OP-Pohjola Group and Pohjola Bank plc (formerly OKO Bank)
OP-Pohjola Group Issuing entities Pohjola Bank plc and OP Mortgage Bank 2 Leading financial services provider in Finland Number one in Deposits, Loans, Non-life Insurance and Life Insurance One of the strongest capital bases in the Nordic area OP-Pohjola Tier 1 12.% The strongest funding base in the Nordic area Deposits/Loans over 66% Liquidity buffer to cover 24 months ahead Finnish risk exposure Baltic exposure limited - EUR 119m in leasing assets
Structure of OP-Pohjola Group 3 4.1 million customers Central Cooperative Risk monitoring and accounting Support services Strategic holdings Ownership 1% 221 member cooperative banks Retail banking Proportion of shares 3 % Proportion of votes 57 % Ownership1% OP Mortgage Bank Pohjola Bank plc Banking Asset Management Non-life Insurance Proportion of shares 14 % Proportion of votes 13 % 35, holders of Series A shares Credit institutions within OP-Pohjola Group are liable for each other's debts and commitments
Joint responsibility of OP-Pohjola Group 4 Helsinki OP Bank Funds Life insurance OP-Pohjola Group Central Cooperative 221 Group member banks Banking Asset Management Pohjola Bank plc OP Mortgage Bank Non-life Insurance Credit institutions within OP-Pohjola Group are liable for each other's debts and commitments.
5 Joint Responsibility within OP-Pohjola Group Joint responsibility within OP-Pohjola Group is based on the Cooperative Banks Act. OP-Pohjola Group Central Cooperative and its member credit institutions are liable for each other's debts and commitments in accordance with the Act. On the basis of this joint responsibility, the Central Cooperative and the member credit institutions are jointly and severally responsible for the debts of the central institution or a member credit institution which is in liquidation or in bankruptcy in the event that these debts cannot be paid from its funds. The liability is apportioned among the Central Cooperative and the member credit institutions in proportion to the total assets in the most recently adopted balance sheets. OP-Pohjola Group's insurance companies do not fall within the scope of joint responsibility.
OP-Pohjola Groups steady success continues Market share of deposits and loans 6 4 35 3 25 2 15 1 5 % Market share of lending Market share of deposits 192 1922 1942 1962 1982 22 222 * Up until 12/22 deposit banks' loans to and deposits placed by Finnish non-mfi's; since 1/23 MFI's loans to and deposits placed by euro area non-mfi's! Latest value 6/29 OP-Pohjola Group Group became the the market market leader leader in in deposits and and loans loans 12/28.
4 % 35 3 25 2 15 1 5 OP- Pohjola Group OP-Pohjola The leading financial services provider in Finland Market share in deposits 31 December 28 Nordea Danske Bank Source: Federation of Finnish Financial Services 35 % 3 Savings banks Market share in loans 31 December 28 Handelsbanken Aktia Local Ålandsbanken cooperative banks 35 % 3 25 2 15 1 5 OP-Pohjola Group* Market share in non-life insurance premiums written 28 Domestic direct insurance If Tapiola** Fennia Local Others Insurance*** *Pohjola Non-Life, A-Insurance, Eurooppalainen, OVY **incl. Turva ***incl. Palonvara 35 % 3 Market share in life insurance Gross premiums written 28 Source: Federation of Finnish Financial Services 7 25 25 2 2 15 15 1 5 OP- Pohjola Group Nordea Danske Bank Source: Federation of Finnish Financial Services Savings banks Handelsbanken Aktia Local Ålands- cooperativebanken banks Tapiola Bank 1 5 OP-Pohjola Group * Mandatum Life and Kaleva Nordea Mandatum Life* Skandia Tapiola Others Source: Federation of Finnish Financial Services
