Arion Banki hf · OMXICE:ARION
Arion Banki hf — Arion Bank — 9M 2014 Earnings Presentation
26 slides from Arion Banki hf's earnings presentation, 2014
Slide 1: Financial Statements 30.09.2014 Investor Presentation
FINANCIAL STATEMENTS 30.09.2014 INVESTOR PRESENTATION
Slide 2: Highlights in Q3 2014
HIGHLIGHTS IN Q3 2014 STABLE OPERATION WITH POSITIVE RESULTS Good quarter All income items on or above budget Continued increase in Commission income Operating expenses relatively modest during the period as customary in Q3 Increased loans and loan commitments More focus on liquidity man
Slide 3: Highlights of the Third Quarter of 2014
HIGHLIGHTS OF THE THIRD QUARTER OF 2014 FINANCIALLY ROBUST BANK WITH STABLE CORE BUSINESS Solid financial results Arion Bank and Norwegian shipping company – Return on equity 19.9% Havila Shipping ASA signed agreement on loan – Capital ratio 24.6% from Bank worth NOK 300 million Regular operat
Slide 4: Highlights of the Third Quarter of 2014 contd.
HIGHLIGHTS OF THE THIRD QUARTER OF 2014 CONTD. Startup Reykjavík event was held for third time Arion‘s vehicle financing unit celebrated its – The ten companies presented themselves and second birthday in September and moved into their ideas to investors Borgartún 18 Customers given the option
Slide 5: Highlights of 9M 2014
HIGHLIGHTS OF 9M 2014 2 Arion Bank
Slide 6: Financial Highlights
FINANCIAL HIGHLIGHTS Net earnings Return on equity Profitability ISK 22.6 bn. Profitability 19.9% 9M 2013: 10.0% 9M 2013: ISK 10.1 bn. Cost-to-income ratio Total equity Efficiency 48.7% Balance ISK 160 bn. 9M 2013: 57.6% 31.12.2013: ISK 145 bn. Total assets Loans-to-deposits ratio Balance ISK 942 bn
Slide 7: Income Statement
INCOME STATEMENT 7
Slide 8: Income Statement: Excellent Results for 9M 2014
INCOME STATEMENT EXCELLENT RESULTS FOR 9M 2014 Substantial increase in 9M 2014 9M 2013 Diff Diff% Net commission income mostly due to Net interest income 18,309 18,313 (4) (0%) excellent performance Net commission income 10,119 8,284 1,835 22% in Cards and Net financial income 5,861 954 4,907 514% I
Slide 9: Income Statement: Continued Solid Performance
INCOME STATEMENT CONTINUED SOLID PERFORMANCE Higher inflation in Q2 Q3 2014 Q2 2014 Q1 2014 9M 2014 and Q3 resulting in higher net interest Net interest income 6,343 6,483 5,483 18,309 income Net commission income 3,526 3,445 3,148 10,119 Continued growth in Net financial income 1,994 4,439 (572) 5,
Slide 10: Breakdown of Net Earnings in 9M 2014
INCOME STATEMENT BREAKDOWN OF NET EARNINGS IN 9M 2014 3,963 (10,026) 5,861 10,119 (8,598) 2,877 (6,464) 6,592 22,633 18,309 Net interest Net Net Other Salaries Other Net change Taxes Net gain Net income commission financial income and related operating in valuation from disc. earnings income income
Slide 11: Core Income
CORE INCOME INCREASED CHALLENGE TO DEFINE CORE VS. NON CORE EARNINGS AS THE BANK DEVELOPS Increased equity has a Net earnings from core operations (ISK million.) (1,152) major effect on returns (6,592) Irregular items have great effect on outcome from core (4,322) operation 22,633 1,065 652 (4,095)
Slide 12: Net Interest Income
NET INTEREST INCOME NET INTEREST INCOME AT NORMAL LEVELS AFTER A SLIGHT DEPRESSION IN PRIOR QUARTERS Increase in Net interest By quarters from Q3 2012 – Q3 2014 (ISK bn.) income in Q2 and Q3 7.0 mainly explained by 6.3 6.3 6.4 6.5 6.3 5.6 5.5 5.5 higher inflation and better performance in liquidity
Slide 13: Net Commission Income
NET COMMISSION INCOME CONTINUED GROWTH IN Q3 Growth expectations Net commission income from Q3 2012 – Q3 2014 (ISK bn.) are materializing, Net 4.0 3.4 3.5 commission income 3.1 2.8 3.0 2.9 has increased by 22% 2.7 2.7 3.0 2.4 from 9M 2013 Net commission 2.0 income from cards increased by 27% from 1.
