2007-05-10 07:00:00 CEST
2007-05-10 07:00:00 CEST
REGULATED INFORMATION
OKO Pankki Oyj - Quarterly report
OP Bank Group Central Cooperative: The OP Bank Group Interim Report 1 January - 31 March 2007 and Executive Chairman's comments
OP Bank Group Central Cooperative Company Release 10 May 2007 at 8.00 am Release category: Interim Report THE OP BANK GROUP INTERIM REPORT 1 JANUARY-31 MARCH 2007 AND EXECUTIVE CHAIRMAN'S COMMENTS The OP Bank Group posted a new earnings record in the first quarter. Earnings before tax grew by 16% to EUR 246 million (211). At the same time, the financial services group's businesses continued their strong growth and the group's market position strengthened further. The OP-Pohjola integration proceeded according to plans. The number of joint banking and non-life insurance customers increased by 22 000. Loyal customer benefits were increased substantially. Executive Chairman's comments In the first quarter, the OP Bank Group enjoyed growth outpacing that of the market and racked up record-high earnings. The OP Bank Group saw robust growth in all its key business areas in the early months of the year. In a challenging competition environment, our rate of growth in mutual fund saving, lending and deposits alike can be considered highly favourable. The trend in premiums written in life insurance was also solid relative to the market. Thanks to vigorous growth, we firmed up our position in the market for banking and investment services in line with our strategy. It was especially gratifying to see further growth in our already dominant market share in residential lending. Concerted progress is being made in the integration of Non-life Insurance into the OP Bank Group. During the first quarter, the number of customers using both our banking and non-life insurance services rose by 22 000 and the number of joint outlets by 54. Today, we offer Finland's widest range of local services in non-life insurance, too. Our robust growth and net interest income, controlled development of expenses and lack of loan losses were decisive factors behind our best-ever quarterly earnings. All three of our business segments improved their earnings level substantially. In addition to achieving good growth and earnings in the first months of the year, our outlays on the development of our loyal customer benefits - part of our drive to deliver on our customer promise - have progressed as planned. The bonuses granted to our customers grew by over 70%. Thanks to the further improvement in our earnings level, we are well-poised to keep developing our rewards for our bonus customers. The start-up of our co-operation with Kesko, announced after the end of the review period, also provides our customers with new flexible services and financial benefits. Helsinki, 10 May 2007 Reijo Karhinen The OP Bank Group's Interim Report for 1 January-31 March 2007 Vigorous growth continues and the market position strengthens further* -Loan portfolio grew by 14%. Growth in home mortgages came to 15% and in corporate loans to 13%. -Deposits grew by 9%. The fastest growth was seen in investment deposits. -Growth in capital invested in mutual funds was very buoyant, amounting to 28%. -Premiums written in Non-life Insurance rose by 9%. -Market share of premiums written in life insurance increased. -Thanks to the robust growth in the OP Bank Group's operations, the Group further consolidated its market position. Earnings grow and profitability rises -Earnings before tax grew by 16% to EUR 246 million. -Income increased by 11%. Of income items, net interest income was up 21%. -Comparable expenses were on a par with the previous year. -Return on equity at fair values was up from 9.4% to 15.5%. -Every business division's result improved. Strong risk-bearing capacity and a stable risk exposure -Own funds were 1.6 times the statutory minimum. -The amount of non-performing receivables was slightly less than a year earlier. OP Bank Group steps up loyal customer benefits and initiates co-operation with the K-Group -The amount of bonuses granted grew by more than 70%. -The OP Bank Group introduced a new loyal customer benefit for day-to-day dealings to OP bonus customers. -The number of joint banking and non-life insurance customers increased by 22 000. -The OP Bank Group and the K-Group initiate co-operation by offering their customers the option of combining the card services of both groups on a single card. Year 2007 -The OP Bank Group's earnings before tax in 2007 are estimated to be higher than in 2006. * Growth in the loan and deposit portfolios and the capital invested in mutual funds is presented as growth since the end of March 2006. OP Bank Group key indicators -------------------------------------------------------------------------------- | | Jan.-Mar. | Jan.-Mar. | Change* | 2006 | | | 2007 | 2006 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings before tax, EUR | 246 | 211 | 16 | 800 | | million | | | | | -------------------------------------------------------------------------------- | Banking and Investment | 184 | 166 | 11 | 643 | | Services | | | | | -------------------------------------------------------------------------------- | Non-life Insurance | 31 | 23 | 33 | 78 | -------------------------------------------------------------------------------- | Life Insurance | 36 | 19 | 92 | 68 | -------------------------------------------------------------------------------- | Return on equity, % | 14.4 | 12.3 | 2.1 | 12.1 | -------------------------------------------------------------------------------- | Return on equity at fair | 15.5 | 9.4 | 6.1 | 11.4 | | values, % | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cost/income, % | 48.7 | 52.5 | -3.8 | 52.1 | | (Banking and Investment | | | | | | Services) | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Average personnel | 12 229 | 12 085 | 1.2 | 12 148 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | 31 Mar. | 31 Mar. | Change * | 31 Dec. | | | 2007 | 2006 | | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total assets, EUR billion | 62.7 | 56.1 | 11.7 | 59.5 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Capital adequacy | 14.3 | 13.9 | 0.5 | 14.3 | -------------------------------------------------------------------------------- | Ratio of own funds to | 1.56 | 1.58 | -0.02 | 1.56 | | minimum amount of own | | | | | | funds** | | | | | -------------------------------------------------------------------------------- | Tier 1 ratio, %*** | 12.8 | 12.8 | 0.0 | 12.7 | -------------------------------------------------------------------------------- | Non-performing loan losses | 0.4 | 0.4 | -0.1 | 0.3 | | within loan and guarantee | | | | | | portfolio, % | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Market share, % | | | | | -------------------------------------------------------------------------------- | Of total loans | 31.2 | 30.8 | 0.4 | 31.1 | -------------------------------------------------------------------------------- | Of total deposits | 33.2 | 32.7 | 0.5 | 32.7 | -------------------------------------------------------------------------------- | Of capital invested in | 21.6 | 21.3 | 0.3 | 21.8 | | mutual funds | | | | | -------------------------------------------------------------------------------- | Of insurance savings through | 19.4 | 18.5 | 0.9 | 19.1 | | life and pension policies | | | | | -------------------------------------------------------------------------------- | | Jan.-Mar. | Jan.-Mar. | Change * | 2006 | | | 2007 | 2006 | | | -------------------------------------------------------------------------------- | Of premiums written in life | 31.2 | 30.3 | 0.9 | 28.3 | | and pension insurance | | | | | -------------------------------------------------------------------------------- * Percentage point change, except for earnings before tax, total assets and average number of personnel, for which the change is stated in per cent, as well as the ratio of own funds to the minimum amount of own funds, for which the change is stated as a change in the ratio. ** Pursuant to the Act on the Supervision of Financial and Insurance Conglomerates. *** Pursuant to the Credit Institutions Act. Operating environment Global economic growth is fastest in Asia. Brisk economic growth is also expected in Eastern Europe and Russia. A moderate rise in output is forecast for the eurozone. On the other hand, growth will slacken in the United States, which may turn into a major risk for the world economy. That said, from the viewpoint of Finland's outlook for exports, international demand will remain relatively favourable. Domestic Finnish demand - consumption and investments - is expected to slow down slightly compared with the previous year. Consumption growth will be dampened by the slackening of growth in household income. Nevertheless, households remain quite upbeat about the outlook for their own finances. Investments are muted by the peaking of growth in residential construction. Growth in total output will accordingly return to the long-term average of about 3% during the present year. The European Central Bank (ECB) continued to tighten monetary policy by nudging its main lending rate from 3.50% to 3.75% in March. The ECB is next expected to raise the rate in June. New rate increases are possible towards the end of the year if the euro economy remains strong and inflation pressures mount. However, the tightening of monetary policy that commenced in 2005 is expected to end this year. The rise in short-term market rates puts the brakes slightly on demand for bank loans, which nonetheless remains rather brisk. Growth in home mortgages is dampened not only by rising interest rates but also by the higher prices of housing. The rise in house prices is expected to level off in the future. Equity market prices continued to head upwards in the first months of the year thanks to the better earnings expectations of companies. However, although the bullish trend has kept on track for a long time, signs of greater uncertainty have surfaced, particularly in emerging markets. Higher investor uncertainty has also cut into net mutual fund subscriptions, leading to a slowdown in the growth of capital invested in them. Likewise, premiums written in life insurance in the first months of the year fell short of the previous year. Ongoing structural changes in the financial sector have heated up competition in non-life insurance. Long-term growth in non-life insurance will be supported by higher awareness of safety and concerns about climate change. In the first months of the year, the claims trend has been poorer than usual as regards house fires and severe traffic accidents. Earnings and total assets of the OP Bank Group The OP Bank Group's earnings and profitability improved substantially compared with the previous year. Earnings before tax grew by 16% to EUR 246 million (211*). The result was an all-time record for any single quarter. Earnings growth raised annual return on equity to 14.4% from its year-ago figure of 12.3%. Return on equity at fair values increased by 6.1% percentage points since last year and amounted to 15.5%. Earnings growth rested on the strong increase in income, net interest income in particular. Net interest income was up 21% to EUR 244 million (202) and other income rose by 4.3% to EUR 313 million (300). Expenses allocated to the report period were EUR 289 million (278), an increase of 3.7% on the figure a year ago. Comparable expenses were on a par with the previous year. Bonuses paid to the owner-members and OP bonus customers rose by 71% to EUR 19 million (11). Growth was primarily due to the decision taken at the end of 2006 to gradually double the amount of OP bonuses by the beginning of 2008. In the first stage, the bonuses paid to OP bonus customers were raised by 50% as of the beginning of February 2007. Impairment losses remained very low. Earnings before tax in Banking and Investment Services rose by 11% to EUR 184 million (166) thanks to robust growth in net interest income. Earnings from Non-Life Insurance were EUR 31 million (23), up 33% on the previous year. Higher net investment income contributed significantly to growth in Non-life Insurance. Earnings before tax from Life Insurance were EUR 36 million (19). In connection with the Pohjola transaction, the OP Bank Group announced that it is seeking revenue and cost synergies totalling about EUR 91 million by the end of 2010. The results achieved thus far support earlier estimates of the synergy benefits. It is estimated that the decisions made by the end of the report period will yield cost savings of over EUR 40 million in 2007 and more than EUR 50 million in 2008. Revenue synergies achieved to date are estimated to amount to about EUR 15 million at the annual level. Integration costs allocated to the review period were approximately EUR 12 million. Costs include EUR 10 million in liquidated damages to savings banks. * The comparison figure for 2006 is given in brackets. For profit and loss account and other aggregated figures, the point of comparison is the figure for January-March 2006. For balance sheet and other cross-sectional figures, the point of comparison is the figure at the previous balance sheet date, 31 December 2006. The results for the review and comparison periods include a few factors that affect comparability. Net income from Life Insurance in the review period was about EUR 8 million higher than comparable income would have been under the fixed-income investment structure of 2006. Expenses in the review period include the aforementioned non-recurring liquidated damages of EUR 10 million. In addition, net investment income for 2006 includes EUR 10 million in non-recurring capital gains. Earnings analysis -------------------------------------------------------------------------------- | EUR million | Jan.-Ma | Jan.-Mar. | Change, | Change, | Jan.-D | | | r. | 2006 | EUR | % | ec. | | | 2007 | | million | | 20 | | | | | | | 06 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings before tax | 246 | 211 | 35 | 16.4 | 800 | -------------------------------------------------------------------------------- | Gross change in fair | 19 | -43 | 63 | | -45 | | value reserve | | | | | | -------------------------------------------------------------------------------- | Earnings before tax at | 265 | 168 | 97 | 58.0 | 754 | | fair values | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Return on equity, % | 14.4 | 12.3 | | 2.1* | 12.1 | -------------------------------------------------------------------------------- | Return on equity at fair | 15.5 | 9.4 | | 6.1* | 11.4 | | values, % | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Income | | | | | | -------------------------------------------------------------------------------- | Net interest income | 244 | 202 | 43 | 21.3 | 883 | -------------------------------------------------------------------------------- | Net income from Non-life | 94 | 86 | 8 | 9.4 | 328 | | Insurance | | | | | | -------------------------------------------------------------------------------- | Net income from Life | 48 | 34 | 14 | 39.5 | 110 | | Insurance | | | | | | -------------------------------------------------------------------------------- | Net commissions and fees | 120 | 110 | 10 | 8.9 | 396 | -------------------------------------------------------------------------------- | Net trading and | 28 | 48 | -20 | -41.1 | 144 | | investment income | | | | | | -------------------------------------------------------------------------------- | Other operating income | 21 | 23 | -1 | -6.5 | 92 | -------------------------------------------------------------------------------- | Share of associates' | 2 | -1 | 3 | | 2 | | profits/losses | | | | | | -------------------------------------------------------------------------------- | Other income, total | 313 | 300 | 13 | 4.3 | 1 073 | -------------------------------------------------------------------------------- | Total income | 558 | 502 | 56 | 11.2 | 1 956 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Expenses | | | | | | -------------------------------------------------------------------------------- | Personnel costs | 140 | 134 | 6 | 4.5 | 527 | -------------------------------------------------------------------------------- | Other administrative | 71 | 72 | -1 | -1.6 | 290 | | expenses | | | | | | -------------------------------------------------------------------------------- | Other operating expenses | 78 | 72 | 6 | 7.8 | 267 | -------------------------------------------------------------------------------- | Total expenses | 289 | 278 | 10 | 3.7 | 1 083 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Impairment losses on | 1 | -2 | 2 | | 9 | | receivables | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Returns to owner-members | | | | | | | and OP bonus customers | | | | | | -------------------------------------------------------------------------------- | Bonuses | 19 | 11 | 8 | 70.6 | 48 | -------------------------------------------------------------------------------- | Interest