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2007-08-09 07:00:09 CEST 2007-08-09 07:00:09 CEST REGULATED INFORMATION OKO Pankki Oyj - Quarterly reportOP Bank Group Interim Report 1 January-30 June 2007 and Executive Chairman's commentsOP Bank Group Central Cooperative Company Release 9 August 2007 at 8.00 a.m. Release category: Interim Report OP BANK GROUP INTERIM REPORT 1 JANUARY-30 JUNE 2007 AND EXECUTIVE CHAIRMAN'S COMMENTS OP Bank Group posted all-time high January-June (EUR 523 million, up 34%) and April-June (EUR 278 million, up 56%) earnings before tax. All businesses within the financial services group continued their strong growth and the group's market position strengthened further. The OP-Pohjola integration proceeded according to plan. Card cooperation with K-Group got off to a good start. OKO Bank Group enhanced its loyal customer benefits substantially. Executive Chairman's comments During the first half of 2007, OP Bank Group enjoyed exceptional success in its various business areas. Whether we set our overall development against our targets or market developments, our first-half performance can justifiably be characterised as excellent. The period's favourable operating environment contributed to achieving all-time high earnings. However, I think that the right choices we have made and our genuine customer focus in particular lie behind our development in line with our strategic core - sustained, strong growth in customer numbers and our business segments' above-market-average growth. Our excellent first-half performance proves that our recent improvements in offerings have been met favourably by our customers. We succeeded in further strengthening our position as the largest financial services group in Finland. Special, individual sources of joy during the reporting period included a marked euro-based increase in loyal customer benefits in line with our customer promise, determined efforts to continue the OP-Pohjola integration process and our cooperation with Kesko that got off to a flying start, and making progress in these areas will continue to be high on OP Bank Group's agenda. Simultaneous vigorous growth in savings accounts and mutual fund savings is also worth noting. OP Bank Group's prospects towards the end of 2007 look very favourable. We continued to boost our competitiveness during the first half. With our earnings power stronger than ever, our risk exposure is stable and growth rate in line with our strategy. Helsinki, 9 August 2007 Reijo Karhinen OP Bank Group's Interim Report for 1 January-30 June 2007 Sustained vigorous growth and stronger market position* Loan portfolio grew by 14%. Growth in home mortgages came to 15% and in corporate loans to 14%. Deposits grew by 8%. Investment deposits increased by 18%. Growth in assets invested in mutual funds remained very buoyant, amounting to 36%. Premiums written in Non-life Insurance rose by 9%, with insurance premium revenue from private customers up by 12%. Market share of premiums written in life insurance increased. Thanks to the robust growth in OP Bank Group's operations, the Group strengthened its market position further. Higher earnings and markedly improved profitability Earnings before tax grew by 34% to EUR 523 million. Income and expenses increased by 19% and 5%, respectively. Earnings and return on equity (13.4%) at fair value more than doubled. Second-quarter earnings before tax came to EUR 278 million, up by 56%. Every business segment improved its year-on-year earnings. Strong risk-bearing capacity and a stable risk exposure Own funds were 1.6 times the statutory minimum. Non-performing loan losses within the loan and guarantee portfolio continued to fall slightly over the previous year. OKO Bank Group enhanced loyal customer benefits and card cooperation with K-Group got off to a good start* Bonuses granted grew by 75%. The number of joint banking and non-life insurance customers increased by 86,000. Card cooperation between OP Bank Group and K-Group got off to a good start. In May-June, the number of issued OP Bank Group cards with the K-Plussa feature came to almost 140,000. Year 2007 OP Bank Group's earnings before tax in 2007 are expected to be markedly higher than in 2006. * Changes are based on a year-on-year comparison. OP Bank Group key indicators -------------------------------------------------------------------------------- | | H1/2007 | H1/2006 | Change* | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings before tax, EUR | 523 | 389 | 34 | 800 | | million | | | | | -------------------------------------------------------------------------------- | Banking and Investment | 368 | 308 | 20 | 643 | | Services | | | | | -------------------------------------------------------------------------------- | Non-life Insurance | 83 | 47 | 77 | 78 | -------------------------------------------------------------------------------- | Life Insurance | 77 | 34 | | 68 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Return on equity, % | 14.7 | 11.9 | 2.9 | 12.1 | -------------------------------------------------------------------------------- | Return on equity at fair | 13.4 | 6.1 | 7.3 | 11.4 | | value, % | | | | | -------------------------------------------------------------------------------- | Cost/income, % | 49 | 53 | -4 | 52 | | (Banking and Investment | | | | | | Services) | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Average personnel | 12,307 | 12,127 | 1.3 | 12,148 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | 30 June | June 30 | Change* | 31 Dec. | | | 2007 | 2006 | | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total assets, EUR billion | 63.4 | 57.8 | 9.7 | 59.5 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Conglomerates | 14.3 | 12.9 | 1.4 | 14.3 | -------------------------------------------------------------------------------- | Ratio of own funds to | 1.57 | 1.51 | 0.06 | 1.56 | | minimum amount of own | | | | | | funds** | | | | | -------------------------------------------------------------------------------- | Tier 1 ratio, %*** | 12.6 | 12.2 | 0.3 | 12.7 | -------------------------------------------------------------------------------- | Non-performing loan losses | 0.4 | 0.4 | -0.04 | 0.3 | | within loan and guarantee | | | | | | portfolio, % | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Market share, % | | | | | -------------------------------------------------------------------------------- | Of total loans | 31.4 | 31.0 | 0.4 | 31.1 | -------------------------------------------------------------------------------- | Of total deposits | 32.8 | 32.5 | 0.3 | 32.7 | -------------------------------------------------------------------------------- | Of capital invested in | 21.5 | 21.2 | 0.3 | 21.8 | | mutual funds | | | | | -------------------------------------------------------------------------------- | Of insurance savings through | 19.7 | 18.5 | 1.2 | 19.1 | | life and | | | | | | pension policies**** | | | | | -------------------------------------------------------------------------------- | | H1/2007 | H1/2006 | Change* | 2006 | -------------------------------------------------------------------------------- | Of premiums written in life | 28.8 | 28.6 | 0.2 | 28.3 | | and pension insurance | | | | | -------------------------------------------------------------------------------- * Percentage point change, except for earnings before tax, total assets and average number of personnel, for which the change is stated in percentages, as well as the ratio of own funds to the minimum amount of own funds, for which the change is stated as a change in the ratio. ** Pursuant to the Act on the Supervision of Financial and Insurance Conglomerates. *** Pursuant to the Credit Institutions Act. **** Preliminary data. Operating environment During Germany's EU Presidency, economic growth has strengthened in the euro zone. In addition to exports, capital spending growth accelerated in the region during the first half. A marked reduction in unemployment has also provided favourable prospects for higher consumer spending. However, the weak US housing market has slowed down economic growth, causing uncertainty in financial markets. The emerging Asian economies and Russia have shown sustained, rapid economic growth. The Finnish economy seems to enjoy a prolonged, vigorous growth. A substantial improvement in employment and income has contributed to higher household spending while world economic growth has maintained export demand. Business expectations are rather optimistic in most industries and economic growth is expected to remain strong during the rest of the year. The European Central Bank (ECB) raises its key rate in order to avert a higher inflation arising from wage increases. As a result of increases carried out until the present day, the key rate is now close to a neutral level from the euro-zone's macroeconomic perspective. The ECB will probably continue to tighten its monetary policy towards the beginning of 2008. Higher interest rates have had only a minor effect on demand for loans in Finland, thanks particularly to improved employment and higher personal disposable income. Loan interest rates are still relatively low, but the previous increases are expected to gradually level off growth in home mortgages and house prices. The equity market has remained bullish, thanks to large Western corporations' good profit performance. However, the market has suffered occasional uncertainty, channelling capital to lower-risk investments. Within the mutual fund business, this has been reflected in considerable growth in money market funds. Financial-sector restructuring has heated up competition in non-life insurance, especially for private customers. The first half saw an increase in severe traffic accidents, whereas there were fewer major fires than a year ago. OP Bank Group's earnings and total assets January-June Earnings before tax grew by 34% to EUR 523 million (389*) - an all-time high for a single first half. OP Bank Group's profitability also improved year on year. Annualised return on equity rose to 14.7% from 11.9% a year ago and return on equity at fair value increased by 7.3 percentage points to 13.4%. Earnings growth rested on a strong increase in income. Net interest income increased by 22% to EUR 509 (416) and other income by 17% to EUR 648 (553). Net income from Non-life Insurance rose by 17% to EUR 206 million (176) and that from Life Insurance by 62% to EUR 97 (60). Net investment income includes EUR 11 million in capital gains on OMX shares (12). Other income includes EUR 6 million in capital gains on the sale of Pohjola's marine hull insurance portfolio. Reported expenses rose to EUR 579 million (550), up by 5.4% on a year earlier, a major part of this growth owing to higher personnel costs resulting from an increase in staff numbers and the payroll bill. The reported higher expenses were also due to integration costs of EUR 13 (4) million recognised for the period. Bonuses paid to owner-members and OP bonus customers rose by 75% to EUR 40 (23), due mainly to the decision of late 2006 to gradually double OP bonuses by the beginning of 2008. In the first stage, the Group raised the OP bonus value by 50% as of the beginning of February 2007. Although impairment losses increased, they remained very low. Every business segment within OP Bank Group showed a marked year-on-year improvement in earnings. Earnings before tax reported by Banking and Investment Services improved by 20% to EUR 368 million (308), thanks to robust growth in net interest income. Earnings from Non-life Insurance totalled EUR 83 million (47), up 77% on the previous year. The Non-life Insurance combined ratio** stood at 97.9% (98.2) and operational combined ratio** at 94.9% (94.8). Life Insurance posted earnings before tax of EUR 77 million (34). Growth in investment income had a major effect on higher earnings recorded by both Non-life and Life Insurance. Net investment income from Non-life Insurance increased by 37% to EUR 88 (64). Within Life Insurance, net income from available-for-sale financial assets rose by 74% to EUR 115 million (66). *Comparatives for 2006 are given in brackets. For income-statement and other aggregated figures, January-June 2006 figures serve as comparatives. For balance-sheet and other cross-sectional figures, figures on the previous balance sheet date (31 December 2006) serve as comparatives. **The combined cost ratio excluding amortisation on intangible assets arising from the Pohjola acquisition and allocated to the business segment. In connection with the Pohjola acquisition, OP Bank Group announced that it would seek revenue and cost synergies of about EUR 91 million by the end of 2010. Results achieved thus far support earlier estimates of the synergy benefits. Based on decisions made by the end of the reporting period, cost savings should come to over EUR 40 million in 2007 and more than EUR 50 million in 2008. Annualised revenue synergies achieved to date are estimated at almost EUR 20 million. Integration costs recognised for the period totalled approximately EUR 13 million. These costs include EUR 10 million in liquidated damages to savings banks recognised for the first quarter, based on an arbitral award issued by the Arbitral Tribunal on 2 April 2007. First-half earnings analysis -------------------------------------------------------------------------------- | EUR million | H1/ | H1/ | Change, | Change, | 2006 | | | 2007 | 2006 | EUR | % | | | | | | mill | | | | | | | ion | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings before tax | 523 | 389 | 134 | 34.5 | 800 | -------------------------------------------------------------------------------- | Gross change in fair | -43 | -180 | 136 | -75.9 | -45 | | value reserve | | | | | | -------------------------------------------------------------------------------- | Earnings before tax at | 480 | 209 | 270 | 129.1 | 754 | | fair value | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Return on equity, % | 14.7 | 11.9 | | 2.9* | 12.1 | -------------------------------------------------------------------------------- | Return on equity at fair | 13.4 | 6.1 | | 7.3* | 11.4 | | value, % | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Income | | | | | | -------------------------------------------------------------------------------- | Net interest income | 509 | 416 | 93 | 22.3 | 883 | -------------------------------------------------------------------------------- | Net income from Non-life | 206 | 176 | 30 | 17.3 | 328 | | Insurance | | | | | | -------------------------------------------------------------------------------- | Net income from Life | 97 | 60 | 37 | 62.0 | 110 | | Insurance | | | | | | -------------------------------------------------------------------------------- | Net commissions and fees | 223 | 202 | 20 | 10.0 | 396 | -------------------------------------------------------------------------------- | Net trading and | 66 | 71 | -5 | -7.2 | 144 | | investment | | | | | | | income | | | | | | -------------------------------------------------------------------------------- | Other operating income | 54 | 45 | 10 | 21.8 | 92 | -------------------------------------------------------------------------------- | Share of associates' | 2 | -1 | 3 | | 2 | | profits/losses | | | | | | -------------------------------------------------------------------------------- | Other income, total | 648 | 553 | 95 | 17.2 | 1 073 | -------------------------------------------------------------------------------- | Total income | 1,157 | 969 | 188 | 19.4 | 1,956 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Expenses | | | | | | -------------------------------------------------------------------------------- | Personnel costs | 285 | 263 | 22 | 8.3 | 527 | -------------------------------------------------------------------------------- | Other administrative | 147 | 148 | -2 | -1.1 | 290 | | expenses | | | | | | -------------------------------------------------------------------------------- | Other operating expenses | 148 | 138 | 9 | 6.7 | 267 | -------------------------------------------------------------------------------- | Total expenses | 579 | 550 | 29 | 5.4 | 1,083 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Impairment losses on | 6 | 1 | 4 | | 9 | | receivables | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Returns to owner-members | | | | | | | and | | | | | | | OP bonus customers | | | | | | -------------------------------------------------------------------------------- | Bonuses | 40 | 23 | 17 | 74.7 | 48 | -------------------------------------------------------------------------------- | Interest on ordinary and | 12 | 8 | 5 | 60.5 | 21 | | supplementary cooperative | | | | | | | capital | | | | | | -------------------------------------------------------------------------------- | Total returns | 52 | 31 | 22 | 71.1 | 69 | -------------------------------------------------------------------------------- * Percentage point(s). On June 30, OP Bank Group's total assets stood at EUR 63.4 billion (59.5), up by 6.5% from those on 31 December 2006. During the period, receivables from customers increased by 6.9% to EUR 42.3 billion (39.6), deposits by 5.4% to EUR 27.1 billion (25.8) and debt securities issued to the public by 8.3% to EUR 14.6 billion. In June, OP Bank Group issued its first covered bond worth one billion euros. Equity capital increased by 5.7% to EUR 5.4 billion (5.1). The fair value reserve under equity, adjusted for deferred tax, totalled EUR 109 (144). On 30 June, the cooperative capital investments and supplementary cooperative capital investments of the member cooperative banks' owner-members totalled EUR 713 million (696). Member banks paid a total of around EUR 21 million in interest on the ordinary and supplementary cooperative capital for the financial year 2006. In March, the Annual General Meeting of OKO Bank plc (OKO Bank) decided to pay EUR 131 (120) in dividends. April-June OP Bank Group posted second-quarter earnings of EUR 278 million before tax, which were the Group's all-time high reported for a single quarter and EUR 100 million higher than a year ago. This improvement was based on growth in income. Year on year, net interest income rose by EUR 50 million and other income by EUR 82 million. Within other income, net income from Non-life Insurance and Life Insurance showed the highest increase, due largely to growth in