Islandsbanki hf · OMXICE:ISB
Islandsbanki hf — FY2011 Earnings Presentation
33 slides from Islandsbanki hf's earnings presentation, Mar 20, 2012
Slide 1: FY 2011 Results
20 March 2012 FY 2011 Results Birna Einarsdóttir, CEO Jón Gudni Ómarsson, CFO 1
Slide 2: Forward Looking Statements
Forward Looking Statements Important information All information contained in this presentation should be regarded as The forward‐lookingg statements made represent p Íslandsbanki’s preliminary and based on company data available at the time of the current expectations, plans or forecasts of its fut
Slide 3: Table of Contents
Table of Contents I. Íslandsbanki Milestones in 2011 II. Income Statement FY 2011 III. Assets & Restructuring IV. Liabilities, Liquidity & Capitalisation V. Appendix: Íslandsbanki profile 3
Slide 4: I. Íslandsbanki milestones in 2011
I. Íslandsbanki milestones in 2011 4
Slide 5: Important events during 2011
Important events during 2011 Many significant milestones reached during the year 1 ST QUARTER Íslandsbanki´s Asset Management unit rebranded as 2 ND QUARTER Íslandsbanki the first Icelandic bank to publish a special VÍB Ri k Report Risk R t on risk i k managementt and d risk i k assessmentt Gl
Slide 6: Synergy driven merger with Byr
Synergy driven merger with Byr Necessary consolidation in Icelandic retail sector ‐ the last substantial acquisition target remaining B r an excellent Byr e cellent fit with ith Íslandsbanki MARKET SHARE IN ICELANDIC RETAIL MARKET By % With market share of about 9%, Byr was focused on retail banki
Slide 7: Successful covered bond issuances
Successful covered bond issuances Íslandsbanki the first bank to list securities on NASDAQ OMX Iceland since the fall of 2008 ISK 100bn covered bond programme in place Covered bonds a sensible funding option Three oversubscribed issuances to date: Increasingly popular as means of funding in ‐ De
Slide 8: II. Income Statement FY 2011
II. Income Statement FY 2011 8
Slide 9: FY 2011 financial highlights
FY 2011 financial highlights Key ratios ROE EXCLUDING ONE ONE‐OFF OFF ITEMS* ITEMS ROE 11.0% 1.5% RESULTS RESULTS 2010: 17.2% % 2010: 28.5% NET INTEREST MARGIN TOTAL DEPOSIT / LOAN RATIO PROFITABILITY FUNDING 4.5% 86.5% 2010: 5.0% 5 0% 2010: 77.5% P CORE COST / INCOME RATIO** TOTAL CAPITAL RATIO STR
Slide 10: Income statement
Income statement Full year comparison Net interest income FY FY ISK m 2011 2010 Decreasing interest rate environment in Iceland Net valuation changes Net interest income 31,225 34,874 Net valuation changes on loans and receivables ( 1,296) 14,507 Comprises future estimated cash flow from loans a
Slide 11: Significant impact of one-off items on profit
Significant impact of one‐off one off items on profit January – December 2011 ONE‐OFF ITEMS AND OTHER EXTRAORDINARY ITEMS Largest one‐off items ISK m 247 496 ‐ 841 Goodwill resulting from 17,873 ‐ 3,982 Byr merger fully impaired in Q4: ISK 17.9bn 17 9bn 13,905 Estimated cost of the February Supr
Slide 12: FY 2011 income split
FY 2011 income split Core operations continue to generate vast majority of income CORE INCOME – NII and NFC OPERATING INCOME SPLIT By business segment, ISK m By income type 20,000 17,923 NII ISK 31.2BN 31 2BN NFC ISK 6 6.0BN 0BN 15,000 15% 8% NII 10,000 7,985 , ISK 40.5 bn NFC 5,936 OTHER INCOME 5,0
Slide 13: III. Assets & Restructuring FY 2011
III. Assets & Restructuring FY 2011 13
Slide 14: Assets
Assets Consolidated – 31 December 2011 Cash and balances with Central Bank ISK m 31.12.2011 31.12.2010 Changes in cash balance mainly due to management of liquid assets between cash and bonds Cash and balances with CB 57,992 30,799 Bonds and debt instruments Derivatives 339 70 Mainly G5 governme
Slide 15: Well diversified loan portfolio
Well diversified loan portfolio Acquisition of Byr diversified the portfolio further CONSOLIDATED LOAN PORTFOLIO CONSOLIDATED LOAN PORTFOLIO ISK bn, by sector By type of exposure 608 600 Other sectors 52 15% Term loans and loan 525 34 7% agreements 500 41 39 Industrials 5% Mortgages 31 45 8% 39 Gove
Slide 16: Loan portfolio performance
Loan portfolio performance No further impairments expected on portfolio, 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 insti
Slide 17: IV. Liabilities, Liquidity & Capitalisation
IV. Liabilities, Liquidity & Capitalisation 17
Slide 18: Liabilities
