Pohjola Pankki Oyj - Interim report (Q1 and Q3)

OP-Pohjola Group earnings continue on strong growth track

OP-Pohjola Group
Stock Exchange Release 24 October 2014 at 9.00 am (EEST)
Interim Report


OP-Pohjola Group earnings continue on strong growth track
  * The Group's earnings for January-September before tax were EUR 739 (610)
    million, that is, up by more than one-fifth year on year.
  * Group total income grew by 8%. Net interest income continued on a good
    growth path and was 16%.
  * Expenses rose by 2.8%. Expenses without non-recurring items affecting
    comparability grew by 1%. Impairment losses on receivables remained at the
    same low level as last year, EUR 50 million (49).
  * Each of the three business segments improved its performance markedly.

      * Banking earnings before tax increased by 48% to EUR 468 million (317).
        The cost/income ratio improved by six percentage points to 55%. The loan
        portfolio grew by 3.4% and deposits by 2.2% in the year to September.
      * Earnings before tax by Non-life Insurance increased by 18% to EUR 190
        million (162). The operating combined ratio reached a record level of
        83.1%. Premiums written increased in the report period by 6%.
      * Wealth Management earnings before tax increased by 43% to EUR 140
        million (98). Mutual fund assets increased in the year to September by
        19% and unit-linked insurance savings by 21%.
      * The number of joint banking and non-life insurance customers increased
        by 78,000 in the year to September.
  * On 30 September 2014, the Group was granted title to all Pohjola Bank
    shares, and the shares of Pohjola were removed from the Helsinki Stock
    Exchange.
  * Despite the purchase of Pohjola Bank plc shares, the Group's capital
    adequacy is strong. On 30 September, the Group's CET1 was 13.6% (17.1). A
    total of EUR 1,230 million in Profit shares supporting CET1 has been issued
    by this report's date of publication.
  * Earnings in 2014 are estimated to be clearly higher than in 2013. For more
    details, see "Outlook towards the year end" below.
  * In October, OP-Pohjola Group decided to change its name. From 1 January
    2015, the Group will be known as OP.


OP-Pohjola Group's key indicators
                                   Q1-Q3/2014  Q1-Q3/2013  Change, % Q1-Q4/2013
-------------------------------------------------------------------------------
 Earnings before tax, € million            739         610      21.1        701

   Banking                                 468         317      47.5        404

   Non-life Insurance                      190         162      17.7        166

   Wealth Management                       140          98      43.0        113



 Returns to owner-members and OP
 bonus customers                           147         145       1.5        193



                                   30 Sep 2014 31 Dec 2013 Change, %

 Common Equity Tier 1 (CET1)
 ratio, % / Core Tier 1 ratio**           13.6        17.1      -3.5

 Ratio of capital base to minimum
 amount of capital base (under the
 Act on the Supervision of
 Financial and Insurance
 Conglomerates)**                         1.79        2.19     -0.40

 Ratio of receivables more than
 90 days overdue to loan and
 guarantee portfolio, %                   0.46        0.42     0.04*

 Joint banking and insurance
 customers (1,000)                       1,570       1,518       3.4
-------------------------------------------------------------------------------
* Change in ratio
** The comparatives are presented based on the regulatory framework effective
before 1 January 2014.


Comments by Reijo Karhinen, Executive Chairman and CEO

OP-Pohjola Group's key figures for this year show that we have performed well.
We have managed to maintain our course in an extremely challenging operating
environment. All quarters this year have been better that those a year ago, and
this past quarter was also our best-ever third quarter of all times. During
these three quarters, our earnings are already better than in the whole of
2013. We therefore predict that the full-year result for 2014 will be
considerably better than it was in 2013. Despite the serious challenges we are
faced with in Finland, the outlook is positive from OP-Pohjola Group's point of
view - we offer our customers a strong and long-term partner that is ready to
act.

The reason for our good profit development is that both our customers and
ourselves were well prepared for poor economic conditions. We performed well in
relation to our moderate cost development. The fact that our problem loans and
credit losses have been low also shows that our customers have been financially
strong and better prepared than during previous recessions. On the whole, the
Finnish private sector's crisis awareness and corrective measures have been much
more determined and successful than those of the public sector. General social
indecision and poor implementation of decisions erode the opportunities of
private actors in the long run, unfortunately also postponing any hopes of an
economic upturn.

As a cooperative, we have two clear roles: business role on the one hand and a
social role dictated by our basic mission on the other.  In our business role,
we have managed to maintain good results in a way that translates to better
capital adequacy, which will contribute to our continued success and especially
to our ability to carry our responsibility for providing financing to our
customers. It is also important that we not only maintain good capital adequacy
but do our utmost to keep our cost-efficiency competitive.

Our basic mission includes a promise to promote the prosperity, security and
wellbeing of our owner-members, customers and operating environment.  Due to
this role, the customer bonuses we pay out continue to increase, the new Profit
shares are becoming a hit product among our owner-members, as are the
Omasairaala hospital we own and the Pivo mobile wallet. Our business growth that
is clearly better than the operating environment average is clear indication of
responsibility attached to our social role.

