Landsbankinn hf. - Interim report (Q1 and Q3)

Landsbankinn hf.: Landsbankinn profits by ISK 16.8 bn in the first nine months of 2017

In the first nine months of 2017, Landsbankinn's after-tax profit was ISK 16.8
bn as compared with ISK 16.4 bn for the same period in 2016. Annualised ROE was
9.4% as compared with 8.5% for the same period the previous year.

Net interest income was ISK 27.1 bn, up by 3.3% between periods. Net commission
income amounted to ISK 6.6 bn, increasing by 11.5% from the same period the
previous year. Positive value changes amounted to ISK 2.1 bn in the first nine
months of 2017 and this amount is 53% lower than for the same period last year.

Other operating income amounted to ISK 5.9 bn as compared with ISK 5.2 bn in the
same period of 2016, which is a 15% increase. The increase is caused mostly by
positive changes in the fair value of unlisted equities.
The default ratio continued to drop, was 1.0% during the first nine months of
the year as compared with 1.8% during the same period of 2016.
The interest margin on assets and liabilities was 2.5% in the first nine months
of 2017, up from 2.3% in the same period of 2016.

The Bank's operating expenses for the first nine months of 2017 amounted to ISK
17.7 bn as compared with ISK 17.6 bn in the same period in 2016; an increase of
just under 1%. Labour cost accounts for ISK 10.3 bn of that figure as compared
with ISK 10.4 bn for the same period in 2016, which is a 1% decrease. Other
operating expenses are up by 2.9% compared to the same period last year and
amount to ISK 7.4 bn. This increase is mostly due to higher contributions to the
Financial Supervisory Authority and the Debtors' Ombudsman.
The cost-income ratio for the first nine months of the year was 44.7%, down by
3 percentage points from the same period of 2016. This decrease is due mostly to
positive market developments.

Lending increased by 6.2% since the beginning of the year, or by just over ISK
52 bn. New loans issued in 2017 are both to households and corporates. The
default ratio continues to drop and currently stands at 1%. Customer deposits
with Landsbankinn increased by 8.3% between periods. Deposits by individuals
increased by ISK 28 bn which is an indication of improved household finances.

Landsbankinn's equity amounted to ISK 243.1 bn as at 30 September this year and
its CAR was 26.8%. Landsbankinn has paid dividend in the total amount of ISK
24.8 bn this year.

Lilja Björk Einarsdóttir, CEO of Landsbankinn:
"Landsbankinn is performing well, as evidenced by its results. A growing market
share in both the individual and the corporate market, favourable economic
conditions and increasing economic activity are the main reasons for the Bank's
results exceeding expectations. Continued efforts to increase cost efficiency
result in more or less unchanged operating costs in Q3 as in the same period of
2016. Landsbankinn's share in housing loans to young people continues to grow
and it is gratifying to see that the Bank is able to support individuals who are
taking their first steps in the real estate market. Young people increasingly
turn to Landsbankinn not least because the Bank offers up to 85% loans, which
suits the needs of first-time home buyers. It is difficult for the Bank to
compete with the terms pension funds offer on housing loans, as the bank tax on
credit issued by large financial undertakings is not leveraged in pension funds.
The bank tax skews competition and negatively impacts terms to customers.

Yesterday it was announced that S&P Global Ratings upgraded Landsbankinn's
rating to BBB+/A-2 with a stable outlook. This is a gratifying confirmation of
increasing confidence in the Bank. Terms offered the Bank on international
financial markets have continuously improved and a higher rating grade will, all
things remaining equal, allow the Bank to secure foreign funding on even better
terms.



The improved rating grade reflects the Bank's strong financial position.
Landsbankinn paid dividend in the amount of ISK 11.8 in Q3, bringing total
dividend payments in 2017 to ISK 24.8 bn. Since 2013, the Bank has paid a total
of ISK 107 bn in dividends. The Bank will continue to improve its capital
structure by paying off unfavourable loans and reducing equity by paying
dividends while simultaneously maintaining a strong financial position. The
Bank's equity following this latest dividend payment is strong, amounting to ISK
243.1 bn. Its capital ratio is 26.8%, which is well above regulatory
requirements."


For further information contact:

Rúnar Pálmason, Public Relations, pr@landsbankinn.is, tel: +354  410 6263 /
899 3745

Hanna Kristín Thoroddsen, Investor Relations, ir@landsbankinn.is, tel:
+354  4107310


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Attachments:

Press_release_Q3_2017.pdf

Results_Presentation_Q3_2017.pdf

Consolidated_Interim_Financial_Statement_30.09.2017.pdf