Arion Banki hf · OMXICE:ARION
Arion Banki hf — Arion Bank — Investor Day (November 2019)
88 slides from Arion Banki hf's investor day presentation, Nov 12, 2019
Slide 1: Arion Bank Capital Markets Day – London
Arion Bank Capital Markets Day – London 12 November 2019
Slide 2: Agenda
Agenda 8.30 Registration and breakfast 9.00 Higher profitability in a more challenging interest rate environment Benedikt Gislason – CEO 9.30 Soft landing, slow takeoff Erna Bjorg Sverrisdottir – Chief Economist 9.50 CIB – Relationships and RWAs Asgeir Reykjord Gylfason – MD of Corporate & Investmen
Slide 3: Higher profitability in a more challenging interest rate environment
Higher profitability in a more challenging interest rate environment Benedikt Gislason CEO
Slide 4: Key messages
Key messages A smaller but more profitable bank going forward Arion Bank is operating in a strong and healthy economy Arion Bank operates a diversified business model and enjoys strong market position Arion Bank is adopting a more disciplined capital allocation approach to increase ROE Arion Bank is
Slide 5: The Icelandic economy: Strong and healthy
The Icelandic economy: Strong and healthy GDP growth Policy rates Iceland: Share of Renewables in Household and non-financial corporate debt, % of GDP Primary Energy Use 1940-2018 6.6% 7% 100% 6% 400% 90% 4.7% 4.6% 4.6% 350% 5% 80% 300% 4% 70% 250% 2.1% 2.9 3% 60% 1.7% 200% 2% The gross official res
Slide 6: Diversified business model and strong market position
Diversified business model and strong market position Banking, insurance and investment services in a robust economy Retail Banking CIB Markets Insurance • Digital leader in the retail • Corporate banking and • Largest asset manager in the • The Bank’s subsidiary Vördur market strategic advisory Ice
Slide 7: Market leader in life insurance and fast growing in P&C
Market leader in life insurance and fast growing in P&C Vördur Insurance has become the fourth pillar to the group’s revenue generation Vördur P&C Leveraging bancassurance Strong development since Arion Bank acquisition in 2016/17 • 40.400 non-life clients partnership in digital innovation • 35.900
Slide 8: Market leader in asset management
Market leader in asset management Private banking, institutional services, fund management and PF administration AuM: Commercial banks with management AUM breakdown (bn. ISK) companies in Iceland (bn. ISK) 1200 1.200 Possibl. oppt. Corp cred, Alt & real estate 1000 1.000 800 800 600 600 400 400 200
Slide 9: Market leader in digital banking
Market leader in digital banking Launching 7 customers facing products in 2019 Open App Personal Finance Management Launched in February 2019 Launched in July 2019 Everyone can use the Arion app by logging in through In the Arion app customers now have an insights option digital authentication, with
Slide 10: Sustainable and responsible banking
Sustainable and responsible banking The dual listing has further supported the emphasis on ESG at the bank UN Principles for AllBright Other commitments and Responsible Banking (PRB) certifications • A founding signatory of the UN • In 25th place out of 333 listed • Recognized as a company which PRB
Slide 11: A more disciplined capital allocation approach
A more disciplined capital allocation approach Capital requirements, taxation and growth of pension fund system a catalyst for co- investment strategy through syndication and intermediation • SA risk weights and next to full utilization of capital buffers result in high capitalization requirements f
Slide 12: Capital requirements are high
Capital requirements are high Icelandic banks apply the standardized approach to RWAs and capital buffers are almost in full force 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% Leverage ratio CET 1 12 Source: CITI and S&P data
Slide 13: Taxation is also high
Taxation is also high Bank levy increase was expected to be temporary but “temporary” can take a long time Bank specific taxes and government charges on systematically important banks, % of average total assets 2017 Figures 0.60% 0.50% 0.17% 0.40% 0.30% 0.55% 0.20% 0.38% 0.38% 0.10% 0.10% 0.08% 0.08
Slide 14: National savings: now the largest balance sheet and growing quickly
National savings: now the largest balance sheet and growing quickly Expanded by half of Arion Bank´s total assets in H1 2019 Pension funds and banking system, total assets, % of GDP 170% 160% 150% 140% 130% 120% 110% 100% 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 201
Slide 15: Building long-term shareholder value
Building long-term shareholder value Customer focus with efficient use of capital Enhance operational Reduce earnings volatility Optimize capital structure efficiencies and returns • Long term client relationships • Cutting costs / improve margins and disciplined capital allocation • Group capital a
Slide 16: The road to sustainable +10% ROE
The road to sustainable +10% ROE 1 Release of CET1 plays a fundamental role >10.0% ROE • Cost to income to reach target • Increased of < 50% revenues from – Structural RWAs changes to – New target of support more 6.5% for the efficient Bank, an operation and • Capital release increase from continued
Slide 17: Key takeaways
Key takeaways Higher profitability in a more challenging interest rate environment Arion Bank is operating in a strong and healthy economy Arion Bank operates a diversified business model and enjoys strong market position Arion Bank is adopting a more disciplined capital allocation approach to incre
Slide 18: Soft Landing, Slow Takeoff
Soft Landing, Slow Takeoff Erna Björg Sverrisdóttir Chief Economist
Slide 19: The missing recession?
