Islandsbanki Hf · OMXICE:ISB
Islandsbanki Hf — FY2023 Earnings Presentation
49 slides from Islandsbanki Hf's earnings presentation, Feb 8, 2024
Slide 1: 4Q23 & FY2023 Financial Results
4Q23 & FY2023 Financial Results 8 February 2024 Jón Guðni Ómarsson Chief Executive Officer Ellert Hlöðversson Chief Financial Officer
Slide 2: ROE of 11.3% in 2023 in a mixed business environment
Íslandsbanki 4Q23 and FY2023 Financial Results ROE of 11.3% in 2023 in a mixed business environment Steady growth in core income compared to 2022 8 February 2024 Core income growth between years C/I ratio below guidance NII and NFCI, ISKbn C/I ratio1 48.6 40.6% 42.1% 42.6% 42.7% 41.6% 41.6% 12.6 39.
Slide 3: Financial targets reached in 2023
Íslandsbanki 4Q23 and FY2023 Financial Results Financial targets reached in 2023 Dividend of 50% of earnings to be proposed to AGM and continued buybacks in 2024 8 February 2024 Target 4Q23 FY2023 2024 Guidance Loans to customers and revenues, in general to grow in line with nominal GDP through the
Slide 4: From cascade to calm: Iceland's economy crests the rapids
Íslandsbanki 4Q23 and FY2023 Financial Results From cascade to calm: Iceland's economy crests the rapids Tepid GDP growth in 2024, followed by steadily accelerating growth later on 8 February 2024 Domestic demand to take over gradually from exports as growth revives.. ..and housing market appears mo
Slide 5: Refunds to customers / market share among SMEs
Íslandsbanki 4Q23 and FY2023 Financial Results Refunds to customers 39% market share from Fríða benefit amongst SME's1 system increased 8 February 2024 by 55% in 2023 Leading in FX Sales in Iceland Strong partner in Corporate Finance Encouraging Fróði and supporting Strengthening innovation 2.0 our
Slide 6: Business Banking had another strong year
Íslandsbanki 4Q23 and FY2023 Financial Results Business Banking had another strong year Serving 22,000 customers around the country Business Banking Digital Journey 8 February 2024 • Serves SME's through • Digital corporate onboarding corporate banking centres • Equity trading for corporates in and
Slide 7: Major digital wins in 2023
Íslandsbanki 4Q23 and FY2023 Financial Results Major digital wins in 2023 8 February 2024 • New Digital & Data unit and strategic investment in data-driven digital product development 51% 80% of advisory centre chats of changes to credit are now serviced by card limit changes • Data driven sales and
Slide 8: Continued strong focus on sustainability
Íslandsbanki 4Q23 and FY2023 Financial Results Continued strong focus on sustainability Guiding our customers through communication and own initiatives 8 February 2024 1 2023 HIGHLIGHTS 93% 25 of the Bank's credit risk meetings with clients of exposure2 assessed with Corporate and Investment regards
Slide 9: Updated Sustainable Funding Framework
Íslandsbanki 4Q23 and FY2023 Financial Results Updated Sustainable Funding Framework The Sustainable Funding framework enables the bank to define clearly what loans of the Bank’s loan portfolio can be considered Sustainable 8 February 2024 Íslandsbanki has published an updated Sustainable Funding Fr
Slide 10: Financial overview
Íslandsbanki 4Q23 and FY2023 Financial Results 8 February 2024 Financial overview islandsbanki.is
Slide 11: Core income grew by 9.9% in 2023
Íslandsbanki 4Q23 and FY2023 Financial Results Core income grew by 9.9% in 2023 High interest rate and inflation impacted operations 8 February 2024 Profit for the period – 4Q22 vs 4Q23 Profit for the year – 2022 vs 2023 ISKm ISKm 1,335 181 (3,533) 5,485 (2,591) (713) (114) (73) 429 (23) 355 (618) (
Slide 12: NII affected by subsiding inflation
Íslandsbanki 4Q23 and FY2023 Financial Results NII affected by subsiding inflation Central Bank policy rates unchanged during period 8 February 2024 Highlights Net interest income Net interest income – YoY comparison – Lending margin was By business segments, ISKm ISKm 1.8% in 4Q23 (1.8% in 12,348 1
Slide 13: Strong fee income from cards and payment processing
Íslandsbanki 4Q23 and FY2023 Financial Results Strong fee income from cards and payment processing in 2023 Allianz Ísland hf., a subsidiary of the Bank, continues to contribute healthily to NFCI 8 February 2024 Highlights Net fee and commission income Net fee and commission income – YoY comparison –
Slide 14: Positive turnaround in NFI towards the end of the year
