Islandsbanki Hf · OMXICE:ISB
Islandsbanki Hf — Q3 2024 Earnings Presentation
46 slides from Islandsbanki Hf's earnings presentation, Oct 23, 2024
Slide 1: 3Q24 Financial Results
3Q24 Financial Results 23 October 2024 Jón Guðni Ómarsson Chief Executive Officer Ellert Hlöðversson Chief Financial Officer
Slide 2: ROE for the first 9 months in excess of target
Íslandsbanki 3Q24 Financial Results ROE for the first 9 months in excess of target Growth in net fee and commission income as well as reversals of impairments contributing to profits 23 October 2024 ROE for FY 2024 to be at guidance C/I ratio below target ROE C/I ratio1 13.2% 44.9% 46.4% 44.2% 11.0%
Slide 3: Capital optimisation includes additional share buybacks
Íslandsbanki 3Q24 Financial Results Capital optimisation includes additional share buybacks Adverse effect from imbalances will likely cause ROE volatility in the coming quarters 23 October 2024 Target 3Q24 9M24 2024 Guidance Loans to customers and revenue, in general to grow in line with nominal GD
Slide 4: The Icelandic economy and society draw on many strengths
Íslandsbanki 3Q24 Financial Results The Icelandic economy and society draw on many strengths Icelanders enjoy high standards of living in a modern, open and egalitarian society 23 October 2024 Iceland ranks highly on a variety of global Income inequality is low compared to OECD peers Sustainable ene
Slide 5: Autumn takes hold in the economy
Íslandsbanki 3Q24 Financial Results Autumn takes hold in the economy Tepid GDP growth in 2024, followed by steadily accelerating growth later on 23 October 2024 Tepid economic growth this year, but likely to gain pace in coming years.. ..and housing market remains resilient in the face of tight mone
Slide 6: Íslandsbanki third quarter
Íslandsbanki 3Q24 Financial Results Biometric authentication Accounting platform PayDay Resolution Plan approved launched in the integrated into app allowing clients to create an invoice from and decision on MREL at app for payments app 19.6% of REA 23 October 2024 Market share amongst SMEs Íslandsb
Slide 7: Emotional, financial and physical health
Íslandsbanki 3Q24 Financial Results Wealth creation by Emotional health is key for a Physical health promoted in supporting good financial successful workplace many ways 23 October 2024 habits of our customers • Digital development is at • Emotional wellbeing is at the • Íslandsbanki Reykjavík the f
Slide 8: Financial overview
Financial overview islandsbanki.is 23 October 2024
Slide 9: Profit before tax considerably ahead of analyst consensus
Íslandsbanki 3Q24 Financial Results Profit before tax considerably ahead of analyst consensus Key drivers of this quarter's results: Loss from CPI imbalance, inflation and impairment reversals 23 October 2024 Profit for the period – 3Q23 vs 3Q24 ISKm 1,443 (163) (8) 478 (573) (69) 165 7,280 6,007 3Q
Slide 10: Reduced inflation resulted in lower lending margin
Íslandsbanki 3Q24 Financial Results Reduced inflation resulted in lower lending margin Reducing fixed rate imbalance to offset CPI imbalance pressure with time 23 October 2024 Highlights Net interest income Net interest income – YoY comparison – Lending margin was By business segments, ISKm ISKm 1.6
Slide 11: Growth in NFCI from previous two quarters
Íslandsbanki 3Q24 Financial Results Growth in NFCI from previous two quarters Capital markets showing signs of recovery, paving the way for continued growth 23 October 2024 Highlights Net fee and commission income Net fee and commission income – YoY comparison – Net income from cards Business segmen
Slide 12: Limited market risk exposure on the Bank's balance sheet
Íslandsbanki 3Q24 Financial Results Limited market risk exposure on the Bank’s balance sheet Volatile markets continue to affect NFI 23 October 2024 Highlights Net financial income (expense) Shares and equity instruments 1 – As in recent quarters, the ISKm ISKbn Bank has limited equity risk on its b
Slide 13: Cost-to-income for the first nine months 44.2% and below target
Íslandsbanki 3Q24 Financial Results Cost-to-income for the first nine months 44.2% and below target Inflation and continued investments in IT main remain largest contributors albeit seasonal fluctuations 23 October 2024 Highlights Administrative expenses Cost-to-income ratio1,2 – Cost-to-income ISKm
Slide 14: LTVs flat while lending growth moderates
Íslandsbanki 3Q24 Financial Results LTVs flat while lending growth moderates Loan portfolio focused on lower risk customers and over 94% covered by collateral 23 October 2024 Highlights Loans to customers Loans to customers – Mortgages remain the By business division, ISKbn By sector, with tourism a
Slide 15: Asset quality remains strong across the board
Íslandsbanki 3Q24 Financial Results Asset quality remains strong across the board Stage 3 declines while increase in Stage 2 loans is related to a handful of distressed cases 23 October 2024 Highlights Net impairment on financial assets Loans to customers: Stage 2 and 3 (NPL) – During the quarter, B
