Islandsbanki hf.: First half 2018 Financial Results

First half 2018 financial highlights

Profit after tax was ISK 7.1bn (1H17: ISK 8.0bn) generating an 8.2% annualised return on equity (1H17: 9.2%).

Earnings from regular operations were ISK 6.8bn (1H17: ISK 7.4bn) with 9.9% annualised return on equity from regular operations normalised for 15% CET1 (1H17: 11.2%).

Net interest income was ISK 15.3bn (1H17: ISK 15.2bn) and net interest margin was 2.8% (1H17: 2.9%).

Net fee and commission income was ISK 5.8bn (1H17: ISK 6.8bn), down by 15% from the same time last year mostly due to lower activity levels from two of the Bank’s fee-generating subsidiaries.

Net impairment on financial assets generated a gain of ISK 1.9bn in 1H18, compared to ISK 0.4bn gain in 1H17.

Administrative costs grew by roughly 3% between years and totalled ISK 13.7bn (1H17: ISK 13.2bn), mainly due to increases in negotiated salary agreements and costs related to new core banking system.

Loans to customers grew by 5.9% (ISK 44.8bn) to a total of ISK 800bn at the end of June. Total new lending amounted to ISK 98.5bn, split across lending divisions while deposits from customers grew by 2.0% (ISK 11.4bn) to ISK 578bn at June end.

Liquidity and capital positions continue to be strong and to exceed all internal and external requirements.

Second quarter 2018 financial highlights

Profit after tax was ISK 5bn, same as for 2Q17, generating an 11.6% annualised return on equity (2Q17: 11.3%).

Earnings from regular operations were ISK 4bn, same as for 2Q17 and annualised return on equity for regular operations normalised for 15% CET1 was 11.6% (2Q17: 11.8%).

Net interest income amounted to ISK 7.6bn (2Q17: ISK 7.8bn) with 2.8% net interest margin (2Q17: 3%).

Net fee and commission income was ISK 3bn (2Q17: ISK 3.5bn).

First half 2018 operational highlights

Continued digital solution development to meet customer preferences. For example, as of end June 2018, 6500 overdraft applications in the Íslandsbanki app for ISK 2.2bn were automatically approved.

Upgrade to new core banking system nearly completed with “go live” set for third quarter.

Active investment bank operations, with the Bank spearheading syndicate loans and issuing large corporate bonds.

In April, the Center of Corporate Governance recognised Íslandsbanki again for good corporate governance.

Euromoney named Íslandsbanki Iceland’s best bank for 2018 in July.

S&P Global Ratings (S&P) affirmed Íslandsbanki's rating of BBB+/A2 with a stable outlook in July.

Birna Einarsdóttir, CEO of Íslandsbanki

Íslandsbanki’s results for the first half of the year exceeded expectations with the Bank delivering a net profit of ISK 7.1bn and an annualised ROE of 8.2%. The parent company continued to deliver stable fee and commission income while favourable conditions in the economy led to positive impairments of the loan portfolio which continues to be robust compared to domestic and international standards.

Investment banking operations were active during the period with the Bank’s seafood team leading an EUR 190m syndicate loan consortium for HB Grandi and the brokerage and corporate finance units teaming up for several large bond issuances for some corporate customers including HS Veitur, Byggðastofnun, Eik Fasteignafélag and Garðabær.

Customers have been pleased with the Bank’s digital solutions, with over 90% now preferring to use the Íslandsbanki online website or apps for their day-to-day bank operations. The Bank introduced several new digital services during the first half of the year, including the option to split credit card payments and an online mortgage loan assessment.

The Bank issued several reports during the period and in July, Euromoney selected Íslandsbanki as Iceland’s best bank in 2018 which is the fifth time that the Bank receives the award. Ahead of us is the Íslandsbanki Reykjavík Marathon on 18 August, which is Iceland’s biggest charity event with last year’s pledges amounting to ISK 118m. We encourage everyone to participate and give pledges for a good cause.

Investor Relations

Investor call in English at 9.30 am (GMT)

Today, 2 August, the Bank will host an investor call in English to present the financial results at 9.30 am (GMT). The call will start with a short macro update on the Icelandic economy, followed by a review of the financial results and Q&A.

Please register by replying to: [email protected]. Dial-in details and presentation will be sent out prior to the call.

Market participants meeting in Icelandic at 10.30 am (GMT)

A meeting with market participants in Icelandic will take place at Íslandsbanki headquarters, Hagasmári 3, 201 Kópavogur, 9 floor at 10.30 am (GMT) on 2 August.

Registration to the meeting is required for participation. Please register here

Additional investor material

All presentation material will subsequently be available and archived on the Bank’s investor relations website where other material is also available: https://www.islandsbanki.is/english/investor-relations/ 

Financial calendar and silent periods

Information on Íslandsbanki's financial calendar and silent periods can be found on the IR website

For further information:

• Investor Relations – Gunnar S. Magnússon, [email protected], tel +354 440 4665.
• Media Relations – Edda Hermannsdottir, [email protected] and tel: +354 440 4005.

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_{About Íslandsbanki
A leader in financial services in Iceland, Íslandsbanki is a universal bank with total assets of ISK 1,036bn and a 25% - 50% market share across all domestic business segments. Building on over 140 years of servicing key industries, Íslandsbanki has developed specific expertise in tourism, seafood and energy related industries. Driven by the vision to be #1 for service, Íslandsbanki’s relationship banking business model is propelled by three business divisions that manage and build relationships with the Bank´s customers. Íslandsbanki has developed a wide range of online services such as the Íslandsbanki, Kreditkort and Kass apps, enabling customers to do their banking whenever and wherever. At the same time, the Bank continues to operate the most efficient branch network in Iceland through its strategically located 14 branches. For the fifth consecutive year, Íslandsbanki led the Icelandic Customer Satisfactory Index for banks in 2017 and was also named Bank of the Year in Iceland by the Banker. Íslandsbanki has a BBB+/A-2 rating from S&P Global Ratings and BBB/F3 from Fitch Ratings and is the only bank in Iceland rated by two international rating agencies. www.islandsbanki.is}  

_{Disclaimer
This press release may contain “forward-looking statements,” involving uncertainty and risks that could cause actual results to differ materially from results expressed or implied by the statements. Íslandsbanki hf. undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after this press release. It is the investor's responsibility to not place undue reliance on these forward-looking statements which only reflect the date of this press release. Forward-looking statements should not be considered as guarantees or predictions of future events and all forward-looking statements are qualified in their entirety by this cautionary statement.} 

Attachments

• ISB_1H_2018_Press_Release
• ISB_1H_2018_Fact Book
• ISB_1H_2018_Condensed Consolidated Interim Financial Statements
• ISB_1H_2018_Fact Sheet
• ISB_1H_2018_IR_Presentation

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