Pohjola November 2008 1
OP-Pohjola Group & Pohjola Bank in brief 2 The leading financial services company in Finland - with a strong diversified presence in Retail and corporate banking Insurance Mutual Funds and Asset Management Market position 1. or 2. in all key areas One of the highest rated banks in Europe (AA-/Aa1/AA-; all stable) Characterised by a strong capital position stable earnings strong liquidity low loan loss provisions no SIV exposure, low risk exposure in bond portfolios
Finnish Economy 3
4 Change in GDP volume 8 % 6 4 United States 2 0-2 -4-6 Finland Eurozone -8 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08f 09f Source: Reuters EcoWin
5 Trade balance and current account in Finland 12-month moving total 20 EUR billion 15 Trade balance 10 5 Current account 0-5 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08f 09f Source: Bank of Finland
Harmonized index* of consumer prices annual change 6 6 5 4 % * except United States United States 3 2 1 0 Eurozone Finland -1 97 98 99 00 01 02 03 04 05 06 07 08 Source: Reuters EcoWin
7 25 % Unemployment rate in Finland 20 15 10 5 0 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 Source: Statistics Finland
8 Average House Prices Average house prices Average house prices 300 250 Index 1996=100 Sweden 450 400 350 Index 1996=100 Ireland 200 150 100 Finland Netherlands France United States 300 250 200 150 100 Great Britain Spain Finland 50 96 97 98 99 00 01 02 03 04 05 06 07 08 Sources: Reuters EcoWin, Statistics Sweden n 50 96 97 98 99 00 01 02 03 04 05 06 07 08 Source: Reuters EcoWin
Finnish Financial Industry 9
36 % OP-Pohjola Group's market share of households' housing loans 10 35 34 33 32 31 30 3/05 9/05 3/06 9/06 3/07 9/07 3/08 9/08
11 Market Shares 31 December 2007 0 5 10 15 20 25 30 35 40 Nordea OP- Pohjola Danske Bank Savings Bank Local Cooper. Banks Aktia Savings Bank Others % Deposits 0 5 10 15 20 25 30 35 40 Nordea OP- Pohjola Danske Bank Handelsbanken Savings Bank Aktia Savings Bank Others % Loans
35 30 25 20 15 10 5 % Mutual fund companies market shares 1998-2008 Latest data 9/2008 12 0 Nordea OP- Pohjola Group Source: Finnish Association of Mutual Funds Danske Bank SEB Gyllenberg Evli Glitnir Others
35 30 % 30,7 Market shares in life insurance Gross premiums written 2007 13 25 20 23,4 21,7 15 10 5 7,2 7,2 9,8 0 OP-Pohjola Group Nordea Sampo* Skandia Tapiola Others * Sampo Life and Kaleva
14 35 % Market shares of non-life insurance premiums written 2007 Domestic direct insurance 30 27,3 26,5 25 20 20,8 15 10 5 10,5 8,6 6,3 0 OP-Pohjola Group* If Tapiola** Fennia Local Insurance*** * Pohjola Non-Life, A-Insurance, Eurooppalainen and OVY ** incl. Turva *** incl. Palonvara Other Source: Federation of Finnish Financial Services
15 OP-Pohjola Group Structure, strategies and financial performance
16 The Structure of OP-Pohjola Group and Pohjola Bank Group Retail Bank in in Helsinki Area Mutual Funds Life Insurance Other OP-Pohjola Group Central Cooperative 227 Member Cooperative Banks Banking Asset Management Non-life Insurance Pohjola Bank plc OP Mortgage Bank Group Functions Legal structure: OP-Pohjola Group has joint and several liability for each others commitments.
