MP banki reports profit of ISK 494 million in the 2nd half of 2014

25.2.2015

The profit of MP banki in the 2nd half of 2014 amounted to ISK 494 million, compared to ISK 159 million in losses in the 1st half. The end result for the year is therefore a profit of ISK 335 million after tax, compared to ISK 477 million in losses for the year of 2013.

Improved returns for the 2nd half of the year

Improved returns in the operations of MP banki in the second half of the year reflect the positive development in operating income with an increase of 23 percent from the first half of the year. Net operating income was ISK 1,836 million for the second half of the year compared to ISK 1,492 million for the first six months. Full year net operating income was ISK 3,328 million. Net fee and commission income increased by 12 percent between the first and second half of the year. It went from ISK 814 million to ISK 916 million from the first and second half respectively. Total net fee and commission income for 2014 was ISK 1,730 million. Net interest income decreased by 7 percent between the first and second half of 2014. For 2014 the net interest income amounted to ISK 1.302 million. A significant turnaround in financial income was recorded between the first and second half of the year. Financial income for the second half amounted to ISK 234 million, including profits from the sale of assets in Lithuania.The bank implemented a rationalization plan in Q4 of 2013 and the 1st half of 2014 to adjust the cost base to a smaller equity base than initial plans had assumed. The measures included sale of non-core assets and a redundancy plan. As a result of these measures administrative expenses decreased by almost ISK 600 million between years, from ISK 3.699 million in 2013 down to ISK 3.071 million in 2014. The reduction amounts to 16 percent between years and about 10 percent between the first and second halves of 2014.

Strong capitalization

Total equity at the end of 2014 was ISK 5,597 million and total assets were ISK 49,344 million. The capital ratio (CAR tier 1) has increased by 3.2 percentage points during the year and was 17.4 percent by the end of year 2014, compared to 14.2 percent by the end of year 2013. The capital ratio is high and significantly above the bank's own internal capital assessment as well as regulatory requirements. The bank is well prepared for implementation of additional CRD IV regulatory capital buffers in the near future.The bank's liquidity position continues to be good and the ratio of liquid assets to total assets is 49 percent. The liquidity coverage ratio (LCR) at the end of 2014 was 133 percent.

Solid market position in core businesses
The bank's capital markets and corporate finance businesses did well during the year. Asset management, including the subsidiaries Júpiter and FÍ fasteignafélag GP, enjoyed respectable AUM growth during the year. The British financial magazine, World Finance, elected MP banki the best asset manager in Iceland in 2014. World Finance awards companies each year for outstanding performance and this past year MP banki was acknowledged as the “Best Investment Management Company”. The magazine evaluates factors such as transparency, performance, reliability, service quality, corporate governance and risk management. The banking operation underwent considerable rationalization changes with firmer focus on segmentation and specialized banking service. The bank provided credit for various financing projects during the year and loans to customers amounted to ISK 22.3 billion at the end of the year. The loan portfolio is performing well, as is reflected in the fact that the ratio of loans with a 90-day default ratio is 0.88 percent and the cross default ratio is 1.24 percent.


Sigurður Atli Jónsson, CEO of MP banki:

I am very pleased with the results of the rationalization changes that we commenced in Q4 of 2013. We have managed to reduce the cost base of MP banki and at the same time improved quality and increased financial strength. It is rewarding to see the result of that plan and an ongoing profit for the second half of 2014. I am impressed with our people who have shown great perseverance and ambition throughout the process. We have managed to transform the business model for banking services. Our asset management business performed well and had a strong inflow of assets under management. The capital markets businesses continued to perform well despite challenging conditions in the financial markets.
For more information please contact Sigurður Atli Jónsson, CEO of MP banki. Tel: (+354) 540 3230 or (+354) 821 2051.