Pohjola Group. Interim Report for 1 January 30 September Pohjola/IR

Transcription

1 Pohjola Group Interim Report for 1 January 3 September 29

2 2 Contents Pohjola in Brief 3 Strategy and Financial targets 7 Interim Report for Q1 3/9 14 Review by Business Segment Banking 26 Asset Management 36 Non-life Insurance 42 Group Functions 53 Acquisition Synergies 57 Outlook towards Year End 59 Pohjola Share 6 OP-Pohjola Group 64 Finnish Economy 7

3 Pohjola in Brief

4 4 Pohjola in Brief Pohjola Group provides banking, asset management and non-life insurance services. It ranks among the leading players in the Finnish financial sector. Serving businesses, institutions and private individuals, the Group provides an extensive package of banking and insurance services which are convenient for customers while supporting corporate customers' business. With over 35, shareholders, Pohjola Bank plc Series A shares are quoted on the NASDAQ OMX Helsinki. Pohjola aims to grow through all of its business divisions and strengthen its market position further. The company places a strong emphasis on profitability throughout its operations and is also committed to strong capitalisation and a shareholder-friendly dividend policy. Pohjola is part of OP-Pohjola Group, the leading financial services group in Finland with over four million customers.

5 Pohjola s Competitive Business Model has proved successful across business segments 5 Banking Margins and market share in corporate loans have developed favourably Currently ranking number two with a market share of 19.7% 1) 1) Share of corporate lending in euros in Finland Deposit banks' corporate loan portfolio until Dec. 22 Proportion as of Jan. 23 based on a new statistical basis of the Bank of Finland Non-life Insurance Leading non-life insurer in Finland for the second consecutive year: market share 27.5% 2) Strong underwriting profitability (operating combined ratio of 86.7% in Q1 3/9) 2) Market share of domestic direct premiums written. 28 based on preliminary data as of March 29 Asset Management Leading position in asset management for institutions based on AUM (asset management and mutual funds) 3) 3) % of total amount of funds under external management (excluding insurance companies) 25 figures include only the former OKO Bank asset management (not the then Pohjola Group s asset management activities) % Source: 9/ Bank 9/1of 9/2 Finland9/3 9/4 9/5 9/6 9/7 9/8 9/9 % Pohjola If/Sampo Tapiola Fennia Lähivakuutus Others Source: Federation of Finnish Insurance Companies Pohjola Company2 Company1 Company Source: SFR. Based on interviews and answers by institutional investors with disclosed investment size % % %

6 Business Structure 6 Pohjola Group Banking Asset Management Non-life Insurance Group Functions Corporate Banking Markets Baltic Banking Institutional Customers Private Customers Corporate Customers Private Customers Baltic States Finance Risk management HR services Corporate communications

7 Strategy and Financial targets

8 Strategy in a Nutshell Value through Integration 8 Mission We promote the prosperity, security and wellbeing of our customers Vision We are the most preferred financial services partner Key objectives Critical success factors Competitive advantages Core values Increasing company value Profitable growth Exploiting customer potential Risk anticipation, selection and rating Highly skilled employees and high-quality partnerships Competitive solutions Cost-efficiency Strong capitalisation Comprehensive financial services offering Part of OP-Pohjola Group Strong brand Close to customers Firmly rooted in Finland Operational flexibility and promptness People-first approach, Responsibility, Prospering together

9 Strategy in Brief 9 We provide corporate and institutional customers with a diverse range of banking, asset management and non-life insurance services, and private individuals with an extensive range of non-life insurance and private banking services. We know our customers well and are in close interaction with them. We will build customer relationships on a long-term basis with the aim of establishing comprehensive customer relationships. Finland is Pohjola s main market area. We are making dedicated efforts to further develop our service network in Finland and neighbouring regions. In other market areas, our service capabilities are based on cooperation with high-quality local or international partners. We stand out from the competition based on our competencies and high-quality solutions. Our competitive advantages lie in flexible and prompt service and a solid ownership base. As part of OP-Pohjola Group, our largest shareholder, we boast the most extensive and diversified service network and largest clientele in Finland. Our profitable growth enables a competitive Total Shareholder Return. We will secure business continuity by maintaining a strong capital base. Joint responsibility with OP- Pohjola Group's member cooperative banks strengthens our creditworthiness.