8 OP-Pohjola Group and Pohjola Bank Key figures OP-Pohjola Group Pohjola Bank OP-Pohjola Group Pohjola Bank EUR million 1-6/9 1-6/9 28 28 Total assets 77 643 33 578 75 746 32 448 Receivables from customers 52 384 11 844 51 78 12 279 Deposits 34 828 3 48 34 533 3 58 Equity capital 5 682 2 6 5 215 1 64 Tier 1, % 12, 11,5 12,6 9,4 Non-performing and zero-interest claims 285 56 23 35 Non-performing and zero-interest bearing receivables of loans and guarantees, %,5,4,4,3 Loan and guarantee portfolio 54 962 13 965 53 93 14 125 Impairment of receivables 75 54 58 28 Impairment of receivables / loan and guarantee portfolio, %,14,39,11,2
9 OP-Pohjola Group and Pohjola Bank plc Income Statement OP-Pohjola Group Pohjola Bank OP-Pohjola Group Pohjola Bank EUR million 1-6/9 1-6/9 28 28 Net interest income 568 119 1 189 174 Impairments of receivables 75 54 58 28 Net interest income after impairments 493 65 1 131 146 Net income from non-life insurance 189 192 345 353 Net income from life insurance -29-139 Net commissions and fees 251 66 433 18 Other income 99 46-6 -19 Total net income 1 3 37 1 764 589 Personnel costs 327 95 598 178 Other expenses 313 153 64 293 Total expenses 64 247 1 238 47 Returns to owner-members and OP-bonus customers 82 154 Earnings before tax 281 123 372 119 Change in fair value reserve 177 14-737 -252 Earnings/loss before tax at fair value 459 227-365 -133
1 OP-Pohjola Group and Pohjola Bank plc Ratios OP-Pohjola Group Pohjola Bank OP-Pohjola Group Pohjola Bank 1-6/9 1-6/9 28 28 Net interest margin, % 1,6* 1,14** 1,7*,94** Cost/ income ratio, Banking and Investment Services, % 53 35 *** 54 46 *** Return on equity (ROE) at fair value, % 12,3 18,3-6, -5,6 Return on assets (ROA), %,53,55,31,3 Non-life Insurance, Solvency ratio, % 77 77 66 66 Life Insurance, Solvency ratio, % 194 123 * Net interest income as a % of average total assets ** Pohjola Bank plc, Average margin of corporate loan portfolio *** Pohjola Bank plc, Cost /income ratio, Banking
The amalgamation of the cooperative banks Capital base and capital adequacy (Standard approach in retail exposure) 6, million 24 24% 11 5, 2 4, 3, 12.3 12.4 12.6 12.1 12. 16 12 Subordinated loans 2, 8 Tier 1 capital resources excl. subordinated loans 1, 4 Capital adequacy ratio, % June 28 Sept. 28 Dec. 28 March 29 June 29 Since 3/28 In accordance with Basel II Standard approach in retail exposure 1,48 1,48 1,4 1,38 1,45 Conglomerate capital adequacy ratio
12 % 1 OP-Pohjola Group Balance Sheet Loans and Investments 55 bn 61 bn 76 bn 78 bn 4 % 4 % 3 % 3 % 9 % 8 % 4 % 2 8 6 4 72 % 73 % 68 % 67 % Receivables from credit institutions Receivables from other credit institutions Financial assets for trading Receivables from customers Non-life Insurance assets 2 4 % 4 % 3 % 7 % 5 % 4 % 3 % 3 % 17 % 17 % 8 % 8 % 26 27 28 H1/9 Investment assets Other items
Pohjola Bank Balance Sheet Loans and Investments 13 % 1 24 bn 26 bn 32 bn 34 bn 14 % 9 % 6 % 7 % 8 6 4 2 9 % 11 % 14 % 14 % 1 % 18 % 2 % 5 % 35 % 38 % 36 % 32 % 9 % 8 % 12 % 4 % 11 % 11 % 1 % 3 % 19 % 18 % 12 % 12 % 26 27 28 H1/9 Loans to member cooperative Banks Receivables from other credit institutions Financial assets for trading Loans to customers Non-life Insurance assets Investment assets Other items
