Kvika Banki Hf · OMXICE:KVIKA
Kvika Banki Hf — Q1 2024 Earnings Presentation
30 slides from Kvika Banki Hf's earnings presentation, May 2, 2024
Slide 1: Kvika banki hf. Q1 2024 Financial Results
Kvika banki hf. Q1 2024 Financial Results 02 May 2024
Slide 2: 3M 2024
3M 2024 Profit before tax from continuing operations of ISK 1,215 million, a 35% increase YoY as all business segments provide a solid performance and costs remain controlled Profit before tax of ISK 1,345 m. for 3M 2024, including TM Insurance, resulting in RoTE of 12.1% Net interest income increas
Slide 3: Commercial Banking
Commercial Banking Segment highlights • Loan portfolio has exhibited healthy growth, despite prevailing Continued revenue high interest rates and a deceleration in private consumption. growth with net This has resulted in continued improvement in net interest operating income income which grew over
Slide 4: Corporate Banking & Capital Markets
Corporate Banking & Capital Markets Segment highlights Strong presence in capital markets and • Moderate lending growth in Q1 after period of strong growth in 2023 as reflected in a 55% YoY growth, mainly Corporate Banking driven by property backed loans loan book continues to grow • Ongoing strong
Slide 5: Asset Management
Asset Management Segment highlights Growth in assets • Assets under management ISK 474.5 billion at end of March 2024 an increase of ISK 4.5 billion during the under management quarter and strong mutual fund performance • Increased marketing presence and net positive inflow into actively managed ret
Slide 6: UK Segment highlights
UK Segment highlights • Robust performance in Q1 driven by very strong quarter Record quarter as for Ortus Secured Finance due to healthy loan book growth, continued improvement in NIM and high exit fees interest margin continues to • Q1 PBT of the consolidated UK operations amounted to rebound and
Slide 7: TM Insurance
TM Insurance • Results from TM’s insurance operations Asset held for sale overall in line with expectations during a seasonally claims heavy quarter Income statement Combined ratio ISK 000 (%) • Combined ratio of 100.5%, decrease in 3M 2024 3M 2023 restated 102.5% 101.0% 99.8% 100.5% cost ratio in t
Slide 8: Financials
Financials Financials 12M 2023 8
Slide 9: Income Statement
Income Statement 3M 2024 Income Statement Revenue growth YoY ISK m. Net operating income by type / ISK m. 3M 2024 3M 2023 4,069 restated* Diff. 110 Net interest income 2,326 1,985 341 3,489 16 Net fees and commissions 1,633 1,488 145 Other net operating income 110 16 94 Net operating income 4,069 3,
Slide 10: Net Interest Income
Net Interest Income • Net interest income grows by 17.2% from Q1 2023 and remains stable from Q4 2023 Interest income stabilizing at higher levels • Interest income due to lending grows by ISK 1,644million from Q1 2023, both due to higher rates and increased volume Net interest income 12M comparison
Slide 11: Net Fee and Commission Income
Net Fee and Commission Income • Net fee and commission income continues to be a stable source of income and continues to rebound in Q1 Fee income continues to gain momentum • Fee and commission growth YoY driven by fees derived from lending activities as well as cards and payments, as Straumur becom
Slide 12: Other Net Operating Income
Other Net Operating Income • Other net operating income consists of net financial income, Kvika’s share in the profit or loss of associates and other operating income Net financial income impacts the group less as TM is held for sale • Net financial income increases by ISK 164 m. from Q1 2023 • Kvik
Slide 13: Operating Expenses
Operating Expenses • Administrative expenses decrease by 4% from Q4 2023 as actions to increase operational efficiency continue to stabilize costs at lower levels Administrative expenses decrease from Q4 2023 • Total operating expenses, administrative expenses, revaluation of contingent consideratio
Slide 14: Capital Position
Capital Position • CAR of 22.1% at the end of March 2024, within management target Strong capital position well above regulatory requirements • CAR of 21.7% excluding unaudited retained earnings for Q1 2024 • Kvika aims to maintain a management buffer of 2% to 4% over current and anticipated CAR req
