Arion Banki Hf · OMXICE:ARION
Arion Banki Hf — Arion Bank — Investor Presentation (January 2018)
29 slides from Arion Banki Hf's investor presentation, January 2018
Slide 1: Arion Bank Investor Presentation January 2018
ARION BANK INVESTOR PRESENTATION JANUARY 2018
Slide 2: Overview
Overview 1 Strong Economy 2 Leading Universal Banking Franchise in Iceland 3 Strong Balance Sheet and Good Asset Quality 4 Strong Capital Position and Sound Funding Profile 5 Medium Term Targets 2
Slide 3: Strong Economy
1 Strong Economy 3
Slide 4: Iceland at glance – strong and modern economy
Iceland at glance – strong and modern economy… Strong economy with further upsides • Iceland became fully independent from Central location Denmark in 1944 1944 Full independence from • The second half of the 20th century saw Denmark substantial economic growth driven primarily by the fishing indust
Slide 5: Strong and modern economy with positive economic fundamentals
Strong and modern economy with positive economic fundamentals… Economic recovery since 2010 Unemployment rate significantly General government gross debt with strong outlook below other countries (% of GDP) • High standards of living % Real GDP Growth, Year-on-year1 • Strong culture and 10 % Average
Slide 6: Supporting a growing and stable banking sector
…supporting a growing and stable banking sector • Highly consolidated The Icelandic banking sector is highly concentrated High correlation between GDP and banking sector growth banking sector Market shares 2016, % GDP Growth vs. Banking Sector concentrated around 3 Indexed numbers based on 2009 main
Slide 7: Leading Universal Banking Franchise in Iceland
2 Leading Universal Banking Franchise in Iceland
Slide 8: A leading universal relationship bank in Iceland with a differentiated and innovative approach
A leading universal relationship bank in Iceland with a differentiated and innovative approach Retail Banking Corporate Banking Investment Banking Asset Management ~ 29% market share1 Leading lender to large corporates A leading capital markets house Largest player in the Icelandic Largest
Slide 9: A universal relationship bank
A universal relationship bank • Primary emphasis on corporations and individuals seeking a variety of financial solutions • Focus on building and strengthening long-term customer relationships by delivering excellent service and tailored solutions • Operations in the greater Reykjavík area as well a
Slide 10: Current ownership structure
Current ownership structure Recent changes in the ownership structure • On the 19th of March, 2017, Kaupskil sold a KAUPTHING EHF GOVERNMENT 10.44% Attestor Capital 29% share in Arion Bank in a private placement 100% 100% 9.99% Taconic Capital THE ICELANDIC STATE KAUPSKIL FINANCIAL INVESTMENTS (ISFI
Slide 11: Fully restructured bank, with potential for further value creation
Fully restructured bank, with potential for further value creation 2010-2012: 2013-2014: 2015+ 2010 30.09.2017 “Restructuring of the bank and “Streamlining and building of the “Strengthening market leadership Loan portfolio composition its customers” business” and harvesting full value potential” 25
Slide 12: Digitalised banking framework
Digitalised banking framework With strong customer focus Increasing digital impact Key digital initiatives Active online bank users1 Active Arion Bank app users1 +4% +6% +5% +20% • On-boarding of a new customer: Took number of visits to a branch, 66,788 69,299 73,769 77,178 +29% 34,232 phone calls,
Slide 13: Strong Balance Sheet and Good Asset Quality
3 Strong Balance Sheet and Good Asset Quality
Slide 14: All key financial indicators performing
All key financial indicators performing Arion bank has consistently delivered a strong financial performance Return on equity (%) Cost-to-income ratio (%) Tier 1 ratio (%) • Solid level of 28.1 26.5 26.6 56.9 57.2 55.3 23.4 capitalization due to 49.8 21.8 19.2 18.6 strong profit generation 32.3 9.2
Slide 15: Comparison with peer group (H1 2017)