investment income. Other income for the second quarter includes EUR 13 million more non-recurring capital gains than a year ago. Reported expenses grew by EUR 19 million. Year on year, second-quarter personnel costs increased by 12%, accounting for EUR 16 million of growth in total expenses. Returns to owner-members grew by EUR 12 million. Impairment losses on receivables came to EUR 5 million, or EUR 2 million higher than a year earlier. Pre-tax earnings at fair value were EUR 215 million against EUR 42 million recorded a year earlier. Fair value reserve shrank (before deferred tax deduction) by EUR 74 million more in the second quarter of 2006 than the current year's second quarter, due mainly to a fall in share prices recorded in April-June 2006. Second-quarter earnings analysis -------------------------------------------------------------------------------- | EUR million | Q2/ | Q2/ | Change, | Q1/ | Change, | | | 2007 | 200 | % | 200 | % | | | | 6 | | 7 | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings before tax | 278 | 178 | 56.0 | 246 | 13.0 | -------------------------------------------------------------------------------- | Gross change in fair | -63 | -136 | -54 | 19 | | | value reserve | | | | | | -------------------------------------------------------------------------------- | Earnings before tax at | 215 | 42 | | 265 | -18.9 | | fair value | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Return on equity, % | 15.1 | 11.8 | 3.3* | 14.4 | 0.7* | -------------------------------------------------------------------------------- | Return on equity at fair | 11.4 | 3.0 | 8.4* | 15.5 | -4.1* | | value, % | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Income | | | | | | -------------------------------------------------------------------------------- | Net interest income | 264 | 214 | 23.2 | 244 | 8.0 | -------------------------------------------------------------------------------- | Net income from Non-life | 112 | 90 | 24.8 | 94 | 19.6 | | Insurance | | | | | | -------------------------------------------------------------------------------- | Net income from Life | 50 | 26 | 91.7 | 48 | 3.9 | | Insurance | | | | | | -------------------------------------------------------------------------------- | Net commissions and fees | 102 | 92 | 11.4 | 120 | -14.7 | -------------------------------------------------------------------------------- | Net trading and | 38 | 23 | 63.8 | 28 | 32.7 | | investment | | | | | | | income | | | | | | -------------------------------------------------------------------------------- | Other operating income | 33 | 22 | 51.5 | 21 | 54.1 | -------------------------------------------------------------------------------- | Share of associates' | 0 | 0 | | 2 | | | profits/losses | | | | | | -------------------------------------------------------------------------------- | Other income, total | 335 | 253 | 32.5 | 313 | 6.9 | -------------------------------------------------------------------------------- | Total income | 599 | 467 | 28.3 | 558 | 7.4 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Expenses | | | | | | -------------------------------------------------------------------------------- | Personnel costs | 145 | 129 | 12.3 | 140 | 4.0 | -------------------------------------------------------------------------------- | Other administrative | 76 | 76 | -0.7 | 71 | 6.2 | | expenses | | | | | | -------------------------------------------------------------------------------- | Other operating expenses | 70 | 66 | 5.5 | 78 | -10.4 | -------------------------------------------------------------------------------- | Total expenses | 290 | 271 | 7.0 | 289 | 0.6 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Impairment losses on | 5 | 3 | 58.5 | 1 | | | receivables | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Returns to | | | | | | | owner-members | | | | | | | and OP | | | | | | | bonus customers | | | | | | -------------------------------------------------------------------------------- | Bonuses | 21 | 12 | 78.5 | 19 | 9.9 | -------------------------------------------------------------------------------- | Interest on cooperative | 7 | 4 | 84.6 | 5 | 36.7 | | capital | | | | | | -------------------------------------------------------------------------------- | Total returns | 28 | 16 | 80.0 | 24 | 15.6 | -------------------------------------------------------------------------------- * Percentage point(s) OP Bank Group's earnings before tax in Q2 were EUR 32 million higher than in Q1. In addition to higher net interest income reported for the second quarter, this improvement was chiefly due to improved non-life insurance loss ratio, capital gains on the marine hull insurance portfolio and OMX shares as well as a good second-quarter return on investment property. Capital adequacy and risk exposure Two sets of capital adequacy regulations Two sets of capital adequacy ratios are calculated for OP Bank Group. OP Bank Group operates in compliance with the Act on Cooperative Banks and other Cooperative Institutions. Owing to the regulations on joint responsibility and security conditions prescribed in the Act, a minimum amount of own funds has been set for the amalgamation of the cooperative banks calculated according to the regulations for capital adequacy specified in the Credit Institutions Act. The amalgamation of the cooperative banks comprises its central institution (OP Bank Group Central Cooperative), the central institution's member credit institutions and companies belonging to their consolidation groups. Although OP Bank Group's insurance companies do not belong to the amalgamation of the cooperative banks, investments made in them nonetheless have a major impact on capital adequacy calculated in accordance with the capital adequacy regulations for credit institutions. This capital adequacy figure is called OP Bank Group's capital adequacy under the Credit Institutions Act. As a result of the Pohjola acquisition, OP Bank Group became a financial and insurance conglomerate, pursuant to the Act on the Supervision of Financial and Insurance Conglomerates. The conglomerate is governed by specific provisions of the capital adequacy requirement. In view of these two capital adequacy requirements, OP Bank Group's risk-bearing capacity is strong. Capital adequacy according to the Credit Institutions Act Amendments to the Credit Institutions Act pertaining to the capital adequacy reform (Basel II) were adopted in February 2007. The transitional provisions of the Act permit the calculation of capital adequacy in 2007 as set forth in the previously valid regulations. OP Bank Group will make use of the transitional provisions and publish its first capital-adequacy calculation in compliance with the new regulations for March 2008. In its credit risk capital requirement calculation, the Group will phase in the Internal Rating-based Approach (IRBA), with the aim of using this approach for the first credit portfolios during 2008. On 30 June, OP Bank Group's capital adequacy ratio under the Credit Institutions Act stood at 14.3% (14.3) and Tier 1 capital adequacy ratio at 12.6% (12.7). June-end Tier 1 own funds totalled EUR 4,543 million (4,271). Net profit for the period, less estimated profit distribution, is included in Tier 1 own funds. Growth in intangible assets and a reduction in cooperative capital included in own funds restrained growth in Tier 1 own funds. The Arbitral Tribunal's decision on the redemption price of Pohjola Group plc shares increased OP Bank Group's intangible assets by EUR 16 million. On June 30, the ratio of hybrid capital to Tier 1 own funds was 4.9% (5.2). Tier 1 own funds do not include equity capital growth resulting from either the IFRS-compliant measurement of pension liabilities and the assets covering them or from the measurement at fair value of investment property. Tier 2 own funds rose by 10% to EUR 976 (886). June-end Tier 2 funds included EUR 109 million in unrealised appreciation recognised in the fair value reserve. At the end of 2006, the corresponding figure was EUR 144 million. In June, OKO Bank plc prematurely called in a EUR 50-million debenture loan included in upper Tier 2 own funds and issued a new GBP 100-million debenture loan included in Tier 2 capital. On 30 June, investments in insurance companies, deducted from the total Tier 1 and Tier 2 own funds, came to EUR 347 million (339). In respect of insurance companies held, the Group deducted as insurance company investments a portion, corresponding to its holding, of these companies' minimum solvency margin. On the basis of the exemption granted by the Financial Supervision Authority on 6 March 2007, investments by OP Bank Group entities in venture capital funds, administered by OKO Venture Capital, are treated in the capital adequacy calculation in the same way as investments in shares in business or industrial corporations. Reported risk-weighted commitments grew by 7.3%, amounting to EUR 36.2 billion (33.7) on 30 June. During the second quarter, OP Bank Group's Tier 1 own funds increased by 1.5% and total own funds by 2.9%, with growth in intangible assets and a reduction in cooperative capital included in own funds restraining growth in Tier 1 own funds, as stated above. Risk-weighted commitments grew by 3.3%. Tier 1 capital adequacy ratio fell by 0.2 percentage point. The capital adequacy ratio remained unchanged due to the issue of the abovementioned debenture loan included in Tier 2 own funds. OP Bank Group's own funds and capital adequacy under the Credit Institutions Act -------------------------------------------------------------------------------- | EUR million | 30 June | 30 June | Change, | 31 Dec. | | | 2007 | 2006 | % | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Own funds | | | | | -------------------------------------------------------------------------------- | Equity capital | 5,415 | 4,654 | 16 | 5,124 | -------------------------------------------------------------------------------- | Cooperative capital, not included | 603 | 621 | -3 | 595 | | in equity capital | | | | | -------------------------------------------------------------------------------- | Hybrid capital | 221 | 224 | -1 | 224 | -------------------------------------------------------------------------------- | Intangible assets | -1,081 | -1,099 | -2 | -1,064 | -------------------------------------------------------------------------------- | Fair value reserve and other | -109 | -43 | | -144 | | reserves | | | | | -------------------------------------------------------------------------------- | Planned profit distribution | -35 | -27 | 29 | -75 | -------------------------------------------------------------------------------- | Other items (incl. excess funding | -470 | -344 | 37 | -388 | | of pension liability and | | | | | | measurement of investment | | | | | | property at fair value) | | | | | -------------------------------------------------------------------------------- | Tier 1 own funds | 4,543 | 3,985 | 14 | 4,271 | -------------------------------------------------------------------------------- | Fair value reserve and other | 109 | 43 | | 144 | | reserves | | | | | -------------------------------------------------------------------------------- | Subordinated liabilities incl. in | 321 | 200 | 60 | 210 | | upper Tier 2 own funds | | | | | -------------------------------------------------------------------------------- | Subordinated liabilities incl. in | 546 | 320 | 71 | 532 | | lower Tier 2 own funds | | | | | -------------------------------------------------------------------------------- | Total Tier 2 own funds | 976 | 563 | 73 | 886 | -------------------------------------------------------------------------------- | Investments in insurance | -347 | -326 | 6 | -339 | | companies | | | | | -------------------------------------------------------------------------------- | Other deduction items | -3 | -9 | -60 | -10 | -------------------------------------------------------------------------------- | Deduction items from combined | -351 | -335 | 5 | -349 | | Tier 1 and Tier 2 own funds | | | | | -------------------------------------------------------------------------------- | Total own funds | 5,168 | 4,213 | 23 | 4,808 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Balance sheet risk grouping in | | | | | | capital adequacy calculation | | | | | | (before risk-weighting factors) | | | | | -------------------------------------------------------------------------------- | Risk group I (risk weight 0%) | 10,870 | 11,205 | -3 | 10,560 | -------------------------------------------------------------------------------- | Risk group V (risk weight 10%) | 2 | 4 | -35 | 3 | -------------------------------------------------------------------------------- | Risk group II (risk weight 20%) | 799 | 762 | 5 | 586 | -------------------------------------------------------------------------------- | Risk group III (risk weight 50%) | 20,829 | 18,237 | 14 | 19,629 | -------------------------------------------------------------------------------- | Risk group IV (risk weight 100%) | 20,213 | 18,403 | 10 | 18,872 | -------------------------------------------------------------------------------- | Deduction items from own funds | 351 | 335 | 5 | 349 | -------------------------------------------------------------------------------- | Other items (incl. insurance | 10,350 | 8,883 | 17 | 9,535 | | assets) | | | | | -------------------------------------------------------------------------------- | Balance sheet total | 63,415 | 57,828 | 10 | 59,535 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Risk-weighted receivables, | | | | | | investments and off-balance-sheet | | | | | | commitments | | | | | -------------------------------------------------------------------------------- | Receivables and investments | 30,788 | 27,674 | 11 | 28,804 | -------------------------------------------------------------------------------- | Off-balance-sheet items | 4,102 | 3,633 | 13 | 3,904 | -------------------------------------------------------------------------------- | Market risk | 1,290 | 1,280 | 1 | 1,010 | -------------------------------------------------------------------------------- | Total risk-weighted receivables, | 36,180 | 32,587 | 11 | 33,718 | | investments and off-balance-sheet | | | | | | commitments | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Capital adequacy ratio, % | 14.3 | 12.9 | 1.4* | 14.3 | -------------------------------------------------------------------------------- | Ratio of Tier 1 own funds to | 12.6 | 12.2 | 0.3* | 12.7 | | total risk-weighted assets, % | | | | | -------------------------------------------------------------------------------- * Percentage point(s). Capital adequacy under the Act on the Supervision of Financial and Insurance Conglomerates OP Bank Group's capital adequacy pursuant to the Act on the Supervision of Financial and Insurance Conglomerates is calculated using the consolidation method, whereby assets included in own funds but not included in equity capital, under the regulations for the banking or insurance industry, are added to the equity capital in the conglomerate's balance sheet. Own funds may not include items not available for covering the losses of other companies belonging to the conglomerate. On 30 June, OP Bank Group's own funds, calculated according to the Act on the Supervision of Financial and Insurance Conglomerates, exceeded the minimum amount, as specified in the Act, by EUR 1,838 million (1,682). The conglomerate's capital adequacy ratio improved by 9.3% from the end of 2006 and by 25% in the year to June. At the end of March, capital adequacy totalled EUR 1,758 million, while on 30 June the capital adequacy ratio stood at 1.57, which is slightly higher than on 31 December 2006. Capital adequacy under the Act on the Supervision of Financial and Insurance Conglomerates -------------------------------------------------------------------------------- | EUR million | 30 June | 30 June | Change, | 31 Dec. | | | 2007 | 2006 | % | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | OP Bank Group's equity | 5,415 | 4,654 | 16,4 | 5,124 | | capital | | | | | -------------------------------------------------------------------------------- | Business segment-specific | 1,691 | 1,422 | 18.9 | 1,577 | | items | | | | | -------------------------------------------------------------------------------- | Goodwill and intangible | -1,130 | -1,150 | -1.8 | -1,133 | | assets | | | | | -------------------------------------------------------------------------------- | Items included in equity | -921 | -603 | 52.7 | -883 | | capital and business | | | | | | segment-specific items, but | | | | | | not included in the | | | | | | conglomerate's own funds | | | | | -------------------------------------------------------------------------------- | Conglomerate's own funds, | 5,054 | 4,322 | 16.9 | 4,685 | | total | | | | | -------------------------------------------------------------------------------- | Minimum amount of the | 3,216 | 2,854 | 12.7 | 3,002 | | conglomerate's own funds (= | | | | | | own funds requirement) | | | | | -------------------------------------------------------------------------------- | Conglomerate's capital | 1,838 | 1,468 | 25.2 | 1,682 | | adequacy | | | | | -------------------------------------------------------------------------------- | Conglomerate's capital | 1.57 | 1.51 | 0.06* | 1.56 | | adequacy ratio | | | | | | (own funds / minimum amount | | | | | | of own funds) | | | | | -------------------------------------------------------------------------------- * Change in ratio. OP Bank Group's risk exposure OP Bank Group's risk exposure is stable, with no significant changes occurring since the disclosure of the financial statements 2006. OP Bank Group's credit risk status is also stable, and credit risks have remained low. Growth in OP Bank Group's loan portfolio outpaced that in the deposit portfolio, increasing wholesale funding on market terms and its share of total funding during the reporting period. OP Bank Group launched a new funding channel in June when it issued its first covered bond for international investors. OP Bank Group's liquidity reserve is significantly higher than the minimum level set for it. The reporting period saw no major changes in the Group's interest rate exposure and the Group's investments risks have not changed significantly since the end of