Arion Bank hf.: Arion Bank Q4 2024 and the full-year 2024 results

Arion Bank reports net earnings of ISK 8.3bn in Q4 2024 and ISK 26.1bn for the full-year 2024. Investor meeting and webcast in English on 13 February at 9:30 CET (8:30 GMT)

Financial highlights for the fourth quarter 2024

• Arion Bank reports net earnings of ISK 8.3bn in Q4 2024, compared with ISK 6.2bn in Q4 2023
• Return on equity was 16.3%, compared with 12.7% in Q4 2023
• Earnings per share in ISK of 6.01, compared with 4.19 in Q4 2023
• Net interest margin of 2.9%, compared with 3.1% in Q4 2023
• Net commission income was ISK 4.1bn, compared with ISK 3.9bn in Q4 2023, making it the best quarter in net commission income for over a year
• Solid performance of Vördur, contributing standalone net results of ISK 1.7bn
• Core income, defined as net interest income, net commission income and insurance service results (excluding opex of the insurance operation), increased by 5.8%, compared with Q4 2023
• Operating expenses increased by 9.8%, compared with Q4 2023
• Effective tax rate was 14.7%
• Cost-to-core income ratio was 57.5%, compared with 54.9% in Q4 2023
• Cost-to-income ratio was 48.0%, the same as in Q4 2023
• The balance sheet increased by 0.8% during the quarter
• Loans to customers increased by 0.8% during the quarter

Financial highlights for the year 2024

• Arion Bank reports net earnings of ISK 26.1bn in 2024, compared with ISK 25.7bn in 2023
• Return on equity was 13.2%, compared with 13.6% in 2023
• Earnings per share in ISK of 18.31, compared with 17.80 in 2023
• Net interest margin of 3.1%, the same as for 2023
• Net commission income of ISK 15.4bn for the year, a 6.3% decrease from the previous year
• Vördur's stand-alone net earnings of ISK 3.7bn which is the best ever full-year results for the insurance business
• Core income, defined as net interest income, net commission income and insurance service results (excluding opex of the insurance operation), increased by 4.6% compared with 2023
• Operating expenses increased by 10.2%, compared with 2023
• Effective tax rate was 25.4%, compared with 27.2% in 2023
• Cost-to-core income ratio was 47.2%, compared with 44.7% in 2023
• Cost-to-income ratio was 42.6%, compared with 40.0% in 2023
• The balance sheet increased by 6.1% from year-end 2023
• Share buybacks and dividend payments totalled ISK 25.5bn in 2024. Arion Bank issued new share capital for the total amount of ISK 6.2bn in order to cover the exercising of issued warrants
• The Bank's capital ratio was 22.6% and the CET1 ratio was 18.2% at the end of December. The ratios take into account the deduction of 61% of net earnings as foreseeable dividend and an ISK 3bn buyback program approved by the Board of Directors and the FSA
• The Board proposes a dividend payment of ISK 11.5 per share, equivalent to around ISK 16bn, net of own shares

Benedikt Gíslason, CEO of Arion Bank
"The financial results for 2024 were consistent with our targets and delivered a return on equity of 13.2%. Core income matched expectations and the fact that the stock markets and bond markets rallied in the second half of the year had a positive impact on financial income. Arion Bank remains financially robust, and the capital ratio and CET1 ratio are well above the requirements made by the Financial Supervisory Authority of the Central Bank of Iceland and Icelandic law. The Bank's liquidity position is also strong and comfortably above regulatory requirements. The board of directors of Arion Bank will propose at the AGM on 12 March that a dividend be paid amounting to ISK 11.5 a share.

It was an eventful year in many respects for Arion Group, which is formed by Arion Bank, the insurance company Vörður and the fund management company Stefnir. Vörður opened four new branches in shared offices with Arion Bank, two in the capital city area, one in Stykkishólmur and another in Egilsstaðir. These complement the two existing branches shared by Vörður and Arion in Selfoss and Akureyri. We want customers who use a wide range of services from Arion to feel the full benefit of doing business with a one-stop shop. This is why we have launched Arion Refund, which enables Arion Bank customers who are insured by Vörður to get a 5% refund on their insurance premiums if they are claims free for 12 months. We also revamped our Premía service which is a tailored and personal service for our high-volume customers. We will also shortly be launching a new rewards scheme for customers of all three companies.

During the year, Arion Bank negotiated a credit facility with the European Investment Fund (EIF). The agreement enables us to lend ISK 15bn to SMEs with a guarantee from the EIF. The goal is to support innovation in sustainability and environmental projects, the digitalization of society and culture.

The diversity of our services is one of Arion's key strengths. Not only do we have the most varied financial service offering in the country, but these services are almost entirely available in the Arion app, which was voted the best banking app by customers for the eighth year in row. The year saw the release of innovative digital solutions designed for families and companies. It is now possible for users to view account statements of children and spouses, open accounts for children and to invest in funds on their behalf. We also brought out sophisticated card solutions for companies which allow users to take a photo of a receipt and attach it to the card transaction statement and to manage credit card limits easily and securely.

During the year we reached a milestone when assets under management at the Group, i.e. Arion Bank's Capital Markets division and Stefnir, crossed the ISK 1,600bn mark, exceeding the Group's balance sheet for the first time. Stefnir also led the acquisition by pension funds of Ívera, through the fund SRE III, which owns 1,900 properties rented to the public on long-term leases. The investment marked a new beginning for Icelandic pension funds on the real estate market.
However, one of our proudest achievements at Arion during the year was the launching of the Women Invest campaign last January. More than 4,000 women attended 45 events we arranged on finance and business throughout the country. This vital campaign has been a big hit and is designed to get more women involved in the financial markets. Women have been at a disadvantage in this area but things are starting to move in the right direction, and assets in portfolios owned by women have grown at the three times the rate of those owned by men. Fund subscriptions by women also increased at double the rate of men. It's a long-term initiative to which we are fully committed."

Investor meeting / webcast in English on 13 February at 9:30 CET (8:30 GMT)
Arion Bank will be hosting a meeting at the Bank's headquarters in Borgartún 19, Reykjavík, on Thursday 13 February at 9:30 CET (8:30 GMT) where CEO Benedikt Gíslason and CFO Ólafur Hrafn Höskuldsson will present the results and Chief Economist Erna Björg Sverrisdóttir will give an update on the economic environment. The meeting will take place in English and will also be streamed live.

The webcast will be accessible live on Lumiconnect and a link is also available on the Bank's website under Investor Relations.

Financial calendar
Arion Bank's financial calendar is available on the Bank's website.

For further information please contact:

Theodór Friðbertsson, Investor Relations at Arion Bank, [e-mail], tel. [phone] or Haraldur Guðni Eiðsson, Head of Corporate Communications, [e-mail], tel. [phone].

This information is information that Arion Bank is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 2025-02-12 16:30 GMT.