Pohjola Pankki Oyj - Interim report (Q1 and Q3)

OP Financial Group's Interim Report for January-September 2015: Strong capital base and growth rate of lending markedly above market average

OP Financial Group
Stock Exchange Release 28 September 2015 at 8.00 am (EET)
Interim Report for January-September 2015


OP Financial Group's Interim Report for January-September 2015: Strong capital
base and growth rate of lending markedly above market average

  * The Group's earnings before tax increased by 25% to EUR 926 million (739).
    Earnings for the nine-month period were higher than those for full year
    2014.
  * Total income increased by 6% and expenses decreased by 5% year on year.
  * The CET1 ratio improved to 18.6% (15.1) supported by strong earnings. The
    ratio has increased by 5.1 percentage points in the year to September
    although the Group's lending has increased markedly above the market
    average:

      * The home loan portfolio grew by 3.5% in the year to September
      * The corporate loan portfolio increased by 7.2%
      * The total loan portfolio increased by 6.0% and the number of loans drawn
        down by 10.4%
  * New customer bonuses totalled EUR 147 million, up 4.2% year on year.
  * Equity investments by owner-customers increased to EUR 2.5 billion (1.9).
  * Each of the three business segments improved its performance markedly:

      * Banking earnings before tax increased by 16% to EUR 531 million (459).
        The cost/income ratio improved by 3 percentage points to 52%. The
        deposit portfolio grew by 8.1%. Impairment loss on receivables remained  low at 0.08% of the loan and guarantee portfolio.
      * Earnings before tax by Non-life Insurance increased by 15% to EUR 218
        million (190). The operating combined ratio was 86.3%. Insurance premium
        revenue rose by 5.2%.
      * Wealth Management earnings before tax increased by 16% to EUR 168
        million (145). Assets under management grew by 9.2% to EUR 64 billion.
  * OP Financial Group has appointed an Executive Vice President to be in charge
    of heading OP Financial Group's change from a conventional financial
    services provider to a digital actor
  * Change in the outlook: Full-year earnings for 2015 are expected to be
    clearly higher than in 2014. (Previous estimate: "to be higher"). For more
    detailed information on the change, see "Outlook towards the year end".

OP Financial Group's key indicators
-------------------------------------------------------------------------------
                                 Q1-3/2015     Q1-3/2014 Change, %         2014
-------------------------------------------------------------------------------
 Earnings before tax,  EUR
 million                               926           739      25.3          915

   Banking                             531           459      15.5          571

   Non-life Insurance                  218           190      14.6          223

   Wealth Management                   168           145      15.5          167



 New accrued customer
 bonuses                               147           141       4.4          189



                             30 Sept. 2015 30 Sept. 2014 Change, % 31 Dec. 2014

 Common Equity Tier 1 (CET1)
 ratio, %                             18.6          13.6      5.1*         15.1

 Ratio of capital base to
 minimum amount of capital
 base (under the Act on the
 Supervision of Financial
 and Insurance
 Conglomerates), %                     197           179       18*          189

 Ratio of receivables more
 than 90 days past due to
 loan and guarantee portfolio, %                         0.44          0.45    -0.01*         0.37

 Joint banking and
 insurance customers
 (1,000)                             1,637         1,570       4.3        1,590
-------------------------------------------------------------------------------
Comparatives  deriving from the  income statement are  based on figures reported
for  the corresponding period in 2014. Unless otherwise specified, balance-sheet
and other cross-sectional figures on 31 December 2014 are used as comparatives.
* Change in ratio


Comments by Reijo Karhinen, President and Group Executive Chairman

OP Financial Group's performance for 2015 is characterised by strong growth and
renewal. We have continued to markedly increase our market share of corporate
and home loans. Thanks to our stronger capital base, we have been able to
provide our customers with access to financing. A 7% increase in corporate
financing and 6% growth in our loan portfolio are proof of our responsibility to
actors in our operating environment. Putting Finland on a new growth path is the
theme to which we are committed.

Our growth rate above the market average that we have witnessed for a long time
is also clearly reflected in our improved profit performance. Our strong volume
growth has compensated for the strain on earnings caused by the interest rate
environment. Furthermore, we have been determined to improve our price
competitiveness by streamlining our operations and putting an end to a prolonged
period of an increase in expenses. Achieving the best ever nine-month earnings
would not have been possible without our performing successfully as a financial
services group. The Non-life Insurance earnings performance has remained very
good. Investment income too has played a significant role in a long-term
earnings improvement. Low loan losses indicate that our customers have strong
balance sheets and also their being cautious in making investments.

Rapid digitisation and swift changes in customer behaviour are adding fuel to
financial-sector transformation. Amid this historically major transformation and
faced by new opportunities, we can boast good financial indicators. We have
prepared for the future by strengthening our financial basis, reforming our
operations and increasing our development expenditure. Our opportunities and
capabilities for developing new services for our customers are good. At the same
time, the need to streamline and improve existing business processes becomes
pronounced.

Our concern applies to the ability of Finland - OP's operating environment - to
make reforms. We live on Finland and Finnish success stories. In our society,
there is still more talk than action. We have come to a standstill in a
dangerous way without a solution-seeking approach. We will pay a high price for
indecision and a slow response. We are a small country with solid intellectual
capital, though, for which agility could be a competitive advantage in a fast-
changing digitising environment.

