Financial Institutions

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Íslandsbanki Q1 2010 financial results

The bank has returned a solid performance for Q1 and one that was broadly in line with expectations. The bank's capital ratios continue to improve, with the Tier 1 ratio climbing by a full percentage point over the quarter to stand at 16.6%, chiefly due to retained profits. Return on equity was 15.3% - again, in line with expectations. We can therefore say that the bank is continuing to consolidate its operations across the board and the restructuring work that the bank is engaged in is continuing apace.
Full information on the results may be found at Íslandsbanki's web-page. You will find a direct link here on the right.

Supreme Court ruling

Readers may be aware that on 16 June the Icelandic Supreme Court ruled that certain car leasing contracts in Icelandic kronur that were indexed to foreign currencies were illegal. Although the Court has yet to rule on how these loans should be settled in an equitable manner, it is clear that the ruling will affect almost all financial institutions in Iceland to some extent. On 30 June, the Central Bank of Iceland and the Icelandic FSA published the following guidelines for banks to observe until a final ruling is made – expected in early Autumn: http://www.sedlabanki.is/?PageID=287&NewsID=2532 . This situation clearly presents the banking sector with uncertainty, but Íslandsbanki is very strongly capitalised and is therefore well positioned to deal with the eventual outcome of the ruling. We will keep readers informed of developments as they occur.

We wish all our readers a relaxing and enjoyable summer.

July 2 2010

Useful websites

Íslandsbanki hf. results

Central Bank guidelines

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Disclaimer: Íslandsbanki has prepared this newsletter for reference purposes only and gives no warranty and makes no representation as to the accuracy or completeness of the contents of this document and accepts no responsibility to the recipient of this document or anyone else for its contents. Should you receive this newsletter in error, please use the “unsubscribe” option provided above. The newsletter may not be considered as containing any investment advice. All views expressed herein are those of the author(s) at the time of writing and may change without notice. Íslandsbanki holds no obligation to update, modify or amend this publication in the event that any matter contained herein changes or subsequently becomes inaccurate. This newsletter is informative in nature, and should not be interpreted as a recommendation to take, or not to take, any particular investment action. It does not represent an offer or an invitation to buy, sell or subscribe for shares in any particular financial instruments. Íslandsbanki accepts no liability for any possible losses or other consequences arising from decisions based on information expressed in this newsletter. Before making an investment decision, it is important to seek expert advice and get well acquainted with the investment market and different investment alternatives.