on ordinary and | 5 | 4 | 1 | 36.3 | 21 | | supplementary | | | | | | | cooperative capital | | | | | | -------------------------------------------------------------------------------- | Total returns to | 24 | 15 | 9 | 61.9 | 69 | | owner-members | | | | | | -------------------------------------------------------------------------------- * Percentage points. The OP Bank Group's total assets exceeded EUR 60 billion during the report period and stood at EUR 62.7 billion (59.5) at the end of March. Total assets saw an increase of 5.3% since the end of 2006. During the review period, receivables from customers increased by 3.3% to EUR 40.9 billion (39.6) and deposits by 2.2% to EUR 26.3 billion (25.8). Debt securities issued to the public rose by 12% to EUR 15.2 billion. Equity capital at the end of March stood at EUR 5.3 billion (5.1). The fair value reserve adjusted for deferred taxes and included in equity totalled EUR 158 million (144). The cooperative capital investments and supplementary cooperative capital investments of the member cooperative banks' owner members totalled EUR 706 million at the end of March (696). The member banks will pay a total of about EUR 21 million in interest on the ordinary and supplementary cooperative capital for the 2006 financial year. In March, the Annual General Meeting of OKO Bank plc (OKO Bank) resolved to pay dividends of EUR 0.65 per share (0.60) for the Series A share and EUR 0.62 per share (0.57) for the Series K share, to a total of EUR 131 million (120). Capital adequacy and risk exposure Two sets of capital adequacy regulations Two sets of capital adequacy ratios are calculated for the OP Bank Group. The OP Bank Group operates in compliance with the Act on Cooperative Banks and other Cooperative Institutions. Because of 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. This is calculated according to the regulations for capital adequacy specified in the Credit Institutions Act. The amalgamation of the cooperative banks comprises its central institution (the OP Bank Group Central Cooperative), the central institution's member credit institutions and the companies belonging to their consolidation groups. Although the OP Bank Group's insurance companies do not belong to the amalgamation of the cooperative banks, the investments made in them nonetheless have a major impact on the capital adequacy that is calculated in accordance with the capital adequacy regulations for credit institutions. This capital adequacy figure is called the OP Bank Group's capital adequacy according to the Credit Institutions Act. Following the Pohjola transaction, the OP Bank Group became a financial and insurance conglomerate pursuant to the Act on the Supervision of Financial and Insurance Conglomerates. The conglomerate is subject to the provisions of the capital adequacy requirement specified for it. The OP Bank Group reported the capital adequacy ratio specified in the Act for the first time as of the end of 2005. Capital adequacy according to the Credit Institutions Act The 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. The OP Bank Group will make use of the transitional provisions and publish its first capital adequacy calculation in line with the new regulations for March 2008. At the end of March, the OP Bank Group's capital adequacy according to the Credit Institutions Act was 14.3% (14.3). The capital adequacy ratio as measured with Tier 1 own funds was 12.8%, or 0.1 percentage point higher than at the end of 2006. The OP Bank Group's risk-bearing capacity is strong. Tier 1 own funds at the end of March amounted to EUR 4 476 million (4 271). The net profit generated during the report period, less the estimated dividend payout, is included in Tier 1 own funds. The redemption price of certain Pohjola Group plc shares was finally decided by the Arbitral Tribunal appointed by the Redemption Committee of the Finnish Central Chamber of Commerce; the acquisition cost of these shares in the Group's accounts and capital adequacy calculations has been taken to be the price indicated in OKO Bank's tender offer (EUR 13.35 per share). For more information on how the decision of the Arbitral Tribunal, which was released on 2 May 2007, affected the OP Bank Group's capital adequacy, see the section entitled “Events after the close of the report period”. At the end of March, the ratio of capital loans to Tier 1 own funds was 5.0% (5.2). The Group has not included in Tier 1 own funds the increase in equity capital resulting from the measurement, in line with IFRS, of pension liabilities and the assets covering them as well as from the measurement at fair value of investment properties. The amount of Tier 2 funds grew by 2.6% to EUR 909 million (886). At the end of March, Tier 2 own funds included EUR 158 million of the unrealised increase in value that was recorded in the fair value reserve. At the end of 2006, the corresponding figure was EUR 144 million. Investments in insurance companies, which are to be deducted from the aggregate amount of Tier 1 and Tier 2 own funds, totalled EUR 350 million (339) at the end of March. In respect of insurance companies held, the OP Bank Group has deducted as insurance company investments a portion, corresponding to its ownership stake, of the minimum amount of the solvency margin of said companies. On the basis of the exemption granted by the Financial Supervision Authority on 6 March 2007, investments by OP Bank Group entities in venture capital funds administered by OKO Venture Capital have been treated in the capital adequacy calculation in the same way as investments in shares in business or industrial corporations. Risk-weighted commitments grew by 3.9% during the report period and amounted to EUR 35.0 billion (33.7) at the end of March. The OP Bank Group's own funds and capital adequacy according to the Credit Institutions Act -------------------------------------------------------------------------------- | EUR million | 31 | 31 | Change, | Change, % | | | Mar. | Dec. | EUR | | | | 200 | 200 | million | | | | 7 | 6 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Own funds | | | | | -------------------------------------------------------------------------------- | Equity capital | 5 259 | 5 124 | 136 | 3 | -------------------------------------------------------------------------------- | Cooperative capital, not | 597 | 595 | 2 | 0 | | included in equity capital | | | | | -------------------------------------------------------------------------------- | Capital loans | 224 | 224 | 0 | 0 | -------------------------------------------------------------------------------- | Intangible assets | -1 049 | -1 064 | 15 | -1 | -------------------------------------------------------------------------------- | Fair value reserve and other | -158 | -144 | -14 | 10 | | reserves | | | | | -------------------------------------------------------------------------------- | Planned dividend payout | -14 | -75 | 61 | -81 | -------------------------------------------------------------------------------- | Other items (incl. excess | -384 | -388 | 4 | -1 | | funding of pension liability | | | | | | and measurement of investment | | | | | | properties at fair value) | | | | | -------------------------------------------------------------------------------- | Tier 1 own funds | 4 476 | 4 271 | 204 | 5 | -------------------------------------------------------------------------------- | Fair value reserve and other | 158 | 144 | 14 | 10 | | reserves | | | | | -------------------------------------------------------------------------------- | Subordinated liabilities | 210 | 210 | | | | included in upper Tier 2 own | | | | | | funds | | | | | -------------------------------------------------------------------------------- | Subordinated liabilities | 540 | 532 | 9 | 2 | | included in lower Tier 2 own | | | | | | funds | | | | | -------------------------------------------------------------------------------- | Tier 2 own funds, total | 909 | 886 | 23 | 3 | -------------------------------------------------------------------------------- | Investments in insurance | -350 | -339 | -10 | 3 | | institutions | | | | | -------------------------------------------------------------------------------- | Other deduction items | -10 | -10 | 0 | 1 | -------------------------------------------------------------------------------- | Deduction items, total | -359 | -349 | -10 | 3 | -------------------------------------------------------------------------------- | Own funds, total | 5 025 | 4 808 | 217 | 5 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Balance sheet risk grouping in | | | | | | capital adequacy calculation | | | | | | (before risk-weighting factors) | | | | | -------------------------------------------------------------------------------- | Risk group I (risk weight 0%) | 11 706 | 10 560 | 1 146 | 11 | -------------------------------------------------------------------------------- | Risk group V (risk weight 10%) | 2 | 3 | 0 | -3 | -------------------------------------------------------------------------------- | Risk group II (risk weight 20%) | 810 | 586 | 224 | 38 | -------------------------------------------------------------------------------- | Risk group III (risk weight | 20 135 | 19 629 | 505 | 3 | | 50%) | | | | | -------------------------------------------------------------------------------- | Risk group IV (risk weight | 19 602 | 18 872 | 730 | 4 | | 100%) | | | | | -------------------------------------------------------------------------------- | Deduction items from own funds | 359 | 349 | 10 | 3 | -------------------------------------------------------------------------------- | Other items (incl. insurance | 10 066 | 9 535 | 530 | 6 | | assets) | | | | | -------------------------------------------------------------------------------- | Balance sheet, total | 62 680 | 59 535 | 3 146 | 5 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Risk-weighted receivables, | | | | | | investments and off-balance | | | | | | sheet commitments | | | | | -------------------------------------------------------------------------------- | Receivables and investments | 29 831 | 28 804 | 1 027 | 4 | -------------------------------------------------------------------------------- | Off-balance sheet items | 3 893 | 3 904 | -11 | 0 | -------------------------------------------------------------------------------- | Market risk | 1 302 | 1 010 | 292 | 29 | -------------------------------------------------------------------------------- | Risk-weighted receivables, | 35 027 | 33 718 | 1 308 | 4 | | investments and off-balance | | | | | | sheet commitments, total | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Capital adequacy ratio, % | 14.3 | 14.3 | | 0.1* | -------------------------------------------------------------------------------- | Ratio of Tier 1 own funds to | 12.8 | 12.7 | | 0.1* | | the aggregate amount of | | | | | | risk-weighted items, % | | | | | -------------------------------------------------------------------------------- * Percentage points. Capital adequacy according to the Act on the Supervision of Financial and Insurance Conglomerates The OP Bank Group's capital adequacy pursuant to the Act on the Supervision of Financial and Insurance Conglomerates is calculated in accordance with the consolidation method. This requires adding to the equity capital according to the conglomerate's balance sheet those items which are included in own funds according to the regulations for the banking or insurance industry and are not included in equity capital. Own funds may not include items that are not available for covering the losses of other companies belonging to the conglomerate. At the end of March, the OP Bank Group's own funds calculated according to the Act on the Supervision of Financial and Insurance Conglomerates exceeded the minimum amount specified in the Act by EUR 1 758 million (1 682). The ratio of the OP Bank Group's own funds to the minimum amount of own funds was 1.56, the same as at the end of 2006. Capital adequacy according to the Act on the Supervision of Financial and Insurance Conglomerates -------------------------------------------------------------------------------- | EUR million | 31Mar. | 31 | Change, | Change, % | | | 2 | Dec. | EUR | | | | 007 | 2006 | million | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | OP Bank Group's equity | 5 259 | 5 124 | 136 | 2.7 | | capital | | | | | -------------------------------------------------------------------------------- | Business segment-specific | 1 572 | 1 577 | -5 | -0.3 | | items | | | | | -------------------------------------------------------------------------------- | Goodwill and intangible | -1 131 | -1 133 | 1 | -0.1 | | assets | | | | | -------------------------------------------------------------------------------- | Items included in equity | -826 | -883 | 57 | -6.4 | | capital and business | | | | | | segment-specific items, which | | | | | | cannot be included in the | | | | | | conglomerate's own funds | | | | | -------------------------------------------------------------------------------- | Conglomerate's own funds, | 4 874 | 4 685 | 189 | 4.0 | | total | | | | | -------------------------------------------------------------------------------- | Minimum amount of the | 3 116 | 3 002 | 114 | 3.8 | | conglomerate's own funds (= | | | | | | own funds requirement) | | | | | -------------------------------------------------------------------------------- | Conglomerate's capital | 1 758 | 1 682 | 76 | 4.5 | | adequacy | | | | | -------------------------------------------------------------------------------- | Conglomerate's capital | 1.56 | 1.56 | | 0.00 | | adequacy ratio | | | | | | (own funds / minimum amount | | | | | | of own funds) | | | | | -------------------------------------------------------------------------------- * change in ratio. The OP Bank Group's risk exposure The OP Bank Group's risk exposure is stable and no significant changes have occurred in it after the publication of the 2006 financial statements. The OP Bank Group's credit risk situation is also stable, and credit risks have remained at a low level. The amount of the OP Bank Group's non-performing and zero-interest loans remains at a low level. At the end of March they totalled EUR 162 million (128), or 27% more than at the turn of the year. From the end of March 2006, the amount of non-performing and zero-interest loans contracted by slightly under one per cent. 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 loans to the loan and guarantee portfolio was 0.4% (0.3). Growth in the OP Bank Group's loan portfolio outpaced the deposit portfolio, increasing the amount of wholesale funding on market terms and its share of total funding during the report period. However, the liquidity reserve is significantly higher than the minimum level set for the OP Bank Group. No significant changes took place in interest rate exposure during the review period. At the close of the period, the investment risks of the insurance entity were at the same level as at the end of 2006. The OP Bank Group's non-performing and zero-interest loans -------------------------------------------------------------------------------- | EUR million | 31 Mar. | 31 Mar. | Change, | Change, % | | | 2007 | 2006 | EUR | | | | | | million | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Households | 102 | 92 | 10.2 | 78 | -------------------------------------------------------------------------------- | Companies | 55 | 69 | -19.9 | 47 | -------------------------------------------------------------------------------- | Condominiums and others | 5 | 2 | | 3 | -------------------------------------------------------------------------------- | Total | 162 | 163 | -0.9 | 128 | -------------------------------------------------------------------------------- | Non-performing loan losses | 0.4 | 0.4 | -0.1* | 0.3 | | within the loan and | | | | | | guarantee portfolio, % | | | | | -------------------------------------------------------------------------------- * Percentage points. Credit ratings Of the international credit rating agencies, Fitch Ratings provides a rating for both the OP Bank Group and its central bank, OKO Bank. The OP Bank Group's financial position also has a considerable impact on the credit ratings issued for OKO Bank alone. Moody's revised OKO Bank's Long-Term Issuer Rating to Aa1 in April. At the end of 2006, the rating was Aa2. Outlook has been confirmed stable by all rating agencies. The credit ratings at the end of March 2007 were the following: -------------------------------------------------------------------------------- | Rating agency | Short-term debt | Long-term debt | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Fitch Ratings (OP Bank | F1+ | AA- | | Group and OKO Bank) | | | -------------------------------------------------------------------------------- | Standard & Poor's (OKO | A-1+ | AA- | | Bank) | | | -------------------------------------------------------------------------------- | Moody's (OKO Bank) | P-1 | Aa1 | -------------------------------------------------------------------------------- The insurance financial strength rating which Pohjola Non-life Insurance Company received from Standard & Poor's on 19 October 2005 is A+ (with a negative outlook). OP Bank Group's long-term financial targets The business strategy that was adopted in June 2006 describes the OP Bank Group's long-term financial targets. Long-term targets have been set for risk-bearing capacity, profitability, risk appetite and efficiency. During the report period, the OP Bank Group outperformed all the long-term financial targets. Except for the indicator for risk appetite, all the indicators improved on the previous year. Long-term performance indicators -------------------------------------------------------------------------------- | | Indicator | Target | 31 Mar. | 31 Mar. | 31 Dec. | | | | | 2007 | 2006 | 2006 | -------------------------------------------------------------------------------- | Risk-bearing | Non-current | minimum | 1.12 | 1.06 | 1.10 | | capacity | own | of | | | | | | funds/econo | 1.0 | | | | | | mic capital | | | | | -------------------------------------------------------------------------------- | | Indicator | Target | Jan.