last December. OP Bank Group's direct risks associated with sub-prime home loans in the USA are insignificant. Credit ratings Of the international credit rating agencies, Fitch Ratings provides a rating for both OP Bank Group and its central bank, OKO Bank. OP Bank Group's financial position also has a considerable impact on credit ratings issued for OKO Bank alone. In April, Moody's revised OKO Bank's Long-Term Issuer Rating from Aa2 at the end of 2006 to Aa1. All credit rating agencies have confirmed a stable rating outlook for OP Bank Group and/or OKO Bank. Credit ratings at the end of June 2007 were as follows: -------------------------------------------------------------------------------- | Rating agency | Short-term debt | Long-term debt | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Fitch Ratings (OP Bank | F1+ | AA- | | Group and OKO Bank) | | | -------------------------------------------------------------------------------- | Standard & Poor's (OKO | A-1+ | AA- | | Bank) | | | -------------------------------------------------------------------------------- | Moody's (OKO Bank) | P-1 | Aa1 | -------------------------------------------------------------------------------- OP Bank Group's long-term financial targets OP Group's business strategy adopted in June 2006 describes the Group's long-term financial targets set for risk-bearing capacity, profitability, risk appetite and efficiency. During the reporting period, OP Bank Group outperformed all its long-term financial performance targets. All indicators other than the risk-appetite indicator improved on the previous year. Long-term performance indicators -------------------------------------------------------------------------------- | | Indicator | Target | 30 June | 30 June | 31 Dec. | | | | | 2007 | 2006 | 2006 | -------------------------------------------------------------------------------- | Risk-bearing | Non-current | Minimum of | 1.11 | 1.04 | 1.10 | | capacity | own | 1.0 | | | | | | funds/econo | | | | | | | mic capital | | | | | -------------------------------------------------------------------------------- | | Indicator | Target | H1/2007 | H1/2006 | 2006 | -------------------------------------------------------------------------------- | Profitabilit | Return on | Minimum of | 22.4% | 19.3% | 20.1% | | y | economic | 17% | | | | | | capital | | | | | -------------------------------------------------------------------------------- | Risk | Impairment | Maximum of | 0.03% | 0.02% | 0.02% | | appetite | losses | 0.25% | | | | | | on | | | | | | | receivables | | | | | | | / | | | | | | | loan and | | | | | | | guarantee | | | | | | | portfolio | | | | | -------------------------------------------------------------------------------- | Efficiency | Cost/income | Maximum of | 49% | 53% | 52% | | (Banking and | | 50% | | | | | Investment | | | | | | | Services) | | | | | | -------------------------------------------------------------------------------- Changes in OP Bank Group's structure The OP Bank Group's consolidated financial statements include 231 member cooperative banks, OP Bank Group Central Cooperative Consolidated and OP Bank Group Mutual Insurance company as well as six subsidiaries of the member banks. At the end of February, Pyhännän Osuuspankki merged with Oulun Osuuspankki. The administrative bodies of Miettilän Osuuspankki and Simpeleen Osuuspankki decided to merge Miettilän Osuuspankki with Simpeleen Osuuspankki. Similarly, the administrative bodies of Ruhtinansalmen Osuuspankki and Suomussalmen Osuuspankki have decided to merge Ruhtinansalmen Osuupankki with Suomussalmen Osuuspankki. These mergers will be entered in the Trade Register in September. Owner-members and customers On 30 June, the cooperative member banks had 1,182,000 owner-members, which is 34,000 more than a year earlier and grew by more than 18,000 during the reporting period. Of the cooperative member banks' owner-members, 879,000 were OP bonus customers. Operating in the Greater Helsinki area and having no owner-members due to the type of its business organisation, Helsinki OP Bank plc had 101,000 OP bonus customers at the end of June. Loyal customer bonuses earned by OP bonus customers and provided by Group member banks and Helsinki OP Bank plc totalled EUR 40 million, up by 75% on a year earlier, this growth stemming particularly from the 50% increase in the value of accumulated bonuses as of early February 2007. Bonuses earned by owner-members are stated in OP Bank Group's income statement under 'Returns to owner-members'. OP bonus customers used a total of EUR 24 million (17) in bonuses for banking services during the first half, and using bonuses to pay Pohjola's non-life insurance products will also be possible from autumn 2007. In March, most of the member banks and Helsinki OP Bank plc decided to offer OP bonus customers a new loyal customer price benefit for daily transactions. The June-end number of OP Bank Group customers in Finland totalled 4,067,000, which is 51,000 more than a year earlier. In addition, OP Bank Group has an approximate total of 200,000 non-life insurance customers in the Baltic countries. In the year to June, the number of joint banking and insurance customers increased by 86,000 to 854,000 as a result of cross-selling. OP Bank Group has the aim of increasing this number to one million by the end of 2008. The number of Pohjola's loyal customer households increased by 30,500 in the year to June and by 17,300 from the beginning of 2007, totalling 385,000 on 30 June 2007. OP Bank Group aims to increase this number to 500,000 by the end of 2010. Redemption of Pohjola Group plc shares On 2 May 2007, the Arbitral Tribunal appointed by the Central Chamber of Commerce decided to set the redemption price of the shares in Pohjola Group plc (Pohjola), a subsidiary of OKO Bank plc, at EUR 14.35 per share. The Tribunal confirmed the annual interest payable on the redemption price between 13 June and 30 June 2006 at 5.5% and from 1 July 2006 at 6.0%. The per-share redemption price set by the Tribunal is EUR 1.00 higher than the EUR 13.35 bid by OKO Bank. OKO Bank and certain Pohjola Group plc's former minority shareholders have agreed that the arbitral award issued by the Arbitral Tribunal will remain final between the parties involved and that the parties will not present claims against one another in the district court. This agreement applies to some 66% of all of the disputed Pohjola shares held by minority shareholders. Some other minority shareholders and the special representative have appealed the arbitral award. OKO Bank has also decided to appeal the arbitral award, in respect of matters other than agreed, and demand that the district court confirm the per-share redemption price at EUR 13.35. Owing to the appeal, OKO Bank has paid or will pay the amounts of the arbitral award only to minority shareholders who will notify OKO Bank of accepting the arbitral award. The arbitral award will have no material effect on profit performance. During the second quarter, OP Bank Group recognised the resulting additional share price as an addition under acquisition cost. On 19 April 2007, 24 savings banks with a majority shareholding in Nooa Savings Bank Ltd bought Nooa Savings Bank shares held by OP Bank Group for EUR 6 million. OP Bank Group became the holder of these shares as a result of Pohjola Group plc's acquisition. This share disposal had no impact on OP Bank Group's earnings. Personnel and incentive system On June 30, OP Bank Group had a staff (excluding seasonal help) of 12,403, or 264 more than on 31 December 2006. On the same date, OP Bank Group's personnel fund had 11,600 members, or around 94 % of OP Bank Group personnel. A management incentive scheme is also in place within the Group. Central Cooperative's corporate governance OP Bank Group Central Cooperative is the central institution of the amalgamation of the cooperative banks, the parent company of OP Bank Group Central Cooperative Consolidated and the company heading the financial and insurance conglomerate formed by OP Bank Group. Acting as a development and service centre for OP Bank Group and as a strategic owner institution, the Central Cooperative plays a pivotal role in developing and steering OP Bank Group's business. OP Bank Group Central Cooperative's Annual Cooperative Meeting of 27 March 2007 re-elected the following members due to resign to the Cooperative's Supervisory Board: Mr Bo Storsjö, Mr Ola Eklund, Mr Paavo Haapakoski, Mr Tapio Kurki and Mr Keijo Väänänen. The new members elected were Mr Pekka Ahvenjärvi, Mr Olli Lehtilä and Mr Harri Sailas. The Supervisory Board has a total of 36 members. At its first meeting following election, the Supervisory Board re-elected Mr Seppo Penttinen Chairman and Mr Paavo Haapakoski and Mr Jukka Hulkkonen Vice Chairmen. In June, the Supervisory Board confirmed a recommendation for Corporate Governance for OP Bank Group member banks. It also specified OP Bank Group's business strategy enabling the Group to start business operations in neighbouring regions. Based on competitive tendering, OP Bank Group Central Cooperative's Annual Cooperative Meeting re-elected KPMG Oy Ab, a firm of independent public accountants, as the auditor of OP Bank Group Central Cooperative and OP Bank Group for the financial year 2007. Capital expenditure The Central Cooperative and its subsidiaries are responsible for developing OP Bank Group's service activities. ICT investments and related specifications make up a significant portion of costs of developing these service activities. During the period, ICT investments worth slightly over EUR 16 million were capitalised in OP Bank Group Central Cooperative Consolidated's balance sheet, EUR 11 million allocated to banking and investment operations, EUR 4 million to non-life insurance operations and less than one million euros to life insurance operations. As a result of the abovementioned arbitral award, the purchase price of Pohjola Group plc shares rose by EUR 16 million during the reporting period. Joint responsibility and joint security Under the Act on Cooperative Banks and Other Cooperative Credit Institutions, the amalgamation of the cooperative banks comprises the organisation's central institution (OP Bank Group Central Cooperative), the Central Cooperative's member credit institutions and the companies belonging to their consolidation groups. This amalgamation is monitored on a consolidated basis. Central Cooperative and its 235 member banks are ultimately responsible for each other's liabilities and commitments. Central Cooperative's members at the end of the reporting period comprised OP Bank Group's 231 member banks as well as OKO Bank, Helsinki OP Bank Plc, OP Mortgage Bank and OP-Kotipankki Oyj. The OP Bank Group insurance companies do not come within the scope of joint responsibility. Deposit banks belonging to OP Bank Group, i.e. its member cooperative banks, OKO Bank, Helsinki OP Bank Plc and OP-Kotipankki Oyj, are regarded as a single bank with respect to deposit protection. Under legislation governing the Investor Compensation Fund, OP Bank Group is also considered a single entity for purposes of compensation protection. Outlook towards the year-end OP Bank Group's market position has strengthened for a number of years now and the Group has the aim of reinforcing its market share further. Earnings before tax in 2007 are expected to be markedly better than in 2006. 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 Bank Group and its various functions, and actual results may differ materially from those expressed in the forward-looking statements. Operations and earnings by business segment OP Bank Group's business segments are Banking and Investment Services, Non-life Insurance and Life Insurance. Non-segment operations are presented in 'Other Operations'. OP Bank Group's segment reporting is based on accounting policies applied in its financial statements. Amortisation on intangible assets arising from the Pohjola acquisition is allocated to the business segments. Companies within the Banking and Investment Services segment are the member banks, Helsinki OP Bank Plc, Op Kotipankki Oyj, OP Mortgage Bank, OP Fund Management Company Ltd, OKO Asset Management Limited, OKO Corporate Finance Ltd, OKO Venture Capital Ltd, as well as certain smaller companies supporting banking and investment services in their entirety. OKO Bank plc's operations, with the exception of Group Administration, are included in the Banking and Investment Services segment. Similarly, the operations of OP Bank Group Mutual Insurance Company are included in this segment because the bulk of the company's operations consists of credit insurance granted to OP Bank Group's retail banks. The Non-life Insurance segment encompasses the operations of OP Bank Group's non-life insurance companies, i.e. Pohjola Non-Life Insurance Company Ltd, Eurooppalainen Insurance Company Ltd, A-Insurance Ltd, the Seesam companies operating in the Baltic countries, as well as the operations of service companies supporting non-life insurance. The Life Insurance segment comprises OP Bank Group's life and pension insurance business, whose operations have been managed by OP Life Assurance Company Ltd on a centralised basis since the beginning of the year. Non-segment operations comprise the corporate administration of OP Bank Group Central Cooperative, FD Finanssidata Oy (FD) and OKO Bank Group. Costs of the services which the Central Cooperative and FD provide for the business segments are allocated to the segments in the form of internal service charges. Summary of performance by business segment, January-June 2007 -------------------------------------------------------------------------------- | EUR million | Income | Expenses | Impairment | Other | Earnings | | | | | losses | items | before | | | | | | | tax | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Banking and | 833 | 411 | 6 | -49 | 368 | | Investment | | | | | | | Services | | | | | | -------------------------------------------------------------------------------- | Non-life | 234 | 150 | 0 | 0 | 83 | | Insurance | | | | | | -------------------------------------------------------------------------------- | Life Insurance | 107 | 30 | 0 | 0 | 77 | -------------------------------------------------------------------------------- | Other Operations | 181 | 185 | 0 | 0 | -5 | -------------------------------------------------------------------------------- | Eliminations | -193 | -193 | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Total | 1,161 | 583 | 6 | -49 | 523 | -------------------------------------------------------------------------------- Banking and Investment Services The operating fundamentals for Banking and Investment Services remained good throughout the reporting period. In nearly all product areas, OP Bank Group's growth outstripped that of its competitors on average. The Group's market position strengthened within both deposits and loans. Loans and deposits On 30 June, OP Bank Group's loan portfolio stood at EUR 42.3 billion (39.6), up by 6.9% from year-end 2006 and 13.6% in the year to June, and the guarantee portfolio totalled EUR 2.4 billion (2.2). In January-June 2006, the loan portfolio increased by 7.1%, or at a slightly slower rate than in the first half of 2007. The loan portfolio's market share rose by 0.4 percentage point to 31.4% in the year to June and by 0.3 percentage point during the reporting period. The June-end home mortgage portfolio totalled EUR 20.2 billion (18.9). The portfolio is still growing swiftly, albeit at a slightly slower rate than a year ago. The home mortgage portfolio increased by 6.8% (7.4) during the reporting period and by 15% (16) in the year to June. On 30 June, the market share of home mortgages stood at 34.6%, up by 0.3 percentage point on a year earlier and 0.2 percentage points greater than on 31 December 2006. The average margin on new home mortgages fell further. The average margin on new variable rate home mortgages was about 0.1 percentage point lower than a year ago and this downward trend continued during the first half of 2007. One in five new home mortgages taken out during the reporting period has an interest-rate cap. Fixed-rate home mortgages accounted for a very low share of all home mortgages, or 0.6% (0.7). OP Bank Group began funding operations by launching a covered bond programme in the international market during the reporting period when in May its financial services group's mortgage bank, OP Mortgage Bank, issued a covered note to the nominal value of one billion euros. This new funding channel will further improve OP Bank Group's strong price competitiveness and position in the home-mortgage market. On 30 June, the consumer credit portfolio amounted to EUR 2.9 billion (2.8), showing an increase of 6.4% during the period and 11% in the year to June. On the same date, OP Bank Group customers had 1.9 million (1.9) various payment cards in use, of which the number of international OP-Visa and OP-MasterCard cards totalled 1.5 million (1.4). May saw the beginning of cooperation between OP Bank Group and K-Group in the integration of both Groups' cards. By the end of June, the number of issued cards combining K-Group's Plussa with OP-Visa or OP-Visa Electron cards totalled 137,000. OP Bank Group also provides a credit facility for K-Plussa MasterCard cards offered by K-Group to its customers. At the end of June, the OP Bank Group's corporate loan portfolio stood at EUR 10.7 billion (9.7), growing by 9.4% during the reporting period and 13.8% in the year to June, and the guarantee portfolio totalled EUR 2.0 billion (1.9). The June-end market share of corporate loans was 26.4%, 0.9% percentage point higher than a year earlier and 0.6% percentage point higher than at the end of 2006. During the period, OP Bank Group's central cooperative bank, OKO Bank plc, acted as the mandated lead arranger in seven corporate bond issues with their combined value exceeding EUR 900 million. In May, OP Bank acted as the mandated lead arranger in a Finnish government bond issue worth four billion euros. OKO Bank also acted as the mandated lead arranger in two initial public offerings (IPOs). OP Bank Group's June-end deposits totalled EUR 27.1 billion (25.7), or 5.4% higher at the end of December 2006. This growth stemmed mainly from investment deposits, which increased by 11% to EUR 12 billion (10.8). The market