Islandsbanki Hf · OMXICE:ISB
Islandsbanki Hf — Q1 2024 Earnings Presentation
49 slides from Islandsbanki Hf's earnings presentation, May 2, 2024
Slide 1: 1Q24 Financial Results
1Q24 Financial Results 2 May 2024 Jón Guðni Ómarsson Chief Executive Officer Ellert Hlöðversson Chief Financial Officer
Slide 2: Total operating income in 1Q24 ahead of consensus
Íslandsbanki 1Q24 Financial Results Total operating income in 1Q24 ahead of consensus Fixed rate imbalance, among other effects NII year on year 2 May 2024 ROE at 2024 guidance C/I ratio within guidance ROE C/I ratio1 11.4% 11.5% 11.2% 42.1% 42.6% 42.7% 44.9% 11.0% 9.8% 39.0% 1Q23 2Q23 3Q23 4Q23 1Q2
Slide 3: Capital optimisation a focus point for the next 24 months
Íslandsbanki 1Q24 Financial Results Capital optimisation a focus point for the next 24 months Financial results reached or close to targets in 1Q24 2 May 2024 Target 1Q24 2024 Guidance Loans to customers and revenues, in general to grow in line with nominal GDP through the business cycle Return on e
Slide 4: From cascade to calm: Iceland's economy crests the rapids
Íslandsbanki 1Q24 Financial Results From cascade to calm: Iceland’s economy crests the rapids Tepid GDP growth in 2024, followed by steadily accelerating growth later on 2 May 2024 Domestic demand to take over gradually from exports as growth revives.. ..and housing market appears more stable as pri
Slide 5: Íslandsbanki 1Q24
Íslandsbanki 1Q24 Financial Results Rating upgrade BBB+/A-2 89% Íslandsbanki's chatbot of key products in Personal Fróði nominated Banking are sold via digital channels for two international awards 2 May 2024 Highest turnover Íslandsbanki Continued commitment to strengthen regulatory in equities on
Slide 6: Infrastructure projects
Íslandsbanki 1Q24 Financial Results Íslandsbanki Infrastructure projects 2 May 2024 Significant accumulated investment Complex projects that require multi- Íslandsbanki has developed strong need layered involvement with extensive relationship with key international know-how players in the infrastruc
Slide 7: Urban development at Kirkjusandur
Íslandsbanki 1Q24 Financial Results Urban development at Kirkjusandur Landmark development close to Reykjavík city centre 2 May 2024 2 May 2024 Plot of the Bank's former headquarters to be developed into mixed area of residential housing with commercial spaces In brief: • Total size of building plot
Slide 8: Íslandsbanki focuses on financial health…
Íslandsbanki 1Q24 Financial Results Íslandsbanki focuses on financial health… Wealth creation by supporting good financial habits in a digital way 2 May 2024 Our digital development supports financial health in Recent digital updates various ways include • Easily accessible information through digit
Slide 9: …while also promoting other aspects of health
Íslandsbanki 1Q24 Financial Results …while also promoting other aspects of health Physical health and emotional wellbeing is fundamental 2 May 2024 2 May 2024 Physical health • Íslandsbanki Reykjavík Marathon – held for the 40th time this summer • Annually the biggest charitable event in Iceland • G
Slide 10: Financial overview
Íslandsbanki 1Q24 Financial Results 2 May 2024 Financial overview islandsbanki.is
Slide 11: Slight reduction in operating income year on year
Íslandsbanki 1Q24 Financial Results Slight reduction in operating income year on year Operations impacted by CPI imbalance and fixed rated imbalance within the banking book 2 May 2024 Profit for the period – 1Q23 vs 1Q24 ISKm (301) 233 (173) (385) (29) (133) (6) 6,211 5,417 1Q23 Net interest Net fee
Slide 12: Growth in interest income and margin from previous quarter
Íslandsbanki 1Q24 Financial Results Growth in interest income and margin from previous quarter Central Bank policy rates unchanged during period 2 May 2024 Highlights Net interest income Net interest income – YoY comparison – Lending margin was By business segments, ISKm ISKm 1.7% in 1Q24 (1.8% in 1
Slide 13: Strong fee income from cards and payment processing
