Arion Bank reported net earnings of ISK 4,863m in the third quarter and ISK 20,393m during the first nine months of the year. Return on equity was 10.5% for the quarter and 14.8% for the first nine months.
Total assets amounted to ISK 1,428bn at the end of the period, compared with ISK 1,314bn at the end of 2021. Loans to customers increased by 11.6% from year-end 2021. The increase was 15.6% in corporate lending and 8.5% in loans to individuals. Total equity amounted to ISK 186bn at period end. Total equity decreased from year-end due to a capital release of ISK 28.9bn which was partly offset by net earnings for the period.
The Bank’s total capital adequacy ratio was 23.1%, and the CET1 ratio was 19.3% at the end of September. The ratios are determined on the basis of the unaudited net earnings in the quarter, with a deduction of 50% of net earnings as foreseeable dividends in line with the Bank’s dividend policy and foreseeable buybacks of ISK 2.8 billion. The Group's capital ratio, as calculated under the Financial Undertakings Act No. 161/2002, was 22.8% and the CET1 ratio was 19.0%. These ratios comfortably exceed the requirements made by the Financial Supervisory Authority of the Central Bank of Iceland (FSA) and Icelandic law.
Benedikt Gíslason, CEO of Arion Bank:
“We are quite pleased with the Bank’s financial results for the third quarter. Core income increased by 19% between years and the trajectory is generally very positive throughout our business. The challenging securities markets over the past few months have, however, impacted the Group’s financial income during the quarter. The Bank remains strongly capitalized and a ISK 5 billion share buyback program is currently underway, and the regulatory authorities have approved the repurchase of a further ISK 5 billion. All in all, we are well on the way towards achieving our financial goals this year.
Our capital markets and asset management businesses are performing strongly despite market turbulence. In terms of turnover on Nasdaq Iceland, Arion Bank’s brokerage had the highest market share in both equities and fixed income during the first nine months of the year.
The Bank’s funding position is robust following a €300 million senior issuance in September. This funding was partly used to pay off loans maturing next year. As a result, the Bank has a light maturity profile through to the end of next year. The Bank’s liquidity position is also robust and allows us to utilize opportunities in terms of capital and balance sheet management.
In many respects Iceland is in an enviable position at the moment, particularly compared to many of our neighbours. Following Russia’s invasion of Ukraine, many of Iceland’s neighbouring countries are dealing with high inflation, not least as a consequence of rising energy prices. We are fortunate to have our geothermal energy and hydropower, both sustainable resources, and this has proven invaluable to us. In addition to lower inflation, there are a lot of positives in our environment and we expect solid GDP growth this year and low unemployment. We can therefore afford to be reasonably optimistic about our environment this coming winter.”
Arion Bank will be hosting a meeting / webcast at the Bank’s headquarters in Borgartún 19, Reykjavík, on Thursday 27 October at 10:30 CEST / 9:30 BST / 8:30 GMT where CEO Benedikt Gíslason and CFO Ólafur Hrafn Höskuldsson will present the results and Chief Economist Erna Björg Sverrisdóttir will give an update on the economic environment. The meeting will take place in English and will be streamed live.
The webcast will be accessible live on financialhearings.com and a link is also available on the Bank’s website under Investor Relations.
Participants attending virtually will be able to ask questions during the meeting through a message board, located below the video feed. Answers will be provided by presenters at the end of the webcast.
Arion Bank’s financial calendar is available on the Bank's website.
Q3 2022 Press release Arion Bank
Q3 2022 Arion Bank Investor Presentation
Arion Bank Condensed Consolidated Interim Financial Statements 30 September 2022
Forward-looking statements
This release contains forward-looking statements that reflect management’s current views with respect to certain future events and potential financial performance. The information in the release is based on company data available at the time of the release. Although Arion Bank believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Accordingly, results could differ materially from those set out in the forward-looking statements as a result of various factors. The most important factors that may cause such a difference for Arion Bank include, but are not limited to: a) the macroeconomic development, b) change in inflation, interest rate and foreign exchange rate levels, c) change in the competitive environment and d) change in the regulatory environment and other government actions. This release does not imply that Arion Bank has undertaken to revise any forward-looking statements, beyond what is required by applicable law or applicable stock exchange regulations if and when circumstances arise that will lead to changes after the date when this release was made. Arion Bank assumes no responsibility or liability for any reliance on any of the information contained herein. It is prohibited to distribute or publish any information in this release without Arion Bank’s prior written consent.
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