Pohjola Bank plc Financial Statements Bulletin for 1 January-31 December 2013
Pohjola Bank plc
Stock Exchange Release 6 February 2014, at 8.00 am
Financial Statements Bulletin
Pohjola Bank plc Financial Statements Bulletin for 1 January-31 December 2013
Pohjola Group in 2013
* Consolidated earnings before tax amounted to EUR 473 million (372) and
consolidated earnings before tax at fair value to EUR 456 million (790).
Return on equity was 14.6% (11.2) and, excluding the effect of a reduction
in the corporate tax rate, 12.4%.
* The Core Tier 1 ratio was 11.3% (10.6) and the pro-forma Common Equity Tier
1 (CET1) under CRD IV/CRR was 11.9%.
* The Banking loan portfolio increased by 5%. The average margin on the
corporate loan portfolio improved to 1.57% (1.52). Impairment loss on
receivables decreased to EUR 35 million (54) and the bank levy reduced
earnings by EUR 17 million (-).
* Within Non-life Insurance, insurance premium revenue increased by 11% (10).
The combined ratio improved to 91.6% (97.1). A reduction in the discount
rate for pension liabilities decreased earnings by EUR 38 million (52).
Excluding changes in reserving bases and amortisation on intangible assets
arising from company acquisition, the operating combined ratio was 86.9%
(90.5). Return on investments at fair value was 3.5% (10.8).
* Within Asset Management, assets under management increased by 16% to EUR
37.9 billion (32.8). Performance-based management fees amounted to EUR 4
* Year on year, total expenses grew by 2%, or EUR 11 million, including the
bank levy of EUR 19 million. Cost savings out of the EUR 25 million
estimated for 2013 based on the efficiency-enhancement programme amounted to
EUR 27 million.
* The Board of Directors proposes a dividend per share of EUR 0.67 (0.46)
payable on Series A shares and EUR 0.64 (0.43) on Series K shares. This
means a dividend payout ratio of 50%.
* Outlook for 2014: Consolidated earnings before tax in 2014 are expected to
be higher than in 2013. In Banking, growth in the loan portfolio is expected
to be at the same level as in 2013. Non-life Insurance's operating combined
ratio is expected to vary between 87 and 91%. For more detailed information
on the outlook, see "Outlook for 2014" below.
* Consolidated earnings before tax were EUR 92 million (92) and consolidated
earnings before tax at fair value amounted to EUR 109 million (185). In Non-
life Insurance, the reduction in the discount rate for pension liabilities
decreased earnings by EUR 38 million.
* Combined net interest income from Corporate Banking and Baltic Banking was
up by 18% year on year. The loan portfolio increased by one per cent and the
average margin on the corporate loan portfolio remained at the September-end
level. Impairment loss decreased to 5 million (20).
* Within Non-life Insurance, insurance premium revenue increased by 13% (13).
The combined ratio was 101.4% (97.2) while the operating combined ratio was
87.9% (95.3). Return on investments at fair value was 1.4% (2.0).
* On 17 December 2013, the Finnish Parliament adopted the reduction of the
corporate tax rate from 24.5% to 20% as of 1 January 2014. This change
improved Pohjola's consolidated earnings after tax by EUR 65 million.
Earnings before tax, EUR million Â Change, % Q4/ Q4/ Change, %
Â Â 2013 2012 2013 2012
Â Banking 251 221 13 75 59 29
Â Non-life Insurance 167 92 82 5 10 -50
Â Asset Management 24 32 -27 5 16 -66
Â Group Functions 32 27 18 7 7 -10
Total 473 372 27 92 92 1
Change in fair value reserve -17 418 Â 17 94 -82
Earnings before tax at fair value 456 790 -42 109 185 -41
Earnings per share, EUR Â 1.33 0.89 Â 0.42 0.21
Equity per share, EUR 9.52 8.67
Average personnel 2,580 3,421 Â 2,551 3,353
Financial targets 2013 2012 2013 2012 Target
Return on equity, % 14.6 11.2 17.9 10.1 13
Core Tier 1 ratio, % 11.3 10.6 Â Â > 11
Operating cost/income ratio by Banking, % 36 34 34 29 < 35
Operating combined ratio by Non-life Insurance, % 86.9 90.5 87.9 95.3 < 92
Operating expense ratio by Non-life Insurance, % 18.7 21.5 19.9 20.6 18
Solvency ratio by Non-life Insurance, % 73 81 Â Â 70
Operating cost/income ratio by Asset Management, % 53 47 56 36 < 45
Total expenses in 2015 at the same level as at the
end of 2012 580 569 Â Â 569
AA rating affirmed by at least two credit rating
agencies or credit ratings at least at the main
competitors' level 2 2 Â Â 2
Dividend payout ratio at least 50%, provided that
Core Tier 1 ratio remains at least 10% 50*) 51 Â Â > 50
*) Board proposal
As a result of change in the recognition of defined benefit pension plans, the
comparatives have been restated.
