Islandsbanki Hf · OMXICE:ISB
Islandsbanki Hf — Q4 2021 Earnings Presentation
44 slides from Islandsbanki Hf's earnings presentation, Feb 10, 2022
Slide 1: 4Q21 Financial Results
4Q21 Financial Results 10 February 2022 Birna Einarsdóttir Chief Executive Officer Jón Guðni Ómarsson Chief Financial Officer islandsbanki.is
Slide 2: ROE of 14.2% in 4Q21 exceeds financial targets and consensus
Íslandsbanki 4Q21 Financial Results ROE of 14.2% in 4Q21 exceeds financial targets and consensus Stronger economic recovery and resilient borrowers drive performance 10 February 2022 1. Exceptionally strong fourth quarter earnings 2. investment banking and asset management NFCI up 28% in 4Q21 (YoY)
Slide 3: Customer success in an outstanding year
Íslandsbanki 4Q21 Financial Results Customer success in an outstanding year Digital services at the heart of the ambition to be #1 for service 10 February 2022 Corporate & Personal Banking Business Banking Investment Banking Iceland Funds 11.5% ROE 18.1% ROE 9.8% ROE 51.2% ROE 61.1% Cost-to-income r
Slide 4: Economic recovery continues
Íslandsbanki 4Q21 Financial Results Economic recovery continues Strong foundations facilitate a robust recovery as world-wide pandemic impact fades 10 February 2022 Exports replace domestic demand as the key catalyst of healthy GDP growth.. ...as domestic demand keeps rising despite short-term pande
Slide 5: ROE above 10% as financial targets are revised
Íslandsbanki 4Q21 Financial Results ROE above 10% as financial targets are revised Strong performance calls for revised targets 10 February 2022 Targets Revised Previous 4Q21 2021 8-10% by 2023 Return on equity1 >10% 14.2% 12.3% >10% long-term Cost-to-income ratio2 <45% <45% by 2023 45.3% 46.2% >16%
Slide 6: Highly attractive capital return and growth opportunity
Íslandsbanki 4Q21 Financial Results Highly attractive capital return and growth opportunity A solid strategy building on strong foundations 10 February 2022 5 4 – Loans to customers and revenues, in general, to grow in line with nominal GDP 3 growth through the business cycle Current 2 policy rate G
Slide 7: Íslandsbanki's four strategic themes in 2022
Íslandsbanki 4Q21 Financial Results Íslandsbanki’s four strategic themes in 2022 The strategy house has served the Bank well as is reflected in the latest results and successful IPO 10 February 2022 Data-driven and personalised sales and services Diverse ecosystems for corporate and individual clien
Slide 8: Key sustainability milestones in 2021
Íslandsbanki 4Q21 Financial Results Key sustainability milestones in 2021 The Bank’s sustainability policy has set short- and medium-term goals with a clear link to ESG criteria and the UN SDGs. 10 February 2022 Carbon footprint from 20 First round of PCAF-aligned calculations of financed operations
Slide 9: Sustainability priorities ahead in 2022
Íslandsbanki 4Q21 Financial Results Sustainability priorities ahead in 2022 Increasing sustainable lending and mapping out path to net-zero emissions in 2040 are the Bank´s biggest sustainability priorities in 2022 10 February 2022 Financed emissions Sustainable lending more than doubled and Sustain
Slide 10: Financial overview
Íslandsbanki 4Q21 Financial Results 10 February 2022 Financial overview islandsbanki.is
Slide 11: Profitability exceeds expectations
Íslandsbanki 4Q21 Financial Results Profitability exceeds expectations Driven by strong underlying business and reversed impairments 10 February 2022 Profit for the period – 4Q20 vs 4Q21 Profit for the period – 2020 vs 2021 ISKm ISKm 11,834 (2,647) 1,318 2,468 (1,182) 906 314 788 (113) (554) 4,023 3
Slide 12: Net interest income rises for all business units
Íslandsbanki 4Q21 Financial Results Net interest income rises for all business units NIM resilient as interest rates fluctuate 10 February 2022 Highlights NII – 4Q20 vs 4Q21 Net interest income – Fall in NII from 3Q21 is By business segments, ISKm ISKm explained by decrease in loans and deposits on
Slide 13: Diverse sources of NFCI and strong growth
Íslandsbanki 4Q21 Financial Results Diverse sources of NFCI and strong growth Headwinds from COVID-19 recede and cards and payment processing fees reach previous levels 10 February 2022 Highlights NFCI – comparison 4Q YoY Net fee and commission income – NFCI up 22.1% from 2020 Business segments, ISK
Slide 14: Supportive equity market lifts NFI
Íslandsbanki 4Q21 Financial Results Supportive equity market lifts NFI Positive valuation of unlisted holdings contributes to good results 10 February 2022 Highlights Net financial income Shares and equity instruments1 – Fair value changes account for ISKm ISKbn considerable part of net financial 94
Slide 15: Cost/income hits target with real cost reduction of 9.4% YoY
