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Wednesday 27 April, 2005

Oko Osuuspank.

Effects of IFRS Reporting

Oko Osuuspankkien Keskuspankki OYJ
27 April 2005

OKO Bank                                   STOCK EXCHANGE RELEASE
                                           April 27, 2005







EFFECTS OF IFRS REPORTING IN OKO BANK GROUP


OKO Bank Group adopted the International Financial Reporting Standards as of the
beginning of 2005. The interim reports in 2005 will be prepared in accordance
with the new principles. This bulletin provides preliminary calculations of the
essential effects of the IFRS standards on the 2004 income statements of OKO
Bank's business divisions, as well as the effects of the standards IAS 39
(Financial Instruments: Recognition and Measurement) and IAS 32 (Financial
Instruments: Disclosure and Presentation) on shareholders' equity on January 1,
2005. The quarterly income statements of 2004 by business divisions are
available at the website www.oko.fi/english/press.



On March 24, 2005, OKO Bank issued a bulletin providing information on the
essential effects of the IFRS transition to OKO Bank's financial information for
2004. The bulletin provided preliminary calculations of the opening balance
sheet on the date of IFRS transition, January 1, 2004, and the quarterly income
statements and balance sheets for 2004 both under FAS (Finnish Accounting
Standards) and IFRS. Furthermore, reconciliations were provided for
shareholders' equity and net income on the ending dates of each quarter
calculated on different principles. Furthermore, the bulletin included key
indicators, the formulas for calculating them, and the changes imposed by the
IFRS transition on the accounting principles for the financial statements. This
bulletin, together with the one issued on March 24, constitutes a single entity.



EFFECTS ON THE EARNINGS OF THE BUSINESS DIVISIONS



The earnings item presented for the business divisions is Earnings before tax,
due to which adjustments under the IAS 12 standard (Income Taxes) are not
presented in IFRS adjustments. The income statements prepared in accordance with
Finnish Accounting Standards (FAS) are grouped in accordance with the IFRS
format. In addition to IFRS adjustments, the new financial statement format also
affects the values of the indicators.



OKO Bank's business divisions include Corporate Banking, Investment Banking,
Retail Banking and Group Treasury. Income and expenses not allocated to the
divisions are integrated under Group Administration.



The most significant earnings effects apply to Retail Banking, where a total of
EUR 0.7 million of non-recurring commissions paid on loan repayment insurance
and recognised as income in the FAS financial statements have been cancelled,
together with goodwill depreciation amounting to EUR 0.5 million. IFRS
adjustments totalling EUR 1.8 million have been made in the Group Treasury
division due to changes in real estate consolidation methods and the fair
valuation of real estate investments. The effect of adjustments due to the IAS
19 standard (Employee Benefits) is distributed between the divisions in
proportion to salaries.



IFRS COMPARISON FIGURES BY DIVISIONS


                                         FAS Q1  IFRS Q1  FAS Q1-2 IFRS Q1-2  FAS Q1-3 IFRS Q1-3  FAS Q1-4 IFRS Q1-4

Earnings before tax, EUR million
Corporate Banking                            14       14        35        35        51        51        66        67
Investment Banking                            2        2         3         3         4         4         8         8
Retail Banking                                6        6        10        10        13        15        20        21
Group Treasury                               10       10        26        26        36        36        47        49
Group Administration                         -2       -2        -4        -4        -6        -7        -8        -8
Total                                        30       30        69        69        98       100       134       136

Return on equity (ROE), % p.a.
Corporate Banking                           9,8      9,8      11,7      11,6      11,2      11,3      10,7      10,8
Investment Banking                         51,6     54,7      40,0      42,1      33,9      37,7      44,0      45,3
Retail Banking                             14,8     15,6      12,3      12,9      10,9      12,0      12,3      12,7
Group Treasury                             27,1     27,1      34,2      34,2      31,1      31,3      30,4      31,3
Group Administration                          -        -         -         -         -         -         -         -

Cost/net income ratio, %
Corporate Banking                            67       45        62        40        63        40        64        41
Investment Banking                           67       65        72        70        74        71        67        66
Retail Banking                               70       68        74        72        76        73        73        71
Group Treasury                               24       24        20        20        20        20        22        21
Group Administration                          -        -         -         -         -         -         -         -



EFFECTS OF THE IAS 39 STANDARD ON SHAREHOLDERS' EQUITY JANUARY 1, 2005



On the opening balance sheet fair valuation was applied to notes, bonds and
equities included in current and non-current assets under FAS and categorised as
Financial assets available for sale. Under FAS, the valuation of current assets
was adjusted only in cases of reduction in value or increase in value up to the
acquisition price, and the valuation of non-current assets was adjusted only in
cases of permanent reduction in value.



In fair value hedging calculations, changes in the value of the hedging and
hedged instrument were recognised as an adjustment of accrued earnings at the
time of transition, but the entries had no effect on shareholders' equity.



