Islandsbanki hf · OMXICE:ISB
Islandsbanki hf — H1 2011 Earnings Presentation
32 slides from Islandsbanki hf's earnings presentation, September 2011
Slide 1: Rebuilding Resilience: 1H Financial update
September 2011 REBUILDING RESILIENCE 1H Financial update
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 By Chapter I. Our Profile II. Highlights - 1H 2011 III. Income Statement IV. Assets & Restructuring V. Liabilities, Liquidity & Capitalisation VI. Icelandic Economy – an update 3
Slide 4: I. Our Profile
~w islandsbanki I. Our Profile
Slide 5: Domestic universal bank and global specialist
Domestic universal bank and global specialist 100+ years of full-service banking and financial services 20 BRANCHES PROVIDE FULL-SERVICE CORPORATE NATIONAL COVERAGE BANK & INTERNATIONAL One of Iceland´s largest universal High ranking in customer SPECIALIST service and satisfaction banking and
Slide 6: Strong banking heritage
Strong banking heritage Serving Icelandic industry, households and commerce since 1904 Re-established as Íslandsbanki on 15 October Glitnir was a leading domestic franchise 2008 after the collapse of Glitnir Bank Strong share of domestic deposits Assumed Glitnir’s domestic assets and deposits
Slide 7: Increased management reporting clarity
Increased management reporting clarity New, clearer reporting structure improving accountability and transparency Board of Directors Internal Audit Ágúst Hrafnkelsson CEO Birna Einarsdóttir Retail Banking Corporate Banking Markets Wealth COO CRO CFO Una Steinsdóttir Vilhelm M. Tryggvi Björn Manageme
Slide 8: II. Highlights - 1H 2011
~w islandsbanki II. Highlights - 1H 2011
Slide 9: 1H financial highlights
1H financial highlights Key ratios developing in line with expectations RETURN ON EQUITY TOTAL CAPITAL RATIO STRENGTH RESULT 12.9% 28% NET INTEREST MARGIN TOTAL DEPOSITS / LOAN RATIO PROFIABILITY LIQUIDITY 4.8% 75.2% CORE COST / INCOME RATIO TOTAL ASSETS ASSET BASE ISK BN EFFICIENCY 50.8% 683 9
Slide 10: 1H operational highlights
1H operational highlights Focus on strengthening the foundations and preparing the Bank for future growth Acquisition of credit card issuer Kreditkort Extensive internal and external service surveys – Supports new retail credit card strategy conducted GROWTH SERVICE Glacier Securities, NY offi
Slide 11: III. Income Statement
~w islandsbanki III. Income Statement
Slide 12: 1H income statement
1H income statement Period from 1 January – 30 June ISK million H1 2011 H1 2010 Net interest income Bank earns less on the large equity base due to sizeable drop in Net interest income 16,303 17,438 risk free interest rates YoY Net valuation changes on loans (255) (474) Margin on deposits has ti
Slide 13: 1H income split: 97% from core operations
1H income split: 97% from core operations Brokerage fees yet to pick up as capital markets remain inactive CORE INCOME 1H 2011 OPERATING INCOME SPLIT By division By category NII ISK 16.3 BN 1,586 NFC ISK 3 BN 15% 3% 8,889 99 3,677 4,144 NII 748 588 498 -56 51 82% NFC Other income Retail Corporate We
Slide 14: Administrative expenses
Administrative expenses Collective wage agreement increases coming through ADMINISTRATIVE EXPENSES Salaries and related expenses ISK BN, Core cost to income ratio Number of full time equivalent employees (FTEs) was 980 on average in 1H 2011 as opposed to 933 in 1H 2010 (parent company) 44.8% 50.8%
Slide 15: IV. Assets & Restructuring
~w islandsbanki IV. Assets & Restructuring
Slide 16: Assets
Assets Little change despite sale of subsidiary ISK millions 30.06.2011 31.12.2010 Bonds and debt instruments Mainly government bonds of G-5 countries Cash and balances with Central Bank 27,761 30,799 No exposure to GIPSIs Derivatives 136 70 Movement of liquid assets from bonds to loans to fin
Slide 17: Loan portfolio: well diversified
Loan portfolio: well diversified Repayments still exceeding new lending as customers continue to deleverage CONSOLIDATED LOAN PORTFOLIO CONSOLIDATED LOAN PORTFOLIO Book value, by sector Book value, by borrower 2% 1% Individuals 2% 4% Real estate 9% 1% Companies 6% 8% 31% Seafood Individuals 8% Comme
Slide 18: Loan portfolio performance
