Landsbankinn hf. - Financial Statement Release

Landsbankinn hf. : Landsbankinn reports profit of ISK 3.3 billion in Q1

Landsbankinn's operations returned an after-tax profit of ISK 3.3 billion in the
first three months of 2016, while profitfor the same period of 2015 amounted to
ISK 6.4 billion.
Operating income in Q1 amounted to ISK 11.5 billion, compared to ISK 14.7
billion in Q1 2015. Higher salary costs arising from new collective bargaining
agreements were offset by a decrease in other operating expenses, with the
result that the bank's total operating expenses in Q1 decreased by 0.5% YoY.
Net interest margin in Q1 2016 was 1.9% compared to 2.0% in Q1 of 2015.
Despite stiff and increasing competition in credit markets, Landsbankinn's
lending has increased from that of Q1 the previous year. Fees and commissions
also increased due to a higher business volume.
The default ratio continues to fall, and averaged 1.7% in Q1 this year compared
to 2.3% during the same period last year.
A rise in the cost-income ratio is due in particular to lower income from
securities. During the first three months of this year Landsbankinn's cost-
income ratio was 55.8% compared to 48% in Q1 of the previous year.
As of 31 March this year Landsbankinn's equity amounted to ISK 267.8 billion and
its capital adequacy ratio was 31.2%. In 2016 the bank will pay dividends of ISK
28.5 billion in two payments, firstly on 20 April and then on 21 September; as a
result the dividend payment does not affect these results.
Landsbankinn's CEO Steinþór Pálsson: "Landsbankinn has delivered an acceptable
performance in Q1. The bank has for some time pointed out that the impact of
one-off items, such as positive revaluations of loans, would decrease and such
effects cannot be expected in the longer term. This has proven to be the case
and this quarter's results reflect the bank's normal operations, without
significant effects from irregular items.
While Landsbankinn needs to deliver an acceptable return, it must at the same
time keep risk within limits, ensuring both sound and efficient operations. In
accordance with its strategy, Landsbankinn directs continuous efforts towards
reducing risk and increasing efficacy. In some instances these cost-containment
measures call for expenditures and investment in the near term but eventually
result in major savings. This applies, for example, to the renewal of the bank's
core IT systems, which is now under way in collaboration with the Icelandic
Banks' Data Centre (RB).
Landsbankinn's position is strong, as witnessed by its large and growing market
share, solid financial basis and dividends. Implementing the bank's strategy has
progressed well, with its key focus on having customers feel that by working
with Landsbankinn they achieve their goals and benefit from doing business with
the bank."
Investor call: On 13 May at 10:00 local time, the bank will host an investor
call in English covering the main Q1 results. Please register to the call by
emailing ir@landsbankinn.is.

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:
+354 410 7272


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Attachments:

Landsbankinn_Q1_2016_Results_Presentation.pdf

Landsbankinn_Condensed_Consolidated_Interim_Financial_Stateme_Q1_2016.pdf

Landsbankinn_Q1_2016_Results_Press_Release.pdf