Arion Banki Hf · OMXICE:ARION
Arion Banki Hf — Arion Bank — Q1 2016 Earnings Presentation
24 slides from Arion Banki Hf's earnings presentation, May 11, 2016
Slide 1: Financial Statements 31 March 2016 Investor Presentation
FINANCIAL STATEMENTS 31 MARCH 2016 INVESTOR PRESENTATION 11 MAY 2016
Slide 2: Arion Bank is a universal relationship bank
ARION BANK IS A UNIVERSAL RELATIONSHIP BANK ARION BANK PROVIDES A FULL RANGE OF FINANCIAL SERVICES Asset Management Corporate Banking Leading player in the Leading lender to large Icelandic market corporates in Iceland AuM equal to Arion Bank’s Innovative and customized total assets solution
Slide 3: Strategic subsidiaries in the Arion Bank Group
STRATEGIC SUBSIDIARIES IN THE ARION BANK GROUP ARION BANK PROVIDES A FULL RANGE OF FINANCIAL SERVICES The largest online and e- Leading life insurance commerce payment company in Iceland services company in Iceland Focus on modern personal Operations in Iceland, insurance services Denmark an
Slide 4: Highlights of the first quarter of 2016
HIGHLIGHTS OF THE FIRST QUARTER OF 2016 GOOD ACCESS TO INTERNATIONAL CREDIT MARKETS Financial results shaped by market conditions Funding secured for longer term • Substantial growth in interest income owing to • 7-year bond issue of $747 million following higher inflation and better priced funding
Slide 5: Highlights of the first quarter of 2016
HIGHLIGHTS OF THE FIRST QUARTER OF 2016 GOOD CORPORATE GOVERNANCE – STARTUPS THRIVING Recognized for good corporate governance Startup Reykjavík best business accelerator • Arion Bank was recognized by the Center for • Major increase in number of applications for the Corporate Governance at the Univ
Slide 6: Highlights of the first quarter of 2016
HIGHLIGHTS OF THE FIRST QUARTER OF 2016 OPENING OF NEW BRANCH AT KEFLAVÍK INTERNATIONAL AIRPORT PRESENTS GREAT OPPORTUNITY New and improved branches Active member of the community • A new branch was opened at Keflavík International • In celebration of the 80th anniversary of Bank’s Airport on 1 May
Slide 7: Headline figures for Q1 2016
HEADLINE FIGURES FOR Q1 2016 Profitability Strength Efficiency Asset quality Cost-to- Problem Net earnings Tier 1 ratio income ratio loans ISK 2,883 26.2% 60.7% 2.1% million Q1 2015: 31.12.2015: Q1 2015: 31.12.2015: ISK 14,908 million 23.4% 29.3% 2.5% Return on Leverage Number of Mortgages/ equity r
Slide 8: Income statement
INCOME STATEMENT 2& Arion Bank
Slide 9: Income statement
INCOME STATEMENT All amounts in ISK million HEALTHY GROWTH IN NET INTEREST INCOME – SHARP REDUCTION IN ONE-OFFS FROM LAST YEAR • Significant increase in net interest income due to higher inflation, higher interest rate, Q1 2016 Q1 2015 Diff Diff% larger loan portfolio and Net interest income 7,273 5
Slide 10: Net interest income
NET INTEREST INCOME All amounts in ISK billion INCREASED NET INTEREST INCOME MAINLY RELATED TO HIGHER INFLATION • Net interest income Net interest income Interest income increase both in comparison with previous period and Q1 15.6 14.8 14.4 2015. The increase is due to 11.3 0.8 1.0 11.3 1.3 higher i
Slide 11: Net commission income
NET COMMISSION INCOME All amounts in ISK billion STABLE COMMISSION BASE IN CARDS AND ASSET MANAGEMENT • Net commission decrease from Q1 2015 mainly due to Net commission income lower IPO activity in investment banking • Asset management stable from Q1 last year but reduction from Q4 is related to pe
Slide 12: Net financial income
NET FINANCIAL INCOME All amounts in ISK billion THE ICELANDIC EQUITY MARKET WAS CHALLENGING DURING THE QUARTER • The Icelandic stock index OMXI8 was volatile during Q1 Net financial income Bond holdings but was approximately the 80.3 80.0 68.5 73.2 70.7 same level at year end 2015 21.1 21.8 14.4 17.
