Islandsbanki Hf · OMXICE:ISB
Islandsbanki Hf — Íslandsbanki — Q2 2022 Earnings Presentation
43 slides from Islandsbanki Hf's earnings presentation, Jul 28, 2022
Slide 1: 2Q22 Financial Results
2Q22 Financial Results 28 July 2022 Birna Einarsdóttir Chief Executive Officer Jón Guðni Ómarsson Chief Financial Officer islandsbanki.is
Slide 2: Sound operations deliver strong performance
Íslandsbanki 2Q22 Financial Results Sound operations deliver strong performance ROE of 11.7% driven by higher revenues 28 July 2022 Growth above 2022 guidance Strong growth in lending NII and NFCI, ISKbn Loans to customers, ISKbn +21.8% +4.1% 10.3 1,154 8.8 8.6 9.2 1,108 8.4 1,090 1,081 1,086 +18.1%
Slide 3: Revised 2022 guidance and financial targets on track
Íslandsbanki 2Q22 Financial Results Revised 2022 guidance and financial targets on track Guidance of over 10% ROE for 2022 following good financial result 28 July 2022 Revised Previous Targets Targets 2022 2022 2Q22 1Q22 2021 Guidance Guidance Return on equity >10% >10%1 8-10% by 11.7% 10.2% 12.3% 2
Slide 4: Export-driven GDP growth following robust growth in demand
Íslandsbanki 2Q22 Financial Results Export-driven GDP growth following robust growth in demand Strong foundations facilitate a vigorous recovery as world-wide pandemic impact fades 28 July 2022 Exports replace domestic demand as the key catalyst of healthy GDP growth… ...as tourism sector recovery c
Slide 5: Strong second quarter of 2022
Íslandsbanki 2Q22 Financial Results Strong second quarter of 2022 Íslandsbanki awarded the Euromoney "Award for Excellence" in 2022 Corporate & 28 July 2022 Personal Banking Business Banking Investment Banking Iceland Funds 16.2% ROE 18.9% ROE 13.0% ROE 18.0% ROE 49.2% Cost-to-income ratio 39.0% Cos
Slide 6: 28 July 2022
Íslandsbanki 2Q22 Financial Results 28 July 2022 6
Slide 7: Summary of environmental and social impact in 2021
Íslandsbanki 2Q22 Financial Results Summary of environmental and social impact in 2021 Avoided emissions from sustainable lending increased by nearly 200% YoY 28 July 2022 Avoided greenhouse gas emissions in 2021 Key developments in 2021 – Sustainable lending more than doubled year-on-year Renewable
Slide 8: Íslandsbanki Reykjavík Marathon
Íslandsbanki 2Q22 Financial Results Íslandsbanki Reykjavík Marathon 20 August 2022 28 July 2022 Key funding event for many The biggest charitable charitable event organisations of the year Over 115 charitable organisations ISK 1bn in benefit total collected Around since 2006 15.000 runners participa
Slide 9: Financial overview
Íslandsbanki 2Q22 Financial Results 28 July 2022 Financial overview islandsbanki.is
Slide 10: Increase in core revenues in a good quarter
Íslandsbanki 2Q22 Financial Results Increase in core revenues in a good quarter Control of costs further boost a positive result 28 July 2022 Profit for the period – 2Q21 vs 2Q22 ISKm 696 (565) 527 (454) 1,837 (1,562) (30) 5,880 5,431 2Q21 Net interest Net fee &Corporate Other netsector & public Ope
Slide 11: NII rose strongly in all business segments
Íslandsbanki 2Q22 Financial Results NII rose strongly in all business segments NIM rose to 2.9% due to a higher interest rate environment 28 July 2022 Highlights Net interest income NII – comparison 2Q YoY – NII continued a positive By business segments, ISKm ISKm trend supported by 10,254 higher in
Slide 12: NFCI rose 18.1% YoY
Íslandsbanki 2Q22 Financial Results NFCI rose 18.1% YoY Broad-based fee generation across the business units 28 July 2022 Highlights Net fee and commission income NFCI – comparison 2Q YoY – Revenues from investment Business segments, ISKm ISKm banking and brokerage 3,653 3,434 3,427 YoY increase fro
Slide 13: Positive NFI in turbulent markets
Íslandsbanki 2Q22 Financial Results Positive NFI in turbulent markets Rising benchmark interest rates do however support financial income in other derivatives 28 July 2022 Highlights Net financial income Shares and equity instruments1 – Reduction in shares and ISKm ISKbn equity instruments in 2Q22 i
Slide 14: Administrative expenses stable in 2Q22
Íslandsbanki 2Q22 Financial Results Administrative expenses stable in 2Q22 5.9% reduction in real terms driven by lower salary costs 28 July 2022 Administrative expenses1 Cost-to-income ratio2 ISKm 5,900 5,768 5,834 5,993 49.9% 47.6% 5,088 446 45.3% 42.7% 413 532 358 39.4% 1,466 327 1,506 1,515 1,45
Slide 15: Impairment reversals continued in 2Q22
