2010-02-11 07:00:00 CET
2010-02-11 07:00:18 CET
REGULATED INFORMATION
Pohjola Pankki Oyj - Financial Statement Release
Pohjola Bank plc Financial Statements Bulletin for 1 January-31 December 2009
Pohjola Bank plc Company Release, 11 February 2010, 8.00 am Release category: Financial statements bulletin Pohjola Bank plc Financial Statements Bulletin for 1 January-31 December 2009 January-December - Earnings before tax more than doubled over the previous year, coming to EUR 265 million (119). - Earnings before tax at fair value amounted to EUR 508 million (-133) and return on equity at fair value stood at 19.2% (-5.6). - Banking improved its earnings before tax thanks to the Markets' good performance. Impairment charges on receivables burdened Banking earnings by EUR 117 million. - Non-life Insurance reported an excellent balance on technical account and recorded an operating combined ratio of 87.7% (91.5). Its return on investment at fair value rose to 10.7% (-7.0). - Asset Management improved its financial performance and assets under management reached a new high, totalling EUR 33.1 billion (25.3). - In line with the valid dividend policy, the Board of Directors proposes that a per-share dividend of EUR 0.34 (0.19) be paid on Series A shares and EUR 0.31 (0.16) on Series K shares. - Outlook: Consolidated earnings before tax in 2010 are expected to be at the same level as in 2009 (for more information on the outlook, see "Outlook for 2010" below). October-December - Earnings before tax amounted to EUR 55 million (5). - Earnings before tax at fair value were EUR 84 million (-66). - Impairment charges on receivables burdened earnings by EUR 34 million. - Non-life Insurance reported an operating combined ratio of 90.9% (96.2) and return on investments of 1.6% (-4.3). - Within Asset Management, assets under management grew by EUR 1.7 billion. Group financial performance and key indicators 1) -------------------------------------------------------------------------------- | Earnings before tax, | 2009 | 2008 | Change | Q4/200 | Q4/200 | Change | | € million | | | | 9 | 8 | | -------------------------------------------------------------------------------- | Banking | 117 | 105 | 12 | 18 | 17 | 1 | -------------------------------------------------------------------------------- | Non-life Insurance | 102 | 55 | 48 | 13 | -18 | 31 | -------------------------------------------------------------------------------- | Asset Management | 21 | 17 | 4 | 11 | 7 | 4 | -------------------------------------------------------------------------------- | Group Functions | 25 | -58 | 82 | 13 | -1 | 14 | -------------------------------------------------------------------------------- | Total | 265 | 119 | 146 | 55 | 5 | 50 | -------------------------------------------------------------------------------- | Change in fair value | 243 | -252 | 495 | 30 | -71 | 100 | | reserve | | | | | | | -------------------------------------------------------------------------------- | Earnings/loss before | 508 | -133 | 641 | 84 | -66 | 150 | | tax at fair value | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Key indicators | 2009 | 2008 | Q4/2009 | Q4/200 | Target | | | | | | | 8 | | | -------------------------------------------------------------------------------- | Earnings before tax, | 265 | 119 | 55 | 5 | | | | € million | | | | | | | -------------------------------------------------------------------------------- | Profit for the | 194 | 89 | 39 | 6 | | | | period, € million | | | | | | | -------------------------------------------------------------------------------- | Return on equity, % | 19.2 | -5.6 | 10.8 | -11.1 | 13.0 | | -------------------------------------------------------------------------------- | Balance sheet total, | 35.5 | 32.4 | | | | | | € billion | | | | | | | -------------------------------------------------------------------------------- | Shareholders' equity, | 2.3 | 1.6 | | | | | | € billion | | | | | | | -------------------------------------------------------------------------------- | Tier 1 ratio, % | 11.8 | 9.4 | | | >9.5 | | -------------------------------------------------------------------------------- | Earnings per share, € | 0.66 | 0.36 | 0.12 | 0.02 | | | | 2) | | | | | | | -------------------------------------------------------------------------------- | Earnings per share, | 1.27 | -0.40 | 0.19 | -0.19 | | | | incl. change in fair | | | | | | | | value, € 2) | | | | | | | -------------------------------------------------------------------------------- | Equity per share, € | 7.09 | 6.58 | | | | | | 2) | | | | | | | -------------------------------------------------------------------------------- | | | | | | | | -------------------------------------------------------------------------------- | Average personnel | 2,966 | 3,085 | 2,979 | 2,920 | | | -------------------------------------------------------------------------------- 1) Comparatives deriving from the income statement are based on figures reported for the corresponding period a year ago. Unless otherwise specified, balance-sheet and other cross-sectional figures on 31 December 2008 are used as comparatives. 2) Adjusted for the effect of the rights issue. President and CEO Mikael Silvennoinen: "Consolidated earnings before tax for the fourth quarter were in line with our expectations. Earnings were markedly better than a year ago but lower than in the third quarter. Consolidated earnings before tax in 2009 more than doubled over the previous year. This strong financial performance was based on excellent results recorded by Markets, a strong improvement in the balance on technical account and higher net interest income reported by the Group Functions. The economic recession dampened demand for corporate loans, resulting in a decrease in the loan portfolio. Impairment charges increased considerably from their previous year's level but their growth levelled off during the second half of 2009. Non-life Insurance showed an excellent balance on technical account. Growth in insurance premium revenue remained strong among private customers, thanks to efficient insurance policy sales by OP-Pohjola Group member banks. When it comes to corporate customers, both insurance premium revenue and claims incurred decreased as a result of the recession. Non-life Insurance return on investments at fair value developed favourably. Within Asset Management, assets under management increased by almost a third, reaching an all-time high at the end of the year. Although the operating environment will remain challenging in 2010, Pohjola Group will have excellent opportunities to continue to implement its strategy systematically during the current year too, thanks to its solid capital base and strong market position." Operating environment In 2009, the world economy drifted into its deepest recession in decades. The financial crisis coming to a head in late 2008 sent various economic regions around the world into a simultaneous nosedive never seen before. This crisis spread worldwide through lack of confidence in financial markets and through international trade. Swift measures taken by central banks and governments helped to restore confidence in financial markets. The world economy showed signs of stabilisation as early as the second quarter of 2009 and the second half saw a cautious recovery in industrialised countries' production figures after a steep fall. The worst of the world economic crisis was over in 2009. Nevertheless, GDP growth expectations for 2010 have remained moderate due to rapidly increasing government debt, low capital spending and consumers remaining cautious about spending. Finnish economy is expected to recover The collapse of international trade hit the Finnish economy violently. In 2009, Finnish exports were roughly a quarter lower than a year ago and capital spending fell sharply and housing construction continued its downward trend. The deteriorating employment situation cast a shadow over households with the result that consumer spending began to decline. 2010 is expected to be a year of economic recovery in Finland. Business and consumer confidence has become stronger. Stronger export markets will gradually revive exports and the diminishing threat of unemployment arising from the stabilising job market will pave the way for a stronger consumer demand. Growth to remain slow in financial markets The economic recession in 2009 dampened demand for corporate loans, resulting in a fall in the Finnish corporate loan portfolio. At the same time, strong recovery in capital markets increased the issuance of commercial papers and bonds, and the volumes of trading in capital market products. Low interest rates and higher consumer confidence boosted demand for home loans. The economic recovery should gradually be reflected in demand for corporate loans although capital spending and demand for capital investment financing are anticipated to remain low. Corporate financing needs are expected to focus on working capital and the refinancing of existing loans. The home mortgage portfolio is expected to grow slightly in 2010. Share indices soared across the world from their March rock-bottom, boosting market-based operations in the financial sector, such as capital market trading and investment services, as well as asset management. Share prices are expected to develop more moderately in 2010 than in 2009 but trading volumes and demand for investment services and asset management services are anticipated to grow. The Finnish non-life insurance market was hit by a major slowdown in 2009 when the recession reduced insurance premium revenue within corporate insurance in particular, as a result of a fall in payroll bills and corporate net sales. On the other hand, the recession was reflected in lower non-life insurance claims expenditure. In 2010, growth in premiums written is expected to remain slow. More stringent regulation as a result of the financial crisis The debate prompted by the financial crisis on the need for enhancing financial regulation and supervision resulted in some concrete measures within the EU during 2009. In 2009, the European Commission adopted several amendments to capital adequacy and solvency directives, and legislative proposals with a view to strengthening capital adequacy and liquidity management and financial supervision in Europe. On 17 December 2009, the Basel Committee on Banking Supervision published consultative documents containing proposals for amendments to capital adequacy and liquidity risk regulations. Key amendments relate to raising the quality and quantity of the capital base, strengthening the liquidity and financial position, and reducing procyclicality. The Committee will carry out a comprehensive impact assessment of the proposed capital and liquidity standards in the first half of 2010, with a view to analysing the overall effect of these amendments and calibrating the proposals. The fully calibrated set of standards will be developed by the end of 2010 and will not be phased in until financial conditions improve and the economic recovery is assured, with the aim of implementation by end-2012. The financial crisis also revealed the need to make changes to accounting policies. In the autumn of 2009, the International Accounting Standards Board (IASB) proposed amendments to the recognition and measurement of financial instruments. These changes relate to the presentation and measurement of financial instruments, accounting for impairments and hedge accounting. In addition, the IASB is also expected to issue other changes in financial statements disclosures. In the spring of 2009, the EU adopted a new, major solvency regime applying to the insurance sector. This Solvency II Directive is aimed at harmonising the regulatory framework for insurance company risk management and solvency management EU-wide. The Directive is due to be transposed into national legislation by 31 October 2012. Consolidated earnings -------------------------------------------------------------------------------- | Consolidated earnings | 2009 | 2008 | Change | 2009 | 2008 | Change | -------------------------------------------------------------------------------- | € million | | | | Q4 | Q4 | | -------------------------------------------------------------------------------- | | | | | | | | -------------------------------------------------------------------------------- | Net interest income | 241 | 174 | 66 | 63 | 54 | 10 | -------------------------------------------------------------------------------- | Impairments of receivables | 129 | 28 | 101 | 34 | 21 | 14 | -------------------------------------------------------------------------------- | Net interest income after | 112 | 146 | -34 | 29 | 33 | -4 | | impairments | | | | | | | -------------------------------------------------------------------------------- | Net income from Non-life | 402 | 353 | 49 | 96 | 74 | 22 | | Insurance | | | | | | | -------------------------------------------------------------------------------- | Net commissions and fees | 143 | 122 | 21 | 41 | 31 | 9 | -------------------------------------------------------------------------------- | Net trading income | 71 | -81 | 152 | 11 | -9 | 20 | -------------------------------------------------------------------------------- | Net investment income | -13 | 6 | -19 | -5 | -3 | -2 | -------------------------------------------------------------------------------- | Other operating income | 50 | 42 | 8 | 17 | 12 | 6 | -------------------------------------------------------------------------------- | Total net income | 766 | 589 | 177 | 190 | 139 | 51 | -------------------------------------------------------------------------------- | Personnel costs | 190 | 178 | 12 | 48 | 47 | 1 | -------------------------------------------------------------------------------- | IT expenses | 75 | 80 | -5 | 20 | 26 | -6 | -------------------------------------------------------------------------------- | Depreciation and | 72 | 69 | 3 | 21 | 20 | 1 | | amortisation | | | | | | | -------------------------------------------------------------------------------- | Other expenses | 164 | 143 | 21 | 45 | 40 | 5 | -------------------------------------------------------------------------------- | Total expenses | 501 | 470 | 31 | 135 | 134 | 1 | -------------------------------------------------------------------------------- | Earnings before tax | 265 | 119 | 146 | 55 | 5 | 50 | -------------------------------------------------------------------------------- | Change in fair value | 243 | -252 | 495 | 30 | -71 | 101 | | reserve | | | | | | | -------------------------------------------------------------------------------- | Earnings/loss before tax | 508 | -133 | 641 | 84 | -66 | 150 | | at fair value | | | | | | | -------------------------------------------------------------------------------- | | | | | | | | -------------------------------------------------------------------------------- | Income tax expense | 71 | 31 | 40 | 16 | -1 | 16 | -------------------------------------------------------------------------------- | Profit for the period | 194 | 89 | 106 | 39 | 6 | 33 | -------------------------------------------------------------------------------- | | | | | | | | -------------------------------------------------------------------------------- | Tax on change in fair | 63 | -65 | 128 | 8 | -18 | 26 | | value reserve | | | | | | | -------------------------------------------------------------------------------- | Profit/loss for the period | 374 | -98 | 472 | 61 | -46 | 107 | | at fair value | | | | | | | -------------------------------------------------------------------------------- January-December earnings Consolidated net income increased by 30% to EUR 766 million (589) and net income before impairments on receivables by 45% to EUR 895 million (617). Net interest income came to EUR 241 million (174), up by 38% year on year. This improvement had its roots in net interest income from the liquidity portfolio and a rise in lending margins of new loans. In addition, the price difference recognised on reclassified notes and bonds increased net interest income by EUR 25 million. Impairments on receivables rose by EUR 101 million year on year to EUR 129 million (28). Some companies' creditworthiness weakened due to the recession, which added to impairment charges. Net income from Non-life Insurance rose by EUR 49 million to EUR 402 million (353), as a result of the favourable development of the balance on technical account. Net investment income recognised in the income statement was at the previous year's level. Net commissions and fees came to EUR 143 million, or EUR 21 million higher than a year ago. This growth came mainly from commission income from loans, guarantees and asset management. Net trading income totalled EUR 71 million (-81), or EUR 152 million higher than in the previous year, with income from derivative and bond trading showing an increase in particular. Negative mark-to-market valuations recognised a year ago in net trading income from the liquidity portfolio totalled EUR 74 million. Net investment income fell by EUR 19 million being EUR 13 million in the red, due to adjustments for property values, impairment charges for equities and lower dividend income than a year ago. Expenses rose by 6% to EUR 501 million (470). Personnel costs increased by EUR 12 million. The number of Group employees increased by 62 from 31 December 2008 and the Group recognised more provisions for performance-based bonuses than a year ago. Non-life Insurance agency fees and sales commissions rose by EUR 15 million, as a result of higher sales and Pohjola's insurance field staff joining the payroll of OP-Pohjola Group member banks on 1 October 2008. Depreciation on leases grew by EUR 4 million. Excluding growth in insurance sales commissions, provisions recognised for performance-based bonuses and depreciation on leases as well as one-off expenses a year ago related to ICT systems integration, expenses rose by 2%. Earnings before tax came to EUR 265 million (119), showing a year-on-year improvement of EUR 146 million. The fair value reserve increased by EUR 243 million, whereas it decreased by EUR 252 million a year ago. Impairments recognised from the fair value reserve in the income statement totalled EUR 45 million. On 31 December 2009, the fair value reserve after tax stood at EUR 0 million, as against EUR -180 million the year before. Earnings before tax at fair value amounted to EUR 508 million (-133). October-December earnings Net income improved by 37% to EUR 190 million (139) and net income before impairments of receivables rose by 40% to EUR 224 million (160). Growth in net interest income slowed down in the fourth quarter. The loan and guarantee portfolio shrank slightly. The average corporate loan margin rose to 1.33% from 1.21% at the end of September. Impairments of receivables rose by EUR 14 million year on year to EUR 34 million (21). Net income from Non-Life Insurance increased to EUR 96 million (74), as a result of a year-on-year improvement in the balance on technical account and in net investment income. Net commissions and fees continued to increase vigorously, totalling EUR 41 million (31). Net commissions and fees from loans and guarantees, securities brokerage and asset management rose year on year. An adjustment in the principle governing recognition of lending fees reduced net commissions and fees by EUR 5 million. These will be recognised as revenue within the next 2-3 years. Good trading performance was reflected in higher net trading income, totalling EUR 11 million (-9). Expenses rose by 1% to EUR 135 million (134) and personnel costs by only EUR 1 million. Entries under the pension scheme reduced personnel costs by EUR 3 million. Underwriting commissions were EUR 7 million higher than a year ago. Expenses a year ago include EUR 6 million in one-off expenses arising from ICT systems integration. Earnings before tax were EUR 55 million (5) and earnings before tax at fair value EUR 84 million (-66). Group risk exposure The Group's risk exposure continued to remain favourable despite the recession. Impairment charges in the fourth quarter were slightly lower than a year ago. Investment-grade exposures continued to remain at good levels, the trend of corporate customers' lowering creditworthiness levelled out towards the year end and the ratio of doubtful receivables to the loan and guarantee portfolio remained low. The financial and liquidity position remained strong. Short-term funding performed well and the availability of long-term funding also improved. Pohjola strengthened its financial position by issuing last year two senior bonds with a maturity of three and five years and each worth EUR 750 million. In addition, OP Mortgage Bank issued in November a EUR 1.25-billion covered bond with a maturity of five years in international capital markets. Pohjola Bank plc maintains OP-Pohjola Group's liquidity portfolio which mainly consists of notes and bonds eligible as collateral for central bank refinancing. The liquidity portfolio totalled EUR 11.7 billion (9.8) on 31 December 2009. This liquidity portfolio plus other items included in OP-Pohjola Group's balance sheet and eligible for central bank refinancing constitute the total liquidity buffer, which can be used to cover OP-Pohjola Group's wholesale funding maturities for some 24 months. Determining the value of the available-for-sale financial assets and at fair value through profit or loss included in the liquidity portfolio is based on mark-to-market valuations. Impairment charges recognised for assets within the liquidity portfolio amounted to EUR 1 million in the fourth quarter and EUR 12 million (9) in 2009. The Group kept market risks at a moderate throughout the financial year. Net loan losses and impairment losses reduced earnings by EUR 34 million (21) in the fourth quarter. Net loan losses and impairment losses recognised for the financial year amounted to EUR 129 million (28), accounting for 0.94% (0.20) of the loan and guarantee portfolio. Final loan losses recognised for the year totalled EUR 15 million (16) and impairment charges EUR 140 million (21). Loan loss recoveries and allowances for impairments totalled EUR 26 million (9). Impairments recognised on an individual basis accounted for over 80% of net loan losses and impairments. Doubtful receivables fell by EUR 6 million to EUR 44 million in the fourth quarter, accounting for 0.32% (0.25) of the loan and guarantee portfolio. With the recession deteriorating customers' creditworthiness, Pohjola has rearranged financing of some of its corporate customers in such a way that part of company ownership has transferred to Pohjola through company shares or stock options. Pohjola considers these measures to be the best way of securing its receivables and collateral and ensuring that the customer's business survives the recession. Assessing the duration of the current recession and its effects on our corporate customers' operating conditions still involves uncertainty. The most significant, identified operational risks pertain to systems, the execution processes of trading and orders, the accuracy of loan and collateral documentation, and the allocation of resources. Materialised operational risks resulted in EUR 3.2 million (2.0) in costs in 2009. Capital adequacy The capital adequacy ratio improved, standing at 13.5% (11.3) as against the statutory minimum requirement of 8%. Tier 1 ratio was 11.8% (9.4). Pohjola Group's Tier 1 target ratio stands at a minimum 9.5% over the economic cycle. Tier 1 capital came to EUR 1,541 million (1,228) and the total capital base amounted to EUR 1,753 million (1,484). Hybrid capital accounted for EUR 274 million of Tier 1 capital. The minimum regulatory capital