Islandsbanki hf · OMXICE:ISB
Islandsbanki hf — Íslandsbanki — Q1 2013 Earnings Presentation
29 slides from Islandsbanki hf's earnings presentation, May 30, 2013
Slide 1: 1Q2013 Financial Results
30 May 2013 1Q2013 Financial Results 1
Slide 2: Table of Contents
Table of Contents I. Income Statement II. Assets & Restructuring III. Liabilities, Liquidity & Capitalisation 2
Slide 3: A leading bank in Iceland
A leading bank in Iceland Serving over 200,000 customers, Íslandsbanki has market share of 31% in retail and 37% in corporate 1. BUSINESS DEVELOPMENT 2. RESTRUCTURING ON TRACK Acquisition of Framtídaraudur, Ratio of loans in restructuring (LPA) has halved since increasing customer base and creat
Slide 4: Overview
Overview Key figures & ratios ISK m 1Q13 4Q12 1Q12 ROE (after tax), % 12.2% 19.7% 17.7% ROE from regular operations (after tax), % 6.2% 13.4% 15.2% Net interest margin (of total assets), % 3.6% 4.2% 4.4% Profitability Cost to income ratio, ratio % %* 51 8% 51.8% 43 0% 43.0% 57 0% 57.0% After tax pro
Slide 5: I. Income Statement
I. Income Statement ~SY Istandsbanki
Slide 6: Income statement
Income statement Quarterly and full year comparison ISK m 1Q13 4Q12 1Q12 2012 2011 Net interest income 7,473 8,560 9,010 32,940 31,225 Net valuation changes on loans and receivables 3,117 3,704 (1,544) 6,486 (1,296) Provision for latent impairment (124) (197) (121) (776) 76 Net interest income after
Slide 7: Development of P&L 1Q2012 – 1Q2013
Development of P&L 1Q2012 – 1Q2013 Net fee and commission income up 17% YoY Change g in net profit p byy line items NII decreasing in line ISK m with expectations as the discount following the 4,658 33 2,754 acquisition of Glitnir loan book is amortized, net interest margin was 3.6% 117 183 389 3
Slide 8: Earnings from regular operations
Earnings from regular operations Regular operations continue to generate decent profitability ISK m 1Q13 4Q12 1Q12 2012 2011 Reported after tax profit 4,585 7,197 5,606 23,418 1,866 Net valuation changes on loans and receivables (3,117) (3,704) 1,544 (6,486) 1,296 Fair value change 0 0 0 0 (3,050) R
Slide 9: 78% of operating income from NII & NFC
78% of operating income from NII & NFC Focus on long‐term stable cash flows, core operations continue to generate majority of total income TOTAL OPERATING INCOME NET INTEREST INCOME ISKm 16,709 ISKm ‐ 17.1% + 6.8% 9,010 , 7 785 7,785 8,560 7 585 7,585 7 473 7,473 13,405 12,648 11,846 11,397 1Q12 2Q1
Slide 10: Income mix is changing
Income mix is changing NII decreasing in line with amortization of discount following the acquisition of Glitnir loan book NET OPERATING INCOME SPLIT NII decreasing in line with expectations as deep By income type, % discount following the acquisition of Glitnir loan book 6% 12% 22% is being amort
Slide 11: Results from cost projects coming through
Results from cost projects coming through Reduction in administrative expenses due to synergy effects and lower restructuring cost ADMINISTRATIVE EXPENSES COST / INCOME RATIO* By type of expense expense, ISK m % ‐ 3% 57.0% 50.7% 50.6% 43.0% 51.8% 7,185 6,754 6,796 6 549 6,549 1Q12 2Q12 3Q12 4Q12 1Q1
Slide 12: Tax & levies paid to Government institutions
Tax & levies paid to Government institutions Taxation has increased considerably in recent years ISK m 1Q13 4Q12 1Q12 FY12 FY11 Income tax* 1,448 1,790 1,452 6,253 75 ** Bank tax 67 227 207 858 682 *** Financial activities tax 186 161 139 623 0 FME and The Debtors´ Ombudsman 115 121 116 462 303 Cont
Slide 13: II. Assets & Restructuring
II. Assets & Restructuring 13
Slide 14: Assets
Assets Consolidated – 31 March 2013 Bonds and debt instruments ISK m 31.03.13 31.12.12 31.12.11 Mainly G5 government bonds in the Bank’s liquidity portfolio No exposure to GIPSIs Cash and balances with CB 65,822 85,500 57,992 Derivatives 119 127 339 Shares and equity instruments Bonds and debt i
Slide 15: Good sector diversification of loan portfolio
Good sector diversification of loan portfolio Portion of FX loans to customers with ISK revenue decreasing substantially LOANS TO CUSTOMERS ‐ CONSOLIDATED LTV DISTRIBUTION OF MORTGAGES TO INDIVIDUALS By sector, as of 31.03.2013 ISK bn, as of 31.03.2013 – average 79%* Other sectors Oth t 35 8% Mortga
