H1 2017 Results Lilja B. Einarsdttir Hreiar Bjarnason CEO CFO H1 - PowerPoint PPT Presentation

H1 2017 Results Lilja B. Einarsdóttir Hreiðar Bjarnason CEO CFO

H1 2017 Results DISCLAIMER This presentation is for information purposes only and shall not be construed as an offer or solicitation for the subscription or purchase or sale of any financial instrument. The information set out in this presentation has not been independently verified. No representation or warranty is made by Landsbankinn as to the accuracy, completeness or fairness of the information or opinions contained in this presentation. This presentation may contain projections and forward-looking statements which are subject to a number of risks and uncertainties that could cause actual results to differ materially and could adversely affect the financial effects described herein. Landsbankinn accepts no liability whatsoever for any direct or indirect loss, howsoever arising, from use of this presentation. Landsbankinn assumes no obligation to update this presentation, provide any additional information or correct any errors, which may eventually become apparent. Landsbankinn 2

H1 2017 Results Highlights ■ After-tax return on equity was 10.6% compared to 8.6% for the Operations same period in 2016 ■ Operating expenses decreased by 2% compared to the same period Highlights of Q2 2017 in 2016 ■ The cost-income ratio for the first six months of the year was 43.0% ■ After-tax profit for Q2 2017 amounted to ISK 5.1 bn compared to ISK 8.0 compared to 47.3% in the same period 2016 bn for the same period in 2016 ■ The effective tax rate in the first half of 2017 is 19% ■ Net interest income amounted to ISK 10.2 billion, the same as in Q2 2016 ■ Credit value adjustments for the period were negative by ISK 0.5 bn Balance sheet compared to positive value adjustments of ISK 2.0 billion in Q2 2016 ■ Net commission income increased by 21% compared to the same period ■ Total assets amounted to ISK 1,171 bn as of the end of June 2017 last year, due to growth in capital markets and asset management in particular ■ Lending grew by roughly ISK 17 bn from year end, mortgages in ■ After-tax return on equity was 8.6% in Q2 compared to 12.4% during the particular same period in 2016 ■ Key figures from the profit and loss account in H1 2017 The bank issued a bond in the amount of EUR 300 m in March, the equivalent to ISK 34 bn. The 5-year bonds have a maturity date in ■ March 2022. The bank also issued a bond in the amount of SEK 1,000 The after-tax profit for the first six months of 2017 amounted to ISK 12.7 billion compared to ISK 11.3 billion for the same period in 2016 m in June or the equivalence of ISK 12 bn. The bonds mature in June 2020. The bank paid up the outstanding balance with LBI ehf. at the ■ Net interest income amounted to ISK 18.2 bn, increasing by 3.2% end of June. compared to the same period in 2016 ■ ■ Credit value adjustments for the period were positive by ISK 1.3 bn The bank's liquidity position is strong, both in terms of foreign currency compared to ISK 2.3 billion for the same period in 2016 and Icelandic kronas, and is above the minimum requirements of ■ regulatory authorities. Net commission income increased by 13.8% compared to the same period last year, due to growth in capital markets and asset management in ■ Landsbankinn's equity was ISK 238.9 bn at the end of June 2017. It particular has decreased by 5% since year end due to the bank paying dividends ■ Other operating income increased by 12% between years, which is largely this year in the amount of ISK 24.8 bn in two payments. The first due to positive fair value adjustments of unlisted equities payment was in March and the second will be on 20 September. ■ The interest margin on assets and liabilities was 2.5% at the end of June ■ compared to 2.3% at the end of June 2016 The equity ratio is now 27.6% and has decreased from 30.2% since year end 2016. Landsbankinn 3

H1 2017 Results Main results H1 2017 H1 2016 Q2 2017 Q2 2016 2016 2015 Profit after taxes 12,653 11,298 5,077 7,983 16,643 36,460 Return on equity after taxes 10.6% 8.6% 8.6% 12.4% 6.6% 14.8% Adjusted return on equity after taxes* 11.1% 8.5% 9.9% 10.1% 7.7% 10.6% Interest spread as a ratio of assets and 2.5% 2.3% 2.9% 2.8% 2.3% 2.2% liabilities Cost-income ratio ** 43.0% 47.3% 43.6% 40.8% 48.4% 43.8% 30.06.17 30.06.16 31.12.16 31.12.15 Total assets 1,170,628 1,109,844 1,111,157 1,118,658 Loans to customers 870,483 827,241 853,417 811,549 Deposits from customers 627,954 556,841 589,725 559,051 Equity 238,944 247,291 251,231 264,531 Total capital ratio 27.6% 28.9% 30.2% 30.4% Net stable funding ratio NSFR total 125% 123% Net stable funding ratio NSFR FX 169% 145% 154% 136% Liquitidity ratio LCR total 183% 123% 128% 113% Liquitidity ratio LCR FX 470% 684% 743% 360% Net FX position 1,535 6,458 3,480 23,795 Arrears (>90 days) 1.1% 1.7% 1.5% 1.8% Full-time eqv. positions 988 1,040 1,012 1,063 *Adjusted ROE after taxes = (Profit after taxes – positive value adjustments after taxes – tax on total liabilities of financial institutions – profit from discontinued operations after taxes) / average equity position **Cost-income ratio = Total operating expenses / (Net operating revenue-value change of lending) Amounts in ISKm 4