Slide 14: Net Financial Income
NET FINANCIAL INCOME REDUCED VOLATILITY DUE TO DECREASED FX IMBALANCE Positive outcome from By quarters from Q3 2012 – Q3 2014 (ISK bn.) 4.4 4.5 Net financial income Net foreign exchange gain (loss) shares mainly related to listed shares in HB 3.5 Grandi and Hagar 2.0 2.5 The bond market has 1.5 0.9
Slide 15: Other Income
OTHER INCOME DECREASE IN OTHER INCOME DUE TO THE SALE OF LANDFESTAR AS PREVIOUSLY INDICATED Decrease in rental By quarters from Q3 2012 – Q3 2014 (ISK bn.) 6.0 income from 5.0 investment property 5.0 due to the sale of 3.6 Landfestar, rental 4.0 income now 3.0 2.4 immaterial 2.0 1.6 1.6 1.2 1.2 No m
Slide 16: Total Operating Expenses
TOTAL OPERATING EXPENSES CONTINUED FOCUS ON OPERATING EFFICIENCY Increase in salaries By quarters from Q3 2012 – Q3 2014 (ISK bn.) from 9M 2013, mainly 10.0 due to the Banks’s 7.8 8.0 7.2 performance plan 6.6 6.8 6.3 6.2 5.3 5.6 Slight decrease in other 6.0 5.2 operating expenses compared to 9M 2013
Slide 17: Balance Sheet
BALANCE SHEET 2 Arion Bank
Slide 18: Balance Sheet
BALANCE SHEET THE BANK IS WELL PREPARED FOR THE LIFTING OF CAPITAL CONTROLS Increase in Loans to Assets customers related to Billion ISK 30.09.2014 30.06.2014 Diff% 31.12.2013 Diff% loans to individuals and Cash & balances with CB 33 17 92% 38 (12%) corporates in seafood, real-estate and Loans to cr
Slide 19: Loans to Customers Are Well Diversified
LOANS TO CUSTOMERS ARE WELL DIVERSIFIED INCREASE IN LOANS TO BOTH CORPORATES AND INDIVIDUALS Increased lending to Development (ISK bn.) Mortgage loans (ISK bn.) new export revenue 636 642 637 653 generating industries 567 576 It is the strategic 325 330 323 332 313 320 objective of the Bank to maint
Slide 20: Improving Asset Quality
IMPROVING ASSET QUALITY GOOD PROGRESS IN PROBLEM LOANS DURING Q3 2014 The Bank has already Development of problem loans (%) reached its year end goal to be below 5% Loans in >90 days past due Other problem loans Problem loans as a percentage of equity are now starting to 12.5 resemble those of 6.5 6
Slide 21: Strong Funding Profile
STRONG FUNDING PROFILE WELL BALANCED FUNDING PROFILE Strong long-term Breakdown of liabilities and equity (%) Maturity of long-term funding 30.09.2014 (ISK bn.) funding and limited need for refinancing 85 ISK FX Long term financing 6 17 Equity mostly due 2020 or 56 Subordinated loans later 3 Covered
Slide 22: Very Solid Capital Base
VERY SOLID CAPITAL BASE INCREASE IN NEW LENDING AFFECTS THE CAPITAL RATIO Arion Bank has maintained very solid levels of capitalization Total capital base (ISK bn.) Total capital ratio (%) due to strong profit generation. As Q3 is not audited the Bank cannot add 179 185 168 171 Q3 net earnings to it
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 14.6 45.6 48.4 45.0 8.2 3.1 2.7 12.2 13.3 2.9 10.7 4.6 Q3-12 Q3-13 Q3-14 Q3-12 Q3-13 Q3-14 Q3-12 Q3-13 Q3-14 Q3-12 Q3-13 Q3-14 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 57.3 52.5 49.8 48.7 19.9 3.2 3.4 2.9 2.9 13.8 10.5 9.2 2011 2012 2013 9M 2014 2011 2012 2013 9M 2014 2011 2012 2013 9M 2014 CPI Imbalance – ISK bn. FX Imbalance – I
Slide 26: www.arionbanki.is
WWW.ARIONBANKI.IS 26