Islandsbanki hf · OMXICE:ISB
Islandsbanki hf — Íslandsbanki — Q3 2013 Earnings Presentation
30 slides from Islandsbanki hf's earnings presentation, Nov 27, 2013
Slide 1: 3Q13 Financial Results
3Q13 Financial Results 27 November 2013
Slide 2: Table of Contents
Table of Contents I. Overview II. Income Statement 3Q13 III. IV. Assets & Restructuring Liabilities, Liquidity & Capitalisation
Slide 3: Overview
3Q13 OVERVIEW
Slide 4: A leading bank in Iceland
A leading bank in Iceland Serving over 200,000 customers, Íslandsbanki has market share of 30% in retail and 37% in corporate 1. SYNERGIES COMING THROUGH 2. COSTS PROGRAMS ARE DELIVERING RESULTS Synergies from mergers with Byr, Cost‐income ratio was 48.5% in 3Q13 compared to Kreditkort and Framt
Slide 5: Awarded 'Best bank in Iceland'
Awarded ‘Best bank in Iceland’ Euromoney annually appoints the best banks around the world with their Awards for Excellence With a clear vision and well defined operational objectives, Íslandsbanki has delivered excellent results Euromoney reviews several factors in the Bank’s operations Retur
Slide 6: Overview: Key figures & ratios
Overview Key figures & ratios 9M13 9M12 3Q13 2Q13 1Q13 PROFITABILITY ROE (after tax), % 13.4% 16.3% 10.6% 17.4% 12.2% ROE from regular operations (after tax), % 8.4% 10.9% 9.8% 9.0% 6.2% Net interest margin (of total assets), % 3.5% 4.1% 3.5% 3.4% 3.6% Cost to income ratio, % 46.6% 52.7% 48.5% 41.1%
Slide 7: Income Statement
ww istandsbanki II INCOME STATEMENT
Slide 8: Income statement
Income statement Year to date and quarterly comparison ISKm 9M13 9M12 3Q13 2Q13 1Q13 Net interest income 21,883 24,380 7,365 7,045 7,473 Net valuation changes on loans and receivables 8,471 2,782 603 4,751 3,117 Provision for latent impairment (66) (579) (48) 106 (124) Net interest income after net
Slide 9: Earnings from regular operations
Earnings from regular operations Regular operations continue to generate decent profitability ISKm 9M13 9M12 3Q13 2Q13 1Q13 Reported after tax profit 15,397 16,221 4,189 6,623 4,585 Net valuation changes on loans and receivables (8,471) (2,782) (603) (4,751) (3,118) Profit (loss) from discontinued o
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 12% 14% is being amortize
Slide 11: 86% of operating income from NII & NFC
86% 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 (NII) ISKm ISKm + 0.2% ‐ 5.4% 16,709 15,805 7,785 8,560 7,473 7,045 7,365 3Q12 4Q12 1Q13 2Q13 3Q13 12,648 NET FEE AND
Slide 12: 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* ISKm % ‐ 4% ‐ 4.2% 7,185 50.6% 51.8% 48.5% 43.0% 41.1% 6,549 6,500 3Q12 4Q12 1Q13 2Q13 3Q13 5,767 OTHER OPERATING EXPENSES 5
Slide 13: Tax & levies paid to Government institutions
Tax & levies paid to Government institutions Taxation has increased considerably in recent years ISKm 9M13 9M12 3Q13 2Q13 1Q13 Income tax* 5,365 4,463 1,570 2,347 1,448 Bank tax** 208 631 76 65 67 Financial activities tax*** 583 466 192 199 192 FME and The Debtors´ Ombudsman 332 347 105 113 115 Cont
Slide 14: Good return despite growing equity base
Good return despite growing equity base Íslandsbanki’s equity has more than doubled since establishment in 2008 or 143% PROFIT AFTER TAX RETURN ON EQUITY TOTAL EQUITY ISKm % ISKm 7,197 ‐ 9% + 14% 159,664 6,623 19.7% 155,537 17.4% 152,101 4,597 4,585 4,189 13.3% 147,660 12.2% 10.6% 140,045 3Q12 4Q12
Slide 15: Assets & Restructuring
303 Ga | “a ~~ 7 MME Z | | | i, ; [3 ASSETS & RESTRUCTURING ela Ay ' >
Slide 16: Assets
Assets Consolidated – 30 September 2013 Bonds and debt instruments ISKm 30.9.2013 30.6.2013 31.12.2012 Mainly G5 government bonds in the Bank’s liquidity portfolio Cash and balances with CB 92,980 98,042 85,500 Shares and equity instruments Derivatives 289 229 127 Decrease due to fair value chan
