ISK 3,065 million after-tax profit

Transcription

1 Press Release, 8 August 2003 Kaupthing Bunadarbanki hf. s first half results for 2003 ISK 3,065 million after-tax profit Kaupthing Bunadarbanki posted an after-tax profit of ISK 3,065 million during the first half of the year, compared to a combined after-tax profit of ISK 1,964 million from Kaupthing Bank and Bunadarbanki Íslands during the same period in This represents an increase in after-tax profit of 56.1%. Return on equity was 19.4% during the first half of the year, compared to 18.7% average return on equity for both banks during the first half of The Bank posted an after-tax profit of ISK 1,689 million during the second quarter, compared to ISK 799 million during the same period in 2002, which represents an increase of 111.4% between years. Net operating income totalled ISK 14,190 million during the first half of the year, which represents a 49.1% increase between years. Net operating income during the second quarter totalled ISK 7,404 million, which represents a 63.7% increase between years. Operating expenses during the first half of the year totalled ISK 9,077 million, which represents in increase of 50.2% between years. The cost ratio was 64.0%. Operating expenses during the second quarter totalled ISK 4,691 million and the cost ratio was 63.4%. Total assets amounted to ISK 493 billion at the end of June, increasing by 13.9% from the beginning of the year. Total loans to customers amounted to ISK 293 billion, increasing by 8.7% from the beginning of the year. Provision for losses during the first half of the year amounted to ISK 1,378 million, which represents a 28.1% increase between years. The Bank s CAD ratio was 11.6% on 30 June, including Tier 1 Capital of 9.0%. The Bank s equity was ISK 34.9 billion. The merger has gone according to schedule. The number of full-time equivalent positions has decreased by 5.7% from the beginning of the year and is now 1,282. Estimated synergistic effects in the form of lower operating costs amount to ISK 1,000-1,200 million per year from the beginning of Hreidar Már Sigurdsson, CEO of Kaupthing Bunadarbanki hf.: The first set of results from Kaupthing Bunadarbanki is most satisfactory. Return on equity is good at 19.4%. The Bank s income formation is strong and based on a wider range of sources than before. The synergistic effects of the merger have yet to fully materialise and the Bank s cost ratio will decrease when this happens. The Bank s management team is working closely together with the employees to improve results, both in terms of expenses and income. The merger between Kaupthing Bank and Bunadarbanki provides us with numerous opportunities for expansion and we are determined to take advantage of them. It is still too early to fully determine the success of the merger but the initial experience has certainly been promising. Sólon R. Sigurdsson, CEO of Kaupthing Bunadarbanki hf. These results indicate what has been achieved by the considerable effort invested in the merger. Our employees and customers have expressed their satisfaction with what has been accomplished. However, this is merely the beginning, and the Bank s increased financial strength will enable us to offer the customers even better services and will reinforce our position on the market.

2 Income statement Key figures Q Q Q Q Q Q Net Interest Income 2,203 2,398 1,884 1,760 1,748 1,606 Net Commission Income 2,250 2,009 1,519 1,881 1,551 1,273 Trading Gains 2,433 2,292 2, ,111 2,024 Other Income , Net Operating Income 7,404 6,786 6,085 5,810 4,523 4,994 Salaries and Related Cost -2,612-2,336-1,940-1,407-1,569-1,589 Other Administrative Cost -2,079-2,050-1,698-1,400-1,461-1,423 Other Operating Cost Total -4,691-4,386-3,638-2,807-3,030-3,012 Provisions for Losses Net Profit Before Taxes 1,962 1,773 1,549 2, ,436 Taxes Net Earnings 1,689 1,376 1,511 1, ,167 Balance sheet Key figures ISK millions ISK Billions Amounts due from Credit Inst Loans to Customers Bonds & Fixed Income Sec Shares & other Variable Yield Sec Other Assets Total Assets Amounts owed to Credit Institutions Deposits Borrowings Other Liabilities Subordinated Loans Equity Total Liabilities and Equity Results by divisions Capital Markets Corporate Finance Treasury Corporate Banking Asset management and Private banking Retail Banking Total Net interest income ,013 1, ,697 4,601 Net commission income 1, ,954 Trading gains 2, ,145 Other income Total income 3,299 1,645 1,740 1, ,553 13,113 Expenses 1, ,683 4,574 Provision for losses ,378 Total expenses 1, ,258 5,952 Gross profit 2,230 1,212 1,224 1, ,295 7,161 2

