Íslandsbanki hf. - Financial Statement Release

Islandsbanki hf. : 2Q13 Interim consolidated financial statements

Highlights:

  * Profit after tax was ISK 6.6bn in 2Q13 (2Q12: ISK 6.0bn), and ISK 11.2bn in
    1H13 (1H12: ISK11.6bn)
  * Return on equity was 17.4% in the quarter (2Q12: 18.6%), but was 14.8% in
    1H13 (1H12: 17.9%). The YoY decrease in ROE is primarily driven by higher
    equity which has increased by 15% YoY, from ISK 135bn to ISK 156bn at end of
    June 2013.
  * Total taxes and levies paid to government institutions amounted to ISK
    3.0bn in 2Q13, compared to ISK 2.2bn in 2Q12.
  * Around 35 thousand individuals and 4 thousand corporates have received
    write-offs, debt forgiveness or some form of debt correction since the
    Bank's establishment, totalling ISK 500bn to date.
  * Total assets were ISK 823bn (Mar13: ISK 829bn), with loans to customers down
    1% to ISK 539bn (Mar13: ISK 543bn).
  * The net interest margin was 3.4% in 2Q13 (1Q13: 3.6%) and is decreasing in
    line with expectations as deep discount following the acquisition of Glitnir
    loan book is being amortized.
  * Net fee and commission income increased to ISK 2.7bn in the quarter  (2Q12:
    ISK 2.3bn) and to 5.2 over the 1st half of the year (1H12: ISK4.4bn). This
    is a YoY increase of 15% which can mainly be attributed to Markets, Retail,
    Wealth and fee generating subsidiaries.
  * Net valuation changes on the loan portfolio resulted in a gain of ISK 4.7bn
    in the quarter (2Q12: ISK 3.6bn) and ISK 7.9bn in the first half of the year
    (1H12: ISK 2.1bn).
  * Total deposits increased to ISK 506bn (Mar13: ISK 492bn), due to normal
    fluctuation in deposits from customers and credit institutions.
  * Equity was ISK 155.5bn, up 2% from Mar13 and 15% YoY. Total capital ratio
    strengthened to 27.4% (Mar13: 26.2%), and Tier 1 ratio was 24.0% (Mar13:
    22.9%).



Please find a more detailed version of the results announcement attached below.



Birna Einarsdóttir, Chief Executive Officer of Íslandsbanki:

 "Íslandsbanki's 2Q13 results are in line with projections. The numbers clearly
show that positive synergies from mergers are being realised on both sides of
the P&L. A great deal has been accomplished in terms of cost efficiency and the
cost/income ratio, for the second quarter of 2013 has fallen to 41.1% and
reduction in operating costs are down 7.5% in real terms.

Euromoney magazine ranked Íslandsbanki as the best bank in Iceland and the
British financial magazine, World Finance, also awarded VÍB, Íslandsbanki's
Wealth Management division, the Investment Management Award for 2013. These two
awards amply demonstrate the level of ambition and achievement that characterise
work at the bank.

Íslandsbanki has tapped two covered bond issues in the quarter and has now
become a regular issuer of commercial paper. Arranged by Bank of America Merrill
Lynch, the Bank has recently signed a USD 250m GMTN programme allowing it to
issue bonds in a broad range of currencies should opportunities arise in
international markets.

Recalculation of foreign currency loans is on track and we estimate that 90% of
transactions will have finished by end of August. The aim is that all remaining
transactions, which amount to 15,000 contracts in total, will be recalculated by
the end of the year. "

Later today, Birna Einarsdóttir, CEO of Íslandsbanki, and Jón Guðni Ómarsson,
CFO, will present the 2Q13 financial results to market participants, followed by
a Q&A session. The meeting starts at 4pm and will be conducted in Icelandic.
Guests must register for the event.

Today, the Bank will also host a conference call in English to present the
results at 2 pm Icelandic time. 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.


[HUG#1725276]

Priedai:

ÍSB 2Q13 Results Presentation.pdf

ÍSB 2Q13 Results Announcement.pdf

ÍSB Condensed Consolidated Financial Statements.pdf