Arion Bank reported net earnings of ISK 3.4 billion for the first three months of 2017, compared with ISK 2.9 billion for the same period of 2016. Return on equity was 6.3%, compared with 5.7% for the first three months of 2016.
Total assets amounted to ISK 1,119.7 billion at the end of March, compared with ISK 1,036.0 billion at the end of 2016. Shareholders’ equity totaled ISK 214.6 billion at the end of March 2017, compared with ISK 211.2 billion at the end of 2016. The Bank enjoys a strong financial position and the focus has been on maintaining good liquidity as the capital controls are lifted, a process which is now largely at an end.
The Bank’s capital ratio at the end of March was 28.0%, compared with 27.1% at the end of 2016. Tier 1 Capital increased during the period to 27.3%, compared with 26.5% at the end of 2016.
Highlights of the income statement and key income related performance indicators:
Highlights of the balance sheet and key performance indicators:
Höskuldur H. Ólafsson, CEO of Arion Bank:
„Arion Bank’s financial results for the first quarter of 2017 are in line with expectations. Operations are stable and the Bank is financially robust, as indicated by a capital ratio of 28%. The Bank’s investments last year had a positive impact on operations. This includes increased commission income after Arion Bank became the sole provider of financial services at Keflavík International Airport in May 2016. Income from insurance activities also grew and now represent a larger share of the Bank’s revenue stream following the acquisition of the insurance company Vördur last year. The impact of this acquisition will become clearer as the companies further collaborate on selling insurance products. It is positive that salaries expenses at the Bank have only risen slightly between years despite these added operations.
In March a milestone was reached when new investors became shareholders in the Bank. This represented a new stage in the ongoing process of selling the Bank. It is likely that the Bank will eventually be listed on a stock market, after which ownership will be in the hands of Icelandic and international investors. No decision on listing the Bank has been taken yet but it is positive that we have got the ball rolling, as it was always clear that the ownership structure in place since 2010 was only a temporary arrangement.
In January Nýherji, one of Iceland's leading IT companies, took over the administration of the Bank’s IT systems. We see this as a great opportunity to strike up a partnership with a market leader in its field, and more than 20 Arion Bank employees subsequently transferred to Nýherji. We retain a team of around 80 IT professionals working in software development and technology management. We will continue to seek collaboration with others where we can share resources and improve efficiency all around.
Last year we introduced several new digital solutions which were well received by our customers. This included a credit assessment for mortgages which can be completed online in just a matter of minutes. At the beginning of the year we introduced a new digital mortgage application process which is far shorter and more straightforward than previous application processes. Our customers can now apply for a mortgage online, without visiting a branch if they so choose. In May four new digital solutions will be launched. These solutions are designed to respond to changing demand for our services. We aim to continue to make our services available online and on mobile phone so that customers can do their banking whenever it suits them.
Diversifying our funding has been one of our key focuses in recent years. In January the Bank tapped its bond issue from December 2016 for a further €200 million, bringing the total issue to €500 million. As before, part of the issue was used to pay down existing loans. It is pleasing to see that the Bank has had a positive response on the international credit markets. Bonds issued by Arion Bank have performed well on the secondary market, demonstrating the market's confidence in the Bank and its future prospects. In Iceland, the Bank continues to successfully issue commercial paper and covered bonds and this is an important component of the Bank’s funding.“
Arion Bank will be hosting a conference call in English on Friday 12 May at 1:00 pm GMT, where Stefán Pétursson, Chief Financial Officer, will discuss the highlights of the Bank’s financial results. People interested in participating can contact firstname.lastname@example.org to obtain dial-in information.
Stefán Pétursson, CFO of Arion Bank, gives an overview of Arion Bank´s 3M 2017 financial results.
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