2009-08-06 07:00:00 CEST
2009-08-06 07:00:12 CEST
REGULATED INFORMATION
Pohjola Pankki Oyj - Interim report (Q1 and Q3)
OP-Pohjola Group's January-June 2009
OP-Pohjola Group Central Cooperative Company Release 6 August 2009 at 8.00 am 1(40) Release category: Interim Report OP-Pohjola Group's January-June 2009 - Consolidated result for the first two quarters was good - earnings before tax stood at EUR 281 million, the same as last year. - Net interest income remained at last year's level and the non-life insurance balance on technical account was excellent. Total income increased by 8% and expenses by 2%. - Credit losses and non-performing receivables increased as expected but were low in relation to the loan and guarantee portfolio. - The Group's market position improved despite the sluggish growth climate - market share growth was fastest in corporate loans (1.7 percentage points in the last 12 months) and in mutual funds (1.6 percentage points). - The integration of banking and insurance is proceeding well. The number of joint customers increased by 68,000 in a year, with over 50% of non-life insurance loyal customer households concentrating their banking transaction with OP-Pohjola Group. - The risk-bearing capacity is high - the financial and insurance conglomerate's capital buffers rose to EUR 1.6 billion, and the Tier 1 ratio was 12.0%. - The Group's full-year earnings are expected to be about the same as in 2008 - the greatest uncertainty is related to how impairment charges will develop. Comments by Reijo Karhinen, Executive Chairman Stability, responsibility and persistence describe OP-Pohjola Group's first half of 2009. Our good and stable earnings, strong capital base and rising market shares are things we can be extremely pleased about, especially under these difficult conditions beset by financial instability. Our success has been aided by the recovering financial markets and the way we have managed things after the acquisition of Pohjola insurance operations. The integration of banking and non-life insurance operations forms an excellent basis for the further development and growth of our business. A turning point has been reached in the financial market crisis, and the fog is beginning to clear away, but we are still a long way from normality. However, our solid foundation enables us to have the presence of mind to face the deepening problems in the Finnish economy. Businesses have more and more problems with their payments and unemployment is getting worse, which will weaken our customers' repayment capacity and increase our credit losses. But there is nothing to indicate that credit losses will become uncontrollable or exceptionally difficult in relation to the state of the economy. At times of deep recession, banks' commitment to customer care is put to the test. Our Finnish roots and the cooperative principle make us deeply motivated to support our customers over this difficult economic situation. OP-Pohjola Group's Interim Report for 1 January-30 June 2009 OP-Pohjola Group's key indicators -------------------------------------------------------------------------------- | | Q2/2009 | Q2/2008 | Change* | 2008 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings before tax, EUR | 281 | 283 | -0,6 | 372 | | million | | | | | -------------------------------------------------------------------------------- | Banking and Investment | 270 | 316 | -14.5 | 532 | | Services | | | | | -------------------------------------------------------------------------------- | Non-life Insurance | 46 | 40 | 16.4 | 55 | -------------------------------------------------------------------------------- | Life Insurance | -41 | -12 | - | -162 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Bonuses paid to customers | 70 | 64 | 9.9 | 132 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Return on equity (ROE),% | 7.4 | 7.4 | 0.1* | 4.1 | -------------------------------------------------------------------------------- | Return on equity at fair | 12.3 | -0.7 | 13.0* | -6.0 | | value,% | | | | | -------------------------------------------------------------------------------- | Cost/income,% | 53 | 52 | 1 | 54 | | (Banking and Investment | | | | | | Services) | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Average personnel | 12,713 | 12,569 | 1.1 | 12,615 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | 30 Jun | 30 Jun | Change* | 31 Dec | | | 2009 | 2008 | | 2008 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total assets, EUR billion | 77.6 | 71.5 | 8.6 | 75.7 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Capital adequacy ** | 12.0 | 12.3 | -0.3 | 12.6 | -------------------------------------------------------------------------------- | Tier 1 ratio,%** | 12.0 | 12.3 | -0.3 | 12.6 | -------------------------------------------------------------------------------- | Ratio of capital base to | 1.45 | 1.48 | -0.03 | 1.40 | | minimum amount of capital | | | | | | base*** | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Non-performing loan losses | 0.5 | 0.4 | 0.1 | 0.4 | | within loan and guarantee | | | | | | portfolio,% | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Market share,% | | | | | -------------------------------------------------------------------------------- | Total loans | 32.3 | 31.5 | 0.8 | 32.1 | -------------------------------------------------------------------------------- | Total deposits | 33.2 | 32.8 | 0.4 | 33.8 | -------------------------------------------------------------------------------- | Capital invested in mutual | 23.0 | 21.4 | 1.6 | 22.5 | | funds | | | | | -------------------------------------------------------------------------------- | Of insurance savings through | 19.3**** | 19.7 | -0.4 | 19.4 | | life and pension insurance | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | Q2/ | Q2/ | Change* | 2008 | | | 2009 | 2008 | | | -------------------------------------------------------------------------------- | Of premiums written in life | 22.9 | 33.1 | -10.2 | 29.3 | | and pension insurance,% | | | | | -------------------------------------------------------------------------------- * Percentage point change, except for earnings before tax, customer bonuses, total assets and average number of personnel, for which the change is stated in percentages, as well as the ratio of capital resources to the minimum amount of capital resources, for which the change is stated as a change in the ratio. ** Pursuant to the Act on Credit Institutions. *** Pursuant to the Act on the Supervision of Financial and Insurance Conglomerates. **** March 2009 Operating environment After its steep deterioration during the first quarter, the world economy showed some signs of stabilisation during the second quarter. Along with aggressive monetary and fiscal policy measures, growth forecasts for China and the USA in particular were revised up. Growth forecasts for Europe's and Finland's economy for this and next year were revised down. GDP in both the whole of Europe and Finland is expected to continue its downward trend, with exports, capital spending and consumer spending decreasing and unemployment rising. Extensive stimulus packages, first adopted by the United States and then by others, are forecast to improve prospects for the rest of the year. Central banks have tried to fight the recession by means of a more relaxed monetary policy. The European Central Bank reduced its benchmark interest rate in May to 1.0%, and has continued to support the liquidity of the banking system through further loans. Many central banks have also resorted to some unusual measures, such as purchase of companies' and public-sector entities' debt instruments straight from the market. These measures have calmed down the financial markets, cutting market rates and narrowing risk premiums. The second quarter saw an adjustment in corporate bond markets when risk premiums fell sharply. In particular, the risk premiums of riskier companies and banks dropped when markets lowered their expectations of future payment defaults. Key factors underlying this adjustment have been attributed to government support for the market through stimulus packages, an absence of alternative investments and the fact that companies have ventured to issue debt instruments. Despite lower interest rates, demand for bank loans - particularly corporate loans - actually declined during the first half. Demand for new home mortgages declined too, although home sales have picked up since the turn of the year and the price level has stabilised. As the recession continues, demand for loans is not likely to improve during the last two quarters. Share prices rose in the spring, but have since levelled off. A certain amount of equity market instability is still to be expected. Mutual fund capital has continued to increase thanks to net subscriptions. Life insurance premiums written began to increase in late spring owing to investment contracts. The growth rate of deposits has slowed down. Poor results by businesses has also restrained premiums written within Non-life Insurance, which has reduced the risk level and thus improved Non-life Insurance's profitability. OP-Pohjola Group's earnings and total assets January-June Pre-tax earnings remained at the previous year's level despite the more challenging operating environment, reaching EUR 281 million (283)*. Thanks to recovering capital markets, earnings before tax at fair value were much higher, coming to EUR 459 million (-21). The Banking pre-tax earnings fell short of the comparison period as a result of higher credit losses, but were nevertheless good considering the current trends. Non-Life Insurance's balance on technical account was excellent, as a result of which the segment's overall result improved on the previous year despite a smaller return on investment. Non-life Insurance's operating combined ratio improved to 88.6% (95.0). Life Insurance's accounting results were burdened by write-downs concerning available-for-sale financial instruments. The Group's revenues increased by 8.2% to EUR 1,079 million (997). Net interest income was EUR 568 million (568), the same as the previous year. Other income increased substantially, reaching EUR 510 million (429), up by 19% year on year. Net commissions - totalling EUR 251 million particularly thanks to higher lending fees and insurance brokerage fees - were higher than last year. Asset management commissions and fees contracted from last year. Net investment income for Life Insurance fell by EUR 32 million and for Non-Life Insurance by EUR 24 million. Banking's investment and net trading income increased by EUR 36 million. The comparison period's net trading income included a decrease of EUR 49 million in fair value from securities in the liquidity reserve. Expenses stood at EUR 640 million (627), up by 2.0% year on year, a significant part of this increase due to higher personnel costs. The 5.3% rise in personnel costs resulted from an increase in staff numbers and previously agreed pay increases. Bonuses paid to owner-members and OP bonus customers rose by 9.9% and totalled EUR 70 million (64). Net impairment losses on loans and receivables increased to EUR 75 million (9.0). New impairment losses in gross terms totalled EUR 104 million, or up by EUR 76 million from last year. Value readjustments and cancellations of impairment losses totalled EUR 29 million, or 51% more than the year before. Impairment losses on receivables remained pretty low, at 0.28% of the loan and guarantee portfolio in annual terms. * Comparatives for 2008 are given in brackets. For income-statement and other aggregated figures, January-June 2008 figures serve as comparatives. For balance-sheet and other cross-sectional figures, figures at the end of the previous reporting period (31 December 2008) serve as comparatives. **The combined cost ratio excluding amortisation on intangible assets arising from the Pohjola acquisition and allocated to the business segment without the effect of changes in calculation bases. Earnings analysis -------------------------------------------------------------------------------- | EUR million | Q2/ | Q2/ | Change, | Change, | 2008 | | | 2009 | 2008 | EUR | % | | | | | | million | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings before tax | 281 | 283 | -2 | -0.6 | 372 | -------------------------------------------------------------------------------- | Gross change in fair value | 177 | -304 | 482 | | -737 | | reserve | | | | | | -------------------------------------------------------------------------------- | Earnings/loss before tax | 459 | -21 | 480 | | -365 | | at fair value | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Return on equity (ROE),% | 7.4 | 7.4 | | 0.1* | 4.1 | -------------------------------------------------------------------------------- | Return on equity at fair | 12.3 | -0.7 | | 13.0* | -6.0 | | value,% | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Income | | | | | | -------------------------------------------------------------------------------- | Net interest income | 568 | 568 | 1 | 0.1 | 1,189 | -------------------------------------------------------------------------------- | Net income from Non-life | 189 | 178 | 11 | 6.4 | 345 | | Insurance | | | | | | -------------------------------------------------------------------------------- | Net income from Life | -29 | 1 | -29 | | -139 | | Insurance | | | | | | -------------------------------------------------------------------------------- | Net commissions and fees | 251 | 231 | 20 | 8.7 | 433 | -------------------------------------------------------------------------------- | Net trading and investment | 46 | -26 | 73 | | -99 | | income | | | | | | -------------------------------------------------------------------------------- | Other operating income | 52 | 46 | 6 | 13.2 | 93 | -------------------------------------------------------------------------------- | Share of associates' | 0 | 0 | 0 | | 1 | | profits/losses | | | | | | -------------------------------------------------------------------------------- | Other income, total | 510 | 429 | 81 | 19.0 | 634 | -------------------------------------------------------------------------------- | Total income | 1,079 | 997 | 82 | 8.2 | 1,823 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Expenses | | | | | | -------------------------------------------------------------------------------- | Personnel costs | 327 | 310 | 16 | 5.3 | 598 | -------------------------------------------------------------------------------- | Other administrative | 156 | 158 | -2 | -1.0 | 328 | | expenses | | | | | | -------------------------------------------------------------------------------- | Other operating expenses | 157 | 159 | -2 | -1.4 | 312 | -------------------------------------------------------------------------------- | Total expenses | 640 | 627 | 13 | 2.0 | 1,238 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Impairment losses on | 75 | 9 | 66 | | 58 | | receivables | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Returns to owner-members | | | | | | | and OP bonus customers | | | | | | -------------------------------------------------------------------------------- | Bonuses | 70 | 64 | 6 | 9.9 | 132 | -------------------------------------------------------------------------------- | Interest on ordinary and | 12 | 14 | -1 | -9.7 | 22 | | supplementary cooperative | | | | | | | capital | | | | | | -------------------------------------------------------------------------------- | Total returns | 82 | 77 | 5 | 6.5 | 154 | -------------------------------------------------------------------------------- * Percentage points OP-Pohjola Group's balance sheet total was EUR 77.6 billion (75.7) on 30 June 2009. At the end of the review period, receivables from customers stood at EUR 52.4 billion (51.7) and deposits at EUR 34.8 billion (34.5). Debt securities issued to the public rose by 0.3% to EUR 18.2 billion. Equity capital increased by 9.0% to EUR 5.7 billion (5.2), not only by the result in the first half of the year and the increased value of investment assets but also a subscription issue in April by Pohjola Bank plc, OP-Pohjola Group Central Cooperative's subsidiary. The share issue increased the Group's equity capital by EUR 171 million. The fair value reserve, adjusted for deferred tax assets, was EUR 424 million in the negative (minus EUR 556 million). This negative fair value reserve is mainly due to equity and mutual fund investments by life and non-life Insurance. The negative fair value reserve may recover by means of asset appreciation and recognised impairments. Only the value changes in the fair value reserve are recognised which the management deem to fulfil the relevant requirements. On 30 June, the cooperative capital investments and supplementary cooperative capital investments of the member cooperative banks' owner-members totalled EUR 743 million (695). Member banks paid a total of EUR 26 million in interest on the ordinary and supplementary cooperative capital for 2008. The Annual General Meeting of Pohjola Bank plc decided that the company will pay a dividend of EUR 0.23 for each Series A and EUR 0.20 for each Series K share for 2008, totalling EUR 45 million (131). April-June Earnings before tax for the second quarter came to EUR 157 million (158). Income increased by 9.1% mainly thanks to higher non-life insurance net income and net commissions. Reported expenses grew by EUR 5.2 million. Year on year, second-quarter personnel costs increased by 3.5%, accounting for EUR 5.5 million of growth in total expenses. Returns to owner-members grew by EUR 4.3 million. Impairment losses on receivables came to EUR 46 million, or EUR 39 million higher year on year. The fair value reserve (gross) increased by EUR 217 million, while a year ago it shrank by EUR 108 million. Impairments of EUR 52 million were recognised in the second quarter. The Q2/2009 net interest income contracted by EUR 5.4 million from Q1/2009. Impairments of receivables were EUR 17 million higher than in January-March. Pre-tax earnings were EUR 33 million lower than in the previous quarter. Pre-tax earnings at fair value were EUR 374 million as opposed to a loss of EUR 85 million in the preceding quarter. Second-quarter earnings analysis -------------------------------------------------------------------------------- | EUR million | Q2/ | Q2/ | Change, | Q1/ | Change, | | | 2009 | 2008 | % | 2009 | % | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings before tax | 157 | 158 | -0.7 | 124 | 26.2 | -------------------------------------------------------------------------------- | Gross change in fair | 217 | -108 | | -40 | | | value reserve | | | | | | -------------------------------------------------------------------------------- | Earnings/loss before tax | 374 | 50 | | 85 | | | at fair value | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Return on equity (ROE),% | 10.1 | 8.3 | 1.8* | 4.9 | 5.2* | -------------------------------------------------------------------------------- | Return on equity at fair | 22.0 | 2.5 | 19.5* | 2.7 | 19.3* | | value,% | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Income | | | | | | -------------------------------------------------------------------------------- | Net interest income | 282 | 296 | -4.8 | 287 | -1.9 | -------------------------------------------------------------------------------- | Net income from Non-life | 120 | 89 | 36.0 | 69 | 75.8 | | Insurance | | | | | | -------------------------------------------------------------------------------- | Net income from Life | -8 | -7 | -,13.4 | -21 | -61.1 | | Insurance | | | | | | -------------------------------------------------------------------------------- | Net commissions and fees | 121 | 107 | 13.7 | 130 | -6.5 | -------------------------------------------------------------------------------- | Net trading and | 26 | 14 | 88.5 | 21 | 25.7 | | investment income | | | | | | -------------------------------------------------------------------------------- | Other operating income | 27 | 23 | 18.4 | 25 | 8.9 | -------------------------------------------------------------------------------- | Share of associates' | 0 | 0 | -6.1 | 0 | | | profits/losses | | | | | | -------------------------------------------------------------------------------- | Other