The missing recession? According to the latest forecast from the CBI, published in the beginning of November, GDP will contract by only 0.2% this year. Arion Bank's forecast for GDP growth in 2019 0,0% -0,2% -0,2% -0,4% -0,6% -0,6% -0,8% -1,0% -0,9% -1,2% -1,4% -1,6% -1,8% -2,0% -1,9% March 2019 Aug
Slide 20: Export sectors are resilient against headwinds
Export sectors are resilient against headwinds Together tourism, seafood and aluminum account for over 70% of total export revenues of the Icelandic economy Share in total exports Export value of capelin 100% - bn. ISK and % of GDP 35 1,4% 30 1,2% 90% 29% 30% 27% 27% 26% 25% 25% 25 1,0% 29% 28% 29%
Slide 21: 0.9% GDP growth in 1H
0.9% GDP growth in 1H Stronger GDP figures result of weaker imports than expected GDP growth in the first six months of each year - YoY 30% 25% 20% 15% 10% 5% 0% -5% -10% -15% -20% Private consumption Public consumption Investment Exports Imports GDP 2015 2016 2017 2018 2019 21 11 November 2019 Sour
Slide 22: Icelandic tourism has risen to the challenge
Icelandic tourism has risen to the challenge Each tourist is spending more than before, softening the economic blow of WOW air‘s bankruptcy Foreign payment card turnover per tourist - YoY %-change 30% 145 25% 140 20% 135 15% 130 10% 125 5% 120 0% 115 -5% 110 -10% -15% 105 -20% 100 2017 Q1 2017 Q2 20
Slide 23: Wooing the high-yield tourist
Wooing the high-yield tourist Average spending per tourist Average number of overnight Type of accommodation by - thous. ISK stays tourists 250 6,5 50% 45% 6,4 40% 200 35% 6,3 30% 150 6,2 25% 20% 6,1 15% 100 10% 6 5% 50 5,9 0% Hotels Hotel Airbnb and Hostel 5,8 apartments similar 0 WOW air Icelandai
Slide 24: Modest angle of attack
Modest angle of attack Tourist arrivals via KEF airport Overnight hotel stays and occupancy in the - Arion Bank’s forecast, millions annually, % increase capital area 3,0 - Arion Bank’s forecast, thousands 3.000 90% Forecast 6% 80% 2,5 5% 8% 2.500 24% 10% 70% 4% -15% 7% 2,0 2% 2.000 60% 40% 50% 1,5
Slide 25: The resilience of tourism has cushioned the blow to the labor market
The resilience of tourism has cushioned the blow to the labor market Register based employment in tourism Unemployment rate industries - Arion Bank’s forecast - % of total in employment 8% 18% 16% 7% 16% Forecast 14% 6% 12% 5% 10% 9% 4% 8% 3% 6% 2% 4% 1% 2% 0% 2003 2004 2005 2006 2007 2008 2009 2010
Slide 26: Moderate wage increases… in Iceland?!
Moderate wage increases… in Iceland?! Iceland has been known for hefty wage increases Nominal wages - Arion Bank‘s forecast, YoY %-change 12% Forecast 10% 8% 6% 4% 2% 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 26 11 November 2019 Sources: Statistics Iceland, Arion Bank
Slide 27: Moderate wage increases… in Iceland?!