14 OP-Pohjola Group Loans and funding breakdown 3 June 29 6 6. billion 5. 4. Other sectors 3.2% Corporate loans 29.7% Long-term wholesale funding 14.7% Sort-term wholesale funding 19.7% 3. 2. 1. Household loans 67.% Deposit funding 65.6%. Loans Funding
million 4 3 5 3 2 5 2 1 5 1 5 Wholesale and retail trade Manufacture of machinery and and eq... Other renting and operating of real estate Renting and operation of residential rea... 15.9% 1.4% OP-Pohjola Group Corporate exposure by sector a total of EUR 24.4 billion H1/29 12/28 6/29 8.8% 8.5% 7.8% 7.% 5.8% 5.5% 4.4% 4.2% 3.6% 3.3% 3.3% 2.9% 2.5% 2.2% 2.4%.7%.6%.1% Construction Services Transportation and storage Forest Industry Buying and selling of own real estate Metal Industry Chemical Industry Food Industry Energy Other manufacturing Agriculture, forestry and fishing Information and communication Financial and insurance services Water supply, sewerage and waste m... Mining and quarrying Other industries 15
OP-Pohjola Group Corporate exposure by credit rating category 16 6 5 4 3 % Rating Moody's Fitch S&P category 1, - 2, Aaa - Aa1 AAA - AA+ AAA - AA+ 2,5-5, Aa2 - Baa3 AA - BBB- AA - BBB- 5,5-7, Ba1 - Ba3 BB+ - BB- BB+ - BB - 7,5-9, B1 - B3 B+ - B- B+ - B- 9,5-1, Caa1 - C CCC+ - C CCC+ - C 11, - 12, D D D 2 1 1-2 3-5 6-7 8-9 1 11-12 Non-rated 28 H1/29
OP-Pohjola Group Net impairments of receivables 17 7 million 6 5 4 3 2 1-1 -2 Q1 Q2 Q3 Q4/8 Q1 Q2 Q3 Q4/9 Gross impairment losses* Reversals Net impairment losses * Includes group-specific net impairment losses
18 OP-Pohjola Group Balance Sheet Funding % 1 8 59 mrd 65 mrd 75 mrd 78 mrd 2 % 1 % 1 % 3 % 47 % 48 % 49 % 47 % Liabilities to other credit institutions Deposits from customers Insurance liabilities 6 4 2 13 % 13 % 1 % 1 % 23 % 22 % 24 % 23 % 2 5 % 2 1 % 6 % 1 % 2 % 2 % % 7 1 % 6 % 1 % % 8 % 8 % 6 % 7 % 26 27 28 H1/9 Debt securities issued to the public Subordinated liabilities Provisions and other liabilities Cooperative capital Shareholders' equity and minority interests
Pohjola Bank Balance Sheet Funding 19 % 1 8 6 4 24 bn 26 bn 32 bn 34 bn 5 % 6 % 8 % 6 % 5 % 5 % 3 % 6 % 8 % 9 % 11 % 11 % 9 % 8 % 7 % 7 % 55 % 5 % 51 % 5 % Deposits from member cooperative banks Liabilities to other credit institutions Deposits from customers Non-life Insurance liabilities Debt securities issued to the public Subordinated liabilities 2 3 % 3 % 3 % 3 % 7 % 1 % 11 % 12 % 1 % 1 % 8 % 7 % 1 % 1 % 5 6 % 26 27 28 H1/9 Provisions and other liabilities Hybrid capital Shareholders' equity and minority interests
OP-Pohjola Group 2 Issued Long Term Senior Debt by Maturity million 4 5 4 Pohjola OP- Mortgage Bank 3 5 3 2 5 2 1 5 1 5 29 21 211 212 213 214 215 216
21 Pohjola Bank Liquidity portfolio Financial assets included in liquidity reserve by maturity and credit rating on 3 June 29 EUR million Year 1 1 3 3 5 5 7 7 1 1 Total % AAA 1 892 2 144 1 341 424 144 34 5 979 62 % AA 1 47 486 589 69 2 191 23 % A 17 388 37 28 66 1 959 1 % BBB 21 3 37 2 27 135 1 % BB+ or lower 19 19 % Internally rated 81 174 4 2 9 35 3 % Total 3 21 3 222 2 313 563 246 35 9 589 1 %
22 Credit Ratings*) Moody's Investors Standard Fitch Service & Poor s Ratings Pohjola Bank Aa1**) AA- AA-***) Handelsbanken Aa1**) AA- AA- Nordea Aa1**) AA- AA- DnB NOR Aa1**) AA- - Danske Bank Aa3 A+ A+ Swedbank A1 A A+ SEB A1 A A OP Mortgage Bank ****) Aaa AAA Pohjola Insurance*****) A1 A+ - If *****) A2 A - Finnish sovereign Aaa AAA AAA *) long-term debt **) on Moody's watch list ***) with negative outlook ****) covered bond rating *****) insurer financial strength
