2011-08-03 07:00:00 CEST
2011-08-03 07:01:28 CEST
REGULATED INFORMATION
Pohjola Pankki Oyj - Interim report (Q1 and Q3)
Good Progress for OP-Pohjola Group: earnings before tax grew by 36 percent
OP-Pohjola Group Company Release 3 August 2011, 08.00 am Release category: Interim Report Good Progress for OP-Pohjola Group: earnings before tax grew by 36 percent - The Group's pre-tax earnings improved by 36% to EUR 362 million (266) - each business segment improved its performance. - Income improved by 12% year on year. Net interest income came to 9% and Other income to 14%. Expenses increased by 7%. - Impairment losses on receivables shrank by 29% year on year, amounting to 0.18% of the loan and guarantee portfolio. - Business continued to increase at a good rate. Growth was particularly brisk in deposits, corporate loans and Non-life Insurance premium revenue. - Good progress was made in the strategic focus areas, that is, integration of banking and non-life insurance operations, and the corporate business. OP- Pohjola Group's joint banking and insurance customers increased in the report period by 45,000 and the corporate loan portfolio by 6%. - OP-Pohjola Group's capital adequacy is very strong. According to the forward- looking stress tests conducted by the European Banking Authority, the Group's banking capital adequacy is one of the best in Europe. - The Group's performance for 2011 is expected to be better than in 2010. For the outlook in full, see 'Outlook towards the year end' below. OP-Pohjola Group's key indicators -------------------------------------------------------------------------------- Q1-Q2/2011 Q1-Q2/2010 Change, % 2010 -------------------------------------------------------------------------------- Earnings before tax, e million 362 266 36.4 575 Banking 226 163 38,5 367 Non-life Insurance 68 42 61.1 83 Life Insurance 52 20 43 Returns to owner-members and OP 89 81 9.7 163 bonus customers 30 Jun 2011 30 Jun 2010 Change, % 31 Dec 2010 Ratio of capital base to minimum amount of capital base (under the Act on the Supervision of 1.61 1.60 0.01* 1.70 Financial and Insurance Conglomerates) Tier I ratio, % 12.0 12.4 -0.4* 12.8 Non-performing loan losses within 0.45 0.45 0.00* 0.34 loan and guarantee portfolio, % Joint banking and insurance 1,242 1,147 8.3 1,197 customers, 1,000 -------------------------------------------------------------------------------- * Change in ratio Comments by Reijo Karhinen, Executive Chairman OP-Pohjola Group's trademarks, long-termism and good earnings power, were the factors that helped us achieve high key figures in the first half in terms of earnings, capital adequacy and growth. Under the current conditions, our performance can be considered excellent. Our earnings improved significantly and this was indeed the best six-month period since the record year in 2007 before the financial crisis. Our earnings improvement of over a third was boosted by solid income growth. I am particularly pleased with the higher rate of net interest income. Credit losses became smaller and smaller, which supports our prediction that the whole of 2011 will be better than 2010. As a result of a major earnings increase, the growth rate of expenses intensified, too. We increased our development expenditure as soon as our earnings capacity normalised after the financial crisis. The establishing of a development unit in Oulu, which has been extremely positively received, serves as a good practical example. Our long-term strategic goal is to ensure that our expense growth does not exceed our income growth. The forward-looking stress test results published in July again showed that our finances rest on a solid foundation. Being ranked for the second time running among the top ten banks in Europe means we have good reason to be pleased with ourselves. This achievement is even more significant at a time when the global financial market is overshadowed by a number of uncertainties and we are faced with major regulatory changes. We are a reliable player in the international funding market, which is reflected in the availability and price of our long- term funding. Ultimately it is our customers that benefit from this. The growth of our business - in some areas quite dramatically - under the current market conditions is proof that our customers want to show their trust to a nationally strong, long-term player that is owned by the customers themselves. The significant increase in deposits and the steady growth of joint banking and non-life insurance customers rank as the obvious strategic high points of the report period. In the summer of 2011, we have seen both in Europe and the US that politicians have a lot of power and that they at the same time shoulder the responsibility for creating stability in the financial sector. Poorly managed public finances combined with lack of discipline within the euro area and poor joint decision- making have knocked the euro area alarmingly off balance, and the road out of the debt crisis will be long and bumpy. We have to be prepared for new, difficult decisions and continued market instability. However, OP-Pohjola Group's future looks positive. The recent stress test results show that we operate on a firm foundation even if the conditions are far from ideal. Financial performance in the report period The Group's earnings before tax grew by 36% to EUR 362 million (266). This was the best performance since the second half of 2007, and can be attributed to lower impairment charges, higher investment income and, as a consequence of higher market rates, growing net interest income. Bonuses to owner-members and OP bonus customers that were recognised in the profit and loss grew by 7.6% year on year to EUR 80 million. All three business segments improved their performance. Following the recession, the financial services group's profitability is reaching it long-term average target level. Earnings before tax at fair value shrank owing to jittery capital markets and, as a consequence of higher interest rates, falling market prices. The Group's fair value reserve shrank by EUR 86 million, while a year ago it increased by EUR 55 million. Outlook towards the year end Both the global and Finnish economies are on the whole positive. 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. OP-Pohjola Group's 2011 earnings before taxes are expected to be better than in 2010, primarily as a result of climbing net interest income and net commissions and fees, but also lower impairment charges related to receivables and investments. The greatest uncertainty is related to the sovereign debt problems described above. All forward-looking statements in this Interim Report expressing the management's expectations, beliefs, estimates, forecasts, projections and assumptions are based on the current view of the future financial performance of OP-Pohjola Group, 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 Reijo Karhinen in a press conference on 3 August 2011 at 12 noon at Teollisuuskatu 1 b, Vallila, Helsinki. Financial reporting in 2011 Interim Report Q1-3/2011: 2 November 2011 Additional information Executive Chairman 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 [HUG#1535755]
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