Pohjola Pankki Oyj - Interim report (Q1 and Q3)

OP-Pohjola Group's January-September performance at same level as last year

OP-Pohjola Group
Stock Exchange Release 31 October 2012 at 8.00 am (EEST)
Interim Report


OP-Pohjola Group's January-September performance at same level as last year

- OP-Pohjola Group's earnings before tax came to EUR 493 million (488).
- The growth of net interest income slowed down to 2%. Comparable total income
increased by 6%. Expenses increased by 9%, excluding those incurred due to the
reorganisation of OP-Pohjola Group Central Cooperative Consolidated.
- Impairments of receivables contracted by 26% to EUR 47 million.
- Earnings before tax in the third quarter amounted to EUR 156 million (122).
- Core Tier 1 ratio was a solid 14.8% on 30 September.
- The liquidity position was strong and the Group has had good access to
funding.
- In August, the Group acquired Skandia Life Finland's life insurance
operations.
- The corporate loan portfolio increased in the year to September by 10%, home
loans by 8% and deposits by 9%. Within Non-life Insurance, insurance premium
revenue rose in the report period by 9%.
- OP-Pohjola Group Central Cooperative Consolidated initiated an efficiency and
reorganisation programme in September, with the aim of achieving annual cost
savings of EUR 150 million  by the end of 2015.
- OP-Pohjola Group's 2012 earnings before tax are expected to be better than in
2011. For more details, see "Outlook for the rest of 2012".


OP-Pohjola Group's key indicators
-------------------------------------------------------------------------------
                                   Q1-Q3/2012  Q1-Q3/2011 Change, %        2011
-------------------------------------------------------------------------------
 Earnings before tax, EUR million         493         488       1.1         525

    Banking                               355         333       6,6         447

    Non-life Insurance                     82          71      15.6           8

    Wealth Management                      74          64      16.6          47



 Returns to owner-members and OP          142         132       7.6         176
 bonus customers

                                  30 Sep 2012 30 Sep 2011 Change, % 31 Dec 2011

 Ratio of capital base to minimum        2.01        1.49     0.52*        1.80
 amount of capital base (under
 the Act on the Supervision of
 Financial and Insurance
 Conglomerates)

 Core Tier 1 ratio, %                    14.8        11.6      3.2*        14.0

 Non-performing receivables              0.55        0.57    -0.01*        0.47
 within loan and guarantee
 portfolio, %

 Joint banking and insurance            1,388       1,264       9.8       1,299
 customers, 1,000
-------------------------------------------------------------------------------
* Change in ratio


Comments by Reijo Karhinen, Executive Chairman

The figures for the first three quarters of 2012 show that OP-Pohjola Group is
not in crisis. Our performance in the current operating environment was good but
nevertheless insufficient, both in relation to tightening regulation requiring
even higher capital adequacy and in light of the financial and business outlook.
Just to maintain our current level of capital adequacy will require us to make a
better result. For a financial services group operating on a cooperative
principle, the only way to maintain and increase capital adequacy is to generate
earnings.

A sufficient capital adequacy achieved through core capital is a strategic
choice for us. This is what has enabled us to stand taller than many others amid
the euro area crisis. We have had good access to funding and our ability to
grant loans has remained excellent. Growth was good, too. I am very happy with
our growth in home and corporate loans that is clearly higher than the market
average. We actually achieved record figures in the growth of joint banking and
insurance customers.

We are in the middle of historic transition. The next few years will be
characterised in the financial sector as a period of discontinuity. We will have
to adjust to a regulatory environment that will be more and more difficult to
control. Never before have we experienced such a simultaneous impact of
increased regulation and new taxes.

The persistently low market interest rates, new cost pressures driven by new
regulations, the new national bank levy and higher funding costs require us to
take more determined steps merely to maintain our current earnings level. Some
of the steps we must take are unpleasant but nevertheless necessary. An economic
upswing is not in the horizon to boost the economy. The effects of regulation
will hit us faster than the operating environment has time to recover from the
euro area sovereign debt crisis.

