Islandsbanki hf · OMXICE:ISB
Islandsbanki hf — Íslandsbanki — Q1 2011 Earnings Presentation
29 slides from Islandsbanki hf's earnings presentation, 2011
Slide 1: Íslandsbanki Q1 2011 results (unaudited)
Íslandsbanki Q1 2011 results (unaudited)
Slide 2: Disclaimer
Disclaimer This material has been prepared for professional investors. Íslandsbanki hf. (ÍSB) when preparing this report has not taken into account any one customer’s particular investment objectives, financial resources or other relevant circumstances and the opinions and recommendations herein are
Slide 3: Contents
Contents 01. Economic outlook 4 02. Highlights of Q1 7 03. Income statement 9 04. Assets 14 05. Funding, liquidity and capitalisation 19 06. Appendix 23 3
Slide 4: 01. Economic outlook
01. Economic outlook
Slide 5: Economy is stabilising
Economy is stabilising Lifting of capital controls is the next challenge Moderate inflation has supported rate cuts Lifting of capital controls to start this year • Inflation close to the Central Bank’s target • ISK depreciated by nearly 4% during Q1 Currently 3.4%, went down to 1.8% in Q1 Stren
Slide 6: Modest growth expected in second half
Modest growth expected in second half Uncertainties still considerable All forecasts project growth in 2011 Considerable slack in labour market • Recovery will be gradual • Unemployment thought to have peaked Moderate growth in exports due to increased world High historically for Iceland and lon
Slide 7: 02. Highlights of Q1
02. Highlights of Q1
Slide 8: Q1 2011 results
Q1 2011 results Restructuring in full force Financial highlights Operational highlights • Results are in line with budget • Restructuring continues to be top priority • Profit after tax for the period was ISK 3.6bn Large strides made in the restructuring of individuals and SMEs • Return on equity
Slide 9: 03. Income statement
03. Income statement
Slide 10: Income Statement January – March 2011
Income Statement 1 January – 31 March 2011 Q1 Q1 Net interest income (ISKm) 2011 2010 • Central Bank policy rate lower by 520bps YoY Net interest income 8,061 9,147 • High level of equity earning lower interest Net valuation changes -664 -1,173 • Lower margin on deposits Latent impairment -171 -561
Slide 11: Administrative expenses
Administrative expenses Core cost to income ratio of 53% Costs are on budget Administrative expenses & core cost / income ratio • Lower interest rates and income affects core ISKm 6,000 52.9% 60% cost /income ratio 49.4% 45.6% 5,000 40.1% 50% • Ratio is still in line with budget and moving 4,000 40.
Slide 12: Impairment allowances
Impairment allowances Loan portfolio is closely monitored Impairments Allowances for impairment (BS) • Specifically assessed impairment allowance (Black book) Allowances for impairment All loans with exposure exceeding 20m where there is (ISKm) Specific Collective Latent Total objective indication
Slide 13: 04. Assets
04. Assets
Slide 14: Balance sheet - assets
Balance sheet - assets Consolidated – 31 March 2011 (ISKm) 31.3.2011 31.12.2010 Asset split Cash and balances with Central Bank 32,181 30,799 7% Derivatives 271 70 5% Bonds and debt instruments 55,503 68,024 5% Loans to customers Shares and equity instruments 3,055 3,022 8% Bonds and debt instrument
Slide 15: Balance sheet - liabilities
Balance sheet - liabilities Consolidated – 31 March 2011 (ISKm) 31.3.2011 31.12.2010 Liability split Financial liabilities 8,529 9,090 Deposits from CB and credit institutions 91,300 96,238 14% Deposits from customers 318,317 327,158 Debt issued and other borrowed funds 53,889 55,425 Deposits from c
Slide 16: Loan portfolio split
