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UKguy1979

Icelandic Banks’ Results Calm Fears

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http://www.ft.com/cms/s/0/f908fae6-6172-11...?nclick_check=1

I know a lot of people have savings with Icelandic banks, some people have sums over 35k in fixed 3 year bonds. I have money saved with them, these results should ease peoples concern. People are quick to post bad news but you never get any positive news. This is the first positive article from a UK paper!!!

Look at Icesave, their net profit only dropped 3% in these difficult times, compare that to UK banks??

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Fears of a systemic financial crisis in Iceland have dissipated after the country’s three main banks announced second-quarter results showing that they are suffering amid the downturn – but not too badly.

Credit losses deepened across the board and market weakness undermined the performance of the banks’ investments but their capital strength, core lending and fee and commission income remained relatively robust.

Kaupthing said net profit fell 40 per cent in the second quarter, Landsbanki’s net profit dropped 3 per cent and Glitnir’s declined 20 per cent. The three dominate Iceland’s banking sector.

There have been fears that the banks’ rapid domestic and international expansion, financed mainly with overseas borrowing, could undermine their strength as the cost of borrowing has risen during the credit crisis.

These fears helped create a spike in credit default swap spreads to about 1,000 basis points, indicating the CDS market believed a banking collapse was very likely.

However, the second-quarter results offered few signs of an imminent collapse. Instead, they showed the banks have responded by deleveraging, diversifying their operations geographically, reducing their reliance on wholesale funding in favour of deposits and expanding fee and commission based income.

Glitnir’s net interest income rose 84 per cent to ISK17.8bn ($224m) in the second quarter compared with the same period last year.

Kaupthing said core income, which comprises net interest income plus net fee and commission income, advanced 15.3 per cent to ISK73.4bn in the first six months.

Landsbanki’s net interest income rose 37 per cent. “There is nothing in our results to justify CDS spreads of 1,000 basis points,” said Sigurjón Árnason, joint chief executive.

However, in spite of the growth in core income from lending, fees and commissions, there are signs the quality of the banks’ loan books is starting to deteriorate. Glitnir said the cost of bad loans rose to ISK4.5bn compared with ISK247m in the same period last year while at Landsbanki costs rose to ISK6.95bn (ISK1.5bn). At Kaupthing they increased to ISK5.6bn (ISK1.1bn).

But even though loan losses are increasing, the banks’ capital adequacy ratios remain solid by international regulatory standards, their reliance on deposits as a source of funding is increasing, wholesale borrowing is dropping and funding requirements for the next year have been met.

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http://www.ft.com/cms/s/0/f908fae6-6172-11...?nclick_check=1

I know a lot of people have savings with Icelandic banks, some people have sums over 35k in fixed 3 year bonds. I have money saved with them, these results should ease peoples concern. People are quick to post bad news but you never get any positive news. This is the first positive article from a UK paper!!!

Look at Icesave, their net profit only dropped 3% in these difficult times, compare that to UK banks??

Talking of Icesave, great to see they are expanding their operations into the EU, the Netherlands in particular: http://www.icesave.nl, but not so good to see that they have removed their clause about suspending withdrawls for 60 days for the Dutch, while it is still there for UK depositors!

See: Can Icesave limit withdrawals for a 60 day period?

http://www.icesave.nl/english/commonquestions/

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  • 396 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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