Highlights of 2022
2022 was in many ways an eventful year and the Bank performed well. The Icelandic economy thrived and Iceland ended the year with one of the highest economic growth rates in Europe. The companies in the Arion Bank Group forged even closer ties with each other with the common aim of providing even better services to our customers.
Arion Bank and Vörður form even stronger partnership
At the beginning of the year Vörður relocated to Arion Bank’s headquarters. Some of those employees joined Arion Bank and they now perform a whole range of support services shared by Arion Bank, Vörður and Stefnir. Closer collaboration between the companies enhances efficiency though shared facilities and employees, e.g. in HR and IT, and by harnessing the combined energy of the companies in sales and marketing and providing services to our customers.Highest market share on stock market
In 2022 Arion Bank had the highest market share in equities and bond trading on Nasdaq Iceland. The Bank had a turnover of ISK 445 billion, representing 21.5% of the total, making it the seventh year in a row that Arion Bank has the highest market share in equities trading on Nasdaq Iceland. The Bank’s turnover on the fixed income market was ISK 518 billion, with a market share of 19.8%, ranking it first on Nasdaq Iceland. Arion Bank also had the highest market share on First North, with 35.4%.Partnerships with dynamic companies
Arion Bank partnered numerous companies during the year and supported them on their journey towards success. The Bank managed the stock market listing of Nova, the acquisition of a 50% share in Annata and the acquisitions and planned de-listing of Origo, as well as the share capital increase and listings of Amaroq Minerals and Alvotech. The Bank was therefore involved in three of the four Icelandic stock market listings this year.Lending growth
Demand for loans was substantial in 2022 despite rising interest rates. Loans to customers increased by 16% and the Bank’s corporate loan portfolio grew by 23%. The Bank's loans to customers amounted to ISK 1,085 billion at year-end.
Arion Bank loaned approximately ISK 150 billion in the form of mortgages in 2022, both new loans and refinancing. The Bank’s mortgage portfolio grew by ISK 12 billion during the year, totalling ISK 514 billion at year-end.
Arion Bank’s car loans continue to gain popularity. The process for registering car loans was digitalized during the year, meaning the whole process, from application to paying out the loan, is now almost 100% digital. The Bank’s car loan portfolio increased by ISK 3 billion to ISK 17 billion at year-end, and green car loans showed strong growth.
Best banking app sixth year in a row
The Arion app was named the best banking app in Iceland for the sixth year running by bank customers in a survey conducted by MMR. Over the last few years the Bank has launched a whole host of new products and 2022 was no exception. The aim is simply to make banking and finance as straightforward and convenient as possible. Our customers can use the app to attend to their finances, trade with shares and funds, buy insurance and get an overview of their pensions.Positive credit rating from Moody’s
In mid-year the Bank received a credit rating from Moody’s. It was the first time Moody’s had rated the Bank, which had previously only been rated by S&P Global Ratings. The Bank received the long-term rating of Baa1 as an issuer and the long-term rating of A3 for deposits. In both cases the outlook was positive.New Deputy CEO, changes to executive committee and new CEOs of subsidiaries
In April Iða Brá Benediktsdóttir, managing director of Retail Banking, also took on the position of Deputy CEO. At the same time, Hákon Hrafn Gröndal, who had been a credit manager in Corporate & Investment Banking, took over as managing director of the division. Jóhann Möller was then appointed managing director of Markets. Jóhann was previously CEO of Stefnir and he was replaced in this position by Jón Finnbogason, who had previously been credit officer at Arion Bank.Towards the end of the year Guðbjörg Heiða Guðmundsdóttir was appointed CEO of Vörður, and she will take up the position on 1 April 2023. Guðbjörg has been at Marel since 2011, most recently as executive vice president for fish and managing director of Marel Iceland. Vörður CEO Guðmundur Jóhann Jónsson had earlier announced his intention to step down after 16 years in the job.
Agreement reached on development of prime building land
During the year an agreement was reached with the town of Mosfellsbær on the future of an area of prime building land owned by Arion Bank. The area in question is the largest undeveloped plot of land in the Reykjavík area and the agreement provides for the development of a sustainable community. The area will be designed from scratch as a diverse and mixed community where people can tend to most of their daily business on foot or by using public transport, where the new City Line project will play a central role. This development project will make more efficient use of natural resources, energy and infrastructure, underlining our commitment to the environment and safeguarding quality of life for coming generations. All areas of the design process will incorporate the UN Sustainable Development Goals.
