by Life Insurance increased due to
improved insurance profitability and that by Non-life Insurance as a result of
higher investment income. Net commissions and fees were higher due to higher
fees from mutual funds. Capital gains on securities added to net trading and
investment income.

Total expenses decreased by 3.3%, being EUR 27 million lower than a year ago. A
non-recurring provision was 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 10 million. Non-recurring expenses of EUR 19 million were recognised in
other operating expenses for the reporting period resulting from the intra-Group
ownership reorganisation and the reconstruction of the Vallila premises. In the
first half a year ago, statutory contributions to the Deposit Guarantee Fund and
the bank levy (EUR 36 million) plus the non-recurring expenses incurred due to
the purchase of Pohjola Bank plc shares (EUR 8 million) increased other
operating expenses.

Impairment losses recognised under various income statement items that reduced
earnings amounted to EUR 52 million (42), of which EUR 37 million (33) concerned
loans and receivables. Net impairment loss on loans and other receivables were
low, at 0.10% (0.09) of the loan and guarantee portfolio.

On 19 May 2015, six former POP Group member banks joined OP Financial Group.
Their accounts have been consolidated for the first time into the Group's
accounts from the date when they joined the Group. As a result of the
consolidation, both the Group's income and expenses grew by EUR 2 million, and
their effect on earnings was slightly positive as a whole. As a result of the
consolidation, the Group's loan portfolio grew by EUR 643 million and deposit
portfolio by EUR 694 million.

Earnings before tax at fair value amounted to EUR 505 million (560). OP
Financial Group's fair value reserve before tax totalled EUR 393 million (531)
on 30 June.

Equity capital amounted to EUR 8.4 billion (7.2) on 30 June. The Group's
earnings and the issuance of Profit Shares added to equity capital. On 30 June,
EUR 2.1 billion (1.6) in Profit Shares were included in equity. In March 2015,
the central cooperative's Supervisory Board decided to raise the target level of
Profit Shares by EUR 0.4 billion to EUR 2.3 billion.

Outlook towards the year end

The euro-area economy has continued to grow at a moderate rate supported by the
ECB's expansionary monetary policy measures. The fragile economic growth is
expected to continue during the second half too. Economic development in Finland
is expected to remain weak. Structural problems in the Finnish economy,
international political tensions, the Greek debt crisis that has escalated again
and poorer prospects for the emerging economies will cause major uncertainty to
the economic rebound in Finland.

Growth expectations are still moderate in the financial sector. Low interest
rates will erode banks' net interest income and weaken insurance institutions'
investment income. 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 in the financial sector have come to
play an ever-increasing role because of the unstable operating environment and
the tighter regulatory framework.

In spite of the uncertainty involved in the operating environment, OP Financial
Group expects its earnings before tax for 2015 to be higher than in 2014
(previous estimate: "to equal or exceed"). 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 5 August
2015 at 11 a.m. at Teollisuuskatu 1 b, Vallila, Helsinki.

Pohjola Bank plc will publish its own Interim Report.

Financial reporting in 2015

Schedule for Interim Reports in 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.fi

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#1943670]

Attachments:

OP Financial Group Q2 background material.pdf

OP Financial Group Q2 2015.pdf