"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."
- Landsbankinn's CEO Lilja Björk Einarsdóttir,
in a news announcement accompanying the Bank's results on 15 February 2018
|Key performance indicators (KPIs)||31.12.2017||31.12.2016|
|Net operating income||53,512||48,700|
|Net interest income||36,271||34,650|
|ROE after taxes||8.2%||6.6%|
|Capital ratio (CAR)||26.7%||30.2%|
|Net interest margin||2.5%||2.3%|
|Overall liquidity ratio (LCR)||157%||128%|
|FX liquidity ratio (LCR FX)||931%||743%|
|Loans / deposits ratio||153.0%||144.7%|
|Full-time equiv. positions||997||1,012|
* Cost-income ratio = Total operating expenses / (Net operating income – value adjustments to loans)
All amounts in ISKm
Landsbankinn's operating profit after taxes amounted to ISK 19.8 bn in 2017 as compared with ISK 16.6 bn in 2016. ROE was 8.2% as compared with 6.6% in 2016. At the end of 2017, the Bank's CAR was 26.7% as compared to 30.2% at the beginning of the year.
The Bank's liquidity position, both in Icelandic króna and foreign currencies, remains very strong. Liquid assets amounted to ISK 167.1 bn at year-end 2017.
The primary measurement of short-term liquidity risk is the liquidity coverage ratio (LCR) which measures the ratio of highly liquid assets to net outflow over a 30-day period under stressed conditions.
Landsbankinn's LCR was 157% at year-end 2017 and the Central Bank requires a 100% minimum LCR. The foreign currency LCR for the same period was 931%; the Central Bank requires a 100% minimum.
Loans to customers amounted to ISK 926 bn at the end of 2017, up from ISK 853 bn at the beginning of the year and thus increasing by ISK 72 bn.
New lending amounted to ISK 279 bn in 2017. Total lending increased by ISK 7 bn due to exchange rate impact, indexation and positive value changes. Instalments from customers amounted to ISK 213 bn during the year.
The Bank's total assets increased by ISK 81.7 bn during the year.
Customer deposits, not counting financial undertakings, grew by 2.6% during the year, or by ISK 15.4 bn. Deposits from financial undertakings increased by 12 bn in 2017.
Landsbankinn has held a credit rating from international rating agency S&P Global Ratings since early 2014. In October 2017, the credit rating was raised by one notch and is currently BBB+/A-2 with a stable outlook.
In March 2017, Landsbankinn issued unsecured bonds in the amount of EUR 300 million. The bonds mature in March 2022, have a fixed 1.375% coupon, and were sold at terms equivalent to a 130 basis point spread above mid-swaps in euros.
In June 2017, Landsbankinn issued unsecured bonds in the amount of SEK 1 billion. The bonds mature in June 2020 and were issued in two classes: SEK 700 million floating rate at STIBOR + 1%, and SEK 300 million at a 0.75% fixed rate.
In September 2017, Landsbankinn issued unsecured bonds in the amount of EUR 300 million. The bonds mature in March 2023, have a fixed 1.0% coupon and were sold at terms equivalent to an 85 basis point spread above mid-swaps in euros.
The Bank's after-tax operating profit for 2017 amounted to ISK 19.8 bn, as compared to ISK 16.6 bn in 2016. At year-end 2017, loan impairment was positive by ISK 1.8 bn.
Net interest income amounted to ISK 36.3 bn in 2017, as compared with ISK 34.7 bn in 2016. The ratio of interest spread to average capital position was 2.5% in 2017, up by 0.2% between years.
Value changes in the credit portfolio were positive by ISK 1.8 bn as compared with a negative change in the amount of ISK 318 bn in 2016. Net commission income amounted to 8,4 bn in 2017, an increase of ISK 622 bn between years. The increase is due first and foremost to changes in the payment card market and increased activity in market transactions.
Operating expenses in 2017 amounted to ISK 23.9 bn; an increase, as compared to ISK 23.5 bn in 2016. Labour cost remains unchanged between years and other operating expenses grew by ISK 324 m. The Bank's cost-income ratio for 2017 was 46.1%. This ratio is the difference between the Bank's operating expenses and net operating revenue with the exception of value changes to lending. Full-time equivalent positions with the Bank decreased by 15 in 2017, from 1,012 to 997.