2014-10-24 08:02:00 CEST
2014-10-24 08:03:31 CEST
REGULATED INFORMATION
Pohjola Pankki Oyj - Interim report (Q1 and Q3)
Pohjola Group Performance for January-September
Pohjola Bank plc
Stock exchange release 24 October 2014, 9.00 am
Interim Report
Pohjola Group Performance for January-September
- Consolidated earnings before tax amounted to EUR 467 million (384) and
consolidated earnings before tax at fair value to EUR 519 million (352). The
return on equity was 15.5% (13.5). The Common Equity Tier 1 (CET1) ratio was
12.0% (11.9*) as against the target of 15%.
- Strong growth in income improved Banking earnings. The loan portfolio grew by
3% to EUR 14.6 billion (14.2). The average corporate loan portfolio margin was
1.49% (1.57). Earnings included EUR 18 million (29) in impairment loss on
receivables.
- Within Non-life Insurance, insurance premium revenue increased by 6% (10). The
combined ratio was 91.0% (88.3). A reduction in the discount rate for pension
liabilities reduced earnings by EUR 62 million (0). Excluding changes in
reserving bases and amortisation on intangible assets arising from company
acquisition, the operating combined ratio improved to 83.1% (86.6). Return on
investments at fair value was 4.9% (2.1).
-Within Asset Management, assets under management increased by 9% to EUR 41.5
billion (37.9).
- OP-Pohjola Group Central Cooperative completed its public voluntary bid
announced in February 2014 and obtained ownership of all Pohjola Bank plc shares
by decision of the arbitral tribunal. Pohjola's series A shares were delisted
from the Helsinki Stock Exchange on 30 September 2014. OP-Pohjola Group Central
Cooperative was entered as the only shareholder in Pohjola's shareholder
register on 7 October 2014.
- Outlook for the remainder of 2014: Consolidated earnings before tax in 2014
are expected to be higher than in 2013. The growth of the Banking loan portfolio
is expected to fall short of that achieved in 2013 (previous estimate: at the
same level as 2013). It is estimated that the Non-life Insurance combined ratio
will vary between 85 and 88% (previous estimate: 87-91). For more detailed
information on the outlook, see "Outlook towards the end of 2014" below.
July-September
- Consolidated earnings before tax amounted to EUR 131 million (131) and
consolidated earnings before tax at fair value to EUR 126 million (173).
- Banking showed considerable improvement in its earnings before tax. Net
interest income grew by 29% year on year. The loan portfolio increased slightly
and the average corporate loan portfolio margin decreased by two basis points.
Earnings included EUR 10 million (10) in impairment loss on receivables.
- Within Non-life Insurance, insurance premium revenue increased by 3% (10). The
combined ratio was 100.6% (83.3). A reduction in the discount rate for pension
liabilities reduced earnings by EUR 62 million (0). The operating combined ratio
was 80.5% (81.6). Return on investments at fair value was 1.4% (1.7).
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 2013 are used as
comparatives. Comparative figures have been restated as a result of the
adoption of IFRS 10 Consolidated Financial Statements.
*) In accordance with the EU capital requirement regulation and directive (EU
575/2013) (CRR) entered into force on 1 January 2014.
**) According to the Solvency II draft (EU 138/2009
Earnings before tax, € Q1-3/
million Q1-3/ 2014 2013 Change % Q3/2014 Q3/2013 2013
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Banking 248 175 41 80 64 251
Group Functions 9 29 -69 -13 -2 39
Non-life Insurance 191 162 18 58 63 166
Asset Management 20 18 8 6 7 24
Group total 467 384 22 131 131 479
Change in fair value reserve 52 -32 -5 42 -16
Earnings before tax at fair 519 352 47 126 173 463
value
Equity per share, € 10.06 9.05 9.54
Average personnel 2,579 2,637 2,589 2,543 2,632
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The above figures describe Pohjola Group as a whole without the division into
continuing and discontinued operations.
Financial targets Q1-3 /2014 Q1-3 /2013 Q3/ Q3/ 2013 Target
2014 2013
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Return on equity, % 15.5 13.5 12.4 13.4 14.4 13
Common Equity Tier 1 ratio
(CET1), % *) 12.0 11.9 15
Operating cost/income ratio by
Banking, % 31 36 29 33 36 < 35
Operating combined ratio by
Non-life Insurance, % 83.1 86.6 80.5 81.6 86.9 < 92
Operating expense ratio by Non-
life Insurance, % 17.4 18.4 16.1 16.2 18.7 18
Non-life Insurance solvency
ratio (under Solvency II
framework), % **) 135 132 125 120
Operating cost/income ratio by
Asset Management, % 49 52 51 47 53 < 45
Total expenses in 2015 at the
same level as at the end of
2012 448 427 151 135 581 569
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 CET 1 ratio
is at least 15%. Dividend
payout ratio is 30% until CET1
ratio of 15% has been achieved. 50 > 50 (30)
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Outlook towards the end of 2014
The growth of the Banking loan portfolio is expected to fall short of that
achieved in 2013 (previous estimate: at the same level as 2013). Due to the
operating environment, corporate investments are expected to remain below their
normal level. The greatest uncertainties related to Banking's financial
performance are associated with volume developments and 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 85% and 88% (previous estimate: 87-91%) if the
number of large claims is not much higher than in 2013. Expected investment
returns will largely depend on developments in the investment environment. The
most significant uncertainties related to Non-life Insurance's financial
performance pertain to developments in bond and investment markets and to the
effect of large claims on claims expenditure.
The greatest uncertainties related to Asset Management's financial performance
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 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.
Consolidated earnings before tax in 2014 are expected to be higher than in 2013.
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, 24 October 2014
Pohjola Bank plc
Board of Directors
This Interim Report is available at www.pohjola.com > Media > Releases.
Financial reporting in 2015
Pohjola Bank plc publishes the following financial information pursuant to the
regular disclosure obligation of a securities issuer:
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
DISTRIBUTION
NASDAQ OMX Helsinki Ltd
London Stock Exchange
SIX Swiss Exchange
Major media
www.pohjola.com, www.op.fi
For additional information, please contact
Jouko Pölönen, President and CEO, tel. +358 (0)10 253 2691
Pohjola is part of the leading Finnish customer-owned financial services group,
OP-Pohjola. Pohjola provides its customers with banking, non-life insurance and
asset management services. Pohjola is OP-Pohjola's central bank and is, together
with OP Mortgage Bank, responsible for OP-Pohjola's funding operations on money
and capital markets. As laid down in the applicable law, Pohjola, its parent
company OP-Pohjola Group Central Cooperative and the member credit institutions
are ultimately jointly and severally liable for each other's debts and
commitments. The joint liability in OP-Pohjola is prescribed by the Act on the
Amalgamation of Deposit Banks Act.
www.pohjola.fi
[HUG#1865387]
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