OKO Bank Presentation I II III IV V Finnish Economy Finnish Financial Industry OP Bank Group OKO Bank Funding Strategy 1
I Finnish Economy 2
Nordic countries in a nutshell Iceland Population: 0.3 million Memberships: OECD, NATO Norway Population: 4.5 million Memberships: OECD, NATO Sweden Population: 8.9 million Memberships: EU, OECD Finland Population: 5.2 million Memberships: EU, EURO, OECD Denmark Population: 5.4 million Memberships: EU, OECD, NATO Picture: The Nordic Book - A Professional Introduction of the Nordic Countries 3
8 6 4 2 0 % Change in GDP volume United States -2 EMU countries -4 Finland -6 Source: OECD -8 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07f 08f OPK/Strat.suunn./at/BKThuoltomaat(v)
20 Trade balance and current account in Finland 12-month moving total EUR billion 15 Trade balance 10 5 Current account 0-5 OPK/Strat.suunn./at/Vaihtotase Source: Bank of Finland 94 95 96 97 98 99 00 01 02 03 04 05 06 07f 08f
5 4 % * except US Harmonized index* of consumer prices annual change US 3 2 1 0 EMU countries Finland -1 Source: EcoWin OPK/Strat.suunn./at/Kuinmaat 97 98 99 00 01 02 03 04 05 06 07
20 % Unemployment rate in Finland 15 10 5 0 OPK/Strat.suunn./at/Startel3 Source: Statistics Finland 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07
II Finnish Financial Industry 8
Market shares in the Finnish banking market June 30, 2007 % 35 Loans % 40 Deposits 30 35 25 20 15 10 30 25 20 15 10 5 5 0 Nordea* * 31.5.2007 OP Bank Group Danske Bank* Handelsbanken Savings Banks Aktia Savings Bank Other 0 Nordea* * 31.5.2007 OP Bank Group Danske Bank* Savings Banks Local Cooper. Banks Aktia Savings Bank Other OPK/Strat.suunn./mm/Suurimmat toimijat
Customer market share in SMEs *) Principal bank 60 % 55 % 50 % 40 % 39 % 39 % 34 % 30 % 20 % 10 % 0 % 9 % 7 % 7 % 4 % 0 % 1996 (n=1000) 2006 (n=2012) 4 % Nordea OP Bank Group Sampo Bank Savings Banks' Association /Aktia Local Co-operative Banks Association Nationwide study of small and medium-sized enterprises Tietoykkönen Oy (1996-2003) Add Value Oy (2004-2005) *) The market share of the number of customers 10
% 35 Mutual fund companies market shares 1998-2006 30 25 20 15 10 5 0 Nordea OPK/Strat.suunn./mm/rahoyhtmo OP Bank Group Source: Finnish Association of Mutual Funds Sampo Gyllenberg Evli FIM Others
% 30 Market shares in life insurance assets 2001-2007 25 20 6/2007 15 10 5 0 Nordea OPK/Strat.suunn./mm/VakSäästötAikasarjaa Sampo Life, Kaleva Source: Federation of Finnish Financial Services OP Life Assurance Company +Pohjola Life Suomi Tapiola Group Others
Market shares in life insurance Gross premiums written 2006 35 % 30 28,3 27,9 25 22,3 20 15 10 5 6,5 6,2 8,8 0 OP Bank Group Nordea Sampo * Tapiola Skandia Others * Sampo Life and Kaleva 13
30 25 % 27,6 Market shares of non-life insurance premiums written 2006 Domestic direct insurance 26,3 Source: Federation of Finnish Financial Services 20 20,5 15 10 10,4 8,6 6,6 5 0 If Pohjola* Tapiola** Fennia Local Insurance Group*** * Pohjola Non-Life, A-Insurance and Eurooppalainen ** incl. Turva *** incl. Palonvara Other 14
III OP Bank Group Structure, strategies and financial performance 15
The Structure of OP Bank Group and OKO Bank Group Mutual Funds Retail Bank in in Helsinki area Life Insurance Other OP Bank Group Central Cooperative OKO Bank 231 Member Cooperative Banks Banking and Investment Services Non-life Insurance Corporate Banking Capital Markets Group Treasury Asset Management Private Customers Corporate Customers Baltic Legal structure: OP Bank Group has joint and several liability for each others commitments. 16
Joint Responsibility for Liability Joint responsibility within the OP Bank 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 Bank Group, OKO Bank Plc, Helsinki OP Bank Plc, OP-Kotipankki Oyj and OP Mortgage Bank Insurance companies within the OP Bank Group are not included in the cooperative joint responsibility 17
OP Bank Group s vision We are the market leader in all our core business areas and the leading financial services group in Finland. 18
% 40 OP Bank Group on the deposit and lending markets* * 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 30 20 10 Market share of lending Market share of deposits 0 1902 1922 1942 1962 1982 2002 2022 OPK/Strat.suunn./mm/talluo1900 Latest value 6/2007