income, total | 287 | 225 | 27.5 | 223 | 28.6 | -------------------------------------------------------------------------------- | Total income | 569 | 521 | 9.1 | 510 | 11.5 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Expenses | | | | | | -------------------------------------------------------------------------------- | Personnel costs | 163 | 158 | 3.5 | 163 | 0.2 | -------------------------------------------------------------------------------- | Other administrative | 76 | 81 | -5.6 | 80 | -4.4 | | expenses | | | | | | -------------------------------------------------------------------------------- | Other operating expenses | 81 | 77 | 5.5 | 76 | 7.3 | -------------------------------------------------------------------------------- | Total expenses | 321 | 316 | 1.6 | 319 | 0.8 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Impairment losses on | 46 | 7 | | 29 | 58.5 | | receivables | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Returns to owner-members | | | | | | | and OP bonus customers | | | | | | -------------------------------------------------------------------------------- | Bonuses | 35 | 33 | 8.4 | 35 | 1.8 | -------------------------------------------------------------------------------- | Interest on ordinary and | 9 | 8 | 20.1 | 3 | | | supplementary cooperative | | | | | | | capital | | | | | | -------------------------------------------------------------------------------- | Total returns | 44 | 40 | 10.6 | 38 | 17.1 | -------------------------------------------------------------------------------- Capital adequacy Two sets of capital adequacy ratios are calculated for OP-Pohjola Group. OP-Pohjola Group operates in compliance with the Act on Cooperative Banks and other Cooperative Institutions. Owing to the regulations on joint responsibility and security conditions prescribed in the Act, a minimum amount of capital resources has been set for the amalgamation of the cooperative banks calculated according to the regulations for capital adequacy specified in the Act on Credit Institutions. The amalgamation of the cooperative banks comprises its central institution (OP-Pohjola Group Central Cooperative), the central institution's member credit institutions and companies belonging to their consolidation groups. Although OP-Pohjola Group's insurance companies do not belong to the amalgamation of the cooperative banks, investments made in them have a major impact on capital adequacy calculated in accordance with the capital adequacy regulations for credit institutions. This capital adequacy figure is called the amalgamation of cooperative banks' capital adequacy. OP-Pohjola Group is also a financial and insurance conglomerate, pursuant to the Act on the Supervision of Financial and Insurance Conglomerates. The conglomerate is governed by specific provisions of the capital adequacy requirement. In view of both capital adequacy requirements, OP-Pohjola Group's risk-bearing capacity is strong. OP-Pohjola Group Central Cooperative will publish annually, as part of the financial statements, the full information required by Pillar III of the capital adequacy framework and the Financial Supervisory Authority standards. In its calculation of capital requirement for credit risk, OP-Pohjola Group will phase in the Internal Rating-based Approach (IRBA). The Financial Supervisory Authority granted OP-Pohjola Group permission to use IRBA in its calculation of capital adequacy requirements for credit risks as of 30 September 2008. This permission concerns liabilities granted to Pohjola Bank plc's corporate and institutional customers. Otherwise the capital requirement is calculated using the Standardised Approach. The adoption of IRBA will reduce OP-Pohjola Group's capital requirement, but will make the requirement more susceptible to market fluctuations. As to market risks, OP-Pohjola Group will continue to use the Standardised Approach. The capital requirement for operational risks will be calculated using the Basic Indicator Approach (BIA), with the objective of adopting the Standardised Approach in 2010. Capital adequacy of the amalgamation of cooperative banks On 30 June, OP-Pohjola Group's capital adequacy ratio under the Credit Institutions Act and the Tier 1 ratio stood at 12.0%. Tier 1 ratio in the 31 December 2008 financial statements stood at 12.6%. -------------------------------------------------------------------------------- | Capital base | | | | | | -------------------------------------------------------------------------------- | EUR million | 30 Jun | 31 Dec | Change, | Change, | 30 Jun | | | 2009 | 2008 | EUR | % | 2008 | | | | | million | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Capital base | | | | | | -------------------------------------------------------------------------------- | Tier 1 capital | 4,836 | 4,884 | -48 | -1.0 | 4,888 | -------------------------------------------------------------------------------- | Tier 2 capital | - | - | | | - | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total capital base | 4,836 | 4,884 | -48 | -1.0 | 4,888 | -------------------------------------------------------------------------------- Tier 1 capital amounted to EUR 4,836 million (4,884) on 30 June. The result for the report period less the estimated dividend payout is included in Tier 1 capital. OP-Pohjola Group's Tier 1 capital fell by 1.0% during the report period mainly as a result of insurance company investments in the first quarter. On the other hand, Pohjola Bank share issue increased the Group's equity capital by EUR 171 million. Tier 2 capital came to zero following deductions from the item during the report period. Any deductions in excess of Tier 2 capital were made from Tier 1 capital. Pohjola was authorised by the Financial Supervisory Authority to redeem prematurely EUR 150 million in debt instruments included in Tier 2 capital. The Financial Supervisory Authority set a condition that this amount must be deducted from the capital base in full. By 30 June a total of EUR 3 million of debt had been redeemed. At the end of the report period, capital resources were reduced by the consolidation group's fair value reserve that was EUR 47 million in the red (-84). On 30 June, insurance company investments, deducted in equal proportions from Tier 1 and 2 funds, came to EUR 2,329 million (2,159). On the basis of the exemptions granted by the Financial Supervisory Authority, investments by OP-Pohjola Group entities in venture capital funds, managed by Pohjola Capital Partners, are treated in the capital adequacy calculation in the same way as investments in shares in business or industrial corporations. On 30 June, the ratio of hybrid capital to Tier 1 capital before adjustments was 3.4% (3.6). Tier 1 capital does not include equity capital growth resulting from the IFRS-compliant measurement of pension liabilities and the assets covering them, and from the measurement at fair value of investment property. -------------------------------------------------------------------------------- | Capital adequacy | | | | | | -------------------------------------------------------------------------------- | EUR million | 30 Jun | 31 Dec | Change, | Change, | 30 Jun | | | 2009 | 2008 | EUR | % | 2008 | | | | | million | | | -------------------------------------------------------------------------------- | Risk-weighted assets, | 40,401 | 38,746 | 1,656 | 4.3 | 39,851 | | total | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Minimum capital | | | | | | | requirement | | | | | | -------------------------------------------------------------------------------- | Credit and | 2,922 | 2,832 | 91 | 3.2 | 2,919 | | counterparty risk | | | | | | -------------------------------------------------------------------------------- | Market risk | 33 | 47 | -14 | -30.1 | 48 | -------------------------------------------------------------------------------- | Operational risks | 277 | 221 | 56 | 25.3 | 221 | -------------------------------------------------------------------------------- | Total | 3,232 | 3,100 | 132 | 4.3 | 3,188 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Capital adequacy | 12.0 | 12.6 | | -0.6 | 12.3 | | ratio,% | | | | | | -------------------------------------------------------------------------------- | Tier 1 ratio,% | 12.0 | 12.6 | | -0.6 | 12.3 | -------------------------------------------------------------------------------- Capital adequacy under the Act on the Supervision of Financial and Insurance Conglomerates OP-Pohjola Group's capital adequacy pursuant to the Act on the Supervision of Financial and Insurance Conglomerates is calculated using the consolidation method, whereby assets included in capital resources but not included in equity capital, under the regulations for the banking or insurance industry, are added to the equity capital in the conglomerate's balance sheet. Capital resources may not include items not available for covering the losses of other companies belonging to the conglomerate. On 30 June, OP-Pohjola 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 1,606 million (1,406). The insurance companies' equalisation provision is not included in the financial and insurance conglomerate's capital resources. On 30 June 2009, the combined equalisation provision less the non-life and life insurance tax liabilities stood at EUR 500 million. The equalisation provision acts as a buffer for insurance companies in case of years with heavy losses and is therefore part of the financial services group's actual buffer against losses. Capital adequacy under the Act on the Supervision of Financial and Insurance Conglomerates -------------------------------------------------------------------------------- | EUR million | 30 Jun | 31 Dec | Change, | Change, | 30 Jun | | | 2009 | 2008 | EUR | % | 2008 | | | | | million | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | OP-Pohjola Group's | 5,682 | 5,215 | 467 | 9.0 | 5,542 | | equity capital | | | | | | -------------------------------------------------------------------------------- | Business-segment-spec | 1,683 | 1,873 | -189 | -10.1 | 1,778 | | ific items | | | | | | -------------------------------------------------------------------------------- | Goodwill and | -1,100 | -1,106 | 6 | 0.6 | -1,118 | | intangible assets | | | | | | -------------------------------------------------------------------------------- | Equalisation | -500 | -481 | -19 | -3.9 | -458 | | provision | | | | | | -------------------------------------------------------------------------------- | Other items included | -579 | -619 | 40 | 6.4 | -449 | | in equity capital and | | | | | | | business-segment-spec | | | | | | | ific items, but not | | | | | | | included in the | | | | | | | conglomerate's | | | | | | | capital resources | | | | | | -------------------------------------------------------------------------------- | Conglomerate's | 5,186 | 4,882 | 305 | 6.2 | 5,295 | | capital base, total | | | | | | -------------------------------------------------------------------------------- | Regulatory capital | 3,217 | 3,115 | 102 | 3.3 | 3,216 | | requirement for | | | | | | | credit institutions | | | | | | -------------------------------------------------------------------------------- | Regulatory capital | 363 | 361 | 2 | 0.6 | 360 | | requirement for | | | | | | | insurance operations | | | | | | -------------------------------------------------------------------------------- | Total minimum amount | 3,580 | 3,476 | 104 | 3.0 | 3,577 | | of conglomerate's | | | | | | | capital base | | | | | | -------------------------------------------------------------------------------- | Conglomerate's | 1,606 | 1,406 | 201 | 14.3 | 1,718 | | capital adequacy | | | | | | -------------------------------------------------------------------------------- | Conglomerate's | 1.45 | 1.40 | | 0.04* | 1.48 | | capital adequacy | | | | | | | ratio (capital | | | | | | | resources/minimum of | | | | | | | capital resources) | | | | | | -------------------------------------------------------------------------------- * Change in ratio Risk exposure OP-Pohjola Group's credit risk situation is still stable and the credit risks have been relatively low. However, the recession has increased doubtful receivables and impairments of receivables and reduced the quality of the credit portfolio. The economic trends are expected to further deteriorate customers' liquidity. OP-Pohjola Group's non-performing and zero-interest receivables came to EUR 285 million (203) on 30 June, which was 0.5% (0.4) of the loan and guarantee portfolio. Gross impairment losses of EUR 104 million (28) were recorded in the report period, which was 0.38% (0.11) of the loan and guarantee portfolio. Of OP-Pohjola Group's corporate exposure, investment-grade exposure stood at 48% (51). OP-Pohjola Group financial position and liquidity remained strong. Short-term funding performed well and the availability of long-term funding also improved. OP-Pohjola Group's long-term funding was increased during the report period by means of two long-term bonds issued by Pohjola Bank plc, worth about EUR 806 million in total. Pohjola Bank has the opportunity to use State guarantee in its funding, if necessary. The liquidity reserve maintained by Pohjola Bank plc amounted to EUR 9.6 billion on 30 June 2009. These liquidity reserves plus other items eligible as collateral included in OP-Pohjola Group's balance sheet comprise a comprehensive liquidity reserve eligible for central bank refinancing, which can be used to cover OP-Pohjola Group's wholesale funding maturities for about 24 months. On 30 June, the investment portfolio of Non-life Insurance totalled EUR 2.7 billion (2.4), fixed-income investments accounting for 83% (82) of the investment portfolio. Investments under the 'investment grade' accounted for approximately 94% (94) of the fixed-income portfolio. The average residual maturity of the fixed-income portfolio was 4.9 years (6.6) and the duration 3.5 years (4.3). On 30 June, the fixed-income portfolio's current interest rate was 4.5%. Return on investments at fair value was 4.5% (-1.2). On 30 June, life insurance investment assets amounted to EUR 4.0 billion (3.9). No significant changes took place in the allocation of investment assets in the first half of 2009. Fixed-income instruments accounted for 72% (73%) of the investment assets. Investments under the 'investment grade' accounted for approximately 85% (83) of the fixed-income portfolio. The average credit rating of a fixed-income portfolio is A+ (A+) and the average duration 3.5 years (3.6), The return on investments for January-June came to 1.7% (-3.3). Fixed-income investments had a better yield as credit spreads fell from the exceptionally high level of the first quarter. As part of normal business planning and management, OP-Pohjola Group creates a number of stress tests and scenario analyses. Stress tests assess the Group's development in terms of result and capital adequacy a few years ahead in a potential but particularly deep recession. In the latest test, in late spring 2009, the Group's capital adequacy was tested under conditions that were based on assumptions that were substantially weaker that the official forecasts for the Finnish economy. According to the stress test results, OP-Pohjola Group's capital adequacy would survive even a deep recession burdened with heavy credit losses while keeping above the statutory minimum requirements without having to increase its equity capital or to issue bonds and notes linked to its capital base. The credit ratings are as follows: -------------------------------------------------------------------------------- | Rating agency | Short-term debt | Long-term debt | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Fitch Rating | F1+ | AA- | | (OP-Pohjola Group and | | | | Pohjola Bank plc) | | | -------------------------------------------------------------------------------- | Standard & Poor's (Pohjola | A-1+ | AA- | | Bank) | | | -------------------------------------------------------------------------------- | Moody's (Pohjola Bank) | P-1 | Aa1 | -------------------------------------------------------------------------------- Standard & Poor's forecasts a stable credit rating outlook for Pohjola Bank plc, whereas Fitch confirmed the credit ratings on 29 July 2009, changing the outlook for long-term debt from stable to negative. Moody's put Pohjola on its watchlist on 15 April 2009. New business strategy OP-Pohjola Group Central Cooperative's Supervisory Board confirmed in June OP-Pohjola Group's business strategy that sets the guidelines for long-term development, integrating non-life insurance operations for the first time on a strategic level as part of the entire financial services group. OP-Pohjola Group's existence is based on benefits provided to its owner-members and customers. The Group's mission, values, customer promise, objective and customer promise remain the same. The Group's success factors are based on five competitive edges: comprehensive financial services, best loyalty benefits, working close to the customer, the cooperative principle and Finnish roots. Deepening the integration of the banking and non-life insurance operations forms the strategy's cornerstone and source of growth. It also states more clearly the Group's strategic intent in terms of corporate business operations. The Group's objective is that each region in Finland has at least one Group member bank that provides comprehensive services locally for individuals and businesses alike. The Group's high capital adequacy provides a strong foundation for business development and growth. The Group still adopts a policy of moderate risk-taking. The Group aims to operate at least as effectively as its main competitors. The strategy also specified in more detail OP-Pohjola Group's long-term financial targets in order to ensure its operation in the long run. These have not been adapted to the existing financial operating environment. At Group level, the objectives were set for risk-bearing capacity, profitability and efficiency. The long-term risk-bearing capacity target is that the capital adequacy ratio calculated according to the Act on the Supervision of Financial and Insurance Conglomerates is 1.5. The profitability target for risk-based economic capital is a 17 per cent return on economic capital. The efficiency of the entire financial services group is measured by the growth differential between income and expenses. The objective is that income grows at a higher rate than expenses. OP-Pohjola Group's success indicators for 2009: -------------------------------------------------------------------------------- | | 2008 | 6/2009 | Target | -------------------------------------------------------------------------------- | Capital adequacy (under | 1.40 | 1.45 | 1.5 | | the Act on the | | | | | Supervision of Financial | | | | | and Insurance | | | | | Conglomerates) | | | | -------------------------------------------------------------------------------- | Return on economic | 10.0% | 9.6% | 17% | | capital | | | | | (12-month rolling) | | | | -------------------------------------------------------------------------------- | Growth differential | -28.8% points. | -15.5% points. | > 0% points. | | between income and | | | | | expenses, percentage | | | | | point | | | | | (12-month rolling) | | | | -------------------------------------------------------------------------------- Changes in OP-Pohjola Group's structure OP-Pohjola Group's consolidated financial statements include 221 member cooperative banks, OP-Pohjola Group Central Cooperative Consolidated and OP Bank Group Mutual Insurance Company. Kuusjoen Osuuspankki, Kiikalan Rekijoen Osuuspankki, Kiskon Osuuspankki, Perniön Osuuspankki and Salon Seudun Osuuspankki merged to create Salon Osuuspankki. In another combination merger, Lieksan Osuuspankki, Nurmeksen Osuuspankki and Valtimon Osuuspankki became Pielisen Osuuspankki. The mergers were entered in the Trade Register on 30 April 2009. Following the mergers, member cooperative banks number 221. In December 2008, OP-Pohjola Group Central Cooperative offered its member cooperative banks to subscribe to its supplementary cooperative capital. The subscription period ended on 2 February 2009, resulting in