Comparison with peer group (H1 2017) Arion bank compares well with local competitors and Nordic banks* Return on equity (%) Cost-to-income ratio (%) Core Tier 1 ratio (%)** • Strong capitalization 27.7% 27.2% 11.7% 60.7% compared to Nordic 10.5% 50.6% 23.3% 9.7% 9.2% 47.5% peers 43.0% 17.2% • RWA ca
Slide 16: Balance sheet - Assets
Balance sheet - Assets All amounts in ISK billion Robust loan growth – strong liquidity position • The balance sheet grew by 30.09.2017: 31.12.2016: 10.5% during the first nine ISK 1,145 Bn ISK 1,036 Bn months, partially due to pre- financing for upcoming bond Other1 34 Other and intangibles: 4% Int
Slide 17: Loans to customers
Loans to customers All amounts in ISK billion Good balance in loans to corporates and individuals • Loans to customers increased by 5.4% during the Loans to customers Loans to customers by sector (%) first nine months 751 Individuals • The mortgage portfolio grew 712 680 54 14 Real Estate & Construc
Slide 18: Balance sheet – Liabilities and Equity
Balance sheet – Liabilities and Equity All amounts in ISK billion Successful international bond issues – Strong equity position • Increase in deposits, 30.09.2017 31.12.2016 mainly from retail customers ISK 1,145 Bn ISK 1,036 Bn • New and successful international bond issues Equity during the first
Slide 19: Strong Capital Position and Sound Funding Profile
4 Strong Capital Position and Sound Funding Profile 19
Slide 20: Capital base
Capital base All amounts in ISK billion Continued strong capital position • Solid level of capital due to Capital ratio (%) Leverage ratio (%) strong profit generation • Risk-weighted assets of 27.1 27.1 16.7 18.0 26.3 15.4 16.7 68.4% are calculated on the 0.6 0.5 14.5 24.2 basis of standardized app
Slide 21: Capital base
Capital base Capital structure and requirements Capital structure and capital need • In Q4 of 2017, the combined capital buffer requirement will 27.1 reach 8.4%, based on the Group’s current risk profile. 0.5 CET1 • The FME’s SREP result based on the Group’s balance sheet as at 21.6 21.6 AT1 31 Dece
Slide 22: Funding
Funding All amounts in ISK billion Success on the international bond market – Kaupthing facility fully prepaid • In June the Bank issued new Funding Repayment of borrowings 854 101.6 3 year, EUR 300 million senior unsecured bond or approx. ISK 74.4 37 billion at interest cost equal 747 760 736 62.0
Slide 23: Good performance in the secondary bond market
Good performance in the secondary bond market The spread between Arion Bank and large Nordic banks continues to decrease Euro Senior Unsecured Bonds – Spread (bps) over mid-swaps 400 350 300 250 200 150 100 50 0 Jan 2015 Sep 2015 Jan 2016 Sep 2016 Jan 2017 Sep 2017 Jan 2018 Mar 2015 Jul 2015 Mar 201
Slide 24: Improving rating and positive outlook
Improving rating and positive outlook Rating fundamentals Strong capital position Strong liquidity position Largely restructured loan book Strong earnings Improved access to foreign debt capital markets A A (Stable) A- BBB+ BBB+ BBB+ (Stable) BBB BBB BBB BBB BBB BBB- BBB- BBB- BBB- BBB- BBB- BB+ BB+
Slide 25: Medium Term Targets
5 Medium Term Targets
Slide 26: Medium term targets
Medium term targets CET 1 Ratio (Subject to regulatory Decrease to circa 17% requirements) Prudent lending to outpace economic growth Loan Growth in the next few years Return on Equity Reach double digit returns Dividend Payout ratio of circa 50% of net earnings Policy attributable to shareholders C
Slide 27: Summary
Summary 1 Strong Economy 2 Leading Universal Banking Franchise in Iceland 3 Strong Balance Sheet and Good Asset Quality 4 Strong Capital Position and Sound Funding Profile 27
Slide 28: Disclaimer
Disclaimer This document has been prepared for information purposes only and should not be relied upon, or form the basis of any action or decision, by any person. Nothing in this document is, nor shall be relied on as, a promise or representation as to the future. In supplying this document, Ario
Slide 29: Q&A
Q&A