Pohjola February 2009
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 Source: Reuters EcoWin
Trade balance and current account in Finland 12-month moving total 5 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 08 Source: Bank of Finland
6 % Harmonized index* of consumer prices annual change * except United States 6 5 4 United States 3 2 1 0 Eurozone Finland -1 97 98 99 00 01 02 03 04 05 06 07 08 09 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
37 % OP-Pohjola Group's market share of households' housing loans 10 36 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 2008 40 35 30 25 20 15 10 5 0 % Market Share in Deposits 31 December 2008 NordeaOP-PohjolaDanske Handelsbanken Savings Group Bank banks Figures are estimates Sources: Bank of Finland, banks Aktia 35 30 25 20 15 10 5 0 % NordeaOP-PohjolaDanske Group Bank Figures are estimates Sources: Bank of Finland, banks Market Share in Loans 31 December 2008 Savings banks Aktia Local Ålands- cooperativebanken banks Handelsbanken Local Ålands- cooperativebanken banks
35 % Mutual fund companies market shares 1998-2008 12 30 25 20 15 10 5 0 Nordea OP- Pohjola Group Source: Finnish Association of Mutual Funds Danske Bank SEB Gyllenberg Evli FIM Others
13 Market shares in life insurance Gross premiums written 2008 35 % 30 29,3 25 20 22,6 21,2 15 12,6 10 5 6,5 7,9 0 OP-Pohjola Group Nordea Mandatum Life* Skandia Tapiola Others * Mandatum 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 Joint responsibility of OP-Pohjola Group Helsinki OP Bank Funds Life insurance OP-Pohjola Group Central Cooperative 221 Group member banks Banking Asset Management Pohjola Bank plc OP Mortgage Bank Non-life Insurance Companies within OP-Pohjola Group are liable for each other's debts and 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 12/2008 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 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 08
20 OP-Pohjola Group Income statement million Change 1 January to 31 December 2008 2007 million % Net interest income 1,189 1,048 141 13 Other income 634 1,206-572 -47 Total income 1,823 2,254-431 -19 Personnel costs 598 553 46 8 Other expenses 640 576 64 11 Total expenses 1,238 1,129 110 10 Impairments of receivables 58 13 45 Returns to owner-members and OP bonus customers 154 107 47 44 Earnings before tax 372 1,005-633 -63
21 OP-Pohjola Group Balance sheet items million 12/2008 12/2007 Total assets 75 746 65 716 Receivables from customers 51 708 44 776 Non-performing and zero-interest claims 203 147 Deposits 34 533 29 001 Equity capital 5 215 5 638
22 OP-Pohjola Group Ratios 12/2008 12/2007 Net interest margin, % * 1.7 1.7 Cost/ income ratio, Banking and Investment Services, % 54 49 Return on equity (ROE), % 4.1 13.7 Return on equity at fair value, % -6.0 10.9 Return on assets (ROA), % 0.31 1.18 Non-performing and zero-interest bearing receivables of loans and guarantees, % 0.4 0.3 Tier 1 ratio, % 12.6 12.6 Capital adequacy ratio, % 12.7 13.8 * Net interest income as a % of average total assets
23 The amalgamation of the cooperative banks Capital resources and capital adequacy 6,000 million % 24 Other capital resources 5,000 20 Tier 2 capital resources 4,000 3,000 2,000 14.3 14.3 14.3 14.1 12.8 13.8 12.3 12.4 12.7 12.7 12.8 12.6 12.7 12.6 12.7 12.3 12.4 12.6 16 12 8 Subordinated loans Tier 1 capital resources excl. subordinated loans Capital adequacy ratio, % 1,000 0 Dec. 2006 June 2007 Dec. 2007 June 2008 Dec. 2008 4 0 Tier 1 funds/ Riskweighted items, total, % 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 2008 2007 2006 %