-Mar. | Jan.-Mar. | Jan.-Dec. | | | | | /2007 | /2006 | /2006 | -------------------------------------------------------------------------------- | Profitability | Return on | minimum | 20.9 | 19.3 | 20.1 | | | economic | of | | | | | | capital | 17% | | | | -------------------------------------------------------------------------------- | Risk appetite | Impairment | maximum | 0.01 | -0.02 | 0.02 | | | losses on | of | | | | | | receivables | 0.25% | | | | | | /loan and | | | | | | | guarantee | | | | | | | portfolio | | | | | -------------------------------------------------------------------------------- | Efficiency | Cost/income | maximum of | 48.7% | 52.5% | 52.1% | | (Banking and | | 50% | | | | | Investment | | | | | | | Services) | | | | | | -------------------------------------------------------------------------------- Changes in the OP Bank Group's structure The OP Bank Group's consolidated financial statements include the 231 member cooperative banks, OP Bank Group Central Cooperative Consolidated and OP Bank Group Mutual Insurance Company as well as six subsidiaries of the member banks. The number of the cooperative banks belonging to the OP Bank Group decreased by one to 231 when Pyhännän Osuuspankki merged with Oulun Osuuspankki at the end of February. The administrative bodies of Miettilän Osuuspankki and Simpeleen Osuuspankki resolved to merge Miettilän Osuuspankki into Simpeleen Osuuspankki. The merger will be entered in the Trade Register in September. Owner-members and customers The cooperative member banks had 1 172 000 owner-members at the end of March, or 32 000 more than a year earlier. During the first quarter of the year, the number of owner-members grew by more than 8 000. Of the cooperative member banks' owner-members, 866 000 were OP bonus customers. At the end of March, Helsinki OP Bank plc, which operates in the Greater Helsinki area and in accordance with its company form does not have owner-members, had 99 000 OP bonus customers. The value of the loyal customer bonuses earned by OP bonus customers totalled EUR 19 million, an increase of 71% on the figure a year earlier. Growth was driven particularly by the raising of the value of accumulated bonuses by 50% as of the beginning of February 2007. In the OP Bank Group's income statement, bonuses earned by the owner-members have been booked under the item Returns to owner-members. OP bonus customers used a total of EUR 10 million (9) in bonuses on banking services in the January-March period. From autumn 2007, it will also be possible to use bonuses to pay for Pohjola's non-life insurance products. In March, most of the member banks and Helsinki OP Bank plc decided to offer a new loyal customer benefit for day-to-day dealings to OP bonus customers. The entire OP Bank Group had 4 055 000 customers in Finland at the end of March, 60 000 more than a year earlier. In addition, the OP Bank Group has a total of about 200 000 non-life insurance customers in the Baltic countries. From March of last year, the number of joint banking and insurance customers increased by 93 000 to 826 000 as a consequence of cross-selling. The OP Bank Group aims at increasing the number of joint customers to one million by the end of 2008. From the end of March 2006, the number of Pohjola's loyal customer households has grown by 35 000 and from the turn of the year, by 8 900. At the end of March, loyal customer households numbered 376 000. The OP Bank Group's target is to increase Pohjola's number of loyal customer households to 500 000 by 2010. Personnel and rewards At the end of March the OP Bank Group had a staff (excluding seasonal interns) of 12 265 employees, or 126 more than at the end of 2006. The member banks' number of employees grew by 46 to 6 707 and OP Bank Group Central Cooperative Consolidated's payroll (incl. OP Bank Group Mutual Insurance Company) grew by 80 employees to 5 558. The number of people employed by the OKO Bank Group, which belongs to OP Bank Group Central Cooperative Consolidated, increased by 41 to 2 960. The OP Bank Group's personnel fund had about 11 600 members at the end of March, or about 94% of the OP Bank Group's personnel. A reward system for management is also used. According to advance information, the personnel fund will be paid bonuses totalling EUR 7.6 million (6.0) for 2006. According to advance information, bonuses under the reward system for management will total EUR 2.9 million (2.2) at companies belonging to the OP Bank Group. The Central Cooperative's corporate governance The 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 at the head of the financial and insurance conglomerate formed by the OP Bank Group. The Central Cooperative operates as the entire OP Bank Group's development and service centre, and is a strategic owner institution. The Central Cooperative has a pivotal role in developing and steering the OP Bank Group's operations. The Annual Cooperative Meeting of the OP Bank Group Central Cooperative was held on 27 March 2007. Of the members due to resign, the meeting re-elected to seats on 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 organisation meeting, the Supervisory Board re-elected Mr Seppo Penttinen chairman. Mr Paavo Haapakoski and Mr Jukka Hulkkonen were elected as the vice chairmen. After competitive tenders were sought, the firm of independent public accountants KPMG Oy Ab was elected auditor of the OP Bank Group Central Cooperative and OP Bank Group for the 2007 financial year. Capital expenditures The Central Cooperative, together with its subsidiaries, is responsible for developing the OP Bank Group's service activities. ICT investments and related specification work makes up a significant part of the costs of developing service activities. During the report period, ICT investments of slightly over EUR 7 million were activated in the balance sheet of OP Bank Group Central Cooperative Consolidated. Of these investments, EUR 5 million were connected with banking and investment operations, slightly under EUR 2 million with non-life insurance operations and less than EUR 0.5 million with life insurance operations. 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 (the OP Bank Group Central Cooperative), the Central Cooperative's member credit institutions and the companies belonging to their consolidation groups. The amalgamation of the cooperative banks is monitored on a consolidated basis. The Central Cooperative and its 235 member banks are ultimately responsible for each other's liabilities and commitments. The Central Cooperative's members at the end of the report period were the OP Bank Group's 231 member banks as well as OKO Bank, Helsinki OP Bank Plc, OP Mortgage Bank and OP-Kotipankki Oyj. The OP Bank Group's insurance companies do not come within the scope of joint responsibility. In respect of deposit protection, the deposit banks belonging to the OP Bank Group, i.e. the member cooperative banks, OKO Bank, Helsinki OP Bank Plc and OP-Kotipankki Oyj, are considered as a single bank. Under legislation concerning the Investor Compensation Fund, the OP Bank Group is also considered a single entity for purposes of compensation protection. Events after the close of the report period Co-operation between OP Bank Group and K-Group begins Long-term co-operation agreed on in June 2006 between the OP Bank Group and the K-Group started from the customer perspective in May 2007 with the introduction of joint cards. The agreement includes, but is not limited to, co-operation in card development, payment transfer services, cash management, customer financing and insurance products. New cards are the most concrete form of co-operation. It is recommended that OP Bank Group customers add the K-Group's Plussa code to their OP-Visa cards. The K-Group store chain offers its customers the K-Plussa MasterCard, which is managed by the OP Bank Group, as a card and financing solution. At the beginning of May, Pohjola joined the Plussa loyal customer programme. Arbitral Tribunal ruling on the end of savings bank co-operation On 2 April 2007, the Arbitral Tribunal gave its ruling on the dispute on the ending of co-operation between Pohjola and savings banks. The dispute was related to the transaction though which OKO Bank, on 12 September 2005, acquired the majority shareholding in Pohjola from Suomi Mutual Life Assurance Company and Ilmarinen Mutual Pension Insurance Company. The Arbitral Tribunal obligated OKO Bank - into which Pohjola merged at the end of 2006 - to pay 32 savings banks a total of about EUR 10 million in liquidated damages, interest and expenses. The impact of the Arbitral Tribunal ruling has been recognised in full in the OP Bank Group's result for the January-March period. On 19 April 2007, the 24 savings banks which have a majority shareholding in Nooa Savings Bank Ltd acquired the shareholding of OKO Bank in Nooa Savings Bank at a redemption price of EUR 6.3 million. OKO Bank had a 25% shareholding in Nooa Savings Bank. The redemption does not have any impact on the OP Bank Group's earnings. Arbitral award on the redemption price of shares in Pohjola Group plc The Arbitral Tribunal appointed by the Central Chamber of Commerce decided on 2 May 2007 to set the redemption price of the shares in Pohjola Group plc (Pohjola), a subsidiary of OKO Bank plc, at EUR 14.35 per share. The Tribunal confirmed the annual interest payable on the redemption price from 13 June to 30 June 2006 at 5.5% and from 1 July 2006 at 6.0%. The redemption price set by the Tribunal is EUR 1.00 higher than the redemption price of EUR 13.35 per share offered by OKO Bank. OKO Bank will consider separately the option of submitting the validity of the arbitral award to the district court. The Finnish Companies Act provides that action must be brought within two months from the date when the interested party received a copy of the arbitral award. The arbitral award will not have any major impact on the 2007 consolidated earnings or shareholders' equity of the OP Bank Group. It is estimated that the arbitral award will decrease the OP Bank Group's capital adequacy ratio, as specified in the Act on Credit Institutions and measured with Tier 1 own funds, by about 0.05 percentage points. Full-year outlook The OP Bank Group's market position has strengthened for a number of years now. The Group's target is to reinforce its market position further. Earnings before tax in 2007 are estimated to be greater than in 2006. All the forecasts and estimates presented in this Interim Report are based on the current view of the trend in the finances of the OP Bank Group and its different functions, and actual results may be significantly different. Operations and earnings by business segment The OP Bank Group's business segments are Banking and Investment Services, Non-life Insurance and Life Insurance. Other operations not belonging to the segments are presented in the group Other Operations. Segment reporting is prepared in accordance with the accounting policies applied in the OP Bank Group's financial statements. Amortisation of intangible assets arising in connection with the Pohjola transaction is allocated to the business segments. The companies included in the Banking and Investment Services segment are the member banks, Helsinki OP Bank Plc, Op Kotipankki Oyj, OP Mortgage Bank, OP Fund Management Company Ltd, OKO Asset Management Limited, OKO Corporate Finance Ltd, OKO Venture Capital Ltd as well as certain smaller companies that support banking and investment services in their entirety. OKO Bank plc's operations, with the exception of Group Administration, are also included in the Banking and Investment Services segment; the operations of OP Bank Group Mutual Insurance Company are also included in this segment because the bulk of the company's operations consists of credit insurance granted to the OP Bank Group's retail banks. The Non-life Insurance segment encompasses the operations of the OP Bank Group's non-life insurance companies, i.e. Pohjola Non-Life Insurance Company Ltd, Eurooppalainen Insurance Company Ltd, A-Insurance Ltd, the Seesam companies that operate in the Baltic area as well as the operations of service companies that support non-life insurance. The Life Insurance segment comprises the OP Bank Group's life and pension insurance business. The OP Bank Group's life and pension insurance operations have been centralised at OP Life Assurance Company Ltd as from the beginning of the year. The operations remaining outside the business segments are the corporate administration of the Central Cooperative, FD Finanssidata Oy (FD) and the OKO Bank Group. The cost of the services which the Central Cooperative and FD provide for the business segments is allocated to the segments in the form of internal service charges. Summary of the business segments' performance, January-March 2007 -------------------------------------------------------------------------------- | EUR million | Income | Expenses | Impairment | Other | Earnings | | | | | losses | items | before | | | | | | | tax | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Banking and | 405 | 197 | 1 | -23 | 184 | | Investment | | | | | | | Services | | | | | | -------------------------------------------------------------------------------- | Non-life Insurance | 101 | 70 | 0 | 0 | 31 | -------------------------------------------------------------------------------- | Life Insurance | 52 | 16 | 0 | 0 | 36 | -------------------------------------------------------------------------------- | Other Operations | 70 | 76 | 0 | 0 | -6 | -------------------------------------------------------------------------------- | Eliminations | -70 | -70 | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Total | 558 | 289 | 1 | -23 | 246 | -------------------------------------------------------------------------------- Banking and Investment Services The operating fundamentals for Banking and Investment Services remained good in the report period. In nearly all product areas, the OP Bank Group's growth outstripped that of its competitors on average. The market position strengthened, particularly within deposits as well as within home mortgages and corporate loans. Loans and deposits The OP Bank Group's loan portfolio at the end of March stood at EUR 40.9 billion (39.6), and the guarantee portfolio totalled EUR 2.1 billion (2.2). Since the end of last year, the loan portfolio has grown by 3.3% and since the end of March 2006 by 14%. The loan portfolio grew at a slightly faster rate than a year earlier. In the space of a year, the market share of the loan portfolio increased by 0.4 percentage point to 31.2%. During the report period, market share rose by 0.1 percentage point. The portfolio of home mortgages at the end of March amounted to EUR 19.5 billion (18.9). The loan portfolio grew by 2.8% in the review period. The loan portfolio grew by 15% in a year. Market share in home mortgages was 34.5% at the end of March, 0.4% percentage point higher than a year earlier and 0.1 percentage point more 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% lower than a year ago. The OP Bank Group's corporate loan portfolio at the end of March stood at EUR 10.3 billion (9.7), and the guarantee portfolio totalled EUR 1.9 billion (1.9). The corporate loan portfolio grew by 5.4% during the report period and by 13% in a year. The market share of corporate loans was 26.0% at the end of March, 0.8% percentage point higher than a year earlier and 0.2% percentage point higher than at the end of 2006. During the report period, the OP Bank Group arranged EUR 1.8 billion of new long-term financing for corporate customers. The OP Bank Group's deposits at the end of March totalled EUR 26.3 billion (25.8), an increase of 2.2% since the end of 2006. The growth took place mainly in investment deposits, which grew by 6.4% to EUR 11.5 billion (10.8). The market share of deposits was 33.2% at the end of March, 0.5 percentage point higher than a year earlier and at the end of 2006. Asset management The capital invested in the OP Bank Group's mutual funds grew by 4.8% during the review period and amounted to EUR 13.9 billion (13.3). The OP Bank Group's market share of the capital of mutual funds registered in Finland was 21.6% at the end of March, up 0.2 percentage point on the previous year and down 0.3 percentage point since the end of 2006. Net subscriptions to the OP Bank Group's mutual funds totalled EUR 488 million (565), down 14% on the previous year. The volume of assets managed by OKO Bank's asset management function was EUR 31.3 billion at the end of March (31.3). Of this amount, EUR 13.1 billion was invested in the OP Bank Group's mutual funds (12.4). EUR 2.3 billion of assets were under management in accordance with the OP-Private operational model. Stock broking for households amounted to 157 000 trades during the report period, or 17% more than a year earlier. Earnings Earnings before tax from Banking and Investment Services were EUR 184 million, an increase of 11.2% on the figure a year ago. Net interest income grew due to the rise in market interest rates and growth in business operations. Net interest income was up 18% to EUR 244 million, and commission and fee income increased by 11% to EUR 120 million. Personnel costs rose by 6.5% and other expenses declined by 4.2%. EUR 1 million of impairment losses were recorded on receivables. The cost/income ratio was 48.7%. Banking and Investment Services -------------------------------------------------------------------------------- | EUR million | Jan.