Íslandsbanki 2Q22 Financial Results Impairment reversals continued in 2Q22 Majority of forborne borrowers have resumed payments 28 July 2022 Highlights Net impairment on financial assets Loans to customers: Stage 2 and 3 (NPL) By period, ISKbn Changes in models Development of gross carrying amount a
Slide 16: Lending volume growth across all business units
Íslandsbanki 2Q22 Financial Results Lending volume growth across all business units Credit quality remains strong and highly collateralised loan portfolio 28 July 2022 Loans to customers +4.1% Loans to customers By business division, ISKbn By sector, with tourism as a separate sector 1,087 1,108 1,1
Slide 17: Deposits are the largest source of funding
Íslandsbanki 2Q22 Financial Results Deposits are the largest source of funding Retail deposits continue to increase 28 July 2022 Highlights Funding sources Customer loans to customer deposits ratio – Term deposits are 18% of total By type, % of total liabilities and equity Development, % deposits 46
Slide 18: Seasoned and diversified long-term funding programme
Íslandsbanki 2Q22 Financial Results Seasoned and diversified long-term funding programme Majority of 2022 maturities already funded through €300m sustainable bond issue in January 28 July 2022 Highlights Sources of borrowings Contractual maturity profile of Currency split of borrowings Development,
Slide 19: Strong capital position and dividend capacity
Íslandsbanki 2Q22 Financial Results Strong capital position and dividend capacity Opportunity exists to optimise capital composition and to continue consistent dividends 28 July 2022 Highlights Capital ratios and leverage ratio Capital distribution plans – Current and long-term expected % of REA (%
Slide 20: Q&A
Íslandsbanki 2Q22 Financial Results 28 July 2022 Q&A Íslandsbanki.is
Slide 21: Appendix I – About Íslandsbanki and additional financial information
Íslandsbanki 2Q22 Financial Results 28 July 2022 Appendix I – About Íslandsbanki and additional financial information islandsbanki.is
Slide 22: This is Íslandsbanki
Íslandsbanki 2Q22 Financial Results This is Íslandsbanki Moving Iceland forward by empowering our customers to succeed 28 July 2022 Vision and Values The Bank Market share1 Sustainability 2Q22 FTEs Íslandsbanki receives top ESG Vision to be 702 31% retail customers score (90/100) from Reitun for the
Slide 23: Key figures & ratios
Íslandsbanki 2Q22 Financial Results Financial overview Key figures & ratios 2Q22 1Q22 4Q21 3Q21 2Q21 PROFITABILITY Profit for the period, ISKm 5,880 5,187 7,092 7,587 5,431 28 July 2022 Return on equity 11.7% 10.2% 14.2% 15.7% 11.6% Net interest margin (of total assets) 2.9% 2.6% 2.4% 2.4% 2.4% Cost
Slide 24: Income growth of 16% YoY driven by NII and NFCI
Íslandsbanki 2Q22 Financial Results Income growth of 16% YoY driven by NII and NFCI Robust profitability in 2Q22 built on a solid platform Income statement, ISKm 2Q22 2Q21 ∆% 1H22 1H21 ∆% 2021 28 July 2022 Net interest income 10,254 8,417 22% 19,463 16,607 17% 34,043 Net fee and commission income 3,
Slide 25: Balance sheet reflects a balanced loan and funding profile
Íslandsbanki 2Q22 Financial Results Balance sheet reflects a balanced loan and funding profile Conservative mix of assets and stable funding 28 July 2022 Assets Simplified balance sheet structure – Vast majority of assets consist of 30.6.2022, ISK 1,437bn lending to both retail and corporates Cash i
Slide 26: Growth in loans to customers continues
Íslandsbanki 2Q22 Financial Results Growth in loans to customers continues Steady mortgage growth supported by a strong capital base Assets, ISKm 30.6.22 31.3.22 Δ Δ% 31.12.21 Δ Δ% 28 July 2022 Cash and balances with Central Bank 77,884 77,799 85 0% 113,667 (35,783) (31%) Loans to credit institution
Slide 27: Diversified funding base
Íslandsbanki 2Q22 Financial Results Diversified funding base Deposits are the largest source of funding Liabilities & Equity, ISKm 30.6.22 31.3.22 Δ Δ% 31.12.21 Δ Δ% 28 July 2022 Deposits from Central Bank and credit institutions 11,437 10,949 488 4% 13,384 (1,947) (15%) Deposits from customers 756,
Slide 28: Appendix II – Icelandic economy update
Íslandsbanki 2Q22 Financial Results 28 July 2022 Appendix II – Icelandic economy update islandsbanki.is
Slide 29: Export-driven GDP growth following robust growth in demand
Íslandsbanki 2Q22 Financial Results Export-driven GDP growth following robust growth in demand GDP growth rapid in 2022 but slower in coming years 28 July 2022 Highlights GDP and contribution of its subcomponents GDP, domestic demand, and external trade – After a 7.1% contraction in 2020, the Volume
