Arion Banki hf · OMXICE:ARION
Arion Banki hf — Arion Bank — Q1 2015 Earnings Presentation
23 slides from Arion Banki hf's earnings presentation, May 12, 2015
Slide 1: Financial Statements 31.3.2015 Investor Presentation
FINANCIAL STATEMENTS 31.3.2015 INVESTOR PRESENTATION 12 MAY 2015
Slide 2: Highlights of Q1 2015: Bond issue and sale of shareholdings
HIGHLIGHTS OF Q1 2015 BOND ISSUE IN EUROS AND SALE OF SHAREHOLDINGS IN TWO COMPANIES Sale of shares in companies in non-core Funding operations First major benchmark bond issue in euros Sale and listing of shares in Refresco Gerber – €300 million (approx. ISK 45 billion) – Arion Bank and subsidi
Slide 3: Highlights of Q1 2015: Better banking
HIGHLIGHTS OF Q1 2015 BETTER BANKING Arion express service Loans Strong emphasis on introducing Arion express New loans in the seafood industry in service to customers. Adverts, courses and cooperation with DNB Bank promotion in branches Continued emphasis on mobile banking Innovation App us
Slide 4: Headline figures for Q1 2015
HEADLINE FIGURES FOR Q1 2015 NET EARNINGS AFFECTED BY VALUE CHANGES OF EQUITIES RELATING TO IPO’S Q1 2015 results Efficiency Strength Asset quality Return on Return on Cost-to- Problem Regular equity income ratio Tier 1 ratio loans operations 35.1% 9.8% 29.3% 21.2% 3.2% Q1 2014: 7.8% Q1 2014: 4.7% Q
Slide 5: Highlights in Q1 2015: Continued strong earnings
HIGHLIGHTS IN Q1 2015 CONTINUED STRONG EARNINGS FOR ARION BANK Net earnings are characterized by high net Net Net interest financial income and other income due to sale earnings income and listing of legacy equity holdings ISK 14,908 ISK 5,783 Net earnings for Q1 2015 ISK 14,908 million million
Slide 6: Income Statement
INCOME STATEMENT 6
Slide 7: Income Statement
INCOME STATEMENT OUTSTANDING PERFORMANCE IN Q1 2015 Net interest income in line with previous quarters Q1 2015 Q4 2014 Q3 2014 Q2 2014 Q1 2014 Net interest income 5,783 5,911 6,343 6,483 5,483 Commission income Net commission income 3,757 3,192 3,526 3,445 3,148 continues to show Net financial incom
Slide 8: Net Interest Income
NET INTEREST INCOME NIM AFFECTED BY NEW FUNDING STILL TO BE CHANNELLED INTO NEW LOANS OR PREPAYMENTS Inflation remains low. 7.5 Interest income from loans CPI balance increased 15 6.5 12.7 by 10% from Q1 2014 6.3 11.6 12.0 10.5 5.9 9.6 Decrease in NIM due 5.8 10 5.5 to increase in low 6.3% 6.7% 6.2%
Slide 9: Net Commission Income
NET COMMISSION INCOME STRONG GROWTH FROM INVESTMENT BANKING AND INTERNATIONAL OPERATIONS OF VALITOR Commission income 5 from cards continues Breakdown of Net commission income to grow mainly due to Q1 2015 growth in international operations of Valitor 3.8 3.4 3.5 0.1 Asset management a 0.3 stable so
Slide 10: Net Financial Income
NET FINANCIAL INCOME EXCELLENT RETURN ON LISTED AND UNLISTED EQUITY POSITIONS Bonds (ISK bn.) and return on bonds (%) (returns include interest income) 9 80.0 73.2 Excellent return on 67.8 67.8 69.7 68.5 equity positions during the period, mainly due 60.0 to shares in Refresco Gerber in connection 9
Slide 11: Total Operating Expenses