President and CEO Jouko PÃ¶lÃ¶nen:
Consolidated earnings before tax in 2013 improved by EUR 101 million to EUR 473
million. Great success in customer businesses, especially in Banking and Non-
life Insurance, and cost savings generated by the efficiency-enhancement
programme were the key drivers behind our improved earnings.
Our fourth-quarter consolidated earnings before tax amounted to EUR 92 million.
This was an excellent result, considering that it included EUR 38 million in
non-cash-flow-based expenses resulting from the reduction of the discount rate
for pension liabilities. Banking reached the best ever fourth-quarter earnings
as a result of higher net interest income from Corporate Banking and lower
impairment losses. Within Non-life Insurance, the operating balance on technical
account improved clearly and investment income increased over the previous year.
Asset Management showed lower year-on-year earnings as a result of a decrease in
performance-based management fees.
Customer business volumes grew at a rate faster than the market average and the
Group strengthened its market position. In 2013, the corporate loan portfolio
increased by 5%, insurance premium revenue by 11% and assets under management by
16%. The number of loyal customer households increased by over 45,000.
In 2013, Pohjola achieved EUR 27 million of the EUR 50 million cost savings for
2013-2015 resulting from the efficiency-enhancement programme. Despite the cost
savings, our total expenses were higher than in 2012, which was partly due to
the bank levy of EUR 19 million. The efficiency-enhancement programme will
continue until the end of 2015, enabling us to improve our efficiency further.
In 2014 and onwards, the European financial sector will face several major
changes in terms of supervision and regulation, such as the creation of the
Banking Union, thorough balance sheet reviews, stress tests and the adoption of
new capital adequacy and liquidity regulations. Pohjola Group has a solid
foundation for 2014. In the face of tightening regulation and supervision, we
will continue to promote the sustainable prosperity, wellbeing and security of
Outlook for 2014
Within Banking, the loan portfolio is expected to grow at the same rate as in
2013. Due to the operating environment, corporate investments are expected to
remain below their normal level. The greatest uncertainties related to Banking's
financial performance are associated with volume developments and future
impairment loss on the loan portfolio. Banking earnings before tax in 2014 are
expected to be at the same level as or higher than in 2013.
Insurance premium revenue is expected to increase at a rate above the market
average. The operating combined ratio is estimated to vary between 87% and 91%
if the number of large claims is not much higher than in 2013. Expected
investment returns are largely dependent on developments in the investment
environment. The most significant uncertainties related to Non-life Insurance's
financial performance pertain to developments in bond and capital markets and to
the effect of large claims on claims expenditure. Non-life Insurance earnings
before tax in 2014 are expected to be higher than in 2013.
The greatest uncertainties related to Asset Management's financial performance
are associated with the actual performance-based commissions and fees tied to
the success of investments and the amount of assets under management. Asset
Management earnings before tax in 2014 are expected to be at the same level as
or higher than in 2013.
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. Group Functions earnings
before tax in 2014 are expected to lower than in 2013 due to low interest rates
and tighter liquidity regulation.
Consolidated earnings before tax in 2014 are expected to be higher than in 2013.
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 2014
Pohjola Bank plc
Board of Directors
This Financial Statement 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: +358 981 710 460
UK: +44 203 364 5374
US: +1 855 753 2230
Jouko PÃ¶lÃ¶nen, Pohjola Bank plc's President and CEO, will present the financial
results in a press conference on OP-Pohjola Group's premises (VÃ¤Ã¤ksyntie 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
Thursday 20 March 2014, starting at 2.00 pm. Proposals by the Board of Directors
to the AGM will be published in a stock exchange release on 6 February 2014 and
notice of the Meeting on 17 February 2014. The notice will also appear in
Helsingin Sanomat and Hufvudstadsbladet on 18 February 2014. 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
Financial reporting in 2014
Schedule for Interim Reports in 2014:
Interim Report Q1/2014Â Â Â Â Â Â Â Â 29 April 2014
Interim Report H1/2014Â Â Â Â Â Â Â Â 6 August 2014
Interim Report Q1-3/2014Â Â Â Â Â Â Â Â 29 October 2014
NASDAQ OMX Helsinki Ltd
London Stock Exchange
SIX Swiss Exchange
For additional information, please contact
Jouko PÃ¶lÃ¶nen, President and CEO, tel. +358 (0)10 253 2691
Vesa Aho, CFO, tel. +358 (0)10 252 2336
Niina Pullinen, Senior Vice President, Investor Relations, tel. +358 (0)10
Pohjola 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 sustainable prosperity, security and well-being 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 473 million
euros in 2013 and the balance sheet total amounted to 44 billion euros on 31
December 2013. Pohjola is part of OP-Pohjola Group, the leading financial
services group in Finland with 4.3 million customers.
Pohjola Bank plc Interim Report Q4_2013:
Background material Q4 2013:
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