Føroya Banki P/F - Financial Statement Release

Annual Report 2008

Announcement 5/2009 - Tórshavn 18 February 2009

- Føroya Banki improves core earnings in 2008 and delivers the promised results
- The Bank has a strong solvency ratio and ample liquidity, making it well
equipped for the future 
- The Bank maintains its focus on profitability, optimisation and sound credit
management 

Please find enclosed the Annual Report 2008 of Føroya Banki P/F. 

“Føroya Banki emerged strongly from a 2008, which left many financial
institutions lying on the ground. In Føroya Banki, we are pleased that the
bottom-line and most of the entries in the Bank's accounts show results that
meet or surpass the expectations announced by us coming into the very turbulent
2008,” says Janus Petersen, CEO. 

Føroya Banki managed to meet the projected expectations for the year with a
full-year total result of DKK 276m before value adjustments and tax. Despite
making more provisions than originally projected, the Bank nevertheless
succeeded in increasing its pre-tax result with 11% in a challenging market.
Net interest and fee income are higher than projected, while employee and
administration expenses showed a decline as a consequence of optimisation
measures. 

“Our solid credit policy has worked well in a Faroese home market, which is
defined by a considerably lower gearing than other economies that we usually
compare ourselves to. This combined with a strong focus on profitability,
optimisation and the Bank's solid economic foundations has given us the
opportunity to create good results, not least in the current financial market,
which is highly satisfactory. At the same time, it is a pleasure to state that
the Føroya Banki share was the share on the NASDAQ OMX in Copenhagen, which
experienced the smallest drop in 2008,” Janus Petersen adds. 

With a solvency ratio of 21% and with an ample liquidity, the Bank is in a
favourable position to meet the challenges of the coming year.  Thus the Bank
has no current plan to participate in the second Danish Bank Package. A final
decision on this matter will be taken before the June 2009 deadline. As a
participant in the first Bank Package, Føroya Banki is prohibited from paying
dividends for the year. The Bank's dividend policy remains, however, unchanged.
The strong net profit in 2008 and the high solvency ratio provides the Bank
with the opportunity to pay out accumulated retained dividends in 2011,
provided the Bank's capital requirements are met at that time. 

- Net interest and commission income increased from DKK 339m in 2007 to DKK
404m, which is an increase of 19 %. 
- Employee and administration expenses decreased from DKK 206m to DKK 191m. 
- The 2008 result before tax was DKK 200m
- Føroya Banki's loans and advances at year-end 2008 were DKK 7.7 bn. The
increase was 3 %. Deposits were DKK 5.6 bn growing by 2% from year-end 2007. 
- Equity was DKK 1,562m at year-end of 2008. Return on equity was 12% compared
to 11% in 2007. 

2009 Outlook
Føroya Banki projects its 2009 pre-tax profit before value adjustments and
non-recurring items to be in the range of DKK 165 - 195m, corresponding to an
increase of 0-15% compared to 2008. 

“Our strategy remains unchanged, and we believe our shareholders are satisfied
that we continue to prioritise profitability and solidity, while slowing down
our expansionary ambitions,” Janus Petersen says. 


FØROYA BANKI
Further information: Janus Petersen, CEO, tel: +298 330 330
www.foroya.fo

Attachments:

annual report 2008.pdf