17 Joint Responsibility for Liability Joint responsibility within the OP-Pohjola Group is based on the Cooperative Bank Act and the Member Credit Institutions are committed to the joint responsibility in their articles of association (commercial banks) or statutes (Member Cooperative Banks) In the event that a Member Credit Institution or the Central Cooperative is unable to pay any debts owed the other Member Credit Institutions/ Central Cooperative are jointly and severally responsible for paying that debt The outstanding debt is apportioned among the Central Cooperative and the Member Credit Institutions in proportion to their assets as a percentage of the total group assets from the most recently adopted balance sheets The joint responsibility under the cooperative system includes the Central Cooperative and its Member Credit Institutions The Member Cooperative Banks of the OP-Pohjola Group, Pohjola Bank plc Helsinki OP Bank Plc, OP-Kotipankki Oyj and OP Mortgage Bank Insurance companies within the OP-Pohjola Group are not included in the cooperative joint responsibility
18 40 % OP-Pohjola Group on the deposit and lending markets* 35 30 25 Market share of lending Latest value 9/2008 20 15 Market share of deposits 10 5 0 1902 1922 1942 1962 1982 2002 2022 * Up until 12/2002 deposit banks' loans to and deposits placed by Finnish non-mfi's; since 1/2003 MFI's loans to and deposits placed by euro area non-mfi's
1,200 1 million OP-Pohjola Group Earnings before tax, 12 month moving total 1995-2003 FAS 19 1 000 800 600 400 200 0 95 96 97 98 99 00 01 02 03 04 05 06 07 09/08
20 OP-Pohjola Group Income statement million Change 1 January to 30 September 2008 2007 million % Net interest income 873 771 101 13 Other income 639 901-262 -29 Total income 1,512 1,672-161 -10 Personnel costs 440 407 33 8 Other expenses 459 419 40 10 Total expenses 899 826 73 9 Impairments of receivables 27 10 18 Returns to owner-members and OP bonus customers 119 80 40 50 Earnings before tax 466 757-291 -38
21 OP-Pohjola Group Balance sheet items million 09/2008 12/2007 Total assets 75 507 65 716 Credit stock 50 170 44 776 Non-performing and zero-interest claims 234 147 Deposits 33 022 29 001 Equity capital 5 470 5 638
22 OP-Pohjola Group Ratios 9/2008 12/2007 Net interest margin, % * 1.6 1.7 Cost/ income ratio, Banking and Investment Services, % 50 49 Return on equity (ROE), % 8.0 13.7 Return on equity at fair value, % -1.7 10.9 Return on assets (ROA), % 0.63 1.18 Non-performing and zero-interest bearing receivables of loans and guarantees, % 0.4 0.3 Tier 1 ratio, % 12.4 12.6 Capital adequacy ratio, % 12.4 13.8 * Net interest income as a % of average total assets
23 The amalgamation of the cooperative banks Own funds and capital adequacy 6,000 million % 24 Tier 2 own funds 5,000 20 Subordinated loans 4,000 3,000 2,000 14.3 14.3 14.3 14.1 12.8 13.8 12.3 12.4 12.7 12.8 12.6 12.7 12.6 12.7 12.3 12.4 16 12 8 Tier 1 own funds excl. subordinated loans Capital adequacy ratio, % 1,000 4 Tier 1 funds/ Riskweighted items, total, % 0 Dec. 2006 March 2007 June 2007 Sept. 2007 Dec. 2007 March 2008 June 2008 Sept. 2008 0 Deductions of own funds are not included
Nordic banks: Total capital ratio 24 Danske Bank Nordea SEB Handelsbanken DnB NOR Swedbank OP-Pohjola Group 0 5 10 15 20 30.9.2008 2007 2006 %
Asset Mix OP-Pohjola Group Loans and leasing assets by sector 25 September 30, 2008 Households: other loans 22 % Households: housing loans 48 % Corporates 30 % Telecommunications and electronics 2 % Construction 6 % Services 9 % Others 7 % Other industry 4 % Forest industry 4 % Communication and publishing 2 % Housing associations 10 % Energy 3 % Food industry 3 % Metal industry 5 % Transports and traffics 5 % Wholesale and retail trade 13 % Real-estate activities 27 %
