Islandsbanki hf · OMXICE:ISB
Islandsbanki hf — Q3 2022 Earnings Presentation
45 slides from Islandsbanki hf's earnings presentation, Oct 27, 2022
Slide 1: 3Q22 Financial Results
3Q22 Financial Results 27 October 2022 Birna Einarsdóttir Chief Executive Officer Jóhann Ottó Wathne Head of Treasury islandsbanki.is
Slide 2: A strong result from an active quarter
Íslandsbanki 3Q22 Financial Results A strong result from an active quarter ROE of 14.4% mainly driven by growth in core income and lower impairments 27 October 2022 Top line growth above 2022 guidance C/I ratio below 2022 guidance and target NII and NFCI, ISKbn C/I ratio +28.7% 47.6% 45.3% 42.7% C/I
Slide 3: Revised 2022 guidance and financial targets on track
Íslandsbanki 3Q22 Financial Results Revised 2022 guidance and financial targets on track Guidance of 11-13% ROE and C/I ratio of 41-44% in 2022 following solid 3Q22 financial results 27 October 2022 Revised Previous Highlights Targets 2022 2022 3Q22 9M22 2021 – Positive revision of ROE Guidance Guid
Slide 4: Adjustment phase ahead for the Icelandic economy
Íslandsbanki 3Q22 Financial Results Adjustment phase ahead for the Icelandic economy Moderate GDP growth on the cards after an impressive surge 27 October 2022 Exports replace domestic demand as the key catalyst of healthy GDP growth… ..as tourism sector recovery continues following receding pandemi
Slide 5: Productive third quarter of 2022
Íslandsbanki 3Q22 Financial Results Productive third quarter of 2022 Íslandsbanki’s shares eligible for the FTSE Total Cap Index in “Large” size segment 27 October 2022 Corporate & Personal Banking Business Banking Investment Banking Iceland Funds 21.6% ROE 26.8% ROE 14.1% ROE 38.7% ROE 42.7% Cost-t
Slide 6: Investment Banking played a pivotal role
Íslandsbanki 3Q22 Financial Results Íslandsbanki Investment Banking played a pivotal role Sale of Míla, Iceland‘s largest telecom infrastructure company 27 October 2022 Financing Advisory and execution – Staple financing – Sell side advisory for Síminn Corporate Corporate Finance Banking – Takeover
Slide 7: Íslandsbanki's pathway to net zero
Íslandsbanki 3Q22 Financial Results Íslandsbanki‘s pathway to net zero Initial sector-specific pathways to net zero now published in accordance with the Net Zero Banking Alliance’s guidelines – Iceland’s different starting point is reflected in the emission reduction targets 27 October 2022 Emission
Slide 8: Financial overview
Íslandsbanki 3Q22 Financial Results 27 October 2022 Financial overview islandsbanki.is
Slide 9: Increase in NII a fundamental driver of a robust result
Íslandsbanki 3Q22 Financial Results Increase in NII a fundamental driver of a robust result Expense control and reversed impairments further enhance a positive result 27 October 2022 Profit for the period – 3Q21 vs 3Q22 ISKm 2,523 90 (1,414) (114) (592) (627) 33 7,587 7,486 Corporate & public sector
Slide 10: Strong rise in NII in a higher interest rate environment
Íslandsbanki 3Q22 Financial Results Strong rise in NII in a higher interest rate environment NIM rose to 3.0% mainly the result of higher deposit margins 27 October 2022 Highlights Net interest income NII – comparison 3Q YoY – Lending margin was By business segments, ISKm ISKm 1.9% in 3Q22 (2.2% in
Slide 11: NFCI continues to rise in a good quarter
Íslandsbanki 3Q22 Financial Results NFCI continues to rise in a good quarter Broad-based fee generation across the business units 27 October 2022 Highlights Net fee and commission income NFCI – comparison 3Q YoY – Card transaction income and Business segments, ISKm ISKm interchange income from YoY 3
Slide 12: NFI affected by volatile markets
Íslandsbanki 3Q22 Financial Results NFI affected by volatile markets Losses in bonds and related derivatives due to rising rates environment 27 October 2022 Highlights Net financial income Shares and equity instruments1 – The largest movement in NFI ISKm ISKbn in the quarter is a loss in Other NFI w
Slide 13: Administrative expenses kept at bay in 3Q22
Íslandsbanki 3Q22 Financial Results Administrative expenses kept at bay in 3Q22 5.5% reduction in real terms driven by lower salary costs 27 October 2022 Highlights Administrative expenses Cost-to-income ratio1 – The reduction in administrative ISKm expenses between 2Q22 and 5,768 5,834 5,993 47.6%
Slide 14: Impairment reversals continued in 3Q22
Íslandsbanki 3Q22 Financial Results Impairment reversals continued in 3Q22 COVID-19 overlay has been turned off, new official tax valuation for real estate reduces impairment 27 October 2022 Highlights Net impairment on financial assets Loans to customers: Stage 2 and 3 (NPL) By period, ISKbn Develo
Slide 15: Lending growth evens out after years of strong loan growth
Íslandsbanki 3Q22 Financial Results Lending growth evens out after years of strong loan growth Credit quality remains strong and the loan portfolio is highly collateralised 27 October 2022 Highlights Loans to customers Loans to customers By business division, ISKbn By sector, with tourism as a separ