Moderate wage increases… in Iceland?! Iceland has been known for hefty wage increases. Average annual wage increases have been around 6.5%. Nominal wages - YoY %-change 12% 10% 8% Forecast 6% 4% 2% 0% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Slide 28: The desirable soft landing within reach?
The desirable soft landing within reach? Analyst expect the recession to be short lived, followed by a gradual turnaround GDP growth 6% 5% 4,8% 4,4% 4% 3% 2,5% 2% 1% 1,0% 0% -1% -0,6% 2017 2018 2019 2020 2021 2022 Arion Bank CBI Statistics Iceland IMF 28 11 November 2019 Sources: CBI, Statistics Ice
Slide 29: That's so Iceland!
That‘s so Iceland! The ISK has been used as a reset button in the past. Current account - % of GDP 5% 0% 115% -5% 100% 103% -10% 54% -15% 44% 40% 33% 24% -20% 18% -25% 1946 1948 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 19
Slide 30: Setting the stage for a more stable ISK
Setting the stage for a more stable ISK EUR/ISK Current account* 170 - % of GDP 10% 160 8% 150 6% 4% 140 2% 130 0% 120 -2% -4% 110 -6% 100 -8% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Net IIP** CBI's FX net reserves - % o
Slide 31: Are we breaking the mold?
Are we breaking the mold? Low inflation, interest rate cuts and adjustment through the labor market, not the typical Icelandic way Inflation* and the CBI's CBI's key interest rates inflation target 10 6% 9 5% 8 7 4% 6 5 3% 4 2% 3 2 1% 1 0% 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 202
Slide 32: Well equipped to handle the turn of the tide
Well equipped to handle the turn of the tide The GDP growth has been export driven Household debt Non-financial corporate debt General government debt - % of GDP - % of GDP - % of GDP 250% 250% 250% 200% 200% 200% 150% 150% 150% 100% 100% 100% 50% 50% 50% 0% 0% 0% 2003 2005 2007 2009 2011 2013 2015
Slide 33: CIB – Relationships and RWAs
CIB – Relationships and RWAs Asgeir Reykfjord Gylfason – Deputy CEO and MD of Corporate and Investment banking
Slide 34: At Corporate Banking we are changing course
At Corporate Banking we are changing course After a period where the emphasis was on loan growth, partly at the expense of pricing, sector split and composition of the loan book, we are changing course. We have reviewed our corporate loan book and formed an opinion on where we want to position ourse
Slide 35: Arion Bank has already begun with the HFF transaction
Arion Bank has already begun with the HFF transaction Following the Q2 results, Arion Bank announced an agreement to sell to the Housing Financing Fund (HFF) a mortgage loan portfolio in the amount of ISK 48 bn. The agreement has a positive impact due to the realization of interest discounts, lower
Slide 36: Our corporate portfolio shows similarities to the Icelandic economy
Our corporate portfolio shows similarities to the Icelandic economy Relative to the Icelandic economy, our book is overweighted in fisheries and wholesale and retail, but underweighted in industry, energy and manufacturing. However, debt related to the energy industry in particular is to a large ext
Slide 37: Four large impairments significantly color Corporate Banking's historic cost of risk
Four large impairments significantly color Corporate Banking’s historic cost of risk Corporate Banking cost of risk – in bps. Corporate banking cost of risk • The corporate loan book - in bps. has taken four large hits in 200 recent years: a offshore services company, two airlines and United Silicon
Slide 38: Corporate Banking's ROE is not acceptable
Corporate Banking’s ROE is not acceptable Our task ahead is to get ROE to 10% or higher • We will be in direct contact with approximately 50% of our loan book in Target > 10% the next two years • Clear focus on addressing mispricing • With strong view on sectors, projects, margins and duration we ar
Slide 39: Increasing multi-product clients to contribute to Revenue / RWA target
By increasing our multi-product clients, we will contribute more towards the bank’s Revenue / RWA target Revenues Revenues / RWA – Corporate / RWA Banking and Arion & Investment - corporate banking Bank’s target ~ 4% in 2020 ~3% historical ~3% 2016 2017 2018 2019* CIB target 39 *9M 2019, annualizesd
Slide 40: Currently, 60% of Corporate Banking's clients are multi-product
Currently, 60% of Corporate Banking’s clients are multi-product Our goal is to increase this ratio across the Bank 40
Slide 41: Aiming to reduce our corporate loan book by ~20% by year-end 2020
We are aiming to reduce our corporate loan book by ~ 20% by year-end 2020 (~ 20%) 41 *Based on 95% average of RW on loan book. Not adjusted for Pillar 2 changes
Slide 42: Our corporate loan book should be placed in mid cap companies
Our corporate loan book should be placed in mid cap companies The large cap companies are bound for debt capital markets, where Arion Bank is a well suited partner to handle the listing, underwriting and market making. The corporate book can work within the mid cap companies, where more risk distrib
Slide 43: Time for the debt capital market to take the next step
It’s time for the debt capital market to take the next step in its growth stage The government is by far the most prominent market player on the Icelandic debt capital market. We want to help it take its next step, to grow and show more similarities to other Nordic countries. Next step Stage: Stage
Slide 44: Key takeaways: We are committed to
Key takeaways We are committed to: Diversifying our sector allocation and achieving sustainable relationships with selected multi-product clients Reducing RWA, lowering our costs and having strict discipline in capital allocation Supporting the Icelandic debt capital market to take the next step for
Slide 45: Coffee break
6c x Coffee break
Slide 46: Driving bottom line results through digitalization
Driving bottom line results through digitalization Iða Benediktsdóttir MD of Retail Banking
Slide 47: Where are we coming from?
