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Thursday 06 February, 2020

Landsbankinn hf.

Landsbankinn hf.: Financial results of Landsbankinn for 2019

Landsbankinn hf.: Financial results of Landsbankinn for 2019
  • Landsbankinn's after-tax profit in 2019 was ISK 18.2 billion.
  • Return on equity (ROE) was 7.5% in 2019, as compared to 8.2% in 2018. Discounting the bank tax, ROE was 9.2% and the Bank’s target is 10% at a minimum, having regard for the impact of bank tax.
  • The cost-income ratio decreased between years, was 42.6% in 2019 as compared to 45.5% in 2018.
  • Landsbankinn’s credit portfolio grew by ISK 76 billion. The default ratio at year-end 2019 was 0.8%, the same number as at year-end 2018.
  • Landsbankinn's equity amounted to ISK 247.7 bn at year-end 2019 and its CAR was 25.8% of risk-weighted assets.
  • A proposal will be made to the AGM to pay an ISK 9.5 bn dividend to shareholders for the year 2019, the equivalent of ISK 0.40 per share.
  • Landsbankinn's annual report and Pillar III risk report for 2019 are published alongside its annual financial statements. The reports are available on the Bank's website.

The profit of Landsbankinn hf. in 2019 was ISK 18.2 bn after taxes, as compared with ISK 19.3 bn in 2018. After-tax ROE was 7.5% in 2019, compared to 8.2% in 2018. Net interest income amounted to ISK 39.7 bn in 2019, as compared with ISK 40.8 bn in 2018. Landsbankinn’s net fee and commission income amounted to ISK 8.2 bn, remaining unchanged from the previous year. Other operating income amounted to ISK 8.5 bn in 2019, as compared with ISK 3.6 bn the previous year, which is a 136% increase between years. The increase is caused mostly by positive changes to the fair value of unlisted equities. Impairment to loans and claims amounted to ISK 4.8 bn as compared with a positive value change of ISK 1.4 bn in 2018. The default ratio of the credit portfolio is unchanged between years, was 0.8% at the end of 2019 and 2018.

The Bank's net operating income for 2019 amounted to ISK 51.5 bn, as compared to ISK 53.9 bn in 2018.
The net interest margin on assets and liabilities was 2.4% compared to 2.7% the previous year.

Other operating expenses amounted to ISK 24 bn in 2019, remaining unchanged between years. Wages and related expenses amounted to ISK 14.5 bn as compared with ISK 14.6 bn the previous year. Other operating income was ISK 9.5 bn in 2019, as compared with ISK 9.3 bn in 2018.

Pre-tax profit in 2019 amounted to ISK 27.5 bn, as compared to ISK 30 bn in 2018. Imputed taxes, including a special financial management tax on wages, amount to ISK 10 bn in 2019 as compared with ISK 11.4 bn in 2018.

Landsbankinn's total assets increased by ISK 100.3 bn between years and amounted to ISK 1,426 bn at year-end 2019. Lending increased by 7.1% between years, or by just over ISK 75.7 bn. The growth in lending is due mostly to an increase in loans to private persons. At the end of 2019, deposits from customers amounted to ISK 708 bn as compared with ISK 693 bn at year-end 2018.

Landsbankinn’s equity at year-end 2019 was ISK 247.7 bn, as compared with ISK 239.6 bn at year-end 2018. In 2019, Landsbankinn paid an ISK 9.9 bn dividend to shareholders, with total dividends paid by the Bank since 2013 amounting to ISK 142 bn. Landsbankinn’s CAR at year-end 2019 was 25.8%, compared to 24.9% at year-end 2018. The Financial Supervisory Authority, Iceland (FME), sets the minimum requirement for total capital at 20.5%.

The Board of Directors of Landsbankinn will propose to the AGM on 27 March 2020 that shareholders be paid a dividend amounting to ISK 0.40 per share for the year 2019, a total amount of ISK 9.5 bn. The dividend payment represents around 52% of profit for the year 2019.

Lilja Björk Einarsdóttir, CEO of Landsbankinn:

“Landsbankinn has made major advances that are reflected in increased customer satisfaction and a strong market position, along with robust and sound operation.

Increased optimisation and on-going restrictive measures are the main reasons behind neigh on stable operating costs year-over-year, despite contractual wage increases. The Bank’s cost-income ratio decreased considerably between years and was 42.6% at year-end 2019. Return on equity (ROE) was 7.5%; 9.2% discounting the bank tax.

The most important aspect of Landsbankinn’s operation is its relationship with customers. Topping the Icelandic Performance Satisfaction Index is an excellent start to 2020, as the survey, carried out in late 2019, measures overall customer satisfaction. We focus jointly on the personal relationship with customers and the development of new digital solutions. Digital service contributes to more accessible and simpler banking. Personal service ensures that customers receive solid financial advice and assistance when needed.

The Bank’s employees have taken advantage of opportunities to strengthen and build customer relationships and we welcomed several new customers in 2019. This applies to both corporates and private individuals. We are proud to have supported over a 1,000 families and individuals taking their first steps in the real estate market: Landsbankinn held a 38% market share in housing loans to first-time buyers in 2019. Landsbankinn offers competitive terms whenever possible yet it should be clear that competing on terms against parties who pay lower levies than the Bank is difficult. Taxation on large financial undertakings, well beyond what applies in neighbouring countries, skews the competitive position severely and negatively impacts terms to customers. Landsbankinn will continue to work on reducing operating costs, with the largest opportunities lying in further standardisation and simplification of the joint infrastructure of the financial system.

The Landsbankinn team is highly motivated as ever and is currently working with the Bank’s management to shape a new future strategy for the Bank, to be introduced in fall. The Bank’s new strategy will focus on further strengthening our relationship with customers while continuing to deliver good and competitive operating results.”

Teleconference to present results

A teleconference to present the Bank's 2019 financial statements will be held for analysts at 10:00 (GMT+0), on Friday 7 February. The meeting will be held in English. Please register for participation by emailing [email protected]

Landsbankinn's financial calendar

27 March 2020 – Annual General Meeting

7 May 2019 - Q1 2020 results

30 July 2020 – H1 2020 results

29 October - Q3 2020 results

11 February 2021 – Annual Financial Statements 2020


For further information contact:

Rúnar Pálmason, Public Relations, [email protected], tel: +354  410 6263

Hanna Kristín Thoroddsen, Investor Relations, [email protected], tel: +354  410 7310


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