Arion Banki hf · OMXICE:ARION
Arion Banki hf — Arion Bank — H1 2014 Earnings Presentation
26 slides from Arion Banki hf's earnings presentation, Aug 9, 2014
Slide 1: Financial Statements 30.06.2014 Investor Presentation
FINANCIAL STATEMENTS 30.06.2014 INVESTOR PRESENTATION 1
Slide 2: Highlights of H1 2014
HIGHLIGHTS OF H1 2014 Excellent results in H1 Strong position in domestic lending New international lending Strong position in Asset Management, Capital Markets and Corporate Finance Problem loan situation steadily improving Very good progress in commission income Ongoing focus on oper
Slide 3: Highlights of First Half of 2014: Financially Robust Bank
HIGHLIGHTS OF FIRST HALF OF 2014 FINANCIALLY ROBUST BANK WITH SOLID FUNDAMENTALS Sound operations and solid results New Arion Bank branch at Borgartún 18, – Return on equity 23.4% Reykjavík – Irregular items still have impact – Focus on high quality personal advisory services and wide range of o
Slide 4: Sale and Listing of HB Grandi on NASDAQ OMX
HIGHLIGHTS OF FIRST HALF OF 2014 SALE AND LISTING OF HB GRANDI ON NASDAQ OMX IPO of HB Grandi hf. Advising and arranging funding for United – Arion Bank’s Investment Banking division Silicon and Silicor Materials arranged the offering and listing on the Icelandic stock exchange Assigned credit
Slide 5: Strong Emphasis on Equal Opportunities at the Bank
HIGHLIGHTS OF FIRST HALF OF 2014 STRONG EMPHASIS ON EQUAL OPPORTUNITIES AT THE BANK Equal opportunities action plan came out The Bank was one of main sponsors of Men and Cancer campaign and Moustache March The Bank signed the UN Women and UN organized by the Icelandic Cancer Society Global Com
Slide 6: Highlights of H1 2014
HIGHLIGHTS OF H1 2014 6
Slide 7: Financial Highlights
FINANCIAL HIGHLIGHTS Net earnings Return on equity Profitability ISK 17.4 bn. Profitability 23.4% H1 2013: 8.9% H1 2013: ISK 5.9 bn. Cost-to-income ratio Total equity Efficiency 50.5% Balance ISK 155 bn. H1 2013: 62.4% 31.12.2013: ISK 145 bn. Total assets Loans-to-deposits ratio Balance ISK 949 bn.
Slide 8: Income Statement
INCOME STATEMENT 8
Slide 9: Income Statement: Excellent Results in H1 2014
INCOME STATEMENT EXCELLENT RESULTS IN H1 2014 Slight decrease in net Million ISK H1 2014 H1 2013 Diff % interest income Net interest income 11,966 12,667 (701) (6%) relating to generally Net commission income 6,593 5,298 1,295 24% low inflation and Net financial income 3,867 296 3,571 1,206% deflati
Slide 10: Income Statement: Outstanding Results in Q2
INCOME STATEMENT OUTSTANDING RESULTS IN Q2 Increase in net interest Million ISK Q2 2014 Q1 2014 H1 2014 income mainly related Net interest income 6,483 5,483 11,966 to higher inflation in Net commission income 3,445 3,148 6,593 Q2. Net financial income 4,439 (572) 3,867 Strong net financial Other in
Slide 11: Breakdown of Net Earnings in H1 2014
INCOME STATEMENT BREAKDOWN OF NET EARNINGS IN H1 2014 3,274 (7,164) 3,867 6,593 (5,811) 2,001 (3,842) 6,525 17,409 11,966 Net Net Net Other Salaries Other Valuation Taxes Net profit f. Net interest commission financial income and oper. change discont. earnings income income income rel. cost exp. ope
Slide 12: Net Interest Income
NET INTEREST INCOME INCREASE IN NET INTEREST INCOME IN Q2 AFTER SLIGHT DEPRESSION IN PRIOR QUARTERS Increase in net interest By quarters from Q2 2012 – Q2 2014 income in Q2 mainly explained by higher 7.7 inflation. 7.0 6.5 6.3 6.3 6.4 5.6 5.5 5.5 Challenge to maintain net interest margin in a 3.8% 3
Slide 13: Net Commission Income
NET COMMISSION INCOME GROWTH EXPECTATIONS ARE MATERIALIZING Good progress in net Net commission income from Q2 2012 – Q2 2014 (ISK bn.) commission income, 4.0 3.4 increased by 21% from 3.1 3.0 2.8 3.0 2.9 H1 2013. 2.7 2.7 3.0 2.4 Gradual increase in commission from Asset 2.0 Management and cards. 1.
