2017-05-11 19:26:26 CEST
2017-05-11 19:26:26 CEST
REGULATED INFORMATION
Arion Bank hf. - Financial Statement Release
Arion Bank’s 3M 2017 financial results
First quarter 2017 compared with first quarter 2016:
Höskuldur H. Ólafsson, CEO :
- Operating "Operations are stable and the Bank is financially robust, as
income ISK indicated by a capital ratio of 28%. The Bank’s investments
12.5 billion last year had a positive impact on operations. This includes
(ISK 12.0 increased commission income after Arion Bank became the sole
billion) - provider of financial services at Keflavík International
Net earnings Airport in May 2016. Income from insurance activities also grew
ISK 3.4 and now represent a larger share of the Bank’s revenue stream
billion (ISK following the acquisition of the insurance company Vördur last
2.9 billion) year."
- Earnings per
share ISK
1.60 (ISK
1.24)
- Net interest
margin (NIM)
2.8% (3.1%)
- Return on
equity 6.3%
(5.7%)
-
Cost-to-incom
e ratio 64.4%
(60.2%)
- Tier 1 ratio
27.3% (26.2%)
Arion Bank reported net earnings of ISK 3.4 billion for the first three months
of 2017, compared with ISK 2.9 billion for the same period of 2016. Return on
equity was 6.3%, compared with 5.7% for the first three months of 2016.
Total assets amounted to ISK 1,119.7 billion at the end of March, compared with
ISK 1,036.0 billion at the end of 2016. Shareholders’ equity totaled ISK 214.6
billion at the end of March 2017, compared with ISK 211.2 billion at the end of
2016. The Bank enjoys a strong financial position and the focus has been on
maintaining good liquidity as the capital controls are lifted, a process which
is now largely at an end.
The Bank’s capital ratio at the end of March was 28.0%, compared with 27.1% at
the end of 2016. Tier 1 Capital increased during the period to 27.3%, compared
with 26.5% at the end of 2016.
Highlights of the income statement and key income related performance
indicators:
In ISK million Q1 2017 Q1 2016 Diff Diff%
Net interest income 7,160 7,273 (113) (2%)
Net commission income 3,330 3,218 112 3%
Other income 2,023 1,468 555 38%
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Operating income 12,513 11,959 554 5%
Operating expenses (8,056) (7,198) (858) 12%
Bank levy (797) (742) (55) 7%
Net impairment 880 (503) 1,383 (275%)
--------------------------------------------------------------------------
Net earnings before taxes 4,540 3,516 1,024 29%
Income tax (1,334) (737) (597) 81%
Net gain from disc. operations 147 104 43 41%
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Net earnings 3,353 2,883 470 16%
--------------------------------------------------------------------------
KPI's:
Return on equity (ROE) 6.3% 5.7%
Earnings per share (ISK) 1.68 1.24
Net interest margin (int. bearing assets) 2.8% 3.1%
Cost-to-income ratio 64.4% 60.2%
Highlights of the balance sheet and key performance indicators:
In ISK million 31.03.2017 31.12.2016 Diff Diff%
---------------------------------------------------------------
Loans 966,940 880,172 86,768 10%
Other assets 152,708 155,852 (3,143) (2%)
Liabilities 904,868 824,640 80,228 10%
Equity 214,607 211,212 3,395 2%
Loans to Deposits ratio 151.4% 172.9%
RWA / Total assets 66.4% 72.7%
Tier 1 ratio 27.3% 26.5%
Höskuldur H. Ólafsson, CEO of Arion Bank:
"Arion Bank’s financial results for the first quarter of 2017 are in line with
expectations. Operations are stable and the Bank is financially robust, as
indicated by a capital ratio of 28%. The Bank’s investments last year had a
positive impact on operations. This includes increased commission income after
Arion Bank became the sole provider of financial services at Keflavík
International Airport in May 2016. Income from insurance activities also grew
and now represent a larger share of the Bank’s revenue stream following the
acquisition of the insurance company Vördur last year. The impact of this
acquisition will become clearer as the companies further collaborate on selling
insurance products. It is positive that salaries expenses at the Bank have only
risen slightly between years despite these added operations.
In March a milestone was reached when new investors became shareholders in the
Bank. This represented a new stage in the ongoing process of selling the Bank.
It is likely that the Bank will eventually be listed on a stock market, after
which ownership will be in the hands of Icelandic and international investors.
No decision on listing the Bank has been taken yet but it is positive that we
have got the ball rolling, as it was always clear that the ownership structure
in place since 2010 was only a temporary arrangement.
In January Nýherji, one of Iceland's leading IT companies, took over the
administration of the Bank’s IT systems. We see this as a great opportunity to
strike up a partnership with a market leader in its field, and more than 20
Arion Bank employees subsequently transferred to Nýherji. We retain a team of
around 80 IT professionals working in software development and technology
management. We will continue to seek collaboration with others where we can
share resources and improve efficiency all around.
Last year we introduced several new digital solutions which were well received
by our customers. This included a credit assessment for mortgages which can be
completed online in just a matter of minutes. At the beginning of the year we
introduced a new digital mortgage application process which is far shorter and
more straightforward than previous application processes. Our customers can now
apply for a mortgage online, without visiting a branch if they so choose. In
May four new digital solutions will be launched. These solutions are designed
to respond to changing demand for our services. We aim to continue to make our
services available online and on mobile phone so that customers can do their
banking whenever it suits them.
Diversifying our funding has been one of our key focuses in recent years. In
January the Bank tapped its bond issue from December 2016 for a further €200
million, bringing the total issue to €500 million. As before, part of the issue
was used to pay down existing loans. It is pleasing to see that the Bank has
had a positive response on the international credit markets. Bonds issued by
Arion Bank have performed well on the secondary market, demonstrating the
market's confidence in the Bank and its future prospects. In Iceland, the Bank
continues to successfully issue commercial paper and covered bonds and this is
an important component of the Bank’s funding."
Conference call in English
Arion Bank will be hosting a conference call in English on Friday 12 May at
1:00 pm GMT, where Stefán Pétursson, Chief Financial Officer, will discuss the
highlights of the Bank’s financial results. People interested in participating
can contact ir@arionbanki.is to obtain dial-in information.
For further information please contact Haraldur Gudni Eidsson of Arion Bank's
Communications division at haraldur.eidsson@arionbanki.is, or tel. +354 444
7108.
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