Íslandsbanki 1Q24 Financial Results Strong fee income from cards and payment processing Allianz Ísland hf., a subsidiary of the Bank, continues to contribute healthily to NFCI 2 May 2024 Highlights Net fee and commission income Net fee and commission income – YoY comparison – Income from cards and B
Slide 14: NFI affected by volatile market environment
Íslandsbanki 1Q24 Financial Results NFI affected by volatile market environment High policy rates and persistent inflation continue to effect domestic markets 2 May 2024 Highlights Net financial income (expense) Shares and equity instruments1 – High policy rates due to ISKm ISKbn persistent inflatio
Slide 15: Cost-to-income ratio beats target of below 45%
Íslandsbanki 1Q24 Financial Results Cost-to-income ratio beats target of below 45% Increase in salaries mainly due to increase in FTEs 2 May 2024 Highlights Administrative expenses Cost-to-income ratio1,2 – Salaries and related ISKm expenses Increased by 5.3% from 1Q23 mainly 7,551 7,397 7,042 6,970
Slide 16: Lending growth with modest credit risk profile
Íslandsbanki 1Q24 Financial Results Lending growth with modest credit risk profile Diversified and highly collateralised loan portfolio 2 May 2024 Highlights Loans to customers Loans to customers – The credit quality of By business division, ISKbn By sector, with tourism as a separate sector assets
Slide 17: Credit quality remains strong
Íslandsbanki 1Q24 Financial Results Credit quality remains strong Stage 2 and 3 stable after having increased in 4Q23 mainly due to seismic activity 2 May 2024 Highlights Net impairment on financial assets Loans to customers: Stage 2 and 3 (NPL) – The Group continues to use By period, ISKbn Developm
Slide 18: Loan to value at healthy levels and NPL remains low
Íslandsbanki 1Q24 Financial Results Loan to value at healthy levels and NPL remains low Mortgage portfolio continues to shift towards CPI-linked loans 2 May 2024 Highlights Mortgage portfolio Interest rate reset profile for NIL 3-5Y fixed rate mortgages – Conservative payment By interest rate type,
Slide 19: Real estate and construction sector performing well
Íslandsbanki 1Q24 Financial Results Real estate and construction sector performing well Occupancy ratios are high, and CPI linked rental agreements provide a natural hedge for borrowers 2 May 2024 Highlights Development of exposure to real estate companies Development of construction exposure – Loan
Slide 20: Deposits are the largest source of funding
Íslandsbanki 1Q24 Financial Results Deposits are the largest source of funding Strong growth in retail deposits in 1Q 2024 2 May 2024 Highlights Funding sources Customer loans to customer deposits ratio – Retail deposits (individuals and By type, % of total liabilities and equity Development, % SME'
Slide 21: Seasoned and diversified long-term funding programme
Íslandsbanki 1Q24 Financial Results Seasoned and diversified long-term funding programme Strong start to funding in 2024 2 May 2024 Highlights Sources of borrowings Contractual maturity profile of Currency split of borrowings – During 1Q24 the Bank issued a Development, ISKbn borrowings 31.03.24 new
Slide 22: Strong liquidity position, ratios well above requirements
Íslandsbanki 1Q24 Financial Results Strong liquidity position, ratios well above requirements Liquid assets of ISK 325bn, representing 20% of total assets 2 May 2024 Highlights Total liquidity coverage ratio (LCR) Liquidity coverage ratio for ISK – All liquidity measures above 200% regulatory requir
Slide 23: Capital optimisation to be concluded before year end 2025
Íslandsbanki 1Q24 Financial Results Capital optimisation to be concluded before year end 2025 Already strong capital position to rise with further REA optimisation 2 May 2024 Highlights Capital ratios and leverage ratio – MREL ratio, including the CET1 % of REA (% of total exposure for leverage rati
Slide 24: 1Q24 results in line with guidance
