2007-05-10 07:00:00 CEST
2007-05-10 07:00:00 CEST
REGULATED INFORMATION
OKO Pankki Oyj - Quarterly report
OKO Bank Plc Interim Report 1 January - 31 March 2007 and the President and CEO's comments
The President and CEO's comments: "In the first quarter of the year, consolidated earnings before tax stood at EUR 65 million. The earnings were good although they included EUR 10 million in liquidated damages plus interest to be paid by OKO Bank on the basis of the ruling by the Arbitral Tribunal. In Banking and Investment Services, performance and growth continued to be strong. In the first quarter, the loan portfolio increased by 5%. In the last 12 months, the growth was 18%. The risk exposure remained favourable in the first quarter of the year. In Non-life Insurance, the balance on technical account was in line with our expectations in January-March. Return on investments was good. Growth in insurance premium revenue and the number of new customers continued to be brisk, boosted by cooperation with OP Bank Group member cooperative banks. Cost synergies related to insurance operations increased by EUR 3 million in the first quarter of the year. The Group has a good basis for achieving the earnings improvements targeted for the year 2007." Helsinki, 10 May 2007 Mikael Silvennoinen OKO BANK PLC INTERIM REPORT 1 JANUARY - 31 MARCH 2007 - Earnings before tax amounted to EUR 65 million (69). 1) - Excluding the effect of one-off items, consolidated net earnings increased by 9% and expenses remained at the same level as in the comparative period. - Earnings per share were EUR 0.25 (0.26). Equity per share was EUR 8.65 (8.99). 1) - Return on equity stood at 13.7% (8.5). - The loan and guarantee portfolio of Banking and Investment Services increased by 3% and 21% in a year. - Insurance premium revenue increased by 9%. The net number of Pohjola's loyal customers increased by 8 900 in January-March. - The liquidated damages of EUR 10 million related to the termination of the cooperation agreement between Pohjola Group plc and savings banks was entered as an expense in the earnings for the review period. - The Arbitral Tribunal's decision of 2 May 2007 to increase the redemption price payable to Pohjola Group plc's minority shareholders by EUR 1.00 to EUR 14.35 per share will be recognised for the second quarter of the year. The decision will have no material effect on earnings. The figures in this release are unaudited. 1) Year 2006 figures for the corresponding periods are used as comparative figures. The end of year 2006 figure is used when comparing balance sheet and other cross-sectional items. -------------------------------------------------------------------------------- | Key figures | 1-3/ | 1-3/ | 1-12/ | | | 2007 | 2006 | 2006 | -------------------------------------------------------------------------------- | | | | 31 Dec. | -------------------------------------------------------------------------------- | Earnings before tax, EUR million | 65 | 69 | 223 | -------------------------------------------------------------------------------- | Profit for the period, EUR million | 50 | 53 | 180 | -------------------------------------------------------------------------------- | Return on equity, % | 13.7 | 8.5 | 9.5 | -------------------------------------------------------------------------------- | | | | | -------------------------------------------------------------------------------- | Balance sheet total, EUR billion | 26.5 | 23.1 | 24.2 | -------------------------------------------------------------------------------- | Risk-weighted items, EUR billion | 12.2 | 10.9 | 11.6 | -------------------------------------------------------------------------------- | Loan portfolio, EUR billion | 8.3 | 7.1 | 7.9 | -------------------------------------------------------------------------------- | Assets under management, EUR billion | 31.3 | 28.9 | 31.3 | -------------------------------------------------------------------------------- | | | | | -------------------------------------------------------------------------------- | Capital adequacy, % | 12.7 | 11.7 | 12.9 | -------------------------------------------------------------------------------- | Tier 1 ratio, % | 8.0 | 8.8 | 8.2 | -------------------------------------------------------------------------------- | Proportion of problem receivables | 0.2 | 0.3 | 0.2 | | to loans and guarantees, % | | | | -------------------------------------------------------------------------------- | | | | | -------------------------------------------------------------------------------- | Earnings per share, EUR | 0.25 | 0.26 | 0.89 | -------------------------------------------------------------------------------- | Earnings per share including change | 0.30 | 0.19 | 0.89 | | in | | | | | fair value, EUR | | | | -------------------------------------------------------------------------------- | Earnings per share, diluted, EUR | 0.25 | 0.26 | 0.89 | -------------------------------------------------------------------------------- | Equity per share, EUR | 8.65 | 8.33 | 8.99 | -------------------------------------------------------------------------------- | Market capitalisation | 2 595 | 2 698 | 2 583 | | (Series A and K shares), EUR million | | | | -------------------------------------------------------------------------------- | Average personnel | 2 932 | 3 113 | 3 030 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings by quarter | 2006 | | | | 2007 | -------------------------------------------------------------------------------- | EUR million | 1-3 | 4-6 | 7-9 | 10-12 | 1-3 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net interest income | 26 | 25 | 22 | 23 | 26 | -------------------------------------------------------------------------------- | Impairment losses on receivables | -1 | 0 | 2 | 0 | 0 | -------------------------------------------------------------------------------- | Net interest income after | 27 | 25 | 20 | 23 | 26 | | impairment losses | | | | | | -------------------------------------------------------------------------------- | Net income from Non-life | 86 | 90 | 68 | 84 | 94 | | Insurance | | | | | | -------------------------------------------------------------------------------- | Net commissions and fees | 26 | 23 | 25 | 29 | 28 | -------------------------------------------------------------------------------- | Net trading income | 3 | 2 | 6 | 9 | 7 | -------------------------------------------------------------------------------- | Net investment income | 20 | 9 | 2 | 7 | 10 | -------------------------------------------------------------------------------- | Other operating income | 12 | 13 | 11 | 13 | 13 | -------------------------------------------------------------------------------- | Total net income | 173 | 163 | 131 | 165 | 179 | -------------------------------------------------------------------------------- | Personnel costs | 42 | 45 | 36 | 42 | 41 | -------------------------------------------------------------------------------- | IT expenses | 11 | 11 | 10 | 10 | 11 | -------------------------------------------------------------------------------- | Amortisation and depreciation | 15 | 14 | 14 | 15 | 15 | -------------------------------------------------------------------------------- | Other expenses | 37 | 35 | 32 | 41 | 47 | -------------------------------------------------------------------------------- | Total expenses | 104 | 105 | 92 | 108 | 114 | -------------------------------------------------------------------------------- | Share of associates' | 0 | 0 | 0 | 0 | 0 | | profits/losses | | | | | | -------------------------------------------------------------------------------- | Earnings before tax | 69 | 57 | 40 | 57 | 65 | -------------------------------------------------------------------------------- | Income tax | 16 | 15 | -4 | 15 | 15 | -------------------------------------------------------------------------------- | Profit for the period | 53 | 42 | 44 | 41 | 50 | -------------------------------------------------------------------------------- | Change in fair value reserve | -15 | -33 | 36 | 12 | 11 | -------------------------------------------------------------------------------- | Earnings for the period at fair | 38 | 9 | 80 | 53 | 61 | | values | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Return on equity, % | 8.5 | 2.1 | 18.3 | 11.7 | 13.7 | -------------------------------------------------------------------------------- | Tier 1 ratio, % | 8.8 | 8.2 | 8.2 | 8.2 | 8.0 | -------------------------------------------------------------------------------- CONSOLIDATED EARNINGS The OKO Bank Group's earnings before tax amounted to EUR 65 million (69) in the first quarter of 2007. The earnings of the first quarter were impaired by the liquidated damages of EUR 10 million related to the termination of the cooperation agreement between Pohjola Group plc and savings banks. Excluding the effect of one-off items, consolidated net earnings increased by 9% but expenses remained at the same level as in the corresponding period. The capital adequacy ratio at the end of the review period was 12.7% (12.9) and the Tier 1 ratio was 8.0% (8.2). Earnings per share were EUR 0.25 (0.26). Equity per share was EUR 8.65 (8.99). Annualised return on equity stood at 13.7% (8.5). EARNINGS BY BUSINESS LINE -------------------------------------------------------------------------------- | Earnings before tax, EUR | 2006 | | | | 2007 | | million | | | | | | -------------------------------------------------------------------------------- | | 1-3 | 4-6 | 7-9 | 10-12 | 1-3 | -------------------------------------------------------------------------------- | Banking and Investment | 47 | 37 | 35 | 43 | 45 | | Services | | | | | | -------------------------------------------------------------------------------- | Non-life Insurance | 23 | 24 | 11 | 20 | 31 | -------------------------------------------------------------------------------- | Other Operations | -1 | -4 | -7 | -7 | -11 | -------------------------------------------------------------------------------- In Banking and Investment Services, earnings before tax amounted to EUR 45 million (47). The earnings for the comparative period included a capital gain of EUR 8 million recognised on the sale of the OMX shares. The loan portfolio of Corporate Banking increased by 5% and stood at EUR 8.3 billion at the end of March. The risk exposure remained good. The level of margins decreased from 0.87% to 0.81% in the first quarter of the year. In Non-life Insurance, earnings before tax stood at EUR 31 million (23). Insurance premium revenue increased by 9% to EUR 204 million (187). Investment income entered in the income statement increased to EUR 48 million (36). Investment income at fair values totalled EUR 64 million (32). Earnings before tax from Other Operations was EUR 11 million negative (1 million negative). The earnings before tax from Other Operations included the effect of liquidated damages totalling EUR 10 million, which were ruled by the Arbitral Tribunal on 2 April 2007 and which were entered under integration expenses. The earnings for the comparative period included a capital gain of EUR 2 million recognised on the sale of Eurocard shares. INTEGRATION The combining of OKO Bank's and Pohjola's business operations proceeds according to plan. The results so far support earlier estimates of income and cost synergies, the annual amount of which is estimated to increase to a good EUR 50 million before tax by 2010. Decisions made thus far result in annual savings of approximately EUR 28 million, of which decisions worth EUR 3 million were taken in the first quarter of 2007. New cost savings are mainly gained from ICT functions in Non-life Insurance. Of the annual cost savings of EUR 28 million, EUR 13 million were gained in 2006. The cost savings for 2007 are estimated to total EUR 26 million and the cost savings as of year 2008 EUR 28 million. The materialisation of cost savings decided in the first quarter of 2007 requires that investments of around EUR 3 million be made in 2008. In Non-life Insurance, the number of loyal customers increased by 8 900 households, which was almost entirely gained through cooperation within the OP Bank Group. At the end of March, the number of loyal customers was over 376 000, while the target by 2010 is 500 000. The average annual premiums written per loyal customer household are over EUR 600. The integration expenses allocated to the review period totalled around EUR 11 million, of which the most significant impact was the liquidated damages of EUR 10 million paid to savings banks. In the period from September 2005 to March 2007, the integration expenses pertaining to the acquisition of Pohjola totalled around EUR 21 million. PERSONNEL At the end of March, the Group had 2 967 employees, which is 41 employees more than at the end of 2006. A total of 734 employees (718) worked for Banking and Investment Services and a total of 2 182 employees (2 154) for Non-life Insurance. The Group Administration employed a total of 52 people (54). INVESTMENTS Aggregate investments totalled EUR 5 million (5), of which EUR 3 million (1) corresponded to investments made in Banking and Investment Services and EUR 2 million (1) to investments made in Non-life Insurance. Of the investments, IT investments accounted for EUR 3 million (4) which were used for developing network services and streamlining internal processes. CAPITAL ADEQUACY The capital adequacy ratio impaired slightly owing to strong growth. The capital adequacy ratio as per the Act on Credit Institutions was 12.7% (12.9), whereas the statutory minimum requirement is 8%. The Tier 1 ratio of OKO Bank's own funds on risk-weighted items was 8.0% (8.2). The risk-weighted items increased from EUR 11 627 million to EUR 12 239 million, i.e. 5.3% mainly as a result of growth in the loan portfolio and in notes and bonds. Own funds grew from EUR 1 504 million to EUR 1 550 million mainly owing to an increase in earnings and the fair value reserve in the review period. Tier 1 own funds totalled EUR 975 million (948). Capital loans accounted for EUR 224 million of Tier 1 own funds, i.e. 22.9% (23.6). The requirement of own funds related to the coverage of market risks was EUR 104 million (81). The Arbitral Tribunal appointed by the Central Chamber of Commerce decided on 2 May 2007 to set the redemption price of Pohjola shares at EUR 14.35 per share for those former minority shareholders of Pohjola who did not accept OKO Bank's redemption offer. The acquisition price of these shares in the accounts and capital adequacy calculations as at 31 March 2007 was the price as per OKO Bank's purchase offer (EUR 13.35 per share). The arbitral award will have no material impact on the consolidated earnings. The additional purchase price will be entered in the balance sheet in the second quarter of the year. According to preliminary estimates, taking into account of the arbitral award in capital adequacy calculation as at 31 March 2007 would have decreased the Tier 1 ratio of OKO Bank's own funds on risk-weighted items to 7.8%. RISK EXPOSURE Banking and Investment Services In Banking and Investment Services, the risk exposure continued to be good despite strong growth. Total exposure grew by EUR 1.7 billion to EUR 28.0 billion. The relative share of investment-grade exposure - that is, ratings 1 to 4, excluding private customers - in total exposures increased to 76% (75), the share of ratings 11 to 12 was 0.2% (0.3) and that of non-rated exposure was 2% (3). Of the corporate exposure, the share of investment-grade corporate exposure remained unchanged, at 51%. The corporate exposure of the two lowest rating classes was EUR 64 million (64), i.e. 0.6% of the corporate exposure. The amount of significant customer exposure declined from EUR 3.0 billion to EUR 2.8 billion. The proportion of problem receivables of the loan and guarantee portfolio remained low, at 0.2%. Loan and guarantee losses and impairment losses did not have any impact on earnings. Market risks were kept at a moderate level despite growth in the amount of notes and bonds and growth in the volumes of derivatives trading. The amount of liquidity reserves totalled EUR 6.5 billion (5.3) at the end of March. The effect of operational risks impairing the amount of earnings was EUR 0.4 million (less than 0.1 million). Non-life Insurance In Non-life Insurance, there were 51 (32) major or medium-sized losses in excess of EUR 0.1 million. The claims incurred of these losses retained for own account totalled EUR 18 million (11). Of the investment portfolio, bonds and bond funds accounted for 70% (72) and equities for 18% (18). The duration of the fixed-income portfolio was lowered during the first quarter of the year from 4.8 years to 3.5 years. In fixed-income investments, the amount of investment-grade commercial paper holdings issued by banks and corporations was raised. Consequently, the average Standard & Poor's credit rating for the fixed-income portfolio decreased from AA to AA-. Owing to a favourable trend in the capital markets, positive performance in investment returns continued and the return on investments at fair values was 2.4%. Credit ratings OKO Bank's credit ratings are as follows: -------------------------------------------------------------------------------- | Credit rating agency | Short-term funding | Long-term funding | -------------------------------------------------------------------------------- | Standard & Poor's | A-1+ | AA- | -------------------------------------------------------------------------------- | Moody's | P-1 | Aa1 | -------------------------------------------------------------------------------- | Fitch | F1+ | AA- | -------------------------------------------------------------------------------- In