Heavy tax burden distorts Icelandic banks’ competitive position
In his speech, Friðrik make reference to the recent White Paper on a Future Vision for the Financial System, which emphasised how much the Icelandic banking system has reformed in recent years. The White Paper, Friðrik said, further confirms the heavy tax burden borne by the Icelandic banking system, which primarily has adversely affected Icelandic consumers and distorted the competitive position of Icelandic banks that must compete with foreign banks, pension funds, and now fintech companies. This is particularly unfortunate in view of the fact that the State owns all of Íslandsbanki and most of Landsbankinn. The State’s holdings in the Icelandic financial system are many times larger than in most other European countries.
The White Paper discusses the benefits of selling Íslandsbanki, and it is clear that Icelandic taxpayers have much to gain from a well-administered sale process. In addition, foreign ownership or listing on both foreign and domestic stock exchanges would be beneficial. But it is the owner — the Icelandic Government — that will decide the matter, but it is exceedingly important that the sale process be fair and transparent.
Friðrik presented proposals to the AGM, including a proposed dividend payment in the amount of ISK 5.3bn, which is in line with the Bank’s dividend policy; amendments to the employment terms policy: amendments to the Articles of Association; and changes in Board membership. In closing, Friðrik thanked Helga Valfells for fruitful collaboration during her term on the Board and welcomed Tómas Már Sigurðsson, who will take her place.
Digital advances prioritised during the year
CEO Birna Einarsdóttir expressed her satisfaction with the Bank’s operating performance in 2018, which generated a profit of ISK 10.6bn. The parent company had a good year, as did IS Funds, which saw a 6% year-on-year increase in fee and commission income. In addition, the Bank contributed to growth in the general economy with 12% lending growth during the year.
Birna noted that investment in the Bank’s core infrastructure had peaked in 2018, with the completion of the launch of the new core payment intermediation and deposit systems, the Bank’s largest tech project to date. The Bank has begun to reap the benefits of the developmental work we have done in the past few years. Taking a new approach to technology and cooperating with fintech companies have been immensely helpful as we design new digital solutions for our customers. During the year, we rolled out a large number of digital innovations that were well received by our customers, and once again, for the sixth year in a row, we topped the Icelandic Customer Satisfaction Index in the banking services category. Birna also mentioned that further digital service enhancements are in the offing, in keeping with the Bank’s prioritisation of digital products and services.
She said that the Bank’s position was very strong and that successful bond market funding and high deposit ratios had delivered a sound liquidity position in both domestic and foreign currencies. The Bank’s capital position is also strong in international comparison, as its risk has remained moderate and its non-performing loan ratio is low. In closing, Birna announced the development of a new strategy for the Bank, reflecting the changed banking environment and the position of Íslandsbanki in the community — a strategy that will make Íslandsbanki an even better bank for our customers.
Results of the AGM
1. Confirmation of annual accounts for 2018
The AGM approved the Bank’s audited consolidated annual accounts for 2018.
2. Board report on the Bank’s activities in 2018
Friðrik Sophusson, Chairman of the Board of Íslandsbanki, delivered the Board report on the Bank’s activities in 2018.
3. Confirmation of annual accounts for 2018
Birna Einarsdóttir, Chief Executive Officer of Íslandsbanki, presented the Bank’s annual accounts and operational highlights in 2018, and the annual accounts were confirmed.
4. Proposal on payment of dividends and disposition of profit for 2018
The AGM approved a dividend payment of ISK 135.3 to the Bank’s shareholders for 2018 profits. The dividend equals about 50% of the profit for the year and is therefore in line with the Bank’s long-term policy of paying dividends in the 40-50% range. The Board is authorised to call an extraordinary shareholders' meeting later in the year because of the possibility that a proposal for an extraordinary dividend on previous operational years could be presented.
5. Election of Board members and alternates
The following were re-elected to the Board of Directors: Anna Þórðardóttir, Auður Finnbogadóttir, Árni Stefánsson, Hallgrímur Snorrason, Heiðrún Jónsdóttir, and Friðrik Sophusson, who was also re-elected Chairman of the Board. Tómas Már Sigurðsson was elected to the Board to replace Helga Valfells, who did not seek re-election. Herdís Gunnarsdóttir and Pálmi Kristinsson were re-elected as alternates.
6. Election of external auditing firm
It was agreed that Ernst & Young would remain the Bank’s external auditing firm until the next AGM.
7. Proposal for remuneration to Members of the Board for the upcoming term
The proposal for remuneration to Board members and alternates was approved.
8. Proposal for Employment Terms Policy.
The Bank’s amended employment terms policy was approved.
9. Proposed amendment to the Articles of Association
A proposed amendment to Article 8 of the Bank’s Articles of Association was approved. The Article will henceforth read as follows:
“Shareholders’ meetings shall be called at least one week in advance and no more than four weeks in advance; however, the Annual General Meeting shall be called with at least two weeks’ notice.
The Board of Directors, Managing Director, and auditors of the company shall always be summoned to shareholders’ meetings, and representatives from the media shall be invited to the Annual General Meeting.”
10. Other business
No other business was lawfully proposed at the meeting.