Landsbankinn hf.: Financial results of Landsbankinn for 2021 - Landsbankinn's net profit in 2021 was ISK 28.9 billion.
- After-tax return on equity (ROE) was 10.8% in 2021. The Bank’s long-term ROE target is 10% at a minimum.
- ROE after taxes was 10.5% in Q4 2021 as compared with an ROE of 15.5% for the same quarter in 2020.
- Net fee and commission income increased by 24% between years, mostly as a result of increased activity in asset management and market transactions.
- Market share in the retail market is around 39.5% and has never been higher. Never before have there been as many new additions to Landsbankinn’s group of satisfied customers.
- Around 2,500 corporates and sole proprietors became Landsbankinn customers in 2021, a record increase.
- Portfolio management agreements increased by 25% between years.
- Operational efficiency continued to grow. The cost/income ratio in 2021 was 43.2% and operating expenses as a ratio of average total asset position was 1.4%.
- The Bank’s total equity amounted to ISK 282.6 billion at year-end 2021 and the Bank’s total capital ratio was 26.6%.
- The Board of Directors will propose that the AGM approve payment of an ISK 14.4 billion dividend to shareholders for the year 2021. Should this proposal be approved, dividends paid by the Bank in 2013-2022 will amount in total to ISK 160.6 billion.
- The Board of Directors is also considering proposing a special dividend in 2022.
- The Annual & Sustainability Report of Landsbankinn and the Pillar III risk report for 2021 are published alongside the Annual Financial Statements.
Landsbankinn’s profit in 2021 was ISK 28.9 billion after taxes, as compared with ISK 10.5 billion in 2020. After-tax ROE for 2021 was 10.8%, as compared with 4.3% the previous year. Net interest income amounted to ISK 39.0 billion in 2021, compared with ISK 38.1 billion in 2018. The net interest margin as a ratio of average total assets was 2.3%, compared with 2.5% the previous year. Landsbankinn's net fee and commission income was ISK 9.5 billion in 2021, compared with ISK 7.6 billion in 2020. Other operating income amounted to ISK 13.9 billion, compared with a negative operating income of ISK 7.5 billion in 2020. There was a reversal in impairment leading to a net release of credit impairment of ISK 7.0 billion in 2021 compared with an ISK 12.0 billion charge in 2020. This reversal reflects the improved economic outlook in Iceland and less than expected economic impact from the pandemic on the Bank’s loan portfolio. The Bank's operating profit for 2021 amounted to ISK 62.3 billion, compared to ISK 38.3 billion the previous year. Operating expenses amounted to ISK 25.9 billion in 2021, compared with ISK 25.6 billion in 2020. Of that amount, salaries and related expenses were ISK 14.8 billion, the same amount as in 2020. Other operating expenses were ISK 9.1 billion in 2021, unchanged from the previous year. Pre-tax profit in 2021 amounted to ISK 36.5 billion, compared with ISK 12.6 billion in 2020. Imputed taxes, including a special tax on liabilities of financial undertakings and a special financial activities tax on salaries, amount to ISK 10.3 billion in 2021, compared with ISK 4.6 billion in 2020. The cost/income ratio in 2021 was 43.2% in 2021, down from 47.4% in 2020. Landsbankinn's total assets grew by ISK 165.6 billion between years and amounted to ISK 1,730 billion at year-end 2021. Lending increased by 9% between years, or by just over ISK 114 billion. The increase in lending is driven by growth in mortgage lending to individuals. At year-end 2021, deposits from customers amounted to ISK 900 billion, compared with ISK 793 billion at year-end 2020, increasing by ISK 107 billion. Total equity at year-end 2021 was ISK 282.6 billion, compared with ISK 258.3 billion at year-end 2020. In 2021, Landsbankinn paid ISK 4.5 billion in dividends to shareholders. Total capital ratio at year-end 2021 was 26.6%, compared with 25.1% at year-end 2020. The Financial Supervisory Authority of the Central Bank of Iceland (FSA) sets Landsbankinn’s total capital requirement at 18.9%. The Board of Directors of Landsbankinn will propose to the AGM on 23 March 2022 that shareholders be paid a dividend amounting to ISK 0.61 per share for the year 2021, a total amount of ISK 14.4 billion. The dividend is equivalent to 50% of the Group’s 2021 net profit. Should this proposal be approved, dividends paid by the Bank in the years 2013-2022 will in total amount to ISK 160.6 billion. The Board of Directors is also considering proposing the payment of a special dividend