Kvika banki (KVIKA) Debt investor presentation summary

Business profile and earnings

• Four operating segments span insurance, asset management, commercial banking and investment banking; 340 employees and 36.4% ROTE at 9M 2021.

• 9M 2021 net operating income was ISK 15.4bn and PBT was ISK 7.9bn; reported after-tax profit was ISK 8.0bn.

• ROTE was 36.4% at 9M 2021; annualized merger cost synergies reached ISK 1.084bn, and the FY 2021 PBT forecast was raised to ISK 9.8bn–10.3bn.

• Asset management AuM was ISK 512bn at 30 September 2021; ISK 85bn of organic growth was offset by divestments of closed-end funds.

Capital and balance sheet

• At 30 September 2021, total capital adequacy ratio was 32.4% versus a 20.6% requirement; CET1 was 28.8% versus a 14.0% requirement, excluding insurance entities.

• Financial-conglomerate solvency ratio was 1.56 versus a 1.00 regulatory minimum; without unaudited Q3 profit, it would have been 1.51.

• Total assets were ISK 234.3bn at 30 September 2021, nearly double year-end 2020 following the TM Insurance and Lykill mergers; liquid assets were ISK 84bn, 35% of assets.

• The loan book rose ISK 40.2bn from year-end 2020; individual loans increased from ISK 5.6bn to ISK 29.0bn, while corporate loans rose 71% to ISK 40.6bn.

Liquidity and funding

• LCR was 171% and NSFR 116% at 30 September 2021, both above the 100% regulatory minimum; HQLA was ISK 34bn, excluding mandatory reserves and CBI collateral.

• Excess liquidity and funding capacity supported repayment of ISK 15.3bn of Lykill debt in Q2 and Q3; deposits increased ISK 8.3bn from year-end 2020.

• ISK 27bn of bonds were outstanding at 30 September 2021; a first green bond of ISK 4.5bn was issued in December 2021 in a significantly oversubscribed closed auction.

• An EMTN programme was signed in December 2021, with a potential first issuance in 1H 2022 and notes planned for listing on Euronext Dublin.