Kvika banki (KVIKA) CMD 2021 presentation summary

Strategy and targets

• Four operating segments span insurance, asset management, commercial banking and investment banking; 9M 2021 net operating income was ISK 15.4bn and ROTE was 36.4%.

• The buy-and-build strategy generated ISK 1,300–1,400m in realized asset-management synergies; refinancing initiatives were expected to generate ISK 3,800–4,500m in synergies.

• Three-year targets include 50,000 more fintech customers using at least three services, UK operations contributing at least 20% of profit, and 20% ROTE.

• Other three-year targets: grow asset management faster than the domestic market, lead Iceland in insurance profitability while increasing market share, and bring funding costs in line with domestic banks.

Insurance

• At 9M 2021, profit after tax was ISK 4,700m, annualized ROE 34%, technical result ISK 1,430m and combined ratio 89.1%; profit comparison excludes Lykill financing acquisition effects.

• Insurance held 24% of Iceland’s market; the investment portfolio was ISK 34.3bn at September 2021, with average ROE of 20.7% and investment return of 11.5% over 2010–9M 2021.

• Digital services include fully automated online sales and claims; 52% of household claims came through the app, while 24% of all insurance sales were online.

Asset management

• AuM was ISK 512bn at September 2021, up ISK 85bn in the first nine months; AuM had a 30% CAGR since 2015.

• Private-banking AuM increased 38% in 2021, with 65% of the increase from net inflows; credit funds held ISK 94bn.

• Asset-management fees were 65% of total net fee and commission income in 1H 2021; the business cited recurring fee streams, scale benefits and low capital requirements.

• Growth opportunities include fintech-enabled retail distribution, cross-selling, overseas investment products and sustainable funds, including a proposed forestry investment fund with Klappir Green Solutions.