supplementary cooperative capital totalling EUR 444 million. The Boards of Directors of Pohjola Bank plc and Pohjola Finance Ltd have approved a plan whereby Pohjola Finance Ltd is expected to merge with its parent company by the end of 2009. Owner-members and customers On 30 June, the cooperative member banks had 1,271,000 owner-members, which is 42,000 more than a year earlier, and Helsinki OP Bank Plc, which operates in the Helsinki Metropolitan Area, had a total of 1,073,000 OP bonus customers. Loyal customer bonuses earned by OP bonus customers totalled EUR 70 million, up by 9.9% on the previous year. Bonuses earned by owner-members are stated in OP-Pohjola Group's income statement under 'Returns to owner-members'. In the first half of the year, OP bonus customers used a total of EUR 35 million (26) of bonuses on banking services and EUR 31 million (13) on Pohjola non-life insurance premiums. In the period under review, OP bonuses have been used to pay over 425,000 insurance premiums, with 30% paid in full using bonuses. OP-Pohjola Group had a total of 4,121,000 customers in Finland at the end of June, or 5,100 more than a year earlier. The number of private customers totalled 3,712,000 and that of corporate customers 409,000. In addition, OP-Pohjola Group has approximately 200,000 non-life insurance customers in the Baltic countries. In the year to June, the number of joint banking and non-life insurance customers in Finland increased by 68,000 to 1,016,000 as a result of cross-selling. On 30 June 2009, the number of Pohjola's loyal customer households totalled 403,000, up by 28,800 from June 2008. More than half of Pohjola's loyal customer households have concentrated their banking transactions in OP-Pohjola Group member cooperative banks. Personnel and incentive system On 30 June, OP-Pohjola Group had a staff of 12,721, or 31 fewer than on 31 December 2008 and 110 more than a year ago. About 94% of OP-Pohjola Group's personnel are members in the Group's Personnel Fund. A management incentive scheme is also in place within the Group. Central Cooperative's corporate governance OP-Pohjola Group Central Cooperative is the central institution of the amalgamation of the cooperative banks, the parent company of OP-Pohjola Group Central Cooperative Consolidated and the company heading the financial and insurance conglomerate formed by OP-Pohjola Group. Acting as a development and service centre for OP-Pohjola Group and as a strategic owner institution, the Central Cooperative plays a pivotal role in developing and steering OP-Pohjola Group's business. The Annual Cooperative Meeting of OP-Pohjola Group Central Cooperative was held on 27 March 2009. The new members elected to the Supervisory Board for 2009-2012 were as follows: Kari Manninen, Managing Director; Jarmo Partanen, Professor; Jorma Vierula, Forest Officer; Tomi Korpisaari, Managing Director; Paavo Pelkonen, Professor; Jorma Pitkälä, maakuntaneuvos (Finnish honorary title); and Jarmo Tuovinen, Managing Director. The Meeting elected Leif Laine, Managing Director, to replace Jari Laaksonen, Managing Director, until 2011. The Supervisory Board comprises 34 members. At is first meeting after the Annual Cooperative Meeting, Supervisory Board elected Paavo Haapakoski Chairman. Professor Jaakko Pehkonen and President Jukka Hulkkonen were elected as Vice Chairmen. The Annual Cooperative Meeting re-elected KPMG Oy Ab, a firm of authorised public accountants, the auditor of OP-Pohjola Group Central Cooperative and OP-Pohjola Group for the financial year 2009. Capital expenditure The Central Cooperative, together with its subsidiaries, is responsible for developing OP-Pohjola Group's services. ICT investments and related specifications make up a significant portion of costs of developing these services. ICT procurement capitalised in the balance sheet totalled EUR 22 million (21). Of these investments, EUR 12 million (12) was allocated to banking and investment operations, EUR 5 million (5) to non-life insurance operations and EUR 4 million (4) to 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 (OP-Pohjola Group Central Cooperative), the Central Cooperative's member credit institutions and the companies belonging to their consolidation groups. This amalgamation is monitored on a consolidated basis. The Central Cooperative and its member banks are ultimately responsible for each other's liabilities and commitments. The Central Cooperative's members at the end of the report period comprised OP-Pohjola Group's 221 member banks as well as Pohjola Bank plc, Helsinki OP Bank Plc, OP Mortgage Bank and OP-Kotipankki Oyj. OP-Pohjola Group's insurance companies do not fall within the scope of joint responsibility. Deposit banks belonging to OP-Pohjola Group, i.e. its member cooperative banks, Pohjola Bank plc, Helsinki OP Bank Plc and OP-Kotipankki Oyj, are regarded as a single bank with respect to deposit protection. Under legislation governing the Investor Compensation Fund, OP-Pohjola Group is also considered a single entity for purposes of compensation protection. Outlook towards the year end The worst part of the financial crisis of now behind us, and the predictability of the operating environment has improved in the first half of the year. However, uncertainty related to the instability of the financial market and the predictability of the operating environment is expected to be higher than average. As a result of the recession, companies and individuals are expected to be even worse affected, having problems keeping up with their loan payments. Profit performance in the financial sector is weakened by sluggish growth, exceptionally low interest rates and increasing credit losses. Despite the difficult operating environment, the Group's full-year result is expected to be at last year's level, with the greatest difficulty in the forecast related to credit loss and other impairment loss developments. All forward-looking statements in this Interim Report expressing the management's expectations, beliefs, estimates, forecasts, projections and assumptions are based on the current view of the future financial performance of OP-Pohjola Group and its various functions, and actual results may differ materially from those expressed in the forward-looking statements. Operations and earnings by business segment OP-Pohjola Group's business segments are Banking and Investment Services, Non-life Insurance and Life Insurance. Non-segment operations are presented in 'Other Operations'. OP-Pohjola Group's segment reporting is based on accounting policies applied in its financial statements. Amortisation on intangible assets arising from the Pohjola acquisition is allocated to the business segments. Companies within the Banking and Investment Services segment are the member banks, Helsinki OP Bank Plc, OP-Kotipankki Oyj, OP Mortgage Bank, OP Fund Management Company Ltd, Pohjola Asset Management Limited, Pohjola Corporate Finance Ltd, Pohjola Capital Partners Ltd, as well as certain smaller companies supporting banking and investment services in their entirety. Pohjola Group's banking and asset management segments are also included in the Banking and Investment Services segment as are the operations of OP-Pohjola Group Mutual Insurance Company, because most of the company's business consists of credit insurance granted to the Group's retail banks. The Non-life Insurance segment encompasses the operations of OP-Pohjola Group's non-life insurance companies, i.e. Pohjola Insurance Ltd, Eurooppalainen Insurance Company Ltd, A-Insurance Ltd, the Seesam companies operating in the Baltic countries, as well as the operations of service companies supporting non-life insurance. The Life Insurance segment comprises OP Life Assurance Company Ltd engaged in the Group's life and pension insurance business. Other Operations includes operations that support all business segments, particularly the operations of OP-Pohjola Group Central Cooperative and Pohjola's Group management. Up until May 2008, FD Finanssidata was included as well. Costs of the services for the business segments are allocated to the segments in the form of internal service charges. The allocation of own capital to the business segments is carried out through an internal bank under Other Operations, which means that any positive results in excess of the target level will be shown under Other Operations. Summary of performance by business segment -------------------------------------------------------------------------------- | EUR million | Incom | Expens | Other | Earnings/ | Earnings/ | Earnings/ | | | e | es | items | loss | loss | loss | | | | | | before | before | before | | | | | | tax | tax | tax | | | | | | Q2/2009 | Q2/2008 | 2008 | -------------------------------------------------------------------------------- | Banking and | 885 | 466 | -148 | 270 | 316 | 532 | | Investment | | | | | | | | Services | | | | | | | -------------------------------------------------------------------------------- | Non-life | 201 | 155 | 0 | 46 | 40 | 55 | | Insurance | | | | | | | -------------------------------------------------------------------------------- | Life Insurance | -10 | 31 | 0 | -41 | -12 | -162 | -------------------------------------------------------------------------------- | Other | 189 | 175 | -9 | 4 | -37 | -24 | | Operations | | | | | | | -------------------------------------------------------------------------------- | Eliminations | -185 | -186 | 0 | 1 | -24 | -29 | -------------------------------------------------------------------------------- | Total | 1,080 | 641 | -158 | 281 | 283 | 372 | -------------------------------------------------------------------------------- Banking and Investment Services The operating environment of Banking and Investment Services was more challenging than previously. The negative effects of the weakening real economy are becoming more apparent, as more and more customers are suffering from weakened liquidity and declining growth. The record-low interest-rates have slowed down net interest income growth and will later send it on a downward path. OP-Pohjola Group's market position has been reinforced in this difficult operating environment. OP-Pohjola Group is the biggest market shares in Finland in deposits and credit. On 30 June, the Group's loan portfolio stood at EUR 51.9 billion (51.0), and the guarantee portfolio at EUR 3.1 billion (3.0). The loan portfolio expanded by 7.0% (14) in the year to June 2009 and by 1.2% in the report period. The market share of the loan portfolio increased year on year by 0.8 percentage points to 32.2%. Credit margins continued to rise throughout the report period. The average margin of new home mortgages has more than doubled in less than twelve months, chiefly as a result of the higher price of long-term debt. The percentage of fixed-rate home mortgages of all home mortgages remained low at 2.4% (2.3). The home mortgage portfolio totalled EUR 24.9 billion (24.2) at the end of June. During the past year, home mortgages increased by 7.8% (14.1) and in the report period by 3.0%. OP-Pohjola Group held 36.0% of the home mortgage portfolio on 31 June 2009, up by 0.6 percentage points year on year. At the end of the report period, the consumer credit portfolio amounted to EUR 3.7 billion (3.7), showing an increase of 5.8% (20.1) year on year and 2.4% in the report period (7.0). On 30 June, the corporate loan portfolio stood at EUR 13.8 billion (13.8), and the guarantee portfolio at EUR 2.8 billion (2.6). The corporate loan portfolio rose by 9.0% year on year, but shrank by 0.1% (11.7) during the report period. Demand for corporate loans slowed down clearly in the first half of 2009 as a result of lower customer company investments. On the other hand, guarantees and other off-balance-sheet commitments increased in the report period by 9.9%. The market share of corporate loans on 30 June was 27.6%, or 1.7 percentage points higher than a year earlier. On 30 June, deposits totalled EUR 34.8 billion (34.5), an increase of 8.6% year on year and 0.9% in the report period. A significant change took place in the structure of deposits during the report period: the focus shifted from investment deposits to current accounts. Investment deposits rose by 7.2% in the year to June (40.5) and current accounts by 10.2% (0.5). The Group's market share of deposits on 30 June was 33.2%, or 0.4 percentage points higher than a year earlier. Capital invested in OP-Pohjola Group's mutual funds totalled EUR 10.6 billion (9.3), showing an increase of 12.8% during the report period but a contraction of 13.0% in the year to June. On 30 June, OP-Pohjola Group held a 23.0% market share of the capital of mutual funds registered in Finland, up by 1.6 percentage points year on year. Net subscriptions to OP-Pohjola Group's mutual funds totalled EUR 606 million (-1,268). Pohjola's Asset Management managed a total of EUR 27.8 billion at the end of June (25.3), of which assets in OP-Pohjola Group's mutual funds accounted for EUR 9.5 billion and OP-Pohjola Group companies for EUR 6.7 billion. Assets managed in accordance with the OP-Private operating model totalled EUR 3.0 billion (2.7). Stockbroking for households totalled 454,000 trades during the report period, or 80.2% more than a year earlier. Earnings and risk exposure Banking and Investment Services reported earnings of EUR 270 million (316) before tax for the first half of 2009, down by 15% year on year. Bonuses given out in the report period rose by 9.9% to EUR 70 million (64). Net interest income fell by 3.5 to EUR 531 million (550), while net commissions and fees rose by 12% to EUR 268 million (239). The fall in net interest income was caused by lower interest rates. Net trading and investment income totalled EUR 52 million (16). Trading income in the report period developed extremely favourably, but on the other hand, revaluation losses were recorded of securities from the comparison period. The report period's return of investments was burdened by EUR 12 million impairment losses related to available-for-sale investments. Personnel costs rose by 8.9% and other expenses by 6.6%. On the other hand, insurance sales bonuses are included under net commissions and fees. The cost/income ratio stood at 53% (52). Impairment losses on receivables came to EUR 66 million (11), the increase being the result of a clear deterioration in the financial situation compared with last year. The amount of impairment losses was still moderate in relation to the business volumes, and moderate considering the current trends. The Group's non-performing and zero-interest receivables increased but remained low, totalling EUR 285 million on 30 June, up by 31% year on year. Households' non-performing loan losses increased in particular. Non-performing and zero-interest loans are stated net of impairments of specific receivables and groups of receivables, which amounted to EUR 117 million (85). The ratio of non-performing and zero-interest receivables to the loan and guarantee portfolio was 0.5%, or slightly higher than a year ago (0.4). Banking and Investment Services: key figures -------------------------------------------------------------------------------- | EUR million | Q2/2009 | Q2/2008 | Change,% | 2008 | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Net interest income | 531 | 550 | -3.5 | 1,121 | -------------------------------------------------------------------------------- | Impairment losses on | 66 | 11 | 492.5 | 48 | | receivables | | | | | -------------------------------------------------------------------------------- | Other income | 354 | 288 | 22.9 | 489 | -------------------------------------------------------------------------------- | Personnel costs | 207 | 190 | 8.9 | 381 | -------------------------------------------------------------------------------- | Other expenses | 259 | 243 | 6.6 | 494 | -------------------------------------------------------------------------------- | Returns to owner-members | 82 | 77 | 6.5 | 154 | | and OP bonus customers | | | | | -------------------------------------------------------------------------------- | Earnings/loss before tax | 270 | 316 | -14.5 | 532 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR million | Q2/2009 | Q2/2008 | Change,% | 2008 | -------------------------------------------------------------------------------- | Home mortgages drawn down | 2,835 | 3,998 | -29.1 | 7,041 | -------------------------------------------------------------------------------- | Corporate loans drawn | 3,612 | 4,042 | -10.6 | 8,271 | | down | | | | | -------------------------------------------------------------------------------- | Net subscriptions to | 606 | -1,268 | | -2,308 | | mutual funds | | | | | -------------------------------------------------------------------------------- | No. of brokered property | 6,908 | 8,323 | -17.0 | 14,569 | | transactions | | | | | -------------------------------------------------------------------------------- --------------------------------------------------------------------------------| EUR billion | 30 Jun | 30 Jun | Change,% | 31 Dec | | | 2009 | 2008 | | 2008 | -------------------------------------------------------------------------------- | Outstanding credit | | | | | -------------------------------------------------------------------------------- | Home loans | 25 | 23 | 7.8 | 24 | -------------------------------------------------------------------------------- | Other loans to households | 10 | 9 | 4.4 | 10 | -------------------------------------------------------------------------------- | Corporate loans | 14 | 13 | 9.0 | 14 | -------------------------------------------------------------------------------- | Other loans | 3 | 3 | 1.4 | 3 | -------------------------------------------------------------------------------- | Total | 52 | 48 | 7.0 | 51 | -------------------------------------------------------------------------------- | Guarantee portfolio | 3.1 | 2.6 | 18.4 | 3 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Deposits | | | | | -------------------------------------------------------------------------------- | Total current and payment | | | | | | transfer | | | | | -------------------------------------------------------------------------------- | Households | 11 | 10 | 4.6 | 10 | -------------------------------------------------------------------------------- | Companies | 4 | 3 | 19.5 | 4 | -------------------------------------------------------------------------------- | Others | 2 | 2 | 24.8 | 2 | -------------------------------------------------------------------------------- | Total current and payment | 17 | 15 | 10.2 | 16 | | transfer | | | | | -------------------------------------------------------------------------------- | Investment deposits | 18 | 17 | 7.2 | 19 | -------------------------------------------------------------------------------- | Total deposits | 35 | 32 | 8.6 | 35 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Mutual funds | | | | | -------------------------------------------------------------------------------- | Equity and hedge funds | 2.7 | 3.3 | -18.8 | 2.1 | -------------------------------------------------------------------------------- | Balanced funds | 1.4 | 1.7 | -19.0 | 1.3 | -------------------------------------------------------------------------------- | Long-term bond funds | 4.7 | 3.8 | 24.1 | 4.0 | -------------------------------------------------------------------------------- | Money market funds | 1.7 | 3.1 | -46.1 | 1.9 | -------------------------------------------------------------------------------- | Total value of mutual | 10.5 | 11.9 | -12.2 | 9.3 | | funds | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Market share,% | 30 Jun | 30 Jun | Change, | 31 Dec | | | 2009 | 2008 | percentage | 2008 | | | | | points | | -------------------------------------------------------------------------------- | Total loans | 32.3 | 31.5 | 0.8 | 32.0 | -------------------------------------------------------------------------------- | Home mortgages | 36.0 | 35.4 | 0.6 | 35.9 | -------------------------------------------------------------------------------- | Corporate loans | 27.6 | 25.9 | 1.7 | 26.8 | -------------------------------------------------------------------------------- | Total deposits | 33.2 | 32.8 | 0.4 | 33.8 | -------------------------------------------------------------------------------- | Capital invested in | 23.0 | 21.4 | 1.6 | 22.5 | | mutual funds | | | | | -------------------------------------------------------------------------------- | EUR million | | | | | -------------------------------------------------------------------------------- | Non-performing and | | | Change.,% | | | zero-interest receivables | | | | | -------------------------------------------------------------------------------- | Households | 180 | 125 | 43.8 | 122 | -------------------------------------------------------------------------------- | Companies and housing | 86 | 65 | 33.3 | 63 | | associations | | | | | -------------------------------------------------------------------------------- | Other | 18 | 28 | -33.8 | 18 | -------------------------------------------------------------------------------- | Total non-performing and | 285 | 218 | 30.8 | 203 | | zero-interest receivables | | | | | -------------------------------------------------------------------------------- | Non-performing and | 0.5 | 0.4 | 0.1* | 0.4 | | zero-interest receivables | | | | | | within loan and guarantee | | | | | | portfolio,% | | | | | -------------------------------------------------------------------------------- * Percentage points Non-life Insurance The non-life insurance business improved well in the report period. On 30 June, the number of loyal customer households within the Non-life Insurance segment totalled 403,000, showing a year-on-year increase of 7.7%. Insurance premium revenue rose by 3.3% to EUR 471 million (456). Comparable figures of insurance premium revenue from Private Customers improved by 11.2% to EUR 207 million. Insurance sales to private customers were transferred to Group member banks in October 2008 with promising results: year on year, non-life insurance policy sales grew by 17% in January-June, in comparison with sales performed by Pohjola's own offices. During the current year, more and more OP-Pohjola Group member banks have begun to sell non-life insurance policies. Within Corporate Customers, the economic recession slowed down growth. Insurance premium revenue shrank to EUR 234 million (241). In the Baltic States, insurance premium revenue rose by 5% to EUR 30 million (29). Pohjola Insurance is the non-life insurance market leader in Finland with a 27.5% market share of premiums written on 31 December 2008, its market share increasing in 2008 by 0.5 percentage points. More than 50% of Pohjola's loyal customer households have also concentrated their banking transactions in OP-Pohjola Group member cooperative banks. OP bonuses obtained through bank transactions were used for the payment of insurance premiums to a total of EUR 31 million in January-June 2009 (13). Bonuses were used to pay almost 425,000 bills and some 130,000 bills were paid using bonuses alone. Earnings and risk exposure Pre-tax earnings from Non-life Insurance amounted to EUR 46 million (40) in the report period. The balance on technical account during the report period was clearly better than last year. The operating combined ratio stood at 88.6 (95.0). Insurance premium revenue totalled EUR 471 million (456) and indemnities EUR 287 million (309). Net investment income recognised under earnings came to EUR 30 million, or EUR 25 million higher year on year (55). Investment income included EUR 21 million writedowns of available-for-sale securities. The non-life insurance segment's expenses grew by 4% to EUR 154 million (149). Personnel costs were reduced as staff selling insurance policies to private customers moved to work for Group member banks. This arrangement had no significant effect on overall costs. As a result of favourable claims developments, claims incurred were lower than a year ago although strong growth in the private customer insurance portfolio added to the number of losses reported. The efficiency of claims settlement and the successful utilisation of partnerships, for instance in the form of early referral to treatment and cost control, contributed to this favourable development. The limit for major or medium-sized loss is EUR 0.1 million for non-life insurance and EUR 0.5 million for pension liabilities. There were 90 (98) such losses in January-June, with their claims incurred retained by Pohjola totalling EUR 45 million (42). The risk ratio was 59.9 (67.0). Operating expenses and loss adjustment expenses grew to EUR 135 million (128), due mainly to higher sales costs. The cost ratio was 28.7 (28.0). On 30 June, Non-life Insurance solvency capital totalled EUR 722 million (608) and the ratio of solvency capital to insurance premium revenue (solvency ratio) stood at 77% (66). Solvency capital increased by EUR 95 million in the second quarter, due to the good financial performance reported by investment and insurance business. As a result of the excellent balance on technical account, equalisation provision increased by EUR 17 million to EUR 384 million in the second quarter. On 30 June, the investment portfolio of Non-life Insurance totalled EUR 2.7 billion (2.4), with bonds and bond funds accounting for 83% (82) and equities 6.8% (7.8). The average remaining maturity of the fixed-income portfolio was 4.9 years and the duration 3.5 years (4.3). The loss on investments was 4.5% (loss of 1.2). Non-life Insurance: key figures -------------------------------------------------------------------------------- | EUR million | Q2/2009 | Q2/2008 | Change, | 2008 | | | | | % | | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Insurance premium revenue | 471 | 456 | 3.3 | 923 | -------------------------------------------------------------------------------- | Insurance claims and | 287 | 309 | -7.1 | 591 | | benefits | | | | | -------------------------------------------------------------------------------- | Net investment income | 30 | 55 | -46.8 | 59 | -------------------------------------------------------------------------------- | Unwinding of discount and | -22 | -20 | 6.0 | -40 | | other items included in | | | | | | net income | | | | | -------------------------------------------------------------------------------- | Net income from Non-life | 192 | 182 | 5.4 | 352 | | Insurance | | | | | -------------------------------------------------------------------------------- | Other net income | 8 | 7 | 23.8 | 9 | -------------------------------------------------------------------------------- | Personnel costs | 55 | 56 | -3.2 | 111 | -------------------------------------------------------------------------------- | Other expenses | 99 | 93 | 7.2 | 195 | -------------------------------------------------------------------------------- | Earnings/loss before tax | 46 | 40 | 16.5 | 55 | -------------------------------------------------------------------------------- | Gross change in fair value | 74 | -88 | -184.6 | -214 | | reserve | | | | | -------------------------------------------------------------------------------- | Earnings/loss before tax | 121 | -48 | -348.7 | -159 | | at fair value | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR million | Q2/2009 | Q2/2008 | Change, | 2008 | | | | | % | | -------------------------------------------------------------------------------- | Insurance premium revenue | | | | | -------------------------------------------------------------------------------- | Private Customers | 207 | 186 | 11.2 | 380 | -------------------------------------------------------------------------------- | Corporate Customers | 234 | 241 | -3.0 | 485 | -------------------------------------------------------------------------------- | Baltic States | 30 | 29 | 5.0 | 58 | -------------------------------------------------------------------------------- | Total insurance premium | 471 | 456 | 3.3 | 923 | | revenue | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR billion | 30 Jun | 30 Jun | Change, | 31 Dec | | | 2009 | 2009 | % | 2008 | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Insurance contract | | | | | | liabilities | | | | | -------------------------------------------------------------------------------- | Discounted insurance | 1.3 | 1.3 | 2.1 | 1.3 | | contract liabilities | | | | | -------------------------------------------------------------------------------- | Other insurance contract | 1.0 | 1.0 | 4.0 | 0.8 | | liabilities | | | | | -------------------------------------------------------------------------------- | Total | 2.3 | 2.2 | 3.0 | 2.1 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Investment portfolio | | | | | -------------------------------------------------------------------------------- | Bonds and bond funds | 2.0 | 1.7 | 13.3 | 1.7 | -------------------------------------------------------------------------------- | Money market instruments | 0.3 | 0.2 | 43.4 | 0.3 | -------------------------------------------------------------------------------- | Equities and equity funds | 0.2 | 0.4 | -49.8 | 0.2 | -------------------------------------------------------------------------------- | Real property investment | 0.1 | 0.1 | 6.1 | 0.1 | | *) | | | | | -------------------------------------------------------------------------------- | Alternative investments | 0.1 | 0.1 | -12.9 | 0.1 | -------------------------------------------------------------------------------- | Total | 2.7 | 2.6 | 4.7 | 2.4 | -------------------------------------------------------------------------------- *) Includes real estate funds Life Insurance The life insurance market's premiums written rose in January-June by 6.8% year on year, the increase partly attributable to product development that has channelled assets into insurance-type products from financial products. Year on year, OP-Pohjola Group's premiums written in life and pension insurance decreased by 24.5% to EUR 295 million (391). Comparability is affected by an insurance portfolio transfer of EUR 36 million included in the 2008 figures. Premiums written in endowment insurance declined by 26%, and premiums written of personal pension plans by 1.2%. Unit-linked premiums written accounted for 49%. On 30 June 2009, OP-Pohjola Group had a market share of 22.9%, down by 6.5 percentage points from 31 December 2008. Life insurance claims paid by OP-Pohjola Group totalled EUR 251 million (324), of which surrenders accounted for EUR 80 million (169). Reported pension payout came to EUR 29 million (23). OP-Pohjola Group's market share of insurance savings through life and pension insurance policies stood at 19.3% (19.4%) in March. Earnings and risk exposure Earnings before tax from Life Insurance were EUR -41 million (-12). Earnings before tax at fair value came to EUR 11 million. The fair value reserve change before tax stood at EUR 52 million (-224) during the report period. Net losses from Life Insurance were EUR 19 million (income of EUR 5.9 million). The provision worth EUR 10 million for future supplementary benefits was reversed during the comparison period. Net profit from investment assets other than those covering unit-linked insurance stood at EUR 3.5 million (EUR 31 million). Investment income includes EUR 83 million impairment loss of available-for-sale securities. Investment income was eroded during the comparison period by a negative valuation of EUR 47 million concerning notes and bonds recognised in the balance sheet, EUR 17 million of which were reflected in the report period's balance sheet. Personnel costs increased to EUR 4.6 million (4.3) and other expenses by 8.8% to EUR 26 million (24). Other expenses include EUR 13 million (13) in commissions paid to the sales network. The life insurance technical provisions totalled EUR 5.5 billion (5.3) at the end of June. Interest-bearing contract liabilities accounted for 67.4% and unit-linked 32.6% of the total liabilities. Life insurance investment assets, excluding assets covering unit-linked insurance, amounted to EUR 4.0 billion (3.9). As the capital markets picked up, the return on investment was positive, standing at 1.7% (-3.3) at the end of the report period. OP-Pohjola Group Central Cooperative, being the chief owner, increased OP Life Assurance Company's operating capital to ensure the latter's capital adequacy. The reserve for invested non-restricted equity in the beginning of the report period totalled EUR 150 million. As capital markets were recovering, OP Life Assurance Company's capital adequacy improved markedly during the second quarter. Life Insurance: key figures -------------------------------------------------------------------------------- | EUR million | Q2/2009 | Q2/2008 | Change,% | 2008 | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Premiums written | 295 | 391 | -24.5 | 717 | -------------------------------------------------------------------------------- | Unit-linked | 144 | 170 | -15.4 | 299 | -------------------------------------------------------------------------------- | Other | 151 | 221 | -31.6 | 418 | -------------------------------------------------------------------------------- | Net investment income | 154 | -217 | -171.0 | -802 | -------------------------------------------------------------------------------- | Unit-linked | 150 | -248 | -160.7 | -708 | -------------------------------------------------------------------------------- | Other | 3.5 | 31 | -88.8 | -94 | -------------------------------------------------------------------------------- | Change in insurance | 216 | -149 | -244.6 | -590 | | contract liabilities | | | | | -------------------------------------------------------------------------------- | Unit-linked | 233 | -286 | -181.3 | -758 | -------------------------------------------------------------------------------- | Other | -17 | 137 | -112.5 | 168 | -------------------------------------------------------------------------------- | Claims incurred | 251 | 324 | -22.7 | 643 | -------------------------------------------------------------------------------- | Other items | -2 | 6 | -133.2 | 12 | -------------------------------------------------------------------------------- | Net income from Life | -19 | 6 | -421.6 | -126 | | Insurance | | | | | -------------------------------------------------------------------------------- | Other income | 9 | 10 | -8.9 | 16 | -------------------------------------------------------------------------------- | Personnel costs | 5 | 4 | 5.8 | 5 | -------------------------------------------------------------------------------- | Other expenses | 26 | 24 | 8.8 | 48 | -------------------------------------------------------------------------------- | Earnings/loss before tax | -41 | -12 | -230.9 | -162 | -------------------------------------------------------------------------------- | Gross change in fair value | 52 | -224 | 123.1 | -403 | | reserve | | | | | -------------------------------------------------------------------------------- | Earnings/loss before tax at | 11 | -237 | 104.7 | -565 | | fair value | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR million | Q2/2009 | Q2/2008 | Change,% | 2008 | -------------------------------------------------------------------------------- | Premiums written, FAS | | | | | -------------------------------------------------------------------------------- | Endowment insurance | 174 | 236 | -26.4 | 382 | --------------------------------------------------------------------------------| Pension insurance | 88 | 118 | -25.4 | 279 | -------------------------------------------------------------------------------- | Term life insurance | 34 | 42 | -20.1 | 73 | -------------------------------------------------------------------------------- | Other | 3 | 9 | -62.1 | 33 | -------------------------------------------------------------------------------- | Total premiums written | 299 | 405 | -26.3 | 766 | -------------------------------------------------------------------------------- | of which unit-linked | 147 | 178 | -17.7 | 317 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Market share of premiums | 22.9 | 33.1 | -10.2* | 29.3 | | written in life and pension | | | | | | insurance,% | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR billion | 30 Jun | 30 Jun | Change* | 31 Dec | | | 2009 | 2008 | % | 2008 | -------------------------------------------------------------------------------- | Insurance savings | | | | | -------------------------------------------------------------------------------- | Endowment insurance | 3.8 | 4.1 | -7.2 | 3.7 | -------------------------------------------------------------------------------- | Pension insurance | 1.7 | 1.6 | 7.0 | 1.5 | -------------------------------------------------------------------------------- | Capital redemption | 0.1 | 0.1 | -18.0 | 0.1 | | contracts | | | | | -------------------------------------------------------------------------------- | Total insurance savings | 5.6 | 5.8 | -3.6 | 5.4 | -------------------------------------------------------------------------------- | of which unit-linked | 1.8 | 2.1 | -11.7 | 1.6 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Investment portfolio | | | | | -------------------------------------------------------------------------------- | Bonds and bond funds | 2.3 | 2.4 | -4.9 | 2.3 | -------------------------------------------------------------------------------- | Money market instruments | 0.5 | 0.0 | | 0.6 | -------------------------------------------------------------------------------- | Equities and equity funds | 0.3 | 0.6 | -51.4 | 0.2 | -------------------------------------------------------------------------------- | Real property investment | 0.3 | 0.3 | -5.1 | 0.3 | | **) | | | | | -------------------------------------------------------------------------------- | Alternative investments | 0.5 | 0.6 | -12.0 | 0.5 | -------------------------------------------------------------------------------- | Total investment portfolio | 4.0 | 4.0 | -0.9 | 3.9 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Market share of insurance | 19.3*** | 19.7 | -0.4* | 19.4 | | savings in life and pension | | | | | | insurance,% | | | | | -------------------------------------------------------------------------------- * Percentage points ** Includes real estate funds *** March 2009 Other Operations Other Operations' pre-tax result for January-June was EUR 41 million better than last year, ending in a profit of EUR 4 million (loss of EUR 37 million). Impairments to the liquidity reserves eroded the result by EUR 42 million euros. In the latter half of 2008, OP-Pohjola Group renewed its liquidity strategy, and reclassified the securities included in the liquidity reserve in terms of accounting. This means that changes in fair value are no longer recognised through profit or loss under Net trading income. EUR 9 million impairment losses from these securities have been recorded under Impairments of receivables. Net investment income was EUR 28 million (15), net trading loss EUR 4 million (loss of EUR 50 million) and the net investment losses EUR 4 million (income of EUR 7 million). Most of the other income in Other Operations came from within the Group as internal service charges, which are recorded as business segment expenses. Of the Other Operations expenses, EUR 60 million (59) were personnel costs and EUR 116 million (113) other costs. Other Operations: key figures -------------------------------------------------------------------------------- | EUR million | Q2/2009 | Q2/2008 | Change,% | 2008 | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Net interest income | 28 | 15 | 80.3 | 39 | -------------------------------------------------------------------------------- | Net trading income | -4 | -50 | -91.7 | -61 | -------------------------------------------------------------------------------- | Net investment income | -4 | 7 | -163.0 | 10 | -------------------------------------------------------------------------------- | Other income | 169 | 161 | 5.0 | 334 | -------------------------------------------------------------------------------- | Expenses | 175 | 172 | 1.8 | 337 | -------------------------------------------------------------------------------- | Impairment losses on | 9 | -2 | -551.3 | 10 | | receivables | | | | | -------------------------------------------------------------------------------- | Earnings/loss before tax | 4 | -37 | -111.1 | -24 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR billion | 30 Jun | 30 Jun | Change,% | 31 Dec | | | 2009 | 2008 | | 2008 | -------------------------------------------------------------------------------- | | , | , | , | | -------------------------------------------------------------------------------- | Receivables from | 6.7 | 3.7 | 79.4 | 6.3 | | financial institutions | | | | | -------------------------------------------------------------------------------- | Financial assets held | 0.6 | 3.1 | -79.8 | 2.1 | | for trading | | | | | -------------------------------------------------------------------------------- | Investment assets | 5.0 | 3.1 | 64.2 | 2.5 | -------------------------------------------------------------------------------- | | , | , | , | , | -------------------------------------------------------------------------------- | Liabilities to credit | 3.5 | 4.0 | -14.1 | 3.4 | | institutions | | | | | -------------------------------------------------------------------------------- | Debt securities issued | 16.9 | 12.5 | 36.0 | 17.1 | | to the public | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | FINANCIAL STATEMENTS AND NOTES | -------------------------------------------------------------------------------- | Income statement | -------------------------------------------------------------------------------- | Statement of comprehensive income | -------------------------------------------------------------------------------- | Key figures, ratios and definitions | -------------------------------------------------------------------------------- | Financial performance by quarter | -------------------------------------------------------------------------------- | Balance sheet | -------------------------------------------------------------------------------- | Statement of changes in equity | -------------------------------------------------------------------------------- | Cash flow statement | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Notes: | -------------------------------------------------------------------------------- | Note 1. Accounting policies | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Notes to the income statement and balance sheet: | -------------------------------------------------------------------------------- | Note 2. Net interest income | -------------------------------------------------------------------------------- | Note 3. Impairments of receivables | -------------------------------------------------------------------------------- | Note 4. Net income from Non-life Insurance | -------------------------------------------------------------------------------- | Note 5. Net income from Life Insurance | -------------------------------------------------------------------------------- | Note 6. Net commissions and fees | -------------------------------------------------------------------------------- | Note 7. Net trading income | -------------------------------------------------------------------------------- | Note 8. Net investment income | -------------------------------------------------------------------------------- | Note 9. Other operating income | -------------------------------------------------------------------------------- | Note 10. Personnel costs | -------------------------------------------------------------------------------- | Note 11. Other administrative expenses | -------------------------------------------------------------------------------- | Note 12. Other operating expenses | -------------------------------------------------------------------------------- | Note 13. Returns to owner-members | -------------------------------------------------------------------------------- | Note 14. Classification of financial instruments | -------------------------------------------------------------------------------- | Note 15. Reclassified notes and bonds | -------------------------------------------------------------------------------- | Note 16. Non-life Insurance assets | -------------------------------------------------------------------------------- | Note 17. Life Insurance assets | -------------------------------------------------------------------------------- | Note 18. Debt securities issued to the public | -------------------------------------------------------------------------------- | Note 19. Fair value reserve after income tax | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Other notes: | -------------------------------------------------------------------------------- | Note 20. Collateral given | -------------------------------------------------------------------------------- | Note 21. Off-balance-sheet commitments | -------------------------------------------------------------------------------- | Note 22. Derivative contracts | -------------------------------------------------------------------------------- | Note 23. Related-party transactions | -------------------------------------------------------------------------------- OP-Pohjola Group income statement -------------------------------------------------------------------------------- | EUR million | Q1-2/ | Q1-2/ | Change, % | 2008 | | | 20 | 20 | | | | | 09 | 08 | | | -------------------------------------------------------------------------------- | Interest income | 1,797 | 2,253 | -20 | 4,853 | -------------------------------------------------------------------------------- | Interest expenses | 1,229 | 1,685 | -27 | 3,664 | -------------------------------------------------------------------------------- | Net interest income (Note 2) | 568 | 568 | 0 | 1,189 | -------------------------------------------------------------------------------- | Impairments of receivables | 75 | 9 | | 58 | | (Note 3) | | | | | -------------------------------------------------------------------------------- | Net interest income after | 493 | 559 | -12 | 1,131 | | impairments | | | | | -------------------------------------------------------------------------------- | Net income from Non-life | 189 | 178 | 6 | 345 | | Insurance operations | | | | | | (Note 4) | | | | | -------------------------------------------------------------------------------- | Net income from Life Insurance | -29 | 1 | | -139 | | operations (Note 5) | | | | | -------------------------------------------------------------------------------- | Net commissions and fees (Note | 251 | 231 | 9 | 433 | | 6) | | | | | -------------------------------------------------------------------------------- | Net trading income (Note 7) | 54 | -57 | | -125 | -------------------------------------------------------------------------------- | Net investment income (Note 8) | -8 | 31 | | 25 | -------------------------------------------------------------------------------- | Other operating income (Note | 52 | 46 | 13 | 93 | | 9) | | | | | -------------------------------------------------------------------------------- | Personnel costs (Note 10) | 327 | 310 | 5 | 598 | -------------------------------------------------------------------------------- | Other administrative expenses | 156 | 158 | -1 | 328 | | (Note 11) | | | | | -------------------------------------------------------------------------------- | Other operating expenses (Note | 157 | 159 | -1 | 312 | | 12) | | | | | -------------------------------------------------------------------------------- | Returns to owner-members (Note | 82 | 77 | 6 | 154 | | 13) | | | | | -------------------------------------------------------------------------------- | Share of associates' | 0 | 0 | | 1 | | profits/losses | | | | | -------------------------------------------------------------------------------- | Earnings before tax for the | 281 | 283 | -1 | 372 | | period | | | | | -------------------------------------------------------------------------------- | Income tax expense | 81 | 78 | 3 | 151 | -------------------------------------------------------------------------------- | Profit for the period | 201 | 205 | -2 | 221 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Profit attributable to: | | | | | -------------------------------------------------------------------------------- | OP-Pohjola Group's owners | 201 | 205 | -2 | 221 | -------------------------------------------------------------------------------- | Minority interest | 0 | 0 | | 0 | -------------------------------------------------------------------------------- | Total | 201 | 205 | -2 | 221 | -------------------------------------------------------------------------------- OP-Pohjola Group statement of comprehensive income -------------------------------------------------------------------------------- | EUR million | Q1-2/ | Q1-2/ | Change, % | 2008 | | | 20 | 20 | | | | | 09 | 08 | | | -------------------------------------------------------------------------------- | Profit for the period | 201 | 205 | -2 | 221 | -------------------------------------------------------------------------------- | Change in fair value reserve | 177 | -304 | | -737 | -------------------------------------------------------------------------------- | Translation differences | 0 | 0 | 21 | 0 | -------------------------------------------------------------------------------- | Income tax on other | 46 | -79 | | -191 | | comprehensive income | | | | | -------------------------------------------------------------------------------- | Total comprehensive income for | 332 | -21 | | -324 | | the period | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total comprehensive income | | | | | | attributable to: | | | | | -------------------------------------------------------------------------------- | OP-Pohjola Group's owners | 332 | -21 | | -324 | -------------------------------------------------------------------------------- | Minority interest | - | - | | - | -------------------------------------------------------------------------------- | Total | 332 | -21 | | -324 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Key figures and ratios | Q1-2/ | Q1-2/ | | 2008 | | | 20 | 20 | | | | | 09 | 08 | | | -------------------------------------------------------------------------------- | Return on equity, % | 7.4 | 7.4 | | 4.1 | -------------------------------------------------------------------------------- | Return on equity at fair | 12.3 | -0.7 | | -6.0 | | value, % | | | | | -------------------------------------------------------------------------------- | Return on assets, % | 0.53 | 0.60 | | 0.31 | -------------------------------------------------------------------------------- | Cost/income ratio, % | 59 | 63 | | 68 | -------------------------------------------------------------------------------- | Average personnel | 12,713 | 12,569 | | 12,615 | -------------------------------------------------------------------------------- | Full-time | 11,571 | 11,418 | | 11,464 | -------------------------------------------------------------------------------- | Part-time | 1,142 | 1,151 | | 1,151 | -------------------------------------------------------------------------------- Definition of key figures and ratios Return on equity (ROE) = Profit for the period / Equity capital (average of the beginning and end of the period) x 100 Return on equity at fair value, % = Profit for the period + change in fair value reserve less deferred tax liability / equity capital (average of the beginning and end of the period) x 100 Return on assets (ROA) = Profit for the period / Balance sheet total (average of the beginning and end of the period) x 100 Cost/income ratio, % = (Personnel costs + other administrative expenses + other operating expenses) / (Net interest income + net income from Non-life Insurance operations + net income from Life Insurance operations + net commissions and fees + net trading income + net investment income + other operating income + share of associates' profits/losses) x 100 Combined ratio (excl. unwinding of discount) Loss ratio+expense ratio Risk ratio+cost ratio Loss ratio (exc. unwinding of discount) Claims and loss adjustment expenses / Net insurance premium revenue x 100 Expense ratio Operating expenses + Amortisation/adjustment of intangible assets related to company acquisition / Net insurance premium revenue x 100 Risk ratio (excl. unwinding of discount) Claims excl. loss adjustment expenses / Net insurance premium revenue x 100 Cost ratio Operating expenses and loss adjustments expenses / Net insurance premium revenue x 100 OP-Pohjola Group quarterly performance -------------------------------------------------------------------------------- | | 2008 | 2009 | -------------------------------------------------------------------------------- | EUR million | Q2 | Q3 | Q4 | Q1 | Q2 | -------------------------------------------------------------------------------- | Interest income | 1,140 | 1,257 | 1,343 | 1,003 | 794 | -------------------------------------------------------------------------------- | Interest expenses | 844 | 952 | 1,026 | 716 | 512 | -------------------------------------------------------------------------------- | Net interest income | 296 | 305 | 316 | 287 | 282 | -------------------------------------------------------------------------------- | Impairments of | 7 | 18 | 31 | 29 | 46 | | receivables | | | | | | -------------------------------------------------------------------------------- | Net interest income | 289 | 287 | 285 | 258 | 235 | | after impairments | | | | | | -------------------------------------------------------------------------------- | Net income from Non-life | 89 | 96 | 72 | 69 | 120 | | Insurance operations | | | | | | -------------------------------------------------------------------------------- | Net income from Life | -7 | -91 | -49 | -21 | -8 | | Insurance operations | | | | | | -------------------------------------------------------------------------------- | Net commissions and fees | 107 | 100 | 102 | 130 | 121 | -------------------------------------------------------------------------------- | Net trading income | 1 | -37 | -30 | 28 | 26 | -------------------------------------------------------------------------------- | Net investment income | 13 | 10 | -16 | -8 | 0 | -------------------------------------------------------------------------------- | Other operating income | 23 | 22 | 25 | 25 | 27 | -------------------------------------------------------------------------------- | Personnel costs | 158 | 130 | 158 | 163 | 163 | -------------------------------------------------------------------------------- | Other administrative | 81 | 72 | 97 | 80 | 76 | | expenses | | | | | | -------------------------------------------------------------------------------- | Other operating expenses | 77 | 69 | 84 | 76 | 81 | -------------------------------------------------------------------------------- | Returns to owner-members | 40 | 42 | 35 | 38 | 44 | -------------------------------------------------------------------------------- | Share of associates' | 0 | 0 | 0 | 0 | 0 | | profits/losses | | | | | | -------------------------------------------------------------------------------- | Earnings before tax for | 158 | 74 | 15 | 124 | 157 | | the period | | | | | | -------------------------------------------------------------------------------- | Income tax expense | 44 | 28 | 45 | 61 | 20 | -------------------------------------------------------------------------------- | Profit for the period | 114 | 46 | -30 | 63 | 137 | -------------------------------------------------------------------------------- | Other comprehensive | | | | | | | income | | | | | | -------------------------------------------------------------------------------- | Change in fair value | -108 | -133 | -299 | -40 | 217 | | reserve | | | | | | -------------------------------------------------------------------------------- | Translation differences | 0 | 0 | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Income tax on other | -28 | -34 | -78 | -10 | 56 | | comprehensive income | | | | | | -------------------------------------------------------------------------------- | Total comprehensive | 34 | -52 | -251 | 34 | 298 | | income for the period | | | | | | -------------------------------------------------------------------------------- OP-Pohjola Group balance sheet -------------------------------------------------------------------------------- | EUR million | 30 June | 30 June | Change, % | 31 Dec | | | 2009 | 2008 | | 2008 | -------------------------------------------------------------------------------- | Cash and cash equivalents | 2,102 | 371 | | 2,393 | -------------------------------------------------------------------------------- | Receivables from credit | 2,199 | 632 | | 2,450 | | institutions | | | | | -------------------------------------------------------------------------------- | Financial assets at fair value | 1,646 | 5,294 | -69 | 3,313 | | through profit or loss | | | | | -------------------------------------------------------------------------------- | Derivative contracts | 1,357 | 892 | 52 | 1,470 | -------------------------------------------------------------------------------- | Receivables from customers | 52,384 | 48,453 | 8 | 51,708 | -------------------------------------------------------------------------------- | Non-life Insurance assets | 3,038 | 2,943 | 3 | 2,670 | | (Note 16) | | | | | -------------------------------------------------------------------------------- | Life Insurance assets (Note | 5,418 | 6,005 | -10 | 5,093 | | 17) | | | | | -------------------------------------------------------------------------------- | Investment assets | 5,232 | 2,914 | 80 | 2,441 | -------------------------------------------------------------------------------- | Investments in associates | 18 | 28 | -35 | 17 | -------------------------------------------------------------------------------- | Intangible assets | 1,200 | 1,227 | -2 | 1,211 | -------------------------------------------------------------------------------- | Property, plant and equipment | 767 | 746 | 3 | 762 | | (PPE) | | | | | -------------------------------------------------------------------------------- | Other assets | 1,947 | 1,767 | 10 | 1,814 | -------------------------------------------------------------------------------- | Tax assets | 337 | 221 | 52 | 403 | -------------------------------------------------------------------------------- | Total assets | 77,643 | 71,493 | 9 | 75,746 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Liabilities to credit | 1,960 | 2,433 | -19 | 693 | | institutions | | | | | -------------------------------------------------------------------------------- | Financial liabilities at fair | 423 | 887 | -52 | 138 | | value through profit or loss | | | | | -------------------------------------------------------------------------------- | Derivative contracts | 1,419 | 959 | 48 | 1,565 | -------------------------------------------------------------------------------- | Liabilities to customers | 36,750 | 34,259 | 7 | 37,082 | -------------------------------------------------------------------------------- | Non-life Insurance liabilities | 2,477 | 2,409 | 3 | 2,238 | -------------------------------------------------------------------------------- | Life Insurance liabilities | 5,626 | 5,859 | -4 | 5,413 | -------------------------------------------------------------------------------- | Debt securities issued to the | 18,212 | 13,935 | 31 | 18,164 | | public (Note 18) | | | | | -------------------------------------------------------------------------------- | Provisions and other | 2,182 | 2,545 | -14 | 2,393 | | liabilities | | | | | -------------------------------------------------------------------------------- | Tax liabilities | 1,002 | 900 | 11 | 971 | -------------------------------------------------------------------------------- | Cooperative capital | 617 | 600 | 3 | 570 | -------------------------------------------------------------------------------- | Subordinated liabilities | 1,293 | 1,181 | 10 | 1,304 | -------------------------------------------------------------------------------- | Total liabilities | 71,961 | 65,967 | 9 | 70,531 | -------------------------------------------------------------------------------- Equity capital -------------------------------------------------------------------------------- | Share of OP-Pohjola Group's | | | | | | owners | | | | | -------------------------------------------------------------------------------- | Share