Pohjola Pankki Oyj : Pohjola Bank Plc Interim Report for January-March 2013 Pohjola Bank plc Stock exchange release 29 April 2013, 8.00 am (UT +3) Interim Report Pohjola Bank Plc Interim Report for January-March 2013 - Consolidated earnings before tax came to EUR 131 million (103) and consolidated earnings before tax at fair value amounted to EUR 114 million (336). Return on equity was 14.8% (13.5). Core Tier 1 ratio stood at 10.7% (10.6). - Banking earnings before tax decreased to EUR 54 million (65). These included EUR 6 million (8) in impairment losses on receivables. The loan portfolio grew by 1.6% from its level at the turn of the year and by 7% in the year to March. The average corporate loan portfolio margin was 1.49% (1.52). - Within Non-life Insurance, insurance premium revenue rose by 10%. The combined ratio improved substantially, coming to 94.2% (102.1). Excluding changes in reserving bases and amortisation on intangible assets arising from company acquisition, the operating combined ratio stood at 92.4% (100.1). Return on investments at fair value was 1.1% (4.8). - Earnings before tax posted by Asset Management amounted to EUR 5 million (6) and assets under management were EUR 34.2 billion (32.7) at the end of the reporting period. - The Group Functions reported earnings of EUR 17 million (17) before tax. The figure included EUR 12 million (1) in capital gains on notes and bonds. - Cost savings out of the EUR 25 million estimated for 2013 based on the efficiency-enhancement programme amounted to EUR 7 million. - Unchanged outlook: Consolidated earnings before tax in 2013 are expected to be higher than in 2012. It is estimated that Non-life Insurance's operating combined ratio will vary between 89 and 93%. For more detailed information on the outlook, see "Outlook for the rest of 2013" below. Earnings before tax, € million Q1/ Q1/ Change, % 2013 2012 2012 Banking 54 65 -18 221 Non-life Insurance 55 15 266 92 Asset Management 5 6 -13 32 Group Functions 17 17 -1 27 Total 131 103 27 372 Change in fair value reserve -17 233 -107 418 Earnings before tax at fair value 114 336 -66 790 Earnings per share, € 0.31 0.25 0.89 Equity per share, € 8.47 7.62 8.67 Average personnel 2,655 3,403 3,421 Q1/ Q1/ Financial targets 2013 2012 2012 Target Return on equity, % 14.8 13.5 11.2 13 Core Tier 1 ratio, % 10.7 10.1 10.6 >11 Operating cost/income ratio by Banking, % 40 34 34 < 35 Operating combined ratio by Non-life Insurance, % 92.4 100.1 90.5 < 92 Operating expense ratio by Non-life Insurance, % 19.9 23.9 21.5 18 Solvency ratio by Non-life Insurance, % 77 85 81 70 Operating cost/income ratio by Asset Management, % 58 53 47 < 45 AA rating affirmed by at least two credit rating agencies or credit ratings at least at the main competitors' level 2 2 2 2 Dividend payout ratio at least 50%, provided that Core Tier 1 ratio remains at least 10% 51 >50 1) Comparatives deriving from the income statement are based on figures reported for the corresponding period a year ago. Unless otherwise specified, balance-sheet and other cross-sectional figures on 31 December 2012 are used as comparatives. As a result of change in the recognition of defined benefit pension plans, the comparatives have been restated. President and CEO Mikael Silvennoinen: We got off to a good start in 2013. Consolidated earnings before tax amounted to EUR 131 million and the return on equity was almost 15%. Non-life Insurance showed a good balance on technical account during the first quarter that is typically a difficult period. Insurance premium revenue increased by 10%, showing a growth rate that was still above the market average. Claims expenditure developed favourably and operating expenses were lower than a year ago. In addition, capital gains arising from investments improved earnings reported by Non-life Insurance. Banking earnings were lower than the year before due to a decrease in income generated by Markets. The loan portfolio increased by around 2% and the Corporate Banking net interest income by 5%. Net loan losses and impairment losses remained low and decreased from their level a year ago. Within Asset Management, assets under management increased as a result of good progress in net asset inflows and positive developments in market values. Omasairaala Oy began to operate in early 2013. The hospital has met with a favourable reception among customers. Thanks to the efficiency-enhancement programme, Group expenses were 2% lower than a year ago. Cost savings out of the EUR 25 million estimated for 2013 came to EUR 7 million during the first quarter, resulting mainly from a reduction in personnel. The programme is proceeding as planned. Outlook for the rest of 2013 Within Banking, growth prospects on the loan portfolio are dimmer than last year. The operating environment for the corporate sector will remain challenging. The greatest uncertainties related to Banking's financial