English Icelandic
Published: 2023-05-04 19:22:00 CEST
Arion Bank hf.
Interim report (Q1 and Q3)

Arion Bank's Q1 2023 financial results

  • Arion Bank reports net earnings of ISK 6,291m in Q1, compared with ISK 5,818m in Q1 2022
  • Return on equity in Q1 was 13.7%, compared with 12.7% in Q1 2022
  • Earnings per share in ISK of 4.32 in Q1, compared with ISK of 3.67 in Q1 2022
  • Net interest margin of 3.1%, the same as for Q1 2022
  • Another strong quarter in terms of fees and commission income, with total fees of ISK 4.4bn. All fee generating businesses delivered a solid quarter with CIB and Asset Management especially strong
  • Core income, defined as net interest income, net commission income and net insurance income, increased by 18.3% compared with Q1 2022
  • Cost-to-core income ratio in Q1 was 47.0%, compared with 47.4% in Q1 2022
  • The balance sheet increased by 2.1% from year-end 2022
  • Dividend payment and share buybacks amounted to ISK 14.8bn in Q1 2023
  • The Bank’s total capital ratio was 23.7% and the CET1 ratio was 18.6% at the end of March

Arion Bank reported net earnings of ISK 6,291m in the first quarter of 2023 with 13.7% return on equity.

Total assets amounted to ISK 1,501bn at the end of March, compared with ISK 1,470bn at the end of 2022. Loans to customers increased by 2.7% from year-end 2022. The increase was 4.5% in corporate lending and 1.1% in loans to individuals, mainly mortgages. Deposits from customers increased by 2.6% during the first quarter. Total equity amounted to ISK 180bn at the end of March. Total equity decreased from year-end due to a capital release of ISK 14.8bn which was partly offset by net earnings for the period.

The Group's capital ratio was 23.7% and the CET1 ratio 18.6%. The ratios are determined on the basis of the unaudited net earnings in the quarter and take into account the deduction of 50% of net earnings as foreseeable dividend in line with the Bank’s dividend policy, and ISK 0.9 billion of the outstanding buyback program that had been authorized by the Financial Supervisory Authority of the Central Bank of Iceland (FSA). The Group's capital ratio, as calculated under the Financial Undertakings Act No. 161/2002, was 23.3% and the CET1 ratio was 18.3%. These ratios comfortably exceed the requirements made by the FSA and Icelandic law.

Benedikt Gíslason, CEO of Arion Bank
“The first quarter financial results were in line with our expectations and we reached our key financial targets. Our core business continues to perform well and core income grew by 18% between years. The Bank’s capital and liquidity positions remain robust.

Arion Bank and our subsidiaries Vörður and Stefnir provide our customers with comprehensive financial services and offer the most diverse service offering of any financial institution in the country. Our revenue streams therefore come from a wide range of sources both on the retail and corporate sides of the business. Asset management and corporate services and advisory performed strongly during the quarter, with almost 75% of the Bank’s commission income originating from corporate services. Deposits grew strongly which provided a solid platform for our lending activities.

During the first few months of the year the financial markets were unsettled in both Europe and the United States. Furthermore, interest rates both in Iceland and internationally have climbed sharply over the past few months. We will of course closely monitor these developments and their impact on the Bank and our customers. As for the Bank’s capital and dividends, then our strategy remains unchanged, but we will nevertheless remain cautious and focus on maintaining our robust position.”

Investor meeting / webcast in English on 5 May at 10:30 CEST / 8:30 GMT
Arion Bank will be hosting a meeting at the Bank’s headquarters in Borgartún 19, Reykjavík, on Friday 5 May at 10:30 CEST / 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 also 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 1 January 31 March 2023.pdf
Q1 2023 Arion Bank Investor Presentation.pdf
Q1 2023 Press Release Arion Bank.pdf