share of deposits stood at 32.8% at the end of June, i.e. 0.3 percentage point higher than a year earlier and 0.1 percentage point higher than at the end of 2006. Asset Management Capital invested in OP Bank Group's mutual funds grew by 13% to EUR 15.1 billion (13.3) during the period and by 36 per cent in the year to June. On 30 June, OP Bank Group held a 21.5% market share of the assets of mutual funds registered in Finland, or 0.3 percentage point higher than a year earlier and 0.3 percentage point lower than at the end of 2006. Net subscriptions to OP Bank Group's mutual funds totalled EUR 1,232 million (938), up 31% on the previous year. On 30 June, assets managed by OKO Bank's asset management were worth EUR 32.5 billion (31.3), EUR 14.2 billion (12.4) of which was invested in OP Bank Group's mutual funds. OP Bank Group companies account for EUR 6.8 billion of assets managed by OKO Bank. Assets managed in accordance with the OP-Private operating model totalled EUR 2.7 billion. Stockbroking for households totalled 289,000 trades during the period, or 15% more than a year earlier. Earnings and risk exposure Banking and Investment Services recorded earnings before tax of EUR 368 million, up by 20% on a year earlier. Second-quarter earnings before tax came to EUR 184 million (142), up by 30% on the year before, remaining at the first-quarter level. A 75% increase in bonuses granted to OP bonus customers, totalling EUR 40 million during the period, put a break on earnings growth. The marked earnings improvement was based on strong income growth. Net interest income increased by 18% to EUR 502 million and net commissions and fees by 13% to EUR 227 million, this net interest income increase stemming from higher market rates and business growth. Personnel costs rose by 14% and other expenses by 0.2%. Reported impairment losses on receivables totalled EUR 6 million (1). The cost/income ratio stood at 49% (53). OP Bank Group's non-performing and zero-interest receivables remained at low levels, totalling EUR 166 million on 30 June, or 2.2% more than a year ago, and showing an increase of 30% from their levels on 31 December 2006. Non-performing and zero-interest loans are stated net of impairment losses on specific receivables and groups of receivables, which amounted to EUR 88 million (91). The ratio of non-performing and zero-interest receivables to the loan and guarantee portfolio was 0.4%, which is greater than on 31 December but slightly smaller than on 30 June 2006. Banking and Investment Services: key figures -------------------------------------------------------------------------------- | EUR million | H1/2007 | H1/2006 | Change, % | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net interest income | 502 | 424 | 18.5 | 899 | -------------------------------------------------------------------------------- | Impairment losses on | 6 | 1 | 0.0 | 9 | | receivables | | | | | -------------------------------------------------------------------------------- | Other income | 331 | 301 | 9.8 | 596 | -------------------------------------------------------------------------------- | Personnel costs | 179 | 156 | 14.5 | 334 | -------------------------------------------------------------------------------- | Other expenses | 232 | 231 | 0.2 | 446 | -------------------------------------------------------------------------------- | Returns to owner-members | 49 | 29 | 71.1 | 64 | -------------------------------------------------------------------------------- | Earnings before tax | 368 | 308 | 19.6 | 643 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Home mortgages drawn | 3,653 | 3,349 | 9.1 | 6,856 | | down | | | | | -------------------------------------------------------------------------------- | Corporate loans drawn | 3,662 | 2,596 | 41.0 | 5,098 | | down | | | | | -------------------------------------------------------------------------------- | Net subscriptions to | 1,232 | 938 | 31.3 | 2,392 | | mutual funds | | | | | -------------------------------------------------------------------------------- | No. of brokered property | 8,195 | 7,892 | 3.8 | 16,031 | | transactions | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR billion | 30 June | 30 June | Change, % | 31 Dec. | | | 2007 | 2006 | | 2006 | -------------------------------------------------------------------------------- | Loan portfolio | | | | | -------------------------------------------------------------------------------- | Home mortgages | 20 | 18 | 14.8 | 19 | -------------------------------------------------------------------------------- | Other loans to | 9 | 8 | 11.0 | 9 | | households | | | | | -------------------------------------------------------------------------------- | Corporate loans | 11 | 9 | 13.8 | 10 | -------------------------------------------------------------------------------- | Other loans | 2 | 2 | 13.2 | 2 | -------------------------------------------------------------------------------- | Total | 42 | 37 | 13.6 | 40 | -------------------------------------------------------------------------------- | Guarantee portfolio | 2.4 | 2.2 | 5.9 | 2.2 | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Deposits | | | | | -------------------------------------------------------------------------------- | Current and payment | | | | | | transfer deposits | | | | | -------------------------------------------------------------------------------- | Households | 10 | 11 | -2.4 | 11 | -------------------------------------------------------------------------------- | Companies | 3 | 3 | 8.9 | 3 | -------------------------------------------------------------------------------- | Others | 2 | 2 | 16.8 | 2 | -------------------------------------------------------------------------------- | Total current and | 15 | 15 | 1.6 | 15 | | payment transfer | | | | | | deposits | | | | | -------------------------------------------------------------------------------- | Investment deposits | 12 | 10 | 18.4 | 11 | -------------------------------------------------------------------------------- | Total deposits | 27 | 25 | 8.4 | 26 | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Mutual funds | | | | | -------------------------------------------------------------------------------- | Equity and hedge funds | 4.7 | 3.8 | 23.2 | 4.4 | -------------------------------------------------------------------------------- | Balanced funds | 2.3 | 1.6 | 40.7 | 2.1 | -------------------------------------------------------------------------------- | Bond funds | 3.6 | 2.6 | 38.7 | 3.5 | -------------------------------------------------------------------------------- | Money market funds | 4.5 | 3.1 | 47.9 | 3.3 | -------------------------------------------------------------------------------- | Total value of mutual | 15.1 | 11.0 | 36.2 | 13.3 | | funds | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Market share (%) | 30 June | 30 June | Change, | 31 Dec. | | | 2007 | 2006 | percentag | 2006 | | | | | e point | | -------------------------------------------------------------------------------- | Of total loans | 31.4 | 31.0 | 0.4 | 31.1 | -------------------------------------------------------------------------------- | Of home mortgages | 34.6 | 34.3 | 0.3 | 34.4 | -------------------------------------------------------------------------------- | Of corporate loans | 26.4 | 25.5 | 0.9 | 25.8 | -------------------------------------------------------------------------------- | Of total deposits | 32.8 | 32.5 | 0.3 | 32.7 | -------------------------------------------------------------------------------- | Of capital invested in | 21.5 | 21.2 | 0.3 | 21.8 | | mutual funds | | | | | -------------------------------------------------------------------------------- | EUR million | | | | | -------------------------------------------------------------------------------- | Non-performing and | | | | | | zero-interest receivables | | | | | -------------------------------------------------------------------------------- | Households | 102 | 93 | 9.8 | 78 | -------------------------------------------------------------------------------- | Companies | 61 | 69 | -11.5 | 47 | -------------------------------------------------------------------------------- | Condominiums and others | 4 | 2 | | 3 | -------------------------------------------------------------------------------- | Total | 166 | 163 | 2.2 | 128 | -------------------------------------------------------------------------------- | Non-performing receivables | 0.4 | 0.4 | 0.0* | 0.3 | | within loan | | | | | | and guarantee portfolio, % | | | | | -------------------------------------------------------------------------------- * Percentage point(s) Non-life Insurance On 30 June, the number of loyal customer households within the Non-life Insurance segment totalled 384,000, up by 17,000 from the end of 2006 and growing by 8,400 during the second quarter. The objective is to serve 500,000 loyal customer households by the end of 2010. Since early May, insurance taken out with Pohjola has generated points within the K-Group's Plussa loyal customer programme. Insurance premium revenue rose by 9% to EUR 423 million (388), insurance premium revenue generated by private customers growing by 12% to EUR 173 million (154) and corporate customers by 5% to EUR 223 million (212). Cooperation with Group member banks and the modernised service offering contributed to this higher insurance premium revenue from private customers. At the end of June, non-life insurance services were available from a total of 250 outlets, 229 of which also provided banking services. Insurance premium revenue in the Baltic countries increased by 26% to EUR 27 million (21). In 2006, Pohjola's market share of premiums written in non-life insurance stood at 26.3%, or 0.3 percentage point greater than a year earlier. Market share data on premiums written in non-life insurance come in only once a year. Claims incurred (excl. loss adjustment expenses) amounted to EUR 283 million (258), or 10% more than a year ago. The reporting period saw two (2) large losses in excess of EUR 2 million, the second quarter seeing none. Large and medium-sized losses (i.e. losses in excess of EUR 0.1 million) accounted for EUR 33 million (31) of all claims incurred. Motor liability and motor vehicle insurance claims developed unfavourably during the period. This growth in claims incurred is explained by the greater incidence of road accidents and increases in car repair prices markedly above those in the general price level. Traveller's insurance claims incurred also went up clearly. Earnings and risk exposure The Non-life Insurance segment posted first-half earnings of EUR 83 million (47) before tax and EUR 52 million (24) for the second quarter, this improvement being largely based on higher net investment income. Net investment income recognised under earnings came to EUR 88 million (64), or EUR 24 million higher year on year. The reported combined ratio stood at 94.9% (94.8). Claims incurred accounted for 66.0% and the ratio of operating expenses to loss adjustment expenses (cost ratio) for 28.9% vis-à-vis 65.6% and 29.1% reported a year ago. Excluding amortisation on intangible assets arising from the Pohjola acquisition, operating expenses and loss adjustment expenses totalled EUR 119 million, up by 8% over the previous year (110). Operating expenses came to EUR 95 million (88) and loss adjustment expenses EUR 24 (22), the former including EUR 1 million (2) in integration-related expenses. Pohjola Non-Life Insurance Company sold its marine hull insurance portfolio to Codan Forsikring A/S, bringing in EUR 6 million in capital gains. During the first half, Non-life Insurance recorded 106 (85) large or medium-sized losses (in excess of EUR 0.1 million). The claims incurred due to these losses rose by 2 million on the year before. On 30 June, the fair value of the segment's investments stood at EUR 2.4 billion (2.4). During the reporting period, the segment reduced its fixed-income investment share of all investments by 5 percentage points to 67% and shortened the fixed-income investment portfolio duration to 3.6 years. Return on investments at fair value was 3.5% and like-for-like return a year earlier was 1.0%. Non-life Insurance: key figures -------------------------------------------------------------------------------- | EUR million | H1/2007 | H1/2006 | Change, % | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Insurance premium revenue | 423 | 388 | 9.1 | 788 | -------------------------------------------------------------------------------- | Insurance claims and | 283 | 258 | 9.6 | 536 | | benefits | | | | | -------------------------------------------------------------------------------- | Net investment income | 88 | 64 | 36.9 | 115 | -------------------------------------------------------------------------------- | Unwinding of discount and | -19 | -17 | 14.5 | -36 | | other items included in net | | | | | | income | | | | | -------------------------------------------------------------------------------- | Net income from Non-life | 209 | 177 | 17.9 | 332 | | Insurance | | | | | -------------------------------------------------------------------------------- | Other income | 25 | 13 | 83.7 | 24 | -------------------------------------------------------------------------------- | Personnel costs | 54 | 53 | 1.0 | 99 | -------------------------------------------------------------------------------- | Other expenses | 97 | 91 | 7.0 | 179 | -------------------------------------------------------------------------------- | Earnings before tax | 83 | 47 | 76.7 | 78 | -------------------------------------------------------------------------------- | Gross change in fair value | -26 | -91 | -71.8 | -93 | | reserve | | | | | -------------------------------------------------------------------------------- | Earnings before tax at fair | 57 | -44 | | -15 | | value | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Insurance premium revenue | | | | | -------------------------------------------------------------------------------- | Private persons | 173 | 154 | 12.0 | 308 | -------------------------------------------------------------------------------- | Corporations and | 223 | 212 | 5.2 | 434 | | institutions | | | | | -------------------------------------------------------------------------------- | Baltic countries | 27 | 21 | 26.3 | 47 | -------------------------------------------------------------------------------- | Total insurance premium | 423 | 388 | 9.1 | 788 | | revenue | | | | | -------------------------------------------------------------------------------- | EUR billion | 30 June | 30 June | Change, % | 31 Dec. | | | 2007 | 2006 | | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Insurance contract | | | | | | liabilities | | | | | -------------------------------------------------------------------------------- | Discounted insurance | 1.3 | 1.2 | 6.2 | 1.2 | | contract liabilities | | | | | -------------------------------------------------------------------------------- | Other insurance contract | 0.9 | 0.9 | 5.6 | 0.7 | | liabilities | | | | | -------------------------------------------------------------------------------- | Total | 2.2 | 2.1 | 6.2 | 2.0 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Investment portfolio | | | | | -------------------------------------------------------------------------------- | Bonds | 1.7 | 1.8 | -7.0 | 1.8 | -------------------------------------------------------------------------------- | Money market instruments | 0.0 | 0.3 | -92.4 | 0.0 | -------------------------------------------------------------------------------- | Equities | 0.5 | 0.4 | 20.2 | 0.4 | -------------------------------------------------------------------------------- | Investment property | 0.1 | 0.1 | 18.7 | 0.1 | -------------------------------------------------------------------------------- | Alternative investments | 0.2 | 0.0 | 289.9 | 0.1 | -------------------------------------------------------------------------------- | Total | 2.4 | 2.6 | -6.2 | 2.4 | -------------------------------------------------------------------------------- Life Insurance During the reporting period, premiums written in the domestic life insurance market were almost 8% lower than a year ago due to a fall in premiums written in capital redemption contracts and endowment insurance. Year on year, OP Bank Group's premiums written in life and pension insurance decreased by 4.8% to EUR 425 million (447). Despite this reduction, OP Bank Group increased its market share in premiums written in life insurance, as evidenced by the market share rising by 0.2 percentage point to 28.8% year on year and being 0.4 percentage point higher than in 2006. Premiums written in endowment insurance declined by 14%. Premiums written in pension insurance grew by 39%, with those written in personal pension insurance increasing by 8.5%. Premiums written in unit-linked policies accounted for 58% of those written in endowment insurance and personal pension insurance. Life insurance claims paid totalled EUR 320 million (225), of which surrenders accounted for EUR 111 million (87). Reported pension payout came to EUR 17 million (13). Return on investments at fair value was 1.9%. The unrealised appreciation of available-for-sale financial assets after deferred tax deduction amounted to EUR 44 million, or EUR 8 million lower than in late 2006. During the reporting period, OP Life Assurance Company Ltd established a network of account managers tasked with supporting Group member banks' corporate customer service and selling group pension and life insurance products to corporate customers. Since 1 July 2007, OP Life Assurance Company Ltd has provided life assurance components related repayment security insurance offered by Group member banks to their borrowing customers while Genworth Financial (GF) will continue to provide the related non-life insurance components. Earnings and risk exposure The Life Insurance segment posted first-half earnings before tax of EUR 77 (34) and second-quarter earnings before tax of EUR 41 (30), this improvement being based on higher net investment income. Net income from investment assets other than those covering unit-linked insurance soared by EUR 39 million to EUR 117 million. In particular, realised capital gains on available-for-sale shares and participations were higher than a year earlier. Fair value reserve shrank by EUR 8 