Landsbankinn hf. - Financial Statement Release

Landsbankinn hf.: Financial Results for Q1 2015

Landsbankinn reports an ISK 6.4 bn profit for the first three months of 2015

In the first three months of 2015, Landsbankinn's net after-tax profit was ISK
6.4 bn as compared with an ISK 4.3 bn profit for the same period in 2014. The
Bank's operating income has increased due to a large extent to higher capital
gains on equities during the period. The cost-income ratio decreases
considerably, is 48% for the first three months of 2015 as compared with 72%
for the same period last year. On 29 March 2015, the Financial Supervisory
Authority (FME) decided, based on authorisations provided for in the Act on
Financial Undertakings, on the merger of Landsbankinn and Sparisjóður
Vestmannaeyja ses., without debt composition measures. The effect of the merger
on operations will first become evident in the Bank's half year financial
statements. 

Steinþór Pálsson, CEO of Landsbankinn: "The Bank's operations have been
successful so far this year. Its position remains strong and, despite an ISK 24
billion dividend payment the Bank's equity is still high. There has been a
significant growth in both lending and deposits and an increasing number of
customers choose to bring their business to Landsbankinn. Our customer group
grew even larger with the merger with Sparisjóður Vestmannaeyjar and
Landsbankinn is very well positioned to receive the newcomers. New shareholders
join the Bank's group of owners, which is very pleasing. Extensive strategy
planning for the next five years was completed in Q1. The objective of the
strategic plan is to ensure profitable and efficient operations for the long
term. As before, the Bank's vision is to be exemplary and a trusted financial
partner to its customers for the mutual benefit for both. The Bank intends to
be a dynamic force and operate in harmony with the environment and the
community so that its customers can say: "This is what a bank should be like"."

Key figures from the profit and loss account and balance sheet for Q1 2015

Operations:

  -- In the first three months of 2015, Landsbankinn's after-tax profit was ISK
     6.4 bn as compared to just under ISK 4.3 bn for the same period in 2014.
  -- Return on equity (ROE) after taxes for the period was 10.6% as compared to
     a ROE of 7.3% for the same period in 2014.
  -- Net interest revenue during the first three months of the year was ISK 7.3
     bn as compared with ISK 7.9 bn in the same period in 2014.
  -- The ratio of interest spread to average capital position is falling, was
     2.6% in the first three months of the year as compared to 2.7% for the same
     period in 2014.
  -- Net commission income amounted to ISK 1.6 bn, increasing by 8% from the
     same period the previous year.
  -- Other operating revenues increase by ISK 5 bn to a large extent due to
     higher capital gains on equities.
  -- Net value adjustments of lending in the first three months of the year were
     positive by ISK 1.6 bn.
  -- Allowing for inflation, the real increase of operating expenses amounts to
     1.3% between years.
  -- Salaries and related expenses increase by 7% between years for the most
     part due to the cost of severance agreements. Operating expenses less
     salaries and related expenses drop by 2.6%.
  -- The cost-income ratio for the first three months of the year was 48%, as
     compared with 72% for the same time last year. This decrease is largely due
     to increased capital gains on equities during the period.
  -- Full-time equivalent positions were 1,102 as at 31 March 2015, down from
     1,178 the same time the previous year.



Balance sheet:

  -- The Bank's equity amounted to ISK 233.9 bn at the end of March and has
     decreased by 7% since the beginning of the year. An ISK 24 bn dividend
     payment to shareholders accounts for the decrease.
  -- The Bank's capital adequacy ratio (CAR - Capital Adequacy Ratio) is now
     26.7%, up from 24.8% at the end of March 2014. This is well above FME
     requirements.
  -- Landsbankinn's total assets amounted to ISK 1,172 bn as at the end of March
     2015.
  -- Customer deposits have increased considerably and amounted to ISK 624 bn at
     the end of March 2015.
  -- New lending to customers in Q1 amounts to ISK 37 bn yet instalments,
     valuation adjustments and other factors contribute to a total increase in
     lending of ISK 17 bn during the period. The merger with Sparisjóður     Vestmannaeyja accounts for around ISK 7 bn of that amount.
  -- The Bank's liquidity position is very strong, both in foreign currency and
     Icelandic króna, and is well above regulatory requirements. The Bank's
     total liquidity position, including its foreign currency liquidity
     position, is also well above the requirements prescribed by the Central
     Bank.
  -- The Bank has a favourable foreign currency position and assets in foreign
     currencies amount to around ISK 20 bn in excess of foreign currency
     liabilities.
  -- Total defaults by companies and households were 2.3% at the end of March
     2015 and remain unchanged year to date.



Key aspects of operations in the first three months of 2015

  -- Based on an agreement between Landsbankinn and the Board of Directors of
     Sparisjóður Vestmannaeyja, the Financial Supervisory Authority (FME)
     decided on the merger of Landsbankinn and Sparisjóður Vestmannaeyja. The
     merger became effective as of Sunday, 29 March. As of that time, all
     employees of the savings bank became employees of Landsbankinn and the Bank
     took over all assets and liabilities of the savings bank.
  -- Landsbankinn continues to hold the largest market share in new housing
     loans. In Q1, there was a growth spurt in new housing loans which now
     amount to ISK 12.8 bn, up from ISK 8.5 bn at the same time last year.
  -- In the first quarter of 2015 Landsbankinn was the largest broker on Nasdaq
     OMX Iceland in bonds, with 24,2% market share and also the largest broker
     in stocks with 28,2% market share.
  -- The Bank's AGM, held on 18 March, approved an ISK 24 bn dividend payment to
     the Bank's owners.
  -- In March, Landsbankinn was the first bank in Iceland to be awarded the
     golden seal of PwC's Equal Pay Audit. Landsbankinn is also the largest
     company to participate in and pass the Equal Pay Audit.
  -- For the second year running, the magazine Global Finance has named
     Landsbankinn the best bank in Iceland.
  -- Also for the second year in a row, International Finance magazine named
     Landsbankinn the best bank in Iceland and Landsbankinn's online bank the
     best online banking service.
  -- A new version of online banking for individuals was introduced in January.
     In February, the panel of the Icelandic Web Awards named it the best
     service website.
  -- For the first time, Landsbankinn's annual report was published in
     electronic format only on the Bank's new annual report website.



For further information:

Kolbrún Gudlaugsdóttir, Investor Relations, ir@landsbankinn.is and tel.: +354
410 4014

Attachments:

Landsbankinn Consolidated Interim Financial Statements 31.03.2015.pdf

Landsbankinn Q1 2015 Results Press Release.pdf

Landsbankinn Q1 2015 Results Presentation.pdf