Íslandsbanki 1Q24 Financial Results 1Q24 results in line with guidance Overall economic outlook indicates soft landing while inflation and policy rate uncertainty remains 2 May 2024 Overall results in line with guidance Icelandic economy on the route to a soft landing • NII growth quarter on quarter
Slide 25: Q&A
Íslandsbanki 1Q24 Financial Results 2 May 2024 Q&A islandsbanki.is
Slide 26: Appendix I – About Íslandsbanki and additional financial information
Íslandsbanki 1Q24 Financial Results 2 May 2024 Appendix I – About Íslandsbanki and additional financial information islandsbanki.is
Slide 27: This is Íslandsbanki
Íslandsbanki 1Q24 Financial Results This is Íslandsbanki Our purpose is to be a force for good by empowering our customers to succeed 2 May 2024 Vision and Values The Bank Market share1 Sustainability 1Q24 FTEs The Bank issued senior To create value 735 31% retail customers preferred green notes in
Slide 28: Financial overview
Íslandsbanki 1Q24 Financial Results Financial overview Key figures & ratios 1Q24 4Q23 3Q23 2Q23 1Q23 PROFITABILITY Profit for the period, ISKm 5,417 6,228 6,007 6,139 6,211 Return on equity 9.8% 11.2% 11.0% 11.5% 11.4% 2 May 2024 Net interest margin (of total assets) 3.0% 2.9% 2.9% 3.2% 3.2% Cost-to
Slide 29: Income Statement
Íslandsbanki 1Q24 Financial Results Income Statement Income growth continues and profitability is robust Income statement, ISKm 1Q24 1Q23 ∆% 4Q23 ∆% Net interest income 12,122 12,423 (2%) 11,730 3% 2 May 2024 Net fee and commission income 3,296 3,469 (5%) 3,773 (13%) Net financial income (expense) (
Slide 30: Balance sheet reflects a balanced loan and funding profile
Íslandsbanki 1Q24 Financial Results Balance sheet reflects a balanced loan and funding profile Conservative mix of assets and stable funding 2 May 2024 Assets Simplified balance sheet structure 31.3.24, ISK 1,644bn – Vast majority of assets consist of lending to both retail and corporates Cash in Ce
Slide 31: Assets
Íslandsbanki 1Q24 Financial Results Assets Asset base mainly consists of loans and liquid assets Assets, ISKm 31.3.24 31.12.23 Δ Δ% 2 May 2024 Cash and balances with Central Bank 68,746 87,504 (18,758) (21%) Loans to credit institutions 114,430 73,475 40,955 56% Bonds and debt instruments 156,091 16
Slide 32: Liabilities and equity
Íslandsbanki 1Q24 Financial Results Liabilities and equity Deposits continue to be the largest source of funding Liabilities & Equity, ISKm 31.3.24 31.12.23 Δ Δ% 2 May 2024 Deposits from Central Bank and credit institutions 14,103 16,149 (2,046) (13%) Deposits from customers 879,554 850,709 28,845 3
Slide 33: Appendix II – Icelandic economy update
Íslandsbanki 1Q24 Financial Results 2 May 2024 Appendix II – Icelandic economy update islandsbanki.is
Slide 34: Gradually accelerating GDP growth following slowdown
Íslandsbanki 1Q24 Financial Results Gradually accelerating GDP growth following slowdown Highlights 2 May 2024 GDP and contribution of its subcomponents GDP and contribution of its subcomponents – GDP growth surged in 2021-2022 but began to decline in 2023, with a Volume change from prior year (%),
Slide 35: Tourism the mainstay of exports, but other sectors support
Íslandsbanki 1Q24 Financial Results Tourism the mainstay of exports, but other sectors support Just over 2.4 million tourists expected to visit Iceland in 2024, and more than 2.7 million in 2026 Highlights 2 May 2024 – Despite earthquakes and the threat of Number of foreign tourists, by year Exports
Slide 36: Modest current account surplus in coming years
Íslandsbanki 1Q24 Financial Results Modest current account surplus in coming years CA surplus due to growing exports and weaker domestic demand growth , external position improves Highlights Imports and contribution from subcomponents Current account balance – Iceland's import growth halted in 2023,
Slide 37: Domestic balance sheets remain healthy
