Iceland’s major banks report decline in profits for first half of year

Iceland’s major banks, Íslandsbanki and Arion Bank, released their financial results for the first half of the year recently, both reporting a decline in profits. Arion Bank’s profit dropped to 5.5 billion Icelandic krónur in the second quarter, down from 7.1 billion the previous year. Similarly, Íslandsbanki saw a decrease in profit to 5.3 billion krónur this quarter, compared to 6.1 billion last year.

While both banks publish their annual reports in both Icelandic and English, their quarterly results are available only in English. To aid Icelandic speakers, they provide summaries of key points in Icelandic alongside the reports.

The banks explain that the English-only quarterly announcements are largely due to their partial funding through international capital markets, with some shareholders originating from abroad. This necessitates the availability of information in English for foreign investors and ratings agencies.

The largest shareholder of Íslandsbanki is the Icelandic government, holding a 42.5 percent stake. At the end of last year, nearly 90 percent of the bank’s shares were owned by Icelanders, whereas over 11 percent of Arion Bank’s shareholders were from outside the country.

Arion Bank indicated that producing quarterly reports in both languages requires significant effort and carries the risk of inconsistency, leading them to choose this format. Íslandbanki also mentioned the substantial workload involved in generating substantial financial data to meet regulatory requirements, concluding that it was more efficient to publish the reports solely in English.

Notably, Landsbankinn, the remaining major bank, does publish its quarterly reports in Icelandic. However, these are also accessible in English, indicating a contrasting approach among the three major banks in Iceland.