2007-11-08 07:00:00 CET
2007-11-08 07:00:00 CET
REGULATED INFORMATION
OKO Pankki Oyj - Quarterly report
OP-Pohjola Group's Interim Report for 1 January-30 September 2007 and Executive Chairman's comments
OP-Pohjola Group posted all-time high January-September earnings before tax (EUR
757 million, up +27%), and July-September earnings before tax were up 12% on
2006. All businesses within the financial services group continued their strong
growth and the group's market position strengthened further. Card cooperation
with K-Group got off to a flying start. OP-Pohjola Group enhanced its loyal
customer benefits substantially. OP Bank Group was renamed OP-Pohjola Group in
September.
Growth remained above-market-average - investment deposits increased by 22%
- Loan portfolio up by 13% - home mortgages and corporate loans by 14%.
- Deposits grew by 11%. Investment deposits grew by 22%.
- The rise in assets invested in mutual funds slowed down but still stood at
26%.
- Non-life Insurance premium revenue rose by 10% and those of private customers
by
16%.
- The market share of premiums written in Life Insurance rose by 1.2%
percentage
points.
- The number of joint banking and non-life insurance customers increased by
87,000.
- In November, the number of issued OP-Pohjola Group cards with the K-Plussa
feature was already over 300,000.
Earnings before tax grew by 27% to EUR 757 million.
- Earnings for January-September were almost as high as all of 2006.
- Income and expenses increased by 16% and 5%, respectively.
- Return on equity at fair value increased by 1.0 percentage point to 12.2%.
- Earnings before tax for the third quarter amounted to EUR 234 million, up by
12%.
- Every business segment improved its year-on-year earnings significantly.
- Bonuses granted to our customers grew by over 75%.
Strong risk-bearing capacity and a stable risk exposure*
- Own funds were 1.8 billion euros above the statutory minimum.
- Non-performing loan losses increased in euros but their share of the loan and
guarantee portfolio remained at last year's level.
- Impairment losses on receivables were low - 0.03% of the annualised loan and
guarantee portfolio.
- The effects of the financial market disruption were marginal in terms of
earnings and capital adequacy.
Year 2007
- OP-Pohjola 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.
Executive Chairman's comments
Above-market-average volume growth, favourable developments in net interest
income and non-life insurance results and successful risk management combined
with a moderate increase in expenses - these were the factors that mostly
contributed to OP-Pohjola Group's record earnings, which were excellent despite
the global market disruption.
What makes the third quarter of 2007 historic is the name change from OP Bank
Group to OP-Pohjola Group and OKO Bank Plc to Pohjola Bank plc. These name
changes show how committed we are to the Pohjola acquisition, and how we are
determined to build a strong, Finnish-owned financial services Group capable of
providing a full range of services for both Finnish and international needs.
The Finnish financial services sector has enjoyed exceptional growth in recent
years, spearheaded by mortgage loans and fund saving. While the growth rate is
now slowing down, it is still well above the GDP growth rate.
OP-Pohjola Group aims to exceed the market growth rate in all conditions. We
will strengthen our competitive position by further increasing the amount of
customer bonuses we pay out. As a result, the amount of these bonuses will
increase to almost EUR 150 million in 2008, compared with over EUR 80 million
this year.
Reijo Karhinen
OP-Pohjola Group key indicators
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| | Q1-3/2007 | Q1-3/2006 | Change* | 2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings before tax, EUR | 757 | 598 | 27 | 800 |
| million | | | | |
--------------------------------------------------------------------------------
| Banking and Investment | 545 | 474 | 15 | 643 |
| Services | | | | |
--------------------------------------------------------------------------------
| Non-life Insurance | 125 | 58 | 114 | 78 |
--------------------------------------------------------------------------------
| Life Insurance | 89 | 46 | 92 | 68 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Return on equity, % | 14.0 | 12.3 | 1.7 | 12.1 |
--------------------------------------------------------------------------------
| Return on equity at fair | 12.2 | 11.3 | 1.0 | 11.4 |
| value, % | | | | |
--------------------------------------------------------------------------------
| Cost/income, % | 48 | 52 | -4.1 | 52 |
| (Banking and Investment | | | | |
| Services) | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Average personnel | 12,339 | 12,128 | 1.7 | 12,148 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | 30 Sep | 30 Sep | Change* | 30 Dec |
| | 2007 | 2006 | | 2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total assets, EUR billion | 64.9 | 59.9 | 8.4 | 59.5 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Capital adequacy ** | 14.1 | 14.0 | 0.1 | 14.3 |
--------------------------------------------------------------------------------
| Tier 1 ratio, %** | 12.7 | 12.4 | 0.2 | 12.7 |
--------------------------------------------------------------------------------
| Ratio of own funds to | 1.54 | 1.53 | 0.01 | 1.56 |
| minimum amount of own | | | | |
| funds*** | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-performing loan losses | 0.4 | 0.4 | 0.0 | 0.3 |
| within loan and guarantee | | | | |
| portfolio, % | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Market share, % | | | | |
--------------------------------------------------------------------------------
| Of total loans | 31.4 | 31.3 | 0.1 | 31.1 |
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| Of total deposits | 33.3 | 33.1 | 0.2 | 32.7 |
--------------------------------------------------------------------------------
| Of capital invested in | 21.7 | 21.5 | 0.2 | 21.8 |
| mutual funds | | | | |
--------------------------------------------------------------------------------
| Of insurance savings through | 19.8 | 18.7 | 1.1 | 19.1 |
| life and pension policies | | | | |
--------------------------------------------------------------------------------
| | Q1-3/2007 | Q1-3/2006 | Change* | 2006 |
--------------------------------------------------------------------------------
| Of premiums written in life | 29.2 | 28.0 | 1.2 | 28.4 |
| 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 Credit Institutions Act.
*** Pursuant to the Act on the Supervision of Financial and Insurance
Conglomerates.
OP Bank Group changed name to OP-Pohjola Group
The Central Cooperative's Supervisory Board decided in its September meeting on
a name change from OP Bank Group to OP-Pohjola Group. The new name combines two
traditional and strong Finnish brands. The name conveys the fact that the
financial services group provides extensive services, combining banking,
investment and insurance operations. The name change shows how the business and
structure of the financial services group have changed into a single financial
services group two years after the Pohjola acquisition. OP-Pohjola Group's
listed central bank, OKO Bank plc, also decided to change its name to Pohjola
Bank plc. OKO Bank's Extraordinary General Meeting decided on the name change in
October but the new name will not be adopted until 1 March 2008. The names of
individual Group member banks will remain unchanged.
Operating environment
The home loan crisis that broke out at the end of the summer has added
uncertainty to the global economy. There are fears that indebted US households
may reduce their spending, which would slow down economic growth in the country.
However, the euro zone is expected to continue its economic growth somewhat at
the previous year's rate. Russia and Asia are still showing rapid growth rates.
The home loan crisis has been reflected in a lending squeeze in international
financial markets, widening margins and large falls in earnings reported by some
financial institutions. Central banks have increased money-market liquidity in
an effort to reduce the risk of drifting into a loan slump and the Federal
Reserve has cut its benchmark interest rate.
Finland has continued to enjoy an economic upward trend, with business
conditions in manufacturing, construction and services companies showing
extraordinary buoyancy. Consequentyly, business confidence is expected to remain
high throughout the rest of the year and consumer confidence is still strong.
Improved employment figures and higher income have supported household spending.
Higher interest rates have reduced demand for loans only a little, because an
increase in customer wealth has compensated for higher rates of interest on
loans. It is projected that growth in the home mortgage portfolio will continue
to slow down slightly while home prices will level off.
Mounting uncertainty in the equity market was reflected in a marked fall in
share prices at the end of the summer. However, prices began to rally during the
autumn although they occasionally underwent drastic swings. This mounting
uncertainty has also affected mutual funds, with bond funds seeing a set of
redemptions in particular.
Premiums written within Non-life Insurance in January-September grew at the same
rate as a year ago. The number of serious road traffic accidents increased
considerably and the number of reported fires were higher than usual.
OP-Pohjola Group's earnings and total assets
January-September
OP-Pohjola Group earnings before tax grew by 27% to EUR 757 million (598*), an
all-time high reported for the same period. Income increased by 16% and expenses
by less than 5%, with the growth differential between income and expenses at
11%. Profitability also improved year on year. Annualised return on equity rose
to 14.0% from 12.3% a year ago and return on equity at fair value improved by
1.0 percentage point to 12.2%. Return on equity at fair value increased by 1.0
percentage point to 12.2%.
Earnings growth rested on a strong increase in income. Net interest income
increased by 20% to EUR 771 (642) and other income by 13% to EUR 895 (795). Net
income from Non-life Insurance rose by 26% to EUR 306 million (243) and that
from Life Insurance by 46% to EUR 117 million (81). 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 826 million (789), up by 4.7% on a year earlier, a
major part of this growth being due 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 (7) million recognised for the
period. Bonuses paid to owner-members and OP bonus customers rose by 75% to EUR
62 million (35). Impairment losses on receivables increased to EUR 10 million
(4), but were still very low.
Every business segment within OP-Pohjola Group showed a year-on-year improvement
in earnings. Earnings before tax reported by Banking and Investment Services
improved by 15% to EUR 545 million (474), thanks to robust growth in net
interest income. Earnings from Non-life Insurance totalled EUR 125 million (58),
up 114% on the previous year. The Non-life Insurance combined ratio** stood at
96.0% (98.8) and operating combined ratio** at 93.0% (95.4). Life Insurance
posted earnings of EUR 89 million (46) before tax. 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 44% to EUR
126 (87). Within Life Insurance, net income from available-for-sale financial
assets rose by 17% to EUR 119 million (101).
Comparatives for 2006 are given in brackets. For income-statement and other
aggregated figures, January-September 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, the then OP Bank Group announced
that it would seek income and cost synergies of about EUR 91 million by the end
of 2010. Results achieved thus far support earlier estimates of the synergy
benefits. It is predicted that decisions made by the end of the reporting period
will bring cost savings of over EUR 40 million in 2007 and more than EUR 50
million in 2008. Annualised revenue synergies achieved to date are estimated to
amount to 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.
Earnings analysis
--------------------------------------------------------------------------------
| EUR million | Q1-3/ | Q1-3/ | Change, | Change, | 2006 |
| | 2007 | 2006 | EUR | % | |
| | | | mill. | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings before tax | 757 | 598 | 159 | 26.6 | 800 |
--------------------------------------------------------------------------------
| Gross change in fair | -95 | -50 | -44 | 88.7 | -45 |
| value reserve | | | | | |
--------------------------------------------------------------------------------
| Earnings before tax at | 663 | 548 | 115 | 20.9 | 754 |
| fair value | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Return on equity, % | 14.0 | 12.3 | | 1.7* | 12.1 |
--------------------------------------------------------------------------------
| Return on equity at fair | 12.2 | 11.3 | | 1.0* | 11.4 |
| value, % | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Income | | | | | |
--------------------------------------------------------------------------------
| Net interest income | 771 | 642 | 129 | 20.2 | 883 |
--------------------------------------------------------------------------------
| Net income from Non-life | 306 | 243 | 63 | 25.9 | 328 |
| Insurance | | | | | |
--------------------------------------------------------------------------------
| Net income from Life | 117 | 81 | 37 | 45.7 | 110 |
| Insurance | | | | | |
--------------------------------------------------------------------------------
| Net commissions and fees | 319 | 295 | 24 | 8.1 | 396 |
--------------------------------------------------------------------------------
| Net trading and | 72 | 110 | -38 | -34.2 | 144 |
| investment income | | | | | |
--------------------------------------------------------------------------------
| Other operating income | 78 | 68 | 10 | 14.7 | 92 |
--------------------------------------------------------------------------------
| Share of associates' | 2 | -1 | 4 | | 2 |
| profits/losses | | | | | |
--------------------------------------------------------------------------------
| Other income, total | 895 | 795 | 100 | 12.5 | 1 073 |
--------------------------------------------------------------------------------
| Total income | 1,666 | 1,437 | 229 | 15.9 | 1,956 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Expenses | | | | | |
--------------------------------------------------------------------------------
| Personnel costs | 407 | 378 | 29 | 7.6 | 527 |
--------------------------------------------------------------------------------
| Other administrative | 211 | 210 | 1 | 0.2 | 290 |
| expenses | | | | | |
--------------------------------------------------------------------------------
| Other operating expenses | 208 | 200 | 8 | 3.9 | 267 |
--------------------------------------------------------------------------------
| Total expenses | 826 | 789 | 37 | 4.7 | 1,083 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Impairment losses on | 10 | 4 | 5 | | 9 |
| receivables | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Returns to owner-members | | | | | |
| and | | | | | |
| OP bonus customers | | | | | |
--------------------------------------------------------------------------------
| Bonuses | 62 | 35 | 27 | 75.5 | 48 |
--------------------------------------------------------------------------------
| Interest on ordinary and | 18 | 14 | 3 | 23.8 | 21 |
| supplementary cooperative | | | | | |
| capital | | | | | |
--------------------------------------------------------------------------------
| Total returns | 80 | 50 | 30 | 60.5 | 69 |
--------------------------------------------------------------------------------
* Percentage points.
On 30 September, OP-Pohjola Group's total assets stood at EUR 64.9 billion
(59.5), up by 9.0% from those on 31 December 2006. During the period,
receivables from customers increased by 10% to EUR 43.6 billion (39.6), deposits
by 9.5% to EUR 28.2 billion (25.8) and debt securities issued to the public by
9.9% to EUR 14.8 billion. Equity capital increased by 8.5% to EUR 5.6 billion
(5.1). The fair value reserve under equity, adjusted for deferred tax
liabilities, totalled EUR 73 million (144).