Slide 16: Mortgage portfolio resistant to rising rates
Íslandsbanki 3Q22 Financial Results Mortgage portfolio resistant to rising rates Average LTV improves, origination process had built-in buffers for expected rate increases 27 October 2022 Highlights Mortgage portfolio LTV distribution of mortgages – Conservative payment By interest rate type, gross
Slide 17: Real estate and construction sector in good shape
Íslandsbanki 3Q22 Financial Results Real estate and construction sector in good shape Exposures in the real estate sector mostly to companies with diverse portfolios 27 October 2022 Highlights Development of exposures to real estate companies Development of construction exposures – Loans to real est
Slide 18: Deposits are the largest source of funding
Íslandsbanki 3Q22 Financial Results Deposits are the largest source of funding Retail deposits continue to increase 27 October 2022 Highlights Funding sources Customer loans to customer deposits ratio – Term deposits are 19% of total By type, % of total liabilities and equity Development, % deposits
Slide 19: Seasoned and diversified long-term funding programme
Íslandsbanki 3Q22 Financial Results Seasoned and diversified long-term funding programme Issuance of EUR covered bonds and Tier 2 in ISK further diversifies the funding mix 27 October 2022 Highlights Sources of borrowings Contractual maturity profile of Currency split of borrowings Development, ISKb
Slide 20: Sound liquidity management, ratios well above requirements
Íslandsbanki 3Q22 Financial Results Sound liquidity management, ratios well above requirements Liquid assets of ISK 316bn, representing 20% of total assets 27 October 2022 Highlights Total liquidity coverage ratio (LCR) Liquidity coverage ratio – foreign currencies and ISK – All liquidity measures a
Slide 21: Strong capital position
Íslandsbanki 3Q22 Financial Results Strong capital position REA continued to increase 27 October 2022 Highlights Capital ratios and leverage ratio1 Capital distribution plans – At the end of September, the % of REA (% of total exposure for leverage ratio) 30.0% – The ratios are determined on the bas
Slide 22: Q&A
Íslandsbanki 3Q22 Financial Results 27 October 2022 Q&A Íslandsbanki.is
Slide 23: Appendix I – About Íslandsbanki and additional financial information
Íslandsbanki 3Q22 Financial Results 27 October 2022 Appendix I – About Íslandsbanki and additional financial information islandsbanki.is
Slide 24: This is Íslandsbanki
Íslandsbanki 3Q22 Financial Results This is Íslandsbanki Moving Iceland forward by empowering our customers to succeed 27 October 2022 Vision and Values The Bank Market share1 Sustainability 3Q22 FTEs Submitted net-zero sectorial Vision to be 704 31% retail customers pathways to the NZBA3 number of
Slide 25: Key figures & ratios
Íslandsbanki 3Q22 Financial Results Financial overview Key figures & ratios 3Q22 2Q22 1Q22 4Q21 3Q21 27 October 2022 PROFITABILITY Profit for the period, ISKm 7,486 5,880 5,187 7,092 7,587 Return on equity 14.4% 11.7% 10.2% 14.2% 15.7% Net interest margin (of total assets) 3.0% 2.9% 2.6% 2.4% 2.4% C
Slide 26: Income growth of 9% YoY driven by NII and NFCI
Íslandsbanki 3Q22 Financial Results Income growth of 9% YoY driven by NII and NFCI Robust profitability in 3Q22 built on a solid platform 27 October 2022 Income statement, ISKm 3Q22 3Q21 ∆% 9M22 9M21 ∆% 2021 Net interest income 11,315 8,792 29% 30,778 25,399 21% 34,043 Net fee and commission income
Slide 27: Balance sheet reflects a balanced loan and funding profile
Íslandsbanki 3Q22 Financial Results Balance sheet reflects a balanced loan and funding profile Conservative mix of assets and stable funding 27 October 2022 Assets Simplified balance sheet structure – Vast majority of assets consist of 30.9.2022, ISK 1,549bn lending to both retail and corporates Cas
Slide 28: Total assets continue to increase
Íslandsbanki 3Q22 Financial Results Total assets continue to increase Assets up by 8% mainly from a strong liquidity position 27 October 2022 Assets, ISKm 30.9.22 30.6.22 Δ Δ% 31.12.21 Δ Δ% Cash and balances with Central Bank 73,566 77,884 (4,318) (6%) 113,667 (40,101) (35%) Loans to credit institut
Slide 29: Diversified funding base
Íslandsbanki 3Q22 Financial Results Diversified funding base Deposits are the largest source of funding 27 October 2022 Liabilities & Equity, ISKm 30.9.22 30.6.22 Δ Δ% 31.12.21 Δ Δ% Deposits from Central Bank and credit institutions 19,912 11,437 8,475 74% 13,384 6,528 49% Deposits from customers 78
Slide 30: Appendix II – Icelandic economy update
Íslandsbanki 3Q22 Financial Results 27 October 2022 Appendix II – Icelandic economy update islandsbanki.is
Slide 31: Moderate GDP growth on the cards after an impressive surge
