Kvika banki (KVIKA) Management presentation summary

Business profile and diversification

• Five operating segments span insurance, asset management, commercial banking, investment banking and UK operations; Ortus Secured Finance completed its acquisition in March 2022.

• FY2021 net operating income was ISK 21,997m; revenue streams include net interest income, fees and commissions, net financial income, and insurance premiums and claims.

• Revenue diversification from acquisitions supports a broader income base; net financial income is market-sensitive, while insurance and asset-management fees tend to be steadier.

• Q1 2022 ROTE was 16.1%, with 353 employees.

Strategy and financial outlook

• Three-year goals include 20% ROTE, UK operations contributing at least 20% of profit, 50,000 more fintech customers using three or more services, and asset-management growth above the domestic market.

• Other three-year goals target insurance profitability and market share, funding costs comparable to domestic banks, and a measurable contribution to climate goals.

• FY2022 PBT outlook was ISK 8,400-9,200m and ROTE 19.1%-21.0%; Q1 PBT was ISK 1,740m, in line with outlook.

• Next-12-month PBT outlook was ISK 8,700-9,700m and ROTE 19.9%-22.2%; assumptions included 7% inflation and a loan book of ISK 110-120bn at period-end.

• Guidance is refreshed after each quarter under Beyond Budgeting, covering the next four quarters.

Segment priorities and growth

• TM held 23% of Iceland's non-life insurance market; its FY2021 combined ratio was 88.7%, and its digital claims process can pay claims in as little as 60 seconds.

• Asset-management AuM was ISK 528bn at year-end 2021; ISK 87bn of organic growth was offset by ISK 86bn of closed-end fund divestments.

• Commercial banking combines specialized corporate lending with digital retail platforms Auður, Netgíró and Aur; the strategy emphasizes fintech and cross-selling.

• Ortus Secured Finance had an ISK 19bn loan book including mandates, had lent more than ISK 85bn since founding, and reported a 50% historical average LTV.

• UK priorities include expanding Ortus lending and continued M&A and investment services; the three-year target is at least 20% of profit from UK operations.