Published: 2019-10-30 20:19:42 CET
Arion Bank hf.
Interim report (Q1 and Q3)

Arion Bank’s Q3 2019 financial results

NET EARNINGS FROM CONTINUING OPERATIONS IMPROVE SUBSTANTIALLY FROM PREVIOUS YEAR

Arion Bank reported net earnings of ISK 0.8 billion for the third quarter of 2019, compared with ISK 1.1 billion for the same period of 2018. Return on equity was 1.6% for the third quarter of 2019, compared with 2.3% for the same period in 2018.

Net earnings from continuing operations amounted to ISK 3,801 million for the third quarter and ISK 8,849 million for the first nine months of 2019, compared with ISK 1,351 million for the third quarter of 2018 and ISK 6,805 million for the first nine months of 2018. Return on equity from continuing operations was approximately 8.5% for the third quarter of 2019, compared with 6.5% for the first nine months of 2019. The subsidiaries Valitor Holding, Stakksberg and TravelCo are classified as assets held for sale.

Total assets amounted to ISK 1,213 billion at the end of September 2019, compared with ISK 1,164 billion at the end of 2018. Loans to customers decreased by ISK 21.3 billion, or 3%, which is in line with the Bank’s strategy to focus on returns rather than the growth of the loan book. Total equity amounted to ISK 196 billion, compared with ISK 201 billion at the end of 2018.

The Bank’s capital ratio, including net earnings for the third quarter, at the end of September 2019 was 23.6%, compared with 22.0% at the end of 2018. The CET1 ratio, including net earnings for the third quarter, was 21.6% at the end of September 2019, compared with 21.2% at the end of 2018.

BENEDIKT GÍSLASON, CEO OF ARION BANK:

“There continue to be positive signs in core operations at Arion Bank. Interest income and income from insurance activities have increased between years and return on equity from continuing operations in the third quarter was 8.5%. Despite these positive developments, Arion Bank’s net earnings for the third quarter are below target owing to a number of factors which the Bank has already reported. The key factors are substantial impairments made in respect of companies held for sale, continuing investments in Valitor’s international business and the recognition of expenses due to organizational changes.

The Bank remains financially robust and the liquidity ratio is strong. The Bank therefore has various opportunities available to it and we have decided to initiate a share buy-back program amounting to ISK 4.5 billion, which will commence on 31 October, and which is designed to reduce the Bank’s equity. Strong liquidity, both in Icelandic króna and foreign currency, also means that the Bank is ideally placed to service its customers and to consider repurchasing older and more expensive wholesale funding.

At the end of the third quarter the Bank announced extensive organizational changes and new focuses in the business. These changes are designed to make the Bank more competitive and to increase return on equity. As a result of the new structure, the total number of employees was reduced by 12% and the number of divisions by two. The Bank’s strategy of offering our customers a diverse range of financial services and being a leading provider of digital financial services remains unchanged. However, there has been a certain shift in focus in terms of financing our corporate clients. Due to high taxes and high capital requirements imposed on financial institutions, it is sometimes cheaper for companies to seek financing from other sources than traditional bank loans. We aim to support these companies by advising them on the best financing options available and developing strong relationships for the future.

Arion Bank has made equality in the workplace a major priority and we have had equal pay certification since 2015. Last year Arion Bank became the first bank to be authorized to use the equal pay symbol of the Ministry of Welfare. Since the Bank was listed on the stock markets in Iceland and in Stockholm a growing number of both Swedish and international analysts have assessed sustainability and equality issues at Arion Bank. Recently Allbright in Sweden reviewed gender representation at all listed companies in Stockholm, a total of 333 organizations, and Arion Bank placed 25th. Although we are proud of this result, we are determined to improve on it.

We recently launched the latest feature in the Arion app, a service bringing the benefits of open banking to our customers. We designed this solution in partnership with the fintech company Meniga and it enables anyone with the Arion app to see their accounts and cards at Arion Bank, Landsbankinn and Íslandsbanki in one place. The information is then collected and sorted to give the user a unique overview over household income and expenditure. The new open banking feature has been received positively by our customers and anybody can download the Arion app and start using this new service immediately.”

WEBCAST FOR MARKET PARTICIPANTS

Arion Bank will be hosting a meeting / webcast on Thursday 31 October at 8:30 GMT (9:30 CET) where CEO Benedikt Gíslason, CFO Stefán Pétursson, deputy CFO Eggert Teitsson and Head of Investor Relations Theodór Fridbertsson 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 7508
      SE: +46 850 558 356
      UK: +44 33 3300 9270
      US: +1 83 3823 0587

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.


The financial calendar of Arion Bank is available on the Bank’s website.


For further information please contact Arion Bank’s Investor Relations at ir@arionbanki.is, or Theodór Fridbertsson, head of investor relations, +354 444 6760.

Media enquiries: Haraldur Gudni Eidsson, head of corporate communications, haraldur.eidsson@arionbanki.is, +354 856 7108.


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 Investor Presentation Q3 2019.pdf
Arion Bank Press Release Q3 2019.pdf
Arion Bank - Consolidated Interim Financial Statements 30 September 2019.pdf