Pohjola Pankki Oyj : OP-Pohjola Group stays on track: considerable earnings improvement, and customer business grows faster than

 Pohjola Pankki Oyj : OP-Pohjola Group stays on track: considerable earnings
   improvement, and customer business grows faster than the market average.

OP-Pohjola Group
Stock Exchange Release 31 July 2013 at 8.00 am
Interim Report

OP-Pohjola Group stays on track: considerable earnings improvement, and
customer business grows faster than the market average.

- Earnings before tax increased by 21% to EUR 398 million (329).
- Total income increased by 6.5%. The decrease in net interest income levelled
off in the report period.
- Expenses without the bank levy decreased by over 2%.
- Core Tier 1 ratio before transitional provisions was 14.6% (14.8).
- Customer business grew at a rate that was much higher than the market
average. The loan portfolio increased in the year to June by 7.2% and deposits
by 8.4%. Non-life Insurance premium revenue increased by 10%.
- The number of joint banking and non-life insurance customers increased by
- Change in outlook: Earnings before tax for the full 2013 are expected to be
better than a year ago. For more information, see "Outlook towards the year

OP-Pohjola Group's key indicators

                                   Q1-Q2/2013  Q1-Q2/2012 Change %        2012
Earnings before tax, EUR million          398         329     21.0         586
 Banking                                193         247    -21.9         424
 Non-life Insurance                      99          54     81.7          92
 Wealth Management                       77          34    124.9         101
Returns to owner-members and OP
bonus customers                            96          96     -0.6         192
                                  30 Jun 2013 30 Jun 2012 Change % 31 Dec 2012
Core Tier 1 ratio before the
transition provisions, %                 14.6        14.7    -0.2*        14.8
Core Tier 1 ratio, %                     13.7        14.7    -1.0*        14.1
Ratio of capital base to minimum
amount of capital base (under the
Act on the Supervision of
Financial and Insurance
Conglomerates)                           1.81        2.01   -0.20*        1,90
Ratio of non-performing
receivables to loan and guarantee
portfolio, %                             0.46        0.53   -0.06*        0.46
Joint banking and
insurance customers (1,000)             1,468       1,358      8.1       1,425

* Change in ratio

Comments by Reijo Karhinen, Executive Chairman and CEO

OP-Pohjola's first half of 2013 strikes a fine balance between growth and
financial performance. We did excellently again despite the demanding
conditions. Our higher-than-expected earnings already give us cause to change
our performance guidance. We now expect our full-year earnings to be better
than last year.

The new regulations for the financial sector stress capital adequacy, just as
they should, which in turn means that earnings performance plays a key role.
We expect our second-half net interest income to be better than the first
half's, with other income continuing to grow steadily. A positive development
in our total income is supported by our steadily growing volumes. The fact
that growth in total expenses came to a halt played a key role in our improved
first-half earnings. In order to stay on track to meet our profit target,
derived from our capital adequacy target, in an environment where interest
rates will remain low and regulation will involve a new burden on earnings, we
will need to pay special attention to our cost-efficiency.

OP-Pohjola Group is a forerunner and trendsetter in the development of Finnish
financial services. From one year to the next, we have taken systematic and
determined steps in terms of development and bold innovation. In the first
half of 2013, we again launched innovative products and services that make our
customers' lives easier, especially in the field of mobile service which is
quickly becoming the most significant channel for using daily services.
Omasairaala hospital is an example of a new service, in which traditional
practices are changed boldly on the basis of customer needs.

And innovation does not end here. We are obliged to carry on by our position
as the country's leading financial services group. Our loyalty benefits and
increased investments in Finland's most comprehensive, versatile and dynamic
service network ensure a superior customer experience in a changing
competitive situation. I am convinced that a deep understanding of our
customers' needs, our long traditions and top financial expertise enable us to
be successful in the future, too.

We have been successful in adhering to our mission and in our strategy-based
business that truly focuses on customer needs, also during times of crisis. In
the midst of major changes affecting our operating and competitive
environment, our market position has continued to strengthen, sometimes even
at a historically high rate. Our position in corporate financing has improved
since 2007 by as much as 8 percentage points. Our sense of responsibility,
consistent with our values, has guided us to go against the currents that
drive the markets in both Finland and the rest of Europe.

There is a clear correlation between banks' ability and willingness for
financing on the one hand and economic growth on the other. This has again
been proven by recent figures concerning Southern and Central Europe. Both
Finland and the rest of Europe urgently need to get on a path of economic
growth. Banks play a key role in securing economic growth. The future of the
economy is largely dependent on how well banks are able to operate. In order
that economic growth can be given a boost, banks should now be offered a
"peaceful work environment". Quick decisions should now be made on the content
of the regulatory initiatives currently under preparation. Decision-makers
should refrain from imposing any new burden on banks. A public, calming
promise would rebuild an atmosphere of trust and contribute to economic

The next few months will be a crucial period for Finnish economic policy
decisions. The labour market and the Government must find the means and
willingness to make the necessary decisions. We can no longer just pick the
easy way out. Many of the crisis-ridden countries in Southern Europe that have
been criticised have already taken the corrective measures that still remain
unresolved in Finland.

