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Annual General Meeting of Íslandsbanki 2015

The Annual General Meeting of Íslandsbanki was held today. Friðrik Sophusson, Chairman of the Board presented the Board’s report and Birna Einarsdóttir, CEO presented the annual results for 2014 and the operational highlights of the year.

Public levies and increased competition

In his speech Mr. Sophusson said that profits can be assumed to contract somewhat in coming years, as the weight of the irregular items declines over time. The chairman talked about the business environment in Iceland and pointed out that Íslandsbanki will pay an estimated ISK 10bn in temporary bank tax over the four years that the tax is to remain in effect. Since its establishment the Bank has now paid nearly ISK 50bn in public levies. Consideration must be given to the competitive position of Icelandic banks, which are increasingly pitted against Nordic banks in the competition for loans to the country’s largest firms, when taxes and other public levies are decided. Iceland’s special tax does not affect foreign competitors; therefore, it is critical that it remain only temporary, as has been announced. 

Reorganisation complete

The chairman talked about the publication of the Pillar 3 report. It contains an analysis of developments of non-performing loans, showing that the Bank’s asset quality has improved rapidly in recent years. In fact, according to data from the European Banking Authority (EBA), Íslandsbanki is comparable to banks in the top third of the European banking system. Mr. Sophusson said that based on this, the Bank considers it safe to declare that the restructuring of its loan portfolio, which began in 2009, is now complete.

The largest growth in lending

Birna Einarsdóttir presented the operating results of 2014. Business proceeded smoothly on all fronts and growth in the loan portfolio was the strongest since the Bank’s establishment. New lending amounted to ISK 165 billion, a 65% increase year-on-year, primarily through corporate lending but also as a result of growing demand in asset-based financing and residential mortgages. Ms. Einarsdóttir said the Bank has set in place a number of streamlining projects aimed at increasing the efficiency of operations and reduction of costs. These projects include supplier contracts review, simplification of processes and reduction of workforce by 240 full-time equivalents since November 2011. Additionally the Bank has been successful in diversifying its funding base and is now Iceland’s largest issuer of covered bonds. In 2014, the Bank was the first Icelandic bank to issue a euro-denominated bond since 2008 and further expanded its issue in Swedish Krona. The Bank’s performance attracted recognition abroad, with both Euromoney and The Banker recognising Íslandsbanki as the best bank in Iceland. In addition, the no bank received a higher score than Íslandsbankiat the Icelandic Customer Satisfaction Index.

The results of the Annual General Meeting

John Mack, who has been the Vice-Chairman of the Board of directors for the past five years, is leaving the Board at his own request. Eva Cederbalk, an economist, will take his seat. She has a 40 year career within the financial sector. Ms. Cederbalk worked for 23 years for the Skandinaviska Enskilda Banken in various positions, including head of retail banking and head of internet and telephone banking. She was also the CEO of SBAB Bank for 7 years. In recent years, Ms. Cederbalk has been a board member of various companies, including investment and insurance companies.
Ernst & Young will be the new auditing firm for the Bank. The Bank’s Remuneration Policy will remain unchanged. The meeting approved a payment of ISK 9 bn ISK in dividends.

Annual report, Risk Report and Chairman´s note can be found here.