3 Auditing The interim accounts have been reviewed by the Bank s auditors. Presentation of results A meeting for Icelandic shareholders and market participants will be held on Monday 11 August at 9:00 a.m. at the future headquarters of Kaupthing Bunadarbanki hf. at Borgartún 19 in Reykjavík. Hreidar Már Sigurdsson, CEO, will present the Bank s results and answer questions. A meeting for Swedish shareholders and market participants will be held in Stockholm on Monday 11 August at 12:00 p.m. Swedish time (10:00 a.m. Icelandic time) at Operakällaren, Karl XII Torg, Stockholm. Sigurdur Einarsson, Executive Chairman of Kaupthing Bunadarbanki, will present the Bank s results and answer questions. It is possible to follow events at the meeting in real-time via the following link: 6D5C00460C9B or by calling +44 (0) to participate and ask questions. Information on the meetings will be available after the meetings on the web site of Kaupthing Bunadarbanki at and the web site of the Iceland Stock Exchange at and Further information For further information on the results please contact the Bank s Chief Executive Officers, Hreidar Már Sigurdsson and Sólon R. Sigurdsson by telephone on , or Jónas Sigurgeirsson, Head of Investor Relations (ir@kaupthing.net), by telephone on Kaupthing Bunadarbanki s next interim results Kaupthing Bunadarbanki will present its results for the third quarter of 2003 on 7 November Information on Kaupthing Bunadarbanki is available on the Bank s web site at Kaupthing Bunadarbanki is a Nordic bank offering comprehensive commercial and investment banking services to individuals, companies and institutional investors. The Bank is a leading player in all the main areas of the Icelandic financial market. The Bank focuses on the growth and development of its international activities and aims to be a leading investment bank in the Nordic countries. Kaupthing Bunadarbanki operates in nine countries and its headquarters are located in Reykjavík. The Bank s main subsidiaries are Kaupthing Bank Sverige, Kaupthing Bank Luxembourg, Kaupthing Sofi in Finland, Kaupthing Bank A/S in Denmark, Kaupthing Føroyar, Kaupthing New York, Handsal Asset Management in Switzerland, Kaupthing Ltd in the United Kingdom, Lýsing and Althjódlega líftryggingafélagid. At the end of June the number of full-time equivalent positions totalled 1,282 at Kaupthing Bunadarbanki and its subsidiaries. Austurstræti Reykjavík Telephone:

4 Market environment So far this year Kaupthing Bunadarbanki s operating environment has been far more positive than in recent years. The main share indices on the Bank s home market rose between % during the second quarter. This has resulted in a higher turnover for Capital Markets, and if these increases continue it should lead to a greater number of corporate projects. The economy appears to be improving in the Bank s main single market, Iceland, and the quality of the Bank s loan portfolio has improved accordingly. The main benchmark bond classes in Iceland have risen between % during the second quarter which has generated considerable trading gains for the Bank. Profit and loss account Kaupthing Bunadarbanki posted a pre-tax profit of ISK 3,735 million during the first half of 2003, compared to the combined pre-tax profit of Kaupthing Bank and Bunadarbanki Íslands of ISK 2,399 million during the first half of * Kaupthing Bunadarbanki posted an after-tax profit of ISK 3,065 million during the first half of 2003, compared to the combined after-tax profit of Kaupthing Bank and Bunadarbanki Íslands of ISK 1,964 million during the first half of This represents an increase in after-tax profit of 56.1% between years. Kaupthing Bunadarbanki posted a pre-tax profit of ISK 1,962 million during the second quarter of 2003, compared to the combined pre-tax profit of both banks of ISK 963 million during the same period of Kaupthing Bunadarbanki posted an after-tax profit of ISK 1,689 million during the second quarter of 2003 and was 111.4% more than the combined after-tax profit of both banks during the same period in Return on equity during the first six months of 2003 was 19.4%, compared to 18.7% during the same period in Earnings per share amounted to ISK 7.5 during the first half of the year. Earnings per share at Kaupthing Bank during the first half of 2002 amounted to ISK 4.4 and ISK 6.8 at Bunadarbanki Íslands. ** Kaupthing Bunadarbanki has three main sources of income: interest income, commission income and trading income. Sources of income for Kaupthing Bunadarbanki during the first half of 2003 Income The Bank s net interest income during the first half of the year Other Income amounted to ISK 4,601 million, compared to ISK 3,354 million combined income of the two Net Trading banks during the same period in Income 34% 2002, representing a 37.2% increase between years. The Bank s net interest income during the second quarter amounted to ISK 2,204 million, increasing by 26.0% between years. The interest differential, i.e. interest income minus interest expenses as a ratio of average total assets, was 2.0% during the first six months of the year. 4% 30% 32% Net Commission Income Net Interest Income * Any reference to the Bank s results for 2002, refers to the proforma results since the merged bank Kaupthing Bank and Bunadarbanki Íslands did not commence operations until 27 May 2003 although the accounts of Kaupthing Bunadarbanki are calculated from 1 January ** Bunadarbanki Islands earning per share for the first half of 2002 has been adjusted for the conversion ratio of the merger between the banks. 4

