Published: 2019-05-08 19:39:55 CEST
Arion Bank hf.
Interim report (Q1 and Q3)

Arion Bank’s Q1 2019 financial results

Positive development in core operations but irregular items affect net earnings

Arion Bank reported net earnings of ISK 1.0 billion for the first quarter of 2019, compared with ISK 1.9 billion for the same period of 2018. Return on equity was 2.1% for the first quarter of 2019, compared with 3.6% for the same period in 2018. Return on equity excluding the subsidiary Valitor, which is classified as held for sale, was 6.2% for the first quarter of 2019, compared with 4.8% for the same period in 2018.

Total assets amounted to ISK 1,223 billion at the end of March 2019, compared with ISK 1,164 billion at the end of 2018. Total equity amounted to ISK 193 billion, compared with ISK 201 billion at the end of 2018. During the first quarter of 2019 Arion Bank paid a dividend of ISK 10 billion, or ISK 5.00 per share.  

The Bank’s capital ratio at the end of March 2019 was 22.3%, compared with 22.0% at the end of 2018. The CET1 ratio was 21.3% at the end of March 2019, compared with 21.2% at the end of 2018.


Stefán Pétursson, acting CEO of Arion Bank

“Irregular items mean that the financial results for the first quarter were disappointing. Regular operations are, however, improving, and key sources of income such as interest and commission income and insurance income are higher than in the first quarter of 2018. The net interest margin remains stable despite lower inflation and the effects of the Bank's measures to lower its funding costs have yet to materialize in full. The bankruptcy of WOW Air and the judgement by Reykjavík District Court against Valitor are the main irregular items negatively affecting the Bank’s financial results, whereas the Bank’s sale of its holding in Farice had a positive effect. The economic slowdown has affected revenue growth and increased general impairments, which are determined on the basis of the economic outlook at any given time. 

Operating expenses are stable and we are continuing to target improved cost efficiency. One of the ways we seek to achieve this is by placing a greater focus on digital solutions. In the last few years the Bank has launched a range of digital solutions which have proven highly popular among our customers, making it easier for them to take care of their finances and easier for us to provide good service. In the first quarter a new version of the Arion App was launched which can be used by anyone wanting to do business with us. Today we are bringing Apple Pay to our customers. From today our customers can add their VISA cards to Apple Pay and use their iPhone, Apple Watch or Mac to make fast and secure purchases in stores, on websites, in apps and numerous other locations in Iceland and abroad. Doing your banking and paying for goods and services has never been so easy.

The Bank remains financially robust and several important steps were taken during the period to optimize the capital structure. The AGM approved a proposal to reduce the Bank's share capital by cancelling the Bank's own shares, 9.3% of share capital, and to pay dividends amounting to ISK 5 a share, or approximately net ISK 9 billion. These measures have already been taken and represent important steps towards the Bank’s achieving its financial targets over the next 3-5 years.   

Arion Bank recently signed a statement that it would endorse and adopt six new UNEP FI Principles for Responsible Banking. The United Nations Environment Programme Finance Initiative (UNEP FI) is a partnership between United Nations Environment and more than 240 financial institutions across the world. We will utilize this platform and the principles on our journey towards responsible banking and sustainability. The aim of the principles is to align the banking sector with international commitments including the UN’s Sustainable Development Goals and the Paris Climate Agreement.   

As we have communicated earlier, Arion Bank’s subsidiary Valitor, an international payment solutions company with operations in Iceland, the United Kingdom and Denmark, is currently in the process of being sold and the goal is to sell part or the whole of the company. The necessary preparatory work is close to completion and marketing to potential investors will start in the coming weeks. We expect this process to be concluded this year. The recent judgment by Reykjavík District Court, which ordered the company to pay ISK 1.2 billion in damages, is not expected to affect the sales process. In April, Valitor entered into a new 2-year business agreement with Stripe, one of the leading Fintech companies in the world.” 

  

Webcast for market participants

Arion Bank will be hosting a meeting / webcast on Thursday 9 May at 8:30 GMT (10:30 CET) where acting CEO Stefán Pétursson, Deputy CFO Eggert Teitsson and Head of Investor Relations Sture Stölen 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 7508

Sweden: +46 856 642 706 

UK: +44 33 3300 9260

USA: +1 83 3526 8347 

The webcast will be accessible live on financialhearings.com and a link will also be made available on the Bank’s website under Investor Relations.

 

For further information please contact Arion Bank’s Investor Relations at ir@arionbanki.is, Sture Stölen, head of investor relations, +46 72 368 6507 or Theódór Fridbertsson, investor relations, +354 444 6760.  

Media enquiries: Haraldur Gudni Eidsson, head of corporate communications, haraldur.eidsson@arionbanki.is, +354 444 7108.

 

Financial calendar 2019

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

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.

Attachments


Arion Bank - Consolidated Financial Statements 31 March 2019.pdf
Arion Bank Investor Presentation Q1 2019.pdf
Arion Bank Press Release Q1 2019.pdf