10 Goals Leading market position in Finland 1 Now Target Corporate Banking 2nd 1st Asset Management 2nd 1st Non-life Insurance 1st 1st Source: Data disclosed by companies, Financial Supervision Authority, Federation of Finnish Insurance Companies

11 11 Financial Targets over the economic cycle million Target 1-9/9 1-9/8 Group Return on equity at fair value, % Tier 1 ratio, % > Banking Operating cost/income ratio, % < Asset Management Operating cost/income ratio, % < Non-life Insurance Operating combined ratio, % Operating expense ratio, % < Solvency ratio, %

12 Credit Ratings*) 12 Moody's Investors Standard Fitch Service & Poor s Ratings Pohjola Bank Aa2**) AA- AA-**) Handelsbanken Aa2 AA- AA- Nordea Aa2 AA- AA- DnB NOR Aa3 AA-**) A+ Danske Bank Aa3 A+**) A+ SEB A1**) A**) A+ Swedbank A2**) A**) - Pohjola Insurance***) A2 A+ - If ***) A2 A - Finnish sovereign Aaa AAA AAA *) Long-term debt **) With negative outlook ***) Insurer financial strength Rating target: AA rating issued by at least two credit rating agencies

13 Dividend Policy 13 Long-term aim: distributing a minimum of 5% of earnings in dividends, provided that Tier 1 stands at least 9.5%. 2,5 2, Dividends paid out more than targeted Dividends paid out more than targeted: % 1 8 In line with the dividend policy, dividend payout ratio stood at 51%, i.e. in 28 a per-share dividend*) of EUR.19 was paid on Series A shares (.53) and EUR.16 on Series K shares (.51). 1,5 1,,5, Dividend payout ratio during 24 8 averaged 53% Dividend per share Dividend payout ratio Target dividend Dividend policy: We aim to distribute a minimum of 5% of earnings per share in dividends, provided that Tier 1 stands at a minimum of 9.5% *) Issue-adjusted dividend

14 Interim Report for Q1 3/9

15 Pohjola Group Relevant information Q1 3/9 Earnings before tax improved year on year to EUR 211 million (114) Earnings before tax at fair value amounted to EUR 424 million ( 67) Consolidated earnings for 29 before tax are expected to be roughly double the amount in comparison with 28

16 Pohjola Group Q3/9 in brief 16 Earnings before tax amounted to EUR 87 million (43). Q3 Earnings before tax at fair value were EUR 196 million ( 39). Impairment charges on receivables burdened earnings by EUR 41 million. Within Asset Management, assets under management grew by EUR 3.6 billion. Non-life Insurance reported an operating combined ratio of 83.1% (8.7) and return on investments of 4.3% ( 1.7). Pohjola updated its strategy in September, focusing on value creation through business integration.

17 Consolidated Earnings 17 rolling 12Mo 28 million 7-9/9 7-9/8 1-9/9 1-9/8 Net interest income Impairments of receivables Net interest income after impairments Net income from Non-life Insurance Net commissions and fees Net trading income Net investment income Other operating income Total income Total expenses Earnings before tax Change in fair value reserve Earnings/loss before tax at fair value Earnings per share,,2,12,54,33,57,36

18 18 Consolidated Earnings by Quarter million 7-9/9 4-6/9 1-3/9 1-12/8 7-9/8 Net interest income Impairments on receivables Net interest income after impairments Net income from Non-life Insurance Net commissions and fees Net trading income Net investment income Other operating income Total income Total expenses Earnings before tax Change in fair value reserve Earnings/loss before tax at fair value Earnings per share,,2,22,1,2,12

19 Earnings before Tax by Business Segment Q1 3/9 million Banking Asset Management Non-life Insurance Group Functions Total 1-9/9 1-9/8

20 2 Earnings before Tax by Business Segment Q3/9 million Banking Asset Management Non-life Insurance Group Functions Total Q3/9 Q3/8

21 million 7 Impairments of Loans and Receivables for Q1 3/9 totalled EUR 95 million (8) Q1/9 Q2/9 Q3/9 21 Credit loss recoveries and reversal of impairments New impairments Net impairments

22 Capital Base and Capital Adequacy 22 million ,2 11,3 11,2 12,2 13, 1,7 11,5 9,4 9,4 11, Q1/9 Q2/9 Q3/9 Tier 1 Tier 2 Tier 1, % Tier 1 ratio, % %

