Kvika Banki Hf · OMXICE:KVIKA
Kvika Banki Hf — Q2 2024 Earnings Presentation
27 slides from Kvika Banki Hf's earnings presentation, Aug 14, 2024
Slide 1: Kvika banki hf. Q2 2024 Financial Results
Kvika banki hf. Q2 2024 Financial Results 14 August 2024
Slide 2: Q2 2024 highlights
Q2 2024 Profit after tax, including TM insurance, increases by 69% year-on-year ISK 1,256 million in Q2 2024, compared to ISK 745 million in Q2 2023 Profit before tax from continuing operations decreases by 22% year-on-year Profit before tax from continuing operations amounts to ISK 1,189 million, c
Slide 3: Commercial Banking
Commercial Banking Segment highlights Continued robust • Loans to customers increase 9% year on year despite high loan book growth interest rates and a deceleration in private consumption. despite a slowdown Loan growth mainly due to strong demand for vehicle in private lending while consumer lendin
Slide 4: Corporate Banking & Capital Markets
Corporate Banking & Capital Markets Segment highlights Disappointing • Moderate growth in corporate lending in Q2 following a market conditions period of strong growth in 2023. Lending continues to be driven by property backed loans which have been a core continue to affect focus in past quarters fe
Slide 5: Asset Management
Asset Management Segment highlights Growth in assets • Assets under management amounted to ISK 479.6 billion at end of June 2024, an increase of ISK 5.1 billion during under management Q2 and a total increase of ISK 9.7 billion during the first as markets remain half of the year challenging • Net po
Slide 6: UK
UK Segment highlights Strong half-year • Robust performance in Q2 driven by a strong quarter for with resilient Ortus Secured Finance due to a healthy loan book level and a sustained improvement in NIM interest margin and growing loan book • Preparation for launch of UK PE fund is ongoing, in collab
Slide 7: TM Insurance
TM Insurance Asset held for sale • Solid results from TM insurance operations which rebound Agreement signed, significantly YoY as investment returns counter negative completion pending impacts of major claims in the period regulatory approval • An agreement for Landsbankinn’s purchase of TM was sig
Slide 8: Financials
Financials Financials 12M 2023 8
Slide 9: Income Statement Q2 2024
Income Statement • Profit before tax from continuing operations: ISK 1,189 m. • Profit after tax: ISK 1,256 m., including TM Insurance, Q2 2024 classified as discontinued operations • Net interest income: Robust 31% YoY growth driven by a larger balance sheet and improved net interest margin Income
Slide 10: Income Statement 6M 2024
Income Statement • Profit before tax from continuing operations: ISK 2,404 m., nearly unchanged YoY 6M 2024 • Profit after tax: ISK 2,340 m., including TM Insurance, classified as discontinued operations, significant improvement YoY in TM’s operations Income Statement ISK m. • Net interest income: R
Slide 11: Net Interest Income
Net Interest Income • Net interest income up 31% from Q2 2023 and 4.4% from Q1 2024 Robust 31% growth year on year • Net interest margin of 3.8% p.a. in Q2 2024, a 40 bps improvement from Q2 2023, mainly due to stabilisation of Central bank rates. Net interest income is calculated as net Net interes
Slide 12: Net Fee and Commission Income
Net Fee and Commission Income • Fees in Asset Management and Corporate Banking & Capital markets decrease YoY due to challenging Market conditions negatively impact fee income in Asset management and Corporate conditions in the domestic capital markets Banking & Capital Markets • Cards and payments
Slide 13: Other Net Operating Income
Other Net Operating Income • Net financial income decreases by ISK 694 from Q2 2023, mainly attributable to one-time realization of gains from Kerecis shareholdings in Q2 2023 Limited net financial income • Generally, other net operating income remains a non-core revenue stream following the classif
Slide 14: Operating Expenses
Operating Expenses • Operating expenses decrease by 0.5% from Q2 2023 while inflation amounted to 6% in the period Efficient cost management • Number of employees reduced by 10% compared to Q2 2023 • Continued focus on efficient cost management Employee development Operating expenses Full time emplo
Slide 15: Capital Position
Capital Position • CAR of 22.1% at the end of June 2024, within management target Strong capital position well above regulatory requirements • Kvika aims to maintain a management buffer of 2% to 4% over current and anticipated CAR requirements • As of 30th of June the Pillar II requirement is 3.6%,
Slide 16: Liquidity and Funding Ratios
Liquidity and Funding Ratios • High Quality Liquid Assets (HQLA) ISK 86.5 bn. excluding mandatory reserves and collateral to the Central Bank Continued strong liquidity position • Liquidity coverage ratio is strong at 475%, where the regulatory minimum is 100%, an unusually strong position partially
Slide 17: Loans to customers
Loans to customers Moderate lending growth in Q2 2024 Loan book development ISK bn. 145.9 146.7 136.3 Commercial Banking Vehicles Commercial vehicles & equipment 123.7 34.6 34.8 Unsecured loans 118.7 34.5 33.5 32.4 16.2 18.1 15.5 7.3 6.7 15.5 7.7 14.9 Corporate Banking & Capital 6.9 33.5 33.6 Market
Slide 18: Credit Quality
Credit Quality • Loan book quality remains stable with minimal changes in staging as risk indicators of credit quality remain at healthy levels Consistent loan book quality • Stage 3 loans as a percentage of the net loan book grow from 3% to 3.6%, partially due to a single exposure that Loans to cus
Slide 19: Diversified Funding Program
Diversified Funding Program • In May 2024 Kvika finalized a SEK 500 m. tap issue of previously issued SEK 225 m bonds maturing in May 2026. The bonds were priced at a spread of STIBOR + 240 bps Solid investment grade rating by Moody’s which represents a significant pricing improvement from 2023 when
Slide 20: Financial Targets
Financial Targets Target 12M 2023 Q2 2024 Return on >20% 12.1% 14.6% Tangible Equity Pre-Tax Capital Adequacy 200-400 bps 390 bps 320 bps Ratio (CAR) Buffer Over Requirement (basis points) Dividend 25% 59% N/A Payout Ratio Dividends and Share Buybacks as % of Profit after Tax 20
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Slide 22: Appendix
Appendix 22
Slide 23: Balance Sheet: Assets
• An increase of ISK 24.0 bn. in assets since year-end 2023 Balance Sheet: Assets • Loan book increase of ISK 10.4 bn. since year-end 2023 Over 30% of the balance sheet consists of liquid assets • 23.6% from Q2 2023 • Loan book growth in the period is mainly attributable to the UK loan book which ha
Slide 24: Balance Sheet: Liabilities
• Liabilities increase by ISK 24 bn. since year-end 2023, Balance Sheet: Liabilities mainly driven by growth in deposits and borrowings Significant growth in retail deposits • Deposits increased by ISK 15.4 bn. in 6M 2024, driven by growth in retail deposits, thereof ISK 12.1 bn. is deposited in Q2
Slide 25: TM Insurance
TM Insurance • Solid results from TM’s insurance operations which rebound significantly YoY, Asset held for sale • Insurance service results are negatively Income statement Combined ratio impacted by major claims in the period ISK m. (%) 6M 2024 6M 2023 resulting in a combined ratio of 101.2%, 99.9%
Slide 26: Disclaimer
Disclaimer This presentation and the information contained therein has been prepared by Kvika banki hf. on a best knowledge basis. Any statements or assumptions are set forth by Kvika alone and not by any third party. Forward looking statements may deviate from what is presented in this presentation
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