Íbúðalánasjóður - Financial Statement Release

The Housing Financing Fund´s Condenced Interim Accounts, January - June 2010

The Condensed Interim Accounts for the period January 1st to June 30th, 2010
has been approved and signed by the Board of Directors of the Housing Financing
Fund (HFF) at its meeting today August 26th  2010. The accounts have been
prepared in accordance with International Financial Reporting Standards (IFRS)
for interim accounts, IAS 34. 

According to the income statement, the loss of the Fund amounted to ISK 1,680
million for the six months ended June 30th 2010. At the end of June, equity
amounted to ISK 8,402 million according to the balance sheet. 

The capital ratio of the Fund, calculated according to stipulations in the
Rules of the Housing Financing Fund no. 544/2004, was 2.1% at the end of June
2010. The calculation of the ratio is equivalent to the calculation of the
capital ratio of financial institutions. The long-term goal of the Fund is to
keep the ratio above 5.0%. The Fund's Board of Directors in collaboration with
the Minister of Social Affairs and Social Security is working on motions for
ways to reach the long-term goal for capital ratio. A group has been
established and it is assumed that the workgroup will deliver its results later
in the year 2010. 

Impairment loss on loans amounted to ISK 3,699 million at the end of June 2010
and has increased by ISK 572 million during the period. Defaults have increased
in the year 2010 and 6.3% of borrowers have one or more overdue installments at
the end of June 2010 compared to 5.3% of borrowers at year end 2009. 

From the beginning of the year the Fund has repossessed 392 apartments on
foreclosed mortgages. Apartments owned by the Fund numbered 739 at the end of
June 2010. The apartments are recognized at estimated market value at the end
of June less write-down amounting to ISK 1,135 million due to uncertainty in
the housing market. 

Among loans to banks at the end of June 2010 the amount of ISK 2,352 million is
capitalized due to claims on Landsbanki Íslands hf., Glitnir banki hf. and
Straumur-Burðarás fjárfestingarbanki hf. and has remained unchanged from year
end 2009. In preparing the Fund's interim financial statements it is assumed
that it is entitled to netting. There is uncertainty over the settlement of
claims and derivative agreements in addition to the Fund's netting
authorization. The Fund's actual loss may therefore differ from this
estimation. 

Attachments:

interim financial statements of íls ii ifrs 30 6 2010.pdf

pressrelease interim accounts 2010.docx