We need to have the courage to reform structures. A positive attitude is the
foundation of our new beginning.

Financial performance in the report period

Earnings before tax increased by 25% to EUR 926 million (739), being higher than
those for full year 2014. This improvement was due especially to strong growth
in income. Net income posted by Life Insurance and Non-life Insurance increased
as a result of improved insurance profitability. Net commissions and fees were
higher due chiefly to higher fees from mutual funds. Capital gains on securities
added to net trading and investment income.

Total expenses decreased by 5.0%, being EUR 58 million lower than a year ago.
Higher personnel costs were explained by a EUR 17-million increase in pension
costs and a EUR 9-million provision for personnel costs related to the
reorganisation of the central cooperative consolidated. In addition to business
expansion, the non-recurring expenses of EUR 18 million related to intra-Group
ownership reorganisation and the reconstruction of the Vallila premises
increased other expenses. A year ago, statutory contributions to the Deposit
Guarantee Fund and the bank levy, totalling EUR 54 million, and non-recurring
expenses of EUR 21 million increased other expenses.

Impairment losses recognised under various income statement items that reduced
earnings amounted to EUR 73 million (63), of which EUR 47 million (50) concerned
loans and receivables. Greater impairment loss was due to investments made by
the Group's insurance companies. Net impairment loss on loans and receivables
were low, at 0.08% (0.09) of the loan and guarantee portfolio.

Earnings before tax at fair value amounted to EUR 697 million (843). OP
Financial Group's fair value reserve before tax totalled EUR 287 million (531)
on 30 September.

Equity capital amounted to EUR 8.7 billion (7.2) on 30 September. This increase
was due to both Group earnings and the issues of Profit Shares. On 30 September,
EUR 2.2 billion (1.6) in Profit Shares were included in equity. In March 2015,
the central cooperative's Supervisory Board decided to raise the target level of
Profit Shares by EUR 0.4 billion to EUR 2.3 billion.

Outlook towards the year end

World economic growth will this year be slightly weaker than last year. Economic
growth in the euro-area will recover slightly over last year but will still be
sluggish. The Finnish economy is still waiting for recovery and no clear turn
for the better is on the horizon. Export demand will remain weak and price
competitiveness has not improved to the extent that it can help the export
sector which has been suffering from structural changes. Implementing the
required measures in turn strain the political situation, which poses a risk on
the revival of home markets.

On the whole, growth expectations in the financial sector are still more
moderate than the long-term average. Low interest rates will erode banks' net
interest income and weaken insurance institutions' investment income. Then
again, low interest rates support customers' loan repayment capacity that has
remained stable despite the prolonged period of slow growth. Capital adequacy
and profitability in the financial sector have come to play an ever-increasing
role because of the unstable operating environment and the tighter regulatory
framework.

In spite of the weak economic environment, OP Financial Group expects its
earnings before tax for 2015 to be markedly higher than in 2014 (previous
estimate: "to be higher"). The most significant uncertainty associated with the
earnings estimate is related to unfavourable changes in the investment
environment.

All forward-looking statements in this report expressing the management's
expectations, beliefs, estimates, forecasts, projections and assumptions are
based on the current view of developments in the economy, and actual results may
differ materially from those expressed in the forward-looking statements.

Press conference
OP Financial Group's financial performance will be presented to the media by
President and Group Executive Chairman Reijo Karhinen in a press conference on
28 October 2015 at 11 am at Gebhardinaukio 1, Vallila, Helsinki.

Pohjola Bank plc will publish its own Interim Report.

Financial reporting in 2016
Schedule for Financial Statements Bulletin for 2015 and Interim Reports in 2016:

 Financial Statements Bulletin 2015    4 February 2016

 Interim Report Q1/2016                27 April 2016

 Interim Report H1/2016                3 August 2016

 Interim Report Q1-3/2016              2 November 2016


OP Cooperative
Executive Board

ADDITIONAL INFORMATION
Reijo Karhinen, President and Group Executive Chairman, tel. +358 (0)10 252 4500
Harri Luhtala, CFO, tel. +358 (0)10 252 2433
Carina Geber-Teir, Executive Vice President, Corporate Communications, tel.
+358 (0)10 252 8394

DISTRIBUTION
NASDAQ OMX Helsinki Ltd
London Stock Exchange
SIX Swiss Exchange
Major media
op.fi and pohjola.fi

OP Financial Group is Finland's leading financial services group providing a
unique range of banking, wealth management and insurance services. OP's mission
is to promote the sustainable prosperity, security and wellbeing of its
customer-owners, customers and operating regions. Its objective is to offer the
best and most versatile package of loyal customer benefits on the market. OP
Financial Group consists of about 180 member cooperative banks, its central
institution OP Cooperative, and the latter's subsidiaries and affiliates. The
Group has a staff of 12,000. OP Financial Group has 4.3 million customers.

As laid down in the applicable law, OP Cooperative and its member credit
institutions are ultimately jointly and severally liable for each other's debts
and commitments. The joint liability in the OP Financial Group is prescribed by
the Act on the Amalgamation of Deposit Banks. Pohjola Bank plc and OP Mortgage
Bank are responsible for OP's funding operations on money and capital markets.
www.op.fi



[HUG#1961933]

Bifogade filer:

OP Financial Group Q3 background material.pdf

OP Financial Group Q3 2015.pdf