Íslandsbanki 3Q22 Financial Results Moderate GDP growth on the cards after an impressive surge Exports take over from demand as the main driver 27 October 2022 Highlights GDP and contribution of its subcomponents GDP, domestic demand, and external trade – After a 6.9% contraction in 2020, the Volume
Slide 32: Tourism industry bouncing back after the pandemic
Íslandsbanki 3Q22 Financial Results Tourism industry bouncing back after the pandemic 1.7 million tourists expected to visit Iceland in 2022, followed by 2 million in 2023 27 October 2022 Highlights Number of foreign tourists, by month Number of foreign tourists, by year – After two punishing years
Slide 33: Icelandic economy resilient to European energy crisis
Íslandsbanki 3Q22 Financial Results Icelandic economy resilient to European energy crisis Geothermal heating keeps energy costs at bay 27 October 2022 Highlights Share of primary energy from renewable sources Proportion of energy source in space heating – Being a small open economy, the % of total %
Slide 34: Current account flips from deficit to surplus
Íslandsbanki 3Q22 Financial Results Current account flips from deficit to surplus Export growth and reduced demand growth push the current account back into positive territory 27 October 2022 Highlights Exports and contribution from subcomponents Current account balance and GDP growth – The return o
Slide 35: Domestic balance sheets still healthy
Íslandsbanki 3Q22 Financial Results Domestic balance sheets still healthy Economy-wide leverage remains moderate in comparison with peers and historical levels 27 October 2022 Private sector debt Corporate debt % of GDP % of GDP 400 300 350 250 300 250 200 200 150 150 100 100 50 50 0 0 2003 2004 200
Slide 36: Investment growth strong in 2022 but slower further ahead
Íslandsbanki 3Q22 Financial Results Investment growth strong in 2022 but slower further ahead Residential investment to take over from business investment as the driver of growth 27 October 2022 Highlights Investment, real change, and contribution of subcomponents Executives’ expectations and busine
Slide 37: Unemployment back to pre-pandemic level
Íslandsbanki 3Q22 Financial Results Unemployment back to pre-pandemic level Worker shortage at its second-highest ever 27 October 2022 Highlights Labour supply according to corporate executives Unemployment1 – Unemployment has fallen swiftly % % of workforce, annual average after peaking in January
Slide 38: Private consumption growth eases after rising steeply
Íslandsbanki 3Q22 Financial Results Private consumption growth eases after rising steeply Erosion of real wages will cut a hefty slice out of private consumption growth in the near term 27 October 2022 Highlights – Private consumption has rebounded Private consumption and related indicators* strongl
Slide 39: The housing market has begun to turn around
Íslandsbanki 3Q22 Financial Results The housing market has begun to turn around Central Bank measures appear to be achieving the intended result 27 October 2022 Capital area house prices relative to macroeconomic fundamentals Residential house prices and turnover in greater Reykjavik Index, January
Slide 40: Inflation has peaked
Íslandsbanki 3Q22 Financial Results Inflation has peaked Inflation set to subside rather quickly in the coming term 27 October 2022 Highlights Inflation and the CBI inflation target Inflation by contribution of main categories – Inflation has risen sharply in the % % recent term. It peaked in July a
Slide 41: Monetary tightening phase probably well advanced
Íslandsbanki 3Q22 Financial Results Monetary tightening phase probably well advanced Gradual easing further ahead; equilibrium rate in sight by the end of the horizon 27 October 2022 Highlights Policy rate and inflation Interest rates – The CBI began raising interest rates %, Real policy rate in ter
Slide 42: ISK set to strengthen further in the coming term
Íslandsbanki 3Q22 Financial Results ISK set to strengthen further in the coming term More favourable CA balance and investment inflows offset pension funds’ foreign investments 27 October 2022 Highlights ISK exchange rate and CBI FX market intervention Real exchange rate and current account balance
Slide 43: Iceland's credit rating has remained at A
Íslandsbanki 3Q22 Financial Results Iceland’s credit rating has remained at A Rating companies acknowledge the flexibility of the economy and resilience to the pandemic shock 27 October 2022 Development of sovereign credit rating Fitch in Dec-17: Moody’s in Nov-19: AAA/Aaa Rating upgrade to A on eco
Slide 44: Disclaimer
Íslandsbanki 3Q22 Financial Results 27 October 2022 Disclaimer This presentation is for information purposes only and shall not be The forward-looking statements represent Íslandsbanki’s current construed as an offer or solicitation for the subscription or purchase or expectations, plans or forecast
Slide 45: islandsbanki.is
Íslandsbanki 3Q22 Financial Results 27 October 2022 islandsbanki.is