Consolidated interim financial results 1H2012
- Profit after tax was ISK 11.6bn compared to ISK 8.1bn in 1H11.
- 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 7.2bn, compared to ISK 7.7bn in 1H11.
- Net valuation changes on the loan portfolio resulted in a gain of ISK 2.1bn in 1H12, compared to a loss of ISK 255m in 1H11.
- Return on equity was 17.9%, compared to 12.9% in 1H11. Return on equity from regular operations was 11.1% in 1H12, compared to 12.4% in 1H11.
- Around 18,700 individuals and 3,200 corporates have received write offs, debt forgiveness or some form of debt correction since the Bank’s establishment, totaling ISK 394bn to date.
- Total assets were ISK 789.9bn at end of June 2012, compared to ISK 792.4bn at the end of March 2012.
- Total deposits were ISK 499.8bn at end of June 2012, compared to ISK 509.3bn at the end of March 2012.
- The net interest margin was 4.0% in 1H12, compared to 4.8% in 1H11.
- Funding diversification continued with two new domestic covered bond issuances listed in Mar 2012 amounting to ISK 3.3bn and two tap issuances in May 2012. Total covered bond issuances now stand at ISK 8.8bn
- Equity was ISK 135.5bn having increased by 10% throughout the first half of 2012. The total capital ratio was 23.5%, which is well above the 16% regulatory minimum set by the Icelandic Financial Services Authority.
“Íslandsbanki's financial strength is well reflected in the 1H12 financial results. The Bank continues to deliver good return on equity, liquidity is strong and the capital ratio is well above the minimum requirements of the Icelandic FSA.
Net fee and commission income has increased by 47% from last year. This growth is attributable to the merger of Íslandsbanki and Byr, solid performance from the subsidiary Borgun and an increase in capital markets activities. However, our cost-to-income ratios have also been affected by one off costs due to the merger. We expect that the full synergy effect of the merger will come through by next year.
Demand for new loans is increasing and new lending to households and corporates has risen during the period. Indeed, new lending in the first half of 2012 at Ergo, the asset based financing division, has equalled the total for the entire year 2011. Capital markets activities are increasing which will presumably have a positive impact on the development and structure of the Icelandic financial markets in the coming months. Íslandsbanki sold a 10.29% share in Icelandair Group hf. during this period. This is in line with the Bank‘s strategy to reduce its holding in companies in unrelated business.
There are several positive developments in the Icelandic economy. However, the recovery is fragile, both in terms of the uncertainties still present in here in Iceland as well as in the general market environment internationally.”