• Arion Bank reports net earnings of ISK 6,039 million in Q1 2021
• The results represent a significant improvement from Q1 2020 and are better than could be expected in the challenging economic environment
• Return on equity in Q1 was 12.5%, compared with a negative 4.6% in Q1 2020
• Net interest margin was 2.7% in a low interest rate environment, compared with 2.8% in Q1 2020
• Core revenues increased by 4.2%, compared with Q1 2020
• The Bank’s total assets increased by 0.7% from year-end 2020, with mortgage lending up 3.7%
• Considerable activity on the corporate lending side albeit a small reduction in the Bank’s corporate loan book due to the syndication and sale of corporate loan exposures to institutional investors
• Dividend payment and share buy-backs amounted to ISK 14.8 billion
• The Bank’s capital ratio was 26.9% and the CET1 ratio was 22.4%
• The Bank is very well positioned to distribute capital and meet funding requirements of our customers

Arion Bank reported net earnings of ISK 6,039 million in the first quarter with 12.5% return on equity. Return on equity, assuming 17% CET1 ratio, was 16.0% for the quarter.

Total assets amounted to ISK 1,181 billion at the end of the period, compared with ISK 1,173 billion at the end of 2020. Loans to customers increased by 1.7%, primarily mortgage lending, but there was a slight decrease in liquid assets, partially due to share buy-backs and dividend payments during the quarter. On the liability side deposits increased by 4.2%. Total equity amounted to ISK 189 billion at the end of the period. Total equity increased due to the reported net earnings but decreased by ISK 14.8 billion due to dividend paid and the share buy-backs.

The Bank’s capital ratio was 26.9% and the CET1 ratio was 22.4% at the end of March 2021, assuming 50% dividend payments of net earnings in line with the dividend policy, and outstanding buy-back of ISK 3 billion, compared with 27.0% and 22.3% respectively at year end 2020. The Group's capital ratio, as calculated under the Financial Undertakings Act No. 161/2002, was 26.5% and the CET1 ratio was 22.0%. The Bank’s capital ratios comfortably exceed the requirements set by law and the Financial Supervisory Authority of the Central Bank.

Benedikt Gíslason, CEO of Arion Bank
“We are pleased with the Bank’s performance in the first quarter. All our key financial targets were met and we believe we have successfully navigated the Bank through the challenging conditions created by the global pandemic. Core revenues, i.e. net interest income, net commission income and net insurance income increased by more than 4% year-over-year. We have also managed to further reduce costs. Impairments and financial income improved substantially between years, since there was great uncertainty surrounding the first quarter results in 2020. Although the route out of the pandemic is still far from clear, there is cause for optimism now that a successful vaccination program is being rolled out, both in Iceland and in many of the countries vital for the tourist industry. We are happy to see so many of our customers getting ready for better times ahead.

A key focus in recent years has been to make banking more convenient for our customers, offering user-friendly digital solutions to make complex actions straightforward. One of our latest products allows people to access their pensions in the Arion app. This solution recently won an award at the annual Icelandic Web Awards for its ability to gather complex information from numerous sources and present it in a way that people can easily understand. We are immensely proud of this achievement as we think it is vital that people fully understand their pensions – both young people who are just starting to save for the future and older people approaching retirement age.

There have been significant changes among the shareholders so far this year. The major international shareholders who participated in the Bank’s IPO three years ago have largely sold their stakes and been replaced by Icelandic investors. Today the Bank has more than 8,000 shareholders, with Icelandic shareholders holding approximately 90% of share capital. Pensions funds own almost 50% of the Bank and other domestic investors hold around 40%. Interestingly, although international shareholders only own around 10% in the Bank, they number around 5,000 and are therefore the majority of shareholders in terms of numbers.”

Investor webcast on 6 May at 10:30 CET (8:30 GMT)
Arion Bank will be hosting a webcast on Thursday 6 May at 10:30 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 +46 850 558 368
UK +44 333 300 9034
USA +1 833 526 8396
Iceland +354 800 7520