2014-11-18 17:48:17 CET

2014-11-18 17:49:25 CET


REGULATED INFORMATION

English Islandic
Arion Bank hf. - Financial Statement Release

Arion Bank's 9 months 2014 financial results 


Arion Bank reported net earnings of ISK 22.6 billion for the first nine months
of 2014, compared with ISK 10.1 billion for the same period of 2013. Return on
equity was 19.9%, compared with 10.0% in the same period of 2013. Total assets
amounted to ISK 942.2 billion, compared with ISK 938.9 billion at the end of
2013. 

The Bank's capital ratio at the end of the period was 24.6%, compared with
23.6% at the end of 2013. 

Highlights of the interim financial statement:

  -- Net earnings of ISK 22.6 billion, compared with ISK 10.1 billion during the
     same period of 2013.
  -- Earnings during the third quarter of 2014 of ISK 5.2 billion, compared with
     ISK 4.2 billion during the third quarter of 2013.
  -- Operating income increased between years to ISK 38.3 billion, compared with
     ISK 31.6 billion in the same period of 2013. The largest increase was in
     net financial income.
  -- Net interest income of ISK 18.3 billion, the same amount as for the first
     nine months of 2013.
  -- Net commission income of ISK 10.1 billion, compared with ISK 8.3 billion
     during the same period of 2013. The increase is largely attributable to
     higher commission income on cards and to activities in Investment Banking.
  -- Income tax and the bank levy amounted to ISK 6.5 billion, compared with ISK
     3.1 billion during the same period of 2013.
  -- Earnings from discontinued operations of ISK 6.6 billion, compared with a
     loss of ISK 3 million in the same period of 2013. These earnings relate
     almost entirely to the sale of the Bank's 18.8% shareholding in HB Grandi
     hf. in the second quarter of 2014.
  -- Operating expenses of ISK 18.6 billion, compared with ISK 18.2 billion
     during the same period of 2013.
  -- The net valuation change during the period is positive, amounting to ISK
     2.9 billion, compared with a negative figure of ISK 119 million in the same
     period last year. The net valuation change on loans to companies totalled
     ISK 2.2 billion during the first nine months and retail loan write-downs
     amounted to ISK 0.2 billion. The valuation increase of other assets
     totalled ISK 0.7 billion.
  -- Return on equity was 19.9%, compared with 10.0% in the same period of 2013.
  -- The net interest margin as a percentage of the average interest-bearing
     assets was 2.9%, the same as for the first nine months of 2013.
  -- The cost-to-income ratio was 48.7%, compared with 57.6% in the same period
     of 2013, mainly because of an increase in operating income compared with
     last year.
  -- Total assets of ISK 942.2 billion, compared with ISK 938.9 billion at the
     end of 2013.
  -- Total equity amounted to ISK 159.8 billion, compared with ISK 144.9 billion
     at the end of 2013. The Bank paid a dividend of ISK 7.8 billion to its
     shareholders during the period.
  -- The capital ratio was 24.6% at the end of the period, compared with 23.6%
     at the end of 2013.



Höskuldur H. Ólafsson, CEO of Arion Bank:"The Bank's financial results for the first nine months of 2014 are strong, and
return on equity is around 20%. Irregular items have had a positive influence
on these results, particularly the Bank's sale of some of its shareholding in
HB Grandi and the subsequent stock market flotation of the company in April. We
are pleased to see continued stability in the Bank's core operations and all
income generating business segments have yielded satisfactory results. We
particularly welcome the growth in commission income, up 22% from last year and
moving closer to our target. Looking ahead we still have challenges on the cost
side. 

The Bank's capital ratio remains robust, something we consider important when
our operating environment is still subject to uncertainty. 

We have been successful in reducing the ratio of non-performing loans and
expect this to continue further during the year. Problem loans have been
increasing in many areas of the world, while the trend in Iceland in recent
years has been the reverse, as household and corporate debt decreases. In fact
corporate debt as a percentage of GDP is at its lowest level since late 2004."



Conference call in English:

Arion Bank will be hosting a conference call in English tomorrow, Wednesday 19
November at 13:00 GMT (14:00 CET), where Stefán Pétursson, CFO, will present
the financial results. Those who would like to participate in the conference
call can send an e-mail to ir@arionbanki.is and will then receive instructions
with dial in details. 



For further information please contact Haraldur Gudni Eidsson of Arion Bank's
Communications division at haraldur.eidsson@arionbanki.is, or tel. +354 856
7108.