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2013-10-30 07:00:00 CET 2013-10-30 07:01:31 CET REGULATED INFORMATION Pohjola Pankki Oyj - Interim report (Q1 and Q3)Strong growth in OP-Pohjola Group's earnings and market positionOP-Pohjola Group Stock Exchange Release 30 October 2013 at 8.00 am Interim Report Strong growth in OP-Pohjola Group's earnings and market position - Earnings before tax increased by 28% to EUR 614 million (481). Earnings before tax for January-September already exceeded those for the full year 2012. Earnings before tax for the third quarter were €216 million (153), an increase of 42 per cent on the year-ago figure. - Total income increased by 8%. Net interest income continued its growth path. - Total expenses remained at the previous year's level. Excluding the bank levy, expenses would have decreased by 3%. - Core Tier 1 ratio improved to 14.9% (14.8). - The Group continued to strengthen its market position. In the year to September, the loan portfolio grew by 5.9%, deposits by 7.2%, mutual fund assets by 23% and Non-life Insurance premiums written by 10%. - The number of joint banking and non-life insurance customers increased by 103,000 in the year to September. - Change in the outlook: Earnings before tax for full 2013 are expected to be markedly better than a year ago. For more information, see "Outlook for the rest of 2013". OP-Pohjola Group's key indicators -------------------------------------------------------------------------------- Q1-Q3/2013 Q1-Q3/2012 Change, % 2012 -------------------------------------------------------------------------------- Earnings before tax, € million 614 481 27.5 586 Banking 323 345 -6.5 424 Non-life Insurance 162 82 97.6 92 Wealth Management 98 74 32.2 101 Returns to owner-members and OP bonus customers 145 142 1.6 192 30 Sep 2013 30 Sep 2012 Change, % 31 Dec 2012 Core Tier 1 ratio before the 14.9 15.1 -0.2* 14.8 transition provisions, % Core Tier 1 ratio, % 13.9 14.8 -0.9* 14.1 Ratio of capital base to minimum 1.86 2.01 -0.15* 1.90 amount of capital base (under the Act on the Supervision of Financial and Insurance Conglomerates) Ratio of non-performing 0.49 0.55 -0.06* 0.46 receivables to loan and guarantee portfolio, % Joint banking and insurance customers (1,000) 1,491 1,388 7.4 1,425 -------------------------------------------------------------------------------- * Change in ratio Comments by Reijo Karhinen, Executive chairman and CEO OP-Pohjola Group's key figures are again a sign of our very strong performance this year. Our capital adequacy, earnings and growth figures are high in terms of their level and are well-balanced. Thanks to our considerably better earnings than we expected, our strong capital adequacy has even improved slightly, although growth that ties up our capital has continued at a rate faster than the market average. From the viewpoint of a customer-owned financial services group, I would describe our performance so far this year as optimal. Following a good third quarter, we estimate that our full-year results will be clearly better than a year ago. This estimate, using figures available so far this year, is based on the performance that is already better than the full year 2012 performance, continued strict control of expenses and net interest income that has begun to increase. We have a solid risk exposure and low loan losses. The upcoming regulatory framework will highlight the importance of capital adequacy in banking, which is automatically reflected in the increasing role of profit performance. However, we are not seeking profit at the expense of growth but in order to ensure it on a long-term basis. We will maintain our profit performance and price competitiveness primarily by making our operations and processes more efficient. We cannot afford to increase our expenses in the next few years. OP-Pohjola Group has continued to increase its particularly strong market position of recent years, and this trend has also continued this year. Again, within the last 12 months, we managed to obtain over 100,000 new joint banking and non-life insurance customers thanks to successful cross-selling. Already more than 70 per cent of Pohjola Insurance's customers also use OP-Pohjola Group's banking services. Another key reason for our success, arising particularly in the recent uncertain operating environment, is the fact that we carry our responsibility for the financial management of Finnish households and businesses. That the growth in euro terms of OP-Pohjola Group's housing loans represented 80 per cent of the growth within the sector is strong proof that what we do is in line with our promises. And in terms of on-balance-sheet corporate financing, we came close to 100 per cent. Our strong profit performance and market position development during January- September have shown that we have had the desire and ability to work on a long- term basis and to listen to our customers. What our customers need on a daily basis is still at the heart of how we operate. According to our mission, we must be able to offer our customers genuine added value. We should also be able to see our own operations from the viewpoint of our customers. Easy use of our services and the right service attitude form the basis of a good customer experience. Our success story gives us the opportunity to look into the future with confidence and with a positive approach. We will continue to put