Islandsbanki hf. : 2013 Annual Consolidated Financial Statements

| Source: Íslandsbanki hf.
Please find attached the 2013 Annual Consolidated Financial Statements, the
press release in full length and the investor presentation.


  * Profit after tax was ISK 23.1bn in 2013 (4Q13: ISK 7.7bn), compared to the
    2012 result of ISK 23.4bn (4Q12: ISK7.2bn).
  * Return on equity was 14.7% in 2013 (4Q13: 19.5%), compared to 17.2% in 2012
    (4Q12: 19.7%). The YoY decrease in ROE is primarily driven by higher equity
    14.4% YoY.
  * Total capital ratio remains strong at 28.4% (2012: 25.5%), and Core Tier 1
    ratio was 25.1% (2012: 22.0%).
  * Net interest income amounted to ISK 28.4bn (2012 ISK 32.9bn), a YoY decrease
    of 13.7%. The net interest margin was 3.4% in 2013 (4Q13: 3.1%) and is
    decreasing in line with expectations as deep discount following the
    acquisition of Glitnir loan book is being amortized.
  * Net fee and commission income was ISK 10.4bn in 2013 (4Q13: ISK 2.8bn)
    compared to 9.5bn in 2012 (4Q12: ISK 2.8bn). This is a YoY increase of 10%
    which can mainly be attributed to Retail, Wealth and fee generating
  * Cost to income ratio was 58.5% (2012: 53.8%).
  * Total taxes and levies paid to the government and other institutions
    increased 34%, amounted to ISK 12.4bn in 2013, compared to  9.2bn in 2012.
  * Loan impairment charges and net valuation changes resulted in a gain of ISK
    16.3bn in 2013 (2012: ISK 5.7bn) as reversal of already impaired loans
    exceeded new impairments.
  * Around 35,500 individuals and 4,100 corporates have received ISK 548bn in
    debt forgiveness of some form since the Bank's establishment.
  * Restructuring is on track, LPA ratio was 8% (Dec12: 14%), 90 days past due
    ratio is 4% (Dec12: 8%).
  * Total assets were ISK 866bn (Dec12: ISK 823bn), but loans to customers
    increased 3% in 2H13.
  * Total deposits increased to ISK 519bn (Dec12: ISK 509bn).

Birna Einarsdóttir, Chief Executive Officer of Íslandsbanki:

"The full year results for 2013 are satisfying. We are now reaping the rewards
from the years of hard work put in from our employees across all divisions of
the Bank.

A higher tax burden has reduced profits - a special bank tax of ISK 2.3bn was
paid out in 2013, out of a total contribution of ISK 12.4bn in taxes and levies
paid to the Government and other institutions.

We are encouraged to see the economy picking up pace with new loans in 2013
amounting to ISK 100bn, a clear sign that businesses and individuals have more
capacity to invest than in previous years.We have made an effort to increase fee
and commission income and it's therefore gratifying to see a 10% rise to a total
of ISK 10.4bn compared to 9.5bn in 2012. Íslandsbanki had the highest turnover
in equity brokerage during the year, and has established itself as a leader in
the field of IPOs in Iceland.

We've achieved a great deal in cost reduction within the Bank but the results
are characterised by one-off items both on the revenue and cost side of the

We have devoted much time and effort to the task of diversifying our funding
base.  Access to international capital markets makes us better equipped to
support our clients who are engaged in international business and need financing
in foreign currency.

Customer surveys consistently show that across the spectrum of individuals,
corporations and institutional investors Íslandsbanki is the leading bank in
Iceland and considered to provide the best quality service. These results are an
encouragement to everyone at the Bank to continue to provide the best service it


Today, the Bank will host an investor call in English to present the results at
1 pm Icelandic time, including a short macro update. To register for the
conference call, please e-mail: Dial-in details and
presentation will be sent out shortly before the call.


At 4pm today, Birna Einarsdóttir, CEO of Íslandsbanki, and Jón Guðni Ómarsson,
CFO, will present the financial results to market participants, followed by a
Q&A session. The meeting is held at the Bank's headquarters in Reykjavík and
will be conducted in Icelandic. Guests must register for the event.

All presentation material will subsequently be available and archived on

For further information:

  * Investor Relations - Tinna Molphy,  and tel:
    +354 440 3187.
  * Media Relations - Dögg Hjaltalín, and tel:
    +354 440 3925.