On 30 September, the cooperative capital investments and supplementary
cooperative capital investments of the member cooperative banks' owner-members
totalled EUR 669 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 for 2006.
July-September
Earnings before tax for the third quarter were €234 million, an increase of EUR
25 million on the year-ago figure. This improvement was the result of an
increase in net interest income and non-life insurance operations. The increase
in Non-Life Insurance operations is largely explained by improvements in
investment income and the combined ratio. Other income did not include any
non-recurring capital gains, while a year ago they totalled EUR 15 million.
Reported expenses grew by EUR 7.8 million. Year on year, third-quarter personnel
costs increased by 6.1%, accounting for EUR 7.0 million of growth in total
expenses. Returns to owner-members grew by EUR 7.3 million. Impairment losses on
receivables came to EUR 3.9 million, or EUR 1.0 million higher than a year
earlier. The fair value reserve (gross) shrank by EUR 51 million, while a year
ago it increased by EUR 130 million.
Despite the fact that expenses tend to be smaller in the third quarter, the
quarter's earnings before tax were EUR 44 million smaller than in the second
quarter.
Third-quarter earnings analysis
--------------------------------------------------------------------------------
| EUR million | Q3/ | Q3/ | Change, | Q2/ | Change, |
| | 2007 | 200 | % | 200 | % |
| | | 6 | | 7 | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings before tax | 234 | 209 | 11.9 | 278 | -15.7 |
--------------------------------------------------------------------------------
| Gross change in fair | -51 | 130 | | -63 | -18.4 |
| value reserve | | | | | |
--------------------------------------------------------------------------------
| Earnings before tax at | 183 | 339 | -46.0 | 215 | -14.9 |
| fair value | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Return on equity, % | 12.6 | 14.0 | -1.4* | 15.1 | -2.4* |
--------------------------------------------------------------------------------
| Return on equity at fair | 10.0 | 22.0 | -12.0* | 11.4 | -1.4* |
| value, % | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Income | | | | | |
--------------------------------------------------------------------------------
| Net interest income | 263 | 226 | 16.2 | 264 | -0.5 |
--------------------------------------------------------------------------------
| Net income from Non-life | 100 | 67 | 48.4 | 112 | -11.1 |
| Insurance | | | | | |
--------------------------------------------------------------------------------
| Net income from Life | 20 | 20 | -2.0 | 50 | -59.5 |
| Insurance | | | | | |
--------------------------------------------------------------------------------
| Net commissions and fees | 96 | 92 | 3.8 | 102 | -6.3 |
--------------------------------------------------------------------------------
| Net trading and | 6 | 39 | -83.7 | 38 | -83.2 |
| investment | | | | | |
| income | | | | | |
--------------------------------------------------------------------------------
| Other operating income | 24 | 24 | 1.5 | 33 | -27.2 |
--------------------------------------------------------------------------------
| Share of associates' | 1 | 0 | | 0 | |
| profits/losses | | | | | |
--------------------------------------------------------------------------------
| Other income, total | 247 | 243 | 1.8 | 335 | -26.2 |
--------------------------------------------------------------------------------
| Total income | 510 | 469 | 8.7 | 599 | -14.9 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Expenses | | | | | |
--------------------------------------------------------------------------------
| Personnel costs | 122 | 115 | 6.1 | 145 | -15.6 |
--------------------------------------------------------------------------------
| Other administrative | 64 | 62 | 3.5 | 76 | -15.3 |
| expenses | | | | | |
--------------------------------------------------------------------------------
| Other operating expenses | 61 | 62 | -2.4 | 70 | -13.2 |
--------------------------------------------------------------------------------
| Total expenses | 247 | 239 | 3.2 | 290 | -15.0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Impairment losses on | 4 | 3 | 35.7 | 5 | -19.9 |
| receivables | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Returns to owner-members | | | | | |
| and | | | | | |
| OP bonus customers | | | | | |
--------------------------------------------------------------------------------
| Bonuses | 22 | 12 | 77.0 | 21 | 2.5 |
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| Interest on ordinary and | 6 | 7 | -17.9 | 7 | -22.3 |
| supplementary cooperative | | | | | |
| capital | | | | | |
--------------------------------------------------------------------------------
| Total returns | 27 | 19 | 43.2 | 28 | -3.8 |
--------------------------------------------------------------------------------
* Percentage points.
Capital adequacy and risk exposure
Two sets of capital adequacy regulations
Two sets of capital adequacy ratios are calculated for OP-Pohjola Group.
OP-Pohjola 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-Pohjola 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 the amalgamation
of cooperative banks' capital adequacy.
As a result of the Pohjola acquisition, OP-Pohjola 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 both capital adequacy requirements, OP-Pohjola Group's risk-bearing
capacity is strong.
Capital adequacy of the amalgamation of cooperative banks
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-Pohjola 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 in 2008.
On 30 September, OP-Pohjola Group's capital adequacy ratio under the Credit
Institutions Act stood at 14.1% (14.3) and Tier 1 capital adequacy ratio at
12.7% (12.7).
September-end Tier 1 own funds totalled EUR 4,719 million (4,271). Net profit
for the period, less estimated profit distribution, is included in Tier 1 own
funds. The Arbitral Tribunal's decision on the redemption price of Pohjola Group
plc shares increased OP-Pohjola Group's intangible assets by EUR 16 million.
On 30 September, the ratio of hybrid capital to Tier 1 own funds was 4.7% (5.3).
Tier 1 own funds do not include equity capital growth resulting from the
IFRS-compliant measurement of pension liabilities and the assets covering them,
as well as from the measurement at fair value of investment property.
Tier 2 own funds rose by 0.9% to EUR 893 (886). September-end Tier 2 funds
included EUR 73 million in unrealised appreciation recognised in the fair value
reserve. At the end of 2006, the corresponding figure was EUR 144 million.
On 30 September, investments in insurance companies, deducted from the total
Tier 1 and Tier 2 own funds, came to EUR 351 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-Pohjola 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 11%, amounting to EUR 37.3 billion
(33.7) on 30 September.
During the third quarter, OP-Pohjola Group's Tier 1 own funds increased by 3.9%
and total own funds by 1.7%. Risk-weighted commitments grew by 3.0%. Tier 1
capital adequacy ratio rose by 0.1 percentage points.
Amalgamation of cooperative banks' own funds and capital adequacy
--------------------------------------------------------------------------------
| EUR million | 30 Sep | 30 Sep | Change, | 31 Dec |
| | 2007 | 2006 | % | 2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Own funds | | | | |
--------------------------------------------------------------------------------
| Equity capital | 5,557 | 4,950 | 12 | 5,124 |
--------------------------------------------------------------------------------
| Cooperative capital, not | 553 | 611 | -9 | 595 |
| included in equity capital | | | | |
--------------------------------------------------------------------------------
| Hybrid capital | 224 | 224 | 0 | 224 |
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| Intangible assets | -1,072 | -1,078 | -1 | -1,064 |
--------------------------------------------------------------------------------
| Fair value reserve and other | -73 | -139 | -48 | -144 |
| reserves | | | | |
--------------------------------------------------------------------------------
| Planned profit distribution | -47 | -40 | 17 | -75 |
--------------------------------------------------------------------------------
| Other items (incl. excess | -423 | -369 | 15 | -388 |
| funding of pension liability | | | | |
| and measurement of | | | | |
| investment property at fair | | | | |
| value) | | | | |
--------------------------------------------------------------------------------
| Tier 1 own funds | 4,719 | 4,158 | 13 | 4,271 |
--------------------------------------------------------------------------------
| Fair value reserve and other | 73 | 139 | -48 | 144 |
| reserves | | | | |
--------------------------------------------------------------------------------
| Subordinated liabilities | 299 | 200 | 49 | 210 |
| included in upper Tier 2 | | | | |
| funds | | | | |
--------------------------------------------------------------------------------
| Subordinated liabilities | 522 | 524 | 0 | 532 |
| included in lower Tier 2 | | | | |
| funds | | | | |
--------------------------------------------------------------------------------
| Tier 2 own funds | 893 | 864 | 3 | 886 |
--------------------------------------------------------------------------------
| Investments in insurance | -351 | -333 | 5 | -339 |
| companies | | | | |
--------------------------------------------------------------------------------
| Other deduction items | -4 | -9 | -53 | -10 |
--------------------------------------------------------------------------------
| Deduction items from combined | -355 | -341 | 4 | -349 |
| Tier 1 and Tier 2 | | | | |
| own funds | | | | |
--------------------------------------------------------------------------------
| Total own funds | 5,257 | 4,680 | 12 | 4,808 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Balance sheet risk grouping in | | | | |
| capital adequacy calculation | | | | |
| (before risk-weighting factors) | | | | |
--------------------------------------------------------------------------------
| Risk group I (risk weight 0%) | 11,112 | 11,585 | -4 | 10,560 |
--------------------------------------------------------------------------------
| Risk group V (risk weight 10%) | 2 | 4 | -43 | 3 |
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| Risk group II (risk weight 20%) | 965 | 674 | 43 | 586 |
--------------------------------------------------------------------------------
| Risk group III (risk weight 50%) | 21,530 | 19,003 | 13 | 19,629 |
--------------------------------------------------------------------------------
| Risk group IV (risk weight 100%) | 20,685 | 18,843 | 10 | 18,872 |
--------------------------------------------------------------------------------
| Deduction items from own funds | 355 | 341 | 4 | 349 |
--------------------------------------------------------------------------------
| Other items (e.g. insurance | 10,250 | 9,428 | 9 | 9,535 |
| assets) | | | | |
--------------------------------------------------------------------------------
| Balance sheet total | 64,900 | 59,878 | 8 | 59,535 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Risk-weighted receivables, | | | | |
| investments and | | | | |
| off-balance-sheet commitments | | | | |
--------------------------------------------------------------------------------
| Receivables and investments | 31,643 | 28,480 | 11 | 28,804 |
--------------------------------------------------------------------------------
| Off-balance-sheet items | 4,243 | 3,769 | 13 | 3,904 |
--------------------------------------------------------------------------------
| Market risk | 1,395 | 1,206 | 16 | 1,010 |
--------------------------------------------------------------------------------
| Total risk-weighted receivables, | 37,280 | 33,454 | 11 | 33,718 |
| investments and | | | | |
| off-balance-sheet commitments | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Capital adequacy ratio, % | 14.1 | 14.0 | 0.1* | 14.3 |
--------------------------------------------------------------------------------
| Ratio of Tier 1 to total | 12.7 | 12.4 | 0.2* | 12.7 |
| risk-weighted assets, % (Tier 1 | | | | |
| ratio) | | | | |
--------------------------------------------------------------------------------
* Percentage points.
Capital adequacy under the Act on the Supervision of Financial and Insurance
Conglomerates
OP-Pohjola 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 September, OP-Pohjola 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 1,785 million (1,682). The
conglomerate's capital adequacy ratio improved by 6.1% from the end of 2006 and
by 15% in the year to September. At the end of June, capital adequacy totalled
EUR 1,838 million. On 31 September, the capital adequacy ratio stood at 1.54,
which is slightly less than on 31 December 2006.
Capital adequacy under the Act on the Supervision of Financial and Insurance
--------------------------------------------------------------------------------
| EUR million | 30 Sep | 30 Sep | Change, | 31 Dec |
| | 2007 | 2006 | % | 2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| OP-Pohjola Group's equity | 5,557 | 4,950 | 12.3 | 5,124 |
| capital | | | | |
--------------------------------------------------------------------------------
| Business-segment-specific | 1,597 | 1,559 | 2.5 | 1,577 |
| items | | | | |
--------------------------------------------------------------------------------
| Goodwill and intangible | -1,127 | -1,150 | -2.0 | -1,133 |
| assets | | | | |
--------------------------------------------------------------------------------
| Items included in equity | -934 | -867 | 7.7 | -883 |
| capital and | | | | |
| business-segment-specific | | | | |
| items, but not included in | | | | |
| the conglomerate's own funds | | | | |
--------------------------------------------------------------------------------
| Conglomerate's own funds, | 5,093 | 4,492 | 13.4 | 4,685 |
| total | | | | |
--------------------------------------------------------------------------------
| Minimum amount of the | 3,307 | 2,938 | 12.6 | 3,002 |
| conglomerate's own funds (= | | | | |
| own funds requirement) | | | | |
--------------------------------------------------------------------------------
| Conglomerate's capital | 1,785 | 1,554 | 14.9 | 1,682 |
| adequacy | | | | |
--------------------------------------------------------------------------------
| Conglomerate's capital | 1.54 | 1.53 | 0.01* | 1.56 |
| adequacy ratio (own | | | | |
| funds/minimum of own funds) | | | | |
--------------------------------------------------------------------------------
* Change in ratio.
Effects of market disruption on OP-Pohjola Group.
The US sub-prime mortgages caused a serious market disruption in the third
quarter, quickly affecting international financial markets, where credit risk
margins for debt instruments rose sharply. This growing uncertainty also
affected bank funding, which was reflected eg in an exceptional rise in
short-term Euribor rates in relation to government bonds.
Before granting home mortgage, OP-Pohjola Group's policy is to make a careful
assessment on the customer's ability to pay back the loan, far removed from the
practice in the US. OP-Pohjola Group's home mortgage portfolio does not include
credit with such risks as the US sub-prime loans.