Íslandsbanki 4Q21 Financial Results Cost/income hits target with real cost reduction of 9.4% YoY Other operating expenses down despite inflation and continued investments in technology 10 February 2022 Highlights Administrative expenses1 Cost-to-income ratio2 – Cost reduction YoY result of ISKm cont
Slide 16: Positive net impairment in 2021 as the economy recovers
Íslandsbanki 4Q21 Financial Results Positive net impairment in 2021 as the economy recovers Tourism sector in better shape than feared 10 February 2022 Net impairment on financial assets1 Loans to customers: Stage 2 and 3 By period, ISKbn Development of gross carrying amount as ratio of total loans
Slide 17: Diversified and highly collateralised loan portfolio
Íslandsbanki 4Q21 Financial Results Diversified and highly collateralised loan portfolio Loans to individuals are 48% of loans to customers, mainly residential mortgages 10 February 2022 Loans to customers Loans to customers LTV distribution by underlying asset class By business division, ISKbn By s
Slide 18: COVID-19 impact on forbearance loans gradually receding
Íslandsbanki 4Q21 Financial Results COVID-19 impact on forbearance loans gradually receding Majority of moratoria borrowers have resumed payments 10 February 2022 Performing loans with forbearance Indication on when payments resume after moratorium Gross carrying amount, ISKbn Gross carrying amount,
Slide 19: Deposits are largest source of funding
Íslandsbanki 4Q21 Financial Results Deposits are largest source of funding Strong growth in retail deposits in 2021 provides a solid funding base 10 February 2022 Highlights Funding sources Customer loans to customer deposits ratio – Term deposits are 18% of total By type, % of total liabilities and
Slide 20: Seasoned and diversified long-term funding programme
Íslandsbanki 4Q21 Financial Results Seasoned and diversified long-term funding programme Majority of 2022 maturities already funded through recent €300m sustainable bond issuance 10 February 2022 Highlights Sources of market borrowings Contractual maturity profile of Currency split of borrowings – S
Slide 21: Strong capital position and dividend capacity
Íslandsbanki 4Q21 Financial Results Strong capital position and dividend capacity Opportunity to optimise capital composition and continue consistent delivery of ordinary dividend 10 February 2022 Highlights Capital ratios and leverage ratio Dividend and buyback of own shares – Current and long term
Slide 22: Q&A
Íslandsbanki 4Q21 Financial Results 10 February 2022 4. Q&A Íslandsbanki.is
Slide 23: Appendix I – About Íslandsbanki and additional financial information
Íslandsbanki 4Q21 Financial Results 10 February 2022 5. Appendix I – About Íslandsbanki and additional financial information islandsbanki.is
Slide 24: This is Íslandsbanki
Íslandsbanki 4Q21 Financial Results This is Íslandsbanki Moving Iceland forward by empowering our customers to succeed 10 February 2022 Vision and Values The Bank Market share1 Sustainability 4Q21 FTEs Vision to be 702 32% retail customers Sustainable lending up by 134% during 2021 number of FTEs at
Slide 25: Key figures & ratios
Íslandsbanki 4Q21 Financial Results Financial overview Key figures & ratios 10 February 2022 4Q21 4Q20 2021 2020 2019 PROFITABILITY Profit for the period, ISKm 7,092 3,525 23,725 6,755 8,454 Return on equity 14.2% 7.6% 12.3% 3.7% 4.8% Net interest margin (of total assets) 2.4% 2.5% 2.4% 2.6% 2.7% Co
Slide 26: Income growth of 8.8% YoY as fee income still increases
Íslandsbanki 4Q21 Financial Results Income growth of 8.8% YoY as fee income still increases Positive net impairment on back of improving economic environment 10 February 2022 Income statement, ISKm 4Q21 4Q20 ∆% 3Q21 ∆% 2021 2020 ∆% Net interest income 8,644 8,258 5% 8,792 (2%) 34,043 33,371 2% Net f
Slide 27: Balance sheet reflects balanced loan and funding profile
Íslandsbanki 4Q21 Financial Results Balance sheet reflects balanced loan and funding profile Broad product offering, strong liquidity portfolio and stable funding 10 February 2022 Assets Simplified balance sheet structure – Vast majority of assets consist of 31.12.2021, ISK 1,429bn lending to both i
Slide 28: Robust growth in total assets in 2021
Íslandsbanki 4Q21 Financial Results Robust growth in total assets in 2021 Steady mortgage growth supported by an even stronger capital base 10 February 2022 Assets, ISKm 31.12.21 30.9.21 Δ Δ% 31.12.20 Δ Δ% Cash and balances with Central Bank 113,667 110,233 3,434 3% 78,948 34,719 44% Loans to credit
Slide 29: Diversified funding base
Íslandsbanki 4Q21 Financial Results Diversified funding base Deposits are largest source of funding 10 February 2022 Liabilities & Equity, ISKm 31.12.21 30.9.21 Δ Δ% 31.12.20 Δ Δ% Deposits from Central Bank and credit institutions 13,384 20,409 (7,025) (34%) 39,758 (26,374) (66%) Deposits from custo
