Arion Bank’s net earnings for the first three months of 2015 were significantly affected by irregular items. The main factors were one-off events such as the Bank's sale of shares in the real estate company Reitir and the international drinks manufacturer Refresco Gerber and the subsequent stock market listing of these companies. Arion Bank reported net earnings of ISK 14.9 billion for the first three months of 2015, compared with ISK 2.9 billion for the same period of 2014. Return on equity was 35.1%, compared with 7.8% in the same period of 2014. Net earnings from regular operations amounted to ISK 4.0 billion for the first quarter of 2015, compared with ISK 1.7 billion for the same period last year. Return on equity from regular operations was 9.8%, compared with 4.6% for the first quarter of 2014. Total assets amounted to ISK 1,004.3 billion, compared with ISK 933.7 billion at the end of 2014.
The Bank’s capital ratio at the end of the period was 23.9%, compared with 26.3% at the end of 2014, and Tier 1 was 21.2%, compared with 21.8% at the end of 2014.
Highlights of the Interim Financial Statements
- Net earnings of ISK 14.9 billion, compared with ISK 2.9 billion during the same period of 2014.
- Net earnings from regular operations amounted to ISK 4.0 billion, compared with ISK 1.7 billion for the same period last year.
- The capital ratio was 23.9% at the end of the period, compared with 26.3% at the end of 2014.
- Return on equity was 35.1%, compared with 7.8% in the same period of 2014. Return on equity from regular operations was 9.8% during the first quarter of 2015, compared with 4.6% during the same period last year.
- Net interest income of ISK 5.8 billion, compared with ISK 5.5 billion during the same period of 2014.
- Net commission income of ISK 3.8 billion, compared with ISK 3.1 billion during the same period of 2014.
- Operating income increased between years and amounted to ISK 21.8 billion, compared with ISK 9.0 billion during the same period of 2014. This sharp increase is related to the profit from sale and valuation change of shareholdings in the real estate company Reitir fasteignafélag hf. and the valuation change in Refresco Gerber in connection with the listing of the companies.
- Net valuation change during the period is positive, amounting to ISK 1.8 billion, compared with ISK 2.0 billion during the same period of 2014.
- Income tax and the bank levy amounted to ISK 2.5 billion, compared with ISK 1.9 billion during the same period of 2014.
- The cost-to-income ratio was 29.3%, compared with 69.0% in the same period of 2014. The cost-to-income ratio for regular operations was 53.2%, compared with 69% during the same period of 2014.
- Total equity amounted to ISK 177.1 billion, compared with ISK 162.2 billion at the end of 2014.
Höskuldur H. Ólafsson, CEO of Arion Bank:
“The financial results for the first three months of 2015 are excellent. The Bank’s performance exceeded all expectations following the successful stock market listing and sale of the Bank’s holdings in two companies, the international drinks manufacturer Refresco Gerber and the real estate company Reitir. The financial results were positively affected by these irregular items and because it is the first quarter, the effect on key indicators is significant. While it represents a strong start to the year, irregular items will clearly not have such a substantial impact during the rest of the year.
Regular operations performed well in the first quarter and generated strong earnings. Return on equity from regular operations was just under 10% for the period. We are continuing to strengthen the Bank’s underlying operations. We have placed emphasis on increasing the proportion of commission income in the Bank’s overall income and we achieved 19% growth in this area over last year. More than 80% of commission income is derived from corporate clients, while approximately 20% comes from services to retail customers.
An important milestone was achieved during the quarter when the Bank issued bonds in euros for EUR 300 million. It represented the largest bond issue by an Icelandic bank for many years. This bond issue clearly demonstrates the economic progress made in Iceland and reflects investors' confidence in the Bank and its efforts in recent years.
The number of sessions in the Arion app exceeded the number of sessions in the online bank in a single month for the first time during the quarter. This service has opened up new possibilities for customers and the pace of change has surpassed our own ambitious targets. There are now around 40,000 active users of the Arion app. This bears testament to the changing landscape in banking services and our heavy investment in technology is clearly paying off for our customers."
Conference call in English
Arion Bank will be hosting a conference call in English tomorrow, Wednesday 13 May at 10:00 BST (11:00 CET), where Stefán Pétursson CFO, will present the 2015 first quarter results. Those who would like to participate in the conference call can send an e-mail to ir@arionbanki.is and will then receive instructions with dial in details.
For further information please contact Haraldur Gudni Eidsson of Arion Bank's Communications division at haraldur.eidsson@arionbanki.is, or tel. +354 856 7108.