23 Investor Relations Contacts CFO Mr Jouko Pölönen Tel. +358 1 252 345 jouko.polonen@pohjola.com SVP, Investor Relations Ms Tarja Ollilainen Tel. +358 1 252 4494 tarja.ollilainen@pohjola.com Head of Group Treasury Mr Hanno Hirvinen Tel. +358 1 252 2221 hanno.hirvinen@pohjola.com Head of Group Funding Mr Lauri Iloniemi Tel. +358 1 252 3541 lauri.iloniemi@pohjola.com
24 Appendix
Finnish Economy
26 Finnish companies are currently better prepared than in the 199s to confront a recession Early 199s Finnish interest rates (12- month Helibor) at 15% (199) Devaluation of Finnish markka by 14% in 1991 and by 27% in 1992 Corporate financing in foreign currencies in many cases Finnish companies equity ratio relatively poor Current account deficit accumulating during a decade preceding the economic slump ( 5% of GDP in 199) Impairments increased Now Interest rates (12-month Euribor) at 1 2% Finland is part of the eurozone Corporate financing mostly in euros Finnish companies equity ratio relatively good Current account surpluses accumulating over 15 years (+2% of GDP in 28) Corporate creditworthiness is expected to deteriorate and impairments to increase Sources: Statistics Finland, Bank of Finland, Pohjola Equity Research
27 Fiscal Deficit and Government Debt Fiscal deficit/gdp, % -1-2 -3-4 -5-6 -7-8 -9-1 Luxem. Slovenia Finland Spain Netherl. Germany Austria Portugal France Belgium 29 21 Greece 2 4 6 8 1 12 Government debt/gdp, % Italy Ireland: FD/GDP: -12%, -16% / GD/GDP: 61%, 8% Source: European Commission
Change in GDP volume 28 8 % 6 4 United States 2-2 -4-6 Finland Eurozone -8 9 91 92 93 94 95 96 97 98 99 1 2 3 4 5 6 7 8 9f 1f Sources: Reuters EcoWin, forecasts OP-Pohjola Group, August 29
2 15 EUR billion Goods and services balance and current account in Finland 12-month moving total Goods and services balance 29 1 5 Current account -5 91 92 93 94 95 96 97 98 99 1 2 3 4 5 6 7 8 9f 1f Sources: Bank of Finland, forecasts OP-Pohjola Group, August 29
Unemployment rate 12-month moving average 3 18 % 16 14 12 1 8 6 93 94 95 96 97 98 99 1 2 3 4 5 6 7 8 9f 1f Sources: Statistics Finland, forecasts OP-Pohjola Group, August 29
31 3 25 Index 1996=1 Average home prices Sweden 2 15 Finland Netherlands United States 1 5 France 96 97 98 99 1 2 3 4 5 6 7 8 9 Sources: Reuters EcoWin, Statistics Sweden
32 Average home prices 45 4 35 Index 1996=1 Ireland 3 25 2 15 1 Great Britain Finland Spain 5 96 97 98 99 1 2 3 4 5 6 7 8 9 Source: Reuters EcoWin
Pohjola Bank plc in Brief
34 Pohjola Bank plc in Brief Pohjola Bank provides banking, investment and non-life insurance services. It ranks among the leading players in the Finnish financial sector. Serving businesses, institutions and private individuals, Pohjola provides an extensive package of banking and insurance services which are convenient for customers while supporting corporate customers' business. With over 35, shareholders, Pohjola Bank Series A shares are quoted on the NASDAQ OMX Helsinki. Pohjola aims to grow through all of its business divisions and strengthen its market position further. The company places a strong emphasis on profitability throughout its operations and is also committed to effective capital management and a shareholder-friendly dividend policy Pohjola is part of OP-Pohjola Group, the leading financial services group in Finland with over four million customers.
