Islandsbanki hf · OMXICE:ISB
Islandsbanki hf — Íslandsbanki — H1 2012 Earnings Presentation
26 slides from Islandsbanki hf's earnings presentation, Aug 30, 2012
Slide 1: 1H12 Financial Results
30 Au gu st 2012 1H 12 Financial Resu lts 1
Slide 2: Forward Looking Statements
Forward Looking Statements Important information All information contained in this presentation should be regarded as The forward-looking statements made represent Íslandsbanki’s preliminary and based on company data available at the time of the current expectations, plans or forecasts of its future
Slide 3: Table of Contents
Table of Contents I. Income Statement 1H12 II. Assets & Restructuring III. Liabilities, Liquidity & Capitalisation 3
Slide 4: Highlights during 1H12
Highlights during 1H12 Many significant milestones reached in the first half of 2012 1 STABLE RECURRING REVENUES Over 80% of the Bank’s net operating income is from 2 CREDIT QUALITY CONTINUES TO IMPROVE Several large restructuring projects finalised in the first core operations (net interest inc
Slide 5: Overview
Overview Key figures & ratios 1H12 1H11 FY11 ROE (after tax), % 17.9% 12.9% 1.5% Adjusted ROE (after tax), % 11.1% 12.4% 11.0% Net interest margin (of total assets), % 4.0% 4.8% 4.5% Profitability Cost to income ratio, % 52.0% 50.5% 51.5%* Net profit, ISK m 11,624 8,062 1,866 Earnings from regular o
Slide 6: I. Income Statement 1H12
I. Income Statement 1H12 ~wy islandsbanki
Slide 7: Income statement
Income statement Comparison of half year statements and full year comparison ISK m 1H12 1H11 FY11 FY10 Net interest income 15,684 16,303 31,225 34,874 Net valuation changes 2,069 -255 -1,296 14,507 Provision for latent impairment -270 -155 76 -514 Net interest income after valuation changes 17,483 1
Slide 8: Core operations continue to improve
Core operations continue to improve Development of P&L line items 1H11 – 1H12 Change in net profit by line items Decrease in NII due to ISK m 2,344 543 -67 -1,652 lower amortised discount 2,069 -994 -1,686 11,624 Net interest margin was 2,208 4.0% in 1H12, compared to 4.8% in 1H11 1,414 Increa
Slide 9: Adjusted earnings from regular operations
Adjusted earnings from regular operations Regular operations continue to genereate good profitability in 1H12 ONE-OFF ITEMS AND OTHER EXTRAORDINARY ITEMS Positive net valuation ISK m changes on loans and receivables of ISK 2.1bn 11,624 - 2,069 12,000 Profit from discontinued - 2,919 operations o
Slide 10: Income split
Income split Focus on long-term stable cash flows, core operations continue to generate vast majority of income NET OPERATING INCOME SPLIT NET OPERATING INCOME SPLIT By income type, ISK m By income type, % 29,000 100% 1% 25,253 8% 90% 16% 20% 24,000 15% 19,430 5,204 80% 114 70% 18% 19,000 3,012 4,42
Slide 11: Temporary increase in expenses
Temporary increase in expenses Objective to build effective and sound infrastructure for future operations TOTAL EXPENSES FTEs Higher number of FTEs By type of expense, ISK m Parent vs Consolidated, Yearly average, # ‐ Merger with Byr in Q411 28,902 1,427 1,335 ‐ Restructuring has taken longer 1,2
Slide 12: II. Assets & Restructuring
II. Assets & Restructuring 12
Slide 13: Assets
Assets Consolidated – 30 June 2012 ISK m 30.06.12 31.03.12 31.12.11 Bonds and debt instruments Mainly G5 government bonds Cash and balances with CB 72,072 78,398 57,992 No exposure to GIPSIs Derivatives 306 205 339 Shares and equity instruments Bonds and debt instruments 50,386 55,579 58,662 D
Slide 14: Well diversified loan portfolio