-Mar. | Jan.-Mar. | Change, % | Jan.-Dec. | | | 2007 | 2006 | | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net interest income | 244 | 206 | 18.2 | 899 | -------------------------------------------------------------------------------- | Impairment losses on | 1 | -2 | | 9 | | receivables | | | | | -------------------------------------------------------------------------------- | Other income | 161 | 169 | -4.4 | 596 | -------------------------------------------------------------------------------- | Personnel costs | 87 | 82 | 6.5 | 334 | -------------------------------------------------------------------------------- | Other expenses | 110 | 115 | -4.2 | 446 | -------------------------------------------------------------------------------- | Returns to owner-members | 23 | 14 | 61.6 | 64 | -------------------------------------------------------------------------------- | Earnings before tax | 184 | 166 | 11.2 | 643 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Home mortgages drawn down | 1 616 | 1 433 | 12.8 | 6 856 | -------------------------------------------------------------------------------- | Corporate loans drawn down | 1 764 | 1 144 | 54.2 | 5 098 | -------------------------------------------------------------------------------- | Net subscriptions to | 488 | 565 | -13.6 | 2 392 | | mutual funds | | | | | -------------------------------------------------------------------------------- | Brokered property | 3 817 | 3 574 | 6.8 | 16 031 | | transactions, figures in | | | | | | units | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR billion | 31 Mar. | 31 Dec. | Change, % | | | | 2007 | 2006 | | | -------------------------------------------------------------------------------- | Loan portfolio | | | | | -------------------------------------------------------------------------------- | Home mortgages | 19 | 19 | 2.8 | | -------------------------------------------------------------------------------- | Other loans to households | 9 | 9 | 1.7 | | -------------------------------------------------------------------------------- | Corporate loans | 10 | 10 | 5.4 | | -------------------------------------------------------------------------------- | Other loans | 2 | 2 | 4.5 | | -------------------------------------------------------------------------------- | Total | 41 | 40 | 3.3 | | -------------------------------------------------------------------------------- | Guarantee portfolio | 2.1 | 2.2 | -4.5 | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Deposits | | | | | -------------------------------------------------------------------------------- | Current and payment | | | | | | transfer deposits | | | | | -------------------------------------------------------------------------------- | Households | 10 | 11 | -2.8 | | -------------------------------------------------------------------------------- | Companies | 3 | 3 | -4.7 | | -------------------------------------------------------------------------------- | Others | 2 | 2 | 19.8 | | -------------------------------------------------------------------------------- | Current and payment | 15 | 15 | -0.8 | | | transfer deposits, total | | | | | -------------------------------------------------------------------------------- | Investment deposits | 12 | 11 | 6.4 | | -------------------------------------------------------------------------------- | Deposits, total | 26 | 26 | 2.2 | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Mutual funds | | | | | -------------------------------------------------------------------------------- | Equity and hedge funds | 4.3 | 4.4 | -1.7 | | -------------------------------------------------------------------------------- | Balanced funds | 2.2 | 2.1 | 6.9 | | -------------------------------------------------------------------------------- | Bond funds | 3.5 | 3.5 | 0.4 | | -------------------------------------------------------------------------------- | Money market funds | 3.9 | 3.3 | 16.7 | | -------------------------------------------------------------------------------- | Value of mutual funds, | 13.9 | 13.3 | 4.8 | | | total | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Market shares | 31 Mar. | 31 Mar. | Change, | 31 Dec. | | | 2007 | 2006 | percentage | 2006 | | | | | point | | -------------------------------------------------------------------------------- | Of total loans | 31.2 | 30.8 | 0.4 | 31.1 | -------------------------------------------------------------------------------- | Of home mortgages | 34.5 | 34.1 | 0.4 | 34.4 | -------------------------------------------------------------------------------- | Of corporate loans | 26.0 | 25.2 | 0.8 | 25.8 | -------------------------------------------------------------------------------- | Of total deposits | 33.2 | 32.7 | 0.5 | 32.7 | -------------------------------------------------------------------------------- | Of capital invested in | 21.6 | 21.3 | 0.3 | 21.8 | | mutual funds | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Non-life Insurance At the end of the review period, the Non-Life Insurance segment had 376 000 loyal customer households, 35 000 more than a year earlier and 8 900 more than at the end of 2006. The objective is to reach 500 000 loyal customer households by the end of 2010. Insurance premium revenue grew by 9% to EUR 204 million (187). Insurance premium revenue from private customers grew by 10% to EUR 80 million (73) and revenue from corporate customers by 6% to EUR 111 million (105). Insurance premium revenue from private customers was increased by co-operation with member banks and the renewed service offering. At the end of March, non-life insurance services were available from a total of 250 outlets, of which 229 also provided bank services. Premiums written in the Baltic countries grew by 32% to EUR 13 million (10). Claims incurred (excl. loss adjustment expenses) amounted to EUR 147 million, or 14% more than a year earlier. Large and medium-sized losses (that is, losses in excess of EUR 0.1 million) accounted for EUR 18 million of claims. A year earlier, corresponding claims were EUR 11 million, while they were EUR 23 million in January-March 2005. Claims incurred for small losses increased in proportion to the growth in the insurance portfolio, with the exception of comprehensive motor vehicle and motor liability insurance, where growth in claims outpaced that of the portfolio. Stripping out the amortisation of intangible assets arising in the Pohjola transaction, operating expenses and loss adjustment expenses totalled EUR 59 million, an increase of 6% on the figure a year earlier. Operating expenses amounted to EUR 47 million (45) and loss adjustment expenses to EUR 12 million (10). Operating expenses include EUR 1 million (1) in integration-related costs. At the end of March, the fair value of the segment's investments was EUR 2.4 billion (2.4). Return on investments at fair values was 2.4%. The comparable return a year earlier was 1.5%. Earnings Earnings before tax from Non-life Insurance amounted to EUR 31 million (23). The effect of unwinding of discount on segment earnings before tax was EUR 9 million negative (8 million negative). The discount rate applied to the 1.2 billion of pension liabilities is 3.3%. The combined ratio excluding the amortisation of intangible assets arising in the Pohjola transaction and attributed to the business segment was 100.8% (98.2%). Claims incurred accounted for 71.1% and operating expenses as well loss adjustment expenses (cost ratio) for 29.7%. A year earlier the corresponding figures were 67.8% and 30.3%, respectively. Reasons underlying the improvement in the cost ratio were the growth in insurance premium revenue and the savings decisions implemented in 2006. Pohjola's market share of premiums written in non-life insurance in 2006 was 26.3%, or 0.3 percentage point greater than a year earlier. Market share data on premiums written in non-life insurance only come in once a year. Non-life Insurance -------------------------------------------------------------------------------- | EUR million | Jan.-Mar. | Jan.-Mar. | Change, % | Jan.-Dec. | | | 2007 | 2006 | | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Insurance premium revenue | 204 | 187 | 9.0 | 788 | -------------------------------------------------------------------------------- | Insurance claims and | 147 | 129 | 14.3 | 536 | | benefits | | | | | -------------------------------------------------------------------------------- | Net investment income | 48 | 36 | 30.5 | 115 | -------------------------------------------------------------------------------- | Unwinding of discount and | -9 | -8 | 11.0 | -36 | | other items included in net | | | | | | income | | | | | -------------------------------------------------------------------------------- | Net income from Non-life | 95 | 86 | 10.0 | 332 | | Insurance | | | | | -------------------------------------------------------------------------------- | Other income | 8 | 7 | 11.6 | 24 | -------------------------------------------------------------------------------- | Personnel costs | 26 | 24 | 8.1 | 99 | -------------------------------------------------------------------------------- | Other expenses | 46 | 46 | -0.4 | 179 | -------------------------------------------------------------------------------- | Earnings before tax | 31 | 23 | 33.0 | 78 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Insurance premium revenue | | | | | -------------------------------------------------------------------------------- | Private persons | 80 | 73 | 10.0 | 308 | -------------------------------------------------------------------------------- | Corporations and | 111 | 105 | 6.1 | 434 | | institutions | | | | | -------------------------------------------------------------------------------- | Baltic countries | 13 | 10 | 32.2 | 47 | -------------------------------------------------------------------------------- | Insurance premium revenue, | 204 | 187 | 9.0 | 788 | | total | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR billion | 31 Mar. | 31 Dec. | Change, % | | | | 2007 | 2006 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Insurance contract | | | | | | liabilities | | | | | -------------------------------------------------------------------------------- | Discounted insurance | 1.2 | 1.2 | 1.5 | | | contract liabilities | | | | | -------------------------------------------------------------------------------- | Other insurance contract | 1.0 | 0.7 | 27.9 | | | liabilities | | | | | -------------------------------------------------------------------------------- | Total | 2.2 | 2.0 | 11.5 | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Investment portfolio | | | | | -------------------------------------------------------------------------------- | Bonds | 1.7 | 1.8 | -3.1 | | -------------------------------------------------------------------------------- | Money market instruments | 0.0 | 0.0 | -13.6 | | -------------------------------------------------------------------------------- | Equities | 0.5 | 0.4 | 9.4 | | -------------------------------------------------------------------------------- | Investment properties | 0.1 | 0.1 | 5.3 | | -------------------------------------------------------------------------------- | Alternative investments | 0.1 | 0.1 | 52.9 | | -------------------------------------------------------------------------------- | Total | 2.4 | 2.4 | 1.4 | | -------------------------------------------------------------------------------- Life Insurance The OP Bank Group's premiums written in life and pension insurance were EUR 256 million (265), 3.4% down on the previous year. Although premiums written contracted, the market share of the OP Bank Group in premiums written in life insurance grew by 0.9 percentage point compared with the year-ago figure and by 2.9 percentage points since the end of 2006. Market share was 31.2% at the end of March. Premiums written in savings life insurance declined by 11%. Premiums written in pension insurance grew by 32%. Growth in premiums written in personal pension insurance was 6.8%. Premiums written in unit-linked policies accounted for 63% of premiums written in savings life insurance and personal pension insurance. Life insurance claims paid totalled EUR 190 million (117), of which surrenders accounted for EUR 67 million (49.1). EUR 8.2 million in pensions (6.1) was paid out in the review period. Return on investments at fair values was 1.2%. Unrealised rise in value of available-for-sale financial assets after the deduction of deferred taxes was EUR 67 million, an increase of EUR 15 million on the end of 2006. Earnings Pre-tax earnings generated by Life Insurance totalled EUR 36 million, as against EUR 19 million a year earlier. The raising of the share of mutual fund investments in the Life Insurance fixed-income portfolio in 2006 affects the comparability of earnings in the report period. Under the portfolio structure for the comparison period, earnings before tax in the review period are estimated to be about EUR 8 million lower than the stated figure. Net income from Life Insurance was EUR 49 million (35). Net income included provisions for future customer bonuses that equalled the provisions previously discharged. A year earlier customer bonuses burdened earnings before tax by EUR 4 million. Personnel costs declined to EUR 1.8 million (2.4) and other administrative expenses to EUR 14.1 million (16.9). Other expenses include EUR 5.2 million (8.1) in commissions paid to the sales network. The aggregate insurance contract liabilities of the OP Bank Group's life insurance operations stood at EUR 5.8 billion at the end of March (5.7), an increase of 2.1% since the end of 2006. The OP Bank Group's market share of insurance savings through life and pension insurance policies increased by 0.9 percentage point to 19.4% since the end of March 2006. Unit-linked policies accounted for 38% 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). Life Insurance -------------------------------------------------------------------------------- | EUR million | Jan.-Mar. | Jan.-Mar. | Change, % | Jan.