23 Balance Sheet Loans and Investments Pohjola Group 23 % bn 26 bn 32 bn 34 bn 9 % 6 % 14 % 8 % 11 % 14 % 9 % 14 % 1 % 5 % 18 % 2 % 34 % 38 % 32 % 36 % 9 % 8 % 11 % 11 % 4 % 15 % 1 % 3 % 19 % 12 % 12 % 15 % /9 Loans to member cooperative banks Receivables from other credit institutions Financial assets for trading Loans to customers Non-life Insurance assets Investment assets Other items

24 Balance Sheet Funding Pohjola Group 24 % bn 26 bn 32 bn 34 bn 5 % 6 % 8 % 5 % 5 % 5 % 3 % 7 % 8 % 9 % 11 % 11 % 11 % 8 % 7 % 7 % Deposits from member cooperative banks Liabilities to other credit institutions Deposits from customers % 5 % 51 % 47 % Non-life Insurance liabilities Debt securities issued to the public Subordinated liabilities 2 3 % 3 % 3 % 3 % 7 % 1 % 11 % 12 % 1 % 1 % 8 % 7 % 1 % 1 % 5 6 % /9 Provisions and other liabilities Hybrid capital Shareholders' equity and minority interests

25 Balance Sheet Funding OP-Pohjola Group 25 % bn 65 bn 75 bn 79 bn 2 % 1 % 1 % 3 % 47 % 48 % 49 % 47 % 13 % 13 % 1 % 11 % 23 % 22 % 24 % 23 % 2 % 2 % 2 % 2 % 5 6 % 7 % 7 % 1 % 1 % 1 % 1 % 8 % 8 % 6 % 8 % /9 Liabilities to other credit institutions Deposits from customers Insurance liabilities Debt securities issued to the public Subordinated liabilities Provisions and other liabilities Cooperative capital Shareholders' equity and minority interests

26 Banking Relevant information Q1 3/9 Earnings before tax improved to EUR 99 million (88) Volumes of trading in bonds and derivatives were up, showing an excellent result Impairment charges rose to EUR 84 million (7), eroding earnings considerably The loan and guarantee portfolio shrank by 4% from its year-start level but the market share of corporate loans increased to 19.7% (19.) The average margin on corporate loans continued to rise Outlook: 29 earnings before tax should be at the same level as in 28 if impairment charges do not rise to unexpectedly high level during the fourth quarter

27 Banking Q3/9 in brief 27 Earnings before tax amounted to EUR 24 million, equalling the amount a year ago despite the EUR 31 million increase in impairment charges. Q3 The loan and guarantee portfolio decreased by EUR.3 billion, whereas a year ago it increased by EUR.6 billion. The average corporate loan margin rose to 1.21%. Despite higher lending margins, net interest income was EUR 5 million lower than a year ago as a result of a reduction in net interest income from trading. However, net commissions and fees rose by almost EUR 7 million, commission income from loans growing by EUR 4 million and that from guarantees by EUR 2 million.

28 28 Banking Performance rolling 12Mo 28 million 7-9/9 7-9/8 1-9/9 1-9/8 Net interest income Impairments of receivables Net interest income after impairments Net commissions and fees Net trading income Other operating income Total income Operating expenses Earnings before tax Operating cost/income ratio, %

29 million 12 Banking Earnings before tax by division Q Corporate Banking Markets Baltic Total 1-9/9 1-9/8

30 Banking Loan portfolio shrank by 5% from its end-28 level to EUR 1.9 billion 3 billion % -5 % % % +17 % /9 The percentages describe the change of loan portfolio from the end of the previous period.

31 % 25 Banking Despite smaller loan portfolio, corporate loan market share strengthened slightly /9 19,7 % / 9/1 9/2 9/3 9/4 9/5 9/6 9/7 9/8 9/9 *) Deposit banks' corporate loan portfolio until Dec./22 **) The proportion as of Jan./23 based on a new statistical basis of the Bank of Finland

32 Banking Average corporate loan portfolio margin rose to 1.21% (Q2/9 1.14%; Q1/9 1.3%, Q4/8.94%, Q3/8.86%) 32 % 1,2 1.21% 1,,8,6,4 Average margin of corporate loan portfolio,2, Q2/ Q2/1 Q2/2 Q2/3 Q2/4 Q2/5 Q2/6 Q2/7 Q2/8 Q2/9