Where are we coming from? Our digital journey started in 2016 The focus of power is shifting towards the customers who expect more convenience, choice and quality A more competitive environment demands increased cost efficiency, clear differentiation and faster development We needed to radically ret
Slide 48: We introduced a new marketing plan and a new way of doing things
We introduced a new marketing plan and a new way of doing things Focus on fast development and go to market of digital solutions A customer-oriented purpose: We work with our customers to build a prosperous future The main target group: Families with diverse financial needs A simple proposition: Mor
Slide 49: Our distribution network
Our distribution network 98% of all customer touchpoints are digital Telephone calls Branch visits Digital branch visits Online Banking logins arionbanki.is App 290,000 407,000 441,000 6,355,000 13,900,000 21,500,000 49 Figures are from July 2018 to June 2019
Slide 50: Digital service
Digital service Focus on the best user experience
Slide 51: Daily interactions made available online in 2016-2017
Daily interactions made available online in 2016-2017 The first wave was focused on the most common interactions Opening new Changing overdraft Arion customer Online mortgage accounts online limit in app club into app process 3 minute process Spreading the credit Changing the credit Online mortgage
Slide 52: Credit assessment process
Credit assessment process
Slide 53: Winning daily interactions in 2018
Winning daily interactions in 2018 Second wave was about more advanced solutions End of month process Opening new Mortgage and push notifications business accounts refinancing Onboarding for Automatic car loan Online pension Consumer lending Investment Banking process service solution 53
Slide 54: The Arion app is the best banking app in Iceland
The Arion app is the best banking app in Iceland Question: What do you think is the best mobile banking solution in Iceland? Comparison of apps 52% 52% 50% 31% 25% 24% 23% 22% 16% 2017 2018 2019 2017 2018 2019 2017 2018 2019 Arion banki Bank 1 Landsbankinn Bank 2 Íslandsbanki 54 MMR research MAY 201
Slide 55: Branch network
Branch network Focus on increased efficiency and digital development
Slide 56: Simplification and streamlining of branch network
Simplification and streamlining of branch network Introduction of new branch concepts in 2017 and 2018 • Better access to banking service • Simplicity • Digital banking solutions More • Advice and education • Uplifting customer service • Queuing Less • IT legacy and work processes • Square meters an
Slide 57: Banking habits are changing
Banking habits are changing There is an obvious preference between age groups of how to use the branches Age distribution of video conference in Digital Branches vs. visits in traditional branches by age 3,0% 2,5% 2,0% 1,5% 1,0% 0,5% 0,0% 12 15 18 21 24 27 30 33 36 39 42 45 48 51 54 57 60 63 66 69 7
Slide 58: Results video
Results video
Slide 59: Results
Results
Slide 60: We are considered industry leaders in banking innovation
We are considered industry leaders in banking innovation Market share has increased, especially in our main target group Bank at the forefront, age group: 18-44 Bank at the forefront, all age groups • Arion Bank has taken the lead in the banking market in the opinion of people aged 18-44, 41% 39% 41
Slide 61: Online sales has increased dramatically in the past two years
Online sales has increased dramatically in the past two years We are now amongst the leading banks in digital sales in the world • Digital sales have increased Digital sales increased by 276% in 2 years1 steadily. As a percentage of total sales, they have increased by 276% between 176 179 2016-2018
Slide 62: Digital services are changing customer behavior
Digital services are changing customer behavior The Bank’s digital journey has produced outstanding results • The growth in active Arion Active online bank users1 Active Arion app users1 Bank app users was 16% in 000s 000s +16% the first 9 months +26% +6% +5% -3% 0% -1% • New digital branches contin
