Islandsbanki hf · OMXICE:ISB
Islandsbanki hf — Íslandsbanki — 9M 2018 Earnings Presentation
44 slides from Islandsbanki hf's earnings presentation, Nov 8, 2018
Slide 1: 9M 2018 Financial Results
Íslandsbanki 9M 2018 Financial Results 8 November, 2018 9M 2018 Financial Results islandsbanki.is
Slide 2: Table of Contents
Íslandsbanki 9M 2018 Financial Results 8 November, 2018 Table of Contents 1. 9M 2018 highlights 2. Income statement 3. Balance sheet 4. Financial targets and highlights 5. Annex – Icelandic economy update 2
Slide 3: 1. 9M 2018 highlights
— Íslandsbanki 9M 2018 Financial Results 8 November, 2018 1. 9M 2018 highlights islandsbanki.is
Slide 4: Economic highlights
Íslandsbanki 9M 2018 Financial Results Economic highlights A year of adjustment ahead following a long upswing period 8 November, 2018 Slower GDP growth ahead due to less increase in domestic demand... …rapid supply increase is facilitating a more balanced housing market… 160 260 140 240 15 7.3 4.0
Slide 5: Financial highlights
Íslandsbanki 9M 2018 Financial Results Financial highlights Key figures & ratios 8 November, 2018 9M18 9M17 3Q18 3Q17 2017 PROFITABILITY ROE 16% CET1 (regular operations)¹ 9.0% 9.7% 8.1% 7.9% 10.3% ROE (after tax) 7.1% 7.7% 4.9% 4.7% 7.5% Net interest margin (of total assets) 2.9% 2.9% 3.0% 2.8% 2.9
Slide 6: Key figures & ratios (cont'd)
Íslandsbanki 9M 2018 Financial Results Financial highlights Key figures & ratios (cont’d) 8 November, 2018 ROE reg. operations CET1 16%1 Profit after tax Cost / income ratio2 ISKm 11.1% 5,033 69.8% 10.3% 69.2% 62.7% 65.0% 62.1% 7.9% 8.0% 8.1% 3,112 2,073 2,097 2,111 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17
Slide 7: This is Íslandsbanki
Íslandsbanki 9M 2018 Financial Results This is Íslandsbanki A leader in financial services in Iceland, Íslandsbanki is a universal bank with a proven strategy 8 November, 2018 Recognition Strategic vision Universal banking Credit ratings Driven by the vision to be #1 for BBB+/A-2 service, our relati
Slide 8: Operational highlights
Íslandsbanki 9M 2018 Financial Results Operational highlights Eventful third quarter 2018 for Íslandsbanki September — New core payment and deposit system, Sopra launched. One 8 November, 2018 of the largest IT projects ever completed in Iceland July — The FME lowered the minimum requirement for tot
Slide 9: The future ready bank
Íslandsbanki 9M 2018 Financial Results The future ready bank New core system for payments and deposits (Sopra) went live in Q3 which will prepare the Bank for future challenges and enable it to benefit from new opportunities 8 November, 2018 Successful launch of new core system in Open Banking as me
Slide 10: #1 for service and digital development
Íslandsbanki 9M 2018 Financial Results #1 for service and digital development Enhanced focus on servicing individuals through digital channels 8 November, 2018 App users Branch visits to tellers and advisors Thousands (active users1) Thousands 62 632 59 51 52 497 322 323 287 Digital innovation enhan
Slide 11: 2. Income statement
— Íslandsbanki 9M 2018 Financial Results 8 November, 2018 2. Income statement islandsbanki.is
Slide 12: Income statement
Íslandsbanki 9M 2018 Financial Results Income statement Continued positive net impairments in 9M18 despite slowdown in the economy 8 November, 2018 ISK m 9M18 9M17 ∆ 3Q18 3Q17 ∆ Highlights Net interest income 23,643 22,661 982 8,301 7,450 851 Net fee and commission income 8,749 10,118 (1,369) 2,939
Slide 13: Operating income
Íslandsbanki 9M 2018 Financial Results Operating income Income up by 2.7% compared to 9M17 as a result of strong interest income and sale of properties 8 November, 2018 Income trends Total operating income (excluding one-off income) Net interest income (NII) Net fee and commission income ISKm ISKm I
Slide 14: Earnings from regular operations
Íslandsbanki 9M 2018 Financial Results Earnings from regular operations Excludes one-off items, ROE calculation now adjusted to normalised CET1 of 16% 8 November, 2018 Resilient ROE from regular operations Earnings from regular operations ISKm ISKm 9M18 9M17 ∆ 3Q18 3Q17 ∆ Reported after tax profit 9
Slide 15: Administrative expenses
Íslandsbanki 9M 2018 Financial Results Administrative expenses Cost to income ratio for the Bank and Íslandssjóðir not far off from long term target of 55% 8 November, 2018 Efficiency – Cost to income ratio1 Cost structure improving overall The Bank & Islandssjóðir The Group2 Administrative expenses
Slide 16: 3. Balance sheet
