English Icelandic
Published: 2022-10-26 18:16:00 CEST
Arion banki hf.
Interim report (Q1 and Q3)

Arion Bank's Q3 2022 financial results

  • Arion Bank reports net earnings of ISK 4,863m in Q3, compared with ISK 8,238m in Q3 2021
  • Return on equity in Q3 was 10.5%, compared with 17.0% in Q3 2021
  • Earnings per share in ISK of 3.26 in Q3, compared with 5.23 in Q3 2021
  • Net interest margin of 3.2%, compared with 2.7% in Q3 2021
  • Core income increased by 19.2% compared with Q3 2021
  • Challenging market conditions impact financial income in the quarter
  • Cost-to-income ratio in Q3 was 41.8%, compared with 37.5% in Q3 2021
  • The Bank’s total capital ratio was 23.1% and the CET1 ratio was 19.3% on 30 September 2022

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.”

Investor meeting / webcast in English on 27 October at 10:30 CEST / 9:30 BST / 8:30 GMT
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.

For any further information please contact Theodór Fridbertsson, Head of IR, tel.+354 856 6760, or Haraldur Gudni Eidsson, Head of Corporate Communications, tel. +354 856 7108.

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

Arion Bank Condensed Consolidated Interim Financial Statements 30 September 2022.pdf
Q3 2022 Arion Bank Investor Presentation.pdf
Q3 2022 Press Release Arion Bank.pdf