5 Net commission income amounted to ISK 4,260 million during the first six months of the year, compared to ISK 2,824 million during the same period last year. This represents an increase in net commission income of 50.8% between years. The increase in net commission income is partly due to large Corporate Finance projects and increased brokerage activities partly arising from the Bank s acquisition of Bankaktiebolaget JP Nordiska, now Kaupthing Bank Sverige. Net commission income during the second quarter amounted to ISK 2,251 million and increased by ISK 700 million or 45.1% between years. Trading gains during the first six months of the year amounted to ISK 4,725 million, compared to ISK 3,135 million during the first half of Approximately 37.0% of trading gains was realised profit. Trading gains during the second quarter of 2003 totalled ISK 2,433 million, which represents an increase of ISK 1,322 million or 119 % between years. Net operating income during the first half of the year totalled ISK 14,190 million, compared to ISK 9,517 million during the first half of 2002, representing an increase of 49.1% between years. Net operating income during the second quarter amounted to ISK 7,404 million and increased by 63.7% between years. Expenses The Bank s salary expenses totalled ISK 4,948 million during the first six months of the year, representing an increase of 56.7% between years. Salary expenses during the second quarter totalled ISK 2,612 million and increased by 66.5% between years. This increase may partly be attributed to the Bank s acquisition of Kaupthing Bank Sverige, and stock option agreements which have now been expensed. Other general operating expenses totalled ISK 3,501 million during the first half of the year and increased by 40.3% between years. This increase is largely attributable to the Bank s acquisition of Kaupthing Bank Sverige. Other general operating expenses during the second quarter totalled ISK 1,789 million and increased by ISK 528 million or 41.9% between years. The Bank s operating expenses during the first half of the year totalled ISK 9,077 million, compared to ISK 6,042 million during the first six months of 2002, representing an increase of 50.2% between years. Operating expenses as a ratio of income were 64.0%. The Bank s operating expenses during the second quarter totalled ISK 4,691 million and increased by ISK 1,661 million or 54.8%. Operating expenses as a ratio of income during the second quarter were 63.4%. Provision for losses amounted to ISK 1,378 million during the first six months of the year. Of this, ISK 317 million was in the general provision for losses. Total provision for losses does not represent final loan losses, but reflects the sum which is put aside to meet potential loan losses. Calculated income tax for the first half of the year totalled ISK 668 million, representing a 55.1% increase between years. Balance sheet Assets The total assets of Kaupthing Bunadarbanki on 30 June 2003 amounted to ISK 493 billion and had increased by ISK 60.3 billion or 13.9% from the beginning of the year. The Bank s loans to customers on 30 June amounted to ISK 293 billion and had increased by ISK 23.3 billion or 8.7% from the beginning of the year. Loans to customers amounted to 59.4% of the Bank s total assets as of 30 June. Holdings in bonds were valued at ISK 99.5 billion. The Bank has entered derivatives agreements against these assets to a total of 57.7 billion and the Bank is thus exposed to market risk of ISK 41.9 billion. The Bank s equity portfolio amounts to ISK 32.4 billion which represents an decrease of 1.5% from the beginning of the year. The Bank has entered derivatives agreements 5