and cooperative capital | 356 | 358 | -1 | 362 | -------------------------------------------------------------------------------- | Fair value reserve (Note 19) | -424 | -236 | 80 | -556 | -------------------------------------------------------------------------------- | Other reserves | 2,605 | 2,375 | 10 | 2,375 | -------------------------------------------------------------------------------- | Retained earnings | 3,146 | 3,029 | 4 | 3,034 | -------------------------------------------------------------------------------- | Minority interest | - | 0 | -100 | 0 | -------------------------------------------------------------------------------- | Total equity capital | 5,682 | 5,526 | 3 | 5,215 | -------------------------------------------------------------------------------- | Total liabilities and equity | 77,643 | 71,493 | 9 | 75,746 | | capital | | | | | -------------------------------------------------------------------------------- Statement of changes in equity capital -------------------------------------------------------------------------------- | EUR million | Share | Fair | Other | Retaine | Minorit | Total | | | and | value | reserve | d | y | equity | | | cooper | reserve | s | earning | interes | capital | | | ative | | | s | t | | | | capita | | | | | | | | l | | | | | | -------------------------------------------------------------------------------- | Balance at 1 | 359 | -10 | 2,235 | 3,052 | 3 | 5,638 | | January 2008 | | | | | | | -------------------------------------------------------------------------------- | Increase of share | 0 | - | - | - | - | 0 | | capital | | | | | | | -------------------------------------------------------------------------------- | Transfer of | 1 | - | - | - | - | 1 | | cooperative | | | | | | | | capital to equity | | | | | | | | capital | | | | | | | -------------------------------------------------------------------------------- | Transfer of | - | - | 138 | -138 | - | - | | reserves | | | | | | | -------------------------------------------------------------------------------- | Profit | - | - | - | -77 | - | -77 | | distribution | | | | | | | -------------------------------------------------------------------------------- | Total | - | -225 | - | 205 | 0 | -21 | | comprehensive | | | | | | | | income for the | | | | | | | | period | | | | | | | -------------------------------------------------------------------------------- | Other | -2 | - | 2 | -12 | -2 | -15 | -------------------------------------------------------------------------------- | Balance at 30 | 358 | -236 | 2,375 | 3,029 | 0 | 5,526 | | June 2008 | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Balance at 1 | 362 | -556 | 2,375 | 3,034 | - | 5,215 | | January 2009 | | | | | | | -------------------------------------------------------------------------------- | Increase of share | - | - | 170 | - | - | 170 | | capital | | | | | | | -------------------------------------------------------------------------------- | Transfer of | 2 | - | - | - | - | 2 | | cooperative | | | | | | | | capital to equity | | | | | | | | capital | | | | | | | -------------------------------------------------------------------------------- | Transfer of | - | - | 62 | -62 | - | - | | reserves | | | | | | | -------------------------------------------------------------------------------- | Profit | - | - | - | -31 | - | -31 | | distribution | | | | | | | -------------------------------------------------------------------------------- | Total | - | 132 | - | 201 | - | 332 | | comprehensive | | | | | | | | income for the | | | | | | | | period | | | | | | | -------------------------------------------------------------------------------- | Other | -8 | - | -1 | 3 | - | -5 | -------------------------------------------------------------------------------- | Balance at 30 | 356 | -424 | 2,605 | 3,146 | - | 5,682 | | June 2009 | | | | | | | -------------------------------------------------------------------------------- Cash flow statement -------------------------------------------------------------------------------- | EUR million | Q1-2/ | Q1-2/ | | | 2009 | 2008 | -------------------------------------------------------------------------------- | Cash flow from operating activities | | | -------------------------------------------------------------------------------- | Profit for the period | 201 | 205 | -------------------------------------------------------------------------------- | Adjustments to profit for the period | 655 | 536 | -------------------------------------------------------------------------------- | Increase (-) or decrease (+) in operating assets | -2,444 | -6,082 | -------------------------------------------------------------------------------- | Receivables from credit institutions | 208 | -374 | -------------------------------------------------------------------------------- | Financial assets at fair value through profit or | 1,626 | -579 | | loss | | | -------------------------------------------------------------------------------- | Derivative contracts | -23 | -46 | -------------------------------------------------------------------------------- | Receivables from customers | -732 | -3,476 | -------------------------------------------------------------------------------- | Non-life Insurance assets | -327 | -299 | -------------------------------------------------------------------------------- | Life Insurance assets | -354 | -105 | -------------------------------------------------------------------------------- | Investment assets | -2,702 | -994 | -------------------------------------------------------------------------------- | Other assets | -140 | -207 | -------------------------------------------------------------------------------- | Increase (+) or decrease (-) in operating | 1,050 | 5,213 | | liabilities | | | -------------------------------------------------------------------------------- | Liabilities to credit institutions | 1,267 | 1,307 | -------------------------------------------------------------------------------- | Financial liabilities at fair value through | 285 | 835 | | profit or loss | | | -------------------------------------------------------------------------------- | Derivative contracts | -55 | 81 | -------------------------------------------------------------------------------- | Liabilities to customers | -332 | 3,036 | -------------------------------------------------------------------------------- | Non-life Insurance liabilities | 87 | 82 | -------------------------------------------------------------------------------- | Life Insurance liabilities | -2 | -93 | -------------------------------------------------------------------------------- | Provisions and other liabilities | -200 | -34 | -------------------------------------------------------------------------------- | Income tax paid | -102 | -96 | -------------------------------------------------------------------------------- | Dividends received | 49 | 57 | -------------------------------------------------------------------------------- | A. Net cash from operating activities | -592 | -167 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flow from investing activities | | | -------------------------------------------------------------------------------- | Increases in held-to-maturity financial assets | -132 | -18 | -------------------------------------------------------------------------------- | Decreases in held-to-maturity financial assets | 201 | 34 | -------------------------------------------------------------------------------- | Acquisition of subsidiaries, net of cash acquired | 0 | -33 | -------------------------------------------------------------------------------- | Disposal of subsidiaries, net of cash disposed | 1 | 2 | -------------------------------------------------------------------------------- | Purchase of PPE and intangible assets | -46 | -53 | -------------------------------------------------------------------------------- | Proceeds from sale of PPE and intangible assets | - | 2 | -------------------------------------------------------------------------------- | B. Net cash used in investing activities | 24 | -67 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flow from financing activities | | | -------------------------------------------------------------------------------- | Increases in subordinated liabilities | 179 | 193 | -------------------------------------------------------------------------------- | Decreases in subordinated liabilities | -192 | -54 | -------------------------------------------------------------------------------- | Increases in debt securities issued to the public | 27,658 | 13,439 | -------------------------------------------------------------------------------- | Decreases in debt securities issued to the public | -27,599 | -13,525 | -------------------------------------------------------------------------------- | Increases in cooperative and share capital | 133 | 76 | -------------------------------------------------------------------------------- | Decreases in cooperative and share capital | -84 | -45 | -------------------------------------------------------------------------------- | Dividends paid and interest on cooperative | -52 | -101 | | capital | | | -------------------------------------------------------------------------------- | Returns to owner-members | -3 | 0 | -------------------------------------------------------------------------------- | Increases in invested unrestricted equity | 171 | - | -------------------------------------------------------------------------------- | Other | - | - | -------------------------------------------------------------------------------- | C. Net cash from financing activities | 210 | -18 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net change in cash and cash equivalents (A+B+C) | -358 | -252 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash and cash equivalents at period-start | 2,538 | 700 | -------------------------------------------------------------------------------- | Cash and cash equivalents at period-end | 2,180 | 448 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest received | 1,870 | 2,110 | -------------------------------------------------------------------------------- | Interest paid | -1,563 | -1,570 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Adjustments to profit for the period | | | -------------------------------------------------------------------------------- | Non-cash transactions and other adjustments | | | -------------------------------------------------------------------------------- | Impairments of receivables | 79 | 12 | -------------------------------------------------------------------------------- | Unrealised net earnings in Non-life Insurance | 190 | 200 | -------------------------------------------------------------------------------- | Unrealised net earnings in Life Insurance | 139 | 126 | -------------------------------------------------------------------------------- | Change in fair value for trading | 59 | 35 | -------------------------------------------------------------------------------- | Unrealised net gains on foreign exchange | -10 | -10 | | operations | | | -------------------------------------------------------------------------------- | Change in fair value of investment property | 8 | -7 | -------------------------------------------------------------------------------- | Depreciation and amortisation | 64 | 65 | -------------------------------------------------------------------------------- | Share of associates' profits/losses | 1 | 1 | -------------------------------------------------------------------------------- | Other | 109 | 101 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Items presented outside cash flow from operating | | | | activities | | | -------------------------------------------------------------------------------- | Capital gains, share of cash flow from investing | -1 | -1 | | activities | | | -------------------------------------------------------------------------------- | Interest on cooperative capital | 12 | 14 | -------------------------------------------------------------------------------- | Other returns to owner-members | 3 | - | -------------------------------------------------------------------------------- | Total adjustments | 655 | 536 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash and cash equivalents | | | -------------------------------------------------------------------------------- | Liquid assets | 133 | 145 | -------------------------------------------------------------------------------- | Receivables from credit institutions payable on | 2,047 | 303 | | demand | | | -------------------------------------------------------------------------------- | Total | 2,180 | 448 | -------------------------------------------------------------------------------- Notes Note 1. Accounting policies The Financial Statements Bulletin for 1 January-30 June 2009 was prepared according to IAS 34 (Interim Financial Reporting), as approved by the EU. The Financial Statements 2008 contain a description of the accounting policies applied by OP-Pohjola Group. In 2009, OP-Pohjola Group adopted the revised IAS 1 according to which the Group presents the statement of comprehensive income and the statement of changes in equity. The Interim Report is based on unaudited information. Since all figures in this report are rounded off, the sum of single figures may differ from the presented sum total. Summary of presentation of income statement: -------------------------------------------------------------------------------- | Net interest income | Received and paid interest on | | | fixed-income instruments, the | | | recognised difference between the | | | nominal value and acquisition value, | | | interest on interest-rate derivatives | | | and fair value change in fair value | | | hedging | -------------------------------------------------------------------------------- | Net income from Non-life Insurance | Premiums written, change in provision | | operations | for unearned premiums and for unpaid | | | claims, investment income, expenses | | | (interest, dividends, realised capital | | | gains and losses) and impairments | -------------------------------------------------------------------------------- | Net income from Life Insurance | Premiums written, change in provision | | operations | for unearned premiums and for unpaid | | | claims, investment income, expenses | | | (interest, dividends, realised capital | | | gains and losses) and impairments | -------------------------------------------------------------------------------- | Net commissions and fees | Commission income and expenses, and the | | | recognition of Day 1 profit related to | | | illiquid derivatives | -------------------------------------------------------------------------------- | Net trading income | Fair value changes in financial | | | instruments at fair value through | | | profit or loss, excluding accrued | | | interest, and capital gains and losses, | | | as well as dividends | -------------------------------------------------------------------------------- | Net investment income | Realised capital gains and losses on | | | available-for-sale financial assets, | | | impairments, dividends as well as fair | | | value changes in investment property, | | | capital gains and losses, rents and | | | other property-related expenses | -------------------------------------------------------------------------------- | Other operating income | Other operating income | -------------------------------------------------------------------------------- | Personnel costs | Wages and salaries, pension costs, | | | social expenses | -------------------------------------------------------------------------------- | Other administrative expenses | Office expenses, IT costs, other | | | administrative expenses | -------------------------------------------------------------------------------- | Other operating expenses | Depreciation/amortisation, rents and | | | other operating expenses | -------------------------------------------------------------------------------- Notes to the income statement and balance sheet Note 2 Net interest income -------------------------------------------------------------------------------- | EUR million | Q1-2/ | Q1-2/ | Change, % | 2008 | | | 20 | 20 | | | | | 09 | 08 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Loans and other receivables | 1,005 | 1,227 | -18 | 2,723 | -------------------------------------------------------------------------------- | Receivables from credit | 55 | 26 | | 73 | | institutions and central banks | | | | | -------------------------------------------------------------------------------- | Notes and bonds | 118 | 160 | -26 | 381 | -------------------------------------------------------------------------------- | Derivatives held for trading | 19 | 6 | | -16 | | (net) | | | | | -------------------------------------------------------------------------------- | Liabilities to credit | -6 | -47 | 0 | -86 | | institutions | | | | | -------------------------------------------------------------------------------- | Liabilities to customers | -310 | -459 | -32 | -1,010 | -------------------------------------------------------------------------------- | Debt securities issued to the | -277 | -277 | 0 | -844 | | public | | | | | -------------------------------------------------------------------------------- | Subordinated debt | -20 | -22 | -8 | -43 | -------------------------------------------------------------------------------- | Hybrid capital | -8 | -4 | | -11 | -------------------------------------------------------------------------------- | Financial liabilities held for | -4 | -7 | -50 | -19 | | trading | | | | | -------------------------------------------------------------------------------- | Other (net) | 6 | 7 | -9 | 17 | -------------------------------------------------------------------------------- | Net interest income before | 579 | 611 | -5 | 1,166 | | items under hedge accounting | | | | | -------------------------------------------------------------------------------- | Derivatives under hedge | -11 | -44 | -76 | 23 | | accounting (net) | | | | | -------------------------------------------------------------------------------- | Total net interest income | 568 | 568 | 0 | 1,189 | -------------------------------------------------------------------------------- Note 3 Impairments of receivables -------------------------------------------------------------------------------- | EUR million | Q1-2/ | Q1-2/ | Change, % | 2008 | | | 20 | 20 | | | | | 09 | 08 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Impairments of receivables | 92 | 20 | | 73 | -------------------------------------------------------------------------------- | Reversals of impairments | -25 | -17 | -51 | -17 | -------------------------------------------------------------------------------- | Payments on impaired | -4 | -3 | -54 | -6 | | receivables | | | | | | amortised from | | | | | | statement of financial | | | | | | position | | | | | -------------------------------------------------------------------------------- | Net change in group-specific | 12 | 8 | 56 | 8 | | impairments | | | | | -------------------------------------------------------------------------------- | Total | 75 | 9 | | 58 | -------------------------------------------------------------------------------- Note 4 Net income from Non-life Insurance -------------------------------------------------------------------------------- | EUR million | Q1-2/ | Q1-2/ | Change, % | 2008 | | | 20 | 20 | | | | | 09 | 08 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net insurance premium revenue | | | | | -------------------------------------------------------------------------------- | Premiums written | 679 | 675 | 1 | 991 | -------------------------------------------------------------------------------- | Insurance premiums ceded to | -44 | -37 | -19 | -42 | | reinsurers | | | | | -------------------------------------------------------------------------------- | Change in provision for | -178 | -198 | 10 | -24 | | unearned premiums | | | | | -------------------------------------------------------------------------------- | Reinsurers' share | 14 | 16 | -13 | -1 | -------------------------------------------------------------------------------- | Total | 471 | 456 | 3 | 923 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net Non-life Insurance claims | | | | | -------------------------------------------------------------------------------- | Claims paid | -303 | -312 | 3 | -602 | -------------------------------------------------------------------------------- | Insurance claims recovered | 4 | 8 | -46 | 14 | | from reinsurers | | | | | -------------------------------------------------------------------------------- | Change in provision for unpaid | 9 | 3 | | -30 | | claims | | | | | -------------------------------------------------------------------------------- | Reinsurers' share | 3 | -7 | | 27 | -------------------------------------------------------------------------------- | Total | -287 | -309 | 7 | -591 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net investment income, | | | | | | Non-life Insurance | | | | | -------------------------------------------------------------------------------- | Interest income | 35 | 35 | 2 | 70 | -------------------------------------------------------------------------------- | Capital gains and losses and | | | | | | realised changes in fair value | | | | | -------------------------------------------------------------------------------- | Notes and bonds | -8 | -10 | 18 | -16 | -------------------------------------------------------------------------------- | Shares and participations | 3 | 3 | 17 | -27 | -------------------------------------------------------------------------------- | Property | 0 | 3 | -98 | 2 | -------------------------------------------------------------------------------- | Other | 1 | 1 | -3 | -10 | -------------------------------------------------------------------------------- | Unrealised changes in fair | | | | | | value | | | | | -------------------------------------------------------------------------------- | Notes and bonds | 0 | 0 | | -4 | -------------------------------------------------------------------------------- | Shares and participations | -13 | 0 | | 4 | -------------------------------------------------------------------------------- | Property | 2 | 3 | -54 | 3 | -------------------------------------------------------------------------------- | Other | 0 | 1 | | 1 | -------------------------------------------------------------------------------- | Dividend income | 6 | 15 | -62 | 26 | -------------------------------------------------------------------------------- | Other | 1 | 0 | | 3 | -------------------------------------------------------------------------------- | Total | 27 | 51 | -48 | 53 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Unwinding of discount | -21 | -21 | -2 | -42 | -------------------------------------------------------------------------------- | Other | 0 | 0 | | 2 | -------------------------------------------------------------------------------- | Net income from Non-life | 189 | 178 | 6 | 345 | | Insurance | | | | | -------------------------------------------------------------------------------- Note 5 Net income from Life Insurance -------------------------------------------------------------------------------- | EUR million | Q1-2/ | Q1-2/ | Change, % | 2008 | | | 20 | 20 | | | | | 09 | 08 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Premiums written | 307 | 408 | -25 | 745 | -------------------------------------------------------------------------------- | Reinsurers' share | -11 | -17 | 32 | -28 | -------------------------------------------------------------------------------- | Net investment income | 144 | -222 | | -816 | -------------------------------------------------------------------------------- | Claims incurred | | | | | -------------------------------------------------------------------------------- | Benefits paid | -253 | -325 | 22 | -645 | -------------------------------------------------------------------------------- | Change in provision for unpaid | -9 | 0 | | -47 | | claims | | | | | -------------------------------------------------------------------------------- | Reinsurers' share | 3 | 1 | | 3 | -------------------------------------------------------------------------------- | Change in insurance contract | | | | | | liabilities | | | | | -------------------------------------------------------------------------------- | Change in life insurance | -212 | 125 | | 602 | | provision | | | | | -------------------------------------------------------------------------------- | Reinsurers' share | 5 | 14 | -66 | 25 | -------------------------------------------------------------------------------- | Other | -2 | 16 | | 22 | -------------------------------------------------------------------------------- | Net income from Life Insurance | -29 | 1 | | -139 | -------------------------------------------------------------------------------- Note 6 Commissions and fees -------------------------------------------------------------------------------- | EUR million | Q1-2/ | Q1-2/ | Change, % | 2008 | | | 20 | 20 | | | | | 09 | 08 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Commission income | | | | | -------------------------------------------------------------------------------- | Lending | 72 | 55 | 32 | 102 | -------------------------------------------------------------------------------- | Deposits | 3 | 3 | -7 | 5 | -------------------------------------------------------------------------------- | Payment transfers | 62 | 58 | 7 | 121 | -------------------------------------------------------------------------------- | Securities brokerage | 10 | 11 | -2 | 20 | -------------------------------------------------------------------------------- | Securities issuance | 4 | 2 | 94 | 4 | -------------------------------------------------------------------------------- | Mutual funds brokerage | 25 | 40 | -37 | 67 | -------------------------------------------------------------------------------- | Asset management and legal | 25 | 25 | -1 | 51 | | services | | | | | -------------------------------------------------------------------------------- | Insurance brokerage | 50 | 40 | 25 | 63 | -------------------------------------------------------------------------------- | Guarantees | 10 | 6 | 64 | 14 | -------------------------------------------------------------------------------- | Other | 21 | 24 | -12 | 46 | -------------------------------------------------------------------------------- | Total | 283 | 263 | 7 | 494 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Commission expenses | | | | | -------------------------------------------------------------------------------- | Total | 32 | 33 | -3 | 61 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net commissions and fees | 251 | 231 | 9 | 433 | -------------------------------------------------------------------------------- Note 7 Net trading income -------------------------------------------------------------------------------- | EUR million | Q1-2/ | Q1-2/ | Change, % | 2008 | | | 20 | 20 | | | | | 09 | 08 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Capital gains and losses | | | | | -------------------------------------------------------------------------------- | Notes and bonds | 21 | -13 | | -15 | -------------------------------------------------------------------------------- | Shares and participations | -3 | 0 | | -2 | -------------------------------------------------------------------------------- | Derivatives | 101 | 28 | | -26 | -------------------------------------------------------------------------------- | Changes in fair value | | | | | -------------------------------------------------------------------------------- | Notes and bonds | -9 | -85 | -90 | -51 | -------------------------------------------------------------------------------- | Shares and participations | 9 | -7 | | -19 | -------------------------------------------------------------------------------- | Derivatives | -72 | 14 | | -11 | -------------------------------------------------------------------------------- | Financial assets and | | | | | | liabilities amortised at cost | | | | | -------------------------------------------------------------------------------- | Capital gains and losses | | | | | -------------------------------------------------------------------------------- | Loans and other receivables | 0 | - | 0 | - | -------------------------------------------------------------------------------- | Dividend income | 0 | 1 | -35 | 1 | -------------------------------------------------------------------------------- | Net income from foreign | 6 | 6 | -5 | -1 | | exchange operations | | | | | -------------------------------------------------------------------------------- | Total | 54 | -57 | | -125 | -------------------------------------------------------------------------------- Note 8 Net investment income -------------------------------------------------------------------------------- | EUR million | Q1-2/ | Q1-2/ | Change, % | 2008 | | | 20 | 20 | | | | | 09 | 08 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Available-for-sale financial | | | | | | assets | | | | | -------------------------------------------------------------------------------- | Capital gains and losses | | | | | -------------------------------------------------------------------------------- | Notes and bonds | 0 | 0 | -95 | -5 | -------------------------------------------------------------------------------- | Shares and participations | -5 | 3 | | 1 | -------------------------------------------------------------------------------- | Other | - | - | | - | -------------------------------------------------------------------------------- | Dividend income | 8 | 10 | -21 | 12 | -------------------------------------------------------------------------------- | Impairment losses | -12 | 0 | | -6 | -------------------------------------------------------------------------------- | Total | -9 | 13 | | 3 | -------------------------------------------------------------------------------- | Investment property | | | | | -------------------------------------------------------------------------------- | Rental income | 24 | 25 | -5 | 49 | -------------------------------------------------------------------------------- | Maintenance charges and | -15 | -15 | -2 | -29 | | expenses | | | | | -------------------------------------------------------------------------------- | Changes in fair value, capital | -8 | 7 | | 2 | | gains and losses | | | | | -------------------------------------------------------------------------------- | Other | 0 | 0 | -38 | 1 | -------------------------------------------------------------------------------- | Total | 2 | 18 | -91 | 22 | -------------------------------------------------------------------------------- | Other | 0 | - | | - | -------------------------------------------------------------------------------- | Net investment income | -8 | 31 | | 25 | -------------------------------------------------------------------------------- Note 9 Other operating income -------------------------------------------------------------------------------- | EUR million | Q1-2/ | Q1-2/ | Change, % | 2008 | | | 20 | 20 | | | | | 09 | 08 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Income from property and | 7 | 6 | 8 | 12 | | business | | | | | | premises in own use | | | | | -------------------------------------------------------------------------------- | Other | 46 | 40 | 14 | 81 | -------------------------------------------------------------------------------- | Total | 52 | 46 | 13 | 93 | -------------------------------------------------------------------------------- Note 10 Personnel costs -------------------------------------------------------------------------------- | EUR million | Q1-2/ | Q1-2/ | Change, % | 2008 | | | 20 | 20 | | | | | 09 | 08 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Wages and salaries | 277 | 265 | 4 | 512 | -------------------------------------------------------------------------------- | Pension costs | 33 | 31 | 9 | 55 | -------------------------------------------------------------------------------- | Other social expenses | 16 | 15 | 13 | 31 | -------------------------------------------------------------------------------- | Total | 327 | 310 | 5 | 598 | -------------------------------------------------------------------------------- Note 11 Other administrative expenses -------------------------------------------------------------------------------- | EUR million | Q1-2/ | Q1-2/ | Change, % | 2008 | | | 20 | 20 | | | | | 09 | 08 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Office expenses | 33 | 23 | 43 | 47 | -------------------------------------------------------------------------------- | IT expenses | 50 | 50 | 0 | 110 | -------------------------------------------------------------------------------- | Telecommunications expenses | 18 | 19 | -7 | 38 | -------------------------------------------------------------------------------- | Marketing expenses | 26 | 31 | -16 | 61 | -------------------------------------------------------------------------------- | Other administrative expenses | 29 | 35 | -15 | 71 | -------------------------------------------------------------------------------- | Total | 156 | 158 | -1 | 328 | -------------------------------------------------------------------------------- Note 12 Other operating expenses -------------------------------------------------------------------------------- | EUR million | Q1-2/ | Q1-2/ | Change, % | 2008 | | | 20 | 20 | | | | | 09 | 08 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Expenses for property and | 36 | 36 | 2 | 74 | | business | | | | | | premises in own use | | | | | -------------------------------------------------------------------------------- | Depreciation | 64 | 65 | 0 | 134 | -------------------------------------------------------------------------------- | Other | 56 | 59 | -5 | 104 | -------------------------------------------------------------------------------- | Total | 157 | 159 | -1 | 312 | -------------------------------------------------------------------------------- Note 13 Returns to owner-members -------------------------------------------------------------------------------- | EUR million | Q1-2/ | Q1-2/ | Change, % | 2008 | | | 20 | 20 | | | | | 09 | 08 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Bonuses | 70 | 64 | 10 | 132 | -------------------------------------------------------------------------------- | Interest on cooperative | 12 | 14 | -10 | 22 | | capital | | | | | -------------------------------------------------------------------------------- | Total | 82 | 77 | 6 | 154 | -------------------------------------------------------------------------------- Note 14. Classification of financial instruments -------------------------------------------------------------------------------- | EUR million | Loans | Invest | Financ | Availa | Hedging | Total | | | and | -ments | ial | ble-fo | derivat | | | | other | held | assets | r-sale | i-ves | | | | receiv | to | at | financ | | | | | -ables | maturi | fair | ial | | | | | | ty | value | assets | | | | | | | throug | | | | | | | | h | | | | | | | | profit | | | | | | | | or | | | | | | | | loss* | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Assets | | | | | | | -------------------------------------------------------------------------------- | Cash and balances | 2,102 | - | - | - | - | 2,102 | | with central banks | | | | | | | -------------------------------------------------------------------------------- | Receivables from | 2,199 | - | - | - | - | 2,199 | | credit institutions | | | | | | | | and central banks | | | | | | | -------------------------------------------------------------------------------- | Derivative contracts | - | - | 1,177 | - | 180 | 1,357 | -------------------------------------------------------------------------------- | Receivables from | 52,384 | - | - | - | - | 52,384 | | customers | | | | | | | -------------------------------------------------------------------------------- | Non-life Insurance | 830 | - | 89 | 2,119 | - | 3,038 | | assets** | | | | | | | -------------------------------------------------------------------------------- | Life Insurance | 497 | - | 2,143 | 2,778 | - | 5,418 | | assets*** | | | | | | | -------------------------------------------------------------------------------- | Notes and bonds | - | 1,157 | 1,597 | 3,285 | - | 6,039 | -------------------------------------------------------------------------------- | Shares and | - | - | 49 | 330 | - | 379 | | participations | | | | | | | -------------------------------------------------------------------------------- | Other receivables | 4,268 | - | 461 | - | - | 4,729 | -------------------------------------------------------------------------------- | Total 30 June 2009 | 62,280 | 1,157 | 5,515 | 8,512 | 180 | 77,643 | -------------------------------------------------------------------------------- | Total 30 June 2008 | 54,554 | 101 | 8,436 | 8,348 | 54 | 71,493 | -------------------------------------------------------------------------------- | Total 31 December | 62,545 | 1,198 | 6,661 | 5,224 | 117 | 75,746 | | 2008 | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR million | Financial | Other | Hedging | Total | | | liabilities at | liabilit | derivati | | | | fair value | ies | ves | | | | through profit or | | | | | | loss**** | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Liabilities | | | | | | -------------------------------------------------------------------------------- | Liabilities to credit | - | - | 1,960 | - | 1,960 | | institutions | | | | | | -------------------------------------------------------------------------------- | Financial liabilities | - | 423 | - | - | 423 | | held for trading(excl. | | | | | | | derivatives) | | | | | | -------------------------------------------------------------------------------- | Derivative contracts | - | 1,258 | - | 161 | 1,419 | -------------------------------------------------------------------------------- | Liabilities to | - | - | 36,750 | - | 36,750 | | customers | | | | | | -------------------------------------------------------------------------------- | Non-life Insurance | - | - | 2,477 | - | 2,477 | | liabilities | | | | | | -------------------------------------------------------------------------------- | Life Insurance | - | 1,807 | 3,819 | - | 5,626 | | liabilities | | | | | | -------------------------------------------------------------------------------- | Debt securities issued | - | - | 18,212 | - | 18,212 | | to the public | | | | | | -------------------------------------------------------------------------------- | Subordinated loans | - | - | 1,293 | - | 1,293 | -------------------------------------------------------------------------------- | Other liabilities | - | - | 3,801 | - | 3,801 | -------------------------------------------------------------------------------- | Total 30 June 2009 | - | 3,488 | 68,312 | 161 | 71,961 | -------------------------------------------------------------------------------- | Total 30 June 2008 | - | 3,769 | 62,073 | 125 | 65,967 | -------------------------------------------------------------------------------- | Total 31 December 2008 | - | 3,145 | 67,257 | 129 | 70,531 | -------------------------------------------------------------------------------- *Assets at fair value through profit or loss include financial assets for trading, financial assets at fair value through profit or loss at inception, and investments and investment property covering unit-linked insurance policies. **Non-life Insurance assets are specified in Note 16. **Life Insurance assets are specified in Note 17. ****Includes the balance sheet value of technical provisions related to unit-linked insurance policies. Debt securities issued to the public are carried at amortised cost. On 30 June 2009, the fair value of these debt instruments was approximately EUR 19 million lower than their carrying amount, based on information available in markets and employing commonly used valuation techniques. Subordinated liabilities are carried at amortised cost. Their fair value are substantially lower than their carrying amount, but determining fair values reliably is difficult in the