Islandsbanki hf. : 3Q2014 Condensed Consolidated Interim Financial Statements

 HIGHLIGHTS

9M14
  * Profit after tax was ISK 18.2bn in 9M14 (9M13: ISK 15.4bn)
  * Return on equity was 13.8% in  9M14 (9M13: 13.4%). This improvement in 9M is
    despite the equity base increasing 14% YoY from 160bn to 181bn.
  * Net interest income amounted to ISK 20.6bn in 9M14 (9M13:  ISK 21.9bn).
  * Net fee and commission income was 8.5bn in 9M14 (9M13: 7.6bn). This increase
    can mainly be attributed to Retail, Markets, Wealth and fee generating
    subsidiaries.
  * Cost to income ratio was 54.4% (9M13: 58.4%); Results from cost projects
    coming through.
  * Total capital ratio remains strong at 29.4% (YE13: 28.4%), and Core Tier 1
    ratio was 26.3% (YE13: 25.1%).
  *  LPA ratio was 7.0% (YE13: 8.3%). Ratio of loans more than 90 days past due
    was 3.1% (YE13: 3.5%).
  * Total assets were ISK 931bn (YE13: ISK 866bn) a 7.5% growth since YE13

3Q14
  * Profit after tax was ISK 3.5bn in 3Q14 (3Q13: ISK 4.2bn)
  * Return on equity was 7.9% in the quarter (3Q13: 10.6%)
  * Net interest income amounted to ISK 7.1bn in 3Q14 (3Q13: ISK 7.4bn). The net
    interest margin was 3.1% in 3Q14 (3Q13: 3.5%) and is now at expected long
    term level.
  * Net fee and commission income was ISK 2.8bn in 3Q14 (3Q13: ISK 2.5bn) a 16%
    increase.
  * Total assets were ISK 931bn (Jun14: ISK 908bn) or 3% growth.
  * Total deposits increased to ISK 561bn (Jun14: ISK 543bn), due to normal
    fluctuation in deposits from customers and credit institutions.


Birna Einarsdóttir, Chief Executive Officer of Íslandsbanki:
"I am pleased with the results for the first nine months of the year which are
in line with expectations. It will, however, continue to be challenging to
strengthen the core operations through cost reduction and increased revenue
growth. We have focused on increasing operational efficiency, achieving a 6.4%
reduction in administrative expenses year on year. Loans to customers have
increased by ISK 54 billion this year.
Íslandsbanki has always been strong in product development and is responsive to
customer needs. Good example of this is the first-time-buyer loan we announced
during the quarter, a housing loan on better terms for those who are taking
their first step on the housing ladder. We are also constantly developing the
App and see a 100% increase in the number of transactions from the beginning of
the year, and 45,000 customers have now downloaded it.
 It is estimated that about 5,000 of the Banks's customers are entitled to the
debt relief program for CPI linked mortgages that the Icelandic government is
implementing. This program is funded through a special bank tax, and the
estimated payment this year is ISK 2.4 billion. It is important that this
temporary tax remains just that - temporary. Increased taxation harms Icelandic
banks very directly, allowing foreign banks a competitive advantage in lending
to Iceland's largest companies. "






INVESTOR CALL IN ENGLISH

The Bank will also host an investor call in English to present the results at 2
pm Icelandic time. The call will start with a short macro update on the
Icelandic economy, followed by a review of the financial results and Q&A. Please
register by replying to ir@islandsbanki.is. Dial-in details and presentation
will be sent out two hours prior to the call.

All presentation material will subsequently be available and archived on
www.islandsbanki.is/ir.

For further information:

Investor Relations - Guðbjörg Birna Björnsdóttir, ir@islandsbanki.is  and tel:
+354 440 4752.

Media Relations - Guðný Helga Herbertsdóttir, pr@islandsbanki.is and tel:
+354 440 3678.




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