Kvika Banki Hf · OMXICE:KVIKA
Kvika Banki Hf — Q1 2025 Earnings Presentation
29 slides from Kvika Banki Hf's earnings presentation, May 7, 2025
Slide 1: Q1 2025 Financial Results
Kvika banki hf. Q1 2025 Financial Results 7 May 2025
Slide 2: Q1 2025 highlights: strategic developments and non-recurring items
Q1 2025 Strategic developments in the first quarter resulted in the recognition of sizable non-recurring items Profit before tax, normalised ISK 1, 590 m. Sale of TM to Landsbanki finalised and acquisition of 100% of Ortus Secured Finance concluded Profit before tax, normalized for non-recurring ite
Slide 3: Non-recurring items in Q1 mainly due to strategic developments
Non-recurring items in Q1 mainly due to strategic developments Kvika’s Q1 results were influenced by several non-recurring Adjustments to reflect underlying performance in Q1 2025 items, reflecting various readjustments following the completion ISK bn. of the TM divestment and finalisation of the ac
Slide 4: Non-recurring expenses will reduce costs going forward
Non-recurring expenses will reduce costs going forward Various non-recurring expenses are recorded in Q1, linked to Adjustments to reflect underlying performance in Q1 2025 the divestment of TM insurance and consequent readjustment ISK bn. of the business 1,590 D A. TM divestment related impact: Exp
Slide 5: Expedited Ortus acquisition pushes forward revaluation
Expedited Ortus acquisition pushes forward revaluation D. Expedited Ortus acquisition: In March 2025, Kvika Adjustments to reflect underlying performance in Q1 2025 completed the expedited acquisition of the remaining 19.7% ISK bn. management share in Ortus, originally scheduled for 1,590 gradual ac
Slide 6: Expedited Ortus acquisition is a key step in UK consolidation
Expedited Ortus acquisition is a key step in UK consolidation Consolidation Plan Year-end 2024 ownership structure Target ownership structure 1. Remainder of shares in Ortus acquired, enabling Kvika’s 100% ownership ➢ No further revaluation of contingent liabilities Kvika banki hf. Kvika banki hf. 2
Slide 7: Ortus acquisition has been successful for Kvika
Ortus acquisition has been successful for Kvika Management shares in Ortus are acquired at GBP 7.2 million, Purchase price summary equivalent to 8.0x 2024 adjusted profit after tax, with a GBP 1.55 GBP m. million maximum earn-out linked to 2025 results 33.2 34.7 1.6 Following the purchase of managem
Slide 8: Commercial Banking: solid loan book and strong deposit base
Commercial Banking Segment highlights Solid loan book position and a strong deposit base • Continued momentum in the preparation of a new mortgage offering, scheduled to launch in the coming weeks • Total deposits increased by over 2% in Q1 2025, despite a declining interest rate environment. Growth
Slide 9: Investment Banking: good quarterly performance amid volatility
Investment Banking Segment highlights Good quarterly performance amid market volatility • Q1 marked by extraordinary market conditions, where the Icelandic stock market experienced a significant downturn, reflecting global market volatility. The CB's monetary policy will continue to play pivotal rol
Slide 10: Asset Management: geopolitical tensions and market volatility
Asset Management Segment highlights Geopolitical tensions and market volatility impacts operations • Asset management was materially impacted by the heightened volatility in global equity market in the quarter, which dampened the expected boost in the Icelandic equity market despite lower interest r
Slide 11: UK: positive Q1 performance since launch of Harpa
UK Segment highlights Positive Q1 performance from UK operations with increased activity level since launch of Harpa • Strong performance in Q1 driven by continued positive results at Ortus Secured Finance maintaining NIM in line with prior quarters and further improvements in credit quality • Finan
Slide 12: Financials
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Slide 13: Income Statement
Income Statement Q1 2025 Income Statement ISK m. Q1 2025 Q1 2024 Diff. Q4 2024 Diff. Net interest income 2,917 2,326 590 2,498 419 Net fees and commissions 1,520 1,633 (113) 1,601 (81) Other net operating income 12 110 (98) 567 (555) • Net Interest Income: Grows 25.4% YoY, driven by a larger balance
Slide 14: Net Interest Income
Net Interest Income Strong net interest margin Net interest income Net interest margin development Q1 2024 to Q1 2025 / ISK m. (%) 522 2,917 • Net interest income up 25.4% from Q1 2024 driven by a 548 growing loan book and a high cash position 2,326 366 • Cash position increased significantly in Feb