TOTAL OPERATING EXPENSES CONTINUED FOCUS ON OPERATING EFFICIENCY Cost-to-income ratio (%) Salaries in line with 80 69.0 10.0 previous quarters 53.5 45.0 Number of employees 8.4 40.5 decreased at the 40 29.3 parent company during the period 6.8 Other operating 6.2 6.4 0 expenses reducing 4.5 Q1-14 Q2
Slide 12: Balance Sheet
BALANCE SHEET 12
Slide 13: Balance Sheet
BALANCE SHEET STRONG BALANCE SHEET OFFERS VARIOUS OPPORTUNITIES Assets above ISK 1,000 Assets 31.3.2015 31.12.2014 31.12.2013 31.12.2012 31.12.2011 billion for the first time, increase in assets Cash & balances with CB 64 21 38 30 29 mainly in cash and cash Loans to credit institutions 126 109 102 1
Slide 14: Loans to Customers
LOANS TO CUSTOMERS INCREASE IN LOANS TO CORPORATES Mortgage loans Loans to corporates by sector (%) 700 decreased due to the 649 648 Real Estate & Construction debt relief of CPI 636 indexed mortgage 50 53 Fishing 600 52 6 6 loans by the Icelandic 562 567 7 25 Wholesale & Retail government 52 8 Fina
Slide 15: Funding
FUNDING STRONG LONG-TERM FUNDING – LIMITED NEED FOR REFINANCING The Bank issued 3-year Maturity of long-term funding EUR 300 million senior 90 1,004 unsecured bond in 1,000 March. Interest rate on 939 934 64 ISK FX 892 901 20 62 the bond is 3.125% 58 61 52 59 32 32 119 47 Deposits increased 32 34 71
Slide 16: Capital Base
CAPITAL BASE SOLID CAPITAL BASE – DIVIDEND OF ISK 12.8 BILLION PAID IN APRIL Decrease in Tier 1 Total capital base (ISK bn.) Total capital ratio (%) and RWA (ISK bn.) capital due to 200 proposed dividend 184 30 171 174 Decrease in Tier 2 due 26.3 159 32 to prepayment of 20 32 24.3 24.0 subordinated
Slide 17: Key Financial Indicators
WY S Ee <= L Q = a N < O Zz <x z iL > Lu =
Slide 18: Key Financial Indicators
KEY FINANCIAL INDICATORS Return on equity (%) Cost-to-income ratio (%) Net interest margin (%) Problem loans* (%) 35.1 72.6 69.0 10.2 3.1 2.6 6.1 7.8 29.3 2.6 4.3 3.2 Q1-13 Q1-14 Q1-15 Q1-13 Q1-14 Q1-15 Q1-13 Q1-14 Q1-15 Q1-13 Q1-14 Q1-15 Loans-to-deposits ratio (%) Tier 1 ratio (%) Liquidity covera
Slide 19: Key Financial Indicators
KEY FINANCIAL INDICATORS Return on equity (%) Cost-to-income ratio (%) Net interest margin (%) 35.1 57.3 52.5 49.8 50.1 3.4 3.4 2.9 2.8 2.6 18.6 29.3 13.8 10.5 9.2 2011 2012 2013 2014 Q1 2015 2011 2012 2013 2014 Q1 2015 2011 2012 2013 2014 Q1 2015 CPI imbalance – ISK bn. FX imbalance – ISK bn. Risk
Slide 20: Questions
es a /~ 2& Arion Bank QUES _
Slide 21: Additional Information: Income Statement in EUR
ADDITIONAL INFORMATION INCOME STATEMENT – EUR (MILLION) Q1 2015 Q4 2014 Q3 2014 Q2 2014 Q1 2014 Net interest income 38 38 41 42 35 Net commission income 25 21 23 22 20 Net financial income 50 9 13 29 (4) Other income 31 34 4 15 6 Operating income 145 102 82 108 57 Salaries and related expense (23) (
Slide 22: Additional Information: Balance Sheet in EUR
ADDITIONAL INFORMATION BALANCE SHEET – EUR (MILLION) Assets Q1 2015 2014 2013 2012 2011 Cash & balances with CB 431 137 240 176 184 Loans to credit institutions 853 705 645 598 435 Loans to customers 4,405 4,197 4,011 3,355 3,536 Financial assets 724 660 546 816 993 Investment property 54 44 180 171
Slide 23: 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