Investor Presentation Landsbankinn November 2017
Investor Presentation 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. This presentation may not be reproduced, retransmitted or further distributed to the press or any other person or published, in whole or in part, for any purpose. Failure to comply with this restriction may constitute a violation of applicable securities laws. This presentation does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of Landsbankinn in any jurisdiction or an inducement to enter into investment activity. No part of this presentation, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. 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 is intended only for persons having professional experience in matters relating to investments being relevant persons (as defined below). Solicitations resulting from this presentation will only be responded to if the person concerned is a relevant person. Neither this presentation nor any copy of it may be taken or transmitted into the United States of America, its territories or possessions, or distributed, directly or indirectly, in the United States of America, its territories or possessions. Any failure to comply with this restriction may constitute a violation of U.S. securities laws. This presentation is not an offer of securities for sale in the United States. Landsbankinn has not registered and does not intend to register any securities in the United States or to conduct a public offering of any securities in the United States. This presentation is made to and is directed only at persons in the United Kingdom having professional experience in matters relating to investments who fall within the definition of "investment professionals" in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotions) Order 2005 (the "Order"), and to those persons to whom it can otherwise lawfully be distributed (such persons being referred to as "relevant persons"). The forward-looking statements in this presentation are based upon various assumptions, many of which are based, in turn, upon further assumptions, including, without limitation, management's examination of historical operating trends, data contained in Landsbankinn’s records and other data available fr om third parties. Although Landsbankinn believes that these assumptions were reasonable when made, these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond its control, and Landsbankinn may not achieve or accomplish these expectations, beliefs or projections. Neither Landsbankinn, nor any of its members, directors, officers, agents, employees or advisers intend or have any duty or obligation to supplement, amend, update or revise any of the forward-looking statements contained in this presentation. 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. 2 Landsbankinn
Investor Presentation The Big Picture – Iceland at a glance Reykjavík Capital city 343,960 (Q2 2017) Population Size 102,775 km 2 Government Parliamentary Constitutional Republic Elections held 28 October 2017 Althingi Legislature 63 members elected for term every four years Full independence in 1944 Political Member of UN in 1946, OECD 1948, NATO milestones 1949. Joined EFTA in 1970 and accessed the European Economic Area in 1994 ISK - Icelandic króna 1 EUR ≈ 122 ISK Currency GDP Total $19.4 billion Landsbankinn‘s branches Per Capita $57,889 (2016) S&P: A/Stable (June 2017) Sovereign Moody’s : A3/Stable (Sept 2016) long term Fitch: A-/Positive (July 2017) credit ratings Source: www.statice.is, www.imf.org 3 Landsbankinn
Investor Presentation A leading Icelandic universal bank ■ Landsbankinn hf. is the largest financial institution in Iceland offering universal banking services for households, corporates and institutional investors ■ The market leader in the Icelandic financial services sector ■ Market share ≈ 35-40 % in the domestic retail segment and corporate sector ■ Award winning mobile banking solutions for retail and corporates ■ The most extensive branch network in Iceland, 24 branches and 13 service points ■ Total number of staff 998 (9M 2017) 4 Landsbankinn