OP-Pohjola Group has no direct sub-prime investments and the Group's indirect
risk in the sub-prime market is very limited, and the effect of the value change
of these investments is less than 0.01 units on capital adequacy as defined in
the Act on Supervision of Financial and Insurance Conglomerates. On 30
September, this capital adequacy stood at 1.54.
As credit risk margins have generally widened, wholesale funding costs have also
increased throughout the banking sector. The greater uncertainty in financial
markets has not had any effect on the availability of the Group's central bank's
(OKO Bank) short-term or long-term funding, and OKO Bank's and OP-Pohjola
Group's liquidity position has remained strong. OP-Pohjola Group and its central
bank have high credit ratings and a good liquidity position and a distributed
funding base with an emphasis on deposits, which is why the market disruption
has no major effect on OP-Pohjola Group's funding expenses.
OP-Pohjola Group's risk exposure
OP-Pohjola Group's risk position is stable.
OP-Pohjola Group's credit risk status is stable and credit risks have remained
low. On 30 September, non-performing loans were up by 12 per cent year on year.
The increase in non-performing loan losses since September 2006 corresponded to
growth in the loan and guarantee portfolio. The ratio of non-performing and
zero-interest loans to the loan and guarantee portfolio remained low at 0.4%.
Growth in OP-Pohjola 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-Pohjola Group launched a new funding
channel in June when it issued its first covered bond for international
investors. The Group's liquidity reserve was well above the required minimum on
30 September, enabling some funding flexibility should the market disruption
take longer. The Group's interest risk fell somewhat in the reporting period
and investment risks have not changed significantly since the end of last
December.
Credit ratings
Of the international credit rating agencies, Fitch Ratings provides a rating for
both OP-Pohjola Group and its central bank, OKO Bank. OP-Pohjola Group's
financial position also has a considerable impact on credit ratings issued for
OKO Bank alone.
Credit ratings at the end of September 2007 were as follows:
--------------------------------------------------------------------------------
| Rating agency | Short-term debt | Long-term debt |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Fitch Rating | F1+ | AA- |
| (OP-Pohjola Group and OKO | | |
| Bank plc) | | |
--------------------------------------------------------------------------------
| Standard & Poor's (OKO | A-1+ | AA- |
| Bank) | | |
--------------------------------------------------------------------------------
| Moody's (OKO Bank) | P-1 | Aa1 |
--------------------------------------------------------------------------------
All of the credit rating agencies have confirmed a stable rating outlook for OKO
Bank.
OP-Pohjola Group's long-term financial targets
OP-Pohjola 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-Pohjola Group
outperformed all its long-term financial performance targets.
Long-term performance indicators
--------------------------------------------------------------------------------
| | Indicator | Target | 30 Sep | 30 Sep | 30 Dec |
| | | | 2007 | 2006 | 2006 |
--------------------------------------------------------------------------------
| Risk-bearing | Non-current | Minimum of | 1.14 | 1.08 | 1.10 |
| capacity | own | 1.0 | | | |
| | funds/econo | | | | |
| | mic capital | | | | |
--------------------------------------------------------------------------------
| | Indicator | Target | Q1-3/2007 | Q1-3/2006 | 2006 |
--------------------------------------------------------------------------------
| Profitabilit | Return on | Minimum of | 22.1% | 20.1% | 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 | 48% | 52% | 52% |
| (Banking and | | 50% | | | |
| Investment | | | | | |
| Services) | | | | | |
--------------------------------------------------------------------------------
Changes in OP-Pohjola Group's structure
The OP-Pohjola Group's consolidated financial statements include 229 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.
Miettilän Osuuspankki merged with Simpeleen Osuuspankki and Ruhtinansalmen
Osuuspankki with Suomussalmen Osuuspankki in September.
Owner-members and customers
The cooperative member banks had 1,191,000 owner-members at the end of
September, or 37,000 more than a year earlier. The number of owner-members
increased by more than 28,000 during the reporting period, and Group member
banks and Helsinki OP Bank plc, which operates in the Greater Helsinki area, had
a total of 994,000 OP bonus customers at the end of September.
Loyal customer bonuses earned by OP bonus customers and provided by Group member
banks and Helsinki OP Bank plc totalled EUR 62 million, up by 75% on a year
earlier, this growth stemming particularly from the 50% increase on 1 February
2007 in the value of bonuses. . Bonuses earned by owner-members are stated in
OP-Pohjola Group's income statement under 'Returns to owner-members'. OP bonus
customers used a total of EUR 36 million (26) in bonuses for banking services
during the first three quarters and using bonuses to pay Pohjola's non-life
insurance products has also been possible since 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 entire OP-Pohjola Group had 4,082,000 customers in Finland at the end of
September, 39 000 more than a year earlier. In addition, OP-Pohjola Group has an
approximate total of 200,000 non-life insurance customers in the Baltic
countries. In the year to September, the number of joint banking and non-life
insurance customers increased by 87,000 to 880,000 as a result of cross-selling.
OP-Pohjola Group aims at increasing the number of joint customers to one million
by the end of 2008.
The number of Pohjola's loyal customer households increased by 31,500 in the
year to September and by 24,300 from the beginning of 2007, with the number of
loyal customer households totalling 392,000 at the end of September.
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 Pohjola Group plc shares at EUR
14.35 per share. The per-share redemption price set by the Tribunal is EUR 1.00
higher than the EUR 13.35 bid by OKO Bank. By the end of September 2007, OKO
agreed with some 1,200 Pohjola Group plc's (Pohjola) former minority
shareholders that the redemption price of EUR 14.35, based on the arbitral
award, would remain final. These shareholders represent around 11.8 million
shares, accounting for roughly 77.5% of all of the disputed Pohjola shares held
by minority shareholders. In other respects, the case of the redemption price of
Pohjola shares is still pending at the Helsinki District Court, the dispute over
setting the redemption price involving about 3.5 million Pohjola shares.
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.
Personnel and incentive system
On 30 September, OP-Pohjola Group had a staff of 12,433, or 294 more than on 31
December 2006. About 94% of OP-Pohjola Group's personnel are members in the
Group's Personnel Fund. A management incentive scheme is also used alongside OP
Personnel Fund.
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-Pohjola Group. Acting as a development and service
centre for OP-Pohjola Group and as a strategic owner institution, the Central
Cooperative plays a pivotal role in developing and steering the 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.
The Supervisory Board issued a recommendation in June on good corporate
governance for Group member banks and redefined OP-Pohjola Group's business
strategy to enable it to engage in business operations in neighbouring regions
too.
Based on competitive tendering, OP Bank Group Central Cooperative's Annual
Cooperative Meeting re-elected KPMG Oy Ab, a firm of authorised public
accountants, the auditor of OP Bank Group Central Cooperative and OP-Pohjola
Group for the financial year 2007.
Capital expenditure
The Central Cooperative, together with its subsidiaries, is responsible for
developing OP-Pohjola 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 of almost EUR 21 million
were capitalised in OP Bank Group Central Cooperative Consolidated's balance
sheet, of which EUR 14 million were allocated to banking and investment
operations, EUR 6 million to non-life insurance operations and EUR 1 million 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 233 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-Pohjola Group's 229 member banks as well as OKO
Bank, Helsinki OP Bank Plc, OP Mortgage Bank and OP-Kotipankki Oyj. OP-Pohjola
Group's insurance companies do not come within the scope of joint
responsibility.
Deposit banks belonging to OP-Pohjola 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-Pohjola Group is also considered a single entity
for purposes of compensation protection.
Outlook towards the year-end
OP-Pohjola 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-Pohjola 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-Pohjola Group's business segments are Banking and Investment Services,
Non-life Insurance and Life Insurance. Non-segment operations are presented in
'Other Operations'. OP-Pohjola 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, Pohjola 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-Pohjola Group's retail
banks.
The Non-life Insurance segment encompasses the operations of OP-Pohjola 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-Pohjola 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-September 2007
--------------------------------------------------------------------------------
| € million | Income | Expenses | Impairment | Other | Earnings |
| | | | losses on | items | before |
| | | | receivables | | tax |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Banking and | 1,204 | 576 | 10 | -74 | 545 |
| Investment | | | | | |
| Services | | | | | |
--------------------------------------------------------------------------------
| Non-life | 342 | 217 | 0 | 0 | 125 |
| Insurance | | | | | |
--------------------------------------------------------------------------------
| Life Insurance | 132 | 43 | 0 | 0 | 89 |
--------------------------------------------------------------------------------
| Other operations | 235 | 237 | 0 | 0 | -2 |
--------------------------------------------------------------------------------
| Eliminations | -242 | -242 | 0 | 0 | 0 |
--------------------------------------------------------------------------------
| Total | 1,672 | 831 | 10 | -74 | 757 |
--------------------------------------------------------------------------------
Banking and investment services
The operating fundamentals for Banking and Investment Services remained good
throughout the reporting period. In nearly all product areas, OP-Pohjola 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 September, OP-Pohjola Group's loan portfolio stood at EUR 43.6 billion
(39.6), up by 10% from year-end 2006 and 13% in the year to September, and the
guarantee portfolio totalled EUR 2.4 billion (2.2). In January-September 2006,
loan portfolio increased by 11%, or at a slightly higher rate than in the
reporting period. The loan portfolio's market share rose by 0.1 percentage
points to 31.4% in the year to September and by 0.3 percentage points during the
reporting period.
The September-end home mortgage portfolio totalled EUR 21.0 billion (18.9). The
portfolio is still growing swiftly, albeit at a slightly slower rate than a year
ago. During the report period, home mortgages increased by 11% (12) and in the
year to September by 14% (16). The September-end market share of home mortgages
was 34.7%, or 0.3 percentage points higher than a year earlier and 0.3
percentage points higher than at the end of 2006. The average margin on new home
mortgages fell further. The average margin on new variable rate home mortgages
was about 0.1 percentage points lower than a year ago and margins began to grow
smaller at a slower rate in the third quarter. About one in four 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 0.5% (0.6).
On 30 September, the consumer credit portfolio amounted to EUR 3.3 billion
(3.0), showing an increase of 8.3% during the period and 9.3% in the year to
September.
On 30 September, OP-Pohjola Group customers had 1.5 million (1.4) international
OP-Visa and OP-MasterCard cards. May saw the beginning of cooperation between
OP-Pohjola Group and K-Group in the integration of both Groups' cards. By the
end of September, the number of cards combining K-Group's Plussa with OP-Visa or
OP-Visa Electron cards totalled 250,000, and in November the 300,000 mark had
been reached. OP-Pohjola Group also provides a credit facility for K-Plussa
MasterCard cards offered by K-Group to its customers.
OP-Pohjola Group's September-end deposits totalled EUR 28.2 billion (25.8), or
9.5% higher than at the end of December 2006. In the year to September, deposits
increased by 11%. This growth stemmed mainly from investment deposits, which
increased by 18% to EUR 12.9 billion (10.9) in the review period. The market
share of deposits stood at 33.3% at the end of September, i.e. 0.2 percentage
points higher than a year earlier and 0.6 percentage points higher than at
year-end 2006.
At the end of September, OP-Pohjola Group's corporate loan portfolio stood at
EUR 10.9 billion (9.7), growing by 12% during the reporting period and 14% in
the year to September, and the guarantee portfolio totalled EUR 2.1 billion
(1.9). The September-end market share of corporate loans was 26.2%, or 0.1
percentage points higher than a year earlier and 0.4 percentage points higher
than at the end of 2006.
Asset Management
Capital invested in OP-Pohjola Group's mutual funds grew by 12% to EUR 14.9
billion (13.3) during the period and by 26% in the year to September. Owing to
the challenging market situation, fund capital fell by 1.1% in the third
quarter. On 30 September, OP-Pohjola Group held a 21.7% market share of the
assets of mutual funds registered in Finland, or 0.2 percentage points higher
than a year earlier and 0.1 percentage points lower than at the end of 2006. Net
subscriptions to the OP-Pohjola Group's mutual funds totalled EUR 1,103 million
(1,374), down 20% on the previous year.
On 30 September, assets managed by OKO Bank's asset management were worth EUR
32.5 billion (31.3), EUR 14.0 billion (12.4) of which was invested in OP-Pohjola
Group's mutual funds. OP-Pohjola Group companies account for EUR 7.0 billion of
assets managed by OKO Bank.
Assets managed in accordance with the OP-Private operating model totalled EUR
2.9 billion. Stockbroking for households totalled 427,000 trades during the
period, or 30% more than a year earlier.
Earnings and risk exposure
Banking and Investment Services recorded earnings of EUR 545 million before tax
, up by 15% on a year earlier. Earnings before tax for the third quarter were
EUR 117 million (166), an increase of 6.9% on the year-ago figure. A 75%
increase in bonuses granted to OP bonus customers, totalling EUR 62 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 17% to EUR 761 million and net commissions and fees by 13%
to EUR 334 million, resulting from higher market rates and business growth.
Personnel costs rose by 12% while other expenses declined by 5%. Reported
impairment losses on receivables totalled EUR 10 million (4). The cost/income
ratio stood at 48% (52).
OP-Pohjola Group's non-performing and zero-interest receivables remained low,
totalling EUR 192 million on 30 September, or 12% more than a year ago, showing
an increase of 51% 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 89 million (91). The ratio of
non-performing and zero-interest receivables to the loan and guarantee portfolio
was 0.4%, The figure increased from 31 December 2006 but was at the same level
as on 30 September 2006.
