2011-08-03 07:00:00 CEST
2011-08-03 07:01:28 CEST
REGULATED INFORMATION
Pohjola Pankki Oyj - Interim report (Q1 and Q3)
Pohjola Group Performance for January-June 2011
Pohjola Bank plc
Company Release, 4 August 2011, 8.00 am
Release category: Interim Report
Pohjola Group Performance for January-June 2011
- Consolidated earnings before tax improved to EUR 197 million (139). Earnings
before tax at fair value were EUR 166 million (108) and return on equity at fair
value stood at 10.5% (7.1).
- Banking earnings before tax rose to EUR 92 million (55). These earnings
included EUR 36 million (62) in impairment charges on receivables. The loan
portfolio increased by 5% from its level on 31 December 2010 and by 6% in the
year to June.
- Within Non-life Insurance, insurance premium revenue rose by 7% and
profitability was good. Excluding amortisation on intangible assets arising from
company acquisition, the operating combined ratio stood at 91.6% (91.6). Within
Non-life Insurance, return on investments at fair value was 1.0% (2.6).
- Asset Management increased its earnings before tax by 13% to EUR 13.5 million
(11,9) and assets under management amounted to EUR 33.9 billion (35).
- The Group Functions reported earnings of EUR 24 million (30) before tax.
- Outlook: Consolidated earnings before tax for 2011 are expected to be higher
than in 2010. It is estimated that the Non-life Insurance operating combined
ratio will vary between 89% and 93% (previous estimate: 89-94%). For more
detailed information on outlook, see "Outlook towards the year end" below.
April-June 2011
- Consolidated earnings before tax improved to EUR 103 million (80). Earnings
before tax at fair value amounted to EUR 92 million (-11).
- Earnings of EUR 39 million (29) before tax posted by Banking included EUR 20
million (29) in impairment charges on receivables.
- Within non-life Insurance, the operating combined ratio stood at 83.3% (88)
and the return on investments at fair value was 0.6% (-0.6).
- Earnings before tax recorded by Asset Management improved by 15% to EUR 7
million (6) and the cost/income ratio stood at 48% (52).
- The Group Functions' earnings of EUR 7 million (8) before tax were at somewhat
the same level as the year before.
Earnings before tax, € million H1/ H1/ Change, % Q2/ Q2/ Change, %
2011 2010 2011 2010 2010
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Banking 92 55 69 39 29 36 133
Non-life Insurance 68 42 61 49 37 35 83
Asset Management 13 12 13 7 6 15 31
Group Functions 24 30 -21 7 8 -14 61
Total 197 139 42 103 80 28 308
Change in fair value -32 -31 -11 -92 -17
reserve
Earnings/loss before 166 108 54 92 -11 291
tax at fair value
Earnings per share, € 0.46 0.32 0.23 0.19 0.72
Earnings per share at 0.39 0.25 0.21 -0.03 0.68
fair value, €
Equity per share, € 7.43 7.01 7.44
Average personnel 3,083 2,999 3,141 3,007 3,005
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Financial targets H1/ H1/ Q2/ Q2/ Target
2011 2010 2011 2010 2010
--------------------------------------------------------------------------------
Return on equity at fair value, % 10.5 7.1 11.4 -1.6 9.3 13.0
Tier 1 ratio, % 12.2 12.0 12.5 >9.5
Operating cost/income ratio by Banking, %
36 35 38 36 35 <40
Operating combined ratio, % 91.6 91.6 83.3 88.0 89.7 92.0
Operating expense ratio, % 21.5 22.0 21.1 22.2 21.3 <20
Solvency ratio, % 86 91 86 70
Operating cost/income ratio by Asset 49 53 48 52 53 <50
Management, %
AA rating affirmed by at least two credit
rating agencies 3 3 3 >2
Dividend payout ratio a minimum of 50%,
provided that Tier 1 > 9.5% 55 >50
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President and CEO Mikael Silvennoinen:
Our first-half consolidated earnings before tax were record high, amounting to
almost EUR 200 million. Our second-quarter earnings were also good, showing a
year-on-year improvement.