-Dec. | | | 2007 | 2006 | | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Premiums written | 256 | 265 | -3.4 | 857 | -------------------------------------------------------------------------------- | Unit-linked | 142 | 152 | -6.8 | 472 | -------------------------------------------------------------------------------- | Other | 114 | 113 | 1.1 | 385 | -------------------------------------------------------------------------------- | Net investment income | 105 | 211 | -50.1 | 463 | -------------------------------------------------------------------------------- | Unit-linked | 57 | 167 | -65.7 | 267 | -------------------------------------------------------------------------------- | Other | 48 | 44 | 8.3 | 196 | -------------------------------------------------------------------------------- | Change in insurance | 122 | 320 | -61.7 | 750 | | contract liabilities | | | | | -------------------------------------------------------------------------------- | Unit-linked | 129 | 293 | -56.2 | 555 | -------------------------------------------------------------------------------- | Other | -6 | 26 | -123.2 | 195 | -------------------------------------------------------------------------------- | Claims incurred | 190 | 117 | 62.6 | 448 | -------------------------------------------------------------------------------- | Other items | 0 | -4 | -100.0 | -4 | -------------------------------------------------------------------------------- | Net income from Life | 49 | 35 | 38.3 | 119 | | Insurance operations | | | | | -------------------------------------------------------------------------------- | Other income | 4 | 4 | -1.8 | 12 | -------------------------------------------------------------------------------- | Personnel costs | 2 | 2 | -22.4 | 8 | -------------------------------------------------------------------------------- | Other expenses | 14 | 18 | -19.7 | 54 | -------------------------------------------------------------------------------- | Earnings before tax | 36 | 19 | 91.6 | 68 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Premiums written | | | | | -------------------------------------------------------------------------------- | Savings life insurance | 187 | 210 | -11.0 | 635 | -------------------------------------------------------------------------------- | Pension insurance | 49 | 37 | 32.0 | 185 | -------------------------------------------------------------------------------- | Term life insurance | 7 | 7 | 2.8 | 22 | -------------------------------------------------------------------------------- | Other | 13 | 12 | 13.4 | 24 | -------------------------------------------------------------------------------- | Premiums written, total | 256 | 266 | -3.5 | 867 | -------------------------------------------------------------------------------- | of which unit-linked | 142 | 152 | -6.8 | 472 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Market share of premiums | 31.2 | 30.3 | 0.9 | 28.3 | | written in life and pension | | | | | | insurance | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR billion | 31 Mar. | 31 Dec. | Change, % | | | | 2007 | 2006 | | | -------------------------------------------------------------------------------- | Insurance savings | | | | | -------------------------------------------------------------------------------- | Savings life insurance | 4.1 | 4.0 | 2.0 | | -------------------------------------------------------------------------------- | Pension insurance | 1.4 | 1.3 | 4.4 | | -------------------------------------------------------------------------------- | Capital redemption | 0.1 | 0.2 | -12.5 | | | contracts | | | | | -------------------------------------------------------------------------------- | Insurance savings, total | 5.7 | 5.6 | 2.1 | | -------------------------------------------------------------------------------- | of which unit-linked | 2.2 | 2.1 | 6.2 | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Investment portfolio | 31 Mar. | 31 Dec. | Change, % | | | | 2007 | 2006 | | | -------------------------------------------------------------------------------- | Fixed-income | 2.8 | 2.9 | -2.7 | | -------------------------------------------------------------------------------- | Equities and equity funds | 0.6 | 0.6 | 4.2 | | -------------------------------------------------------------------------------- | Investment properties | 0.4 | 0.3 | 24.5 | | -------------------------------------------------------------------------------- | Alternative investments | 0.2 | 0.2 | -5.5 | | -------------------------------------------------------------------------------- | Total | 4.1 | 4.1 | 0.5 | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | 31 Mar. | 31 Dec. | Change* | 31 Dec. | | | 2007 | 2006 | | 2006 | -------------------------------------------------------------------------------- | Market share of insurance | 19.4. | 18.5 | 0.9 | 19.1 | | savings in life and pension | | | | | | insurance | | | | | -------------------------------------------------------------------------------- Other Operations Earnings before tax from Other Operations were EUR 5.9 million negative (3.2) in the review period. The result of Other Operations is burdened by the EUR 10 million in liquidated damages in the Nooa Savings Bank dispute, as stated earlier. -------------------------------------------------------------------------------- | OP Bank Group income statement 1 January - | | | | | 31 March 2007 | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR million | 1-3/ | 1-3/ | Change, | 1-12/ | | | 2007 | 2006 | % | 2006 | -------------------------------------------------------------------------------- | Interest income | 756 | 480 | 57 | 2 340 | -------------------------------------------------------------------------------- | Interest expenses | 511 | 279 | 83 | 1 457 | -------------------------------------------------------------------------------- | Net interest income (Note 1) | 244 | 202 | 21 | 883 | -------------------------------------------------------------------------------- | Impairment losses on receivables | 1 | -2 | | 9 | | (Note 2) | | | | | -------------------------------------------------------------------------------- | Net interest income after | 244 | 203 | 20 | 874 | | impairment losses | | | | | -------------------------------------------------------------------------------- | Net income from Non-life | 94 | 86 | 9 | 328 | | Insurance operations | | | | | | (Note 3) | | | | | -------------------------------------------------------------------------------- | Net income from Life Insurance | 48 | 34 | 40 | 110 | | operations (Note 4) | | | | | -------------------------------------------------------------------------------- | Net commissions and fees (Note | 120 | 110 | 9 | 396 | | 5) | | | | | -------------------------------------------------------------------------------- | Net trading income (Note 6) | 9 | 10 | -1 | 32 | -------------------------------------------------------------------------------- | Net investment income (Note 7) | 19 | 39 | -51 | 112 | -------------------------------------------------------------------------------- | Other operating income (Note 8) | 21 | 23 | -6 | 92 | -------------------------------------------------------------------------------- | Personnel costs (Note 9) | 140 | 134 | 4 | 527 | -------------------------------------------------------------------------------- | Other administrative expenses | 71 | 72 | -2 | 290 | | (Note 10) | | | | | -------------------------------------------------------------------------------- | Other operating expenses (Note | 78 | 72 | 8 | 267 | | 11) | | | | | -------------------------------------------------------------------------------- | Returns to owner-members (Note | 23 | 14 | 62 | 64 | | 12) | | | | | -------------------------------------------------------------------------------- | Share of associates' | 2 | -1 | | 2 | | profits/losses | | | | | -------------------------------------------------------------------------------- | Earnings before tax for the | 246 | 211 | 16 | 800 | | period | | | | | -------------------------------------------------------------------------------- | Income tax | 61 | 70 | -12 | 202 | -------------------------------------------------------------------------------- | Profit for the period | 185 | 141 | 31 | 598 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Share of OP Bank Group's owners | 184 | 141 | 30 | 598 | | in the period's earnings | | | | | -------------------------------------------------------------------------------- | Share of minority interest in | 0 | 0 | | 0 | | the period's earnings | | | | | -------------------------------------------------------------------------------- | Total | 185 | 141 | 31 | 598 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Key figures and ratios | 1-3/ | 1-3/ | | 1-12/ | | | 2007 | 2006 | | 2006 | -------------------------------------------------------------------------------- | Return on equity, % | 14.4 | 12.3 | | 12.1 | -------------------------------------------------------------------------------- | Return on equity at fair values, | 15.5 | 9.4 | | 11.4 | | % | | | | | -------------------------------------------------------------------------------- | Return on assets, % | 1.22 | 1.05 | | 1.06 | -------------------------------------------------------------------------------- | Cost/income ratio, % | 52 | 55 | | 55 | -------------------------------------------------------------------------------- | Average personnel | 12 229 | 12 085 | | 12 148 | -------------------------------------------------------------------------------- | Full-time | 11 018 | 11 407 | | 10 988 | -------------------------------------------------------------------------------- | Part-time | 1 211 | 678 | | 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 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | OP Bank Group quarterly | | | | | | | performance | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | 2006 | 2007 | -------------------------------------------------------------------------------- | EUR million | 1-3 | 3-6 | 6-9 | 9-12 | 1-3 | -------------------------------------------------------------------------------- | Interest income | 480 | 551 | 617 | 692 | 756 | -------------------------------------------------------------------------------- | Interest expenses | 279 | 337 | 391 | 450 | 511 | -------------------------------------------------------------------------------- | Net interest income | 202 | 214 | 226 | 241 | 244 | -------------------------------------------------------------------------------- | Impairment losses on | -2 | 3 | 3 | 5 | 1 | | receivables | | | | | | -------------------------------------------------------------------------------- | Net interest income after | 203 | 211 | 223 | 237 | 244 | | impairment losses | | | | | | -------------------------------------------------------------------------------- | Net income from Non-life | 86 | 90 | 67 | 85 | 94 | | Insurance operations | | | | | | -------------------------------------------------------------------------------- | Net income from Life | 34 | 26 | 20 | 30 | 48 | | Insurance operations | | | | | | -------------------------------------------------------------------------------- | Net commissions and fees | 110 | 92 | 92 | 101 | 120 | -------------------------------------------------------------------------------- | Net trading income | 10 | 1 | 8 | 14 | 9 | -------------------------------------------------------------------------------- | Net investment income | 39 | 22 | 31 | 20 | 19 | -------------------------------------------------------------------------------- | Other operating income | 23 | 22 | 24 | 24 | 21 | -------------------------------------------------------------------------------- | Personnel costs | 134 | 129 | 115 | 149 | 140 | -------------------------------------------------------------------------------- | Other administrative | 72 | 76 | 62 | 80 | 71 | | expenses | | | | | | -------------------------------------------------------------------------------- | Other operating expenses | 72 | 66 | 62 | 66 | 78 | -------------------------------------------------------------------------------- | Returns to owner-members | 14 | 15 | 18 | 18 | 23 | -------------------------------------------------------------------------------- | Share of associates' | -1 | 0 | 0 | 3 | 2 | | profits/losses | | | | | | -------------------------------------------------------------------------------- | Earnings before tax for the | 211 | 178 | 209 | 202 | 246 | | period | | | | | | -------------------------------------------------------------------------------- | Income tax | 70 | 42 | 39 | 51 | 61 | -------------------------------------------------------------------------------- | Profit for the period | 141 | 136 | 170 | 151 | 185 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | OP Bank Group balance sheet | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR million | 31 March | 31 March | Change, | 31 Dec. | | | 2007 | 2006 | % | 2006 | -------------------------------------------------------------------------------- | Liquid assets | 1 242 | 1 071 | 16 | 1 041 | -------------------------------------------------------------------------------- | Receivables from financial | 349 | 187 | 86 | 344 | | institutions | | | | | -------------------------------------------------------------------------------- | Financial assets for trading | 5 379 | 5 001 | 8 | 4 816 | | (Note 13) | | | | | -------------------------------------------------------------------------------- | Derivative contracts | 384 | 180 | | 319 | -------------------------------------------------------------------------------- | Receivables from customers | 40 889 | 35 859 | 14 | 39 595 | -------------------------------------------------------------------------------- | Non-life Insurance assets | 2 984 | 3 101 | -4 | 2 761 | | (Note 14) | | | | | -------------------------------------------------------------------------------- | Life Insurance assets (Note | 6 284 | 5 672 | 11 | 6 061 | | 15) | | | | | -------------------------------------------------------------------------------- | Investment assets (Note 16) | 1 448 | 1 714 | -16 | 1 413 | -------------------------------------------------------------------------------- | Investments in associates | 36 | 40 | -9 | 35 | -------------------------------------------------------------------------------- | Intangible assets | 1 246 | 1 281 | -3 | 1 255 | -------------------------------------------------------------------------------- | Tangible assets | 704 | 693 | 2 | 702 | -------------------------------------------------------------------------------- | Other assets | 1 633 | 1 134 | 44 | 1 104 | -------------------------------------------------------------------------------- | Tax receivables | 103 | 123 | -17 | 90 | -------------------------------------------------------------------------------- | Assets classified as held for | - | 60 | | - | | sale | | | | | -------------------------------------------------------------------------------- | Total assets | 62 680 | 56 118 | 12 | 59 535 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Liabilities to financial | 660 | 2 062 | -68 | 1 088 | | institutions | | | | | -------------------------------------------------------------------------------- | Financial liabilities for | 0 | 3 | | - | | trading | | | | | -------------------------------------------------------------------------------- | Derivative contracts | 406 | 178 | | 340 | -------------------------------------------------------------------------------- | Liabilities to customers | 28 437 | 26 131 | 9 | 27 715 | -------------------------------------------------------------------------------- | Non-life Insurance | 2 515 | 2 292 | 10 | 2 099 | | liabilities (Note 17) | | | | | -------------------------------------------------------------------------------- | Life Insurance liabilities | 5 830 | 5 232 | 11 | 5 667 | | (Note 18) | | | | | -------------------------------------------------------------------------------- | Debt securities issued to the | 15 151 | 11 469 | 32 | 13 500 | | public (Note 19) | | | | | -------------------------------------------------------------------------------- | Provisions and other | 1 936 | 1 720 | 13 | 1 508 | | liabilities | | | | | -------------------------------------------------------------------------------- | Tax liabilities | 869 | 845 | 3 | 834 | -------------------------------------------------------------------------------- | Cooperative capital | 597 | 724 | -17 | 597 | -------------------------------------------------------------------------------- | Subordinated liabilites (Note | 1 020 | 830 | 23 | 1 063 | | 20) | | | | | -------------------------------------------------------------------------------- | Liabilities directly | - | 46 | | - | | associated with assets | | | | | | classified as held for sale | | | | | -------------------------------------------------------------------------------- | Total liabilities | 57 421 | 51 531 | 11 | 54 411 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Equity capital | | | | | -------------------------------------------------------------------------------- | Share of OP Bank Group's | | | | | | owners | | | | | -------------------------------------------------------------------------------- | Share and cooperative capital | 353 | 245 | 44 | 344 | -------------------------------------------------------------------------------- | Share issue account | 0 | 0 | | - | -------------------------------------------------------------------------------- | Translation differences | 0 | -1 | -97 | 0 | -------------------------------------------------------------------------------- | Reserves | 2 336 | 2 233 | 5 | 2 295 | -------------------------------------------------------------------------------- | Retained earnings | 2 567 | 2 106 | 22 | 2 483 | -------------------------------------------------------------------------------- | Minority interest | 3 | 4 | -14 | 2 | -------------------------------------------------------------------------------- | Total equity capital | 5 259 | 4 587 | 15 | 5 124 | -------------------------------------------------------------------------------- | Total liabilities and equity | 62 680 | 56 118 | 12 | 59 535 | | capital | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Changes in equity | | | | | | | capital | | | | | | -------------------------------------------------------------------------------- | EUR million | Share | Reserve | Retained | Minorit | Total | | | and | s | earnings | y | equity | | | cooperat | | | interes | capital | | | ive | | | t | | | | capital | | | | | -------------------------------------------------------------------------------- | Equity capital 1 | 244 | 2 250 | 2 061 | 203 | 4 757 | | January 2006 | | | | | | -------------------------------------------------------------------------------- | Changes in accounting | - | - | - | - | - | | policies | | | | | | -------------------------------------------------------------------------------- | Increase in share | 1 | -1 | - | - | - | | capital | | | | | | -------------------------------------------------------------------------------- | Fair value reserve | - | -33 | - | - | -33 | -------------------------------------------------------------------------------- | Transfer of reserves | - | 15 | -15 | - | - | -------------------------------------------------------------------------------- | Distribution of profit | - | - | -73 | -1 | -74 | -------------------------------------------------------------------------------- | Profit for the period | - | - | 141 | 0 | 141 | -------------------------------------------------------------------------------- | Other | 0 | 1 | -8 | -198 | -205 | -------------------------------------------------------------------------------- | Equity capital 31 March | 245 | 2 233 | 2 106 | 4 | 4 587 | | 2006 | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Equity capital 1 | 344 | 2 295 | 2 483 | 2 | 5 124 | | January 2007 | | | | | | -------------------------------------------------------------------------------- | Increase in share | - | - | - | - | - | | capital | | | | | | -------------------------------------------------------------------------------- | Transfer of cooperative | 9 | - | - | - | 9 | | capital to equity | | | | | | | capital | | | | | | -------------------------------------------------------------------------------- | Fair value reserve | - | 14 | - | - | 14 | -------------------------------------------------------------------------------- | Transfer of reserves | - | 27 | -27 | - | - | -------------------------------------------------------------------------------- | Distribution of profit | - | - | -76 | - | -76 | -------------------------------------------------------------------------------- | Profit for the period | - | - | 184 | 0 | 185 | -------------------------------------------------------------------------------- | Other | - | 0 | 3 | 1 | 3 | -------------------------------------------------------------------------------- | Equity capital 31 March | 353 | 2 336 | 2 567 | 3 | 5 259 | | 2007 | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flow statement | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR million | | | | 1-3/ | 1-3/ | | | | | | 2007 | 2006 | -------------------------------------------------------------------------------- | Cash flow from operating activities | | | | | | -------------------------------------------------------------------------------- | Profit for the period | | | | 185 | 141 | -------------------------------------------------------------------------------- | Adjustments to profit for the period | | | | 360 | 383 | -------------------------------------------------------------------------------- | Increase (-) or decrease (+) in | | | | -2 860 | -2 582 | | operating assets | | | | | | -------------------------------------------------------------------------------- | Receivables from financial institutions | | | | -6 | 480 | -------------------------------------------------------------------------------- | Financial assets held for trading | | | | -554 | -1 148 | -------------------------------------------------------------------------------- | Derivative contracts | | | | -20 | -14 | -------------------------------------------------------------------------------- | Receivables from customers | | | | -1 296 | -1 055 | -------------------------------------------------------------------------------- | Non-life Insurance assets | | | | -201 | -322 | -------------------------------------------------------------------------------- | Life Insurance assets | | | | -213 | -165 | -------------------------------------------------------------------------------- | Investment assets | | | | -37 | -93 | -------------------------------------------------------------------------------- | Other assets | | | | -533 | -265 | -------------------------------------------------------------------------------- | Increase (+) or decrease (-) in | | | | 973 | 122 | | operating liabilities | | | | | | -------------------------------------------------------------------------------- | Liabilities to financial institutions | | | | -428 | 32 | -------------------------------------------------------------------------------- | Financial liabilities held for trading | | | | - | -1 | -------------------------------------------------------------------------------- | Derivative contracts | | | | 23 | 15 | -------------------------------------------------------------------------------- | Liabilities to customers | | | | 721 | -344 | -------------------------------------------------------------------------------- | Non-life Insurance liabilities | | | | 216 | 169 | -------------------------------------------------------------------------------- | Life Insurance liabiilties | | | | 40 | -7 | -------------------------------------------------------------------------------- | Provisions and other liabilities | | | | 401 | 258 | -------------------------------------------------------------------------------- | Income tax paid | | | | -30 | -26 | -------------------------------------------------------------------------------- | Dividends received | | | | 59 | 42 | -------------------------------------------------------------------------------- | A. Total cash flow from operating | | | | -1 313 | -1 920 | | activities | | | | | | -------------------------------------------------------------------------------- | Cash flow from investing activities | | | | | | -------------------------------------------------------------------------------- | Increases in held-to-maturity financial | | | | -50 | -1 | | assets | | | | | | -------------------------------------------------------------------------------- | Decreases in held-to-maturity financial | | | | 54 | 4 | | assets | | | | | | -------------------------------------------------------------------------------- | Acquisition of subsidiaries net of cash and | | | - | -102 | | cash equivalents acquired | | | | | -------------------------------------------------------------------------------- | Disposal of subsidiaries net of cash and | | | 3 | 5 | | cash equivalents disposed of | | | | | -------------------------------------------------------------------------------- | Investments in tangible and intangible | | | | -25 | -18 | | assets | | | | | | -------------------------------------------------------------------------------- | Surrender of tangible and intangible | | | | 3 | 5 | | assets | | | | | | -------------------------------------------------------------------------------- | B. Total cash flow from investing | | | | -15 | -107 | | activities | | | | | | -------------------------------------------------------------------------------- | Cash flow from financing activities | | | | | | -------------------------------------------------------------------------------- | Increases in subordinated liabilities | | | | 40 | 181 | -------------------------------------------------------------------------------- | Decreases in subordinated liabilities | | | | -83 | -227 | -------------------------------------------------------------------------------- | Increases in debt securities issued to | | | | 9 510 | 11 150 | | the public | | | | | | -------------------------------------------------------------------------------- | Decreases in debt securities issued to | | | | -7 862 | -8 556 | | the public | | | | | | -------------------------------------------------------------------------------- | Increases in cooperative and share | | | | 44 | 24 | | capital | | | | | | -------------------------------------------------------------------------------- | Decrease in cooperative and share | | | | -34 | -16 | | capital | | | | | | -------------------------------------------------------------------------------- | Dividends paid and interest on | | | | -76 | -73 | | cooperative capital | | | | | | -------------------------------------------------------------------------------- | Returns to owner-members | | | | -7 | -9 | -------------------------------------------------------------------------------- | Monetary increases in other equity items | | | | - | 1 | -------------------------------------------------------------------------------- | Other | | | | - | -11 | -------------------------------------------------------------------------------- | C. Total cash flow from financing | | | | 1 532 | 2 464 | | activities | | | | | | -------------------------------------------------------------------------------- | Net change in cash and cash equivalents | | | | 204 | 437 | | (A+B+C) | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash and cash equivalents at the | | | | 1 098 | 729 | | beginning of the period | | | | | | -------------------------------------------------------------------------------- | Cash and cash equivalents at the end of | | | | 1 302 | 1 166 | | the period | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest received | | | | 674 | 392 | -------------------------------------------------------------------------------- | Interest paid | | | | 510 | 277 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Adjustments to profit for the period | | | | | | -------------------------------------------------------------------------------- | Items not associated with payment and | | | | | | | other adjustments | | | | | | -------------------------------------------------------------------------------- | Impairments on receivables | | | | 1 | -1 | -------------------------------------------------------------------------------- | Unrealised net earnings in Non-life | | | | 209 | 210 | | Insurance | | | | | | -------------------------------------------------------------------------------- | Unrealised net earnings in Life | | | | 103 | 171 | | Insurance | | | | | | -------------------------------------------------------------------------------- | Change in fair value for trading | | | | 8 | 8 | -------------------------------------------------------------------------------- | Unrealised net gains on foreign exchange | | | | -12 | -18 | | operations | | | | | | -------------------------------------------------------------------------------- | Change in fair value of investment | | | | 1 | -1 | | properties | | | | | | -------------------------------------------------------------------------------- | Amortisation and depreciation | | | | 32 | 32 | -------------------------------------------------------------------------------- | Share of associates' profits/losses | | | | -2 | 1 | -------------------------------------------------------------------------------- | Other | | | | 15 | -29 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Items presented outside cash flow from | | | | | | | operating activities | | | | | | -------------------------------------------------------------------------------- | Capital gains, share of cash flow from | | | | - | -3 | | investing activities | | | | | | -------------------------------------------------------------------------------- | Interest on cooperative capital | | | | 5 | 4 | -------------------------------------------------------------------------------- | Other returns to owner-members | | | | - | 9 | -------------------------------------------------------------------------------- | Total adjustments | | | | 360 | 383 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash and cash equivalents | | | | | | -------------------------------------------------------------------------------- | Liquid assets | | | | 137 | 157 | -------------------------------------------------------------------------------- | Receivables from financial institutions | | | | 1 165 | 1 009 | | payable on demand | | | | | | -------------------------------------------------------------------------------- | Total | | | | 1 302 | 1 166 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Notes | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 1 Net interest income | | | | | -------------------------------------------------------------------------------- | EUR million | 1-3/ | 1-3/ | Change, % | 1-12/ | | | 2007 | 2006 | | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest income | | | | | -------------------------------------------------------------------------------- | Receivables from financial | 13 | 7 | 100 | 34 | | institutions | | | | | -------------------------------------------------------------------------------- | Receivables from customers | 462 | 305 | 52 | 1 460 | -------------------------------------------------------------------------------- | Other | 281 | 169 | 66 | 846 | -------------------------------------------------------------------------------- | Total | 756 | 480 | 57 | 2 340 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest expenses | | | | | -------------------------------------------------------------------------------- | Liabilities to financial | 8 | 15 | -45 | 71 | | institutions | | | | | -------------------------------------------------------------------------------- | Liabilities to customers | 135 | 74 | 83 | 361 | -------------------------------------------------------------------------------- | Other | 367 | 190 | 94 | 1 025 | -------------------------------------------------------------------------------- | Total | 511 | 279 | 83 | 1 457 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net interest income | 244 | 202 | 21 | 883 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 2 Impairment losses on | | | | | | receivables | | | | | -------------------------------------------------------------------------------- | EUR million | 1-3/ | 1-3/ | Change, % | 1-12/ | | | 2007 | 2006 | | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Impairment losses on | 6 | 7 | -11 | 38 | | receivables | | | | | -------------------------------------------------------------------------------- | Reversals of impairment | -4 | -8 | 47 | -24 | | losses | | | | | -------------------------------------------------------------------------------- | Payments on impaired | -1 | -1 | -37 | -6 | | receivables | | | | | | amortised from balance sheet | | | | | -------------------------------------------------------------------------------- | Net change in group-specific | 0 | 1 | -29 | 1 | | impairment losses | | | | | -------------------------------------------------------------------------------- | Total | 1 | -2 | | 9 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 3 Net income from | | | | | | Non-life Insurance | | | | | -------------------------------------------------------------------------------- | EUR million | 1-3/ | 1-3/ | Change, % | 1-12/ | | | 2007 | 2006 | | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net insurance premium | | | | | | revenue | | | | | -------------------------------------------------------------------------------- | Premiums written | 433 | 405 | 7 | 877 | -------------------------------------------------------------------------------- | Insurance premiums ceded to | -29 | -28 | -6 | -55 | | reinsurers | | | | | -------------------------------------------------------------------------------- | Change in provision for | -216 | -206 | -5 | -35 | | unearned premiums | | | | | -------------------------------------------------------------------------------- | Reinsurers' share | 16 | 16 | -1 | 2 | -------------------------------------------------------------------------------- | Total | 204 | 187 | 9 | 788 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net Non-life Insurance | | | | | | claims | | | | | -------------------------------------------------------------------------------- | Claims paid | -149 | -119 | -25 | -470 | -------------------------------------------------------------------------------- | Insurance claims recovered | 1 | -6 | | -30 | | from reinsurers | | | | | -------------------------------------------------------------------------------- | Change in provision for | -2 | 0 | | -51 | | unpaid claims | | | | | -------------------------------------------------------------------------------- | Reinsurers' share | 2 | -4 | | 15 | -------------------------------------------------------------------------------- | Total | -147 | -129 | -14 | -536 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net investment income, | | | | | | Non-life Insurance | | | | | -------------------------------------------------------------------------------- | Interest income | 17 | 18 | -4 | 72 | -------------------------------------------------------------------------------- | Capital gains and losses and realised | | | | | changes in fair value | | | | -------------------------------------------------------------------------------- | Notes and bonds | -24 | -1 | | -24 | -------------------------------------------------------------------------------- | Shares and participations | 32 | 4 | | 36 | -------------------------------------------------------------------------------- | Properties | 0 | 1 | -96 | 1 | -------------------------------------------------------------------------------- | Other | 3 | 2 | | 8 | -------------------------------------------------------------------------------- | Unrealised changes in fair | | | | | | value | | | | | -------------------------------------------------------------------------------- | Notes and bonds | 0 | 0 | | -1 | -------------------------------------------------------------------------------- | Shares and participations | 0 | 0 | | 0 | -------------------------------------------------------------------------------- | Properties | 0 | 0 | -91 | 2 | -------------------------------------------------------------------------------- | Other | 1 | 0 | | -1 | -------------------------------------------------------------------------------- | Dividend income | 18 | 14 | 32 | 22 | -------------------------------------------------------------------------------- | Total | 46 | 36 | 29 | 116 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Unwinding of discount | -10 | -9 | -5 | -37 | -------------------------------------------------------------------------------- | Other | 0 | 0 | -65 | -3 | -------------------------------------------------------------------------------- | Net income from Non-life | 94 | 86 | 9 | 328 | | Insurance | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 4 Net income from Life | | | | | | Insurance | | | | | -------------------------------------------------------------------------------- | EUR million | 1-3/ | 1-3/ | Change, % | 1-12/ | | | 2007 | 2006 | | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Premiums written | 255 | 265 | -4 | 859 | -------------------------------------------------------------------------------- | Reinsurers' share | 0 | 0 | -12 | -2 | -------------------------------------------------------------------------------- | Net investment income | 104 | 209 | -50 | 454 | -------------------------------------------------------------------------------- | Claims incurred | | | | | -------------------------------------------------------------------------------- | Benefits paid | -184 | -114 | -61 | -437 | -------------------------------------------------------------------------------- | Change in provision for | -5 | -6 | 24 | -24 | | unpaid claims | | | | | -------------------------------------------------------------------------------- | Reinsurers' share | 0 | 0 | | 0 | -------------------------------------------------------------------------------- | Change in insurance contract | | | | | | liabilities | | | | | -------------------------------------------------------------------------------- | Change in life insurance | -122 | -310 | 61 | -695 | | provision | | | | | -------------------------------------------------------------------------------- | Reinsurers' share | 0 | -1 | 81 | -4 | -------------------------------------------------------------------------------- | Other | 0 | -8 | | -40 | -------------------------------------------------------------------------------- | Net income from Life | 48 | 34 | 40 | 110 | | Insurance | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 5 Commissions and fees | | | | | -------------------------------------------------------------------------------- | EUR million | 1-3/ | 1-3/ | Change, % | 1-12/ | | | 2007 | 2006 | | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Commission income | | | | | -------------------------------------------------------------------------------- | Lending | 26 | 21 | 20 | 88 | -------------------------------------------------------------------------------- | Deposits | 1 | 2 | -7 | 6 | -------------------------------------------------------------------------------- | Payment transfers | 28 | 29 | -4 | 116 | -------------------------------------------------------------------------------- | Securities brokerage | 7 | 7 | -4 | 22 | -------------------------------------------------------------------------------- | Securities issuance | 1 | 1 | -41 | 6 | -------------------------------------------------------------------------------- | Mutual funds brokerage | 23 | 22 | 5 | 84 | -------------------------------------------------------------------------------- | Asset management and legal | 12 | 15 | -20 | 56 | | services | | | | | -------------------------------------------------------------------------------- | Insurance brokerage | 27 | 23 | 18 | 43 | -------------------------------------------------------------------------------- | Guarantees | 3 | 3 | 6 | 11 | -------------------------------------------------------------------------------- | Other | 10 | 7 | 34 | 36 | -------------------------------------------------------------------------------- | Total | 137 | 130 | 5 | 467 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Commission expenses | | | | | -------------------------------------------------------------------------------- | Total | 17 | 20 | -16 | 71 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net commissions and fees | 120 | 110 | 9 | 396 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 6 Net trading income | | | | | -------------------------------------------------------------------------------- | EUR million | 1-3/ | 1-3/ | Change, % | 1-12/ | | | 2007 | 2006 | | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Capital gains and losses | | | | | -------------------------------------------------------------------------------- | Notes and bonds | -1 | -3 | -84 | -9 | -------------------------------------------------------------------------------- | Shares and participations | 2 | -1 | | 7 | -------------------------------------------------------------------------------- | Derivatives | -1 | 4 | | 10 | -------------------------------------------------------------------------------- | Changes in fair value | | | | | -------------------------------------------------------------------------------- | Notes and bonds | -3 | -27 | -88 | -27 | -------------------------------------------------------------------------------- | Shares and participations | 0 | 7 | | 3 | -------------------------------------------------------------------------------- | Derivatives | 9 | 25 | -64 | 35 | -------------------------------------------------------------------------------- | Net income from hedge | | | | | | accounting | | | | | -------------------------------------------------------------------------------- | Net income from hedging | - | - | | - | | contracts | | | | | -------------------------------------------------------------------------------- | Net income from hedged | - | - | | - | | contracts | | | | | -------------------------------------------------------------------------------- | Dividend income | 0 | 0 | -35 | 1 | -------------------------------------------------------------------------------- | Net income from foreign | 3 | 4 | -16 | 13 | | exchange operations | | | | | -------------------------------------------------------------------------------- | Total | 9 | 10 | -1 | 32 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 7 Net investment income | | | | | -------------------------------------------------------------------------------- | EUR million | 1-3/ | 1-3/ | Change, % | 1-12/ | | | 2007 | 2006 | | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Available-for-sale financial | | | | | | assets | | | | | -------------------------------------------------------------------------------- | Capital gains and losses | | | | | -------------------------------------------------------------------------------- | Notes and bonds | 0 | 0 | 27 | 1 | -------------------------------------------------------------------------------- | Shares and participations | 7 | 21 | -66 | 40 | -------------------------------------------------------------------------------- | Other | - | - | | - | -------------------------------------------------------------------------------- | Net income from hedge | | | | | | accounting | | | | | -------------------------------------------------------------------------------- | Net income from hedging | - | - | | - | | contracts | | | | | -------------------------------------------------------------------------------- | Net income from hedged | - | - | | - | | contracts | | | | | -------------------------------------------------------------------------------- | Dividend income | 6 | 6 | 11 | 20 | -------------------------------------------------------------------------------- | Impairment losses | 0 | - | | -1 | -------------------------------------------------------------------------------- | Total | 13 | 27 | -52 | 60 | -------------------------------------------------------------------------------- | Investment properties | | | | | -------------------------------------------------------------------------------- | Rental income | 14 | 14 | -4 | 55 | -------------------------------------------------------------------------------- | Maintenance charges and | -6 | -8 | 25 | -34 | | expenses | | | | | -------------------------------------------------------------------------------- | Changes in fair value, | -1 | 6 | | 30 | | capital gains and losses | | | | | -------------------------------------------------------------------------------- | Other | 0 | 0 | | 1 | -------------------------------------------------------------------------------- | Total | 6 | 12 | -48 | 52 | -------------------------------------------------------------------------------- | Other | 0 | - | | 0 | -------------------------------------------------------------------------------- | Net investment income | 19 | 39 | -51 | 112 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 8 Other operating | | | | | | income | | | | | -------------------------------------------------------------------------------- | EUR million | 1-3/ | 1-3/ | Change, % | 1-12/ | | | 2007 | 2006 | | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Income from properties and | 3 | 3 | -15 | 12 | | business | | | | | | premises in own use | | | | | -------------------------------------------------------------------------------- | Other | 19 | 20 | -5 | 80 | -------------------------------------------------------------------------------- | Total | 21 | 23 | -6 | 92 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 9 Personnel costs | | | | | -------------------------------------------------------------------------------- | EUR million | 1-3/ | 1-3/ | Change, % | 1-12/ | | | 2007 | 2006 | | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Salaries and remuneration | 122 | 116 | 5 | 459 | -------------------------------------------------------------------------------- | Pension costs | 9 | 8 | 13 | 35 | -------------------------------------------------------------------------------- | Other indirect personnel | 8 | 9 | -5 | 33 | | costs | | | | | -------------------------------------------------------------------------------- | Total | 140 | 134 | 4 | 527 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 10 Other administrative | | | | | | expenses | | | | | -------------------------------------------------------------------------------- | EUR million | 1-3/ | 1-3/ | Change, % | 1-12/ | | | 2007 | 2006 | | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Office expenses | 13 | 13 | 0 | 51 | -------------------------------------------------------------------------------- | IT expenses | 21 | 23 | -12 | 87 | -------------------------------------------------------------------------------- | Telecommunications expenses | 10 | 10 | -3 | 39 | -------------------------------------------------------------------------------- | Marketing expenses | 14 | 14 | 1 | 59 | -------------------------------------------------------------------------------- | Other administrative | 14 | 12 | 15 | 55 | | expenses | | | | | -------------------------------------------------------------------------------- | Total | 71 | 72 | -2 | 290 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 11 Other operating | | | | | | expenses | | | | | -------------------------------------------------------------------------------- | EUR million | 1-3/ | 1-3/ | Change, % | 1-12/ | | | 2007 | 2006 | | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Expenses for properties and | 17 | 18 | -6 | 70 | | business | | | | | | premises in own use | | | | | -------------------------------------------------------------------------------- | Depreciation | 32 | 32 | -2 | 130 | -------------------------------------------------------------------------------- | Other | 29 | 22 | 33 | 66 | -------------------------------------------------------------------------------- | Total | 78 | 72 | 8 | 267 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 12 Returns to | | | | | | owner-members | | | | | -------------------------------------------------------------------------------- | EUR million | 1-3/ | 1-3/ | Change, % | 1-12/ | | | 2007 | 2006 | | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Bonuses | 17 | 10 | 71 | 43 | -------------------------------------------------------------------------------- | Interest on cooperative | 5 | 4 | 36 | 21 | | capital | | | | | -------------------------------------------------------------------------------- | Total | 23 | 14 | 62 | 64 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 13 Financial assets | | | | | | held for trading | | | | | -------------------------------------------------------------------------------- | EUR million | 31 March | 31 March | Change, % | 31 Dec. | | | 2007 | 2006 | | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Notes and bonds | 5 297 | 4 929 | 7 | 4 736 | -------------------------------------------------------------------------------- | Shares and participations | 81 | 72 | 13 | 80 | -------------------------------------------------------------------------------- | Purchased loans and other | - | - | | - | | receivables | | | | | -------------------------------------------------------------------------------- | Total | 5 379 | 5 001 | 8 | 4 816 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 14 Non-life Insurance | | | | | | assets | | | | | -------------------------------------------------------------------------------- | EUR million | 31 March | 31 March | Change, % | 31 Dec. | | | 2007 | 2006 | | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Investments | | | | | -------------------------------------------------------------------------------- | Loan and other receivebles | 87 | 53 | 64 | 67 | -------------------------------------------------------------------------------- | Shares and participations | 759 | 680 | 12 | 766 | -------------------------------------------------------------------------------- | Properties | 59 | 60 | -2 | 56 | -------------------------------------------------------------------------------- | Notes and bonds | 1 579 | 1 919 | -18 | 1 536 | -------------------------------------------------------------------------------- | Other | 4 | 1 | | 1 | -------------------------------------------------------------------------------- | Total | 2 488 | 2 713 | -8 | 2 426 | -------------------------------------------------------------------------------- | Other assets | | | | | -------------------------------------------------------------------------------- | Prepayments and accrued | -10 | -26 | 61 | -2 | | income | | | | | -------------------------------------------------------------------------------- | Other | | | | | -------------------------------------------------------------------------------- | Arising from direct | 373 | 303 | 23 | 241 | | insurance operations | | | | | -------------------------------------------------------------------------------- | Arising from reinsurance | 116 | 92 | 26 | 90 | | operations | | | | | -------------------------------------------------------------------------------- | Cash in hand and at bank | 18 | 18 | -4 | 5 | -------------------------------------------------------------------------------- | Total | 496 | 388 | 28 | 335 | -------------------------------------------------------------------------------- | Life Insurance assets | 2 984 | 3 101 | -4 | 2 761 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 15 Life Insurance | | | | | | assets | | | | | -------------------------------------------------------------------------------- | EUR