April, Moody's updated the credit rating of OKO Bank's long-term funding to Aa1 (Aa2 on 31 December 2006). The credit rating outlook for OKO Bank is stable according to all of the above credit rating agencies. RESOLUTIONS PASSED BY THE ANNUAL GENERAL MEETING The Annual General Meeting of OKO Bank plc, held on 27 March 2007, adopted the company's Financial Statements for 2006, granted discharge from liability for those accountable, and passed a resolution on the divided payout of EUR 0.65 for Series A share and EUR 0.62 for Series K share. The number of members of the Board of Directors was confirmed at ten. In addition, the AGM approved the proposal by the Board of Directors for the amendment of the company's Articles of Association. The AGM also approved the authorisation to be granted to the Board for the issuance of new shares. KPMG Oy Ab, Authorised Public Accountants, with Mr Sixten Nyman, Authorised Public Accountant, (as reported by KPMG) as the chief auditor, and Mr Raimo Saarikivi, Authorised Public Accountant, were elected as the company's auditors. ADMINISTRATION The Annual General Meeting of OKO Bank plc, held on 27 March 2007, elected the following persons to the company's Board of Directors until the closing of the next AGM: Ms Merja Auvinen, Managing Director; Mr Erkki Böös, Senior Executive Vice President; Mr Eino Halonen, President and CEO; Mr Simo Kauppi, Deputy Managing Director; Ms Satu Lähteenmäki, Professor; Mr Harri Nummela, Executive Vice President; Mr Heikki Vitie, Deputy to the President; and Mr Tom von Weymarn. Of those elected, Mr Nummela has not previously been a member of the company's Board of Directors. On the basis of their duties as per the Articles of Association, the OKO Bank Board of Directors also includes as the Chairman of the Board Mr Reijo Karhinen, Executive Chairman of the OP Bank Group and Chairman of the Executive Board of the OP Bank Group Central Cooperative, and as the Vice Chairman of the Board Mr Tony Vepsäläinen, President of the Central Cooperative and Vice Chairman of the Executive Board of the Central Cooperative. In its organising meeting held after the AGM of OKO Bank plc on 27 March 2007, the Board of Directors elected members for the Board committees. The members of the Audit Committee are Mr Tom von Weymarn (Chairman); Ms Merja Auvinen, Managing Director; Mr Erkki Böös, Senior Executive Vice President and Mr Harri Nummela, Executive Vice President. The members of the Risk Management Committee are Mr Tony Vepsäläinen, President (Chairman); Mr Eino Halonen, President and CEO; Mr Simo Kauppi, Deputy Managing Director, and Mr Heikki Vitie, Deputy to the President. The members of the Compensation Committee are Mr Reijo Karhinen, Executive Chairman (Chairman); Mr Tony Vepsäläinen, President and Ms Satu Lähteenmäki, Professor. The Board of Directors has assessed the independence of its members and concluded that Ms Satu Lähteenmäki and Mr Tom von Weymarn are independent of the company and its major shareholders. SHARE CAPITAL AND SHAREHOLDERS At the end of March, there were a total of 159.4 million Series A shares quoted on the Helsinki Stock Exchange. Series A shares represented 78.4% of all shares and 42% of votes. The number of Series K shares totalled around 44.0 million. At the end of the review period, the Series A share price was EUR 12.76 while the share-issue adjusted price was EUR 13.38 a year earlier. In January-March, the share price reached a high of EUR 14.20 and a low of EUR 12.62. Around 38 million shares changed owners during the first quarter of the year. In the first quarter of 2006, the corresponding number was 40.7 million. At the end of March, OKO Bank had around 33 000 shareholders. The number increased by 700 shareholders from the turn of the year. Around 95% of the shareholders were private individuals. No significant changes occurred in the holdings of the major shareholders. The largest shareholder was the OP Bank Group Central Cooperative, which held 30% of OKO Bank's shares and 56.9% of the votes. The number of nominee registered shares in proportion to all Series A shares decreased from the year-end level of 19.7% to 18.7%. EVENTS AFTER THE REVIEW PERIOD In its ruling of 2 April 2007, the Arbitral Tribunal obligated OKO Bank to pay 32 savings banks a total of around EUR 8.8 million in liquidated damages, plus interest and expenses. The impact of the Arbitral Tribunal ruling on the OKO Bank first quarter consolidated earnings before tax was around EUR 10 million. In accordance with the ruling of the Arbitral Tribunal, Pohjola Group plc had substantially violated provisions in the shareholder agreement on Nooa Savings Bank Ltd. The dispute on the shareholder agreement was related to the transaction through which OKO Bank, on 12 September 2005, acquired the majority shareholding in Pohjola from Suomi Mutual Life Assurance Company and Ilmarinen Mutual Pension Insurance Company. After the transaction, cooperation between the savings banks and Pohjola regarding Nooa Savings Bank came to an end. Pohjola later merged with OKO Bank at the end of 2006. On 19 April 2007, the 24 savings banks which had a majority shareholding in Nooa Savings Bank Ltd acquired the shareholding of OKO Bank in Nooa Savings Bank at a redemption price of EUR 6.3 million. OKO Bank had a 25% shareholding in Nooa Savings Bank. OKO Bank obtained possession of Nooa Savings Bank shares at the end of 2006 once the earlier holder of the shares, Pohjola Group plc, had been merged with OKO Bank. In accordance with the Articles of Association of Nooa Savings Bank, the other shareholders of the company, in that connection, became entitled to redeem the shares transferred to OKO Bank. The redemption does not have any impact on the OKO Bank Group earnings. The Arbitral Tribunal appointed by the Central Chamber of Commerce decided on 2 May 2007 to set the redemption price of the shares in Pohjola Group plc at EUR 14.35 per share. The Tribunal confirmed the annual interest payable on the redemption price from 13 June to 30 June 2006 at 5.5% and from 1 July 2006 at 6.0%. The redemption price set by the Tribunal is EUR 1.00 higher than the redemption price of EUR 13.35 per share offered by OKO Bank. On 29 June 2006, OKO Bank paid the former minority shareholders of Pohjola entitled to redemption (15 215 137 shares) EUR 13.35 per share in redemption price and, on this amount, an interest of 2.50% as of 13 June 2006. The remainder of the redemption price and interest will be paid to those entitled to it no later than within a month from the effective date of the arbitral award. OKO Bank will consider separately the option of submitting the validity of the arbitral award to the district court. The Finnish Companies Act provides that action must be brought within two months from the date when the interested party received a copy of the arbitral award. The arbitral award will have no material impact on the consolidated earnings. The additional purchase price will be entered in the balance sheet in the second quarter of the year. Pohjola Non-Life Insurance Company Ltd (Pohjola), a subsidiary of OKO Bank plc, will sell its marine hull insurance portfolio to Codan Forsikring A/S. An agreement was signed on the deal on 21 March 2007. The transaction is expected to materialise in the second quarter of the current year. When materialised, the transaction will have a slightly positive impact on earnings. The completion of the transaction is conditional on obtaining the regulatory approval of the authorities. Premiums written from the Pohjola marine hull insurance portfolio were EUR 18 million in 2006. OUTLOOK FOR THE REMAINDER OF THE YEAR In Banking and Investment Services, growth in the corporate loan market is estimated to continue but at a slower pace than in 2006. Lending margins are not expected to decrease significantly. OKO Bank's corporate loan portfolio is forecast to grow faster than the market. The risk exposure is estimated to remain good and the amount of impairment losses on receivables at a lower level than normally. OKO Bank's commission income is expected to increase especially as a result of growing demand for asset management services and structured product and service packages. Provided that the operating environment remains as expected, the year 2007 earnings before tax of Banking and Investment Services are estimated to be better than in 2006 (the same or better earnings according to the previous estimate). In addition to the market growth, tight cooperation with OP Bank Group member cooperative banks, which is estimated to improve Pohjola's market share in the household customer base in particular, will have an impact on the upward trend in the insurance premium revenue in Non-life Insurance. Growth in Pohjola's insurance premium revenue is forecast to exceed the GDP growth this year despite the sale of the marine hull insurance portfolio. The unfavourable trend in major losses in the latter half of 2006 is expected to normalise. In Non-life Insurance, the combined ratio excluding changes in reserving bases and the amortisation of intangible assets arising from the acquisition is estimated to be under 94.0%, as targeted. The long-term return expectation for the investment portfolio in Non-life Insurance is 5.2%. Earnings from Other Operations, excluding the liquidated damages of EUR 10 million ruled by the Arbitral Tribunal, are estimated to be on a par with the earnings in 2006. Despite the liquidated damages of EUR 10 million ruled by the Arbitral Tribunal, OKO Bank is estimated to have good opportunities to improve earnings before tax at fair values by at least 10% in 2007, provided that no radical changes take place in equity and interest rate markets. The main risks related to the materialisation of the near-future outlook stated above concern the general operating environment of the business and the development of interest rates and share prices. The management of the Group has no influence on the general operating environment of the business. However, the management may influence the effects of interest rate changes and the equity market on investments and trading by investing assets securely, by diversifying risks, by ensuring the professional skills of its personnel, and by effective risk management. In addition, the management may influence the appropriate pricing of customer-specific risk and consequently the financial performance of the Group. All of the forecasts and estimates presented in this report are based on the current understanding of the financial development of the Group and its different operations; actual performance may vary significantly. BUSINESS OPERATIONS The table below presents the actual earnings of the Group and its business lines before tax, as well as the strategic targets and their actuals. The calculation of operative key ratios has been presented on page 17. -------------------------------------------------------------------------------- | | 2006 | | | | 2007 | Target | | | | | | | | 2009 | -------------------------------------------------------------------------------- | | 1-3 | 4-6 | 7-9 | 10-12 | 1-3 | | -------------------------------------------------------------------------------- | Banking and | | | | | | | | Investment Services | | | | | | | -------------------------------------------------------------------------------- | Earnings before tax, | 47 | 37 | 35 | 43 | 45 | | | EUR million | | | | | | | -------------------------------------------------------------------------------- | Operative return on | 18.9 | 14.0 | 16.1 | 19.2 | 17.6 | > 18 | | equity (ROE), % | | | | | | | -------------------------------------------------------------------------------- | Operative cost/income | 38.0 | 43.1 | 40.9 | 44.0 | 39.1 | 40 | | ratio, % | | | | | | | -------------------------------------------------------------------------------- | | | | | | | | -------------------------------------------------------------------------------- | Non-life Insurance | | | | | | | -------------------------------------------------------------------------------- | Earnings before tax, | 23 | 24 | 11 | 20 | 31 | | | EUR million | | | | | | | -------------------------------------------------------------------------------- | Operative return on | 23.8 | -14.4 | 44.1 | 27.6 | 35.0 | > 20 | | equity (ROE), % | | | | | | | -------------------------------------------------------------------------------- | Operative combined | 98.2 | 91.6 | 96.7 | 95.3 | 100.8 | < 94 | | ratio, % | | | | | | | -------------------------------------------------------------------------------- | | | | | | | | -------------------------------------------------------------------------------- | Other Operations | | | | | | | -------------------------------------------------------------------------------- | Earnings before tax, | -1 | -4 | -7 | -7 | -11 | | | EUR million | | | | | | | -------------------------------------------------------------------------------- BANKING AND INVESTMENT SERVICES Banking and Investment Services comprises the following divisions: Corporate Banking, Markets, Group Treasury and Asset Management -------------------------------------------------------------------------------- | | 2006 | | | | 2007 | -------------------------------------------------------------------------------- | | 1-3 | 4-6 | 7-9 | 10-12 | 1-3 | -------------------------------------------------------------------------------- | Income statement, | | | | | | | EUR million | | | | | | -------------------------------------------------------------------------------- | Net interest income | 30 | 28 | 27 | 29 | 29 | -------------------------------------------------------------------------------- | Impairment losses on | -1 | 0 | 2 | 0 | 0 | | receivables | | | | | | -------------------------------------------------------------------------------- | Net interest income | 30 | 28 | 25 | 28 | 29 | | after impairment losses | | | | | | -------------------------------------------------------------------------------- | Net commissions and fees | 23 | 22 | 26 | 29 | 26 | -------------------------------------------------------------------------------- | Net trading income | 3 | 2 | 6 | 9 | 7 | -------------------------------------------------------------------------------- | Net investment income | 14 | 8 | 2 | 6 | 5 | -------------------------------------------------------------------------------- | Other operating income | 7 | 7 | 4 | 7 | 7 | -------------------------------------------------------------------------------- | Total net income | 76 | 67 | 62 | 79 | 74 | -------------------------------------------------------------------------------- | Total operating expenses | 29 | 29 | 27 | 36 | 30 | -------------------------------------------------------------------------------- | Amortisation on | 1 | 1 | 1 | 1 | 1 | | intangible assets from | | | | | | | acquisition | | | | | | -------------------------------------------------------------------------------- | Earnings before tax | 47 | 37 | 35 | 43 | 45 | -------------------------------------------------------------------------------- | Change in fair value | -4 | -7 | 2 | 2 | -2 | | reserve | | | | | | -------------------------------------------------------------------------------- | Earnings at fair values | 43 | 30 | 37 | 45 | 43 | | before tax | | | | | | -------------------------------------------------------------------------------- | | | | | | | -------------------------------------------------------------------------------- | Key figures and ratios, | | | | | | | % | | | | | | -------------------------------------------------------------------------------- | Operative return on | 18.9 | 14.0 | 16.1 | 19.2 | 17.6 | | equity (ROE) p.a. | | | | | | -------------------------------------------------------------------------------- | Operative cost/income | 38.0 | 43.1 | 40.9 | 44.0 | 39.1 | | ratio | | | | | | -------------------------------------------------------------------------------- | Proportion of problem | 0.3 | 0.2 | 0.2 | 0.2 | 0.2 | | receivables to | | | | | | | receivables from | | | | | | | customers and | | | | | | | guarantees, % | | | | | | -------------------------------------------------------------------------------- | | | | | | | -------------------------------------------------------------------------------- | | 31 Marc | 30 June | 30 Sept | 31 Dec. | 31 March | | | h | | . | | | -------------------------------------------------------------------------------- | Information on volumes, | | | | | | | EUR billion | | | | | | -------------------------------------------------------------------------------- | Receivables from | 7.1 | 7.4 | 7.7 | 7.9 | 8.3 | | customers | | | | | | -------------------------------------------------------------------------------- | Unused standby credit | 2.7 | 3.1 | 3.1 | 3.6 | 3.4 | | facilities | | | | | | -------------------------------------------------------------------------------- | Guarantees | 1.5 | 1.8 | 1.9 | 1.9 | 1.8 | -------------------------------------------------------------------------------- | Assets under management | 28.9 | 28.5 | 29.7 | 31.3 | 31.3 | -------------------------------------------------------------------------------- | Notes and bonds | 4.9 | 4.1 | 5.2 | 4.9 | 5.5 | -------------------------------------------------------------------------------- | Receivables from member | 4.1 | 4.1 | 4.6 | 4.7 | 3.9 | | cooperative banks | | | | | | -------------------------------------------------------------------------------- | Liabilities to member | 1.4 | 1.4 | 1.4 | 1.3 | 1.3 | | cooperative banks | | | | | | -------------------------------------------------------------------------------- | Risk-weighted items | 9.9 | 10.7 | 11.1 | 11.1 | 11.8 | -------------------------------------------------------------------------------- | Debt