Slide 30: Tourism recovering swiftly from a two-year drought
Íslandsbanki 2Q22 Financial Results Tourism recovering swiftly from a two-year drought We forecast that 1.5-1.6 million tourists will visit Iceland in 2022 28 July 2022 Highlights Number of foreign tourists, by month Number of foreign tourists, by year – After a turbulent two-year period the thousan
Slide 31: Current account balance set to improve in the near term
Íslandsbanki 2Q22 Financial Results Current account balance set to improve in the near term Increased share of exports in GDP growth spurs a recovery of external trade in coming quarters 28 July 2022 Highlights Exports and contribution from subcomponents Current account balance and GDP growth – The
Slide 32: Domestic balance sheets still healthy
Íslandsbanki 2Q22 Financial Results Domestic balance sheets still healthy Economy-wide leverage remains moderate in comparison with peers and historical levels 28 July 2022 Private sector debt Corporate debt % of GDP % of GDP 400 300 350 250 300 250 200 200 150 150 100 100 50 50 0 0 2003 2004 2005 2
Slide 33: Investment growth loses pace after a growth spurt
Íslandsbanki 2Q22 Financial Results Investment growth loses pace after a growth spurt Residential investment to take over from business investment as the driver of growth 28 July 2022 Highlights Investment, real change, and contribution of subcomponents Executives’ expectations and business investme
Slide 34: Unemployment continues to fall
Íslandsbanki 2Q22 Financial Results Unemployment continues to fall A growing labour shortage will probably be one of the greatest challenges 28 July 2022 Highlights Labour supply according to corporate executives Unemployment1 – Unemployment has fallen swiftly % % of workforce, annual average after
Slide 35: Inflation erodes household purchasing power
Íslandsbanki 2Q22 Financial Results Inflation erodes household purchasing power Private consumption growth will be weaker in the near term as a result Highlights 28 July 2022 – Private consumption rallied last year, Private consumption and related indicators growing by 7.6% YoY, after contracting by
Slide 36: Real estate markets still buoyant
Íslandsbanki 2Q22 Financial Results Real estate markets still buoyant Commercial property prices rising again while residential house price rises have gained steam 28 July 2022 Capital area house prices relative to macroeconomic fundamentals Residential house prices and turnover in greater Reykjavik
Slide 37: Inflation to spike in autumn 2022
Íslandsbanki 2Q22 Financial Results Inflation to spike in autumn 2022 House prices and import costs the main drivers short-term but wage costs also matter 28 July 2022 Highlights Inflation and the CBI inflation target Inflation by contribution of main categories – Inflation started rising in mid-202
Slide 38: Policy rate to rise rapidly throughout 2022
Íslandsbanki 2Q22 Financial Results Policy rate to rise rapidly throughout 2022 Gradual easing further ahead; equilibrium rate in sight by the end of the horizon 28 July 2022 Highlights Policy rate and inflation Interest rates – The Central Bank of Iceland has % % hiked its policy by 4 percentage po
Slide 39: ISK likely to appreciate further
Íslandsbanki 2Q22 Financial Results ISK likely to appreciate further CA surplus and inflows for securities purchases offset pension funds’ foreign investments 28 July 2022 Highlights ISK exchange rate and CBI FX market intervention Real exchange rate and current account balance – Following nearly 3%
Slide 40: Alternative scenarios demonstrate impact of key uncertainties
Íslandsbanki 2Q22 Financial Results Alternative scenarios demonstrate impact of key uncertainties COVID-19, war in Ukraine and upcoming wage negotiations could have significant impact 28 July 2022 Highlights GDP growth, % Inflation, % – The economic outlook for Iceland, like the 8.9 5.9 global outlo
Slide 41: Iceland's credit rating has remained at A
Íslandsbanki 2Q22 Financial Results Iceland’s credit rating has remained at A Rating companies acknowledge the flexibility of the economy and resilience to the pandemic shock 28 July 2022 Development of sovereign credit rating Fitch in Dec-17: Moody’s in Nov-19: AAA/Aaa Rating upgrade to A on econom
Slide 42: Disclaimer
Íslandsbanki 2Q22 Financial Results 28 July 2022 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 43: islandsbanki.is
Íslandsbanki 2Q22 Financial Results 28 July 2022 islandsbanki.is