Banking and Investment Services: key figures
--------------------------------------------------------------------------------
| € million | Q1-3/2007 | Q1-3/2006 | Change, % | 2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net interest income | 761 | 653 | 16.6 | 899 |
--------------------------------------------------------------------------------
| Impairment losses on | 10 | 4 | 0.0 | 9 |
| receivables | | | | |
--------------------------------------------------------------------------------
| Other income | 444 | 437 | 1.5 | 596 |
--------------------------------------------------------------------------------
| Personnel costs | 256 | 229 | 11.5 | 334 |
--------------------------------------------------------------------------------
| Other expenses | 320 | 336 | -4.8 | 446 |
--------------------------------------------------------------------------------
| Returns to owner-members | 74 | 46 | 59.5 | 64 |
--------------------------------------------------------------------------------
| Earnings before tax | 545 | 474 | 15.1 | 643 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| € million | Q1-3/2007 | Q1-3/2006 | Change, % | 2006 |
--------------------------------------------------------------------------------
| Home mortgages drawn down | 5,513 | 5,177 | 6.5 | 6,856 |
--------------------------------------------------------------------------------
| Corporate loans drawn down | 5,069 | 3,785 | 33.9 | 5,098 |
--------------------------------------------------------------------------------
| Net subscriptions to | 1,103 | 1,374 | -19.7 | 2,392 |
| mutual funds | | | | |
--------------------------------------------------------------------------------
| No. of brokered property | 12,467 | 12,337 | 1.1 | 16,031 |
| transactions | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EUR billion | 30 Sep | 30 Sep | Change, % | 30 Dec |
| | 2007 | 2006 | | 2006 |
--------------------------------------------------------------------------------
| Loan portfolio | | | | |
--------------------------------------------------------------------------------
| Home mortgages | 21 | 18 | 14.0 | 19 |
--------------------------------------------------------------------------------
| Other loans to households | 9 | 8 | 8.3 | 9 |
--------------------------------------------------------------------------------
| Corporate loans | 11 | 10 | 14.4 | 10 |
--------------------------------------------------------------------------------
| Other loans | 3 | 2 | 15.7 | 2 |
--------------------------------------------------------------------------------
| Total | 44 | 39 | 13.0 | 40 |
--------------------------------------------------------------------------------
| Guarantee portfolio | 2.4 | 2.2 | 6.6 | 2.2 |
--------------------------------------------------------------------------------
| | | | | |
--------------------------------------------------------------------------------
| Deposits | | | | |
--------------------------------------------------------------------------------
| Total current and payment | | | | |
| transfer | | | | |
--------------------------------------------------------------------------------
| Households | 11 | 11 | -1.6 | 11 |
--------------------------------------------------------------------------------
| Companies | 3 | 3 | 9.6 | 3 |
--------------------------------------------------------------------------------
| Others | 2 | 2 | 10.1 | 2 |
--------------------------------------------------------------------------------
| Total current and payment | 15 | 15 | 2.8 | 15 |
| transfer | | | | |
| | | | | |
--------------------------------------------------------------------------------
| Investment deposits | 13 | 11 | 22.3 | 11 |
--------------------------------------------------------------------------------
| Total deposits | 28 | 25 | 10.9 | 26 |
--------------------------------------------------------------------------------
| | | | | |
--------------------------------------------------------------------------------
| Mutual funds | | | | |
--------------------------------------------------------------------------------
| Equity and hedge funds | 4.6 | 4.2 | 10.0 | 4.4 |
--------------------------------------------------------------------------------
| Balanced funds | 2.2 | 1.7 | 24.7 | 2.1 |
--------------------------------------------------------------------------------
| Bond funds | 3.8 | 2.8 | 34.3 | 3.5 |
--------------------------------------------------------------------------------
| Money market funds | 4.3 | 3.1 | 40.1 | 3.3 |
--------------------------------------------------------------------------------
| Total value of mutual | 14.9 | 11.8 | 25.8 | 13.3 |
| funds | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Market shares, % | 30 Sep | 30 Sep | Change, % | 30 Dec |
| | 2007 | 2006 | points | 2006 |
--------------------------------------------------------------------------------
| Of total loans | 31.4 | 31.3 | 0.1 | 31.1 |
--------------------------------------------------------------------------------
| Of home mortgages | 34.7 | 34.4 | 0.3 | 34.4 |
--------------------------------------------------------------------------------
| Of corporate loans | 26.2 | 26.1 | 0.1 | 25.8 |
--------------------------------------------------------------------------------
| Of total deposits | 33.3 | 33.1 | 0.2 | 32.7 |
--------------------------------------------------------------------------------
| Of capital invested in | 21.7 | 21.5 | 0.2 | 21.8 |
| mutual funds | | | | |
--------------------------------------------------------------------------------
| EUR million | | | | |
--------------------------------------------------------------------------------
| Non-performing and | | | Change. % | |
| zero-interest receivables | | | | |
--------------------------------------------------------------------------------
| Households | 117 | 106 | 10.7 | 78 |
--------------------------------------------------------------------------------
| Non-banking corporate | 67 | 62 | 6.5 | 47 |
| sector | | | | |
--------------------------------------------------------------------------------
| Condominiums and others | 9 | 4 | | 3 |
--------------------------------------------------------------------------------
| Non-performing and | 192 | 172 | 11.9 | 128 |
| zero-interest receivables, | | | | |
| total | | | | |
--------------------------------------------------------------------------------
| Non-performing loan losses | 0.4 | 0.4 | 0.0* | 0.3 |
| within loan and guarantee | | | | |
| portfolio, % | | | | |
--------------------------------------------------------------------------------
* Percentage points
Non-life Insurance
On 30 September, the number of loyal customer households within the Non-life
Insurance segment totalled 392,000, up by 24,300 from 31 December 2006 and by
over 7,000 from 30 September 2007. 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 10% to EUR 639 million (584), generated by
private customers growing by 16% to EUR 266 million (229) and corporate
customers by 3% to EUR 332 million (321). The Group member banks' extensive
service network and the modernised service offering contributed to this higher
insurance premium revenue from private customers. At the end of September,
non-life insurance services were available from 278 outlets, 262 of which also
provided banking services. Premium revenue generated by the Baltic business
increased by 21% to EUR 41 million (34).
In 2006, Pohjola's market share of premiums written in non-life insurance stood
at 26.3%, or 0.3 percentage points greater than a year earlier. Market share
data on premiums written in non-life insurance come in only once a year.
Earnings and risk exposure
The Non-life Insurance segment January-September earnings before tax were EUR
125 million (58) and third-quarter earnings before tax EUR 42 million (11), this
improvement being largely based on higher net investment income. Net investment
income recognised under earnings came to EUR 126 million (87), or EUR 38 million
higher year on year
Insurance premium revenue came to EUR 639 million (584). Claims incurred (excl.
loss adjustment expenses) amounted to EUR 424 million (399), or 6% more than a
year earlier. Stripping out the amortisation on intangible assets arising from
the Pohjola transaction, operating expenses and loss adjustment expenses
totalled EUR 171 million (159), an increase of 8% on the figure a year earlier.
Operating expenses amounted to EUR 137 million (127) and loss adjustment
expenses to EUR 35 million (32). Operating expenses include integration expenses
of EUR 1 million (2) The reporting period includes capital gains of EUR 6
million from the sale of the marine hull insurance portfolio.
The reporting period's operational combined ratio was 93.0% (95.4). Losses
accounted for 65.5% (67.4) and the ratio of operating expenses to loss
adjustment expenses was 27.6% (28.0).
The number of major losses of over EUR 2 million retained for own account during
the reporting period was 5 (9). In non-life insurance in January-September, the
number of major or medium-sized losses (in excess of EUR 0.1 million) was 163
(135), the claims paid for these amounting to EUR 59 million (60). The number of
road accidents was higher than last year. The upward trend in the economy was
also reflected in a sharp increase in claims incurred under traveller's
insurance.
At the end of September, the fair value of the segment's investments was EUR 2.5
billion (2.4). Return on these investments at fair value was 4.6%. Like-for-like
return a year earlier was 4.8% (3.6).
Non-life Insurance: key figures
--------------------------------------------------------------------------------
| EUR million | Q1-3/2007 | Q1-3/2006 | Change, % | 2006 |
--------------------------------------------------------------------------------
| | | | | |
--------------------------------------------------------------------------------
| Insurance premium revenue | 639 | 584 | 9.5 | 788 |
--------------------------------------------------------------------------------
| Insurance claims and | 424 | 399 | 6.3 | 536 |
| benefits | | | | |
--------------------------------------------------------------------------------
| Net investment income | 126 | 87 | 44.4 | 115 |
--------------------------------------------------------------------------------
| Unwinding of discount and | -29 | -26 | 12.1 | -36 |
| other items included in net | | | | |
| income | | | | |
--------------------------------------------------------------------------------
| Net income from Non-life | 312 | 246 | 26.8 | 332 |
| Insurance | | | | |
--------------------------------------------------------------------------------
| Other income | 29 | 19 | 56.6 | 24 |
--------------------------------------------------------------------------------
| Personnel costs | 76 | 76 | 1.0 | 99 |
--------------------------------------------------------------------------------
| Other expenses | 141 | 131 | 7.1 | 179 |
--------------------------------------------------------------------------------
| Earnings before tax | 125 | 58 | 114.0 | 78 |
--------------------------------------------------------------------------------
| Gross change in fair value | -8 | 4 | | 18 |
| reserve | | | | |
--------------------------------------------------------------------------------
| Earnings before tax at fair | 117 | 62 | 88.6 | 96 |
| value | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EUR million | Q1-3/2007 | Q1-3/2006 | Change, % | 2006 |
--------------------------------------------------------------------------------
| Insurance premium revenue | | | | |
--------------------------------------------------------------------------------
| Private customers | 266 | 229 | 16.3 | 308 |
--------------------------------------------------------------------------------
| Corporate customers | 332 | 321 | 3.4 | 434 |
--------------------------------------------------------------------------------
| Baltic States | 41 | 34 | 21.2 | 47 |
--------------------------------------------------------------------------------
| Total insurance premium | 639 | 584 | 9.5 | 788 |
| revenue | | | | |
--------------------------------------------------------------------------------
| | | | | |
--------------------------------------------------------------------------------
| EUR billion | 30 Sep | 30 Sep | Change, % | 30 Dec |
| | 2007 | 2006 | | 2006 |
--------------------------------------------------------------------------------
| | | | | |
--------------------------------------------------------------------------------
| Insurance contract | | | | |
| liabilities | | | | |
--------------------------------------------------------------------------------
| Discounted insurance | 1.3 | 1.2 | 6.0 | 1.2 |
| contract liabilities | | | | |
--------------------------------------------------------------------------------
| Other insurance contract | 0.8 | 0.8 | 2.3 | 0.7 |
| liabilities | | | | |
--------------------------------------------------------------------------------
| Total | 2.1 | 2.0 | 6.2 | 2.0 |
--------------------------------------------------------------------------------
| | | | | |
--------------------------------------------------------------------------------
| Investment portfolio | | | | |
--------------------------------------------------------------------------------
| Bonds | 1.6 | 1.8 | -9.3 | 1.8 |
--------------------------------------------------------------------------------
| Money market instruments | 0.1 | 0.4 | -74.0 | 0.0 |
--------------------------------------------------------------------------------
| Equities | 0.5 | 0.4 | 25.3 | 0.4 |
--------------------------------------------------------------------------------
| Investment property | 0.1 | 0.1 | 39.5 | 0.1 |
--------------------------------------------------------------------------------
| Total | 2.5 | 2.7 | -9.2 | 2.4 |
--------------------------------------------------------------------------------
Life Insurance
During the reporting period, premiums written in the domestic life insurance
market were almost 7% lower than a year ago due to a fall in premiums written in
capital redemption contracts and endowment insurance.
Year on year, OP-Pohjola Group's premiums written in life and pension insurance
decreased by 4.3% to EUR 567 million (592). Although premiums written
contracted, the market share of OP-Pohjola Group in premiums written in life
insurance grew in the reporting period to 29.2%, which is 1.2 percentage points
better than the year-ago figure and 0.9 percentage points higher than the 2006
market share. Premiums written in endowment insurance declined by 13%. Premiums
written in pension insurance grew by 28%, with those written in personal pension
insurance increasing by 9%. Premiums written in unit-linked policies accounted
for 66% of those written in endowment insurance and personal pension insurance.
Life insurance claims paid totalled EUR 384 million (312), of which surrenders
accounted for EUR 157 million (114). Reported pension payout came to EUR 27
million (20).
Return on investments at fair value was 1.8%. The unrealised appreciation of
available-for-sale financial assets after deferred tax deduction amounted to EUR
36 million, or EUR 48 million lower than in late 2006.
Earnings and risk exposure
Earnings before tax from Life Insurance were EUR 89 million (46). Earnings
before tax in the third quarter amounted to EUR 12 million (13). Net income from
investment assets other than those covering unit-linked insurance soared by EUR
24 million to EUR 139 million. In particular, realised capital gains on
available-for-sale shares and participations were higher than a year ago.
Net income posted by Life Insurance came to EUR 121 million (85). Personnel
costs fell to EUR 4.5 million (6.4) and other expenses to EUR 38 million (44),
the latter including EUR 22 million (19) in commissions paid to the sales
network.