securities issued | 11.7 | 12.2 | 12.9 | 13.9 | 15.1 | | to the public | | | | | | -------------------------------------------------------------------------------- | | | | | | | -------------------------------------------------------------------------------- | Average personnel | 730 | 778 | 750 | 718 | 734 | -------------------------------------------------------------------------------- | | | | | | | -------------------------------------------------------------------------------- | Average margins, % | | | | | | -------------------------------------------------------------------------------- | Margin on corporate loan | 0.88 | 0.79 | 0.89 | 0.87 | 0.81 | | stock | | | | | | -------------------------------------------------------------------------------- | Margin on institutional | 0.27 | 0.26 | 0.25 | 0.24 | 0.24 | | loan stock | | | | | | -------------------------------------------------------------------------------- | Margin on member | 0.15 | 0.15 | 0.14 | 0.12 | 0.12 | | cooperative banks' loan | | | | | | | stock | | | | | | -------------------------------------------------------------------------------- | Margin on member | 0.21 | 0.13 | 0.13 | 0.11 | 0.11 | | cooperative banks' | | | | | | | deposits | | | | | | -------------------------------------------------------------------------------- Earnings In Banking and Investment Services, earnings before tax stood at EUR 45 million (47). Net interest income before impairment losses was EUR 29 million (30). The net amount of impairment losses did not burden the earnings. Net commission income increased to EUR 26 million (23). Growth in commission income was mainly due to an increase in commission income in Corporate Banking. Net trading income was EUR 7 million (3). Earnings increased as a result of growth in earnings related to notes and bonds. Net investment income amounted to EUR 5 million (14). In the comparative period, net investment income included a capital gain of EUR 8 million recognised on the sale of OMX shares. Operative return on equity was 17.6% (18.9) and the cost/income ratio was 39.1% (38.0). Corporate Banking OKO Bank's market position in Corporate Banking strengthened further. In Corporate Banking, the aggregate amount of loans, binding standby credit facilities and guarantees increased by 3% to EUR 12.3 billion from the end of 2006. In January-March, the loan portfolio of Corporate Banking increased by 5% and stood at EUR 8.3 billion. The annual growth was EUR 1.3 billion or 18%. At the end of March, OKO Bank's market share in corporate loans went up to 17.3%, which represented a growth of 0.1 percentage point from the year end. In Corporate Banking, net interest income increased by 13% to EUR 24 million (21). The level of margins in the corporate loan portfolio was lower (0.81%) than at the end of 2006 (0.87%). The margins of institutional loans remained unchanged in the first quarter of the year. Despite long-lasting and brisk growth in the loan portfolio, the risk exposure is still considered to be good. The net amount of impairment losses did not burden the earnings. In Corporate Banking, earnings before tax went up to EUR 26 million (21). Markets The turnover of customer trading in fixed income, derivative and currency products increased by a total of EUR 3.9 billion or 7%. In Markets, earnings before tax increased to EUR 7 million (3), which is mainly explained by growth in earnings generated by customer trading in derivatives, by growth in interest rate margins and by growth in net trading income. In January-March, OKO Bank acted as manager in four bond issues totalling EUR 455 million. In 2006, OKO Bank was the largest manager measured by volume in bond issues launched by Finnish companies. Central Banking At the end of March, OKO Bank's net receivables from OP Bank Group member cooperative banks totalled EUR 2.6 billion, which was EUR 0.8 billion less than at the end of 2006. In February, OP Mortgage Bank acquired a mortgage loan portfolio of EUR 1.3 billion from OP Bank Group member cooperative banks, which used the proceeds from the sale to pay back loans totalling around EUR 1.1 billion to OKO Bank. OP Mortgage Bank financed the acquisition of the loan portfolio by taking out a temporary loan from OKO Bank. In the long run, it will finance loan portfolio acquisitions through direct loans from the capital markets. In Group Treasury, earnings before tax were at the same level as in the previous year, at EUR 5 million (5). Group Treasury Growth in the loan portfolio was mainly funded from the markets. The amount of debt securities issued to the public grew to EUR 15.1 billion (13.9). In January-March, five long-term issues totalling EUR 412 million were launched in the international markets. The earning before tax of Group Treasury declined to EUR 3 million (15), of which net investment income totalled EUR 5 million (14). In the corresponding period a year earlier, the earnings included a capital gain of EUR 8 million recognised on the sale of the OMX Group shares. Asset Management In Asset Management, the amount of assets under management stood at the year-end level of EUR 31.3 billion. The merger of Pohjola Group with OKO Bank plc decreased the amount of assets under management by around EUR 1.1 billion in the first quarter of the year. In the review period, the majority of the growth in customer assets was gained from net sales. Of the amount, institutional customers accounted for EUR 16.8 billion (17.6), OP mutual funds for EUR 13.1 billion (12.4) and OKO Private for EUR 0.7 billion (0.7). In Asset Management, earnings went up by 16% to EUR 4 million (3) as a result of increased management fees and materialised cost synergies. NON-LIFE INSURANCE Non-life Insurance includes the following divisions: - Corporate Customers - Private Customers - Baltic States -------------------------------------------------------------------------------- | | 2006 | | | | 2007 | -------------------------------------------------------------------------------- | | 1-3 | 4-6 | 7-9 | 10-12 | 1-3 | -------------------------------------------------------------------------------- | Income statement, | | | | | | | EUR million | | | | | | -------------------------------------------------------------------------------- | Insurance premium | 187 | 200 | 196 | 204 | 204 | | revenue | | | | | | -------------------------------------------------------------------------------- | Claims incurred | 129 | 129 | 141 | 137 | 147 | -------------------------------------------------------------------------------- | Loss adjustment | 10 | 11 | 10 | 12 | 12 | | expenses | | | | | | -------------------------------------------------------------------------------- | Operating expenses | 45 | 43 | 39 | 45 | 47 | -------------------------------------------------------------------------------- | Amortisation/adjustment | 7 | 6 | 6 | 6 | 6 | | of intangible assets | | | | | | | related to acquisition | | | | | | -------------------------------------------------------------------------------- | Balance on technical | -4 | 11 | 0 | 3 | -8 | | account | | | | | | -------------------------------------------------------------------------------- | Net investment income | 36 | 28 | 23 | 28 | 48 | -------------------------------------------------------------------------------- | Other income and | 1 | -4 | 1 | 0 | 3 | | expenses | | | | | | -------------------------------------------------------------------------------- | Operating profit | 33 | 35 | 24 | 32 | 42 | -------------------------------------------------------------------------------- | Unwinding of discount | 9 | 9 | 9 | 9 | 10 | -------------------------------------------------------------------------------- | Finance costs | 1 | 2 | 3 | 2 | 2 | -------------------------------------------------------------------------------- | Earnings before tax | 23 | 24 | 11 | 20 | 31 | -------------------------------------------------------------------------------- | Change in fair value | -5 | -38 | 46 | 14 | 16 | | reserve | | | | | | -------------------------------------------------------------------------------- | Earnings at fair values | 18 | -14 | 58 | 34 | 47 | | before tax | | | | | | -------------------------------------------------------------------------------- | | | | | | | -------------------------------------------------------------------------------- | Key figures, % | | | | | | -------------------------------------------------------------------------------- | Operative return on | 23.8 | -14.4 | 44.1 | 27.6 | 35.0 | | equity | | | | | | -------------------------------------------------------------------------------- | Loss ratio | 74.3 | 70.0 | 76.8 | 73.1 | 78.0 | -------------------------------------------------------------------------------- | Expense ratio | 23.8 | 21.6 | 19.9 | 22.1 | 22.9 | -------------------------------------------------------------------------------- | Operative combined | 98.2 | 91.6 | 96.7 | 95.3 | 100.8 | | ratio | | | | | | -------------------------------------------------------------------------------- | Combined ratio | 102.2 | 94.4 | 99.9 | 98.3 | 103.9 | -------------------------------------------------------------------------------- | Return on investments | 1.5 | -0.5 | 2.5 | 1.5 | 2.4 | -------------------------------------------------------------------------------- | | | | | | | -------------------------------------------------------------------------------- | | 31 March | 30 Jun | 30 Sept | 31 Dec. | 31 March | | | | e | . | | | -------------------------------------------------------------------------------- | | | | | | | -------------------------------------------------------------------------------- | Volume data, | | | | | | | EUR million | | | | | | -------------------------------------------------------------------------------- | Insurance contract | | | | | | | liabilities | | | | | | -------------------------------------------------------------------------------- | Discounted insurance | 1 184 | 1 194 | 1207 | 1 223 | 1 241 | | contract liabilities | | | | | | -------------------------------------------------------------------------------- | Other insurance | 914 | 857 | 818 | 746 | 954 | | contract liabilities | | | | | | -------------------------------------------------------------------------------- | Investment portfolio | | | | | | -------------------------------------------------------------------------------- | Bonds | 1 790 | 1 825 | 1802 | 1 752 | 1 697 | -------------------------------------------------------------------------------- | Money market | 379 | 266 | 397 | 22 | 19 | | investments | | | | | | -------------------------------------------------------------------------------- | Equities | 422 | 392 | 378 | 447 | 489 | -------------------------------------------------------------------------------- | Investment property | 60 | 58 | 53 | 56 | 60 | -------------------------------------------------------------------------------- | Alternative investments | 65 | 43 | 75 | 87 | 133 | -------------------------------------------------------------------------------- | | | | | | | -------------------------------------------------------------------------------- | Average personnel | 2 099 | 2 134 | 2 204 | 2 154 | 2 182 | -------------------------------------------------------------------------------- Earnings Earnings before tax stood at EUR 31 million (23). Insurance premium revenue Insurance premium revenue increased by 9% to EUR 204 million (187). The growth was strongest in the Private Customers division where insurance premium revenue increased to EUR 80 million (73) as a result of cooperation within the OP Bank Group and of revised service supply. In the Corporate Customers division, premium revenue of comprehensive motor vehicle and motor liability insurance generated the largest monetary and proportional growth. Premium revenue generated by the Baltic business increased by 32% to EUR 13 million (10). Claims incurred and operating expenses The operative combined ratio was 100.8% (98.2), of which claims incurred represented 71.1 percentage points (67.8). Operating expenses and loss adjustment expenses (cost ratio) declined to 29.7 percentage points (30.3) owing to an increase in insurance premium revenue and to savings decisions implemented in 2006. Claims incurred (excluding loss adjustment expenses) increased to EUR 147 million (129), of which major and medium-sized losses (in excess of EUR 0.1 million) accounted for EUR 18 million (EUR 11 million in 2006, EUR 23 million in 2005). The number of major losses of over EUR 2 million retained for own account was 2 (-). Claims incurred from small losses (of less than EUR 0.1 million) went up in proportion to the increasing insurance portfolio in all other lines except for motor liability and comprehensive motor vehicle insurance. Despite the mild winter, the number of road accidents in Finland increased in the first quarter of the year. In addition, the increase in repair shop prices was more rapid than estimated. Operating expenses and loss adjustment expenses grew to EUR 59 million (55). Operating expenses were EUR 47 million (45) and loss adjustment expenses EUR 12 million (10). Operating expenses include integration expenses of EUR 1 million (1) Investment operations In Non-life Insurance, the fair value of investments at the end of March was EUR 2.4 billion (2.4). Of the amount, equities accounted for 18% (18) and money market instruments for 1% (1). Return on investments at fair values was 2.4%. Net investment income entered under earnings was EUR 48 million (36). Net investment income at fair values was EUR 64 million. The discount rate for the EUR 1.2 billion pension liabilities was 3.3% (3.3). The unwinding of discount is entered as a post-balance-on-technical-account item. OTHER OPERATIONS The earnings of Other Operations consist of Group administrative expenses and funding costs of Pohjola shares. -------------------------------------------------------------------------------- | | 2006 | | | | 2007 | -------------------------------------------------------------------------------- | | 1-3 | 4-6 | 7-9 | 10-12 | 1-3 | -------------------------------------------------------------------------------- | Income statement, EUR million | | | | | | -------------------------------------------------------------------------------- | Net interest income | -3 | -1 | -4 | -4 | -3 | -------------------------------------------------------------------------------- | Other net income | 19 | 15 | 8 | 6 | 11 | -------------------------------------------------------------------------------- | Net income | 16 | 13 | 4 | 2 | 8 | -------------------------------------------------------------------------------- | Expenses | 17 | 17 | 12 | 8 | 19 | -------------------------------------------------------------------------------- | Earnings before tax | -1 | -4 | -7 | -7 | -11 | -------------------------------------------------------------------------------- Earnings Earnings before tax showed a loss of EUR 11 million (EUR 1 million negative). Earnings were burdened by the liquidated damages ruled by the Arbitral Tribunal on 2 April 2007 for OKO Bank concerning the shareholder agreement dispute over Nooa Savings Bank Ltd. The effect of the decision amounted to EUR 10 million, which was entered as an expense in the earnings for the first quarter of the year. The earnings for the comparative period included a capital gain of EUR 2 million recognised on the sale of Eurocard shares. CALCULATION OF OPERATIVE KEY RATIOS Operative return on equity, % Banking and Investment Services: + Profit for the period + Amortisation and write-downs on intangible assets and goodwill related to acquisition of Pohjola Asset Management and their tax effect + Change in fair value reserve after tax *100 + 7% of risk-weighted commitments + Shareholders' equity of OKO Asset Management and Pohjola Property Management - Capital loans allocated to business line (average of the beginning and end of the period) Non-life Insurance: + Profit for the period + Amortisation and write-downs on intangible assets and goodwill related to acquisition of non-life business and their tax effect + Change in fair value reserve after tax*100 + 70% solvency ratio - Capital loans allocated to business line (average of the beginning and end of the period) or minimum capital requirement set by the authorities, whichever is larger Operative cost/income ratio + Personnel costs + Other administrative expenses + Other operating expenses excluding amortisation and write-downs on intangible assets and goodwill related to Pohjola acquisition *100 + Net interest income + Net income from Non-life Insurance + Net commissions and fees + Net trading income + Net investment income + Other operating income Operative combined ratio Loss ratio + expense ratio excluding amortisation and write-downs on intangible assets and goodwill related to acquisition of non-life insurance business OKO Bank Group income statement, 1 January to 31 March 2007 -------------------------------------------------------------------------------- | EUR million | 1 January to | 1 January | | | 31 March 2007 | to 31 March 2006 | -------------------------------------------------------------------------------- | Interest income | 438 | 248 | -------------------------------------------------------------------------------- | Interest expenses | 411 | 222 | -------------------------------------------------------------------------------- | Net interest income (Note 1) | 26 | 26 | -------------------------------------------------------------------------------- | Impairment losses on | 0 | -1 | | receivables | | | | (Note 2) | | | -------------------------------------------------------------------------------- | Net interest income | 26 | 27 | | after | | | | impairment losses | | | -------------------------------------------------------------------------------- | Net income from Non-life | 94 | 86 | | Insurance | | | | (Note 3) | | | -------------------------------------------------------------------------------- | Net commissions and fees (Note | 28 | 26 | | 4) | | | -------------------------------------------------------------------------------- | Net trading income (Note 5) | 7 | 3 | -------------------------------------------------------------------------------- | Net investment income (Note 6) | 10 | 20 | -------------------------------------------------------------------------------- | Other operating income (Note | 13 | 12 | | 7) | | | -------------------------------------------------------------------------------- | Total net income | 179 | 173 | -------------------------------------------------------------------------------- | Personnel costs (Note 8) | 41 | 42 | -------------------------------------------------------------------------------- | Other administrative expenses | 34 | 32 | | (Note 9) | | | -------------------------------------------------------------------------------- | Other operating expenses (Note | 39 | 30 | | 10) | | | -------------------------------------------------------------------------------- | Total expenses | 114 | 104 | -------------------------------------------------------------------------------- | Earnings before tax | 65 | 69 | -------------------------------------------------------------------------------- | Income tax | 15 | 16 | -------------------------------------------------------------------------------- | Profit for the period | 50 | 53 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Basic earnings per share, EUR | | | -------------------------------------------------------------------------------- | Series A | 0.25 | 0.26 | -------------------------------------------------------------------------------- | Series K | 0.24 | 0.26 | -------------------------------------------------------------------------------- | Diluted earnings per share, | | | | EUR | | | -------------------------------------------------------------------------------- | Series A | 0.25 | 0.26 | -------------------------------------------------------------------------------- | Series K | 0.24 | 0.26 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | OKO Bank Group balance sheet | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR million | 31 March | 31 Dec. | | | 2007 | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Liquid assets | 1 125 | 907 | -------------------------------------------------------------------------------- | Receivables from financial institutions | 5 969 | 5 546 | -------------------------------------------------------------------------------- | Financial assets for trading (Note 11) | 5 389 | 4 801 | -------------------------------------------------------------------------------- | Derivative contracts | 380 | 320 | -------------------------------------------------------------------------------- | Receivables from customers | 8 268 | 7 864 | -------------------------------------------------------------------------------- | Non-life Insurance assets (Note 12) | 2 984 | 2 766 | -------------------------------------------------------------------------------- | Investment assets (Note 13) | 209 | 225 | -------------------------------------------------------------------------------- | Investments in associates | 8 | 8 | -------------------------------------------------------------------------------- | Intangible assets (Note 14) | 1 013 | 1 020 | -------------------------------------------------------------------------------- | Tangible assets | 97 | 95 | -------------------------------------------------------------------------------- | Other assets | 1 082 | 633 | -------------------------------------------------------------------------------- | Deferred tax assets | 12 | 12 | -------------------------------------------------------------------------------- | Total assets | 26 536 | 24 196 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Liabilities to financial institutions | 1 944 | 2 390 | -------------------------------------------------------------------------------- | Financial liabilities for trading | 0 | - | -------------------------------------------------------------------------------- | Derivative contracts | 394 | 331 | -------------------------------------------------------------------------------- | Liabilities to customers | 2 340 | 1 994 | -------------------------------------------------------------------------------- | Non-life Insurance liabilities (Note 15) | 2 515 | 2 099 | -------------------------------------------------------------------------------- | Debt securities issued | 14 851 | 13 263 | | to the public | | | | (Note 16) | | | -------------------------------------------------------------------------------- | Provisions and other liabilities | 1 475 | 1 010 | -------------------------------------------------------------------------------- | Deferred tax liabilities | 363 | 355 | -------------------------------------------------------------------------------- | Subordinated liabilities (Note 17) | 897 | 924 | -------------------------------------------------------------------------------- | Total liabilities | 24 778 | 22 368 | -------------------------------------------------------------------------------- | Shareholders' equity | | | -------------------------------------------------------------------------------- | Share of parent company's owners | | | -------------------------------------------------------------------------------- | Share capital | 428 | 428 | -------------------------------------------------------------------------------- | Reserves | 809 | 793 | -------------------------------------------------------------------------------- | Retained earnings | 522 | 607 | -------------------------------------------------------------------------------- | Minority interest | 0 | 0 | -------------------------------------------------------------------------------- | Total shareholders' equity | 1 758 | 1 828 | -------------------------------------------------------------------------------- | Total liabilities and shareholders' equity | 26 536 | 24 196 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Changes in shareholders' | | | | | | | equity, 1 January to 31 | | | | | | | March | | | | | | -------------------------------------------------------------------------------- | | Attribu | | | | Minori | Total | | | table to | | | | ty | share-h | | | equity | | | | intere | olders' | | | holders | | | | st | equity | | | of | | | | | | | | the | | | | | | | | parent | | | | | | -------------------------------------------------------------------------------- | EUR million | Share | Fair | Other | Retaine | | | | | capital | value | reserve | d | | | | | | reserve | s | earning | | | | | | | | s | | | -------------------------------------------------------------------------------- | Shareholders' | 423 | 48 | 744 | 549 | 199 | 1 961 | | equity, 1 | | | | | | | | January 2006 | | | | | | | -------------------------------------------------------------------------------- | Adjusted | 423 | 48 | 744 | 549 | 199 | 1 961 | | shareholders' | | | | | | | | equity on 1 | | | | | | | | January | | | | | | | -------------------------------------------------------------------------------- | Available-for-s | | | | | | | | ale financial | | | | | | | | assets | | | | | | | -------------------------------------------------------------------------------- | Valuation gains | | -9 | | | | -9 | | and losses | | | | | | | -------------------------------------------------------------------------------- | Share | | -12 | | | | -12 | | transferred to | | | | | | | | the | | | | | | | | income | | | | | | | | statement | | | | | | | -------------------------------------------------------------------------------- | Translation | | | | | | 0 | | differences | | | | | | | | from foreign | | | | | | | | units | | | | | | | -------------------------------------------------------------------------------- | Deferred taxes | | 5 | | | | 5 | -------------------------------------------------------------------------------- | Net income | | -15 | | | | -15 | | recognised | | | | | | | | under | | | | | | | | shareholders' | | | | | | | | equity | | | | | | | -------------------------------------------------------------------------------- | Profit for the | | | | 53 | 0 | 53 | | period | | | | | | | -------------------------------------------------------------------------------- | Total income | | -15 | | 53 | 0 | 38 | | and expenses | | | | | | | | for the period | | | | | | | -------------------------------------------------------------------------------- | Share issue | | | -1 | | | -1 | | expenses | | | | | | | -------------------------------------------------------------------------------- | Stock options | 1 | | 1 | | | 2 | | exercised | | | | | | | -------------------------------------------------------------------------------- | Dividends paid | | | | -121 | | -121 | -------------------------------------------------------------------------------- | Share-based | | | | 0 | | 0 | | payment | | | | | | | -------------------------------------------------------------------------------- | Acquisitions of | | | | | -198 | -198 | | subsidiaries | | | | | | | -------------------------------------------------------------------------------- | Shareholders' | 424 | 33 | 743 | 480 | 0 | 1 679 | | equity, 31 | | | | | | | | March 2006 | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | Attribut | | | | Minori | Total | | | able to | | | | ty | share-h | | | equity | | | | intere | olders' | | | holders | | | | st | equity | | | of the | | | | | | | | parent | | | | | | -------------------------------------------------------------------------------- | EUR million | Share | Fair | Other | Retaine | | | | | capital | value | reserve | d | | | | | | reserve | s | earning | | | | | | | | s | | | -------------------------------------------------------------------------------- | Shareholders' | 428 | 47 | 747 | 607 | 0 | 1 828 | | equity, 1 | | | | | | | | January 2007 | | | | | | | -------------------------------------------------------------------------------- | Adjusted | 428 | 47 | 747 | 607 | 0 | 1 828 | | shareholders' | | | | | | | | equity on 1 | | | | | | | | January | | | | | | | -------------------------------------------------------------------------------- | Available-for-s | | | | | | | | ale financial | | | | | | | | assets | | | | | | | -------------------------------------------------------------------------------- | Valuation gains | | 17 | | 0 | | 17 | | and losses | | | | | | | -------------------------------------------------------------------------------- | Share | | -3 | | | | -3 | | transferred to | | | | | | | | the | | | | | | | | income | | | | | | | | statement | | | | | | | -------------------------------------------------------------------------------- | Translation | | | | 0 | | 0 | | differences | | | | | | | | from | | | | | | | | foreign | | | | | | | | units | | | | | | | -------------------------------------------------------------------------------- | Deferred taxes | | -4 | | | | -4 | -------------------------------------------------------------------------------- | Net income | | 11 | | 0 | | 11 | | recognised | | | | | | | | under | | | | | | | | shareholders' | | | | | | | | equity | | | | | | | -------------------------------------------------------------------------------- | Profit for the | | | | 50 | 0 | 50 | | period | | | | | | | -------------------------------------------------------------------------------- | Total income | | 11 | | 50 | 0 | 61 | | and | | | | | | | | expenses | | | | | | | | for the period | | | | | | | -------------------------------------------------------------------------------- | Dividends paid | | | | -131 | | -131 | -------------------------------------------------------------------------------- | Reserve | | | 4 | -4 | | | | transfers | | | | | | | -------------------------------------------------------------------------------- | Share-based | | | | 0 | | 0 | | payment | | | | | | | -------------------------------------------------------------------------------- | Shareholders' | 428 | 57 | 750 | 522 | 0 | 1 758 | | equity, 31 | | | | | | | | March 2007 | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Own funds and capital adequacy | | | -------------------------------------------------------------------------------- | EUR million | 31 March | 31 Dec. | | | 2007 | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Own funds | | | -------------------------------------------------------------------------------- | Shareholders' equity | 1758 | 1 828 | -------------------------------------------------------------------------------- | Minority interest | 0 | 1 | -------------------------------------------------------------------------------- | Capital loans *) | 224 | 224 | -------------------------------------------------------------------------------- | Intangible assets | -855 | -859 | -------------------------------------------------------------------------------- | Fair value reserve, excess funding | -127 | -115 | | of | | | | pension liability, change in | | | | equalisation | | | | provision and change in fair | | | | value of | | | | properties | | | -------------------------------------------------------------------------------- | Dividend distribution proposed by Board of | - | -131 | | Directors | | | -------------------------------------------------------------------------------- | Planned dividend distribution | -25 | - | -------------------------------------------------------------------------------- | Tier 1 own funds | 975 | 948 | -------------------------------------------------------------------------------- | Fair value reserve | 57 | 47 | -------------------------------------------------------------------------------- | Subordinated liabilities considered | 200 | 200 | | upper | | | | Tier 2 funds | | | -------------------------------------------------------------------------------- | Subordinated liabilities considered | 488 | 474 | | lower | | | | Tier 2 funds | | | -------------------------------------------------------------------------------- | Tier 2 own funds | 745 | 721 | -------------------------------------------------------------------------------- | Investments in insurance institutions | -163 | -157 | -------------------------------------------------------------------------------- | Other mandatory adjustments | -8 | -8 | -------------------------------------------------------------------------------- | Mandatory adjustments, total | 171 | -165 | -------------------------------------------------------------------------------- | Own funds, total **) | 1 550 | 1 504 | -------------------------------------------------------------------------------- Risk-weighted receivables, investments and off-balance sheet items -------------------------------------------------------------------------------- | Loan and guarantee portfolio excl. | 7 995 | 7 635 | | inter-group | | | | items of OP Bank Group | | | -------------------------------------------------------------------------------- | Binding standby credit facilities | 1 322 | 1 408 | -------------------------------------------------------------------------------- | Inter-group items of OP Bank Group | 1 230 | 1 169 | -------------------------------------------------------------------------------- | Market risk | 1 302 | 1 007 | -------------------------------------------------------------------------------- | Other items (equities incl. | 389 | 407 | | Pohjola, | | | | properties, other assets etc. | | | -------------------------------------------------------------------------------- | Risk-weighted receivables, investments | 12 239 | 11 627 | | and | | | | off-balance sheet items, total | | | -------------------------------------------------------------------------------- | | | 0 | -------------------------------------------------------------------------------- | Capital adequacy ratio, % ***) | 12.7 | 12.9 | -------------------------------------------------------------------------------- | Tier 1 ratio, % ***) | 8.0 | 8.2 | -------------------------------------------------------------------------------- | Capital adequacy ratio under the Act on | 1.12 | 1.13 | | Supervision of Financial and Insurance | | | | Conglomerates | | | -------------------------------------------------------------------------------- The capital adequacy ratio of the OP Bank Group as per the Credit Institutions Act was 14.3% (14.3) and the Tier 1 ratio was 12.8% (12.7). The capital adequacy ratio of the OP Bank Group calculated by the consolidation method as per the Act on the Supervision of Financial and Insurance Conglomerates was 1.56 (1.56). *) OKO Bank has four capital loans that can be considered Tier I funds: Capital loan of 10 billion Japanese yen of which EUR 74 million has been regarded as Tier 1 funds. Interest on the loan is fixed at 4.23% until 2034 and thereafter variable 6-month Yen LIBOR + 1.58%. If interest cannot be paid for a given interest period, the obligation to pay interest will lapse. The loan may be called in at the earliest in 2014. Capital loan of EUR 50 million, which is a perpetual loan without interest rate step-ups, but with an 8 per cent interest rate cap. The loan was issued on 31 March 2005, and the interest rate for the first year is 6.5%. Thereafter, the interest rate will be CMS 10 years + 0.1%. Interest payments are annual. The loan may be called in for the first time in 2010, subject to authorisation by the Financial Supervision Authority. Capital loan of EUR 60 million, which