Pohjola Group. Boston - New York May 2008 with Handelsbanken. Group CFO Ilkka Salonen Head of Non-Life Insurance Tomi Yli-Kyyny

Transcription

1 Pohjola Group Boston - New York May 28 with Handelsbanken Group CFO Ilkka Salonen Head of Non-Life Insurance Tomi Yli-Kyyny

2 2 Pohjola Group Growth remained strong Customer business improved profitability Lower liquidity reserve market value undermined earnings markedly Capital adequacy at a good level

3 12 mrd. billion Banking and Investment Services Strong growth: Loan portfolio up by 11% in the first quarter 11% % 8 17% 6 12% 7% 19% 13% /22 12/23 12/24 12/25 12/26 12/27 3/28 Growth rates are based on growth over the previous period.

4 million 3 Non-life Insurance Strong growth: Insurance premium revenue up by 8% % % 6% 5 1% Private Customers Corporate Customers Baltic Total 1-3/27 1-3/28

5 Banking and Investment Services Earnings adjusted for fair value changes up by 12% *) 5 million Q1 27 Q2 27 Q3 27 Q4 27 Q Earnings before tax Earnings adjusted for fair value changes *) *) Earnings adjusted for value changes in liquidity reserves

6 Non-life Insurance Customer business profitability improved Operating combined ratio Q1

7 Financial targets 7 1-3/28 1-3/27 27 Target 21 Banking and Investment Services Operative return on equity, % > 19 Operative cost/income ratio, % < 4 Non-life Insurance Operative return on equity, % > 2 Operative combined ratio, % Operating expense ratio, % < 2 Solvency ratio, % Group Return on equity at fair values, % Tier 1 ratio, % (old approach) Tier 1 ratio, % (new approach) > 8.5

8 Income statement 8 million 1-3/28 1-3/27 27 Net interest income after impairment losses Net income from non-life insurance Net commissions and fees Other operating income Total income Total expenses Earnings before tax Earnings per share,

9 million 5 Earnings before tax by business line 45 January-March Banking and Investment Services Non-life Insurance 1-3/27 1-3/28 Other operations

10 1 Own funds and capital adequacy million % Tier 2 Tier 1 Tier 1 ratio, % Capital adequacy ratio, % /4* 12/5* 12/6* 12/7 3/8 3 * Measurement approach under Basel I, which is not comparable with the current approach under Basel II

11 Long-term credit ratings *) 11 Moody's Investors Standard Fitch Service & Poor s Ratings Pohjola Bank Aa1 AA- AA- Danske Bank Aa1 AA- AA- Handelsbanken Aa1 AA- AA- Nordea Aa1 AA- AA- DnB NOR Aa1 AA- - Swedbank Aa1 A+ A+ SEB Aa2 A+ A+ Pohjola Insurance **) A2 A+ - If **) A2 A - Finnish Sovereign Aaa AAA AAA *) Long-term funding **) Insurer financial strength

12 12 Banking and Investment Services Customer business improved profitability, but the lower liquidity reserve market value eroded earnings

13 Banking and Investment services Q1/28 in brief 13 The loan portfolio grew by 11% and by 26% in the year to March. The average level of corporate loan portfolio's margins stood at 83% (.81). Loss before tax EUR 1 (earnings of EUR 45 million). EUR 59 million negative mark-to-market valuation of liquidity reserves, EUR 49 million recognised in the income statement.

14 Banking and investment services Performance 14 million 1-3/8 1-3/7 2 7 Net interest income Impairment losses on receivables -2 1 Net interest income after impairment losses Net commissions and fees Net trading income Net investment income Other operating income Total income Operating expenses Earnings before tax at fair values

15 Banking and Investment Services Credit margins in the derivatives market *) /6 3/7 6/7 9/7 12/7 3/8 itraxx 5 yrs, Companies and financial institutions investment grade (left axis) itraxx Financials Senior 5 yrs, Financial institutions investment grade (left axis) itraxx Crossover 5 yrs, Companies below investment grade (right axis) *) Developments in margins in the spot and derivatives markets may differ from each other

16 million Banking and investment services Earnings before tax by division January-March Corporate Banking Markets Central Banking Treasury Asset Management Banking and Investment Services 1-3/27 1-3/28

17 billion 12 Banking and investment services Growth in the first quarter: loan portfolio % 11% % 7% 19% 13% 17% /22 12/23 12/24 12/25 12/26 12/27 3/28 The percentages describe the change of loan portfolio from the end of the previous period.

18 % 1,,9,8,7,6,5,4,3,2,1, Banking and Investment Services Average margin of corporate loan portfolio Average margin of corporate loan portfolio 18 12/99 12/ 12/1 12/2 12/3 12/4 12/5 12/6 12/7

19 % Banking and investment services Corporate exposure by credit rating *) 1-2 (AAA-A-) 3-4 (BBB+ - BBB-) 5-6 (BB+ - BB) 7-8 (BB- - B+) 9-1 (B - C) (D) Non-rated 31 Dec Dec Dec Dec Dec March.28

20 billion 14 Banking and investment services Loan and guarantee portfolio % /2 12/3 12/4 12/5 12/6 12/7 3/28-1 Loan and guarantee portfolio *) Impairment losses on receivables / Loan and guarantee portfolio, % Doubtful receivables / Loan and guarantee portfolio, % *) Loan portfolio, including leasing assets, repos, guarantees and guarantee commitments.

