Íslandsbanki hf. - Interim report (Q1 and Q3)

Islandsbanki hf. : 3Q2013 Interim Consolidated Financial Statements

+------------------------------------------------------------------------------+
|HIGHLIGHTS                                                                    |
|   ·         Profit after tax was ISK 4.2bn in 3Q13 (3Q12: ISK 4.6bn), and ISK|
|15.4bn in 9M13 (9M12: ISK16.2bn).                                             |
|   ·         Return on equity was 10.6% in the quarter (3Q12: 13.3%), and     |
|13.4% in 9M13. (9M12: 16.3%). The YoY decrease in ROE is primarily driven by  |
|higher equity which is up 3% from Jun13 and 14% YoY.                          |
|   ·         Total capital ratio remains strong at 27.2% (Jun13: 27.4%), and  |
|Core Tier 1 ratio was 23.9% (Jun13: 24%), albeit a 3.5% increase in RWA in the|
|quarter to 663bn (Jun13: 641bn).                                              |
|   ·         Net interest income amounted to ISK 7.4bn (3Q12: ISK 7.8bn), a   |
|YoY decrease of 5.1%. The net interest margin was 3.5% in 3Q13 (2Q13: 3.4%)   |
|and is decreasing in line with expectations as deep discount following the    |
|acquisition of Glitnir loan book is being amortized.                          |
|   ·         Net valuation changes on the loan portfolio resulted in a gain of|
|ISK 0.6bn in the quarter (3Q12: ISK 0.7n) and ISK 8.5bn in the first 9 months |
|(9M12: ISK 2.8bn).                                                            |
|   ·         Net fee and commission income increased to ISK 2.5bn in the      |
|quarter  (3Q12: ISK 2.3bn) and to 7.6bn  in the first 9 months (9M12: ISK     |
|6.7bn). This is a YoY increase of 8% over the quarter and 13% over 9M which   |
|can mainly be attributed to Markets, Retail, Wealth and fee generating        |
|subsidiaries.                                                                 |
|   ·         Cost to income ratio decreased to 48.5% (3Q12: 50.6%).           |
|   ·         Around 35 thousand individuals and 4,100 corporates have received|
|ISK 524bn in debt forgiveness of some form since the Bank's establishment.    |
|   ·         Restructuring is on track, LPA ratio was 9.8% (Sep12: 17.4%), 90 |
|days past due ratio is 5% (Dec12: 8%).                                        |
|   ·         Total assets were ISK 863bn (Jun13: ISK 823bn), with loans to    |
|customers increasing 2% to ISK 549bn (Jun13: ISK 539bn).                      |
|   ·         Total deposits increased to ISK 526bn (Jun13: ISK 506bn), due to |
|normal fluctuation in deposits from customers and credit institutions.        |
|                                                                              |
|   Birna Einarsdóttir, Chief Executive Officer of Íslandsbanki:               |
|      "The results for the first nine months are characterised by improved    |
|efficiency. Costs have decreased by ISK 732m representing a 7.5% reduction    |
|year-on-year when adjusted for inflation. This is the result of several cost  |
|initiatives, e.g. the Bank merged and consolidated three of its branches. As  |
|before, the Bank operates the most efficient branch network in Iceland.       |
|                                                                              |
|      Íslandsbanki's 9m results are in line with projections and return on    |
|equity was 13.4% which is good considering the Bank's high equity ratio of    |
|27.2%.                                                                        |
|                                                                              |
|      In a period that is normally characterised by the summer holidays, it   |
|was nonetheless a busy quarter for the Bank. Net fee and commission income    |
|increased 13% to ISK 7.6bn in the first 9 months, compared to ISK 6.7bn for   |
|the same period last year.                                                    |
|                                                                              |
|      The quality of the loan portfolio improved between quarters, the ratio  |
|of loans more than 90 days past due was 5%, and the Loan Portfolio Analysis   |
|ratio, an Icelandic key measure of asset quality, now down to 9.8% from 44% in|
|2009."                                                                        |
|                                                                              |
|INVESTOR CALL                                                                 |
|Today, the Bank will host an investor call in English to present the results  |
|at 1 pm Icelandic time, including a short macro update. To register for the   |
|conference call, please e-mail:  ir@islandsbanki.is.                          |
|                                                                              |
|All presentation material will subsequently be available and archived on      |
|www.islandsbanki.is/ir.                                                       |
|                                                                              |
|For further information:                                                      |
|  * Investor Relations - Tinna Molphy, tinna.molphy@islandsbanki.is  and tel: |
|    +354 440 3187.                                                            |
|  * Media Relations - Dögg Hjaltalín, dogg.hjaltalin@islandsbanki.is and tel: |
|    +354 440 3925.                                                            |
|                                                                              |
|                                                                              |
+------------------------------------------------------------------------------+
|Tags: Financial results, Interim financial results, 3Q12, 3Q2012, third       |
|quarter, financial calendar, investor call,                                   |
+------------------------------------------------------------------------------+

[HUG#1746069]

Attachments:

ÍSB - 3Q13 Condensed Consolidated Financial Statements.pdf

ÍSB - 3Q13 Results Announcement.pdf

ÍSB - 3Q13 Investor Presentation.pdf