Slide 16: Well collateralised mortgage book with stable NPLs
Íslandsbanki 3Q24 Financial Results Well collateralised mortgage book with stable NPLs Continued shift to CPI-linked loans while fixed rate imbalance subsides in the banking book 23 October 2024 Highlights Mortgage portfolio Interest rate reset profile for NIL 3-5y fixed rate mortgages – Conservativ
Slide 17: CRE portfolio well diversified and of good quality
Íslandsbanki 3Q24 Financial Results CRE portfolio well diversified and of good quality Continuing reduction in Stage 3 quarter by quarter for the last year 23 October 2024 Highlights Development of exposure to real estate companies Development of construction exposure – Loans to real estate companie
Slide 18: Growth in retail deposits continued in 3Q24
Íslandsbanki 3Q24 Financial Results Growth in retail deposits continued in 3Q24 Deposits remain the largest funding base for the Bank, in excess of 50% 23 October 2024 Highlights Funding sources Customer loans to customer deposits ratio – Retail deposits (individuals and By type, % of total liabilit
Slide 19: Light maturity profile will allow opportunistic issuance
Íslandsbanki 3Q24 Financial Results Light maturity profile will allow opportunistic issuance Continued tightening of spreads in the international markets throughout 2024 23 October 2024 Highlights Sources of borrowings Contractual maturity profile of Currency split of borrowings – During 3Q24 the Ba
Slide 20: Strong liquidity position, ratios well above requirements
Íslandsbanki 3Q24 Financial Results Strong liquidity position, ratios well above requirements Liquid assets rising to 19% of total assets following a reduction in 2Q24 due to repurchase of EUR note 23 October 2024 Highlights Total liquidity coverage ratio (LCR) Liquidity coverage ratio for ISK – All
Slide 21: Capital position considerably in excess of targets
Íslandsbanki 3Q24 Financial Results Capital position considerably in excess of targets Capital optimisation to be completed before year-end 2025 subject to market conditions 23 October 2024 Highlights Capital and leverage ratios Current regulatory requirements and minimum capital target – SREP: As o
Slide 22: ROE considerably in excess of analyst consensus
Íslandsbanki 3Q24 Financial Results ROE considerably in excess of analyst consensus Key drivers of this quarter's results: Loss from CPI imbalance, inflation and impairment reversals 23 October 2024 ROE for the first 9 months in excess of guidance Policy rate cuts to continue as inflation subsides •
Slide 23: Q&A
Q&A islandsbanki.is 23 October 2024
Slide 24: Appendix I – About Íslandsbanki and additional financial information
23 October 2024 Appendix I – About Íslandsbanki and additional financial information islandsbanki.is
Slide 25: This is Íslandsbanki
Íslandsbanki 3Q24 Financial Results This is Íslandsbanki Our purpose is to be a force for good by empowering our customers to succeed 23 October 2024 Vision and Values The Bank Market share1 Sustainability 3Q24 FTEs To create value Assets under the Bank's 744 31% retail customers Sustainable Funding
Slide 26: Financial overview: Key figures & ratios
Íslandsbanki 3Q24 Financial Results Financial overview Key figures & ratios 3Q24 2Q24 1Q24 4Q23 3Q23 23 October 2024 PROFITABILITY Profit for the period, ISKm 7,280 5,266 5,417 6,228 6,007 Return on equity 13.2% 9.7% 9.8% 11.2% 11.0% Net interest margin (of total assets) 2.9% 3.1% 3.0% 2.9% 2.9% Cos
Slide 27: Income Statement
Íslandsbanki 3Q24 Financial Results Income Statement 23 October 2024 Income statement, ISKm 3Q24 3Q23 ∆% 9M24 9M23 ∆% 2023 Net interest income 11,777 11,846 (1%) 36,390 36,881 (1%) 48,611 Net fee and commission income 3,565 3,400 5% 10,280 10,461 (2%) 14,234 Net financial income (expense) 228 (193)
Slide 28: Balance sheet reflects a balanced loan and funding profile
Íslandsbanki 3Q24 Financial Results Balance sheet reflects a balanced loan and funding profile Conservative mix of assets and stable funding 23 October 2024 Assets Simplified balance sheet structure 30.9.24, ISK 1,622bn – Vast majority of assets consist of lending to both retail and corporates Cash
Slide 29: Assets
Íslandsbanki 3Q24 Financial Results Assets Asset base mainly consists of loans and liquid assets 23 October 2024 Assets, ISKm 30.9.24 30.6.24 Δ Δ% 31.12.23 Δ Δ% Cash and balances with Central Bank 104,777 84,981 19,796 23% 87,504 17,273 20% Loans to credit institutions 58,177 46,599 11,578 25% 73,47
Slide 30: Liabilities and equity
Íslandsbanki 3Q24 Financial Results Liabilities and equity Deposits continue to be the largest source of funding 23 October 2024 Liabilities & Equity, ISKm 30.9.24 30.6.24 Δ Δ% 31.12.23 Δ Δ% Deposits from Central Bank and credit institutions 11,525 10,466 1,059 10% 16,149 (4,624) (29%) Deposits from
Slide 31: Appendix II – Icelandic economy update