Slide 63: Steady growth in operating income since 2013
Steady growth in operating income since 2013 Increase in net interest income in 2019 despite transfer of ISK 1 billion in net interest income to Corporate Banking division at beginning of the year • Strong focus on Operating income 2013-2019 (ISK million) increased profitability has 23.341 resulted
Slide 64: Improved operating efficiency
Improved operating efficiency Mostly because of Bank’s digital journey Number of branches FTEs in Retail Banking 1 • Strong emphasis on digital solutions has led to more use of 3 2 the Bank’s self-service channels 367 355 358 367 25 343 24 24 317 • This approach has created 23 23 287 18 opportunitie
Slide 65: Preparing for open banking
Preparing for open banking Orchestrator of ecosystems
Slide 66: Integrate into broader customer journeys in 2019
Integrate into broader customer journeys in 2019 Preparation for Open Banking and the opportunities ahead with broader value ecosystems Open app, Insurance sales Account aggregation onboarding in app through app with other banks in app Personalized recommendation Mobile payments Personal finance usi
Slide 67: Rós video
Rós video
Slide 68: Going forward
Going forward: We are ready for the open banking environment Development and deployment of API strategy to be ready for PSD2 and the era of open banking Increased co-operation with third party to source and implement solutions for our customers and further develop new revenue streams Further deploym
Slide 69: Arion Bank Financials: a new trajectory
Arion Bank Financials: a new trajectory Stefan Petursson CFO 12 November
Slide 70: Balance sheet - Assets
Balance sheet - Assets Strong and simple 30.09.2019 30.06.2019 31.12.2018 ISK 1,213 billion ISK 1,233 billion ISK 1,164 billion Other and intangibles: 7.1% Other1 77 83 of total assets 8 Intangibles 8 70 ISK 316 billion, of which 144 6 Financial instruments 162 ISK 257 billion liquidity 115 reserve
Slide 71: Balance sheet – Liabilities and equity
Balance sheet – Liabilities and equity Very strong capital position with a Capital Ratio of 23.6% and well balanced funding 30.09.2019 30.06.2019 31.12.2018 ISK 1,213 billion ISK 1,234 billion ISK 1,164 billion Equity 195 196 CET1 ratio 21.6% 201 Leverage ratio 12.8% Other1 77 76 11 Subordinated lia
Slide 72: Loans to customers are well balanced and well diversified
Loans to customers are well balanced and well diversified 6.9% reduction in corporate loans since YE 2018 in line with strategy has released SK 48 billon of RWA’s Loans to customers Loans to customers by sector (%) Individuals 13 Real Estate & Construction 834 4 822 812 7 Fishing 765 58 58 50 60 10
Slide 73: Income statement Q3 2019
Income statement Q3 2019 Arion Bank is already on a new trajectory with core operations performing better and a substantial improvement in earnings from continuing operations Q3 2019 Q3 2018 Diff% Q2 2019 Diff% Net interest income 7,382 7,209 2% 7,808 (5%) Net commission income 2,639 2,686 (2%) 2,47
Slide 74: Net interest income
Net interest income Holding up at time of base rate reduction and T2 issuance Net interest income Effective inflation • Net interest income increased by 2.4% from Q3 2018, mainly through funding 8.0 7.8 and liquidity management 7.2 7.4 7.4 • The Bank’s strategy of increased focus 4.2% 4.4% on return
Slide 75: Total operating expenses
Total operating expenses Positive development in cost-to-income excluding cost relating to redundancies at the end of third quarter Cost-to-income ratio (%) Total operating expenses • 10.5% reduction of FTE’s at the parent company from Q2 and 16.2% from Q3 2018 – ISK 1.1 billion one-off expense in Q
Slide 76: Digitalization and other IT development has increased costs
Digitalization and other IT development has increased costs Key issue as regards cost development IT cost to operating income (IT C/I) 20,0% IT cost in “Grow” category elevated 15,0% • Digitalization efforts began in 2016 • SOPRA implementation elevates IT cash 10,0% spend in 2019-2020 5,0% • IT cos