OP Bank Group Income statement million Change 1 January to 30 June 2007 2006 million % Net interest income 509 416 93 22 Other income 648 553 95 17 Total income 1 157 969 188 19 Personnel costs 285 263 22 8 Other expenses 294 287 8 3 Total expenses 579 550 29 5 Impairment losses on receivables 6 1 4 Returns to owner-members 49 29 20 71 Earnings before tax 523 389 134 34 20
OP Bank Group Earnings before tax, 12 month moving total 1995-2003 FAS million 1000 900 800 700 600 500 400 300 200 100 0 95 96 97 98 99 00 01 02 03 04 05 06 06/07 21
OP Bank Group Ratios 06/2007 06/2006 Net interest margin, % * 1.7 1.5 Cost/ income ratio, Banking and Investment Services, % 49 53 Return on equity (ROE), % 14.7 11.9 Return on equity at fair value, % 13.4 6.1 Return on assets (ROA), % 1.26 1.01 Non-performing and zero-interest bearing receivables of loans and guarantees, % 0.4 0.4 Tier 1 ratio, % 12.6 12.2 Capital adequacy ratio, % 14.3 12.9 * Net interest income as a % of average total assets 22
OP Bank Group Balance sheet items million 06/2007 06/2006 Total assets 63 415 57 828 Credit stock 42 344 37 270 Non-performing and zero-interest claims 166 163 Deposits 27 130 25 017 Equity capital 5 415 4 654 23
OP Bank Group Own funds and capital adequacy million 6 000 % 24 Tier 2 own funds 5 000 20 Capital loans 4 000 3 000 2 000 14,3 14,3 14,3 14,0 12,9 12,2 12,4 12,7 12,8 12,6 16 12 8 Tier 1 own funds excl. capital loans Capital adequacy ratio, % 1 000 4 Tier 1 funds/ Riskweighted items, total, % 0 06/2006 09/2006 12/2006 03/2007 06/2007 0 Deductions of own funds are not included 24
Nordic banks: Total capital ratio 2003-2007 Danske Bank Nordea Latest data: June 30, 2007 SEB Handelsbanken DnB NOR Swedbank OP Bank Group Sampo Bank % 0 4 8 12 16 25
Asset Mix OP Bank Group Loans and leasing assets by sector June 30, 2007 Loans and leasing assets by sector Households: other loans 24 % June 30, 2007 Telecommunications and electronics 2 % Construction 7 % Services 9 % Communication and publishing 2 % Housing associations 11 % Energy 2 % Food industry 3 % Corporates 28 % Others 7 % Wholesale and retail trade 13 % Households: housing loans 48 % Other industry 4 % Forest industry 4 % Metal industry 6 % Transports and traffics 5 % Real-estate activities 25 % 26
OP Bank Group Loans and leasing assets by sector Non-performing and Change zero-interest loans million 30.6.2007 30.6.2006 million % 30.6.2007 Of loans Enterprises and housing companies 12 053 28 % 10 537 28 % 1 516 14 % 64 0,5% Industry 2 351 6 % 2 297 6 % 53 2 % 12 0,5% Construction 804 2 % 679 2 % 125 18 % 6 0,7% Trade and catering 1 717 4 % 1 416 4 % 302 21 % 14 0,8% Real-estate investment 3 101 7 % 2 587 7 % 514 20 % 16 0,5% Other enterprises 2 723 6 % 2 387 6 % 336 14 % 13 0,5% Housing companies 1 357 3 % 1 171 3 % 186 16 % 3 0,2% Finance and insurance 46 0 % 8 0 % 38 0 0,0% Public sector entities and non-profit organisations 797 2 % 731 2 % 67 9 % 1 0,1% Households 29 034 69 % 25 711 69 % 3 323 13 % 102 0,4% Housing loans 20 247 48 % 17 630 47 % 2 616 15 % 48 0,2% Foreign 466 1 % 320 1 % 145 45 % 0 0,0% Other items, net -55 0 % -42-12 Total 42 342 100 % 37 265 100 % 5 076 14 % 166 0,4% 27
OP Bank Group Corporate loans and leasing assets by industry million 30.6.2007 Non-performing and zerointerest loans Housing associations 1 357 11 % 3 5 % Food industry 354 3 % 2 3 % Energy 251 2 % 0 0 % Wholesale and retail trade 1 519 13 % 12 18 % Real-estate activities 3 101 26 % 16 26 % Transports and traffics 622 5 % 6 9 % Metal industry 671 6 % 3 5 % Forest industry 462 4 % 2 4 % Other industry 521 4 % 2 4 % Others 877 7 % 1 2 % Services 1 058 9 % 8 13 % Construction 804 7 % 6 9 % Telecommunications and electronics 222 2 % 1 1 % Communication and publishing 232 2 % 2 3 % Total 12 053 100 % 64 100 % 28
OP Bank Group Non-performing and zero-interest loans million 30.6.2007 30.6.2006 Change, % 31.12.2006 Households 102 93 9.8 78 Companies 61 69-11.5 47 Housing corporations and others 4 2 3 Total 166 163 2.2 128 Non-performing loans of loan and guarantee portfolio, % 0.4 0.4 0.0* 0.3 * Percentage points 29