Pohjola Bank plc Business Structure 35 Pohjola Bank plc Banking Asset Management Non-life Insurance Group Functions Corporate Banking Markets Baltic Banking Institutional Customers Private Customers Corporate Customers Private Customers Baltic States Finance incl. Group treasury Risk management HR services Corporate communications
Pohjola Bank plc s competitive of business model has been demonstrated across business areas 36 Banking Margins and market share in corporate loans have developed favourably Currently ranking number two with a market share of 19.4 per cent 1) 1) Share of corporate lending in Euros in Finland Deposit banks' corporate loan portfolio until Dec. 22 The proportion as of Jan. 23 based on a new statistical basis of the Bank of Finland Non-life Non-Life Insurance Leading non-life insurer in Finland for second consecutive year, market share 27.5 per cent 2) Strong underwriting profitability (operating combined ratio of 88.6 per cent in H1/9) 2) Market share of domestic direct premiums written. 28 based on preliminary data as of March 29 Asset Management Leading position in asset management for institutions based on AUM (asset management and mutual funds) 3) 3) % of total amount of funds under external management (excluding insurance companies) 25 figures include only former OKO Bank asset management (not then-pohjola Group s asset management activities % 25 2 15 1 5 3 25 2 15 1 5 6/ 6/1 6/2 6/3 6/4 6/5 6/6 6/7 6/8 6/9 Source: Bank of Finland % 4 35 3 25 2 15 1 5 21 22 23 24 25 26 27 28 Pohjola If/Sampo Tapiola Fennia Lähivakuutus Others Source: Federation of Finnish Insurance Companies Pohjola Company2 Company1 Company3 25 26 27 28 Source: SFR. Based on interviews and answers by institutional investors with disclosed investment size 6/9 19.4% 28 27.5% 28 24.%
Pohjola Bank plc Essential information H1/9 Earnings before tax improved markedly year on year to EUR 123 million (71) Earnings before tax at fair value were EUR 227 million ( 28) Banking improved its profit performance despite higher impairment charges Within Asset Management, assets under management rebounded Non-life Insurance reported an excellent balance on technical account and return on investment at fair value rose to 4.5% Outlook: earnings before tax in 29 are expected to be markedly higher than in 28
Pohjola Bank plc Consolidated Earnings 38 rolling 12Mo 28 million 4-6/9 4-6/8 1-6/9 1-6/8 Net interest income 67 4 119 75 218 174 Impairments 33-1 54-3 85 28 Net interest income after impairments 35 42 65 78 133 146 Net income from Non-life Insurance 122 9 192 181 364 353 Net commissions and fees 36 31 66 63 126 122 Net trading income 8-2 33-46 -2-81 Net investment income 3-9 9-11 6 Other operating income 11 9 22 2 44 42 Total income 212 173 37 35 654 589 Total expenses 125 119 247 234 483 47 Earnings before tax 87 54 123 71 171 119 Change in fair value reserve 1-33 14-99 -49-252 Earnings/loss before tax at fair value 186 2 227-28 122-133 Earnings per share,,22,16,33,21,48,36
Pohjola Bank plc Consolidated Earnings by quarter 39 million 4-6/9 1-3/9 1-12/8 7-9/8 4-6/8 1-3/8 Net interest income 67 52 54 45 4 35 Impairments 33 21 21 11-1 -2 Net interest income after impairments 35 31 33 34 42 37 Net income from Non-life Insurance 122 7 74 98 9 91 Net commissions and fees 36 3 31 28 31 32 Net trading income 8 25-9 -26-2 -44 Net investment income -9-3 3 5 Other operating income 11 11 12 1 9 11 Total income 212 158 139 145 173 133 Total expenses 125 122 134 12 119 115 Earnings before tax 87 36 5 43 54 17 Change in fair value reserve 1 4-71 -82-33 -66 Earnings/loss before tax at fair value 186 41-66 -39 2-48 Earnings per share,,22,1,2,12,16,5
