Landsbankinn had positive results in 2016. Conditions in the economic environment were favourable and the majority of the Bank's customers prospered.
Since the beginning of 2015, the Bank's employees have worked to implement its new and ambitious strategy for the years leading up to 2020. Landsbankinn has made concerted efforts to improve customer service and at the same time taken steps to strengthen core operations.
Since 2013, the Bank has paid out the lion's share of each previous year's profit in dividend while simultaneously maintaining strong liquidity and equity positions. Landsbankinn paid just under ISK 28.5 bn in dividends to its owners in 2016. In 2013-2016, the Bank has paid a total of ISK 82 bn in dividend, 98% of which goes to the National Treasury. At the Annual General Meeting of Landsbankinn on 22 March 2017, the Board of Directors will propose that the Bank pay ISK 13 bn in dividend for the year 2016. Should this proposal be approved, dividend paid by Landsbankinn in 2013-2017 will amount to ISK 95 bn. The Board will further propose that the AGM approve payment of a special dividend in September 2017.
The quality of the Bank's credit portfolio continued to improve in 2016. It is especially pleasing to note that at year-end, the proportion of loans in arrears had fallen to its lowest value since the establishment of the Bank, or 1,5%.
|National Treasury of Iceland||98.20%|
In October 2016, rating agency Standard & Poor's revised Landsbankinn's credit rating to BBB/A-2 with a positive outlook. Improving terms and healthy transactions on international markets allowed the Bank to lower its debt to LBI ehf. by ISK 61 bn in 2016. The Bank intends to discharge the debt in full in 2017.
Supreme Court rulings in four cases involving the foreign currency indexation of loans impact the Bank's results for 2016 to a considerable degree. Results were nevertheless acceptable and Landsbankinn profited by ISK 16.6 bn, after taxes. The Bank's balance sheet is very sound, with equity amounting to ISK 251.2 bn and its CAR being 30.2% at year-end.
In September, Landsbankinn announced that it would offer to buy back own shares as authorised by the AGM. The Bank purchased own shares to the amount of ISK 1,391 bn during two buy-back periods. The third and last buy-back period begins on 13 February and ends on 24 February 2017. At the end of 2016, Landsbankinn’s shareholders numbered 1,003.
Several changes occurred to the composition of the Board of Directors in April last year. I became the first woman to chair Landsbankinn’s Board of Directors when Tryggvi Pálsson stepped down as Chairman and left the Board. Directors Eva Sóley Guðbjörnsdóttir, Kristján Davíðsson, Jóhann Hjartarson and Jón Sigurðsson all left the Board. I thank them for their efforts and our acquaintanceship. New directors of the Board are Magnús Pétursson, Berglind Svavarsdóttir, Einar Þór Bjarnason, Hersir Sigurgeirsson and Jón Guðmann Pétursson. In November, Ásbjörg Kristinsdóttir announced her resignation as an alternate to the Board of Directors of Landsbankinn. Danielle Pamela Neben was a Director of the Board since April 2013 and has now resigned. I thank her for her work on behalf of the Bank.
The Board of Directors of Landsbankinn is optimistic about the future. Landsbankinn is well positioned and opportunities abound. Certainly there is need to improve core operations even further and we face several challenges going forward, such as the implementation of new rules on the Bank's operation, increasingly stiff competition both domestically and abroad, fast-paced technological developments and increased customer demands for varied service.
The Board deems the restructuring period that followed the financial collapse to have ended. The Board thanks Steinþór Pálsson, who stepped down as CEO in late November 2016, for his weighty efforts on behalf of the Bank since mid-year 2010. We wish him all the best for the future.
Hreiðar Bjarnason, Managing Director of the Finance division, has served as interim CEO since 30 November 2016. Lilja Björk Einarsdóttir will take up the position of CEO of Landsbankinn on 15 March. She has extensive experience and knowledge of the management of financial undertakings. The Board of Directors trusts her to lead the powerful team of Landsbankinn employees to positive achievements for the benefit of customers, shareholders and the entire community.
Landsbankinn is Iceland's largest bank, both in terms of customer numbers and balance sheet. It plays an important role in the country's economy, and its size, ownership and history accord it a special place in the minds of many Icelanders. The Bank's strategy is to be exemplary so that its customers can truly say: This is what a bank should be like.
Technological developments have influenced banking very much in recent years and further and even more frequent changes can be expected in the near future. Landsbankinn continues to emphasise the development of digital solutions in its operation.