On 30 September, total insurance contract liabilities within OP-Pohjola Group's
life insurance operations stood at EUR 6.0 billion (5.7), or 5.9% higher than on
31 December 2006. OP-Pohjola Group's market share of insurance savings through
life and pension insurance policies increased by 0.7 percentage points to 19.8%
since year-end 2006. Unit-linked policies accounted for 40% of insurance
contract liabilities in life and pension insurance (37).
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
--------------------------------------------------------------------------------
| € million | Q1-3/2007 | Q1-3/2006 | Change, % | 2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Premiums written | 567 | 592 | -4.3 | 857 |
--------------------------------------------------------------------------------
| Unit-linked | 330 | 328 | 0.6 | 472 |
--------------------------------------------------------------------------------
| Other | 236 | 264 | -10.4 | 385 |
--------------------------------------------------------------------------------
| Net investment income | 310 | 234 | 32.6 | 463 |
--------------------------------------------------------------------------------
| Unit-linked | 171 | 120 | 43.4 | 267 |
--------------------------------------------------------------------------------
| Other | 139 | 115 | 21.3 | 196 |
--------------------------------------------------------------------------------
| Change in insurance | 368 | 427 | -13.7 | 750 |
| contract liabilities | | | | |
--------------------------------------------------------------------------------
| Unit-linked | 321 | 281 | 14.0 | 555 |
--------------------------------------------------------------------------------
| Other | 48 | 146 | -67.2 | 195 |
--------------------------------------------------------------------------------
| Claims incurred | 384 | 312 | 23.1 | 448 |
--------------------------------------------------------------------------------
| Other items | -4 | -2 | 67.3 | -4 |
--------------------------------------------------------------------------------
| Net income from Life | 121 | 85 | 42.0 | 119 |
| Insurance | | | | |
--------------------------------------------------------------------------------
| Other income | 11 | 11 | -6.4 | 12 |
--------------------------------------------------------------------------------
| Personnel costs | 4 | 6 | -30.4 | 8 |
--------------------------------------------------------------------------------
| Other expenses | 38 | 44 | -13.0 | 54 |
--------------------------------------------------------------------------------
| Earnings before tax | 89 | 46 | 92.0 | 68 |
--------------------------------------------------------------------------------
| | -48 | -4 | 1092 | -5 |
--------------------------------------------------------------------------------
| Earnings before tax at fair | 42 | 42 | -2.0 | 13 |
| value | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EUR million | Q1-3/2007 | Q1-3/2006 | Change, % | 2006 |
--------------------------------------------------------------------------------
| Premiums written | | | | |
--------------------------------------------------------------------------------
| Endowment insurance | 401 | 461 | -13.0 | 635 |
--------------------------------------------------------------------------------
| Pension insurance | 130 | 102 | 27.8 | 185 |
--------------------------------------------------------------------------------
| Term life insurance | 31 | 17 | 88.1 | 22 |
--------------------------------------------------------------------------------
| Other | 4 | 2 | 57.3 | 24 |
--------------------------------------------------------------------------------
| Total premiums written | 566 | 582 | -2.7 | 867 |
--------------------------------------------------------------------------------
| of which unit-linked | 330 | 328 | 0.6 | 472 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Market share of premiums | 29.2 | 28.0 | 1.2* | 28.4 |
| written in life and pension | | | | |
| insurance, % | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EUR billion | 30 Sep | 30 Sep | Change, % | 30 Dec |
| | 2007 | 2006 | | 2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Insurance savings | | | | |
--------------------------------------------------------------------------------
| Endowment insurance | 4.3 | 3.9 | 10.4 | 4.0 |
--------------------------------------------------------------------------------
| Pension insurance | 1.5 | 1.2 | 22.9 | 1.3 |
--------------------------------------------------------------------------------
| Capital redemption | 0.1 | 0.2 | -21.2 | 0.2 |
| contracts | | | | |
--------------------------------------------------------------------------------
| Total insurance savings | 5.9 | 5.3 | 12.3 | 5.6 |
--------------------------------------------------------------------------------
| of which unit-linked | 2.4 | 1.8 | 32.0 | 2.1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Investment portfolio | | | | |
--------------------------------------------------------------------------------
| Fixed-income | 2.7 | 3.1 | -11.0 | 2.9 |
--------------------------------------------------------------------------------
| Equities and equity funds | 0.6 | 0.4 | 48.2 | 0.6 |
--------------------------------------------------------------------------------
| Investment property | 0.5 | 0.3 | 46.5 | 0.3 |
--------------------------------------------------------------------------------
| Alternative investments | 0.2 | 0.2 | 17.4 | 0.2 |
--------------------------------------------------------------------------------
| Total investment portfolio | 4.1 | 4.1 | 1.5 | 4.1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Market share of insurance | 19.8 | 18.7 | 1.1* | 19.1 |
| savings in life and pension | | | | |
| insurance, % | | | | |
--------------------------------------------------------------------------------
* Percentage points.
Other Operations
Other Operations reported a pre-tax loss of EUR 2.2 million (19.6) and, as
stated above, its results were burdened by the EUR 10 million in liquidated
damages related to the Nooa Savings Bank dispute.
--------------------------------------------------------------------------------
| OP-Pohjola Group income statement 1 January - 30 | | |
| September 2007 | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EUR million | Q3/ | Q3/ | Change, % | 2006 |
| | 200 | 200 | | |
| | 7 | 6 | | |
--------------------------------------------------------------------------------
| Interest income | 2,581 | 1,649 | 57 | 2,340 |
--------------------------------------------------------------------------------
| Interest expenses | 1,809 | 1,007 | 80 | 1,457 |
--------------------------------------------------------------------------------
| Net interest income (Note 1) | 771 | 642 | 20 | 883 |
--------------------------------------------------------------------------------
| Impairment losses on receivables | 10 | 4 | | 9 |
| (Note 2) | | | | |
--------------------------------------------------------------------------------
| Net interest income after | 762 | 638 | 19 | 874 |
| impairment losses | | | | |
--------------------------------------------------------------------------------
| Net income from Non-life | 306 | 243 | 26 | 328 |
| Insurance operations | | | | |
| (Note 3) | | | | |
--------------------------------------------------------------------------------
| Net income from Life Insurance | 117 | 81 | 46 | 110 |
| operations (Note 4) | | | | |
--------------------------------------------------------------------------------
| Net commissions and fees (Note | 319 | 295 | 8 | 396 |
| 5) | | | | |
--------------------------------------------------------------------------------
| Net trading income (Note 6) | 0 | 18 | | 32 |
--------------------------------------------------------------------------------
| Net investment income (Note 7) | 73 | 92 | -21 | 112 |
--------------------------------------------------------------------------------
| Other operating income (Note 8) | 78 | 68 | 15 | 92 |
--------------------------------------------------------------------------------
| Personnel costs (Note 9) | 407 | 378 | 8 | 527 |
--------------------------------------------------------------------------------
| Other administrative expenses | 211 | 210 | 0 | 290 |
| (Note 10) | | | | |
--------------------------------------------------------------------------------
| Other operating expenses (Note | 208 | 200 | 4 | 267 |
| 11) | | | | |
--------------------------------------------------------------------------------
| Returns to owner-members (Note | 74 | 46 | 60 | 64 |
| 12) | | | | |
--------------------------------------------------------------------------------
| Share of associates' | 2 | -1 | | 2 |
| profits/losses | | | | |
--------------------------------------------------------------------------------
| Earnings before tax for the | 757 | 598 | 27 | 800 |
| period | | | | |
--------------------------------------------------------------------------------
| Income tax expense | 197 | 151 | 31 | 202 |
--------------------------------------------------------------------------------
| Profit for the period | 560 | 447 | 25 | 598 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Attributable to: | | | | |
--------------------------------------------------------------------------------
| OP-Pohjola Group's owners | 560 | 447 | 25 | 598 |
--------------------------------------------------------------------------------
| Minority interest | 0 | 0 | | 0 |
--------------------------------------------------------------------------------
| Total | 560 | 447 | 25 | 598 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Key figures and ratios | Q3/ | Q3/ | | 2006 |
| | 200 | 200 | | |
| | 7 | 6 | | |
--------------------------------------------------------------------------------
| Return on equity, % | 14.0 | 12.3 | | 12.1 |
--------------------------------------------------------------------------------
| Return on equity at fair value, | 12.2 | 11.3 | | 11.4 |
| % | | | | |
--------------------------------------------------------------------------------
| Return on assets, % | 1.20 | 1.06 | | 1.06 |
--------------------------------------------------------------------------------
| Cost/income ratio, % | 50 | 55 | | 55 |
--------------------------------------------------------------------------------
| Average personnel | 12,339 | 12,128 | | 12,148 |
--------------------------------------------------------------------------------
| Full-time | 11,221 | 10,998 | | 10,988 |
--------------------------------------------------------------------------------
| Part-time | 1,118 | 1,130 | | 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 values, % = | | | |
--------------------------------------------------------------------------------
| 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-Pohjola Group | | | | | |
| quarterly performance | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | 2006 | 2007 | |
--------------------------------------------------------------------------------
| EUR million | Q3 | Q4 | Q1 | Q2 | Q3 |
--------------------------------------------------------------------------------
| Interest income | 617 | 692 | 756 | 882 | 943 |
--------------------------------------------------------------------------------
| Interest expenses | 391 | 450 | 511 | 618 | 680 |
--------------------------------------------------------------------------------
| Net interest income | 226 | 241 | 244 | 264 | 263 |
--------------------------------------------------------------------------------
| Impairment losses on | 3 | 5 | 1 | 5 | 4 |
| receivables | | | | | |
--------------------------------------------------------------------------------
| Net interest income after | 223 | 237 | 244 | 259 | 259 |
| impairment losses | | | | | |
--------------------------------------------------------------------------------
| Net income from Non-life | 67 | 85 | 94 | 112 | 100 |
| Insurance operations | | | | | |
--------------------------------------------------------------------------------
| Net income from Life | 20 | 30 | 48 | 50 | 20 |
| Insurance operations | | | | | |
--------------------------------------------------------------------------------
| Net commissions and fees | 92 | 101 | 120 | 102 | 96 |
--------------------------------------------------------------------------------
| Net trading income | 8 | 14 | 9 | 6 | -16 |
--------------------------------------------------------------------------------
| Net investment income | 31 | 20 | 19 | 32 | 22 |
--------------------------------------------------------------------------------
| Other operating income | 24 | 24 | 21 | 33 | 24 |
--------------------------------------------------------------------------------
| Personnel costs | 115 | 149 | 140 | 145 | 122 |
--------------------------------------------------------------------------------
| Other administrative | 62 | 80 | 71 | 76 | 64 |
| expenses | | | | | |
--------------------------------------------------------------------------------
| Other operating expenses | 62 | 66 | 78 | 70 | 61 |
--------------------------------------------------------------------------------
| Returns to owner-members | 18 | 18 | 23 | 26 | 25 |
--------------------------------------------------------------------------------
| Share of associates' | 0 | 3 | 2 | 0 | 1 |
| profits/losses | | | | | |
--------------------------------------------------------------------------------
| Earnings before tax for | 209 | 202 | 246 | 278 | 234 |
| the period | | | | | |
--------------------------------------------------------------------------------
| Income tax expense | 39 | 51 | 61 | 77 | 59 |
--------------------------------------------------------------------------------
| Profit for the period | 170 | 151 | 185 | 201 | 175 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| OP-Pohjola Group balance sheet | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EUR million | 30 Sep | 30 Sep | Change, | 31 |
| | 2007 | 2006 | % | Dec |
| | | | | 2006 |
--------------------------------------------------------------------------------
| Liquid assets | 1,173 | 1,531 | -23 | 1,041 |
--------------------------------------------------------------------------------
| Receivables from financial | 281 | 355 | -21 | 344 |
| institutions | | | | |
--------------------------------------------------------------------------------
| Financial assets for trading | 4,317 | 5,212 | -17 | 4,816 |
| (Note 13) | | | | |
--------------------------------------------------------------------------------
| Derivative contracts | 559 | 259 | | 319 |
--------------------------------------------------------------------------------
| Receivables from customers | 43,587 | 38,581 | 13 | 39,595 |
--------------------------------------------------------------------------------
| Non-life Insurance assets (Note | 2,853 | 3,122 | -9 | 2,761 |
| 14) | | | | |
--------------------------------------------------------------------------------
| Life Insurance assets (Note 15) | 6,469 | 5,829 | 11 | 6,061 |
--------------------------------------------------------------------------------
| Investment assets (Note 16) | 1,706 | 1,518 | 12 | 1,413 |
--------------------------------------------------------------------------------
| Investments in associates | 30 | 40 | -24 | 35 |
--------------------------------------------------------------------------------
| Intangible assets | 1,244 | 1,275 | -2 | 1,255 |
--------------------------------------------------------------------------------
| Property, plant and equipment | 711 | 697 | 2 | 702 |
| (PPE) | | | | |
--------------------------------------------------------------------------------
| Other assets | 1,905 | 1,346 | 41 | 1,104 |
--------------------------------------------------------------------------------
| Tax assets | 66 | 112 | -41 | 90 |
--------------------------------------------------------------------------------
| Total assets | 64,900 | 59,878 | 8 | 59,535 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Liabilities to financial | 665 | 2,600 | -74 | 1,088 |
| institutions | | | | |
--------------------------------------------------------------------------------
| Financial liabilities for | 6 | 0 | | - |
| trading | | | | |
--------------------------------------------------------------------------------
| Derivative contracts | 579 | 260 | | 340 |
--------------------------------------------------------------------------------
| Liabilities to customers | 30,166 | 27,820 | 8 | 27,715 |
--------------------------------------------------------------------------------
| Non-life Insurance liabilities | 2,403 | 2,305 | 4 | 2,099 |
| (Note 17) | | | | |
--------------------------------------------------------------------------------
| Life Insurance liabilities | 6,020 | 5,389 | 12 | 5,667 |
| (Note 18) | | | | |
--------------------------------------------------------------------------------
| Debt securities issued to the | 14,832 | 12,452 | 19 | 13,500 |
| public (Note 19) | | | | |
--------------------------------------------------------------------------------
| Provisions and other | 2,214 | 1,583 | 40 | 1,508 |
| liabilities | | | | |
--------------------------------------------------------------------------------
| Tax liabilities | 848 | 826 | 3 | 834 |
