Arion Bank’s 9M 2016 financial results
Arion Bank reported net earnings of ISK 17.3 billion for the first nine months of 2016, compared with ISK 25.4 billion for the same period of 2015. Return on equity was 11.2%, compared with 19.8% for the first nine months of 2015. Adjusted earnings amounted to ISK 5.7 billion, compared with ISK 11.5 billion in the first nine months of 2015. Return on equity from adjusted operations was 3.7%, compared with 9.5% for the same period last year.
Total assets amounted to ISK 1,038.5 billion at the end of September, compared with ISK 1,011.0 billion at the end of 2015. Shareholders’ equity totalled ISK 206.9 billion at the end of September, compared with ISK 192.8 billion at the end of 2015. The Bank enjoys a strong financial position and has focused on maintaining good liquidity in the period leading up to the lifting of the capital controls.
The Bank’s capital ratio at the end of the period was 26.1%, compared with 24.2% at the end of 2015. Tier 1 Capital increased during the period to 25.5%, compared with 23.4% at the end of 2015.
Highlights of the income statement and key performance indicators:
| In ISK million | 9M 2016 | 9M 2015 | Q3 2016 | Q3 2015 |
| Net interest income | 22,058 | 20,287 | 7,432 | 7,112 |
| Net commission income | 10,213 | 10,726 | 3,466 | 3,292 |
| Net financial income | 4,339 | 10,176 | 844 | 453 |
| Share of profit of associates | 710 | 6,956 | 16 | 2,739 |
| Other operating income | 2,642 | 2,232 | 781 | 709 |
| Operating income | 39,962 | 50,377 | 12,539 | 14,305 |
| Salaries and related expense | (12,252) | (10,320) | (3,826) | (3,153) |
| Other operating expenses | (10,393) | (9,016) | (3,425) | (3,012) |
| Bank levy | (2,190) | (2,168) | (705) | (779) |
| Net impairment | 6,827 | (114) | 5,882 | (33) |
| Net earnings before taxes | 21,954 | 28,759 | 10,467 | 7,328 |
| Income tax | (5,261) | (3,639) | (3,170) | (1,272) |
| Net gain from disc. operations | 569 | 277 | 206 | 15 |
| Net earnings | 17,262 | 25,397 | 7,503 | 6,071 |
| KPI’s: | ||||
| Return on equity (ROE) | 11.2% | 19.8% | 14.4% | 14.2% |
| Net interest margin (int. bearing assets) | 3.1% | 3.0% | 3.1% | 3.1% |
| Cost-to-income ratio | 56.7% | 38.4% | 57.8% | 43.1% |
| Tier 1 ratio | 25.5% | 22.2% | 25.5% | 22.2% |
Höskuldur H. Ólafsson, CEO of Arion Bank:
“The financial results for the first nine months of 2016 are satisfactory. The Bank’s core operations have performed slightly below expectations as external conditions have been challenging in many respects. The performance of the equities market had a negative impact on the financial results, as the Bank still has holdings in listed equities. Nevertheless the core operations remain solid and the Bank continues to consolidate its capital. Standard & Poor’s cited Arion Bank’s improving capital position, better access to foreign debt capital markets and greater resilience in the Icelandic economy as reasons for upgrading the Bank’s credit rating to BBB/A-2 with a positive outlook. The spread on the Bank’s international issues on the secondary market has decreased, clearly indicating that there is demand on the international credit markets for Arion Bank bonds.
At the end of September Arion Bank completed the acquisition of the insurance company Vörður, adding non-life insurance to our product range, which has already included life insurance for several years. As a subsidiary of Arion Bank, Vörður will form a close partnership with the Bank, bringing benefits to the customers of both companies.”
Conference call in English
Arion Bank will be hosting a conference call in English on Thursday 17 November at 1:00 pm GMT, where Stefán Pétursson, Chief Financial Officer, will discuss the highlights of the Bank’s financial results. People interested in participating can contact [email protected] to obtain dial-in information.
For further information please contact Haraldur Gudni Eidsson of Arion Bank’s Communications division at [email protected], or tel. +354 444 7108.