6 against these assets to a total of ISK 5.0 billion. Unlisted shares amounted to ISK 9.9 billion, or 2.0% of the Bank s total assets. Listed shares totalled ISK 22.5 billion or approximately 4.6% of the Bank s total assets. All the Bank s securities are entered at market value, with the exception of unlisted securities, which are entered at purchase price or the estimated market price, whichever is lower. Assets of Kaupthing Bunadarbanki 30 June 2003 Unlisted Shares 2% Listed Shares 5% Bonds in Trading Book 8% Bonds Held as Hedge 12% Other Assets 4% Amounts due from Credit Institutions 9% Loans to Customers 60% Kaupthing Bunadarbanki s major assets in unlisted shares (Exceeding ISK 500 million) Company Industry Ownership Mundur ehf. Holding Company 20% Stodir hf. Real estate 20% Karen Millen Fashion retail 12% Vífilfell hf Coca Cola bottler 25% The Bank s total provision for losses amounted to ISK 6,941 million on 30 June 2003, which represented 2.3% of loans and guarantees. Liabilities and equity Liabilities owed to lending institutions totalled ISK billion, of which 42.6% were liabilities to the Central Bank of Iceland due to repurchase agreements. The Bank s deposits totalled ISK billion at the end of June, which represents an increase of ISK 18.8 billion or 11.4% from the beginning of the year. Deposits represented 37.2% of the Bank s total financing on 30 June, compared to 38.1% at year-end The Bank s equity totalled ISK 34.9 billion on 30 June, compared to ISK 33.4 billion at yearend Dividends of ISK 1,244 million were paid out and own shares were purchased for ISK 585 million during the period. The Bank s equity base was ISK 41.2 billion at the end of the period. The CAD ratio was 11.6%, compared to 14.7% at Kaupthing Bank and 10.9% at Bunadarbanki Íslands at yearend Tier 1 capital was 9.0%, compared to 11.5% at Kaupthing Bank and 8.1% at Bunadarbanki Íslands at year-end

7 The Bank s share capital amounted to ISK 4,127,741,090 at nominal value which is divided into 412,774,109 shares on 30 June. The total number of shareholders at the end of the period was approximately 40,000. One shareholder owned more than 10% of share capital, and this was Meidur ehf. which owned 12.5%. Kaupthing Bunadarbanki owned 18.8% in Meidur ehf. on 30 June. The calculated deferred income tax liability amounted to ISK 1,424 million on 30 June. Liabilities and equity of Kaupthing Bunadarbanki on 30 June 2003 Subordinated Loans 2% Equity 7% Other Liabilities 4% Amounts owed to Credit Institutions 28% Borrowings 21% Deposits 38% Operating results of profit centres of Kaupthing Bunadarbanki Kaupthing Bunadarbanki, which now operates in nine countries, divides its operations into six profit centres, in addition to ancillary units. The Bank s profit centres are: Asset Management and Private Banking, Treasury, Corporate Finance, Corporate Banking, Capital Markets and Retail Banking. A profit was made by all the Bank s profit centres during the first and second quarters. The largest gross profit was in Capital Markets, ISK 2,230 million, followed by Retail Banking with ISK 1,295 million, Treasury with ISK 1,224 million, Corporate Finance with ISK 1,212 million, Corporate Banking with ISK 1,044 million and Asset Management and Private Banking with ISK 155 million. Asset Management and Private Banking Asset Management and Private Banking is responsible for managing and investing assets of individuals and institutional investors, and operates mutual funds and pension funds. Asset Management and Private Banking made a gross profit of ISK 155 million before overhead costs during the first half of the year. ISK millions Q Q H Net interest income Net commission income Trading gains Other income 6 6 Total income Expenses Provision for losses Total expenses Gross profit

8 Assets in custody at the Bank totalled ISK billion on 30 June and had increased by 25.3% since the beginning of the year. Assets under management at the Bank totalled ISK billion on 30 June and had increased by 1.8% since the beginning of the year. Treasury Treasury is responsible for inter-bank trading, derivatives and foreign exchange trading and the Bank s financing. Treasury made a gross profit of ISK 1,224 million before overhead costs during the first half of the year. Treasury s satisfactory results are partly attributable to the Bank s strong position in derivatives and foreign exchange trading and own position taking in foreign exchange. ISK millions Q Q H Net interest income ,013 Net commission income Trading gains Other income Total income ,740 Expenses Provision for losses Total expenses Gross profit ,224 Corporate Finance Corporate Finance is responsible for assisting companies with stock offerings and advises on mergers and acquisitions. Corporate Finance made a gross profit of ISK 1,212 million before overhead costs during the first half of the year. Several large projects were completed during the first six months of the year which explains the increase in income. Lower trading gains between quarters is due to write of unlisted shares owned by the Bank. ISK millions Q Q H Net interest income Net commission income Trading gains Other income Total income 531 1,114 1,645 Expenses Provision for losses Total expenses Gross profit ,212 Corporate Banking Corporate Banking provides services such as advice and assistance in financing to mediumsized and large companies in Iceland. Corporate Banking made a gross profit of ISK 1,044 million before overhead costs during the first half of the year. The lower interest differential and increased provision for losses explains the decrease in gross profit between periods. 8