Liabilities Consolidated – 31 December 2011 D Deposits it ISK m 31.12.2011 31.12.2010 Increase due to Byr Financial liabilities 9,346 9,090 Debt issued and other borrowings Derivatives 4 027 4,027 429 ISK 52bn bond issued to the Central Bank secured on a pool of mortgages Deposits from CB and cr
Slide 19: Deposits
Deposits Deposits of parent company increased by 24% due to Byr merger DEPOSIT DEVELOPMENT DEPOSIT COMPOSITION T l exposure, parent company, ISK bn Total b B customer type By 600 Foreign financial 534 Domestic institutions Other financial 0% 9% Individuals, 500 +24% institutions stable 430 5% 26% 40
Slide 20: Solid funding base
Solid funding base Deposits largest source of funding FUNDING STRUCTURE Prudent asset and liability management Diversification of funding 100% Other Other Íslandsbanki is aiming for Deposits from ST fundingg further diversification of 90% ST Loans to CIs CIs & CBs assets Bonds & debt funding sourc
Slide 21: Sound management of liquidity
Sound management of liquidity Liquid assets of ISK 186bn far exceed regulatory targets LIQUIDITY BACK‐UP* BACK UP / DEPOSIT COVERAGE RATIO Regulatory liquidity requirements 31 December, parent company, ISK bn FME requires cash or cash‐like assets against demand Asset type ISK FX Total deposits of
Slide 22: Imbalances strictly monitored
Imbalances strictly monitored Gross foreign currency gap actively improved through restructuring IMBALANCES FX assets 31 December Categorisation based on customer cash flow Real FX assets (FX/FX) amount to ISK 168bn ISKm FX Inflation Exchange E h rate changes h are ffully ll offset ff iin the
Slide 23: Sound capital position
Sound capital position Exceeds legal and regulatory requirements of 16% and legal limit of 8% CAPITAL RATIOS Strong capitalisation Development, % The total capital ratio decreased in Q4 2011 32% mainly due to Byr merger 27.9% Still far exceeds regulatory 28% 26.6% requirements of 16% and 22.6% 2
Slide 24: Summary
Summary Economy is bouncing back and Íslandsbanki sound progress in 2011 paves way for continued success Íslandsbanki Economy bouncing back Consolidation in Icelandic Banking Universal bank offering Iceland the first country after the Íslandsbanki's acquisition of Byr is part comprehensive fin
Slide 25: V. Appendix: Íslandsbanki Profile
V. Appendix: Íslandsbanki Profile 25
Slide 26: Strong banking heritage
Strong banking heritage Serving Icelandic households, agriculture, industry and commerce since 1875 Íslandsbanki was established on 15 Oct 2008 after the Íslandsbanki’ss merger with Byr in December 2011 Íslandsbanki collapse of financial system Byr, the result of a line of mergers of Iceland’s sav
Slide 27: Universal banking in Iceland
Universal banking in Iceland International reach in niche sectors of Seafood and Geothermal energy One of Iceland´s largest universal banking Retail Corporate and financial services groups dating back to 21 BRANCHES PROVIDE FULL‐SERVICE CORPORATE 1875 NATIONAL COVERAGE BANK Staff of 1,100+ H
Slide 28: Increased management reporting clarity
Increased management reporting clarity Clearer reporting structure to improve accountability and transparency Board of Directors Internal Audit Ágúst g Hrafnkelsson CEO Birna Einarsdóttir Retail Banking Corporate Banking Markets Wealth CFO CRO COO Una Steinsdóttir Vilhelm M. Tryggvi ygg Björn j Mana
Slide 29: Executive Management Board
Executive Management Board A strong team holding diversified backgrounds within banking and finance BIRNA EINARSDÓTTIR UNA STEINSDÓTTIR VILHELM M. THORSTEINSSON Chief Executive Officer Retail Banking Corporate Banking Birna Einarsdóttir first joined Una Steinsdóttir joined Íslandsbanki Vilhelm Már T
Slide 30: Ownership structure
Ownership structure Current owner intends to exit within 5 years, has mandated UBS as advisor Shareholders WINDING UP BOARD WINDING‐UP On 13 Sept 2009 Glitnir, Íslandsbanki and the Icelandic GLITNIR BANKI HF. Government agreed on the settlement of assets and liabilities “Old” Bank between the “old
Slide 31: Board of Directors
Board of Directors Independent board combining international experience with domestic expertise FRIDRIK SOPHUSSON JOHN EE. 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 experienc
Slide 32: Íslandsbanki different from predecessor
Íslandsbanki different from predecessor Significant change in operations and overall direction WEAKNESSES IN GLITNIR GLITNIR’SS OPERATIONS CHANGE • Expansion into highly leveraged LBO and • Focus on the strengths derived from the acquisition Loss of focus on core commercial real estate markets outsi
Slide 33: Thank you
Thank you 33