Consolidated annual financial results 2011
- Profit after tax from regular operations was ISK 13.9bn, compared to ISK 17.8bn in 2010. Profit after tax, including one-off items like goodwill impairment, costs associated with the Byr merger, loan portfolio net valuation change, and fair value gains from shares, was ISK 1.9bn, compared to ISK 29.4bn in 2010.
- The entire goodwill from the acquisition of Byr was impaired at year-end 2011 which resulted in a one-off charge to the comprehensive income statement of ISK 17.9bn.
- Net valuation change of the loan portfolio resulted in a loss of ISK 1.3bn in 2011, compared to a gain of ISK 14.5bn in 2010. The expected cost of the Supreme Court ruling of 15 February 2012 is ISK 12.1bn. Significant uncertainty still remains on the ruling’s precedential value and the method of recalculating the interest on loans affected by the ruling.
- Return on equity of regular operations was 11.0%. Taking into account one-off items, return on equity was 1.5%.
- Around 17,600 individuals and 2,700 corporates have received write offs, debt forgiveness or some form of debt correction since the Bank’s establishment, totalling ISK 343bn.
- Total assets were ISK 795.9bn at year-end 2011, compared to ISK 683.2bn in 2010. The increase is a result of the Byr merger.
- Total deposits were 525.8bn at year-end 2011, compared to ISK 423.4bn in 2010.
- An important step towards funding diversification reached when Íslandsbanki was the first bank to list ISK 4bn worth of covered bonds in the NASDAQ OMX Iceland.
- Equity was ISK 123.7bn at year-end and increased by 2% throughout the year. Total capital ratio was 22.6%, which is well above the 16% regulatory minimum set by the Icelandic Financial Services Authority.
Birna Einarsdóttir, Chief Executive Officer of Íslandsbanki
“2011 was an eventful year for Íslandsbanki and important milestones were reached in strengthening operations. The merger of Íslandsbanki and Byr was a great success, increasing market share significantly and setting the scene for future income and synergy effects that have started to emerge in 2012 but will be fully realised in 2013. Furthermore, an important step towards funding diversification was reached when Íslandsbanki was the first bank to list covered bonds on the NASDAQ OMX Iceland since the fall of 2008.
The full-year results show an acceptable return on equity for regular operations. The Bank´s balance sheet and capital position is sound which has allowed us to efficiently meet challenges in our ever changing operating environment. The entire goodwill from the acquisition of Byr was impaired at year end 2011, resulting in a one-off charge to the comprehensive income statement. The fourth quarter was also affected by the recent Supreme Court’s ruling on FX loans. It is of great importance, that the uncertainty regarding FX loans be resolved as quickly as possible.
We have strived to work with our customers in restructuring in such a way that they continue as good customers and value our customer relationship. Our effort has proved well as Íslandsbanki’s customers were the most satisfied in the Icelandic financial sector according to customer satisfaction survey Ánægjuvogin. I firmly believe that 2012 will mark the turnaround where our hard work over the past three years will start to bear fruit and render a more normalised business environment.“