UPDATE 1-Kaupthing Q1 net surges from Q4, can weather storm
April 30th, 2008 | by admin |By Adam Cox
STOCKHOLM, April 30 (Reuters) - Iceland’s Kaupthing(KAUP.IC: Quote, Profile, Research) posted on Wednesday first-quarter net profit nearlytwice that of the prior three months as the bank slashed costsand said it was ready to weather even a lengthy market crisis.
Iceland’s largest bank earned a net profit of 18.7 billionIcelandic crowns ($251 million), almost double the 9.8 billioncrowns earned in the fourth quarter and nearly matching the 20.3billion crowns of a year earlier.
At 21.6 billion crowns in the quarter, operating expensesfell 17 percent from the fourth quarter when measured in euros,but were up 21.8 percent from a year earlier.
“Operating expenses dropped significantly between quartersand this trend will continue,” Kaupthing Chief Executive HreidarSigurdsson said in the results statement.
Sigurdsson said Kaupthing was ready to cope with anyprotracted market crisis and that management had made it a toppriority to keep the bank liquid.
As the global credit crunch has jacked up the price of riskand sent investors scurrying for safe bets, Iceland’s banks havebeen all but frozen out of funding markets over fears they tookon too much debt in their rapid overseas expansion. This hasincreased costs and crimped growth opportunities.
Kaupthing’s impairments in the quarter surged to 4.1 billioncrowns from 2.0 billion in the fourth, and from 1.4 billion inthe first quarter of 2007.
“The general quality of the bank’s assets is good, despitethe increase in impairments between quarters,” Sigurdsson said.
