Landsbankinn's funding rests on three main pillars – deposits from customers, market funding and equity. The Bank’s credit rating is estimated by S&P Global Ratings as BBB+/A-2 with a stable outlook.

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Landsbankinn’s credit has been rated by the international rating agency Standard & Poor’s from the beginning of 2014. Since then, the Bank’s credit rating has consistently been revised upwards every year. In October 2017, the credit rating was raised by one notch and is currently estimated as BBB+/A-2 with a stable outlook.

Customer deposits

The largest part of Landsbankinn's funding is in the form of deposits from customers, credit institutions and the Central Bank, all of which amounted to ISK 637 bn at year-end 2017 and are mostly non-indexed and on demand. Customer deposits increased by 27 bn in 2017. Inflation-linked deposits amounted to ISK 106 bn at year-end 2017, increasing by ISK 3 bn from the previous year.

EMTN issuance

The size of the Bank’s EMTN programme is EUR 2 bn and was increased in size from 1.5 bn in 2017. Inaugural issuance under the programme was made in the fall of 2015 with continued issuance in 2016 and 2017. Landsbankinn issued a five year EUR 300m bond and a three year SEK 1,000m bond in the first half of 2017 and used the proceeds to pre-pay in full the bonds issued to LBI ehf. The bonds issued to LBI (formerly Landsbanki Íslands hf.) were a consideration for the assets and liabilities transferred from LBI to the Bank in October 2008, originally amounting to ISK 350 bn at the date of issue. In 2014, an agreement was made for the final payment of the bonds to take place in October of 2026, with an authorisation to make pre-payments without any additional cost at any time during the time period. Discharging the debt to LBI in full lowered funding cost and lifted the collateralisation of assets securing the bonds.

Standard & Poor's

Long-term BBB+
Short-term A-2
Outlook Stable
Issue date October 2017
Funding pillars (ISKm)
Debt repayment profile (ISKm)

International debt issuance weights most heavily in the Bank's market funding.

International debt issuance weights most heavily in the Bank's market funding. In November 2017, the Bank issued a 5.5-year EUR 300 m bond and used the proceeds to pre-pay older debt, including the partial refinancing of the euro bond maturing in 2018. At year-end 2017, bond issuance in foreign currency amounted to ISK 191 bn, increasing by ISK 73 bn during the year.

The spread has decreased considerably since the first issuance in 2015 and during the year 2017 the spread of the Bank’s benchmark issuances in EUR continued to tighten in the secondary market, decreasing by over 70bp for the bond maturing in 2021. Refinancing of the Bank’s older debt at more favourable terms has had a significant positive impact on the Bank’s average funding cost.

Historical z-spread

Covered bonds

The size of the programme for covered bond issuance is ISK 120 bn and was increased from ISK 100 bn in 2017. The covered bond issuance is primarily intended to fund the Bank’s mortgage portfolio and to mitigate interest rate risk. Regular auctions of covered bonds were held in 2017 with two new series being issued during the year, an inflation-linked 7.5-year covered bond and a non-indexed 6-year covered bond. One series matured in 2017. Agreements with market makers in the secondary market for covered bonds were renewed during the year. At year-end 2017, the outstanding covered bonds issuance amounted to ISK 70 bn, increasing by ISK 32 bn during the year.

Commercial paper

Landsbankinn continued regular issuance of commercial paper in 2017 under the ISK 50 bn debt issuance programme. Outstanding issuance of commercial paper amounted to ISK 7 bn at year-end 2017 compared to ISK 12 bn at the end of 2016.


The Bank’s equity amounted to ISK 243 bn at year-end 2017, decreasing by ISK 8 bn over the course of the year. Landsbankinn paid ISK 25 bn in dividends to shareholders in 2017. The Bank also availed itself of the authorisation to offer shareholders to tender their shares for up to 2% of outstanding shares, less the shares already bought back in 2016. The scale of the buy-back in 2017 was insignificant. Landsbankinn’s total capital ratio was 26.7% at year-end 2017.

Capital ratio