Well diversified loan portfolio Acquisition of Byr diversified the portfolio further in terms of industry sectors and facility types CONSOLIDATED LOAN PORTFOLIO The loan portfolio increased by 2% in Q2 ISK bn, by sector Other sectors New lending exceeds repayments for the first time in Industrials
Slide 15: Loan portfolio performance
Loan portfolio performance Carrying amount reflects expected recovery of loans LOAN PORTFOLIO ANALYSIS (LPA1) LOANS IN RESTRUCTURING TRANSFERRED TO WORKOUT Excluding fully performing loans to By status of restructuring By level of completion credit institutions 19.6% (1Q12: 23.5%) 6.4% (1Q12: 7.4%)
Slide 16: Restructuring proceeding on track
Restructuring proceeding on track Aim to have ratio of loans in restructuring below 11% by FY12, 5% by FY13 and 2% by FY14 LOAN PORTFOLIO ANALYSIS (LPA1) LOANS IN RESTRUCTURING TRANSFERRED TO WORKOUT Excluding fully performing loans to By status of restructuring By level of completion credit institu
Slide 17: III. Liabilities, Liquidity & Capitalisation
III. Liabilities, Liquidity & Capitalisation 17
Slide 18: Liabilities
Liabilities Consolidated – 30 June 2012 Deposits ISK m 30.06.12 31.03.12 31.12.11 Slight decrease in deposits in line with development on the asset side Financial liabilities 11,154 10,596 9,346 Normal fluctuations in deposit base Derivatives 5,377 5,761 4,027 Deposits from CB and credit inst. 4
Slide 19: Deposits are stable
Deposits are stable Slight decrease in deposits in line with development on the asset side DEPOSIT DEVELOPMENT DEPOSIT COMPOSITION Total exposure, parent company, ISKbn As of 30.06.12, parent company, by customer type 19 534 520 % 509 Foreign financial 12% Domestic institutions 13% 13% Individuals,
Slide 20: Structurally sound balance sheet
Structurally sound balance sheet Solid funding base where deposits are the largest source of funding BALANCE SHEET COMPOSITION 30.06.2012, % Funding diversification 100% Other Prudent asset and liability Other Deposits from ST funding management 90% ST Loans to CIs CIs & CBs assets Bonds & debt 80
Slide 21: Diversification of funding continues
Diversification of funding continues Íslandsbanki was the first bank to list securities on the NASDAQ OMX Iceland since 2008 ÍSLANDSBANKI COVERED BONDS An ISK 100bn covered bond programme in place Yield and turnover as of August 2012 Íslandsbanki plans to issue around ISK 10bn of CBs annually 4.00
Slide 22: Sound management of liquidity
Sound management of liquidity Liquid assets of ISK 162bn exceed regulatory targets LIQUIDITY BACK-UP* / DEPOSIT COVERAGE RATIO Regulatory liquidity requirements 30.06.2012, parent company, ISKbn FME requires cash or cash-like assets against demand Asset type ISK FX Total deposits of 5% ‐ Íslandsba
Slide 23: Imbalances strictly monitored
Imbalances strictly monitored Gross foreign currency gap actively improved through restructuring IMBALANCES FX assets 30.06.2012 Categorisation based on customer cash flow Real FX assets (FX/FX) amount to ISK 171bn FX Exchange rate changes are fully offset in the impairment account ISKbn denom
Slide 24: Equity has doubled since establishment
Equity has doubled since establishment Capital ratios continue to strengthen on back of retained earnings TOTAL EQUITY DEVELOPMENT ISK bn Strong equity base 11.8 135.5 7.3 - 5.1 Has provided comfort given 21.1 the uncertainty in the Bank´s operating 8.3 environment 15.9 No dividend has been paid
Slide 25: Sound capital position
Sound capital position Exceeds legal and regulatory requirements of 16% and legal limit of 8% CAPITAL RATIOS, STANDARDISED APPROACH Development, % Increase in capital ratios by on the back of retained earnings and increase in 32% risk weighted assets 27,9% 28% 26,6% New interpretation of 23,8% 2
Slide 26: Thank you
Thank you 26