4 Nordic banks Basel II Tier 1 ratios excluding transitional rules H1/9 14,% 12,% 13,1 % 12,6 % 12,2 % 12,% 11,5% 11,3 % 11,2 % 1,% 8,% 7,3 % 6,% 4,% 2,%,% SEB Handelsbanken Danske Bank OP-Pohjola Group Pohjola Bank Swedbank Nordea DnB NOR Source: Company data Note: Tier 1 capital ratios based on latest reported Basel II figures excluding transitional rules and adjusted for subsequent announced capital raisings Note: Nordea adjusted for the rights issue of 2.5bn on February 1; Danske Bank adjusted for the participation to Danish state s hybrid capital program of DKK26.bn on February 6; Swedbank adjusted for the dividend reduction of SEK2.9bn on March 9; SEB adjusted for the rights issue of SEK15.bn; Handelsbanken adjusted for the tier 1 hybrids issue of SEK2.7bn on March 25
Pohjola Bank plc Receivables and liabilities between Pohjola Bank and OP-Pohjola Group retail banks 41 million 6 5 4 3 2 1-1 -2-3 -4 12/6 3/7 6/7 9/7 12/7 3/8 6/8 9/8 12/8 3/9 6/9 Reserve deposits Other loans Net position Other deposits Capital investments and perpetual bonds
42 Pohjola Bank plc Financial targets over the economic cycle million Target 1-6/9 1-6/8 Group Return on equity at fair value, % 13 18,3-2,4 Tier 1 ratio, % > 9,5 11,5 9,8 Banking Operating cost/income ratio, % < 4 36 46 Asset Management Operating cost/income ratio, % < 5 63 61 Non-life Insurance Operating combined ratio, % 92 88,6 95, Operating expense ratio, % < 2 21,8 21,6 Solvency ratio, % 7 77 7
Pohjola Bank plc Earnings before Tax by Business Segment January June 29 43 million 14 12 123 1 8 6 4 76 64 46 4 71 2-2 6 7-5 -4-6 -4 Banking Asset Management Non-life Insurance Group Functions Total H1/9 H1/8
Pohjola Bank plc Average margin of corporate loan portfolio continued to rise % 1,2 Q2/9 1.14% (Q1/9: 1.3% and Q4/8:.94%) 44 1, 1,14 %,8,6,4,2 Average margin of corporate loan portfolio, Q2/ Q2/1 Q2/2 Q2/3 Q2/4 Q2/5 Q2/6 Q2/7 Q2/8 Q2/9
million 5 4 3 2 1-1 Pohjola Bank plc Impairments of Loans and Receivables totalled in January-June 29 EUR 54 million (-3) 45-2 26 27 28 Q1/9 Q2/9 Credit loss recoveries and reversal of impairments New impairments Net credit and impairments
Pohjola Bank plc Banking - Doubtful receivables rose to EUR 55 million (35) and impairments of receivables to EUR 44 million (18) 46 billion % 16 6, 14 5, 12 4, 1 8 6 3, 2, 4,2,1,25,34,39 1, 2,2,,,1,2 26 27 28 Q1/9 Q2/9, -1, Loan and guarantee portfolio *) Doubtful receivables / Loan and guarantee portfolio, % Impairment of receivables / Loan and guarantee portfolio, % *) Loan portfolio, repos, lease liabilities, guarantees and guarantee liabilities
Pohjola Bank plc Corporate* banking exposure EUR 16.2 billion by sector 47 2 1 8 1 6 11,5 % 1,9 % 9,3 % M 1 4 1 2 1 8 6 4 2 7,9 % 7, % 6,8 % 6,7 % 4,9 %4,9 %4,9 % 4,8 % 4,3 % 4,3 % 3,2 % 2,9 % 2, % 1,9 %,7 %,7 %,4 % Renting and operation of own or leased residental estate Manufacture of Machinery and and equipment (incl. services) Wholesale and retail trade Construction Transportation and storage ** * Companies and Housing Corporations Forest industry Buying and selling of own real estate Services Chemical industry Metal industry Renting and operation of own or leased real estate H1/29 28 27 ** In H1/29, 52% of exposures within the renting and operation of own or leased residential estate were guaranteed by general government Food industry Energy Other Manufacturing Information and communicatio n Agriculture, forestry and fishing Financial and insurance services Mining and quarrying Water supply, sewerage and waste management Other industries
