Arion Bank reported net earnings of ISK 10.1 billion for the first nine months of 2013, compared with ISK 14.5 billion for the same period in 2012. Return on equity was 10.0%, compared with 15.9% in the same period in 2012. Return on equity based on regular operations was 9.2%, compared with 11.9% in the same period in 2012. Total assets amounted to ISK 936.9 billion, compared with ISK 900.7 billion at the end of 2012.
Net earnings for the third quarter of 2013 amounted to ISK 4.2 billion, compared with ISK 3.3 billion in the same period in 2012. Return on equity in the third quarter was 12.2%, compared with 10.7% in the same period in 2012. Return on equity based on regular operations in the third quarter was 11.2%, compared with 12.4% in the same period in 2012.
The Bank’s capital ratio at the end of the period was 23.6%, but was 24.3% at the end of 2012.
Highlights of the interim financial statement:
- Net earnings of ISK 10.1 billion, compared with ISK 14.5 billion during the same period in 2012.
- Earnings during the third quarter of 2013 of ISK 4.2 billion, compared with ISK 3.3 billion during the same period in 2012.
- Earnings from regular operations of ISK 9.3 billion, compared with ISK 10.9 billion during the same period in 2012.
- Operating income decreased between years to ISK 31.5 billion from ISK 34.4 billion in the same period in 2012. The main reason for this is the decrease in the interest-rate differential following an increase in term deposits and bond issues. Other income is also lower due to smaller changes in the value of assets.
- Net interest income of ISK 18.3 billion, lower than the same period in 2012 as a result of higher funding cost and lower inflation.
- Net negative valuation change on loans of ISK 0.1 billion, mostly as a result of write-downs relating to court judgments on currency-linked loans and written off loans totalling ISK 7.8 billion and an increase in the valuation of loans, primarily to corporate clients, of ISK 7.6 billion.
- Return on equity was 10.0%, compared with 15.9% in the same period in 2012. Return on equity based on regular operations was 9.2%, compared with 11.9% in the same period in 2012.
- The interest-rate differential as a percentage of average interest-bearing assets was 2.9% during the period, compared with 3.3% during the same period in 2012.
- The cost-to-income ratio was 57.6%, compared with 49.8% during the same period in 2012. The high ratio is partly explained by provisions relating to the fine imposed on Valitor by the Competition Authority and lower operating income than in the same period in 2012. The cost-to-income ratio on regular operations was 56.3%, compared with 51.3% during the same period in 2012.
- Loans to customers of ISK 576.2 billion at the end of the period, and has increased slightly from year end 2012.
- Total assets of ISK 936.9 billion, compared with ISK 900.7 billion at the end of 2012.
- Shareholders’ equity at the end of the period of ISK 140.9 billion, compared with ISK 130.9 billion at the end of 2012.
Höskuldur H. Ólafsson, CEO of Arion Bank:
The Bank’s third quarter figures were good and in line with our expectations. Overall we are pleased with the Bank’s performance over the first nine months of the year, especially since uncertainties remain in our external environment. The Bank’s core activities are stable and the financial results are to a far greater extent built on traditional banking activities rather than irregular items such as valuation changes.
We are glad to report that Arion Bank will complete the recalculation of currency-linked loans next week, when 70 customers will be informed of the results of the recalculation of their loans. The process of recalculating 3,700 currency-linked loans, which has been ongoing for the past year, is now nearing an end. There only remain a few currency-linked loans to companies where we are awaiting a decision from the Supreme Court.
The quarter also marked the fifth anniversary of the founding of Arion Bank. During this time our objective has been to develop a good bank which provides its customers with excellent service and sound advice, a bank which takes responsible decisions but is bold when needed. We hope that these aims have come across in the last few years.
For further information please contact Haraldur Gudni Eidsson of Arion Bank's Communications division at haraldur.eidsson@arionbanki.is, or tel. +354 856 7108.
