Islandsbanki Hf · OMXICE:ISB
Islandsbanki Hf — Íslandsbanki — Investor Presentation (October 2022)
43 slides from Islandsbanki Hf's investor presentation, October 2022
Slide 1: J.P. Morgan - Investor update
Íslandsbanki J.P. Morgan - Investor update islandsbanki.is
Slide 2: Sound operations deliver strong performance
Íslandsbanki - Investor update Sound operations deliver strong performance ROE of 11.7% driven by higher revenues October 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% 3.4
Slide 3: Revised 2022 guidance and financial targets on track
Íslandsbanki - Investor update Revised 2022 guidance and financial targets on track Guidance of over 10% ROE for 2022 following good financial result October 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% 2023 C
Slide 4: Adjustment phase ahead in the Icelandic economy
Íslandsbanki - Investor update Adjustment phase ahead in the Icelandic economy Moderate GDP growth in the cards after an impressive surge October 2022 Exports replace domestic demand as the key catalyst of healthy GDP growth… ..as tourism sector recovery continues following receding pandemic impact
Slide 5: Strong second quarter of 2022
Íslandsbanki - Investor update Strong second quarter of 2022 Íslandsbanki awarded the Euromoney "Award for Excellence" in 2022 October 2022 Corporate & 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% Cost-to-
Slide 6: October 2022
Íslandsbanki - Investor update October 2022 6
Slide 7: Summary of environmental and social impact in 2021
Íslandsbanki - Investor update Summary of environmental and social impact in 2021 Avoided emissions from sustainable lending increased by nearly 200% YoY October 2022 Avoided greenhouse gas emissions in 2021 Key developments in 2021 – Sustainable lending more than doubled year-on-year Renewable ener
Slide 8: 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 - Investor update October 2022 Financial overview islandsbanki.is
Slide 10: Increase in core revenues in a good quarter
Íslandsbanki - Investor update Increase in core revenues in a good quarter Control of costs further boost a positive result October 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 Operatin
Slide 11: NII rose strongly in all business segments
NII rose strongly in all business segments NIM rose to 2.9% due to a higher interest rate environment Highlights Net interest income NII – comparison 2Q YoY – NII continued a positive By business segments, ISKm ISKm trend supported by 10,254 higher interest rate 8,792 9,209 518 8,417 8,644 YoY envir
Slide 12: NFCI rose 18.1% YoY
NFCI rose 18.1% YoY Broad-based fee generation across the business units 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 from currency sales 2,907 170 451 3,064 + 18.1% 283
Slide 13: Positive NFI in turbulent markets
Íslandsbanki - Investor update Positive NFI in turbulent markets Rising benchmark interest rates do however support financial income in other derivatives October 2022 Highlights Net financial income Shares and equity instruments1 – Reduction in shares and ISKm ISKbn equity instruments in 2Q22 is 941
Slide 14: Administrative expenses stable in 2Q22
Íslandsbanki - Investor update Administrative expenses stable in 2Q22 5.9% reduction in real terms driven by lower salary costs October 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 1,457 1,2
Slide 15: Impairment reversals continued in 2Q22
Íslandsbanki - Investor update Impairment reversals continued in 2Q22 Majority of forborne borrowers have resumed payments October 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 as rat
Slide 16: Lending volume growth across all business units
Íslandsbanki - Investor update Lending volume growth across all business units Credit quality remains strong and highly collateralised loan portfolio October 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 1,154 1,
Slide 17: Mortgages portfolio resistant to rising rates
Íslandsbanki - Investor update Mortgages portfolio resistant to rising rates Average LTVs stable and built-in buffers for rate increases October 2022 Highlights Mortgage portfolio LTV distribution of mortgages to individuals1 – Conservative payment Gross carrying amount, ISKbn Gross carrying amount,
Slide 18: Deposits are the largest source of funding
Íslandsbanki - Investor update Deposits are the largest source of funding Retail deposits continue to increase October 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% 152
Slide 19: Seasoned and diversified long-term funding programme
Íslandsbanki - Investor update Seasoned and diversified long-term funding programme Majority of 2022 maturities already funded through €300m sustainable bond issue in January October 2022 Highlights Sources of borrowings Contractual maturity profile of Currency split of borrowings Development, ISKbn
Slide 20: Strong capital position and dividend capacity
Íslandsbanki - Investor update Strong capital position and dividend capacity Opportunity exists to optimise capital composition and to continue consistent dividends October 2022 Highlights Capital ratios and leverage ratio Capital distribution plans – Current and long-term expected % of REA (% of to
Slide 21: Q&A
Íslandsbanki - Investor update October 2022 Q&A Íslandsbanki.is
Slide 22: Appendix I – About Íslandsbanki and additional financial information
Íslandsbanki - Investor update October 2022 Appendix I – About Íslandsbanki and additional financial information islandsbanki.is
Slide 23: This is Íslandsbanki
Íslandsbanki - Investor update This is Íslandsbanki Moving Iceland forward by empowering our customers to succeed October 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 seco
Slide 24: Key figures & ratios