million. Raising the share of mutual fund investments within the Life Insurance fixed-income portfolio in 2006 affects the comparability of net investment income to a small extent. Net income posted by Life Insurance came to EUR 99 million (63). Personnel costs fell to EUR 3.1 million (4.8) and other expenses to EUR 27 million (32), the latter including EUR 11 million (14) in commissions paid to the sales network. On 30 June, OP Bank Group's life insurance operations' total insurance contract liabilities stood at EUR 6.0 billion (5.7), or 5.2% higher than on 31 December 2006. OP Bank Group's market share of insurance savings through life and pension insurance policies increased by 1.2 percentage points to 19.7% (preliminary data) in the year to June. Unit-linked policies accounted for 40% (37) of insurance contract liabilities in life and pension insurance. Life insurance investment assets, excluding assets covering unit-linked insurance, amounted to EUR 4.1 billion (4.1). The structure of the investment portfolio did not undergo any major changes during the period. Life Insurance: key figures -------------------------------------------------------------------------------- | EUR million | H1/2007 | H1/2006 | Change, % | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Premiums written | 425 | 447 | -4.8 | 857 | -------------------------------------------------------------------------------- | Unit-linked | 242 | 254 | -4.5 | 472 | -------------------------------------------------------------------------------- | Other | 183 | 193 | -5.2 | 385 | -------------------------------------------------------------------------------- | Net investment income | 297 | 128 | 131.2 | 463 | -------------------------------------------------------------------------------- | Unit-linked | 180 | 50 | 256.0 | 267 | -------------------------------------------------------------------------------- | Other | 117 | 78 | 50.3 | 196 | -------------------------------------------------------------------------------- | Change in insurance contract | 303 | 286 | 5.9 | 750 | | liabilities | | | | | -------------------------------------------------------------------------------- | Unit-linked | 305 | 151 | 101.6 | 555 | -------------------------------------------------------------------------------- | Other | -2 | 135 | -101.5 | 195 | -------------------------------------------------------------------------------- | Claims incurred | 320 | 225 | 42.1 | 448 | -------------------------------------------------------------------------------- | Other items | 0 | -1 | -100.0 | -4 | -------------------------------------------------------------------------------- | Net income from Life | 99 | 63 | 58.6 | 119 | | Insurance operations | | | | | -------------------------------------------------------------------------------- | Other income | 7 | 8 | -3.4 | 12 | -------------------------------------------------------------------------------- | Personnel costs | 3 | 5 | -34.2 | 8 | -------------------------------------------------------------------------------- | Other expenses | 27 | 32 | -16.5 | 54 | -------------------------------------------------------------------------------- | Earnings before tax | 77 | 34 | 128.8 | 68 | -------------------------------------------------------------------------------- | Gross change in fair value | -8 | -99 | -92 | -55 | | reserve | | | | | -------------------------------------------------------------------------------- | Earnings before tax at fair | 69 | -65 | -205.9 | 13 | | value | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Premiums written | | | | | -------------------------------------------------------------------------------- | Endowment insurance | 303 | 354 | -14.3 | 635 | -------------------------------------------------------------------------------- | Pension insurance | 96 | 68 | 39.8 | 185 | -------------------------------------------------------------------------------- | Term life insurance | 13 | 12 | 5.8 | 22 | -------------------------------------------------------------------------------- | Other | 3 | 2 | 52.5 | 24 | -------------------------------------------------------------------------------- | Total premiums written | 415 | 437 | -4.9 | 867 | -------------------------------------------------------------------------------- | of which unit-linked | 242 | 254 | -4.5 | 472 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Market share of premiums | 28.8 | 28.6 | 0.2* | 28.4 | | written in life and pension | | | | | | insurance, % | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR billion | 30 June | 30 June | Change, % | 31 Dec. | | | 2007 | 2006 | | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Insurance savings | | | | | -------------------------------------------------------------------------------- | Endowment insurance | 4.3 | 3.8 | 29.7 | 4.0 | -------------------------------------------------------------------------------- | Pension insurance | 1.5 | 1.2 | 106.8 | 1.3 | -------------------------------------------------------------------------------- | Capital redemption contracts | 0.1 | 0.2 | 479.3 | 0.2 | -------------------------------------------------------------------------------- | Total insurance savings | 5.9 | 5.1 | 22.3 | 5.6 | -------------------------------------------------------------------------------- | of which unit-linked | 2.4 | 1.7 | 83.8 | 2.1 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Investment portfolio | | | | | -------------------------------------------------------------------------------- | Fixed-income | 2.8 | 3.0 | -8.2 | 2.9 | -------------------------------------------------------------------------------- | Equities and equity funds | 0.6 | 0.5 | 43.1 | 0.6 | -------------------------------------------------------------------------------- | Investment property | 0.4 | 0.3 | 62.0 | 0.3 | -------------------------------------------------------------------------------- | Alternative investments | 0.2 | 0.2 | 9.7 | 0.2 | -------------------------------------------------------------------------------- | Total investment portfolio | 4.1 | 4.0 | 3.9 | 4.1 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Market share of insurance | 19.7 | 18.5 | 1.2* | 19.1 | | savings in life and pension | | | | | | insurance, %** | | | | | -------------------------------------------------------------------------------- * Percentage point(s) ** Preliminary data Other Operations Other Operations reported a per-tax loss of EUR 5.9 million (3.2) and, as stated above, its results were burdened by the EUR 10 million in liquidated damages related to the Nooa Savings Bank dispute. -------------------------------------------------------------------------------- | OP Bank Group income statement 1 January-30 | | | | | June 2007 | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR million | H1/ | H1/ | Change, | 2006 | | | 2007 | 2006 | % | | -------------------------------------------------------------------------------- | Interest income | 1,638 | 1,031 | 59 | 2,340 | -------------------------------------------------------------------------------- | Interest expenses | 1,129 | 616 | 83 | 1,457 | -------------------------------------------------------------------------------- | Net interest income (Note 1) | 509 | 416 | 22 | 883 | -------------------------------------------------------------------------------- | Impairment losses on receivables | 6 | 1 | | 9 | | (Note 2) | | | | | -------------------------------------------------------------------------------- | Net interest income after | 503 | 414 | 21 | 874 | | impairment losses | | | | | -------------------------------------------------------------------------------- | Net income from Non-life | 206 | 176 | 17 | 328 | | Insurance operations | | | | | | (Note 3) | | | | | -------------------------------------------------------------------------------- | Net income from Life Insurance | 97 | 60 | 62 | 110 | | operations (Note 4) | | | | | -------------------------------------------------------------------------------- | Net commissions and fees (Note | 223 | 202 | 10 | 396 | | 5) | | | | | -------------------------------------------------------------------------------- | Net trading income (Note 6) | 15 | 10 | 51 | 32 | -------------------------------------------------------------------------------- | Net investment income (Note 7) | 51 | 61 | -17 | 112 | -------------------------------------------------------------------------------- | Other operating income (Note 8) | 54 | 45 | 22 | 92 | -------------------------------------------------------------------------------- | Personnel costs (Note 9) | 285 | 263 | 8 | 527 | -------------------------------------------------------------------------------- | Other administrative expenses | 147 | 148 | -1 | 290 | | (Note 10) | | | | | -------------------------------------------------------------------------------- | Other operating expenses (Note | 148 | 138 | 7 | 267 | | 11) | | | | | -------------------------------------------------------------------------------- | Returns to owner-members (Note | 49 | 29 | 71 | 64 | | 12) | | | | | -------------------------------------------------------------------------------- | Share of associates' | 2 | -1 | | 2 | | profits/losses | | | | | -------------------------------------------------------------------------------- | Earnings before tax for the | 523 | 389 | 34 | 800 | | period | | | | | -------------------------------------------------------------------------------- | Income tax expense | 138 | 112 | 23 | 202 | -------------------------------------------------------------------------------- | Profit for the period | 385 | 277 | 39 | 598 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Attributable to: | | | | | -------------------------------------------------------------------------------- | OP Bank Group's owners | 385 | 277 | 39 | 598 | -------------------------------------------------------------------------------- | Minority interest | 0 | 0 | | 0 | -------------------------------------------------------------------------------- | Total | 385 | 277 | 39 | 598 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Key figures and ratios | H1/ | H1/ | | 2006 | | | 2007 | 2006 | | | -------------------------------------------------------------------------------- | Return on equity, % | 14.7 | 11.9 | | 12.1 | -------------------------------------------------------------------------------- | Return on equity at fair value, | 13.4 | 6.1 | | 11.4 | | % | | | | | -------------------------------------------------------------------------------- | Return on assets, % | 1.26 | 1.01 | | 1.06 | -------------------------------------------------------------------------------- | Cost/income ratio, % | 50 | 57 | | 55 | -------------------------------------------------------------------------------- | Average personnel | 12,307 | 12,127 | | 12,148 | -------------------------------------------------------------------------------- | Full-time | 11,161 | 10,982 | | 10,988 | -------------------------------------------------------------------------------- | Part-time | 1,146 | 1,146 | | 1,160 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Definition of key figures and ratios | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Return on equity (ROE) = | | | | -------------------------------------------------------------------------------- | Profit for the period / | | | | -------------------------------------------------------------------------------- | Equity capital (average of the beginning and end of the period) | | | x 100 | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Return on equity at fair value, % = | | | | -------------------------------------------------------------------------------- | Profit for the period + change in fair value reserve less | | | deferred tax liability / | | -------------------------------------------------------------------------------- | equity capital (average of the beginning and end of the period) | | | x 100 | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Return on assets (ROA) = | | | | -------------------------------------------------------------------------------- | Profit for the period / | | | | -------------------------------------------------------------------------------- | Balance sheet total (average of the beginning and end of the | | | period) x 100 | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cost/income ratio, % = | | | | -------------------------------------------------------------------------------- | (Personnel costs + other administrative expenses + | | | | other operating expenses) / | | | -------------------------------------------------------------------------------- | (Net interest income + net income from Non-life Insurance operations + net | | income from Life Insurance operations + net commissions and fees + net | | trading income + net investment income + other operating income + share of | | associates' profits/losses) x 100 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Combined ratio (excl. unwinding of | | | | | discount) | | | | -------------------------------------------------------------------------------- | Loss ratio+expense ratio | | | | -------------------------------------------------------------------------------- | Risk ratio+cost ratio | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | OP Bank Group quarterly | | | | | | | performance | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | 2006 | 2007 | -------------------------------------------------------------------------------- | EUR million | Q2 | Q3 | Q4 | Q1 | Q2 | -------------------------------------------------------------------------------- | Interest income | 551 | 617 | 692 | 756 | 882 | -------------------------------------------------------------------------------- | Interest expenses | 337 | 391 | 450 | 511 | 618 | -------------------------------------------------------------------------------- | Net interest income | 214 | 226 | 241 | 244 | 264 | -------------------------------------------------------------------------------- | Impairment losses on | 3 | 3 | 5 | 1 | 5 | | receivables | | | | | | -------------------------------------------------------------------------------- | Net interest income | 211 | 223 | 237 | 244 | 259 | | after | | | | | | | impairment losses | | | | | | -------------------------------------------------------------------------------- | Net income from Non-life | 90 | 67 | 85 | 94 | 112 | | Insurance operations | | | | | | -------------------------------------------------------------------------------- | Net income from Life | 26 | 20 | 30 | 48 | 50 | | Insurance operations | | | | | | -------------------------------------------------------------------------------- | Net commissions and fees | 92 | 92 | 101 | 120 | 102 | -------------------------------------------------------------------------------- | Net trading income | 1 | 8 | 14 | 9 | 6 | -------------------------------------------------------------------------------- | Net investment income | 22 | 31 | 20 | 19 | 32 | -------------------------------------------------------------------------------- | Other operating income | 22 | 24 | 24 | 21 | 33 | -------------------------------------------------------------------------------- | Personnel costs | 129 | 115 | 149 | 140 | 145 | -------------------------------------------------------------------------------- | Other administrative | 76 | 62 | 80 | 71 | 76 | | expenses | | | | | | -------------------------------------------------------------------------------- | Other operating expenses | 66 | 62 | 66 | 78 | 70 | -------------------------------------------------------------------------------- | Returns to owner-members | 15 | 18 | 18 | 23 | 26 | -------------------------------------------------------------------------------- | Share of associates' | 0 | 0 | 3 | 2 | 0 | | profits/losses | | | | | | -------------------------------------------------------------------------------- | Earnings before tax for | 178 | 209 | 202 | 246 | 278 | | the period | | | | | | -------------------------------------------------------------------------------- | Income tax expense | 42 | 39 | 51 | 61 | 77 | -------------------------------------------------------------------------------- | Profit for the period | 136 | 170 | 151 | 185 | 201 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | OP Bank Group balance sheet | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR million | 30 June | 30 June | Change, | 31 | | | 2007 | 2006 | % | Dec. | | | | | | 200 | | | | | | 6 | -------------------------------------------------------------------------------- | Liquid assets | 1,844 | 1,299 | 42 | 1,041 | -------------------------------------------------------------------------------- | Receivables from financial | 384 | 299 | 29 | 344 | | institutions | | | | | -------------------------------------------------------------------------------- | Financial assets for trading | 3,599 | 5,319 | -32 | 4,816 | | (Note 13) | | | | | -------------------------------------------------------------------------------- | Derivative contracts | 555 | 282 | 97 | 319 | -------------------------------------------------------------------------------- | Receivables from customers | 42,344 | 37,270 | 14 | 39,595 | -------------------------------------------------------------------------------- | Non-life Insurance assets (Note | 2,873 | 2,929 | -2 | 2,761 | | 14) | | | | | -------------------------------------------------------------------------------- | Life Insurance assets (Note 15) | 6,437 | 5,565 | 16 | 6,061 | -------------------------------------------------------------------------------- | Investment assets (Note 16) | 1,477 | 1,635 | -10 | 1,413 | -------------------------------------------------------------------------------- | Investments in associates | 29 | 40 | -26 | 35 | -------------------------------------------------------------------------------- | Intangible assets | 1,250 | 1,283 | -3 | 1,255 | -------------------------------------------------------------------------------- | Property, plant and equipment | 706 | 702 | 0 | 702 | | (PPE) | | | | | -------------------------------------------------------------------------------- | Other assets | 1,711 | 1,066 | 61 | 1,104 | -------------------------------------------------------------------------------- | Deferred tax assets | 205 | 139 | 48 | 90 | -------------------------------------------------------------------------------- | Total assets | 63,415 | 57,828 | 10 | 59,535 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Liabilities to financial | 565 | 3,108 | -82 | 1,088 | | institutions | | | | | -------------------------------------------------------------------------------- | Financial liabilities for | 0 | 0 | -99 | - | | trading | | | | | -------------------------------------------------------------------------------- | Derivative contracts | 568 | 291 | 95 | 340 | -------------------------------------------------------------------------------- | Liabilities to customers | 29,221 | 26,908 | 9 | 27,715 | -------------------------------------------------------------------------------- | Non-life Insurance liabilities | 2,355 | 2,141 | 10 | 2,099 | | (Note 17) | | | | | -------------------------------------------------------------------------------- | Life Insurance liabilities (Note | 5,972 | 5,196 | 15 | 5,667 | | 18) | | | | | -------------------------------------------------------------------------------- | Debt securities issued to the | 14,624 | 11,912 | 23 | 13,500 | | public (Note 19) | | | | | -------------------------------------------------------------------------------- | Provisions and other liabilities | 2,006 | 1,346 | 49 | 1,508 | -------------------------------------------------------------------------------- | Tax liabilities | 975 | 810 | 20 | 834 | -------------------------------------------------------------------------------- | Cooperative capital | 603 | 686 | -12 | 597 | -------------------------------------------------------------------------------- | Subordinated liabilities (Note | 1,112 | 776 | 43 | 1,063 | | 20) | | | | | -------------------------------------------------------------------------------- | Total liabilities | 58,000 | 53,174 | 9 | 54,411 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Equity capital | | | | | -------------------------------------------------------------------------------- | Share of OP Bank Group's owners | | | | | -------------------------------------------------------------------------------- | Share and cooperative capital | 357 | 288 | 24 | 344 | -------------------------------------------------------------------------------- | Share issue account | 0 | 0 | | - | -------------------------------------------------------------------------------- | Translation differences | 0 | 0 | -94 | 0 | -------------------------------------------------------------------------------- | Reserves | 2,338 | 2,192 | 7 | 2,295 | -------------------------------------------------------------------------------- | Retained earnings | 2,718 | 2,170 | 25 | 2,483 | -------------------------------------------------------------------------------- | Minority interest | 3 | 4 | -26 | 2 | -------------------------------------------------------------------------------- | Total equity capital | 5,415 | 4,654 | 16 | 5,124 | -------------------------------------------------------------------------------- | Total liabilities and equity | 63,415 | 57,828 | 10 | 59,535 | | capital | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Statement of | | | | | | | changes | | | | | | | in equity | | | | | | | capital | | | | | | -------------------------------------------------------------------------------- | EUR million | Share | Reserves | Retained | Minorit | Total | | | and | | earnings | y | e | | | coope | | | interes | quity | | | rative | | | t | c | | | ca | | | | apital | | | pital | | | | | -------------------------------------------------------------------------------- | Balance at 1 January | 244 | 2,250 | 2,061 | 203 | 4,757 | | 2006 | | | | | | -------------------------------------------------------------------------------- | Increase of share | 1 | - | - | - | 1 | | capital | | | | | | -------------------------------------------------------------------------------- | Transfer of | 45 | - | - | - | 45 | | cooperative capital | | | | | | | to | | | | | | | equity capital | | | | | | -------------------------------------------------------------------------------- | Fair value reserve | - | -134 | - | - | -134 | -------------------------------------------------------------------------------- | Transfer of reserves | - | 81 | -81 | - | - | -------------------------------------------------------------------------------- | Profit distribution | - | - | -77 | -1 | -78 | -------------------------------------------------------------------------------- | Profit for the period | - | - | 277 | 0 | 277 | -------------------------------------------------------------------------------- | Other | -2 | -4 | -10 | -199 | -214 | -------------------------------------------------------------------------------- | Balance at 30 June | 288 | 2,192 | 2,170 | 4 | 4,654 | | 2006 | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Balance at 1 January | 344 | 2,295 | 2,483 | 2 | 5,124 | | 2007 | | | | | | -------------------------------------------------------------------------------- | Increase in share | - | - | - | - | - | | capital | | | | | | -------------------------------------------------------------------------------- | Transfer of | 11 | - | - | - | 11 | | cooperative capital | | | | | | | to | | | | | | | equity capital | | | | | | -------------------------------------------------------------------------------- | Fair value reserve | - | -35 | - | - | -35 | -------------------------------------------------------------------------------- | Transfer of reserves | - | 78 | -78 | - | - | -------------------------------------------------------------------------------- | Profit distribution | - | - | -76 | - | -76 | -------------------------------------------------------------------------------- | Profit for the period | - | - | 385 | 0 | 385 | -------------------------------------------------------------------------------- | Other | 2 | 0 | 4 | 0 | 6 | -------------------------------------------------------------------------------- | Balance at 30 June | 357 | 2,338 | 2,718 | 3 | 5,415 | | 2007 | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flow statement | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR million | H1/ | H1/ | | | 2007 | 2006 | -------------------------------------------------------------------------------- | Cash flow from operating activities | | | -------------------------------------------------------------------------------- | Profit for the period | 385 | 277 | -------------------------------------------------------------------------------- | Adjustments to profit for the period | 501 | 651 | -------------------------------------------------------------------------------- | Increase (-) or decrease (+) in operating assets | -2,699 | -4,416 | -------------------------------------------------------------------------------- | Receivables from financial institutions | -14 | 352 | -------------------------------------------------------------------------------- | Financial assets held for trading | 1,212 | -1,520 | -------------------------------------------------------------------------------- | Derivative contracts | -28 | -30 | -------------------------------------------------------------------------------- | Receivables from customers | -2,770 | -2,471 | -------------------------------------------------------------------------------- | Non-life Insurance assets | -127 | -257 | -------------------------------------------------------------------------------- | Life Insurance assets | -238 | -218 | -------------------------------------------------------------------------------- | Investment assets | -97 | -184 | -------------------------------------------------------------------------------- | Other assets | -637 | -88 | -------------------------------------------------------------------------------- | Increase (+) or decrease (-) in operating | 1,560 | 1,590 | | liabilities | | | -------------------------------------------------------------------------------- | Liabilities to financial institutions | -523 | 1,083 | -------------------------------------------------------------------------------- | Financial liabilities held for trading | 0 | -3 | -------------------------------------------------------------------------------- | Derivative contracts | 40 | 43 | -------------------------------------------------------------------------------- | Liabilities to customers | 1,505 | 306 | -------------------------------------------------------------------------------- | Non-life Insurance liabilities | 65 | 25 | -------------------------------------------------------------------------------- | Life Insurance liabilities | 2 | -7 | -------------------------------------------------------------------------------- | Provisions and other liabilities | 471 | 143 | -------------------------------------------------------------------------------- | Income tax paid | -91 | -94 | -------------------------------------------------------------------------------- | Dividends received | 78 | 42 | -------------------------------------------------------------------------------- | A. Net cash from operating activities | -266 | -1,950 | -------------------------------------------------------------------------------- | Cash flow from investing activities | | | -------------------------------------------------------------------------------- | Increases in held-to-maturity financial assets | -127 | -94 | -------------------------------------------------------------------------------- | Decreases in held-to-maturity financial assets | 138 | 147 | -------------------------------------------------------------------------------- | Acquisition of subsidiaries, net of cash and cash | -1 | -309 | | equivalents acquired | | | -------------------------------------------------------------------------------- | Disposal of subsidiaries, net of cash and cash | 10 | 7 | | equivalents disposed | | | -------------------------------------------------------------------------------- | Purchase of PPE and intangible assets | -47 | -51 | -------------------------------------------------------------------------------- | Proceeds from sale of PPE and intangible assets | 13 | 5 | -------------------------------------------------------------------------------- | B. Net cash used in investing activities | -14 | -295 | -------------------------------------------------------------------------------- | Cash flow from financing activities | | | -------------------------------------------------------------------------------- | Increases in subordinated liabilities | 212 | 186 | -------------------------------------------------------------------------------- | Decreases in subordinated liabilities | -161 | -257 | -------------------------------------------------------------------------------- | Increases in debt securities issued to the public | 20,415 | 18,400 | -------------------------------------------------------------------------------- | Decreases in debt securities issued to the public | -19,278 | -15,353 | -------------------------------------------------------------------------------- | Increases in cooperative and share capital | 97 | 80 | -------------------------------------------------------------------------------- | Decrease in cooperative and share capital | -80 | -66 | -------------------------------------------------------------------------------- | Dividends paid and interest on cooperative capital | -97 | -92 | -------------------------------------------------------------------------------- | Returns to owner-members | -7 | -9 | -------------------------------------------------------------------------------- | Monetary increases in other equity items | 0 | 0 | -------------------------------------------------------------------------------- | Other | 0 | -11 | -------------------------------------------------------------------------------- | C. Net cash from financing activities | 1,101 | 2,878 | -------------------------------------------------------------------------------- | Net change in cash and cash equivalents (A+B+C) | 820 | 634 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash and cash equivalents at period-start | 1,098 | 729 | -------------------------------------------------------------------------------- | Cash and cash equivalents at period-end | 1,918 | 1,363 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest received | 1,489 | 943 | -------------------------------------------------------------------------------- | Interest paid | -989 | -560 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Adjustments to profit for the period | | | -------------------------------------------------------------------------------- | Non-cash items and other adjustments | | | -------------------------------------------------------------------------------- | Impairments on receivables | 9 | -2 | -------------------------------------------------------------------------------- | Unrealised net earnings in Non-life Insurance | 208 | 200 | -------------------------------------------------------------------------------- | Unrealised net earnings in Life Insurance | 156 | 316 | -------------------------------------------------------------------------------- | Change in fair value for trading | -11 | 6 | -------------------------------------------------------------------------------- | Unrealised net gains on foreign exchange operations | -7 | -18 | -------------------------------------------------------------------------------- | Change in fair value of investment property | -8 | -10 | -------------------------------------------------------------------------------- | Amortisation and depreciation | 65 | 63 | -------------------------------------------------------------------------------- | Share of associates' profits/losses | -1 | 1 | -------------------------------------------------------------------------------- | Other | 73 | 81 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Items presented outside cash flow from operating | | | | activities | | | -------------------------------------------------------------------------------- | Capital gains, share of cash flow from investing | -2 | -3 | | activities | | | -------------------------------------------------------------------------------- | Interest on cooperative capital | 12 | 8 | -------------------------------------------------------------------------------- | Other returns to owner-members | 7 | 9 | -------------------------------------------------------------------------------- | Total adjustments | 501 | 651 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash and cash equivalents | | | -------------------------------------------------------------------------------- | Liquid assets | 131 | 154 | -------------------------------------------------------------------------------- | Receivables from financial institutions payable on | 1,787 | 1,209 | | demand | | | -------------------------------------------------------------------------------- | Total | 1,918 | 1,363 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Notes | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 1 Net interest income | | | | | -------------------------------------------------------------------------------- | EUR million | H1/ | H1/ | Change, | 2006 | | | 2007 | 2006 | % | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest income | | | | | -------------------------------------------------------------------------------- | Receivables from financial | 26 | 14 | 82 | 34 | | institutions | | | | | -------------------------------------------------------------------------------- | Receivables from customers | 952 | 645 | 48 | 1,460 | -------------------------------------------------------------------------------- | Other | 659 | 372 | 77 | 846 | -------------------------------------------------------------------------------- | Total | 1,638 | 1,031 | 59 | 2,340 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest expenses | | | | | -------------------------------------------------------------------------------- | Liabilities to financial | 19 | 33 | -43 | 71 | | institutions | | | | | -------------------------------------------------------------------------------- | Liabilities to customers | 285 | 156 | 83 | 361 | -------------------------------------------------------------------------------- | Other | 825 | 428 | 93 | 1,025 | -------------------------------------------------------------------------------- | Total | 1,129 | 616 | 83 | 1,457 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net interest income | 509 | 416 | 22 | 883 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 2 Impairment losses on | | | | | | receivables | | | | | -------------------------------------------------------------------------------- | EUR million | H1/ | H1/ | Change, | 2006 | | | 2007 | 2006 | % | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Impairment losses on receivables | 14 | 13 | 5 | 38 | -------------------------------------------------------------------------------- | Reversals of impairment losses | -8 | -12 | 31 | -24 | -------------------------------------------------------------------------------- | Payments on impaired receivables | -3 | -2 | -42 | -6 | | amortised from balance sheet | | | | | -------------------------------------------------------------------------------- | Net change in group-specific | 3 | 2 | 41 | 1 | | impairment losses | | | | | -------------------------------------------------------------------------------- | Total | 6 | 1 | | 9 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 3 Net income from Non-life | | | | | | Insurance | | | | | -------------------------------------------------------------------------------- | EUR million | H1/ | H1/ | Change, | 2006 | | | 2007 | 2006 | % | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net insurance premium revenue | | | | | -------------------------------------------------------------------------------- | Premiums written | 642 | 589 | 9 | 877 | -------------------------------------------------------------------------------- | Insurance premiums ceded to | -40 | -35 | -12 | -55 | | reinsurers | | | | | -------------------------------------------------------------------------------- | Change in provision for unearned | -193 | -177 | -9 | -35 | | premiums | | | | | -------------------------------------------------------------------------------- | Reinsurers' share | 14 | 11 | 28 | 2 | -------------------------------------------------------------------------------- | Total | 423 | 388 | 9 | 788 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net Non-life Insurance claims | | | | | -------------------------------------------------------------------------------- | Claims paid | -275 | -235 | -17 | -470 | -------------------------------------------------------------------------------- | Insurance claims recovered from | 4 | -11 | | -30 | | reinsurers | | | | | -------------------------------------------------------------------------------- | Change in provision for unpaid | -15 | -10 | -54 | -51 | | claims | | | | | -------------------------------------------------------------------------------- | Reinsurers' share | 4 | -2 | | 15 | -------------------------------------------------------------------------------- | Total | -283 | -258 | -10 | -536 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net investment income, Non-life | | | | | | Insurance | | | | | -------------------------------------------------------------------------------- | Interest income | 35 | 36 | -5 | 72 | -------------------------------------------------------------------------------- | Capital gains and losses and | | | | | | realised changes in fair value | | | | | -------------------------------------------------------------------------------- | Notes and bonds | -28 | -4 | | -24 | -------------------------------------------------------------------------------- | Shares and participations | 41 | 9 | | 36 | -------------------------------------------------------------------------------- | Property | 3 | 1 | | 1 | -------------------------------------------------------------------------------- | Other | -2 | 5 | | 8 | -------------------------------------------------------------------------------- | Unrealised changes in fair value | | | | | -------------------------------------------------------------------------------- | Notes and bonds | 0 | -1 | 93 | -1 | -------------------------------------------------------------------------------- | Shares and participations | 0 | 0 | 9 | 0 | -------------------------------------------------------------------------------- | Property | 0 | 0 | -41 | 2 | -------------------------------------------------------------------------------- | Other | 3 | -1 | | -1 | -------------------------------------------------------------------------------- | Dividend income | 33 | 20 | 62 | 22 | -------------------------------------------------------------------------------- | Total | 85 | 65 | 31 | 116 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Unwinding of discount | -19 | -18 | -5 | -37 | -------------------------------------------------------------------------------- | Other | 0 | 0 | | -3 | -------------------------------------------------------------------------------- | Net income from Non-life | 206 | 176 | 17 | 328 | | Insurance | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 4 Net income from Life | | | | | | Insurance | | | | | -------------------------------------------------------------------------------- | EUR million | H1/ | H1/ | Change, | 2006 | | | 2007 | 2006 | % | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Premiums written | 425 | 448 | -5 | 859 | -------------------------------------------------------------------------------- | Reinsurers' share | -1 | -1 | -12 | -2 | -------------------------------------------------------------------------------- | Net investment income | 295 | 125 | | 454 | -------------------------------------------------------------------------------- | Claims incurred | | | | | -------------------------------------------------------------------------------- | Benefits paid | -311 | -220 | -41 | -437 | -------------------------------------------------------------------------------- | Change in provision for unpaid | -11 | -11 | -6 | -24 | | claims | | | | | -------------------------------------------------------------------------------- | Reinsurers' share | 0 | 0 | | 0 | -------------------------------------------------------------------------------- | Change in insurance contract | | | | | | liabilities | | | | | -------------------------------------------------------------------------------- | Change in life insurance | -299 | -277 | -8 | -695 | | provision | | | | | -------------------------------------------------------------------------------- | Reinsurers' share | 0 | -1 | 88 | -4 | -------------------------------------------------------------------------------- | Other | 0 | -2 | | -40 | -------------------------------------------------------------------------------- | Net income from Life Insurance | 97 | 60 | 62 | 110 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 5 Commissions and fees | | | | | -------------------------------------------------------------------------------- | EUR million | H1/ | H1/ | Change, | 2006 | | | 2007 | 2006 | % | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Commission income | | | | | -------------------------------------------------------------------------------- | Lending | 52 | 43 | 22 | 88 | -------------------------------------------------------------------------------- | Deposits | 3 | 3 | -9 | 6 | -------------------------------------------------------------------------------- | Payment transfers | 55 | 59 | -6 | 116 | -------------------------------------------------------------------------------- | Securities brokerage | 14 | 12 | 21 | 22 | -------------------------------------------------------------------------------- | Securities issuance | 4 | 4 | 18 | 6 | -------------------------------------------------------------------------------- | Mutual funds brokerage | 47 | 42 | 12 | 84 | -------------------------------------------------------------------------------- | Asset management and legal | 25 | 30 | -17 | 56 | | services | | | | | -------------------------------------------------------------------------------- | Insurance brokerage | 35 | 28 | 25 | 43 | -------------------------------------------------------------------------------- | Guarantees | 6 | 5 | 9 | 11 | -------------------------------------------------------------------------------- | Other | 20 | 16 | 27 | 36 | -------------------------------------------------------------------------------- | Total | 261 | 241 | 8 | 467 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Commission expenses | | | | | -------------------------------------------------------------------------------- | Total | 39 | 39 | 0 | 71 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net commissions and fees | 223 | 202 | 10 | 396 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 6 Net trading income | | | | | -------------------------------------------------------------------------------- | EUR million | H1/ | H1/ | Change, | 2006 | | | 2007 | 2006 | % | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Capital gains and losses | | | | | -------------------------------------------------------------------------------- | Notes and bonds | -10 | -7 | 38 | -9 | -------------------------------------------------------------------------------- | Shares and participations | 4 | 4 | 2 | 7 | -------------------------------------------------------------------------------- | Derivatives | 6 | 8 | -26 | 10 | -------------------------------------------------------------------------------- | Changes in fair value | | | | | -------------------------------------------------------------------------------- | Notes and bonds | -13 | -39 | -66 | -27 | -------------------------------------------------------------------------------- | Shares and participations | 1 | -2 | | 3 | -------------------------------------------------------------------------------- | Derivatives | 20 | 39 | -48 | 35 | -------------------------------------------------------------------------------- | Net income from hedge accounting | | | | | -------------------------------------------------------------------------------- | Net income from hedging | - | - | | - | | contracts | | | | | -------------------------------------------------------------------------------- | Net income from hedged contracts | - | - | | - | -------------------------------------------------------------------------------- | Dividend income | 1 | 1 | 4 | 1 | -------------------------------------------------------------------------------- | Net income from foreign exchange | 6 | 6 | 1 | 13 | | operations | | | | | -------------------------------------------------------------------------------- | Total | 15 | 10 | 51 | 32 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 7 Net investment income | | | | | -------------------------------------------------------------------------------- | EUR million | H1/ | H1/ | Change, | 2006 | | | 2007 | 2006 | % | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Available-for-sale financial | | | | | | assets | | | | | -------------------------------------------------------------------------------- | Capital gains and losses | | | | | -------------------------------------------------------------------------------- | Notes and bonds | 0 | 0 | | 1 | -------------------------------------------------------------------------------- | Shares and participations | 21 | 30 | -28 | 40 | -------------------------------------------------------------------------------- | Other | - | - | | - | -------------------------------------------------------------------------------- | Net income from hedge accounting | | | | | -------------------------------------------------------------------------------- | Net income from hedging | - | - | | - | | contracts | | | | | -------------------------------------------------------------------------------- | Net income from hedged contracts | - | - | | - | -------------------------------------------------------------------------------- | Dividend income | 9 | 11 | -16 | 20 | -------------------------------------------------------------------------------- | Impairment losses | 0 | -1 | -37 | -1 | -------------------------------------------------------------------------------- | Total | 30 | 40 | -25 | 60 | -------------------------------------------------------------------------------- | Investment property | | | | | -------------------------------------------------------------------------------- | Rental income | 27 | 28 | -3 | 55 | -------------------------------------------------------------------------------- | Maintenance charges and expenses | -15 | -17 | 12 | -34 | -------------------------------------------------------------------------------- | Changes in fair value, capital | 8 | 10 | -22 | 30 | | gains and losses | | | | | -------------------------------------------------------------------------------- | Other | 0 | -1 | | 1 | -------------------------------------------------------------------------------- | Total | 21 | 21 | -1 | 52 | -------------------------------------------------------------------------------- | Other | 0 | - | | 0 | -------------------------------------------------------------------------------- | Net investment income | 51 | 61 | -17 | 112 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 8 Other operating income | | | | | -------------------------------------------------------------------------------- | EUR million | H1/ | H1/ | Change, | 2006 | | | 2007 | 2006 | % | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Income from property and | 8 | 7 | 7 | 12 | | business | | | | | | premises in own use | | | | | -------------------------------------------------------------------------------- | Other | 47 | 37 | 25 | 80 | -------------------------------------------------------------------------------- | Total | 54 | 45 | 22 | 92 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 9 Personnel costs | | | | | -------------------------------------------------------------------------------- | EUR million | H1/ | H1/ | Change, | 2006 | | | 2007 | 2006 | % | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Wages and salaries | 250 | 230 | 8 | 459 | -------------------------------------------------------------------------------- | Pension costs | 18 | 18 | 3 | 35 | -------------------------------------------------------------------------------- | Other social expenses | 17 | 15 | 13 | 33 | -------------------------------------------------------------------------------- | Total | 285 | 263 | 8 | 527 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 10 Other administrative | | | | | | expenses | | | | | -------------------------------------------------------------------------------- | EUR million | H1/ | H1/ | Change, | 2006 | | | 2007 | 2006 | % | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Office expenses | 23 | 26 | -14 | 51 | -------------------------------------------------------------------------------- | IT expenses | 42 | 45 | -7 | 87 | -------------------------------------------------------------------------------- | Telecommunications expenses | 19 | 20 | -2 | 39 | -------------------------------------------------------------------------------- | Marketing expenses | 31 | 30 | 2 | 59 | -------------------------------------------------------------------------------- | Other administrative expenses | 32 | 27 | 18 | 55 | -------------------------------------------------------------------------------- | Total | 147 | 148 | -1 | 290 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 11 Other operating expenses | | | | | -------------------------------------------------------------------------------- | EUR million | H1/ | H1/ | Change, | 2006 | | | 2007 | 2006 | % | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Expenses for property and | 35 | 35 | -1 | 70 | | business | | | | | | premises in own use | | | | | -------------------------------------------------------------------------------- | Depreciation | 65 | 63 | 2 | 130 | -------------------------------------------------------------------------------- | Other | 48 | 40 | 21 | 66 | -------------------------------------------------------------------------------- | Total | 148 | 138 | 7 | 267 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 12 Returns to owner-members | | | | | -------------------------------------------------------------------------------- | EUR million | H1/ | H1/ | Change, | 2006 | | | 2007 | 2006 | % | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Bonuses | 36 | 21 | 75 | 43 | -------------------------------------------------------------------------------- | Interest on cooperative capital | 12 | 8 | 61 | 21 | -------------------------------------------------------------------------------- | Total | 49 | 29 | 71 | 64 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 13 Financial assets held | | | | | | for trading | | | | | -------------------------------------------------------------------------------- | EUR million | 30 June | 30 June | Change, | 31 Dec. | | | 2007 | 2006 | % | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Notes and bonds | 3,515 | 5,226 | -33 | 4,736 | -------------------------------------------------------------------------------- | Shares and participations | 84 | 93 | -9 | 80 | -------------------------------------------------------------------------------- | Purchased loans and other | - | - | | - | | receivables | | | | | -------------------------------------------------------------------------------- | Total | 3,599 | 5,319 | -32 | 4,816 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 14 Non-life Insurance | | | | | | assets | | | | | -------------------------------------------------------------------------------- | EUR million | 30 June | 30 June | Change, | 31 Dec. | | | 2007 | 2006 | % | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Investments | | | | | -------------------------------------------------------------------------------- | Loan and other receivables | 82 | 57 | 43 | 67 | -------------------------------------------------------------------------------- | Shares and participations | 772 | 631 | 22 | 766 | -------------------------------------------------------------------------------- | Property | 67 | 57 | 17 | 56 | -------------------------------------------------------------------------------- | Notes and bonds | 1,523 | 1,838 | -17 | 1,536 | -------------------------------------------------------------------------------- | Other | 4 | 1 | | 1 | -------------------------------------------------------------------------------- | Total | 2,448 | 2,584 | -5 | 2,426 | -------------------------------------------------------------------------------- | Other assets | | | | | -------------------------------------------------------------------------------- | Prepayments and accrued income | -12 | 3 | | -2 | -------------------------------------------------------------------------------- | Other | | | | | -------------------------------------------------------------------------------- | Arising from direct insurance | 320 | 228 | 40 | 241 | | operations | | | | | -------------------------------------------------------------------------------- | Arising from reinsurance | 113 | 98 | 15 | 90 | | operations | | | | | -------------------------------------------------------------------------------- | Cash in hand and at bank | 4 | 16 | -73 | 5 | -------------------------------------------------------------------------------- | Total | 425 | 345 | 23 | 335 | -------------------------------------------------------------------------------- | Life Insurance assets | 2,873 | 2,929 | -2 | 2,761 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 15 Life Insurance assets | | | | | -------------------------------------------------------------------------------- | EUR million | 30 June | 30 June | Change, | 31 Dec. | | | 2007 | 2006 | % | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Investments | | | | | -------------------------------------------------------------------------------- | Loan and other receivables | 11 | 4 | | 64 | -------------------------------------------------------------------------------- | Shares and participations | 2,508 | 1,369 | 83 | 2,139 | -------------------------------------------------------------------------------- | Property | 105 | 100 | 5 | 103 | -------------------------------------------------------------------------------- | Notes and bonds | 1,367 | 2,328 | -41 | 1,608 | -------------------------------------------------------------------------------- | Other | 5 | 1 | | 0 | -------------------------------------------------------------------------------- | Total | 3,996 | 