unprecedented efforts into product and service development. OP Mobile's growth into becoming the primary point of access for private banking customers is ongoing. Users value our mobile services very highly, and the innovative Pivo service is a forerunner in smart wallets. With Omasairaala hospital, we are leading the way in the development of healthcare processes. OP-Pohjola Group is firmly rooted in Finland, so it is delightful to see that the country's economic policy is finally being adjusted. Now Finland needs to proceed with determination. The journey has only begun. Economic confidence has improved markedly in the rest of Europe, but deteriorated in Finland. Finland has to be aware of the crisis to take the necessary decisions, but this stage must be passed quickly, because the uncertainty and consequent low confidence and negative atmosphere are eating up consumer spending and capital spending. To improve overall sentiment, Finland not only needs a successful collective agreement but also systematic implementation of the Government's structural programme. Financial performance in the reporting period OP-Pohjola Group's earnings before tax were EUR 614 million (481). Earnings were improved especially because of a solid increase in investment income due to capital gains on securities, the good financial performance of Non-Life Insurance and an increase in net commissions and fees. The good performance of Non-life Insurance was the result of premiums written that have been increasing for a long time and of lower operating expenses. Life Insurance's performance was better than a year ago thanks to capital gains and the acquisition of Aurum Investment Insurance Ltd. The fact that growth in expenses has come to a halt has contributed to the improved results of the entire Group. Due to low interest rates, net interest income decreased by 14% year on year. The decrease in net interest income slowed down in the second quarter and net interest income began to increase slightly during the third quarter. The Group's expenses were at the same level as last year despite the EUR 35 million bank levy and the growth and expansion of business. Without the effect of the bank levy, total expenses would have decreased by more than 3%. Thanks to measures taken in the efficiency-enhancement programme, wages and salaries decreased by more than 6% in net terms. Because pension costs increased, personnel costs as a whole decreased by 4%. A non-recurring provision for expenses of EUR 20 million related to the efficiency-enhancement programme of OP-Pohjola Group Central Cooperative Consolidated increased personnel costs a year ago. Other administrative expenses were almost 6% lower than a year ago. OP-Pohjola Group's fair value reserve before tax totalled EUR 371 million (449) on 30 September. Earnings before tax at fair value were EUR 536 million (1,042). Bonuses to owner-members and OP bonus customers recognised in the income statement increased by 5.4% year on year to EUR 136 million. Outlook for the rest of 2013 The world economy is recovering but growth is expected to remain slower than usual. Not only the euro-area economy but also the Finnish economy has shown a slight improvement. As a result of the actions taken by the ECB, financial markets have remained relatively stable. Despite the slight improvement, risks associated with economic development are higher than usual, and the economy may turn for worse than expected in quite a short period. The operating environment in the financial sector is gradually improving although historically low interest rates are eroding banks' net interest income and will weaken insurance institutions' investment income. The economic recession has not increased loan losses in the banking sector by more than a fraction. The bank levy confirmed at the end of last year has caused major new costs to Finnish banks. Changes in the operating environment and the more rigorous regulatory framework will highlight the role of measures to strengthen the capital base and improve profitability. Unless the operating environment turns out to be considerably weaker than expected, OP-Pohjola Group's earnings before tax for 2013 are expected to be markedly better (previous estimate: better) than in 2012. The most significant factors that may affect earnings in the rest of the year concern changes in capital markets. 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-Pohjola Group's financial performance will be presented to the media by Executive Chairman and CEO Reijo Karhinen in a press conference on 30 October 2013, starting at noon at Vääksyntie 4, Vallila, Helsinki. Pohjola Bank plc will publish its own interim report. Financial reporting in 2014 Schedule for Financial Statements Bulletin for 2013 and Interim Reports in 2014: Financial Statements Bulletin 2013: 6 February 2014 Interim Report Q1/2014: 29 April 2014 Interim Report H1/2014: 6 August 2014 Interim Report Q1-3/2014: 29 October 2014 OP-Pohjola Group Central Cooperative 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-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 the listed company Pohjola Bank plc. With a staff of 13,000 OP-Pohjola Group posted consolidated earnings of 601 million euros before tax in 2012 and had total assets of 99.8 billion euros on 31 December 2012. The group has over four million customers. [HUG#1739080] |
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