First Half 2019 Results

Íslandsbanki put in a solid performance in the first half of 2019 with the Bank having over 40% market share of new loans to individuals during the period. Customers are always embracing new digital solutions, and the Bank has recently launched a new online mortgage service alongside the introduction of Apple Pay.


First Half 2019 (1H19) financial highlights

Profit after tax amounted to ISK 4.7bn (1H18: ISK 7.1bn) generating a 5.4% annualised return on equity (1H18: 8.2%).

Earnings from regular operations were ISK 5.7bn (1H18: ISK 6.8bn) with 7.2% annualised return on equity from regular operations normalised for 16% CET1 (1H18: 9.4%).

Net interest income was ISK 16.8bn (1H18: ISK 15.3bn), an increase of 9.4% between years and the net interest margin was 2.8% (1H18: 2.8%).

Net fee and commission income was ISK 6.6bn (1H18: ISK 5.8bn), up by 14% from the same time last year.

Net impairment on financial assets generated a loss of ISK 1,848m in 1H19, compared to ISK 1,934 gain in 1H18.

Administrative costs grew by approximately 4.7% between years and totalled ISK 14.4bn (1H18: ISK 13.7bn).

The cost to income ratio for the Group by end-June was 62.0% compared to 67.3% for the same period in 2018, while the same ratio for the parent company was 55.4% and in line with the Bank‘s 55% long term target.

Loans to customers grew by 5.7% (ISK 47.8bn) to a total of ISK 894bn at the end of June. Total new lending during the first half of 2019 amounted to ISK 107.4bn, split across business segments.

Deposits from customers grew by 6.4% (ISK 36.9bn) to ISK 616bn at the end of June.

The Bank’s liquidity position is strong in both the Icelandic króna and foreign currencies and exceeds all internal and external requirements. Capital ratios are high and in line with the long term targets.

Second quarter 2019 financial highlights

Profit after tax was ISK 2.1bn (2Q18: 5.0bn), generating a 4.9% annualised return on equity (2Q18: 11.6%).

Earnings from regular operations were ISK 3.0bn (2Q18: 3.9bn) and annualised return on equity for regular operations normalised for 16% CET1 was 7.8% (2Q18: 11.1%).

Net interest income amounted to ISK 8.6bn (2Q18: ISK 7.6bn) with 2.8% net interest margin (2Q18: 2.8%).

Net fee and commission income was ISK 3.4bn (2Q18: ISK 3.0bn).

Birna Einarsdóttir, CEO of Íslandsbanki Íslandsbanki put in a solid performance in the first half of 2019. We are pleased to see that the Bank was responsible for over 40% market share of new loans to individuals during the period. Customers are always embracing new digital solutions, and the Bank has recently launched a new online mortgage service alongside the introduction of Apple Pay to our services.

According to Gallup, the Bank has the largest market share as primary bank for SMEs at 37% and surveys are showing that the Bank now enjoys its highest NPS scores since the start of measurements. The Bank also recorded the largest trading volume in the local bond market and the second largest in the stock market. Consequently, fee and commission income rose by 14% and interest income increased by 9.4% during the period.

The cost to income ratio of the parent company is now at the Bank's target of 55%, a very welcome development and a reflection of the hard work put in to improving both top and bottom line performance. However, the corresponding ratio for the Group as a whole is 62%. Overall loan growth has remained stable and the Bank's asset quality is strong by international comparison.

The Group generated a profit of ISK 4.7 billion in the first half of 2019, which is a drop since the same period last year. Negative net impairments are higher as a result of the weaker economic situation and the continuing losses of one of the Bank‘s subsidiaries adversely affected the results at Group level.

The Bank's liquidity ratios have strengthened over the course of the year and are well above internal and regulatory requirements. Capital ratios are in line with the Bank’s long term targets. The Bank's funding operations have been successful, notably issuing a further subordinated bond in Swedish Kroner in the second quarter, and deposits have risen since the beginning of the year.

The Íslandsbanki Reykjavík Marathon is at hand and will be held on 24 August. This is the largest fundraising event of the year in Iceland and we are proud to be the main sponsor once again and we encourage people to run and support a good cause.

First half 2019 (1H19) operational highlights

Íslandsbanki announced this summer that its customers can now use Apple Pay.

A fully automated online mortgage application and evaluation procedure was recently introduced by the Bank.

Íslandsbanki led the bond market in terms of trading volume in June, with a market share of 19.7%.

In June, Íslandsbanki issued a SEK 500 m 10NC5 Tier 2 bond.

Íslandsbanki published a new report on the Icelandic tourism sector in May and organised a conference on that topic at the Hilton Reykjavík Nordica.

Íslandsbanki released a new macro-economic forecast in June 2019 and published an article „Is the krona in balance“ on the Bank‘s website in July.

In July, Íslandsbanki lowered interest rates on housing and car loans, following a policy rate decision by the Central Bank of Iceland’s Monetary Policy Committee.

In July it was announced that Riaan Dreyer had been appointed Director of Information Technology at Íslandsbanki.

S&P Global Ratings affirmed Íslandsbanki's rating of BBB+/A2 but changed the outlook from stable to negative.

Investor Relations Investor call in English at 9.00 GMT on Thursday 1 August

The Bank will host an investor call in English at 9.00 GMT on Thursday, 1 August. The call will start with a short macro update on the Icelandic economy, followed by a review of the financial results and Q&A.

Please register by sending an email to: ir@islandsbanki.is. Dial-in details and investor material will be sent prior to the call.

Market participants meeting in Icelandic at 10.30 GMT on Thursday 1 August

A meeting with market participants in Icelandic will take place at Íslandsbanki headquarters, Hagasmári 3, 201 Kópavogur, 9 floor at 10.30 GMT on Thursday, 1 August.

Registration to the meeting is required. Please register by sending an email to: ir@islandsbanki.is

See further information about the results here

Further information:


Gunnar S. Magnússon


Investor Relations

Send email+354 4404665