Islandsbanki hf. : Interim Consolidated Statements 9M2016

09.11.2016 - IR Releases

9M16 Highlights

  • Profit after tax was ISK 15.6bn in 9M16, compared to ISK 16.7bn in 9M15. The profit in 9M16 was driven by strong core income and the completion of the sale of Borgun's shares in Visa Europe, compared to a high net loan impairment gain in 9M2015.
  • Return on equity was 10.3% in 9M16, compared to 11.9% in 9M15.
  • Earnings from regular operations was ISK 11.2bn, compared to ISK 11.8bn in 9M15. Return on equity from regular operations on 15% CET1 was 10.4% in 9M16 compared to 12.3% in 9M15.
  • Net interest income amounted to ISK 23.7bn in 9M16 (9M15 ISK 21.0bn) up 13%. The net interest margin rose to 3.0% in 9M16 (9M15: 2.9%), in part due to high interest rate environment and rising equity levels.
  • Net fee and commission income was ISK 9.9bn in 9M16 at comparable levels to previous year (9M15: 9.9bn).
  • A loss of ISK 1.2bn was recognised due to building damages in current headquarters at Kirkjusandur.
  • Cost to income ratio was 56.0% in 9M16 (9M15: 55.6%), the cost to income ratio excludes the Bank tax and one-off cost items.
  • Total assets amounted to ISK 1,068bn (Jun16: ISK 1,030bn), whereby loans to customers and liquidity portfolio account for 95% of balance sheet.
  • Loans to customers grew by 2.8% in 9M16 to ISK 684.2bn. Total new lending was ISK 124bn across various lending divisions, but strengthening of the ISK had some dampening effect on the growth of the portfolio.
  • Ratio of loans more than 90 days past due and impaired was 2.3% (Jun16: 2.5%).
  • Deposits from customers decreased by 6.8% in 9M16 to ISK 553bn in line with expectations following composition agreements and the CBI's FX auctions.
  • The Bank issued a benchmark EUR 500m note maturing in 2020, making us fully market funded.
  • Total capital ratio and CET1 ratio both at 27.8%, as the only subordinated loan of EUR 138m was prepaid in September.
  • The liquidity position is strong and exceeds internal and external requirements. At June 2016, the Bank's liquidity coverage ratio (LCR) was 195% (Jun16: 173%) and the total net stable funding ratio (NSFR) was 126% (June16: 117%).
  • Leverage ratio was at 17.7% at the end of September compared to 18.3% at Jun16, indicating a moderate leverage.
  • The Bank has issued three notes in FX over the period. Making the Bank fully market funded, Íslandsbanki issued a 4-year EUR 500m (ISK 65bn) 1.75% Fixed Rate Note, corresponding to a spread of 200 basis points over mid-swaps in August. This followed a USD 35m private placement in January and EUR 75m tap issue in May.
  • S&P upgraded Íslandsbanki to BBB/A-2 with a positive outlook in October 2016, and Fitch affirmed its BBB-/F3 rating with a stable outlook in April. Íslandsbanki is the only Icelandic bank to have investment grade ratings from both S&P and Fitch.


  • Profit after tax was ISK 2.5bn in 3Q16 (3Q15: ISK 5.9bn).
  • Return on regular operations on 15% CET1 was 8.7% in the quarter (3Q15: 11.1%).
  • Net interest income amounted to ISK 7.8bn in 3Q16 (3Q15: ISK 7.5bn).
  • Net fee and commission income was ISK 3.2bn in 3Q16 (3Q15: ISK 3.5bn).

Birna Einarsdóttir, Chief Executive Officer at Íslandsbanki:

"It has been a very eventful quarter for Íslandsbanki, in particular with regard to the Bank's funding and operating environment.

The debt levels of the Icelandic sovereign, as well as for individuals and corporates in Iceland, have been greatly reduced and the long awaited steps towards the lifting of capital controls were finally passed into law. Íslandsbanki recently issued a benchmark EUR 500m note making us fully market funded. The Bond was more than twice oversubscribed and has performed very well in the secondary market. S&P Global Ratings (S&PGR) recent upgrade of Íslandsbanki to BBB/A-2 with positive outlook in October was well aligned with these positive trends in the Icelandic economy and the banking sector.

Our sound business position continues to render strong recurring revenues and a resilient ROE. The profit for the first 9 months was ISK 15.6bn, rendering a ROE 10.3%. As previously reported, one-off items had a considerable impact over the period. When adjusted for, earnings from regular operations was 11.2bn rendering ROE of 10.4%. Net interest income rose 13% from year-end 2015, mainly due to a higher interest rate environment and equity levels. The loan portfolio grew 3% on the back of ISK 124bn in new lending. However, we note that competition for lending is stiffening, which coupled with increased taxation on the banking sector is likely to impact future profitability.

Leverage continues to be low at 17.7%. Our solid total capital ratio of 27.8% and sound liquidity position make us well prepared for any adverse effects that might stem from full capital account liberalisation."

Investor Relations - Investor Call in English

On Wednesday 9 November, the Bank will host an investor call in English to present the results at 1pm 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 Dial-in details and presentation will be sent out two hours prior to the call.

All presentation material will subsequently be available and archived on
For information on Íslandsbanki's financial calendar and silent periods see


Jón Guðni Ómarsson, CFO of Íslandsbanki comments on the 9M2016 financial results.


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