--------------------------------------------------------------------------------
| Cooperative capital | 553 | 611 | -9 | 597 |
--------------------------------------------------------------------------------
| Subordinated liabilities (Note | 1,058 | 1,082 | -2 | 1,063 |
| 20) | | | | |
--------------------------------------------------------------------------------
| Total liabilities | 59,343 | 54,928 | 8 | 54,411 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity capital | | | | |
--------------------------------------------------------------------------------
| Share of OP-Pohjola Group's | | | | |
| owners | | | | |
--------------------------------------------------------------------------------
| Share and cooperative capital | 360 | 321 | 12 | 344 |
--------------------------------------------------------------------------------
| Share issue account | - | 0 | | - |
--------------------------------------------------------------------------------
| Translation differences | 0 | 0 | | 0 |
--------------------------------------------------------------------------------
| Reserves | 2,306 | 2,289 | 1 | 2,295 |
--------------------------------------------------------------------------------
| Retained earnings | 2,888 | 2,336 | 24 | 2,483 |
--------------------------------------------------------------------------------
| Minority interest | 3 | 4 | -20 | 2 |
--------------------------------------------------------------------------------
| Total equity capital | 5,557 | 4,950 | 12 | 5,124 |
--------------------------------------------------------------------------------
| Total liabilities and equity | 64,900 | 59,878 | 8 | 59,535 |
| capital | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Statement of changes in | | | | | |
| equity capital | | | | | |
--------------------------------------------------------------------------------
| EUR million | Share | Reserve | Retained | Minorit | Total |
| | and | s | earnings | y | equity |
| | cooperat | | | interes | capital |
| | ive | | | t | |
| | capital | | | | |
--------------------------------------------------------------------------------
| Balance at 1 January | 244 | 2,250 | 2,061 | 203 | 4,757 |
| 2006 | | | | | |
--------------------------------------------------------------------------------
| Increase of share | 3 | 1 | - | - | 4 |
| capital | | | | | |
--------------------------------------------------------------------------------
| Transfer of cooperative | 76 | - | - | - | 76 |
| capital to equity | | | | | |
| capital | | | | | |
--------------------------------------------------------------------------------
| Fair value reserve | - | -38 | - | - | -38 |
--------------------------------------------------------------------------------
| Transfer of reserves | - | 79 | -79 | - | - |
--------------------------------------------------------------------------------
| Profit distribution | - | - | -77 | -1 | -78 |
--------------------------------------------------------------------------------
| Profit for the period | - | - | 447 | 0 | 447 |
--------------------------------------------------------------------------------
| Other | -2 | -3 | -16 | -199 | -219 |
--------------------------------------------------------------------------------
| Balance at 30 September | 321 | 2,289 | 2,336 | 4 | 4,950 |
| 2006 | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Balance at 1 January | 344 | 2,295 | 2,483 | 2 | 5,124 |
| 2007 | | | | | |
--------------------------------------------------------------------------------
| Increase of share | - | - | - | - | - |
| capital | | | | | |
--------------------------------------------------------------------------------
| Transfer of cooperative | 17 | - | - | - | 17 |
| capital to equity | | | | | |
| capital | | | | | |
--------------------------------------------------------------------------------
| Fair value reserve | - | -71 | - | - | -71 |
--------------------------------------------------------------------------------
| Transfer of reserves | - | 81 | -81 | - | - |
--------------------------------------------------------------------------------
| Profit distribution | - | - | -76 | - | -76 |
--------------------------------------------------------------------------------
| Profit for the period | - | - | 560 | 0 | 560 |
--------------------------------------------------------------------------------
| Other | -1 | 1 | 3 | 0 | 3 |
--------------------------------------------------------------------------------
| Balance at 30 September | 360 | 2,306 | 2,888 | 3 | 5,557 |
| 2007 | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow statement |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EUR million | Q3/ | Q3/ |
| | 2007 | 2006 |
--------------------------------------------------------------------------------
| Cash flow from operating activities | | |
--------------------------------------------------------------------------------
| Profit for the period | 560 | 447 |
--------------------------------------------------------------------------------
| Adjustments to profit for the period | 616 | 779 |
--------------------------------------------------------------------------------
| Increase (-) or decrease (+) in operating | -5,057 | -6,178 |
| assets | | |
--------------------------------------------------------------------------------
| Receivables from financial institutions | 93 | 364 |
--------------------------------------------------------------------------------
| Financial assets held for trading | 507 | -1,381 |
--------------------------------------------------------------------------------
| Derivative contracts | -49 | -42 |
--------------------------------------------------------------------------------
| Receivables from customers | -4,012 | -3,783 |
--------------------------------------------------------------------------------
| Non-life Insurance assets | -94 | -414 |
--------------------------------------------------------------------------------
| Life Insurance assets | -338 | -434 |
--------------------------------------------------------------------------------
| Investment assets | -339 | 39 |
--------------------------------------------------------------------------------
| Other assets | -825 | -527 |
--------------------------------------------------------------------------------
| Increase (+) or decrease (-) in operating | 2,883 | 2,579 |
| liabilities | | |
--------------------------------------------------------------------------------
| Liabilities to financial institutions | -423 | 575 |
--------------------------------------------------------------------------------
| Financial liabilities held for trading | 6 | -4 |
--------------------------------------------------------------------------------
| Derivative contracts | 50 | 55 |
--------------------------------------------------------------------------------
| Liabilities to customers | 2,451 | 1,345 |
--------------------------------------------------------------------------------
| Non-life Insurance liabilities | 166 | 239 |
--------------------------------------------------------------------------------
| Life Insurance liabilities | -16 | 45 |
--------------------------------------------------------------------------------
| Provisions and other liabilities | 649 | 324 |
--------------------------------------------------------------------------------
| Income tax paid | -122 | -97 |
--------------------------------------------------------------------------------
| Dividends received | 111 | 47 |
--------------------------------------------------------------------------------
| A. Net cash from operating activities | -1,009 | -2,423 |
--------------------------------------------------------------------------------
| Cash flow from investing activities | | |
--------------------------------------------------------------------------------
| Increases in held-to-maturity financial assets | -196 | -149 |
--------------------------------------------------------------------------------
| Decreases in held-to-maturity financial assets | 208 | 211 |
--------------------------------------------------------------------------------
| Acquisition of subsidiaries, net of cash and | - | -312 |
| cash equivalents acquired | | |
--------------------------------------------------------------------------------
| Disposal of subsidiaries, net of cash and cash | 13 | 6 |
| equivalents disposed | | |
--------------------------------------------------------------------------------
| Purchase of PPE and intangible assets | -86 | -63 |
--------------------------------------------------------------------------------
| Proceeds from sale of PPE and intangible assets | 15 | 7 |
--------------------------------------------------------------------------------
| B. Net cash used in investing activities | -46 | -300 |
--------------------------------------------------------------------------------
| Cash flow from financing activities | | |
--------------------------------------------------------------------------------
| Increases in subordinated liabilities | 223 | 499 |
--------------------------------------------------------------------------------
| Decreases in subordinated liabilities | -226 | -289 |
--------------------------------------------------------------------------------
| Increases in debt securities issued to the | 27,011 | 25,308 |
| public | | |
--------------------------------------------------------------------------------
| Decreases in debt securities issued to the | -25,670 | -21,731 |
| public | | |
--------------------------------------------------------------------------------
| Increases in cooperative and share capital | 136 | 120 |
--------------------------------------------------------------------------------
| Decrease in cooperative and share capital | -162 | -150 |
--------------------------------------------------------------------------------
| Dividends paid and interest on cooperative | -97 | -92 |
| capital | | |
--------------------------------------------------------------------------------
| Returns to owner-members | -7 | -9 |
--------------------------------------------------------------------------------
| Monetary increases in other equity items | - | - |
--------------------------------------------------------------------------------
| Other | - | -14 |
--------------------------------------------------------------------------------
| C. Net cash from financing activities | 1,208 | 3,642 |
--------------------------------------------------------------------------------
| Net change in cash and cash equivalents (A+B+C) | 153 | 919 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash and cash equivalents at period-start | 1,098 | 729 |
--------------------------------------------------------------------------------
| Cash and cash equivalents at period-end | 1,251 | 1,648 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Interest received | 2,283 | 1,434 |
--------------------------------------------------------------------------------
| Interest paid | -1,458 | -841 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Adjustments to profit for the period | | |
--------------------------------------------------------------------------------
| Non-cash items and other adjustments | | |
--------------------------------------------------------------------------------
| Impairments on receivables | 14 | 4 |
--------------------------------------------------------------------------------
| Unrealised net earnings in Non-life Insurance | 135 | 169 |
--------------------------------------------------------------------------------
| Unrealised net earnings in Life Insurance | 257 | 399 |
--------------------------------------------------------------------------------
| Change in fair value for trading | 28 | -11 |
--------------------------------------------------------------------------------
| Unrealised net gains on foreign exchange | -43 | -10 |
| operations | | |
--------------------------------------------------------------------------------
| Change in fair value of investment properties | -11 | -18 |
--------------------------------------------------------------------------------
| Amortisation and depreciation | 97 | 95 |
--------------------------------------------------------------------------------
| Share of associates' profits/losses | -2 | 2 |
--------------------------------------------------------------------------------
| Other | 120 | 120 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Items presented outside cash flow from | | |
| operating activities | | |
--------------------------------------------------------------------------------
| Capital gains, share of cash flow from | -3 | -3 |
| investing activities | | |
--------------------------------------------------------------------------------
| Interest on cooperative capital | 18 | 23 |
--------------------------------------------------------------------------------
| Other returns to owner-members | 7 | 9 |
--------------------------------------------------------------------------------
| Total adjustments | 616 | 779 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash and cash equivalents | | |
--------------------------------------------------------------------------------
| Liquid assets | 129 | 131 |
--------------------------------------------------------------------------------
| Receivables from financial institutions payable | 1,123 | 1,517 |
| on demand | | |
--------------------------------------------------------------------------------
| Total | 1,251 | 1,648 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Notes | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Note 1 Net interest income | | | | |
--------------------------------------------------------------------------------
| EUR million | Q3/ | Q3/ | Change, | 2006 |
| | 2007 | 2006 | % | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Interest income | | | | |
--------------------------------------------------------------------------------
| Receivables from financial | 41 | 23 | 76 | 34 |
| institutions | | | | |
--------------------------------------------------------------------------------
| Receivables from customers | 1,505 | 1,036 | 45 | 1,460 |
--------------------------------------------------------------------------------
| Other | 1,035 | 589 | 76 | 846 |
--------------------------------------------------------------------------------
| Total | 2,581 | 1,649 | 57 | 2,340 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Interest expenses | | | | |
--------------------------------------------------------------------------------
| Liabilities to financial | 24 | 54 | -54 | 71 |
| institutions | | | | |
--------------------------------------------------------------------------------
| Liabilities to customers | 462 | 250 | 85 | 361 |
--------------------------------------------------------------------------------
| Other | 1,323 | 703 | 88 | 1,025 |
--------------------------------------------------------------------------------
| Total | 1,809 | 1,007 | 80 | 1,457 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net interest income | 771 | 642 | 20 | 883 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Note 2 Impairment losses on | | | | |
| receivables | | | | |
--------------------------------------------------------------------------------
| EUR million | Q3/ | Q3/ | Change, | 2006 |
| | 2007 | 2006 | % | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Impairment losses on | 22 | 21 | 5 | 38 |
| receivables | | | | |
--------------------------------------------------------------------------------
| Reversals of impairment losses | -13 | -17 | 20 | -24 |
--------------------------------------------------------------------------------
| Payments on impaired | -4 | -4 | -6 | -6 |
| receivables | | | | |
| amortised from | | | | |
| balance sheet | | | | |
--------------------------------------------------------------------------------
| Net change in group-specific | 5 | 4 | 30 | 1 |
| impairment losses | | | | |
--------------------------------------------------------------------------------
| Total | 10 | 4 | | 9 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Note 3 Net income from Non-life | | | | |
| Insurance | | | | |
--------------------------------------------------------------------------------
| EUR million | Q3/ | Q3/ | Change, | 2006 |
| | 2007 | 2006 | % | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net insurance premium revenue | | | | |
--------------------------------------------------------------------------------
| Premiums written | 798 | 732 | 9 | 877 |
--------------------------------------------------------------------------------
| Insurance premiums ceded to | -45 | -44 | -1 | -55 |
| reinsurers | | | | |
--------------------------------------------------------------------------------
| Change in provision for | -118 | -111 | -7 | -35 |
| unearned premiums | | | | |
--------------------------------------------------------------------------------
| Reinsurers' share | 4 | 7 | -32 | 2 |
--------------------------------------------------------------------------------
| Total | 639 | 584 | 10 | 788 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net Non-life Insurance claims | | | | |
--------------------------------------------------------------------------------