Íslandsbanki 4Q23 and FY2023 Financial Results Positive turnaround in NFI in towards the end of the year Volatile market environment affects the overall 2023 performance 8 February 2024 Highlights Net financial income (expense) Shares and equity instruments 1 – Income in NFI in the quarter ISKm ISKb
Slide 15: Cost-to-income ratio beats target of below 45%
Íslandsbanki 4Q23 and FY2023 Financial Results Cost-to-income ratio beats target of below 45% 41.6% cost-to-income ratio for 2023 the same as 2022 8 February 2024 Highlights Administrative expenses Cost-to-income ratio1,2 – Increase in salaries in ISKm 4Q23 from 3Q23 is primarily explained by 7,551
Slide 16: Stable lending with modest credit risk profile
Íslandsbanki 4Q23 and FY2023 Financial Results Stable lending with modest credit risk profile Diversified and highly collateralised loan portfolio 8 February 2024 Highlights Loans to customers Loans to customers – The credit quality of By business division, ISKbn By sector, with tourism as a separat
Slide 17: Credit quality remains strong
Íslandsbanki 4Q23 and FY2023 Financial Results Credit quality remains strong Increase in loans on Stage 2 and impairment allowance is a result of seismic activity 8 February 2024 Highlights Net impairment on financial assets Loans to customers: Stage 2 and 3 (NPL) 1.0 – Temporary changes were By per
Slide 18: Mortgage portfolio continues to shift towards CPI-linked loans
Íslandsbanki 4Q23 and FY2023 Financial Results Mortgage portfolio continues to shift towards CPI-linked loans Loan to value is strong and supports this shift 8 February 2024 Highlights Mortgage portfolio Interest rate reset profile for NIL 3-5Y fixed rate mortgages – Conservative payment By interest
Slide 19: Real estate and construction sector in a good shape
Íslandsbanki 4Q23 and FY2023 Financial Results Real estate and construction sector in a good shape High interest rates and inflation temper loan growth 8 February 2024 Highlights Development of exposure to real estate companies Development of construction exposure – Loans to real estate companies Gr
Slide 20: Deposits are the largest source of funding
Íslandsbanki 4Q23 and FY2023 Financial Results Deposits are the largest source of funding Strong year-on-year growth in deposits 8 February 2024 Highlights Funding sources Customer loans to customer deposits ratio – Retail deposits (individuals and By type, % of total liabilities and equity Developm
Slide 21: Seasoned and diversified long-term funding programme
Íslandsbanki 4Q23 and FY2023 Financial Results Seasoned and diversified long-term funding programme Strong liquidity position and positive spread development in 2023 8 February 2024 Highlights Sources of borrowings Contractual maturity profile of Currency split of borrowings – In 2023 the Bank was a
Slide 22: Strong liquidity position, ratios well above requirements
Íslandsbanki 4Q23 and FY2023 Financial Results Strong liquidity position, ratios well above requirements Liquid assets of ISK 313bn, representing 20% of total assets 8 February 2024 Highlights Total liquidity coverage ratio (LCR) Liquidity coverage ratio for ISK – All liquidity measures above regula
Slide 23: Strong capital position
Íslandsbanki 4Q23 and FY2023 Financial Results Strong capital position Capital ratios rise with REA optimization/advancements 8 February 2024 Highlights Capital ratios and leverage ratio – MREL ratio, including the CET1 % of REA (% of total exposure for leverage ratio) capital held to meet Strong ca
Slide 24: Q&A
Íslandsbanki 4Q23 and FY2023 Financial Results 8 February 2024 Q&A islandsbanki.is
Slide 25: Appendix I – About Íslandsbanki and additional financial information
Íslandsbanki 4Q23 and FY2023 Financial Results 8 February 2024 Appendix I – About Íslandsbanki and additional financial information islandsbanki.is
Slide 26: This is Íslandsbanki
Íslandsbanki 4Q23 and FY2023 Financial Results This is Íslandsbanki Our purpose is to be a force for good by empowering our customers to succeed 8 February 2024 Vision and Values The Bank Market share1 Sustainability 4Q23 FTEs To create value 725 31% retail customers The Bank has updated its Sustain
Slide 27: Key figures & ratios
Íslandsbanki 4Q23 and FY2023 Financial Results Financial overview Key figures & ratios 4Q23 4Q22 2023 2022 2021 8 February 2024 PROFITABILITY Profit for the period, ISKm 6,228 5,982 24,585 24,535 23,725 Return on equity 11.2% 11.1% 11.3% 11.8% 12.3% Net interest margin (of total assets) 2.9% 3.1% 3.
