MP Bank Consolidated Financials for 2011

29.2.2012

Positive results for 2H 2011 and significant profit in Q4

MP Bank is gaining momentum ahead of expectations and the management plan approved in July of last year. After disclosing a loss before tax of ISK 681 million in first half of 2011 the bank has turned profitable in the second half thereby reducing loss before tax to ISK 541 million for the full year. After calculation of income tax and special tax on financial institutions the loss for 2011 is ISK 484 million.

MP Bank reaches profitability ahead of plan

Profit before tax in the second half is ISK 140 million. Broken down by quarters the loss before tax in the third quarter was ISK 166 million whereas the bank produced a profit of ISK 306 million in the fourth quarter. The management plan assumed continued loss during 2011 while the bank's resources are gradually brought to full capacity. The results are significantly ahead of those plans.

The bank's loan book grew by 76% from end of June to end of December when it was at ISK 13.3 billion. Net interest income increased even further from being negative of ISK 45 million in Q2 to a positive number of ISK 323 million in Q4.

There were also significant improvements in fee and commission income which went from ISK 72 million in Q2 to ISK 563 million in Q4.

MP Bank is well funded. Deposits amount to ISK 36.6 billion at year end. Total equity is ISK 5.1 billion and Tier 1 capital ratio is at 19.2% at year end, well above the minimum regulatory requirements of 8%.

The bank has ample liquidity with net stable funding ratio (NSFR) of 274% and liquidity cover ratio (LCR) above 1000%. Both are well above the minimum Basel III requirements of 100% for each indicator.

Summary Financials – Income Statement

In ISK million Q1 Q2 Q3 Q4   2011
Net interest income 0.0 -45.2 180.9 323.0
458.7
Net fee income 0.0 72.2 141.0 562.8
776.0
Net financial income 0.0 191.8 46.0 254.9
492.7
Share in associates 0.0 -16.4 3.7 78.8
66.1
Other income 0.0 12.9 6.8 16.7
36.4
Net operating income 0.0 215.4 378.4 1,236.2
1,830.0







Administrative expenses -0.3 -737.4 -523.5 -865.7
-2,127.0
Impairment losses 0.0 -158.5 -21.0 -64.7
-244.2
Pre-tax profit/loss -0.3 -680.6 -166.1 305.8
-541.2







Income tax 0.0 139.0 38.5 -61.9
115.6
Special banking tax 0.0 -18.3 -18.9 -20.7
-57.9
Profit/loss -0.3 -559.9 -146.5 223.1
-483.6

Summary Financials – Balance Sheet

In ISK million Q1 Q2 Q3 Q4
Cash and cash equivalents 0 21,871 15,852 11,545
Fixed income securities 0 9,981 17,409 13,679
Shares and share certificates 101 1,077 985 1,069
Securities used for hedging 0 6,448 3,331 7,695
Investment in associates 171 356 490 405
Loans to customers 0 7,560 10,092 13,294
Other assets 2 2,164 2,569 2,422
Total assets 274 49,456 50,727 50,109





Short positions in securities 0 6,421 5,593 4,839
Short positions used for hedging 0 3,571 2,651 1,274
Deposits 0 32,980 36,776 36,645
Other liabilities 255 1,683 1,030 2,282
Total liabilities 255 44,655 46,049 45,040





Share capital 100 5,500 5,500 5,550
Other equity -81 -699 -822 -481
Total equity 19 4,801 4,678 5,069

Future path has been marked

MP Bank completed three acquisitions in 2011. The acquisition of Alfa Securities (asset management), Júpíter (fund management) and the acquisition of the corporate finance operations of Saga Investment Bank. The bank sold its branch operation in Lithuania in October of last year while maintaining a strong foothold in the pension fund market through MP Pension Funds Baltic.

The immediate action plan produced in July of last year has been completed successfully and the management of the bank is now working within a longer term strategic plan, which marks the future path for the bank.

There is continued focus on the bank's existing three business segments;

  • By maintaining a leading position in investment banking where the bank has a 26% market share in bond trading on the NASDAQ OMX Nordic (Iceland).
  • Expanding asset management where the bank and its subsidiaries have approximately ISK 55 billion in assets under management.
  • Growing the retail banking franchise where MP Bank provides selected banking services mainly to small to medium sized enterprises and affluent private clients.

Furthermore MP Bank recently announced an expansion of its business model into the leasing market in Iceland, which will become its fourth major business segment.

We are very happy with the progress we have made so far. I am pleased with how we are developing our business model and gradually strengthening the bank's infrastructure and resources to reach our potentials. We are working closely with our clients in all our business segments to support their goals. The bank´s loan book is growing at a steady pace and in line with our continued efforts to work with small and medium sized enterprises in the resurrection of the Icelandic economy. This has been a rewarding task and we are very happy with how well both our clients and we as a bank are progressing. The external factors are still very demanding and the advancement of the economic recovery remains our greatest concern. However, we are still very much in the process of expanding all our businesses, and welcome new and valuable clients every day,” - says Sigurður Atli Jónsson, CEO of MP Bank.