Discover Iceland 2012 Birna Einarsdóttir, CEO of Íslandsbanki August 2012 1
It has been a busy 4 years since 2008 We have met every challenge and implemented several strategic initiatives along the way Financial Restructuring main focus from 2009-11 - More than 18,700 households and 3,200 corporates Improving infrastructure - IT, processes and procedures Funding diversification - Íslandsbanki the first bank to issue covered bonds in Iceland since 2008 Adapting the business model - Growth by acquisition of Byr 4 th largest retail bank - Creation of two strong financial brands - Ergo in asset based financing - VÍB in wealth management Accelerating the restoration of capital markets - Icelandair Group sales of shares - Vodafone Iceland - IPO - Eimskip Shipping line IPO - TM Insurance company sales of 60% of shares Key milestones November 2008 FME publishes a pro forma balance sheet February 2009 Name changed to Íslandsbanki October 2008 ISB commences operation January 2009 All employees attend a strategic session August 2009 Agreement between the government and creditors presented 14 August 2009 15 October 2009 Creditors acquire 95% of share capital in Íslandsbanki 28 April 2010 First full year results published 20 February Acquisition of Byr Bank finalised June 2009 Business Plan and future presented Capitalisation of the bank by Icelandic Government 25 January 2010 First AGM of the Bank. New Board of Directors elected 6 December 2011 ISB - first Icelandic bank to issue covered bond since 2008 June 2012 ESA approval 2
COST PROFITABILITY STRENGTH RESULTS 1H12 financial highlights Comparison of key figures ADJUSTED ROE* (AFTER TAX) ROE (AFTER TAX) 11.1% 1H11: 12.4% FY 2011: 11.0% NET INTEREST MARGIN (OF TOTAL ASSETS) 4.0% 1H11: 4.8% FY 2011: 4.5% FUNDING RESULTS 17.9% 1H11: 12.9% FY 2011: 1.5% TOTAL DEPOSIT / LOAN RATIO 83.8% 1Q12: 87.2% FY 2011: 86.5% COST / INCOME RATIO TOTAL CAPITAL RATIO 52.0% 23.5% 1H11: 50.5% FY 2011: 51.5%** 1Q12: 23.3% FY 2011: 22.6% * Earnings from regular operations is defined as earnings excluding one-off items e.g. net valuation changes from the loan portfolio, fair value gain deriving from changes in accounting treatment, costs associated with the Byr merger and the impairment of goodwill, and net earnings from discontinued operations ** Excluding write down of goodwill in 2H 2011 3
Equity has doubled since establishment Capital ratios continue to strengthen on back of retained earnings TOTAL EQUITY DEVELOPMENT ISK bn Growth on the back of retained earnings 65.7 2.4 8.2 15.9 8.3 21.1 7.3-5.1 11.8 135.5 Has provided comfort given the uncertainty in the bank s operating environment No dividend has been paid since foundation Starting to weigh down on profitability Equity at 15.10.2008 2H* 1H 2H 1H 2H 1H 2H 1H 2008 2009 2010 2011 2012 Equity at 30.06.2012 * Period from 15.10.2008 until 31.12.2008 4
Shifting focus from crisis to confidence Much has been achieved, but new tasks emerge as we move towards the new normal What have we been focusing on to date? What are the main tasks ahead? Balance sheet Financial restructuring Strengthen the infrastructure Building a trusted banking institution Future ownership Cost focus and increased efficiency Focus on normalised business operations and re-building the capital markets Diversifying funding sources 5
What will drive growth? Our business model is built around our vision of the future developments in the Icelandic economy Leverage our strong market position and financial strength to take the lead in rebuilding the Icelandic capital markets and create more diversified investment opportunities to the benefit of investors and corporates alike Accelerate the growth of our wealth management business in line with more investment opportunities in the Icelandic capital markets and Internationally as capital controls are lifted Synergies and economies of scale expected from combining the operations of Byr and other fee driven subsidiaries will start to come through in 2012 and more markedly in 2013 Develop our business internationally in select niche segments of seafood and geothermal energy to grow with our domestic clients, expand our capabilities and reach new customers internationally Continued focus on cost efficiency and streamlining operations in parallel to finalisation of costly financial restructuring efforts of households and corporates in 2013 Net fee and commission income will increase in line with more activity in capital markets, Synergies from BYR merger to realise in 2013 International growth in select niche markets Increased cost efficiencies and finalisation of restructuring efforts 6
August 2012 Thank you and have a great day! 7