Kaupthing Bank reports net earnings of ISK 60.2 billion (EUR 683 million).

Kaupthing Bank’s Results for the First Nine Months of 2007 is out and reports net earnings of ISK 60.2 billion (EUR 683 million).

Hreidar Mar Sigurdsson, CEO: “Kaupthings activities have been characterised by robust growth and we continued to strengthen our position in the third quarter. Trends in interest income and fee and commission income are most encouraging; interest income was up 60%, while fee and commission income grew by 75% in the third quarter compared with the same period last year. The international financial markets experienced considerable unrest during the quarter, but it is good to see that our strategy of risk diversification enabled us to achieve 19% return on equity during the quarter. The Bank is performing well and results were particularly strong in corporate banking and investment banking. I believe that 2007 will prove to be another excellent year for Kaupthing Bank.”

Shareholders net earnings for the first nine months of ISK 60.2 billion, increasing by 31.3% compared with the same period in 2006. Earnings decreased, however, by 10.5% between periods taking into account the one-off after-tax profit of ISK 21.4 billion related to Exista in the third quarter of 2006

Shareholders net earnings in the third quarter of ISK 14.4 billion, increasing by 3.0% from the third quarter of 2006. Earnings decreased, however, by 59.3% between periods taking into account the one-off after-tax profit of ISK 21.4 billion related to Exista in the third quarter of 2006

Return on equity for the first nine months of 27.5% on an annualised basis. Earnings per share of ISK 82.6

Net interest income in the third quarter up by 59.7% YoY to ISK 20.3 billion

Net fee and commission income in the third quarter grew by 75.2% YoY to ISK 13.4 billion

Financial loss in Treasury of ISK 6.9 billion in the third quarter, primarily due to the decrease in the fair value of derivative contracts, bonds and asset-backed securities- Total assets of ISK 4,889.9 billion (EUR 55.6 billion) at the end of September 2007, increasing by 27.7% at a fixed exchange rate from the beginning of the year and by 20.6% in ISK

– On 15 August 2007 the Bank signed an agreement to acquire the Dutch bank NIBC for EUR 3 billion, expected to complete by the end of the year

The board of directors will seek approval at a shareholders meeting to issue new shares in the Bank and to sell them in a pre-emptive rights issue during the fourth quarter 2007

The board of directors plans to change the Banks functional currency into the euro as of January 2008, in accordance with IFRS

The board of directors will propose at the shareholders meeting that the Banks shares be redenominated in euros
Further information

Information on Kaupthing Bank is available on the Banks website www.kaupthing.com.