Kvika banki (KVIKA) Q4 2024 earnings summary

Executive summary

• 2024 marked a turnaround year with profit before tax from continuing operations at ISK 5,817m, up 93% year-over-year, and profit after tax (including TM) at ISK 8,150m, up 102% year-over-year.

• Revenue growth was driven by a significant increase in net interest income and a rebound in financial income, while costs decreased despite inflation.

• Sale of TM Insurance is expected to complete in 2025, with the purchase price uplifted from ISK 28.6bn to ISK 32.0bn due to strong performance.

• Auður surpassed ISK 100bn in retail deposits and launched company accounts, while the Harpa PE fund was launched in the UK.

Financial highlights

• Q4 2024 profit before tax from continuing operations was ISK 1,601m, up 340% year-over-year; net interest income rose 7.1% to ISK 2,498m; net fee and commission income increased 1.5% to ISK 1,601m.

• Full-year net interest income grew 21% to ISK 9,681m; net fee and commission income up 4% to ISK 6,137m; other net operating income up 49% to ISK 1,367m.

• Administrative expenses decreased 2% year-over-year despite 6% inflation; employee count down 6%.

• Net interest margin stabilized at 3.8% in Q4 2024.

• Cost to core income ratio improved to 58.9% in Q4 2024.

Outlook and guidance

• Strong capital position post-TM sale will enable increased returns to shareholders, including a regular and special dividend and share buyback program.

• Loan book targeted to double to ISK 280–300bn by 2027, focusing on vehicle, equipment, and corporate lending.

• Strategic priorities include simplified operations, stable interest income, and leveraging infrastructure for profitable growth.