About Us
  • Our service
  • Organization
  • Corporate Governance
  • Investor Relations
  • More
    • MediaNews
    Arion Bank’s financial results for Q4 2020 and for the year 2020
    10.02.2021

    Arion Bank’s financial results for Q4 2020 and for the year 2020

    Höfuðstöðvar Arion banka, Borgartúni 19 - myndHöfuðstöðvar Arion banka, Borgartúni 19

    • Arion Bank reports net earnings of ISK 5,761 million in Q4 2020, a significant improvement from Q4 2019
    • Net earnings amounted to ISK 8,110 million from continuing operations, an improvement of 56% from Q4 2019
    • Return on equity in Q4 was 11.8%, compared with a negative 5.8% in Q4 2019
    • Net interest margin was 2.9% in a low interest rate environment, compared with 3.0% in Q4 2019
    • Core revenues increased by 8.2%, compared with Q4 2019
    • The Bank’s total assets increased by 8% from year-end 2019 where the loan book increased by 6% and deposits by 15%
    • Net earnings of ISK 12,469 million in 2020 and 6.5% ROE, compared with ISK 1,100 million and 0.6% ROE in 2019
    • Net earnings from continuing operations amounted to ISK 16,747 million and increased by 19% from the previous year
    • The Bank’s capital ratio was 27.0% and the CET1 ratio was 22.3% at the end of the year, assuming Board’s proposal of ISK 3 billion dividend payment, equaling ISK 1.74 per share, and ISK 15 billion buy-back of own shares
    • Share buy-back program has been approved by the Board of Directors
    • Arion Bank is well prepared for the future with a revised Strategic Direction and updated Medium Term Targets

    Arion Bank reported net earnings of ISK 8,110 million from continuing operations in the fourth quarter and ISK 16,747 million from continuing operations during the year. Net earnings amounted to ISK 5,761 million for the quarter and ISK 12,469 million for the year. Return on equity was 11.8% for the quarter and 6.5% for the year. Return on equity, assuming 17% CET1 ratio, was 14.9% for the quarter and 7.9% for the year.

    Total assets amounted to ISK 1,173 billion at the end of the year, compared with ISK 1,082 billion at the end of 2019. Loans to customers increased by 6% from year-end 2019, primarily due to mortgage lending. Liquid assets increased due to significant deposit growth and proceeds from the Bank´s issuance of AT1 in February. Deposits increased by 15% from year-end 2019, as the Bank focused on deposits from individuals and corporates. Total equity amounted to ISK 198 billion at the end of the year, compared with ISK 190 billion at the end of 2019.

    The Bank’s capital ratio, as calculated under the Financial Undertakings Act No. 161/2002, was 27.0% at the end of the year, compared with 24.0% at the end of 2019. The CET 1 ratio was 22.3% at the end of the year, compared with 21.2% at the end of 2019. These ratios assume a dividend payment of ISK 3 billion and ISK 15 billion buy-back of own shares, which has been authorized by the Financial Supervisory Authority of the Central Bank of Iceland (FSA). The Bank’s capital ratios comfortably exceed the requirements set by law and the FSA. The Group's own funds increased by ISK 28 billion from year-end 2019.

    The Board of Directors of Arion Bank has approved to authorize the management of the Bank to initiate share buy- back programs in Iceland and Sweden to purchase own shares (including in the form of SDRs). As soon as available, the Bank will disclose information about the initiation date, daily volume limits and the manager(s) of the Programs, which will be independent and make trading decisions independently and without influence by the Bank with regards to the timing of purchases.

    Benedikt Gíslason, CEO of Arion Bank:

    “The economic and social impact of the Covid-19 pandemic meant that 2020 was a year like no other. Nevertheless the Bank managed to successfully adapt its business to the new reality after restrictions on gatherings came into effect in March, and our employees deserve plaudits for their fortitude and resourcefulness. Some 80% of employees were working from home for an extended period, where they got on with their work and continued to serve our customers. At one stage our branches were only open to people with appointments. The migration to digital services which has occurred in financial services in Iceland proved to be invaluable in 2020, as retail and corporate customers were able to take care of nearly all their financial needs using digital platforms and could make contactless payments to buy goods and services.