Asset Mix OP-Pohjola Group Loans and leasing assets by sector 25 December 31, 2008 Households: other loans 22% Corporates 30% Telecommunications and electronics 2% Services 9% Others 8% Construction 6% Communication and publishing 2% Housing associations 10% Energy 3% Food industry 3% Wholesale and retail trade 13% Households: housing loans 48% Other industry 5% Forest industry 4% Metal industry 5% Transports and traffics 5% Real-estate activities 25%
26 OP-Pohjola Group Loan portfolio by sector Change Non-performing and zero-interest loans million 31 Dec. 2008 31 Dec. 2007 million % 31 Dec. 2008 Of loans Non-banking corporate sector and housing associations 15,457 30% 12,822 29% 2,635 21% 63 0.4% Industry 2,944 6% 2,310 5% 633 27% 15 0.5% Construction 856 2% 803 2% 53 7% 10 1.2% Trade and catering 2,181 4% 1,936 4% 245 13% 11 0.5% Property investment 4,086 8% 3,287 7% 799 24% 15 0.4% Other companies 3,831 8% 3,057 7% 774 25% 11 0.3% Housing associations 1,560 3% 1,429 3% 131 9% 1 0.1% Finance and insurance 16 0% 12 0% 4 35% 0 0.7% Public corporations and non-profit organisations 864 2% 854 2% 11 1% 3 0.3% Households 33,842 66% 30,560 68% 3,283 11% 122 0.4% Home mortgages 24,156 47% 21,547 48% 2,610 12% 71 0.3% Foreign 884 2% 589 1% 295 50% 15 1.7% Other items, net -97 0% -62-35 Total 50,967 100% 44,774 100% 6,193 14% 203 0.4%
27 OP-Pohjola Group Non-performing and zero-interest loans million 31 Dec. 2008 31 Dec. 2007 Change, % Households 122 92 32.7 Companies 62 52 19.5 Housing associations and others 19 3 Total 203 147 37.8 Non-performing loans of loan and guarantee portfolio, % 0.4 0.3 0.06* * Percentage points
Pohjola Bank plc 28
Earnings before Tax by Business Segment million 200 January December 181 29 150 136 100 105 50 21 17 55 0-50 -50-58 -100 Banking Asset Management Non-life Insurance Group Functions 2007 2008
Own Funds and Capital Adequacy 30 million % 2 000 50 1 800 45 1 600 1 400 550 721 66 46 256 40 35 1 200 1247 1228 30 1 000 800 1002 948 25 20 600 12,8 12,9 11,2 11,7 15 400 200 9,6 8,2 10,7 9,4 10 5 0 2005 2006 2007 2008 0 Tier 1 Tier 2 Tier 3 Capital adequacy ratio, % Tier 1 ratio, % * For capital adequacy measurement, treatment of insurance company holdings changed as of 2007
Income Statement 31 million 10-12/08 10-12/07 1-12/08 1-12/07 Net interest income 54 30 174 115 Impairments 21-1 28 1 Net interest income after impairments 33 31 146 114 Net income from non-life insurance 74 123 353 433 Net commissions and fees 29 32 108 115 Net trading income -9-27 -81-34 Net investment income -3 1 6 28 Other operating income 14 20 56 71 Total income 139 179 589 728 Total expenses 134 112 470 440 Earnings before tax 5 67 119 288 Earnings per share, 0,03 0,24 0,44 1,04
Funding Profile 32
Long-term Credit Ratings*) 33 Moody's Investors Standard Fitch Service & Poor s Ratings Pohjola Bank Aa1 AA- AA- Handelsbanken Aa1 AA- AA- Nordea Aa1 AA- AA- DnB NOR Aa1 AA- - Danske Bank Aa3 A A+ SEB A1 A+ A+ Swedbank A1 A A+ Pohjola Insurance Ltd**) A1 A+ - If **) A2 A - Finnish sovereign Aaa AAA AAA *) Long-term debt **) Insurer financial strength 3.4.2009
34 OP-Pohjola Group Funding Profile 80 billion Non-life insurance liabilities 70 60 50 40 2.1 6.1 0.9 31.2 2.2 5.4 0.7 37.1 Life insurance liabilities Liabilities to financial institutions Liabilities to customers 30 20 10 0 14.1 18.2 5.6 6.9 5.6 5.2 31 Dec. 2007 31 Dec. 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 2055 21.4.2008
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 2009 2010 2011 2012 2014 2015 2016 21.4.2008
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 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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