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2013-10-30 07:00:00 CET 2013-10-30 07:00:59 CET REGULATED INFORMATION Pohjola Pankki Oyj - Interim report (Q1 and Q3)Pohjola Bank plc's Interim Report for January-September 2013Pohjola Bank plc Stock exchange release 30 October 2013, 8.00 am Interim Report Pohjola Bank plc's Interim Report for January-September 2013 - Consolidated earnings before tax amounted to EUR 381 million (281) and consolidated earnings before tax at fair value to EUR 347 million (605). Return on equity was 13.7% (11.6). Core Tier 1 capital ratio was 10.7% (10.6). - The loan portfolio held by Banking grew by 5% from its level at the turn of the year and by 6% in the year to September. The average corporate loan portfolio margin increased to 1.57% (1.52). Impairment loss on receivables decreased to EUR 29 million (34) and the bank levy reduced earnings by EUR 13 million (-). - Within Non-life Insurance, insurance premium revenue increased by 10% (9). Combined ratio improved to 88.3% (97.1). A reduction in the discount rate for pension liabilities reduced earnings during the same period a year ago by EUR 52 million. Excluding the changes in reserving bases and amortisation on intangible assets arising from company acquisition, the operating combined ratio was 86.6% (89.0). Return on investments at fair value was 2.1% (8.6). - Within Asset Management, assets under management increased by 11% to EUR 36.6 billion (32.8). - The Group's total expenses remained at the previous year's level despite the bank levy of EUR 15 million. Cost savings out of the EUR 25 million estimated for 2013 based on the efficiency-enhancement programme amounted to EUR 22 million. - Events after the reporting period: The reduction in the discount rate for Non- life Insurance pension liabilities will reduce fourth-quarter consolidated earnings by an estimated EUR 39 million. - Outlook for the rest of 2013: Consolidated earnings before tax in 2013 are expected to be higher than in 2012. Within Banking, the loan portfolio growth rate is expected to remain below the 2012 rate (previous estimate: growth at the same rate as in 2012). It is estimated that the Non-life Insurance operating combined ratio will vary between 87% and 90% (previous estimate: 88-92%). Within Asset Management, performance-based management fees are expected to remain below the exceptionally high level reported a year ago. For more detailed information on the outlook, see "Outlook for the rest of 2013" below. July-September - Consolidated earnings before tax amounted to EUR 129 million (79) and consolidated earnings before tax at fair value to EUR 170 million (172). A reduction in the discount rate for pension liabilities reduced earnings a year earlier by EUR 52 million. - Combined net interest income from Corporate Banking and Baltic Banking was up by 14% year on year. The loan portfolio decreased by 1% and the average margin of the corporate loan portfolio increased by 4 basis points. Impairment loss decreased to 10 million (15). - Within Non-life Insurance, insurance premium revenue increased by 10% (11). Combined ratio was 83.3% (101.7) while operating combined ratio was 81.6% (82.2.) Return on investments at fair value was 1.7% (3.0). Comparatives deriving from the income statement are based on figures reported for the corresponding period a year ago. Unless otherwise specified, balance- sheet and other cross-sectional figures on 31 December 2012 are used as comparatives. As a result of change in the recognition of defined benefit pension plans, the comparatives have been restated. Earnings before tax, EUR Q1-3/ Q1-3/ Change, % Q3/ Q3/ Change, % million 2013 2012 2013 2012 2012 ------------------------------------------------------------------------------- Banking 175 162 8 64 42 52 221 Non-life Insurance 162 82 98 63 27 129 92 Asset Management 18 17 10 7 5 34 32 Group Functions 26 20 29 -4 4 27 Total 381 281 36 129 79 64 372 Change in fair value reserve -34 324 41 94 -56 418 Earnings before tax at fair value 347 605 -43 170 172 -1 790 Earnings per share, EUR 0.91 0.67 0.30 0.19 0.89 Equity per share, EUR 9.04 8.26 8.67 Average personnel 2,589 3,424 2,543 3,439 3,421 ------------------------------------------------------------------------------- Q1-3/ Q1-3/ Q3/ Q3/ Financial targets 2013 2012 2013 2012 2012 Target ------------------------------------------------------------------------------- Return on equity, % 13.7 11.6 13.6 9.3 11.2 13 Core Tier 1 ratio, % 10.7 10.7 10.6 > 11 Operating cost/income ratio by Banking, % 36 35 33 39 34 < 35 Operating combined ratio by Non-life Insurance, % 86.6 89.0 81.6 82.2 90.5 < 92 Operating expense ratio by Non-life Insurance, % 18.4 21.8 16.2 19.2 21.5 18 Solvency ratio by Non-life Insurance, % 81 85 81 70 Operating cost/income ratio by Asset Management, % 52 54 47 54 47 < 45 AA rating affirmed by at least two credit rating agencies or credit ratings at least at the main competitors' level 2 2 2 2 Dividend payout ratio at least 50%, provided that Core Tier 1 ratio remains at least 10% 51 > 50 ------------------------------------------------------------------------------- President and CEO Mikael Silvennoinen: In the third quarter, Pohjola reported good earnings before tax, amounting to EUR 129 million. Our customer business made strong progress. Consolidated earnings before tax in January-September totalled EUR 381 million, which was markedly higher than a year ago. The January-September return on equity stood at 13.7%. Banking reported clearly better earnings before tax in the third quarter. Both Corporate Banking and Markets improved their earnings on a year earlier. The average corporate loan portfolio margin increased by 4 basis points in the third quarter and the loan portfolio grew 6% year on year. Net loan losses and impairment losses declined. Insurance premium revenue continued to grow vigorously within Non-life Insurance. The third-quarter balance on technical account was the best we have ever recorded and the operating combined ratio was 81.6%. Greater operating efficiency manifested itself in the substantially improved expense ratio. Return on investments at fair