Íslandsbanki's 2010 results
Íslandsbanki presents its audited consolidated financial statements for the year ended 2010, which have been prepared on a going concern basis. The Bank returned a profit of ISK 29.4bn for the period. Tax charges and National Insurance are estimated at ISK 8.1bn. The Bank's total capital ratio of 26.6% exceeds the 16% minimum set by the Icelandic Financial Supervisory Authority (FME). Return on equity was 28.5% for the period.
- Profit after tax for the year ended 31 December 2010 amounted to ISK 29.4bn compared to ISK 24bn for the previous year.
- Tax charges and National Insurance for the period amounted to ISK 8.1bn. Thereof, National Insurance charge was ISK 670m, income tax was ISK 7.2bn and a new bank tax that came into force during the year resulted in an ISK 221m payment to the State.
- Net interest income was ISK 34.9bn compared to ISK 32bn in 2009.
- Net valuation changes on loans and receivables amounted to ISK 14.5bn. This revenue is mostly due to favourable developments from the restructuring of the corporate loan portfolio acquired from Glitnir.
- Net fee and commission income was ISK 7.4bn compared to ISK 7bn in 2009.
- Other financial loss was ISK 0.9bn compared to a profit of ISK 285m in 2009. This is explained by a devaluation of equity instruments.
- Net foreign exchange loss on the Bank's foreign exchange gap was ISK 0.9bn compared to a gain of ISK 2.6bn in 2009. This is due to strengthening of the Icelandic krona in the period. The foreign exchange gap was closed with a foreign exchange swap at year end 2010.
- Charge for the Investors' and Depositors' Guarantee Fund was ISK 0.6bn in 2010. This charge is expected to double in 2011 following a change in legislation. The Bank has disclosed an ISK 3.7bn off balance sheet guarantee obligation towards the Fund to cover possible future events.
- Core cost/income ratio was 43.7% compared to 41.3% in 2009.
- Total assets at 31 December 2010 were ISK 683bn compared to ISK 717bn at year end 2009.
- Loans to customers and credit institutions totalled ISK 546bn and total deposits amounted to ISK 423bn at the end of the period. Loans to customers and credit institutions were ISK 577bn in 2009 and total deposits were ISK 479bn.
- The deposit/loan ratio was 77.5% at the end of the year compared to 83% at year end 2009.
- Equity as of 31 December 2010 amounted to ISK 122bn compared to 91bn in 2009.
- Return on equity for the period was 28.5% compared to 30% in 2009.
- There will be no dividend payments in the year 2011 from the 2010 earnings.
- Total capital ratio at end of the period was 26.6% compared to 19.8% in the previous year. The Financial Supervisory Authority sets a minimum total capital ratio of 16%.
- The average number of full time equivalent employees (FTE) was 1,080 at the end of the period. Average FTE was 1,039 in 2009.
Birna Einarsdóttir, CEO of Íslandsbanki:
"We are proud to present these results today. 2010 was a year of good progress at the Bank in face of an atmosphere of heightened uncertainty in Iceland. Court rulings on the legality of foreign exchange linked loans called into question the capitalisation of the banking industry as a whole in the first half of the year, fears that were subsequently allayed by new legislation that clarified the legal status of these loans.
The Bank has made deep inroads into the restructuring of its loan books, with the expectation that work on the retail and corporate portfolios will be mostly complete by the end of 2011. This work remains, collectively, the biggest endeavour that Íslandsbanki is engaged in - yet every effort made here brings the Bank closer to normalising its core business, and provides opportunities for future business.
We cannot, however, be complacent about either Íslandsbanki or the economy. The prospects for both are inter-linked and subject to continued uncertainties. That said, the Icelandic economy is showing unmistakeable signs of growth and it is our duty to ensure that Íslandsbanki can assume a very active role in supporting its customers into this recovery. We can be satisfied that the Bank's strong capitalisation, liquidity and earnings ratios give it the best possible foundation to help lead the economy back to a prosperous, sustainable path."