Slide 15: Net Fee and Commission Income
Net Fee and Commission Income Stable income stream Net fee and commission income Net fee and commission income Q1 2024 to Q1 2025 / ISK m. ISK m. 1,633 12 1,633 1,601 77 13 1,520 1,552 1,520 61 1,351 70 89 • Net fee and commission income decreases by 113 million (114) (20) 138 (80) 539 60 590 464 fr
Slide 16: Other Net Operating Income
Other Net Operating Income Trading losses in a turbulent quarter Other net operating income Other net operating income Q1 2024 to Q1 2025 / ISK m. Composition / ISK m. 110 Net financial income Other operating income Profit from associates 567 474 44 70 • Net financial income decreases despite UK and
Slide 17: Operating Expenses
Operating Expenses Significant non-recurring items in the period Employee development Cost to core income Full time employees at the end of each period (%) Cost to core income Excl.one-off costs 249 244 249 253 253 • Administrative expenses are materially affected by non- 70.5% 68.9% 69.5% 65.9% rec
Slide 18: Balance Sheet: Assets
Balance Sheet: Assets Unusually high cash position due to TM divestment Assets ISK bn. 359.4 363.8 • Material change due to TM divestment, with ‘assets held for 350.9 354.6 342.8 Assets held for sale sale’ of ISK 57.7 billion at year-end 2024 removed from the 53.4 54.5 21.4 52.6 57.7 16.2 Intangible
Slide 19: Loans to Customers
Loans to Customers Significant growth in Q1 Loan book development ISK bn. 160.6 146.7 150.2 Commercial Banking 145.9 146.0 Vehicles 36.2 Commercial vehicles & equipment Unsecured loans 35.9 34.6 34.8 35.4 17.9 17.5 16.2 18.1 18.1 7.0 7.3 7.3 6.7 6.8 Investment Banking 42.3 Real estate 33.5 33.6 35.9
Slide 20: Credit Quality
Credit Quality Improvement in stage 3 loan ratio Loans to customers risk stage allocation Impairment loss allowance Net loan book / (%) ISK bn. Stage 1 Stage 3 Stage 1 Stage 3 Stage 2 FVTPL Stage 2 % of gross loan book 1.5% 1.6% 1.6% 1.5% 1.4% 3.0% 3.6% 4.3% 4.1% 2.5% • Loan book quality continues t
Slide 21: Balance Sheet: Liabilities
Balance Sheet: Liabilities Significant growth in retail deposits Liabilities and equity ISK bn. • Liabilities decrease somewhat since year-end 2024 as the 359.4 363.8 354.6 balance sheet shifts due to TM divestment 350.9 342.8 26.7 27.1 27.3 27.3 Liabilities of asset held for sale 20.9 20.4 17.3 39.
Slide 22: Deposits
Deposits Retail deposits remain a key funding base Deposits by type Loans to deposits ISK bn. (%) 168.0 162.6 163.4 96% 160.1 3.5 92% 91% 89% 92% 158.4 3.5 7.4 3.5 6.9 21.2 23.3 • Deposits grow by 6% YoY, largely attributable to retail 25.2 25.2 11.9 deposits through the Auður brand 32.3 11.2 8.5 7.
Slide 23: Debt Issuance
Debt Issuance Significant steps taken towards improved rates Development of market funding MREL requirements ISK bn. 31.3.2025 66.2 67.4 MREL-RWEA: Percentage of risk- MREL-TEM: Percentage of total • Kvika is an active issuer of bonds in the public bond markets 65.0 60.3 0.6 0.7 56.8 0.3 weighted ex
Slide 24: Liquidity and Funding Ratios
Liquidity and Funding Ratios Continued strong liquidity position Total liquidity coverage ratio (LCR) Net stable funding ratio (NSFR) 31.3.2025 / (%) 31.3.2025 / (%) Regulatory minimum Regulatory minimum 780% 159% 800 900 160 142% 148% 144% 900 700 800 140 137% 800 600 700 120 700 • High Quality Liq
Slide 25: Capital Position
Capital Position Strong capital position well above regulatory requirements • CAR of 23.9% at the end of March, well above Kvika’s management target as expected during the transitional Regulatory total capital (CAR) period post-divestment (%) • CAR of 23.0% excluding unaudited retained earnings for
Slide 26: Financial Targets
Financial Targets Target 12M 2024 Q1 2025 Return on Tangible >20% 18.8% 17.7% Equity Pre-tax Normalized for non-recurring items in the period, RoTE of 7.8% per income statement Capital Adequacy Ratio 200-400 bps. 480 bps. 590 bps. (CAR) Buffer Over Requirement (basis points) Dividend Payout Ratio 25
Slide 27: Kvika is in an enviable position as key strategic milestones are executed
Kvika is in an enviable position as key strategic milestones are executed in Q1 • Capital base at an historic high, with exceptionally strong capital and liquidity ratios • Increased focus and stability of earnings after departure from insurance • Step-up in net interest income level at the expense
Slide 28: 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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