Pohjola Bank reports falling income from asset management

Finland’s Pohjola Bank reported full year results today showing that earnings from its asset managment business fell 13% to €27m during 2011 compared to earnings of €31m in 2010.

The rate of decline accelerated during the fourth quarter, when earnings fell by 44% to €8m from €14m during the same period one year earlier.

The figures relate to earnings before tax. The bank said that its 2010 figures included net income of €6m derived from corporate transactions. Total AUM as of 31 December stood at €31.3bn.

Looking ahead, president and CEO Mikael Silvennoinen said: “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. “

He added: “The operating environment looks challenging in 2012. It is probable that the economic growth rate in Finland and the rest of Europe will remain more slowly than last year. However, Pohjola has entered 2012 with confidence and on solid foundations: we are competitive in terms of our capital base and creditworthiness, our liquidity is on a solid basis and we have good access to market funding. We will continue to focus on what we can do the best: we promote the prosperity, security and wellbeing of our customers.”

Earnings before tax, EUR million 2011 2010 Change % Q4/ 2011 Q4/ 2010 Change %
 Asset Management  27  31  -13  8 14 -44

Pohjola’s banking operations managed to grow consolidated pre-tax earnings to €198m, but lower earnings from its non-life insurance and asset management businesses dragged the consolidated pre-tax earnings from these three business areas combined down to €258m from €303m the year before.

Tellingly, the bank reported its return on equity at fair value slumped to 3.4% from 9.3% one year earlier, although its Tier one ratio remained above the 9.5% minimum target at 10.6% compared to 12.5% in 2010.

The Core Tier 1 ratio was reported as 10.3%.

At the OP-Pohjola Group level, including life insurance business, the Core Tier 1 ratio was 14%.

Group level pre-tax earnings slipped -9.9% to €518m





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