Pohjola Pankki Oyj : Pohjola Bank Plc Interim Report for January-March 2013

 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%
- 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

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

There is still great uncertainty about the economic outlook and the operating

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

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

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

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

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.


Pohjola Bank plc Q1 2013 background material
Pohjola Bank plc Interim Report Q1 _2013


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Source: Pohjola Pankki Oyj via Thomson Reuters ONE
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