2008-02-14 07:00:00 CET
2008-02-14 07:00:16 CET
REGULATED INFORMATION
OKO Pankki Oyj - Financial Statement Release
OKO BANK PLC'S FINANCIAL STATEMENTS BULLETIN FOR 2007 WITH PRESIDENT AND CEO'S COMMENTS
President and CEO's comments: Banking and Investment Services posted record earnings for the fourth quarter and the financial year 2007, excluding write-downs on liquidity reserves. These write-downs, resulting mainly from wider credit spreads, undermined the business line's earnings during the second half of the year. The year-end balance on technical account was better than a year ago even without the discount rate increase on insurance contract liabilities effected in December. The annualised balance on technical account was markedly greater than in 2006. Despite unstable market conditions, Non-life Insurance's return on investment at fair value stood at 0.2% during the fourth quarter of 2007 and 4.8% during the entire year. Business growth remained nevertheless strong during the second half. Year on year, the Group's loan portfolio increased by 19% and insurance premium revenue by 8%. According to my estimates, both Banking and Investment Services and Non-life Insurance strengthened their market position during 2007. Considering the market conditions, the Group showed a good performance during the fourth quarter. The Group's risk exposure was good at the end of the year. Helsinki, 14 February 2008 Mikael Silvennoinen OKO BANK PLC'S FINANCIAL STATEMENTS BULLETIN FOR 2007 October-December 2007 1) - Earnings before tax amounted to EUR 67 million (57). - Earnings per share stood at EUR 0.24 (0.20), while equity per share was EUR 9.19 (9.07). - Non-life Insurance return on investment at fair value stood at 0.2% (1.5). - The trend of strongly widening credit spreads continuing in international financial markets reduced the market value of the Group Treasury's liquidity reserves by EUR 35 million, of which EUR 32 million was recognised in the income statement and EUR 3 million in the fair value reserve. - Return on equity at fair value was 5.1% (11.7). - The Group's net income increased by 8% and expenses by 4%. - Non-life Insurance reported a combined ratio of 83.5% (98.3) and at the end of December the pension liabilities' discount rate was revised up from 3.3% to 3.5%. This rise plus other changes in reserving bases increased the balance on technical account by EUR 32 million. The operating combined ratio, excluding changes in reserving bases and amortisation on intangible assets arising from the corporate acquisition, stood at 95.9% (95.8%). - OKO Bank plc's Extraordinary General Meeting on 9 October 2007 decided to rename the company's business name Pohjola Bank plc. January-December 2007 - Earnings before tax amounted to EUR 288 million (223). - Earnings per share stood at EUR 1.04 (0.89), while return on equity was 9.3% (9.5). - The Group's net income increased by 15% and expenses by 8%. - Corporate Banking's loan portfolio rose by 19% and the division's earnings exceeded EUR 100 million, totalling EUR 103 (80). - According to preliminary information, the Group became Finland's leading non-life insurer in terms of premiums written. Insurance premium revenue increased by 8%. The net number of Non-life Insurance's loyal customers grew by 34,000. - Non-life Insurance return on investment at fair value stood at 4.8% (5.2). - Non-life Insurance reported a combined ratio of 92.9% (98.7) and an operating combined ratio of 93.8% (95.5). - A dividend proposed by the Board of Directors amounts to EUR 0.65 (0.65) per Series A share and EUR 0.62 (0.62) per Series K share. This Financial Statements Bulletin is based on unaudited figures. 1) Comparatives deriving from the income statement are based on figures reported for the corresponding period a year ago. Unless otherwise specified, balance-sheet and other cross-sectional figures on 30 September 2007 are used as comparatives. -------------------------------------------------------------------------------- | Key indicators | Q4/ | Q4/ | | 2006 | | | 2007 | 2006 | 2007 | | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Earnings before tax, EUR million | 67 | 57 | 288 | 223 | -------------------------------------------------------------------------------- | Profit for the period, EUR | 49 | 41 | 212 | 180 | | million | | | | | -------------------------------------------------------------------------------- | Return on equity, % | 5.1 | 11.7 | 9.3 | 9.5 | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Balance sheet total, EUR billion | | | 25.9 | 24.2 | -------------------------------------------------------------------------------- | Risk-weighted items, EUR billion | | | 13.4 | 11.6 | -------------------------------------------------------------------------------- | Loan portfolio, EUR billion | | | 9.4 | 7.9 | -------------------------------------------------------------------------------- | Assets under management, EUR | | | 31.3 | 31.3 | | billion | | | | | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Capital adequacy, % | | | 12.2 | 12.9 | -------------------------------------------------------------------------------- | Tier 1 ratio, % | | | 7.5 | 8.2 | -------------------------------------------------------------------------------- | Proportion of doubtful | | | 0.1 | 0.2 | | receivables, % | | | | | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Earnings per share, EUR | 0.24 | 0.20 | 1.04 | 0.89 | -------------------------------------------------------------------------------- | Earnings per share, incl. change | 0.12 | 0.26 | 0.85 | 0.89 | | in fair value, EUR | | | | | -------------------------------------------------------------------------------- | Earnings per share, diluted, EUR | 0.24 | 0.20 | 1.04 | 0.89 | -------------------------------------------------------------------------------- | Equity per share, EUR | | | 9.19 | 8.99 | -------------------------------------------------------------------------------- | Dividend per share (Board | | | 0.65 | 0.65 | | proposal) | | | | | -------------------------------------------------------------------------------- | Market capitalisation (A+K | | | 2,658 | 2,583 | | shares), EUR million | | | | | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Average personnel | | | 3,006 | 3,030 | -------------------------------------------------------------------------------- CONSOLIDATED EARNINGS -------------------------------------------------------------------------------- | Earnings performance | | | | | | | | | | by quarter | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | | 200 | | | | 200 | | | | | | 6 | | | | 7 | | | -------------------------------------------------------------------------------- | EUR million | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | -------------------------------------------------------------------------------- | | | | | | | | | | -------------------------------------------------------------------------------- | Net interest income | 26 | 25 | 22 | 23 | 26 | 32 | 27 | 30 | -------------------------------------------------------------------------------- | Impairment losses on | -1 | 0 | 2 | 0 | 0 | 1 | 1 | -1 | | receivables | | | | | | | | | -------------------------------------------------------------------------------- | Net interest income | 27 | 25 | 20 | 23 | 26 | 31 | 26 | 31 | | after impairment | | | | | | | | | | losses | | | | | | | | | -------------------------------------------------------------------------------- | Net income from | 86 | 90 | 68 | 84 | 94 | 113 | 103 | 123 | | Non-life Insurance | | | | | | | | | -------------------------------------------------------------------------------- | Net commissions and | 26 | 23 | 25 | 29 | 28 | 31 | 24 | 32 | | fees | | | | | | | | | -------------------------------------------------------------------------------- | Net trading income | 3 | 2 | 6 | 9 | 7 | 3 | -16 | -27 | -------------------------------------------------------------------------------- | Net investment | 20 | 9 | 2 | 7 | 10 | 13 | 5 | 1 | | income | | | | | | | | | -------------------------------------------------------------------------------- | Other operating | 12 | 13 | 11 | 13 | 13 | 24 | 15 | 20 | | income | | | | | | | | | -------------------------------------------------------------------------------- | Total net income | 173 | 163 | 131 | 165 | 179 | 214 | 156 | 179 | -------------------------------------------------------------------------------- | Personnel costs | 42 | 45 | 36 | 42 | 41 | 45 | 37 | 43 | -------------------------------------------------------------------------------- | IT expenses | 11 | 11 | 10 | 10 | 11 | 11 | 10 | 11 | -------------------------------------------------------------------------------- | Depreciation and | 15 | 14 | 14 | 15 | 15 | 16 | 15 | 16 | | amortisation | | | | | | | | | -------------------------------------------------------------------------------- | Other expenses | 37 | 35 | 32 | 41 | 47 | 43 | 38 | 41 | -------------------------------------------------------------------------------- | Total expenses | 104 | 105 | 92 | 108 | 114 | 114 | 100 | 112 | -------------------------------------------------------------------------------- | Share of associates' | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | | profits/losses | | | | | | | | | -------------------------------------------------------------------------------- | Earnings before tax | 69 | 57 | 40 | 57 | 65 | 100 | 56 | 67 | -------------------------------------------------------------------------------- | Change in fair value | -20 | -45 | 47 | 16 | 14 | -25 | -10 | -34 | | reserve | | | | | | | | | -------------------------------------------------------------------------------- | Earnings before tax | 49 | 13 | 86 | 72 | 79 | 75 | 46 | 33 | | at fair value | | | | | | | | | -------------------------------------------------------------------------------- | | | | | | | | | | -------------------------------------------------------------------------------- | Income tax expense | 16 | 15 | -4 | 15 | 15 | 27 | 16 | 18 | -------------------------------------------------------------------------------- | Profit for the | 53 | 42 | 44 | 41 | 50 | 73 | 40 | 49 | | period | | | | | | | | | -------------------------------------------------------------------------------- | | | | | | | | | | -------------------------------------------------------------------------------- | Tax on change in | -5 | -11 | 12 | 4 | 4 | -7 | -2 | -9 | | fair value reserve | | | | | | | | | -------------------------------------------------------------------------------- | Earnings for the | 38 | 9 | 80 | 53 | 61 | 54 | 33 | 24 | | period at fair value | | | | | | | | | -------------------------------------------------------------------------------- | | | | | | | | | | -------------------------------------------------------------------------------- | Return on equity, % | 8.5 | 2.1 | 18.3 | 11.7 | 13.7 | 12.2 | 7.1 | 5.1 | -------------------------------------------------------------------------------- | Tier 1 capital | | | | | | | | | -------------------------------------------------------------------------------- | ratio, % | 8.8 | 8.2 | 8.2 | 8.2 | 8.0 | 8.0 | 7.9 | 7.5 | -------------------------------------------------------------------------------- October-December OKO Bank Group's (OKO) earnings before tax rose by 19% to EUR 67 million (57). Consolidated net income increased by 8% to EUR 179 million (165) while expenses rose by 4% to EUR 112 million (108). On 31 December, capital adequacy ratio stood at 12.2% (13.0) and Tier 1 ratio at 7.5% (7.9). Earnings per share were EUR 0.24 (0.20), while equity per share was EUR 9.19 (9.07). Earnings before tax at fair value totalled EUR 33 million (72). These higher-than-expected earnings are explained by the year-end increase of Non-life Insurance pension liabilities' discount rate from 3.3% to 3.5%, improving earnings before tax by EUR 29 million. Annualised return on equity stood at 5.1% (11.7). January-December Earnings before tax came to EUR 288 million (223). The fourth-quarter increase in the discount rate from 3.3% to 3.5% improved consolidated earnings before tax and earnings before tax at fair value by EUR 29 million. Consolidated net income increased by 15% to EUR 728 million (632) and expenses by 8% to EUR 440 million (409). Earnings per share were EUR 1.04 (0.89). Return on equity stood at 9.3% (9.5). EARNINGS BY BUSINESS LINE -------------------------------------------------------------------------------- | Earnings before tax, EUR | Q4/2007 | Q4/2006 | 2007 | 2006 | | million | | | | | -------------------------------------------------------------------------------- | Banking and Investment | 21 | 43 | 141 | 163 | | Services | | | | | -------------------------------------------------------------------------------- | Non-life Insurance | 56 | 20 | 181 | 78 | -------------------------------------------------------------------------------- | Other Operations | -10 | -7 | -34 | -19 | -------------------------------------------------------------------------------- | Group total | 67 | 57 | 288 | 223 | -------------------------------------------------------------------------------- October-December Banking and Investment Services recorded earnings of 21 EUR million before tax (43). Financial market uncertainties continued to widen credit spreads, affecting in particular the Group Treasury, which showed a pre-tax loss of EUR 30 million (7). Other businesses recorded earnings in line with or above expectations. The loan portfolio of Corporate Banking grew by 4.6%, standing at EUR 9.4 billion on 31 December. At the end of December, OKO Bank's market share of corporate loans rose to 17.3%, up by 0.1 percentage point on a year earlier. The risk exposure remained good. The average level of corporate loan portfolio's margins remained stable, standing at 0.81% on 31 December. Non-life Insurance posted earnings of EUR 56 million (20) before tax. Insurance premium revenue improved by 3% to EUR 211 million (204). Changes in reserving bases, including a rise of the discount rate, reduced provisions for previous years by a total of EUR 32 million (1) in net terms. The operating combined ratio stood at 95.9% (95.8). Investment income from Non-life Insurance recognised in the income statement totalled EUR 32 million (28). Due to the uncertainty in financial markets, investment income at fair value came to EUR 3 million (42). Other Operations made a pre-tax loss of EUR 10 million (loss of EUR 7 million). January-December Banking and Investment Services recorded earnings of 141 EUR million before tax (163). Uncertainties caused by the troubled US home loan market widened credit spreads during the second half, affecting in particular the Group Treasury, which showed a pre-tax loss of EUR 35 million (32). Other businesses recorded earnings in line with or above expectations. Corporate Banking, Markets, and Asset Management posted all-time high earnings. The loan portfolio of Corporate Banking grew by 19%, standing at EUR 9.4 billion on 31 December. The risk exposure remained good. The average level of corporate loan portfolio's margins stood at 0.81% (0.87). Non-life Insurance posted earnings of EUR 181 million (78) before tax. Insurance premium revenue improved by 8% to EUR 850 million (788). The combined ratio stood at 92.9% (98.7). Changes in reserving bases, including a rise of the discount rate, reduced provisions for previous years by a total of EUR 32 million (1) in net terms while improving the balance on technical account. The operating combined ratio stood at 93.8% (95.5). Investment income recognised in the income statement totalled EUR 160 million (115) and, despite uncertain financial markets, that in fair value came to EUR 121 (132). Earnings before tax include a non-recurring capital gain of EUR 6 million on the sale of the marine hull insurance portfolio. Other Operations made a pre-tax loss of EUR 34 million (loss of EUR 19 million). OPERATING ENVIRONMENT In 2007, the financial market's operating environment was characterised by somewhat mixed feelings. Thanks to the strong economic uptrend that continued until the autumn, demand for banking and insurance services remained brisk. This upturn began to lose momentum towards the end of the year while the exacerbating problems in the US housing market added uncertainty in the world economy. Although this uncertainty is anticipated to prevail in 2008, Finnish economic growth is expected to remain moderate. With the world economy showing weakening growth in 2007, growth in the EU remained almost at the previous year's rate. At the same time, however, the US economy suffered a marked slowdown and this downward trend was exacerbated by the late-summer housing market crash. This bleaker US economic outlook will also cast a shadow over the trend pictures in the fast-growing Asian economies. The US housing market crisis squeezed lending in international markets while widening lending margins. Due to US subprime loans, financial institutions in a number of countries reported hefty losses, which the sector expects to record more in 2008. Central banks increased money-market liquidity several times in an effort to reduce the risk of drifting into a loan slump and the Federal Reserve also cut its benchmark interest rate. After raising the benchmark interest rate twice during the first half of 2007, standing at 4.0%, the European Central Bank kept the interest rate unchanged during the second half. Finnish economic growth expected to slow in 2008 In 2007, Finland continued to enjoy an upward trend longer than expected although the economy began to slow down slightly in late autumn, with GDP growing by around 4%. As in the previous year, this growth was supported by exports, which increased particularly to Western Europe, Finland's main market area. Housing starts began to decline, but demand for investments in other housing construction projects perked up considerably. Growth in consumer spending remained relatively steady, with higher wages and lower unemployment improving consumer spending power. According to surveys conducted among companies, business conditions remained better than usual in all the main sectors. Output growth in the manufacturing industry slowed down slightly in the second half of the year, although order-books remained long. Construction firms also enjoyed larger-than-usual order books but showed a weaker confidence. Growth in service-sector sales slowed down although expectations for future sales remained favourable. Although economic growth is expected to slow down in 2008, due to more tepid growth in exports and consumer spending than in 2007, it is anticipated to remain at the average long-term rate. Consumer confidence was strong in 2007, but expectations for 2008 have become more cautious. Consumer prices rose at an accelerating pace of 2.5% in 2007 and the inflation rate is anticipated to stand at over 3% in 2008. Greater uncertainty in financial markets The European Central Bank tightened its monetary policy by raising the Euribor rates twice during the first half of 2007. In the autumn, the US housing loan crisis increased the volatility of short-term market rates which rose more than long-term market rates. At the end of 2007, the 3-month Euribor rate was 4.69% and the 12-month Euribor rate 4.75%. The euro-zone's economic upturn losing momentum speaks in favour of lower Euribor rates in 2008. In 2007, the Finnish banking market continued its brisk growth for the fifth year running. In order for the growth to remain at around the previous years' pace, the stock market should get rid of the uncertainty and consumers should demonstrate a modest courage in borrowing. The growth rate of corporate loans rose to 12.9% in 2007. Greater uncertainty in international financial markets did not practically affect the Finnish corporate bond market. There were still plenty of M&As and transfers of business to the next generation. Deposits with financial institutions grew by 13.9% because higher interest on deposits provided protection against swings in stock markets. Capital markets showed favourable developments although the US financial crisis indeed cast a shadow particularly over equity markets towards the end of the year. In Finland, the OMX Helsinki Cap index - a measure of stock prices - improved by 3.9% in 2007. The growth rate of capital invested in mutual funds slowed to 8.3% as a result of the greater second-half uncertainty spreading from international markets. Premiums written in life insurance fell by 8.8% year on year, although insurance savings increased by 3.6%. In 2007, the cash-basis and like-for-like premiums written of Non-life Insurance rose by about 5%. CAPITAL ADEQUACY The capital adequacy ratio remained strong despite vigorous growth in the loan portfolio, standing at 12.2% (13.0) as against the statutory minimum requirement of 8%. Tier 1 ratio to total risk-weighted items was 7.5% (7.9). The risk-weighted items increased by 4.4 percentage points to EUR 13,374 million during the fourth quarter, due mainly to growth in the loan and guarantee portfolio. The own funds and capital adequacy table can be found on page 30. Since 1 January 2008, OKO has calculated its capital adequacy in compliance with a new capital adequacy regime reflected in the calculation of own funds and their minimum requirements. Moreover, OKO's own funds are calculated by deducting the total carrying amount of insurance company investment from its own funds, half from Tier 1 and half from Tier 2. Until the end of 2007, goodwill arising from insurance company investment and intangible assets were deducted from Tier 1 and the insurance company's minimum solvency margin was deducted from total own funds. As a result of the adoption of the new capital adequacy measurement technique, Tier 1 increases by roughly EUR 180 million, improving the Tier 1 ratio by around 1.5 percentage points. However, total own funds diminish by some EUR 190 million, lowering total capital adequacy by 1.3 percentage points, in comparison with the previous measurement technique. Since 1 January 2008, the minimum regulatory capital requirements (Pillar 1) for credit risk have been calculated using the Standardised Approach (SA). In the calculation of capital adequacy requirements for credit risk, OKO Bank aims to phase in the Internal Ratings-based Approach (IRBA) in such a way that the capital adequacy requirement for the first exposure classes, such as corporate exposure, will be calculated using IRBA from the second half of 2008. From 1 January 2008, the capital adequacy requirement for operational risks will be calculated using the Basic Indicator Approach (BIA) and that for market risks using SA. The adoption of IRBA for credit risk and OP-Pohjola Group's zero-risk weight of internal items are expected to lower the minimum requirement for own funds from their current levels. Due to transitional provisions, the minimum requirement for own funds may decrease by a maximum of 10% in 2008 and by a maximum of 20% in 2009 in comparison with the current method. RISK EXPOSURE Banking and Investment Services With financial markets suffering sustained turbulence during the fourth quarter, widening credit spreads within Banking and Investment Services resulted in a decrease in value of EUR 35 million, which was due to the market valuation of