Íslandsbanki 9M 2018 Financial Results 8 November, 2018 3. Balance sheet islandsbanki.is
Slide 17: Assets
Íslandsbanki 9M 2018 Financial Results Assets Total assets are 12.2% up from year-end 2017 8 November, 2018 ISK m 30.9.2018 30.6.2018 31.3.2018 Highlights Cash and balances w ith CB 156,251 166,194 177,029 Liquid assets — Three line items – cash and balances with the Bonds and debt instruments 63,32
Slide 18: Diversified loan portfolio
Íslandsbanki 9M 2018 Financial Results Diversified loan portfolio Loans to customers grew by 10.6% in the first 9 months of 2018 8 November, 2018 Loans to customers Loans to customers Highlights by sector, consolidated by currency, consolidated — Strong demand for loans across all sectors for the St
Slide 19: LTV distribution of loan portfolio
Íslandsbanki 9M 2018 Financial Results LTV distribution of loan portfolio Loans generally well covered by stable collateral, majority in residential and commercial real estate 8 November, 2018 LTV distribution by underlying asset class LTV distribution of mortgages to individuals Highlights ISK bn,
Slide 20: Asset quality
Íslandsbanki 9M 2018 Financial Results Asset quality Asset quality improving with NPL ratios continuing downward trend 8 November, 2018 Loans to customers & off-balance sheet items: impairment Loans to customers, gross carrying amount Highlights allowance account1 Risk class and impairment stage. IS
Slide 21: Liabilities
Íslandsbanki 9M 2018 Financial Results Liabilities Diversified funding strategy 8 November, 2018 ISK m 30.9.2018 30.6.2018 31.3.2018 Highlights Deposits from CB and credit inst. 15,530 15,391 13,563 Deposits — Customer deposits are up by 7.3% to ISK 609bn Deposits from customers 608,646 578,414 575,
Slide 22: Deposits remain the main source of funding
Íslandsbanki 9M 2018 Financial Results Deposits remain the main source of funding Core deposits continue to be stable 8 November, 2018 Deposit by LCR category Deposit composition Highlights 30.09.2018 compared with year end-2017, consolidated ISK bn, consolidated Stable core deposit base — Deposits
Slide 23: Borrowings
Íslandsbanki 9M 2018 Financial Results Borrowings Successful international and domestic market transactions 8 November, 2018 Borrowing sources Maturity profile of long-term debt and repayment of Highlights Book value, ISK bn long term debt as percentage of balance sheet1 Nominal value, ISK bn Ísland
Slide 24: Sound management of liquidity
Íslandsbanki 9M 2018 Financial Results Sound management of liquidity Liquid assets of ISK 254bn are prudently managed 8 November, 2018 Net stable funding ratio (NSFR) Liquidity coverage ratio – all currencies Liquidity coverage ratio – foreign currencies and 250% Icelandic krona 180% 600% 159% 160%
Slide 25: Sound capital position
Íslandsbanki 9M 2018 Financial Results Sound capital position The capital ratio in line with target and leverage is low 8 November, 2018 Capital and leverage ratios Risk exposure amount (REA) Highlights ISK bn Capital ratios 75% — The capital base was ISK 186bn and the CET1 capital 73% 74% 74% 71% w
Slide 26: Íslandsbanki's capital target
Íslandsbanki 9M 2018 Financial Results Íslandsbanki's capital target Based on the regulatory SREP requirement in addition to 50 – 200bp management buffer 8 November, 2018 Íslandsbanki’s capital target Capital requirement composition Highlights — The sum of Pillar 1, Pillar 2-R and the combined Tier
Slide 27: Íslandsbanki credit ratings
Íslandsbanki 9M 2018 Financial Results Íslandsbanki Íslandsbanki credit ratings S&P FITCH Ratings affirmed from both Fitch and S&P in late 2017 and mid-2018 8 November, 2018 Long-term BBB+ BBB S&P FITCH Short-term A-2 F3 BBB+/A-2 Stable Outlook BBB/F3 Stable Outlook Press Release 17 July 2018 Press
Slide 28: 4. Financial targets and next steps
Íslandsbanki 9M 2018 Financial Results 8 November, 2018 4. Financial targets and next steps islandsbanki.is
Slide 29: Financial targets
Íslandsbanki 9M 2018 Financial Results Financial targets Medium and long term strategies structured around achieving key financial targets 8 November, 2018 Target 9M18 2017 2016 Guidance — Based on risk free rate + 4-6% which is considered to be CBI current account rate, currently at 4.25% (average
Slide 30: Next steps for Íslandsbanki
Íslandsbanki 9M 2018 Financial Results Next steps for Íslandsbanki The Bank’s core investments have created a strong platform for offering enhanced digital and personalised services while maintaining low risk and reducing overhead costs in an increasingly 8 November, 2018 competitive environment Mai