Financial performance in the reporting period

OP-Pohjola Group's earnings before tax were EUR 398 million (329). Earnings
were improved especially because of a solid increase in investment income of
all segments and the good financial performance of Non-life Insurance.
Investment income was improved by capital gains on securities. The good
performance by Non-life Insurance was the result of premiums written that have
been increasing for a long time and of lower operating expenses. Net
commissions and fees, too, were higher than a year ago.

Due to low interest rates, net interest income decreased by 18% year on year.
The fall in net interest income slowed down in the second quarter.

The Group's expenses were at the same level as last year despite the EUR 23
million bank levy and the growth and expansion of business. Without the effect
of the bank levy, total expenses would have decreased by more than 2%. Thanks
to measures taken in the efficiency enhancement program, the wages and
salaries decreased by more than 2%. Because other social expenses increased,
personnel costs as a whole decreased only by 0.6%. Other administrative
expenses were almost 8% lower than a year ago.

OP-Pohjola Group's fair value reserve before tax was EUR 288 million on 30
June, reducing in the report period by EUR 160 million. Earnings before tax at
fair value amounted to EUR 238 million (703).

Bonuses to owner-members and OP bonus customers recognised in the income
statement increased by 5.4% year on year to EUR 89 million.

Outlook towards the year end

The world economy will this year grow at a rate below the average. The
recession in the euro area should recede within the next 12 months, but a turn
for the better is not yet in the horizon. The Finnish economy too contracted
during the first half and its full-year growth is expected to remain weak. As
a result of the actions taken by the ECB, financial markets have remained
relatively stable. However, the euro area has not yet overcome its debt crisis
and there is still potential for major financial market disruptions.

The operating environment in the financial sector is projected to continue to
remain challenging. Historic-low market interest rates have eroded banks' net
interest income and will weaken insurance institutions' investment income. The
weak economic situation may lower demand for financial services, and the bank
levy confirmed late last year saddled Finnish banks with major new costs.
Changes in the operating environment make measures that support profitability
in the financial sector even more urgent.

Unless the operating environment turns out to be considerably weaker than
expected, OP-Pohjola Group's earnings before tax (previous estimate: at about
the same level or somewhat lower) is expected to be better than in 2012. The
most significant factors that may affect earnings in the second half of 2013
concern changes in capital markets and impairment losses on receivables.

All forward-looking statements in this report expressing the management's
expectations, beliefs, estimates, forecasts, projections and assumptions are
based on the current view on developments in the economy, and actual results
may differ materially from those expressed in the forward-looking statements.

Press conference

OP-Pohjola Group's financial performance will be presented to the media by
Executive Chairman and CEO Reijo Karhinen in a press conference on 31 July
2013, starting at noon at Vääksyntie 4, Vallila, Helsinki.

Pohjola Bank plc will publish its own interim report.

Financial reporting in 2013   
Schedule for Interim Reports in 2013:
Interim Report Q1-3/2013: 30 October 2013

OP-Pohjola Group Central Cooperative   
Executive Board

Executive Chairman and CEO Reijo Karhinen, tel. +358 (0)10 252 4500
Harri Luhtala, CFO, tel. +358 (0)10 252 2433
Carina Geber-Teir, Chief Communications Officer, tel. +358 (0)10 252 8394

NASDAQ OMX Helsinki Ltd
London Stock Exchange
SIX Swiss Exchange
Major media
op.fi and pohjola.fi

OP-Pohjola Group is Finland's leading financial services group providing a
unique range of banking, investment and insurance services. The Group has the
mission of promoting the sustainable prosperity, well-being and security of
its owner-members, customers and operating regions through its local presence.
Its objective is to offer the best and most versatile package of loyal
customer benefits on the market. OP-Pohjola Group consists of some 200 member
cooperative banks and the Group's central institution, OP-Pohjola Group
Central Cooperative, with its subsidiaries and closely-related companies, the
largest of which is the listed company Pohjola Bank plc.With a staff of 13,000
OP-Pohjola Group posted consolidated earnings of 601 million euros before tax
in 2012 and had total assets of 99.8 billion euros on 31 December 2012. The
group has over four million customers.

OP_Pohjola Group background material
OP_Pohjola Group Interim Report Q2_2013


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Source: Pohjola Pankki Oyj via Thomson Reuters ONE
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