Slide 13: Total operating expense
TOTAL OPERATING EXPENSE All amounts in ISK billion NEW WAGE AGREEMENTS HAVE A MAJOR IMPACT • Increase in salaries greatly affected by new wage Cost-to-income ratio (%) agreements 60.7 • Increase in IT expenditures, professional services and 47.5 marketing expenses compared with prior year 43.1 • Cos
Slide 14: Balance sheet
BALANCE SHEET 14
Slide 15: Balance sheet
BALANCE SHEET All amounts in ISK billion THE BANK IS WELL PREPARED FOR THE LIFTING OF THE CAPITAL CONTROLS • Healthy increase in loans to Assets 31.03.2016 2015 2014 2013 2012 customers Cash & balances with CB 70 48 21 38 30 Loans to credit institutions 92 87 109 102 101 • Decrease in investment in
Slide 16: Loans to customers
LOANS TO CUSTOMERS All amounts in ISK billion CONTINUED DEMAND FOR CORPORATE LENDING • Continued good balance in loans to corporates and Loans to customers Loans to corporates (%) individuals • Increase in loans to 680 694 Real Estate & Construction 648 17 customers during the period, 636 57 55 28 F
Slide 17: Funding
FUNDING All amounts in ISK billion THE BANK HAS BEEN LEADING THE RE-ENTRY INTO THE INTERNATIONAL MARKETS • In January the Bank and Funding Maturity of long term funding Kaupthing reached a funding 1,028 95.0 98.4 agreement under which the 1,011 ISK FX 59 Bank issued a 7 year USD 748 939 934 62 901 m
Slide 18: Capital base
CAPITAL BASE All amounts in ISK billion VERY STRONG CAPITAL BASE OFFERS VARIOUS ALTERNATIVES • No dividend payment in 2016 Capital ratio (%) Leverage ratio (%) • Solid level of capitalization due to strong profit generation 27.0 16.7 17.3 26.3 15.4 0.8 14.5 24.3 24.2 • The Bank uses standardized 23.
Slide 19: Outlook and key financial indicators
OUTLOOK AND KEY FINANCIAL INDICATORS 19
Slide 20: Outlook
OUTLOOK STRONGER DEMAND IN THE ECONOMY GIVES PROMISING SIGNS FOR THE FUTURE • Exciting times ahead in a rather challenging • The Bank will continue to seek ways to diversify its environment sources of funding • Arion Bank occupies strong position owing to its • Arion Bank's strong capital position m
Slide 21: Key financial indicators
KEY FINANCIAL INDICATORS Return on equity (%) Cost-to-income ratio (%) Net interest margin (%) Problem loans* (%) 35.1 69.0 60.7 29.3 2.6 3.1 6.1 2.6 7.8 3.2 5.7 2.1 Q1-14 Q1-15 Q1-16 Q1-14 Q1-15 Q1-16 Q1-14 Q1-15 Q1-16 Q1-14 Q1-15 Q1-16 Loans-to-deposits ratio (%) Tier 1 ratio (%) Liquidity coverag
Slide 22: Key financial indicators
KEY FINANCIAL INDICATORS Return on equity (%) Cost-to-income ratio (%) Net interest margin (%) 57.3 60.7 49.8 50.1 28.1 3.4 3.0 3.1 2.9 2.8 18.6 32.6 13.8 9.2 5.7 2012 2013 2014 2015 Q1 2016 2012 2013 2014 2015 Q1 2016 2012 2013 2014 2015 Q1 2016 CPI Imbalance – ISK bn. FX Imbalance – ISK bn. Risk w
Slide 23: Arion Bank
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Slide 24: 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