Kvika Banki Hf · OMXICE:KVIKA
Kvika Banki Hf — 6M 2022 Earnings Presentation
24 slides from Kvika Banki Hf's earnings presentation, Aug 18, 2022
Slide 1: Kvika banki hf. 6M 2022 Financial Results
Kvika banki hf. 6M 2022 Financial Results 18 August 2022
Slide 2: Highlights of 6M 2022 results
Profit before tax (PBT) for 6M 2022 ISK 2,167 million with return on weighted tangible equity (RoTE) 10.0% Negative earnings announcement due to difficult market conditions in the quarter impacting financial income. PAT amounts to ISK 1,732 million Strong financial position with consolidated solvenc
Slide 3: Results by business segment
▪ Combined ratio in line with ▪ Market share in retail investment ▪ Healthy loan book growth of over 7% ▪ Acquisition of 78% share in Ortus ▪ Increased interest in FX felt both expectations and healthy growth funds grew by 5% in the period, in the quarter completed in March, integration of through c
Slide 4: Profit before tax (PBT)
Profit before tax (PBT) Diversified income across segments • Kvika’s profit before tax for the first six months of PBT development / ISK m. Net operating income by segment / 6M 2022 2022 is ISK 2,167 million with a RoTE of 10.0% ’21 ’22 Asset Management Insurance UK • PBT in Q2 amounted to ISK 427 m
Slide 5: Income statement and pre-tax profit bridge
Income statement ISK m. 6M 2022 6M 2021 Pre-tax profit (loss) bridge Net interest income 3,426 1,775 6M 2021 to 6M 2022 / ISK m. Net fees and commissions 3,219 3,514 1,651 167 Net premiums and claims 1,696 1,529 (295) Net financial income (91) 2,558 4,626 Income from associates - (28) 229 Other inco
Slide 6: Net interest income (NII)
Net interest income (NII) Segment split • Loan book composition, indexation and favorable ISK m. 6M 2022 / (%) track in funding continue to impact NII, which ’21 ’22 1,855 TM Insurance 4.6% grows year on year partially due to Lykill 1,718 5.5% 0.1% 1,571 Asset Management acquisition Commercial Banki
Slide 7: Net fee and commission income (NFC)
Net fee and commission income (NFC) Segment split • NFC income continues to provide a strong ISK m. 6M 2022 / (%) recurring fee base, creating less reliance on ’21 ’22 0.0% variable fees TM Insurance 4.1% 1,829 1,733 Asset Management → Asset management is a key contributor to NFC 1,684 1,642 1,576 1
Slide 8: Net premiums and claims (NPC)
Net premiums and claims (NPC) Combined ratio • Combined ratio of 99.9 for 6M 2022 and 98.8 for Q2 ISK m. (%) • Claims ratio increases from 6M 2021 while major ’21 ’22 Major claims ratio Claims ratio Expense ratio Reinsurance ratio claims ratio is significantly lower than in the first half 1,529 101.
Slide 9: Net financial income (NFI)
Net financial income (NFI) Segment split • Negative total NFI performance due to difficult ISK m. 6M 2022 / ISK m. market conditions ’21 ’22 TM Insurance • Losses contributed mainly by TM Insurance’s 2,185 Asset Management 480 investment activities and securities held by Commercial Banking 1,552 1,5
Slide 10: Operating expenses (OPEX)
Operating expenses (OPEX) Segment split • Operating expenses were in line with the Group’s ISK m. 6M 2022 / (%) budget in Q2 2022 ’21 ’22 6.1% → Cost to income ratio higher than normal in Q2 due TM Insurance to lower net financial income 3,949 Asset Management 15.6% 32.3% 3,165 3,326 3,245 Commercia
Slide 11: Assets
Assets Cash and financial instruments • ISK 40.6 billion increase in assets since year-end 30.6.22 / ISK billions 30.6.22 / ISK billions 2021 driven by increased cash position and loan Liquid assets ISK 108 billion book growth, as well as an ISK 9.5 billion increase Cash and balances with Central Ba
Slide 12: Loan book: vehicles, commercial vehicles, real estate, development
Vehicles Commercial vehicles Real estate Real estate development and equipment • Car dealers are the primary source of loan • Mostly to legal entities backed by residential and • Construction level from land to fully equipped property applications • Collateralized by commercial vehicles or various c
Slide 13: Loan book IFRS 9 risk stage allocation
Net carrying amount Gross carrying amount • Loan book increases by ISK 26.3 billion since IFRS 9 risk stage allocation / ISK billions IFRS 9 risk stage allocation / ISK billions year-end 2021, mainly due to the acquisition of a FVTPL Stage 3 Stage 2 Stage 1 majority share in Ortus Secured Finance FV
Slide 14: Liquidity coverage ratio and net stable funding ratio
Liquidity coverage ratio (LCR) Net stable funding ratio (NSFR) • HQLA assets ISK 53bn excluding mandatory 30.6.2022 / ISK billions 30.6.2022 / ISK billions reserves and collateral to the Central Bank • Liquidity coverage ratio is strong at 229%, where High quality liquid assets 53 Available stable f
Slide 15: Liabilities and equity
Liabilities and equity Maturity of deposits • Liabilities increase by 39.7 billion since year-end ISK billions 30.6.22 / (%) 2021, driven by debt issuance and increase in Debt issuance Deposits On demand 4.3% borrowings Borrowings Other 1-3 months 7.3% 1.4% Subordinated liabilities Equity 3-12 month
Slide 16: Sources of borrowings, issue currency and rating
Sources of borrowings Issue currency • Kvika has been an active issuer in Iceland since 30.6.22 / ISK billions 30.6.22 / ISK billions 2015 and in 2021 established an EMTN 75 12 70 programme and obtained a credit rating from ISK 55 53 14 17.6% Moody’s Investors Service 3 18 EUR 48 15 20 6 17 3 GBP •
Slide 17: CAR and solvency
CAR and solvency Capital position and requirements • Capital adequacy is calculated on a consolidated 30.6.2022 / ISK bn. 30.6.2022 / (%) level as the solvency ratio of the financial Minimum regulatory requirement conglomerate Total own funds 24.4% • The consolidated capital adequacy ratio (CAR) is
Slide 18: PBT Outlook 2022-23
PBT Outlook 2022-23 • At the end of each quarter the Group revises key ISK million assumptions for the next four quarters and 9,848 updates previously reported outlook as required 9,164 8,492 • Updated guidance published to the market after each quarters’ results, guiding the next four quarters • PB
Slide 19: Key Takeaways
Key Takeaways And focus going forward il Five operating segments provide a highly diverse source of income for the Group NU Strong financial position and valuable infrastructure for growth NU NFI negatively affecting total PBT, Group otherwise operating in line with guidance il Rating and EMTN progr
Slide 20: Appendix
Appendix
Slide 21: Kvika compared with other banks
Net operating income / 30.6.22 Cost to income Loans to Asset Liquidity Net stable 1% ratio deposits encumbrance coverage ratio funding ratio 74% 149% 22% 229% 126% 118% 21% 100% 104% 151% 48% Reg. min. 10% 100% Reg. min. 81% 42% KVIKA Other KVIKA Other KVIKA Other KVIKA Other KVIKA Other banks* bank
Slide 22: Investment asset income and insurance investment assets
Investment asset income Insurance investment assets* • Negative return on investment assets in the first 6 ISK m. 30.6.2022 / ISK m. months of 2022 of -1.0% mainly due to difficult 1,291 equity market circumstances 1,142 1,181 Cash and term deposits 2,523 • Positive performance in bonds and real est
Slide 23: 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, e.g. due
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