There were concerns that the rapid international expansion of Icelandic banks, financed principally by overseas borrowing, could affect the earnings of Glitnir, Landsbanki and Kaupthings banks as the cost of borrowing has risen during the credit crisis.
The Financial times published an article about the situation of the Icelandic banks in a positive manner (for once).
The second quarter results showed that the banks have responded by deleveraging, diversifying their operations geographically, reducing their reliance on wholesale funding in favour of deposits and expanding fee and commission based income. Even though loan losses are increasing, the banks’ capital adequacy ratios remain solid by international regulatory standards.
In the meantime the ISK has appreciated this past few days of a bit more than 5%. This morning a euro was sold at 121,-. I cross my finger that this will remain stable (or appreciate again) until my vacation abroad :)
