Arion Bank reported net earnings of ISK 25.4 billion for the first nine months of 2015, compared with ISK 22.6 billion for the same period of 2014. Arion Bank’s net earnings for the first nine months of 2015 were affected by irregular items, as in the first nine months of 2014. The main factors were one-off events such as the Bank’s sale of shares in the real estate company Reitir, the international drinks manufacturer Refresco Gerber and the telecommunications company Síminn in connection with stock market listing of these companies. Return on equity was 19.8%, compared with 19.9% in the same period of 2014. Net earnings from regular operations amounted to ISK 13.5 billion for the first nine months of 2015, compared with ISK 11.4 billion for the same period last year. Return on equity from regular operations was 11.2%, compared with 10.1% for the first nine months of 2014. Total assets amounted to ISK 1,009.5 billion, compared with ISK 933.7 billion at the end of 2014.
The Bank’s capital ratio at the end of the period was 23.5%, compared with 26.3% at the end of 2014. The decrease is mainly related to a dividend payment of ISK 12.8 billion and the prepayment of a subordinated loan of ISK 20 billion during the period. Tier 1 was 22.2%, compared with 21.8% at the end of 2014.
Highlights of the Interim Financial Statements
- Net earnings of ISK 25.4 billion, compared with ISK 22.6 billion during the same period of 2014.
- Net earnings from regular operations amounted to ISK 13.5 billion, compared with ISK 11.4 billion for the same period last year.
- The capital ratio was 23.5% at the end of the period, compared with 26.3% at the end of 2014.
- Return on equity was 19.8%, compared with 19.9% in the same period of 2014. Return on equity from regular operations was 11.2% during the first nine months of 2015, compared with 10.1% during the same period last year.
- Net interest income of ISK 20.3 billion, compared with ISK 18.3 billion during the same period of 2014.
- Net commission income of ISK 10.7 billion, compared with ISK 10.1 billion during the same period of 2014.
- Operating income increased considerably between years and amounted to ISK 50.4 billion, compared with ISK 38.3 billion during the same period of 2014. This sharp increase is related to the profit from the sale and valuation change of shareholdings in the real estate company Reitir fasteignafélag hf., Refresco Gerber and the telecommunications company Síminn hf. in connection with the listing of the companies in 2015.
- Net valuation change during the period was negative, amounting to ISK 0.1 billion, compared with a positive valuation change of ISK 2.9 billion during the same period of 2014. Net valuation change was negatively affected during the period by an additional impairment of the loan portfolio of the subsidiary AFL – sparisjóður amounting to ISK 1.7 billion, as reported in the Financial Statements for the first six months of 2015. Net valuation change of other loans in the Group was positive by a similar amount.
- Income tax amounted to ISK 3.6 billion, compared with ISK 4.4 billion during the same period of 2014.
- The cost-to-income ratio was 38.4%, compared with 48.7% in the same period of 2014. The cost-to-income ratio for regular operations was 49.7%, compared with 54.6% during the same period of 2014.
- Total equity amounted to ISK 174.8 billion, compared with ISK 162.2 billion at the end of 2014.
Höskuldur H. Ólafsson, CEO of Arion Bank:
“Arion Bank’s financial results for the first nine months of 2015 were most satisfactory. The Bank’s sale of legacy holdings prior to their IPOs had a significant impact on the financial results. One-off events such as this will have less of an effect on earnings in the future and the Bank's financial results will be increasingly driven by regular banking activities. The strong recent focus on reinforcing its core business makes the Bank well prepared to do this.
Many exciting projects have been completed during the first nine months of the year. The Bank has arranged all three IPOs on the Icelandic stock market this year, thereby helping to strengthen the market and bring a diverse group of investors on board as shareholders of the restructured companies. There has been considerable public interest in recent share offerings. We take note of constructive debate on this subject and will adjust our procedures where appropriate. The Bank has been involved in plans to construct a 5 star hotel in central Reykjavík, and in October we signed an agreement to acquire the insurance company Vörður, subject to approval from the regulators.
The Bank has successfully managed to diversify its sources of funding over the last couple of years. The Bank’s public bonds have been performing well in the secondary market and the upgrading of the credit rating by S&P to investment grade will further improve access to the international credit markets.”
Conference call in English
Arion Bank will be hosting a conference call in English on Thursday 12 November at 13:00 GMT (14:00 CET), where Stefán Pétursson CFO, will present the 9M 2015 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.