33 Banking Corporate exposure *) by sector totalled EUR 16.2 billion 33 M ** Renting and operation of own or leased residen... 11,2 % 1,7 % Manufacture of Machinery and and equipment (i... 9,4 % Wholesale and retail trade Construction Transportation and storage 7,8 % 6,9 %6,7 % 6,6 % Buying and selling of own real estate Forest industry Chemical industry Metal industry Renting and operation of own or leased real es... 5,2 %5,1 %4,9 % 4,8 %4,3 % 4,2 % 3,5 % 3,1 % 2, % 1,8 %,7 %,7 %,4 % Services Food industry Energy Other Manufacturing Information and communication 9/ Agriculture, forestry and fishing Financial and insurance services Mining and quarrying Water supply, sewerage and waste management Other industries * Companies and housing corporations ** In Q1 3/9, exposure of 912 million, or 5%, by Renting and operation of own or leased residential dwellings is guaranteed by general government.

34 Banking Of corporate exposure*), the share of investment-grade exposure (ratings 1 5) remained at the June-end level, 58% % % Rating category Moody's Fitch S&P 1, - 2, Aaa - Aa1 AAA - AA+ AAA - AA+ 2,5-5, Aa2 - Baa3 AA - BBB- AA - BBB- 5,5-7, Ba1 - Ba3 BB+ - BB- BB+ - BB - 7,5-9, B1 - B3 B+ - B- B+ - B- 9,5-1, Caa1 - C CCC+ - C CCC+ - C 11, - 12, D D D % 2 13 % % 1 % 2 % 1 % 3-5 *) Companies and housing corporations / Non-rated

35 Banking Doubtful receivables for Q1 3/9 increased to EUR 49 million (34) and impairments of receivables to EUR 84 million (7). Impairments of receivables accounted for.62% of the loan and guarantee portfolio 35 billion ,62,24,2,8,1,25,37,1,34, Q1/9 Q2/9 Q3/9 % 6, 5, 4, 3, 2, 1,, -1, Loan and guarantee portfolio *) Non-performing loans / Loan and guarantee portfolio, % Impairment of receivables / Loan and guarantee portfolio, % *) Loan portfolio, repos, lease liabilities, guarantees and guarantee liabilities

36 Asset Management Relevant information Q1 3/9 Earnings before tax improved to EUR 11 million (1) Assets under management increased by 24% to EUR 31.4 billion (25.3) Asset Management expects its earnings before tax in 29 to be better than in 28 if no major changes occur in the investment market during the fourth quarter

37 Asset Management Q3/9 in brief 37 Earnings before tax amounted to EUR 4 million (3). Q3 Net commissions and fees increased by 1% year on year. Assets under management grew by EUR 3.6 billion during July September as a result of higher net assets inflow and favourable market developments, institutional clients accounting for EUR 1.8 billion of this growth, OP mutual funds for EUR 1.4 billion and Pohjola Private client assets for EUR.4 billion. The operating cost/income ratio improved to 54% (58).

38 38 Asset Management Performance rolling 12Mo 28 million 7-9/9 7-9/8 1-9/9 1-9/8 Net commissions and fees Other operating income Total income Operating expenses Earnings before tax Operating cost/income ratio, %

39 Asset Management Assets under management increased by 24% in Q1 3/9. Half of this growth was explained by higher net assets inflow and half by favourable market developments billion ,5 25,3 24,9 27,8 31, Q1/9 Q2/9 Q3/9

40 Asset Management Assets under management by client group 4 % 1 29, bn 31,4 bn 31,5 bn 25,3 bn 31,4 bn 8 37 % 41 % 42 % 34 % 35 % % 2 % 3 % 3 % 7 % OP-Mutual funds Pohjola Private 2 61 % 57 % 56 % 63 % 58 % Institutional clients /9

41 Asset Management Assets under management by asset class 41 % 1 29, bn 31,4 bn 31,5 bn 25,3 bn 31,4 bn 14 % 17 % 17 % 15 % 12 % % 24 % 4 % 39 % 46 % 28 % 27 % 17 % 43 % 25 % Money market Bonds Equities Other investments 2 22 % 14 % 17 % 22 % 2 % /9

42 Non-life Insurance Relevant information Q1 3/9 Earnings before tax improved to EUR 89 million (73) The operating balance on technical account was very good. Operating combined ratio stood at 86.7% (9.) Growth remained vigorous within Private Customers while the recession cut revenue from corporate customers. The number of loyal customer households exceeded that of other customers Return on investments at fair value was 9.% Outlook: Non-life Insurance expects its earnings before tax in 29 be markedly higher than in 28. The operating combined ratio for 29 is estimated to vary between 87% and 91% if the number of major losses in Q4/9 will not be much larger than in the previous year.