Loan portfolio performance Clear objectives have guided consistent progress in restructuring LOAN PORTFOLIO ANALYSIS (LPA*) NON-PERFORMING LOANS (NPL**) TRANSFERRED TO WORKOUT Excludes loans to credit institutions, By status of restructuring By level of completion that are fully performing 26.6% 13%
Slide 19: V. Liabilities, Liquidity & Capitalisation
V. Liabilities, Liquidity & Capitalisation
Slide 20: Liabilities
Liabilities Deposits decrease as companies and households deleverage Deposits ISK millions 30.06.2011 31.12.2010 Change in customer deposits largely due to loan pre-payment from a single large customer Financial liabilities 10,582 9,090 Derivatives 1,738 429 Debt issued and other borrowings Deposi
Slide 21: Deposits
Deposits Stable source of funding with blanket guarantee still in place DEPOSIT DEVELOPMENT DEPOSIT BASE Total exposure, ISK BN By currency CPI-linked 15% Non CPI-linked - 2% FX 423 14% 415 71% 31.12.2010 30.06.2011 Slight contraction in deposits Concentration is monitored closely Changes in the i
Slide 22: Sound management of liquidity
Sound management of liquidity Liquid assets far exceeding targets LIQUID ASSETS / DEPOSIT COVERAGE RATIO INTERNAL LIQUIDITY RATIOS 30 June, parent company, ISK BN Development, all currencies Liquidity Ratio A Liquidity Ratio B Class Asset type ISK FX Total 220% Liquidity Ratio C Limit 200% A Cash an
Slide 23: Imbalances strictly monitored
Imbalances strictly monitored Net foreign currency gap actively improved IMBALANCES NET FX GAP 30 June, ISK BN Development, ISK BN FX Inflation 48.4 47.1 Assets 250 147 Liabilities (173) 117 Gross gap 77 30 0.8 1.5 1.9 Adjustment for FX/ISK assets (75) Net gap 2 30 Q2 Q3 Q4 Q1 Q2 2010 2011 Foreign c
Slide 24: Sound capital position
Sound capital position Ratios continue to strengthen on back of retained earnings CAPITAL RATIOS TOTAL EQUITY CAPITAL Change over past 30 months Development, ISK BN 28.0% 4.2% 129 +107% 7 21 8 13.1% Tier 1 ratio 16 23.8% 68 8 Tier 2 ratio 13.1% 31.12.2008 30.06.2011 Equity at 1H 2H 1H 2H 1H Equity a
Slide 25: VI. Icelandic Economy – an update
VI. Icelandic Economy – an update
Slide 26: Past the low point of an economic cycle
Past the low point of an economic cycle Some uncertainty, but economic indicators point to improving conditions Indicators of economic turnaround in 2011 ICELANDIC ECONOMY, Quarterly Economic Growth Corrected for seasonality Economic growth was positive in both Q1 and Q2 2011 — Driven by investmen
Slide 27: Economy is stabilising
Economy is stabilising Iceland is not suffering a debt crisis Moderate inflation has supported rate cuts Unemployment thought to have peaked Inflation Unemployment — Currently 5%, double the Central Bank’s target — CB expects 7.1% unemployment this year compared with 8.1% last year — Temporary d
Slide 28: Iceland completes IMF programme
Iceland completes IMF programme Successful conclusion of the stand-by arrangement in August 2011 IMF programme main objectives Objectives largely fulfilled Exchange rate stability Icelandic Krona (ISK) — ISK severely devalued following October 2008 collapse — Stable albeit under strict capital c
Slide 29: Board of Directors
Board of Directors Independent board combining international experience with domestic expertise FRIDRIK SOPHUSSON JOHN E. MACK DANIEL LEVIN Chairman of the Board Vice-Chairman Dr. Daniel Levin is a US and Swiss Mr. Sophusson is an Icelandic A US national, Mr. Mack was national, with broad experience
Slide 30: Current ownership structure
Current ownership structure Current Resolution Committee owner intends to exit within 5 years RESOLUTION COMMITTEE Shareholders GLITNIR BANKI HF. On 13 Sept 2009 Glitnir, Íslandsbanki and the Icelandic “Old” Bank Government agreed on the settlement of assets and liabilities between the “old” and t
Slide 31: Material changes have been made
Material changes have been made Íslandsbanki is a substantially different bank Weaknesses in Glitnir’s operations Changes Expansion into highly levered LBO and Focus on the strengths derived from the Focused on core commercial real estate markets outside Iceland acquisition of Glitnir’s assets s
Slide 32: Íslandsbanki
Íslandsbanki