SOURCE: Landsbanki Íslands hf

October 26, 2006 03:13 ET

Landsbanki - Q3 Results Confirm Strong Underlying Profitability

REYKJAVÍK, UK -- (MARKET WIRE) -- October 26, 2006 --

Highlights of the Consolidated Interim Financial Statements of Landsbanki Íslands hf. as of 30 September 2006

  * The Bank's profit before tax was ISK 32.2 billion (EUR  371m), as
    compared with ISK 23.3 billion (EUR  303m) for the first nine months
    of 2005.
  * After-tax profit has increased by 61% and was ISK 26.2 billion (EUR
  * Annualised after-tax ROE for the period was 33%.
  * The Group's core earnings (interest margin plus fees and
    commissions) amounted to ISK 52.3 billion (EUR  603m), an increase
    of ISK 24.6 billion (EUR  243m) YoY or 89%.
  * Cost Income Ratio was 42.7% for the first nine months of 2006.
  * Trading gains and investment income amounted to ISK 12.3 billion
    (EUR  142m), as compared to ISK 13.9 billion (EUR  180m) in the first
    9M of 2005.
  * Income from operations outside Iceland amounted to ISK 30.2
    billion (EUR  348m) or 47% of total Group income as compared to ISK
    6.7 billion (EUR  87m) and 16% in the first 9M of 2005.
  * The Group's total assets amounted to ISK 1,962 billion at the end
    of September 2006, increasing by ISK 557 billion during the YtD.
    A major portion of this increase is the result of ISK
    depreciation and the accordant inflationary impact. Converted to
    EUR, the Bank's total assets amounted to EUR 22.1 billion at the
    end of September as compared to EUR 18.8 billion at the beginning
    of this year.
  * Customers' deposits increased by 54% during the period, amounting
    to ISK 513 billion (EUR  5.8 billion) at the end of September 2006.
    Deposits were equivalent to almost 40% of total customer loans.
  * The Bank's capital ratio (CAD rules) was 15.0% at the end of the
    year. Tier 1 capital was 13.0%.

CEO Sigurjón Th. Árnason:

"Landsbanki has continued its very successful performance this year. After-tax profit amounted to over ISK 26 billion and return on equity was 33%. The Bank's core earnings have almost doubled, with net interest income plus fees and commissions amounting to ISK 52.3 billion. Income from operations abroad continues to increase and now comprises 47% of the Group's total income, a reflection of the successful performance and growth of our foreign subsidiaries as well as the parent company's operations abroad. In recent months our emphasis has been on diversifying funding, with bond issuance in new markets and new deposit products launched on our current markets. The ratio of deposits to customer loans is almost 40%, as compared with 34% at the beginning of this year and we aim at increasing this ratio still further. Landsbanki's newest deposit scheme in the UK, Icesave, has drawn favourable attention and its prospects are very promising."

CEO Halldór J. Kristjánsson:

"As the results confirm, Landsbanki's operations during the first nine months of this year have proceeded extremely well, with all income units returning a good profit. The situation on foreign financing markets has continued to improve following some volatility early in the year. This past quarter the bank concluded its first US bond issue. The facility amounted to USD 2.25 billion and was oversubscribed, with total subscriptions around USD 4 billion. This is an indication of the trust enjoyed by Landsbanki on foreign credit markets, ensuring its ready access to funding. Landsbanki's strong anchoring is the core of its vitality; both its financing and income base have strengthened steadily in recent quarters, while its capital position is very solid."

A copy of Landsbanki's interim financial statements for the first 9M of 2006 is available on the Bank's website

For further information:

Landsbanki CEOs:       Halldor J. Kristjansson tel: +354 820 6399 and
                       Sigurjon Th. Arnason tel: +354 898 0177

Financial Dynamics:    Andrew Walton tel: +44 20 7269 7204 /
                                     mob: +44 7711 264 157

Landsbanki Consolidated Interim Financial Statements 30092006.pdf:

Landsbanki Consolidated Interim Financial Statements - Press Release 30.09.2006:

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