Íslandsbanki - Investor update 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 October 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-to-i
Slide 25: Income growth of 16% YoY driven by NII and NFCI
Íslandsbanki - Investor update 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 October 2022 Net interest income 10,254 8,417 22% 19,463 16,607 17% 34,043 Net fee and commission income 3,434 2
Slide 26: Balance sheet reflects a balanced loan and funding profile
Íslandsbanki - Investor update Balance sheet reflects a balanced loan and funding profile Conservative mix of assets and stable funding October 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 in Cen
Slide 27: Growth in loans to customers continues
Íslandsbanki - Investor update 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% October 2022 Cash and balances with Central Bank 77,884 77,799 85 0% 113,667 (35,783) (31%) Loans to credit institutions 37,
Slide 28: Diversified funding base
Íslandsbanki - Investor update 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% October 2022 Deposits from Central Bank and credit institutions 11,437 10,949 488 4% 13,384 (1,947) (15%) Deposits from customers 756,862 7
Slide 29: Appendix II – Icelandic economy update
Íslandsbanki - Investor update October 2022 Appendix II – Icelandic economy update islandsbanki.is
Slide 30: Moderate GDP growth on the cards after an impressive surge
Íslandsbanki - Investor update Moderate GDP growth on the cards after an impressive surge Exports take over from demand as the main driver October 2022 Highlights GDP and contribution of its subcomponents GDP, domestic demand, and external trade – After a 6.9% contraction in 2020, the Volume change
Slide 31: Tourism industry bouncing back after the pandemic
Íslandsbanki - Investor update Tourism industry bouncing back after the pandemic 1.7 million tourists expected to visit Iceland in 2022, followed by 2 million in 2023 October 2022 Highlights Number of foreign tourists, by month Number of foreign tourists, by year – After two punishing years dominate
Slide 32: Current account flips from deficit to surplus
Íslandsbanki - Investor update Current account flips from deficit to surplus Export growth and reduced demand growth push the current account back into positive territory October 2022 Highlights Exports and contribution from subcomponents Current account balance and GDP growth – The return of touris
Slide 33: Domestic balance sheets still healthy
Íslandsbanki - Investor update Domestic balance sheets still healthy Economy-wide leverage remains moderate in comparison with peers and historical levels October 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 2006 2
Slide 34: Investment growth strong in 2022 but slower further ahead
Íslandsbanki - Investor update Investment growth strong in 2022 but slower further ahead Residential investment to take over from business investment as the driver of growth October 2022 Highlights Investment, real change, and contribution of subcomponents Executives’ expectations and business inves
Slide 35: Unemployment back to pre-pandemic level
Íslandsbanki - Investor update Unemployment back to pre-pandemic level Worker shortage at its second-highest ever October 2022 Highlights Labour supply according to corporate executives Unemployment1 – Unemployment has fallen swiftly % % of workforce, annual average after peaking in January 2021as t
Slide 36: Private consumption growth eases after rising steeply
Íslandsbanki - Investor update Private consumption growth eases after rising steeply Erosion of real wages will cut a hefty slice out of private consumption growth in the near term Highlights October 2022 – Private consumption has rebounded Private consumption and related indicators* strongly after
Slide 37: Real estate markets still buoyant
Íslandsbanki - Investor update Real estate markets still buoyant Commercial property prices rising again while residential house price rises have gained steam October 2022 Capital area house prices relative to macroeconomic fundamentals Residential house prices and turnover in greater Reykjavik Inde
Slide 38: Inflation has peaked
Íslandsbanki - Investor update Inflation has peaked Inflation set to subside rather quickly in the coming term October 2022 Highlights Inflation and the CBI inflation target Inflation by contribution of main categories – Inflation has risen sharply in the % % recent term. It peaked in July at 9.9%,
Slide 39: Monetary tightening phase probably well advanced
Íslandsbanki - Investor update Monetary tightening phase probably well advanced Gradual easing further ahead; equilibrium rate in sight by the end of the horizon October 2022 Highlights Policy rate and inflation Interest rates – The CBI began raising interest rates %, Real policy rate in terms of av
Slide 40: ISK set to strengthen further in the coming term
Íslandsbanki - Investor update ISK set to strengthen further in the coming term More favourable CA balance and investment inflows offset pension funds’ foreign investments October 2022 Highlights ISK exchange rate and CBI FX market intervention Real exchange rate and current account balance – Follow
Slide 41: Iceland's credit rating has remained at A
Íslandsbanki - Investor update Iceland’s credit rating has remained at A Rating companies acknowledge the flexibility of the economy and resilience to the pandemic shock October 2022 Development of sovereign credit rating Fitch in Dec-17: Moody’s in Nov-19: AAA/Aaa Rating upgrade to A on economic Up
Slide 42: Disclaimer
Íslandsbanki - Investor update October 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 of its
Slide 43: islandsbanki.is
Íslandsbanki - Investor update October 2022 islandsbanki.is