Under the agreement a total of 3,700 homes will be built, a mixture of single family and multi-family residences, as well as 150 apartments for people aged 55 and over, schools, sports facilities and commercial property. The company Blikastaðaland ehf., a subsidiary of Arion Bank, will participate in the development of the area, and Mosfellsbær will be given ownership of all the land at no cost as development progresses.
Publication of the Impact and
Allocation Report and the Report on Financed Emissions
At the beginning of 2022 Arion Bank published its first impact and allocation report for the Bank’s green financing framework. The report specifies the allocation of funds raised through green bond issues and green deposits in 2021, and there is also a section on the positive environment and climate impact of green projects at Arion Bank.
At the end of the year the Bank published its first report on financed emissions which is based on the Partnership for Carbon Accounting Financials (PCAF) methodology. Assessing and disclosing the greenhouse gas (GHG) emissions which are financed through lending and investments is a prerequisite for the Bank’s ability to set targets on reducing emissions, and this is the next step.
Balance sheet
The Bank’s assets increased by 12% in 2022, growing to ISK 1,470 billion at year-end. The key factor here was the 16% increase in loans to customers.
In 2022 Arion Bank continued to work on diversifying its funding, which included issuing green and covered bonds. In January 2022 Arion Bank issued a new green bond series in Icelandic krónur. The new series attracted a positive response and bonds amounting to ISK 6 billion were sold to a broad group of Icelandic investors. The Bank also issued covered bonds in the amount of ISK 10.1 billion. In December 2022 the Bank issued two series of subordinated bonds in Icelandic krónur which are classed as Tier 2, amounting to a total of ISK 12.1 billion.
In April 2022 Arion Bank issued euro-denominated covered bonds amounting to €200 million. The issue was additional to the 5-year €300 million issue in autumn 2021, bringing the total issue to €500 million. In September 2022 Arion Bank held its second green bond issue in euros, issuing 3-year instruments for a total of €300 million.
Customer deposits remain the most important component of the Bank’s funding mix and grew by 15% during the year.
Assets held for sale at Arion Bank underwent substantial change during the year. The sale of the payment solutions company Valitor was completed in mid-year following the approval of the regulatory authorities. Stakksberg’s main assets, the plot of land and industrial facilities at Helguvík, were transferred to Landey, Arion Bank’s property development company, at the end of the year. Arion Bank will now seek to sell the existing infrastructure at Helguvík, either to be transported elsewhere or to be used for the purpose of developing other activities at the site. Sólbjarg sold the operations, brand and web domain of Heimsferðir ehf. during the year. Sólbjarg is now a minority shareholder in Ferðaskrifstofa Íslands through its holding in Heimbjarg ehf.
Awards and recognition
The Banker magazine, a leading global finance news publication published by the Financial Times, named Arion Bank the Bank of the Year in Iceland for 2022, the second year in a row.
Arion Bank achieved the score “outstanding” in Reitun’s ESG rating, scoring 90 out of 100 possible points. This is the third year in row the Bank has achieved this score.
Sustainalytics, which specializes in assessing ESG risks at companies, performed a risk assessment of Arion Bank. The company concluded that Arion Bank is one of the best performing companies in this respect globally. The Bank scored 12 points on a scale from 0-100, with a lower score signifying lower risk. Sustainalytics therefore believes there is minimal risk of significant financial damage due to ESG issues at the Bank. Arion Bank is in the top 6% of more than 1,000 banks worldwide which have been rated by Sustainalytics and in the top 4% of 400 regional banks.
Arion Bank received the Covered Bond Report award for excellence for the first Icelandic issuance of covered bonds in euros in 2021.
Arion Bank, Vörður and Stefnir have been recognized again as companies which had achieved excellence in corporate governance following a formal assessment based on guidelines on corporate governance issued by the Icelandic Chamber of Commerce, the Confederation of Icelandic Employers, and Nasdaq Iceland.
Arion Bank was in first place of major Icelandic companies which Viðskiptablaðið and Keldan consider to be model businesses. Companies need to meet a strict set of criteria to get on to this list.