Islandsbanki hf · OMXICE:ISB
Islandsbanki hf — Q2 2024 Earnings Presentation
49 slides from Islandsbanki hf's earnings presentation, Jul 25, 2024
Slide 1: 2Q24 Financial Results
2Q24 Financial Results 25 July 2024 Jón Guðni Ómarsson Chief Executive Officer Ellert Hlöðversson Chief Financial Officer
Slide 2: Profit in line with analyst consensus
Íslandsbanki 2Q24 Financial Results Profit in line with analyst consensus Net interest margins holding steady while imbalances continue to have adverse effects 25 July 2024 ROE at 2024 guidance C/I ratio affected by IT investments ROE C/I ratio1 44.9% 46.4% 11.5% 11.0% 11.2% 42.6% 42.1% 9.8% 9.7% 39
Slide 3: Capital optimisation includes additional share buybacks
Íslandsbanki 2Q24 Financial Results Capital optimisation includes additional share buybacks Reported ROE in line with analyst consensus including a charge of 470m due to an administrative fine 25 July 2024 Target 2Q24 2024 Guidance Loans to customers and revenues, in general to grow in line with nom
Slide 4: Warm winds, cool seas? Modest growth following GDP surge
Íslandsbanki 2Q24 Financial Results Warm winds, cool seas? Modest growth following GDP surge Tepid GDP growth in 2024, followed by steadily accelerating growth later on 25 July 2024 Domestic demand to take over from exports as primary growth driver.. ..and housing market appears resilient in the fac
Slide 5: Íslandsbanki second quarter
Íslandsbanki 2Q24 Financial Results Rating action Íslandsbanki participated in a Highest turnover in equities A3 Stable outlook milestone infrastructure on Nasdaq Iceland YTD refinancing 25 July 2024 Legislation passed by Parliament Íslandsbanki Market share amongst SMEs second quarter in June on fu
Slide 6: Financial Health remains a focal point
Íslandsbanki 2Q24 Financial Results Financial Health remains a focal point Wealth creation by supporting good financial habits in a digital way Digital development within Íslandsbanki 25 July 2024 supports financial health in various ways Recent digital updates include • New campaign focusing on Fin
Slide 7: Íslandsbanki Reykjavík Marathon 24 August 2024
Íslandsbanki 2Q24 Financial Results Íslandsbanki Reykjavík Marathon 25 July 2024 24 August 2024 Biggest charitable Key funding event event in Iceland annually for many charitable organisations 40-year anniversary ISK 200 million of the first Reykjavík raised in 2023 – ISK marathon 1.4 billion since
Slide 8: Financial overview
Íslandsbanki 2Q24 Financial Results 25 July 2024 Financial overview islandsbanki.is
Slide 9: Profit before tax ahead of analyst consensus
Íslandsbanki 2Q24 Financial Results Profit before tax ahead of analyst consensus Changes in impairments account for the largest part of Q-on-Q comparison 25 July 2024 Profit for the period – 2Q23 vs 2Q24 ISKm (121) (173) 210 (149) (1,108) 389 79 6,139 5,266 2Q23 Net interest Net fee & Other net Oper
Slide 10: Net interest income and margin increasing from 1Q24
Íslandsbanki 2Q24 Financial Results Net interest income and margin increasing from 1Q24 Pressure on NII anticipated as inflation is expected to subside in the second half of 2024 25 July 2024 Highlights Net interest income Net interest income – YoY comparison – Lending margin was By business segment
Slide 11: Payment processing and cards the largest NFCI contributor
Íslandsbanki 2Q24 Financial Results Payment processing and cards the largest NFCI contributor Year-on-year growth in Allianz while volatility in financial markets has adverse effects 25 July 2024 Highlights Net fee and commission income Net fee and commission income – YoY comparison – Net income fro
Slide 12: Volatile markets continue to affect NFI
Íslandsbanki 2Q24 Financial Results Volatile markets continue to affect NFI Limited market risk exposure on the Bank's balance sheet 25 July 2024 Highlights Net financial income (expense) Shares and equity instruments 1 – High policy rates continue to ISKm ISKbn have significant negative effects on
