The Group's earnings before tax amounted to EUR 518 million (575). In 2011, the changes in reservation bases recorded in non-life and life insurance weakened the Group’s earnings by EUR 74 million. In 2010, similar changes in reservation bases were recorded by EUR 50 million in net terms. Pre-tax earnings adjusted for changes in reserving bases contracted in the challenging operating environment by 5.3% year on year.
The result made in the report period was boosted by increased net interest income and net commissions and fees in Banking as well as by decreased impairment losses on receivables. Earnings were eroded by falling investment income and the changes in reserving bases referred to above. Bonuses to owner-members and OP bonus customers that were recognised in the profit and loss grew by 7.4% year on year to EUR 163 million.
Earnings before tax at fair value were eroded by falling market prices owing to the uncertainty in the investment market.
Pre-tax earnings by Banking went up by 30% and income by 6.9%. Net commissions and fees increased by 1.7% year on year owing to the favourable development of commissions and fees related to lending and payment transfer services in the first half of the year.
Earnings before taxes for the Group’s non-life insurance segment were eroded as a result of increased life expectancy among policyholders and a technical provision of EUR 59 million (35) made due to the lower discount rate used for calculation of technical provisions and also as a result of lower investment income than the year before. The operating combined ratio of Non-life Insurance was 89.8% (89.7). Earnings for the life insurance segment were eroded by EUR 15 million owing to increased life expectancy among policyholders.
Expenses increased year on year by 6.1% mainly because of higher ICT and personnel costs. The personnel increased by some 700, increasing personnel costs considerably.
Impairment losses recognised under various income statement items that eroded the report period's performance amounted to EUR 178 million (298), of which EUR 101 million (149) concerned loans and other receivables. The greatest single impairment, EUR 45 million, concerned the Group’s direct Greek government exposure. At the end of the year, the Group’s balance sheet contained a total of EUR 16 million in direct Greek government exposure. Net impairment losses on loans and other receivables were 0.16% (0.25) of the loan and guarantee portfolio.
Equity capital stood at EUR 6,531 million on 31 December. Equity capital was on the one hand boosted by the report period's performance but on the other hand eroded by a shrunken fair value reserve, a higher percentage of ownership by the central institution in Pohjola Bank plc, and dividend payments.
On 31 December, the cooperative capital investments and supplementary cooperative capital investments of the member cooperative banks’ owner-members totalled EUR 756 million (778).
The Board of Directors of Pohjola Bank plc proposes that a per-share dividend of EUR 0.41 (0.40) be paid on Series A shares and EUR 0.38 (0.37) on Series K shares, which would total EUR 129 million (126), of which the Group's internal divided would account for 52%.
OP-Pohjola Group had 4,163,000 customers in Finland at the end of December. Private customers totalled 3,733,000 and corporate customers 430,000. Year on year, the number of joint banking and non-life insurance customers in Finland increased by 102,000 to 1,299,000 as a result of cross-selling.