2016-11-16 18:12:49 CET

2016-11-16 18:12:49 CET


REGULATED INFORMATION

English Islandic
Arion Bank hf. - Financial Statement Release

Arion Bank’s 9M 2016 financial results 


Arion Bank reported net earnings of ISK 17.3 billion for the first nine months
of 2016, compared with ISK 25.4 billion for the same period of 2015. Return on
equity was 11.2%, compared with 19.8% for the first nine months of 2015.
Adjusted earnings amounted to ISK 5.7 billion, compared with ISK 11.5 billion
in the first nine months of 2015. Return on equity from adjusted operations was
3.7%, compared with 9.5% for the same period last year. 

Total assets amounted to ISK 1,038.5 billion at the end of September, compared
with ISK 1,011.0 billion at the end of 2015. Shareholders’ equity totalled ISK
206.9 billion at the end of September, compared with ISK 192.8 billion at the
end of 2015. The Bank enjoys a strong financial position and has focused on
maintaining good liquidity in the period leading up to the lifting of the
capital controls. 

The Bank’s capital ratio at the end of the period was 26.1%, compared with
24.2% at the end of 2015. Tier 1 Capital increased during the period to 25.5%,
compared with 23.4% at the end of 2015. 

Highlights of the income statement and key performance indicators:

In ISK million                             9M 2016   9M 2015   Q3 2016  Q3 2015
Net interest income                          22,058    20,287    7,432    7,112
Net commission income                        10,213    10,726    3,466    3,292
Net financial income                          4,339    10,176      844      453
Share of profit of associates                   710     6,956       16    2,739
Other operating income                        2,642     2,232      781      709
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Operating income                             39,962    50,377   12,539   14,305
Salaries and related expense               (12,252)  (10,320)  (3,826)  (3,153)
Other operating expenses                   (10,393)   (9,016)  (3,425)  (3,012)
Bank levy                                   (2,190)   (2,168)    (705)    (779)
Net impairment                                6,827     (114)    5,882     (33)
-------------------------------------------------------------------------------
Net earnings before taxes                    21,954    28,759   10,467    7,328
Income tax                                  (5,261)   (3,639)  (3,170)  (1,272)
Net gain from disc. operations                  569       277      206       15
-------------------------------------------------------------------------------
Net earnings                                 17,262    25,397    7,503    6,071
-------------------------------------------------------------------------------
                                                                               
KPI's:                                                                         
Return on equity (ROE)                        11.2%     19.8%    14.4%    14.2%
Net interest margin (int. bearing assets)      3.1%      3.0%     3.1%     3.1%
Cost-to-income ratio                          56.7%     38.4%    57.8%    43.1%
Tier 1 ratio                                  25.5%     22.2%    25.5%    22.2%



Höskuldur H. Ólafsson, CEO of Arion Bank:

“The financial results for the first nine months of 2016 are satisfactory. The
Bank’s core operations have performed slightly below expectations as external
conditions have been challenging in many respects. The performance of the
equities market had a negative impact on the financial results, as the Bank
still has holdings in listed equities. Nevertheless the core operations remain
solid and the Bank continues to consolidate its capital. Standard & Poor's
cited Arion Bank's improving capital position, better access to foreign debt
capital markets and greater resilience in the Icelandic economy as reasons for
upgrading the Bank’s credit rating to BBB/A-2 with a positive outlook. The
spread on the Bank’s international issues on the secondary market has
decreased, clearly indicating that there is demand on the international credit
markets for Arion Bank bonds. 

At the end of September Arion Bank completed the acquisition of the insurance
company Vörður, adding non-life insurance to our product range, which has
already included life insurance for several years. As a subsidiary of Arion
Bank, Vörður will form a close partnership with the Bank, bringing benefits to
the customers of both companies.” 



Conference call in English

Arion Bank will be hosting a conference call in English on Thursday 17 November
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.