This means that the good performance figures we have achieved now do not serve
as a sound basis for predicting the future. The reorganisation of OP-Pohjola
Group Central Cooperative Consolidated arises from the necessity to prepare for
the future. Making the necessary changes in time is a responsible way to react
to a major shift in the operating environment. We cannot rely on securing our
earnings capacity and capital adequacy by increasing our customer margins and
service charges. It is necessary that we simultaneously rationalise our own
operations and in this way seek major cost savings in the entire Group.

Our good earnings power is our strength. As we are owned by our customers, they
are the reason for our existence. In light of the actual market share figures,
we have responded to Finnish financing and other financial requirements in an
exemplary manner. And this is the way we intend to keep it. Even in the middleof major changes, we invest a lot in development and build the future with a
feeling of confidence.

We expect political decision-makers to make fair decisions. Customers of a bank
which operates mainly in Finland must not be placed in a disadvantaged position
through tax decisions. Decision-makers should have the vision and courage to
disclose the genuine condition and outlook of our national economy. Sustainable
economic growth will not be attained just by raising taxes and increasing
bureaucracy.


Financial performance in the report period

OP-Pohjola Group's earnings before tax came to EUR 493 million, which was at the
same level as in 2011. Changes in reserving bases recorded in Non-life Insurance
in the report period weakened the Group's earnings by EUR 52 million. A year ago
there were no similar changes in reserving bases. When Skandia Life Finland was
bought, a positive non-recurring item of EUR 19 million related to estimated
cost and income synergies was recognised. A non-recurring provision for expenses
of EUR 20 million was made related to the reorganisation of OP-Pohjola Group
Central Cooperative Consolidated announced in September.

The report period's profit performance was supported by higher net interest
income year on year, lower impairment loss on receivables, earnings from
derivatives and an increase in net investment income by Non-life Insurance. The
growth of net interest income slowed down considerably during the report period.
Earnings were eroded by lower wealth management commissions and fees year on
year, lower investment income by Banking, and the Group's higher expenses.
Bonuses to owner-members and OP bonus customers recognised in the income
statement grew by 6.5% year on year to EUR 129 million.

The Group's fair value reserve increased by EUR 560 in the report period million
thanks to the performance of the investment market, whereas a year ago it
decreased by EUR 456 million. Earnings before tax at fair value came to EUR
1,053 million (32).


Outlook for the rest of 2012

The world economic outlook has been weak throughout the report period. As a
result of the European sovereign debt crisis, the euro area has already sunk
into recession. Economic growth in the euro area is estimated to be weak, even
by the most optimistic predictions.  The economic prospects for Finland look
subdued, too.

The financial sector is under major profitability pressures. Future
profitability will be eroded by extremely low market interest rates, grim
economic situation, challenging investment environment, tightening regulations
in the sector and the national bank levy. These changes will be felt the most in
2013.

Uncertainty about economic development and the continued threat of a deepening
euro area sovereign debt crisis make it difficult to predict OP-Pohjola Group's
financial performance in the last quarter of 2012. OP-Pohjola Group's 2012
results are expected to be better than the year before, provided that the
operating environment will not deteriorate significantly more than expected and
the euro area's sovereign debt crisis will not get any worse. The greatest
uncertainty affecting the financial performance during the rest of the year
relates to investment income.

All forward-looking statements in this report 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-Pohjola Group's financial performance will be presented to the media by
Executive Chairman and CEO Reijo Karhinen in a press conference on 31 October
2012 at 12 noon at Teollisuuskatu 1 b, Vallila, Helsinki.

Pohjola Bank plc will publish its own interim report.


Publication dates for the 2012 financial statements and 2013 interim reports

Financial Statements Bulletin for 1 January-31 December 2012: 6 February 2013
Interim report for 1 January-31 March 2013: 2 May 2013
Interim report for 1 January-30 June 2013: 31 July 2013
Interim report for 1 January-30 September 2013: 30 October 2013


Additional information

Executive Chairman and CEO Reijo Karhinen, 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.fi


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 more than 13,000 OP-Pohjola
Group posted consolidated earnings of 518 million euros before tax in 2011 and
had total assets of 92 billion euros on 31 December 2011. The group has over
four million customers.


[HUG#1653782]

Attachments:

OP_Pohjola Group Q3 2012 background material.pdf

OP_Pohjola Group_s Interim Report 1 January_30 September 2012.pdf