Pohjola Bank plc Financial Statements Bulletin for 1 January-31 December 2012

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 financial year. - 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. October-December - 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 points. - 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, %     2012 2011   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 portfolio. 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 in 2013. 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 environment. 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- looking statements. 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 webcast. 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 Password: Pohjola Press conference 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 DISTRIBUTION NASDAQ OMX Helsinki Ltd London Stock Exchange SIX Swiss Exchange Major media www.pohjola.com, www.op.fi 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)10 252 4494 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. www.pohjola.com Pohjola_Q4_2012_results: http://hugin.info/142911/R/1675792/545962.pdf Pohjola_Q4_2012_IR_backgroundmaterial: http://hugin.info/142911/R/1675792/545963.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#1675792]