The Bank and Íslandssjóðir turned in a good operating performance during the year, with the Group delivering a profit of ISK 10.6bn. The Bank’s funding activities were successful during the year, its liquidity position is strong in both domestic and foreign currencies, and its risk is moderate and well managed. In the past year, we have focused on modernising the Bank and building up a responsible business and risk culture. We intend to continue on that path in the coming year by formulating strategies that we are certain will make our Bank even better, for the benefit of the entire community. We welcome the publication of the new White Paper on a Future Vision for the Financial System, issued at the end of the year, which confirms how much the Icelandic banking system has reformed in recent years. The White Paper also points out how heavy a tax burden the Icelandic banking system bears. This situation is mainly harmful to Icelandic consumers, and we hope to see it change.
Digital advances at the forefront
Digital advances were a salient feature of Íslandsbanki’s operations in 2018, when we launched a large number of innovations. We announced our intention to open the door to collaboration with fintech companies, and with the launch of our new core system during the autumn, we completed the biggest tech project since the Bank’s establishment. With this as a cornerstone, we look forward to developing sophisticated digital solutions at an even faster pace and to offering our customers innovations that will make their banking more convenient and the service we provide them even better.
The most satisfied customers in the market
We are delighted that for yet another year, Íslandsbanki tops customer satisfaction rankings in the Icelandic banking market. Without doubt, a high level of service is one of the main reasons for this, and in the software development work that lies ahead, we will stress strongly that the user experience must be the best possible. We have made every endeavour to offer stateof- the-art solutions that our customers can use at any time, no matter where they are. A large and constantly growing share of our customers communicate with the bank by electronic means. For example, the Íslandsbanki app user group grew by 27% during the year, and roughly 95% of credit assessments for mortgage loans now take place online.
Financing and service to large firms and SMEs
We turned our attention to small and medium-sized enterprises (SME) during the year. For the first time, we published a thorough report on the position and operating environment of SMEs and followed through with an ambitious programme of informational seminars. According to the report, SMEs are the drivers of output growth in Iceland, and it is therefore important to support them. Customer satisfaction metrics show that Íslandsbanki ranks #1 for service to this vital segment of the Icelandic economy, which greatly pleases us. Our position among large companies and institutional investors is strong as well. We have carved out a niche as a leader in syndicated loans, including arranging the largest syndicated loan in the history of the Icelandic fishing industry last year. We emphasise responsible participation in project financing, and our thoroughness and strong relationship with our customers has proven successful for us as well as for them. The Bank’s corporate finance unit had an outstanding year, completing 40 projects, and the foreign currency brokerage team had a successful year as well.
Íslandsbanki subsidiary Íslandssjóðir established Iceland’s first commodities fund, and the country’s first green bond fund was offered to institutional investors. We are tremendously proud to participate actively in developing a market for green bonds based on sustainable, socially responsible projects.
”We are delighted that for yet another year, our customers are the most satisfied in the Icelandic banking market. Without doubt, a high level of service is one of the main reasons for this, and in the software development work that lies ahead, we will stress strongly that the user experience must be the best possible.”
Íslandsbanki and Íslandssjóðir: strong position and diversified funding
Íslandsbanki and Íslandssjóðir turned in strong operating results during the year, but operational difficulties among subsidiaries — which the Bank recently put up for sale — had a negative impact on the consolidated accounts. The consolidated profit for 2018 totalled ISK 10.6bn and the return on equity 8.0%. The return on equity from regular operations was in line with expectations, at 6.1%. The Bank’s funding activities were successful during the year, and its liquidity position is very strong in both domestic and foreign currencies. Risk management was also robust, and the Bank’s non-performing loan ratio has continued to fall, to 1.7%, which is excellent in international context.
Participants in the community
As before, we are committed to top-quality educational and informational programmes and discussions. It is particularly gratifying that, at a time when young people visit Bank branches less and less often, our informational meetings and seminars on savings, investment, and homebuying should attract full houses time and time again. Our educational seminars on retirement have never been larger in scope than they were in 2018, with some 1,600 guests attending 34 meetings. Our educational meetings for refugees have been well received, also. Íslandsbanki TV drew deserved attention on the web, as did our extremely well-attended meeting on equal rights, the fourth in a series on women’s labour participation and opportunities.
Strategy in line with changing times
At the end of the year, the Government issued a highly interesting report entitled White Paper on a Future Vision for the Financial System. Many of the recommendations in the White Paper are in line with work already underway within the Bank, reflecting the shared commitment of all parties to building up a sound financial system. Surveys indicate that confidence in the financial system is still low, as it takes a long time — and it might take a full generation — to restore trust after the banking collapse of 2008. Clearly, though, the Bank has changed greatly in the past decade, with a more responsible business culture and a more rigorous regulatory framework. Íslandsbanki will continue to change rapidly, and within a few years it will be entirely different from the Bank we know today. It is our job to shape its operations to align with new times while building confidence through responsible business practices. We have decided to use the first half of 2019 to focus on a strategysetting initiative for the Bank. We do this with our customers’ expectations in mind, and we are certain that it will deliver further operational improvements in harmony with the community. We will therefore place strong emphasis on sustainability and responsible operations. We look forward to continued positive interactions with our customers, owners, and other stakeholders, and we are optimistic about the exciting times ahead. ”We are delighted that for yet another year, our customers are the most satisfied in the Icelandic banking market. Without doubt, a high level of service is one of the main reasons for this, and in the software development work that lies ahead, we will stress strongly that the user experience must be the best possible.”