Landsbankinn Investor Presentation November 2016 Investor - PowerPoint PPT Presentation

Landsbankinn Investor Presentation November 2016

Investor Presentation Landsbankinn hf. The Big Picture – Iceland at a glance Reykjavík Capital city 334,300 (Q3 2016). An estimated 7% of the Population population is of foreign-born nationality. Median age is 37.1 years Size 102,775 km 2 Government Parliamentary Constitutional Republic. Post elections taking place 29 October a coalitions has not been formed 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 ≈ 123 ISK Currency Landsbankinn„s branches GDP Total $14.5 billion Per Capita $52,426 (2014) S&P: BBB+/Stable (January 2016) Sovereign Moody’s : A3/Stable (September 2016) long term Fitch: BBB+/Stable (July 2015) credit ratings 2

Investor Presentation Landsbankinn hf. A leading Icelandic universal bank ■ Landsbankinn is headquartered in Reykjavik, Iceland and anchored on the domestic operations of the old Landsbanki Íslands hf. (LBI hf.) ■ Universal Banking services in Iceland for households, corporates and institutional investors ■ Credit rating assigned by Standard & Poor’s (S&P)  BBB positive outlook (October 2016) ■ The market leader in the Icelandic financial services sector ■ Strong retail presence with the most extensive branch network ■ Market share about 35-40 % in the domestic retail segment and corporate sector ■ Total number of staff 1,043 (Q3 2016) ■ The Icelandic State holds 98% of shares in Landsbankinn 3

Investor Presentation Landsbankinn hf. 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” 4

Investor Presentation Landsbankinn hf. Ownership Icelandic State Treasury ≈ 1100 other Landsbankinn The Icelandic State - Own Shares Financial Investments shareholders (ISFI) 1.4% 98.2% 0.4% The Government has announced its plans to ISFI’s Selection Committee nominates ■ ■ members to the Board of Directors of sell 28.2% stake in Landsbankinn Landsbankinn based on an assessment of qualifications, education and experience of individuals being considered for membership 5

Investor Presentation Landsbankinn hf. Organisational chart Steinthór Pálsson Helgi Teitur Helgason Árni Thór Thorbjörnsson Hrefna Ösp Sigfinnsdóttir Perla Ösp Ásgeirsdóttir Ragnhildur Geirsdóttir Hreidar Bjarnason 6

Investor Presentation Landsbankinn hf. S&P credit rating 1 3 5 7 9 11 20.01.2014 21.07.2015 25.10.2016 13 15 17 19 07.10.2008 07.10.2010 07.10.2012 07.10.2014 07.10.2016 Landsbankinn hf. Republic of Iceland - Foreign Currency Fundamental factors: Sovereign Landsbankinn Very strong capital and earnings ■ Long-term rating BBB+ BBB Strong liquidity position ■ Short-term rating A-2 A-2 Average funding profile ■ Outlook Stable Positive Adequate risk and business position ■ Last rating action Jan 2016 October 2016 7

Investor Presentation Landsbankinn hf. Strong overall credit profile Equity to Asset ratio Core Tier 1 ratio Year-end 2015 Year-end 2015 23.6% 25% 35% 30.4% 30% 20% 25% 15% 18.5% 18.5% 20% 16.8% 15.3% 14.1% 13.3% 15% 10% 7.3% 6.4% 4.9% 10% 4.8% 4.5% 4.6% 5% 5% 0% 0% Landsbankinn Nordea Danske Bank DNB Bank of Nordic banks* European Landsbankinn Nordea Danske Bank DNB Bank of Nordic banks* European Ireland banks* Ireland banks* * Averages from 2014 S&P RAC ratio year-end 2015* 18.6%** 20% Landsbankinn is among the global leaders in terms of its ■ leverage and core tier 1 ratio 15% 11.7% Landsbankinn’s pro -forma RAC ratio as of mid-year 2016 11.2% ■ 10.4% 10% 10.0% is at 18.6% 10% 7.3% Landsbankinn aims to be in the highest category for RAC ■ 5% ratio, as determined and measured by the relevant credit rating agency 0% Landsbankinn Swedbank AB Jyske Bank AS Nordea Bank DNB Bank AS Danske Bank AS Bank of Ireland AB *Source: Standard&Poors – RatingsDirect 8 **Mid-year 2016 RAC ratio