notes and bonds at fair value through profit or loss and of those available for sale, included in liquidity reserves. Of this amount, EUR 32 million was recognised in the income statement and EUR 3 million in fair value reserve. The negative value change recognised from liquidity reserves during the second half totalled EUR 63 million, EUR 57 million of which was recognised in the income statement. On 31 December, financial assets included in liquidity reserves totalled EUR 5,749 million (5,542). A significant part of Pohjola Bank's portfolios comprises notes and bonds, issued by entities with high credit rating, which may be used as collateral for central bank debt. Notes and bonds include EUR 2,219 million in financial assets held for trading, EUR 2,481 million in financial assets at fair value through profit or loss and EUR 603 million in available-for-sale financial assets. All financial assets are measured at market prices in the financial statements. Changes in the fair value of financial assets held for trading and financial assets at fair value through profit or loss are recognised in the income statement and those in the fair value of available-for-sale financial assets in the fair value reserve under shareholders' equity. Financial assets included in liquidity reserves by balance sheet item, EUR million -------------------------------------------------------------------------------- | EUR million | 31 Dec 2007 | 31 Dec 2006 | -------------------------------------------------------------------------------- | Deposits with the Bank of Finland (net) | 446 | 505 | -------------------------------------------------------------------------------- | Financial assets held for trading | | | -------------------------------------------------------------------------------- | Short-term notes and bonds | 1 581 | 1 668 | -------------------------------------------------------------------------------- | Long-term notes and bonds | 638 | 801 | -------------------------------------------------------------------------------- | Financial assets at fair value through | 2 481 | 2 325 | | profit or loss | | | -------------------------------------------------------------------------------- | Available for sale financial assets | 603 | 85 | -------------------------------------------------------------------------------- | Total liquidity reserves | 5 749 | 5 384 | -------------------------------------------------------------------------------- Financial assets included in liquidity reserves by maturity and credit rating on 31 December 2007, EUR million -------------------------------------------------------------------------------- | Year( | 0 - 1 | 1 - 3 | 3 - 5 | 5 - 7 | 7 - 10 | 10 - | Total | % | | s) | | | | | | | | | -------------------------------------------------------------------------------- | AAA | 833 | 451 | 569 | 362 | 376 | 0 | 2 591 | 45 | -------------------------------------------------------------------------------- | AA | 1 398 | 239 | 294 | 216 | 26 | 0 | 2 173 | 38 | -------------------------------------------------------------------------------- | A | 74 | 203 | 126 | 34 | 57 | 0 | 494 | 9 | -------------------------------------------------------------------------------- | BBB | 14 | 31 | 71 | 22 | 0 | 0 | 138 | 2 | -------------------------------------------------------------------------------- | BB+ | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | | or | | | | | | | | | | lower | | | | | | | | | -------------------------------------------------------------------------------- | Inter | 35 | 133 | 157 | 15 | 12 | 0 | 353 | 6 | | nally | | | | | | | | | | rated | | | | | | | | | -------------------------------------------------------------------------------- | | 2 355 | 1 059 | 1 217 | 648 | 471 | 0 | 5 749 | 100 | -------------------------------------------------------------------------------- The average remaining maturity of liquidity reserves was 2.7 years. Internally rated financial assets consist mainly of bonds issued by Finnish companies and institutions. Negative changes in value will be reversed during the remaining term to maturity if the notes and bonds are not sold before their maturity and their issuer is not declared insolvent. The probability of the realisation of negative value changes will be reduced by high credit ratings associated with notes and bonds and OKO's strong liquidity enabling the bank to hold these notes and bonds until maturity. However, any protracted uncertainty in financial markets will increase the risk of the realisation of negative value changes. OKO Bank has no direct investments in US sub-prime home loans, and indirect investments through AAA-rated, securitised instruments amount only to roughly EUR 3 million. The greater uncertainty in financial markets has not had any effect on the availability of OKO Bank's short-term or long-term funding, and the Bank's liquidity position has remained strong. Owing to the turbulence in financial markets and growth in deposits by the general public with OP-Pohjola Group member banks, due to the broader customer base resulting from the Pohjola acquisition, reduced the need for wholesale funding through OKO Bank during the fourth quarter. Despite the greater uncertainty in financial markets, Banking and Investment Services' risk exposure continued to remain good. During the fourth quarter, total exposure increased by EUR 0.5 billion to EUR 28.2 billion, due mainly to growth in the corporate loan portfolio and notes and bonds. Total exposure grew by EUR 1.9 billion from the beginning of 2007. Credit rating by total exposure and corporate exposure remained unchanged during the fourth quarter. The ratio of investment-grade exposure - i.e. ratings 1-4 - to total exposure stood at 56% and the corporate exposure of the two lowest rating classes came to EUR 70 million, accounting for 0.6% of total exposure. Significant customer exposure for the fourth quarter fell to EUR 3.6 billion (4.0). The ratio of doubtful receivables to the loan and guarantee portfolio remained low, or 0.1% (0.2). In net terms, credit and guarantee losses improved earnings for the fourth quarter by EUR 0.7 million and pulled down earnings for 2007 by EUR 0.9 million. OKO Bank kept interest rate risks at moderate levels throughout the financial year and covered market risks, arising from the issuance of structured bonds, using derivative contracts corresponding to the bonds' structure of returns. On 31 December, the market value of equity and venture capital funds came to EUR 44 million, of which venture capital funds with their investment commitments accounted for EUR 30 million (29). Overnight currency exposure and the associated risk remained low throughout the year. On 31 December, net currency exposure amounted EUR-15 million (-12) and capital tied to property holdings came to EUR 27 million. Non-life Insurance As a result of internal dividend distribution decisions made in the fourth quarter and the repayment of Pohjola Non-Life Insurance Company's subordinated loan, Non-life Insurance capitalisation came closer to the target level of 70%. On 31 December 2007, Non-life Insurance solvency capital came to EUR 613 million (694) and the ratio of solvency capital to insurance premium revenue (solvency ratio) stood at 72% (82). In Non-life Insurance, the fourth quarter saw 66 (57) major or medium-sized losses (in excess of EUR 0.1), with their claims incurred retained for own account totalling EUR 39 million (24), while their total number for 2007 came to 221 (189) and the related claims incurred retained for own account totalled EUR 97 million (85). On 31 December, the investment portfolio of Non-life Insurance totalled EUR 2,511 million as against EUR 2,490 million a year ago, with bonds and bond funds accounting for 69% (64) and equities for 16% (18). Non-life Insurance investment portfolio by allocation -------------------------------------------------------------------------------- | Allocation | Fair | % | Fair value | % | | | value on | | on 31 Dec | | | | 31 Dec | | 2006, EUR | | | | 2007, | | million | | | | EUR | | | | | | million | | | | -------------------------------------------------------------------------------- | Money market | 51 | 2 | 69 | 3 | -------------------------------------------------------------------------------- | Bonds and bond funds | 1,722 | 69 | 1,798 | 72 | -------------------------------------------------------------------------------- | Equities | 413 | 16 | 430 | 17 | -------------------------------------------------------------------------------- | Alternative investments | 188 | 7 | 87 | 3 | -------------------------------------------------------------------------------- | Real property | 138 | 5 | 107 | 4 | -------------------------------------------------------------------------------- | Total | 2,511 | 100 | 2,490 | 100 | -------------------------------------------------------------------------------- Despite turbulent financial markets, the fixed-income portfolio remained favourable. The average credit rating of the fixed-income portfolio, in accordance with Standard & Poor's, was AA-, which was almost the same as a year earlier (AA). Non-life Insurance has neither direct nor indirect investments related to sub-prime home loans. All portfolios are measured at market prices. The average remaining maturity of the fixed-income portfolio was 5.4 years and the duration 3.8 years (4.8). On 31 December, the fixed-income portfolio's current interest rate was 4.8% (4.2). Non-life Insurance fixed-income portfolio by maturity and credit rating on 31 December 2007, EUR million -------------------------------------------------------------------------------- | Year( | 0 - 1 | 1 - 3 | 3 - 5 | 5 - 7 | 7 - 10 | 10 - | Total | % | | s) | | | | | | | | | -------------------------------------------------------------------------------- | AAA | 54 | 185 | 128 | 43 | 116 | 86 | 613 | 35 | -------------------------------------------------------------------------------- | AA | 46 | 60 | 93 | 17 | 34 | 20 | 270 | 15 | -------------------------------------------------------------------------------- | A | 20 | 103 | 287 | 107 | 30 | 54 | 600 | 34 | -------------------------------------------------------------------------------- | BBB | 5 | 31 | 84 | 29 | 8 | 14 | 170 | 10 | -------------------------------------------------------------------------------- | BB+ | 16 | 21 | 13 | 3 | 16 | 29 | 98 | 6 | | or | | | | | | | | | | lower | | | | | | | | | -------------------------------------------------------------------------------- | Inter | 3 | 2 | 12 | 0 | 2 | 0 | 19 | 1 | | nally | | | | | | | | | | rated | | | | | | | | | -------------------------------------------------------------------------------- | | 144 | 403 | 616 | 198 | 205 | 203 | 1 769 | 100 | -------------------------------------------------------------------------------- Despite the markedly greater volatility of financial markets, the investment portfolio's return stood at 0.2% (1.5) during the fourth quarter and at 4.8% (5.2) during the financial year. INTEGRATION The integration process of OKO Bank's and Pohjola's business operations is proceeding according to plan. The results so far support earlier estimates of income and cost synergies, the annual amount of which should reach a good EUR 50 million before tax by the end of 2010. Decisions made until the present date result in annual savings of approximately EUR 33 million, of which EUR 8 million relates to decisions taken in 2007. New cost savings were mainly allocated to ICT functions with Non-life Insurance. Of the annual cost savings, EUR 13 million was gained in 2006, EUR 29 million in 2007 and the estimate for 2008 onwards is EUR 33 million. Integration expenses for September 2005-December 2007, related to the Pohjola acquisition, totalled EUR 23 million. Pohjola's new business model resulting from OKO Bank's Pohjola acquisition removed life-insurance and fund-saving products from Pohjola's product portfolio. While updating the Group's strategy, the Board re-specified the definition of the loyal customer household to be in line with the new business model, excluding life insurance and fund-saving products from the definition. Loyal customer households are now defined as households who have taken out Pohjola policies within at least three non-life insurance product lines. Although this change decreased the number of loyal customer households by 45,000 to 347,000 (30 September 2007), the average annual premiums written per loyal customer household rose to over EUR 700. Similarly, the target set for the number of loyal customers has changed, i.e. OKO Bank aims to increase the number of loyal customer households to 450,000 (500,000, based on the previous definition) by the end of 2010. The number of loyal customer households within Non-life Insurance increased by more than 34,000 during the financial year, over 90% of which was thanks to cooperation within OP-Pohjola Group. On 31 December, loyal customer households numbered 355,000. Customer service took a major step in November when OP-Pohjola Group expanded loyal customer benefits, related to the Pohjola integration, in such a way that customers can also use OP bonuses earned through banking transactions to pay Pohjola insurance premiums. This represents a major benefit to the over 892,000 loyal customers who have concentrated their purchases of banking and insurance services and around 580,000 of them can now pay their insurance premiums using OP bonuses. An estimated over ten per cent of these customers are able to pay all their insurance premiums by using bonuses. OKO Bank's Extraordinary General Meeting of 9 October 2007 decided to rename OKO Bank plc's business name Pohjola Bank plc. The resulting altered Articles of Association will be registered in the Trade Register and the new business name will be officially adopted on 1 March 2008. Similarly, the majority of Group companies' names will begin with Pohjola. The name change will bring all Group operations under a single name and brand. On 12 September 2007, OP Bank Group was renamed OP-Pohjola Group. GROUP RESTRUCTURING FOR OCTOBER-DECEMBER OKO Bank plc announced that it would buy all of the shares in K-Finance Ltd, a Kesko Corporation subsidiary, with the parties signing the related agreement on 21 December 2007. The purchase price totals around EUR 30 million, of which goodwill accounts for roughly EUR 12 million. The final purchase price will be determined on the basis of the shareholders' equity and the fixed goodwill effective on 31 January. K-Finance provides financing services to corporate customers, mainly to commercial customers of Kesko Agro and Konekesko and agricultural retailers in Finland, Estonia, Latvia and Lithuania. The acquiree's loan portfolio stood at about EUR 260 million on 30 September 2007. The two companies also agreed on cooperation according to which K-Finance will continue to provide financing services to Kesko Agro and Konekesko customers. On 21 December 2007, OKO Bank plc announced that it would sell its subsidiary ZAO OKO Capital Vostok to Swedbank of Sweden. Operating in Moscow and St. Petersburg, the divested company is involved in investment banking and has a staff of seven. Requiring regulatory approval in Russia, this deal will have no major effect on OKO Bank Group's earnings. PERSONNEL On December 31, the Group had a staff of 3,058, or 12 more than on 30 September, 758 (743) of whom worked for Banking and Investment Services, 2,023 (2,037) for Non-life Insurance in Finland and 224 (221) abroad, and 53 (55) for Other Operations. CAPITAL EXPENDITURE Fourth-quarter gross capital expenditure totalled EUR 6 million, EUR 3 million allocated to Banking and Investment Services and EUR 2 million to Non-life Insurance. These investments were mainly made in IT systems aimed at developing network services and streamlining internal processes. DECISIONS BY THE EXTRAORDINARY GENERAL MEETING As proposed by the Board of Directors, OKO Bank plc's Extraordinary General Meeting on 9 October 2007 decided to change the Company's business name and alter Articles 1 and 2 of the Articles of Association. Accordingly, the Company's new business name is Pohjola Pankki Oyj in Finnish, Pohjola Bank Abp in Swedish and Pohjola Bank plc in English. This alteration of the Articles of Association will be registered in the Trade Register and the new business name will be adopted officially on 1 March 2008. SHARE CAPITAL AND SHAREHOLDERS Shares and share capital OKO Bank shares are divided into Series A and K shares. Series A shares available for the general public are quoted on the OMX Nordic Exchange Helsinki, whereas the holding of Series K shares is restricted to entities within OP-Pohjola Group. These two share classes also differ in other respects. At a general meeting of shareholders, Series A shares entitle their holders to one vote and Series K shares five votes. In addition, Series A shares pay an annual dividend which is at least one percentage point higher than dividends payable on Series K shares. On 31 December 2007, the number of shares totalled a well over 203 million, remaining unchanged over a year ago, with Series A shares numbering 159.6 million, representing 78.5% of all shares. In accordance with the conversion clause in OKO Bank's Articles of Association, in 2007 member cooperative banks converted 194,580 Series K shares into an equivalent number of Series A shares. These conversions had no effect on the share capital. On 31 December 2007, OKO Bank held no treasury shares and the shareholders' meeting has not authorised the Board to buy back treasury shares. Shareholders, share price performance and trading volume On 31 December, OKO Bank had 30,272 registered shareholders, down by 1,946 on a year earlier, the number of private individuals as shareholders totalling 28,781. The largest shareholder was OP Bank Group Central Cooperative, the parent entity of OKO Bank, representing 29.9% of all shares and 57.0% of votes. The number of nominee registered shares in proportion to all Series A shares fell from 19.7% a year ago to 18.0% on 31 December 2007. In 2007, OKO Bank's share price advanced by 3%, while the weighted index of the OMX Helsinki CAP rose by almost 4%. On 31 December 2007, Series A share closed at EUR 13.07 against EUR 12.70 a year earlier. In 2007, the share price reached a high of EUR 15.28 and a low of EUR 11.93. The share trading volume increased considerably, as evidenced by around 147 million shares changing hands during the year as against 104 million a year ago. EVENTS AFTER THE REPORTING PERIOD On 31 January 2008, OKO Bank Group became the owner of K-Finance shares. The purchase price was around EUR 30 million, of which goodwill accounted for roughly EUR 12 million. PROSPECTS FOR 2008 Although economic growth is expected to slow down in 2008, it should, however, stand at the long-term average rate. The corporate loan market is expected to continue its growth, albeit at a slower rate than in 2007, and lending margins should remain stable. The 2008 earnings before tax generated by Banking and Investment Services are anticipated to be better than in 2007, based on an estimate of liquidity reserves' fair value changes outperforming those in 2007. Risk exposure is projected to remain healthy. In addition to market growth, intense cooperation with OP-Pohjola Group member cooperative banks and the adoption of bonus benefits for joint banking and insurance customers, which are expected to strengthen the market share among private customers in particular, will contribute to insurance premium revenue within Non-life Insurance. In Non-life Insurance, the operating combined ratio is estimated to vary between 91% and 95% if the number of major losses is not unusually large. Non-life Insurance's expected long-term return on investment is 5.4%. Other Operations' earnings for 2007 include EUR 11 million in non-recurring expenses. Since OKO Bank does not expect to incur these expenses in 2008, earnings are anticipated to be better than in 2007. Should the forward-looking statements and assumptions about the near-term outlook come true, the main risks involved are associated with developments in credit spreads, interest rates and share prices, as well as the general operating environment. Although developments in the general operating environment are beyond the Group management's control, the management may influence the effects of interest-rate changes and the equity market on investment and trading by investing assets securely, diversifying risks, promoting its personnel's professional skills and managing risks effectively. In addition, the management may contribute to the appropriate pricing of customer-specific risk and, consequently, the Group's financial performance. All forward-looking statements in this bulletin expressing the management's expectations, beliefs, estimates, forecasts, projections and assumptions are based on the current view of the future financial performance of OKO Bank plc and its various functions, and actual results may differ materially from those expressed in the forward-looking statements. BUSINESS OPERATIONS The table below shows earnings before tax reported by the Group's business lines, and the strategic targets and their actuals. Formulae for key ratios can be found on pages 24-26. -------------------------------------------------------------------------------- | | Q4/2007 | Q4/2006 | 2007 | 2006 | Target | | | | | | | by end | | | | | | | of | | | | | | | 2010 | -------------------------------------------------------------------------------- | | | | | | | -------------------------------------------------------------------------------- | Banking and Investment | | | | | | | Services | | | | | | -------------------------------------------------------------------------------- | Earnings before tax, EUR | 21 | 43 | 141 | 163 | | | million | | | | | | -------------------------------------------------------------------------------- | Operating return on | 6.7 | 19.2 | 12.1 | 18.2 | > 19 | | equity, % | | | | | | -------------------------------------------------------------------------------- | Operating cost/income | 60.9 | 44.0 | 46.3 | 41.5 | < 40 | | ratio, % | | | | | | -------------------------------------------------------------------------------- | | | | | | | -------------------------------------------------------------------------------- | Non-life Insurance | | | | | | -------------------------------------------------------------------------------- | Earnings before tax, EUR | 56 | 20 | 181 | 78 | | | million | | | | | | -------------------------------------------------------------------------------- | Operating return on | 18.5 | 27.6 | 25.2 | 20.9 | > 20 | | equity, % | | | | | | -------------------------------------------------------------------------------- | Operating combined ratio, | 95.9 | 95.8 | 93.8 | 95.5 | 92 | | % | | | | | | -------------------------------------------------------------------------------- | Operating expense ratio | 20.8 | 21.9 | 21.2 | 21.9 | < 20 | -------------------------------------------------------------------------------- | Solvency ratio | | | 72 | 75 | 70 | -------------------------------------------------------------------------------- | | | | | | | -------------------------------------------------------------------------------- | Other Operations | | | | | | -------------------------------------------------------------------------------- | Earnings/loss before tax, | -10 | -7 | -34 | -19 | | | EUR million | | | | | | -------------------------------------------------------------------------------- BANKING AND INVESTMENT SERVICES Banking and Investment Services comprises the following divisions: - Corporate Banking - Markets - Central Banking and Group Treasury - Asset Management -------------------------------------------------------------------------------- | | 2007 | 2006 | 2007 | 2006 | -------------------------------------------------------------------------------- | | Q4 | Q4 | | | -------------------------------------------------------------------------------- | Income statement, EUR million | | | | | -------------------------------------------------------------------------------- | Net interest income | 35 | 29 | 131 | 113 | -------------------------------------------------------------------------------- | Impairment losses on receivables | -1 | 0 | 1 | 1 | -------------------------------------------------------------------------------- | Net interest income after | 36 | 28 | 130 | 112 | | impairment losses | | | | | -------------------------------------------------------------------------------- | Net commissions and fees | 33 | 29 | 115 | 99 | -------------------------------------------------------------------------------- | Net trading income | -27 | 9 | -34 | 19 | -------------------------------------------------------------------------------- | Net investment income | 1 | 6 | 24 | 29 | -------------------------------------------------------------------------------- | Other operating income | 13 | 7 | 35 | 24 | -------------------------------------------------------------------------------- | Total net income | 55 | 79 | 269 | 284 | -------------------------------------------------------------------------------- | Total expenses | 33 | 36 | 125 | 118 | -------------------------------------------------------------------------------- | Amortisation on intangible | 1 | 1 | 3 | 4 | | assets related to company | | | | | | acquisition | | | | | -------------------------------------------------------------------------------- | Earnings before tax | 21 | 43 | 141 | 163 | -------------------------------------------------------------------------------- | Change in fair value reserve | -3 | 2 | -16 | -7 | -------------------------------------------------------------------------------- | Earnings before tax at fair | 18 | 45 | 126 | 156 | | value | | | | | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Key ratios, % | | | | | -------------------------------------------------------------------------------- | Operating return on equity (ROE) | 6.7 | 19.2 | 12.1 | 18.2 | | p.a. | | | | | -------------------------------------------------------------------------------- | Operating cost/income ratio | 60.9 | 44.0 | 46.3 | 41.5 | -------------------------------------------------------------------------------- | Proportion of doubtful | 0.1 | 0.2 | 0.1 | 0.2 | | receivables to receivables from | | | | | | customers and guarantees, % | | | | | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | | | | 31 Dec | 31 Dec | -------------------------------------------------------------------------------- | Volume data, EUR billion | | | | | -------------------------------------------------------------------------------- | Receivables from customers | | | 9.3 | 7.9 | -------------------------------------------------------------------------------- | Unused standby credit facilities | | | 3.5 | 3.6 | -------------------------------------------------------------------------------- | Guarantees | | | 2.1 | 1.9 | -------------------------------------------------------------------------------- | Assets under management | | | 31.3 | 31.3 | -------------------------------------------------------------------------------- | Notes and bonds | | | 2.8 | 4.9 | -------------------------------------------------------------------------------- | Receivables from OP-Pohjola | | | 3.9 | 4.7 | | Group member cooperative banks | | | | | -------------------------------------------------------------------------------- | Liabilities to OP-Pohjola Group | | | 1.6 | 1.3 | | member cooperative banks | | | | | -------------------------------------------------------------------------------- | Risk-weighted commitments | | | 13.0 | 11.1 | -------------------------------------------------------------------------------- | Debt securities issued to the | | | 12.9 | 13.9 | | public | | | | | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Average personnel | | | 758 | 718 | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Average margins, % | | | | | -------------------------------------------------------------------------------- | Margin on corporate loan | | | 0.81 | 0.87 | | portfolio | | | | | -------------------------------------------------------------------------------- | Margin on institutional loan | | | 0.23 | 0.24 | | portfolio | | | | | -------------------------------------------------------------------------------- | Margin on OP-Pohjola Group | | | 0.12 | 0.12 | | member cooperative banks' loan | | | | | | portfolio | | | | | -------------------------------------------------------------------------------- | Margin on OP-Pohjola Group | | | 0.11 | 0.11 | | member cooperative banks' | | | | | | deposits | | | | | -------------------------------------------------------------------------------- OCTOBER-DECEMBER Earnings Banking and Investment Services reported earnings of EUR 21 million (43) before tax. Net interest income before impairment losses on receivables came to EUR 35 million (29). Impairment losses on receivables improved earnings by a net amount of EUR 0.7 million (-0.3). Net commission income was EUR 33 million (29). Wider credit spreads dented earnings by EUR 32 million through the market price valuation of liquidity reserves, with the result that Banking and Investment Services showed a trading loss of EUR 27 million (9). Net investment income amounted to EUR 1 million (6). Operating return on equity stood at 6.7% (19.2) and the cost/income ratio at 60.9% (44.0). Corporate Banking The Corporate Banking loan portfolio grew by 4.6% to EUR 9.4 billion during the fourth quarter. Demand for loans remained at a normal level and the loan portfolio grew by 19% to EUR 1.5 billion in the year to December. Net interest income rose by 25% to EUR 29 million (24). The margin level in the corporate loan portfolio remained stable, standing at 0.81% on 31 December. The margins of institutional loans remained unchanged during the fourth quarter. Despite long-lasting and brisk growth in the loan portfolio, the risk exposure is still considered to be good. Impairment losses on receivables improved earnings by EUR 0.7 million (-0.3). Corporate Banking recorded earnings of EUR 30 million (21) before tax. Markets Earnings before tax improved to EUR 8 million (6), which is mainly explained by growth in net commission income, derivatives trading income, stock broking volumes and customer trading margins. Central Banking Year on year, Central Banking posted higher earnings before tax, totalling EUR 6 million (5). Group Treasury Group Treasury showed a loss of EUR 30 million before tax (7). Its earnings performance was eroded by prolonged uncertainty in financial markets and the resulting wider credit spreads, with its negative effect of EUR 35 million on the market price valuation of liquidity reserves and the fixed-income instrument portfolio, EUR 32 million recognised in the income statement and EUR 3 million in the fair value reserve. Net investment income totalled EUR 1 million (6). Asset Management Asset Management improved its earnings to EUR 7 million (4) as a result of favourable business development and a stronger market position. In Asset Management, assets under management on 31 December totalled EUR 31.3 billion (32.5), institutional customers accounting for EUR 17.3 billion (16.7), Pohjola Private for EUR 0.9 billion (1.0) and OP mutual funds for EUR 13.1 billion (14.2). JANUARY-DECEMBER Earnings Banking and Investment Services reported earnings of EUR 141 million (163) before tax. Net interest income before impairment losses on receivables came to EUR 131 million (113). Impairment losses on receivables reduced earnings by a net amount of EUR 1 million (1). Net commission income was EUR 115 million (99). Wider credit spreads dented earnings by EUR 57 million through the market price valuation of liquidity reserves, with the result that Banking and Investment Services showed a trading loss of EUR 34 million (19). Net investment income amounted to EUR 24 million (29). Operating return on equity stood at 12.1% (18.2) and the cost/income ratio at 46.3% (41.5). Corporate Banking The Corporate Banking loan portfolio rose by 19% to EUR 9.4 billion (7.9). Year on year, OKO Bank's market share of corporate loans rose by 0.1 percentage point to 17.3%. Net interest income rose by 22% to EUR 106 million (86). On 31 December, the margin of the corporate loan portfolio stood at 0.81% (0.87). The margins of institutional loans remained almost unchanged. Despite long-lasting and brisk growth in the loan portfolio, the risk exposure is still considered to be good. Net impairment losses on receivables totalled EUR 1 million (1). Earnings before tax exceeded EUR 100 million, coming to EUR 103 million (80). Markets Earnings before tax improved to EUR 33 million (18), which is mainly explained by successful exposure management in view of market conditions, improved demand for derivatives products due to companies' greater needs for hedging and growth in net commission income from brokerage. In addition, demand was brisk for capital-secured structured bonds, a total of EUR 187 million (91) of these bonds being issued during January-December. Central Banking Year on year, Central Banking posted higher earnings before tax, totalling EUR 20 million (18). In June, OP Mortgage Bank issued a one-billion-euro covered bond, reducing OP-Pohjola Group member banks' need for financing from OKO Bank. In 2007, OKO Bank's net receivables from OP-Pohjola Group member banks decreased to EUR 2.3 billion (3.3) in such a way that receivables fell to EUR 3.9 billion (4.7) while liabilities rose to EUR 1.6 billion ((1.3). Group Treasury Group Treasury's second-half earnings performance was eroded by the uncertainty in financial markets and the resulting wider credit spreads, with its negative effect of EUR 63 million on the market price valuation of liquidity reserves and the fixed-income instrument portfolio, EUR 57 million recognised in the income statement and EUR 6 million in the fair value reserve. Net investment income totalled EUR 23 million (29). Consequently, Group Treasury showed a loss of EUR 35 million (32) before tax. Asset Management Asset Management improved its earnings to EUR 21 million (14) as a result of favourable business development and a stronger market position. Assets under management on 31 December totalled EUR 31.3 billion (31.3), institutional customers accounting for EUR 17.3 billion (18.2), Pohjola Private for EUR 0.9 billion (0.7) and OP mutual funds for EUR 13.1 billion (12.4). NON-LIFE INSURANCE Non-life Insurance consists of the following divisions: - Corporate Customers - Private Customers - Baltic States -------------------------------------------------------------------------------- | | 2007 | 2006 | 2007 | 2006 | | | Q4 | Q4 | | | -------------------------------------------------------------------------------- | Income statement, EUR million | | | | | -------------------------------------------------------------------------------- | Insurance premium revenue | 211 | 204 | 850 | 788 | -------------------------------------------------------------------------------- | Claims incurred | 113 | 137 | 536 | 536 | -------------------------------------------------------------------------------- | Loss adjustment expenses | 12 | 12 | 46 | 44 | -------------------------------------------------------------------------------- | Operating expenses | 45 | 45 | 182 | 172 | -------------------------------------------------------------------------------- | Amortisation/adjustment of | 6 | 6 | 26 | 25 | | intangible assets related to | | | | | | company acquisition | | | | | -------------------------------------------------------------------------------- | Balance on technical account | 35 | 3 | 60 | 10 | -------------------------------------------------------------------------------- | Net investment income | 34 | 28 | 160 | 115 | -------------------------------------------------------------------------------- | Other income and expenses | -1 | 0 | 8 | -2 | -------------------------------------------------------------------------------- | Operating profit | 68 | 32 | 228 | 124 | -------------------------------------------------------------------------------- | Unwinding of discount | 10 | 9 | 39 | 36 | -------------------------------------------------------------------------------- | Finance costs | 3 | 2 | 9 | 8 | -------------------------------------------------------------------------------- | Earnings before tax | 56 | 20 | 181 | 78 | -------------------------------------------------------------------------------- | Change in fair value reserve | -31 | 14 | -39 | 17 | -------------------------------------------------------------------------------- | Earnings before tax at fair | 24 | 34 | 142 | 96 | | value | | | | | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Key ratios, % | | | | | -------------------------------------------------------------------------------- | Operating return on equity | 18.5 | 27.6 | 25.2 | 20.9 | -------------------------------------------------------------------------------- | Operating loss ratio | 75.2 | 73.9 | 72.6 | 73.7 | -------------------------------------------------------------------------------- | Operating expense ratio | 20.8 | 21.9 | 21.2 | 21.9 | -------------------------------------------------------------------------------- | Operating combined ratio | 95.9 | 95.8 | 93.8 | 95.5 | -------------------------------------------------------------------------------- | Loss ratio | 59.2 | 73.1 | 68.6 | 73.5 | -------------------------------------------------------------------------------- | Expense ratio | 24.3 | 25.2 | 24.4 | 25.1 | -------------------------------------------------------------------------------- | Combined ratio | 83.5 | 98.3 | 92.9 | 98.7 | -------------------------------------------------------------------------------- | Return on investment | 0.2 | 1.5 | 4.8 | 5.2 | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | | 31 Dec | 31 Dec | 31 Dec | 31 Dec | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Volume data, EUR million | | | | | -------------------------------------------------------------------------------- | Insurance contract liabilities | | | | | -------------------------------------------------------------------------------- | Discounted insurance contract | | | 1,244 | 1,205 | | liabilities | | | | | -------------------------------------------------------------------------------- | Other insurance contract | | | 773 | 764 | | liabilities | | | | | -------------------------------------------------------------------------------- | Investment portfolio | | | | | -------------------------------------------------------------------------------- | Bonds and bond funds | | | 1,722 | 1,798 | -------------------------------------------------------------------------------- | Money market investments | | | 51 | 69 | -------------------------------------------------------------------------------- | Equities | | | 413 | 430 | -------------------------------------------------------------------------------- | Real property | | | 138 | 107 | -------------------------------------------------------------------------------- | Alternative investments | | | 188 | 87 | -------------------------------------------------------------------------------- | Total | | | 2,511 | 2,490 | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Average personnel | | | 2,247 | 2,154 | -------------------------------------------------------------------------------- OCTOBER-DECEMBER Earnings The balance on technical account increased to EUR 35 million (3). Changes in reserving bases, including a rise of the discount rate from 3.3% to 3.5%, reduced provisions for previous years by a total of EUR 32 million (1) in net terms while improving the balance on technical account correspondingly. Earnings before tax came to EUR 56 million (20). Insurance premium revenue Insurance premium revenue grew by 3% to EUR 211 million (204). Adjusted for non-recurring items, insurance premium revenue grew by 5%. Claims incurred and operating expenses The reported operating combined ratio, adjusted for amortisation on intangible assets and for changes in reserving bases, stood at 95.9% (95.8), of which claims incurred accounted for 69.7 percentage points (68.1). The ratio of operating expenses to loss adjustment expenses (cost ratio) fell to 26.2 percentage points (27.7). Claims incurred (excl. loss adjustment expenses) amounted to EUR 113 million (137). Claims incurred due to major losses continued to show unfavourable developments during the fourth quarter. Claims incurred due to major and medium-sized losses (in excess of EUR 0.1 million) came to EUR 39 million (24) and the number of major losses of over EUR 2 million retained for own account was 4(2). However, the first-half upward trend in motor liability and motor vehicle insurance claims was offset by the exceptionally mild weather during October-December. Operating expenses and loss adjustment expenses remained at the previous year's level of EUR 57 million (57), the former coming to EUR 45 million (45) and the latter to EUR 12 million (12). Investment operations On December 31, the fair value of Non-life Insurance investments amounted to EUR 2.5 billion (2.5), with equities accounting for 16% (17) and money market instruments for 2% (3). Despite uncertain financial markets, return on these investments at fair value stood at 0.2% (1.5). Net investment income recognised in earnings amounted to EUR 34 million (28) and net investment income at fair value reached EUR 3 million (42). JANUARY-DECEMBER Earnings The balance on technical account increased to EUR 60 million (10). Changes in reserving bases, including a rise of the discount rate from 3.3% to 3.5%, reduced provisions for previous years by a total of EUR 32 million (1) in net terms while improving the balance on technical account correspondingly. Earnings before tax came to EUR 181 million (78). Insurance premium revenue Insurance premium revenue grew by 8% to EUR 850 million (788). The Private Customers division showed the strongest growth, with insurance premium revenue increasing by 12% to EUR 345 million (308), as a result of cooperation within OP-Pohjola Group and of upgraded services. Insurance premium revenue within Corporate Customers rose by 3% to EUR 449 (434). The disposal of the marine hull insurance portfolio cut insurance premium revenue by EUR 4 million. Premium revenue generated by the Baltic business increased by 19% to EUR 56 million (47). Claims incurred and operating expenses The reported operating combined ratio stood at 93.8% (95.5), of which claims incurred accounted for 67.1 percentage points (68.2). The ratio of operating expenses to loss adjustment expenses (cost ratio) fell to 26.7 percentage points (27.3). Claims incurred (excl. loss adjustment expenses) amounted to EUR 536 million (536). With respect to major losses, 2007 was similar to 2006. The second half saw unfavourable developments in major and medium-sized losses (in excess of EUR 0.1 million), these representing EUR 64 million (54) of claims incurred. Major and medium-sized losses accounted for EUR 97 million (85) of claims incurred during 2007. The number of major losses of over EUR 2 million retained for own account was 9 (11). Although the upward trend in motor liability and motor vehicle insurance claims levelled off during the fourth quarter, the number of road accidents in 2007 increased over the previous year. The upward trend in the economy was also reflected in a sharp increase in claims incurred under traveller's insurance. Operating expenses and loss adjustment expenses rose to EUR 228 million (216), the former accounting for EUR 182 million (172) and the latter for EUR 46 million (44). This increase in expenses is mainly attributable to higher costs resulting from insurance sales and new information systems. Investment operations On December 31, the fair value of Non-life Insurance investments amounted to EUR 2.5 billion (2.5), with equities accounting for 16% (17) and money market instruments for 2% (3). Despite uncertain financial markets, return on these investments at fair value stood at 4.8% (5.2). Net investment income recognised in earnings amounted to EUR 160 million (115) and net investment income at fair value reached EUR 121 million (132). OTHER OPERATIONS Results by Other Operations consist of Group administrative expenses and funding costs of Pohjola shares. -------------------------------------------------------------------------------- | | 2007 | 2006 | 2007 | 2006 | -------------------------------------------------------------------------------- | | Q4 | Q4 | | | -------------------------------------------------------------------------------- | Income statement, EUR million | | | | | -------------------------------------------------------------------------------- | Net interest income | -3 | -4 | -12 | -13 | -------------------------------------------------------------------------------- | Other net income | 2 | 6 | 21 | 48 | -------------------------------------------------------------------------------- | income | -1 | 2 | 9 | 35 | -------------------------------------------------------------------------------- | Expenses | 9 | 8 | 43 | 54 | -------------------------------------------------------------------------------- | Earnings/loss before tax | -10 | -7 | -34 | -19 | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- OCTOBER-DECEMBER Other Operations showed a loss of EUR 10 million before tax (loss of EUR 7 million). JANUARY-DECEMBER Other Operations showed a loss of EUR 34 million before tax (loss of EUR 19 million). First-quarter earnings performance was burdened by EUR 10 million in liquidated damages related to the cancellation of partnership between Pohjola Group plc and savings banks. Interest expenses of EUR 1 million were recognised in the second quarter, related to the redemption of Pohjola shares held by minority shareholders. Results for the same period a year ago included EUR 2 million in capital gains on the sale of Eurocard shares. Pohjola Group plc's merger with OKO Bank plc on 31 December 2006 reduced net income and expenses for 2007. OKO BANK PLC'S BOARD PROPOSAL FOR THE ALLOCATION OF DISTRIBUTABLE FUNDS On 31 December 2007, OKO Bank plc's shareholders' equity totalled 1,314,993,768.51 euros, 202,292,991.71 euros of which represented distributable equity. The following funds are at the AGM's disposal for profit distribution: -------------------------------------------------------------------------------- | | EUR | -------------------------------------------------------------------------------- | Profit