As announced earlier today, 22 June 2023, the Board of Directors of Íslandsbanki has agreed to accept the offer made by the Financial Supervisory Authority of the Central Bank of Iceland (the “FSA”) to conclude the FSA’s inspection of the execution of the offering by the Icelandic State of a 22.5% stake in the share capital of the Bank that took place in March 2022 with a settlement agreement (the “Settlement Agreement”). The Settlement Agreement provides that Íslandsbanki will pay a fine of ISK 1,160 million (the “Fine”). This announcement describes the effect of the Fine on Íslandsbanki’s anticipated financial results for the second quarter of 2023 and includes an updated ROE guidance for 2023.
The Bank will record a charge of ISK 860 million in the second quarter in connection with this matter and had previously made a provision of ISK 300 million in its 2022 annual accounts.
The additional charge to the accounts is estimated to bring the after-tax profit for the second quarter of 2023 into the range of ISK 5.8 - 6.5 billion, amounting to annualised return on equity in the range of 10.7-12.1%. This estimate is based on management accounts for April and May and the forecast for June 2023 and assumes a positive effect of impairments in the second quarter of the year 2023. The financial results for the second quarter are subject to change until the end of the quarter and the interim financial results for Q2 are completed and reviewed.
In light of the results for the first quarter and the estimate for the second quarter, the Bank is updating its ROE guidance for the year 2023. The initial ROE guidance was 10-11% but the Bank is now guiding towards a range of 10.7-11.7%, assuming normalised through-the-cycle annual impairment level of 25-30bp on the Bank’s loan portfolio for the second half of the year 2023. The new guidance is subject to various risk and uncertainty factors which could lead to different results.
Íslandsbanki will publish its Q2 2023 financial results after market close on 27 July 2023.
This announcement is released by Íslandsbanki hf. and contains information that qualified or may have qualified as inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 (MAR), encompassing information relating to the FSA proceedings described above. For the purposes of MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055, this announcement is made by Jón Guðni Ómarsson, Chief Financial Officer at Íslandsbanki hf.
For further information please contact:
Investor Relations - Bjarney Anna Bjarnadóttir, ir@islandsbanki.is
Public Relations - Edda Hermannsdóttir, pr@islandsbanki.is
Disclaimer
This press release may contain “forward-looking statements,” involving uncertainty and risks that could cause actual results to differ materially from results expressed or implied by the statements. Íslandsbanki hf. undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after this press release. It is the investor's responsibility to not place undue reliance on these forward-looking statements which only reflect the date of this press release. Forward-looking statements should not be considered as guarantees or predictions of future events and all forward-looking statements are qualified in their entirety by this cautionary statement.