9 ISK millions Q Q H Net interest income ,779 Net commission income Trading gains Other income Total income 907 1,044 1,951 Expenses Provision for losses Total expenses Gross profit ,044 Capital Markets Capital Markets is responsible for securities brokerage for institutional investor and proprietary trading. Capital Markets made a gross profit of ISK 2,230 million before overhead costs during the first half of the year. Capital Market s strong results are largely due to trading gains and increased income which reflects the improved situation on the main securities markets. ISK millions Q Q H Net interest income Net commission income ,021 Trading gains 1, ,655 Other income Total income 1,900 1,398 3,299 Expenses ,069 Provision for losses Total expenses ,069 Gross profit 1, ,230 Retail Banking Retail Banking provides individuals, families and smaller companies with comprehensive financial services, such as deposits and loans, securities trading, clearing and internet banking. The Bank s branches and service points in Iceland belong to the Retail Banking division. Retail Banking made a gross profit of ISK 1,295 million before overhead costs during the first half of the year. The lower interest differential and increased provision for losses explains the decrease in gross profit between periods. ISK millions Q Q H Net interest income 1,274 1,423 2,697 Net commission income Trading gains Other income Total income 1,755 1,798 3,553 Expenses ,683 Provision for losses Total expenses 1,249 1,009 2,258 Gross profit ,295 9

10 The Bank s operations by region Kaupthing Bunadarbanki divides its operations into four regions: Iceland, the Nordic countries, other European countries and the United States. Iceland Operations in Iceland were successful and returned an after-tax profit of ISK 2,966 million. The Bank s headquarters are located in Iceland and the country is the Bank s most important individual market. Nordic countries Operations in the Nordic countries experienced some difficulties during the period and returned an after-tax loss of ISK 399 million. This includes irregular items, such as costs due to staff redundancies, totalling ISK 143 million. Streamlining measures and synergistic effects with other companies within the group have now resulted in a profit on operations in Sweden. Other European countries A satisfactory profit was made on operations during the first six months of 2003 in Luxembourg, Switzerland and the United Kingdom, with the after-tax profit amounting to ISK 167 million. United States The Bank s operations in the United States were successful and returned an after-tax profit of ISK 331 million. The merger between Kaupthing Bank hf. and Bunadarbanki Íslands hf. The Board of Directors of Kaupthing Bunadarbanki hf. Directly after the shareholders meetings in Kaupthing Bank hf. and Bunadarbanki Íslands hf. on 26 May 2003, the first shareholders meeting of the merged Bank was held. The following people were elected on to the Board of Directors as regular members: Sigurdur Einarsson, Chairman of the Board (Executive Chairman) Hjörleifur Jakobsson, CEO of Olíufélagid Tommy Persson, CEO of Länsförsäkringar AB Gunnar Páll Pálsson, Managing Director of VR Jón Helgi Gudmundsson, CEO of BYKO Finnur Ingólfsson, CEO of VÍS Ásgeir Thoroddsen, Attorney to the Supreme Court of Iceland Peter Gatti, Managing Director of Hauck & Aufhäuser Bjarnfredur Ólafsson, Attorney to the District Court New organizational chart approved A new organizational chart for the Bank was approved. There are eleven main divisions, each directed by a Managing Director. There are six ancillary divisions, each directed by an Executive Director. There are two Chief Executive Officers, Hreidar Már Sigurdsson and Sólon R. Sigurdsson. The Executive Chairman of the Bank is Sigurdur Einarsson. The merger between the banks In all major respects the merger between the banks has gone according to schedule. Preparations for the merger progressed more quickly than anticipated and the formal merger of the banks was brought forward two days. The first day of operations of Kaupthing Bunadarbanki was 27 May However, the Bank s pro forma balance sheet is calculated as of 1 January The Bank s new headquarters It has been decided to move the majority of the Bank s activities in Iceland to new headquarters at Borgartún 19 in Reykjavík. The premises are currently being refurbished and the Bank is expected to commence activities there around New Year. 10