Slide 28: Income Statement
Íslandsbanki 4Q23 and FY2023 Financial Results Income Statement Income growth continues and profitability is robust 8 February 2024 Income statement, ISKm 4Q23 4Q22 ∆% 3Q23 ∆% 2023 2022 ∆% Net interest income 11,730 12,348 (5%) 11,846 (1%) 48,611 43,126 13% Net fee and commission income 3,773 4,038
Slide 29: Balance sheet reflects a balanced loan and funding profile
Íslandsbanki 4Q23 and FY2023 Financial Results Balance sheet reflects a balanced loan and funding profile Conservative mix of assets and stable funding 8 February 2024 Assets Simplified balance sheet structure 31.12.23, ISK 1,583bn – Vast majority of assets consist of lending to both retail and corp
Slide 30: Assets
Íslandsbanki 4Q23 and FY2023 Financial Results Assets Asset base mainly consists of loans and liquid assets 8 February 2024 Assets, ISKm 31.12.23 30.9.23 Δ Δ% 31.12.22 Δ Δ% Cash and balances with Central Bank 87,504 84,332 3,172 4% 94,424 (6,920) (7%) Loans to credit institutions 73,475 117,699 (44,
Slide 31: Liabilities and equity
Íslandsbanki 4Q23 and FY2023 Financial Results Liabilities and equity Deposits continue to be the largest source of funding 8 February 2024 Liabilities & Equity, ISKm 31.12.23 30.9.23 Δ Δ% 31.12.22 Δ Δ% Deposits from Central Bank and credit institutions 16,149 15,159 990 7% 15,269 880 6% Deposits fr
Slide 32: Appendix II – Icelandic economy update
Íslandsbanki 4Q23 and FY2023 Financial Results 8 February 2024 Appendix II – Icelandic economy update islandsbanki.is
Slide 33: Tepid GDP growth in 2024, followed by a steady rise later on
Íslandsbanki 4Q23 and FY2023 Financial Results Tepid GDP growth in 2024, followed by a steady rise later on 8 February 2024 Highlights GDP and contribution of its subcomponents GDP and contribution of its subcomponents – GDP growth surged in 2021-2022 but began to decline in 2023, with a Volume chan
Slide 34: The forecast is riddled with uncertainties, but these stand out
Íslandsbanki 4Q23 and FY2023 Financial Results The forecast is riddled with uncertainties, but these stand out 8 February 2024 Geopolitical unrest Wage agreements Grindavík Global tension and unrest are more widespread than they After initial signs of harmony and hopes of relatively The Government h
Slide 35: Tourism the mainstay of exports, but other sectors support
Íslandsbanki 4Q23 and FY2023 Financial Results Tourism the mainstay of exports, but other sectors support Just over 2.4 million tourists expected to visit Iceland in 2024, and more than 2.7 million in 2026 8 February 2024 Highlights Number of foreign tourists, by year Exports and contribution from s
Slide 36: Small current account surplus in coming years
Íslandsbanki 4Q23 and FY2023 Financial Results Small current account surplus in coming years CA surplus due to growing exports and weaker domestic demand growth , external position improves 8 February 2024 Highlights Imports and contribution from subcomponents Current account balance – Iceland's imp
Slide 37: Domestic balance sheets remain healthy
Íslandsbanki 4Q23 and FY2023 Financial Results Domestic balance sheets remain healthy Economy-wide leverage remains moderate as the ratio of private sector debt to GDP declines 8 February 2024 Private sector debt Corporate debt % of GDP % of GDP 400 300 350 250 300 250 200 200 150 150 100 100 76 50
Slide 38: Investment virtually flat this year but set to regain steam
