Pohjola Pankki Oyj - Interim report (Q1 and Q3)

OP-Pohjola Group started 2013 well, an improvement from 2012. Business growth continued to be strong.

OP-Pohjola Group
Stock Exchange Release 29 April 2013 at 8.00 am (EEST)
Interim Report

OP-Pohjola Group started 2013 well, an improvement from 2012. Business growth
continued to be strong.

- Earnings before tax rose by 17% to EUR 234 million (199).
- Earnings by Non-life Insurance were record-high in the first quarter, and
investment income rose significantly.
- Performance by Banking was lower than in the first quarter of 2012, but 25%
higher than in the fourth quarter of 2012.
- A solid increase in Other Income compensated a major drop in net interest
income.
- Expenses were lower than last year. Expenses without bank levy reduced by
3.1%.
- Core Tier 1 ratio before the transition provisions was 14.6% (14.8).
- The loan portfolio grew by 7.5% and deposits by 10% in the year to March. Non-
life Insurance grew by 10%.
- 2013 earnings before tax are expected to be about the same or slightly lower
than in 2012. For more details, see "Outlook for the rest of 2013".


OP-Pohjola Group's key indicators
-------------------------------------------------------------------------------
                                     Q1/2013       Q1/2012 Change %        2012
-------------------------------------------------------------------------------
 Earnings before tax, €                  234           199     17,5         586
 million

    Banking                               99           144    -31.4         424

    Non-life Insurance                    55            15                   92

    Wealth Management                     57            26                  101



 Returns to owner-members and             48            44      7.2         192
 OP bonus customers

                               31 March 2013 31 March 2012 Change % 31 Dec 2012

 Ratio of capital base to               1.85          2.02   -0.17*        1.90
 minimum amount of capital
 base (under the Act on the
 Supervision of Financial and
 Insurance Conglomerates)

 Core Tier 1 ratio, %                   14.1          15.1    -1.1*        14.1

 Core Tier 1 ratio before the
 transition provisions                  14.6          15.2    -0.6*        14.8

 Ratio of non-performing
 receivables to loan and
 guarantee portfolio, %                 0.51          0.53   -0.02*        0.46

 Joint banking and                     1,442         1,329      8.5       1,425
 insurance customers  (1,000)
-------------------------------------------------------------------------------
* Change in ratio


Comments by Reijo Karhinen, Executive Chairman and CEO

OP-Pohjola Group got off to a positive start in 2013.  The operating model of
our financial services group proved again its strength and its capacity to even
out earnings volatility. Record-high earnings by Non-life Insurance, a
considerable increase in investment income and the fact that we have been able
to stop expenses from growing contributed to a better first-quarter result than
expected.  The positive earnings development in the Group was shadowed by lower
earnings by Banking than a year ago caused by lower net interest income and the
new bank levy. Nevertheless, compared with the last quarter of 2012, Banking's
performance improved by 25 per cent.

What is descriptive of the change in our revenue model is that the amount of
'Other income' more than doubled in the report period relative to the net
interest income. The results of the efficiency-enhancement programme started
last year can be seen as lower expenses at Group level, regardless of the bank
levy. The downward trend of net interest income will even out substantially
during the rest of the year. However, the revenue model of retail banking is
changing permanently, and the requirement for higher efficiency is here to stay.

The volume of our business continued to grow strongly despite the market
conditions and in comparison with the entire sector.  Our balance sheet total
exceeded the EUR 100 billion mark. We have been operating in accordance with our
mission and values by responding to our customers' needs for loans. Our market
shares are on a steep rise both in terms of corporate and home loans. To be
successful in this challenging market situation, we have had to make some bold
long-term decisions and to understand our customers well.

Following the acquisition of Pohjola, we have considerably strengthened our
market position in our key business segments. Our latest achievement is to be
the biggest provider of bank financing to businesses. We are at the forefront in
developing a new type of financial services group model in Finland. We have been
supported in this by our firm foundation in cooperative principles and the bonus
system that rewards loyal customers financially. We will continue, in line with
our strategy, to provide our customers with the best overall solutions and
loyalty benefits in the sector.

Although the global economy is still frail and Europe's protracted debt crisis
casts a nasty shadow on the economy, OP-Pohjola Group's outlook for the rest of
2013 is stable. Our capital base is strong, our risk exposure is good and our
growth rate is in line with our strategy.

The financial sector will still experience years of uncertainty as major changes
are taking place. We will come under considerable pressure, both in terms of
political decisions and in the form of new regulations.  Economic development,
which continues to be poor, and the uncertainty caused by regulatory changes
will increase risks, which in itself requires bigger financial buffers in our
sector, thereby creating pressure to push prices up. The financial crisis, an
imported one from Finland's point of view, is making itself felt with a delay in
the form of tighter regulation and as an impediment to economic growth.


Financial performance in the report period

OP-Pohjola Group's earnings before tax came to EUR 234 million (199). Earnings
were improved by record-level earnings by Non-life Insurance in January-March,
the levelling off of expense growth and higher investment income.

The strong profit performance by Non-life Insurance was caused by prolonged
growth of premiums written and exceptionally low claims expenditure during a
traditionally challenging first quarter. The Group's expenses were slightly
lower than a year ago despite the higher expenses caused by the bank levy.
Efficiency was considerably improved thanks to the efficiency-enhancing
programme that started in late 2012. Investment income was improved by front-
load realisation of capital gains in the first quarter.

Expenses were below last year's level despite the bank levy that became
effective on 1 January 2013. A total of EUR 12 million of bank levy was
recognised in the first quarter. Without the bank levy, expenses would have
contracted by over 3%.

OP-Pohjola Group's fair value reserve was EUR 425 million on 31 March, reducing
in the first quarter by EUR 24 million. Earnings before tax at fair value came
to EUR 210 million (577).

Bonuses to owner-members and OP bonus customers recognised in the income
statement grew by 6.1% year on year to EUR 45 million.

Outlook for the rest of 2013

Growth prospects for the world economy are still dim, and economic growth in the
euro area will be only modest at best. Finnish economic growth is also expected
to remain weak. Although the situation in financial markets has remained
relatively stable as a result of actions taken by the European Central Bank, the
debt crisis within the euro area has not been solved yet. A deepening debt
crisis could have significant implications for the entire financial sector.

The operating environment in the financial sector is projected to remain
relatively difficult. Historically low market interest rates are eroding banks'
net interest income and weakening insurance companies' investment income, while
the weak market conditions will reduce demand for financial services and the
bank levy confirmed in late 2012 will cause major costs to Finnish banks. As
financial regulation is becoming tighter, measures that support profitability
are becoming more and more important.

Unless the operating environment turns out to be considerably weaker than
expected, OP-Pohjola Group's financial performance is expected to be at about
the same level as in 2012, or somewhat lower. The primary uncertainties
affecting the financial performance in 2013 relate to the rate of business
growth, impairment loss on receivables and 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 on developments in the economy, and actual results may
differ materially from those expressed in the forward-looking statements.


Financial reporting in 2013

Schedule for Interim Reports in 2013:

Interim Report H1/2013: 31 July 2013
Interim Report Q1-3/2013: 30 October 2013

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 29 April
2013, starting at noon at Vääksyntie 4, Vallila, Helsinki.

Pohjola Bank plc will publish its own interim report.

OP-Pohjola Group Central Cooperative
Executive Board

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 aunique 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 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.

www.op.fi

[HUG#1697151]

Attachments:

OP-Pohjola Group Interim Report Q1 _2013.pdf

OP-Pohjola Group Q1 2013 background material.pdf