H1 2017 Results Development of KPIs Return on equity after taxes Total capital ratio 16% 35% 14% 30% 14.8% 30.4% 30.2% 29.5% 12% 25% 27.6% 12.5% 12.4% 26.7% 10% 10.6% 20% 8% 15% 6% 6.6% 10% 4% 5% 2% 0% 0% 2013 2014 2015 2016 H1 2017 31.12.13 31.12.14 31.12.15 31.12.16 30.06.17 Cost-income ratio excluding valuation adjustments Dividend yield Special dividend 60% 56.0% 50% 12% 48.4% 10% 40% 10.8% 43.8% 42.9% 43.0% 9.4% 8% 4.7% 30% 8.2% 6% 20% 4% 5.2% 4.4% 10% 2% 0% 0% 2013 2014 2015 2016 H1 2017 2012 2013 2014 2015 2016 Landsbankinn 5

H1 2017 Results Marketshare – Retail banking Source: Gallup Landsbankinn 6

H1 2017 Results Marketshare – Corporate banking Source: Gallup Landsbankinn 7

H1 2017 Results Landsbankinn‘s successes Landsbankinn 8

H1 2017 Results Landsbankinn‘s successes Landsbankinn 9

H1 2017 Results Strategy Vision: Landsbankinn is to be exemplary Mission: The trusted financial partner Our relationship with customers is based on mutual benefit. We are a trusted financial partner that supports customers towards success. We aim to tailor our services to fit their needs and to operate in harmony with our environment and society. We want our customers to be able to say … “This is how a bank should be” Landsbankinn 10

H1 2017 Results

H1 2017 Results Income Statement Change from H1 2016 to H1 2017 13,500 13,000 1,468 - 891 12,653 441 Profit H1 2017 12,500 40 168 Taxes Other operating expenses 12,000 -974 565 FX gain (loss) Salaries and related expenses 11,500 538 11,298 Other income Net interest income Profit H1 2016 11,000 Net fee and commission income Net adjustments in valuation 10,500 10,000 9,500 Landsbankinn Amounts in ISKm 12

H1 2017 Results Income Statement H1 2017 H1 2016 Change Q2 2017 Q2 2016 Change Net interest income 18,176 17,611 3% 10,158 10,145 0% Net adjustments in valuation 1,301 2,275 -43% -478 1,964 -124% Net interest income after adjustments in 19,477 19,886 -2% 9,680 12,109 -20% valuation Net fee and commission income 4,432 3,894 14% 2,316 1,914 21% Other net operating income 5,379 4,802 12% 1,579 3,038 -48% Total operating income 29,288 28,582 2% 13,575 17,061 -20% Salaries and related expenses 7,145 7,313 -2% 3,654 3,559 3% Other operating expenses 4,903 4,943 -1% 2,477 2,444 1% Total operating expenses 12,048 12,256 -2% 6,131 6,003 2% Profit before tax 17,240 16,326 6% 7,444 11,058 -33% Income tax expense and tax on liabilities of financial 4,587 5,028 -9% 2,367 3,074 -23% institutions Profit for the period 12,653 11,298 12% 5,077 7,983 -36% Amounts in ISKm 13

H1 2017 Results Net interest income and valuation adjustments H1 2017 H1 2016 Change Q2 2017 Q2 2016 Change Interest income 31,670 32,843 -1,173 -4% 17,125 18,071 -946 -5% Interest expense -13,494 -15,232 1,738 11% -6,967 -7,926 959 12% Net interest income 18,176 17,611 565 3% 10,158 10,145 13 0% Net impairment loss on loans and guarantees 533 2,275 -1,742 -77% -491 1,964 -2,455 -125% Net impairment from foreign currency linkage of loans 768 0 768 13 0 13 0% and advances to customers Net valuation adjustments 1,301 2,275 -974 -43% -477 1,964 -2,441 -124% Net interest income after net valuation adjustments 19,477 19,886 -409 -2% 9,680 12,109 -2,429 -20% Amounts in ISKm 14