Reports 2020
Íslandsbanki's 2020 Annual and Sustainability Report, with the Consolidated Financial Statements and the Pillar 3 Report, provide a clear picture of the Bank's operations during the year.
Our Profile
Here you can read the highlights from the Bank´s 2020 reports. For more information on the Bank´s 2020 financial results please visit our investor relations page
Our Profile
Moving Iceland forward by empowering our customers to succeed
- Íslandsbanki is a universal bank and a leader in financial services in Iceland with a history of 145 years of servicing key industries. The Bank has a 25-40% market share across all domestic business segments.
- Íslandsbanki's purpose is to move Iceland forward by empowering our customers to succeed. Driven by the vision to be #1 for service, Íslandsbanki's relationship banking business model is propelled by three business divisions that manage and build relationships with the Bank's customers.
- Íslandsbanki has developed a wide range of online services such as the Íslandsbanki and Kass apps, enabling customers to do their banking anywhere and anytime. At the same time, the Bank continues to operate the most efficient branch network in Iceland through its strategically located 12 branches.
- Íslandsbanki has a BBB/A-2 rating from S&P Global Ratings.
To our stakeholders
Chairman's statement
Without a doubt, the year 2020 will linger long in our memory. COVID-19 made its presence known early on, and as soon as March the virus had developed into a global pandemic affecting most of the inhabited world. The impact was felt here in Iceland when demand for international flights collapsed as one country after another imposed a variety of travel restrictions.
CEO's address
It is safe to say that 2020 was a memorable year fora number ofreasons. The global COVID-19 pandemic changed our daily lives through its impact on our health and the associated bans on public gatherings. The impact on the economy and labour market will gradually come into focus, but it is already clear that businesses and individuals faced major challenges during the year.
A force for good
We want to contribute to bringing meaningful changes to society and the economy.
Íslandsbanki's strategy
Today Íslandsbanki operates in accordance with a strategy approved by the Board of Directors at the beginning of 2019, following extensive work involving customers, employees, and other stakeholders.
According to the strategy, Íslandsbanki's objective is to be a force for good in the community, and its vision is to provide customers with the best banking service possible at all times.
Awe-inspiring adaptability
"The year 2020 will go down in history for a number of reasons, but the impact of the global COVID-19 pandemic on the economy and employment will be chief among them. Developments following the onset of the pandemic put Íslandsbanki in the unprecedented position of having most of its staff forced to work from home, and the lessons learned from this challenge were invaluable. The shift occurred virtually from one day to the next, and because our outstanding staff members are so accustomed to a flexible work environment, it went far more smoothly than we had hoped. Our employees demonstrated awe-inspiring adaptability, admirable resilience, and a spirit of collaboration that we can all be proud of. We closed ranks during this difficult year and came back twice as strong."
Hafsteinn Bragason
Head of Human Resources
Through collaboration we are #1 for service
Personalised digital banking services
2020 was an extraordinary year in many respects. The global COVID-19 pandemic made a strong impact, ushering in rapid changes and accelerating the implementation of solutions for day-to-day banking services. For much of the year, access to the Bank's branches was limited because of bans on gatherings, yet at the same time, customers' access to personalised service has been expanded. Concurrent with the first closure of branch offices in the spring, we introduced priority telephone lines, a very well received service enhancement. The successful launch of our chatbot Fróði has proven to be a boon for the Bank during the flood of telephone calls from customers seeking information. The Bank also introduced a number of new smart solutions during the year, chief among them automated mortgage refinancing, a new digital securities trading solution, and various enhancements to app and online bank functions, including loan prepayments, information services, etc. We welcome 2021 with open arms and look forward to meeting our customers’ needs with outstanding personalised service.
Sigríður Hrefna Hrafnkelsdóttir
Director, Personal Banking
Strengthening the foundations for a resilient recovery
2020 was a year of challenges for the Icelandic economy. From the beginning of the COVID-19 pandemic, we were determined to support our customers and work with them on solutions, thereby preparing for a strong recovery when the economy begins to normalise. Use of relief programs have largely been concentrated in tourism and related sectors. Otherwise, new lending for general investment projects has been brisk in sectors such as retail and wholesale trade, services, and construction. There has been an increase in car financing as well. We have made it a priority to offer outstanding personalised service despite the temporarily closed doors of our branches. We have been aided in this effort by our digital services, which have been advanced significantly by the COVID-19 pandemic. During the year, we made structural changes in our service to small and medium-sized enterprises (SME), including the establishment of our Business Banking Centre in Norðurturn, where Business Banking services for the capital area were merged into a single location. We are convinced that this change will result in better service and enhance momentum. In line with Íslandsbanki's sustainability strategy, we took our first steps towards more sustainable banking practices by offering green financing through Ergo. We aim to broaden our selection of green products and expand the share of green projects in our loan portfolio, in keeping with our goal of being a force for good in the community.
