OP-Pohjola Group has good first quarter - earnings before tax were over EUR 200 million
(Thomson Reuters ONE) -
OP-Pohjola Group
Stock Exchange Release 3 May 2012 at 8.00 am (UT +3)
Interim Report
OP-Pohjola Group has good first quarter - earnings before tax were over EUR 200
million, capital adequacy improved further and business growth remained strong
- Earnings before tax for the first quarter were EUR 203 million (210), that is,
about the same as a year ago. Compared to the previous quarter - which was
burdened by non-recurring items (Q4/2011: EUR 37 million) - earnings rose
significantly.
- Net interest income increased considerably, being 15% higher than a year ago.
Total income increased by 5%.
- Due to investments in business growth and development, expenses increased by
13%. Impairment loss on receivables came to EUR 11 million, or 55% lower than a
year earlier.
- The Group's capital adequacy reached a new record level as the Core Tier 1
ratio exceeded the 15% target, standing at 15.1%.
- Integration of banking and non-life insurance operations proceeded well. The
number of joint customers rose in the report period by 31,000. Growth continued
in both business segments at a rate above the market average with the exception
of mutual funds.
- The Group improved its market position in both home loans and corporate
financing.
- OP-Pohjola Group's 2012 earnings before tax are expected to be about the same
or better than in 2011. For more details, see "Outlook for the rest of 2012".
OP-Pohjola Group's key indicators
-------------------------------------------------------------------------------
Q1/2012 Q1/2011 Change % Q1-4/2011
-------------------------------------------------------------------------------
Earnings before tax, EUR million 203 210 -3.2 525
Banking 155 134 15.1 483
Non-life Insurance 15 19 -19.4 8
Life Insurance 19 37 -47.6 10
Returns to owner-members
and OP bonus customers 44 42 5.4 176
31 Mar 2012 31 Mar 2011 Change % 31 Dec 2011
Ratio of capital base to minimum
amount of capital base (under the
Act on the Supervision of
Financial and Insurance
Conglomerates) 2.02 1.67 0.35* 1.80
Tier 1 ratio, %
Core Tier 1, % 15.1 12.7 2.5* 14.0
Non-performing receivables within
the loan portfolio, % 0.53 0.43 0.10* 0.47
Joint banking and insurance
customers, 1,000 1,329 1,222 8.8 1,299
-------------------------------------------------------------------------------
* Change in ratio
Comments by Reijo Karhinen, Executive Chairman
We got off to a good start to our 110th anniversary. Our first-quarter
performance was on the whole the best since the financial crisis: our earnings,
capital adequacy and growth performance were at a level that I am very happy
with.
Despite the sovereign debt crisis, our funding suffered no hiccups. This created
stability and a positive feeling, and our financial position is now very strong.
Many banks elsewhere in Europe had to cut down on their operations to improve
their capital adequacy, but we were going against the current. Our capital
adequacy got better and better and actually reached record figures. At the same
time, our business growth enjoyed double-figure growth.
Our operating profit was at the same level as last year and improved
considerably from the last quarter of 2011 that was burdened by extraordinary
items. Our earnings were boosted by significantly higher net interest income but
eroded by much higher expenses. Both of these were affected by strong business
growth. Our expenses grew because we increased our resources for development and
customer service. The persistently low interest rates will level off net
interest income growth in the course of 2012. It is clear that if we wish to
continue to offer competitive prices in the long run, we need to keep our
expenses in check.
This month we are celebrating our Group's 110th anniversary, and there is reason
for celebration as the number customers we attract keeps going up. The number of
customers we have who use both our banking and non-life insurance services has
increased after the purchase of the Pohjola insurance operations by over
600,000. During the first quarter, this growth continued at a record rate of
31,000 customers. This would not have been possible if we had not been able to
keep up with the times. Whenever our customers approach us, I want them to feel
that we provide an easy-to-use, personal and caring service.
In recent years, economic turbulence has become the norm, and swiftly changing
capital markets dominate financial reporting. Predicting the future is still
very difficult, but on the other hand businesses that are able to operate within
an atmosphere of uncertainty have a definite competitive edge. Although
Finland's economic future and recovery from the euro area sovereign debt crisis
is uncertain and some setbacks surely lie ahead, we have nevertheless reason to
be positive. The difference with the last quarter of 2011 is striking.
OP-Pohjola Group has shown excellent resilience in the midst of the financial
and sovereign debt crisis. I continue to look into the future with confidence.
Financial performance in the report period
The Group's earnings before tax amounted to EUR 203 million (210). The report
period's profit performance was supported by higher net interest income, lower
impairment loss on receivables and the fact that non-life insurance claims
expenditure was lower in relation to insurance premiums than a year ago.
Earnings were eroded by lower net investment income and asset management
commissions and fees than a year earlier, as well as higher expenses. Bonuses to
owner-members and OP bonus customers recognised in the income statement grew by
5.9% year on year to EUR 42 million.
The Group's fair value reserve increased by EUR 378 million thank to a recovery
of the investment environment, while a year ago it decreased by EUR 82 million.
Earnings before tax at fair value was record-high - EUR 581 million (128).
Outlook for the rest of 2012
The outlook for both the global and Finnish economy has become a little more
positive during the first quarter. However, economic growth for 2012 will
probably remain sluggish in Finland and in the euro area in general. The
European sovereign debt crisis will continue to cause instability to general
economic development. The financial sector will also be adversely affected by
the extremely low interest rates, jittery capital markets and tighter regulation
in the sector.
The sovereign debt crisis in the euro area will make it difficult to estimate
OP-Pohjola Group's performance for the rest of 2012. OP-Pohjola Group's 2012
results are expected to be at the same or even a better level than the year
before, provided that the operating environment will not undergo any major
deterioration and the management of the euro-area debt crisis will take no new
turn for the worse.
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 3 May 2012,
starting at noon at Teollisuuskatu 1 b, Vallila, Helsinki.
Financial reporting in 2012
Interim Report H1/2012 1 August 2012
Interim Report Q1-3/2012 31 October 2012
Helsinki, 3 May 2012
OP-Pohjola Group Central Cooperative
Executive Board
Additional information
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
Distribution
NASDAQ OMX Helsinki Ltd
London Stock Exchange
SIX Swiss Exchange
Major media
op.fi and pohjola.fi
OP_Pohjola Group Q1 2012 background material:
http://hugin.info/142911/R/1608170/510277.pdf
OP_Pohjola Groups Interim Report 1 January_31 March 2012:
http://hugin.info/142911/R/1608170/510276.pdf
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#1608170]
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Datum: 03.05.2012 - 01:01 Uhr
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