Pohjola Bank plc Stock Exchange Release 29 April 2015 at 8.00 am Interim Report
Pohjola Group performance for January-March 2015
- Consolidated earnings before tax were EUR 160 million (159) and consolidated earnings before tax at fair value amounted to EUR 259 million (163). The return on equity was 15.3% (16.6). - The Common Equity Tier 1 ratio (CET1) was 13.5% (12.4) as against the target of 15%. - Earnings reported by Banking in January-March were almost at the same level as in the previous year. The loan portfolio grew by 2% to EUR 15.2 billion (14.9). Earnings included EUR 14 million (4) in impairment loss on receivables. - Within Non-life Insurance, insurance premium revenue increased by 5% (8). Combined ratio improved to 88.8% (91.0). A reduction in the discount rate for pension liabilities reduced earnings by EUR 17 million (-). Operating combined ratio*) improved to 87.2% (89.3). Return on investments at fair value was 2.6% (1.4). - Within Wealth Management, earnings improved somewhat due to higher performance-based management fees. Assets under management increased by 8% to EUR 46.9 billion (43.3). - Unchanged outlook: Consolidated earnings from continuing operations before tax in 2015 are expected to be at the same level as in 2014. For more detailed information on the outlook, see "Outlook towards the end of 2015" below. 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 2014 are used as comparatives. *) Year 2104 excluding changes in reserving bases and amortisation on intangible assets arising from company acquisition. **) Excluding the effect of transition provisions. ***) The expense target for 2012 has been adjusted to correspond to the change in the accounting policies applied as of 1 January 2015 (see Note 1. Accounting policies).
| Earnings before tax, € million | Q1/2015 | Q1/2014 | Change, % | 2014 |
| Banking | 83 | 83 | 0 | 303 |
| Non-Life Insurance | 70 | 62 | 12 | 223 |
| Other Operations | 0 | 8 | 20 | |
| Wealth Management | 7 | 6 | 7 | 38 |
| Group total | 160 | 159 | 0 | 584 |
| Change in fair value reserve | 99 | 4 | 79 | |
| Earnings before tax at fair value | 259 | 163 | 59 | 663 |
| Equity per share, € | 10.55 | 9.25 | 10.38 | |
| Average personnel | 2,483 | 2,593 | 2,563 |
The above figures describe Pohjola Group as a whole without the division into continuing and discontinued operations.
| Financial targets | Q1/2015 | Q1/2014 | Target | 2014 |
| Return on equity, % | 15.3 | 16.6 | 13 | 14.3 |
| Common Equity Tier 1 (CET1) ratio, % | 13.5 | 12.0 | 15 | 12.4 |
| Operating cost/income ratio by Banking, % | 27 | 33 | < 35 | 33 |
| Operating combined ratio by Non-life Insurance, % | 87.2 | 89.3 | < 92 | 84.7 |
| Operating expense ratio by Non-life Insurance, % | 17.9 | 18.5 | 18 | 18.4 |
| Non-life Insurance solvency ratio (under Solvency II framework), %**) | 109 | 134 | 120 | 117 |
| Operating cost/income ratio by Wealth Management, % | 50 | 51 | < 45 | 42 |
| Total expenses in 2015 at the same level as at the end of 2012 | 127 | 135 | 514***) | 531 |
| 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 CET 1 ratio is at least 15%. Dividend payout ratio is 30% until CET1 ratio of 15% has been achieved. | > 50 (30) | 30 |
Outlook towards the year end
The first signs of recovery can be seen in the European economy. However, only modest growth is expected in 2015, despite the measures taken by the European Central Bank to support economic growth. Similarly, economic growth in Finland is expected to remain weak. The tension in international politics will continue to cause uncertainty for the Finnish economy.
Weak economic growth also reduces growth expectations in the financial sector. Record-low interest rates will erode banks' net interest income and weaken insurance institutions' investment income. On the other hand, low interest rates improve customers' loan repayment capacity, which has remained stable despite the long period of slow growth. The importance of profitability and capital adequacy is emphasised in an unstable operating environment and under tightening regulation.
Despite the challenging operating environment, Pohjola Group's consolidated earnings from continuing operations before tax in 2015 are expected to be at the same level as in 2014. The most significant uncertainties affecting earnings in 2015 relate to the rate of business growth, impairment loss on receivables, developments in bond and capital markets, the effect of large claims on claims expenditure and to the discount rate applied to insurance liabilities.
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 2015 Pohjola Bank plc Board of Directors
This Interim Report is available at www.pohjola.com > Media > Releases.
Financial reporting in 2015
Pohjola Bank plc publishes the following financial information pursuant to the regular disclosure obligation of a securities issuer:
Schedule for Interim Reports in 2015: Interim Report H1/2015: 5 August 2015 Interim Report Q1-3/2015: 28 October 2015
DISTRIBUTION NASDAQ OMX Helsinki Ltd London Stock Exchange SIX Swiss Exchange Major media www.pohjola.com, www.op.fi
For additional information, please contact Jouko Pölönen, President and CEO, tel. +358 (0)10 253 2691 Carina Geber-Teir, Executive Vice President, Corporate Communications, tel. +358 (0)10 252 8394
Pohjola is part of the leading Finnish customer-owned financial services group, OP Financial Group. Pohjola provides its customers with banking, non-life insurance and wealth management services. Pohjola is OP Financial Group's central bank and is, together with OP Mortgage Bank, responsible for OP Financial Group's funding operations on money and capital markets. As laid down in the applicable law, Pohjola, its parent company OP Cooperative and the member credit institutions are ultimately jointly and severally liable for each other's debts and commitments. The joint liability in OP is prescribed by the Act on the Amalgamation of Deposit Banks Act.
Pohjola Bank's Interim Report for 1 January-31 March 2015 http://hugin.info/142911/R/1916237/685149.pdf
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