Slide 31: Annex – Icelandic economy update
Íslandsbanki 9M 2018 Financial Results 8 November, 2018 Annex – Icelandic economy update islandsbanki.is
Slide 32: 2019: A year of adjustment
Íslandsbanki 9M 2018 Financial Results 2019: A year of adjustment Investment, private consumption and service exports take a breather 8 November, 2018 — After a long period of economic upswing, the end of the growth period GDP and the contribution of major subitems 1 appears to be in sight YoY chang
Slide 33: Tourism sector growth slows as sector matures
Íslandsbanki 9M 2018 Financial Results Tourism sector growth slows as sector matures Streamlining and mergers take over from rapid growth and supply-side increases 8 November, 2018 — The tourism sector is still growing by most measures, although the pace Foreign visitors and overnight hotel stays Se
Slide 34: Current account expected to remain in surplus
Íslandsbanki 9M 2018 Financial Results Current account expected to remain in surplus Net external position to continue improving throughout decade 8 November, 2018 — Both import and export growth to keep tapering off early in the forecast Imports, YoY change (%) Current account balance horizon % of
Slide 35: Domestic balance sheets remain robust
Íslandsbanki 9M 2018 Financial Results Domestic balance sheets remain robust Economy-wide leverage moderate in comparison with peers and historical levels 8 November, 2018 Household debt - domestic Corporate debt – international comparison % % of GDP 140 300 300 120 250 250 100 200 200 80 150 150 60
Slide 36: Outlook for similar investment level in coming years
Íslandsbanki 9M 2018 Financial Results Outlook for similar investment level in coming years Growth shifts from business investment to residential investment and public sector investment 8 November, 2018 — Investment in Iceland picked up strongly in the middle of the decade, Investment 1 after a stee
Slide 37: Households take their foot off the accelerator
Íslandsbanki 9M 2018 Financial Results Households take their foot of the accelerator Private consumption growth eases, but labour market is strong 8 November, 2018 — In the recent past, private consumption growth has levelled off Unemployment and wage growth Real wages and private consumption 8 12 Y
Slide 38: Real estate market moving gradually toward balance
Íslandsbanki 9M 2018 Financial Results Real estate market moving gradually toward balance Supply is increasing and main drivers of recent price rises are losing momentum 8 November, 2018 Real residential capital region house prices and defining factors New apartments and population increase in the c
Slide 39: Period of sub-target inflation has ended
Íslandsbanki 9M 2018 Financial Results Period of sub-target inflation has ended Inflation to peak in 2019 following ISK depreciation as domestic cost pressures remain considerable 8 November, 2018 — Inflation has been close to the CBI’s 2.5% inflation target in the recent Inflation and contribution
Slide 40: Real exchange rate set to remain high through this decade
Íslandsbanki 9M 2018 Financial Results Period of sub-target inflation has ended Real exchange rate set to remain high through this decade 8 November, 2018 — Following a 12 month period of relatively stable ISK, the currency has ISK exchange rate, daily values and volatility Trade balance and real ex
Slide 41: Iceland's credit rating has improved markedly
Íslandsbanki 9M 2018 Financial Results Iceland’s credit rating has improved markedly Upgrades from S&P and Fitch following lifting of capital controls 8 November, 2018 Moody´s in July 18: Development of sovereign credit rating Fitch in Dec-17: Outlook changed to positive AAA/Aaa Rating upgrade to A
Slide 42: More about Íslandsbanki
Íslandsbanki 9M 2018 Financial Results More about Íslandsbanki Learn more about the Bank on the Investor Relations website and through our contacts 8 November, 2018 Investor relations Media relations Gunnar S. Magnússon Edda Hermannsdóttir Head of Investor Relations Executive Director and Head of Co
Slide 43: Forward looking statements
Íslandsbanki 9M 2018 Financial Results 8 November, 2018 Forward looking statements All information contained in this presentation should be regarded as The forward-looking statements represent Íslandsbanki’s current preliminary and based on company data available. Due care and expectations, plans or
Slide 44: Takk fyrir!
Íslandsbanki 9M 2018 Financial Results 8 November, 2018 Takk fyrir! islandsbanki.is