Highlights in 1Q 2017:
- Earnings from regular operations was ISK 3.5bn, which is at comparable levels to1Q16.
- Return on equity from regular operations on 15% CET1 was 10.6% in 1Q17 compared to 9.4% in 1Q16.
- Profit after tax was ISK 3.0bn in 1Q17, compared to ISK 3.5bn in 1Q16. The profit in 1Q17 was driven by strong core income. Return on equity was 7.0% in 1Q17, compared to 6.9% in 1Q16.
- Net interest income amounted to ISK 7.4bn in 1Q17 (1Q16 ISK 7.5bn) down 2% over the year. The net interest margin was 2.9% in 1Q17 (1Q16: 2.9%).
- Net fee and commission income was ISK 3.3bn in 1Q17 compared to 3.1bn in 1Q16, up 4% over the year.
- Administrative costs totalled ISK 6.4bn in 1Q17, down 1.5% from 1Q16.
- Cost to income ratio was 60.1% in 1Q17 (1Q16: 59.0%), the cost to income ratio excludes the bank tax and one-off cost items.
- Total assets amounted to ISK 1,029bn (Dec16: ISK 1,048bn), whereby loans to customers and liquidity portfolio account for 96% of the balance sheet.
- Loans to customers grew by 2.3% (ISK 15.7bn) in 1Q17 to ISK 703bn. Total new lending was ISK 46bn across various lending divisions.
- Asset quality continues to improve whereby the ratio of loans more than 90 days past due and impaired continues to improve and was 1.6% (Dec16: 1.8%).
- Deposits from customers contracted by 4.5% (ISK 27bn) in 1Q17 to ISK 567bn.
- Total capital ratio was 23.1% and CET1 ratio was 22.8% at period end, compared to 25.2% and 24.9% respectively at year-end 2016.
- The liquidity position is strong and exceeds internal and external requirements. At period end the Bank's liquidity coverage ratio (LCR) was 181% (Dec16: 187%) and the total net stable funding ratio (NSFR) was 121% (Dec16: 123%).
- Leverage ratio was 15.5% at Mar17 compared to 16.0% at Dec16, indicating a moderate leverage.
- Íslandsbanki is the only Icelandic bank to have two international credit ratings. In January 2017, Fitch upgraded the Bank to BBB/F3, with a stable outlook, and in October 2016, S&P upgraded the Bank to BBB/A-2, with a positive outlook.
Birna Einarsdóttir, Chief Executive Officer:
Our core operations continued to produce stable core income, whereby net interest income and net fee and commission income contributed to 97% of the Bank’s total income. Return on equity from regular operations on 15% CET1 was 10.6%, compared to 9.4% in 1Q16. In March, the AGM approved a dividend payment of ISK 10bn to the Bank’s shareholders for 2016 profits. All liquidity and capital measures remain solid and leverage remains modest at 15.5%.
The full capital account liberalisation introduced in March marks a significant milestone for the Icelandic economy. As a result, upgrades were granted to the Iceland sovereign ratings. Íslandsbanki also received an upgrade and now has a BBB rating from both Fitch and S&P.
This step towards a more normalised operating environment in Iceland is a gratifying one for Íslandsbanki. Over the quarter, ISK 46bn was granted in new lending which was well spread across all business segments. Net fee and commission income was up 4% over the year. Corporate finance has been very active and closed several mandates. We also note a rise in demand for interest rate and FX risk related products from both domestic and international customers.
Individuals and companies are now allowed to invest in international securities without limitations. VÍB, Íslandsbanki’s wealth management arm, has a broad range of funds available to clients that only invest in international markets. Customers can now also buy foreign currency in the online bank and process payments to overseas accounts as per usual.
In April, the branches in Kirkjusandur and Suðurlandsbraut were merged to form Laugardalur, the Bank’s largest branch for individuals and SMEs. As a result, Íslandsbanki continues to operate the most efficient branch network in Iceland, with 14 branches nationwide. Simultaneously, we are making great strides in digitalisation and customer satisfaction continues to rise. For four years in a row, Íslandsbanki has been named Iceland’s #1 bank in the Icelandic Customer Satisfaction Survey.
Investor call in English
The Bank will also host an investor call in English to present the results at 1 pm Icelandic time. 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 replying to ir@islandsbanki.is. Dial-in details and presentation will be sent out two hours prior to the call.
All presentation material will subsequently be available and archived on www.islandsbanki.is/ir.
For information on Íslandsbanki's financial calendar and silent periods see https://www.islandsbanki.is/english/investor-relations/calendar/.
Video - Islandsbanki Q1 results
Jón Guðni Ómarsson, CFO of Íslandsbanki goes over the results of the quarter of 2017: