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S&P assigns cred­it rat­ing to Lands­bank­inn’s co­v­ered bonds

S&P Global Ratings has today assigned a credit rating for covered bonds issued by Landsbankinn at A- with stable outlook.
14 January 2021 - Landsbankinn

The credit rating for covered bonds issued by Landsbankinn is two notches above Landsbankinn’s issuer credit rating, which is BBB with a stable outlook.

S&P´s credit rating is based i.a. on the strong legal framework regarding covered bond issuance in Iceland.

Lilja Björk Einarsdóttir, CEO of Landsbankinn, says: “We are very pleased with the result and the credit rating further supports covered bonds as an investment opportunity. Covered bond issuance has become an important part of the funding structure as Landsbankinn has been steadily increasing market share in mortgage lending. The favourable credit rating reflects solid operations of Landsbankinn as well as the strong legal framework regarding covered bond issuance.”

Credit ratings

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S&P raises Landsbankinn’s covered bond rating to A

S&P Global Ratings has today announced that Landsbankinn’s covered bond rating has been raised. The rating uplift is one notch and the rating is therefore A with stable outlook.
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Landsbankinn’s net profit in the first three months of 2022 was ISK 3.2 billion. Return on equity (ROE) was 4.7%. Net fee and commission income increased by 28.5% YoY, mainly from growing activity in asset management and capital markets. Net interest income grew by 19%, mainly driven by a larger balance sheet and better returns on liquid assets. Market share in the retail market measured 39% at the end of the quarter, slightly higher than in the same quarter last year. The cost/income ratio was 54.9% and costs remain stable. Operating expenses as a ratio of average total assets were 1.4%. Growth in mortgage lending has declined while lending to corporates increased by ISK 20.7 billion, not having regard for exchange rate impact. Around 90% of new housing mortgages in the first quarter were non-indexed and 58% of the mortgages carry fixed rates, in most cases for a 3-year period. Landsbankinn became a Visa principal member, increasing operational efficiency and making it easier for the Bank to offer new services linked to payment cards, among other things. Mortgage papers were registered electronically for the first time in February, with Landsbankinn becoming the first Icelandic bank to offer this service. The transaction volume in Landsbréf’s mutual funds has grown by 30% between years.
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