Slide 16: Improving credit quality
Improving credit quality Both cross default and facility based credit quality measures are improving Loan Portfolio Analysis (LPA) measurement DEVELOPMENT OF LPA AND PAST DUE LOANS Percentage of the total loan portfolio (book value) The LPA ratio has decreased sharply in recent months 25% Measur
Slide 17: Loan portfolio performance
Loan portfolio performance Carrying amount reflects expected recovery of loans LOAN PORTFOLIO ANALYSIS (LPA*) LOANS IN RESTRUCTURING** TRANSFERRED TO WORKOUT Excluding fully performing loans to credit By status of restructuring By level of completion institutions 11.9% (31.12.2012: 13.7%) 3.0% (31.1
Slide 18: III. Liabilities, Liquidity & Capitalisation
III. Liabilities, Liquidity & Capitalisation 18
Slide 19: Liabilities
Liabilities Consolidated 31 March 2013 Deposits p ISK m 31.03.13 31.12.12 31.12.11 With a deposit ratio of 82%, Íslandsbanki has not been competing for less sticky deposits from CB and credit Derivatives and short positions 12,141 18,435 13,373 institutions Deposits from CB and credit inst. inst 2
Slide 20: Deposits remain a stable source of funding
Deposits remain a stable source of funding Normal fluctuations in deposit base DEPOSIT DEVELOPMENT DEPOSIT FUNDING T l exposure, parent company, ISK bn Total b Term and on demand deposits split, parent company 550 100% 86% 87% 86% 500 84% 84% 82% 90% 450 80% 400 70% 350 60% 300 ISK bn 534 535 50% 25
Slide 21: Structurally sound balance sheet
Structurally sound balance sheet Solid funding base where deposits are the largest source of funding BALANCE SHEET COMPOSITION 31.03.2013, % Prudent asset and liability management 100% Other Other Short‐ The Bank has short term 90% Short‐ Cash & balances Deposits from CIs & CBs term assets that
Slide 22: Diversification of funding continues
Diversification of funding continues Íslandsbanki the first bank to list commercial paper and covered bonds on NASDAQ OMX Iceland since 2008 COVERED BONDS PERFORMING WELL IN AFTERMARKET ISK 25bn bond programme in place Spread on top of HFF bonds (Government guaranteed) Íslandsbanki plans to issue
Slide 23: Sound management of liquidity
Sound management of liquidity Liquid assets of ISK 165bn exceed regulatory requirements and internal targets LIQUIDITY BACK‐UP* / DEPOSIT COVERAGE RATIO FME LIQUIDITY RATIOS 31 03 2013 parent company, ISK bn 31.03.2013, b 40% 36% 35% 33% 32% 32% 32% 31% Asset type ISK FX Total 30% 25% 20% Cash and b
Slide 24: Imbalances strictly monitored
Imbalances strictly monitored The currency imbalance decreased in Q1 2013 IMBALANCES ISK bn, 31.03.2013 The adjustment of previous reports for FX/ISK loans, i.e. loans with a non‐ISK contractual currency to customers with ISK income, is no longer separately reported Decrease of the currency imba
Slide 25: Sound capital position
Sound capital position Capital ratios steadily increasing CAPITAL RATIOS and RWA RWA* Development Capital C it l ratios ti rising i i on the th back b k off reteained t i d earnings i 26.2% Drop in RWA between Q4 2012 and Q1 2013 is mainly 25.5% 23.3% 23.5% 24.3% due to a shrinking currency gap
Slide 26: 5 key messages
5 key messages 1Q2013 interim financial results 1. NII and NFC drive 78% of total operating income 2. NFC up 17% while NII decreasing in line with expectations as discount, following the acquisition of Glitnir loan book, is being amortized 3. Restructuring on track, asset quality improving with LPA
Slide 27: 2012 Annual Report and Risk Report
2012 Annual Report and Risk Report The Annual Report and all financial information is available and archived on www.islandsbanki.is/ir. The Annual Report centres on three key themes themes: • Company – review of the Bank's operations, strategic direction, and governance • Financials – review of the
Slide 28: Disclaimer
Disclaimer Important information All information contained in this presentation should be regarded as The forward‐lookingg statements made represent p Íslandsbanki’s preliminary and based on company data available at the time of the current expectations, plans or forecasts of its future results and
Slide 29: Thank you
Thank you 29