Our market position is solid and getting better. So far this year, our growth
has clearly hinged on wealth management products and services. We have also
grown at a high rate in non-life insurance.  However, loan markets have been
considerably slower, which has also affected us.  As a result of general
uncertainty, customers' investment and purchase decisions have been all but
frozen.

Right now, we at OP-Pohjola Group are setting our sights long into the future,
being in the process of implementing one of the Group's biggest reforms ever.
Our programme is bold with a clear goal. We have been a pathfinder in building a
new type of financial services group in the Finnish market, and now we want to
solidify our position as the country's most competitive financial services
group. We will create digital services that will be our next success story. We
will rely on a collective approach and customer-ownership. Respecting the
customer lies at the core of our customer-focused approach. Our new brand, OP in
short, will have new content as of the beginning of 2015.

Financial performance in the report period

OP-Pohjola Group's earnings before tax increased by 21% to EUR 739 million
(610), exceeding the full-year earnings of 2013 by 5%. Earnings were boosted
especially by an increase in net interest income and Non-life Insurance's
investment income. Net commissions and fees and Life Insurance's net income also
increased. However, the Group's earnings were eroded by higher non-recurring
expenses.

Net interest income increased by 16%. The increase in net interest income can be
attributed to an increase in average loan portfolio margins and to growth in the
balance sheet. The favourable development of net interest income from capital
market products and the decrease of deposit funding costs also promoted the
growth of net interest income.

The Group's expenses increased by 2.8% year on year. Other operating expenses
were increased in the report period by non-recurring expenses incurred by the
purchase of Pohjola Bank plc shares and a tax penalty payment, amounting to a
total of EUR 21 million. Without these non-recurring items' effect on
comparability, the growth in expenses equalled 1%.

OP-Pohjola Group's fair value reserve before tax totalled EUR 477 million (409)
at the end of the report period. Earnings before tax at fair value amounted to
EUR 843 million (536).

Equity capital amounted to EUR 6.7 billion (7.7) on 30 September. The purchase
of Pohjola Bank plc shares in the report period reduced the Group's equity
capital by EUR 2.4 billion. Equity capital was also decreased by profit
distribution outside the Group. On the other hand, equity capital was increased
by the Group's earnings and the issuance of Profit shares.

Outlook towards the year end

The growth of the world economy has been weak, and there is no clear upturn in
sight. The eurozone economy has failed to start growing, despite the gentle
financial policy of the European Central Bank and other measures taken to
support economic growth. The growth of Finland's economy has remained weak,
regardless of an increase in the number of new industrial orders. The crisis in
Ukraine is still a significant factor of uncertainty for the Finnish economy,
slowing Finland's recovery from recession.

Modest economic development combined with the tensions of international politics
are weakening growth prospects in the financial sector. Historically low
interest rates will erode banks' net interest income and weaken insurance
institutions' investment income The significance of measures that support
capital adequacy and profitability is heightened by changes in the operating
environment and the tightening of regulation.

Unless the operating environment turns out to be considerably weaker than
expected, OP-Pohjola Group's earnings before tax are expected to be clearly
higher than in 2013. The most significant factors of uncertainty with regard to
earnings development relate to fast and unanticipated 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 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 24 October
2014 at 12 noon at Vääksyntie 4, Vallila, Helsinki.


Pohjola Bank plc will publish its own Interim Report.


Financial reporting in 2015

Schedule for Financial Statements Bulletin for 2014 and Interim Reports in
2015:

Financial Statements Bulletin 2014                               5 February
2015
Interim Report Q1/2015                                        29 April
2015
Interim Report H1/2015                                        5 August 2015

Interim Report Q1-3/2015                                        28 October
2015

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 is Finland's leading financial services group providing a unique
range of banking, wealth management and insurance services. OP-Pohjola's mission
is to promote the sustainable prosperity, security and wellbeing of its
customer-owners, customers and operating regions. Its objective is to offer the
best and most versatile package of loyal customer benefits on the market. OP-
Pohjola Group consists of about 180 member cooperative banks, its central
institution OP-Pohjola Group Central Cooperative, and the latter's subsidiaries
and affiliates. The Group has a staff of 12,000.

As laid down in the applicable law, OP-Pohjola Group Central Cooperative and its
member credit institutions are ultimately jointly and severally liable for each
other's debts and commitments. The joint liability in the OP-Pohjola Group is
prescribed by the Act on the Amalgamation of Deposit Banks Act. Pohjola Bank plc
and OP Mortgage Bank are responsible for OP-Pohjola's funding operations on
money and capital markets.

Financial services provider OP-Pohjola is continuing its revamp - this time the
focus is on its brand. The changes under way form part of the creation of a new
financial services group fully owned by its customers. OP-Pohjola's name is OP
as of 1 January 2015.

www.op.fi

[HUG#1865390]

Attachments:

OP-Pohjola Group Interim Report Q3_2014.pdf

OP-Pohjola Group Q3 2014 background material.pdf