Published: 2019-08-08 19:35:55 CEST
Arion Bank hf.
Half Year financial report

Arion Bank’s Q2 2019 financial results

Continuing positive trends in core operations, but irregular items affect net earnings

Arion Bank reported net earnings of ISK 2.1 billion for the second quarter of 2019, compared with ISK 3.1 billion for the same period of 2018. Return on equity was 4.3% for the second quarter of 2019, compared with 5.9% for the same period in 2018. Return on equity excluding the subsidiary Valitor, which is classified as held for sale, was 6.6% for the second quarter of 2019, compared with 7.2% for the same period in 2018. 

Total assets amounted to ISK 1,233 billion at the end of June 2019, compared with ISK 1,164 billion at the end of 2018. Total equity amounted to ISK 195 billion, compared with ISK 201 billion at the end of 2018.

The Bank’s capital ratio at the end of June 2019 was 22.8%, compared with 22.0% at the end of 2018. The CET1 ratio was 21.4% at the end of June 2019, compared with 21.2% at the end of 2018.

Benedikt Gíslason, CEO of Arion Bank

“Arion Bank’s financial results for the second quarter were disappointing. However, it is good to see that the Bank’s core operations are developing positively, and net interest income continues to grow, both compared with Q1 2019 and Q2 2018. The quality of the loan book remains good but the economy has begun to slow down, something reflected by a decrease in the size of the loan book and loan impairments. Additionally the composition of the loan book is changing, reflecting the Bank’s emphasis on returns instead of growth. Commission income remains stable and earnings from the insurance operation of the Bank’s subsidiary Vördur were strong. Operating expenses are moving in the right direction and one of our key tasks in the near term is to make further improvements in this area.

Arion Bank is a leading innovator and developer of financial services in Iceland. It is exciting to take the helm of such a dynamic and forward-looking company. Over the last few years the Bank has launched a whole range of exciting digital products for our customers, some of which have gone on to win international awards. More recently the Bank has introduced new digital solutions such as Apple Pay, which our customers have welcomed with open arms. The Bank has also recently brought out a product which enables customers to analyze their household finances more effectively in the App. Soon customers will be able to use the App to get personalized quotes for car and home insurance from Vördur, and it will be the first time we offer services from another company in the App. The App continues to win acclaim and in a recent survey the Arion App was yet again rated as the best banking app in Iceland.

We will continue along this path and we are about to begin shaping the key focuses in our strategy and business for the next few years, so that the Bank is fully prepared to deal with the major changes occurring in the financial services sector. We will look at various areas of the Bank's operations, such as capital structure, quality of the loan portfolio, increased risk diversification, and cost efficiency, where digital solutions play a key role. The aim is to further consolidate the Bank’s position, increase profitability and ensure that the Bank remains a leading provider of cutting-edge financial services.  

Preparing for the future is of the utmost importance and every positive step we take counts. In the spring Arion Bank and Kolvidur signed an agreement on offsetting the carbon emissions produced by the Bank’s activities. Kolvidur will fix the carbon in plants and soil through soil reclamation and forestry to offset the Bank's carbon emissions in 2019. Kolvidur intends to plant up to 5,000 trees in respect of the current operating year. Carbon offsetting the Bank’s day-to-day operations is an important component of the Bank’s environment policy.”

   
Webcast for market participants

Arion Bank will be hosting a meeting / webcast on Friday 9 August at 8:30 GMT (10:30 CEST) where CEO Benedikt Gíslason, CFO 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.

     IS: +354 800 7520

     SE: +46 850 558 358

     UK: +44 33 3300 9263

     US: +1 83 3526 8381

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, +354 856 7108.

  

Financial calendar 2019-2020

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

Third quarter 2019                                             30 October 2019

Full year 2019 and fourth quarter 2019                12 February 2020

AGM                                                                  17 March 2020

First quarter 2020                                              6 May 2020

Second quarter 2020                                          29 July 2020

Third quarter 2020                                             28 October 2020


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 Press Release Q2 2019.pdf
Arion Bank Investor Presentation Q2 2019.pdf
Arion Bank - Consolidated Interim Financial Statements 30 June 2019.pdf