26 OP-Pohjola Group Loan portfolio by sector Change Non-performing and zero-interest loans million 30 Sept. 2008 30 Sept. 2007 million % 30 Sept. 2008 Of loans Non-banking corporate sector and housing associations 15,051 30% 12,334 28% 2,716 22% 71 0.5% Industry 2,795 6% 2,346 5% 449 19% 13 0.5% Construction 872 2% 799 2% 74 9% 11 1.3% Trade and catering 2,207 4% 1,669 4% 538 32% 12 0.5% Property investment 3,971 8% 3,280 8% 691 21% 15 0.4% Other companies 3,656 7% 2,830 6% 826 29% 13 0.4% Housing associations 1,549 3% 1,410 3% 139 10% 6 0.4% Finance and insurance 14 0% 47 0% -33-70% 0 0.9% Public corporations and non-profit organisations 861 2% 820 2% 42 5% 5 0.6% Households 33,434 67% 29,942 69% 3,492 12% 147 0.4% Home mortgages 23,778 47% 20,952 48% 2,827 13% 75 0.3% Foreign 621 1% 498 1% 123 25% 12 1.9% Other items, net 100 0% -57 157 Total 50,081 100% 43,584 100% 6,497 15% 234 0.5%
27 OP-Pohjola Group Non-performing and zero-interest loans million 30 Sept. 2008 30 Sept. 2007 Change, % 31 Dec. 2007 Households 147 117 25.0 92 Companies 64 67-3.6 52 Housing associations and others 23 9 3 Total 234 192 21.7 147 Non-performing loans of loan and guarantee portfolio, % 0.4 0.4 0.03* 0.3 * Percentage points
Pohjola Bank plc 28
Earnings before Tax by Business Segment million 150 January September 125 29 100 97 88 73 50 0 14 10-50 -15-57 -100 Banking Asset Management Non-life Insurance Group Functions 1-9/2007 1-9/2008
Own Funds and Capital Adequacy 30 million % 2 000 50 1 800 45 1 600 1 400 550 721 258 378 362 279 40 35 1 200 1 000 800 1002 948 1185 1181 1233 1203 30 25 20 600 400 200 12,8 12,9 9,6 8,2 10,9 10,8 10,9 11,4 9,0 8,2 8,5 9,3 15 10 5 0 2005 2006 2007 Q1/08 Q2/08 Q3/08 Tier 1 Tier 2 Capital adequacy ratio, % Tier 1 ratio, % 0 * For capital adequacy measurement, treatment of insurance company holdings changed as of 2007
Income Statement 31 rolling million 7-9/08 7-9/07 1-9/08 1-9/07 12Mo 1-12/07 Net interest income 45 27 120 85 150 115 Impairments 11 1 8 2 7 1 Net interest income after impairments 34 26 113 83 143 114 Net income from non-life insurance 98 103 280 310 403 433 Net commissions and fees 24 24 79 83 111 115 Net trading income -26-16 -72-7 -99-34 Net investment income 0 5 9 28 10 28 Other operating income 14 15 42 51 62 71 Total income 145 156 450 549 629 728 Total expenses 102 100 337 328 448 440 Earnings before tax 43 56 114 220 181 288 Earnings per share, 0,15 0,20 0,41 0,80 0,65 1,04
Funding Profile 32
Long-term Credit Ratings*) 33 Moody's Investors Standard Fitch Service & Poor s Ratings Pohjola Bank Aa1 AA- AA- Danske Bank Aa1 AA- AA- Handelsbanken Aa1 AA- AA- Nordea Aa1 AA- AA- DnB NOR Aa1 AA- - Swedbank Aa2 A+ A+ SEB Aa3 A A+ Pohjola Insurance Ltd**) A1 A+ - If **) A2 A - Finnish sovereign Aaa AAA AAA *) Long-term debt **) Insurance financial strength
34 OP-Pohjola Group Funding Profile 80 billion Non-life insurance liabilities 70 60 50 40 2.4 6.0 0.7 30.2 2.5 5.7 4.0 35.4 Life insurance liabilities Liabilities to financial institutions Liabilities to customers 30 20 10 0 14.8 15.8 5.3 6.6 5.6 5.5 30 Sept. 2007 30 Sept. 2008 Debt securities issued to the public Other liabilities Equity capital
35 LT2, UT2 and Tier 1 by Call Date 450 000 000 400 000 000 350 000 000 300 000 000 250 000 000 200 000 000 Tier1 Upper tier2 Lower tier2 150 000 000 100 000 000 50 000 000 0 2010 2011 2012 2013 2014 2015
36 Issued Senior Debt by Maturity 3 000 000 000 2 500 000 000 2 000 000 000 1 500 000 000 1 000 000 000 Other USD EUR 500 000 000 0 2008 2009 2010 2011 2012 2014 2015
37 Issued Senior Debt by Maturity Pohjola OP-Mortgage Bank 4 000 000 000 3 500 000 000 3 000 000 000 2 500 000 000 2 000 000 000 1 500 000 000 1 000 000 000 500 000 000 0 2008 2009 2010 2011 2012 2014 2015 2016
38 Contact Information Jouko Pölönen, CFO, Pohjola Group tel. +358 10 252 3405 mobile +358 50 350 8226 jouko.polonen@pohjola.com Hanno Hirvinen, Executive Vice President Head of Group Treasury tel. +358 10 252 2221 mobile +358 50 522 8322 hanno.hirvinen@pohjola.com
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