43 Non-life Insurance Q3/9 in brief Earnings before tax amounted to EUR 43 million (33). Earnings before tax at fair value improved by EUR 145 million. 43 Net investment income amounted to EUR 19 million (6) and net investment Q2 income at fair value reached EUR 12 million ( 46). Profitability was very good. The operating combined ratio stood at 83.1% (8.7). Growth remained vigorous within Private Customers, with insurance premium revenue improving by 12%. The recession affected insurance premium revenue from Corporate Customers, showing a decrease of 9%. As a whole, insurance premium revenue remained at the previous year's level, amounting to EUR 241 million (241). The number of loyal customer households increased by 8,73 (7,46) and non-life insurance policy sales by OP-Pohjola Group member banks grew by 33%, in comparison with sales recorded by Pohjola's own offices a year ago.

44 Non-life Insurance Performance 44 rolling 12Mo 28 million 7-9/9 7-9/8 1-9/9 1-9/8 Insurance premium revenue Claims incurred Operating expenses Balance on technical account before amortisation Amortisation/adjustment on intangible asset* Balance on technical account Net investment income Other income and expenses Earnings/loss before tax Change in fair value reserve Earnings/loss before tax at fair value Operating loss ratio, % 61,8 61,9 65,1 69,4 65,4 69,7 Operating expense ratio, % 21,3 18,8 21,7 2,6 23, 21,9 Operating combined ratio, % 83,1 8,7 86,7 9, 88,2 91,5 Return on investment, % 4,3-1,7 9, -2,8 4,8-7, *) Due to amortisation on intangible assets arising from company acquisition

45 million Non-life Insurance Growth in insurance premium revenue Q1 3 2 % % -5 % % Private Customers Corporate Customers Baltic Total 1-9/9 1-9/8

46 million Non-life Insurance Growth in insurance premium revenue Q3 12 % -9 % -4 % % 46 Private Customers Corporate Customers Baltic Total Q3/9 Q3/8

47 Non-life Insurance The number of loyal customer households totalled 412,. The number grew by 8,7 in Q3/9 and by 23, in Q1 3/9 47 Growth 4 Total 45 TARGET / Growth Number of loyal customer households Target

48 Non-life Insurance Non-life insurers' market share in premiums written *) 48 % /8 27.5% Pohjola If/Sampo Tapiola Fennia Lähivakuutus Others *) Market share of domestic direct premiums written Source: Federation of Finnish Insurance Companies

49 Non-life Insurance Operating combined ratio by division Q % Private Customers Corporate Customers Baltic Total 9 86,9 % 87,8 % 85,8 % 91,9 % 92,2 % 89,2 % 86,7 % 9, % /9 1-9/8 1-9/9 1-9/8 1-9/9 1-9/8 1-9/9 1-9/8 Operating expenses / Insurance premium revenue Claims incurred / Insurance premium revenue

50 Non-life Insurance Operating combined ratio Q3 5 % ,8 82,5 95,4 96,7 93,8 89,5 91,5 8,7 83, Full year 7-9

51 Non-life Insurance Change in allocation of investment portfolio de-hedging of equity derivatives 51 % M 2 57 M M M 3 % 2 % 6 % 12 % 3% 2% 11% 15% Money market 6 72% 72 % 69% 69 % 7% 7 % 68% 73 % Bonds and bond funds Private Equity 4 Equities 2 4% 4 % 5% 5 % 14% 4% 2 % 13 % 3% 13% 4% 4 % 4% 8 % 13 % 7% 5% 4 % 4% 3% 4% 4% 7 % 6% 5 % 6 % 4 % 6% 3 % 4 % 6 % 5 % /9 Alternative investments Real estate

52 Non-life Insurance Net investment income and change in fair value reserve 52 million Q3/7 Q4/7 Q1/8 Q2/8 Q3/8 Q4/8 Q1/9 Q2/9 Q3/9 Net investment income on income statement Change in fair value reserve Net investment income at fair value

53 Group Functions Relevant information Q1 3/9 Earnings before tax were EUR 11 million (loss of 57), EUR 68 million higher than in the previous year The reclassification of notes and bonds at 28-end reduced earnings volatility Impairment charges recognised on bonds totalled EUR 11 million and on equities EUR 4 million Liquidity and the availability of funding remained at good levels and market liquidity has increased during the current year