Slide 17: Good sector diversification of loan portfolio
Good sector diversification of loan portfolio FX loans to customers with ISK revenue decreasing substantially LOANS TO CUSTOMERS LTV DISTRIBUTION OF MORTGAGES TO INDIVIDUALS % by sector, consolidated as of 30.09.2013 ISKbn, consolidated as of 30.09.2013 – average 77%* Other Industrials sectors 35 an
Slide 18: Restructuring on track
Restructuring on track Extensive work with households and corporates since 2008 LOAN PORTFOLIO ANALYSIS LPA (proportion of loans in restructuring, % book value) and 90 days past due (%) LPA ratio measures the ‐ 34% progress of restructuring 44% 42% LPA was 9.8% at end of September 2013 Proport
Slide 19: Loan portfolio performance
Loan portfolio performance Significant success in transforming loans in restructuring to performing loans LOAN PORTFOLIO ANALYSIS LPA (proportion of loans in restructuring, % book value) In total, over ISK 524bn in debt forgiveness of some form since the Bank‘s establishment 35.4% 39.6% 39.0% 37.5
Slide 20: Liabilities, Liquidity & Capitalisation
3Q13 LIABILITIES, LIQUIDITY & CAPITALISATION
Slide 21: Liabilities
Liabilities Consolidated ‐ 30 September 2013 Deposits ISKm 30.9.2013 30.6.2013 31.12.2012 Customers deposits were stable, and the deposit to loan ratio of 86% remains strong Derivatives and short positions 12,866 11,082 18,435 Customer term deposit of parent company now 30% of total Deposits fro
Slide 22: Deposits remain a stable source of funding
Deposits remain a stable source of funding Normal fluctuations in deposit base DEPOSIT DEVELOPMENT AND DEPOSIT RATIO DEPOSITS FROM CUSTOMERS ISKbn, total amount, parent company Customer term deposits as a percentage of total customer deposits, ISKbn and %, parent company Deposits/loans 507 505 550 4
Slide 23: Structurally sound balance sheet
Structurally sound balance sheet Solid funding base where deposits are the largest source of funding BALANCE SHEET COMPOSITION 30.09.2013 Short‐ Prudent asset and term liability management funding Other Short‐term assets The Bank has short term assets that can easily be liquidated to Deposits co
Slide 24: 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 Domestic bond issuance Spread on top of HFF bonds (Government guaranteed) Total outstanding commercial paper (sh
Slide 25: Sound management of liquidity
Sound management of liquidity Liquid assets of ISK 207bn exceed internal and external requirements LIQUIDITY BACK‐UP* / DEPOSIT COVERAGE RATIO FME LIQUIDITY RATIOS 30.09.2013, parent company, ISK bn % 40% 38% Asset type ISK FX Total 30% 20% 18% Cash and balances with CB 84 1 85 10% Balances with cre
Slide 26: Imbalances strictly monitored
Imbalances strictly monitored The currency imbalance increased between quarters IMBALANCES ISK bn, consolidated as of 30.09.2013 Currency imbalance The Group’s currency imbalance increased in 3Q13 and was ISK Currency Inflation imbalance 22bn at end of September, compared to ISK 19.1bn at end of J
Slide 27: Sound capital position
Sound capital position Capital ratios steadily increasing, decrease in RWA/Total assets indicates improved credit quality Capital ratios CAPITAL RATIOS and RWA Development, % and ISKbn Capital ratios remain steady between the second and third 26.2% 27.4% 27.2% quarter since retained earnings are o
Slide 28: 5 key messages
5 key messages 3Q2013 interim financial results 1. NFC in 3Q13 is up 8% YoY while NII decreasing in line with expectations as discount, following the acquisition of Glitnir loan book, is being amortized 2. Significant results in cost cutting, cost‐income ratio down to 48.5% in 3Q13 from 50.6% in 3Q1
Slide 29: Disclaimer
Disclaimer 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 results and pre
Slide 30: Thank you
Thank you