Arion Bank hf.: Standard & Poor's has affirmed Arion Bank's long term credit rating BBB+ but revised the outlook from stable to negative

Standard & Poor's has affirmed Arion Bank's long term credit rating BBB+ but revised the outlook from stable to negative. The Bank's short term credit rating remains A-2.

Main comments from Standard & Poor's:

• The affirmation of the bank's ratings reflects that Arion Bank maintains a solid market position in Iceland, with relatively advanced digitalized banking platforms while its exceptional capitalization counterbalances it's geographic and loan book concentrations. Standard & Poor's see Arion Bank as being well ahead of many other European banks in its preparation for technological disruption

• In a fiercely competitive environment, no longer supported by a strong economy, Icelandic banks' business prospects and earnings have become weaker. Furthermore, the role of pension funds in lending distorts Icelandic banks' competitive environment in terms of business generation and margins. Therefore it is seen as a negative trend for industry risk.
  
• Overall, economic risks for Icelandic banks remain stable for now. The economy is expected to contract in 2019 but rebound in 2020.

For further information please contact Theodor Fridbertsson, investor relations, at [e-mail] or tel: [phone].

Attachment

• S&P _July2019 (https://ml-eu.globenewswire.com/Resource/Download/d268f48e-0d37-46d1-a185-40e7e5ceee5b)