54 54 Group Functions Q3/9 in brief Reported earnings before tax were the best quarterly earnings this year, amounting to EUR 16 million, EUR 33 million higher than in the previous year. Q3 Net interest income from notes and bonds included in the liquidity reserve portfolio contributed to higher net income. The positive price difference between the nominal value and acquisition value of reclassified notes and bonds within the liquidity reserve portfolio recognised in net interest income totalled EUR 5 million. Impairment charges recognised on notes and bonds totalled EUR 2 million (). Pohjola increased its long-term funding by issuing in August a EUR 75-euro floating rate senior bond with a maturity of three years.

55 Group Functions Performance 55 million 7-9/9 7-9/8 1-9/9 1-9/8 rolling 12Mo 28 Net interest income Impairments on receivables Net interest income after impairments Net commissions and fees -1-1 Net trading income Net investment income Other operating income Total income Operating expenses Earnings before tax

56 Group Functions Receivables and liabilities between Pohjola Bank and OP-Pohjola Group retail banks 56 million /7 12/7 3/8 6/8 9/8 12/8 3/9 6/9 9/9 Reserve deposits Other deposits Other loans Net position

57 Acquisition Synergies Revenue synergies: the number of loyal customer households, 412,, exceeded that of other customers strong growth will continue The revenue synergies resulting from growth in the number of loyal customer households by the end of the reporting period reached an annual level of EUR 14 million and the management is targeting EUR 17 million by the end of 21 More than 52% of Pohjola's loyal customer households have also concentrated their banking transactions in OP-Pohjola Group

58 Revenue Synergies Revenue synergies reached an annual level of EUR 14 million million 2 Target: EUR 17 million by the end of Q3/9 21 Target Revenue synergies The estimate is based on the following formula: 1%* (new loyal customer households received as a result of cooperation with Group member banks * average insurance premium / household) + a 5.4% return on insurance premium invested

59 Outlook towards Year End Consolidated earnings for 29 before tax are expected to be roughly double the amount in comparison with 28 The greatest uncertainty associated with the year-end outlook relates to developments in impairment charges The full outlook section can be found in the Interim Report

60 Pohjola Share Pohjola s share trading volume increased markedly. In January September, 138 million shares changed hands, as against 92 million a year ago The number of shareholders increased to 35, from the year-start level

61 Trading Volume and Price 61 million shares Acquisition of Non-life Insurance 8 7, Trading volume Price

62 Market Capitalisation of Pohjola Series A and K Shares 62 billion 3, 2,5 2,39 2,58 2,66 2,39 2, 1,98 1,5 1, 1,2,5,

63 Shareholdings of Pohjola Series A and K Shares As of 3 September % 15 % 9 % 1 % 1 % 31 % 14 % OP-Pohjola Group Central Cooperative OP-Pohjola Group member cooperative banks Ilmarinen Mutual Pension Insurance Company Suomi Mutual Life Assurance Company Other domestic institutions Nominee-registered shareholders Households

64 OP-Pohjola Group

65 65 Structure of OP-Pohjola and Roles of Group Entities

66 4 % OP- Pohjola Group OP-Pohjola Leading Financial Services Provider in Finland Market share in deposits 31 December 28 Nordea Danske Bank Source: Federation of Finnish Financial Services 35 % 3 Savings banks Market share in loans 31 December 28 Handelsbanken Aktia Local Ålandsbanken cooperative banks 35 % OP-Pohjola Group* Market share in non-life insurance premiums written 28 Domestic direct insurance If Tapiola** Fennia Local Others Insurance*** *Pohjola Non-Life, A-Insurance, Eurooppalainen, OVY **incl. Turva ***incl. Palonvara 35 % 3 Market share in life insurance Gross premiums written 28 Source: Federation of Finnish Financial Services OP- Pohjola Group Nordea Danske Bank Source: Federation of Finnish Financial Services Savings banks Handelsbanken Aktia Local Ålands- cooperativebanken banks Tapiola Bank 1 5 OP-Pohjola Group * Mandatum Life and Kaleva Nordea Mandatum Life* Skandia Tapiola Others Source: Federation of Finnish Financial Services

