Landsbankinn hf.: Financial results of Landsbankinn in H1 of 2023 - Landsbankinn’s profit in the first half of the year amounted to ISK 14.5 billion, ISK 6.7 billion thereof in the second quarter.
- Return on equity (ROE) was 10.3% in H1.
- Net fee and commission income grew by 6.1% between years, reflecting good breadth in the Bank’s service platform and a strong market share.
- Net interest income grew by 28.6%, mainly driven by a growing loan book and rising interest levels.
- The interest margin is 2.9%, up by 0.4 percentage points compared with the same period in 2022. Improved return on the Bank’s liquid assets positively impacts the interest margin.
- The cost/income ratio was 36.1%.
- Lending to corporates increased by ISK 47.5 billion in H1, not having regard for exchange rate impact, mostly to the construction sector and real estate companies.
- Customer deposits have grown by 5% since the beginning of the year.
- Loans in arrears have not changed and impairment provisions are in line with the Bank’s estimates.
The interest margin on average total asset position was 2.9% in the first half of 2023, compared with 2.5% in the same period the previous year. The Bank’s operating cost amounted to ISK 14.2 billion in the period, compared with ISK 12.9 billion for the same period the previous year. Salaries and related expenses were ISK 8.3 billion thereof, compared with ISK 7.3 billion in the same period the previous year. Other operating cost was ISK 5.8 billion, compared with ISK 5.5 billion for the same period last year. The cost/income ratio for the first half of 2023 was 36.1%, compared with 52% in the same period in 2022.
Landsbankinn's total assets increased by ISK 109.3 billion during the period, amounting to ISK 1.896 billion at the end of H1 2023. Loans to customer grew by ISK 51.0 billion in H1 2023. Deposits from customers amounted to ISK 1,012 billion at the end of the first half of 2023, compared with ISK 967.9 billion at year-end 2022, increasing by ISK 44.6 billion. Landsbankinn’s equity amounted to ISK 285.1 billion as at 30 June this year and its total capital ratio was 25.3%. The Bank's Annual General Meeting, held on 23 March 2023, approved a motion from the Board of Directors to pay a dividend to shareholders for the operating year 2022 in the amount of ISK 8.5 billion in two instalments. The first instalment in the amount of ISK 4,251 million was paid to shareholders on 29 March 2023. The second instalment in the amount of ISK 4,251 million will be paid out on 20 September 2023. As a result, total dividend paid by the Bank in 2013-2023 will amount to ISK 175.1 billion. Construction of the Bank’s new headquarters at Reykjastræti 6 are nearing completion and is expected to be finalised in early fall. The building is 16,500 square metres; 21,500 square metres including the underground car park and technical spaces. An estimate prepared towards the end of 2019 set construction cost of the building at ISK 11.8 billion, less inflation indexation. Additional cost of construction is ISK 3.4 billion. This additional cost is due largely to longer duration of construction than originally estimated, increased volume of building materials and deviations that occurred during the construction period. During the construction period, the Construction Terms Index has risen by 25%, leading to an estimated cost increase of ISK 1.4 billion. The total cost of construction of the building will be around ISK 16.5 billion. This amount is offset by the sales value of those parts of the building the Bank will not use for own purposes and the estimated sales value of the old Landsbankinn building in Austurstræti with connected buildings, in total around ISK 7.8 billion. In addition, annual savings achieved with the move to Reykjastræti amount to around ISK 600 million, including ISK 480 per annum in paid rent. Lilja Björk Einarsdóttir, CEO of Landsbankinn: “Landsbankinn's operations in the first half of the year were successful and we achieved all of our financial targets. The Bank’s profit was ISK 14.5 billion and return on equity was 10.3%, in line with our long-term goals. We have recently emphasised offering help to customers who are experiencing higher interest expenses as well as to customers who are looking to achieve better returns on their savings in the current high inflation environment. We introduced a new inflation-indexed Landsbók savings account with a shorter fixed period, suitable for both individuals and businesses who want to ensure that their savings retain their value. We talk to customers who are struggling with higher interest expenses and find solutions together, such as extending loan terms, refinancing, etc. The move to the Bank’s new headquarters at Reykjastræti has been going well and we have achieved all our main goals for increased efficiency and a modern work environment that contributes to enhanced collaboration. We are moving from facilities that are more than twice as large as the new building and the cost efficiencies achieved amount to around ISK 600 million per year. We have dealt with various challenges, much as others who have been engaged in construction projects recently, and are relatively happy with the results even though exceeding scheduled cost is never the desired outcome. We are building for the future, much as when Austurstræti 11 was rebuilt a 100 years ago, and the move will clearly result in improved operation and a stronger bank. This is an amazing change for our people and I firmly believe that this revitalisation and improvement of our work environment will be reflected in even better service for our customers. Looking back at operating results for the past six years is interesting - that is the period since the final decision to build at Reykjastræti was taken. We have reduced the number of square metres housing the Bank’s activities by 36%, full time positions have decreased by 20%, major digital advances have improved our services even more and we are proud of operating many branches and outlets throughout Iceland. We continue to advance, to reach more customers and to add robust new services, such as merchant acquiring. Landsbankinn’s app is excellent, a reliable and secure banking app that our customers can trust. The Bank has proven that it is always developing and our customers respond by showing that they appreciate simpler and accessible solutions.”
Landsbankinn's financial calendar
Q3 2023 results 26 October 2023
Annual results 2023 1 February 2024
For further information contact:
Public Relations, pr@landsbankinn.is Investor Relations, ir@landsbankinn.is
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