Slide 13: Cost-to-income ratio in excess of target
Íslandsbanki 2Q24 Financial Results Cost-to-income ratio in excess of target Increased operational expenditure related to additional FTEs, inflation and IT investments 25 July 2024 Highlights Administrative expenses Cost-to-income ratio1,2 – Salaries and related ISKm expenses increased by 46.4% 7.9%
Slide 14: Lending growth with modest credit risk profile
Íslandsbanki 2Q24 Financial Results Lending growth with modest credit risk profile LTVs flat throughout the year despite high inflation and interest rates 25 July 2024 Highlights Loans to customers Loans to customers – A growth of 2.3% in the By business division, ISKbn By sector, with tourism as a
Slide 15: NPL reducing between quarters
Íslandsbanki 2Q24 Financial Results NPL reducing between quarters Reduction in Stage 2 loans related to Grindavík and improved status of a few credit cases 25 July 2024 Highlights Net impairment on financial assets Loans to customers: Stage 2 and 3 (NPL) – The Group continues to use By period, ISKbn
Slide 16: Well collateralised mortgage book with stable NPLs
Íslandsbanki 2Q24 Financial Results Well collateralised mortgage book with stable NPLs Continued shift to CPI-linked loans while fixed rate imbalance subsides in the banking book 25 July 2024 Highlights Mortgage portfolio Interest rate reset profile for NIL 3-5y fixed rate mortgages – Conservative p
Slide 17: CRE portfolio well diversified and of good quality
Íslandsbanki 2Q24 Financial Results CRE portfolio well diversified and of good quality Reduced NPLs despite high inflation due to high occupancy ratios and natural CPI hedge 25 July 2024 Highlights Development of exposure to real estate companies Development of construction exposure – Loans to real
Slide 18: Strong growth in retail deposits during 2Q24
Íslandsbanki 2Q24 Financial Results Strong growth in retail deposits during 2Q24 Deposits remain the largest funding base for the bank, now in excess of 50% 25 July 2024 Highlights Funding sources Customer loans to customer deposits ratio – Retail deposits (individuals and By type, % of total liabil
Slide 19: Light maturity profile will allow opportunistic issuance
Íslandsbanki 2Q24 Financial Results Light maturity profile will allow opportunistic issuance Repurchase of EUR 300m due in 2026 on the back of strong capital and liquidity position 25 July 2024 Highlights Sources of borrowings Contractual maturity profile of Currency split of borrowings – During 2Q2
Slide 20: Strong liquidity position, ratios well above requirements
Íslandsbanki 2Q24 Financial Results Strong liquidity position, ratios well above requirements Despite reduction due to buyback of EUR 300m bond end of 2Q24, liquid assets are 17% of total assets 25 July 2024 Highlights Total liquidity coverage ratio (LCR) Liquidity coverage ratio for ISK – All liqui
Slide 21: Íslandsbanki's capital ratios well above target
Íslandsbanki 2Q24 Financial Results Íslandsbanki's capital ratios well above target Results of SREP and implementation of Basel IV provide additional capital optimization capacity 25 July 2024 Highlights Capital and leverage ratios Current regulatory requirements and minimum capital – SREP: As of 30
Slide 22: Share price development broadly in line with the overall market
Íslandsbanki 2Q24 Financial Results Share price development broadly in line with the overall market Foreign ownership holds steady since 2021 listing on Nasdaq Iceland 25 July 2024 Highlights Íslandsbanki share price and foreign ownership development – Diverse ownership with one of Closing price1 (I
Slide 23: 2Q24 results in line with guidance
Íslandsbanki 2Q24 Financial Results 2Q24 results in line with guidance Continued disinflation paves the way for policy rate cuts to commence 25 July 2024 Results broadly in line with guidance Continued disinflation on the horizon • PBT in excess of consensus and ROE inc. • Tepid GDP growth in 2024 w
Slide 24: Q&A
Íslandsbanki 2Q24 Financial Results 25 July 2024 Q&A islandsbanki.is
Slide 25: Appendix I – About Íslandsbanki and additional financial information
Íslandsbanki 2Q24 Financial Results 25 July 2024 Appendix I – About Íslandsbanki and additional financial information islandsbanki.is
Slide 26: This is Íslandsbanki
Íslandsbanki 2Q24 Financial Results This is Íslandsbanki Our purpose is to be a force for good by empowering our customers to succeed 25 July 2024 Vision and Values The Bank Market share1 Sustainability 2Q24 FTEs To create value 726 30% retail customers Íslandsbanki published a principle adverse imp
Slide 27: Financial overview
Íslandsbanki 2Q24 Financial Results Financial overview Key figures & ratios 2Q24 1Q24 4Q23 3Q23 2Q23 PROFITABILITY Profit for the period, ISKm 5,266 5,417 6,228 6,007 6,139 25 July 2024 Return on equity 9.7% 9.8% 11.2% 11.0% 11.5% Net interest margin (of total assets) 3.1% 3.0% 2.9% 2.9% 3.2% Cost-t
Slide 28: Income Statement
Íslandsbanki 2Q24 Financial Results Income Statement Profitability close to financial targets Income statement, ISKm 2Q24 2Q23 ∆% 1H24 1H23 ∆% 2023 25 July 2024 Net interest income 12,491 12,612 (1%) 24,613 25,035 (2%) 48,611 Net fee and commission income 3,419 3,592 (5%) 6,715 7,061 (5%) 14,234 Net
Slide 29: Balance sheet reflects a balanced loan and funding profile
Íslandsbanki 2Q24 Financial Results Balance sheet reflects a balanced loan and funding profile Conservative mix of assets and stable funding 25 July 2024 Assets Simplified balance sheet structure 30.6.24, ISK 1,596bn – Vast majority of assets consist of lending to both retail and corporates Cash in
Slide 30: Assets
Íslandsbanki 2Q24 Financial Results Assets Asset base mainly consists of loans and liquid assets Assets, ISKm 30.6.24 31.3.24 Δ Δ% 31.12.23 Δ Δ% 25 July 2024 Cash and balances with Central Bank 84,981 68,746 16,235 24% 87,504 (2,523) (3%) Loans to credit institutions 46,599 114,430 (67,831) (59%) 73
Slide 31: Liabilities and equity
Íslandsbanki 2Q24 Financial Results Liabilities and equity Deposits continue to be the largest source of funding Liabilities & Equity, ISKm 30.6.24 31.3.24 Δ Δ% 31.12.23 Δ Δ% 25 July 2024 Deposits from Central Bank and credit institutions 10,466 14,103 (3,637) (26%) 16,149 (5,683) (35%) Deposits fro
Slide 32: Appendix II – Icelandic economy update
Íslandsbanki 2Q24 Financial Results 25 July 2024 Appendix II – Icelandic economy update islandsbanki.is
Slide 33: GDP growth tepid in 2024 but set to regain momentum later
Íslandsbanki 2Q24 Financial Results GDP growth tepid in 2024 but set to regain momentum later Highlights 25 July 2024 GDP and contribution of its subcomponents GDP and contribution of its subcomponents – Following a surge in 2021-2022 GDP growth began to decline in 2023, with a Volume change from pr
Slide 34: Modest export growth in the offing as tourist sector matures
Íslandsbanki 2Q24 Financial Results Modest export growth in the offing as tourist sector matures Negligible export growth expected this year, but more robust growth seen in coming years Highlights 25 July 2024 – Despite earthquakes and the threat of Number of foreign tourists, by year Exports and co
Slide 35: External trade in the black once again
Íslandsbanki 2Q24 Financial Results External trade in the black once again A better balance between exports and demand is reflected in a modest current account surplus Highlights 25 July 2024 Imports and contribution from subcomponents Current account balance – Imports slammed into reverse in 2023,
Slide 36: External trade in the black once again
Íslandsbanki 2Q24 Financial Results External trade in the black once again A better balance between exports and demand is reflected in a modest current account surplus Highlights 25 July 2024 Imports and contribution from subcomponents Current account balance – Imports slammed into reverse in 2023,
Slide 37: Domestic balance sheets remain healthy
