Published: 2019-02-13 18:35:39 CET
Arion Bank hf.
Annual Financial Report

Arion Bank’s financial results for Q4 2018

Core banking trends continue to be positive

Arion Bank reported net earnings of ISK 1.6 billion for the fourth quarter of 2018, compared with ISK 4.1 billion for the same period of 2017. Return on equity was 3.2% for the fourth quarter of 2018, compared with 7.3% for the same period in 2017. Net earnings in 2018 were ISK 7.8 billion and return on equity 3.7% compared with ISK 14.4 billion net earnings and 6.6% return on equity in 2017. The Board proposes a dividend payment of ISK 10 billion or ISK 5.00 per share. The dividend payment is a continuation of the optimization of the Bank’s capital structure.

Total assets amounted to ISK 1,164.3 billion at the end of 2018, compared with ISK 1,147.8 billion at the end of 2017. Total equity amounted to ISK 200.9 billion, compared with ISK 225.7 billion at the end of 2017. In 2018 Arion Bank paid dividend of ISK 16.2 billion and purchased treasury stock for ISK 17.1 billion.  

The Bank’s capital ratio at the end of 2018 was 22.0%, compared with 24.0% at the end of 2017. The CET1 ratio was 21.2% at the end of 2018, compared with 23.6% at the end of 2017.

Höskuldur H. Ólafsson, CEO of Arion Bank

“Arion Bank’s financial results for the fourth quarter were below expectations, as indeed they were for 2018 as a whole. However, we can see positive developments in the Bank’s core operations and are pleased to see the improvement in the Bank's net interest margin during the fourth quarter in line with our objectives. Challenging conditions on the equity and bond markets, not least a volatile airline industry, have left their mark on operations, both during the quarter and 2018 as a whole. One of our main tasks this year will be to increase profitability and a number of projects have been launched in this respect. It is nevertheless obvious that generating a satisfactory return on equity will be challenging without an increase in lending rates when the government continues to burden the banking system with extremely high taxes and the regulators increase capital requirements and other public levies.

In November the Bank announced that it had appointed Citi to advice on the planned sale of the Bank's subsidiary Valitor. The sales process is currently being prepared and further developments can be expected this year.

At the end of the year Arion Bank was named the marketing company of 2018 by the Icelandic marketing association, Ímark, for the successful digital journey the Bank has been on. Our digital solutions have also begun to make an impression internationally and the Bank won two awards for its digital products in December. In a little over two years we have launched around 20 digital products and our branch network has evolved in response to the popularity of these solutions. During the fourth quarter two new micro-branches were opened. These micro-branches focus on digital services and occupy substantially less space than the older traditional branches. In fact we were able to reduce the total size of our branches in the Reykjavík area by close to 40% during last year. This trend clearly has an impact on how we work and it also influences how our customers obtain their financial services from us. Today 97% of interaction between the Bank and our customers is through digital channels, such as the App, Arion Online Banking and our website, and digital sales grew 125% during the year.”

Conference call in English

Arion Bank will be hosting a meeting / webcast on Thursday 14 February at 8:30 GMT / 9:30 CET where CEO Höskuldur H. Ólafsson and CFO Stefán Pétursson will present the results and answer questions from participants. The meeting will take place in English at the Bank’s headquarters, Borgartún 19, and will be streamed live.

Those attending the meeting in Borgartún 19 need to register here. To participate in the webcast via telephone and to submit questions please call in using the relevant number before the start of the webcast. Iceland: +354 800 7415 (pin: 90959272#) / SE: +46 850 558 354 / UK: +44 333 300 9260 / US: +1 646 722 4902. The webcast will be accessible live on and a link will also be made available on the Bank’s website under Investor Relations.

For further information please contact Sture Stölen, head of Arion Bank’s Investor Relations at or Theódór Fridbertsson at Investor Relations  at, tel. +354 444 6760. 

Financial calendar 2019

The Bank’s Financial Statements are scheduled for publication as stated below.

Annual Report and Pillar 3 disclosures 2018                      20 February 2019
AGM 2019                                                                           20 March 2019
First quarter 2019                                                                 8 May 2019
Second quarter 2019                                                             8 August 2019
Third quarter 2019                                                              30 October 2019

This calendar may be subject to change.

This is information that Arion Bank hf. is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above.


Arion Bank investor presentation Q4 2018.pdf
Press release Arion Bank Q4 2018.pdf
Arion Bank - Consolidated Financial Statements 2018.pdf