Íslandsbanki: Consolidated interim financial results 1Q 2012

30.05.2012 - IR Releases

Highlights:

  • Profit after tax, was ISK 5.6bn compared to ISK 3.6bn in 1Q11.
  • Profit after tax from regular operations, defined as earnings excluding one-off items e.g. net valuation changes from the loan portfolio, fair value gain deriving from changes in accounting treatment, costs associated with the Byr merger and the impairment of goodwill, and net earnings from discontinued operations, was ISK 4.8bn, compared to ISK 3.8bn in 1Q11 and ISK 13.9bn in FY11.
  • Net valuation change on the loan portfolio resulted in a loss of ISK 1.5bn in 1Q12, compared to a loss of ISK 664m in 1Q11.
  • Return on equity was 17.7%, compared to 11.7% in 1Q11. Return on equity from regular operations was 15.1% in 1Q12, compared to 12.4% in 1Q11.
  • Around 18,200 individuals and 3,000 corporates have received write offs, debt forgiveness or some form of debt correction since the Bank’s establishment, totaling ISK 370bn to date.
  • Total assets were ISK 792.4bn at the end of March 2012, compared to ISK 795.9bn at year-end 2011.
  • Total deposits were ISK 509.3bn at the end of March 2012, compared to ISK 525.8bn at year-end 2011.
  • The net interest margin was 4.4% in 1Q12, compared to 4.5% in FY11.
  • Funding diversification continued with two new domestic covered bond issuances listed in Mar 2012 amounting to ISK 3.3bn.
  • Equity was ISK 129.4bn having increased by 5% throughout the first quarter. The total capital ratio was 23.3%, which is well above the 16% regulatory minimum set by the Icelandic Financial Services Authority.

Birna Einarsdóttir, Chief Executive Officer of Íslandsbanki
“The first quarter in 2012 sends a strong signal for the rest of the year. The Bank´s capital is well above the minimum regulatory requirements and earnings from regular operations continue to grow. This quarter will always be notable in the history of the Bank as the merger of Íslandsbanki and Byr was completed. I am immensely proud of our employees for their dedication and positive attitude shown in this great task.

Another Supreme Court ruling on loans in foreign currency was passed in February, inevitable delaying the restructuring process. Not only is it inconvenient for customers but also for the Bank and the community as a whole, especially as the final interpretation of the ruling will not be available until later this Autumn.

We saw an increase in loan growth during the quarter, in particular at Ergo, the Bank’s asset based financing division. This suggests that companies are starting to take cautious steps in their investments. However, we also clearly note that the seafood industry and related companies are holding back on new investments while uncertainty remains on new legislation and fishing fees.

The Bank´s covered bonds have been well received by investors, who welcomed two new issuances in March and tap issuances in May. This diversifies the Bank´s funding profile and enables us to provide our customers with better business terms.”

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