| Claims paid | -407 | -347 | -17 | -470 |
--------------------------------------------------------------------------------
| Insurance claims recovered from | 7 | -18 | | -30 |
| reinsurers | | | | |
--------------------------------------------------------------------------------
| Change in provision for unpaid | -24 | -41 | 41 | -51 |
| claims | | | | |
--------------------------------------------------------------------------------
| Reinsurers' share | 1 | 8 | -87 | 15 |
--------------------------------------------------------------------------------
| Total | -424 | -399 | -6 | -536 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net investment income, Non-life | | | | |
| Insurance | | | | |
--------------------------------------------------------------------------------
| Interest income | 51 | 55 | -7 | 72 |
--------------------------------------------------------------------------------
| Capital gains and losses and | | | | |
| realised changes in fair value | | | | |
--------------------------------------------------------------------------------
| Notes and bonds | -33 | -9 | | -24 |
--------------------------------------------------------------------------------
| Shares and participations | 45 | 12 | | 38 |
--------------------------------------------------------------------------------
| Property | 3 | 1 | | 1 |
--------------------------------------------------------------------------------
| Other | 3 | 7 | -61 | 8 |
--------------------------------------------------------------------------------
| Unrealised changes in fair | | | | |
| value | | | | |
--------------------------------------------------------------------------------
| Notes and bonds | 0 | -1 | 94 | -1 |
--------------------------------------------------------------------------------
| Shares and participations | 0 | 0 | | -1 |
--------------------------------------------------------------------------------
| Property | 0 | -1 | | 2 |
--------------------------------------------------------------------------------
| Other | 3 | -1 | | -1 |
--------------------------------------------------------------------------------
| Dividend income | 47 | 22 | | 22 |
--------------------------------------------------------------------------------
| Total | 119 | 86 | 39 | 116 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Unwinding of discount | -29 | -28 | -5 | -37 |
--------------------------------------------------------------------------------
| Other | 0 | 0 | | -3 |
--------------------------------------------------------------------------------
| Net income from Non-life | 306 | 243 | 26 | 328 |
| Insurance | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Note 4 Net income from Life | | | | |
| Insurance | | | | |
--------------------------------------------------------------------------------
| EUR million | Q3/ | Q3/ | Change, | 2006 |
| | 2007 | 2006 | % | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Premiums written | 574 | 593 | -3 | 859 |
--------------------------------------------------------------------------------
| Reinsurers' share | -8 | -1 | | -2 |
--------------------------------------------------------------------------------
| Net investment income | 307 | 228 | 35 | 454 |
--------------------------------------------------------------------------------
| Claims incurred | | | | |
--------------------------------------------------------------------------------
| Benefits paid | -384 | -305 | -26 | -437 |
--------------------------------------------------------------------------------
| Change in provision for unpaid | -13 | -14 | 11 | -24 |
| claims | | | | |
--------------------------------------------------------------------------------
| Reinsurers' share | 0 | 0 | | 0 |
--------------------------------------------------------------------------------
| Change in insurance contract | | | | |
| liabilities | | | | |
--------------------------------------------------------------------------------
| Change in life insurance | -361 | -413 | 13 | -695 |
| provision | | | | |
--------------------------------------------------------------------------------
| Reinsurers' share | 6 | 0 | | -4 |
--------------------------------------------------------------------------------
| Other | -4 | -7 | 42 | -40 |
--------------------------------------------------------------------------------
| Net income from Life Insurance | 117 | 81 | 46 | 110 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Note 5 Commissions and fees | | | | |
--------------------------------------------------------------------------------
| EUR million | Q3/ | Q3/ | Change, | 2006 |
| | 2007 | 2006 | % | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Commission income | | | | |
--------------------------------------------------------------------------------
| Lending | 76 | 65 | 17 | 88 |
--------------------------------------------------------------------------------
| Deposits | 4 | 5 | -10 | 6 |
--------------------------------------------------------------------------------
| Payment transfers | 84 | 87 | -4 | 116 |
--------------------------------------------------------------------------------
| Securities brokerage | 21 | 15 | 33 | 22 |
--------------------------------------------------------------------------------
| Securities issuance | 5 | 6 | -7 | 6 |
--------------------------------------------------------------------------------
| Mutual funds brokerage | 70 | 60 | 17 | 84 |
--------------------------------------------------------------------------------
| Asset management and legal | 37 | 40 | -8 | 56 |
| services | | | | |
--------------------------------------------------------------------------------
| Insurance brokerage | 42 | 35 | 18 | 43 |
--------------------------------------------------------------------------------
| Guarantees | 8 | 8 | 4 | 11 |
--------------------------------------------------------------------------------
| Other | 29 | 24 | 23 | 36 |
--------------------------------------------------------------------------------
| Total | 377 | 346 | 9 | 467 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Commission expenses | | | | |
--------------------------------------------------------------------------------
| Total | 59 | 51 | 15 | 71 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net commissions and fees | 319 | 295 | 8 | 396 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Note 6 Net trading income | | | | |
--------------------------------------------------------------------------------
| EUR million | Q3/ | Q3/ | Change, | 2006 |
| | 2007 | 2006 | % | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Capital gains and losses | | | | |
--------------------------------------------------------------------------------
| Notes and bonds | -9 | -6 | 52 | -9 |
--------------------------------------------------------------------------------
| Shares and participations | 4 | 4 | 1 | 7 |
--------------------------------------------------------------------------------
| Derivatives | 0 | 6 | -94 | 10 |
--------------------------------------------------------------------------------
| Changes in fair value | | | | |
--------------------------------------------------------------------------------
| Notes and bonds | -34 | -19 | 77 | -27 |
--------------------------------------------------------------------------------
| Shares and participations | -1 | 0 | | 3 |
--------------------------------------------------------------------------------
| Derivatives | 25 | 23 | 8 | 35 |
--------------------------------------------------------------------------------
| Dividend income | 1 | 1 | 4 | 1 |
--------------------------------------------------------------------------------
| Net income from foreign | 12 | 9 | 36 | 13 |
| exchange operations | | | | |
--------------------------------------------------------------------------------
| Total | 0 | 18 | | 32 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Note 7 Net investment income | | | | |
--------------------------------------------------------------------------------
| EUR million | Q3/ | Q3/ | Change, | 2006 |
| | 2007 | 2006 | % | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Available-for-sale financial | | | | |
| assets | | | | |
--------------------------------------------------------------------------------
| Capital gains and losses | | | | |
--------------------------------------------------------------------------------
| Notes and bonds | -3 | 0 | | 1 |
--------------------------------------------------------------------------------
| Shares and participations | 25 | 47 | -48 | 40 |
--------------------------------------------------------------------------------
| Other | - | - | | - |
--------------------------------------------------------------------------------
| Dividend income | 23 | 11 | | 20 |
--------------------------------------------------------------------------------
| Impairment losses | -1 | -1 | -1 | -1 |
--------------------------------------------------------------------------------
| Total | 43 | 58 | -26 | 60 |
--------------------------------------------------------------------------------
| Investment property | | | | |
--------------------------------------------------------------------------------
| Rental income | 40 | 42 | -5 | 55 |
--------------------------------------------------------------------------------
| Maintenance charges and | -22 | -25 | 10 | -34 |
| expenses | | | | |
--------------------------------------------------------------------------------
| Changes in fair value, capital | 11 | 17 | -36 | 30 |
| gains and losses | | | | |
--------------------------------------------------------------------------------
| Other | 1 | -1 | | 1 |
--------------------------------------------------------------------------------
| Total | 29 | 34 | -13 | 52 |
--------------------------------------------------------------------------------
| Other | - | 0 | -100 | 0 |
--------------------------------------------------------------------------------
| Net investment income | 73 | 92 | -21 | 112 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Note 8 Other operating income | | | | |
--------------------------------------------------------------------------------
| EUR million | Q3/ | Q3/ | Change, | 2006 |
| | 2007 | 2006 | % | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Income from property and | 10 | 10 | 7 | 12 |
| business | | | | |
| premises in own use | | | | |
--------------------------------------------------------------------------------
| Other | 68 | 58 | 16 | 80 |
--------------------------------------------------------------------------------
| Total | 78 | 68 | 15 | 92 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Note 9 Personnel costs | | | | |
--------------------------------------------------------------------------------
| EUR million | Q3/ | Q3/ | Change, | 2006 |
| | 2007 | 2006 | % | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Wages and salaries | 357 | 331 | 8 | 459 |
--------------------------------------------------------------------------------
| Pension costs | 28 | 26 | 7 | 35 |
--------------------------------------------------------------------------------
| Other social expenses | 22 | 21 | 6 | 33 |
--------------------------------------------------------------------------------
| Total | 407 | 378 | 8 | 527 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Note 10 Other administrative | | | | |
| expenses | | | | |
--------------------------------------------------------------------------------
| EUR million | Q3/ | Q3/ | Change, | 2006 |
| | 2007 | 2006 | % | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Office expenses | 35 | 39 | -10 | 51 |
--------------------------------------------------------------------------------
| IT expenses | 60 | 66 | -9 | 87 |
--------------------------------------------------------------------------------
| Telecommunications expenses | 28 | 28 | 1 | 39 |
--------------------------------------------------------------------------------
| Marketing expenses | 42 | 41 | 3 | 59 |
--------------------------------------------------------------------------------
| Other administrative expenses | 45 | 36 | 24 | 55 |
--------------------------------------------------------------------------------
| Total | 211 | 210 | 0 | 290 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Note 11 Other operating | | | | |
| expenses | | | | |
--------------------------------------------------------------------------------
| EUR million | Q3/ | Q3/ | Change, | 2006 |
| | 2007 | 2006 | % | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Expenses for property and | 53 | 52 | 2 | 70 |
| business | | | | |
| premises in own use | | | | |
--------------------------------------------------------------------------------
| Depreciation | 97 | 95 | 2 | 130 |
--------------------------------------------------------------------------------
| Other | 58 | 53 | 9 | 66 |
--------------------------------------------------------------------------------
| Total | 208 | 200 | 4 | 267 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Note 12 Returns to | | | | |
| owner-members | | | | |
--------------------------------------------------------------------------------
| EUR million | Q3/ | Q3/ | Change, | 2006 |
| | 2007 | 2006 | % | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Bonuses | 56 | 32 | 76 | 43 |
--------------------------------------------------------------------------------
| Interest on cooperative capital | 18 | 14 | 24 | 21 |
--------------------------------------------------------------------------------
| Total | 74 | 46 | 60 | 64 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Note 13 Financial assets held | | | | |
| for trading | | | | |
--------------------------------------------------------------------------------
| EUR million | 30 Sep. | 30 Sep. | Change, | 31 Dec. |
| | 2007 | 2006 | % | 2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Notes and bonds | 4,238 | 5,110 | -17 | 4,736 |
--------------------------------------------------------------------------------
| Shares and participations | 79 | 102 | -23 | 80 |
--------------------------------------------------------------------------------
| Purchased loans and other | - | - | | - |
| receivables | | | | |
--------------------------------------------------------------------------------
| Total | 4,317 | 5,212 | -17 | 4,816 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Note 14 Non-life Insurance | | | | |
| assets | | | | |
--------------------------------------------------------------------------------
| EUR million | 30 Sep. | 30 Sep. | Change, | 31 Dec. |
| | 2007 | 2006 | % | 2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Investments | | | | |
--------------------------------------------------------------------------------
| Loan and other receivables | 80 | 54 | 48 | 67 |
--------------------------------------------------------------------------------
| Shares and participations | 794 | 697 | 14 | 766 |
--------------------------------------------------------------------------------
| Property | 71 | 52 | 35 | 56 |
--------------------------------------------------------------------------------
| Notes and bonds | 1,531 | 1,953 | -22 | 1,536 |
--------------------------------------------------------------------------------
| Other | 5 | 2 | | 1 |
--------------------------------------------------------------------------------
| Total | 2,481 | 2,759 | -10 | 2,426 |
--------------------------------------------------------------------------------
| Other assets | | | | |
--------------------------------------------------------------------------------
| Prepayments and accrued income | -17 | -7 | | -2 |
--------------------------------------------------------------------------------
| Other | | | | |
--------------------------------------------------------------------------------
| Arising from direct insurance | 292 | 267 | 9 | 241 |
| operations | | | | |
--------------------------------------------------------------------------------
| Arising from reinsurance | 91 | 93 | -2 | 90 |
| operations | | | | |
--------------------------------------------------------------------------------
| Cash in hand and at bank | 6 | 10 | -44 | 5 |
--------------------------------------------------------------------------------
| Total | 372 | 364 | 2 | 335 |
--------------------------------------------------------------------------------
| Life Insurance assets | 2,853 | 3,122 | -9 | 2,761 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Note 15 Life Insurance assets | | | | |
--------------------------------------------------------------------------------
| EUR million | 30 Sep. | 30 Sep. | Change, | 31 Dec. |
| | 2007 | 2006 | % | 2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Investments | | | | |
--------------------------------------------------------------------------------
| Loan and other receivables | 16 | 60 | -73 | 64 |
--------------------------------------------------------------------------------
| Shares and participations | 2,558 | 1,533 | 67 | 2,139 |
--------------------------------------------------------------------------------
| Property | 118 | 100 | 18 | 103 |
--------------------------------------------------------------------------------
| Notes and bonds | 1,315 | 2,253 | -42 | 1,608 |