value in the third quarter was lower than a year ago, due mainly to an increase in market interest rates. Within Asset Management, assets under management increased as a result of growth in OP mutual funds, good progress in net inflows and positive developments in market values. The third quarter that ended was my 64th and last quarter that I report as Pohjola's President and CEO. I am delighted that my successor was found on the Group Executive Committee. Jouko Pölönen, President of Pohjola Non-life Insurance Ltd, will take up his duties as the new President and CEO on 15 November 2013. I would like to take this opportunity to thank our personnel, customers and shareholders for smooth cooperation and trust for the last 16 years in my capacity as President and CEO. I wish Jouko all success in his new position. Outlook towards the year end Within Banking, the loan portfolio growth rate is expected remain below the 2012 rate of 9% (previous estimate: at the same rate as in 2012). The operating environment for the corporate sector will remain challenging. The greatest uncertainties related to Banking's financial performance in 2013 are associated with future impairment loss on the loan portfolio. Insurance premium revenue is expected to increase at a rate above the market average. In Non-life Insurance, the operating combined ratio for the full year 2013 is estimated to vary between 87% and 90% (previous estimate: 88-92%) if the number of large claims is not much higher than in 2012. Expected investment returns will largely depend on developments in the investment environment. The most significant uncertainties related to Non-life Insurance's financial performance in 2013 pertain to the investment environment and the effect of large claims on claims expenditure. The greatest uncertainties related to Asset Management's financial performance in 2013 are associated with the actual performance-based commissions and fees tied to the success of investments and the amount of assets under management. Performance-based management fees are expected to remain below the exceptionally high level reported a year ago. The key determinants affecting the Group Functions' financial performance include net interest income arising from assets in the liquidity buffer, any capital gains or losses on notes and bonds and any impairment loss that may be recognised on notes and bonds in the income statement. It is estimated that the Group Functions' net interest income will be lower than in 2012. Consolidated earnings before tax in 2013 are expected to be higher than in 2012. The Finnish government has planned to cut the corporate tax rate from 24.5% to 20% as of 1 January 2014. Such a change would bring a one-off positive effect that would be recognised in the earnings for the fourth quarter of 2013. The change is expected to improve Pohjola Group's earnings for 2013 after tax by an estimated EUR 60 million. There is still great uncertainty about the economic outlook and the operating 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 the future development in the operating environment and the future financial performance of Pohjola Group and its various functions, and actual results may differ materially from those expressed in the forward- looking statements. Helsinki, 30 October 2013 Pohjola Bank plc Board of Directors This Interim Report is available at www.pohjola.com > Media > Releases, where background information on the Report can also be found. Analyst meeting, conference call and live webcast Pohjola will hold a briefing in English for analysts and investors on 30 October starting at 3.00 pm Finnish time, EET (2.00 pm CET, 1.00 pm UK time, 8am US EST). The briefing is a combined analyst meeting, conference call and live webcast. Analysts and investors may attend the briefing in one of the following two ways: 1) By viewing the briefing as live webcast via the internet. The link will be available on the IR website before the briefing begins. Questions on the internet are welcome via a question button available in the webcast window. An on-demand webcast of the briefing can be viewed via the IR website afterwards. 2) By dialling one of the regional conference call numbers shown below. Questions are welcome by telephone in the Q&A session according to instructions. To participate via a conference call, please dial in 5-10 minutes before the beginning of the event: FI: +358 981 710 460 UK: +44 203 364 5374 US: +1 855 753 2230 Password: Pohjola Press conference Mikael Silvennoinen, Pohjola Bank plc's President and CEO, will present the financial results in a press conference on OP-Pohjola Group's premises (Vääksyntie 4, Vallila, Helsinki), on 30 October, starting at noon. 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 DISTRIBUTION NASDAQ OMX Helsinki Ltd London Stock Exchange SIX Swiss Exchange Major media www.pohjola.com, www.op.fi For additional information, please contact: Mikael Silvennoinen, President and CEO, tel. +358 (0)10 252 2549 Vesa Aho, CFO, tel. +358 (0)10 252 2336 Niina Pullinen, Senior Vice President, Investor Relations, tel. +358 (0)10 252 4494 Pohjola is a Finnish financial services group which provides its customers with banking, non-life insurance and asset management services. Our mission is to promote the prosperity, security and wellbeing of our customers. Profitable growth and an increase in company value form our key objectives. Pohjola Group serves corporate customers in Finland and abroad by providing an extensive range of financial, investment, cash-management and non-life insurance services. We offer non-life insurance and private banking services to private customers. Pohjola Series A shares have been listed on the Large Cap List of the NASDAQ OMX Helsinki since 1989. The number of shareholders totals around 32,000. Pohjola's consolidated earnings before tax came to 374 million euros in 2012 and the balance sheet total amounted to 45 billion euros on 31 December 2012. Pohjola is part of OP-Pohjola Group, the leading financial services group in Finland with over four million customers. www.pohjola.com [HUG#1739071] |
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