On the opening balance sheet loan loss provisions under FAS were cancelled, and
impairment losses specific to each receivable and group of receivables were
booked in accordance with the new principles. The increase in impairment losses,
which mostly comprised impairment losses specific to groups of receivables, was
recognised as an adjustment of accrued earnings.


Shareholders' equity under IFRS December 31, 2004,

EUR million                                                                                                 776

    Shares and holdings available for sale                                                   16
    Notes and bonds available for sale                                                        1
    Deferred tax                                                                             -4
Fair value reserve                                                                                           13

    Shares and holdings available for sale                                                    2
    Transfer of derivatives to non-hedging                                                   -4
    Categorisation of notes and bonds to assets held

    for trading                                                                               5
    Impairment losses on receivables                                                         -1
Retained earnings                                                                                             2

Total                                                                                                        15
Shareholders' equity January 1, 2005                                                                        791



The transition to IAS 39 has a minor effect on OKO Bank's capital adequacy.



EFFECTS OF IFRS TRANSITION ON INCOME STATEMENT AND BALANCE SHEET



1. IAS 12, Income Taxes

On the consolidated FAS balance sheet accumulated appropriations were divided
into Shareholders' equity and Deferred tax liability, and on the income
statement into Profit for the period and Change in deferred tax liability. The
IFRS financial statements represent all deferred tax receivables and liabilities
associated with temporary differences between accounting and taxation, as well
as any changes in these, if the tax attributable to the difference is expected
to be realised in the future.



2. IAS 17, Leases

Income on finance lease contracts is divided into interest income and commission
income. With regard to income on other lease contracts as referred to in IAS 17,
commissions are entered in Commission income, other income in Other operating
income, and depreciation in Other operating expenses.



According to FAS, net income on all leasing contracts was entered in the item
Leasing income.



3. IAS 18, Revenue

In its FAS financial statements 1995-2003 OKO Bank's subsidiary Okopankki Oyj
recognised non-recurring commissions paid on loan repayment insurance and
associated with several years as income on the cash basis. These commissions
include a risk of being returned. In the IFRS transition these income
recognitions were retroactively cancelled and recognised as liabilities.
According to the IFRS principle, only the share of commissions attributable to
the financial period shall be recognised as income.



4. IAS 19, Employee Benefits

All of the Group's pension schemes are classified as defined-benefit plans. The
Group used the option provided in IFRS 1, according to which funds in pension
schemes were valued at fair value and the obligation at present value based on
the calculatory assumptions valid at the time of transition on January 1, 2004.
The difference between funds and obligations in pension schemes was entered in
Other assets. The asset item in Other assets and the pension costs will be
adjusted during the financial period on the basis of actuarial calculations.



5. IAS 36, Impairment of Assets

Upon IFRS transition the minor goodwill included on the FAS balance sheet was
recognised as expense and the goodwill depreciations included in the FAS
financial statements were cancelled. The goodwill originated in the
establishment of Okopankki Oyj.



6. IAS 40, 16, 31, Investment Property, Property, Plant and Equipment, Interests
in Joint Ventures

Investment properties were valued at fair value upon transition, and changes in
fair value after the transition will be entered in Net income from investments.
In FAS financial statements investment properties were valued at acquisition
cost deducted by depreciation and write-downs.



The revaluation in the consolidated financial statements concerning Kiinteisto
Oy Arkadiankatu 23, which is fully owned by OKO Bank and included in the Bank's
consolidated financial statements, was cancelled at the time of transition
January 1, 2004. The property is mostly classified as an investment property,
but a part of it is in the company's own use. The fair value method in
accordance with the IAS 40 standard was applied to the part in investment use.
Fair value was used as the deemed acquisition cost for the part in own use
within the scope of the allowance by the IFRS 1 first-time adoption standard.
The value of the part in own use before revaluation was EUR 8.125 million, and
the revaluated acquisition cost was EUR 6.161 million.



Mutual real estate companies in which OKO Bank or its subsidiaries have a
substantial influence or control are consolidated like assets under joint
control as referred to in the IAS 31 standard. Entries associated with
consolidation by the acquisition cost method were cancelled upon transition.



7. Other adjustments

IAS 38, Intangible Assets: In comparison with Finnish Accounting Standards, wage
and salary costs capitalised in the acquisition cost of internally generated
assets reduce personnel expenses and increase depreciation belonging to other
operating expenses. Internally generated assets refer to computer software
included in Intangible assets.



The figures presented in this bulletin are unaudited.





OKO Bank





Markku Koponen
Senior Vice President




FOR ADDITIONAL INFORMATION, PLEASE CONTACT:
Mrs Marja Huhta, CFO and Head of IR, tel.+358 10 252 2037
Mr Olli Kankkunen, Vice President, Business Control, tel. +358 10 252 3864




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