--------------------------------------------------------------------------------
| Other | 5 | 0 | | 0 |
--------------------------------------------------------------------------------
| Total | 4,012 | 3,945 | 2 | 3,913 |
--------------------------------------------------------------------------------
| Assets covering unit-linked | | | | |
| insurance contracts | | | | |
--------------------------------------------------------------------------------
| Shares and participations | 2,416 | 1,837 | 32 | 2,090 |
--------------------------------------------------------------------------------
| Other assets | | | | |
--------------------------------------------------------------------------------
| Prepayments and accrued income | 26 | 41 | -36 | 45 |
--------------------------------------------------------------------------------
| Other | | | | |
--------------------------------------------------------------------------------
| Arising from direct insurance | 8 | 0 | | 1 |
| operations | | | | |
--------------------------------------------------------------------------------
| Arising from reinsurance | 7 | 6 | 20 | 2 |
| operations | | | | |
--------------------------------------------------------------------------------
| Cash in hand and at bank | 0 | 1 | -78 | 9 |
--------------------------------------------------------------------------------
| Total | 41 | 47 | -13 | 58 |
--------------------------------------------------------------------------------
| Life insurance assets | 6,469 | 5,829 | 11 | 6,061 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Note 16 Investment assets | | | | |
--------------------------------------------------------------------------------
| EUR million | 30 Sep. | 30 Sep. | Change, | 31 Dec. |
| | 2007 | 2006 | % | 2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Available-for-sale financial | | | | |
| assets | | | | |
--------------------------------------------------------------------------------
| Notes and bonds | 676 | 544 | 24 | 435 |
--------------------------------------------------------------------------------
| Shares and participations | 405 | 331 | 22 | 333 |
--------------------------------------------------------------------------------
| Other | - | - | | - |
--------------------------------------------------------------------------------
| Held-to-maturity financial | 118 | 136 | -13 | 133 |
| assets | | | | |
--------------------------------------------------------------------------------
| Investment property | 499 | 499 | 0 | 504 |
--------------------------------------------------------------------------------
| Subsidiaries and associates not | 9 | 8 | 6 | 9 |
| consolidated | | | | |
--------------------------------------------------------------------------------
| Total | 1,706 | 1,518 | 12 | 1,413 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Note 17 Non-life Insurance | | | | |
| liabilities | | | | |
--------------------------------------------------------------------------------
| EUR million | 30 Sep. | 30 Sep. | Change, | 31 Dec. |
| | 2007 | 2006 | % | 2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Insurance contract liabilities | | | | |
--------------------------------------------------------------------------------
| Provision for unearned premiums | 392 | 361 | 9 | 285 |
--------------------------------------------------------------------------------
| Provision for unpaid claims | 1,724 | 1,665 | 4 | 1,683 |
--------------------------------------------------------------------------------
| Total | 2,116 | 2,025 | 4 | 1,969 |
--------------------------------------------------------------------------------
| Other | 287 | 280 | 3 | 131 |
--------------------------------------------------------------------------------
| Non-life Insurance liabilities | 2,403 | 2,305 | 4 | 2,099 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Note 18 Life Insurance | | | | |
| liabilities | | | | |
--------------------------------------------------------------------------------
| EUR million | 30 Sep. | 30 Sep. | Change, | 31 Dec. |
| | 2007 | 2006 | % | 2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Insurance contract liabilities | 3,521 | 3,400 | 4 | 3,461 |
--------------------------------------------------------------------------------
| Provisions for unit-linked | 2,370 | 1,780 | 33 | 2,042 |
| policies | | | | |
--------------------------------------------------------------------------------
| Other liabilities | | | | |
--------------------------------------------------------------------------------
| Accrued expenses and deferred | 3 | 6 | -53 | 1 |
| income | | | | |
--------------------------------------------------------------------------------
| Other | | | | |
--------------------------------------------------------------------------------
| Arising from direct insurance | 0 | 0 | | 4 |
| operations | | | | |
--------------------------------------------------------------------------------
| Arising from reinsurance | 3 | 0 | | 1 |
| operations | | | | |
--------------------------------------------------------------------------------
| Other | 123 | 202 | -39 | 159 |
--------------------------------------------------------------------------------
| Total | 129 | 209 | -39 | 165 |
--------------------------------------------------------------------------------
| Life Insurance liabilities | 6,020 | 5,389 | 12 | 5,667 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Note 19 Debt securities issued | | | | |
| to the public | | | | |
--------------------------------------------------------------------------------
| EUR million | 30 Sep. | 30 Sep. | Change, | 31 Dec. |
| | 2007 | 2006 | % | 2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Bonds | 8,921 | 6,579 | 36 | 7,574 |
--------------------------------------------------------------------------------
| Certificates of deposit | 5,801 | 5,753 | 1 | 5,812 |
--------------------------------------------------------------------------------
| Other | 109 | 120 | -9 | 114 |
--------------------------------------------------------------------------------
| Total | 14,832 | 12,452 | 19 | 13,500 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Note 20 Subordinated | | | | |
| liabilities | | | | |
--------------------------------------------------------------------------------
| EUR million | 30 Sep. | 30 Sep. | Change, | 31 Dec. |
| | 2007 | 2006 | % | 2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Subordinated loans | 203 | 238 | -15 | 208 |
--------------------------------------------------------------------------------
| Other | 855 | 844 | 1 | 855 |
--------------------------------------------------------------------------------
| Total | 1,058 | 1,082 | -2 | 1,063 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Collateral given | | | | |
--------------------------------------------------------------------------------
| EUR million | 30 Sep. | 30 Sep. | Change, | 31 Dec. |
| | 2007 | 2006 | % | 2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Given on behalf of own | | | | |
| liabilities and commitments | | | | |
--------------------------------------------------------------------------------
| Mortgages | 1 | 1 | 0 | 1 |
--------------------------------------------------------------------------------
| Pledges | 2,388 | 2,618 | -9 | 2,521 |
--------------------------------------------------------------------------------
| Other | 70 | 31 | | 31 |
--------------------------------------------------------------------------------
| Total | 2,458 | 2,649 | -7 | 2,553 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Off-balance-sheet items | | | | |
--------------------------------------------------------------------------------
| EUR million | 30 Sep. | 30 Sep. | Change, | 31 Dec. |
| | 2007 | 2006 | % | 2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Guarantees | 577 | 555 | 4 | 577 |
--------------------------------------------------------------------------------
| Other guarantee liabilities | 1,795 | 1,671 | 7 | 1,654 |
--------------------------------------------------------------------------------
| Bill liabilities | - | - | | - |
--------------------------------------------------------------------------------
| Letters of credit | 134 | 148 | -9 | 171 |
--------------------------------------------------------------------------------
| Pledges | 1 | 1 | 0 | 1 |
--------------------------------------------------------------------------------
| Loan commitments | 7,850 | 6,916 | 14 | 7,417 |
--------------------------------------------------------------------------------
| Commitments related to | 20 | 13 | | 13 |
| short-term | | | | |
| trade transactions | | | | |
--------------------------------------------------------------------------------
| Other | 490 | 445 | 10 | 451 |
--------------------------------------------------------------------------------
| Total off-balance-sheet items | 10,867 | 9,749 | 11 | 10,285 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Derivative contracts | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total trading and hedging | | | | | |
| derivatives, | | | | | |
| 30 September 2007 | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EUR million | Nominal values / remaining term | Fair values |
| | to maturity | |
--------------------------------------------------------------------------------
| | <1 | 1-5 | >5 | Total | Assets | Liabil |
| | year | years | years | | | ities |
--------------------------------------------------------------------------------
| Interest rate | 72,707 | 27,619 | 9,322 | 109,64 | 417 | -353 |
| derivatives | | | | 9 | | |
--------------------------------------------------------------------------------
| Currency derivatives | 8,330 | 1,780 | 1,158 | 11,268 | 94 | -287 |
--------------------------------------------------------------------------------
| Equity and | 11 | 238 | 28 | 277 | 48 | - |
| index-linked | | | | | | |
| derivatives | | | | | | |
--------------------------------------------------------------------------------
| Credit derivatives | 40 | 131 | - | 171 | 0 | 0 |
--------------------------------------------------------------------------------
| Other derivatives | 8 | 7 | - | 15 | 1 | - |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total derivatives | 81,096 | 29,775 | 10,508 | 121,37 | 561 | -640 |
| | | | | 9 | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total trading and hedging | | | | | |
| derivatives, | | | | | |
| 30 September 2006 | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EUR million | Nominal values / remaining term | Fair values |
| | to maturity | |
--------------------------------------------------------------------------------
| | <1 | 1-5 | >5 | Total | Assets | Liabil |
| | year | years | years | | | ities |
--------------------------------------------------------------------------------
| Interest rate | 35,875 | 17,502 | 5,025 | 58,402 | 162 | -169 |
| derivatives | | | | | | |
--------------------------------------------------------------------------------
| Currency derivatives | 4,912 | 1,013 | 357 | 6,282 | 37 | -60 |
--------------------------------------------------------------------------------
| Equity and | 37 | 129 | - | 166 | 26 | 0 |
| index-linked | | | | | | |
| derivatives | | | | | | |
--------------------------------------------------------------------------------
| Credit derivatives | - | 121 | - | 121 | 0 | -1 |
--------------------------------------------------------------------------------
| Other derivatives | 8 | 15 | - | 22 | 1 | - |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total derivatives | 40,831 | 18,780 | 5,383 | 64,994 | 226 | -230 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Related party transactions | | | | | |
| 30 September 2007 | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| OP-Pohjola Group's related parties comprise associates, administrative |
| personnel and other related party companies. The administrative personnel |
| comprises OP-Pohjola Group's Executive Chairman (Chairman of the Executive |
| Board of OP-Pohjola 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-Pohjola Group Pension Fund and OP-Pohjola |
| Group Pension Foundation. |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| With respect to loans granted to the management, OP-Pohjola Group applies |
| standard terms and conditions for credit. Loans are tied to generally used |
| reference rates. |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EUR million | Associate | Management | Others |
| | s | | |
--------------------------------------------------------------------------------
| Loans | 90 | 3 | - |
--------------------------------------------------------------------------------
| Other receivables | 0 | 0 | 0 |
--------------------------------------------------------------------------------
| Deposits | 14 | 4 | 35 |
--------------------------------------------------------------------------------
| 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 the end of the | - | - | - |
| period | | | |
--------------------------------------------------------------------------------
| 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 | - | 81,114 | 3,680,793 |
--------------------------------------------------------------------------------
| Number of participations | - | 3,541 | - |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Related party transactions 30 | | | |
| September 2006 | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EUR million | Associate | Management | Others |
| | s | | |
--------------------------------------------------------------------------------
| Loans | 96 | 4 | - |
--------------------------------------------------------------------------------
| Other receivables | 0 | 0 | - |
--------------------------------------------------------------------------------
| Deposits | 0 | 3 | 31 |
--------------------------------------------------------------------------------
| Other liabilities | - | - | 10 |
--------------------------------------------------------------------------------
| Interest income | 0 | 0 | - |
--------------------------------------------------------------------------------
| Interest expenses | 0 | 0 | 1 |
--------------------------------------------------------------------------------
| Dividend income | - | - | - |
--------------------------------------------------------------------------------
| Commission income | 0 | 0 | 0 |
--------------------------------------------------------------------------------
| Commission expenses | 0 | 0 | 0 |
--------------------------------------------------------------------------------
| Other operating income | - | - | - |
--------------------------------------------------------------------------------
| Impairments on loans | - | - | - |
--------------------------------------------------------------------------------
| Impairments on loans at the end of the | - | - | - |
| period | | | |
--------------------------------------------------------------------------------
| Off-balance-sheet items | | | |
--------------------------------------------------------------------------------
| Guarantees | - | - | - |
--------------------------------------------------------------------------------
| Irrevocable commitments | - | - | - |
--------------------------------------------------------------------------------
| Other off-balance-sheet commitments | - | - | - |
--------------------------------------------------------------------------------
| Wages and salaries and | | | |
| performance-based pay | | | |
--------------------------------------------------------------------------------
| Wages and salaries | - | 4 | - |
--------------------------------------------------------------------------------
| Performance-based pay | - | - | - |
--------------------------------------------------------------------------------
| Holdings of related parties | | | |
--------------------------------------------------------------------------------
| Number of share options | - | - | - |
--------------------------------------------------------------------------------
| Number of shares | - | 63,224 | 3,680,793 |
--------------------------------------------------------------------------------
| Number of participations | - | 5,754 | - |
--------------------------------------------------------------------------------
The Interim Report for 1 January-30 September 2007 was prepared in accordance
with IAS 34 (Interim Financial Reporting).
The accounting policies applied are described in the 2006 financial statements.
Data in this Interim Report are based on unaudited figures.
OKO Bank plc will publish its own interim report.
OP-Pohjola Group will publish its financial statements for 2007 on 14 February
2008. The Group will publish its interim reports for three, six and nine months
in 2008 on 8 May, 7 August and 6 November 2008, respectively.
Helsinki, 8 November 2007
OP Bank Group Central Cooperative
Executive Board
OP Bank Group Central Cooperative
Markku Koponen
Senior Vice President
DISTRIBUTION
OMX Nordic Exchange Helsinki
Major media
FOR ADDITIONAL INFORMATION, PLEASE CONTACT
Reijo Karhinen, Executive Chairman,
tel. +358 10 252 4500
Tony Vepsäläinen, President , tel. +358 10 252 4020
Harri
Luhtala, CFO , tel. +358 10 252 2433
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