Pohjola Bank plc Non-life Insurance Performance 48 rolling 12Mo 28 million 4-6/9 4-6/8 1-6/9 1-6/8 Insurance premium revenue 24 236 471 456 938 923 Claims incurred -154-167 -314-335 -623-643 Operating expenses -53-5 -13-98 -26-22 Balance on technical account before amortisation 34 19 54 23 19 78 Amortisation/adjustment on intangible asset* -6-7 -12-14 -28-3 Balance on technical account 28 12 42 9 81 49 Net investment income 31 18 3 55 33 59 Other income and expenses -11-13 -25-25 -53-53 Earnings/loss before tax 48 17 46 4 61 55 Change in fair value reserve 72-33 74-88 -64-226 Earnings/loss before tax at fair value 12-16 121-48 -2-171 Operating loss ratio, % 64,1 7,6 66,7 73,4 63, 69,7 Operating expense ratio, % 21,9 21,4 21,8 21,6 22,2 21,9 Operating combined ratio, % 86, 91,9 88,6 95, 85,1 91,5 Return on investment, % 4,9 -,6 4,5-1,2-1,3-7, *) Due to amortisation on intangible assets arising from company acquisition
49 Pohjola Bank plc Non-life Insurance growth in insurance premium revenue, January June million 5 45 3 % 4 35 3 25 2 15 1 11 % -3 % 5 5 % Private Customers Corporate Customers Baltic Total H1/9 H1/8
5 Pohjola Bank plc Non-life Insurance - Allocation of investment portfolio % 1 8 2 482 M 2 57 M 2 415 M 2 79 M 3 % 2 % 12 % 1 % 3% 2% 11% 15% Money market 6 4 72% 72 % 69% 69 % 7% 7 % 73 % 68% Bonds and bond funds Capital investments Equities 2 4% 4 % 5% 5 % 14% 13 % 4% 3% 13% 4% 4 % 4% 3 % 13 % 7% 5% 4 % 4% 4 % 3% 4% 4% 7 % 6% 5 % 4 % 6% 5 % 3 % 4 % 6 % 5 % 26 27 28 H1/9 Alternative investments Real estate
Pohjola Bank plc Non-life Insurance - Net investment income 51 million 15 1 5-5 -1 Q1/7 Q2/7 Q3/7 Q4/7 Q1/8 Q2/8 Q3/8 Q4/8 Q1/9 Q2/9 Net investment income on income statement Change in fair value reserve Net investment income at fair value
OP Life Assurance Allocation of investment portfolio 52 1 % 9 % 8 % 7 % 6 % 5 % 4 % 3 % 2 % 1 % % 4 16 M 3 991 M 3 938 M 3 854 M 3 923 M 3 955 M 5 % 5 % 5 % 6 % 6 % 8 % 15 % 17 % 17 % 16 % 15 % 13 % 5 % 4 % 8 % 17 % 16 % 14 % 58 % 56 % 58 % 6 % 61 % 61 % 15 % 19 % 14 % 2 % 1 % 2 % Q1 28 Q2 28 Q3 28 Q4 28 Q1 29 Q2 29* Real estate Alternative investments Equities Bond investments Money market investments
53 OP Life Assurance Net investment income milj. 4 2-2 -4-6 Q1 / 28 Q2 / 28 Q3 / 28 Q4 / 28 Q1 / 29 Q2 / 29 Net investment income on income statement Change in fair value reserve Net investment income at fair value
OP Mortgage Bank in Brief
55 OP Mortgage Bank in Brief OP Mortgage Bank is a special purpose bank operating under the Act on Mortgage Credit Banks The sole purpose of the bank is to raise funds for the member banks of the OP-Pohjola Group by issuing covered bonds with mortgage collateral The outstanding covered bonds of OP Mortgage Bank are rated AAA by S&P and Aaa by Moody s OP Mortgage Bank is a 1% owned subsidiary of the OP- Pohjola Group Central Cooperative OP Mortgage Bank benefits from the joint and several liability based on the Cooperative Bank Act. However since assets in its Cover Asset Pool are ring-fenced the noteholders have a right to receive what is due to them before other debtors
56 Main features of the OP Mortgage Bank`s covered asset pool as of June 29 Collateralized by first ranking Finnish residential mortgages No commercial mortgages Current balance of the Cover Asset Pool is 2.5 billion Total amount of covered bonds issued is 2 billion Weighted average un-indexed LTV of 52% Average loan size approximately 62. No loans over 9 days in arrears No currency risk Hedging agreement in place to mitigate the interest rate risk All assets in the Covered Asset Pool are ring-fenced for the benefit of the covered bond holders