requirement to cover market risk amounted to EUR 36 million (47). On 31 December, the fair value reserve of the consolidation group stood at EUR 18 million (-22). On 31 December 2009, risk-weighted assets totalled EUR 13,024 million, as against EUR 13,120 million the year before. Risk-weighted assets rose by EUR 240 million from the comparable figures at the end of last year, due to downgraded corporate credit ratings. Pohjola Bank plc strengthened its capital base through the EUR 308-million rights issue held between 7 and 24 April 2009. After the deduction of the related issue expenses, Tier 1 capital increased by EUR 298 million. Pohjola was authorised in April 2009 by the Financial Supervisory Authority to redeem prematurely no more than EUR 150 million in debenture loans included in Tier 2 capital by the end of 2009. Accordingly, Pohjola repurchased loans for EUR 7 million. With respect to the capital adequacy requirement for operational risks, Pohjola aims to adopt the Standardised Approach in the autumn of 2010. Credit ratings Pohjola Bank plc's credit ratings are as follows: -------------------------------------------------------------------------------- | Rating agency | Short-term debt | Long-term debt | -------------------------------------------------------------------------------- | Standard & Poor's | A-1+ | AA- | -------------------------------------------------------------------------------- | Moody's | P-1 | Aa2 | -------------------------------------------------------------------------------- | Fitch | F1+ | AA- | -------------------------------------------------------------------------------- In January 2010, Standard & Poor's affirmed Pohjola's credit rating, with the outlook remaining stable. According to the rating agency, Pohjola's capital adequacy is on a solid basis and OP-Pohjola Group's capital adequacy is markedly above the level of peer groups. Moody's Investor Service has affirmed negative outlook on Pohjola's credit rating. Fitch Ratings has also issued a negative outlook for the long-term debt ratings of Pohjola. The main reason for the negative outlook is the rapid deterioration of the Finnish economy and its potential effects on Pohjola and OP-Pohjola Group mainly operating in Finland. Pohjola Insurance Ltd's financial strength ratings In January 2010, Standard & Poor's affirmed Pohjola Insurance Ltd's financial strength rating (A+). The financial strength rating by Moody's is A2, with negative outlook. Pohjola strategy The updated strategy adopted in September focuses on intensifying integration, upgrading businesses and improving service capabilities. Pohjola's mission is to promote the prosperity, security and well-being of its customers, and profitable growth and an increase in company value form the Group's key objectives. Pohjola's vision is to be the most preferred financial services partner for its customers. This position as the most preferred partner is built around the ability to exceed customer expectations and the Group's reliability. The following three key competitive advantages support the achievement of these goals: we operate close to customers, provide comprehensive financial services and are part of the strong OP-Pohjola Group. Pohjola is upgrading and further developing its operations through the following strategic initiatives: 1. Upgrading business for corporate and institutional customers 2. Intensifying integration 3. Enhancing international service capabilities 4. Enhancing the Group's intellectual capital When it comes to upgrading business for corporate and institutional customers, Pohjola has the aim of strengthening not only its own but also the entire OP-Pohjola Group's market position as a partner of mid-size companies in particular. Well-defined responsibilities between Pohjola and OP-Pohjola Group member banks play a key role in this respect. At the beginning of 2010, Pohjola adopted a new CRM organisation covering Banking and Non-life Insurance with the aim of seeking more customer-focused operations. On the basis of this new model, the business lines will remain responsible for the provision, sale and development of their own products and services while enjoying a stronger CRM organisation in support of their operations. This change will support OP-Pohjola Group's strategic goal of being Finland's leading financial services group in business for corporate customers. Intensifying business integration involves measures to make more efficient use of customer potential shared by Banking and Non-life Insurance. Pohjola exploits customer data in identifying customer potential, targeting efforts, selecting customers and determining prices. Pohjola has become the number one insurance company for OP-Pohjola Group member bank customers and more than half of Pohjola's non-life insurance customers are also Group member bank customers. Pohjola's third initiative to upgrade its business involves enhancing its international service capabilities. The Group will extend its international partner network in order to provide its customers with competitive services on a global scale. Pohjola is also a full-blown financial services provider for its customers abroad. The fourth initiative involves enhancing the Group's intellectual capital. The Group will invest in its ability to reinvent itself and develop its operations further in order to be able to provide customers with the best solutions and services available in the sector. Pohjola will enhance its competencies on a long-term basis in view of future needs Financial targets and actuals -------------------------------------------------------------------------------- | Financial targets | 2009 | 2008 | Target | -------------------------------------------------------------------------------- | Group | | | | -------------------------------------------------------------------------------- | Return on equity, % | 19.2 | -5.6 | 13 | -------------------------------------------------------------------------------- | Tier 1 ratio, % | 11.8 | 9.4 | >9.5 | -------------------------------------------------------------------------------- | Banking | | | | -------------------------------------------------------------------------------- | Operating cost/income ratio, % | 35 | 46 | <40 | -------------------------------------------------------------------------------- | Non-life Insurance | | | | -------------------------------------------------------------------------------- | Operating combined ratio, % | 87.7 | 91.5 | 92 | -------------------------------------------------------------------------------- | Operating expense ratio, % | 22.2 | 21.9 | <20 | -------------------------------------------------------------------------------- | Solvency ratio, % | 88 | 66 | 70 | -------------------------------------------------------------------------------- | Asset Management | | | | -------------------------------------------------------------------------------- | Operating cost/income ratio, % | 53 | 57 | <50 | -------------------------------------------------------------------------------- | Rating | | | | -------------------------------------------------------------------------------- | AA rating affirmed by at least two | 3 | 3 | ≥ 2 | | credit rating agencies | | | | -------------------------------------------------------------------------------- | Dividend policy | | | | -------------------------------------------------------------------------------- | Dividend payout ratio a minimum of 50%, | 51 1) | 51 | >50 | | provided that Tier 1 a minimum of 9.5%. | | | | -------------------------------------------------------------------------------- | 1) 55% of consolidated earnings for the financial year | -------------------------------------------------------------------------------- The financial targets are set over the economic cycle. Performance by business line Banking - Earnings before tax improved to EUR 117 million (105). - With larger volumes, Markets recorded excellent results. - Impairment charges rose to EUR 117 million (18), eroding earnings considerably. - The loan and guarantee portfolio shrank by 6% from its year-start level but the market share of corporate loans increased to 19.7% (19.0). - The average corporate loan margin rose to 1.33% (0.94). - Operating cost/income ratio improved to 35% (46). Banking: financial results and key figures and ratios -------------------------------------------------------------------------------- | Financial results, € | 2009 | 2008 | Change | Q4/2009 | Q4/2008 | Change | | million | | | | | | | -------------------------------------------------------------------------------- | | | | | | | | -------------------------------------------------------------------------------- | Net interest income | 165 | 158 | 7 | 41 | 41 | 0 | -------------------------------------------------------------------------------- | Impairments of | 117 | 18 | 99 | 33 | 11 | 23 | | receivables | | | | | | | -------------------------------------------------------------------------------- | Net interest income | | | | | | | | after | | | | | | | -------------------------------------------------------------------------------- | impairments of | 49 | 140 | -92 | 7 | 30 | -23 | | receivables | | | | | | | -------------------------------------------------------------------------------- | Net commissions and | 85 | 63 | 22 | 20 | 16 | 3 | | fees | | | | | | | -------------------------------------------------------------------------------- | Net trading income | 78 | -20 | 98 | 14 | -9 | 24 | -------------------------------------------------------------------------------- | Other income | 30 | 28 | 2 | 7 | 9 | -1 | -------------------------------------------------------------------------------- | Total net income | 242 | 211 | 31 | 49 | 46 | 3 | -------------------------------------------------------------------------------- | Total expenses | 125 | 106 | 18 | 31 | 29 | 2 | -------------------------------------------------------------------------------- | Earnings before tax | 117 | 105 | 12 | 18 | 17 | 1 | -------------------------------------------------------------------------------- | Earnings before tax | 120 | 103 | 16 | 19 | 21 | -2 | | at fair value | | | | | | | -------------------------------------------------------------------------------- | Loan and guarantee | 13.3 | 14.1 | -0.8 | | | | | portfolio, € billion | | | | | | | -------------------------------------------------------------------------------- | Margin on corporate | 1.33 | 0.94 | 0.39 | | | | | loan portfolio, % | | | | | | | -------------------------------------------------------------------------------- | Ratio of doubtful | | | | | | | | receivables to | | | | | | | -------------------------------------------------------------------------------- | loan and guarantee | 0.32 | 0.24 | 0.08 | | | | | portfolio, % | | | | | | | -------------------------------------------------------------------------------- | Ratio of impairments | | | | | | | | of receivables | | | | | | | -------------------------------------------------------------------------------- | to loan and | 0.88 | 0.12 | 0.76 | | | | | guarantee portfolio, | | | | | | | | % | | | | | | | -------------------------------------------------------------------------------- | Operating | | | | | | | | cost/income | | | | | | | -------------------------------------------------------------------------------- | ratio, % | 35 | 46 | -12 | 37 | 51 | -14 | -------------------------------------------------------------------------------- | Personnel | 607 | 613 | -6 | | | | -------------------------------------------------------------------------------- January-December earnings Earnings before tax were EUR 117 million (105), showing a year-on year improvement despite a substantial increase in impairment charges. The economic recession made corporate customers cut capital spending, slowing down demand for loans. The loan portfolio shrank by 7% from its level at the end of 2008, standing at EUR 10.7 billion on 31 December 2009. Binding standby credit facilities increased by EUR 0.8 billion to EUR 2.9 billion. The guarantee portfolio remained unchanged, standing at EUR 2.6 billion. The portfolio of guarantees for the TyEL premium loans (under the Employees Pensions Act) grew by EUR 0.2 billion to EUR 1.3 billion, whereas other guarantees decreased correspondingly. Pohjola raised margins on new and renewed loans to cover higher funding costs, which was reflected in a rise in the average corporate loan margin. In addition, strong growth in the loan portfolio the year before contributed to higher net interest income. Net interest income from corporate loans increased by EUR 11 million to EUR 138 million (127). Net commissions and fees were one-third higher than the year before, Commission income from loans grew by EUR 14 million and that from guarantees by EUR 7 million. Similarly, net commissions and fees from payment transfers and securities brokerage were higher than the year before. The Markets division showed a strong profit performance, reporting an increase in net income from trading in bonds and derivatives. The division's combined net interest income and net trading income climbed by EUR 75 million year on year, totalling EUR 99 million (24). The Group strengthened its market position as a corporate and investment bank in line with its strategy. Net trading income was reduced last year by the EUR 10-million negative mark-to-market valuations of notes and bonds recognised at fair value through profit or loss. The price difference between the nominal value of notes and bonds and their acquisition price arising from the reclassification recognised in net interest income totalled EUR 4 million. The cost/income ratio improved considerably to 35% (46). Expenses rose by EUR 18 million. Excluding growth in depreciation on leases and in provisions recognised for performance-based bonuses, growth in expenses was significantly smaller. October-December earnings Earnings before tax were EUR 18 million, or one million euros higher than the year before. Impairment charges increased by EUR 23 million to EUR 33 million (11). The loan and guarantee portfolio decreased by EUR 0.3 billion whereas a year ago it increased by EUR 0.5 billion. Despite higher lending margins, net interest income remained at the previous year's level because net interest income from trading fell by EUR 3 million. Net commissions and fees rose by over EUR 3 million, commission income from both loans and guarantees growing by one million euros. An adjustment in the principle governing recognition of lending fees reduced net commissions and fees by EUR 5 million. These will be recognised as revenue within the next 2-3 years. The Markets division posted earnings of EUR 13 million, recognised in net interest income and net trading income, or EUR 16 million higher than the year before, due particularly to trading in bond and derivative markets. Risk exposure by Banking Within Banking, key risks are associated with credit risk arising from customer business, and market risks. The division's total exposure decreased by EUR 0.1 billion to EUR 21.1 billion during the fourth quarter and by EUR 0.4 billion from the beginning of 2009. The ratio of investment-grade exposure - that is, ratings 1-5 - to total exposure, excluding households, remained at a healthy level, standing at 64% (68). The share of ratings 11-12 was 1.6% (0.6) and that of non-rated exposure 1% (1). Corporate exposure (including housing corporations) accounted for 78% (77) of total exposure within Banking. Of corporate exposure, the share of investment-grade exposure stood at 57% (61) and the exposure of the lowest two rating categories amounted to EUR 321 million (117), accounting for 2.0% (0.7) of the total corporate exposure. The distribution of corporate exposure by industry remained highly diversified and none of the industries represented over 12% of corporate exposure on 31 December. The most significant industries included the lease and management of flats representing 11.2% (10.8), trade 10.9% (10.4) and the manufacture of machinery and equipment 9.7% (10.0). Significant customer exposure decreased to EUR 2.9 billion (4.4). The ratio of doubtful receivables to the loan and guarantee portfolio continued to remain low, standing at EUR 44 million (34), or 0.32% (0.24). Past due payments came to EUR 70 million (32), representing 0.51% (0.22) of the loan and guarantee portfolio. Net loan losses and impairment losses reduced results by EUR 33 million (11) in October-December and by EUR 117 million (18) in 2009, accounting for 0.85% (0.12) of the loan and guarantee portfolio. On 31 December, Baltic Banking exposures totalled EUR 89 million, accounting for less than 1% of the loan and guarantee portfolio. The Baltic Banking share of net loan losses and impairment charges for January-December amounted to EUR 5 million, comprising mainly impairments on receivables assessed on a collective basis. Interest rate risk exposure averaged EUR 3.7 million in the fourth quarter and EUR 5.8 million in January-December, based on the 1-percentage-point change in the interest rate. Non-life Insurance - Earnings before tax improved to EUR 102 million (55). - The operating balance on technical account amounted to EUR 116 million (78) - the best ever in Pohjola's history. - Non-life Insurance recorded very good profitability. The operating combined ratio stood at 87.7% (91.5). - Total insurance premium revenue was up by 2%. Growth remained vigorous among private customers but the recession cut revenue from corporate customers. - The number of loyal customer households is growing according to the strategic target, their number totalling 424,715 on 31 December, showing a year-on-year increase of 9%. - Return on investments at fair value was 10.7% (-7.0). Non-life Insurance: financial results and key figures and ratios -------------------------------------------------------------------------------- | Financial results, € | 2009 | 2008 | Change | Q4/2009 | Q4/2008 | Change | | million | | | | | | | -------------------------------------------------------------------------------- | Insurance premium | 943 | 923 | 19 | 231 | 227 | 4 | | revenue | | | | | | | -------------------------------------------------------------------------------- | Claims incurred | -617 | -643 | 26 | -154 | -160 | 5 | -------------------------------------------------------------------------------- | Operating expenses | -210 | -202 | -8 | -55 | -58 | 3 | -------------------------------------------------------------------------------- | Amortisation | -28 | -30 | 2 | -9 | -10 | 1 | | adjustment of | | | | | | | | intangible assets | | | | | | | -------------------------------------------------------------------------------- | Balance on technical | 88 | 49 | 39 | 12 | -1 | 13 | | account | | | | | | | -------------------------------------------------------------------------------- | Net investment | 61 | 59 | 1 | 13 | -2 | 15 | | income | | | | | | | -------------------------------------------------------------------------------- | Other income and | -46 | -53 | 7 | -11 | -15 | 3 | | expenses | | | | | | | -------------------------------------------------------------------------------- | Earnings/loss before | 102 | 55 | 48 | 13 | -18 | 31 | | tax | | | | | | | -------------------------------------------------------------------------------- | Earnings/loss before | 290 | -171 | 462 | 42 | -104 | 146 | | tax at fair value | | | | | | | -------------------------------------------------------------------------------- | Operating combined | 87.7 | 91.5 | | 90.9 | 96.2 | | | ratio, % | | | | | | | -------------------------------------------------------------------------------- | Operating expense | 22.2 | 21.9 | | 24.0 | 25.7 | | | ratio, % | | | | | | | -------------------------------------------------------------------------------- | Return on | 10.7 | -7.0 | | 1.6 | -4.3 | | | investments at fair | | | | | | | | value, % | | | | | | | -------------------------------------------------------------------------------- | Solvency ratio , % | 88 | 66 | | | | | -------------------------------------------------------------------------------- | Personnel | 2,070 | 2,018 | 52 | | | | -------------------------------------------------------------------------------- January-December earnings Earnings before tax amounted to EUR 102 million (55). Earnings before tax at fair value improved by EUR 462 million. The balance on technical account was better although growth in insurance premium revenue slowed down due to the recession. The operating balance on technical account was the best ever in Pohjola's history. The balance on technical account before amortisation on intangible assets stood at EUR 116 million (78). Favourable developments in the capital market were reflected in return on investments at fair value. Net investment income amounted to EUR 61 million (59) and net investment income at fair value reached EUR 248 million (-166). The number of loyal customer non-life insurance households increased by 35,448, or 9%, in the year to December. With the year-end number coming to 424,715, the number of loyal customer households exceeded that of other customers at the end of September. The number of loyal customer households is growing according to the strategic target and the Group has the aim of increasing this number to 450,000 by the end of 2010. Up to 55% of loyal customer households have also concentrated their banking transactions in OP-Pohjola Group member cooperative banks. OP-Pohjola Group member banks' and Helsinki OP Bank's customers can use their OP bonuses earned through banking transactions to pay Pohjola non-life insurance premiums. During the reporting year, OP bonuses were used to pay 914,300 insurance premiums, with 227,700 paid in full using bonuses. Insurance premiums paid using bonuses totalled EUR 58 million. The revenue synergies resulting from growth in the number of loyal customer households by the end of 2009 reached an annual level of EUR 16 million and the management is targeting EUR 17 million by the end of 2010. Cooperation with OP-Pohjola Group member banks became more intense during the financial year. Insurance sales to private customers were transferred to Group member banks in October 2008 and their sales performance has been excellent: year on year, non-life insurance policy sales grew by 29% in January-December, in comparison with sales recorded by Pohjola's own offices. The reporting year saw the sales network strengthen when an increasing number of OP-Pohjola Group member banks joined the insurance sales network and increased the number of their insurance salespeople. Last year, Group member banks became the largest insurance sales channel for private customers. Insurance business Profitability was very good. The combined ratio stood at 90.7% (94.7). The operating combined ratio excluding changes in reserving bases and amortisation on intangible assets arising from the corporate acquisition stood at 87.7% (91.5%). Developments in insurance premium revenue were characterised by dichotomy. Growth remained strong within Private Customers, relying on the OP-Pohjola cooperation, whereas insurance premium revenue from Corporate Customer and in the Baltic States decreased due to the recession. Total insurance premium revenue improved by 2% to EUR 942 million (923). With the growth in policies for Private Customers, motor liability, fire and property insurance policies became the largest lines of insurance in terms of insurance premium revenue, outstripping statutory workers' compensation insurance. Within Private Customers, insurance premium revenue rose by 12% to EUR 424 million (380). The number of loyal customer households grew by 35,448 (34,387) during January-December. Pohjola strengthened its market position among private customers. Within Corporate Customers, insurance premium revenue decreased by 5% to EUR 461 million (485). The most drastic fall was seen in statutory workers' compensation insurance, considering that payroll bills which determine insurance premiums were on the decrease. Falling corporate net sales and profits have also been reflected in insurance premiums. In the Baltic States, insurance premium revenue decreased by 2% to EUR 57 million (58). 