1 January 2008 to 30 June 2008
MP Investment Bank's results for the first half of 2008
Key results from operations and balance sheet:
• Profits during the first six months of the year amounted to ISK 1,525
million, an increase of 36.4% compared to the first six months of 2007.
• The bank's earnings before tax in the first half of the year equalled ISK
1,540 million, rising by 12.6% from the same period last year.
• Net interest income amounts to ISK 762 million in the first six months
compared to ISK 159 million in the first six months of 2007.
• Interest income increased by 45.6% in the first six months of the year
compared to the corresponding period last year and totalled ISK 3,190
million.
• Return on equity (ROE) in the first six months of the year 2008 equals a
return of 49.6% on a yearly basis.
• Exchange rate earnings from financial operations increased by 8.3% between
periods, at ISK 679 million.
• Net income from operations rose by 16.5% from the corresponding period last
year and amounted to ISK 2,083 million.
• The bank's total assets increased by 29.8% from the start of the year and
stood at ISK 68,220 million at the end of June 2008 compared to ISK 52,549
million on 31 December 2007.
• The bank's liquid assets on 30 June 2008 amounted to ISK 10,742 million.
• On 30 June 2008, equity equalled ISK 7,502 million, an increase of 21.3% from
31 December 2007.
• The consolidation's equity (CAD) ratio was 29.6% at the end of June 2008
compared to 28.1% at the end of 2007.
• Earnings per share amounted to 1.43 during the first 6 months of the year
compared to 1.04 for the corresponding period of last year, which represent
an increase of 37.5%.
• The number of employees as of 30 June 2008 is 50 compared to 41 at the same
time last year.
Operations in the first half of 2008:
MP Investment Bank's operations were very successful in the first half of the
year, particularly taking into account the difficult conditions on financial
markets worldwide. Interest rate difference increased significantly from the
previous year, explained by own trading on the bond market and a significant
expansion of bond brokerage activities. The above factors also resulted in a
substantial growth of the bank's balance sheet since the turn of the year. The
bank's commissions have been somewhat reduced since 2007 as a result of
decreasing turnover on the domestic stock market, but at the same time bond
brokerage commissions have risen significantly, and the income of the bank's
branch in Lithuania has also increased considerably. The operations in
Lithuania have been a success so far this year and the bank has already made a
strong name for itself among investors in the country.
The business of the bank's asset management has been good so far this year.
Demand for the bank's asset management services for individuals and
institutional investors has increased significantly following good management
results and the independence of the service.
The bank's exchange rate earnings were healthy during the first part of the
year, primarily justified by the bank's proprietary bond trading. The bank
adopts a prudential point of view when evaluating all assets in its portfolio,
listed or unlisted assets alike.
The bank considers the loan portfolio to be solid. Practically every loan is
secured by liquid securities and active risk management is used to evaluate
individual loans. In the Financial Interim Statement all loans are evaluated
from a prudential point of view and the bank has made a general precautionary
provision for losses on the loan portfolio, equalling around 1.5% of the bank's
loans to customers.
The bank's funding has been successful during the year. New funding lines with
domestic and foreign financial institutions have been arranged and the
Lithuania branch negotiated its first line in the first half of the year.
Prospects for the remaining months of 2008:
There is no end in sight to the difficulties on financial markets worldwide.
The development of the domestic economic situation, i.e. high interest rate
policy, inflation, the devaluation of the Icelandic króna and plunging real
estate prices, has created difficult operating conditions for domestic
companies.
Not having a large part of its assets tied up in long-term loans and shares has
been convenient for the bank this year. Therefore the bank has managed to shift
its emphases in accordance with the conditions. In the latter half of the year
focus will be on growing the branch in Lithuania, where the bank sees great
opportunities. Bond brokerage and asset management will also be improved
further, with our independence and professionalism as guiding lights.
The bank believes that times like these give rise to great opportunities, in
spite of the difficult operating conditions on financial markets. A high CAD
equity ratio, healthy balance of liquid assets and solid operations are a
source of optimism for the bank.
For further information contact Styrmir Þór Bragason, CEO of MP Investment
Bank. Telephone number: +354 540 3200.
A copy of the bank's Interim Financial Statements can be accessed on the bank's
web site, www.mp.is.