for 2007 | 79,106,258.66 | -------------------------------------------------------------------------------- | Retained earnings | 99,737,260.74 | -------------------------------------------------------------------------------- | Non-restricted reserves | 23,449,472.31 | -------------------------------------------------------------------------------- | Total | 202,292,991.71 | -------------------------------------------------------------------------------- The Board of Directors proposes that the company's distributable funds be distributed as follows: EUR 0.65 per share payable on 159,564,128 Series A shares, totalling EUR 103,716,683.20, and EUR 0.62 per share payable on 43,786,772 Series K shares, totalling EUR 27,147,798.64, i.e. the proposed total dividend distribution amounts to EUR 130,864,481.84. The Board of Directors proposes that the profit for 2007, EUR 79,106,258.66, and EUR 51,758,223.18 of retained earnings be allocated to dividend distribution, with EUR 71,428,509.87 remaining in the company's distributable equity. The company's financial position has not undergone any material changes after the financial year. The company's liquidity is good and will not be jeopardised by the proposed profit distribution, in the Board of Directors' view. The Board of Directors proposes that the dividend be paid to shareholders who have been entered in the Shareholder Register, maintained by Finnish Central Securities Depository Ltd, by the dividend record date on 1 April 2008 and that the dividend be paid within the book-entry securities system on 10 April 2008. FORMULAE FOR KEY RATIOS Return on equity (ROE) at fair value (%) Profit for the period + Change in fair value reserve after tax / Shareholders' equity (average of the beginning and end of period) x 100 Cost/income ratio, % Personnel costs + Other administrative expenses + Other operating expenses / (Net interest income + Net income from Non-life Insurance + Net commissions and fees + Net trading income + Net investment income + Other operating income) x 100 Earnings/share (EPS) Profit for the period attributable to equity holders of the Parent / Average share-issue adjusted number of shares during the period Earnings/share (EPS), diluted The denominator is the average share-issue adjusted number of shares during the financial period plus the number of shares which will be obtained if all stock options are converted into shares, less the number of shares obtained through the exercise of all stock options multiplied by the share subscription price and divided by the average share price during the financial period. Earnings/share (EPS) at fair value (Profit for the period attributable to equity holders of the Parent + Change in fair value reserve) / Average share-issue adjusted number of shares during the period Equity/share Shareholders' equity / Share-issue adjusted number of shares on the balance sheet date Dividend per share Dividends paid for the period / Share-issue adjusted number of shares on the balance sheet date Capital adequacy, % Own funds / Risk-weighted items x 100 Tier 1 ratio, % Tier 1 capital / Risk-weighted items x 100 KEY RATIOS FOR NON-LIFE INSURANCE The key ratio formulae for Non-life Insurance are based on regulations issued by Insurance Supervisory Authority, using the corresponding IFRS sections to the extent applicable. The ratios are calculated using activity-based expenses applied by non-life insurance companies, which are not presented on the same principle as in the Consolidated Income Statement. Loss ratio (excl. unwinding of discount) Claims and loss adjustment expenses / Net insurance premium revenue x 100 Expense ratio Operating expenses + Amortisation/adjustment of intangible assets related to company acquisition / Net insurance premium revenue x 100 Risk ratio (excl. unwinding of discount) Claims excl. loss adjustment expenses / Net insurance premium revenue x 100 Cost ratio Operating expenses and loss adjustment expenses / Net insurance premium revenue x 100 Combined ratio (excl. unwinding of discount) Loss ratio + expense ratio Risk ratio + cost ratio OPERATING KEY RATIOS Operating return on equity, % Banking and Investment Services: (+ Profit for the period + Amortisation and write-downs on intangible assets and goodwill related to the acquisition of Pohjola Asset Management, and their tax effect + Change in fair value reserve after tax) / (+ 7% of risk-weighted commitments + Shareholders' equity of OKO Asset Management and Pohjola Property Management - Subordinated loans allocated to business lines (average of the beginning and end of period) x 100 Non-life Insurance: (+ Profit for the period + Amortisation and write-downs on intangible assets and goodwill related to the acquisition of non-life business, and their tax effect + Change in fair value reserve after tax) / (+ 70% solvency ratio - Subordinated loans allocated to business lines (average of the beginning and end of period) or minimum capital required by the authorities, if this is larger) x 100 Operating cost/income ratio (+ Personnel costs + Other administrative expenses + Other operating expenses excl. amortisation and write-downs on intangible assets and goodwill related to Pohjola acquisition) / (+ Net interest income + Net income from Non-life Insurance + Net commissions and fees + Net trading income + Net investment income + Other operating income) x 100 Operating loss ratio Claims and loss adjustment expenses, excl. changes in reserving bases / Insurance premium revenue, excl. net changes in reserving bases x 100 Operating expense ratio Operating expenses / Insurance premium revenue, excl. net changes in reserving bases x 100 Operating combined ratio Operating loss ratio + operating expense ratio -------------------------------------------------------------------------------- | Consolidated income statement | | | | | -------------------------------------------------------------------------------- | EUR million | Q4/2007 | Q4/2006 | Q1-4/2007 | Q1-4/2006 | -------------------------------------------------------------------------------- | Interest income | 668 | 387 | 2 234 | 1 270 | -------------------------------------------------------------------------------- | Interest expenses | 637 | 364 | 2 119 | 1 175 | -------------------------------------------------------------------------------- | Net interest income (Note 1) | 30 | 23 | 115 | 96 | -------------------------------------------------------------------------------- | Impairment losses on | -1 | 0 | 1 | 1 | | receivables | | | | | | (Note 2) | | | | | -------------------------------------------------------------------------------- | Net interest income | 31 | 23 | 114 | 94 | | after | | | | | | impairment losses | | | | | -------------------------------------------------------------------------------- | Net income from Non-life | 123 | 84 | 433 | 328 | | Insurance | | | | | | (Note 3) | | | | | -------------------------------------------------------------------------------- | Net commissions and fees (Note | 32 | 29 | 115 | 102 | | 4) | | | | | -------------------------------------------------------------------------------- | Net trading income (Note 5) | -27 | 9 | -34 | 20 | -------------------------------------------------------------------------------- | Net investment income (Note 6) | 1 | 7 | 28 | 37 | -------------------------------------------------------------------------------- | Other operating income (Note | 20 | 13 | 71 | 50 | | 7) | | | | | -------------------------------------------------------------------------------- | Total income | 179 | 165 | 728 | 632 | -------------------------------------------------------------------------------- | Personnel costs (Note 8) | 43 | 42 | 166 | 165 | -------------------------------------------------------------------------------- | Other administrative expenses | 38 | 38 | 145 | 133 | | (Note 9) | | | | | -------------------------------------------------------------------------------- | Other operating expenses (Note | 31 | 28 | 129 | 111 | | 10) | | | | | -------------------------------------------------------------------------------- | Total expenses | 112 | 108 | 440 | 409 | -------------------------------------------------------------------------------- | Earnings before tax | 67 | 57 | 288 | 223 | -------------------------------------------------------------------------------- | Income tax expense | 18 | 15 | 76 | 42 | -------------------------------------------------------------------------------- | Profit for the period | 49 | 41 | 212 | 180 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Basic earnings per share, EUR | | | | | -------------------------------------------------------------------------------- | Series A | 0.24 | 0.21 | 1.04 | 0.90 | -------------------------------------------------------------------------------- | Series K | 0.24 | 0.20 | 1.03 | 0.89 | -------------------------------------------------------------------------------- | Diluted earnings per share, | | | | | | EUR | | | | | -------------------------------------------------------------------------------- | Series A | 0.24 | 0.21 | 1.04 | 0.90 | -------------------------------------------------------------------------------- | Series K | 0.24 | 0.20 | 1.03 | 0.89 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Consolidated balance sheet | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR million | | 30 | 31 Dec | | | | Dec | 2006 | | | | 2007 | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Liquid assets | | 448 | 907 | -------------------------------------------------------------------------------- | Receivables from financial | | 5 217 | 5 546 | | institutions | | | | -------------------------------------------------------------------------------- | Financial assets at fair value | | | | | through profit or loss (Note 11) | | | | -------------------------------------------------------------------------------- | Financial assets held for trading | | 2 220 | 2 476 | -------------------------------------------------------------------------------- | Financial assets at fair value | | 2 481 | 2 325 | | through profit or loss at inception | | | | -------------------------------------------------------------------------------- | Derivative contracts | | 528 | 320 | -------------------------------------------------------------------------------- | Receivables from customers | | 9 288 | 7 864 | -------------------------------------------------------------------------------- | Non-life Insurance assets (Note 12) | | 2 809 | 2 766 | -------------------------------------------------------------------------------- | Investment assets (Note 13) | | 725 | 225 | -------------------------------------------------------------------------------- | Investment in associates | | 2 | 8 | -------------------------------------------------------------------------------- | Intangible assets (Note 14) | | 999 | 1 020 | -------------------------------------------------------------------------------- | Property, plant and equipment (PPE) | | 97 | 95 | -------------------------------------------------------------------------------- | Other assets | | 1 090 | 633 | -------------------------------------------------------------------------------- | Tax assets | | 18 | 12 | -------------------------------------------------------------------------------- | Total assets | | 25 922 | 24 196 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Liabilities to financial | | 2 739 | 2 390 | | institutions | | | | -------------------------------------------------------------------------------- | Financial liabilities at fair value | | | | | through profit or loss | | | | -------------------------------------------------------------------------------- | Financial assets held for trading | | 52 | 0 | -------------------------------------------------------------------------------- | Financial liabilities at fair value | | 0 | 0 | | through profit or loss at inception | | | | -------------------------------------------------------------------------------- | Derivative contracts | | 548 | 331 | -------------------------------------------------------------------------------- | Liabilities to customers | | 2 738 | 1 994 | -------------------------------------------------------------------------------- | Non-life Insurance liabilities (Note | | 2 140 | 2 099 | | 15) | | | | -------------------------------------------------------------------------------- | Debt securities issued | | 12 856 | 13 263 | | to the | | | | | public (Note 16) | | | | -------------------------------------------------------------------------------- | Provisions and other liabilities | | 1 659 | 1 010 | -------------------------------------------------------------------------------- | Tax liabilities | | 371 | 355 | -------------------------------------------------------------------------------- | Subordinated liabilities (Note 17) | | 950 | 924 | -------------------------------------------------------------------------------- | Total liabilities | | 24 053 | 22 368 | -------------------------------------------------------------------------------- | Shareholders' equity | | | | -------------------------------------------------------------------------------- | Capital and reserves attributable to | | | | | equity holders of the Parent | | | | -------------------------------------------------------------------------------- | Share capital | | 428 | 428 | -------------------------------------------------------------------------------- | Reserves | | 757 | 793 | -------------------------------------------------------------------------------- | Retained earnings | | 685 | 607 | -------------------------------------------------------------------------------- | Total shareholders' equity | | 1 869 | 1 828 | -------------------------------------------------------------------------------- | Total liabilities and shareholders' | | 25 922 | 24 196 | | equity | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Consolidated statement of | | | | | | | changes in equity | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | Attri | | | | Minori | Total | | | butabl | | | | ty | equity | | | e to | | | | intere | | | | equity | | | | st | | | | holder | | | | | | | | s of | | | | | | | | the | | | | | | | | Parent | | | | | | -------------------------------------------------------------------------------- | EUR million | Share | Fair | Other | Retain | | | | | capita | value | reserv | ed | | | | | l | reserve | es | earnin | | | | | | | | gs | | | -------------------------------------------------------------------------------- | | | | | | | | -------------------------------------------------------------------------------- | Balance at 1 January | 423 | 48 | 744 | 549 | 199 | 1 961 | | 2006 | | | | | | | -------------------------------------------------------------------------------- | Adjusted | 423 | 48 | 744 | 549 | 199 | 1 961 | | shareholders' equity | | | | | | | | on 1 January | | | | | | | -------------------------------------------------------------------------------- | Available-for-sale | | | | | | | | financial assets | | | | | | | -------------------------------------------------------------------------------- | Fair value gains and | | 16 | | | | 16 | | losses | | | | | | | -------------------------------------------------------------------------------- | Amount transferred to | | -17 | | | | -17 | | income statement | | | | | | | -------------------------------------------------------------------------------- | Deferred taxes | | | | | | | -------------------------------------------------------------------------------- | Net income recognised | | -1 | | -1 | | 0 | | in shareholders' | | | | | | | | equity | | | | | | | -------------------------------------------------------------------------------- | Profit for the period | | | | 181 | | 181 | -------------------------------------------------------------------------------- | Total recognised | | -1 | | 180 | | 180 | | income and expenses | | | | | | | | for the period | | | | | | | -------------------------------------------------------------------------------- | Share issue expenses | | | -1 | | | -1 | -------------------------------------------------------------------------------- | Stock options | 5 | | 4 | | | 8 | | exercised | | | | | | | -------------------------------------------------------------------------------- | Dividends paid on | | | | | | | -------------------------------------------------------------------------------- | Series A share | | | | -95 | | -95 | -------------------------------------------------------------------------------- | Series K share | | | | -25 | | -25 | -------------------------------------------------------------------------------- | Acquisition of | | | | | -198 | -198 | | subsidiaries | | | | | | | -------------------------------------------------------------------------------- | Balance at 31 | 428 | 47 | 747 | 607 | 0 | 1828 | | December 2006 | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | Attri | | | | Minori | Total | | | butabl | | | | ty | equity | | | e to | | | | intere | | | | equity | | | | st | | | | holder | | | | | | | | s of | | | | | | | | the | | | | | | | | Parent | | | | | | -------------------------------------------------------------------------------- | EUR million | Share | Fair | Other | Retain | | | | | capita | value | reserv | ed | | | | | l | reserve | es | earnin | | | | | | | | gs | | | -------------------------------------------------------------------------------- | | | | | | | | -------------------------------------------------------------------------------- | Balance at 1 January | 428 | 47 | 747 | 607 | 0 | 1828 | | 2007 | | | | | | | -------------------------------------------------------------------------------- | Adjusted | 428 | 47 | 747 | 607 | 0 | 1828 | | shareholders' equity | | | | | | | | on 1 January | | | | | | | -------------------------------------------------------------------------------- | Available-for-sale | | | | | | | | financial assets | | | | | | | -------------------------------------------------------------------------------- | Fair value gains and | | -48 | | | | -48 | | losses | | | | | | | -------------------------------------------------------------------------------- | Amount transferred to | | -6 | | | | -6 | | income statement | | | | | | | -------------------------------------------------------------------------------- | Deferred taxes | | 14 | | | | 14 | -------------------------------------------------------------------------------- | Net income recognised | | -40 | | | | -40 | | in shareholders' | | | | | | | | equity | | | | | | | -------------------------------------------------------------------------------- | Profit for the period | | | | 212 | | 212 | -------------------------------------------------------------------------------- | Total recognised | | -40 | | 212 | | 172 | | income and | | | | | | | | expenses | | | | | | | | for the period | | | | | | | -------------------------------------------------------------------------------- | Dividends paid on | | | | | | | -------------------------------------------------------------------------------- | Series A share | | | | -104 | | -104 | -------------------------------------------------------------------------------- | Series K share | | | | -27 | | -27 | -------------------------------------------------------------------------------- | Transfer of reserves | | | 4 | -4 | | 0 | -------------------------------------------------------------------------------- | Balance at 31 | 428 | 7 | 750 | 685 | 0 | 1869 | | December 2007 | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Own funds and capital | | | | | | | adequacy | | | | | | -------------------------------------------------------------------------------- | EUR million | 31 | 30 Sept | 30 | 31 | 31 | | | Dec | 2007 | Jun | Mar | Dec | | | 200 | | 200 | 2007 | 2006 | | | 7 | | 7 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Own funds | | | | | | -------------------------------------------------------------------------------- | Equity capital | 1 869 | 1 845 | 1 813 | 1758 | 1 828 | -------------------------------------------------------------------------------- | Minority interest | 0 | 0 | 0 | 0 | 1 | -------------------------------------------------------------------------------- | Hybrid capital *) | 224 | 224 | 224 | 224 | 224 | -------------------------------------------------------------------------------- | Intangible assets | -847 | -850 | -854 | -855 | -859 | -------------------------------------------------------------------------------- | Fair value reserve, | -114 | -129 | -122 | -127 | -115 | | excess funding of | | | | | | | | | | | | | | pension liability, | | | | | | | change in equalisation | | | | | | | | | | | | | | provision and change in | | | | | | | fair value of | | | | | | | | | | | | | | investment property | | | | | | -------------------------------------------------------------------------------- | Dividend distribution | -131 | - | - | - | -131 | | proposed by Board of | | | | | | | Directors | | | | | | -------------------------------------------------------------------------------- | Planned dividend | - | -81 | -61 | -25 | - | | distribution | | | | | | -------------------------------------------------------------------------------- | Tier 1 capital | 1 002 | 1 010 | 999 | 975 | 948 | -------------------------------------------------------------------------------- | Fair value reserve | 7 | 32 | 39 | 57 | 47 | -------------------------------------------------------------------------------- | Subordinated liabilities | 299 | 299 | 299 | 200 | 200 | | included in | | | | | | | upper Tier | | | | | | | 2 | | | | | | -------------------------------------------------------------------------------- | Subordinated liabilities | 488 | 489 | 491 | 488 | 474 | | included in | | | | | | | lower Tier | | | | | | | 2 | | | | | | -------------------------------------------------------------------------------- | Tier 2 capital **) | 793 | 820 | 828 | 745 | 721 | -------------------------------------------------------------------------------- | Investment in insurance | -164 | -166 | -163 | -163 | -157 | | companies | | | | | | -------------------------------------------------------------------------------- | Other allowances | -1 | -1 | -1 | -8 | -8 | -------------------------------------------------------------------------------- | Total allowances | 165 | -167 | -164 | -171 | -165 | -------------------------------------------------------------------------------- | Total own funds ***) | 1 629 | 1 663 | 1 663 | 1 550 | 1 504 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Risk-weighted | | | | | | | receivables, investments | | | | | | | and off-balance-sheet | | | | | | | commitments | | | | | | -------------------------------------------------------------------------------- | Loan and guarantee | 9 851 | 8 551 | 8 446 | 7 995 | 7 635 | | portfolio | | | | | | | excl. | | | | | | | intra-Group items | | | | | | | of OP-Pohjola Group | | | | | | -------------------------------------------------------------------------------- | Binding standby credit | 1 424 | 1 362 | 1 258 | 1 322 | 1 408 | | facilities | | | | | | -------------------------------------------------------------------------------- | Intra-Group items of | 1 075 | 1 098 | 1 075 | 1 230 | 1 169 | | OP-Pohjola Group | | | | | | -------------------------------------------------------------------------------- | Market risk | 611 | 1 395 | 1 290 | 1 302 | 1 007 | -------------------------------------------------------------------------------- | Other items (equities | 413 | 404 | 396 | 389 | 407 | | incl. | | | | | | | Pohjola, | | | | | | | properties, | | | | | | | other assets etc.) | | | | | | -------------------------------------------------------------------------------- | Total risk-weighted | 13 374 | 12 809 | 12 465 | 12 239 | 11 627 | | receivables, investments | | | | | | | and off-balance-sheet | | | | | | | items | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Capital adequacy ratio, | 12.2 | 13.0 | 13.3 | 12.7 | 12.9 | | % | | | | | | -------------------------------------------------------------------------------- | Ratio of Tier 1 to total | 7.5 | 7.9 | 8.0 | 8.0 | 8.2 | | risk-weighted items, % | | | | | | -------------------------------------------------------------------------------- | Capital adequacy ratio | 1.09 | 1.14 | 1.16 | 1.12 | 1.13 | | under the Act on | | | | | | | Supervision of Financial | | | | | | | and Insurance | | | | | | | Conglomerates | | | | | | -------------------------------------------------------------------------------- OP-Pohjola Group's capital adequacy ratio under the Credit Institutions Act stood at 13.8% and the ratio of Tier 1 to total risk-weighted items at 12.6%. OP-Pohjola Group's capital adequacy ratio calculated using the consolidation method, under the Act on the Supervision of Financial and Insurance Conglomerates, was 1.52. *) OKO Bank has four loans under hybrid capital classified as Tier I funds: Hybrid capital of 10 billion Japanese yen of which EUR 74 million has been regarded as Tier 1 funds. The loan carries a fixed interest rate of 4.23% until 2034 and thereafter a 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. Hybrid capital of EUR 50 million, which is a perpetual loan without interest rate step-ups, but with an 8% interest rate cap. Issued on 31 March 2005, the loan carries an interest rate of 6.5% for the first year. Thereafter, the interest rate will be CMS 10 years + 0.1%, payable on an annual basis. Subject to authorisation by the Financial Supervision Authority, the loan may be called in at the earliest in 2010. Hybrid capital of EUR 60 million, which is a perpetual loan. Issued on 30 November 2005, the loan carries a variable interest rate based on 3-month Euribor + 0.65% until 2015 and thereafter variable 3-month Euribor+1.65%, payable on a quarterly basis. If interest cannot be paid for a given interest period, the obligation to pay interest will lapse. Subject to authorisation by the Financial Supervision Authority, the loan may be called in at the earliest in 2015. Hybrid capital of EUR 40 million, which is a perpetual loan. Issued on 30 November 2005, the loan carries a variable interest rate based on 3-month Euribor + 1.25%, payable on a quarterly basis. If interest cannot be paid for a given interest period, the obligation to pay interest will lapse. Subject to authorisation by the Financial Supervision Authority, the loan may be called in at the earliest in 2010. The hybrid capital has been hedged against the interest rate and currency risk based on interest rate and currency swaps on the date of issue. **) During the reporting period, the Group had no issues and repayments of loans included in Tier 2. ***) Based on special permission given by the Financial Supervision Authority in accordance with subsection 5, section 75 of the Credit Institutions Act, the following investments in venture capital funds, totalling EUR 5 million and managed by OKO Venture Capital Ltd, have not been deducted from own funds: Promotion Equity I Ky, Promotion Capital I Ky, Promotion Bridge I Ky and Suomi Välirahoitusrahasto I Ky. -------------------------------------------------------------------------------- | Consolidated cash flow | | | | | | statement | | | | | -------------------------------------------------------------------------------- | EUR million | | | Q1-4/2007 | Q1-4/2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flow from operating | | | | | | activities | | | | | -------------------------------------------------------------------------------- | Profit for the period | | | 212 | 181 | -------------------------------------------------------------------------------- | Adjustments to profit for the | | | 111 | 155 | | period | | | | | -------------------------------------------------------------------------------- | Increase (-) or decrease (+) | | | -2 100 | -3 203 | | in operating assets | | | | | -------------------------------------------------------------------------------- | Receivables from financial | | | 384 | -810 | | institutions | | | | | -------------------------------------------------------------------------------- | Financial assets at fair | | | 81 | -1 102 | | value through profit or loss | | | | | -------------------------------------------------------------------------------- | Derivative contracts | | | -62 | -31 | -------------------------------------------------------------------------------- | Receivables from customers | | | -1 430 | -1125 | -------------------------------------------------------------------------------- | Non-life Insurance assets | | | -79 | -68 | -------------------------------------------------------------------------------- | Investment assets | | | -506 | 102 | -------------------------------------------------------------------------------- | Other assets | | | -488 | -169 | -------------------------------------------------------------------------------- | Increase (+) or decrease (-) | | | 1860 | -899 | | in operating liabilities | | | | | -------------------------------------------------------------------------------- | Liabilities to financial | | | 348 | -1173 | | institutions | | | | | -------------------------------------------------------------------------------- | Financial liabilities at fair | | | 52 | -4 | | value through profit or loss | | | | | -------------------------------------------------------------------------------- | Derivative contracts | | | 66 | 25 | -------------------------------------------------------------------------------- | Liabilities to customers | | | 745 | -64 | -------------------------------------------------------------------------------- | Non-life Insurance | | | 0 | 101 | | liabilities | | | | | -------------------------------------------------------------------------------- | Provisions and other | | | 650 | 215 | | liabilities | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Income tax paid | | | -55 | -49 | -------------------------------------------------------------------------------- | Dividends received | | | 70 | 37 | -------------------------------------------------------------------------------- | A. Net cash from | | | 98 | -3 780 | | operating | | | | | | activities | | | | | -------------------------------------------------------------------------------- | Cash flow from investing | | | | | | activities | | | | | -------------------------------------------------------------------------------- | Acquisition of subsidiaries, | | | -10 | -303 | | net of cash acquired | | | | | -------------------------------------------------------------------------------- | Disposal of subsidiaries, net | | | 12 | 219 | | of cash disposed | | | | | -------------------------------------------------------------------------------- | Purchase of PPE and | | | -19 | -21 | | intangible assets | | | | | -------------------------------------------------------------------------------- | Proceeds from sale of PPE and | | | 20 | 5 | | intangible assets | | | | | -------------------------------------------------------------------------------- | B. Net cash used in | | | 2 | -101 | | investing | | | | | | activities | | | | | -------------------------------------------------------------------------------- | Cash flow from financing | | | | | | activities | | | | | -------------------------------------------------------------------------------- | Increases in subordinated | | | 153 | 407 | | liabilities | | | | | -------------------------------------------------------------------------------- | Decreases in subordinated | | | -126 | -177 | | liabilities | | | | | -------------------------------------------------------------------------------- | Increases in debt securities | | | 29 383 | 30 435 | | issued to the public | | | | | -------------------------------------------------------------------------------- | Decreases in debt securities | | | -29 777 | -26 180 | | issued to the public | | | | | -------------------------------------------------------------------------------- | Increases in share capital | | | | 4 | -------------------------------------------------------------------------------- | Dividends paid | | | -131 | -120 | -------------------------------------------------------------------------------- | Other increases in equity | | | | 5 | | items | | | | | -------------------------------------------------------------------------------- | C. Net cash used in | | | -498 | 4 374 | | financing | | | | | | activities | | | | | -------------------------------------------------------------------------------- | Net increase/decrease in cash | | | -397 | 493 | | and cash equivalents (A+B+C) | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash and cash equivalents | | | 1107 | 614 | | at | | | | | | period-start | | | | | -------------------------------------------------------------------------------- | Cash and cash equivalents | | | 710 | 1 107 | | at | | | | | | period-end | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest received | | | 2 040 | 1117 | -------------------------------------------------------------------------------- | Interest paid | | | -1 919 | -1041 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Adjustments to profit for the | | | | | | period | | | | | -------------------------------------------------------------------------------- | Non-cash items | | | | | -------------------------------------------------------------------------------- | Impairment losses on | | | 4 | 2 | | receivables | | | | | -------------------------------------------------------------------------------- | Unrealised net earnings in | | | 48 | 107 | | Non-life Insurance | | | | | -------------------------------------------------------------------------------- | Change in fair value for | | | 55 | 22 | | trading | | | | | -------------------------------------------------------------------------------- | Unrealised net gains on | | | -46 | -36 | | foreign exchange operations | | | | | -------------------------------------------------------------------------------- | Change in fair value of | | | -13 | -1 | | investment property | | | | | -------------------------------------------------------------------------------- | Planned amortisation | | | 61 | 57 | | /depreciation | | | | | -------------------------------------------------------------------------------- | Share of associates' profits | | | 0 | 0 | -------------------------------------------------------------------------------- | Other | | | 7 | 7 | -------------------------------------------------------------------------------- | Items presented outside | | | | | | cash | | | | | | flow from operating | | | | | | activities | | | | | -------------------------------------------------------------------------------- | Capital gains, share of cash | | | -4 | -3 | | flow from investing | | | | | | activities | | | | | -------------------------------------------------------------------------------- | Capital losses, share of cash | | | -1 | 1 | | flow from investing | | | | | | activities | | | | | -------------------------------------------------------------------------------- | Total adjustments | | | 111 | 155 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Information by segment -------------------------------------------------------------------------------- | Financial | Corpora | 2006 | Market | 2006 | Central | 2006 | | performance from | te | | s | | Banking | | | October to December | Banking | | 2007 | | 2007 | | | EUR million | 2007 | | | | | | -------------------------------------------------------------------------------- | Net interest income | 29 | 24 | 5 | 2 | 4 | 4 | -------------------------------------------------------------------------------- | Impairment losses | -1 | 0 | - | - | - | - | | on receivables | | | | | | | -------------------------------------------------------------------------------- | Net interest income | 30 | 23 | 5 | 2 | 4 | 4 | | after impairment | | | | | | | | losses | | | | | | | -------------------------------------------------------------------------------- | Net income from | | | | | | | | Non-life Insurance | | | | | | | -------------------------------------------------------------------------------- | Net commissions and | 13 | 9 | 4 | 6 | 0 | 0 | | fees | | | | | | | -------------------------------------------------------------------------------- | Net trading income | -2 | 0 | 6 | 7 | 0 | 0 | -------------------------------------------------------------------------------- | Net investment | 0 | 0 | 0 | - | - | - | | income | | | | | | | -------------------------------------------------------------------------------- | Other operating | 6 | 4 | 0 | 0 | 3 | 2 | | income | | | | | | | -------------------------------------------------------------------------------- | Total income | 47 | 37 | 16 | 16 | 7 | 6 | -------------------------------------------------------------------------------- | of which | | | | | 1 | 0 | | inter-segment | | | | | | | | income | | | | | | | -------------------------------------------------------------------------------- | Personnel costs | -6 | -7 | -4 | -6 | 0 | -1 | --------------------------------------------------------------------------------| IT expenses | -2 | -2 | -2 | -1 | 0 | 0 | -------------------------------------------------------------------------------- | Amortisation on | | | | | | | | intangible assets | | | | | | | | from acquisitions | | | | | | | -------------------------------------------------------------------------------- | Other amortisation | -4 | -3 | 0 | 0 | 0 | 0 | | and depreciation | | | | | | | -------------------------------------------------------------------------------- | Other expenses | -5 | -4 | -2 | -2 | 0 | 0 | -------------------------------------------------------------------------------- | Total expenses | -17 | -16 | -7 | -9 | -1 | -1 | -------------------------------------------------------------------------------- | Share of | | | | | | | | associates' | | | | | | | | profits/losses | | | | | | | -------------------------------------------------------------------------------- | Earnings before tax | 30 | 21 | 8 | 6 | 6 | 5 | | *) | | | | | | | -------------------------------------------------------------------------------- | Income tax | | | | | | | -------------------------------------------------------------------------------- | Profit for the | | | | | | | | period | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Key ratios % | | | | | | | -------------------------------------------------------------------------------- | Operating | | | | | | | | cost/income ratio | | | | | | | -------------------------------------------------------------------------------- | Operating return on | | | | | | | | equity | | | | | | | -------------------------------------------------------------------------------- | Return on equity at | | | | | 18.8 | 15.9 | | fair values | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Financial | Treasu | 2006 | Asset | 2006 | Banking | 2006 | | performance from | ry | | Managemen | | and | | | October to December | 2007 | | t | | Investme | | | EUR million | | | 2007 | | nt | | | | | | | | Services | | | | | | | | , | | | | | | | | total | | | | | | | | 2007 | | | | | | | | | | -------------------------------------------------------------------------------- | Net interest income | -2 | 1 | -1 | -2 | 35 | 29 | -------------------------------------------------------------------------------- | Impairment losses | - | - | - | - | -1 | 0 | | on receivables | | | | | | | -------------------------------------------------------------------------------- | Net interest income | -2 | 1 | -1 | -2 | 36 | 28 | | after impairment | | | | | | | | losses | | | | | | | -------------------------------------------------------------------------------- | Net income from | | | | | | | | Non-life Insurance | | | | | | | -------------------------------------------------------------------------------- | Net commissions and | 0 | 0 | 15 | 14 | 33 | 29 | | fees | | | | | | | -------------------------------------------------------------------------------- | Net trading income | -31 | 1 | | 0 | -27 | 9 | -------------------------------------------------------------------------------- | Net investment | 1 | 6 | 0 | | 1 | 6 | | income | | | | | | | -------------------------------------------------------------------------------- | Other operating | 3 | 0 | 1 | 0 | 13 | 7 | | income | | | | | | | -------------------------------------------------------------------------------- | Total income | -29 | 8 | 15 | 12 | 55 | 79 | -------------------------------------------------------------------------------- | of which | 0 | 0 | 0 | 0 | 1 | 1 | | inter-segment | | | | | | | | income | | | | | | | -------------------------------------------------------------------------------- | Personnel costs | 0 | 0 | -4 | -5 | -14 | -18 | -------------------------------------------------------------------------------- | IT expenses | 0 | 0 | -1 | 0 | -6 | -4 | -------------------------------------------------------------------------------- | Amortisation on | | | -1 | -1 | -1 | -1 | | intangible assets | | | | | | | | from acquisitions | | | | | | | -------------------------------------------------------------------------------- | Other amortisation | 0 | 0 | 0 | 0 | -5 | -4 | | and depreciation | | | | | | | -------------------------------------------------------------------------------- | Other expenses | 0 | 0 | -2 | -2 | -8 | -9 | -------------------------------------------------------------------------------- | Total expenses | -1 | -1 | -8 | -8 | -34 | -36 | -------------------------------------------------------------------------------- | Share of | | | | | | | | associates' | | | | | | | | profits/losses | | | | | | | -------------------------------------------------------------------------------- | Earnings before tax | -30 | 7 | 7 | 4 | 21 | 43 | -------------------------------------------------------------------------------- | Income tax | | | | | | | -------------------------------------------------------------------------------- | Profit for the | | | | | | | | period | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Key ratios, % | | | | | | | -------------------------------------------------------------------------------- | Operating | | | 45 | 59 | 61 | 44 | | cost/income ratio | | | | | | | -------------------------------------------------------------------------------- | Operating return on | | | | | 6.7 | 19.2 | | equity | | | | | | | -------------------------------------------------------------------------------- | Return on equity at | | | | | | | | fair values | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Financial performance | Non-life | Non-life | Other | Other | | from October to December | Insurance | Insurance | operations | operations | | EUR million | 2007 | 2006 | 2007 | 2006 | -------------------------------------------------------------------------------- | Net interest income | -2 | -2 | -3 | -4 | -------------------------------------------------------------------------------- | Impairment losses on | | | | | | receivables | | | | | -------------------------------------------------------------------------------- | Net interest income after | -2 | -2 | -3 | -4 | | impairment losses | | | | | -------------------------------------------------------------------------------- | Net income from Non-life | 123 | 85 | -1 | - | | Insurance | | | | | -------------------------------------------------------------------------------- | Net commissions and fees | 1 | 1 | 0 | 0 | -------------------------------------------------------------------------------- | Net trading income | | | | 0 | -------------------------------------------------------------------------------- | Net investment income | | | -1 | 1 | -------------------------------------------------------------------------------- | Other operating income | 6 | 5 | 4 | 6 | -------------------------------------------------------------------------------- | Total income | 128 | 89 | -1 | 2 | -------------------------------------------------------------------------------- | of which inter-segment | | 0 | 3 | 4 | | income | | | | | -------------------------------------------------------------------------------- | Personnel costs | -27 | -23 | -2 | -1 | -------------------------------------------------------------------------------- | IT expenses | -3 | -3 | -3 | -3 | -------------------------------------------------------------------------------- | Amortisation on | -8 | -8 | | | | intangible assets from | | | | | | acquisitions | | | | | -------------------------------------------------------------------------------- | Other amortisation and | -1 | 0 | -1 | -1 | | depreciation | | | | | -------------------------------------------------------------------------------- | Other expenses | -33 | -34 | -3 | -3 | -------------------------------------------------------------------------------- | Total expenses | -72 | -69 | -9 | -8 | -------------------------------------------------------------------------------- | Share of associates' | 0 | 0 | | 0 | | profits/losses | | | | | -------------------------------------------------------------------------------- | Earnings before tax | 56 | 20 | -10 | -7 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Financial performance | Eliminati | Eliminatio | OKO Bank | OKO Bank | | from | ons 2007 | ns 2006 | Group 2007 | Group 2006 | | October to December | | | | | | EUR million | | | | | -------------------------------------------------------------------------------- | Net interest income | 0 | 1 | 30 | 23 | -------------------------------------------------------------------------------- | Impairment losses on | | | -1 | 0 | | receivables | | | | | -------------------------------------------------------------------------------- | Net interest income after | 0 | 1 | 31 | 23 || impairment losses | | | | | -------------------------------------------------------------------------------- | Net income from Non-life | 1 | -1 | 123 | 84 | | Insurance | | | | | -------------------------------------------------------------------------------- | Net commissions and fees | -1 | 0 | 32 | 29 | -------------------------------------------------------------------------------- | Net trading income | | 0 | -27 | 9 | -------------------------------------------------------------------------------- | Net investment income | | | 1 | 7 | -------------------------------------------------------------------------------- | Other operating income | -3 | -4 | 20 | 13 | -------------------------------------------------------------------------------- | Total