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. Claims incurred (excl. loss adjustment expenses) amounted to EUR 551 million (583), with higher claims incurred among private customers resulting from growth in the insurance portfolio. Claims incurred among corporate customers were considerably lower than a year ago as a result of the recession and the favourable trend in large claims. The risk ratio stood at 58.4% (63.1). The reported number of major or medium-sized losses (in excess of EUR 0.1 million and over EUR 0.5 million in pension liabilities) came to 190 (204) in January-December, with their claims incurred retained for own account totalling EUR 85 million (84). Operating expenses and loss adjustment expenses grew to EUR 276 million (262), due mainly to higher sales commissions and product and system development costs. This growth coupled with a slowdown in insurance premium revenue weakened the cost ratio, standing at 29.3% (28.4). The operating balance on technical account within Private Customers improved to EUR 48 million (31) because insurance premium revenue was higher than claims incurred and operating expenses. Within Corporate Customers, the operating balance on technical account improved to EUR 62 million (40), despite lower insurance premium revenue, thanks to favourable claims developments. The balance on technical account for statutory workers' compensation insurance fell from the exceptionally good level reported a year ago. When it comes to corporate motor liability and comprehensive motor vehicle insurance, and property and commercial general liability insurance, the balance on technical account showed a significant improvement as a result of a reduction in losses due to the recession. Within property and commercial general liability insurance, developments in claims were favourable. The balance on technical account recorded by the Baltic States remained at around the previous year's level, amounting to EUR 6 million (7). Investment Return on investments at fair value stood at 10.7% (-7.0). Net investment income recognised in the income statement amounted to EUR 61 million (59). Impairment charges recognised from the fair value reserve in the income statement totalled EUR 37 million. On 31 December 2009, the investment portfolio totalled EUR 2,851 million (2,415), bonds and bond funds accounting for 76% (82) and listed equities for 10% (4). Unlisted equity investments plus the aforementioned equities represented a total of 13% (8). The fixed-income portfolio by credit rating remained healthy, considering that investments under the "investment-grade" represented 94% (94) and 80% of the investments were rated at least A-. The average residual maturity of the fixed-income portfolio was 4.9 years and the duration 3.3 years (4.3). October-December earnings Earnings before tax came to EUR 13 million (-18). Earnings before tax at fair value improved by EUR 146 million to EUR 42 million (-104). The balance on technical account before amortisation on intangible assets stood at EUR 21 million (9). Net investment income was EUR 13 million (-2) and at fair value EUR 42 million (-88). Insurance business Insurance profitability improved year on year. The combined ratio stood at 94.4% (100.5) and the operating combined ratio at 90.9% (96.2). Growth remained vigorous within Private Customers, whereas insurance premium revenue generated by Corporate Customers continued to decline at the same rate as earlier. In the Baltic region, the economic downswing was clearly reflected in developments in insurance premium revenue. Total insurance premium revenue rose by 2% to EUR 231 million (227). Insurance premium revenue from Private Customers improved by 13% to EUR 104 million (92). Growth in the number of loyal customer households picked up remarkably during the fourth quarter, up by 12,661 households (7,300). Year on year, non-life insurance policy sales by OP-Pohjola Group member banks to private customers grew by 51% in October-December. Insurance premium revenue from Corporate Customers dropped by 5% to EUR 114 million (120). In the Baltic States, insurance premium revenue decreased by 14% to EUR 13 million (15). Favourable claims developments continued during the fourth quarter and claims incurred were lower than a year ago. Claims incurred (excl. loss adjustment expenses) amounted to EUR 137 million (142) and the risk ratio stood at 59.3% (62.4). The reported number of major or medium-sized losses (in excess of EUR 0.1 million and over EUR 0.5 million in pension liabilities) came to 49 (59) in October-December, with their claims incurred retained for own account totalling EUR 18 million (27). Operating expenses and loss adjustment expenses were EUR 73 million (76). These year-on-year lower expenses were due to product and system development costs mainly recognised for Q4/2008 that sped up growth in expenses at that time. The cost ratio was 31.6% (33.7). The operating balance on technical account within Private Customers improved to EUR 6 million (-4) and that within Corporate Customers came to EUR 13 million (11). The operating balance on technical account reported by the Baltic States amounted to EUR 2 million (2). Investment Return on investments at fair value was 1.6% (-4.3) and net investment income amounted to EUR 13 million (-2). Risk exposure by Non-life Insurance Major risks within Non-life Insurance include underwriting risks associated with claims developments and market risks associated with investment portfolios covering technical provisions. Non-life Insurance increased its solvency capital, standing at EUR 827 million (608) on 31 December 2009. The solvency ratio, i.e. the ratio of solvency capital to insurance premium revenue, was 88% (66). As a result of the excellent balance on technical account, equalisation provisions increased to EUR 417 million (362). Moody's downgraded Pohjola Insurance Ltd's rating from A1 to A2 in September, due to the deterioration of the Finnish economy. Equity risks rose due to the de-hedging of equity derivatives and favourable market developments in equity investments. Pohjola maintained its interest-rate exposure lower than the long-term target. Asset Management - Earnings before tax improved by 25% to EUR 21 million (17). - Assets under management increased by 31% to EUR 33.1 billion (25.3). - Net commissions and fees increased by 7% to EUR 50 million (46). - Operating cost/income ratio improved to 53% (57). Asset Management: financial results and key figures and ratios -------------------------------------------------------------------------------- | Financial results, € | 2009 | 2008 | Chang | Q4/2009 | Q4/2008 | Change | | million | | | e | | | | -------------------------------------------------------------------------------- | | | | | | | | -------------------------------------------------------------------------------- | Net commissions and | 50 | 46 | 3 | 20 | 15 | 5 | | fees | | | | | | | -------------------------------------------------------------------------------- | Other income and | 2 | 0 | 3 | 0 | 0 | 0 | | expenses | | | | | | | -------------------------------------------------------------------------------- | Total income | 52 | 46 | 6 | 20 | 15 | 5 | -------------------------------------------------------------------------------- | Total expenses | 30 | 29 | 1 | 9 | 8 | 1 | -------------------------------------------------------------------------------- | Earnings before tax | 21 | 17 | 4 | 11 | 7 | 4 | -------------------------------------------------------------------------------- | Earnings before tax | 21 | 17 | 4 | 11 | 7 | 4 | | at fair value | | | | | | | -------------------------------------------------------------------------------- | | | | | | | | -------------------------------------------------------------------------------- | Assets under | 33.1 | 25.3 | 7.8 | | | | | management, € billion | | | | | | | -------------------------------------------------------------------------------- | Operating cost/income | | | | | | | -------------------------------------------------------------------------------- | ratio, % | 53 | 57 | -4 | 43 | 50 | -7 | -------------------------------------------------------------------------------- | Personnel | 162 | 154 | 8 | | | | -------------------------------------------------------------------------------- January-December earnings Earnings before tax increased by 25% to EUR 21 million (17) and the operating cost/income ratio stood at 53% (57). Assets under management increased by 31% year on year, totalling EUR 33.1 billion (25.3) on 31 December 2009. A good net assets inflow and favourable market developments since the second quarter contributed to this increase. Of the assets under management, institutional clients accounted for EUR 19.2 billion (16.0), OP mutual funds for EUR 11.4 billion (8.5) and Pohjola Private for EUR 2.5 billion (0.7). October-December earnings Earnings before tax amounted to EUR 11 million (7). Net commissions and fees increased by 35% year on year and results were markedly better. Higher performance-based fees than a year ago contributed to the increase in net commissions and fees. Assets under management grew by EUR 1.7 billion during October-December as a result of a positive net assets inflow and favourable market developments, institutional clients accounting for EUR 0.8 billion of this growth, OP mutual funds for EUR 0.5 billion and Pohjola Private client assets for EUR 0.3 billion. The operating cost/income ratio improved to 43% (50). Group Functions - Earnings before tax were EUR 82 million higher than in the previous year, totalling EUR 25 million (loss of 58). - Impairment charges recognised on bonds totalled EUR 12 million (9) and on equities EUR 9 million (4). - Liquidity and the availability of funding remained at good levels and market liquidity increased. - The reclassification at 2008-end of notes and bonds reduced earnings volatility. Group Functions: financial results and key figures and ratios -------------------------------------------------------------------------------- | Financial results, € | 2009 | 2008 | Change | Q4/200 | Q4/2008 | Change | | million | | | | 9 | | | -------------------------------------------------------------------------------- | Net interest income | 75 | 25 | 49 | 24 | 16 | 7 | -------------------------------------------------------------------------------- | Impairments of | 12 | 10 | 2 | 1 | 10 | -9 | | receivables | | | | | | | -------------------------------------------------------------------------------- | Net interest income | 63 | 15 | 48 | 23 | 6 | 16 | | after impairments of | | | | | | | | receivables | | | | | | | -------------------------------------------------------------------------------- | Net trading income | -7 | -61 | 54 | -3 | 0 | -3 | -------------------------------------------------------------------------------- | Net investment income | -14 | 6 | -20 | -6 | -3 | -3 | -------------------------------------------------------------------------------- | Other income | 18 | 21 | -3 | 7 | 5 | 2 | -------------------------------------------------------------------------------- | Total net income | 60 | -19 | 78 | 22 | 9 | 13 | -------------------------------------------------------------------------------- | Total expenses | 36 | 39 | -3 | 9 | 9 | -1 | -------------------------------------------------------------------------------- | Earnings/loss before | 25 | -58 | 81 | 13 | -1 | 13 | | tax | | | | | | | -------------------------------------------------------------------------------- | Earnings/loss before | 76 | -83 | 157 | 10 | 10 | -1 | | tax at fair value | | | | | | | -------------------------------------------------------------------------------- | Liquidity portfolio, | 11.7 | 9.8 | 1.9 | | | | | € billion | | | | | | | -------------------------------------------------------------------------------- | Receivables and | 1.0 | -0.2 | 1.2 | | | | | liabilities to | | | | | | | | OP-Pohjola Group | | | | | | | | member banks, net | | | | | | | | position, € billion | | | | | | | -------------------------------------------------------------------------------- | Personnel | 136 | 129 | 7 | | | | -------------------------------------------------------------------------------- January-December earnings Earnings before tax were EUR 25 million, as against a loss of EUR 58 million reported a year ago. This performance improvement was partly resulted from successful investment operations within the liquidity portfolio and a change in accounting practice at the end of 2008, i.e. some notes and bonds included in the liquidity portfolio were reclassified in such a way that they are carried at amortised cost and changes in their fair value are not recognised through profit or loss. On 31 December 2009, the carrying amount of the reclassified notes and bonds came to EUR 2.9 billion. The reclassification was reflected in higher year-on-year net trading income and net interest income. The positive price difference between the nominal value and the acquisition value, arising from the reclassification, recognised for January-December totalled EUR 25 million, of which EUR 20 million was recognised in the Group Functions' net interest income and EUR 5 million in Banking. Net trading income was reduced last year by the EUR 71 million negative mark-to-market valuations of notes and bonds recognised at fair value through profit or loss. In 2009, Pohjola increased its liquidity portfolio by acquiring state-guaranteed notes and bonds worth EUR 2.4 billion, of which income recognised in net interest income totalled EUR 22 million. In addition, a shift in the focus of the funding structure towards short-term funding and lower interest rates reduced funding costs. January-December results included EUR 12 million (9) in impairment charges on bonds. In addition, impairments recognised on shares and participations included in available-for-sale financial assets totalled EUR 9 million (4). Liquidity and the availability of funding remained good and market liquidity increased during the financial year. Debt instruments issued to the public increased to EUR 17 billion (16.6), with certificates of deposit and Euro Commercial Papers accounting for EUR 11 billion (10). Long-term debt instruments issued in international capital markets in 2009 totalled EUR 1.8 billion. Pohjola Bank plc's net receivables from OP-Pohjola Group member banks rose to EUR 1 billion (-0.2). October-December earnings Earnings before tax were EUR 13 million (a loss of EUR 1 million). Net interest income from notes and bonds included in the liquidity portfolio contributed to higher net income. The positive price difference between the nominal value and acquisition value of reclassified notes and bonds within the liquidity portfolio recognised in net interest income totalled EUR 5 million. Impairment charges recognised on equities totalled EUR 4 million and on notes and bonds EUR 2 million. Pohjola increased its long-term funding by issuing bonds worth EUR 195 million in international capital markets. Risk exposure by Group Functions Major risks within the Group Functions include those associated with the fair value change of assets included in the liquidity portfolio, and liquidity risks. The Group Functions exposure totalled EUR 18.3 billion (13.8), consisting of assets in the liquidity portfolio and receivables from OP-Pohjola Group member banks. Almost all of the exposure was based on investment-grade counterparties. The Group Functions maintains the liquidity portfolio in order to secure OP-Pohjola Group's liquidity. The liquidity portfolio amounted to EUR 11.7 billion (9.8), comprising primarily investments in notes and bonds issued by governments, municipalities, financial institutions and companies all showing good credit ratings, and in securitised assets. Interest rate risk exposure averaged EUR 5.3 million in the fourth quarter and EUR 10.5 million in January-December, based on the 1-percentage-point change in the interest rate. Shares and shareholders On 31 December 2009, the number of Pohjola Bank plc shares totalled 319,551,415 and votes conferred by the shares 593,178,315. On the same date, the number of Series A shares quoted on NASDAQ OMX Helsinki Ltd totalled 251,144,690, representing 78.6% of all Pohjola shares and 42.3% of all votes. The number of unlisted Series K shares totalled 68,406,725. In 2009, 175 million shares changed hands, as against 119 million a year ago. On 31 December 2009, one Series A share closed at EUR 7.55, as against EUR 7.88 at the end of 2008. In 2009, the share price reached a high of EUR 9.31 and a low of EUR 3.80. On 31 December 2009, Pohjola Bank had 37,000 shareholders, increasing by 6,400 in the year to December, private individuals accounting for 94% of all shareholders. The largest shareholder was OP-Pohjola Group Central Cooperative, representing 29.9% of shares and 57.04% of votes. On 31 December 2009, nominee-registered shares accounted for 16% of all Series A shares. Pohjola held a rights issue of EUR 308 million between 7 and 24 April 2009, subscriptions being made by 28,000 shareholders and covering a total of 91,179,502 new Series A shares and a total of 25,021,013 new Series K shares. Trading in the new Series A shares began on NASDAQ OMX Helsinki Ltd on 5 May 2009. The new shares included the right to dividends and other distributions as well as other shareholder rights as of the registration date of 4 May 2009. A total of 401,060 Series K shares held by OP-Pohjola Group member cooperative banks were converted into Series A shares in 2009, and trading in the converted Series A shares began on 26 June 2009. Group restructuring Pohjola Finance Ltd merged with its parent company Pohjola Bank plc on 30 September 2009. Board's proposal for profit distribution On 31 December 2009, the shareholders' equity of Pohjola Bank plc totalled EUR 1,573,915,313.76, EUR 439,990,536.66 of which represented distributable equity. The following funds are at the AGM's disposal for profit distribution: -------------------------------------------------------------------------------- | | € | -------------------------------------------------------------------------------- | Profit for 2009 | 91 051 491,64 | -------------------------------------------------------------------------------- | Retained earnings | 17 558 207,96 | -------------------------------------------------------------------------------- | Reserve for invested non-restricted | 307 931 364,75 | | equity | | -------------------------------------------------------------------------------- | Other non-restricted reserves | 23 449 472,31 | -------------------------------------------------------------------------------- | Total | 439 990 536,66 | -------------------------------------------------------------------------------- The Board of Directors proposes that the Company's distributable funds be distributed as follows: EUR 0.34 per share payable on 251,144,690 Series A shares, totalling EUR 85,389,194.60, and EUR 0.31 per share payable on 68,406,725 Series K shares, totalling EUR 21,206,084.75, i.e. the proposed total dividend distribution amounts to EUR 106,595,279.35. The Board of Directors proposes that the profit for 2009, EUR 91,051,491.64, and EUR 15,543,787.71 out of retained earnings be allocated to dividend distribution, with EUR 333,395,257.31 remaining in the Company's distributable equity. Pohjola Bank plc has EUR 475 million in voluntary provisions in its balance sheet, and their reversal enables an increase of distributable funds by EUR 351 million. In addition, the Board of Directors proposes that a maximum of EUR 500,000 be available to the Board of Directors reserved from the distributable funds for donations and other contributions to the public good. The Company's financial position has not undergone any material changes since the end of the financial year 2009. The Company's liquidity is good and will not be jeopardised by the proposed profit distribution, in the Board of Directors' view. The Board of Directors proposes that the dividend be paid to shareholders who have been entered in the Shareholder Register, maintained by Euroclear Finland Ltd, by the dividend record date on 31 March 2010 and that the dividend be paid within the book-entry securities system on 9 April 2010. Outlook for 2010 The loan portfolio within Banking shrank in 2009. The economic recovery should gradually be reflected in demand for corporate loans and increase the corporate loan portfolio, with demand for corporate financing focusing on working capital and the refinancing of existing loans. It is estimated that the rise in the average margin on the corporate loan portfolio will slow down and the margin on new loans will take a turn downwards. Given that the business environment is still challenging for companies, impairment charges are estimated to remain higher than usual. The greatest uncertainties related to Banking's financial performance in 2010 are associated with impairment charges on the loan portfolio. Within Non-life Insurance, insurance premium revenue rose by 2% in 2009. In 2010, premium revenue is expected to continue to increase at above-the-market-average rate, thanks to the growing number of private customers. It is estimated that insurance premium revenue from corporate insurance will continue to decrease slightly. In Non-life Insurance, the operating combined ratio is estimated to vary between 89% and 94% in 2010 if the number of large claims is not much higher than in 2009. Long-term returns on investment within Non-life Insurance stand at 5.4%. Returns on investment stood at 10.7% in 2009 and returns for 2010 will largely depend on developments in the investment environment. The most significant uncertainties related to Non-life Insurance's financial performance in 2010 pertain to the investment environment and the effect of large claims on claims expenditure. Within Asset Management, assets under management increased vigorously in 2009 and the upward trend is expected to continue in 2010. Market developments and the net inflow of assets, among other things, will have an effect on the amount of assets under management. The greatest uncertainties related to Asset Management's financial performance in 2010 are associated with the actual performance-based fees tied to the success of investments and the amount of assets under management. The key determinants affecting the Group Functions' result include net interest income arising from assets in the liquidity portfolio and any impairment charges recognised on notes and bonds through profit or loss. Consolidated earnings before tax in 2010 are expected to be at the same level as in 2009. When it comes to the outlook for 2010, the greatest uncertainty is related to developments in impairment charges, large claims and the investment environment. There is still great uncertainty about future economic development and the overall operating environment, and these factors are beyond the Group management's control. All forward-looking statements in this report expressing the management's expectations, beliefs, estimates, forecasts, projections and assumptions are based on the current view of the future development in the operating environment and the future financial performance of Pohjola Group and its various functions, and actual results may differ materially from those expressed in the forward-looking statements. -------------------------------------------------------------------------------- | FINANCIAL STATEMENTS AND NOTES | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Financial performance by quarter | -------------------------------------------------------------------------------- | Consolidated income statement | -------------------------------------------------------------------------------- | Consolidated statement of comprehensive income | -------------------------------------------------------------------------------- | Consolidated balance sheet | -------------------------------------------------------------------------------- | Consolidated statement of changes in equity | -------------------------------------------------------------------------------- | Capital base and capital adequacy | -------------------------------------------------------------------------------- | Consolidated cash flow statement | -------------------------------------------------------------------------------- | Segment information | -------------------------------------------------------------------------------- | Formulae for key figures and ratios | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 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 commissions and fees | -------------------------------------------------------------------------------- | Note 6. Net trading income | -------------------------------------------------------------------------------- | Note 7. Net investment income | -------------------------------------------------------------------------------- | Note 8. Other operating income | -------------------------------------------------------------------------------- | Note 9. Classification of financial instruments | -------------------------------------------------------------------------------- | Note 10. Reclassified notes and bonds | -------------------------------------------------------------------------------- | Note 11. Non-life Insurance assets | -------------------------------------------------------------------------------- | Note 12. Intangible assets | -------------------------------------------------------------------------------- | Note 13. Debt securities issued to the public | -------------------------------------------------------------------------------- | Note 14. Fair value reserve after income tax | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Notes to risk management: | -------------------------------------------------------------------------------- | Note 15. Risk exposure by Banking | -------------------------------------------------------------------------------- | Note 16. Risk exposure by Non-life Insurance | -------------------------------------------------------------------------------- | Note 17. Risk exposure by Group Functions | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Other notes: | -------------------------------------------------------------------------------- | Note 18. Collateral given | -------------------------------------------------------------------------------- | Note 19. Off-balance-sheet commitments | -------------------------------------------------------------------------------- | Note 20. Derivative contracts | -------------------------------------------------------------------------------- | Note 21. Other contingent liabilities and commitments | -------------------------------------------------------------------------------- | Note 22. Related-party transactions | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Financial | | | | | | | | | | performance by | | | | | | | | | | quarter | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | 2008 | 2009 | -------------------------------------------------------------------------------- | EUR million | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | -------------------------------------------------------------------------------- | | | | | | | | | | -------------------------------------------------------------------------------- | Net interest income | 35 | 40 | 45 | 54 | 52 | 67 | 58 | 63 | -------------------------------------------------------------------------------- | Impairments of | -2 | -1 | 11 | 21 | 21 | 33 | 41 | 34 | | receivables | | | | | | | | | -------------------------------------------------------------------------------- | Net interest income | 37 | 42 | 34 | 33 | 31 | 35 | 17 | 29 | | after impairments | | | | | | | | | -------------------------------------------------------------------------------- | Net income from | 91 | 90 | 98 | 74 | 70 | 122 | 114 | 96 | | Non-life Insurance | | | | | | | | | -------------------------------------------------------------------------------- | Net commissions and | 32 | 31 | 28 | 31 | 30 | 36 | 36 | 41 | | fees | | | | | | | | | -------------------------------------------------------------------------------- | Net trading income | -44 | -2 | -26 | -9 | 25 | 8 | 27 | 11 | -------------------------------------------------------------------------------- | Net investment | 5 | 3 | 0 | -3 | -9 | 0 | 1 | -5 | | income | | | | | | | | | -------------------------------------------------------------------------------- | Other operating | 11 | 9 | 10 | 12 | 11 | 11 | 11 | 17 | | income | | | | | | | | | -------------------------------------------------------------------------------- | Total net income | 133 | 173 | 145 | 139 | 158 | 212 | 206 | 190 | -------------------------------------------------------------------------------- | Personnel costs | 45 | 47 | 38 | 47 | 45 | 50 | 47 | 48 | -------------------------------------------------------------------------------- | IT expenses | 19 | 18 | 19 | 26 | 19 | 18 | 19 | 20 | -------------------------------------------------------------------------------- | Depreciation and | 16 | 16 | 17 | 20 | 17 | 17 | 17 | 21 | | amortisation | | | | | | | | | -------------------------------------------------------------------------------- | Other expenses | 36 | 38 | 29 | 40 | 41 | 40 | 36 | 45 | -------------------------------------------------------------------------------- | Total expenses | 115 | 119 | 102 | 134 | 122 | 125 | 119 | 135 | -------------------------------------------------------------------------------- | Earnings before tax | 17 | 54 | 43 | 5 | 36 | 87 | 87 | 55 | -------------------------------------------------------------------------------- | Change in fair value | -66 | -33 | -82 | -71 | 4 | 100 | 109 | 30 | | reserve | | | | | | | | | -------------------------------------------------------------------------------- | Earnings/loss before | -48 | 20 | -39 | -66 | 41 | 186 | 196 | 84 | | tax at fair value | | | | | | | | | -------------------------------------------------------------------------------- | | | | | | | | | | -------------------------------------------------------------------------------- | Income tax expense | 4 | 14 | 13 | -1 | 11 | 22 | 23 | 16 | -------------------------------------------------------------------------------- | Profit for the | 13 | 39 | 30 | 6 | 25 | 65 | 65 | 39 | | period | | | | | | | | | -------------------------------------------------------------------------------- | | | | | | | | | | -------------------------------------------------------------------------------- | Tax on change in | -17 | -9 | -21 | -18 | 1 | 26 | 28 | 8 | | fair value reserve | | | | | | | | | -------------------------------------------------------------------------------- | Profit/loss for the | -35 | 14 | -31 | -47 | 29 | 139 | 146 | 61 | | period at fair value | | | | | | | | | -------------------------------------------------------------------------------- Consolidated income statement -------------------------------------------------------------------------------- | EUR million | Q4/ | Q4/ | Q1-4/ | Q1-4/ | -------------------------------------------------------------------------------- | | 2009 | 2008 | 2009 | 2008 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net interest income (Note 2) | 63 | 54 | 241 | 174 | -------------------------------------------------------------------------------- | Impairments of receivables (Note | 34 | 21 | 129 | 28 | | 3) | | | | | -------------------------------------------------------------------------------- | Net interest income after | 29 | 33 | 112 | 146 | | impairments | | | | | -------------------------------------------------------------------------------- | Net income from Non-life | 96 | 74 | 402 | 353 | | Insurance (Note 4) | | | | | -------------------------------------------------------------------------------- | Net commissions and fees (Note | 41 | 31 | 143 | 122 | | 5) | | | | | -------------------------------------------------------------------------------- | Net trading income (Note 6) | 11 | -9 | 71 | -81 | -------------------------------------------------------------------------------- | Net investment income (Note 7) | -5 | -3 | -13 | 6 | -------------------------------------------------------------------------------- | Other operating income (Note 8) | 17 | 12 | 50 | 42 | -------------------------------------------------------------------------------- | Total income | 190 | 139 | 766 | 589 | -------------------------------------------------------------------------------- | Personnel costs | 48 | 47 | 190 | 178 | -------------------------------------------------------------------------------- | IT expenses | 20 | 26 | 75 | 80 | -------------------------------------------------------------------------------- | Depreciation/amortisation | 21 | 20 | 72 | 69 | -------------------------------------------------------------------------------- | Other expenses | 45 | 40 | 164 | 143 | -------------------------------------------------------------------------------- | Total expenses | 135 | 134 | 501 | 470 | -------------------------------------------------------------------------------- | Share of associates' | 0 | 0 | 0 | 0 | | profits/losses | | | | | -------------------------------------------------------------------------------- | Earnings before tax | 55 | 5 | 265 | 119 | -------------------------------------------------------------------------------- | Income tax expense | 16 | -1 | 71 | 31 | -------------------------------------------------------------------------------- | Profit for the period | 39 | 6 | 194 | 88 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Attributable to owners of the | 39 | 6 | 194 | 88 | | Parent | | | | | -------------------------------------------------------------------------------- | Attributable to minority | | 0 | 0 | 0 | | interest | | | | | -------------------------------------------------------------------------------- | Total | 39 | 6 | 194 | 89 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings per share (EPS), basic, | | | | | | EUR | | | | | -------------------------------------------------------------------------------- | Series A | 0.13 | 0.03 | 0.66 | 0.36 | -------------------------------------------------------------------------------- | Series K | 0.10 | 0.00 | 0.63 | 0.33 | -------------------------------------------------------------------------------- Due to Pohjola Bank plc's rights issue and new shares entered in the Trade Register on 4 May 2009, the per-share ratios have been adjusted retroactively using the share issue ratio. Consolidated statement of comprehensive income -------------------------------------------------------------------------------- | EUR million | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Profit for the period | 39 | 6 | 194 | 88 | -------------------------------------------------------------------------------- | Change in fair value reserve | 30 | -71 | 243 | -252 | -------------------------------------------------------------------------------- | Translation differences | 0 | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Income tax on other | 8 | -18 | 63 | -65 | | comprehensive income | | | | | -------------------------------------------------------------------------------- | Total comprehensive income for | 61 | -46 | 374 | -98 | | the period | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total comprehensive income | 61 | -46 | 374 | -98 | | attributable to owners of the | | | | | | Parent | | | | | -------------------------------------------------------------------------------- | Total comprehensive income | | 0 | 0 | 0 | | attributable to minority | | | | | | interest | | | | | -------------------------------------------------------------------------------- | Total | 61 | -46 | 374 | -98 | -------------------------------------------------------------------------------- Consolidated balance sheet -------------------------------------------------------------------------------- | EUR million | 31 Dec | 31 Dec | | | 2009 | 2008 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash and cash equivalents | 3,102 | 2,260 | -------------------------------------------------------------------------------- | Receivables from credit institutions | 7,630 | 6,644 | -------------------------------------------------------------------------------- | Financial assets at fair value through profit | | | | or loss | | | -------------------------------------------------------------------------------- | Financial assets held for trading | 1,224 | 3,213 | -------------------------------------------------------------------------------- | Financial assets at fair value through profit | 55 | 43 | | or loss at inception | | | -------------------------------------------------------------------------------- | Derivative contracts | 1,443 | 1,486 | -------------------------------------------------------------------------------- | Receivables from customers | 11,323 | 12,279 | -------------------------------------------------------------------------------- | Non-life Insurance assets (Note 11) | 3,156 | 2,745 | -------------------------------------------------------------------------------- | Investment assets | 5,415 | 1,285 | -------------------------------------------------------------------------------- | Investment in associates | 2 | 2 | -------------------------------------------------------------------------------- | Intangible assets (Note 12) | 960 | 987 | -------------------------------------------------------------------------------- | Property, plant and equipment (PPE) | 117 | 127 | -------------------------------------------------------------------------------- | Other assets | 1,068 | 1,281 | -------------------------------------------------------------------------------- | Tax assets | 15 | 98 | -------------------------------------------------------------------------------- | Total assets | 35,510 | 32,448 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Liabilities to credit institutions | 4,984 | 3,643 | -------------------------------------------------------------------------------- | Financial liabilities at fair value through | | | | profit or loss | | | -------------------------------------------------------------------------------- | Financial assets held for trading | 71 | 138 | -------------------------------------------------------------------------------- | Derivative contracts | 1,456 | 1,644 | -------------------------------------------------------------------------------- | Liabilities to customers | 4,133 | 3,508 | -------------------------------------------------------------------------------- | Non-life Insurance liabilities | 2,279 | 2,238 | -------------------------------------------------------------------------------- | Debt securities issued to the public (Note 13) | 17,295 | 16,425 | -------------------------------------------------------------------------------- | Provisions and other liabilities | 1,291 | 1,522 | -------------------------------------------------------------------------------- | Tax liabilities | 434 | 368 | -------------------------------------------------------------------------------- | Subordinated liabilities | 1,300 | 1,322 | -------------------------------------------------------------------------------- | Total liabilities | 33,244 | 30,808 | -------------------------------------------------------------------------------- | Shareholders' equity | | | -------------------------------------------------------------------------------- | Capital and reserves attributable to owners of | | | | the Parent | | | -------------------------------------------------------------------------------- | Share capital | 428 | 428 | -------------------------------------------------------------------------------- | Fair value reserve | 0 | -180 | -------------------------------------------------------------------------------- | Other reserves | 1,093 | 796 | -------------------------------------------------------------------------------- | Retained earnings | 746 | 597 | -------------------------------------------------------------------------------- | Minority interest | | 0 | -------------------------------------------------------------------------------- | Total shareholders' equity | 2,267 | 1,640 | -------------------------------------------------------------------------------- | Total liabilities and shareholders' equity | 35,510 | 32,448 | -------------------------------------------------------------------------------- Consolidated statement of changes in equity -------------------------------------------------------------------------------- | EUR million | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | Attributable to owners of Pohjola Group | -------------------------------------------------------------------------------- | | Share | Fair | Other | Retained | | | capital | value | reserves | earnings | | | | reserve | | | -------------------------------------------------------------------------------- | | Minorit | Total | | | y | equity | | | interes | | | | t | | -------------------------------------------------------------------------------- | Balance at 1 | 428 | 7 | 750 | 685 | 0 | 1,869 | | January 2008 | | | | | | | -------------------------------------------------------------------------------- | Transfer of | | | 45 | -45 | | | | reserves | | | | | | | -------------------------------------------------------------------------------- | Profit distribution | | | | -131 | | -131 | -------------------------------------------------------------------------------- | EUR 0.65 per Series | | | | -104 | | -104 | | A share | | | | | | | -------------------------------------------------------------------------------- | EUR 0.62 per Series | | | | -27 | | -27 | | K share | | | | | | | -------------------------------------------------------------------------------- | Total comprehensive | | -187 | | 88 | 0 | -52 | | income for the | | | | | | | | period | | | | | | | -------------------------------------------------------------------------------- | Equity-settled | | | | 0 | | 0 | | share-based | | | | | | | | transactions | | | | | | | -------------------------------------------------------------------------------- | Other | | | | 0 | | 0 | -------------------------------------------------------------------------------- | Balance at 31 | 428 | -180 | 795 | 597 | 0 | 1,640 | | December 2008 | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | Attributable to owners of Pohjola Group | -------------------------------------------------------------------------------- | | Share | Fair | Other | Retained | | | capital | value | reserves | earnings | | | | reserve | | | -------------------------------------------------------------------------------- | | Minorit | Total | | | y | equity | | | interes | | | | t | | -------------------------------------------------------------------------------- | Balance at 1 | 428 | -180 | 795 | 597 | 0 | 1,640 | | January 2009 | | | | | | | -------------------------------------------------------------------------------- | Rights issue | | | 308 | | | 308 | -------------------------------------------------------------------------------- | Issue expenses | | | -10 | | | -10 | -------------------------------------------------------------------------------- | Transfer of | | | 0 | 0 | | | | reserves | | | | | | | -------------------------------------------------------------------------------- | Profit distribution | | | | -45 | | -45 | -------------------------------------------------------------------------------- | EUR 0.23 per Series | | | | -37 | | -37 | | A share | | | | | | | -------------------------------------------------------------------------------- | EUR 0.20 per Series | | | | -9 | | -9 | | K share | | | | | | | -------------------------------------------------------------------------------- | Total comprehensive | | 180 | | 194 | 0 | 374 | | income for the | | | | | | | | period | | | | | | | -------------------------------------------------------------------------------- | Equity-settled | | | | 0 | | 0 | | share-based | | | | | | | | transactions | | | | | | | -------------------------------------------------------------------------------- | Other | | | | 0 | | 0 | -------------------------------------------------------------------------------- | Balance at 31 | 428 | 0 | 1,093 | 746 | | 2,267 | | December 2009 | | | | | | | -------------------------------------------------------------------------------- *Due to Pohjola Bank plc's rights issue and new shares entered in the Trade Register on 4 May 2009, the number of shares has been adjusted in such a way that the adjusted dividend per share is as follows: 2008: EUR 0.53 per Series A share and EUR 0.50 per Series K share 2009: EUR 0.19 per Series A share and EUR 0.16 per Series K share Capital base and capital adequacy -------------------------------------------------------------------------------- | EUR million | 31 Dec | 31 Dec | | | 2009 | 2008 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Capital base | | | -------------------------------------------------------------------------------- | Equity capital | 2,267 | 1,640 | -------------------------------------------------------------------------------- | Elimination of insurance companies' effect in | 92 | 266 | | equity capital (equity capital and Group | | | | eliminations) | | | -------------------------------------------------------------------------------- | Minority interest | 0 | 0 | -------------------------------------------------------------------------------- | Hybrid capital | 274 | 274 | -------------------------------------------------------------------------------- | Intangible assets | -145 | -144 | -------------------------------------------------------------------------------- | Fair value reserve, excess funding of pension | -49 | -8 | | liability and change in fair value of | | | | investment property | | | -------------------------------------------------------------------------------- | Dividend distribution proposed by Board of | -107 | -45 | | Directors | | | -------------------------------------------------------------------------------- | Insurance company investments 50% | -715 | -705 | -------------------------------------------------------------------------------- | Impairments - expected losses 50% | -76 | -50 | -------------------------------------------------------------------------------- | Tier 1 capital | 1,541 | 1,228 | -------------------------------------------------------------------------------- | Fair value reserve | 18 | -22 | -------------------------------------------------------------------------------- | Subordinated liabilities included in upper | 299 | 299 | | Tier 2 | | | -------------------------------------------------------------------------------- | Subordinated liabilities included in lower | 687 | 734 | | Tier 2 | | | -------------------------------------------------------------------------------- | Insurance company investments 50% | -715 | -705 | -------------------------------------------------------------------------------- | Impairments - expected losses 50% | -76 | -50 | -------------------------------------------------------------------------------- | Tier 2 capital | 212 | 256 | -------------------------------------------------------------------------------- | Total capital base | 1,753 | 1,484 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Risk-weighted assets, excl. transitional rules | 13,024 | 12,784 | -------------------------------------------------------------------------------- | Risk-weighted assets according to transitional | 13,024 | 13,120 | | rules | | | -------------------------------------------------------------------------------- | Ratios, excl. transitional rules: | | | -------------------------------------------------------------------------------- | Capital adequacy ratio, % | 13.5 | 11.6 | -------------------------------------------------------------------------------- | Tier 1 ratio, % | 11.8 | 9.6 | -------------------------------------------------------------------------------- | Capital adequacy ratio under the Act on | 1.73 | 1.29 | | Supervision of Financial and Insurance | | | | Conglomerates | | | -------------------------------------------------------------------------------- | Ratios according to transitional rules: | | | -------------------------------------------------------------------------------- | Capital adequacy ratio, % | 13.5 | 11.3 | -------------------------------------------------------------------------------- | Tier 1 ratio, % | 11.8 | 9.4 | -------------------------------------------------------------------------------- | Capital adequacy ratio under the Act on | 1.73 | 1.26 | | Supervision of Financial and Insurance | | | | Conglomerates | | | -------------------------------------------------------------------------------- Capital base and capital adequacy measurement is based on approaches under Basel II. Pohjola has used the Internal Ratings Based Approach for corporate exposures. OP-Pohjola Group's capital adequacy ratio under the Act on Credit Institutions stood at 12.6% and Tier 1 ratio at 12.6%. OP-Pohjola Group's capital adequacy ratio calculated using the consolidation method, under the Act on the Supervision of Financial and Insurance Conglomerates, was 1.58. Consolidated cash flow statement -------------------------------------------------------------------------------- | EUR million | Q1-4/ | Q1-4/ | -------------------------------------------------------------------------------- | | 2009 | 2008 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flow from operating activities | | | -------------------------------------------------------------------------------- | Profit for the period | 194 | 88 | -------------------------------------------------------------------------------- | Adjustments to profit for the period | 433 | 225 | -------------------------------------------------------------------------------- | Increase (-) or decrease (+) in operating | -2,634 | -3,775 | | assets | | | -------------------------------------------------------------------------------- | Receivables from credit institutions | -1,035 | 689 | -------------------------------------------------------------------------------- | Financial assets at fair value through profit | 1,805 | -746 | | or loss | | | -------------------------------------------------------------------------------- | Derivative contracts | -36 | -75 | -------------------------------------------------------------------------------- | Receivables from customers | 837 | -2,171 | -------------------------------------------------------------------------------- | Non-life Insurance assets | -331 | -226 | -------------------------------------------------------------------------------- | Investment assets | -4,106 | -994 | -------------------------------------------------------------------------------- | Other assets | 232 | -251 | -------------------------------------------------------------------------------- | Increase (+) or decrease (-) in operating | 1,707 | 1,594 | | liabilities | | | -------------------------------------------------------------------------------- | Liabilities to credit institutions | 1,340 | 725 | -------------------------------------------------------------------------------- | Financial liabilities at fair value through | -67 | 86 | | profit or loss | | | -------------------------------------------------------------------------------- | Derivative contracts | -4 | 106 | -------------------------------------------------------------------------------- | Liabilities to customers | 625 | 773 | -------------------------------------------------------------------------------- | Non-life Insurance liabilities | 43 | 68 | -------------------------------------------------------------------------------- | Provisions and other liabilities | -231 | -164 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Income tax paid | -12 | -38 | -------------------------------------------------------------------------------- | Dividends received | 9 | 33 | -------------------------------------------------------------------------------- | A. Net cash from operating activities | -303 | -1,872 | -------------------------------------------------------------------------------- | Cash flow from investing activities | | | -------------------------------------------------------------------------------- | Increases in held-to-maturity financial assets | -170 | -161 | -------------------------------------------------------------------------------- | Decreases in held-to-maturity financial assets | 219 | 0 | -------------------------------------------------------------------------------- | Acquisition of subsidiaries and associates, net | 0 | -51 | | of cash acquired | | | -------------------------------------------------------------------------------- | Disposal of subsidiaries and associates, net of | 1 | 9 | | cash disposed | | | -------------------------------------------------------------------------------- | Purchase of PPE and intangible assets | -18 | -32 | -------------------------------------------------------------------------------- | Proceeds from sale of PPE and intangible assets | 1 | 6 | -------------------------------------------------------------------------------- | B. Net cash used in investing activities | 33 | -230 | -------------------------------------------------------------------------------- | Cash flow from financing activities | | | -------------------------------------------------------------------------------- | Increases in subordinated liabilities | 160 | 505 | -------------------------------------------------------------------------------- | Decreases in subordinated liabilities | -184 | -132 | -------------------------------------------------------------------------------- | Increases in debt securities issued to the | 53,151 | 45,207 | | public | | | -------------------------------------------------------------------------------- | Decreases in debt securities issued to the | -52,294 | -41,622 | | public | | | -------------------------------------------------------------------------------- | Increases in invested unrestricted equity | 298 | | -------------------------------------------------------------------------------- | Dividends paid | -45 | -131 | -------------------------------------------------------------------------------- | C. Net cash used in financing activities | 1,085 | 3,828 | -------------------------------------------------------------------------------- | Net increase/decrease in cash and cash | 815 | 1,726 | | equivalents (A+B+C) | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash and cash equivalents at period-start | 2,435 | 710 | -------------------------------------------------------------------------------- | Cash and cash equivalents at period-end | 3,250 | 2,435 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest received | 1,959 | 3,536 | -------------------------------------------------------------------------------- | Interest paid | -1,873 | -2,862 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Adjustments to profit for the period | | | -------------------------------------------------------------------------------- | Non-cash transactions | | | -------------------------------------------------------------------------------- | Impairments of receivables | 133 | 29 | -------------------------------------------------------------------------------- | Unrealised net earnings in Non-life Insurance | 106 | 85 | -------------------------------------------------------------------------------- | Change in fair value for trading | -100 | 56 | -------------------------------------------------------------------------------- | Unrealised net gains on foreign exchange | 157 | -31 | | operations | | | -------------------------------------------------------------------------------- | Change in fair value of investment property | 7 | 5 | -------------------------------------------------------------------------------- | Planned amortisation /depreciation | 72 | 69 | -------------------------------------------------------------------------------- | Share of associates' profits | 0 | 0 | -------------------------------------------------------------------------------- | Other | 58 | 11 | -------------------------------------------------------------------------------- | Items presented outside cash flow from | | | | operating activities | | | -------------------------------------------------------------------------------- | Capital gains, share of cash flow from | 0 | -1 | | investing activities | | | -------------------------------------------------------------------------------- | Total adjustments | 433 | 225 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash and cash equivalents | | | -------------------------------------------------------------------------------- | Liquid assets * | 3,106 | 2,264 | -------------------------------------------------------------------------------- | Receivables from credit institutions payable on | 144 | 172 | | demand | | | -------------------------------------------------------------------------------- | Total | 3,250 | 2,435 | -------------------------------------------------------------------------------- *Of which EUR 4 million (4) consists of Non-life Insurance cash and cash equivalents. Segment information -------------------------------------------------------------------------------- | Q4 earnings | | | | | | | -------------------------------------------------------------------------------- | EUR million | Banking | Non-life | Asset Management | | | | Insurance | | -------------------------------------------------------------------------------- | | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | -------------------------------------------------------------------------------- | Net interest income | 41 | 41 | -1 | -3 | 0 | -1 | -------------------------------------------------------------------------------- | Impairments of | 33 | 11 | | | | | | receivables | | | | | | | -------------------------------------------------------------------------------- | Net interest income | 7 | 30 | -1 | -3 | 0 | -1 | | after impairments | | | | | | | -------------------------------------------------------------------------------- | Net income from | | | 93 | 71 | | | | Non-life Insurance | | | | | | | -------------------------------------------------------------------------------- | Net commissions and | 20 | 16 | 3 | 4 | 20 | 15 | | fees | | | | | | | -------------------------------------------------------------------------------- | Net trading income | 14 | -9 | 0 | | 0 | | -------------------------------------------------------------------------------- | Net investment income | 0 | | 0 | | | 0 | -------------------------------------------------------------------------------- | Other operating | 7 | 9 | 4 | 0 | 0 | 1 | | income | | | | | | | -------------------------------------------------------------------------------- | Total net income | 49 | 46 | 99 | 71 | 20 | 15 | -------------------------------------------------------------------------------- | Personnel costs | 11 | 10 | 28 | 30 | 6 | 5 | -------------------------------------------------------------------------------- | IT expenses | 5 | 6 | 12 | 15 | 1 | 1 | -------------------------------------------------------------------------------- | Amortisation on | | | 8 | 8 | 1 | 1 | | intangible assets | | | | | | | | related to company | | | | | | | | acquisitions | | | | | | | -------------------------------------------------------------------------------- | Other | 7 | 7 | 5 | 4 | 0 | 0 | | depreciation/amortisa | | | | | | | | tion | | | | | | | | and impairments | | | | | | | -------------------------------------------------------------------------------- | Other expenses | 7 | 7 | 34 | 31 | 2 | 1 | -------------------------------------------------------------------------------- | Total expenses | 31 | 29 | 86 | 89 | 9 | 8 | -------------------------------------------------------------------------------- | Earnings before tax | 18 | 17 | 13 | -18 | 11 | 7 | -------------------------------------------------------------------------------- | Change in fair value | 1 | 4 | 29 | -86 | | | | reserve | | | | | | | -------------------------------------------------------------------------------- | Earnings/loss before | 19 | 21 | 42 | -104 | 11 | 7 | | tax | | | | | | | | at fair value | | | | | | | -------------------------------------------------------------------------------- | | | | | | | | -------------------------------------------------------------------------------- | Capital expenditure, | 3 | 3 | 2 | 4 | 1 | 0 | | EUR million | | | | | | | -------------------------------------------------------------------------------- | | | | | | | -------------------------------------------------------------------------------- | Q4 earnings | | | | | | | -------------------------------------------------------------------------------- | EUR million | Group Functions | Eliminations | Group total | -------------------------------------------------------------------------------- | | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | -------------------------------------------------------------------------------- | Net interest income | 24 | 16 | 1 | 1 | 63 | 54 | -------------------------------------------------------------------------------- | Impairments of | 1 | 10 | | | 34 | 21 | | receivables | | | | | | | -------------------------------------------------------------------------------- | Net interest income | 23 | 6 | 1 | 1 | 29 | 33 | | after impairments | | | | | | | -------------------------------------------------------------------------------- | Net income from | | | 2 | 2 | 96 | 74 | | Non-life Insurance | | | | | | | -------------------------------------------------------------------------------- | Net commissions and | 0 | 0 | -2 | -3 | 41 | 31 | | fees | | | | | | | -------------------------------------------------------------------------------- | Net trading income | -3 | 0 | 0 | | 11 | -9 | -------------------------------------------------------------------------------- | Net investment income | -5 | -3 | | | -5 | -3 | -------------------------------------------------------------------------------- | Other operating | 7 | 5 | -1 | -2 | 17 | 12 | | income | | | | | | | -------------------------------------------------------------------------------- | Total net income | 22 | 9 | 0 | -2 | 190 | 139 | -------------------------------------------------------------------------------- | Personnel costs | 3 | 3 | | | 48 | 47 | -------------------------------------------------------------------------------- | IT expenses | 2 | 3 | 0 | 0 | 20 | 26 | -------------------------------------------------------------------------------- | Amortisation on | | | | | 8 | 9 | | intangible assets | | | | | | | | related to company | | | | | | | | acquisitions | | | | | | | -------------------------------------------------------------------------------- | Other | 1 | 0 | | | 13 | 11 | | depreciation/amortisa | | | | | | | | tion | | | | | | | | and impairments | | | | | | | -------------------------------------------------------------------------------- | Other expenses | 3 | 3 | 0 | -2 | 45 | 40 | -------------------------------------------------------------------------------- | Total expenses | 9 | 9 | 0 | -2 | 135 | 134 | -------------------------------------------------------------------------------- | Earnings before tax | 13 | -1 | 0 | 0 | 55 | 5 | -------------------------------------------------------------------------------- | Change in fair value | -3 | 11 | 2 | 0 | 30 | -71 | | reserve | | | | | | | -------------------------------------------------------------------------------- | Earnings/loss before | 10 | 10 | 2 | 0 | 84 | -66 | | tax | | | | | | | | at fair value | | | | | | | -------------------------------------------------------------------------------- | | | | | | | | -------------------------------------------------------------------------------- | Capital expenditure, | 0 | 1 | | | 6 | 8 | | EUR million | | | | | | | -------------------------------------------------------------------------------- | Earnings per share, | | | | | 0.12 | 0.02 | | EUR | | | | | | | -------------------------------------------------------------------------------- | Return on equity at | | | | | 10.8 | -11.1 | | fair value, % | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Q 1-4 earnings | | | | | | | -------------------------------------------------------------------------------- | EUR million | Banking | Non-life | Asset Management | | | | Insurance | | -------------------------------------------------------------------------------- | | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | -------------------------------------------------------------------------------- | Net interest income | 165 | 158 | -2 | -11 | 1 | -2 | -------------------------------------------------------------------------------- | Impairments of | 117 | 18 | | | | | | receivables | | | | | | | -------------------------------------------------------------------------------- | Net interest income | 49 | 140 | -2 | -11 | 1 | -2 | | after impairments | | | | | | | -------------------------------------------------------------------------------- | Net income from | | | 400 | 352 | | | | Non-life Insurance | | | | | | | -------------------------------------------------------------------------------- | Net commissions and | 85 | 63 | 16 | 19 | 50 | 46 | | fees | | | | | | | -------------------------------------------------------------------------------- | Net trading income | 78 | -20 | | | 0 | | -------------------------------------------------------------------------------- | Net investment income | 0 | 0 | | | 0 | | -------------------------------------------------------------------------------- | Other operating | 30 | 28 | 6 | 0 | 2 | 2 | | income | | | | | | | -------------------------------------------------------------------------------- | Total net income | 242 | 211 | 419 | 360 | 52 | 46 | -------------------------------------------------------------------------------- | Personnel costs | 50 | 39 | 110 | 111 | 17 | 17 | -------------------------------------------------------------------------------- | IT expenses | 21 | 20 | 44 | 45 | 2 | 3 | -------------------------------------------------------------------------------- | Amortisation on | | | 30 | 33 | 3 | 3 | | intangible assets | | | | | | | | related to company | | | | | | | | acquisitions | | | | | | | -------------------------------------------------------------------------------- | Other | 28 | 24 | 8 | 7 | 1 | 1 | | depreciation/amortisa | | | | | | | | tion | | | | | | | | and impairments | | | | | | | -------------------------------------------------------------------------------- | Other expenses | 25 | 24 | 125 | 110 | 7 | 6 | -------------------------------------------------------------------------------- | Total expenses | 125 | 106 | 317 | 306 | 30 | 29 | -------------------------------------------------------------------------------- | Earnings before tax | 117 | 105 | 102 | 55 | 21 | 17 | -------------------------------------------------------------------------------- | Change in fair value | 3 | -2 | 188 | -226 | | | | reserve | | | | | | | -------------------------------------------------------------------------------- | Earnings/loss before | 120 | 103 | 290 | -171 | 21 | 17 | | tax | | | | | | | | at fair value | | | | | | | -------------------------------------------------------------------------------- | | | | | | | | -------------------------------------------------------------------------------- | Average personnel | 607 | 613 | 2,070 | 2,018 | 162 | 154 | -------------------------------------------------------------------------------- | Capital expenditure, | 7 | 7 | 9 | 13 | 1 | 1 | | EUR million | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Q 1-4 earnings | | | | | | | -------------------------------------------------------------------------------- | EUR million | Group Functions | Eliminations | Group total | -------------------------------------------------------------------------------- | | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | -------------------------------------------------------------------------------- | Net interest income | 75 | 25 | 2 | 4 | 241 | 174 | -------------------------------------------------------------------------------- | Impairments of | 12 | 10 | | | 129 | 28 | | receivables | | | | | | | -------------------------------------------------------------------------------- | Net interest income | 63 | 15 | 2 | 4 | 112 | 146 | | after impairments | | | | | | | -------------------------------------------------------------------------------- | Net income from | | | 3 | 2 | 402 | 353 | | Non-life Insurance | | | | | | | -------------------------------------------------------------------------------- | Net commissions and | -1 | 0 | -7 | -6 | 143 | 122 | | fees | | | | | | | -------------------------------------------------------------------------------- | Net trading income | -7 | -61 | 0 | 0 | 71 | -81 | -------------------------------------------------------------------------------- | Net investment income | -13 | 6 | 0 | | -13 | 6 | -------------------------------------------------------------------------------- | Other operating | 18 | 21 | -5 | -8 | 50 | 42 | | income | | | | | | | -------------------------------------------------------------------------------- | Total net income | 60 | -19 | -7 | -9 | 766 | 589 | -------------------------------------------------------------------------------- | Personnel costs | 13 | 11 | | | 190 | 178 | -------------------------------------------------------------------------------- | IT expenses | 9 | 13 | 0 | 0 | 75 | 80 | -------------------------------------------------------------------------------- | Amortisation on | | | | | 33 | 36 | | intangible assets | | | | | | | | related to company | | | | | | | | acquisitions | | | | | | | -------------------------------------------------------------------------------- | Other | 2 | 2 | | | 39 | 33 | | depreciation/amortisa | | | | | | | | tion | | | | | | | | and impairments | | | | | | | -------------------------------------------------------------------------------- | Other expenses | 13 | 13 | -6 | -9 | 164 | 143 | -------------------------------------------------------------------------------- | Total expenses | 36 | 39 | -7 | -9 | 501 | 470 | -------------------------------------------------------------------------------- | Earnings before tax | 25 | -58 | 0 | 0 | 265 | 119 | -------------------------------------------------------------------------------- | Change in fair value | 52 | -25 | 1 | 0 | 243 | -252 | | reserve | | | | | | | -------------------------------------------------------------------------------- | Earnings/loss before | 76 | -83 | 1 | 0 | 508 | -133 | | tax | | | | | | | | at fair value | | | | | | | -------------------------------------------------------------------------------- | | | | | | | | -------------------------------------------------------------------------------- | Average personnel | 136 | 129 | | | 2,975 | 2,913 | -------------------------------------------------------------------------------- | Capital expenditure, | 1 | 4 | | | 18 | 25 | | EUR million | | | | | | | -------------------------------------------------------------------------------- | Earnings per share, | | | | | 0.66 | 0.36 | | EUR | | | | | | | -------------------------------------------------------------------------------- | Return on equity at | | | | | 19.2 | -5.6 | | fair value, % | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Balance sheet | | | | | | | -------------------------------------------------------------------------------- | EUR million | Banking | Non-life | Asset Management | | | | Insurance | | -------------------------------------------------------------------------------- | | 31 Dec | 31 Dec | 31 Dec | 31 Dec | 31 Dec | 31 Dec | | | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | -------------------------------------------------------------------------------- | Receivables from | 10,880 | 11,776 | | | | | | customers | | | | | | | -------------------------------------------------------------------------------- | Receivables from | 278 | 427 | | | 5 | 7 | | credit institutions | | | | | | | -------------------------------------------------------------------------------- | Financial assets at | 932 | 1,375 | | | | | | fair value through | | | | | | | | profit or loss | | | | | | | -------------------------------------------------------------------------------- | Non-life Insurance | | | 3,202 | 2,798 | | | | assets | | | | | | | -------------------------------------------------------------------------------- | Investment assets | 18 | 2 | 0 | 0 | 17 | 21 | -------------------------------------------------------------------------------- | Investments in | | | 2 | 2 | | | | associates | | | | | | | -------------------------------------------------------------------------------- | Other assets | 2,012 | 2,220 | 829 | 854 | 131 | 127 | -------------------------------------------------------------------------------- | Total assets | 14,119 | 15,800 | 4,033 | 3,654 | 153 | 154 | -------------------------------------------------------------------------------- | Liabilities to | 1,263 | 1,070 | | | | | | customers | | | | | | | -------------------------------------------------------------------------------- | Liabilities to credit | 747 | 590 | | | | | | institutions | | | | | | | -------------------------------------------------------------------------------- | Non-life Insurance | | | 2,279 | 2,238 | | | | liabilities | | | | | | | -------------------------------------------------------------------------------- | Debt securities | | | | | | | | issued to the public | | | | | | | -------------------------------------------------------------------------------- | Subordinated | | | 50 | 50 | | | | liabilities | | | | | | | -------------------------------------------------------------------------------- | Other liabilities | 1,872 | 2,010 | 108 | 52 | 15 | 14 | -------------------------------------------------------------------------------- | Total liabilities | 3,882 | 3,671 | 2,437 | 2,340 | 15 | 14 | -------------------------------------------------------------------------------- | Shareholders' equity | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Balance sheet | | | | | | | -------------------------------------------------------------------------------- | EUR million | Group Functions | Eliminations | Group total | -------------------------------------------------------------------------------- | | 31 Dec | 31 Dec | 31 Dec | 31 Dec | 31 Dec | 31 Dec | | | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | -------------------------------------------------------------------------------- | Receivables from | 527 | 749 | -84 | -247 | 11,323 | 12,279 | | customers | | | | | | | -------------------------------------------------------------------------------- | Receivables from | 10,468 | 8,513 | -20 | -43 | 10,732 | 8,904 | | credit institutions | | | | | | | -------------------------------------------------------------------------------- | Financial assets at | 347 | 1,880 | | | 1,279 | 3,255 | | fair value through | | | | | | | | profit or loss | | | | | | | -------------------------------------------------------------------------------- | Non-life Insurance | | | -47 | -53 | 3,156 | 2,745 | | assets | | | | | | | -------------------------------------------------------------------------------- | Investment assets | 5,387 | 1,270 | -6 | -8 | 5,415 | 1,285 | -------------------------------------------------------------------------------- | Investments in | | | | | 2 | 2 | | associates | | | | | | | -------------------------------------------------------------------------------- | Other assets | 691 | 786 | -58 | -8 | 3,604 | 3,979 | -------------------------------------------------------------------------------- | Total assets | 17,421 | 13,199 | -215 | -358 | 35,510 | 32,448 | -------------------------------------------------------------------------------- | Liabilities to | 2,915 | 2,483 | -45 | -45 | 4,133 | 3,508 | | customers | | | | | | | -------------------------------------------------------------------------------- | Liabilities to credit | 4,320 | 3,304 | -84 | -251 | 4,984 | 3,643 | | institutions | | | | | | | -------------------------------------------------------------------------------- | Non-life Insurance | | | | | 2,279 | 2,238 | | liabilities | | | | | | | -------------------------------------------------------------------------------- | Debt securities | 17,323 | 16,481 | -28 | -56 | 17,295 | 16,425 | | issued to the public | | | | | | | -------------------------------------------------------------------------------- | Subordinated | 1,250 | 1,272 | | | 1,300 | 1,322 | | liabilities | | | | | | | -------------------------------------------------------------------------------- | Other liabilities | 1,318 | 1,603 | -59 | -7 | 3,253 | 3,672 | -------------------------------------------------------------------------------- | Total liabilities | 27,126 | 25,142 | -216 | -358 | 33,244 | 30,808 | -------------------------------------------------------------------------------- | Shareholders' equity | | | | | 2,267 | 1,640 | -------------------------------------------------------------------------------- | | | | | | | | -------------------------------------------------------------------------------- | Capital adequacy | | | | | 13.5 | 11.3 | | ratio, % | | | | | | | -------------------------------------------------------------------------------- | Tier 1 ratio, % | | | | | 11.8 | 9.4 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Banking | -------------------------------------------------------------------------------- | | -------------------------------------------------------------------------------- | | Net income | Earnings/lo | Net income | Earnings/loss | | | | ss before | | before tax | | | | tax | | | -------------------------------------------------------------------------------- | | Q4/ | Q4/ | Q4/ | Q4/ | Q1-4/ | Q1-4/ | Q1-4/ | Q1-4/ | | | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | -------------------------------------------------------------------------------- | Corporate | 26 | 41 | 6 | 21 | 125 | 172 | 48 | 99 | | Banking | | | | | | | | | -------------------------------------------------------------------------------- | Markets | 22 | 4 | 13 | -3 | 117 | 36 | 77 | 9 | -------------------------------------------------------------------------------- | Baltic Banking | 1 | 1 | -1 | -1 | 0 | 3 | -8 | -3 | -------------------------------------------------------------------------------- | Total | 49 | 46 | 18 | 17 | 242 | 211 | 117 | 105 | -------------------------------------------------------------------------------- | | | | | | | | | | -------------------------------------------------------------------------------- | Non-life | Insurance | Balance on | Insurance | Balance on | | Insurance | premium | technical | premium | technical | | | revenue | account | revenue | account | -------------------------------------------------------------------------------- | | Q4/ | Q4/ | Q4/ | Q4/ | Q1-4/ | Q1-4/ | Q1-4/ | Q1-4/ | | | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | -------------------------------------------------------------------------------- | Private | 104 | 92 | 6 | -4 | 424 | 380 | 48 | 31 | | Customers | | | | | | | | | -------------------------------------------------------------------------------- | Corporate | 114 | 120 | 13 | 11 | 461 | 485 | 62 | 40 | | Customers | | | | | | | | | -------------------------------------------------------------------------------- | Baltic States | 13 | 15 | 2 | 2 | 57 | 58 | 6 | 7 | -------------------------------------------------------------------------------- | Amortisation | | | -9 | -10 | | | -28 | -30 | | adjustment of | | | | | | | | | | intangible | | | | | | | | | | assets | | | | | | | | | -------------------------------------------------------------------------------- | Total | 231 | 227 | 12 | -1 | 943 | 923 | 88 | 49 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Group Functions | Q4/ | Q4/ | Q1-4/ | Q1-4/ | | | 2009 | 2008 | 2009 | 2008 | -------------------------------------------------------------------------------- | Central Banking earnings | 4 | 6 | 18 | 21 | | before tax, EUR million | | | | | -------------------------------------------------------------------------------- | | 31 Dec | 31 Dec | | | | | 2009 | 2008 | | | -------------------------------------------------------------------------------- | Receivables from OP-Pohjola | 6,264 | 4,437 | | | | Group entities, EUR million | | | | | -------------------------------------------------------------------------------- | Liabilities to OP-Pohjola | 2,742 | 3,692 | | | | Group entities, EUR million | | | | | -------------------------------------------------------------------------------- Formulas for key ratios Return on equity (ROE) at fair value Profit for the period + Change in fair value reserve after tax / Shareholders' equity (average of the beginning and end of period) x 100 Earnings/share (EPS) Profit for the period attributable to owners of the Parent / Average share-issue adjusted number of shares during the period Earnings/share (EPS) at fair value (Profit for the period attributable to owners of the Parent + Change in fair value reserve) / Average share-issue adjusted number of shares during the period Equity/share Shareholders' equity / Share-issue adjusted number of shares at the end of the reporting period Dividend per share (DPS) Dividends paid for the financial year/ Share-issue adjusted number of shares on the balance sheet date Market capitalisation Number of shares x closing price on the balance sheet date Capital adequacy ratio under the Act on the Supervision of Financial and Insurance Conglomerates Conglomerate's total capital / Conglomerate's total minimum capital requirement Capital adequacy ratio, % Total capital / Total minimum capital requirement x 8 Tier 1 ratio, % Total Tier 1 capital / Total minimum capital requirement x 8 Key ratios for Non-life Insurance The key ratio formulae for Non-life Insurance are based on regulations issued by the Insurance Supervisory Authority, using the corresponding IFRS sections to the extent applicable. The ratios are calculated using expenses by function applied by non-life insurance companies, which are not presented on the same principle as in the Consolidated Income Statement. Loss ratio 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 Claims excl. loss adjustment expenses / Net insurance premium revenue x 100 Cost ratio Operating expenses and loss adjustment expenses / Net insurance premium revenue x 100 Combined ratio Loss ratio + expense ratio Risk ratio + cost ratio Operating key ratios Operating cost/income ratio (+ Personnel costs + Other administrative expenses + Other operating expenses excl. amortisation and write-downs on intangible assets and goodwill related to Pohjola acquisition) / (+ Net interest income + Net income from Non-life Insurance + Net commissions and fees + Net trading income + Net investment income + Other operating income) x 100 Operating loss ratio Claims incurred, excl. changes in reserving bases/ Insurance premium revenue, excl. net changes in reserving bases x 100 Operating expense ratio Operating expenses / Insurance premium revenue, excl. net changes in reserving bases x 100 Operating combined ratio Operating loss ratio + operating expense ratio Solvency ratio (+ Non-life Insurance net assets + Subordinated loans + Net tax liability for the period - Deferred tax to be realised in the near future and other items deducted from the solvency margin - Intangible assets)/ Insurance premium revenue Values used in calculating the ratios -------------------------------------------------------------------------------- | EUR million | 2009 | 2008 | -------------------------------------------------------------------------------- | Non-life Insurance | | | -------------------------------------------------------------------------------- | Net tax liabilities for the period | -14 | 26 | -------------------------------------------------------------------------------- | Own subordinated loans | 50 | 50 | -------------------------------------------------------------------------------- | Deferred tax to be realised in the near future | 6 | -45 | | and other items deducted from the solvency | | | | margin of the companies | | | -------------------------------------------------------------------------------- | Intangible assets | 800 | 826 | -------------------------------------------------------------------------------- Notes Note 1. Accounting policies The Financial Statements Bulletin for 1 January-31 December 2009 has been prepared in accordance with IAS 34 (Interim Financial Reporting), as approved by the EU. The Financial Statements 2009 contain a description of the accounting policies applied by Pohjola Group. In 2009, 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 Financial Statements Bulletin is based on unaudited information. Since all figures in the bulletin have been 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 | Premiums written, claims paid, change in | | Insurance | provision 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, central banking | | | service fee | -------------------------------------------------------------------------------- | Personnel costs | Wages and salaries, pension costs, social | | | expenses | -------------------------------------------------------------------------------- | Other administrative | Office expenses, IT costs, other | | expenses | administrative expenses | -------------------------------------------------------------------------------- | Other operating expenses | Depreciation/amortisation, other Non-life | | | Insurance expenses, rents | -------------------------------------------------------------------------------- Notes to the income statement and balance sheet Note 2. Net interest income -------------------------------------------------------------------------------- | EUR million | Q4/ | Q4/ | Q1-4/ | Q1-4/ | -------------------------------------------------------------------------------- | | 2009 | 2008 | 2009 | 2008 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Loans and other receivables | 65 | 238 | 406 | 667 | -------------------------------------------------------------------------------- | Receivables from credit | 37 | 77 | 202 | 264 | | institutions and central banks | | | | | -------------------------------------------------------------------------------- | Notes and bonds | 36 | 96 | 206 | 345 | -------------------------------------------------------------------------------- | Derivatives held for trading | 12 | -12 | 37 | -19 | | (net) | | | | | -------------------------------------------------------------------------------- | Liabilities to credit | -13 | -41 | -61 | -174 | | institutions | | | | | -------------------------------------------------------------------------------- | Liabilities to customers | -4 | -31 | -32 | -108 | -------------------------------------------------------------------------------- | Debt securities issued to the | -53 | -227 | -352 | -686 | | public | | | | | -------------------------------------------------------------------------------- | Subordinated debt | -9 | -11 | -37 | -41 | -------------------------------------------------------------------------------- | Hybrid capital | -3 | -5 | -15 | -13 | -------------------------------------------------------------------------------- | Financial liabilities held for | -1 | -5 | -5 | -19 | | trading | | | | | -------------------------------------------------------------------------------- | Other (net) | -1 | 0 | -1 | -1 | -------------------------------------------------------------------------------- | Net interest income before items | 67 | 78 | 349 | 215 | | under hedge accounting | | | | | -------------------------------------------------------------------------------- | Derivatives under hedge | -4 | -25 | -109 | -41 | | accounting (net) | | | | | -------------------------------------------------------------------------------- | Items under hedge accounting | -4 | -25 | -109 | -41 | | (net) | | | | | -------------------------------------------------------------------------------- | Total net interest income | 63 | 54 | 241 | 174 | -------------------------------------------------------------------------------- Note 3. Impairments of receivables -------------------------------------------------------------------------------- | EUR million | Q4/ | Q4/ | Q1-4/ | Q1-4/ | -------------------------------------------------------------------------------- | | 2009 | 2008 | 2009 | 2008 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Receivables eliminated as loan | 1 | 4 | 15 | 16 | | or guarantee losses | | | | | -------------------------------------------------------------------------------- | Recoveries from receivables | -2 | 0 | -2 | -1 | | eliminated as loan or guarantee | | | | | | losses | | | | | -------------------------------------------------------------------------------- | Increase in impairment | 37 | 18 | 140 | 21 | | provisions | | | | | -------------------------------------------------------------------------------- | Decrease in impairment | -1 | -2 | -24 | -9 | | provisions | | | | | -------------------------------------------------------------------------------- | Total impairments of receivables | 34 | 21 | 129 | 28 | -------------------------------------------------------------------------------- Note 4. Net income from Non-life Insurance -------------------------------------------------------------------------------- | EUR million | Q4/ | Q4/ | Q1-4/ | Q1-4/ | -------------------------------------------------------------------------------- | | 2009 | 2008 | 2009 | 2008 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net insurance premium revenue | | | | | -------------------------------------------------------------------------------- | Premiums written | 166 | 144 | 1,005 | 991 | -------------------------------------------------------------------------------- | Insurance premiums ceded to | -9 | -1 | -51 | -42 | | reinsurers | | | | | -------------------------------------------------------------------------------- | Change in provision for unearned | 76 | 95 | -15 | -24 | | premiums | | | | | -------------------------------------------------------------------------------- | Reinsurers' share | -2 | -10 | 4 | -1 | -------------------------------------------------------------------------------- | Total | 231 | 227 | 943 | 923 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net Non-life Insurance claims | | | | | -------------------------------------------------------------------------------- | Claims paid | 152 | 156 | 595 | 602 | -------------------------------------------------------------------------------- | Insurance claims recovered from | -11 | -5 | -20 | -14 | | reinsurers | | | | | -------------------------------------------------------------------------------- | Change in provision for unpaid | -13 | 2 | -30 | 30 | | claims | | | | | -------------------------------------------------------------------------------- | Reinsurers' share | 11 | -9 | 15 | -27 | -------------------------------------------------------------------------------- | Total | 139 | 144 | 560 | 591 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net investment income, Non-life | | | | | | Insurance | | | | | -------------------------------------------------------------------------------- | Interest income | 16 | 19 | 69 | 74 | -------------------------------------------------------------------------------- | Net realised gains and realised | | | | | | fair value gains and losses | | | | | -------------------------------------------------------------------------------- | Notes and bonds | 12 | 1 | 7 | -16 | -------------------------------------------------------------------------------- | Shares and participations | -4 | -27 | 15 | -27 | -------------------------------------------------------------------------------- | Loans and receivables | | | 0 | | -------------------------------------------------------------------------------- | Investment property | 1 | 0 | 1 | 2 | -------------------------------------------------------------------------------- | Other | -3 | -6 | -18 | -10 | -------------------------------------------------------------------------------- | Unrealised fair value gains and | | | | | | losses | | | | | -------------------------------------------------------------------------------- | Notes and bonds | 0 | -1 | 1 | -4 | -------------------------------------------------------------------------------- | Shares and participations | -10 | 5 | -20 | 4 | -------------------------------------------------------------------------------- | Loans and receivables | -1 | | -3 | | -------------------------------------------------------------------------------- | Investment property | 0 | 2 | 1 | 3 | -------------------------------------------------------------------------------- | Other | 2 | -1 | -2 | 1 | -------------------------------------------------------------------------------- | Dividend income | 0 | 5 | 7 | 26 | -------------------------------------------------------------------------------- | Total | 13 | -3 | 58 | 54 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Unwinding of discount | -11 | -11 | -43 | -42 | -------------------------------------------------------------------------------- | Other | 2 | 4 | 4 | 9 | -------------------------------------------------------------------------------- | Total net income from Non-life | 96 | 74 | 402 | 353 | | Insurance | | | | | -------------------------------------------------------------------------------- Note 5. Net commissions and fees -------------------------------------------------------------------------------- | EUR million | Q4/ | Q4/ | Q1-4/ | Q1-4/ | -------------------------------------------------------------------------------- | | 2009 | 2008 | 2009 | 2008 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Commission income | | | | | -------------------------------------------------------------------------------- | Lending | 5 | 6 | 38 | 24 | -------------------------------------------------------------------------------- | Payment transfers | 3 | 3 | 13 | 13 | -------------------------------------------------------------------------------- | Securities brokerage | 6 | 5 | 21 | 19 | -------------------------------------------------------------------------------- | Securities issuance | 5 | 1 | 8 | 3 | -------------------------------------------------------------------------------- | Asset management and legal | 20 | 13 | 52 | 48 | | services | | | | | -------------------------------------------------------------------------------- | Insurance operations | 4 | 4 | 17 | 19 | -------------------------------------------------------------------------------- | Guarantees | 4 | 3 | 16 | 9 | -------------------------------------------------------------------------------- | Other | 7 | 3 | 13 | 11 | -------------------------------------------------------------------------------- | Total commission income | 55 | 38 | 178 | 146 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Commission expenses | | | | | -------------------------------------------------------------------------------- | Payment transfers | 1 | 1 | 2 | 3 | -------------------------------------------------------------------------------- | Securities brokerage | 2 | 2 | 8 | 6 | -------------------------------------------------------------------------------- | Securities issuance | 2 | 2 | 9 | 5 | -------------------------------------------------------------------------------- | Asset management and legal | 2 | 1 | 7 | 7 | | services | | | | | -------------------------------------------------------------------------------- | Other | 7 | 1 | 9 | 2 | -------------------------------------------------------------------------------- | Total commission expenses | 14 | 6 | 35 | 24 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total net commissions and fees | 41 | 31 | 143 | 122 | -------------------------------------------------------------------------------- Note 6. Net trading income -------------------------------------------------------------------------------- | EUR million | Q4/ | Q4/ | Q1-4/ | Q1-4/ | -------------------------------------------------------------------------------- | | 2009 | 2008 | 2009 | 2008 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Financial assets and liabilities | | | | | | held for trading | | | | | -------------------------------------------------------------------------------- | Capital gains and losses and | | | | | | realised changes in fair value | | | | | -------------------------------------------------------------------------------- | Notes and bonds | 6 | 13 | 41 | 2 | -------------------------------------------------------------------------------- | Shares and participations | 0 | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Derivatives | 3 | -68 | 118 | -49 | -------------------------------------------------------------------------------- | Unrealised changes in fair value | | | | | -------------------------------------------------------------------------------- | Notes and bonds | -9 | 27 | -24 | 26 | -------------------------------------------------------------------------------- | Shares and participations | 0 | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Derivatives | 7 | 21 | -77 | 19 | -------------------------------------------------------------------------------- | Financial assets and liabilities | | | | | | at fair value through profit or | | | | | | loss | | | | | -------------------------------------------------------------------------------- | Capital gains and losses and | | | | | | realised changes in fair value | | | | | -------------------------------------------------------------------------------- | Notes and bonds | 0 | -11 | -9 | -16 | -------------------------------------------------------------------------------- | Unrealised changes in fair value | | | | | -------------------------------------------------------------------------------- | Notes and bonds | 0 | 4 | 10 | -65 | -------------------------------------------------------------------------------- | Net income from foreign exchange | 4 | 5 | 13 | 2 | | operations | | | | | -------------------------------------------------------------------------------- | Total net trading income | 11 | -9 | 71 | -81 | -------------------------------------------------------------------------------- Note 7. Net investment income -------------------------------------------------------------------------------- | EUR million | Q4/ | Q4/ | Q1-4/ | Q1-4/ | -------------------------------------------------------------------------------- | | 2009 | 2008 | 2009 | 2008 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Available-for-sale financial | | | | | | assets | | | | | -------------------------------------------------------------------------------- | Capital gains and losses | | | | | -------------------------------------------------------------------------------- | Notes and bonds | 1 | 0 | 1 | 0 | -------------------------------------------------------------------------------- | Shares and participations | 0 | | 0 | 1 | -------------------------------------------------------------------------------- | Dividend income | | 0 | 2 | 7 | -------------------------------------------------------------------------------- | Impairments | -5 | -4 | -9 | -4 | -------------------------------------------------------------------------------- | Total | -5 | -3 | -6 | 4 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Investment property | 0 | 1 | -7 | 2 | -------------------------------------------------------------------------------- | Total net investment income | -5 | -3 | -13 | 6 | -------------------------------------------------------------------------------- Note 8. Other operating income -------------------------------------------------------------------------------- | EUR million | Q4/ | Q4/ | Q1-4/ | Q1-4/ | -------------------------------------------------------------------------------- | | 2009 | 2008 | 2009 | 2008 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Central banking service fees | 2 | 2 | 9 | 9 | -------------------------------------------------------------------------------- | Realisation of repossessed items | 0 | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Rental income from assets rented | 6 | 6 | 25 | 22 | | under operating lease | | | | | -------------------------------------------------------------------------------- | Other | 9 | 4 | 15 | 11 | -------------------------------------------------------------------------------- | Total | 17 | 12 | 50 | 42 | -------------------------------------------------------------------------------- Note 9. Classification of financial instruments -------------------------------------------------------------------------------- | EUR million | Loans | Held to | At fair | Availabl | Hedging | Total | | | and | maturit | value | e for | derivati | | | | receiva | y | through | sale | ves | | | | bles | | profit | | | | | | | | or | | | | | | | | loss* | | | | -------------------------------------------------------------------------------- | Assets | | | | | | | -------------------------------------------------------------------------------- | Cash and | 3,102 | | | | | 3,102 | | balances with | | | | | | | | central banks | | | | | | | -------------------------------------------------------------------------------- | Receivables | 7,630 | | | | | 7,630 | | from credit | | | | | | | | institutions | | | | | | | | and central | | | | | | | | banks | | | | | | | -------------------------------------------------------------------------------- | Derivative | | | 1,385 | | 59 | 1,443 | | contracts | | | | | | | -------------------------------------------------------------------------------- | Receivables | 11,323 | | | | | 11,323 | | from customers | | | | | | | -------------------------------------------------------------------------------- | Non-life | 769 | | 85 | 2,301 | | 3,156 | | Insurance | | | | | | | | assets** | | | | | | | -------------------------------------------------------------------------------- | Notes and | | 1,086 | 1,279 | 4,225 | | 6,590 | | bonds*** | | | | | | | -------------------------------------------------------------------------------- | Shares and | | | | 87 | | 87 | | participations | | | | | | | -------------------------------------------------------------------------------- | Other | 2,162 | | 18 | | | 2,180 | | receivables | | | | | | | -------------------------------------------------------------------------------- | Total 31 | 24,986 | 1,086 | 2,767 | 6,613 | 59 | 35,510 | | December 2009 | | | | | | | -------------------------------------------------------------------------------- | Total 31 | 24,451 | 1,103 | 4,816 | 2,036 | 43 | 32,448 | | December 2008 | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR million | At fair | Other | Hedging | Total | | | value | liabilit | derivati | | | | through | ies | ves | | | | profit | | | | | | or loss | | | | -------------------------------------------------------------------------------- | Liabilities | | | | | -------------------------------------------------------------------------------- | Liabilities to credit institutions | | 4,984 | | 4,984 | -------------------------------------------------------------------------------- | Financial liabilities held for | 71 | | | 71 | | trading (excl. derivatives) | | | | | -------------------------------------------------------------------------------- | Derivative contracts | 1,306 | | 150 | 1,456 | -------------------------------------------------------------------------------- | Liabilities to customers | | 4,133 | | 4,133 | -------------------------------------------------------------------------------- | Non-life Insurance liabilities | 0 | 2,279 | | 2,279 | -------------------------------------------------------------------------------- | Debt instruments issued to the | | 17,295 | | 17,295 | | public | | | | | -------------------------------------------------------------------------------- | Subordinated liabilities | | 1,300 | | 1,300 | -------------------------------------------------------------------------------- | Other liabilities | | 1,726 | | 1,726 | -------------------------------------------------------------------------------- | Total 31 December 2009 | 1,377 | 31,716 | 150 | 33,244 | -------------------------------------------------------------------------------- | Total 31 December 2008 | 1,670 | 29,026 | 111 | 30,808 | -------------------------------------------------------------------------------- *Assets at fair value through profit or loss include financial assets held for trading, financial assets at fair value through profit or loss at inception and investment property. ** Non-life Insurance assets are specified in Note 11. *** On 31 December 2009, notes and bonds included EUR 55 million (43) in notes and bonds recognised using the fair value option. Debt securities issued to the public are carried at amortised cost. On 31 December 2009, the fair value of these debt instruments was EUR 30 million higher 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 was EUR 42 million lower than their carrying amount. Note 10. Reclassified notes and bonds The table below shows the carrying amounts and fair values of the reclassified notes and bonds. -------------------------------------------------------------------------------- | EUR million, 31 December 2009 | Carryin | Fair | Effectiv | Impairment | | | g | value | e | s arising | | | amount | | interest | from | | | | | rate | credit | | | | | | risk | -------------------------------------------------------------------------------- | Loans and other receivables | 2,467 | 2,478 | 5.2 | 50 | -------------------------------------------------------------------------------- | Investments held to maturity | 798 | 761 | 4.2 | | -------------------------------------------------------------------------------- | Available-for-sale financial | | | | | | assets | | | | | -------------------------------------------------------------------------------- | Total | 3,266 | 3,239 | | 50 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR million, 31 December 2008 | Carryin | Fair | Effectiv | Impairment | | | g | value | e | s arising | | | amount | | interest | from | | | | | rate | credit | | | | | | risk | -------------------------------------------------------------------------------- | Loans and other receivables | 3,177 | 3,032 | 5.4 | 9 | -------------------------------------------------------------------------------- | Investments held to maturity | 946 | 864 | 4.5 | | -------------------------------------------------------------------------------- | Available-for-sale financial | 55 | 55 | 5.1 | | | assets | | | | | -------------------------------------------------------------------------------- | Total | 4,177 | 3,951 | | 9 | -------------------------------------------------------------------------------- If notes and bonds were not reclassified and had been measured using fair values available in the market: -------------------------------------------------------------------------------- | | Q1-4/2009 | Q1-4/2008 | -------------------------------------------------------------------------------- | EUR million | Income | Fair | Income | Fair | | | statemen | value | statemen | value | | | t | reserve | t | reserve | -------------------------------------------------------------------------------- | Banking | 9 | | -21 | -8 | -------------------------------------------------------------------------------- | Non-life Insurance | | 27 | | -24 | -------------------------------------------------------------------------------- | Group Functions | 80 | 42 | -162 | -15 | -------------------------------------------------------------------------------- | Total | 90 | 69 | -183 | -47 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Interest accrued on reclassified notes and bonds in January-December totalled EUR 113 million. Interest accrued from 1 July, the reclassification date, until 31 December 2008 totalled EUR 101 million. The price difference between the nominal value and acquisition value recognised in the income statement totalled EUR 28 million (17). Impairments recognised on bonds and notes totalled EUR 41 million (9). The Group used derivatives to hedge against interest rate risks, applying hedge accounting from 1 October 2008. Negative mark-to-market valuations recognised on hedging derivative contracts amounted to EUR 6.6 million. Note 11. Non-life Insurance assets -------------------------------------------------------------------------------- | EUR million | 31 Dec | 31 Dec | | | 2009 | 2008 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Investments | | | -------------------------------------------------------------------------------- | Loans and other receivables | 424 | 419 | -------------------------------------------------------------------------------- | Equities | 387 | 318 | -------------------------------------------------------------------------------- | Property | 78 | 81 | -------------------------------------------------------------------------------- | Notes and bonds | 1,392 | 1,152 | -------------------------------------------------------------------------------- | Other | 530 | 419 | -------------------------------------------------------------------------------- | Total | 2,810 | 2,389 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Other assets | | | -------------------------------------------------------------------------------- | Prepayments and accrued income | 38 | 33 | -------------------------------------------------------------------------------- | Other | | | -------------------------------------------------------------------------------- | From direct insurance | 214 | 218 | -------------------------------------------------------------------------------- | From reinsurance | 89 | 100 | -------------------------------------------------------------------------------- | Cash in hand and at bank | 4 | 4 | -------------------------------------------------------------------------------- | Total | 346 | 355 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total Non-life insurance assets | 3,156 | 2,745 | -------------------------------------------------------------------------------- Note 12. Intangible assets -------------------------------------------------------------------------------- | EUR million | 31 Dec | 31 Dec | | | 2009 | 2008 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Goodwill | 516 | 516 | -------------------------------------------------------------------------------- | Brands | 173 | 176 | -------------------------------------------------------------------------------- | Customer relationships | 203 | 226 | -------------------------------------------------------------------------------- | Other | 68 | 68 | -------------------------------------------------------------------------------- | Total | 960 | 987 | -------------------------------------------------------------------------------- Note 13. Debt securities issued to the public -------------------------------------------------------------------------------- | EUR million | 31 Dec | 31 Dec | | | 2009 | 2008 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Bonds | 6,549 | 6,185 | -------------------------------------------------------------------------------- | Certificates of deposit, commercial papers and | 10,519 | 10,033 | | ECPs | | | -------------------------------------------------------------------------------- | Other | 227 | 208 | -------------------------------------------------------------------------------- | Total | 17,295 | 16,425 | -------------------------------------------------------------------------------- Note 14. Fair value reserve after income tax -------------------------------------------------------------------------------- | EUR million | 31 Dec | 31 Dec | | | 2009 | 2008 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Loans and other receivables | | | -------------------------------------------------------------------------------- | Reclassified notes and bonds | -17 | -25 | -------------------------------------------------------------------------------- | Available-for-sale financial assets | | | -------------------------------------------------------------------------------- | Notes and bonds | 53 | -9 | -------------------------------------------------------------------------------- | Equities and mutual funds with equity risk | -35 | -92 | -------------------------------------------------------------------------------- | Other funds | 0 | -54 | -------------------------------------------------------------------------------- | Total | 0 | -180 | -------------------------------------------------------------------------------- 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. The fair value reserve before tax totalled EUR -0 million (-243) and the related deferred tax asset amounted to EUR 0 million (63). On 31 December 2009, positive mark-to-market valuations of equity instruments before tax in the fair value reserve totalled EUR 58 million and negative mark-to-market valuations EUR 103 million. In 2009, impairments recognised from the fair value reserve in the income statement totalled EUR 45 million. Notes to risk management Note 15. Risk exposure by Banking -------------------------------------------------------------------------------- | Total exposure by rating category*, EUR billion | -------------------------------------------------------------------------------- | Rating category | 31 Dec | 31 Dec | Change | | | 2009 | 2008 | | -------------------------------------------------------------------------------- | 1-2 | 2.6 | 2.8 | -0.2 | -------------------------------------------------------------------------------- | 3-5 | 10.4 | 11.2 | -0.7 | -------------------------------------------------------------------------------- | 6-7 | 4.2 | 4.3 | -0.1 | -------------------------------------------------------------------------------- | 8-9 | 2.4 | 1.9 | 0.5 | -------------------------------------------------------------------------------- | 10 | 0.1 | 0.1 | 0.0 | -------------------------------------------------------------------------------- | 11-12 | 0.3 | 0.1 | 0.2 | -------------------------------------------------------------------------------- | Non-rated | 0.2 | 0.3 | -0.1 | -------------------------------------------------------------------------------- | Total | 20.3 | 20.6 | -0.3 | -------------------------------------------------------------------------------- | *) excl. private customers | -------------------------------------------------------------------------------- Sensitivity analysis of market risk -------------------------------------------------------------------------------- | | | 31 Dec 2009 | 31 Dec 2008 | -------------------------------------------------------------------------------- | Banking, EUR | Risk | Change | Effect | Effect | Effect | Effect | | million | parame | | on | on | on | on | | | ter | | result | share-h | result | share- | | | | | s | olders' | s | holder | | | | | | equity | | s' | | | | | | | | equity | -------------------------------------------------------------------------------- | Interest-rat | Intere | 1 percentage | 5 | | 5 | | | e risk | st | point | | | | | -------------------------------------------------------------------------------- | Currency | Market | 20 percentage | 1 | | 4 | | | risk | value | points | | | | | -------------------------------------------------------------------------------- | Volatility | | | | | | | | risk | | | | | | | -------------------------------------------------------------------------------- | Interest-rat | Volati | 20 percentage | 4 | | 1 | | | e volatility | lity | points | | | | | -------------------------------------------------------------------------------- | Currency | Volati | 10 percentage | 0 | | 2 | | | volatility | lity | points | | | | | -------------------------------------------------------------------------------- | Credit risk | Credit | 0.5 percentage | 12 | | 20 | | | premium *) | spread | points | | | | | -------------------------------------------------------------------------------- Sensitivity figures have been calculated as the sum of the currencies' intrinsic value. *) The credit risk premium has been calculated on notes and bonds at fair value through profit or loss and available for sale, included in the liquidity buffer. Note 16. Risk exposure by Non-life Insurance -------------------------------------------------------------------------------- | Risk | | Total | Change in risk | Effect on | Effect | | parameter | | amount | parameter | combined ratio | on | | | | 31 | | | share-h | | | | Dec | | | olders' | | | | 2009, | | | equity, | | | | EUR | | | EUR | | | | millio | | | million | | | | n | | | | -------------------------------------------------------------------------------- | Insurance portfolio or | 943 | Up 1% | Up 0.9 | 9 | | insurance premium | | | percentage | | | revenue*) | | | point | | -------------------------------------------------------------------------------- | Claims incurred*) | 617 | Up 1% | Down 0.7 | -6 | | | | | percentage | | | | | | points | | -------------------------------------------------------------------------------- | Large claim of over | | 1 loss | Down 0.5 | -5 | | EUR 5 million | | | percentage | | | | | | points | | -------------------------------------------------------------------------------- | Personnel costs*) | 110 | Up 8% | Down 1.0 | -9 | | | | | percentage | | | | | | point | | -------------------------------------------------------------------------------- | Expenses by function*) | 267 | Up 4% | Down 1.1 | -11 | | **) | | | percentage | | | | | | point | | -------------------------------------------------------------------------------- | Inflation for | 487 | Up 0.25 | Down 0.3 | -3 | | collective liability | | percentage | percentage | | | | | points | points | | -------------------------------------------------------------------------------- | Life expectancy for | 1,326 | Up 1 year | Down 3.1 | -30 | | discounted insurance | | | percentage | | | contract liability | | | points | | -------------------------------------------------------------------------------- | Discount rate for | 1,326 | Down 0.1 | Down 1.7 | -16 | | discounted insurance | | percentage | percentage | | | contract liability | | point | points | | -------------------------------------------------------------------------------- *) Moving 12-month **) Expenses by function in Non-life Insurance excluding expenses for investment management and expenses for other services rendered Non-life Insurance investment portfolio by allocation -------------------------------------------------------------------------------- | EUR million | | | | -------------------------------------------------------------------------------- | Portfolio allocation | Fair value | % | Fair value | % | | | 31 Dec | | 31 Dec | | | | 2009 | | 2008 | | -------------------------------------------------------------------------------- | Money market | 101 | 4 % | 279 | 12 % | | instruments | | | | | -------------------------------------------------------------------------------- | Bonds and bond funds | 2,067 | 72 % | 1,690 | 70 % | -------------------------------------------------------------------------------- | Equities | 364 | 13 % | 190 | 8 % | -------------------------------------------------------------------------------- | Alternative | 155 | 5 % | 111 | 5 % | | investments | | | | | -------------------------------------------------------------------------------- | Real property | 164 | 6 % | 145 | 6 % | -------------------------------------------------------------------------------- | Total | 2,851 | 100 % | 2,415 | 100 % | -------------------------------------------------------------------------------- Non-life Insurance fixed-income portfolio by maturity and credit rating on 31 December 2009* -------------------------------------------------------------------------------- | EUR million | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Year( | 0-1 | 1-3 | 3-5 | 5-7 | 7-10 | 10- | Total | % | | s) | | | | | | | | | -------------------------------------------------------------------------------- | Aaa | 13 | 105 | 203 | 78 | 25 | 104 | 529 | 24 % | -------------------------------------------------------------------------------- | Aa1−A | 51 | 203 | 85 | 39 | 9 | 17 | 404 | 19 % | | a3 | | | | | | | | | -------------------------------------------------------------------------------- | A1−A3 | 43 | 279 | 258 | 75 | 86 | 54 | 794 | 37 % | -------------------------------------------------------------------------------- | Baa1− | 33 | 119 | 98 | 40 | 8 | 14 | 312 | 14 % | | Baa3 | | | | | | | | | -------------------------------------------------------------------------------- | Ba1 | 40 | 18 | 34 | 16 | 5 | 0 | 113 | 5 % | | or | | | | | | | | | | lower | | | | | | | | | -------------------------------------------------------------------------------- | Inter | 4 | 5 | 8 | 1 | 0 | 1 | 20 | 1 % | | nally | | | | | | | | | | rated | | | | | | | | | -------------------------------------------------------------------------------- | Total | 183 | 730 | 686 | 249 | 133 | 191 | 2,172 | 100 % | -------------------------------------------------------------------------------- * Excludes credit derivatives. The table below shows the sensitivity of investment risks and their effect on shareholders' equity: -------------------------------------------------------------------------------- | Non-life | Risk parameter | Change | Effect on | | Insurance | | | shareholders' | | | | | equity, EUR million | -------------------------------------------------------------------------------- | | | | 31 Dec | 31 Dec | | | | | 2009 | 2008 | -------------------------------------------------------------------------------- | Bonds and bond | Interest rate | 1 percentage | 73 | 82 | | funds1) | | point | | | -------------------------------------------------------------------------------- | Equities 2) | Market value | 20 percentage | 73 | 33 | | | | points | | | -------------------------------------------------------------------------------- | Venture capital | Market value | 20 percentage | 14 | 18 | | funds and | | points | | | | unquoted | | | | | | equities | | | | | -------------------------------------------------------------------------------- | Commodities | Market value | 20 percentage | 5 | 2 | | | | points | | | -------------------------------------------------------------------------------- | Real property | Market value | 10 percentage | 16 | 15 | | | | points | | | -------------------------------------------------------------------------------- | Currency | Value of | 20 percentage | 21 | 12 | | | currency | points | | | -------------------------------------------------------------------------------- | Credit risk | Credit spread | 0.5 percentage | 39 | 43 | | premium 3) | | points | | | -------------------------------------------------------------------------------- | Derivatives 4) | Volatility | 20 percentage | 0 | 0 | | | | points | | | -------------------------------------------------------------------------------- 1) Include money-market investments, convertible bonds and interest-rate derivatives 2) Include hedge funds and equity derivatives 3) Includes bonds and money-market investments, including government bonds and interest-rate derivatives issued by developed countries 4) 20 percentage points for equity derivatives, 10 percentage points for interest-rate derivatives and 5 percentage points for currency derivatives. Note 17. Risk exposure by Group Functions -------------------------------------------------------------------------------- | Total exposure by rating category*, EUR billion | -------------------------------------------------------------------------------- | Rating category | 31 Dec | 31 Dec | Change | | | 2009 | 2008 | | -------------------------------------------------------------------------------- | 1-2 | 15.3 | 12.0 | 3.4 | -------------------------------------------------------------------------------- | 3-5 | 2.9 | 1.8 | 1.1 | -------------------------------------------------------------------------------- | 6-7 | 0.0 | 0.0 | 0.0 | -------------------------------------------------------------------------------- | 8-9 | 0.0 | 0.0 | 0.0 | -------------------------------------------------------------------------------- | 10 | 0.0 | 0.0 | 0.0 | -------------------------------------------------------------------------------- | 11-12 | 0.0 | 0.0 | 0.0 | -------------------------------------------------------------------------------- | Non-rated | 0.0 | 0.0 | 0.0 | -------------------------------------------------------------------------------- | Total | 18.3 | 13.8 | 4.5 | -------------------------------------------------------------------------------- Sensitivity analysis of market risk -------------------------------------------------------------------------------- | | | | 31 Dec 2009 | 31 Dec 2008 | -------------------------------------------------------------------------------- | Group | Risk | Change | Effect | Effect | Effect | Effect | | Functions, | parame | | on | on | on | on | | E | ter | | result | share-h | result | share- | | UR million | | | s | olders' | s | holder | | | | | | equity | | s' | | | | | | | | equity | -------------------------------------------------------------------------------- | Interest-rat | Intere | 1 percentage | 2 | 3 | 11 | | | e risk | st | point | | | | | | | rate | | | | | | -------------------------------------------------------------------------------- | Interest-rat | Volati | 20 percentage | 1 | | | | | e volatility | lity | points | | | | | -------------------------------------------------------------------------------- | Credit risk | Credit | 0.5 percentage | | 68 | | 0 | | premium *) | spread | points | | | | | -------------------------------------------------------------------------------- | Price risk | | | | | | | -------------------------------------------------------------------------------- | Equity | Market | 20 percentage | | 2 | | 2 | | portfolio | value | points | | | | | -------------------------------------------------------------------------------- | Private | Market | 20 percentage | | 6 | | 7 | | equity funds | value | points | | | | | -------------------------------------------------------------------------------- | Property | Market | 10 percentage | 3 | | 2 | | | risk | value | points | | | | | -------------------------------------------------------------------------------- Sensitivity figures have been calculated as the sum of the currencies' intrinsic value. *) The credit risk premium has been calculated on notes and bonds at fair value through profit or loss and available for sale, included in the liquidity buffer. Financial assets included in liquidity portfolio by maturity and credit rating on 31 December 2009 -------------------------------------------------------------------------------- | EUR | | | | | | | | | | milli | | | | | | | | | | on | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Year | 0-1 | 1-3 | 3-5 | 5-7 | 7-10 | 10- | Total | % | -------------------------------------------------------------------------------- | Aaa | 3,468 | 1,701 | 1,826 | 417 | 224 | 104 | 7,740 | 66 % | -------------------------------------------------------------------------------- | Aa1−A | 1,028 | 731 | 668 | 72 | 10 | 3 | 2,511 | 22 % | | a3 | | | | | | | | | -------------------------------------------------------------------------------- | A1−A3 | 133 | 486 | 175 | 16 | 2 | 0 | 812 | 7 % | -------------------------------------------------------------------------------- | Baa1− | 22 | 46 | 45 | 3 | 10 | 0 | 126 | 1 % | | Baa3 | | | | | | | | | -------------------------------------------------------------------------------- | Ba1 | 8 | 20 | 24 | 25 | 10 | 0 | 88 | 1 % | | or | | | | | | | | | | lower | | | | | | | | | -------------------------------------------------------------------------------- | Inter | 100 | 151 | 115 | 11 | 10 | 0 | 386 | 3 % | | nally | | | | | | | | | | rated | | | | | | | | | -------------------------------------------------------------------------------- | Total | 4,758 | 3,135 | 2,853 | 544 | 266 | 107 | 11,663 | 100 % | -------------------------------------------------------------------------------- The residual maturity of the liquidity portfolio averages 3 years. Other notes Note 18. Collateral given -------------------------------------------------------------------------------- | EUR million | 31 Dec | 31 Dec | | | 2009 | 2008 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Given on behalf of own liabilities and | | | | commitments | | | -------------------------------------------------------------------------------- | Mortgages | 1 | 1 | -------------------------------------------------------------------------------- | Pledges | 5,839 | 4,134 | -------------------------------------------------------------------------------- | Other | 600 | 400 | -------------------------------------------------------------------------------- | Total collateral given | 6,439 | 4,534 | -------------------------------------------------------------------------------- | Total collateralised liabilities | 1,023 | 614 | -------------------------------------------------------------------------------- Note 19. Off-balance-sheet commitments -------------------------------------------------------------------------------- | EUR million | 31 Dec | 31 Dec | | | 2009 | 2008 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Guarantees | 1,296 | 1,133 | -------------------------------------------------------------------------------- | Other guarantee liabilities | 1,283 | 1,476 | -------------------------------------------------------------------------------- | Loan commitments | 4,140 | 3,149 | -------------------------------------------------------------------------------- | Commitments related to short-term trade | 98 | 152 | | transactions | | | -------------------------------------------------------------------------------- | Other | 447 | 416 | -------------------------------------------------------------------------------- | Total off-balance-sheet commitments | 7,264 | 6,328 | -------------------------------------------------------------------------------- Note 20. Derivative contracts -------------------------------------------------------------------------------- | 31 Dec 2009 | Nominal values/residual | Total | Fair values | | | term to maturity | | | -------------------------------------------------------------------------------- | EUR million | <1 year | 1-5 | >5 | | Assets | Liabiliti | | | | years | years | | | es | -------------------------------------------------------------------------------- | Interest rate | 44,063 | 51,231 | 13,013 | 108,307 | 1,167 | 1,235 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Currency | 11,513 | 1,959 | 489 | 13,962 | 243 | 338 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Equity and | 177 | 814 | 41 | 1,032 | 87 | | | index | | | | | | | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Credit | 56 | 178 | | 234 | 4 | 2 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Other | 3,850 | 252 | | 4,102 | 3 | 24 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Total | 59,660 | 54,435 | 13,543 | 127,638 | 1,505 | 1,599 | | derivatives | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 31 Dec 2008 | Nominal values/residual | Total | Fair values | | | term to maturity | | | --------------------------------------------------------------------------------| EUR million | <1 year | 1-5 | >5 | | Assets | Liabiliti | | | | years | years | | | es | -------------------------------------------------------------------------------- | Interest rate | 30,212 | 50,776 | 11,910 | 92,897 | 1,111 | 1,129 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Currency | 12,902 | 1,128 | 1,037 | 15,067 | 426 | 747 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Equity and | 127 | 525 | | 652 | 21 | 2 | | index | | | | | | | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Credit | 188 | 179 | | 367 | 4 | 21 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Other | | 16 | | 16 | 1 | | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Total | 43,429 | 52,625 | 12,947 | 109,000 | 1,563 | 1,899 | | derivatives | | | | | | | -------------------------------------------------------------------------------- Note 21. Other contingent liabilities and commitments On 31 December 2009, Banking commitments to venture capital funds amounted to EUR 16 million and Non-Life Insurance commitments to venture capital funds amounted to EUR 82 million. They are included in the section 'Off-balance-sheet commitments'. Note 22. Related-party transactions Pohjola Group's related parties comprise its parent company, associates and administrative personnel and other related-party companies. Pohjola Group's Parent Company is OP-Pohjola Group Central Cooperative. Pohjola Group's associates were Autovahinkokeskus Oy on 31 December 2009 and Autovahinkokeskus Oy and Vahinkopalvelu Oy on 31 December 2008. Pohjola Group's administrative personnel comprises Pohjola Bank plc's President and CEO, members of the Board of Directors and their close family members. Normal loan terms and conditions apply to loans granted to the management. Tied to generally used reference rates, these loans with normal collateral are repaid according to the agreed repayment schedule. Other related-party entities include OP Pension Fund, OP Pension Foundation and sister companies within OP-Pohjola Group Central Cooperative Consolidated. Related-party transactions by 31 December 2009 -------------------------------------------------------------------------------- | EUR million | | | | -------------------------------------------------------------------------------- | | Parent | Admini-stra | Others | | | company | tive | | | | | personnel | | -------------------------------------------------------------------------------- | Loans | 250 | | 3,064 | -------------------------------------------------------------------------------- | Other receivables | 89 | | 316 | -------------------------------------------------------------------------------- | Deposits | 8 | | 319 | -------------------------------------------------------------------------------- | Other liabilities | 7 | | 308 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest income | 5 | | 196 | -------------------------------------------------------------------------------- | Interest expenses | 6 | | 180 | -------------------------------------------------------------------------------- | Dividend income | 0 | | 2 | -------------------------------------------------------------------------------- | Net income from Non-life Insurance | 2 | | 4 | -------------------------------------------------------------------------------- | Net commissions and fees | -1 | 0 | 24 | -------------------------------------------------------------------------------- | Net trading income | | | -3 | -------------------------------------------------------------------------------- | Other operating income | 4 | | 5 | -------------------------------------------------------------------------------- | Operating expenses | 76 | | 4 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Off-balance-sheet commitments | | | | -------------------------------------------------------------------------------- | Guarantees | | | 75 | -------------------------------------------------------------------------------- | Irrevocable commitments | 8 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Salaries and other short-term | | | | | benefits, and performance-based | | | | | pay | | | | -------------------------------------------------------------------------------- | Salaries and short-term benefits | | 1 | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Related-party holdings | | | | -------------------------------------------------------------------------------- | Number of shares | 95,798,479 | 103,402 | 6,622,475 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Related-party transactions by 31 | | | | | December 2008 | | | | -------------------------------------------------------------------------------- | EUR million | | | | -------------------------------------------------------------------------------- | | Parent | Admini-stra | Others | | | company | tive | | | | | personnel | | -------------------------------------------------------------------------------- | Loans | 50 | | 2,167 | -------------------------------------------------------------------------------- | Other receivables | 62 | | 92 | -------------------------------------------------------------------------------- | Deposits | 56 | | 395 | -------------------------------------------------------------------------------- | Other liabilities | 1 | | 447 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest income | 8 | | 287 | -------------------------------------------------------------------------------- | Interest expenses | 11 | | 218 | -------------------------------------------------------------------------------- | Dividend income | 0 | | 5 | -------------------------------------------------------------------------------- | Net income from Non-life Insurance | 5 | | 4 | -------------------------------------------------------------------------------- | Net commissions and fees | -1 | 0 | 20 | -------------------------------------------------------------------------------- | Net trading income | | | -33 | -------------------------------------------------------------------------------- | Other operating income | 3 | | 7 | -------------------------------------------------------------------------------- | Operating expenses | 80 | | 3 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Off-balance-sheet commitments | | | | -------------------------------------------------------------------------------- | Guarantees | | | 68 | -------------------------------------------------------------------------------- | Irrevocable commitments | 8 | | 1 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Salaries and other short-term | | | | | benefits, and performance-based | | | | | pay | | | | -------------------------------------------------------------------------------- | Salaries and short-term benefits | | 2 | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Related-party holdings | | | | -------------------------------------------------------------------------------- | Number of shares | 60,825,897 | 63,421 | 4,205,946 | -------------------------------------------------------------------------------- Helsinki, 11 February 2010 Pohjola Bank plc Board of Directors This Financial Statements bulletin is available at www.pohjola.fi/english > Media. Background information on the bulletin can also be found at the same address. Meeting for analysts and the media A meeting for analysts will be held in Finnish at 10.00 am (Finnish time) on 11 February 2010. A conference call in English for analysts and investors will be held on the same day at 1.30 pm GMT (3.30 pm Finnish time), tel. +358 (0)20 699100, PIN code 911239#. Mikael Silvennoinen, Pohjola Bank plc's President and CEO, will present the financial results at a press conference in OP-Pohjola Group Central Cooperative (Teollisuuskatu 12.00 b, Vallila, Helsinki), on 11 February, starting at noon. Annual General Meeting Pohjola Bank plc will hold its Annual General Meeting (AGM) in the Congress Wing of the Helsinki Fair Centre, Helsinki, on Friday, 26 March 2010, starting at 2.00 pm. Notice of the Meeting will be published as a company release on 1 March 2010, after which it will appear in Helsingin Sanomat and Hufvudstadsbladet. Thereafter, the Report by the Board of Directors and the Financial Statements and other AGM documentation will also be available at www.pohjola.fi. Financial reporting in 2010 -------------------------------------------------------------------------------- | Schedule for Interim Reports in 2010: | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interim Report Q1 | 5 May | -------------------------------------------------------------------------------- | Interim Report H1 | 4 August | -------------------------------------------------------------------------------- | Interim Report Q1-3 | 3 November | -------------------------------------------------------------------------------- Pohjola Bank plc Carina Geber-Teir Senior Vice President, Corporate Communications -------------------------------------------------------------------------------- | DISTRIBUTION | -------------------------------------------------------------------------------- | NASDAQ OMX Helsinki Ltd | -------------------------------------------------------------------------------- | London Stock Exchange | -------------------------------------------------------------------------------- | Major media | -------------------------------------------------------------------------------- | www.pohjola.fi, www.op.fi | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | For additional information, please contact | -------------------------------------------------------------------------------- | Mikael Silvennoinen, President and CEO, tel. +358 (0)10 252 2549 | -------------------------------------------------------------------------------- | Jouko Pölönen, CFO, tel. +358 (0)10 252 3405 | -------------------------------------------------------------------------------- | Tarja Ollilainen, Senior Vice President, Investor Relations, tel. +358 (0)10 | | 252 4494 | --------------------------------------------------------------------------------
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