A Year of Structuring and Escalation
Annual Results Highlights:
• Net interest income ISK 0.6 billion
• Fee and commission income ISK 1.6 billion
• Write-down of subprime related investments ISK 2.1 billion
• At the end of year 2007 there were no assets related to the U.S. subprime
market on the balance sheet
• Loss of the year amounts to ISK 0.8 billion
• Total assets at the end of the year were ISK 34.3 billion compared to ISK
15.0 billion at the beginning of the year
• Assets under management were ISK 33.0 billion
• The capital adequacy ratio was 18.5%
DR. TRYGGVI THOR HERBERTSSON, CEO: “During our first year we have managed to
complete important tasks and we are proud of our achievements. Net interest
income along with fee and commission income amounts to ISK 2.2 billion which is
a good first year result. Our real estate advisory has been very successful and
the auto-loan subsidiary Avant practically moved from being the smallest to
become a major player in the auto loan business in Iceland”.
The year was a period of structuring and escalation for Askar. The bank
recruited talented people and established partnerships on a global basis. A
representative office was opened in India and the Askar Real Estate Advisory
launched representative offices in Romania and Florida in addition to the
office in Luxembourg. Important work was done in implementing IT and Risk
systems, in finalizing the headquarters, and developing the infrastructure of
the company.
The bank's strategy is to focus on alternative investments - investments in
real estate, infrastructure and private equity - in emerging as well as niche
markets. The conditions in global financial markets have changed dramatically
during the last months and investors are to a greater extent looking towards
alternative investments. The strategy of Askar Capital aligns well with these
changes in investor appetite.
At the beginning of 2007, Askar Capital invested in structured credit products
with U.S. mortgages as underlying assets. Conditions in these markets changed
drastically and consequently the investments have decreased severely in value.
Because of this unfortunate development and in order to remove any doubts about
the risks of the bank, all assets related to this asset class were written off.
The write-down amounted to a total of ISK 2.1 billion. At year end no assets
related to the U.S. subprime market were on the books of the bank. If these
write-downs had not occurred, the profit of the bank would have been about ISK
0.9 billion.
Tasks ahead for 2008 are numerous. A new Managing Director has been hired to
lead Asset Management within Askar Capital. He has an extensive experience in
establishing asset management operations on a global scale and there are high
expectations for the asset management business in the year ahead. Funds for
qualified investors are being launched and are open to investors. Askar Capital
is in the process of strengthening its infrastructure and moreover the capital
structure is being modified to better match the duration of assets and
liabilities.
There are turbulent times ahead in financial markets but we believe that every
danger brings an opportunity for us.
For further information please contact:
DR. Tryggvi Thor Herbertsson, CEO, +354-412 8800
Bogi Nils Bogason, CFO, +354-665-8801