Loan portfolio split Consolidated 31 March 2011 - book value ISK 529bn Large difference in book value and claim value Sector split Individuals Real estate • Well diversified exposures among sectors in 5% 4% Iceland 6% Seafood 32% • 37% denominated in FX 6% Commerce & services • Total loan portfolio
Slide 17: Overdue and impaired loans
Overdue and impaired loans Book value reflects expected recovery Recorded past due loan information is skewed Breakdown of impaired loans – by borrower 2% • Majority of past due loans are in some workout or restructuring process 21% • Large difference between claim and book value • Impaired loans ar
Slide 18: 05. Funding, liquidity and capitalisation
05. Funding, liquidity and capitalisation
Slide 19: Deposits main source of funding
Deposits main source of funding Total deposits gradually declining in line with expectations Changes in insurance scheme pending Deposit development ISKbn • Deposit outflow is mainly due to repayments of 500 460 453 455 loans and anticipated withdrawals 450 425 409 400 • Concentration in the deposit
Slide 20: Robust liquidity ratios
Robust liquidity ratios Liquid assets cover 38% of total deposits Ratios well above internal targets Development of internal liquidity ratios* - all currencies 220% Liquidity Ratio A Liquidity Ratio B • Liquidity ratios continue to far exceed minimum Liquidity Ratio C Limit 200% requirements 180% •
Slide 21: Imbalances have been reduced
Imbalances have been reduced At acceptable levels Restructuring expected to close gross gap Imbalances at 31 March 2011 • Foreign currency (FX) assets of ISK 240bn are divided into: Foreign currency (ISKbn) denominated Inflation indexed Assets recognised are real FX assets (FX-FX) Assets 240 143
Slide 22: Capital ratios
Capital ratios Remain well above minimum requirements Capital ratios continue to increase Capital ratios • Core Tier 1 ratio of 23.2% and a total capital 28% 26.6% 27.4% ratio of 27.4% at 31 March 2011 (unaudited) 26% 4,0% 4,2% 24% • Íslandsbanki’s total capital ratio exceeds the 22% 21.5% FME’s hei
Slide 23: 06. Appendix
06. Appendix
Slide 24: Key figures
Key figures Total assets Total loan book ISKbn ISKbn 568 570 564 546 800 700 700 715 600 529 683 666 700 500 600 500 400 400 300 300 200 200 100 100 0 0 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 2010 2011 2010 2011 Total borrowings Equity ISKbn ISKbn 70 60.4 59.0 140 121 124 57.7 55.4 60 53.9 120 105 96 100 50
Slide 25: Key figures
Key figures Total deposit / loan ratio Net interest margin 90% 82% 80% 81% 6% 5.2% 5.2% 78% 77% 4.8% 80% 4.7% 4.7% 5% 70% 4% 60% 50% 3% 40% 2% 30% 1% 20% 0% 10% Q1 Q2 Q3 Q4 Q1 0% Q1 Q2 Q3 Q4 Q1 2010 2011 2010 2011 Return on equity* Core cost / income ratio 28.5% 30% 60% 52.9% 49.4% 25% 50% 45.6% 40.
Slide 26: Key figures
Key figures Total capital ratio Tier 1 ratio 30% 26.6% 27.4% 25% 22.6% 23.2% 25% 21.5% 22.6% 18.7% 20.8% 20% 16.6% 17.7% 20% 15% 15% 10% 10% 5% 5% 0% 0% Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 2010 2011 2010 2011 Total administrative expenses FTE (quarterly average) consolidated 1,090 1,133 1,139 ISKbn 5.17 1
Slide 27: Prudent internal liquidity measures
Prudent internal liquidity measures Conservative classification of liquid assets Liquid assets A Liquid assets B Liquid assets C • Liquidation time 0-3 days • Liquidation time up to 15 days • Liquidation time up to 6 months • Collateral that can be used for • Highly liquid bonds (investment • Other
Slide 28: Iceland has valuable macro fundamentals
Iceland has valuable macro fundamentals Plenty of quality protein & sustainable power • High competitiveness and standard of living Export value of seafood GDP pr. capita among highest in the world 250 209 High educational level and good health care (even access) 198 199 192 200 178 165 172 179
Slide 29: Íslandsbanki Q1 2011 results (unaudited)
Íslandsbanki Q1 2011 results (unaudited)