in 2022. Lilja Björk Einarsdóttir, CEO of Landsbankinn: “Our results show that Landsbankinn’s operation was successful in 2021. The Bank’s ROE was 10.8%, which is in line with our goals; an extremely good result, especially considering the Bank’s strong equity of ISK around 283 billion and a capital ratio well in excess of regulatory requirements. Income has grown while operational improvements have enhanced efficiency and costs have remained stable over the past several years. Growth in fee and commission income exceeded our goals considerably, mostly from increased market transactions and successful asset management. We worked on several fruitful share and bond offerings in 2021 and Landsbankinn Corporate Finance coordinated the IPO of Síldarvinnslan, which was very successful. Despite the effects of Covid-19, the Bank’s employees achieved a great deal. Customer numbers grew considerably in all of the Bank’s business units and we introduced numerous new solutions and improved service for individuals, corporates, institutional investors and asset management customers. For the third year in a row, Landsbankinn tops the list of banks in the Icelandic Performance Satisfaction Index. We look forward to launching even more new solutions and good services to the record number of new customers who came to bank with us in 2021. The Bank’s successes are passed on to customers and, for the past three years, we have been able to offer the lowest interest rates on non-indexed housing mortgages. This has led more and more people to take out mortgages with us and, in 2021, on average over 700 families and individuals took out loans with the Bank every single month. Corporates have been cautious in all the uncertainty and sought less funding, with the exception of the construction sector. The Bank participated in the construction funding of 3,800 residential apartments in 2021. The Bank’s position in the seafood and fisheries sectors remains strong, forming the single largest sector in the Bank’s loan book, exceeded only by loans to individuals. Despite general good standing among corporates, the outlook for next year is yet unclear as regards lending to corporates since the risk of inflation and price hikes add to uncertainty. Landsbankinn has worked industriously on sustainability in its operation in recent years, efforts that can safely be said to have borne fruit in 2021. The Bank’s new Sustainable Finance Framework has diversified ithe funding structure with the issuance of two green bond series in the total amount of EUR 600 million in 2021. The Bank’s work on sustainability has also created opportunities to offer customers enhanced services, such as bond issuances and in lending. The international rating agency Sustainalytics considers the Bank at negligible risk of impact from ESG factors - an important message to investors, shareholders and the Bank’s customers. The Bank’s good performance provides considerable scope to pay a dividend to shareholders. The Bank’s equity is also significantly in excess of regulatory requirements and higher than what we consider sustainable. We see this as an opportunity to optimise the Bank’s funding structure by releasing equity and the Board of Directors will propose that the AGM approve payment of a dividend amounting to about half of the profit of 2021. Landsbankinn is still popularly referred to as the Bank “where all of Iceland banks”. This is an old slogan but we are still proud of our connections with the entire country. We aim for continuous advancement, to maintain a presence in all of Iceland, simplify customers’ lives and provide first-rate financial service to all manner of industry and companies of all shapes and sizes. We want people throughout Iceland to choose Landsbankinn in order to get access to banking service around the clock and expert advice, both on-site and through remote meetings. Last but not least, we want to develop in line with society. That’s Landsbankinn, an ever-smarter bank. Teleconference to present results On Friday 4 February 2022, at 10:00, the Bank will host a teleconference on its results in English. Please register by email to ir@landsbankinn.is. Landsbankinn's financial calendar Annual General Meeting, 23 March 2022 Q1 2022 results 5 May 2022 Q2 2022 results 21 July 2022 Q3 2022 results 27 October 2022 Annual results 2022 2 February 2023. For further information contact: Rúnar Pálmason, Public Relations, pr@landsbankinn.is Hanna Kristín Thoroddsen, Investor Relations, ir@landsbankinn.is
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