21 Banking and investment services Impairment losses on receivables and credit losses New impairment losses Credit loss recoveries and reversal of impairment losses Net credit and impairment losses 1-3/28

22 Banking and investment services Average balances of receivables and liabilities between Pohjola Bank million 5 5 and OP-Pohjola Group retail banks /4 6/4 9/4 12/4 3/5 6/5 9/5 12/5 3/6 6/6 9/6 12/6 3/7 6/7 9/7 12/7 3/8 Other deposits Reserve deposits Capital investments and perpetual bonds Cash reserve deposits Other loans Net position

23 Mrd. billion 35 3 Banking and investment services Growth- assets under management 152 % 14% % -6% % 37 % 3 % 5

24 24 Non-life Insurance Strong growth and balance on technical account investment income lower than a year ago

25 Non-life Insurance Q1/28 in brief 25 Insurance premium revenue EUR 22 million (24), up 8%. Operating combined ratio 98.2% (1.8). Return on investment at fair value stood at.6% (2.4). Earnings before tax EUR 22 (31).

26 Non-life Insurance Performance 26 M 1-3/8 1-3/7 27 Insurance premium revenue Claims incurred Operating expenses Operating balance on technical account Amortisation/adjustment on intangible asset*) Balance on technical account Investment income and expenses Other income and expenses 3 8 Operating profit Unwinding of discount Finance costs Earnings before tax *) Due to amortisation on intangible assets arising from company acquisition

27 million 3 Non-life insurance Growth - insurance premium revenue January-March % % 1 9% 5 1% Private Customers Corporate Customers Baltic Total 1-3/27 1-3/28

28 Net annual growth 5 45 Strong growth in the number of Loyal Customer Households Total growth 45 (target by 21) Net annual growth Total growth

29 4 Non-life insurers' market shares in premiums written*) Pohjola If/Sampo Tapiola Fennia Lähivakuutus Others *) market shares of domestic direct premiums written

30 % Private Customers Non-life insurance Operating combined ratio by division Corporate Customers Baltic Total % 97.4 % 12.1 % 99.6 % 91.7 % 89. % 1.8 % 98.2 % /7 1-3/8 1-3/7 1-3/8 1-3/7 1-3/8 1-3/7 1-3/8 Operating expenses / Insurance premium revenue Claims handling expenses / Insurance premium revenue Claims incurred / Insurance premium revenue

31 Non-life insurance Development of combined ratio Q1 Whole year

32 million 32 Non-life insurance Allocation of investment portfolio million 8 % 2 49 million 3 % million 2 % million 5% Money market *) 2 Bonds and bond funds *) 16 7% 72% 69% 69% Shares Alternative investments 12 Properties % 17% 16% 14% Fair values, 31 Dec. 25 Fair values, 31 Dec. 26 Fair values, 31 Dec 27 Fair values, 31 March 28 *) The figures include accrued interest income on interest-bearing instruments.

33 Non-life insurance Net investment income 33 million /6 4-6/6 7-9/6 1-12/6 1-3/7 4-6/7 7-9/7 1-12/7 1-3/8 Net investment income on income statement Change in fair value reserve Net investment income at fair values

34 34 Acquisition synergies

35 Net annual growth 5 45 Strong growth in the number of Loyal Customer Households Total growth 45 (target by 21) Net annual growth Total growth

36 Non-life Insurance Income synergies supported by growth of loyal customer households million Revenue synergies Target *) The estimate was calculated using the following formula: 1% *( new loyal customer households obtained through cooperation within the OP Bank Group * average premium/household)-+ 5,4 % profit for invested insurance premiums

37 Non-life insurance Cost synergies on the track 37 million 4 Target Non-life Insurance Asset Management Group structure

38 38 Prospects for 28

39 Prospects for the Rest of 28 In 28, economic growth is expected to slow down and the corporate loan market is anticipated to continue its growth at a slower rate than in 27. Recent developments in the corporate loan market herald widening lending margins. Provided that the negative mark-to-market valuations of liquidity reserves will not increase considerably during the rest of the year, Banking and Investment Services' earnings before tax in 28 are estimated to be better than or at the same level as in 27. Risk exposure is projected to remain healthy. In addition to market growth, intense cooperation with OP-Pohjola Group member cooperative banks and the adoption of bonus benefits for joint banking and insurance customers, which are expected to strengthen the market share among private customers in particular, will contribute to insurance premium revenue within Non-life Insurance. In Non-life Insurance, the operating combined ratio is estimated to vary between 91% and 95% if the number of major losses is not unusually large. Non-life Insurance's expected long-term return on investment is 5.4%. Other Operations' results for 27 included EUR 11 million in non-recurring expenses. Since the Group does not expect to incur these expenses in 28, results are anticipated to be better than in

40 Pohjola Group Business Structure 6 May 28 4 Pohjola Group Banking Asset Management Non-life Insurance Group Functions Corporate Banking Markets Baltic States Institutional Customers Private Customers Corporate Customers Private Customers Baltic States Finance Risk Management HR Services Corporate Communications

41 41 IR contact information CFO Ilkka Salonen Tel ilkka.salonen@pohjola.fi IR Controller Raila Rissanen Tel raila.rissanen@pohjola.fi SVP,Corporate Planning and IR Pasi Laaksonen Tel pasi.laaksonen@pohjola.fi IR Communications Officer Jaana Mäkelä Tel jaana.j.makela@pohjola.fi

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