Diversified business mix OP Bank Group - Earnings before tax, 1-6/2007 OKO Bank Group - earnings before tax, 1-6/2007 15 % 16 % 46 % 54 % 69 % Banking and Investment Services Non-Life Insurance Life Insurance Banking and Investment Services Non-Life Insurance 30
IV OKO Bank 31
Strategic targets Leading market position ROE 13% Banking and Investment Services: expense / income ratio 40% Non-life Insurance: combined ratio < 94% excl. amortisation on intangible assets related to Pohjola acquisition Measures 32
Quarterly key figures 1-3/2006 4-6/2006 1-3/2007 4-6/2007 31 March 2006 30 June 200631 March 2007 30 June 2007 Earnings before tax, million 69 57 65 100 Return on equity at fair values, % *) 8,5 2,1 13,7 12,2 Tier 1 ratio, % 8,8 8,2 8,0 8,0 Solvency ratio,% 11,7 10,5 12,7 Earnings per share, 0,26 0,21 0,25 0,36 Equity per share, ***) 8,33 8,37 8,65 8,91 *) Return on equity has been calculated at fair values since 2006. Income has been annualised 33
Financial objectives high profitability the main objective 1-6/2006 1-12/2006 1-6/2007 Target 30 June 2006 31 Dec 2006 30 June 2007 2009 Banking and Investment Services Operative return on equity, % 17.5 18.2 17.7 >18 Operative cost/income ratio, % 40.3 41.5 38.6 40 Non-life Insurance Operative return on equity, % 4.5 20.9 30.7 > 20 Operative combined ratio, % 94.8 95.4 94.9 < 94 Group Return on equity at fair values, % 5.2 9.5 12.8 13.0 Tier 1 ratio, % 8.2 8.2 8.0 8.0 34
Quarterly Income statement million I-3/06 4-6/06 7-9/06 10-12/06 1-3/07 4-6/07 Net interest income 26 25 22 23 26 32 Impairment losses on receivables -1 0 2 0 0 1 Net interest income after impairment losses 27 25 20 23 26 31 Net income from non-life insurance 86 90 68 84 94 113 Net commissions and fees 26 23 25 29 28 31 Net trading income 3 2 6 9 7 3 Net investment income 20 9 2 7 10 13 Other operating income 12 13 11 13 13 24 Total income 173 163 132 165 179 214 Personnel costs 42 45 36 42 41 45 IT expenses 11 11 10 10 11 11 Amortisation on intangible assets from acquisition 9 9 9 9 9 9 Other depreciation and amortisation 6 5 5 6 6 7 Other expenses 37 35 32 41 47 43 Total expenses 104 105 92 108 114 114 Share of associates' profits/losses 0 0 0 0 0 0 Earnings before tax 69 57 40 57 65 100 35
V Funding Strategy 36
Long - term credit ratings *) OKO Bank Danske Bank Nordea DnB NOR Handelsbanken Swedbank SEB Moody's Investors Service Standard & Poor's Fitch Ratings Aa1 AA- AA- Aa1 AA- AA- Aa1 AA- AA- Aa1 A+ - Aa1 AA- AA- Aa1 A+ A+ Aa2 A+ A+ If **) A2 A - Pohjola **) A2 A+ - Finnish Sovereign Aaa AAA AAA *) Long-term funding **) Insurance financial strength Source: Companies' internet pages 8/07
Balance sheet Funding billion 28 26 24 22 20 18 16 14 12 10 16.5 billion 19% 7% 25% 22.3 billion 7% 9% 9% 9% 41% 24.2 billion 5% 5% 8% 9% 55% 25.1 billion 6% 2% 9% 9% 53% Liabilities to Member Cooperative Banks Liabilities to other financial institutions Liabilities to customers Non-life insurance liabilities Life insurance liabilities Debt securities issued to the public Subordinated liabilities 8 Capital loans 6 4 2 0 37% 31 Dec 2004 31 Dec 2005 31 Dec 2006 30 June 2007 Shareholders' equity and minority interests Other items 38
OP Bank Group Funding Profile mrd. 70 60 50 40 30 20 10 0 30 June 2006 30 June 2007 Non-life insurance liabilities Life insurance liabilities Liabilities to financial institutions Liabilities to customers Debt securities issued to the public Other liabilities Equity capital 39
OP Bank Group Quarterly loans and deposits billion 50 40 30 20 Loans (excl. loans mediated from Treasury funds) Deposits 10 0 I II III IV/06 I II III IV/07 40
Issued Senior Debt by Maturity 2 000 000 000 1 500 000 000 1 000 000 000 500 000 000 USD Muut EUR 0 2007 2008 2009 2010 2011 2012 2014 2016 9.8.2007 41
LT2, UT2 and Tier1 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 2014 2015 2055 9.8.2007 42
Contact persons at OKO Bank for debt investor relations Mr Timo Ritakallio Deputy Chief Executive Officer Head of Banking and Investment Services tel. +358 10 252 4322 mob. +358 500 536 346 e-mail:timo.ritakallio@okobank.com Mr Hanno Hirvinen Executive Vice President Head of Group Treasury tel. +358 10 252 2221 mob. +358 50 522 8322 e-mail:hanno.hirvinen@okobank.com www.okobank.com 43
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