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Thursday, 15 February 2018

Landsbankinn hf.: Financial results of Landsbankinn for 2017

Landsbankinn hf.    

Published: 17:42 CET 15-02-2018 /GlobeNewswire /Source: Landsbankinn hf. / : LBANK CBI 22 /ISIN: IS0000025856

Landsbankinn hf.: Financial results of Landsbankinn for 2017

Financial results of Landsbankinn for 2017

  • Landsbankinn's after-tax profit in 2017 was ISK 19.8 billion.
  • Return on equity (ROE) was 8.2% in 2017, as compared to 6.6% in 2016.
  • The cost-income ratio decreased between years and was 46.1% in 2017.
  • Landsbankinn's credit portfolio grew by ISK 72 bn. The increase is equal parts in loans to corporates and housing loans to individuals. The default percentage continues to decrease and was 0.9% at year-end 2017.
  • Landsbankinn's equity amounted to ISK 246.1 bn at year-end 2017 and its capital ratio was 26.7% of risk-weighted assets.
  • A proposal will be made to the AGM on 21 March to pay an ISK 15.4 bn dividend to shareholders for the year 2017. In addition, the Board of Directors intends to propose that the AGM approve payment of a special dividend.
  • Landsbankinn's annual report is published alongside the annual financial statement. The report is available on the Bank's website.

The profit of Landsbankinn hf. in 2017 was ISK 19.8 bn after taxes, as compared with ISK 16.6 bn in 2016. Return on equity (ROE) after-taxes was 8.2% for the year 2017, as compared with an ROE of 6.6% in 2016. Net interest income increased by ISK 1.6 bn between years, amounting to ISK 36.3 bn in 2017. Landsbankinn's net commission income is up by 8% between years and amounted to ISK 8.4 bn. This increase is derived mostly from an increased business volume in lending, capital markets and asset management. Other operating income amounted to ISK 7 bn, a YoY increase of 7%. The increase is caused largely by positive changes in the fair value of unlisted equities. Positive value changes in the credit portfolio amounted to ISK 1.8 bn as compared with a negative value change of ISK 318 bn in 2016.

Operating expenses were ISK 23.9 bn, up by 1.4% between years. Wages and related expenses were unchanged between years. Other operating expenses increased by 3.4%, largely due to higher contributions to the FME and the Debtors' Ombudsman, and costs associated with new software.

Pre-tax profit in 2017 amounted to ISK 29.7 bn, as compared to ISK 25.2 bn in 2016. Imputed taxes, including a special financial management tax on wages, amount to ISK 10.6 bn in 2017 as compared with ISK 9.2 bn in 2016.

Landsbankinn's total assets increased by ISK 81.7 bn between years and amounted to ISK 1,193 bn at year-end 2017. Lending increased by 8.5% between years, or by just over ISK 72 bn. The increase is equal parts in loans to corporates and housing loans to individuals. The default ratio continues to fall and stood at 0.9% at year-end 2017 as compared with 1.5% at year-end 2016.

At the end of 2017, deposits from customers amounted to ISK 605 bn as compared with ISK 590 bn at year-end 2016.

Landsbankinn's equity at year-end 2017 was ISK 246.1 bn, as compared with ISK 251.2 bn at year-end 2016. In 2017, Landsbankinn paid an ISK 24.8 bn dividend to shareholders. Landsbankinn's capital ratio at year-end 2017 was 26.7%, as compared to 30.2% at year-end 2016. The FME sets the total capital requirement for Landsbankinn at 21.4%.

The Board of Directors will propose to the AGM on 21 March 2018 that shareholders be paid a dividend of ISK 0.65 per share for the year 2017, a total amount of ISK 15.4 bn. The dividend payment represents around 78% of the year's profit. In addition, the Board of Directors intends to propose that the AGM approve payment of special dividend, the amount of which will be disclosed in motions to the AGM.

Lilja Björk Einarsdóttir, CEO of Landsbankinn:

Landsbankinn had positive operating results in 2017 and the Bank's performance was in line with expectations. Market share grew to reach a record high in the retail market, surveys showed increasing confidence in the Bank and customers are better satisfied with its services.

Increasing economic activity and marketing efforts have resulted in a year-over-year increase in the Bank's commission income, most of the increase coming from corporate banking activity and services to institutional investors. The same underlying factors contribute to the increase in lending to both corporate and retail customers. Operating expenses remained more or less constant and the cost-income ratio was close to the Bank's target of 45%.

In 2017, the Bank's profit was ISK 19.8 bn and return on equity was 8.2%. Landsbankinn is well funded and at year-end, its equity amounted to ISK 246 bn. The capital ratio was 26.7%, which is quite considerably higher than regulatory demands. The Bank's objective is to achieve a 10% return on equity by 2020.

Landsbankinn has followed a strategy of growing the balance sheet responsibly in line with the economy. The bank is operationally stable and generates a reasonable return on equity. Dividend payments have been a part of effective liquidity management and the bank has made considerable dividend payments in recent years.

Landsbankinn enjoys increasing trust on international financial markets which is reflected in better terms for the bank as well as oversubscription of debt issuance. The Bank will continue its efforts to optimise its capital structure in the near future and is considering the issuance of subordinated bonds.

Towards the end of the year, Landsbankinn implemented new deposit and payment systems, considerably strengthening its IT infrastructure. Implementation of the new systems also reduced the operational risk posed by older core banking systems. In coming years, Landsbankinn will place increased emphasis on digital banking solutions that improve the Bank's services even further, making them more efficient and accessible to customers.

Landsbankinn is a leading provider of financial services in Iceland and is well positioned to handle coming changes in banking. We will continue to focus on providing individuals and companies throughout Iceland with first-class service.

For further information contact:

Rúnar Pálmason, Public Relations, pr@landsbankinn.is, tel: +354  410 6263 / 899 3745

Hanna Kristín Thoroddsen, Investor Relations, ir@landsbankinn.is, tel: +354  4107310



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This announcement is distributed by Nasdaq Corporate Solutions (One Liberty Plaza, 165 Broadway, New York, NY 10006. Tel: +1 212 401 8700. www.nasdaqomx.com) on behalf of Nasdaq Corporate Solutions clients. Source: Landsbankinn hf., Austurstraeti 11, Reykjavik 155, Iceland
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