Investor Presentation Landsbankinn hf. Capital ratio & regulatory requirements Implementation of CRD IV capital buffers 2.50% 2.50% 2.50% 1.25% 1% 0% 2% 2% 2% 3% 3% 3% 1.1.2017 Q1 2017 Q4 2017 Landsbankinn‟s Total Capital Ratio (CAR) is 29.1% ■ Landsbankinn’s regulatory capital requirements, are determined by the ■ SREP process and additional capital buffers based on CRD IV In July 2015, a legislation came into force in Iceland implementing capital ■ buffer requirements under CRD IV On 22 January 2016 (and on 3 October 2016), the Icelandic Financial ■ Stability Council made recommendations to the FME, in accordance with the new legislation to formally implement the new CRD IV capital buffers in steps The Bank’s target for the Group’s minimum capital ratio is to be comfortably ■ above the fully phased in FME capital requirements plus capital buffers. The bank also aims to be in the highest category for risk-adjusted capital ratio, as determined by and measured by the relevant credit rating agencies Landsbankinn’s leverage ratio at the end of Q3 was 20.0% ■ The legal minimum requirement in Iceland is 3.0% ■ * The systemic risk buffer and the countercyclical capital buffer only apply to domestic assets 9

Investor Presentation Landsbankinn hf. Strong market position Market share - Personal banking – Q3 2016 Market share - Corporate banking – Q3 2016 37% 33% Landsbankinn Landsbankinn Others Others 63% 67% Source: Gallup Iceland Share of equities trading on NASDAQ ICE Share of fixed income trading on NASDAQ ICE 21% 24% Landsbankinn Landsbankinn Others Others 76% 79% Source: NASDAQ Iceland 10

Investor Presentation Landsbankinn hf. Banking system in Iceland – three main players Assets (ISKbn) Equity (ISKbn) Tier 1 ratio 1134 300 35% 1150 251 250 29.1% 1100 209 1068 201 30% 27.8% 26.8% 200 1035 1050 150 25% 1000 100 20% 950 50 900 0 15% Landsbankinn Íslandsbanki Arion banki* Landsbankinn Íslandsbanki Arion banki* Landsbankinn Íslandsbanki Arion banki* Cost to Income ratio Loans to Deposit ratio Leverage ratio 80% 200% 25% 20.0% 18.1% 17.7% 56.0% 56.1% 180% 20% 168.6% 60% 47.7% 160% 15% 143.5% 40% 140% 10% 123.7% 20% 120% 5% 0% 100% 0% Landsbankinn Íslandsbanki Arion banki* Landsbankinn Íslandsbanki Arion banki* Landsbankinn Íslandsbanki Arion banki* Source: Interim Financial Statements 9M 2016 11 *Arion bank‘s H1 2016 Results

Results 9M 2016

Investor Presentation Landsbankinn hf. Financial highlights 9M 2016 Operations Balance Sheet Profit after taxes Total Assets ISK 16.4bn ISK 1,134bn EUR 128m EUR 8.9bn Equity ISK 251bn Return on equity after 8.5% EUR 1.96bn taxes Tier 1 Capital 29.1% Interest spread as a ratio 2.3% of assets and liabilities LCR Total 140% Cost-income ratio 47.7% Arrears (>90 days) 1.8% Exchange rate: EUR/ISK 127.9 as at 30 th September 2016 13

Investor Presentation Landsbankinn hf. Development of KPIs Return on equity after taxes Total capital ratio 16% 35% 14% 30% 14.8% 30.4% 29.5% 12% 29.1% 25% .12,5% 12.4% 26.7% 12.0% 25.1% 10% 20% 8% 8.5% 15% 6% 10% 4% 5% 2% 0% 0% 2012 2013 2014 2015 9M 2016 31.12.12 31.12.13 31.12.14 31.12.15 30.09.16 Cost-income ratio excluding valuation adjustments Divident yield 60% 12% 56.0% 50% 10% 10.8% 47.7% 9.4% 40% 45.0% 8% 43.8% 42.9% 8.2% 30% 6% 20% 4% 4.4% 10% 2% 0% 0% 2012 2013 2014 2015 9M 2016 2012 2013 2014 2015 14