Íslandsbanki held its Annual General Meeting today, Thursday 23 March. Chairman of the Board Fridrik Sophusson addressed the meeting on behalf of the Board, and CEO Birna Einarsdóttir reviewed the Bank’s earnings reports and the highlights of operations in 2016.
Íslandsbanki paid ISK 10.2bn in taxes in 2016, including ISK 2.8bn in the form of the special bank tax. Fridrik emphasised the need for a substantial reduction in the bank tax, which was introduced as a temporary measure to finance the Government’s mortgage loan adjustments. In comparison with neighbouring countries, the tax burden in Iceland is fourfold. As a result, it is necessary to provide investors with some assurance about future developments; otherwise, the tax will affect both the Bank’s market listing and the price the State could receive for selling it. In addition, the tax situation erodes the competitive position of Iceland’s banks.
Fridrik also noted that the Icelandic banking system had shrunk from more than eight times GDP in 2008 to less than twice GDP by the end of 2015. By that measure, it has shrunk by roughly 80% and is now modest in size compared with the banking systems in other Nordic countries.
A busy and successful year
At the meeting, Birna discussed the Bank’s operations and the highlights of an eventful year. The Bank moved to its new headquarters at the end of 2016, thereby uniting staff members previously working in four locations in one location. Birna reviewed the Bank’s loan portfolio, some 13% of it comprising loans to the tourism sector during a year that saw a modest increase in lending activity.
She also mentioned the Bank’s EUR 500m bond issue at the best terms since 2008. She welcomed the strong demand, with the number of foreign bond investors nearly doubling. The Bank’s credit ratings were upgraded to BBB by both Standard & Poor's and Fitch. Íslandsbanki is the only Icelandic bank that is rated by two international rating agencies.
The Bank came out on top of the Icelandic Customer Satisfaction Index for the fourth year in a row. Birna thanked the Bank’s staff for a job well done during the year, stating that the Satisfaction Index rankings supported the Bank’s stated vision of providing the best banking services in Iceland.
Results of the AGM
The following were elected to the Board of Directors: Anna Thórdardóttir, Audur Finnbogadóttir, Árni Stefánsson, Hallgrímur Snorrason, Heidrún Jónsdóttir, Helga Valfells, and Friðrik Sophusson, who was also elected Chairman of the Board. Herdís Gunnarsdóttir and Pálmi Kristinsson were elected as alternates. The AGM approved a dividend payment of ISK 10bn to the Bank’s shareholders for 2016 profits. The Board was also 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. The Bank’s compensation policy was approved at the meeting, and remuneration to Board members and alternates was decided as well. Ernst & Young will remain the Bank’s external auditing firm until the next AGM.