Pohjola Bank issues third quarter earnings report
Pohjola Bank Plc issuing 3Q interim report said its consolidated earnings before tax came to EUR 282 million (245) and consolidated earnings before tax at fair value amounted to EUR 606 million (65). Return on equity at fair value stood at 25.0% (2.5). Core Tier 1 ratio improved to 10.7%.
Earnings before tax recorded by Banking improved to EUR 163 million ( 135). These included EUR 34 million (36) in impairment charges for receivables. The loan portfolio increased by 7% from its level on 31 December 2011. The average corporate loan portfolio margin stood at 1.48% (1.34). Within Non-life Insurance, insurance premium revenue rose by 9%. The combined ratio was 97.1% (91.5).
Excluding the changes in reserving bases and amortisation on intangible assets arising from company acquisition, the operating combined ratio stood at 89.0% (89.4). Return on investments at fair value was 8.6% (-1.8).
Earnings before tax posted by Asset Management amounted to EUR 17 million (19) and assets under management were EUR 32.0 billion (31.3) at the end of the reporting period. Pohjola initiated a reorganisation programme with the aim of achieving annual cost savings of around EUR 50 million by the end of 2015.
Pohjola revised its financial targets when it adopted its updated strategy. More detailed information on the financial targets can be found in "Events after the balance sheet date" in interim report.
Outlook towards the year end: Consolidated earnings before tax for 2012 are expected to be sub- stantially higher than in 2011. It is estimated that the Non- life Insurance combined ratio will vary between 89% and 92% (previous estimate: 89- 94%). For more detailed information on outlook, see "Outlook towards the year end" below.
Consolidated earnings before tax were EUR 79 million (47). A reduction in the discount rate for technical provisions related to pension liabilities eroded earnings by EUR 52 million while higherthan- usual realised investment income improved earnings.
Consolidated earnings before tax at fair value came to EUR 173 million (-101) and return on equity at fair value stood at 20.4% (13.6). Earnings before tax recorded by Banking totalled EUR 42 million (43).
These included EUR 15 million (1) in impairment charges on receivables. The loan portfolio increased by 1% and the average margin of the corporate loan portfolio rose by 5 basis points.
Within Non- life Insurance, insurance premium revenue rose by 11%. The combined ratio stood at 101.8% (87.2) while the operating combined ratio was 82.3% (85.2). Return on investments at fair value was 3.0% (2.8).Comparatives deriving from the income statement are based on figures reported for the corresponding period a year ago.
Unless otherwise specified, balance-sheet and other cross-sectional figures on 31 December 2011 are used as comparatives. President and CEO Mikael Silvennoinen said our business at operational level made good progress during the third quarter. We continued to strengthen our position among customers. Nonlife Insurance experienced a record growth in the number of loyal customer households in January-September.
Within Banking, the loan portfolio continued to grow but not as fast as in the previous two quarters. The average corporate loan margin rose to 1.48% at the end of September. Insurance premium revenue continued to increase strongly and Non-life Insurance showed good operating profitability. Within Asset Management, assets under management rebounded during the third quarter in the wake of favourable market developments.