Íslandsbanki 4Q23 and FY2023 Financial Results Investment virtually flat this year but set to regain steam Business investment to contract in 2024 and return to growth thereafter 8 February 2024 Highlights Investment, real change, and contribution of subcomponents Executives’ expectations and busine
Slide 39: Labour market tension to ease
Íslandsbanki 4Q23 and FY2023 Financial Results Labour market tension to ease Real wage set to grow during the forecast horizon 8 February 2024 Highlights Wages, year on year change Unemployment1 – The labour market has been quite % % of workforce, annual average tight in the recent term, and unemplo
Slide 40: Private consumption shifts gears
Íslandsbanki 4Q23 and FY2023 Financial Results Private consumption shifts gears Households consumption declines and saving rises 8 February 2024 Highlights Household saving Private consumption and related indicators – Private consumption shifted into % of disposable income % change YoY (left) and in
Slide 41: The real estate market has stabilized in recent quarters
Íslandsbanki 4Q23 and FY2023 Financial Results The real estate market has stabilized in recent quarters Central Bank measures have contributed to slower price increases of residential housing 8 February 2024 Capital area house prices relative to macroeconomic fundamentals Residential house prices an
Slide 42: The Icelandic housing market is relatively resilient
Íslandsbanki 4Q23 and FY2023 Financial Results The Icelandic housing market is relatively resilient Supply, demand, mortgage market factors combine to make a large price correction less likely 8 February 2024 Households are not highly indebted compared to peers Mortgage market is flexible w.r.t. loa
Slide 43: Is target level inflation a distant dream?
Íslandsbanki 4Q23 and FY2023 Financial Results Is target level inflation a distant dream? A wage-price spiral could develop 8 February 2024 Highlights Inflation and the CBI inflation target – Twelve-month inflation measured % 6.7% in January and has eased noticeably after peaking over 10% early in 2
Slide 44: Gradual monetary easing phase in the starting blocks
Íslandsbanki 4Q23 and FY2023 Financial Results Gradual monetary easing phase in the starting blocks Declining inflation and a shrinking positive output gap facilitate lower interest rates later on 8 February 2024 Highlights Policy rate and inflation Key interest rates – The Central Bank of Iceland %
Slide 45: Additional modest ISK appreciation in the offing
Íslandsbanki 4Q23 and FY2023 Financial Results Additional modest ISK appreciation in the offing A higher real exchange rate will impede further improvement in the CA later on 8 February 2024 Highlights ISK exchange rate and selected determinants Real exchange rate and current account balance – The I
Slide 46: Iceland's credit rating continues its gradual upward trend
Íslandsbanki 4Q23 and FY2023 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 8 February 2024 Development of sovereign credit rating Fitch in Dec-17: Moody’s in Nov-19: Mood
Slide 47: The Icelandic economy and society draw on many strengths
Íslandsbanki 4Q23 and FY2023 Financial Results The Icelandic economy and society draw on many strengths Icelanders enjoy high standards of living in a modern, open and egalitarian society 8 February 2024 Iceland ranks highly on a variety of global Income inequality is low compared to OECD peers Sust
Slide 48: Disclaimer
Íslandsbanki 4Q23 and FY2023 Financial Results 8 February 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
Slide 49: islandsbanki.is
Íslandsbanki 4Q23 and FY2023 Financial Results 8 February 2024 islandsbanki.is