performance in 2013 are associated with future impairment loss on the loan portfolio. Insurance premium revenue is expected to increase at a rate above the market average. The operating combined ratio for the full year 2013 is estimated to vary between 89% and 93% if the number of large claims is not much higher than in 2012. Expected investment returns are largely dependent on developments in the investment environment. The most significant uncertainties related to Non-life Insurance's financial performance in 2013 pertain to the investment environment and the effect of large claims on claims expenditure. The greatest uncertainties related to Asset Management's financial performance in 2013 are associated with the actual performance-based fees tied to the success of investments and the amount of assets under management. The key determinants affecting the Group Functions' financial performance include net interest income arising from assets in the liquidity buffer, any capital gains or losses on notes and bonds and any impairment loss that may be recognised on notes and bonds in the income statement. It is estimated that the Group Functions' net interest income will be lower than in 2012. Consolidated earnings before tax in 2013 are expected to be higher than in 2012. There is still great uncertainty about the economic outlook and the operating 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 the future development in the operating environment and the future financial performance of Pohjola Group and its various functions, and actual results may differ materially from those expressed in the forward-looking statements. Helsinki, 29 April 2013 Pohjola Bank plc Board of Directors This Interim Report is available at www.pohjola.com > Media > Releases, where background information on the Bulletin can also be found. Analyst meeting, conference call and live webcast Pohjola will hold a briefing in English for analysts and investors on Pohjola Asset Management Ltd premises in Helsinki on 29 April starting at 3.00 pm Finnish time, EET (2.00 pm CET, 1.00 pm UK time, 8am US EST). Analysts and investors may attend the briefing in one of the following two ways: 1) View the briefing as live webcast via the internet. The link will be available on the IR website before the briefing begins. Questions are welcome via a question button available in the webcast window. An on-demand webcast can be viewed via the IR website afterwards. 2) Dial one of the regional conference call numbers shown below. Questions are welcome in the Q&A session according to instructions. To participate via a conference call, please dial in 5-10 minutes before the beginning of the event: FI: 09 23 11 3289 US: 1 86 6682 8490 UK: 08 445 718 957 International: +44 (0) 1452 555131 Password: Pohjola Press conference Mikael Silvennoinen, Pohjola Bank plc's President and CEO, will present the financial results in a press conference on OP-Pohjola Group's premises (Vääksyntie 4, Vallila, Helsinki), on 29 April, starting at noon. Financial reporting in 2013 Schedule for Interim Reports in 2013 Interim Report H1/2013: 31 July 2013 Interim Report Q1-3/2013: 30 October 2013 DISTRIBUTION NASDAQ OMX Helsinki Ltd London Stock Exchange SIX Swiss Exchange Major media www.pohjola.com, www.op.fi For additional information, please contact: Mikael Silvennoinen, President and CEO, tel. +358 (0)10 252 2549 Vesa Aho, CFO, tel. +358 (0)10 252 2336 Niina Pullinen, Senior Vice President, Investor Relations, tel. +358 (0)10 252 4494 Pohjola Bank plc is a Finnish financial services group which provides its customers with banking, non-life insurance and asset management services. Our mission is to promote the prosperity, security and wellbeing of our customers. Profitable growth and an increase in company value form our key objectives. Pohjola Group serves corporate customers in Finland and abroad by providing an extensive range of financial, investment, cash-management and non-life insurance services. We offer non-life insurance and private banking services to private customers. Pohjola Series A shares have been listed on the Large Cap List of the NASDAQ OMX Helsinki since 1989. The number of shareholders totals around 32,000. Pohjola's consolidated earnings before tax came to 374 million euros in 2012 and the balance sheet total amounted to 45 billion euros on 31 December 2012. Pohjola is part of OP-Pohjola Group, the leading financial services group in Finland with over four million customers. www.pohjola.com Pohjola Bank plc Q1 2013 background material Pohjola Bank plc Interim Report Q1 _2013 ------------------------------------------------------------------------------ This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. Source: Pohjola Pankki Oyj via Thomson Reuters ONE HUG#1697161
Pohjola Pankki Oyj : Pohjola Bank Plc Interim Report for January-March 2013
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