million | 31 March | 31 March | Change, % | 31 Dec. | | | 2007 | 2006 | | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Investments | | | | | -------------------------------------------------------------------------------- | Loan and other receivebles | 41 | 5 | | 64 | -------------------------------------------------------------------------------- | Shares and participations | 2 437 | 1 320 | 85 | 2 139 | -------------------------------------------------------------------------------- | Properties | 102 | 100 | 3 | 103 | -------------------------------------------------------------------------------- | Notes and bonds | 1 434 | 2 350 | -39 | 1 608 | -------------------------------------------------------------------------------- | Other | 0 | 1 | -100 | 0 | -------------------------------------------------------------------------------- | Total | 4 014 | 3 776 | 6 | 3 913 | -------------------------------------------------------------------------------- | Assets covering unit-linked | | | | | | insurance contracts | | | | | -------------------------------------------------------------------------------- | Shares and participations | 2 225 | 1 836 | 21 | 2 090 | -------------------------------------------------------------------------------- | Other assets | | | | | -------------------------------------------------------------------------------- | Prepayments and accrued | 33 | 44 | -24 | 45 | | income | | | | | -------------------------------------------------------------------------------- | Other | | | | | -------------------------------------------------------------------------------- | Arising from direct | 11 | 0 | | 1 | | insurance operations | | | | | -------------------------------------------------------------------------------- | Arising from reinsurance | 1 | 5 | -79 | 2 | | operations | | | | | -------------------------------------------------------------------------------- | Cash in hand and at bank | 1 | 11 | -94 | 9 | -------------------------------------------------------------------------------- | Total | 46 | 60 | -24 | 58 | -------------------------------------------------------------------------------- | Life insurance assets | 6 284 | 5 672 | 11 | 6 061 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 16 Investment assets | | | | | -------------------------------------------------------------------------------- | EUR million | 31 March | 31 March | Change, % | 31 Dec. | | | 2007 | 2006 | | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Available-for-sale financial | | | | | | assets | | | | | -------------------------------------------------------------------------------- | Notes and bonds | 476 | 710 | -33 | 435 | -------------------------------------------------------------------------------- | Shares and participations | 339 | 292 | 16 | 333 | -------------------------------------------------------------------------------- | Other | - | - | | - | -------------------------------------------------------------------------------- | Held-to-maturity financial | 129 | 201 | -36 | 133 | | assets | | | | | -------------------------------------------------------------------------------- | Investment properties | 496 | 501 | -1 | 504 | -------------------------------------------------------------------------------- | Subsidiaries and associates | 8 | 9 | -14 | 9 | | not consolidated | | | | | -------------------------------------------------------------------------------- | Total | 1 448 | 1 714 | -16 | 1 413 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 17 Non-life Insurance | | | | | | liabilities | | | | | -------------------------------------------------------------------------------- | EUR million | 31 March | 31 March | Change, % | 31 Dec. | | | 2007 | 2006 | | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Insurance contract | | | | | | liabilities | | | | | -------------------------------------------------------------------------------- | Provision for unearned | 501 | 456 | 10 | 285 | | premiums | | | | | -------------------------------------------------------------------------------- | Provision for unpaid claims | 1 694 | 1 604 | 6 | 1 683 | -------------------------------------------------------------------------------- | Total | 2 195 | 2 060 | 7 | 1 969 | -------------------------------------------------------------------------------- | Other | 320 | 231 | 38 | 131 | -------------------------------------------------------------------------------- | Non-life Insurance | 2 515 | 2 292 | 10 | 2 099 | | liabilities | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 18 Life Insurance | | | | | | liabilities | | | | | -------------------------------------------------------------------------------- | EUR million | 31 March | 31 March | Change, % | 31 Dec. | | | 2007 | 2006 | | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Insurance contract | 3 559 | 3 244 | 10 | 3 461 | | liabilities | | | | | -------------------------------------------------------------------------------- | Provisions for unit-linked | 2 207 | 1 757 | 26 | 2 042 | | policies | | | | | -------------------------------------------------------------------------------- | Other liabilities | | | | | -------------------------------------------------------------------------------- | Accrued expenses and | -3 | 3 | | 1 | | deferred income | | | | | -------------------------------------------------------------------------------- | Other | | | | | -------------------------------------------------------------------------------- | Arising from direct | 2 | - | | 4 | | insurance operations | | | | | -------------------------------------------------------------------------------- | Arising from reinsurance | 1 | - | | 1 | | operations | | | | | -------------------------------------------------------------------------------- | Other | 64 | 227 | -72 | 159 | -------------------------------------------------------------------------------- | Total | 64 | 230 | -72 | 165 | -------------------------------------------------------------------------------- | Life Insurance liabilities | 5 830 | 5 232 | 11 | 5 667 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 19 Debt securities | | | | | | issued to the public | | | | | -------------------------------------------------------------------------------- | EUR million | 31 March | 31 March | Change, % | 31 Dec. | | | 2007 | 2006 | | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Bonds | 7 680 | 5 525 | 39 | 7 574 | -------------------------------------------------------------------------------- | Certificates of deposit | 7 358 | 6 217 | 18 | 5 812 | -------------------------------------------------------------------------------- | Other | 114 | -274 | | 114 | -------------------------------------------------------------------------------- | Total | 15 151 | 11 469 | 32 | 13 500 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Note 20 Subordinated | | | | | | liabilities | | | | | -------------------------------------------------------------------------------- | EUR million | 31 March | 31 March | Change, % | 31 Dec. | | | 2007 | 2006 | | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Capital loans | 208 | 216 | -3 | 208 | -------------------------------------------------------------------------------- | Other | 812 | 615 | 32 | 855 | -------------------------------------------------------------------------------- | Total | 1 020 | 830 | 23 | 1 063 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Collateral given | | | | | -------------------------------------------------------------------------------- | EUR million | 31 March | 31 March | Change, % | 31 Dec. | | | 2007 | 2006 | | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Given on behalf of own | | | | | | liabilities and commitments | | | | | -------------------------------------------------------------------------------- | Mortgages | 1 | 1 | 0 | 1 | -------------------------------------------------------------------------------- | Pledges | 696 | 1 509 | -54 | 2 521 | -------------------------------------------------------------------------------- | Other | 37 | 15 | | 31 | -------------------------------------------------------------------------------- | Total | 733 | 1 524 | -52 | 2 553 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Off-balance sheet items | | | | | -------------------------------------------------------------------------------- | EUR million | 31 March | 31 March | Change, % | 31 Dec. | | | 2007 | 2006 | | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Guarantees | 577 | 426 | 36 | 577 | -------------------------------------------------------------------------------- | Other guarantee liabilities | 1 553 | 1 443 | 8 | 1 654 | -------------------------------------------------------------------------------- | Bill liabilities | - | - | | - | -------------------------------------------------------------------------------- | Letters of credit | 191 | 135 | 41 | 171 | -------------------------------------------------------------------------------- | Pledges | 1 | 1 | 0 | 1 | -------------------------------------------------------------------------------- | Loan commitments | 7 468 | 5 935 | 26 | 7 417 | -------------------------------------------------------------------------------- | Commitments related to | 13 | - | | 13 | | short-term | | | | | | trade transactions | | | | | -------------------------------------------------------------------------------- | Other | 511 | 459 | 11 | 451 | -------------------------------------------------------------------------------- | Total off-balance sheet | 10 314 | 8 399 | 23 | 10 285 | | items | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Derivative | | | | | | | | contracts | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total trading and | | | | | | | | hedging | | | | | | | | derivatives, 31 | | | | | | | | March 2007 | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR million | Nominal values/ | Fair | | | remaining term | values | | | to maturity | | -------------------------------------------------------------------------------- | | <1 | 1-5 | >5 | Total | Assets | Liabilit | | | year | years | years | | | ies | -------------------------------------------------------------------------------- | Interest rate | 39 | 20 573 | 7 072 | 67 497 | 266 | -262 | | derivatives | 852 | | | | | | -------------------------------------------------------------------------------- | Currency | 8 345 | 1 670 | 882 | 10 896 | 53 | -166 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Equity and | 75 | 167 | - | 242 | 34 | 1 | | index-linked | | | | | | | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Credit derivatives | - | 131 | - | 131 | 0 | -1 | -------------------------------------------------------------------------------- | Other derivatives | 8 | 7 | - | 15 | 1 | - | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total derivatives | 48 | 22 548 | 7 954 | 78 781 | 354 | -427 | | | 280 | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total trading and | | | | | | | | hedging | | | | | | | | derivatives, 31 | | | | | | | | March 2006 | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR million | Nominal values/ | Fair | | | remaining term | values | | | to | | | | maturity | | -------------------------------------------------------------------------------- | | <1 | 1-5 | >5 | Total | Assets | Liabilit | | | year | years | years | | | ies | -------------------------------------------------------------------------------- | Interest rate | 28 | 14 278 | 4 065 | 46 678 | 164 | -168 | | derivatives | 335 | | | | | | -------------------------------------------------------------------------------- | Currency | 4 371 | 687 | 372 | 5 430 | 43 | -52 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Equity and | 151 | 111 | - | 262 | 23 | 0 | | index-linked | | | | | | | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Credit derivatives | - | 150 | - | 150 | 0 | -1 | -------------------------------------------------------------------------------- | Other derivatives | 79 | 15 | - | 94 | 6 | - | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total derivatives | 32 | 15 241 | 4 437 | 52 615 | 237 | -221 | | | 937 | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Related party transactions | | | | | | | 31 March 2007 | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | The related parties of the OP Bank Group include associates, administrative | | personnel and other related party companies. The administrative personnel | | comprises the OP Bank Group Executive Chairman (Chairman of the Executive | | Board of the OP Bank Group Central Cooperative), President of the OP Bank | | Group Central Cooperative, members and deputy members of the Executive and | | Supervisory Boards and their close relatives. Other communities considered | | as related parties include OP Bank Group Pension Fund and OP Bank Group | | Pension Foundation. | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Standard terms and conditions for credit are applied to loans granted to the | | management. Loans are tied to generally used reference rates. | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR million | Associates | Management | Others | -------------------------------------------------------------------------------- | Loans | 97 | 7 | - | -------------------------------------------------------------------------------- | Other receivables | 0 | 0 | - | -------------------------------------------------------------------------------- | Deposits | 0 | 7 | 30 | -------------------------------------------------------------------------------- | 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 | | | | -------------------------------------------------------------------------------- | Salaries and remunerations and | | | | | performance-based pay | | | | -------------------------------------------------------------------------------- | Salaries and remunerations | - | 1 | - | -------------------------------------------------------------------------------- | Performance-based pay | - | - | - | -------------------------------------------------------------------------------- | Holdings of related parties | | | | -------------------------------------------------------------------------------- | Number of share options | - | - | - | -------------------------------------------------------------------------------- | Number of shares | - | 82 314 | - | -------------------------------------------------------------------------------- | Number of participations | - | 6 707 | - | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Related party transactions 31 | | | | | March 2006 | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR million | Associates | Management | Others | -------------------------------------------------------------------------------- | Loans | 100 | 4 | - | -------------------------------------------------------------------------------- | Other receivables | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Deposits | 3 | 7 | 25 | -------------------------------------------------------------------------------- | 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 | | | | -------------------------------------------------------------------------------- | Salaries and remunerations and | | | | | performance-based pay | | | | -------------------------------------------------------------------------------- | Salaries and remunerations | - | 2 | - | -------------------------------------------------------------------------------- | Performance-based pay | - | - | - | -------------------------------------------------------------------------------- | Holdings of related parties | | | | -------------------------------------------------------------------------------- | Number of share options | - | - | - | -------------------------------------------------------------------------------- | Number of shares | - | 62 199 | - | -------------------------------------------------------------------------------- | Number of participations | - | 3 723 | - | -------------------------------------------------------------------------------- The Interim Report 1 January 2007 to 31 March 2007 has been prepared in accordance with IAS 34 (Interim Financial Reporting). The accounting policies applied are described in the 2006 financial statements. The figures in this Interim Report are unaudited. OKO Bank plc will publish its own interim report. The six-month Interim Report for 2007 will be published on 9 August 2007 and the nine-month Interim Report on 8 November 2007. Helsinki, 10 May 2007 OP Bank Group Central Cooperative Executive Board OP Bank Group Central Cooperative Markku Koponen Senior Vice President DISTRIBUTION Helsinki Stock Exchange Principal media FOR ADDITIONAL INFORMATION, CONTACT Executive Chairman Reijo Karhinen, tel. +358 10 252 4500 President Tony Vepsäläinen, tel. +358 10 252 4020 CFO Harri Luhtala, tel. +358 10 252 2433
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