Interim report (Q1 and Q3)
Islandsbanki hf.: First Quarter 2019 Financial Results
First Quarter 2019 (1Q19) financial highlights
Profit after tax was ISK 2.6bn (1Q18: ISK 2.1bn) generating an 5.9% annualised return on equity (1Q18: 4.8%).
Earnings from regular operations were ISK 2.7bn (1Q18: ISK 2.9bn) with 6.7% annualised return on equity from regular operations normalised for 16% CET1 (1Q18: 8.0%).
Net interest income was ISK 8.2bn (1Q18: ISK 7.7bn), an increase of 5.3% between years and the net interest margin was 2.8% (1Q18: 2.9%).
Net fee and commission income was ISK 3.2bn (1Q18: ISK 2.8bn), up by 15.8% from the same time last year.
Net impairment on financial assets generated a loss of ISK 919m in 1Q19, compared to ISK 88m gain in 1Q18.
Administrative costs grew by approximately 3.5% between years and totalled ISK 7.1bn (1Q18: ISK 6.9bn.
The cost to income ratio for the Group by end March was 62.6% compared to 69.8% for same period in 2018, while the same ratio for the parent company was 58.1% and slightly above the Bank‘s 55% long term target.
Loans to customers grew by 3.2% (ISK 26.9bn) to a total of ISK 874bn at the end of March. Total new lending during the first three months of 2019 amounted to ISK 51.3bn, split across business segments.
Deposits from customers grew by 5.6% (ISK 32.3bn) to ISK 611bn at the end of March.
The Bank’s liquidity position is strong in both the Icelandic krona and foreign currencies and exceed all internal and external requirements. Capital ratios are high and in line with the long-term targets.
Birna Einarsdóttir, CEO of Íslandsbanki
Robust lending growth and a substantial rise in fee income, marks the Bank's first quarter performance, where it earned a profit of ISK 2.6bn, which is in line with expectations.
The Bank's funding and capital metrics are strong, with liquidity ratios in domestic and foreign currencies in line with internal limits and requirements set by the regulator and capital ratios at the Bank's long term target. The loan portfolio is likewise performing well by international comparisons.
I am pleased how very well the Bank's recent EUR 300 million bond issue was received by investors. This is continuing testimony to trust in the Bank from international investors and confidence in the resilience of the Icelandic economy.
Íslandsbanki launched several new digital solutions for its customers in early 2019. New digital solutions: “Welcome to business” and “Loan in the app” were both received favourably by customers and there is more to come from the Bank in this area.
The Bank published a new report on the tourism sector last week, which has not gone unnoticed and which is understandable given the importance of this sector for the Icelandic economy.
A new strategy for the Bank, which international consultancy firm, Boston Consulting Group advised on, was presented to employees in March. I am convinced that the new strategy will prepare the Bank for a changing banking world and we have already started implementing it.
Íslandsbanki's future is an exciting one, where we intend to move Iceland forward by empowering our customers to succeed, and to have a more active role in shaping and progressing society, always with the vision to be number 1 for service.
First quarter 2019 (1Q19) operational highlights
For the sixth year in a row, Íslandsbanki received recognition for excellence in corporate governance from the University of Iceland Institute of Business Administration's Centre for Corporate Governance.
Íslandsbanki had eight nominations for marketing awards “Lúðurinn“, as well as being nominated to the “Áran“, for the most successful advertising campaign for the Íslandsbanki Reykjavik Marathon.
New digital solutions: “Welcome to business" (“Velkomin í viðskipti”) and “Loan in the app" („Lán í appi”) have both been received favourably by customers. Customers can also now perform contactless payments with Garmin and Fitbit watches.
The Bank's new strategy was presented to employees in March as well as the Bank's enhanced focus on societal impact. The Bank will from now on put a special emphasis on supporting four of the UN's Sustainable Development Goals (SDGs): #4 Quality Education; #5 Gender Equality; #9 Industry, Innovation and Infrastructure; and #13 Climate Action.
As part of the Bank's support to the SDGs, it has been decided to stop giving out gifts made out of plastic to children and teens to counter pollution and waste.
Íslandsbanki recently received Equal Pay Certification. The main purpose of the certificate is to promote gender equality vis-a-vis equal pay in the job market.
Íslandsbanki launched a new website in January. The site has been redesigned and reprogrammed from bottom up, in collaboration with Kolibri and Brandenburg. The look of the Íslandsbanki brand has been updated in recent months, and the website reflects this new interface.
The Bank's annual general meeting was held in March where the shareholders approved the Board's proposal to pay a dividend of ISK 5.3bn of 2018 profits. Tómas Már Sigurðsson was elected to the Board to replace Helga Valfells, who did not seek re-election.
Íslandsbanki‘s customers are the most satisfied in the Icelandic banking market according to the Icelandic Customer Satisfaction Index for the sixth consecutive year.
Investor call in English at 2.00 pm (GMT)
On Thursday 9 May, the Bank will host an investor call in English to present the financial results at 2.00 pm (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@example.com.
Dial-in details and presentation will be sent out prior to the call.
For further information:
Head of Investor Relations – Gunnar Magnússon
firstname.lastname@example.org tel. +354 440 4665
Head of Communications - Edda Hermannsdóttir
email@example.com tel. +354 440 4005
Íslandsbanki press releases
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A leader in financial services in Iceland, Íslandsbanki is a universal bank with total assets of ISK 1,130bn 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 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 sixth consecutive year, Íslandsbanki led the Icelandic Customer Satisfactory Index for banks in 2018 and was also named Best Bank of Iceland in 2018 by Euromoney. Íslandsbanki has a BBB+/A-2 rating from S&P Global Ratings. www.islandsbanki.is
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.