67 67 OP-Pohjola Group and Pohjola Bank Key figures and ratios OP-Pohjola Group Pohjola Bank OP-Pohjola Group Pohjola Bank EUR million 1-9/9 1-9/ Total assets Receivables from customers Deposits Equity capital Tier 1, % 12,3 11,3 12,6 9,4 Non-performing receivables, EUR m Non-performing receivables / loan and guarantee portfolio, %,5,36,4,25 Loan and guarantee portfolio, EUR bn 55,4 13,6 53,9 14,1 Impairment of receivables, EUR m Impairment of receivables / loan and guarantee portfolio, %,23,7,11,2 Personnel * OP-Pohjola Group shows this figure as an annualised one. The figure presented in the table is the actual figure reported for the period.

68 68 OP-Pohjola Group and Pohjola Bank Income statement OP-Pohjola Group Pohjola Bank OP-Pohjola Group Pohjola Bank EUR million 1-9/9 1-9/ Net interest income Impairments of receivables Net interest income after impairments Net income from non-life insurance Net income from life insurance Net commissions and fees Other income Total net income Personnel costs Other expenses Total expenses Returns to owner-members and OP-bonus customers Earnings before tax Change in fair value reserve Earnings/loss before tax at fair value

69 69 OP-Pohjola Group and Pohjola Bank Ratios OP-Pohjola Group Pohjola Bank OP-Pohjola Group Pohjola Bank 1-9/9 1-9/ Net interest margin, % 1,5* 1,21** 1,7*,94** Cost/ income ratio, Banking, % *** *** Return on equity (ROE) at fair value, % 16,4 21,8-6, -5,6 Return on assets (ROE) at fair value, % 1,2 1,3 -,5 -,3 Non-life Insurance, Solvency ratio, % Life Insurance, Solvency ratio, % 12,4 6,2 * Net interest income as % of average total assets ** Pohjola Bank plc, average margin of corporate loan portfolio *** Pohjola Bank plc, cost /income ratio, Banking

70 Finnish Economy

71 8 % Change in GDP volume United States Finland Euro Area f 1f Sources: Reuters EcoWin, forecasts OP-Pohjola Group, August 29

72 GDP and demand components GDP shares in 28 in brackets Index Fixed investment (2.6%) Exports (47.%) 12 Private consumption (51.7%) GDP f 1f Sources: Statistics Finland, OP-Pohjola-Group Public consumption (22.3%)

73 73 Finnish goods exports Machinery, equipment and transport equipment change -41.6% Electric and electronics industry products change -36.3% By product groups Share of total exports and annual change Other products change -9.8% Source: National Board of Customs 2.8% 11.6% 1-7/ % 18.4% 16.6% 1.5% Forest industry products change -31.9% Chemical industry products change -33.5% Metals and metal products change -51.2% Total exports 25.6 EUR Billion (change, -36.%) Other countries 39% Poland 3% Italy 3% By countries 1-7/29 France 4% Source: National Board of Customs China 5% Germany 1% Sweden 1% Russia 9% US 6% Netherlands 6% United Kingdom 5%

74 Unemployment rate in Finland % Seasonally adjusted Source: Statistics Finland

75 12 1 % Consumer price index by commodity group Annual change Housing Food -2-4 Transport CPI Sources: Statistics Finland, OP-Pohjola Group

76 Average house prices Index 1996=1 Ireland 3 25 United Kingdom 2 15 Finland Sweden 1 Spain Source: Reuters EcoWin

77 %, of disposable income Households' debt ratio Norway Denmark Sweden Finland Sources: Central Banks, Statistics Finland

78 78 Corporate debt low in international comparison % of GDP Year Finland Norway Denmark Sweden Corporate loans* Debt securities** * Excl. loans between Finnish companies ** Commercial papers, corporate bonds and financial derivatives Source: Eurostat, Consolidated Financial Accounts

79 79 Fiscal balance as % of GDP Luxembourg Fiscal balance and government debt Finland Netherlands Austria Germany France Belgium Euro Area Portugal Italy Spain Ireland Greece Debt as % of GDP Source: European Commission, Autumn Forecast 29

80 8 Investor Relations Contacts CFO Jouko Pölönen Tel jouko.polonen@pohjola.com SVP, IR Tarja Ollilainen Tel tarja.ollilainen@pohjola.com IR Controller Päivi Kainulainen Tel paivi.kainulainen@pohjola.com IR Assistant Anne Hasso Tel anne.hasso@pohjola.com