Annual Consolidated Statements 2017
Consolidated 2017 Annual Audited Financial Statement
Highlights in 2017 were:
- Profit after tax was ISK 13.2bn in 2017, compared to ISK 20.2bn in 2016. The profit in 2016 was considerably higher due to one-off income from the sale of subsidiary Borgun’s shares in Visa Europe. Return on equity was 7.5% in 2017, compared to 10.2% in 2016.
- Earnings from regular operations was ISK 13.8bn, compared to 15.1bn in 2016.
- Return on equity from regular operations on 15% CET1 was 10.3% in 2017 compared to 10.7% in 2016.
- Net interest income amounted to ISK 30.0bn in 2017 (2016 ISK 31.8bn) down 5.7% in the period. The net interest margin was 2.9% in 2017 (2016: 3.1%).
- Net fee and commission income was ISK 13.8bn in 2017 compared to 13.7bn in 2016, up 0.2% in the period.
- Administrative costs totalled ISK 27.0bn in 2017, marginally above 2016. When adjusted for one-off costs, there is a 4.5% rise in costs, or a 2.7% rise in real terms when adjusted for inflation. This is mainly a result of investments in IT, including the Sopra Banking Platform, which will replace the Bank’s core deposit and payment systems. The Bank’s head office operations were consolidated into new headquarters at Norðurturn in Kópavogur adding front end costs.
- Cost to income ratio was 62.5% in 2017 (2016: 56.9%), the cost to income ratio excludes the bank tax and one-off cost items.
- Total assets amounted to ISK 1,036bn (Sep17: ISK 1,078bn), whereby loans to customers and the Bank´s liquidity portfolio account for 92% of the balance sheet.
- Loans to customers grew by 9.8% (ISK 67.3bn) in 2017 to ISK 755bn. Total new lending was ISK 199bn during the year across various lending divisions.
- Asset quality continues to improve whereby the ratio of loans more than 90 days past due was 1.0% (Sep17: 1.1%).
- Deposits from customers contracted in line with expectations by 4.6% (ISK 27bn) in 2017 to ISK 567bn.
- Total capital ratio was 24.1% and CET1 ratio was 22.6% at period end, compared to 22.6% and 22.5% respectively at September 2017.
- The liquidity position is strong and exceeds internal and external requirements. At period end, the Bank's liquidity coverage ratio (LCR) was 142% (Sep17: 183%) and the total net stable funding ratio (NSFR) was 117% (Sep17: 115%).
- Leverage ratio was 16.2% at Dec17 compared to 15.3% at Sep17, indicating a moderate leverage in both domestic and international comparison.
- 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 2017, S&P Global Ratings upgraded the Bank to BBB+/A-2, with a stable outlook. Fitch affirmed the rating in December 2017.
Highlights in 4Q17 were:
- Profit after tax was ISK 3.1bn in 4Q17 (4Q16: ISK 4.6bn). Return on equity was 6.9% in 4Q17, compared to 9.0% in 4Q16.
- Return on regular operations normalised on 15% CET1 was 8.1% in the quarter (4Q16: 11.7%).
- Net interest income amount to ISK 7.3bn in 4Q17 (4Q16: ISK 8.1bn) and the net interest margin was 2.8% (4Q16: 3.2%).
- Net fee and commission income was ISK 3.6bn in 4Q17 (4Q16: ISK 3.8bn).
Birna Einarsdóttir, Chief Executive Officer
2017 was a transformative year for us at Íslandsbanki. We introduced a new organisational structure, completed the move to our new headquarters, and revamped the Bank’s core systems. We continued to prepare the Bank for a changed international regulatory framework, technological challenges, and the prospect of new competitors in the market.
In spite of these major changes, the Bank performed strongly during the year. Our loan portfolio grew by 9.8% with ISK 199bn issued in new loans, and our profit for the year was ISK 13.2bn after tax with returns on regular operations measuring 10.3%, which is in line with set targets.
The Bank´s credit ratings were upgraded, and we took even further steps towards a more economical funding structure, with the first foreign subordinated bond issue by an Icelandic financial institution since 2008.
The Bank retained its position as Iceland’s leader in customer service during the year, leading the Icelandic Customer Satisfaction Index for fifth consecutive year, topping the rankings in most categories of service surveys carried out among individuals and companies, and was selected Bank of the Year in Iceland by The Banker.
We look forward to rolling out a number of innovative services in 2018, which will be beneficial for our customers and help us maintain our position as a leading service provider in the banking market.
Investor call in English
Today, 14 February, the Bank will host an investor call in English to present the results at 9:30 am, 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: email@example.com. Dial-in details and presentation will be sent out prior to the call.
Financial calendar and silent periods
Information on Íslandsbanki's financial calendar and silent periods can be found here.
Jón Guðni Ómarsson, CFO of Íslandsbanki, goes over the results of the year 2017.
In addition, all 2016 investor material, including the press release, fact sheet, fact book and video, is available on the IR website under finances