20/03-2019 20:51:33: (ARION.ICEX) Annual General Meeting of Arion Bank 2019

Annual General Meeting of Arion Bank 2019

The 2019 Annual General Meeting of Arion Bank was held today, Wednesday 20 March, at the Bank.s headquarters in Borgartún, Reykjavík. The agenda of the meeting contained standard AGM business and the Bank.s annual financial statements were approved. Changes to the Board.s salaries were approved. The salaries were increased by 5%, which is in line with the increase in the salary index. The salaries of the Nomination Committee are unchanged. The Bank.s remuneration policy was approved and it was decided that Deloitte ehf. will continue to serve as the Bank.s auditors.

The Board of Directors. proposal of an ISK 10 billion dividend was approved, representing ISK 5 per share, and a proposal on the cancellation of the Bank.s own shares was also approved. The meeting authorized the Board of Directors to acquire, on behalf of the Bank, up to 10% of issued share capital in the Bank. The Board was also granted authorization to decide on the issuance of Additional Tier 1 notes.

The following candidates were re-elected on to the Board of Directors at the meeting: Benedikt Gíslason, Brynjólfur Bjarnason, Herdís Dröfn Fjeldsted and Steinunn Kristín Þórðardóttir. Liv Fiksdahl and Renier Lemmens were elected as new Board members. Eva Cederbalk and Måns Höglund did not seek re-election to the Board of Directors. Brynjólfur Bjarnason, was elected Chairman of the Board, and Herdís Dröfn Fjeldsted, Vice Chairman.

Ólafur Örn Svansson and Sigurbjörg Ásta Jónsdóttir were re-elected as Alternates and Þröstur Ríkharðsson was elected as a new Alternate.

Christopher Felix Johannes Guth and Sam Taylor were elected to the Bank.s Nomination Committee.

Further information on the results of the annual general meeting can be found on the Bank.s website.

The report of the Board of Directors for 2018

Eva Cederbalk, departing Chairman of the Board of Directors, presented the report of the Board. The following is an excerpt from her report:

.It was particularly pleasing that a successful international IPO was held in 2018 in which 30% of Arion Bank shares were sold to international and Icelandic investors. In fact 70% of the shares in the IPO were sold to international investors. Arion Bank was subsequently listed on the main lists of Nasdaq Iceland and Nasdaq Stockholm. It represented a vital step in the Bank.s development and is an evidence of what has been achieved over the past 10 years..

.The government recently published a white paper on the future of the financial system in Iceland. [.] It is disappointing that the white paper did not say anything more explicit on the scrapping of the specific taxation of the banking system, in particular the bank levy. The bank levy, which is in fact a tax on deposits and bonds issued by Icelandic financial institutions, is 10 times higher in Iceland than in the handful of other European countries which impose such a tax. Similar taxes are not collected from other financial institutions operating on the joint European financial market.

The bank levy greatly distorts the competition environment and in fact leads to market failure. The end result is that the current system favours international banks, which are increasingly offering their services in Iceland, and Icelandic pension funds, which can offer their fund members mortgages at terms which the banks cannot match due to fees and capital requirements placed on them, but from which the pension funds are exempt.

When the playing field is no longer level, it undermines the regular banking system and favours the shadow banking system. We would have liked to have seen it spelled out more clearly how the banking levy should be abolished and we think it.s only fair that it be abolished as quickly as possible..

.Arion Bank continues to develop its business on solid foundations. The Bank occupies a strong position in its chosen markets and is a leader in digital financial services. Digital services and increased automation are crucial for making the business more efficient and generating higher income. The goal is to continue in this direction, to make the Bank more efficient and competitive so that it can achieve financial objectives..

Eva Cederbalk, which did not seek re-election, concluded hear speech by thanking her colleagues on the Board of Directors as well as the management and employees of the Bank for excellent cooperation over the last two years.

The annual financial statements for 2018

Höskuldur H. Ólafsson, Chief Executive Officer, presented the Annual Financial Statements for 2018. He said that the financial results for 2018 were below expectations despite stable income from core banking e.g. interest and commission income and growing insurance income. However, impairments and challenging equity and bond markets had a negative impact on net earnings, which amounted to ISK 7.8 billion, and return on equity was 3.7%. The capital ratio at year-end was 22%.

Höskuldur discussed the important milestone reached with the Bank.s IPO and dual listing in Iceland and Sweden. The market capitalization when the Bank was listed was ISK 135 billion and the level of interest the Bank attracted before the IPO was pleasing. In the end the IPO was heavily oversubscribed, with investors chiefly from the United Kingdom, the United States, Iceland, Germany and Sweden taking part.

Höskuldur said that the Bank would continue to work towards achieving its stated financial targets in areas such as CET 1, cost-to-income and return on equity. The Bank is setting up the business to ensure these targets are achieved. Keeping costs in check is, in his opinion, of utmost importance and a series of initiatives aimed at reducing costs have been launched. In this regard the Bank benefits amongst other things from its digital journey.

During the year, nine new digital products were launched and the Bank won three international awards for its digital approach and for the digital solutions themselves. Höskuldur discussed how Arion Bank is adapting its branch network to the new digital services. The Bank closed six branches and opened two new digital branches, making the branch structure more cost effective and reducing the space the Bank occupies in the Reykjavík area alone by almost 40%.

Höskuldur also talked about the multiple projects within the Bank relating to responsible banking and sustainability. He particularly highlighted the fact that in 2018 Arion Bank became the first Icelandic bank to be given permission to use the Ministry of Welfare.s equal pay symbol, and also mentioned the revision of the Bank.s credit rules to ensure that loan decisions now take sustainability into account, and the work carried out by Asset Management to analyze the social and environmental commitment of listed companies.

Höskuldur mentioned that the intended divestment of Valitor was being prepared and the aim is to start marketing the company to potential investors soon.

Finally, Höskuldur thank departing board members, Eva Cederbalk and Måns Höglund, for the cooperation and their contribution through the years.


For further information on the Annual General Meeting of Arion Bank please visit the Bank.s website or contact Sture Stölen, head of Arion Bank.s Investor Relations, at ir@arionbanki.is, or Theódór Fridbertsson, at Investor Relations, at theodor.fridbertsson@arionbanki.is, tel. +354 444 6760.


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