is a perpetual loan. The loan was issued on 30 November 2005, and the interest rate is variable 3-month EURIBOR + 0.65% until 2015 and thereafter variable 3-month EURIBOR +1.65%. Interest payments are quarterly. If interest cannot be paid for a given interest period, the obligation to pay interest will lapse. The loan may be called in for the first time in 2015, subject to authorisation by the Financial Supervision Authority. Capital loan of EUR 40 million, which is a perpetual loan. The loan was issued on 30 November 2005, and the interest rate is variable 3-month EURIBOR + 1.25%. Interest payments are quarterly. If interest cannot be paid for a given interest period, the obligation to pay interest will lapse. The loan may be called in for the first time in 2010, subject to authorisation by the Financial Supervision Authority. The capital loans have been hedged against the interest rate and currency risk by interest rate and currency swaps at the date of issue. **) The following investments in venture capital funds, totalling EUR 6 million and managed by OKO Venture Capital Ltd, have not been deducted from own funds according to the exception provided by the Financial Supervision Authority in line with the order in §75, clause 5 o the Act on Credit Institutions: Promotion Equity I Ky, Promotion Capital I Ky, Promotion Rahasto II Ky and Promotion Bridge I Ky. ***) Percentage points -------------------------------------------------------------------------------- | Cash flow statement | | | -------------------------------------------------------------------------------- | EUR million | 31 March | 31 March | | | 2007 | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flow from operating activities | | | -------------------------------------------------------------------------------- | Profit for the period | 50 | 53 | -------------------------------------------------------------------------------- | Adjustments to reconcile profit for | 198 | 196 | | the | | | | period to cash used | | | | in operating activities | | | -------------------------------------------------------------------------------- | Increase (-) or decrease (+) | -2 022 | -2 085 | | in operating | | | | assets | | | -------------------------------------------------------------------------------- | Receivables from financial institutions | -422 | 43 | -------------------------------------------------------------------------------- | Financial assets for trading | -578 | -1 259 | -------------------------------------------------------------------------------- | Derivative contracts | -16 | -14 | -------------------------------------------------------------------------------- | Receivables from customers | -407 | -291 | -------------------------------------------------------------------------------- | Non-life Insurance assets | -196 | -322 | -------------------------------------------------------------------------------- | Investment assets | 13 | -112 | -------------------------------------------------------------------------------- | Other assets | -416 | -130 | -------------------------------------------------------------------------------- | Increase (+) or decrease (-) | 566 | 47 | | in operating | | | | liabilities | | | -------------------------------------------------------------------------------- | Liabilities to financial institutions | -446 | -200 | -------------------------------------------------------------------------------- | Financial liabilities for trading | 0 | -1 | -------------------------------------------------------------------------------- | Derivative contracts | 22 | 15 | -------------------------------------------------------------------------------- | Liabilities to customers | 347 | -228 | -------------------------------------------------------------------------------- | Non-life Insurance liabilities | 216 | 169 | -------------------------------------------------------------------------------- | Provisions and other liabilities | 427 | 292 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Income taxes paid | -12 | -11 | -------------------------------------------------------------------------------- | Dividends received | 23 | 18 | -------------------------------------------------------------------------------- | A. Net cash provided by (used in) | -1 197 | -1 782 | | operating | | | | activities | | | -------------------------------------------------------------------------------- | Cash flow from investing activities | | | -------------------------------------------------------------------------------- | Acquisition of subsidiaries net of cash and | - | -97 | | cash equivalents acquired | | | -------------------------------------------------------------------------------- | Disposal of subsidiaries net of cash and | - | 216 | | cash equivalents disposed of | | | -------------------------------------------------------------------------------- | Acquisition of tangible and | -5 | -9 | | intangible | | | | assets | | | -------------------------------------------------------------------------------- | Disposal of tangible and | 3 | - | | intangible assets | | | -------------------------------------------------------------------------------- | B. Net cash provided by (used in) | -2 | 110 | | investing | | | | activities | | | -------------------------------------------------------------------------------- | Cash flow from financing activities | | | -------------------------------------------------------------------------------- | Increase in subordinated loans | 0 | 150 | -------------------------------------------------------------------------------- | Decrease in subordinated loans | -28 | -157 | -------------------------------------------------------------------------------- | Increase in debt securities | 8 905 | 10 317 | | issued to the | | | | public | | | -------------------------------------------------------------------------------- | Decrease in debt securities | -7 313 | -8 060 | | issued to the | | | | public | | | -------------------------------------------------------------------------------- | Dividends paid | -133 | -120 | -------------------------------------------------------------------------------- | C. Net cash provided by (used in) | 1 431 | 2 130 | | financing | | | | activities | | | -------------------------------------------------------------------------------- | Net increase/decrease in cash | 232 | 458 | | and cash | | | | equivalents (A+B+C) | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash and cash equivalents | 1107 | 614 | | at the beginning | | | | of the period | | | -------------------------------------------------------------------------------- | Cash and cash equivalents | 1 339 | 1 072 | | at the end of the | | | | period | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest received | 400 | 193 | -------------------------------------------------------------------------------- | Interest paid | -372 | -186 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Adjustments to profit for the period | | | -------------------------------------------------------------------------------- | Items not associated with | | | | payment | | | -------------------------------------------------------------------------------- | Impairment losses on receivables | 0 | -1 | -------------------------------------------------------------------------------- | Unrealised net earnings in Non-life | 209 | 210 | | Insurance | | | -------------------------------------------------------------------------------- | Change in fair value for trading | 4 | 16 | -------------------------------------------------------------------------------- | Unrealised net gains on | -12 | -18 | | foreign exchange | | | | operations | | | -------------------------------------------------------------------------------- | Scheduled amortisation /depreciation | 15 | 15 | -------------------------------------------------------------------------------- | Share of associates' profits | 0 | 0 | -------------------------------------------------------------------------------- | Other | -18 | -24 | -------------------------------------------------------------------------------- | Items presented outside | | | | cash flow from | | | | operating activities | | | -------------------------------------------------------------------------------- | Capital gains, share of cash flow from | 0 | -2 | | investing activities | | | -------------------------------------------------------------------------------- | Adjustments, total | 198 | 196 | -------------------------------------------------------------------------------- Segment information -------------------------------------------------------------------------------- | Financial | Corpora | 2006 | Market | 2006 | Central | 2006 | | performance from | te | | s | | Banking | | | January to March | Banking | | 2007 | | 2007 | | | EUR million | 2007 | | | | | | -------------------------------------------------------------------------------- | Net interest income | 24 | 21 | 4 | 4 | 3 | 3 | -------------------------------------------------------------------------------- | Impairment losses | 0 | -1 | | | | | | on receivables | | | | | | | -------------------------------------------------------------------------------- | Net interest income | 24 | 22 | 4 | 4 | 3 | 3 | | after impairment | | | | | | | | losses | | | | | | | -------------------------------------------------------------------------------- | Net income from | | | | | | | | Non-life Insurance | | | | | | | -------------------------------------------------------------------------------- | Net commissions and | 10 | 8 | 6 | 5 | 0 | 0 | | fees | | | | | | | -------------------------------------------------------------------------------- | Net trading income | 2 | 1 | 5 | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Net investment | 0 | | | 0 | | | | income | | | | | | | -------------------------------------------------------------------------------- | Other operating | 4 | 3 | 0 | 0 | 2 | 2 | | income | | | | | | | -------------------------------------------------------------------------------- | Total income | 40 | 34 | 14 | 9 | 6 | 6 | -------------------------------------------------------------------------------- | of which | | | | | 0 | 0 | | inter-segment | | | | | | | | income | | | | | | | -------------------------------------------------------------------------------- | Personnel costs | -5 | -5 | -4 | -3 | 0 | 0 | -------------------------------------------------------------------------------- | IT expenses | -2 | -2 | -2 | -1 | 0 | 0 | -------------------------------------------------------------------------------- | Amortisation on | | | | | | | | intangible assets | | | | | | | | from acquisitions | | | | | | | -------------------------------------------------------------------------------- | Other amortisation | -3 | -3 | 0 | 0 | 0 | 0 | | and depreciation | | | | | | | -------------------------------------------------------------------------------- | Other expenses | -3 | -4 | -2 | -1 | 0 | -1 | -------------------------------------------------------------------------------- | Total expenses | -14 | -13 | -7 | -6 | -1 | -1 | -------------------------------------------------------------------------------- | Share of | | | | | | | | associates' | | | | | | | | profits/losses | | | | | | | -------------------------------------------------------------------------------- | Earnings before tax | 26 | 21 | 7 | 3 | 5 | 5 | | *) | | | | | | | -------------------------------------------------------------------------------- | Income tax | | | | | | | -------------------------------------------------------------------------------- | Profit for the | | | | | | | | period | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Key figures, % | | | | | | | -------------------------------------------------------------------------------- | Operative | | | | | | | | cost/income ratio | | | | | | | -------------------------------------------------------------------------------- | Operative return on | | | | | | | | equity | | | | | | | -------------------------------------------------------------------------------- | Return on equity at | | | | | 14.0 | 14.9 | | fair values | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Financial | Treasu | 2006 | Asset | 2006 | Banking | 2006 | | performance from | ry | | Managemen | | and | | | January to March | 2007 | | t | | Investme | | | EUR million | | | 2007 | | nt | | | | | | | | Services | | | | | | | | , | | | | | | | | total | | | | | | | | 2007 | | | | | | | | | | -------------------------------------------------------------------------------- | Net interest income | -1 | 1 | 0 | 0 | 29 | 30 | -------------------------------------------------------------------------------- | Impairment losses | | | | | 0 | -1 | | on receivables | | | | | | | -------------------------------------------------------------------------------- | Net interest income | -1 | 1 | 0 | 0 | 29 | 30 | | after impairment | | | | | | | | losses | | | | | | | -------------------------------------------------------------------------------- | Net income from | | | | | | | | Non-life Insurance | | | | | | | -------------------------------------------------------------------------------- | Net commissions and | 0 | 0 | 10 | 10 | 26 | 23 | | fees | | | | | | | -------------------------------------------------------------------------------- | Net trading income | 0 | 2 | | | 7 | 3 | -------------------------------------------------------------------------------- | Net investment | 5 | 14 | 0 | 0 | 5 | 14 | | income | | | | | | | -------------------------------------------------------------------------------- | Other operating | 0 | 0 | 0 | 1 | 7 | 7 | | income | | | | | | | -------------------------------------------------------------------------------- | Total income | 4 | 16 | 10 | 11 | 74 | 76 | -------------------------------------------------------------------------------- | of which | 0 | 0 | 0 | 0 | | 0 | | inter-segment | | | | | | | | income | | | | | | | -------------------------------------------------------------------------------- | Personnel costs | 0 | 0 | -4 | -4 | -13 | -13 | -------------------------------------------------------------------------------- | IT expenses | 0 | 0 | -1 | 0 | -4 | -3 | -------------------------------------------------------------------------------- | Amortisation on | | | -1 | -1 | -1 | -1 | | intangible assets | | | | | | | | from acquisitions | | | | | | | -------------------------------------------------------------------------------- | Other amortisation | 0 | 0 | 0 | 0 | -5 | -4 | | and depreciation | | | | | | | -------------------------------------------------------------------------------- | Other expenses | 0 | -1 | -1 | -2 | -7 | -8 | -------------------------------------------------------------------------------- | Total expenses | -1 | -1 | -6 | -7 | -30 | -29 | -------------------------------------------------------------------------------- | Share of | | | | | | | | associates' | | | | | | | | profits/losses | | | | | | | -------------------------------------------------------------------------------- | Earnings before tax | 3 | 15 | 4 | 3 | 45 | 47 | -------------------------------------------------------------------------------- | Income tax | | | | | | | -------------------------------------------------------------------------------- | Profit for the | | | | | | | | period | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Key figures, % | | | | | | | -------------------------------------------------------------------------------- | Operative | | | 54 | 61 | 39 | 38 | | cost/income ratio | | | | | | | -------------------------------------------------------------------------------- | Operative return on | | | | | 17.6 | 18.9 | | equity | | | | | | | -------------------------------------------------------------------------------- | Return on equity at | | | | | | | | fair values | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Financial performance | Non-life | Non-life | Other | Other | | from January to March | Insurance | Insurance | operations | operations | | EUR million | 2007 | 2006 | 2007 | 2006 | -------------------------------------------------------------------------------- | Net interest income | -2 | -1 | -3 | -3 | -------------------------------------------------------------------------------- | Impairment losses on | | | | | | receivables | | | | | -------------------------------------------------------------------------------- | Net interest income after | -2 | -1 | -3 | -3 | | impairment losses | | | | | -------------------------------------------------------------------------------- | Net income from Non-life | 95 | 86 | | | | Insurance | | | | | -------------------------------------------------------------------------------- | Net commissions and fees | 4 | 3 | 0 | 0 | -------------------------------------------------------------------------------- | Net trading income | | | 0 | 0 | -------------------------------------------------------------------------------- | Net investment income | | | 4 | 6 | -------------------------------------------------------------------------------- | Other operating income | 4 | 4 | 6 | 13 | -------------------------------------------------------------------------------- | Total income | 101 | 92 | 8 | 16 | -------------------------------------------------------------------------------- | of which inter-segment | | 0 | 3 | 10 | | income | | | | | -------------------------------------------------------------------------------- | Personnel costs | -26 | -24 | -1 | -4 | -------------------------------------------------------------------------------- | IT expenses | -3 | -3 | -3 | -4 | -------------------------------------------------------------------------------- | Amortisation on | -8 | -8 | | | | intangible assets from | | | | | | acquisitions | | | | | -------------------------------------------------------------------------------- | Other amortisation and | -1 | -1 | -1 | -1 | | depreciation | | | | | -------------------------------------------------------------------------------- | Other expenses | -31 | -32 | -13 | -7 | -------------------------------------------------------------------------------- | Total expenses | -70 | -69 | -19 | -17 | -------------------------------------------------------------------------------- | Share of associates' | 0 | 0 | 0 | 0 | | profits/losses | | | | | -------------------------------------------------------------------------------- | Earnings before tax | 31 | 23 | -11 | -1 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Financial performance | Eliminati | Eliminatio | OKO Bank | OKO Bank | | from January to March | ons 2007 | ns 2006 | Group 2007 | Group 2006 | | EUR million | | | | | -------------------------------------------------------------------------------- | Net interest income | 1 | 1 | 26 | 26 | -------------------------------------------------------------------------------- | Impairment losses on | | | 0 | -1 | | receivables | | | | | -------------------------------------------------------------------------------- | Net interest income after | 1 | 1 | 26 | 27 | | impairment losses | | | | | -------------------------------------------------------------------------------- | Net income from Non-life | -1 | -1 | 94 | 86 | | Insurance | | | | | -------------------------------------------------------------------------------- | Net commissions and fees | -1 | 0 | 28 | 26 | -------------------------------------------------------------------------------- | Net trading income | 0 | 0 | 7 | 3 | -------------------------------------------------------------------------------- | Net investment income | | 0 | 10 | 20 | -------------------------------------------------------------------------------- | Other operating income | -4 | -11 | 13 | 12 | -------------------------------------------------------------------------------- | Total income | -4 | -11 | 179 | 173 | -------------------------------------------------------------------------------- | of which inter-segment | | | - | - | | income | | | | | -------------------------------------------------------------------------------- | Personnel costs | 0 | 0 | -41 | -42 | -------------------------------------------------------------------------------- | IT expenses | 0 | | -11 | -11 | -------------------------------------------------------------------------------- | Amortisation on | | | -9 | -9 | | intangible assets from | | | | | | acquisitions | | | | | -------------------------------------------------------------------------------- | Other amortisation and | | | -6 | -6 | | depreciation | | | | | -------------------------------------------------------------------------------- | Other expenses | 4 | 11 | -47 | -37 | -------------------------------------------------------------------------------- | Total expenses | 4 | 12 | -114 | -104 | -------------------------------------------------------------------------------- | Share of associates' | | | 0 | 0 | | profits/losses | | | | | -------------------------------------------------------------------------------- | Earnings before tax | 0 | 0 | 65 | 69 | -------------------------------------------------------------------------------- | Income tax | | | -15 | -16 | -------------------------------------------------------------------------------- | Profit before the period | | | 50 | 53 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Key ratios, % | | | | | -------------------------------------------------------------------------------- | Operative cost/income | | | | | | ratio | | | | | -------------------------------------------------------------------------------- | Operative return on | | | | | | equity | | | | | -------------------------------------------------------------------------------- | Return on equity at fair | | | 13.7 | 8.5 | | values | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Non-life Insurance by | Private | 2006 | Corporate | 2006 | | division | Customers | | Customers | | | | 2007 | | 2007 | | -------------------------------------------------------------------------------- | Balance on technical | | | | | | account, EUR million | | | | | -------------------------------------------------------------------------------- | Insurance premium revenue | 80 | 73 | 111 | 105 | -------------------------------------------------------------------------------- | Claims incurred | 57 | 51 | 93 | 82 | -------------------------------------------------------------------------------- | Amortisation on | 3 | 3 | 3 | 4 | | intangible assets from | | | | | | acquisitions | | | | | -------------------------------------------------------------------------------- | Operating expenses | 23 | 20 | 20 | 21 | -------------------------------------------------------------------------------- | Total expenses | 83 | 75 | 117 | 107 | -------------------------------------------------------------------------------- | Balance on technical | -3 | -2 | -6 | -2 | | account | | | | | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Key ratios, % | | | | | -------------------------------------------------------------------------------- | Operative return on | | | | | | equity | | | | | -------------------------------------------------------------------------------- | Loss ratio | 71.7 | 70.9 | 83.9 | 78.0 | -------------------------------------------------------------------------------- | Expense ratio | 29.3 | 28.0 | 18.2 | 20.5 | -------------------------------------------------------------------------------- | Operative combined ratio | 100.9 | 98.9 | 102.1 | 98.5 | -------------------------------------------------------------------------------- | Combined ratio | 104.3 | 103.3 | 105.0 | 102.2 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Non-life Insurance by | Baltic | 2006 | Total | 2006 | | division | States | | 2007 | | | | 2007 | | | | -------------------------------------------------------------------------------- | Balance on technical | | | | | | account, EUR million | | | | | -------------------------------------------------------------------------------- | Insurance premium revenue | 13 | 10 | 204 | 187 | -------------------------------------------------------------------------------- | Claims incurred | 9 | 6 | 159 | 139 | -------------------------------------------------------------------------------- | Amortisation on | 0 | 0 | 6 | 7 | | intangible assets from | | | | | | acquisitions | | | | | -------------------------------------------------------------------------------- | Operating expenses | 3 | 3 | 47 | 45 | -------------------------------------------------------------------------------- | Total expenses | 12 | 9 | 212 | 191 | -------------------------------------------------------------------------------- | Balance on technical | 1 | 1 | -8 | -4 | | account | | | | | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Key ratios, % | | | | | -------------------------------------------------------------------------------- | Operative return on | | | 35.0 | 23.8 | | equity | | | | | -------------------------------------------------------------------------------- | Loss ratio | 65.4 | 60.8 | 78.0 | 74.3 | -------------------------------------------------------------------------------- | Expense ratio | 23.5 | 26.9 | 22.9 | 23.8 | -------------------------------------------------------------------------------- | Operative combined ratio | 89.0 | 87.7 | 100.8 | 98.2 | -------------------------------------------------------------------------------- | Combined ratio | 91.2 | 90.7 | 103.9 | 102.2 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Balance sheet | Corpora | Market | Central | Treasur | Asset | Banking | | 31 March 2007 | te | s | Banking | y | Managemen | and | | EUR million | Banking | | | | t | Investmen | | | | | | | | t | | | | | | | | Services, | | | | | | | | total | -------------------------------------------------------------------------------- | Receivables | 8 198 | 18 | 59 | 7 | | 8 282 | | from | | | | | | | | customers | | | | | | | -------------------------------------------------------------------------------- | Receivables | 178 | 42 | 6 384 | 503 | 2 | 7 108 | | from | | | | | | | | financial | | | | | | | | institutions | | | | | | | -------------------------------------------------------------------------------- | Non-life | | | | | | | | insurance | | | | | | | | assets | | | | | | | -------------------------------------------------------------------------------- | Financial | 349 | 1 201 | 2 440 | 1 559 | 12 | 5 561 | | assets for | | | | | | | | trading and | | | | | | | | investment | | | | | | | | assets | | | | | | | -------------------------------------------------------------------------------- | Investments | | | | | | | | in associates | | | | | | | -------------------------------------------------------------------------------- | Other assets | 231 | 1 015 | 48 | 80 | 130 | 1 503 | -------------------------------------------------------------------------------- | Total assets | 8 956 | 2 276 | 8 931 | 2 149 | 144 | 22 455 | -------------------------------------------------------------------------------- | Liabilities | 317 | 115 | 987 | 843 | | 2 261 | | to customers | | | | | | | -------------------------------------------------------------------------------- | Liabilities | 0 | 225 | 1 472 | 246 | | 1 942 | | to financial | | | | | | | | institutions | | | | | | | -------------------------------------------------------------------------------- | Non-life | | | | | | | | insurance | | | | | | | | liabilities | | | | | | | -------------------------------------------------------------------------------- | Debt | | | | 15 050 | | 15 050 | | securities | | | | | | | | issued to the | | | | | | | | public | | | | | | | -------------------------------------------------------------------------------- | Subordinated | | | | 897 | | 897 | | liabilities | | | | | | | -------------------------------------------------------------------------------- | Other | 343 | 918 | 164 | 329 | 13 | 1 766 | | liabilities | | | | | | | -------------------------------------------------------------------------------- | Total | 660 | 1 258 | 2 622 | 17 364 | 13 | 21 917 | | liabilities | | | | | | | -------------------------------------------------------------------------------- | Shareholders' | | | | | | | | equity | | | | | | | -------------------------------------------------------------------------------- | Total | | | | | | | | liabilities | | | | | | | | and | | | | | | | | shareholders' | | | | | | | | equity | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Balance sheet | Non-life | Other | Eliminatio | OKO Bank Group | | 31 March 2007 | Insurance | Operations, | ns | | | EUR million | , | total | | | | | total | | | | -------------------------------------------------------------------------------- | Receivables from | | 53 | -67 | 8 268 | | customers | | | | | -------------------------------------------------------------------------------- | Receivables from | | 11 | -25 | 7 094 | | financial | | | | | | institutions | | | | | -------------------------------------------------------------------------------- | Non-life insurance | 3 199 | | -215 | 2 984 | | assets | | | | | -------------------------------------------------------------------------------- | Financial assets | 137 | -94 | -8 | 5 596 | | for trading and | | | | | | investment assets | | | | | -------------------------------------------------------------------------------- | Investments in | 2 | 7 | | 8 | | associates | | | | | -------------------------------------------------------------------------------- | Other assets | 898 | 185 | -2 | 2 584 | -------------------------------------------------------------------------------- | Total assets | 4 236 | 162 | -318 | 26 536 | -------------------------------------------------------------------------------- | Liabilities to | | 144 | -65 | 2 340 | | customers | | | | | -------------------------------------------------------------------------------- | Liabilities to | | 2 | 0 | 1 944 | | financial | | | | | | institutions | | | | | -------------------------------------------------------------------------------- | Non-life insurance | 2 515 | | | 2 515 | | liabilities | | | | | -------------------------------------------------------------------------------- | Debt securities | | | -199 | 14 851 | | issued to the | | | | | | public | | | | | -------------------------------------------------------------------------------- | Subordinated | 40 | | -40 | 897 | | liabilities | | | | | -------------------------------------------------------------------------------- | Other liabilities | 84 | 395 | -14 | 1 891 | -------------------------------------------------------------------------------- | Total liabilities | 2 639 | 541 | -318 | 24 778 | -------------------------------------------------------------------------------- | Shareholders' | | | | 1 758 | | equity | | | | | -------------------------------------------------------------------------------- | Total liabilities | | | | 26 536 | | and shareholders' | | | | | | equity | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Balance sheet | Corpora | Market | Central | Treasur | Asset | Banking | | 31 March 2006 | te | s | Banking | y | Managemen | and | | EUR million | Banking | | | | t | Investmen | | | | | | | | t | | | | | | | | Services, | | | | | | | | total | -------------------------------------------------------------------------------- | Receivables | 6 965 | 1 | 85 | 0 | | 7 051 | | from | | | | | | | | customers | | | | | | | -------------------------------------------------------------------------------- | Receivables | 118 | 56 | 4 446 | 907 | 14 | 5 561 | | from | | | | | | | | financial | | | | | | | | institutions | | | | | | | -------------------------------------------------------------------------------- | Non-life | | | | | | | | insurance | | | | | | | | assets | | | | | | | -------------------------------------------------------------------------------- | Financial | 321 | 2 364 | 1 399 | 1 043 | 6 | 5 133 | | assets for | | | | | | | | trading and | | | | | | | | investment | | | | | | | | assets | | | | | | | -------------------------------------------------------------------------------- | Investments | | | | | | | | in associates | | | | | | | -------------------------------------------------------------------------------- | Other assets | 162 | 590 | 46 | 62 | 128 | 987 | -------------------------------------------------------------------------------- | Total assets | 7 565 | 3 011 | 5 996 | 2 012 | 149 | 18 732 | -------------------------------------------------------------------------------- | Liabilities | 340 | 46 | 741 | 748 | | 1 874 | | to customers | | | | | | | -------------------------------------------------------------------------------- | Liabilities | 1 | 186 | 2 432 | 758 | | 3 376 | | to financial | | | | | | | | institutions | | | | | | | -------------------------------------------------------------------------------- | Non-life | | | | | | | | insurance | | | | | | | | liabilities | | | | | | | -------------------------------------------------------------------------------- | Debt | | | | 11 720 | | 11 720 | | securities | | | | | | | | issued to the | | | | | | | | public | | | | | | | -------------------------------------------------------------------------------- | Subordinated | | | | 694 | | 694 | | liabilities | | | | | | | -------------------------------------------------------------------------------- | Other | 325 | 601 | 136 | 156 | 16 | 1 235 | | liabilities | | | | | | | -------------------------------------------------------------------------------- | Total | 666 | 833 | 3 309 | 14 076 | 16 | 18 900 | | liabilities | | | | | | | -------------------------------------------------------------------------------- | Shareholders' | | | | | | | | equity | | | | | | | -------------------------------------------------------------------------------- | Total | | | | | | | | liabilities | | | | | | | | and | | | | | | | | shareholders' | | | | | | | | equity | | | | | | | -------------------------------------------------------------------------------- | | | | | | | | -------------------------------------------------------------------------------- | Investments | 1 | 0 | 0 | 0 | 0 | 1 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Balance sheet | Non-life | Other | Eliminatio | OKO | | 31 March 2006 | Insurance, | operations, | ns | Bank | | EUR million | total | total | | Group | -------------------------------------------------------------------------------- | Receivables from | | | -12 | 7 039 | | customers | | | | | -------------------------------------------------------------------------------- | Receivables from | | 22 | -43 | 5 541 | | financial | | | | | | institutions | | | | | -------------------------------------------------------------------------------- | Non-life Insurance | 3 153 | | -52 | 3 101 | | assets | | | | | -------------------------------------------------------------------------------- | Financial assets for | 203 | 486 | -468 | 5 355 | | trading and | | | | | | investment assets | | | | | -------------------------------------------------------------------------------- | Investments in | 2 | 7 | | 8 | | associates | | | | | -------------------------------------------------------------------------------- | Other assets | 900 | 91 | -6 | 1 966 | -------------------------------------------------------------------------------- | Assets classified as | 60 | | | 60 | | held for sale | | | | | -------------------------------------------------------------------------------- | Total assets | 4 318 | 606 | -578 | 23 070 | -------------------------------------------------------------------------------- | Liabilities to | | 13 | -57 | 1 830 | | customers | | | | | -------------------------------------------------------------------------------- | Liabilities to | | | -12 | 3 364 | | financial | | | | | | institutions | | | | | -------------------------------------------------------------------------------- | Non-life Insurance | 2 292 | | | 2 292 | | liabilities | | | | | -------------------------------------------------------------------------------- | Debt securities | | | -446 | 11 275 | | issued to the public | | | | | -------------------------------------------------------------------------------- | Subordinated | 40 | | -40 | 694 | | liabilities | | | | | -------------------------------------------------------------------------------- | Other liabilities | 252 | 427 | -23 | 1 891 | -------------------------------------------------------------------------------- | Liabilities related | 46 | | | 46 | | to assets classified | | | | | | as held for sale | | | | | -------------------------------------------------------------------------------- | Total liabilities | 2 629 | 440 | -578 | 21 391 | -------------------------------------------------------------------------------- | Shareholders' equity | | | | 1 679 | -------------------------------------------------------------------------------- | Total liabilities | | | | 23 070 | | and shareholders' | | | | | | equity | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Investments | 3 | 1 | | 5 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Notes | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 1) Net interest income | | | -------------------------------------------------------------------------------- | EUR million | 1-3/2007 | 1-3/2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest income | | | -------------------------------------------------------------------------------- | From receivables from | 64 | 34 | | financial | | | | institutions | | | -------------------------------------------------------------------------------- | From receivables from customers | 89 | 51 | -------------------------------------------------------------------------------- | From others | 284 | 162 | -------------------------------------------------------------------------------- | Total | 438 | 248 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest expenses | | | -------------------------------------------------------------------------------- | From liabilities to financial | 20 | 23 | | institutions | | | -------------------------------------------------------------------------------- | From liabilities to customers | 19 | 11 | -------------------------------------------------------------------------------- | From others | 373 | 188 | -------------------------------------------------------------------------------- | Total | 411 | 222 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net interest income | 26 | 26 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 2) Impairment losses on receivables | | | -------------------------------------------------------------------------------- | EUR million | 1-3/2007 | 1-3/2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Receivables amortised as loan or | 1 | 1 | | | | | | guarantee losses | | | -------------------------------------------------------------------------------- | Recoveries from receivables amortised | 0 | 0 | | as loan or guarantee losses | | | -------------------------------------------------------------------------------- | Increase in impairment loss provisions | 0 | 1 | -------------------------------------------------------------------------------- | Decrease in impairment loss provisions | -1 | -2 | -------------------------------------------------------------------------------- | Impairment losses on receivables, total | 0 | -1 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 3) Net income from Non-life Insurance | | | -------------------------------------------------------------------------------- | EUR million | 1-3/2007 | 1-3/2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net insurance premium revenue | | | -------------------------------------------------------------------------------- | Premiums written | 433 | 405 | -------------------------------------------------------------------------------- | Insurance premiums ceded | -29 | -28 | | to | | | | reinsurers | | | -------------------------------------------------------------------------------- | Change in provision for | -216 | -206 | | unearned | | | | premiums | | | -------------------------------------------------------------------------------- | Reinsurers' share | 15 | 16 | -------------------------------------------------------------------------------- | Total | 204 | 187 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net Non-life Insurance claims | | | -------------------------------------------------------------------------------- | Claims paid | 149 | 119 | -------------------------------------------------------------------------------- | Insurance claims | -1 | 6 | | recovered from | | | | reinsurers | | | -------------------------------------------------------------------------------- | Change in provision for unpaid claims | -2 | 0 | -------------------------------------------------------------------------------- | Reinsurers' share | 2 | 4 | -------------------------------------------------------------------------------- | Total | 147 | 129 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net investment income, Non-life | | | | Insurance | | | -------------------------------------------------------------------------------- | Interest rates | 17 | 18 | -------------------------------------------------------------------------------- | Net realised gains and realised | | | | | | | | fair value gains and losses | | | -------------------------------------------------------------------------------- | Notes and bonds | -24 | -1 | -------------------------------------------------------------------------------- | Shares and participations | 32 | 4 | -------------------------------------------------------------------------------- | Investment properties | 0 | 1 | -------------------------------------------------------------------------------- | Other | 3 | 2 | -------------------------------------------------------------------------------- | Unrealised fair value gains and losses | | | -------------------------------------------------------------------------------- | Notes and bonds | 0 | 0 | -------------------------------------------------------------------------------- | Shares and participations | 0 | 0 | -------------------------------------------------------------------------------- | Investment properties | 0 | 0 | -------------------------------------------------------------------------------- | Other | 1 | 0 | -------------------------------------------------------------------------------- | Dividend income | 18 | 14 | -------------------------------------------------------------------------------- | Total | 46 | 36 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Unwinding of discount | -10 | -9 | -------------------------------------------------------------------------------- | Other | 1 | 0 | -------------------------------------------------------------------------------- | Net income from Non-life Insurance, | 94 | 86 | | total | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 4) Net commissions and fees | | | -------------------------------------------------------------------------------- | EUR million | 1-3/2007 | 1-3/2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Commission income from | | | -------------------------------------------------------------------------------- | Lending | 6 | 4 | -------------------------------------------------------------------------------- | Payment transfers | 3 | 3 | -------------------------------------------------------------------------------- | Securities brokerage | 7 | 8 | -------------------------------------------------------------------------------- | Securities issuance | 0 | 1 | -------------------------------------------------------------------------------- | Asset management and | 12 | 11 | | legal | | | | services | | | -------------------------------------------------------------------------------- | Insurance operations | 3 | 2 | -------------------------------------------------------------------------------- | Guarantees | 1 | 1 | -------------------------------------------------------------------------------- | Other | 2 | 1 | -------------------------------------------------------------------------------- | Total | 34 | 31 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Commission expenses on | | | -------------------------------------------------------------------------------- | Payment transfers | 1 | 1 | -------------------------------------------------------------------------------- | Securities brokerage | 2 | 3 | -------------------------------------------------------------------------------- | Securities issuance | 1 | 0 | -------------------------------------------------------------------------------- | Asset management and | 2 | 1 | | legal | | | | services | | | -------------------------------------------------------------------------------- | Other | 0 | 0 | -------------------------------------------------------------------------------- | Total | 6 | 5 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net commissions and fees, total | 28 | 26 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 5) Net trading income | | | -------------------------------------------------------------------------------- | EUR million | 1-3/2007 | 1-3/2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Financial assets and liabilities | | | | held | | | | for trading | | | -------------------------------------------------------------------------------- | Capital gains and losses and | | | | realised | | | | changes in value | | | -------------------------------------------------------------------------------- | Notes and bonds | 0 | -3 | -------------------------------------------------------------------------------- | Shares and participations | 0 | 0 | -------------------------------------------------------------------------------- | Derivatives | -1 | 4 | -------------------------------------------------------------------------------- | Unrealised changes in value | | | -------------------------------------------------------------------------------- | Notes and bonds | -3 | -27 | -------------------------------------------------------------------------------- | Shares and participations | 0 | 1 | -------------------------------------------------------------------------------- | Derivatives | 9 | 24 | -------------------------------------------------------------------------------- | Net income from foreign | 3 | 3 | | exchange | | | | operations *) | | | -------------------------------------------------------------------------------- | Total | 7 | 3 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 6) Net investment income | | | -------------------------------------------------------------------------------- | EUR million | 1-3/2007 | 1-3/2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Available-for-sale financial assets | | | -------------------------------------------------------------------------------- | Capital gains and losses | | | -------------------------------------------------------------------------------- | Notes and bonds | 0 | 0 | -------------------------------------------------------------------------------- | Shares and participations | 4 | 15 | -------------------------------------------------------------------------------- | Dividend income | 5 | 4 | -------------------------------------------------------------------------------- | Total | 9 | 19 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Investment properties | 1 | 1 | -------------------------------------------------------------------------------- | Net investment income, total | 10 | 20 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 7) Other operating income | | | -------------------------------------------------------------------------------- | EUR million | 1-3/2007 | 1-3/2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Central bank service fee | 2 | 2 | -------------------------------------------------------------------------------- | Realisation of repossessed items | 0 | 0 | -------------------------------------------------------------------------------- | Rental income from assets rented | -1 | 3 | | | | | | under operating lease | | | -------------------------------------------------------------------------------- | Other | 11 | 7 | -------------------------------------------------------------------------------- | Total | 13 | 12 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 8) Personnel costs | | | -------------------------------------------------------------------------------- | EUR million | 1-3/2007 | 1-3/2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Salaries and remunerations | 34 | 35 | -------------------------------------------------------------------------------- | Pension costs | 5 | 5 | -------------------------------------------------------------------------------- | Other indirect personnel costs | 2 | 2 | -------------------------------------------------------------------------------- | Personnel costs, total | 41 | 42 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 9) Other administrative expenses | | | -------------------------------------------------------------------------------- | EUR million | 1-3/2007 | 1-3/2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Office expenses | 15 | 11 | -------------------------------------------------------------------------------- | IT expenses | 11 | 11 | -------------------------------------------------------------------------------- | Telecommunications expenses | 2 | 3 | -------------------------------------------------------------------------------- | Marketing expenses | 2 | 3 | -------------------------------------------------------------------------------- | Other administrative expenses | 4 | 4 | -------------------------------------------------------------------------------- | Other administrative expenses, total | 34 | 32 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 10) Other operating expenses | | | -------------------------------------------------------------------------------- | EUR million | 1-3/2007 | 1-3/2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Expenses from properties and | 6 | 6 | | | | | | business premises in own use | | | -------------------------------------------------------------------------------- | Expenses from realisation of | 0 | 0 | | | | | | repossessed items | | | -------------------------------------------------------------------------------- | Scheduled amortisation | | | | and | | | | depreciation | | | -------------------------------------------------------------------------------- | Amortisation on intangible | 9 | 9 | | | | | | assets due to acquisition | | | -------------------------------------------------------------------------------- | Other | 6 | 6 | -------------------------------------------------------------------------------- | Other*) | 18 | 9 | -------------------------------------------------------------------------------- | Other operating expenses, total | 39 | 30 | -------------------------------------------------------------------------------- *) The item includes EUR 10 million in liquidated damages, with interest and expenses, paid by OKO Bank to savings banks on the basis of an arbitral award. The liquidated damages were due to the ceasing of cooperation between Pohjola and savings banks in consequence of combining the operations of OP Bank Group and Pohjola. -------------------------------------------------------------------------------- | 11) Financial assets for trading | | | -------------------------------------------------------------------------------- | EUR million | 31 March | 31 Dec. | | | 2007 | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Notes and bonds | 5388 | 4795 | -------------------------------------------------------------------------------- | Shares and participations | 1 | 6 | -------------------------------------------------------------------------------- | Total | 5389 | 4801 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 12) Non-life Insurance assets | | | -------------------------------------------------------------------------------- | EUR million | 31 March | 31 Dec. | | | 2007 | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Money market investments, | 19 | 22 | | money | | | | market funds and deposits | | | -------------------------------------------------------------------------------- | Bonds and bond funds | 1 697 | 1 752 | -------------------------------------------------------------------------------- | Shares and participations | 489 | 447 | -------------------------------------------------------------------------------- | Alternative investments | 133 | 87 | -------------------------------------------------------------------------------- | Investment properties | 60 | 56 | -------------------------------------------------------------------------------- | Other | 587 | 400 | -------------------------------------------------------------------------------- | Total | 2 984 | 2 766 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 13) Investment assets | | | -------------------------------------------------------------------------------- | EUR million | 31 March | 31 Dec. | | | 2007 | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Available-for-sale financial assets | | | -------------------------------------------------------------------------------- | Notes and bonds | 95 | 94 | -------------------------------------------------------------------------------- | Shares and participations | 85 | 101 | -------------------------------------------------------------------------------- | Investment properties | 29 | 29 | -------------------------------------------------------------------------------- | Total | 209 | 225 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 14) Intangible assets | | | -------------------------------------------------------------------------------- | EUR million | 31 March | 31 Dec. | | | 2007 | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Goodwill | 494 | 494 | -------------------------------------------------------------------------------- | Brands | 179 | 179 | -------------------------------------------------------------------------------- | Customer relations pertaining to | 268 | 274 | | | | | | insurance contracts and policy | | | | | | | | acquisition costs | | | -------------------------------------------------------------------------------- | Other | 72 | 73 | -------------------------------------------------------------------------------- | Total | 1 013 | 1 020 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 15) Non-life Insurance liabilities | | | -------------------------------------------------------------------------------- | EUR million | 31 March | 31 Dec. | | | 2007 | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Insurance contract liabilities | | | -------------------------------------------------------------------------------- | Provision for unearned premiums | 501 | 285 | -------------------------------------------------------------------------------- | Provision for unpaid claims | 1 694 | 1 683 | -------------------------------------------------------------------------------- | Total | 2 195 | 0 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Other | 320 | 130 | -------------------------------------------------------------------------------- | Total | 2 515 | 2 099 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 16) Debt securities issued to the | | | | public | | | -------------------------------------------------------------------------------- | EUR million | 31 March | 31 Dec. | | | 2007 | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Bonds | 7 599 | 7 630 | -------------------------------------------------------------------------------- | Certificates of deposit | 7 138 | 5 519 | -------------------------------------------------------------------------------- | Other | 114 | 115 | -------------------------------------------------------------------------------- | Total | 14 851 | 13 263 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 17) Subordinated liabilities | | | -------------------------------------------------------------------------------- | EUR million | 31 March | 31 Dec. | | | 2007 | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Capital loans | 199 | 198 | -------------------------------------------------------------------------------- | Other | 697 | 727 | -------------------------------------------------------------------------------- | Total | 897 | 924 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Collateral given | | | -------------------------------------------------------------------------------- | EUR million | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Given on behalf of own liabilities and | 31 March | 31 Dec. | | commitments | 2007 | 2006 | -------------------------------------------------------------------------------- | Mortgages | 1 | 1 | -------------------------------------------------------------------------------- | Pledges | 695 | 2520 | -------------------------------------------------------------------------------- | Other | 37 | 31 | -------------------------------------------------------------------------------- | Total collateral given | 732 | 2552 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Off-balance sheet items | | | -------------------------------------------------------------------------------- | EUR million | 31 March | 31 Dec. | | | 2007 | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Guarantees | 522 | 534 | -------------------------------------------------------------------------------- | Guarantee liabilities | 1 273 | 1 384 | -------------------------------------------------------------------------------- | Loan commitments | 3 384 | 3 563 | -------------------------------------------------------------------------------- | Commitments related to | 184 | 165 | | short-term sale | | | | events | | | -------------------------------------------------------------------------------- | Other | 475 | 421 | -------------------------------------------------------------------------------- | Off-balance sheet items, total | 5 838 | 6 066 | -------------------------------------------------------------------------------- Accounts receivable and payable from sale or purchase of assets on behalf of customers -------------------------------------------------------------------------------- | EUR million | 31 March | 31 Dec. | | | 2007 | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Accounts receivable | 161 | 71 | -------------------------------------------------------------------------------- | Accounts payable | 177 | 70 | -------------------------------------------------------------------------------- Derivative contracts -------------------------------------------------------------------------------- | Derivatives held | | | | | | | for trading and | | | | | | | hedging on 31 March | | | | | | | 2007 | | | | | | -------------------------------------------------------------------------------- | EUR million | | Nominal | | Total | Fair | | | | | values/ | | | Values | | | | | remaining | | | | | | | | term | | | | | | | | to | | | | | | | | maturity | | | | | -------------------------------------------------------------------------------- | | <1 | 1-5 years | >5 | | Assets | Liabilities | | | year | | years | | | | -------------------------------------------------------------------------------- | | | | | | | | -------------------------------------------------------------------------------- | Interest | 39 | 20 683 | 8 621 | 69 292 | 268 | 263 | | rate | 989 | | | | | | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Currency | 8 651 | 1 670 | 882 | 11 202 | 53 | 169 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Equity and | 75 | 167 | | 242 | 34 | -1 | | index-linke | | | | | | | | d | | | | | | | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Credit | | 131 | | 131 | 0 | 1 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Other | 8 | 7 | | 15 | 1 | | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Total | 48 | 22 658 | 9 503 | 80 882 | 356 | 431 | | derivatives | 722 | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Derivatives held | | | | | | | for trading and | | | | | | | hedging on 31 March | | | | | | | 2006 | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR million | | Nominal | | Total | Fair | | | | | values/ | | | Values | | | | | remaining | | | | | | | | term | | | | | | | | to | | | | | | | | maturity | | | | | -------------------------------------------------------------------------------- | | <1 | 1-5 years | >5 | | Assets | Liabilities | | | year | | years | | | | -------------------------------------------------------------------------------- | | | | | | | | -------------------------------------------------------------------------------- | Interest | 28 | 14 470 | 4 088 | 46 937 | 167 | 169 | | rate | 378 | | | | | | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Currency | 4 512 | 687 | 372 | 5 571 | 43 | 53 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Equity and | 151 | 111 | | 262 | 23 | | | index-linke | | | | | | | | d | | | | | | | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Credit | | 150 | | 150 | 0 | 1 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Other | 79 | 15 | | 94 | 6 | | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Total | 33 | 15 434 | 4 460 | 53 015 | 240 | 224 | | derivatives | 120 | | | | | | -------------------------------------------------------------------------------- Other contingent liabilities and commitments On 31 March 2007, OKO Bank's commitments to venture capital funds amounted to EUR 7 million and Pohjola Non-Life's commitments to EUR 43 million. They are included in the section 'Off-balance sheet commitments'. Related party transactions The related parties of the OKO Bank Group comprise its parent, associates and administrative personnel, as well as other related party companies. The parent of the OKO Bank Group is Osuuspankkikeskus Osk (OP Bank Group Central Cooperative). The OKO Bank Group had the following associates on 31 March 2007 and 31 March 2006: Nooa Savings Bank Ltd, Autovahinkokeskus Oy and Vahinkopalvelu Oy. The administrative personnel of the OKO Bank Group includes the President and CEO of OKO Bank, the deputy to the President and CEO, and the members and deputy members of the Board of Directors and their close family members. Information on the members of the Supervisory Board and their close family members was included in the related party transactions until 30 March 2006, when the Supervisory Board was abolished. Normal credit terms apply to the loans granted to the management. The loans are tied to generally applied benchmark interest rates and the loans are repaid in accordance with the agreed repayment schedule. The loans have normal collateral. The other related party entities include OP Pension Fund, OP Pension Foundation and sister companies in OP Bank Group Central Cooperative Consolidated. -------------------------------------------------------------------------------- | Related party | | | | | | transactions | | | | | | on 31 March 2007 | | | | | -------------------------------------------------------------------------------- | | Parent | Consolidate | Administrativ | Others | | | company | d | e personnel | | | | | associates | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Loans | 27 | | | 2 488 | -------------------------------------------------------------------------------- | Other receivables | 12 | | | 68 | -------------------------------------------------------------------------------- | Deposits | 4 | | | 113 | -------------------------------------------------------------------------------- | Other liabilities | 43 | | | 38 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest income | 1 | | | 30 | -------------------------------------------------------------------------------- | Interest expenses | 1 | | | 11 | -------------------------------------------------------------------------------- | Dividend income | | | | 4 | -------------------------------------------------------------------------------- | Commission income | | | 0 | 7 | -------------------------------------------------------------------------------- | Commission expenses | | | 0 | 0 | -------------------------------------------------------------------------------- | Other operating | 2 | | | 2 | | income | | | | | -------------------------------------------------------------------------------- | Operating expenses | 14 | | | 1 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Off-balance sheet | | | | | | commitments | | | | | -------------------------------------------------------------------------------- | Guarantees | | | | 27 | -------------------------------------------------------------------------------- | Irrevocable | 8 | | | 81 | | commitments | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Salaries and | | | | | | remuneration and | | | | | | performance-related | | | | | | pay | | | | | -------------------------------------------------------------------------------- | Salaries and | | | 0 | | | remuneration | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Holdings of related | | | | | | parties | | | | | -------------------------------------------------------------------------------- | Number of shares | 60 825 | | 67 778 | 4 205 946 | | | 897 | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Related party | | | | | | transactions | | | | | | on 31 March 2006 | | | | | -------------------------------------------------------------------------------- | | Parent | Consolidate | Administrativ | Others | | | company | d | e personnel | | | | | associates | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Loans | 53 | | | 1 333 | -------------------------------------------------------------------------------- | Other receivables | 5 | | | 62 | -------------------------------------------------------------------------------- | Deposits | 4 | | | 72 | -------------------------------------------------------------------------------- | Other liabilities | 36 | | | 8 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest income | | | | 10 | -------------------------------------------------------------------------------- | Interest expenses | 1 | | | 2 | -------------------------------------------------------------------------------- | Commission income | 2 | | | 3 | -------------------------------------------------------------------------------- | Commission expenses | 1 | | | | -------------------------------------------------------------------------------- | Other operating | | | | 2 | | income | | | | | -------------------------------------------------------------------------------- | Operating expenses | 4 | | | 8 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Off-balance sheet | | | | | | commitments | | | | | -------------------------------------------------------------------------------- | Guarantees | | | | 7 | -------------------------------------------------------------------------------- | Irrevocable | 8 | | | | | commitments | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Salaries and | | | | | | remuneration and | | | | | | performance-related | | | | | | pay | | | | | -------------------------------------------------------------------------------- | Salaries and | | | 1 | | | remuneration | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Holdings of related | | | | | | parties | | | | | -------------------------------------------------------------------------------- | Number of shares | 60 825 | | 49 728 | 3 680 793 | | | 897 | | | | -------------------------------------------------------------------------------- The Interim Report 1 January to 31 March 2007 has been prepared in accordance with IAS 34 (Interim Financial Reporting). The accounting policies and the principles of segment reporting are described in the 2006 financial statements. The figures in this Interim Report are unaudited. All figures in the Report have been expressed in round numbers. Consequently, the sum of single figures may differ from the presented total sum. Financial reporting in 2007 The Interim Report of the OKO Bank Group for January-June will be disclosed on 9 August 2007 and for January-September on 8 November 2007 Helsinki 10 May 2007 OKO Bank plc Board of Directors (Translation) Statement on the review of the OKO Bank interim report for the period 1 January to 31 March 2007 To the Board of Directors of OKO Bank We have performed a review of the OKO Bank interim report for the period 1 January to 31 March 2007. The interim report has been prepared by, and is the responsibility of, the Board of Directors and the President, as defined under chapter 2, section 5 of the Finnish Securities Markets Act. Based on our review, and at the request of the Board of Directors, we issue our statement on the interim report in line with chapter 2, section 5, subsection 7 of the Finnish Securities Markets Act. Our review was conducted in accordance with practice statement “910 Review” issued by the Finnish Institute of Authorised Public Accountants. The review was planned and conducted in order to obtain reasonable assurance about whether the interim report is free of material misstatement. The review was limited in scope and mainly consisted of enquiries of company personnel and analytical procedures, and thus provides less assurance than an audit. We have not performed an audit and, accordingly, we do not express an audit opinion. Based on our review, nothing has come to our attention that would cause us to believe that the interim report, in all material respects, would not have been prepared in accordance with relevant rules and regulations, and that it would not fairly present the result of operations and financial position of the OKO Bank Group, as defined in the Finnish Securities Markets Act. Helsinki, 10 May 2007 KPMG OY AB Sixten Nyman Authorised Public Accountant Raimo Saarikivi Authorised Public Accountant This Interim Report is available on the Internet at www.oko.fi/english > Press. Background information on the Report can also be found at the same address. Meeting for analysts A meeting for analysts will be held in Finnish on 10 May 2007 at 10.00 am, and an English-language conference call will be arranged the same day at 3.30 pm, telephone +358 9 8248 5222 (PIN code 4745). OKO Bank plc Markku Koponen Senior Vice President Distribution: Helsinki Stock Exchange London Stock Exchange SWX Swiss Exchange Principal media www.oko.fi/english For additional information, please contact: Mr Mikael Silvennoinen, President and CEO, tel. +358 10 252 2549 Mr Ilkka Salonen, CFO, tel. +358 10 252 3146 Ms Marja Huhta, Senior Vice President, Investor Relations, tel. +358 10 252 2037
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