Executive Chairman's review

OP-Pohjola Group’s year 2013 was excellent in many ways. We recorded our third-best annual results of all time, our capital adequacy increased to a new record height and our market position improved in all of our main business lines. While strengthening our foundation, we also made dedicated efforts to build our future. From the very beginning, our smart wallet Pivo and Omasairaala hospital as part of our health and wellbeing business were enthusiastically welcomed by our customers.

Our good results for 2013 were based on growth in our customer business and on the record earnings reported by Non-life Insurance that is going strong. Banking, too, showed better earnings than expected, supported by net interest income that turned upward in the second half of the year. Despite our many efficiency-enhancement measures, we were not quite able to stop our expenses from increasing. If we exclude the effect of the bank levy, our expenses decreased. We will continue to work on restraining expense growth in 2014.

The fact that our market position in terms of home loans and corporate financing has continued to strengthen is a proof that we are carrying our responsibility to an increasing extent for the effectiveness of the Finnish financing system. Another sign that we stress customer benefits is that we made a new record in 2013 in the number of customers using OP-Pohjola as their main bank and insurer. I believe that by making bold reforms yet respecting traditional values we will continue to be successful in the future too. We see digitalisation as a great opportunity to improve customer contacts and customer experience not only in the mobile and online channels but also in our branch offices.

Tightening regulation requires us to have better and better capital adequacy and consequently better financial performance. Capital adequacy has been a clear competitive advantage to OP-Pohjola Group for a long time. We therefore decided in early 2014 to raise our capital adequacy target (CET1) to 18%. Our primary method for maintaining a high level of capital adequacy is to show good financial performance to enhance our capital base.

OP-Pohjola Group has been owned by its customers right from the start. The plan of the central institution of OP-Pohjola Group to buy all Pohjola Bank plc shares and delist Pohjola, announced in early February, also lies behind our values. Following the purchase of the Pohjola shares, the idea is to begin to build a new, truly customer-owned, dynamic and agile OP-Pohjola. We are ready to reinvent ourselves and challenge all competitors in the sector. We respect our obligation stemming from our mission towards our customers and operating environment. We will use our financial results for the benefit of our customers. We will have more capacity to develop services and products and our customers will have more powerful voice in our development work.

This is a historic decision. The purchase worth a total of EUR 3.4 billion is one of Europe’s largest restructurings in the financial sector following the financial crisis. Our decision stresses our Finnish ownership. Finland is our main market area and it is our duty to ensure through our own dedicated efforts that Finland will thrive in terms of its economy and prosperity. We will also take care of our customers’ needs in the international arena. Our success depends totally on our customers’ success.


Helsinki, 10 February 2014


Reijo Karhinen


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