11 Synergy from the merger Kaupthing Bunadarbanki has defined the main areas in which it is possible to achieve synergy from the merger. Synergy is particularly expected to result in lower cost of capital for the Bank and lower general operating expenses, such as salary expenses, sales and marketing expenses and administration expenses for IT systems. The synergistic effects of the merger are expected to be between ISK 1,000 million and 1,200 million per year from the beginning of No estimates have been made on the increase or decrease in income as a result of the merger. Costs of the merger The Bank s management has estimated that the cost of the merger will be around ISK 200 million and approximately half of this has been expensed. Personnel Full-time equivalent positions at the Bank and its subsidiaries totalled 1,282 at the end of June. Full-time equivalent positions at the Bank have decreased by 78 or 5.7% since the beginning of the year. The reasons for the decrease include redundancies resulting from the merger between the banks, the sale of the Bank s subsidiary, Bunadarbanki International S.A. in Luxembourg, and the fact that some of the vacant positions at the Bank have yet to be filled. Dividends and dividend policy Kaupthing Bunadarbanki s policy is to pay out annual dividends. The aim is to pay out between 10 30% of after-tax profit every year in dividends. Highlights of the first quarter Financing of the Bank In June the Bank completed a two-year loan deal totalling EUR 500 million, or approximately ISK 43.5 billion. It involved a bond issue on the international market within Kaupthing Bunadarbanki s Euro Medium Term Note Programme. It was originally planned to issue EUR 250 million but due to the high level of interest from financial institutions it was decided to increase the issue to EUR 500 million. The bonds were sold to almost 50 investors across Europe. New credit rating from Moody s Moody s Investors Services published a credit rating for Kaupthing Bunadarbanki. Moody s assigned A3 / Prime 1 / C ratings to Kaupthing Bunadarbanki. A positive outlook was assigned to the ratings. This rating is identical to the rating previously given to Bunadarbanki by Moody s. Prior to the merger Kaupthing Bank did not have a credit rating from Moody s. Change of name from JP Nordiska to Kaupthing Bank Sverige It was decided in May to change the name of the Bank s subsidiary in Sweden from Bankatiebolaget JP Nordiska to Kaupthing Bank Sverige AB. This change is another stage in the restructuring of the Bank s activities in Sweden. Prospects The Bank s operating prospects are good. The Icelandic economy is stable at the moment and economic prospects in Iceland, the Bank s largest single market, are positive. The Corporate Finance pipeline is good. The Bank s operations outside Iceland are satisfactory on the whole and prospects are reasonable. The Bank s operations in Sweden, the Bank s largest subsidiary, are showing a recovery and the reorganization of operations in Sweden is continuing. The Bank s management aims to maintain the Bank s rapid growth rate, although not at the expense of profitability, by means of organic and external growth, i.e. acquisitions of other companies, if suitable opportunities arise. Operations have been successful and management assumes that the Bank will continue to achieve its goal of 15% return on equity in the near future. It should be remembered, however, that the operations of a bank such as Kaupthing Bunadarbanki are subject to certain factors which cannot be controlled by the Bank, such as developments on the financial market. 11

12 Pro forma five year summary ISK millions Profit and Loss Net interest income 6,998 5,811 4,089 3,361 2,959 Other operating income 14,414 8,039 5,112 5,379 3,371 Net operating income 21,412 13,850 9,201 8,740 6,330 Other operating expenses -12,486-10,565-7,030-5,352-4,321 Provision for losses -2,794-1, Taxes Net earnings 5,363 1,915 1,013 1, Balance Sheet Assets Amounts due from credit institutions 38,519 17,696 19,553 17,952 9,213 Loans 269, , ,823 85,846 68,862 Bonds and other fixed income securities 69,298 57,599 35,223 25,505 22,768 Shares and other variable yield securities 36,410 24,005 15,112 7,127 3,001 Other assets 18,852 13,711 10,910 4,910 4,171 Total assets 432, , , , ,015 Liabilities and equity Amounts owed to credit institutions 109,865 88,166 47,731 18,177 18,057 Deposits 164,570 83,473 67,369 61,003 45,779 Borrowings 102, ,750 66,828 45,623 33,467 Other liabilities 11,559 5,656 6,889 4,768 2,200 Subordinate loans 11,010 8,364 6,187 2,761 1,374 Equity 33,379 22,154 12,616 9,007 7,138 Total liabilities and equity 432, , , , ,015 KEY RATIOS Equity ratio 7,7% 7,0% 6,1% 6,4% 6,6% cost/income ratio 58,3% 76,3% 76,4% 61,2% 68,3% Return on equity 18,7% Return on capital employed 6,7% 8,7% 7,7% 7,7% 6,6% Provisions for losses during the year,99%,78%,6%,92%,94% Provision for losses at year-end 2,1% 2,0% 1,7% 2,0% 2,3% It should be pointed out that trading between Kaupthing Bank and Bunadarbanki Íslands formed an insignificant part of the banks trading in 2002 and should therefore not have a significant impact when the operations of the merged bank are compared with the pro forma operations of both banks in