Slide 14: Net Financial Income
NET FINANCIAL INCOME THE BANK HAS SUCCESSFULLY REDUCED ITS FX IMBALANCE High income relating to By quarters from Q2 2012 – Q2 2014 (ISK bn.) share price develop- 4.5 Total net financial income FX gain (loss) ment of HB Grandi. 4.4 3.5 Other shares and 2.5 0.9 1.1 1.5 0.7 0.7 bonds generally under 0.
Slide 15: Other Income
OTHER INCOME VOLATILITY IN OTHER INCOME EXPECTED TO DECREASE WITH THE SALE OF LANDFESTAR Stable rental income of By quarters from Q2 2012 – Q2 2014 6.0 ISK 1.1 bn. from 5.0 investment properties. 5.0 Due to the sale of 4.0 3.6 Landfestar ehf. rental income in H2 will be 3.0 2.4 immaterial. 2.1 2.0 1
Slide 16: Total Operating Expenses
TOTAL OPERATING EXPENSES OPERATING EFFICIENCY IS A FOCUS FOR THE BANK GOING FORWARD Number of employees By quarters from Q2 2012 – Q2 2014 (ISK bn.) 10.0 gradually decreasing. 7.8 Salaries and related 8.0 7.2 6.6 6.8 6.3 6.2 expenses increase 5.8 6.0 5.2 5.3 from last year, mainly due to the Bank’s
Slide 17: Balance Sheet
BALANCE SHEET 17
Slide 18: Strong Balance Sheet - Well Positioned for Future Growth
BALANCE SHEET STRONG BALANCE SHEET - WELL POSITIONED FOR FUTURE GROWTH The Bank has Assets succeeded in Billion ISK 30.6.2014 31.3.2014 Diff% 31.12.2013 Diff% maintaining loans to Cash & balances with CB 17 19 (7%) 38 (54%) customers in a Loans to credit institutions 140 95 47% 102 37% competitive d
Slide 19: Loans to Customers Are Well Diversified
LOANS TO CUSTOMERS ARE WELL DIVERSIFIED WITH LOANS TO INDIVIDUALS REPRESENTING 49% OF TOTAL LOANS TO CUSTOMERS Corporate portfolio Development (ISK bn.) Mortgage loans (ISK bn.) quite stable. Large 636 642 637 repayments but 565 567 577 increased demand for 325 330 323 new loans. 318 313 320 266 268
Slide 20: Improving Asset Quality
IMPROVING ASSET QUALITY PROBLEM LOANS APPROACHING LEVELS AT OTHER NORDIC BANKS Good progress in loans Development of problem loans* (%) over 90 days in default. The focus on problem Loans in >90 days past due Other problem loans loans is ongoing and the objective is to be 15.8 well below 5% at year
Slide 21: Strong Funding Profile
STRONG FUNDING PROFILE NO SIGNIFICANT REDEMPTION OF LONG-TERM FUNDING REQUIRED IN THE MEDIUM TERM Limited need for Breakdown of liabilities and equity (%) Maturity of long-term funding 30.06.2014 (ISK bn.) refinancing. Well balanced funding profile. 6 Equity 16 Subordinated loans 102 No significant
Slide 22: Very Solid Capital Base
VERY SOLID CAPITAL BASE INCREASED CAPITAL RATIO DESPITE DIVIDEND PAYMENT OF ISK 7.8 BILLION Arion Bank has maintained very solid levels of capitalization Total capital base (ISK bn.) Total capital ratio (%) due to strong profit generation. The Bank’s capital base is composed of core 179 168 171 165
Slide 23: Key Financial Indicators
KEY FINANCIAL INDICATORS 23
Slide 24: Key Financial Indicators
KEY FINANCIAL INDICATORS Return on equity (%) Cost-to-income ratio (%) Net interest margin (%) Problem loans* (%) without net valuation change 38.5 50.9 54.4 22.7 40.5 15.5 3.8 3.1 3.1 13.4 8.5 5.4 Q2-12 Q2-13 Q2-14 Q2-12 Q2-13 Q2-14 Q2-12 Q2-13 Q2-14 Q2-12 Q2-13 Q2-14 Loans-to-deposits ratio (%) Ti
Slide 25: Key Financial Indicators
KEY FINANCIAL INDICATORS Return on equity YTD (%) Cost-to-income ratio YTD (%) Net interest margin YTD (%) without net valuation change 62.4 53.0 52.0 50.5 23.4 20.3 18.8 3.4 2.8 3.1 2.8 8.9 H1-11 H1-12 H1-13 H1-14 H1-11 H1-12 H1-13 H1-14 H1-11 H1-12 H1-13 H1-14 CPI Imbalance – ISK bn. FX Imbalance
Slide 26: www.arionbanki.is
WWW.ARIONBANKI.IS “« Arion Bank