    The Bank’s financial results improved substantially between years, both net earnings and earnings from continuing operations, illustrating that the organizational changes and shifts in focus made at the end of the third quarter of 2019 have had the desired effect. The fourth quarter results were particularly strong, with earnings from continuing operations up 56% YoY, and return on equity in the period was in excess of the Bank’s target of 10%. The Financial Supervisory Authority of the Central Bank of Iceland has approved the Bank’s request to be permitted to buy back up to ISK 15 billion of own shares, which is positive news for Arion Bank and hopefully the entire banking sector. The Bank will also propose at its AGM that a dividend of approximately ISK 3 billion be paid. Despite this the Bank continues to have one of the strongest financial positions in Europe and has significant lending capacity.

    In response to the changing economic conditions Arion Bank was the first bank in Iceland to offer both retail and corporate customers the option of deferring repayments on their loans. Payment holidays were granted on loans totalling ISK 130 billion and at the end of the year the figure was ISK 35 billion. At the same time the Bank granted a record number of mortgages, which is obviously due to the low interest rate environment. At year-end approximately half of the Bank’s mortgage portfolio were loans granted in 2020, a total of ISK 200 billion. Corporate lending was also unusually strong, with ISK 440 billion going to companies in 2020, a significant proportion being to companies refinancing loans. New corporate loans included more than ISK 1 billion in the form of supplementary loans and approximately ISK 3 billion in business support loans which formed part of the raft of government measures relating to Covid-19. As the year progressed the markets rallied and assets under management at the Bank increased by more than ISK 100 billion during the year. Arion Bank was the leading equities broker in Iceland for the fifth year in succession.

    We saw a surge in the use of our digital channels in 2020 which also means that we are in much more frequent contact with our customers. We interacted with all of our customers once a day on average in 2020, a total of 42 million interactions, 99% of which were digital. The growing popularity of our digital platforms provides us with huge potential to further enhance our services in the future, making them even more convenient and efficient.

    In 2020 we sought to expand our range of green products. Mid-year we launched a new deposit account called Green Deposits which has been used to finance the Bank’s green car loans. By investing in Green Deposits our customers can contribute to the vital transition to renewable energy. The reaction from customers has exceeded all our expectations and due to its popularity we have expanded the account framework. We were also the first bank to offer green mortgages with special interest rates. By providing the option of green mortgages our prime objective is to encourage individuals, construction companies and real estate companies to build more environmentally friendly housing, as in our opinion there is currently too little available.

    In December the board of directors approved a revised strategy for the Bank which builds on the journey the Bank has been taking in recent years, our culture and values and the shifts in focus which were introduced in September 2019. The Bank’s new core strategy is to excel by offering smart and reliable financial solutions which create future value for our customers, shareholders and society as a whole. We have already begun to implement the strategy and it will shape our business and services over the coming years.

    The economy is showing clear signs of a recovery now that external uncertainty is beginning to recede. It is crucial that we as a country bounce back strongly so that the economy can quickly regain its former strength. Arion Bank is well set to play its role in the economic recovery alongside our dedicated and hard-working customers.”

    Investor webcast on 11 February at 9:30 CET (8:30 GMT)

    Arion Bank will be hosting a webcast on Thursday 11 February at 9:30 CET (8:30 GMT) where CEO Benedikt Gíslason, CFO Stefán Pétursson, Deputy CFO Eggert Teitsson and Head of Investor Relations Theodór Fridbertsson will present the results and answer questions from participants. The webcast will take place in English and will be streamed live.

    The webcast will be accessible live on financialhearings.com and a link will also be made available on the Bank’s website under Investor Relations.

    To participate in the webcast via telephone and ask questions please call in using the relevant number indicated below before the start of the webcast:

    Sweden: +46 850 558 354
    UK: +44 333 300 9261
    Iceland: +354 800 7520
    USA: +1 844625 1570

    The financial calendar of Arion Bank is available on the Bank’s website.

    Arion Bank Press Release Q4 2020

    Arion Bank Investor Presentation Q4 2020

    Arion Bank Consolidated Financial Statements 2020