Íslandsbanki 2Q24 Financial Results Domestic balance sheets remain healthy Economy-wide leverage remains moderate as the ratio of private sector debt to GDP declines 25 July 2024 Private sector debt Corporate debt % of GDP % of GDP 400 250 200 300 150 200 100 100 75 50 73 0 0 2003 2005 2007 2009 201
Slide 38: Investment on an upward path over the forecast horizon
Íslandsbanki 2Q24 Financial Results Investment on an upward path over the forecast horizon Growing need for investment, lower rates, and greater optimism fuel investment growth Highlights 25 July 2024 Investment, real change, and contribution of subcomponents Business investment and related indicato
Slide 39: Labour market remains hardy but tension eases
Íslandsbanki 2Q24 Financial Results Labour market remains hardy but tension eases Real wage set to grow during the forecast horizon Highlights 25 July 2024 Wages, year on year change Unemployment1 – The Icelandic labour market is hardy % % of workforce, annual average and resilient, and we do not ex
Slide 40: Private consumption shifts gears
Íslandsbanki 2Q24 Financial Results Private consumption shifts gears Households' consumption declines and saving rises Highlights 25 July 2024 Household saving Private consumption and related indicators – Private consumption shrank YoY in 2H23 but was broadly unchanged year- % of disposable income %
Slide 41: The real estate market has been robust in recent quarters
Íslandsbanki 2Q24 Financial Results The real estate market has been robust in recent quarters Central Bank measures seem to have a greater impact on CRE than on residential house prices 25 July 2024 Capital area house prices relative to macroeconomic fundamentals Residential house prices and turnove
Slide 42: The Icelandic housing market is relatively resilient
Íslandsbanki 2Q24 Financial Results The Icelandic housing market is relatively resilient Supply, demand, mortgage market factors combine to make a large price correction less likely 25 July 2024 Households are not highly indebted compared to peers Mortgage market is flexible w.r.t. loan types with d
Slide 43: The bumpy road to disinflation
Íslandsbanki 2Q24 Financial Results The bumpy road to disinflation Inflation has proven persistent but looks set to decline towards target in due course 25 July 2024 Highlights Inflation and the CBI inflation target* Month-on-month and year-on-year CPI change* – Twelve-month inflation measured % *Fo
Slide 44: How quickly will interest rates fall?
Íslandsbanki 2Q24 Financial Results How quickly will interest rates fall? Declining inflation and a cooling economy pave the way for relatively slow monetary easing Highlights 25 July 2024 Policy rate and inflation* Key interest rates – The Central Bank of Iceland has %, Real policy rate based on 12
Slide 45: A modest ISK appreciation in the offing
Íslandsbanki 2Q24 Financial Results A modest ISK appreciation in the offing A higher real exchange rate will impede further improvement in the CA later on Highlights 25 July 2024 ISK exchange rate and selected determinants Real exchange rate and current account balance – Following a period of intra-
Slide 46: Iceland's credit rating continues its gradual upward trend
Íslandsbanki 2Q24 Financial Results Iceland's credit rating continues its gradual upward trend Rating companies acknowledge the flexibility of the economy and resilience to recent global shocks 25 July 2024 Development of sovereign credit rating Fitch in Dec-17: Moody's in Nov-19: Moody's in Jul-23:
Slide 47: The Icelandic economy and society draw on many strengths
Íslandsbanki 2Q24 Financial Results The Icelandic economy and society draw on many strengths Icelanders enjoy high standards of living in a modern, open and egalitarian society 25 July 2024 Iceland ranks highly on a variety of global Income inequality is low compared to OECD peers Sustainable energy
Slide 48: Disclaimer
Íslandsbanki 2Q24 Financial Results 25 July 2024 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 forecasts o
Slide 49: islandsbanki.is
Íslandsbanki 2Q24 Financial Results 25 July 2024 islandsbanki.is