2013-02-06 07:05:21 -
Pohjola Bank plc
Stock exchange release, 6 February 2013, 8.00 am
Financial Statements Release
Pohjola Bank plc Financial Statements Bulletin for 1 January-31 December 2012
Pohjola Group in 2012
- Consolidated earnings before tax came to EUR 374 million (258) and
consolidated earnings before tax at fair value amounted to EUR 792 million (78).
Return on equity stood at 11.2% (9.2) and return on equity at fair value was
23.3% (3.1). Core Tier 1 ratio stood at 10.6% (10.3).
- Earnings before tax recorded by Banking improved to EUR 222 million (199).
These included EUR 54 million (49) in impairment charges on receivables. The
loan portfolio increased by 9% from its level on 31 December 2011. The average
corporate loan portfolio margin stood at 1.52% (1.34).
- Within Non-life Insurance, insurance premium revenue
rose by 10%. The combined
ratio was 97.1% (97.7). Excluding the changes in reserving bases and
amortisation on intangible assets arising from company acquisition, the
operating combined ratio stood at 90.5% (89.8). Return on investments at fair
value was 10.8% (-0.4).
- Earnings before tax posted by Asset Management amounted to EUR 32 million (27)
and assets under management were EUR 32.7 billion (31.3) at the end of the
- The Board of Directors proposes that a per-share dividend of EUR 0.46 (0.41)
be paid on Series A shares and EUR 0.43 (0.38) on Series K shares. This means a
dividend payout ratio of 51%.
- Outlook for 2013: 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 2013" below.
- Consolidated earnings before tax came to EUR 92 million (13) and consolidated
earnings before tax at fair value amounted to EUR 186 million (13). Return on
equity was 10.1% (5.6).
- Earnings of EUR 59 million (64) before tax posted by Banking included EUR 20
million (13) in impairment charges on receivables. The loan portfolio increased
by 2% and the average margin of the corporate loan portfolio rose by 4 basis
- Within Non-life Insurance, insurance premium revenue rose by 13%. The combined
ratio stood at 97.2% (116.9) while the operating combined ratio was 95.3%
(91.0). Return on investments at fair value was 2.0% (1.4).
- Earnings before tax reported by Asset Management improved to EUR 16 million
(8) as a result of vigorous growth in performance-based fees.
- As a result of the procedures of information and consultation of employees
under the Finnish Act on Co-operation within Undertakings, Pohjola decided to
cut 281 jobs, outsource 22 jobs and 618 employees will join the payroll of other
companies within OP-Pohjola Group Central Cooperative Consolidated.
Earnings before tax, EUR million 2012 2011 Change, % Q4/ Q4/ Change, %
Banking 222 199 12 59 64 -7
Non-life Insurance 92 8 10 -63
Asset Management 32 27 19 16 8 104
Group Functions 28 24 15 8 5 62
Total 374 258 45 92 13 611
Change in fair value reserve 418 -180 94 0
Earnings before tax at fair value 792 78 186 13
Earnings per share, EUR 0.89 0.67 0.22 0.10
Equity per share, EUR 8.67 7.22
Average personnel 3,421 3,189 3,353 3,411
Q4/ Q4/ Target
Financial targets 2012 2011 2012 2011
Return on equity, % 11.2 9.2 10.1 5.6 13.0
Core Tier 1 ratio, % 10.6 10.3 > 11.0
Operating cost/income ratio by
Banking, % 34 35 29 32 < 35
Operating combined ratio by Non-
life Insurance, % 90.5 89.8 95.3 91.0 < 92
Operating expense ratio by Non-life
Insurance, % 21.5 21.8 20.6 25.6 18
Solvency ratio by Non-life
Insurance, % 81 77 70
Operating cost/income ratio by
Asset Management, % 47 49 36 49 < 45
AA rating affirmed by at least two
credit rating agencies or credit
ratings at least at the main
competitors' level 2 2 2
Dividend payout ratio at least
50%, provided that Core Tier 1
ratio remains at least 10% 51 *) 60 > 50
*) Board proposal
President and CEO Mikael Silvennoinen:
Pohjola Group showed record earnings for 2012 - much better than a year ago.
Consolidated earnings before tax amounted to EUR 374 million and at fair value
to almost EUR 800 million. Group earnings grew most in Non-life Insurance, aided
by good investment performance. Banking and Asset Management reported better
financial results than a year ago, rising to record levels.
Our fourth-quarter consolidated earnings before tax came to EUR 92 million.
Fourth-quarter net interest income decreased over the previous year and over the
previous quarters of 2012. Our solid profit performance during the fourth
quarter was based on strong growth in net commissions and fees and the levelling
off of the upward trend in Group costs.
Pohjola Group strengthened its market position during 2012. Annual growth in the
corporate loan portfolio was brisk. The average corporate loan portfolio margin
increased, standing at 1.52% at the turn of the year. Insurance premium revenue
showed a strong increase, accelerating during the fourth quarter. Asset
Management was successful in investment operations in terms of both
institutional clients and mutual funds.
During the fourth quarter, the Group completed the procedures for Information
and Consultation of Employees initiated in the early autumn and related to the
reorganisation programme of OP-Pohjola Group Central Cooperative Consolidated.
As a result, the number of Pohjola Group's employees will reduce considerably.
The reorganisation will enable us to significantly improve the Group's cost-
efficiency, with a view to ensuring our competitiveness and service capabilities
in the future too.
Outlook for 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
On 28 December 2012, the Finnish Parliament passed a bill on a temporary bank
tax. This tax accounts for 0.125% of risk-weighted assets, which means that
Pohjola will incur additional non-deductible expenses of around EUR 19 million
Insurance premium revenue is expected to increase at an above-the-market-average
rate. 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 Pohjola
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 charges 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
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-
Helsinki, 6 February 2013
Pohjola Bank plc
Board of Directors
This Financial Statements Bulletin 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 6 February
starting at 3.00 pm Finnish time, EET (2.00 pm CET, 1.00 pm UK time, 8am US
EST). The briefing is a combined analyst meeting, conference call and live
Analysts and investors may attend the briefing in one of the following two ways:
1) By viewing the briefing as live webcast via the internet. The link will be
available on the IR website before the briefing begins. Questions on the
internet are welcome via a question button available in the webcast window. An
on-demand webcast of the briefing can be viewed via the IR website afterwards.
2) By dialling one of the regional conference call numbers shown below.
Questions are welcome by telephone 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 11 328
US: 1 86 6682 8490
UK: 08 445 718 957
International: +44 (0) 1452 555131
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 6 February, starting at noon
Annual General Meeting
Pohjola Bank plc will hold its Annual General Meeting (AGM) in the Congress Wing
of the Helsinki Exhibition & Convention Centre (Messuaukio 1, Helsinki) on
Friday 22 March 2013, starting at 2.00 pm. Proposals by the Board of Directors
to the AGM will be published as a company release on 6 February 2013 and notice
of the Meeting on 18 February 2013. The notice will also appear in Helsingin
Sanomat and Hufvudstadsbladet on 19 February 2013. Thereafter, the Report by the
Board of Directors and the Financial Statements and other AGM documentation will
also be available on the company's website at www.pohjola.com.
Financial reporting in 2013
Schedule for Interim Reports in 2013:
Interim Report Q1/2013: 2 May 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
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
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.
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