Record profits by MP Investment Bank in 2007
MP Investment Bank turned a profit of ISK 2,250 million before tax in 2007.
Profits after tax amounted to ISK 1,780 million, equivalent to a return on
capital of 35% on a yearly basis. According to the annual accounts for 2007 the
Bank's equity amounts to more than ISK 6,187 million and the Bank's CAD ratio
stands at 27.95%.
The Bank is financially strong and therefore well capable of further growth.
Main results:
• The Bank's profit before tax in 2007 amounted to ISK 2,250 million, an
increase of 35% from the previous year.
• Profit after tax amounted to ISK 1,780 million, an increase of 40% from
2006.
• Income from operations increased by 45% and amounted to ISK 3.16 million.
• Net interest income in 2007 amounted to ISK 779 million, which is a
significant increase from the years before.
• Net fee income receivable increased by 50% between years and amounted to ISK
1,528 million.
• Return of equity after tax amounted to 35%.
• Equity increased by 26% during the year, from ISK 4,927 million in 2006 to
ISK 6.187 million in 2007.
• Equity ratio (CAD) amounted to 28.1% at the end of 2007.
• The Bank's balance sheet decreased by 22% from the previous year and now
stands at ISK 52 million.
• MP Investment Bank holds no assets linked to collateralised debt obligations
or so called sub-prime loans.
• The Board of Directors will propose that the Company pay a dividend of 30%,
amounting to ISK 320 million. This is equivalent to 18% of the profits of the
year.
• The Board of Directors will request the permission of the annual general
meeting to apply for a commercial banking licence to the Financial
Supervisory Authority.
MP Investment Bank's annual general meeting will be held on 13 March.
2007
MP Investment Bank's performance in 2007 was excellent, despite the instability
on the world's financial markets, most notably during the latter part of the
year. The Bank's commissions receivable continued to rise from the previous
year. Net interest income increased significantly between years; a very
pleasing development since great emphasis was laid on increasing this income
factor.
The Bank's share in BYR Savings Bank was redeemed during the year and following
that sale MP Investment Bank's holding of domestic securities with
variable-income (i.e. shares in savings banks and other shares) decreased
considerably. Parallel to the Bank's substantial growth during the past few
years the Bank's risk management and internal control has been greatly
improved, ensuring that the bank suffered no major difficulties due to
extensive deflation of stock markets in the autumn of 2007.
The Bank's funding was improved during the year. In the spring MP Investment
Bank finalised its first foreign long-term syndicated loan. At the end of the
year domestic and foreign binding loan commitments were finalised.
At the start of 2007 the Bank opened its first branch in the Baltic states in
Vilnius, Lithuania. The Vilnius branch was successful during the year and
currently returns around 15% of the Bank's total income and around 15% of the
Bank's balance sheet represents the activities of the branch. Today MP
Investment Bank has 13 employees in Lithuania. In February 2008 the branch
moved to an impressive new office building. The office space is much larger
than the first one and offers the potential of further growth in the coming
months, as the Bank has targeted further expansion of its activities in
Lithuania in 2008.
During 2007, MP Investment Bank's management company received authorisation as
a fund management company for mutual and investment funds and has already
started a money market fund and a corporate bond fund. More funds are planned.
The Bank's subsidiary in Lithuania received authorisation to operate pension
funds in 2007 and started such operations in the autumn under the name MP
Pension Fund Baltic.
Prospects for 2008
In spite of the instability of financial markets at the beginning of 2008 the
Bank's operation is off to a bright start. Risk management and credit control
will be enhanced further.
In 2008 the Bank will focus on the ongoing expansion of its operations in the
Baltic states as well as increasing the activities of the Bank's asset
management in Iceland and abroad.
The Bank's Board of Directors has decided to propose an application for a
commercial banking licence to the Financial Supervisory Authority at the
upcoming general meeting. A commercial banking licence allows the Bank to
expand its activities further, especially through the Lithuanian branch.
For further information contact:
Styrmir Þór Bragason,CEO of MP Investment Bank, tel. +354 858 3240
