Total dividends paid by Landsbankinn in 2018 will amount to ISK 24.8 billion
The Annual General Meeting (AGM) of Landsbankinn today, 21 March, agreed to pay dividends in the total amount of ISK 24.8 billion in 2018. Dividends will be paid in two instalments, ISK 15,366 bn in dividend for the operating year 2017, which is equivalent to 78% of that year's profit, and a special dividend to shareholders in the amount of ISK 9,456 bn. As a result, total dividends paid by the Bank in the years 2013-2018 will amount to ISK 131.7 bn.
The AGM was held at Landsbankinn’s branch in Austurstræti 11. The agenda for the meeting was regular AGM business.
On the occasion of the meeting, Landsbankinn’s Report on Social Responsibility for 2017 was published. Landsbankinn's Annual Report for 2017 was published alongside annual financial statements on 15 February.
Report of the Board of Directors
Helga Björk Eiríksdóttir, Chairman of the Board of Directors, said in her speech to the AGM that Landsbankinn had enjoyed favourable winds in 2017. It is important and satisfying, said Helga, that surveys show growing confidence in the Bank, as well as increased customer satisfaction with its services. The Bank has managed to curtail costs and 2017 operations were in line with plans. This notwithstanding, after-tax ROE was under the long-term target and the Bank must work to improve core operations even further. In 2018, primary focus will be placed on development and innovation in the field of digital service solutions.
Helga Björk said that sound operations and a solid balance sheet had allowed the Bank to pay out considerable dividends to shareholders. As a result of the dividend proposal submitted to the AGM and approved by the meeting, the Bank will have paid a total of ISK 132 billion in dividends during the period 2013-2018. Nigh on the entirety of all dividends accrue to the National Treasury, which holds a 98.2% share in the Bank.
Helga Björk also spoke of special taxes levied on the three large banks and the effect of this taxation on their competitive position, with regard, for example, to foreign banks.
Helga Björk said that efforts to respond to stiffening competition, fast-paced changes in banking services and increased pressure to economise in operations included consolidating the Bank's centralised activities in new facilities. The Bank is set to construct a new building at Austurhöfn in Reykjavík that will fulfil the needs of a modern financial undertaking and facilitate collaboration between the Bank’s various departments.
Landsbankinn’s 2017 results
Lilja Björk Einarsdóttir, CEO of Landsbankinn, presented the Bank’s 2017 results to the AGM. She said that the Bank had achieved many success during the year. The Bank’s market share in the corporate and retail markets continued to increase and the Bank has now held the highest market share on the retail market for four consecutive years. Since Landsbankinn places great emphasis on providing excellent service and offering competitive terms, it is gratifying to see an increasing number of both individuals and companies choosing to bank with Landsbankinn.
Lilja described the operating results for 2017 as very positive, with the Bank’s after-tax profit amounting to ISK 19.8 billion as compared with ISK 16.6 billion in 2016. Return on equity was 8.2% and the capital ratio was 26.7%. The Bank’s cost-income ratio was 46.1%, down from the previous year. The Bank’s target is to achieve a minimum 10% return on equity, to maintain a cost-income ratio of under 45% and a capital ratio of at least 23%. Lilja said that lower operating costs would benefit both customers and owners. The Bank aims to further optimise its capital structure through such actions as continued regular and special dividend payments to shareholders. The Bank would not achieve all profitability targets in 2018 - the aim is to reach set goals by 2020.
Lilja said that the Bank had achieved good results in various areas in 2017. The Bank’s rating grade was upped a notch, to BBB+ with a stable outlook. The Bank had weighed in on Internet security matters, as well as corporate social responsibility as a founding member of a new organisation to promote responsible investment, IcelandSIF. One of the major projects undertaken in 2017, the implementation of a new deposit and payment system, was successful and the Bank can as a result base future development and changes in digital services on solid foundations. Landsbankinn intends to improve and advance digital services even further and in so doing strengthen personal, long-term business relationships with both individuals and companies.
At the AGM, Hreiðar Bjarnason, Managing Director of Finance, discussed changes to the Bank’s funding in 2017. The Bank has increasingly taken advantage of favourable terms offered on international credit markets, including to complete the refinancing of its debt to its forerunner, Landsbanki Íslands hf., in 2017. Hreiðar pointed out that only in the past two years, from October 2015 to November 2017, the interest rate premium on Landsbankinn’s EUR-denominated bonds had fallen from a 295 basis point spread above mid-swaps to 85 points.
Dividends paid in 2018 will amount to ISK 24.8 billion
The AGM approved the motion of the Board of Directors to pay shareholders a dividend amounting to ISK 0.65 per share for the accounting year 2017, a total of ISK 15,366 million. The date of payment shall be 28 March 2018. The AGM also approved the motion of the Board of Directors to pay a special dividend to shareholders in the amount of ISK 0.40 per share, a total of ISK 9,456 million. The date of payment of the special dividend shall be 19 September 2018.
These dividend payments are in line with Landsbankinn’s dividend policy which stipulates that regular dividend payments to shareholders shall in general amount to 60-80% of the previous year's profit and that special dividend payments shall be made to optimise the Bank's capital structure. In taking decisions on dividend payments it shall be ensured that the Bank is at all times in compliance with all regulatory requirements and that it maintains a strong financial standing.
The following persons were elected regular members of the Board of Directors:
- Helga Björk Eiríksdóttir (Chairman)
- Berglind Svavarsdóttir
- Einar Thór Bjarnason
- Hersir Sigurgeirsson
- Jón Guðmann Pétursson
- Samúel Guðmundsson
- Sigríður Benediktsdóttir
The following persons were elected alternates to the Board of Directors:
- Guðrún Ó. Blöndal
- Thorvaldur Jacobsen
The AGM approved an unchanged remuneration policy for Landsbankinn. The remuneration policy states, inter alia, that the terms of employment of the Bank’s employees shall be competitive without being leading in the market. The AGM approved a 5% raise in remuneration to Directors of the Board.