3,802 | 5 | 3,913 | -------------------------------------------------------------------------------- | Assets covering unit-linked | | | | | | insurance contracts | | | | | -------------------------------------------------------------------------------- | Shares and participations | 2,401 | 1,702 | 41 | 2,090 | -------------------------------------------------------------------------------- | Other assets | | | | | -------------------------------------------------------------------------------- | Prepayments and accrued income | 28 | 46 | -41 | 45 | -------------------------------------------------------------------------------- | Other | | | | | -------------------------------------------------------------------------------- | Arising from direct insurance | 11 | 0 | | 1 | | operations | | | | | -------------------------------------------------------------------------------- | Arising from reinsurance | 1 | 4 | -76 | 2 | | operations | | | | | -------------------------------------------------------------------------------- | Cash in hand and at bank | 1 | 10 | -94 | 9 | -------------------------------------------------------------------------------- | Total | 40 | 61 | -35 | 58 | -------------------------------------------------------------------------------- | Life insurance assets | 6,437 | 5,565 | 16 | 6,061 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 16 Investment assets | | | | | -------------------------------------------------------------------------------- | EUR million | 30 June | 30 June | Change, | 31 Dec. | | | 2007 | 2006 | % | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Available-for-sale financial | | | | | | assets | | | | | -------------------------------------------------------------------------------- | Notes and bonds | 460 | 667 | -31 | 435 | -------------------------------------------------------------------------------- | Shares and participations | 387 | 315 | 23 | 333 | -------------------------------------------------------------------------------- | Other | - | - | | - | -------------------------------------------------------------------------------- | Held-to-maturity financial | 123 | 146 | -16 | 133 | | assets | | | | | -------------------------------------------------------------------------------- | Investment property | 498 | 497 | 0 | 504 | -------------------------------------------------------------------------------- | Subsidiaries and associates not | 9 | 10 | -10 | 9 | | consolidated | | | | | -------------------------------------------------------------------------------- | Total | 1,477 | 1,635 | -10 | 1,413 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 17 Non-life Insurance | | | | | | liabilities | | | | | -------------------------------------------------------------------------------- | EUR million | 30 June | 30 June | Change, | 31 Dec. | | | 2007 | 2006 | % | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Insurance contract liabilities | | | | | -------------------------------------------------------------------------------- | Provision for unearned premiums | 467 | 427 | 10 | 285 | -------------------------------------------------------------------------------- | Provision for unpaid claims | 1,705 | 1,624 | 5 | 1,683 | -------------------------------------------------------------------------------- | Total | 2,172 | 2,051 | 6 | 1,969 | -------------------------------------------------------------------------------- | Other | 183 | 90 | | 131 | -------------------------------------------------------------------------------- | Non-life Insurance liabilities | 2,355 | 2,141 | 10 | 2,099 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 18 Life Insurance | | | | | | liabilities | | | | | -------------------------------------------------------------------------------- | EUR million | 30 June | 30 June | Change, | 31 Dec. | | | 2007 | 2006 | % | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Insurance contract liabilities | 3,564 | 3,391 | 5 | 3,461 | -------------------------------------------------------------------------------- | Provisions for unit-linked | 2,384 | 1,646 | 45 | 2,042 | | policies | | | | | -------------------------------------------------------------------------------- | Other liabilities | | | | | -------------------------------------------------------------------------------- | Accrued expenses and deferred | 2 | 5 | -64 | 1 | | income | | | | | -------------------------------------------------------------------------------- | Other | | | | | -------------------------------------------------------------------------------- | Arising from direct insurance | 2 | 4 | -52 | 4 | | operations | | | | | -------------------------------------------------------------------------------- | Arising from reinsurance | 1 | 0 | 25 | 1 | | operations | | | | | -------------------------------------------------------------------------------- | Other | 18 | 150 | -88 | 159 | -------------------------------------------------------------------------------- | Total | 23 | 160 | -86 | 165 | -------------------------------------------------------------------------------- | Life Insurance liabilities | 5,972 | 5,196 | 15 | 5,667 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 19 Debt securities issued | | | | | | to the public | | | | | -------------------------------------------------------------------------------- | EUR million | 30 June | 30 June | Change, | 31 Dec. | | | 2007 | 2006 | % | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Bonds | 8,911 | 6,499 | 37 | 7,574 | -------------------------------------------------------------------------------- | Certificates of deposit | 5,605 | 5,289 | 6 | 5,812 | -------------------------------------------------------------------------------- | Other | 108 | 123 | -13 | 114 | -------------------------------------------------------------------------------- | Total | 14,624 | 11,912 | 23 | 13,500 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 20 Subordinated liabilities | | | | | -------------------------------------------------------------------------------- | EUR million | 30 June | 30 June | Change, | 31 Dec. | | | 2007 | 2006 | % | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Subordinated loans | 203 | 214 | -5 | 208 | -------------------------------------------------------------------------------- | Other | 909 | 562 | 62 | 855 | -------------------------------------------------------------------------------- | Total | 1,112 | 776 | 43 | 1,063 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Collateral given | | | | | -------------------------------------------------------------------------------- | EUR million | 30 June | 30 June | Change, | 31 Dec. | | | 2007 | 2006 | % | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Given on behalf of own | | | | | | liabilities and commitments | | | | | -------------------------------------------------------------------------------- | Mortgages | 1 | 1 | 0 | 1 | -------------------------------------------------------------------------------- | Pledges | 1,194 | 2,702 | -56 | 2,521 | -------------------------------------------------------------------------------- | Other | 47 | 15 | | 31 | -------------------------------------------------------------------------------- | Total | 1,241 | 2,717 | -54 | 2,553 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Off-balance-sheet items | | | | | -------------------------------------------------------------------------------- | EUR million | 30 June | 30 June | Change, | 31 Dec. | | | 2007 | 2006 | % | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Guarantees | 585 | 518 | 13 | 577 | -------------------------------------------------------------------------------- | Other guarantee liabilities | 1,774 | 1,709 | 4 | 1,654 | -------------------------------------------------------------------------------- | Bill liabilities | - | - | | - | -------------------------------------------------------------------------------- | Letters of credit | 147 | 179 | -18 | 171 | -------------------------------------------------------------------------------- | Pledges | 1 | 1 | 0 | 1 | -------------------------------------------------------------------------------- | Loan commitments | 7,593 | 6,803 | 12 | 7,417 | -------------------------------------------------------------------------------- | Commitments related to | 15 | - | | 13 | | short-term | | | | | | trade transactions | | | | | -------------------------------------------------------------------------------- | Other | 454 | 457 | -1 | 451 | -------------------------------------------------------------------------------- | Total off-balance-sheet items | 10,568 | 9,667 | 9 | 10,285 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Derivative | | | | | | | | contracts | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total trading and | | | | | | | | hedging | | | | | | | | derivatives, 30 | | | | | | | | June 2007 | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR million | Nominal values/ | Fair | | | remaining term | values | | | to maturity | | -------------------------------------------------------------------------------- | | <1 | 1-5 | >5 | Total | Assets | Liabilit | | | year | years | years | | | ies | -------------------------------------------------------------------------------- | Interest rate | 43,02 | 23,541 | 8,186 | 74,750 | 446 | -407 | | derivatives | 3 | | | | | | -------------------------------------------------------------------------------- | Currency | 7,870 | 1,740 | 1,251 | 10,861 | 43 | -173 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Equity and | 31 | 216 | 28 | 275 | 46 | 0 | | index-linked | | | | | | | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Credit derivatives | - | 131 | - | 131 | 0 | -1 | -------------------------------------------------------------------------------- | Other derivatives | 8 | 7 | - | 15 | 1 | - | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total derivatives | 50,93 | 25,636 | 9,465 | 86,032 | 537 | -580 | | | 1 | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total trading and | | | | | | | | hedging | | | | | | | | derivatives, 30 | | | | | | | | June 2006 | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR million | Nominal values/ | Fair | | | remaining term | values | | | to | | | | maturity | | -------------------------------------------------------------------------------- | | <1 | 1-5 | >5 | Total | Assets | Liabilit | | | year | years | years | | | ies | -------------------------------------------------------------------------------- | Interest rate | 33,79 | 15,704 | 4,360 | 53,856 | 201 | -175 | | derivatives | 3 | | | | | | -------------------------------------------------------------------------------- | Currency | 5,001 | 738 | 369 | 6,107 | 31 | -73 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Equity and | 37 | 119 | - | 156 | 20 | 0 | | index-linked | | | | | | | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Credit derivatives | - | 146 | 4 | 150 | 0 | -1 | -------------------------------------------------------------------------------- | Other derivatives | 8 | 15 | - | 22 | 1 | - | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total derivatives | 38,83 | 16,722 | 4,732 | 60,292 | 254 | -249 | | | 8 | | | | | | -------------------------------------------------------------------------------- Related party transactions 30 June 2007 OP Bank Group's related parties include associates, administrative personnel and other related party companies. The administrative personnel comprises OP Bank Group's Executive Chairman (Chairman of the Executive Board of OP Bank Group Central Cooperative), President of OP Bank Group Central Cooperative, members and deputy members of the Executive and Supervisory Boards and their family members. Other organisations considered as related parties include OP Bank Group Pension Fund and OP Bank Group Pension Foundation. With respect to loans granted to the management, OP Bank Group applies standard terms and conditions for credit. Loans are tied to generally used reference rates. -------------------------------------------------------------------------------- | EUR million | Associate | Management | Others | | | s | | | -------------------------------------------------------------------------------- | Loans | 102 | 4 | - | -------------------------------------------------------------------------------- | Other receivables | 0 | 0 | - | -------------------------------------------------------------------------------- | Deposits | 0 | 4 | 29 | -------------------------------------------------------------------------------- | Other liabilities | - | - | - | -------------------------------------------------------------------------------- | Interest income | 0 | 0 | - | -------------------------------------------------------------------------------- | Interest expenses | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Dividend income | 1 | - | - | -------------------------------------------------------------------------------- | Commission income | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Commission expenses | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Other operating income | - | - | - | -------------------------------------------------------------------------------- | Impairments on loans | - | - | - | -------------------------------------------------------------------------------- | Impairments on loans at period-end | - | - | - | -------------------------------------------------------------------------------- | Off-balance-sheet items | | | | -------------------------------------------------------------------------------- | Guarantees | - | - | - | -------------------------------------------------------------------------------- | Irrevocable commitments | - | - | - | -------------------------------------------------------------------------------- | Other off-balance-sheet commitments | - | - | - | -------------------------------------------------------------------------------- | Wages and salaries and | | | | | performance-based pay | | | | -------------------------------------------------------------------------------- | Wages and salaries | - | 2 | - | -------------------------------------------------------------------------------- | Performance-based pay | - | - | - | -------------------------------------------------------------------------------- | Holdings of related parties | | | | -------------------------------------------------------------------------------- | Number of share options | - | - | - | -------------------------------------------------------------------------------- | Number of shares | - | 82,314 | 3,680,793 | -------------------------------------------------------------------------------- | Number of participations | - | 5,541 | - | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Related party transactions 30 June | | | | | 2006 | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR million | Associate | Management | Others | | | s | | | -------------------------------------------------------------------------------- | Loans | 94 | 4 | - | -------------------------------------------------------------------------------- | Other receivables | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Deposits | 36 | 4 | 24 | -------------------------------------------------------------------------------- | Other liabilities | - | - | 3 | -------------------------------------------------------------------------------- | Interest income | 0 | 0 | - | -------------------------------------------------------------------------------- | Interest expenses | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Dividend income | 1 | - | - | -------------------------------------------------------------------------------- | Commission income | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Commission expenses | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Other operating income | - | - | - | -------------------------------------------------------------------------------- | Impairments on loans | - | - | - | -------------------------------------------------------------------------------- | Impairments on loans at period-end | - | - | - | -------------------------------------------------------------------------------- | Off-balance-sheet items | | | | -------------------------------------------------------------------------------- | Guarantees | - | - | - | -------------------------------------------------------------------------------- | Irrevocable commitments | - | - | - | -------------------------------------------------------------------------------- | Other off-balance-sheet commitments | - | - | - | -------------------------------------------------------------------------------- | Wages and salaries and | | | | | performance-based pay | | | | -------------------------------------------------------------------------------- | Wages and salaries | - | 3 | - | -------------------------------------------------------------------------------- | Performance-based pay | - | - | - | -------------------------------------------------------------------------------- | Holdings of related parties | | | | -------------------------------------------------------------------------------- | Number of share options | - | - | - | -------------------------------------------------------------------------------- | Number of shares | - | 63,224 | 3,680,793 | -------------------------------------------------------------------------------- | Number of participations | - | 5,754 | - | -------------------------------------------------------------------------------- This Interim Report for 1 January-30 June 2007 has been prepared in accordance with IAS 34 (Interim Financial Reporting). OP Bank Group's accounting policies can be found in its Financial Statements 2006. This Interim Report is based on unaudited figures. OKO Bank plc publishes its own Interim Report. OP Bank Group will publish its Interim Report for Q1-Q3/2007 on 8 November 2007. Helsinki, 9 August 2007 OP Bank Group Central Cooperative Executive Board Markku Koponen Senior Vice President DISTRIBUTION OMX Nordic Exchange Helsinki Major media FOR FURTHER INFORMATION, PLEASE CONTACT Mr Reijo Karhinen, Executive Chairman, tel. +358 (0)10 252 4500 Mr Tony Vepsäläinen, President, tel. +358 (0)10 252 4020 Mr Harri Luhtala, CFO, tel. 010 252 2433 |
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