Slide 77: Arion Bank was IPO'd in June of 2018
Arion Bank was IPO’d in June of 2018 Medium term targets at the time reflected expectations about the development of the Icelandic financial market over time Return on Equity Exceed 10% Cost to Income Ratio Reduce to circa 50% Loan growth Prudent lending in line with economic growth CET 1 Ratio (Sub
Slide 78: Development of key financial indicators
Development of key financial indicators Single name events have affected net earnings but core performance has been deteriorating until recently Return on equity (%) Cost-to-income ratio (%) Net interest margin (%) 56.0 56.9 56.3 48.9 3.1 2.9 2.8 2.7 10.5 6.6 3.7 2.6 2016 2017 2018 9M 2019 2016 2017
Slide 79: The sector has rationalized mainly through FTE reduction
The sector has rationalized mainly through FTE reduction A leadership in digitalization has allowed Arion Bank to reduce FTE’s by 16% since Q3 2018 Number of FTE’s at parent company 1100 1000 900 800 700 600 500 2016 2016 2017 2018 30.09.2019 Arion Bank 1 Bank 2 79
Slide 80: Arion Bank is on a different trajectory
Arion Bank is on a different trajectory Strategy as regards focus on returns rather than loan growth began in Q3 2018 Credit risk (ISK billion) 887 809 751 728 690 683 662 633 615 Arion Bank 1 Bank 2 2016 2017 2018 30.09.2019 Net interest income / Credit risk (%) 5.4% 5.2% 5.0% 4.8% 4.6% 4.4% 4.2% 4
Slide 81: Arion Bank is on a different trajectory
Arion Bank is on a different trajectory Strategy as regards focus on returns rather than loan growth began in Q3 2018 Credit risk (ISK billion) 933 887 809 815 751 728 690 683 662 646 633 615 Arion Bank 1 Bank 2 2016 2017 2018 30.09.2019 Net interest income / Credit risk (%) 5.4% 5.2% 5.0% 4.8% 4.6%
Slide 82: Capital position is very strong and allows for substantial distributions
Capital positon is very strong and allows for substantial distributions Fully in line with the Bank’s Equity Story 23.6 2.0 21.8 21.8 Capacity to distribute 1.5 ISK 35.3 bn or EUR 250 million 2.8 in addition to ISK 4.5 bn buy- CET 1 back 2.1 AT1 9.2 T2 21.6 Pillar 1 3.1 16.9 Pillar 2 R Capital buffe
Slide 83: Arion Bank medium-term targets have been modified
Arion Bank medium-term targets have been modified The Bank is acknowledging new reality Return on Equity Exceed 10% Cost to Income Ratio Reduce to circa 50% Loan growth Prudent lending in line with economic growth CET 1 Ratio (Subject to regulatory requirements) Reduce to circa 17% (Subject to regul
Slide 84: Arion Bank is committed to its medium-term targets
Arion Bank is committed to its medium-term targets New revenue target introduced and loan growth target amended Return on Equity Exceed 10% Revenues / RWAs Exceed 6.5% Cost to Income Ratio Reduce to circa 50% Loan growth The loan book will grow in line with economic growth. However, the corporate lo
Slide 85: Potential capital release in the near term
Potential capital release in the near term • Distributions will be through dividends, share buy-backs or tender offers Distribution 2018 2019 Dividend pr. ISK 8.9 ISK 5.0 share Main levers under current RWAs, Share buy back ISK 8.6 ISK 2.51 Pillar 2 and capital buffer requirements: pr. share. Up to
Slide 86: Arion Bank performance in the capital markets
Arion Bank perfomance in the capital markets Share/SDR relative performance since IPO ISK 5 per share dividend 130 ISK 5 per share dividend Share buy-back 120 program launched 110 100 90 80 70 60 50 Arion Banki Iceland STOXX® Europe 600 Banks Issued debt performance relative to local peers 250 200 1
Slide 87: Q&A
Q&A 87
Slide 88: Disclaimer
Disclaimer • This document has been prepared for information purposes only and should not be relied upon, or form the basis of any action or decision, by any person. Nothing in this document is, nor shall be relied on as, a promise or representation as to the future. In supplying this document, Ario