Íslandsbanki´s Annual General Meeting


Íslandsbanki held its Annual General meeting today.  Fridrik Sophusson, the Chairman of the Board said in his speech that the bank’s staff, management and Board members had worked continuously to strengthen Íslandsbanki’s infrastructure and operations. 2012’s strong results were the results of these efforts

Strong financial position 
The Chairman said that the bank’s equity position was strong and the Board had agreed on a minimum capital adequacy reference level of 18%, as is stated in the third edition of the Bank’s Risk Report. This reference level was derived from  a legally mandated process and is a precursor to the introduction of Basel III capital standards.

Healthy corporate governance
Mr. Sophusson spoke of the tightened regulatory framework for financial institutions since 2008. He said that it was abundantly clear that the legal and regulatory architecture of the financial system needed revamping after the financial crisis.  On the other hand, he stated that it was of paramount importance that Government authorities and financial supervisors bear in mind that regulation and oversight can never take the place of sound corporate governance. The most effective way to promote  the running of healthy financial institutions was to foster a sense of responsibility and accountability within the firms themselves, including their management and owners.

Modest dividends paid to shareholders
In his speech, the Chairman mentioned that the bank’s ownership structure has remained unchanged since October 2009 and during that period the bank has not paid dividends to its owners.  Over that same period, the Bank has contributed ISK 23 billion to Icelandic society in the form of taxes and public levies. Mr. Sophusson said that the Board of Directors had therefore decided to propose to the Annual General Meeting that a modest dividend of ISK 3 billion would be paid to shareholders in Icelandic Kronas. 

Future ownership of Íslandsbanki
The Chairman furthermore said that it was clear that the bank’s current owners do not intend to own the bank for the long term. He said that it was most important for the bank’s customers, employees and the whole community that Íslandsbanki would have private sector owners, whether domestic or foreign, who would be committed to long term financial operations, and who would be guided by long-term views.  In that way, the bank could best fulfil its obligations to its customers, support the build-up of the economy and contribute to society.

Birna Einarsdóttir, the CEO of Íslandsbanki said that 2012 was a year of turnaround for Íslandsbanki, when the toil of previous years began to yield results.  The bank´s profit for the year totalled ISK 23.4bn, and return on equity was 17.2%.  

Year of mergers 
Mrs. Einarsdóttir said that the merger with the savings bank Byr increased the Bank’s market share significantly. This allowed Íslandsbanki to realise its goal of running the most efficient branch network, whilst raising its market share to over 30%. Furthermore. the 2012 merger with Kreditkort increased the bank‘s market share and bolstered its credit card operations .

Active participant in the Icelandic Economy
In her speech, the CEO spoke of the increasing demand for credit. The number of applications referred to credit committees had risen by almost 40% year on year, and that the Bank had lent ISK 142bn in new money to its corporate customers in 2012.  Mrs. Einarsdóttir furthermore said that the bank had overseen the stock exchange listings of Eimskipafélag Íslands and Fjarskipti (Vodafone), as well as managing the bond offering by real estate firm Eik fasteignafélag, along with several other successful projects during the year. These examples clearly show that Íslandsbanki is an active participant in Icelandic industry and business.

Progress in financial restructuring
Mrs. Einarsdóttir furthermore said that the bank had made excellent progress in reducing the portion of the loan portfolio that was in financial restructuring, lowering it from 22.6% to 13.7%.  The CEO pointed out that 86% of the Bank´s loan portfolio is not undergoing any restructuring.  The Bank decided to award rebates of 30% of  2012´s interest payments to 20,000 of its established customers. The rebates totalled ISK 2.5bn, with each customer receiving an average of ISK 120,000. 

The CEO also said that the bank had continued to diversify its funding base by issuing covered bonds, alongside the introducion of a new deposit product, the 30 day Vaxtaþrep notice account.

Finally, Mrs. Einarsdóttir said that market research indicated that Íslandsbanki is viewed the leading financial services firm in Iceland both in the retail and corporate market.  She said that the bank had a clear strategy - to be number one for service - and that interesting times lie ahead for Iceland´s financial system.

Changes in the bank’s statutes
The Annual General Meeting agreed to changes in the bank’s statutes regarding the Board of Directors, with the number of alternates for Board members being reduced from seven down to at least two.  The bank´s Board of Directors will remain unchanged, but the alternates will be Jón Eiríksson and Þóranna Jónsdóttir.  Furthermore, the meeting agreed that a dividend of ISK 3 billion would be paid to shareholders in Icelandic Kronas.  The meeting also agreed that Deloitte hf. will  continue to be Íslandsbanki´s auditors for the next two years. No changes were made to the board member stipends and the meeting agreed that the bank‘s remuneration policy would remain unchanged from last year.  

Íslandsbanki´s annual report along with the risk book was distributed at the meeting, both of which may be obtained on the Bank´s website.

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