Smart and flexible service that simplifies life
We offer smart and flexible service that simplifies life and are there for customers when it matters.
Growing satisfaction with the Bank's services
Satisfaction with our service has been growing in recent years. We know this from customer compliments, it is reflected in our increased market share and in the fact that Landsbankinn again tops the Icelandic Performance Satisfaction Index for the banking sector. This is the fourth year in a row that the Bank receives this sought-after recognition.
The number of active customers grew by 6,000 in 2022 and, at the end of the year, our share in the retail market measured 40.1% according to our own data - a record high.
The Bank’s success is based on clear goals and strategy. It is important to us that customers are happy with our service and that the solutions we offer are convenient and conducive to simplifying life.
Reduced demand for housing mortgages
We continue to offer favourable terms on housing mortgages and, while interest rate hikes and other measures introduced by the Central Bank of Iceland (CBI) have put a damper on demand, especially in the latter part of the year, it remained considerable. All in all, we financed new housing mortgages to the tune of ISK 178 billion for around 6,600 individuals and families, 40% of them were first-time buyers.
The CBI raised its policy rate by 4 percentage points (pp) in 2022 and Landsbankinn’s variable rates on housing mortgages were raised by 3.3 pp in the same period. Fixed rates on the Bank’s 3-year housing mortgages increase by 2.85 pp.
At the beginning of the year, customers were equally likely to choose fixed or variable rates but, as the year progressed, the popularity of variable rates increased. This development is understandable as the gap between variable and fixed rates has grown considerably narrower.
Mortgages with payments past due remain historically low, with around 0.1% of loans 90 days or more in arrears. Despite interest rate hikes and higher debt service brought on by variable rates, default rates have not gone up.
Increased demand for inflation-indexed loans
Around the middle of the year, new rules on the calculation of debt service ratios were introduced by the CBI. The new rules, along with higher non-indexed rates, increased demand for inflation-indexed housing mortgages as the year progressed. At year-end 2022, the ratio of new inflation-indexed loans had risen to 21% from 7% at the beginning of the year.
Should the trend continue, the popularity of inflation-indexed loans will remain high as they carry lower debt service than non-indexed loans. The Bank lowered the maximum term of inflation-indexed loans to 25 years in 2022. This was done having regard for the fact that calculation of the CBI's debt service ratio is based on 25-year term of loan and the fact that a shorter loan term reduces the risk to the borrower, simply because of the shorter period in which to accumulate indexation.
Branches collaborate to improve service
We emphasise providing good access to advice and our customers can make an appointment to come see us or consult with us over the phone or via remote meeting. Our advisory service is provided by knowledgeable and experienced employees based all around the country. As the workload varies between branches, we implemented a system whereby employees all around the country collaborate to improve service, shorten wait times and boost customer access to expert knowledge. This also makes work in the branches more varied and employees have been enthusiastic about this new possibility.
Around 60% of appointments booked by our customers are handled by employees located in rural Iceland. As an example, a strong team in various geographic locations tends to housing loan advice to customers regardless of their physical location. The odds of a customer requestion mortgage advice talking to an advisor outside of the capital city area are higher than not.
We are the country’s largest commercial bank with the highest number of customers. This year, more than 350,000 customers turned to branch employees to seek advice and/or tend to general banking business. At the same time, our Customer Service Centre received just under 300,000 phone calls.
Popular mortgage advice
We are very pleased with how many of our customers seek our advice on whether or not to refinance existing mortgages. Many customers want to know if they can get more favourable terms, change the structure of loans or the loan term with the aim of saving on interest expense. Just over 50% of customers refinanced their loans in 2022 or around half of customers who took out new mortgages.
Customers who buy and sell real estate often explore the option of retaining and transferring the loans between properties, especially in the case of fixed-rate loans. In recent years, there has been a sharp decrease in mortgage transfer requests which picked up again in 2022 in response to the changes interest environment.
Electric cars are speeding up
Landsbankinn’s customers purchased more electric cars in 2022 than in the previous years. In 2020, around 6% of car loans financed the purchase of electric cars; 14% in 2021 and 26% in 2022.
Aukakrónur on your phone an instant hit
Aukakrónur are the country’s strongest benefit system. Customers easily accrue Aukakrónur when they use their credit cards with our partners. In 2022, Landsbankinn’s customers collected 524 million Aukakrónur and purchased goods and services with the system’s partners for 526 million Aukakrónur.
As of November 2022, customers could use their phones to pay with Aukakrónur and this boosted use greatly, or by over 50%.
We discuss Aukakrónur in the phone and other digital services in more detail in the chapter on smarter banking service.
Customers collect Aukakrónur on all domestic turnover and also receive a discount in the form of Aukakrónur from our partners. 20 new partners joined the programme during the year. At the end of the year, they numbered 200 around the country. Collaboration with Já.is makes it easy for customers to see where they can use their Aukakrónur to purchase the goods or service they need.
All surveys show that Aukakrónur are very popular, both among our customers and partners. Customers who use Aukakrónur are both more satisfied and loyal.
More use of our gift cards
A Landsbankinn gift card is an excellent present that ensures that everyone gets something they like. Customers can buy gift cards from two gift card ATMs in the capital or have gift cards delivered to the branch or outlet of their choice. Corporate customers can get assistance with bulk orders.
The popularity of the gift cards is increasing with sales up by 8.5% between years in 2022. The amounts on the gift cards are also up between years, with gift cards sold for over ISK 2 billion, a 20% increase from the previous year.
From mid-November to Christmas Eve Day, sale to corporates increased by 13.5% and 5.5% to individuals between years.
Sale of gift cards is seasonal, peaking in November and December, yet in 2022, the sale was spread more evenly between months than last year. In 2022, around 28% of the year’s sale took place in November and 52% in December. In 2021, 70% of the sale was in December.
Save in App
Save in App is a great way to grow savings. By saving in the app, customers get our best rates for non-indexed deposit accounts, regardless of amount. In addition to getting competitive terms, customers can set their own savings goal and select the savings method that best suits their needs. It’s also quite popular to invite friends and family to help reach the savings goals by contributing deposits. Everyone who is invited can watch the savings grow in the app.
With Save in App, the deposit account Markmið is created. It is a non-indexed and unrestricted account with monthly interest payments.
Save in App offers four savings methods. Customers can transfer to the account at any time, they can set automatic transfers of a predetermined amount each month or save part of their wages, which can come in handy for young customers who work part of the year. A certain amount of each debit card transaction can also be deposited to savings. These methods are all designed to make it easier for customers to grow their savings in a fun way while achieving more favourable terms.
Growing payment card turnover
Private consumption grew in 2022, as can be seen in the 26% increase in payment card turnover with our customers.
Payment card turnover grew even more internationally, or by 69% between years, and Icelanders are clearly hungry for travel. At the same time, more tourists visited Iceland, a trend we expect to continue.
Better payment card service and easier product development
Landsbankinn has selected Valitor (now Rapyd) as issuer and processor of all its payment cards, both debit and credit. In 2022, processing of debit cards was transferred from RB’s systems to those of Rapyd. Processing and issuance of debit and credit cards remains similar, with card service residing in the same systems, while product development grows easier. This also leads to efficiencies that will support service improvement for the benefit of customers.