Íslandsbanki 1Q24 Financial Results Domestic balance sheets remain healthy Economy-wide leverage remains moderate as the ratio of private sector debt to GDP declines 2 May 2024 Private sector debt Corporate debt % of GDP % of GDP 400 300 250 300 200 200 150 100 100 74 50 73 0 0 2003 2005 2007 2009 2
Slide 38: Investment virtually flat this year but set to regain steam
Íslandsbanki 1Q24 Financial Results Investment virtually flat this year but set to regain steam Business investment to contract in 2024 and return to growth thereafter Highlights 2 May 2024 Investment, real change, and contribution of subcomponents Executives’ expectations and business investment %
Slide 39: Labour market tension to ease
Íslandsbanki 1Q24 Financial Results Labour market tension to ease Real wage set to grow during the forecast horizon Highlights 2 May 2024 Wages, year on year change Unemployment1 – The labour market has been quite % % of workforce, annual average tight in the recent term, and unemployment has fallen
Slide 40: Private consumption shifts gears
Íslandsbanki 1Q24 Financial Results Private consumption shifts gears Households' consumption declines and saving rises Highlights 2 May 2024 Household saving Private consumption and related indicators – Private consumption shifted into reverse in 2023, after two-year growth % of disposable income %
Slide 41: The real estate market has stabilized in recent quarters
Íslandsbanki 1Q24 Financial Results The real estate market has stabilized in recent quarters Central Bank measures have contributed to slower price increases of residential housing 2 May 2024 Capital area house prices relative to macroeconomic fundamentals Residential house prices and turnover in gr
Slide 42: The Icelandic housing market is relatively resilient
Íslandsbanki 1Q24 Financial Results The Icelandic housing market is relatively resilient Supply, demand, mortgage market factors combine to make a large price correction less likely 2 May 2024 Households are not highly indebted compared to peers Mortgage market is flexible w.r.t. loan types with dif
Slide 43: The bumpy road to disinflation
Íslandsbanki 1Q24 Financial Results The bumpy road to disinflation Inflation has proven persistent but looks set to decline towards target in due course 2 May 2024 Highlights Inflation and the CBI inflation target * Inflation by contribution of main categories – Twelve-month inflation measured % *Fo
Slide 44: Gradual monetary easing phase to commence in 2024
Íslandsbanki 1Q24 Financial Results Gradual monetary easing phase to commence in 2024 Declining inflation and a shrinking positive output gap facilitate lower interest rates later on Highlights 2 May 2024 Policy rate and inflation * Key interest rates – The Central Bank of Iceland %, Real policy rat
Slide 45: Additional modest ISK appreciation in the offing
Íslandsbanki 1Q24 Financial Results Additional modest ISK appreciation in the offing A higher real exchange rate will impede further improvement in the CA later on Highlights 2 May 2024 ISK exchange rate and selected determinants Real exchange rate and current account balance – The Icelandic króna (
Slide 46: Iceland's credit rating continues its gradual upward trend
Íslandsbanki 1Q24 Financial Results Iceland’s credit rating continues its gradual upward trend Rating companies acknowledge the flexibility of the economy and resilience to recent global shocks 2 May 2024 Development of sovereign credit rating Fitch in Dec-17: Moody’s in Nov-19: Moody’s in Jul-23: A
Slide 47: The Icelandic economy and society draw on many strengths
Íslandsbanki 1Q24 Financial Results The Icelandic economy and society draw on many strengths Icelanders enjoy high standards of living in a modern, open and egalitarian society 2 May 2024 Iceland ranks highly on a variety of global Income inequality is low compared to OECD peers Sustainable energy u
Slide 48: Disclaimer
Íslandsbanki 1Q24 Financial Results 2 May 2024 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 forecasts of
Slide 49: islandsbanki.is
Íslandsbanki 1Q24 Financial Results 2 May 2024 islandsbanki.is