current market situation. Note 15. Reclassified notes and bonds The table below shows the carrying amounts and fair values of the reclassified notes and bonds: -------------------------------------------------------------------------------- | 30 June 2009, EUR | Carrying | Fair value | Effective | Impairment | | million | amount | | interest | s arising | | | | | rate | from | | | | | | credit | | | | | | risk | -------------------------------------------------------------------------------- | Loans and other | 3,126 | 2,992 | 5.6 | 22 | | receivables | | | | | -------------------------------------------------------------------------------- | Investments held to | 868 | 792 | 4.5 | - | | maturity | | | | | -------------------------------------------------------------------------------- | Available-for-sale | 58 | 58 | 5.1 | - | | financial assets | | | | | -------------------------------------------------------------------------------- | Total | 4,052 | 3,842 | | 22 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 31 December 2008, EUR | Carrying | Fair value | Effective | Impairment | | million | amount | | interest | s arising | | | | | rate | from | | | | | | credit | | | | | | risk | -------------------------------------------------------------------------------- | Loans and other | 3,611 | 3,440 | 5.4 | 10 | | receivables | | | | | -------------------------------------------------------------------------------- | Investments held to | 946 | 864 | 4.5 | - | | maturity | | | | | -------------------------------------------------------------------------------- | Available-for-sale | 55 | 55 | 5.1 | - | | financial assets | | | | | -------------------------------------------------------------------------------- | Total | 4,612 | 4,358 | | 10 | -------------------------------------------------------------------------------- If notes and bonds were not reclassified and had been measured using fair values: -------------------------------------------------------------------------------- | | 1 Jan-30 June 2009 | 31 December 2008 | -------------------------------------------------------------------------------- | EUR million | Income | Fair value | Income | Fair value | | | statement | reserve | statement | reserve | -------------------------------------------------------------------------------- | Banking | -3 | -2 | -21 | -10 | -------------------------------------------------------------------------------- | Non-life Insurance | 2 | 13 | - | -24 | -------------------------------------------------------------------------------- | Life Insurance | 6 | 5 | 0 | -26 | -------------------------------------------------------------------------------- | Group Functions | 0 | 18 | -162 | -15 | -------------------------------------------------------------------------------- | Total | 5 | 34 | -183 | -75 | -------------------------------------------------------------------------------- Interest accrued on notes and bonds in the first quarter totalled EUR 81.7 million. The price difference between the nominal value and acquisition value recognised in net interest income totalled EUR 15.8 million. Impairments on notes and bonds totalled EUR 21 million. The Group used derivatives to hedge against interest rate risks, applying hedge accounting from 1 October 2008. Note 16 Non-life Insurance assets -------------------------------------------------------------------------------- | EUR million | 30 June | 30 June | Change, % | 31 Dec | | | 2009 | 2008 | | 2008 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Investments | | | | | -------------------------------------------------------------------------------- | Loan and other receivables | 384 | 79 | | 419 | -------------------------------------------------------------------------------- | Shares and participations | 321 | 525 | -39 | 318 | -------------------------------------------------------------------------------- | Property | 82 | 83 | -1 | 81 | -------------------------------------------------------------------------------- | Notes and bonds | 1,288 | 1,414 | -9 | 1,075 | -------------------------------------------------------------------------------- | Other | 516 | 422 | 22 | 422 | -------------------------------------------------------------------------------- | Total | 2,592 | 2,521 | 3 | 2,316 | -------------------------------------------------------------------------------- | Other assets | | | | | -------------------------------------------------------------------------------- | Prepayments and accrued income | 29 | 26 | 12 | 33 | -------------------------------------------------------------------------------- | Other | | | | | -------------------------------------------------------------------------------- | Arising from direct insurance | 280 | 289 | -3 | 218 | | operations | | | | | -------------------------------------------------------------------------------- | Arising from reinsurance | 129 | 99 | 30 | 100 | | operations | | | | | -------------------------------------------------------------------------------- | Cash in hand and at bank | 8 | 8 | 8 | 4 | -------------------------------------------------------------------------------- | Total | 446 | 421 | 6 | 355 | -------------------------------------------------------------------------------- | Non-life Insurance assets | 3,038 | 2,943 | 3 | 2,670 | -------------------------------------------------------------------------------- Note 17 Life Insurance assets -------------------------------------------------------------------------------- | EUR million | 30 June | 30 June | Change, % | 31 Dec | | | 2009 | 2008 | | 2008 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Investments | | | | | -------------------------------------------------------------------------------- | Loan and other receivables | 434 | 55 | | 422 | -------------------------------------------------------------------------------- | Shares and participations | 2,291 | 2,625 | -13 | 2,259 | -------------------------------------------------------------------------------- | Property | 123 | 123 | 0 | 123 | -------------------------------------------------------------------------------- | Notes and bonds | 659 | 1,047 | -37 | 550 | -------------------------------------------------------------------------------- | Other | 0 | 0 | -41 | 0 | -------------------------------------------------------------------------------- | Total | 3,507 | 3,850 | -9 | 3,354 | -------------------------------------------------------------------------------- | Assets covering unit-linked | | | | | | insurance contracts | | | | | -------------------------------------------------------------------------------- | Shares and participations | 1,848 | 2,095 | -12 | 1,614 | -------------------------------------------------------------------------------- | Other assets | | | | | -------------------------------------------------------------------------------- | Prepayments and accrued income | 24 | 24 | -1 | 23 | -------------------------------------------------------------------------------- | Other | | | | | -------------------------------------------------------------------------------- | Arising from direct insurance | 3 | 8 | -66 | 20 | | operations | | | | | -------------------------------------------------------------------------------- | Arising from reinsurance | 43 | 27 | 59 | 38 | | operations | | | | | -------------------------------------------------------------------------------- | Cash in hand and at bank | -7 | 0 | | 44 | -------------------------------------------------------------------------------- | Total | 63 | 60 | 4 | 125 | -------------------------------------------------------------------------------- | Life Insurance assets | 5,418 | 6,005 | -10 | 5,093 | -------------------------------------------------------------------------------- Note 18 Debt securities issued to the public -------------------------------------------------------------------------------- | EUR million | 30 June | 30 June | Change, % | 31 Dec | | | 2009 | 2008 | | 2008 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Bonds | 7,723 | 7,651 | 1 | 7,654 | -------------------------------------------------------------------------------- | Certificates of deposit, | 10,462 | 6,157 | 70 | 10,322 | | commercial papers and ECPs | | | | | -------------------------------------------------------------------------------- | Other | 27 | 126 | -78 | 188 | -------------------------------------------------------------------------------- | Total | 18,212 | 13,935 | 31 | 18,164 | -------------------------------------------------------------------------------- Note 19 Fair value reserve after income tax -------------------------------------------------------------------------------- | EUR million | 30 June | 30 June | Change, % | 31 Dec | | | 2009 | 2008 | | 2008 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Notes and bonds | -38 | -108 | -65 | -84 | -------------------------------------------------------------------------------- | Shares and participations | -387 | -128 | | -472 | -------------------------------------------------------------------------------- | Total | -424 | -236 | 80 | -556 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- The negative fair value reserve may recover by means of asset appreciation and recognised impairments. Only the value changes in the fair value reserve are recognised which the management deem to fulfil the relevant requirements. Other notes Note 20 Collateral given -------------------------------------------------------------------------------- | EUR million | 30 June | 30 June | Change, % | 31 Dec | | | 2009 | 2008 | | 2008 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Given on behalf of own | | | | | | liabilities and commitments | | | | | -------------------------------------------------------------------------------- | Mortgages | 1 | 1 | 0 | 1 | -------------------------------------------------------------------------------- | Pledges | 4,133 | 3,182 | 30 | 4,135 | -------------------------------------------------------------------------------- | Other | 421 | 388 | 8 | 400 | -------------------------------------------------------------------------------- | Total | 4,554 | 3,571 | 28 | 4,536 | -------------------------------------------------------------------------------- Note 21 Off-balance-sheet items -------------------------------------------------------------------------------- | EUR million | 30 June | 30 June | Change, % | 31 Dec | | | 2009 | 2008 | | 2008 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Guarantees | 1,446 | 721 | | 1,241 | -------------------------------------------------------------------------------- | Other guarantee liabilities | 1,663 | 1,905 | -13 | 1,794 | -------------------------------------------------------------------------------- | Pledges | 1 | 1 | -43 | 1 | -------------------------------------------------------------------------------- | Loan commitments | 8,303 | 8,235 | 1 | 7,686 | -------------------------------------------------------------------------------- | Commitments related to | 115 | 172 | -33 | 177 | | short-term | | | | | | trade transactions | | | | | -------------------------------------------------------------------------------- | Other | 582 | 570 | 2 | 485 | -------------------------------------------------------------------------------- | Total off-balance-sheet items | 12,109 | 11,604 | 4 | 11,384 | -------------------------------------------------------------------------------- Note 22 Derivative contracts -------------------------------------------------------------------------------- | | 30 June 2009 | -------------------------------------------------------------------------------- | EUR million | Nominal values / remaining term to | Fair values | | | maturity | | -------------------------------------------------------------------------------- | | <1 year | 1-5 | >5 | Total | Assets | Liabilit | | | | years | years | | | ies | -------------------------------------------------------------------------------- | Interest rate | 26,488 | 44,929 | 10,248 | 81,665 | 1,235 | 1,201 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Currency | 12,718 | 1,714 | 660 | 15,093 | 161 | 419 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Equity and | 160 | 702 | 31 | 893 | 39 | 0 | | index-linked | | | | | | | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Credit | 108 | 167 | - | 275 | 3 | 13 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Other | 3,982 | 131 | - | 4,113 | 1 | 26 | | derivatives | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total | 43,456 | 47,643 | 10,939 | 102,03 | 1,440 | 1,659 | | derivatives | | | | 8 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | 30 June 2008 | -------------------------------------------------------------------------------- | EUR million | Nominal values / remaining term to | Fair values | | | maturity | | -------------------------------------------------------------------------------- | | <1 year | 1-5 | >5 | Total | Assets | Liabilit | | | | years | years | | | ies | -------------------------------------------------------------------------------- | Interest rate | 46,132 | 38,210 | 10,313 | 94,655 | 676 | 683 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Currency | 13,369 | 1,490 | 1,002 | 15,861 | 142 | 456 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Equity and | 27 | 317 | 83 | 427 | 36 | - | | index-linked | | | | | | | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Credit | 157 | 205 | 20 | 383 | 3 | 5 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Other | - | 16 | - | 16 | 3 | - | | derivatives | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total | 59,685 | 40,239 | 11,418 | 111,34 | 861 | 1,143 | | derivatives | | | | 2 | | | -------------------------------------------------------------------------------- Note 23 Related-party transactions OP-Pohjola Group's related parties comprise associates, administrative personnel and other related-party companies. The administrative personnel comprises OP-Pohjola Group's Executive Chairman (Chairman of the Executive Board of OP-Pohjola Group Central Cooperative), President of OP-Pohjola Group Central Cooperative, members and deputy members of the Executive and Supervisory Boards and their family members. Other organisations considered as related parties include OP Bank Group Pension Fund and OP Bank Group Pension Foundation. With respect to loans granted to the management, OP-Pohjola Group applies standard terms and conditions for credit. Loans are tied to generally used reference rates. -------------------------------------------------------------------------------- | 30 June 2009 | | | | -------------------------------------------------------------------------------- | EUR million | Associates | Management | Others | -------------------------------------------------------------------------------- | Loans | 97 | 11 | - | -------------------------------------------------------------------------------- | Other receivables | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Deposits | 3 | 11 | 48 | -------------------------------------------------------------------------------- | 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 of loans | - | - | - | -------------------------------------------------------------------------------- | Impairments of loans at the end of | - | - | - | | the period | | | | -------------------------------------------------------------------------------- | Off-balance-sheet items | | | | -------------------------------------------------------------------------------- | Guarantees | - | - | - | -------------------------------------------------------------------------------- | Irrevocable commitments | - | - | - | -------------------------------------------------------------------------------- | Other off-balance-sheet commitments | - | 0 | - | -------------------------------------------------------------------------------- | Wages and salaries | | | | | and | | | | | performance-based pay | | | | -------------------------------------------------------------------------------- | Wages and salaries | - | 3 | - | -------------------------------------------------------------------------------- | Performance-based pay | - | - | - | -------------------------------------------------------------------------------- | Holdings of related parties | | | | -------------------------------------------------------------------------------- | Number of share options | - | - | - | -------------------------------------------------------------------------------- | Number of shares | - | 128,387 | 5,784,097 | -------------------------------------------------------------------------------- | Number of participations | - | 5,011 | - | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 30 June 2008 | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR million | Associates | Management | Others | -------------------------------------------------------------------------------- | Loans | 104 | 4 | - | -------------------------------------------------------------------------------- | Other receivables | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Deposits | 32 | 9 | 27 | -------------------------------------------------------------------------------- | Other liabilities | - | - | - | -------------------------------------------------------------------------------- | Interest income | 0 | 0 | - | -------------------------------------------------------------------------------- | Interest expenses | 1 | 0 | 0 | -------------------------------------------------------------------------------- | Dividend income | 1 | - | - | -------------------------------------------------------------------------------- | Commission income | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Commission expenses | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Other operating income | - | - | - | -------------------------------------------------------------------------------- | Impairments of loans | - | - | - | -------------------------------------------------------------------------------- | Impairments of loans at the end of | - | - | - | | the period | | | | -------------------------------------------------------------------------------- | Off-balance-sheet items | | | | -------------------------------------------------------------------------------- | Guarantees | - | - | - | -------------------------------------------------------------------------------- | Irrevocable commitments | - | - | - | -------------------------------------------------------------------------------- | Other off-balance-sheet commitments | - | 0 | - | -------------------------------------------------------------------------------- | Wages and salaries and | | | | | performance-based pay | | | | -------------------------------------------------------------------------------- | Wages and salaries | - | 2 | - | -------------------------------------------------------------------------------- | Performance-based pay | - | - | - | -------------------------------------------------------------------------------- | Holdings of related parties | | | | -------------------------------------------------------------------------------- | Number of share options | - | - | - | -------------------------------------------------------------------------------- | Number of shares | - | 99,144 | 3,680,793 | -------------------------------------------------------------------------------- | Number of participations | - | 5,509 | - | -------------------------------------------------------------------------------- Pohjola Bank plc will publish its own interim report. The third-quarter interim report will be published on 5 November 2009. Helsinki, 6 August 2009 OP-Pohjola Group Central Cooperative Executive Board OP-Pohjola Group Central Cooperative Carina Geber-Teir Senior Vice President, Corporate Communications FURTHER INFORMATION Reijo Karhinen, Executive Chairman, tel. +358 (0)10 252 4500 Tony Vepsäläinen, President, tel. +358 (0)10 252 4020 Harri Luhtala, CFO, tel. +358 (0)10 252 2433 Carina Geber-Teir, Executive Vice President (Corporate Communications), tel. +358 (0)10 252 8394 DISTRIBUTION NASDAQ OMX Helsinki Ltd London Stock Exchange SWX Swiss Exchange Major media
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