Finland’s OP-Pohjola reports “solid performance” in first half despite eurozone crisis

Finnish financial services group OP-Pohjola has reported first half pre-tax earnings of €337m, slightly down on the €366m reported for the same period last year as its life and non-life insurance business struggled.

Banking operations were more solid, with pre-tax earnings over the period rising rising 17.3% to €268m, and helping the group to achieve a Core Tier 1 ratio of 14.7%, which is described as exceptionally high compared to peers.

Executive chairman Reijo Karhinen said: “The value of our achievement is even better considering the deepening debt crisis in the euro area.”

“During the financial and sovereign debt crisis, our solid capital adequacy is becoming an increasingly important competitive advantage. We have strong capital buffers, which will also benefit our customers. During the first half of 2012, this was witnessed by our strong growth. Our lending growth figures show that despite the uncertain operating environment, our customers rely on us in their financing decisions. The fact that our market position is growing well shows that our customers have faith in us.

“This was our second-best six-month period since the beginning of the financial crisis. It was a good achievement under the current conditions, albeit that the bottom line was not quite at the same level as a year ago.

“In addition to volume growth, our first-half profit performance was boosted by banking income items, that is, higher net interest income and markedly lower loan losses. On the other hand, the unstable investment environment weakened the performance of our insurance operations.”

He added: “the next few months still seem very challenging. It is alarming to see how the markets are losing trust in the euro. A broken Europe has arrived at a crossroads. It is not only a case of the future of the euro, but the continuation of the integration on our continent. With distrust between member countries, it is also difficult for the markets to have faith in the future of the euro area. The euro is a political project. To be successful, it requires strong political leadership. The euro has been and still is worth fighting for from Finland’s perspective too.”

Looking ahead at the rest of its 2012 financial year, Pohjola Bank president and ceo Michael Silvennoinen said flatter investment returns were posing a challenge to the the growth in investment income from this part of the group.

In terms of asset management he added: “The greatest uncertainties related to Asset Management’s financial performance in 2012 are associated with the actual performance-based fees tied to the success of investments and the amount of assets under management.”


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