Una Steinsdóttir
Managing Director, Business Banking
Headwinds and headway
A demanding and eventful year is behind us – a year that saw a global pandemic make its mark on our activities and those of most of our customers. Strong and solid business relationships are never more important than during challenging times. With that in mind, we placed strong emphasis on working closely with those customers that needed solutions and flexibility in order to weather the unprecedented storm that struck during the year. Corporate and Investment Banking give priority to providing outstanding service, and it was therefore gratifying to see how many projects were concluded successfully in 2020 – whether in corporate finance, in the markets, in asset management, or in lending. We also worked closely with Governmental authorities to ensure that the pandemic response measures offered by the authorities would enable Icelandic companies to deal with the pandemic. We took major steps in the area of sustainability, including the Bank's first sustainable bond issue and the set-up of a Sustainable Financing Framework that lays the foundations for sustainable lending.
Ásmundur Tryggvason
Director, Corporate and Investment Banking
Strong returns despite a challenging year
“We accomplished a number of positive things during the year, which was an extraordinary one for many reasons. For the first time, we published an impact report for our green bond fund, which measures the impact of the fund's investments on carbon emissions. We also published Iceland Funds' ESG accounts, a report that reviews sustainability factors in the company's operations. We achieved strong returns in funds and asset portfolios during the year, and owners of both stocks and bonds can be well satisfied with the return on their savings despite the worldwide wave of COVID-19-related shocks. Diversification of assets proved its worth once again, and blended asset portfolios delivered very good results overall. Our Private Fund E, for example, generated the best returns of all mixed funds in Iceland in 2020.”
Kjartan Smári Höskuldsson
Director, Iceland Funds hf.
Digitally connected banking companion
"Íslandsbanki's investment in digital solutions and product-centred development has prepared it well to face the challenges accompanying the COVID-19 pandemic with minimal disruption of day-to-day operations and service levels. With a coordinated effort by our IT and business units, we have been able to respond quickly and effectively to new circumstances and develop digital solutions and tactics that meet our customers' changing needs.
Íslandsbanki formulated a new digital strategy during the year. The new strategy puts the Bank at the forefront of open banking and creates opportunities for continuing growth and development.
With the experience of 2020 and a new digital strategy under our belt, Íslandsbanki is prepared for the challenges and opportunities of the future."
Riaan Dreyer, Director of IT
Sustainability
Íslandsbanki remains focused on integrating sustainability practices into its activities, in addition to its profit objectives. We intend to seek broad collaboration on responsible business practices that support sustainable development in the Icelandic economy as well as the UN SDGs.
Sustainability Policy and goals
Íslandsbanki strives to be a responsible and positive force in society
Sustainability Results
For the second time, Íslandsbanki publishes detailed information on the impact of its operations based on the environment, social and governance (ESG) criteria.
Corporate & Organisational Structure
Íslandsbanki is governed by its shareholders, Board of Directors and the Chief Executive Officer in accordance with the Bank’s Articles of Association, other Board directives, and the relevant external legal and regulatory instruments.
Economic review
Although the Corona Crisis inevitably dominated 2020, it also highlighted the increased resilience of the Icelandic economy and the stronger foundations on which it rests. Changed consumption patterns, economic policy responses, and a strong position at the beginning of the pandemic did much to cushion against the blow. The outlook is for GDP growth to gain momentum over the course of 2021.
Financials and funding
„Íslandsbanki’s annualised after-tax return on equity was 3.7% in 2020. This is below our long-term target, but the return in H2/2021 showed strong resilience in the wake of the substantial uncertainty early in the year. Despite significant volatility in the financial markets, Íslandsbanki’s funding activities were successful in 2020. Deposits grew apace, and the Bank had ready access to domestic and foreign bond markets. In large part, this is thanks to the strength of the Icelandic economy and the confidence that Íslandsbanki has built up among investors in recent years. During the year, Íslandsbanki became the first Icelandic bank to issue a sustainable financial framework, and soon afterwards it became the first bank in Iceland to issue green and sustainable bonds.“
Jón Guðni Ómarsson, Chief financial officer
Risk management
Risk assessment and the prudent evaluation and pricing of risk are key elements in Íslandsbanki’s operations. Íslandsbanki’s risk governance is based on a three lines of defence framework and aims for informed decision-making and strong risk awareness throughout the Bank.
Íslandsbanki’s Pillar 3 Report contains information on risk management, risk measurement, material risk exposures, capital adequacy and liquidity adequacy, in accordance with Icelandic law and European Regulation. The report should provide market participants and other stakeholders with information that facilitates a better understanding of the Bank’s risk profile and capital adequacy.
View Pillar 3 Report (pdf)
Allocation and Impact Report
TheAllocationandImpact Reportfor Íslandsbanki's Sustainable Financing Framework gives an overview of the first three months of the implementation and reports on the environmental and social impact of the eligible assets already approved under the Framework.