Slide 15: Liquidity and Funding Ratios
Liquidity and Funding Ratios • High Quality Liquid Assets (HQLA) ISK 76 bn. excluding mandatory reserves and collateral to the Central Bank Continued strong liquidity position • Liquidity coverage ratio is strong at 286%, where the regulatory minimum is 100% Liquidity coverage ratio (LCR) • Net stab
Slide 16: Credit Quality
Credit Quality • Stage 1 loans amount to 92.9% of the net loan book, a significant increase from 92.0% at the end of Q4 2023, as exposures mainly categorized as stage 2 loans are resolved Considerable improvement in Q1 and/or returned to stage 1 • Stage 3 loans remain stable between quarters Loans t
Slide 17: Loans to customers
Loans to customers Lending growth 7% in Q1 2024 Loan book development ISK bn. 145.9 136.3 Commercial Banking Vehicles Commercial vehicles & equipment 123.7 34.6 Unsecured loans 118.7 34.5 109.8 33.5 32.4 16.2 31.2 15.5 7.3 15.5 7.7 14.9 Corporate Banking & Capital 13.1 6.9 33.5 Markets 6.7 Real esta
Slide 18: Diversified Funding Program
Diversified Funding Program • Kvika has been an active issuer in Iceland since 2015 and in 2021 established an EMTN programme and obtained a credit rating from Moody’s Investors Service Solid investment grade rating by Moody’s • ISK 39 bn. of senior bonds outstanding on 31 March 2024 whereof 50% is
Slide 19: Financial Targets
Financial Targets Target 12M 2023 Q1 2024 Return on >20% 12.1% 12.1% Tangible Equity Pre-Tax RoTE of continuing operations: 15.5% Capital Adequacy 200-400bps 390bps 300bps Ratio (CAR) Buffer Over Requirement (basis points) Dividend 25% 59% N/A Payout Ratio Dividends and Share Buybacks as % of Profit
Slide 20: UK update
Financials UK update 12M 2023 20
Slide 21: UK Developments
UK Developments • Net interest income more than doubles year-on-year due to significant loan book growth and a higher proportion of floating Strong Q1 2024 performance underscores strengthened loan book position and rate loans, enhancing NIM and NFC the reorganisation of operations • Floating rate l
Slide 22: Growing UK Investments and Revenue Streams
Growing UK Investments and Revenue Streams Well-thought-out strategic journey for KSL in as new initiatives to grow AuM are underway Current UK Investments & AuM1 Building Pipeline of Opportunities over the next 3 years • Upcoming launch of UK focused PE fund with ISK 3.5 – 5.0 Focus on new fund bn.
Slide 23: The Ortus Loan Book
The Ortus Loan Book Successful emphasis on increasing share of floating rate loans in high interest rate Highlights environment • Strong demand has allowed the Ortus team to grow the overall gross book year-on-year from Q4 2021 Q1 2023 Q1 2024 ISK 23.1 bn. to ISK 36.2 bn. as at the end of March 2024
Slide 24: UK Business Outlook
UK Business Outlook Three-year growth horizon Three-year targets aim to reach a loan portfolio of ISK 55 billion and total assets under management invested in the UK of ISK 20 billion 1 2 Lending / Ortus Asset Management and Corporate Finance / KSL • Continued growth of loan book through a combinati
Slide 25: Appendix
Appendix 25
Slide 26: Balance Sheet: Assets
• An increase of ISK 15.1 bn. in assets since year-end 2023 Balance Sheet: Assets • Loan book increase of ISK 9.6 bn. since year-end 2023 Over 30% of the balance sheet consists of liquid assets • 32.9% from Q1 2023 • Loan book growth in the period is mainly attributable to the UK loan book which had
Slide 27: Balance Sheet: Liabilities
• Liabilities increase by ISK 16.2 bn. since year-end 2023, Balance Sheet: Liabilities mainly driven by growth in deposits and borrowings • Deposits increased by ISK 4 billion in Q1 2024, driven by growth in Significant growth in retail deposits retail deposits • Increase in money market deposits re
Slide 28: Financial Instruments: TM Insurance
• Subsidiary and revenue segment TM Insurance holds a Financial Instruments: TM Insurance significant amount of investment assets due to traditional insurance operations Additional information • TM‘s investment portfolio yielded a positive return on investment of 1.6% in Q1 2024 and 6.4% in 2023 Inv
Slide 29: 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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