Slide 30: Appendix II – Icelandic economy update
Íslandsbanki 4Q21 Financial Results 10 February 2022 6. Appendix II – Icelandic economy update islandsbanki.is
Slide 31: Economic recovery likely to accelerate as pandemic recedes
Íslandsbanki 4Q21 Financial Results Economic recovery likely to accelerate as pandemic recedes Exports replace domestic demand as the key catalyst of growth 10 February 2022 Highlights GDP and contribution of its subcomponents GDP, domestic demand, and external trade – After a deep contraction in 20
Slide 32: Tourism reloaded
Íslandsbanki 4Q21 Financial Results Tourism reloaded 1-1.2 million tourists are projected to visit Iceland in 2022, rising to 1.5 million in 2023 10 February 2022 Highlights Number of foreign tourists, by year – Nearly 700,000 tourists visited Iceland in 2021, an increase of nearly 45% relative Thou
Slide 33: Current account surplus in the offing after a temporary deficit
Íslandsbanki 4Q21 Financial Results Current account surplus in the offing after a temporary deficit The recovery of tourism and growth in other exports explain the improvement in external trade 10 February 2022 Highlights Exports and contribution from subcomponents Current account balance and GDP gr
Slide 34: Domestic balance sheets still healthy despite COVID-19
Íslandsbanki 4Q21 Financial Results Domestic balance sheets still healthy despite COVID-19 Economy-wide leverage remains moderate in comparison with peers and historical levels 10 February 2022 Private sector debt Corporate debt % of GDP % of GDP 400 300 350 250 300 250 200 200 150 150 100 100 50 50
Slide 35: Moderate investment growth following a spike in 2021
Íslandsbanki 4Q21 Financial Results Moderate investment growth following a spike in 2021 Residential investment to gain steam, while public investment will contract further ahead 10 February 2022 Highlights Investment, real change, and contribution of subcomponents Executives’ expectations and busin
Slide 36: Unemployment converging to a new equilibrium
Íslandsbanki 4Q21 Financial Results Unemployment converging to a new equilibrium The relatively swift economic recovery has caused a rapid decline in unemployment 10 February 2022 Highlights Labour supply according to corporate executives Unemployment* – Unemployment fell rapidly in 2021, % % of wor
Slide 37: Further private consumption growth ahead after robust 2021
Íslandsbanki 4Q21 Financial Results Further private consumption growth ahead after robust 2021 Household consumption supported by continued real wage growth and sound asset position 10 February 2022 Highlights Private consumption and related indicators – Following 3.0% contraction in 2020, % change
Slide 38: Real estate markets lively despite pandemic
Íslandsbanki 4Q21 Financial Results Real estate markets lively despite pandemic Commercial property prices rising again while residential house price rises have gained steam 10 February 2022 Capital area house prices relative to macroeconomic fundamentals Residential house prices and turnover in gre
Slide 39: ISK set to appreciate further with growth in export revenues
Íslandsbanki 4Q21 Financial Results ISK set to appreciate further with growth in export revenues The ISK has been stable recently, and the CBI has suspended intervention 10 February 2022 Highlights ISK exchange rate and CBI FX market intervention Real exchange rate and current account balance – The
Slide 40: Inflation to decrease gradually over 2022
Íslandsbanki 4Q21 Financial Results Inflation to decrease gradually over 2022 Inflation likely to reach the target in H1/2023 10 February 2022 Highlights Inflation and the CBI inflation target Headline inflation, by country – 2021 was Iceland’s biggest inflation year since 2012, with prices rising b
Slide 41: Policy rate to keep rising in the next two years
Íslandsbanki 4Q21 Financial Results Policy rate to keep rising in the next two years Long-term interest rates approaching equilibrium within the forecast horizon 10 February 2022 Highlights Policy rate and inflation Interest rates – Reacting to deteriorating inflation outlook and recovering economy,
Slide 42: Iceland's credit rating has remained at A
Íslandsbanki 4Q21 Financial Results Iceland’s credit rating has remained at A Setbacks in the tourist sector have not affected the sovereign ratings 10 February 2022 Development of sovereign credit rating Fitch in Dec-17: Moody’s in Nov-19: AAA/Aaa Rating upgrade to A on economic Upgrade to A2 on su
Slide 43: Disclaimer
Íslandsbanki 4Q21 Financial Results 10 February 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 forecas
Slide 44: islandsbanki.is
Íslandsbanki 4Q21 Financial Results 10 February 2022 islandsbanki.is