income | -3 | -5 | 179 | 165 | -------------------------------------------------------------------------------- | of which inter-segment | -3 | -4 | | | | income | | | | | -------------------------------------------------------------------------------- | Personnel costs | | | -43 | -42 | -------------------------------------------------------------------------------- | IT expenses | 1 | 0 | -11 | -10 | -------------------------------------------------------------------------------- | Amortisation on | | | -9 | -9 | | intangible assets from | | | | | | acquisitions | | | | | -------------------------------------------------------------------------------- | Other amortisation and | | | -7 | -6 | | depreciation | | | | | -------------------------------------------------------------------------------- | Other expenses | 3 | 5 | -41 | -41 | -------------------------------------------------------------------------------- | Total expenses | 3 | 5 | -112 | -108 | -------------------------------------------------------------------------------- | Share of associates' | | | 0 | 0 | | profits/losses | | | | | -------------------------------------------------------------------------------- | Earnings before tax | 0 | 0 | 67 | 57 | -------------------------------------------------------------------------------- | Income tax | | | -18 | -15 | -------------------------------------------------------------------------------- | Profit for the period | | | 49 | 41 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Key ratios, % | | | | | -------------------------------------------------------------------------------- | Operating cost/income | | | | | | ratio | | | | | -------------------------------------------------------------------------------- | Operating return on | | | | | | equity | | | | | -------------------------------------------------------------------------------- | Return on equity at fair | | | 5.1 | 11.7 | | values | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Non-life Insurance by | Private | 2006 | Corporate | 2006 | | division | Customers | | Customers | | | from October to December | 2007 | | 2007 | | -------------------------------------------------------------------------------- | Balance on technical | | | | | | account, EUR million | | | | | -------------------------------------------------------------------------------- | Insurance premium revenue | 79 | 79 | 117 | 113 | -------------------------------------------------------------------------------- | Claims incurred | 40 | 38 | 75 | 103 | -------------------------------------------------------------------------------- | Amortisation on | 3 | 3 | 3 | 3 | | intangible assets from | | | | | | acquisitions | | | | | -------------------------------------------------------------------------------- | Operating expenses | 24 | 24 | 16 | 18 | -------------------------------------------------------------------------------- | Total expenses | 67 | 65 | 94 | 124 | -------------------------------------------------------------------------------- | Balance on technical | 12 | 14 | 23 | -12 | | account | | | | | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Key ratios, % | | | | | -------------------------------------------------------------------------------- | Operating return on | | | | | | equity | | | | | -------------------------------------------------------------------------------- | Loss ratio | 71.3 | 66.2 | 79.0 | 80.8 | -------------------------------------------------------------------------------- | Expense ratio | 28.5 | 28.8 | 13.8 | 15.4 | -------------------------------------------------------------------------------- | Operating combined ratio | 99.7 | 95.1 | 92.8 | 96.2 | -------------------------------------------------------------------------------- | Combined ratio | 84.2 | 81.8 | 80.5 | 110.5 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Non-life Insurance by | Baltic | 2006 | Total | 2006 | | division | States | | 2007 | | | from October to December | 2007 | | | | -------------------------------------------------------------------------------- | Balance on technical | | | | | | account, EUR million | | | | | -------------------------------------------------------------------------------- | Insurance premium revenue | 15 | 13 | 211 | 204 | -------------------------------------------------------------------------------- | Claims incurred | 10 | 8 | 125 | 149 | -------------------------------------------------------------------------------- | Amortisation on | 0 | 0 | 6 | 6 | | intangible assets from | | | | | | acquisitions | | | | | -------------------------------------------------------------------------------- | Operating expenses | 4 | 5 | 45 | 45 | -------------------------------------------------------------------------------- | Total expenses | 14 | 13 | 176 | 200 | -------------------------------------------------------------------------------- | Balance on technical | 1 | 0 | 35 | 3 | | account | | | | | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Key ratios, % | | | | | -------------------------------------------------------------------------------- | Operating return on | | | 18.5 | 27.6 | | equity | | | | | -------------------------------------------------------------------------------- | Loss ratio | 65.7 | 62.1 | 75.2 | 73.9 | -------------------------------------------------------------------------------- | Expense ratio | 28.2 | 36.2 | 20.8 | 21.9 | -------------------------------------------------------------------------------- | Operating combined ratio | 93.9 | 98.2 | 95.9 | 95.8 | -------------------------------------------------------------------------------- | Combined ratio | 88.5 | 75.1 | 92.4 | 99.9 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Financial | Corpora | 2006 | Market | 2006 | Central | 2006 | | performance from | te | | s | | Banking | | | January to December | Banking | | 2007 | | 2007 | | | EUR million | 2007 | | | | | | -------------------------------------------------------------------------------- | Net interest income | 106 | 86 | 18 | 12 | 13 | 12 | -------------------------------------------------------------------------------- | Impairment losses | 1 | 1 | - | - | - | - | | on receivables | | | | | | | -------------------------------------------------------------------------------- | Net interest income | 105 | 85 | 18 | 12 | 13 | 12 | | after impairment | | | | | | | | losses | | | | | | | -------------------------------------------------------------------------------- | Net income from | | | | | | | | Non-life Insurance | | | | | | | -------------------------------------------------------------------------------- | Net commissions and | 42 | 35 | 24 | 22 | 0 | 0 | | fees | | | | | | | -------------------------------------------------------------------------------- | Net trading income | -3 | 2 | 21 | 13 | 2 | 1 | -------------------------------------------------------------------------------- | Net investment | 1 | 0 | 0 | 0 | | 0 | | income | | | | | | | -------------------------------------------------------------------------------- | Other operating | 20 | 14 | 0 | 0 | 10 | 9 | | income | | | | | | | -------------------------------------------------------------------------------- | Total income | 165 | 136 | 63 | 47 | 24 | 23 | -------------------------------------------------------------------------------- | of which | | | | | 2 | 2 | | inter-segment | | | | | | | | income | | | | | | | -------------------------------------------------------------------------------- | Personnel costs | -23 | -22 | -16 | -15 | -2 | -2 | -------------------------------------------------------------------------------- | IT expenses | -8 | -6 | -6 | -5 | -1 | -1 | -------------------------------------------------------------------------------- | Amortisation on | | | | | | | | intangible assets | | | | | | | | from acquisitions | | | | | | | -------------------------------------------------------------------------------- | Other amortisation | -15 | -13 | -1 | -1 | 0 | 0 | | and depreciation | | | | | | | -------------------------------------------------------------------------------- | Other expenses | -15 | -16 | -6 | -7 | -2 | -2 | -------------------------------------------------------------------------------- | Total expenses | -62 | -56 | -29 | -28 | -5 | -5 | -------------------------------------------------------------------------------- | Share of | | | | | | | | associates' | | | | | | | | profits/losses | | | | | | | -------------------------------------------------------------------------------- | Earnings before tax | 103 | 80 | 33 | 18 | 20 | 18 | | *) | | | | | | | -------------------------------------------------------------------------------- | Income tax | | | | | | | -------------------------------------------------------------------------------- | Profit for the | | | | | | | | period | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Key figures, % | | | | | | | -------------------------------------------------------------------------------- | Operating | | | | | | | | cost/income ratio | | | | | | | -------------------------------------------------------------------------------- | Operating return on | | | | | | | | equity | | | | | | | -------------------------------------------------------------------------------- | Return on equity at | | | | | 16.2 | 15.0 | | fair values | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Financial | Treasu | 2006 | Asset | 2006 | Banking | 2006 | | performance from | ry | | Managemen | | and | | | January to December | 2007 | | t | | Investme | | | EUR million | | | 2007 | | nt | | | | | | | | Services | | | | | | | | , | | | | | | | | total | | | | | | | | 2007 | | | | | | | | | | -------------------------------------------------------------------------------- | Net interest income | -3 | 5 | -3 | -2 | 131 | 113 | -------------------------------------------------------------------------------- | Impairment losses | - | - | - | - | 1 | 1 | | on receivables | | | | | | | -------------------------------------------------------------------------------- | Net interest income | -3 | 5 | -3 | -2 | 130 | 112 | | after impairment | | | | | | | | losses | | | | | | | -------------------------------------------------------------------------------- | Net income from | | | | | | | | Non-life Insurance | | | | | | | -------------------------------------------------------------------------------- | Net commissions and | 0 | -1 | 49 | 43 | 115 | 99 | | fees | | | | | | | -------------------------------------------------------------------------------- | Net trading income | -54 | 3 | | | -34 | 19 | -------------------------------------------------------------------------------- | Net investment | 23 | 29 | 0 | | 24 | 29 | | income | | | | | | | -------------------------------------------------------------------------------- | Other operating | 4 | 1 | 1 | 1 | 35 | 24 | | income | | | | | | | -------------------------------------------------------------------------------- | Total income | -30 | 37 | 48 | 41 | 269 | 284 | -------------------------------------------------------------------------------- | of which | 0 | 0 | 1 | 2 | 3 | 4 | | inter-segment | | | | | | | | income | | | | | | | -------------------------------------------------------------------------------- | Personnel costs | -1 | -2 | -15 | -15 | -57 | -56 | -------------------------------------------------------------------------------- | IT expenses | -2 | -1 | -3 | -2 | -20 | -15 | -------------------------------------------------------------------------------- | Amortisation on | | | -3 | -3 | -3 | -3 | | intangible assets | | | | | | | | from acquisitions | | | | | | | -------------------------------------------------------------------------------- | Other amortisation | 0 | 0 | 0 | 0 | -17 | -15 | | and depreciation | | | | | | | -------------------------------------------------------------------------------- | Other expenses | -2 | -2 | -5 | -7 | -30 | -33 | -------------------------------------------------------------------------------- | Total expenses | -5 | -5 | -27 | -27 | -128 | -121 | -------------------------------------------------------------------------------- | Share of | | | | | | | | associates' | | | | | | | | profits/losses | | | | | | | -------------------------------------------------------------------------------- | Earnings before tax | -35 | 32 | 21 | 14 | 141 | 163 | -------------------------------------------------------------------------------- | Income tax | | | | | | | -------------------------------------------------------------------------------- | Profit for the | | | | | | | | period | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Key ratios, % | | | | | | | -------------------------------------------------------------------------------- | Operating | | | 50 | 65 | 46 | 41 | | cost/income ratio | | | | | | | -------------------------------------------------------------------------------- | Operating return on | | | | | 12.1 | 18.2 | | equity | | | | | | | -------------------------------------------------------------------------------- | Return on equity at | | | | | | | | fair values | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Financial performance | Non-life | Non-life | Other | Other | | from January to December | Insurance | Insurance | operations | operations | | EUR million | 2007 | 2006 | 2007 | 2006 | -------------------------------------------------------------------------------- | Net interest income | -7 | -8 | -12 | -13 | -------------------------------------------------------------------------------- | Impairment losses on | | | | | | receivables | | | | | -------------------------------------------------------------------------------- | Net interest income after | -7 | -8 | -12 | -13 | | impairment losses | | | | | -------------------------------------------------------------------------------- | Net income from Non-life | 435 | 332 | | | | Insurance | | | | | -------------------------------------------------------------------------------- | Net commissions and fees | 6 | 6 | 0 | -1 | -------------------------------------------------------------------------------- | Net trading income | | | 0 | 0 | -------------------------------------------------------------------------------- | Net investment income | | -1 | 4 | 9 | -------------------------------------------------------------------------------- | Other operating income | 30 | 18 | 20 | 40 | -------------------------------------------------------------------------------- | Total income | 464 | 347 | 9 | 35 | -------------------------------------------------------------------------------- | of which inter-segment | | 0 | 11 | 28 | | income | | | | | -------------------------------------------------------------------------------- | Personnel costs | -103 | -99 | -5 | -11 | -------------------------------------------------------------------------------- | IT expenses | -10 | -13 | -14 | -15 | -------------------------------------------------------------------------------- | Amortisation on | -33 | -33 | | | | intangible assets from | | | | | | acquisitions | | | | | -------------------------------------------------------------------------------- | Other amortisation and | -3 | -2 | -4 | -4 | | depreciation | | | | | -------------------------------------------------------------------------------- | Other expenses | -133 | -122 | -20 | -24 | -------------------------------------------------------------------------------- | Total expenses | -284 | -268 | -43 | -54 | -------------------------------------------------------------------------------- | Share of associates' | 0 | 0 | 0 | 0 | | profits/losses | | | | | -------------------------------------------------------------------------------- | Earnings before tax | 181 | 78 | -34 | -19 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Financial performance | Eliminati | Eliminatio | OKO Bank | OKO Bank | | from January to December | ons 2007 | ns 2006 | Group 2007 | Group 2006 | | EUR million | | | | | -------------------------------------------------------------------------------- | Net interest income | 3 | 3 | 115 | 96 | -------------------------------------------------------------------------------- | Impairment losses on | | | 1 | 1 | | receivables | | | | | -------------------------------------------------------------------------------- | Net interest income after | 3 | 3 | 114 | 94 | | impairment losses | | | | | -------------------------------------------------------------------------------- | Net income from Non-life | 1 | -3 | 433 | 328 | | Insurance | | | | | -------------------------------------------------------------------------------- | Net commissions and fees | -5 | -2 | 115 | 102 | -------------------------------------------------------------------------------- | Net trading income | 0 | 0 | -34 | 20 | -------------------------------------------------------------------------------- | Net investment income | - | 0 | 28 | 37 | -------------------------------------------------------------------------------- | Other operating income | -14 | -33 | 71 | 50 | -------------------------------------------------------------------------------- | Total income | -15 | -34 | 728 | 632 | -------------------------------------------------------------------------------- | of which inter-segment | -13 | -31 | | | | income | | | | | -------------------------------------------------------------------------------- | Personnel costs | | | -166 | -165 | -------------------------------------------------------------------------------- | IT expenses | 1 | 0 | -43 | -42 | -------------------------------------------------------------------------------- | Amortisation on | | | -36 | -36 | | intangible assets from | | | | | | acquisitions | | | | | -------------------------------------------------------------------------------- | Other amortisation and | | | -25 | -21 | | depreciation | | | | | -------------------------------------------------------------------------------- | Other expenses | 14 | 34 | -170 | -144 | -------------------------------------------------------------------------------- | Total expenses | 15 | 34 | -440 | -409 | -------------------------------------------------------------------------------- | Share of associates' | | | 0 | 0 | | profits/losses | | | | | -------------------------------------------------------------------------------- | Earnings before tax | 0 | 0 | 288 | 223 | -------------------------------------------------------------------------------- | Income tax | | | -76 | -42 | -------------------------------------------------------------------------------- | Profit for the period | | | 212 | 180 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Key ratios, % | | | | | -------------------------------------------------------------------------------- | Operating cost/income | | | | | | ratio | | | | | -------------------------------------------------------------------------------- | Operating return on | | | | | | equity | | | | | -------------------------------------------------------------------------------- | Return on equity at fair | | | 9.3 | 9.5 | | values | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Non-life Insurance by | Private | 2006 | Corporate | 2006 | | division | Customers | | Customers | | | from January to December | 2007 | | 2007 | | -------------------------------------------------------------------------------- | Balance on technical | | | | | | account, EUR million | | | | | -------------------------------------------------------------------------------- | Insurance premium revenue | 345 | 308 | 449 | 434 | -------------------------------------------------------------------------------- | Claims incurred | 214 | 194 | 331 | 358 | -------------------------------------------------------------------------------- | Amortisation on | 11 | 11 | 13 | 13 | | intangible assets from | | | | | | acquisitions | | | | | -------------------------------------------------------------------------------- | Operating expenses | 97 | 84 | 71 | 75 | -------------------------------------------------------------------------------- | Total expenses | 322 | 289 | 415 | 446 | -------------------------------------------------------------------------------- | Balance on technical | 23 | 18 | 34 | -13 | | account | | | | | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Key ratios, % | | | | | -------------------------------------------------------------------------------- | Operating return on | | | | | | equity | | | | | -------------------------------------------------------------------------------- | Loss ratio | 66.8 | 67.7 | 77.7 | 79.8 | -------------------------------------------------------------------------------- | Expense ratio | 27.7 | 27.3 | 15.7 | 17.3 | -------------------------------------------------------------------------------- | Operating combined ratio | 94.6 | 95.0 | 93.3 | 97.1 | -------------------------------------------------------------------------------- | Combined ratio | 93.4 | 94.2 | 92.4 | 103.1 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Non-life Insurance by | Baltic | 2006 | Total | 2006 | | division | States | | 2007 | | | from January to December | 2007 | | | | -------------------------------------------------------------------------------- | Balance on technical | | | | | | account, EUR million | | | | | -------------------------------------------------------------------------------- | Insurance premium revenue | 56 | 47 | 850 | 788 | -------------------------------------------------------------------------------- | Claims incurred | 37 | 27 | 583 | 580 | -------------------------------------------------------------------------------- | Amortisation on | 1 | 1 | 25 | 26 | | intangible assets from | | | | | | acquisitions | | | | | -------------------------------------------------------------------------------- | Operating expenses | 14 | 13 | 182 | 172 | -------------------------------------------------------------------------------- | Total expenses | 52 | 41 | 790 | 778 | -------------------------------------------------------------------------------- | Balance on technical | 4 | 5 | 60 | 10 | | account | | | | | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Key ratios, % | | | | | -------------------------------------------------------------------------------- | Operating return on | | | 25.2 | 20.9 | | equity | | | | | -------------------------------------------------------------------------------- | Loss ratio | 66.8 | 58.2 | 72.6 | 73.7 | -------------------------------------------------------------------------------- | Expense ratio | 25.6 | 28.5 | 21.2 | 21.9 | -------------------------------------------------------------------------------- | Operating combined ratio | 92.4 | 86.7 | 93.8 | 95.5 | -------------------------------------------------------------------------------- | Combined ratio | 94.6 | 89.2 | 92.9 | 98.7 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Balance sheet | Corpora | Market | Central | Treasur | Asset | Banking | | 31 December | te | s | Banking | y | Managemen | and | | 2007 | Banking | | | | t | Investmen | | EUR million | | | | | | t | | | | | | | | Services, | | | | | | | | total | -------------------------------------------------------------------------------- | Receivables | 9 238 | 15 | 34 | 2 | | 9 289 | | from | | | | | | | | customers | | | | | | | -------------------------------------------------------------------------------- | Receivables | 182 | 87 | 5 244 | 153 | 4 | 5 671 | | from | | | | | | | | financial | | | | | | | | institutions | | | | | | | -------------------------------------------------------------------------------- | Non-life | | | | | | | | insurance | | | | | | | | assets | | | | | | | -------------------------------------------------------------------------------- | Financial | 365 | 1 012 | 2 512 | 1 480 | 23 | 5 392 | | assets at | | | | | | | | fair value | | | | | | | | through | | | | | | | | profit or | | | | | | | | loss and | | | | | | | | investment | | | | | | | | assets | | | | | | | -------------------------------------------------------------------------------- | Investments | | | | | | | | in associates | | | | | | | -------------------------------------------------------------------------------- | Other assets | 384 | 1 101 | 52 | 124 | 134 | 1 796 | -------------------------------------------------------------------------------- | Total assets | 10 170 | 2 215 | 7 842 | 1 760 | 161 | 22 148 | -------------------------------------------------------------------------------- | Liabilities | 427 | 35 | 1 333 | 975 | | 2 770 | | to customers | | | | | | | -------------------------------------------------------------------------------- | Liabilities | 2 | 257 | 2 141 | 339 | | 2 738 | | to financial | | | | | | | | institutions | | | | | | | -------------------------------------------------------------------------------- | Non-life | | | | | | | | insurance | | | | | | | | liabilities | | | | | | | -------------------------------------------------------------------------------- | Debt | | | | 12 879 | | 12 879 | | securities | | | | | | | | issued to the | | | | | | | | public | | | | | | | -------------------------------------------------------------------------------- | Subordinated | | | | 950 | | 950 | | liabilities | | | | | | | -------------------------------------------------------------------------------- | Other | 509 | 1 070 | 17 | 593 | 17 | 2 206 | | liabilities | | | | | | | -------------------------------------------------------------------------------- | Total | 937 | 1 363 | 3 490 | 15 736 | 17 | 21 543 | | liabilities | | | | | | | -------------------------------------------------------------------------------- | Equity | | | | | | | | Capital | | | | | | | -------------------------------------------------------------------------------- | Total | | | | | | | | liabilities | | | | | | | | and | | | | | | | | shareholders' | | | | | | | | equity | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Capital | 4 | 0 | 0 | 1 | 2 | 8 | | expenditure | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Balance sheet | Non-life | Other | Eliminatio | OKO Bank Group | | 31 December 2007 | Insurance | Operations, | ns | | | EUR million | , | total | | | | | total | | | | -------------------------------------------------------------------------------- | Receivables from | | 13 | -13 | 9 288 | | customers | | | | | -------------------------------------------------------------------------------- | Receivables from | | 11 | -17 | 5 665 | | financial | | | | | | institutions | | | | | -------------------------------------------------------------------------------- | Non-life insurance | 2 842 | | -33 | 2 809 | | assets | | | | | -------------------------------------------------------------------------------- | Financial assets | 0 | 203 | -169 | 5 426 | | at fair value | | | | | | through profit or | | | | | | loss and | | | | | | investment assets | | | | | -------------------------------------------------------------------------------- | Investments in | 2 | | | 2 | | associates | | | | | -------------------------------------------------------------------------------- | Other assets | 875 | 122 | -61 | 2 732 | -------------------------------------------------------------------------------- | Total assets | 3 719 | 349 | -294 | 25 922 | -------------------------------------------------------------------------------- | Liabilities to | | 17 | -48 | 2 738 | | customers | | | | | -------------------------------------------------------------------------------- | Liabilities to | 0 | 1 | 0 | 2 739 | | financial | | | | | | institutions | | | | | -------------------------------------------------------------------------------- | Non-life insurance | 2 140 | | | 2 140 | | liabilities | | | | | -------------------------------------------------------------------------------- | Debt securities | | | -24 | 12 856 | | issued to the | | | | | | public | | | | | -------------------------------------------------------------------------------- | Subordinated | | | | 950 | | liabilities | | | | | -------------------------------------------------------------------------------- | Other liabilities | 100 | 387 | -63 | 2 630 | -------------------------------------------------------------------------------- | Total liabilities | 2 241 | 404 | -135 | 24 053 | -------------------------------------------------------------------------------- | Shareholders' | | | | 1 869 | | equity | | | | | -------------------------------------------------------------------------------- | Total liabilities | | | | 25 922 | | and shareholders' | | | | | | equity | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Capital | 9 | 3 | | 19 | | expenditure | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Balance sheet | Corpora | Market | Central | Treasur | Asset | Banking | | 31 December | te | s | Banking | y | Managemen | and | | 2006 | Banking | | | | t | Investmen | | EUR million | | | | | | t | | | | | | | | Services, | | | | | | | | total | -------------------------------------------------------------------------------- | Receivables | 7 788 | 12 | 58 | 9 | | 7 868 | | from | | | | | | | | customers | | | | | | | -------------------------------------------------------------------------------- | Receivables | 300 | 58 | 5 785 | 463 | 1 | 6 607 | | from | | | | | | | | financial | | | | | | | | institutions | | | | | | | -------------------------------------------------------------------------------- | Non-life | | | | | | | | insurance | | | | | | | | assets | | | | | | | -------------------------------------------------------------------------------- | Financial | 336 | 851 | 2 284 | 1 512 | 23 | 5 006 | | assets at | | | | | | | | fair value | | | | | | | | through | | | | | | | | profit or | | | | | | | | loss and | | | | | | | | investment | | | | | | | | assets | | | | | | | -------------------------------------------------------------------------------- | Investments | | | | | | | | in associates | | | | | | | -------------------------------------------------------------------------------- | Other assets | 177 | 563 | 51 | 75 | 128 | 994 | -------------------------------------------------------------------------------- | Total assets | 8 602 | 1 484 | 8 177 | 2 059 | 152 | 20 475 | -------------------------------------------------------------------------------- | Liabilities | 358 | 5 | 981 | 839 | | 2 184 | | to customers | | | | | | | -------------------------------------------------------------------------------- | Liabilities | | 259 | 1 752 | 381 | | 2 391 | | to financial | | | | | | | | institutions | | | | | | | -------------------------------------------------------------------------------- | Non-life | | | | | | | | insurance | | | | | | | | liabilities | | | | | | | -------------------------------------------------------------------------------- | Debt | | | | 13 898 | | 13 898 | | securities | | | | | | | | issued to the | | | | | | | | public | | | | | | | -------------------------------------------------------------------------------- | Subordinated | | | | 924 | | 924 | | liabilities | | | | | | | -------------------------------------------------------------------------------- | Other | 406 | 475 | 35 | 284 | 14 | 1 214 | | liabilities | | | | | | | -------------------------------------------------------------------------------- | Total | 764 | 740 | 2 767 | 16 327 | 14 | 20 611 | | liabilities | | | | | | | -------------------------------------------------------------------------------- | Equity | | | | | | | | Capital | | | | | | | -------------------------------------------------------------------------------- | Total | | | | | | | | liabilities | | | | | | | | and | | | | | | | | shareholders' | | | | | | | | equity | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Capital | 5 | 1 | 0 | 2 | 1 | 9 | | expenditure | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Balance sheet | Non-life | Other | Eliminatio | OKO Bank Group | | 31 December 2006 | Insurance | Operations, | ns | | | EUR million | , | total | | | | | total | | | | -------------------------------------------------------------------------------- | Receivables from | | | -4 | 7 864 | | customers | | | | | -------------------------------------------------------------------------------- | Receivables from | | 66 | -220 | 6 453 | | financial | | | | | | institutions | | | | | -------------------------------------------------------------------------------- | Non-life insurance | 2 824 | | -58 | 2 766 | | assets | | | | | -------------------------------------------------------------------------------- | Financial assets | 0 | 687 | -666 | 5 026 | | at fair value | | | | | | through profit or | | | | | | loss and | | | | | | investment assets | | | | | -------------------------------------------------------------------------------- | Investments in | 2 | 7 | | 8 | | associates | | | | | -------------------------------------------------------------------------------- | Other assets | 901 | 298 | -113 | 2 079 | -------------------------------------------------------------------------------- | Total assets | 3 726 | 1 058 | -1 061 | 24 196 | -------------------------------------------------------------------------------- | Liabilities to | | 140 | -330 | 1 994 | | customers | | | | | -------------------------------------------------------------------------------- | Liabilities to | | | -1 | 2 390 | | financial | | | | | | institutions | | | | | -------------------------------------------------------------------------------- | Non-life insurance | 2 099 | | | 2 099 | | liabilities | | | | | -------------------------------------------------------------------------------- | Debt securities | | | -635 | 13 263 | | issued to the | | | | | | public | | | | | -------------------------------------------------------------------------------- | Subordinated | 40 | | -40 | 924 | | liabilities | | | | | -------------------------------------------------------------------------------- | Other liabilities | 156 | 384 | -57 | 1 697 | -------------------------------------------------------------------------------- | Total liabilities | 2 295 | 523 | -1 062 | 22 368 | -------------------------------------------------------------------------------- | Shareholders' | | | | 1 828 | | equity | | | | | -------------------------------------------------------------------------------- | Total liabilities | | | | 24 196 | | and shareholders' | | | | | | equity | | | | | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Capital | 10 | 3 | | 21 | | expenditure | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Notes | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 1) Net interest income | | | | | -------------------------------------------------------------------------------- | EUR million | Q4/07 | Q4/06 | Q1-4/07 | Q1-4/06 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest income | | | | | -------------------------------------------------------------------------------- | Receivables from | 69 | 59 | 270 | 181 | | | | | | | | financial institutions | | | | | -------------------------------------------------------------------------------- | Receivables from customers | 121 | 78 | 415 | 272 | -------------------------------------------------------------------------------- | Other | 478 | 250 | 1 549 | 817 | -------------------------------------------------------------------------------- | Total | 668 | 387 | 2 234 | 1 270 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest expenses | | | | | -------------------------------------------------------------------------------- | Liabilities to financial | 30 | 28 | 94 | 106 | | institutions | | | | | -------------------------------------------------------------------------------- | Liabilities to customers | 23 | 17 | 82 | 53 | -------------------------------------------------------------------------------- | Other | 584 | 319 | 1 943 | 1 015 | -------------------------------------------------------------------------------- | Total | 637 | 364 | 2 119 | 1 175 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total net interest income | 30 | 23 | 115 | 96 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 2) Impairment losses on | | | | | | receivables | | | | | -------------------------------------------------------------------------------- | EUR million | Q4/07 | Q4/06 | Q1-4/07 | Q1-4/06 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Receivables eliminated as | 1 | 3 | 5 | 5 | | loan or | | | | | | guarantee losses | | | | | -------------------------------------------------------------------------------- | Recoveries from receivables | -3 | | -3 | -1 | | amortised as loan or | | | | | | guarantee losses | | | | | -------------------------------------------------------------------------------- | Increase in impairment loss | 3 | 2 | 6 | 4 | | provisions | | | | | -------------------------------------------------------------------------------- | Decrease in impairment loss | -2 | -5 | -7 | -8 | | provisions | | | | | -------------------------------------------------------------------------------- | Total impairment losses on | -1 | 0 | 1 | 1 | | receivables | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 3) Net income from Non-life | | | | | | Insurance | | | | | -------------------------------------------------------------------------------- | EUR million | Q4/07 | Q4/06 | Q1-4/07 | Q1-4/06 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net insurance premium revenue | | | | | -------------------------------------------------------------------------------- | Premiums written | 146 | 145 | 944 | 877 | -------------------------------------------------------------------------------- | Insurance premiums ceded | -4 | -11 | -49 | -55 | | | | | | | | to reinsurers | | | | | -------------------------------------------------------------------------------- | Change in provision for | 75 | 76 | -43 | -35 | | | | | | | | unearned premiums | | | | | -------------------------------------------------------------------------------- | Reinsurers' share | -6 | -5 | -2 | 2 | -------------------------------------------------------------------------------- | Total | 211 | 204 | 850 | 788 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net Non-life Insurance claims | | | | | -------------------------------------------------------------------------------- | Claims paid | 149 | 123 | 556 | 470 | -------------------------------------------------------------------------------- | Insurance claims | -8 | 12 | -14 | 30 | | | | | | | | recovered from reinsurers | | | | | -------------------------------------------------------------------------------- | Change in provision for | -34 | 9 | -10 | 51 | | unpaid claims | | | | | -------------------------------------------------------------------------------- | Reinsurers' share | 6 | -7 | 5 | -15 | -------------------------------------------------------------------------------- | Total | 113 | 137 | 536 | 536 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net investment income, | | | | | | Non-life Insurance | | | | | -------------------------------------------------------------------------------- | Interest income | 17 | 17 | 69 | 72 | -------------------------------------------------------------------------------- | Net realised gains and losses | | | | | | and | | | | | | realised fair value | | | | | | change | | | | | -------------------------------------------------------------------------------- | Notes and bonds | -5 | -17 | -39 | -28 | -------------------------------------------------------------------------------- | Shares and participations | 3 | 23 | 49 | 34 | -------------------------------------------------------------------------------- | Investment property | 0 | 0 | 3 | 1 | -------------------------------------------------------------------------------- | Other | 10 | 2 | 13 | 8 | -------------------------------------------------------------------------------- | Unrealised fair value gains | | | | | | and losses | | | | | -------------------------------------------------------------------------------- | Notes and bonds | 0 | 0 | 0 | -1 | -------------------------------------------------------------------------------- | Shares and participations | -1 | -1 | -1 | -1 | -------------------------------------------------------------------------------- | Investment property | 1 | 2 | 2 | 2 | -------------------------------------------------------------------------------- | Other | -3 | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Dividend income | 13 | 0 | 61 | 22 | -------------------------------------------------------------------------------- | Total | 35 | 26 | 157 | 108 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Unwinding of discount | -10 | -9 | -39 | -37 | -------------------------------------------------------------------------------- | Other | -1 | 0 | 2 | 5 | -------------------------------------------------------------------------------- | Total net income from | 123 | 84 | 433 | 328 | | Non-life Insurance | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 4) Net commissions and fees | | | | | -------------------------------------------------------------------------------- | EUR million | Q4/07 | Q4/06 | Q1-4/07 | Q1-4/06 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Commission income | | | | | -------------------------------------------------------------------------------- | Lending | 7 | 4 | 22 | 16 | -------------------------------------------------------------------------------- | Payment transfers | 3 | 3 | 12 | 12 | -------------------------------------------------------------------------------- | Securities brokerage | 6 | 6 | 26 | 21 | -------------------------------------------------------------------------------- | Securities issuance | 1 | 0 | 6 | 5 | -------------------------------------------------------------------------------- | Asset management and | 17 | 17 | 56 | 53 | | | | | | | | legal services | | | | | -------------------------------------------------------------------------------- | Insurance operations | 1 | 0 | 6 | 4 | -------------------------------------------------------------------------------- | Guarantees | 2 | 2 | 6 | 6 | -------------------------------------------------------------------------------- | Other | 2 | 3 | 8 | 6 | -------------------------------------------------------------------------------- | Total commission income | 39 | 35 | 142 | 123 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Commission expenses on | | | | | -------------------------------------------------------------------------------- | Payment transfers | 1 | 1 | 3 | 3 | -------------------------------------------------------------------------------- | Securities brokerage | 2 | 2 | 10 | 8 | -------------------------------------------------------------------------------- | Securities issuance | 1 | 0 | 4 | 1 | -------------------------------------------------------------------------------- | Asset management and | 2 | 2 | 9 | 8 | | | | | | | | legal services | | | | | -------------------------------------------------------------------------------- | Other | 0 | 0 | 2 | 2 | -------------------------------------------------------------------------------- | Total commission expenses | 7 | 6 | 27 | 21 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total net commissions and | 32 | 29 | 115 | 102 | | fees | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 5) Net trading income | | | | | -------------------------------------------------------------------------------- | EUR million | Q4/07 | Q4/06 | Q1-4/07 | Q1-4/06 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Financial assets and | | | | | | liabilities | | | | | | held for trading | | | | | -------------------------------------------------------------------------------- | Capital gains and losses and | | | | | | realised changes in fair | | | | | | value | | | | | -------------------------------------------------------------------------------- | Notes and bonds | 0 | -3 | -8 | -8 | -------------------------------------------------------------------------------- | Shares and participations | 0 | 0 | 0 | 1 | -------------------------------------------------------------------------------- | Derivatives | 1 | 7 | 3 | 13 |-------------------------------------------------------------------------------- | Unrealised changes in fair | | | | | | value | | | | | -------------------------------------------------------------------------------- | Notes and bonds | 1 | -5 | 2 | -10 | -------------------------------------------------------------------------------- | Shares and participations | 0 | 0 | 0 | -1 | -------------------------------------------------------------------------------- | Derivatives | -1 | 11 | 23 | 32 | -------------------------------------------------------------------------------- | Financial assets and | | | | | | liabilities at fair value | | | | | | through profit or loss | | | | | -------------------------------------------------------------------------------- | Capital gains and losses and | | | | | | realised changes in fair | | | | | | value | | | | | -------------------------------------------------------------------------------- | Notes and bonds | 0 | 0 | 0 | -1 | -------------------------------------------------------------------------------- | Shares and participations | | | | | -------------------------------------------------------------------------------- | Derivatives | | | | | -------------------------------------------------------------------------------- | Unrealised changes in fair | | | | | | value | | | | | -------------------------------------------------------------------------------- | Notes and bonds | -32 | -4 | -67 | -17 | -------------------------------------------------------------------------------- | Shares and participations | | | | | -------------------------------------------------------------------------------- | Derivatives | | | | | -------------------------------------------------------------------------------- | Net income from foreign | | | | | | exchange operations | | | | | -------------------------------------------------------------------------------- | Currency swaps | 3 | 26 | 45 | 36 | -------------------------------------------------------------------------------- | Other | 0 | -23 | -32 | -25 | -------------------------------------------------------------------------------- | Total net trading income | -27 | 9 | -34 | 20 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 6) Net investment income | | | | | -------------------------------------------------------------------------------- | EUR million | Q4/07 | Q4/06 | Q1-4/07 | Q1-4/06 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Available-for-sale financial | | | | | | assets | | | | | -------------------------------------------------------------------------------- | Capital gains and losses | | | | | -------------------------------------------------------------------------------- | Shares and participations | 0 | -1 | 16 | 21 | -------------------------------------------------------------------------------- | Dividend income | 1 | 7 | 9 | 14 | -------------------------------------------------------------------------------- | Impairment losses | -1 | 0 | 0 | -1 | -------------------------------------------------------------------------------- | Total | 0 | 6 | 26 | 35 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Investment property | 0 | 1 | 3 | 2 | -------------------------------------------------------------------------------- | Total net investment income | 1 | 7 | 28 | 37 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 7) Other operating income | | | | | -------------------------------------------------------------------------------- | EUR million | Q4/07 | Q4/06 | Q1-4/07 | Q1-4/06 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Central banking service fees | 2 | 2 | 9 | 9 | -------------------------------------------------------------------------------- | Rental income from assets | 4 | 3 | 14 | 12 | | rented | | | | | | under operating | | | | | | lease | | | | | -------------------------------------------------------------------------------- | Other | 13 | 9 | 46 | 28 | -------------------------------------------------------------------------------- | Total | 20 | 13 | 71 | 50 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 8) Personnel costs | | | | | -------------------------------------------------------------------------------- | EUR million | Q4/07 | Q4/06 | Q1-4/07 | Q1-4/06 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Wages and salaries | 34 | 36 | 135 | 135 | -------------------------------------------------------------------------------- | Pension costs | 7 | 3 | 21 | 19 | -------------------------------------------------------------------------------- | Other social expenses | 3 | 3 | 10 | 11 | -------------------------------------------------------------------------------- | Total personnel costs | 43 | 42 | 166 | 165 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 9) Other administrative | | | | | | expenses | | | | | -------------------------------------------------------------------------------- | EUR million | Q4/07 | Q4/06 | Q1-4/07 | Q1-4/06 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Office expenses | 16 | 16 | 61 | 51 | -------------------------------------------------------------------------------- | IT expenses | 11 | 10 | 43 | 42 | -------------------------------------------------------------------------------- | Telecommunication expenses | 3 | 3 | 10 | 11 | -------------------------------------------------------------------------------- | Marketing expenses | 4 | 4 | 14 | 13 | -------------------------------------------------------------------------------- | Other administrative expenses | 4 | 5 | 17 | 15 | -------------------------------------------------------------------------------- | Total other administrative | 38 | 38 | 145 | 133 | | expenses | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 10) Other operating expenses | | | | | -------------------------------------------------------------------------------- | EUR million | Q4/07 | Q4/06 | Q1-4/07 | Q1-4/06 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Expenses for property and | 7 | 5 | 25 | 22 | | | | | | | | business premises in own use | | | | | -------------------------------------------------------------------------------- | Non-life Insurance credit | 2 | 2 | 9 | 7 | | losses | | | | | -------------------------------------------------------------------------------- | Planned amortisation | | | | | | | | | | | | and depreciation | | | | | -------------------------------------------------------------------------------- | Amortisation on intangible | 9 | 9 | 36 | 36 | | | | | | | | assets related to company | | | | | | acquisition | | | | | -------------------------------------------------------------------------------- | Other | 6 | 6 | 24 | 21 | -------------------------------------------------------------------------------- | Other*) | 6 | 7 | 34 | 25 | -------------------------------------------------------------------------------- | Total other operating | 31 | 28 | 129 | 111 | | expenses | | | | | -------------------------------------------------------------------------------- *) The item includes EUR 10 million in liquidated damages, including interest and expenses, paid by OKO Bank to savings banks on the basis of an arbitral award. The liquidated damages were due to the termination of cooperation between Pohjola and savings banks as a result of combining the operations of OP Bank Group and Pohjola. -------------------------------------------------------------------------------- | 11) Financial assets at fair | | | | | value through profit or loss | | | | -------------------------------------------------------------------------------- | EUR million | | 31 | 31 | | | | Dec | Dec | | | | 2007 | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Financial assets held for | | | | | trading | | | | -------------------------------------------------------------------------------- | Notes and bonds | | 2220 | 2470 | -------------------------------------------------------------------------------- | Shares and participations | | 0 | 6 | -------------------------------------------------------------------------------- | Financial assets at fair value | | | | | through profit or loss at | | | | | inception | | | | -------------------------------------------------------------------------------- | Notes and bonds | | 2481 | 2325 | -------------------------------------------------------------------------------- | Shares and participations | | 0 | 0 | -------------------------------------------------------------------------------- | Total | | 4701 | 4801 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 12) Non-life Insurance assets | | | | -------------------------------------------------------------------------------- | EUR million | | 31 | 31 | | | | Dec | Dec | | | | 2007 | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Money market investments, | | 22 | 22 | | | | | | | money market funds and deposits | | | | -------------------------------------------------------------------------------- | Bonds and long-term bond funds | | 1 688 | 1 752 | -------------------------------------------------------------------------------- | Shares and participations | | 444 | 447 | -------------------------------------------------------------------------------- | Alternative investments | | 188 | 87 | -------------------------------------------------------------------------------- | Property | | 85 | 56 | -------------------------------------------------------------------------------- | Other | | 382 | 400 | -------------------------------------------------------------------------------- | Total | | 2 809 | 2 766 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 13) Investment property | | | | -------------------------------------------------------------------------------- | EUR million | | 31 | 31 Dec | | | | Dec | 2006 | | | | 2007 | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Available-for-sale financial | | | | | assets | | | | -------------------------------------------------------------------------------- | Notes and bonds | | 618 | 94 | -------------------------------------------------------------------------------- | Shares and participations | | 83 | 101 | -------------------------------------------------------------------------------- | Investment property | | 24 | 29 | -------------------------------------------------------------------------------- | Total | | 725 | 225 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 14) Intangible assets | | | | -------------------------------------------------------------------------------- | EUR million | | 31 | 31 Dec | | | | Dec | 2006 | | | | 2007 | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Goodwill | | 504 | 494 | -------------------------------------------------------------------------------- | Brands | | 179 | 179 | -------------------------------------------------------------------------------- | Customer relationships | | 250 | 274 | | pertaining to | | | | | insurance | | | | | contracts and policy | | | | | | | | | | acquisition costs | | | | -------------------------------------------------------------------------------- | Other | | 66 | 73 | -------------------------------------------------------------------------------- | Total | | 999 | 1 020 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 15) Non-life Insurance | | | | | liabilities | | | | -------------------------------------------------------------------------------- | EUR million | | 31 | 31 Dec | | | | Dec | 2006 | | | | 2007 | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Insurance contract liabilities | | | | -------------------------------------------------------------------------------- | Provision for unearned premiums | | 318 | 285 | -------------------------------------------------------------------------------- | Provision for unpaid claims | | 1 699 | 1 683 | -------------------------------------------------------------------------------- | Total | | 2 017 | 1 969 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Other | | 123 | 130 | -------------------------------------------------------------------------------- | Total | | 2 140 | 2 099 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 16) Debt securities issued to | | | | | the public | | | | -------------------------------------------------------------------------------- | EUR million | | 31 | 31 Dec | | | | Dec | 2006 | | | | 2007 | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Bonds | | 7 107 | 7 630 | -------------------------------------------------------------------------------- | Certificates of deposit | | 5 640 | 5 519 | -------------------------------------------------------------------------------- | Other | | 109 | 115 | -------------------------------------------------------------------------------- | Total | | 12 856 | 13 263 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 17) Subordinated liabilities | | | | -------------------------------------------------------------------------------- | EUR million | | 31 | 31 Dec | | | | Dec | 2006 | | | | 2007 | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Subordinated loans | | 193 | 198 | -------------------------------------------------------------------------------- | Other | | 757 | 727 | -------------------------------------------------------------------------------- | Total | | 950 | 924 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Collateral given | | | | -------------------------------------------------------------------------------- | EUR million | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Given on behalf of own | | 31 | 31 Dec | | liabilities and commitments | | Dec | 2006 | | | | 2007 | | -------------------------------------------------------------------------------- | Mortgages | | 1 | 1 | -------------------------------------------------------------------------------- | Pledges | | 2631 | 2 519 | -------------------------------------------------------------------------------- | Other | | 123 | 31 | -------------------------------------------------------------------------------- | Total collateral given | | 2741 | 2 550 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Off-balance-sheet commitments | | | | -------------------------------------------------------------------------------- | EUR million | | 31 | 31 | | | | Dec | Dec | | | | 2007 | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Guarantees | | 570 | 534 | -------------------------------------------------------------------------------- | Other guarantee liabilities | | 1 489 | 1 384 | -------------------------------------------------------------------------------- | Loan commitments | | 3 456 | 3 563 | -------------------------------------------------------------------------------- | Commitments related to | | 145 | 165 | | short-term trade transactions | | | | -------------------------------------------------------------------------------- | Other | | 506 | 421 | -------------------------------------------------------------------------------- | Total off-balance-sheet | | 6 167 | 6 066 | | commitments | | | | -------------------------------------------------------------------------------- Accounts receivable and payable from sale or purchase of assets on behalf of customers -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR million | 31 | 31 Dec | | | Dec | 2006 | | | 2007 | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Accounts receivable | 86 | 71 | -------------------------------------------------------------------------------- | Accounts payable | 88 | 70 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Derivative contracts Derivatives held for trading and hedging on 31 December 2007 -------------------------------------------------------------------------------- | EUR million | Nominal values/remaining | Total | Fair values | | | term to maturity | | | -------------------------------------------------------------------------------- | | <1 year | 1-5 | >5 | | Assets | Liabil | | | | years | years | | | ities | -------------------------------------------------------------------------------- | | | | | | | | -------------------------------------------------------------------------------- | Interest rate | 44 391 | 39 021 | 8 818 | 92 230 | 388 | -378 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Currency | 9 131 | 1 650 | 995 | 11 775 | 77 | -342 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Equity and index | 14 | 264 | 58 | 335 | 51 | 0 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Credit | 71 | 125 | 0 | 196 | 0 | -1 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Other derivatives | 8 | 6 | 0 | 14 | 2 | 0 | -------------------------------------------------------------------------------- | Total derivatives | 53 615 | 41 067 | 9 870 | 104 551 | 518 | -720 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Derivatives held for trading and hedging on 31 December 2006 -------------------------------------------------------------------------------- | EUR million | Nominal values/remaining | Total | Fair values | | | term to maturity | | | -------------------------------------------------------------------------------- | | <1 year | 1-5 | >5 | | Assets | Liabil | | | | years | years | | | ities | -------------------------------------------------------------------------------- | | | | | | | | -------------------------------------------------------------------------------- | Interest rate | 21 886 | 18 952 | 5 847 | 46 685 | 213 | -215 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Currency | 6 284 | 1 660 | 802 | 8 746 | 37 | -132 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Equity and index | 28 | 136 | 0 | 164 | 32 | 0 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Credit | 0 | 131 | 0 | 131 | 0 | -1 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Other derivatives | 8 | 15 | 0 | 22 | 1 | 0 | -------------------------------------------------------------------------------- | Total derivatives | 28 206 | 20 894 | 6 649 | 55 749 | 284 | -349 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Other contingent liabilities and commitments On 31 December 2007, OKO Bank's commitments to venture capital funds amounted to EUR 14 million and Pohjola Non-Life's commitments to EUR 51 million. They are included in the section 'Off-balance-sheet commitments'. Related-party transactions OKO Bank Group's related parties comprise its parent company, associates and administrative personnel and other related-party companies. OKO Bank Group's Parent Company is Osuuspankkikeskus Osk (OP Bank Group Central Cooperative). OKO Bank Group's associates were Autovahinkokeskus Oy and Vahinkopalvelu Oy on 31 December 2007 and Nooa Savings Bank Ltd, Autovahinkokeskus Oy and Vahinkopalvelu Oy on 31 December 2006. OKO Bank Group's administrative personnel comprises OKO Bank's President and CEO, his deputy, members and deputy members of the Board of Directors and their close family members. Information on members and deputy members of the Supervisory Board and their close family members was included in related-party transactions until 30 March 2006, when the Supervisory Board was abolished. Normal loan terms and conditions apply to loans granted to the management. Tied to generally used reference rates, these loans with normal collateral are repaid according to the agreed repayment schedule. Other related-party entities include OP Pension Fund, OP Pension Foundation and their sister companies within OP Bank Group Central Cooperative Consolidated. Related-party transactions by 31 December 2007 -------------------------------------------------------------------------------- | | Parent | Consoli- | Admini-s | Others | | | company | dated | trative | | | | | associa | personne | | | | | tes | l | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Loans | 4 | | | 1 325 | -------------------------------------------------------------------------------- | Other receivables | 64 | | | 486 | -------------------------------------------------------------------------------- | Deposits | | | | 420 | -------------------------------------------------------------------------------- | Other liabilities | 2 | | | 230 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest income | 2 | | | 172 | -------------------------------------------------------------------------------- | Interest expenses | 6 | | | 102 | -------------------------------------------------------------------------------- | Dividend income | | | | 4 | -------------------------------------------------------------------------------- | Other Non-life Insurance | 3 | | | 2 | | income | | | | | -------------------------------------------------------------------------------- | Commission income | 1 | | | 27 | -------------------------------------------------------------------------------- | Commission expenses | 2 | | | 3 | -------------------------------------------------------------------------------- | Trading income | | | | 3 | -------------------------------------------------------------------------------- | Trading expenses | | | | 4 | -------------------------------------------------------------------------------- | Other operating income | 6 | | | 11 | -------------------------------------------------------------------------------- | Operating expenses | 59 | | | 5 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Off-balance-sheet commitments | | | | | -------------------------------------------------------------------------------- | Guarantees | 8 | | | 45 | -------------------------------------------------------------------------------- | Irrevocable commitments | | | | 77 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Salaries and other short-term | | | | | | benefits, | | | | | | and | | | | | | performance-based pay | | | | | -------------------------------------------------------------------------------- | Salaries and short-term | | | 1 | | | benefits | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Related-party holdings | | | | | -------------------------------------------------------------------------------- | Number of shares | 60 825 897 | | 72 278 | 4 220 946 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Related-party transactions by 31 December 2006 -------------------------------------------------------------------------------- | | Parent | Consoli- | Admini-s | Others | | | company | dated | trative | | | | | associa | personne | | | | | tes | l | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Loans | 27 | | | 1 741 | -------------------------------------------------------------------------------- | Other receivables | 8 | | | 70 | -------------------------------------------------------------------------------- | Deposits | | | | 108 | -------------------------------------------------------------------------------- | Other liabilities | 4 | | | 135 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest income | 2 | | | 53 | -------------------------------------------------------------------------------- | Interest expenses | 4 | | | 11 | -------------------------------------------------------------------------------- | Dividend income | | | | 3 | -------------------------------------------------------------------------------- | Commission income | 1 | | | 21 | -------------------------------------------------------------------------------- | Commission expenses | 2 | | | 2 | -------------------------------------------------------------------------------- | Trading expenses | | | | | -------------------------------------------------------------------------------- | Other operating income | 1 | | | 13 | -------------------------------------------------------------------------------- | Operating expenses | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Off-balance-sheet commitments | | | | | -------------------------------------------------------------------------------- | Guarantees | | | | 36 | -------------------------------------------------------------------------------- | Irrevocable commitments | 8 | | | 62 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Salaries and other short-term | | | | | | benefits, | | | | | | and | | | | | | performance-based pay | | | | | -------------------------------------------------------------------------------- | Salaries and short-term | | | 3 | | | benefits | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Related-party holdings | | | | | -------------------------------------------------------------------------------- | Number of shares | 60 825 897 | | 55 728 | 4 205 946 | -------------------------------------------------------------------------------- The Interim Report for 1 October-31 December 2007 was prepared according to IAS 34 (Interim Financial Reporting), as approved by the EU. The Financial Statements 2007 contain a description of the accounting policies and the principles of segment reporting applied by OKO Bank Group. Data in this Interim Report are based on unaudited figures. Since all figures in this Interim Report are rounded off, the sum of single figures may differ from the presented sum total. Financial reporting in 2008 Release dates of Interim Reports for 2008: Interim Report Q1 8 May Interim Report Q2 7 August Interim Report Q3 6 November Helsinki, 14 February 2008 OKO Bank plc Board of Directors This Interim Report is available 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 at 10.00 am on 14 February 2008 and a conference call in English on the same day at 3.30 pm, telephone +358 20 699101, PIN-code 680967#. OKO Bank plc Markku Koponen Senior Vice President DISTRIBUTION OMX Nordic Exchange Helsinki Major media www.oko.fi 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, Head of IR, tel. +358 10 252 2037
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