All of our business segments improved their first-half financial performance
from that reported a year earlier. Total income and total expenses increased by
9% and 3%, respectively. Furthermore, impairment charges decreased considerably.
The European sovereign debt crisis cast uncertainty over economic growth,
weakened stock markets, raised interest rates and widened credit spreads. As a
result, our earnings before tax at fair value were EUR 166 million (108).
The loan portfolio held by Banking grew by 5% from its 2010-end level and showed
growth of 6% in the year to June. Within Corporate Banking, growth in net
interest income has levelled off due to smaller lending margins and higher
financing costs. The Markets division posted good financial performance in both
client trading and trading business.
Insurance premium revenue continued to grow and developments in claims
normalised after the first quarter.
Our second-quarter balance on technical account was excellent. In the first
half, it was at the same good level as the year before.
Asset Management showed improved earnings year on year although assets under
management decreased from their 2010-end level. The cost/income ratio was better
than targeted.
The results of the EU-wide forward-looking stress test published in July proved
that OP-Pohjola Group has a strong capital base and will also withstand a
possible deterioration in the operating environment. Pohjola's test results are
included in those of OP-Pohjola Group. This strong capital base will provide
good opportunities for growth based on our strategy. During the first half, we
continued to strengthen our customer service resources in order to be able to
better meet the needs of a growing number of customers.
Outlook towards the year end
The economic recovery has been reflected in demand for corporate loans, with the
result that the corporate loan portfolio has begun to grow. The average
corporate loan margin has turned down and tougher competition is expected to
send the margin on new loans down. With continued economic growth, impairment
charges for 2011 are expected to be lower than the year before. The greatest
uncertainties related to Banking's financial performance in 2011 are associated
with future impairment charges on the loan portfolio.
Insurance premium revenue is expected to continue to increase at an above-the-
market-average rate among private customers. Insurance premium revenue from
corporate customers has rebounded. In Non-life Insurance, the operating combined
ratio is estimated to vary between 89% and 93% (previous estimate: 89-94%) in
2011 if the number of large claims is not much higher than in 2010. Expected
long-term returns on investment within Non-life Insurance stand at 5.1%. Returns
will largely depend on developments in the investment environment. The most
significant uncertainties related to Non-life Insurance's financial performance
in 2011 pertain to the investment environment and the effect of large claims on
claims expenditure.
Within Asset Management, assets under management are expected to increase during
the rest of the year, their amounts being affected by market developments and
the net inflow of assets. The greatest uncertainties related to Asset
Management's financial performance in 2011 are associated with the actual
performance-based commissions and fees tied to the success of investments and
the amount of assets under management.
The key determinants affecting the Group Functions' financial performance
include net interest income arising from assets in the liquidity portfolio, any
capital gains or losses on notes and bonds and any impairment charges recognised
on notes and bonds in the income statement. Capital gains on notes and bonds are
expected to decrease in 2011.
Consolidated earnings before tax in 2011 are expected to be higher than in 2010.
There is still great uncertainty about economic outlook and the operating
environment. A major risk that may undermine this outlook is the exacerbation
of the fiscal crisis in certain euro countries and any repercussions on the
entire financial sector may be rapid and significant.
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, 3 August 2011
Pohjola Bank plc
Board of Directors
This Interim Report is available at www.pohjola.fi > Media > Releases, where
background information on the release can also be found.
Analyst meeting, conference call and live webcast
Pohjola will hold a briefing in English for analysts and investors on 3 August
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:
UK, International +44 203 043 24 36
US +1 866 458 40 87
FIN +358 923 101 527
Password: Pohjola
Press conference
Mikael Silvennoinen, Pohjola Bank plc's President and CEO, will present the
interim results in a press conference on OP-Pohjola Group's premises
(Teollisuuskatu 1b, Vallila, Helsinki), on 3 August, starting at noon.
Financial reporting in 2011:
Schedule for Interim Reports in 2011:
Interim Report Q1-3/2011:2 November 2011
Distribution
NASDAQ OMX Helsinki Ltd
London Stock Exchange
SIX Swiss Exchange
Major media
www.pohjola.fi, 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
Tarja Ollilainen, Senior Vice President, Investor Relations, tel. +358 (0)10
252 4494
[HUG#1535749]
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