23 October 2024 Appendix II – Icelandic economy update islandsbanki.is
Slide 32: Negligible GDP growth in 2024, steady improvement ahead
Íslandsbanki 3Q24 Financial Results Negligible GDP growth in 2024, steady improvement ahead Growth prospects have dimmed due to weaker export growth and the effects of chronically high interest rates 23 October 2024 Highlights GDP and contribution of its subcomponents GDP and contribution of its sub
Slide 33: Export growth to firm up again following headwinds in 2024
Íslandsbanki 3Q24 Financial Results Export growth to firm up again following headwinds in 2024 Growth in tourism flat in 2024 but moderate growth expected in 2025-2026 23 October 2024 Highlights – Following a surge in 2023 and early Number of foreign tourists, by year Exports and contribution from s
Slide 34: Current account flips from temporary deficit to balance
Íslandsbanki 3Q24 Financial Results Current account flips from temporary deficit to balance A setback in exports and buoyant imports cause a CA deficit this year, but a balanced CA is in sight 23 October 2024 Highlights Imports and contribution from subcomponents Current account balance – After cont
Slide 35: ISK set to appreciate marginally during the forecast horizon
Íslandsbanki 3Q24 Financial Results ISK set to appreciate marginally during the forecast horizon The real exchange rate is close to equilibrium in terms of the external balance of the economy 23 October 2024 Highlights ISK exchange rate and selected determinants Real exchange rate and current accoun
Slide 36: Domestic balance sheets remain healthy
Íslandsbanki 3Q24 Financial Results Domestic balance sheets remain healthy Private sector debt ratios are stable and public debt remains moderate in global context 23 October 2024 Private sector debt Corporate debt % of GDP % of GDP 400 300 250 300 200 200 150 100 100 78 50 73 0 0 2003 2005 2007 200
Slide 37: Robust investment over the forecast horizon
Íslandsbanki 3Q24 Financial Results Robust investment over the forecast horizon High interest rates and a more ambiguous outlook for exports will impede investment temporarily, but growth will pick up again later 23 October 2024 Highlights Investment, real change, and contribution of subcomponents B
Slide 38: Labour market shows signs of rebalancing
Íslandsbanki 3Q24 Financial Results Labour market shows signs of rebalancing Real wages set to grow during the forecast horizon 23 October 2024 Highlights Wages, year-on-year change Unemployment1 – The Icelandic labour market has % % of workforce, annual average been tight with high participation po
Slide 39: Private consumption growth eases but is still resilient
Íslandsbanki 3Q24 Financial Results Private consumption growth eases but is still resilient Expected to grow weakly in the near term but gain steam later in the forecast horizon 23 October 2024 Highlights Household saving Private consumption and related indicators – Private consumption ticked upward
Slide 40: The real estate market shows continued resilience
Íslandsbanki 3Q24 Financial Results The real estate market shows continued resilience Central Bank measures seem to have a greater impact on CRE than on residential house prices 23 October 2024 Capital area house prices relative to macroeconomic fundamentals Residential house prices and turnover Ind
Slide 41: The Icelandic housing market is relatively resilient
Íslandsbanki 3Q24 Financial Results The Icelandic housing market is relatively resilient Supply, demand, mortgage market factors combine to make a large price correction less likely 23 October 2024 Households are not highly indebted compared to peers Mortgage market is flexible w.r.t. loan types wit
Slide 42: Colder weather brings cooling inflation
Íslandsbanki 3Q24 Financial Results Colder weather brings cooling inflation Inflation will not reach target during the forecast horizon but will fall below the upper tolerance limit in 2Q25 23 October 2024 Highlights Inflation and the CBI inflation target * Month-on-month and year-on-year CPI change
Slide 43: Monetary easing has started and looks set to continue
Íslandsbanki 3Q24 Financial Results Monetary easing has started and looks set to continue Falling inflation and a cooling economy should facilitate further policy rate cuts this winter 23 October 2024 Highlights Policy rate and inflation * Key interest rates – The Central Bank of Iceland (CBI) %, Re
Slide 44: Iceland's credit rating rising apace
Íslandsbanki 3Q24 Financial Results Iceland’s credit rating rising apace Rating companies acknowledge the flexibility of the economy and improving public debt metrics 23 October 2024 Development of sovereign credit rating Fitch in Dec-17: Moody’s in Nov-19: Moody’s in Sep-24: AAA/Aaa Rating upgrade
Slide 45: Disclaimer
Íslandsbanki 3Q24 Financial Results 23 October 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 forecast
Slide 46: islandsbanki.is
islandsbanki.is 23 October 2024