Investor Presentation Strategy 5 Landsbankinn
Investor Presentation Ownership Icelandic State Treasury ≈ 900 other shareholders Landsbankinn The Icelandic State - Own shares Financial Investments (ISFI) 1.5% 98.2% 0.3% The Finance Ministry published an ownership policy In regards to Landsbankinn the policy states, ■ ■ in July 2017 in regards to equity holdings in financial The government will retain a significant equity ■ companies that are supervised by the Icelandic State stake in the bank (34-40%) to ensure stability in Financial Investments (ISFI) the domestic financial sector The remaining equity stake will be sold in the next ■ few years given favorable market conditions Equity in Landsbankinn will be listed on a stock ■ exchange 6 Landsbankinn
Investor Presentation Organisational chart Lilja B. Einarsdóttir Helgi Teitur Helgason Árni Þór Þorbjörnsson Hrefna Ösp Sigfinnsdóttir Perla Ösp Ásgeirsdóttir Arinbjörn Ólafsson Hreiðar Bjarnason 7 Landsbankinn
Investor Presentation S&P credit rating 1 3 5 7 Fundamental factors for Landsbankinn: 9 Very strong capital and earnings ■ 25.10.2017 11 25.10.2016 20.01.2014 21.07.2015 Strong liquidity position ■ 13 15 Average funding profile ■ 17 Adequate business position ■ 19 07.10.2008 07.10.2009 07.10.2010 07.10.2011 07.10.2012 07.10.2013 07.10.2014 07.10.2015 07.10.2016 07.10.2017 Moderate risk position ■ Landsbankinn hf. Republic of Iceland - Foreign currency Icelandic sovereign Landsbankinn hf. Long-term rating A BBB+ Short-term rating A-1 A-2 Outlook Stable Stable Last rating action March 2017 October 2017 8 Landsbankinn
Investor Presentation Strong overall credit profile Year-end 2016 Year-end 2016 CET 1 ratio Leverage ratio 35% 25% 29.7% 20.3% 30% 20% 25% 18.4% 15% 20% 16.3% 16.3% 15% 12.3% 10% 7.3% 7.3% 10% 5.0% 4.6% 5% 5% 0% 0% Landsbankinn Nordea Danske Bank DNB Bank of Ireland Landsbankinn Nordea Danske Bank DNB Bank of Ireland S&P RAC ratio year-end 2016 25% Landsbankinn is among the global leaders in terms of ■ its leverage and CET 1 ratio 19.9%* 20% Landsbankinn’s pro -forma RAC ratio as of mid-year ■ 2017 is at 19.9% 15% 12.3% 11.6% 10.9% 10.3% 10.2% 10.1% Landsbankinn aims to be in the highest category for ■ 10% RAC ratio, as determined and measured by the relevant credit rating agency 5% 0% Landsbankinn Swedbank AB Jyske Bank AS Nordea Bank DNB Bank AS Danske Bank Bank of Ireland AB AS Source: Standard&Poors – RatingsDirect 9 Landsbankinn *Mid-year 2017 RAC ratio
Investor Presentation Banking System in Iceland – Three Main Players Assets (ISKbn) Equity (ISKbn) Tier 1 ratio 1250 300 35% 1199 243 1200 250 222 1144 30% 1150 178 26.6% 200 26.3% 1078 1100 150 25% 22.5% 1050 100 1000 20% 950 50 900 0 15% Landsbankinn Íslandsbanki Arion banki Landsbankinn Íslandsbanki Arion banki Landsbankinn Íslandsbanki Arion banki Leverage ratio Cost to Income ratio Loans to Deposit ratio 80% 200% 25% 60.2% 18.1% 180% 20% 55.3% 168.4% 16.8% 60% 15.3% 44.7% 160% 15% 40% 141.8% 140% 130.0% 10% 20% 120% 5% 0% 100% 0% Landsbankinn Íslandsbanki Arion banki Landsbankinn Íslandsbanki Arion banki Landsbankinn Íslandsbanki Arion banki Source: 9M 2017 Financial Statements 10 Landsbankinn
Investor Presentation Strong market position Retail banking Corporate banking Source: Gallup 11 Landsbankinn
“ Deild” and “TRÚNAÐARMÁL”: 9M 2017 Results
Investor Presentation Financial highlights Operations Balance Sheet Profit after taxes Total Assets ISK 16.84bn ISK 1,199bn EUR 134.3m EUR 9.6bn Equity ISK 243bn Return on equity after 9.4% EUR 1.9bn taxes Tier 1 Capital 26.3% Interest spread as a ratio 2.5% of assets and liabilities LCR Total 158% Cost-income ratio 44.7% Arrears (>90 days) 1.0% Exchange rate: EUR/ISK as at 30 September 2017 125.4 13 Landsbankinn
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