Kvika banki (KVIKA) Q2 2024 earnings summary

Executive summary

• Profit after tax, including TM Insurance, rose 69% year-over-year to ISK 1,256 million in Q2 2024, while profit before tax from continuing operations fell 22% due to one-off financial income in Q2 2023.

• Net operating income for 6M 2024 was ISK 8,064 million, up 3% year-over-year; profit after taxes, including discontinued operations, reached ISK 2,340 million, a 22% increase year-over-year.

• TM tryggingar hf. insurance operations are classified as discontinued; a purchase agreement for its sale was signed in May 2024.

• Net interest income increased 31% year-over-year in Q2, driven by 24% loan growth and margin improvement.

• Operating expenses remained nearly unchanged year-over-year, reflecting efficient cost management and a 10% reduction in headcount.

Financial highlights

• Q2 2024 profit after tax: ISK 1,256m (up from ISK 745m in Q2 2023); 6M 2024 profit after tax: ISK 2,340m, up from ISK 1,912m in 6M 2023.

• Net interest income: ISK 2,428m in Q2 2024 (up 31% YoY); ISK 4,754m for 6M 2024 (up 24% YoY).

• Net fee and commission income declined 11% YoY in Q2; net fee income for 6M 2024 was ISK 2,984m, slightly down.

• Administrative expenses nearly flat year-over-year despite inflation; ISK 2,733m in Q2, ISK 5,399m for 6M 2024.

• Liquid assets at end of June 2024 were ISK 114.0bn, 31.7% of total assets.

Outlook and guidance

• Management targets a return on tangible equity above 20% and a capital adequacy buffer of 200–400 bps over requirements.

• No dividend will be paid in 2024 on 2023 operations; share buybacks are planned to meet the dividend policy.

• The Board may call a shareholder meeting to discuss potential dividends after the TM sale.

• Capital adequacy remains strong; further capital actions may follow the TM divestment.

• Plans to raise a new credit fund in Asset Management before year-end.