The Finnish economy experienced a sharp decline in exports of goods and services in 2009 as the manufacturing industry was hurt by low global demand. The decline was even more drastic than in the 1990s recession, but low interest rates have eased the situation considerably.
Banking Activities Finland´s profit before loan impairment charges rose to €159m. In the fourth quarter, profit before tax was €34m. Impairment charges began to fall in the second half of the year, and in Q4 the unit posted a net positive entry of €15m.
Net interest income came to €405m in 2009, down 10% from the level the year before. Lower money market rates and the costs of long-term funding contributed to the decline.
Operating expenses down €74m
Owing mainly to lower integration expenses and realised synergies, operating expenses fell 14% to €455m. The synergies announced at the acquisition in 2007 have now been fully realised.
Retail lending remained at the same level as in 2008, while corporate lending declined 18% because of lower financing needs.
Total deposits rose 6% during the year. Retail deposits were up 5%, and corporate deposits 8%.
At December 31, 2009, Banking Activities Finland´s market share of lending was 12.6%, down from 13.8% a year earlier, while its share of total deposits was 12.2%, up from12.0%.
The Group´s annual customer satisfaction survey, “Moment of Truth”, revealed significantly improved satisfaction among Sampo Bank´s retail customers. Two-thirds of the customers were highly or very satisfied with the quality of the service. Customers were particularly pleased with meetings at the bank, at which committed advisers provided clear and easy-to-understand advice.
Sampo Bank Group’s high solvency ratio
Sampo Bank Group’s solvency ratio improved as the bank’s risk-weighted assets declined and its capital base remained strong (Sampo Bank Group includes the Sampo Bank operations of Danske Capital Finland and Danske Markets Finland).
At the end of the period, Sampo Bank Group's tier 1 capital and solvency ratios were 13.7% and 14.9%, respectively.
Macroeconomic outlook for 2010
The global economic recovery is expected to benefit Finnish exports and brighten the outlook for the Finnish economy. Consumers are likely to remain cautious, however, owing to the slow pace of the recovery and the low employment rate. Unemployment is expected to rise further in 2010.
Forecasts indicate GDP growth of about 1.5% in Finland in 2010.
Ilkka Hallavo, Sampo Bank CEO:
“Two thousand and nine was a very difficult year. The Finnish economy experienced the deepest recession since the 90s. We managed to improve our profit before loan impairment charges significantly, however, and in the fourth quarter our pre-tax result was positive. With a solid solvency ratio of 14.9%, Sampo Bank is among the best capitalised Nordic banks.
“In the second half of year, loan impairment charges declined, and in fourth quarter we posted a net positive entry. This year we expect the charges to be lower than in 2009 if economic recovery continues.
“Personally I am very pleased that our operating expenses have decreased steadily owing to synergies and efficiencies from operating on the Danske Bank Group’s shared platform.”
Press release in PDF
For further information:
Ilkka Hallavo, CEO, Sampo Bank. Tel.: +358 10 546 8057
Pekka Kainulainen, CFO, Sampo Bank. Tel.: +358 10 546 7807
Timo J. Anttila, Head of Communications, Sampo Bank. Tel: +358 10 546 8002