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Kvika banki hf.: Financial Results for the First Nine Months of 2023


At a board meeting on 2 November 2023, the Board of Directors and the CEO approved the interim financial statements of Kvika banki hf. (“Kvika”) group for the period 1 January to 30 September 2023.

Highlights of the 9M 2023 Interim Financial Statements

  • Pre-tax profit amounted to ISK 3,742 million
  • Pre-tax return on tangible equity was 11.5%
  • Earnings per share for the period amounted to ISK 0.5
  • Total assets amounted to ISK 328 billion
  • The group’s equity amounted to ISK 80 billion
  • The solvency ratio of the financial conglomerate was 1.24 and its capital adequacy ratio (CAR) for operations excluding insurance was 22.7%
  • Total liquidity coverage ratio (LCR) was 301%
  • Assets under management were ISK 449 billion
  • Combined ratio of 94.0%

A presentation for shareholders and market participants will be held at 16:15 on Thursday, 2 November in Kvika’s headquarters on the 9th floor at Katrínartún 2, 105 Reykjavík. The presentation will be conducted in Icelandic and a live stream can be accessed on the following website:

Attached is the investor presentation. Additionally, a recording with English subtitles will be made available on Kvika’s website.

Results Continue to Reflect Challenging Financial Markets

Kvika’s pre-tax profit for the first nine months of 2023 amounted to ISK 3,742 million and return on tangible equity before taxes (RoTE) was 11.5% in the period. In Q3 profit before tax amounted to ISK 1,058 million which is in line with the bank´s outlook for pre-tax profit excluding net financial income published in August.

Net interest income amounted to ISK 6,469 million, increasing by 12% compared to the same period the year before. Interest income from lending has increased significantly from the same period in 2022, mainly due to a healthy loan book growth, countered by lower interest margins on treasury assets due to rapid interest rate hikes.

Net financial income and net fee and commission income were significantly affected by market conditions, with net financial income amounting to ISK 170 million, and net fee and commission income amounting to ISK 4,423 million.

Operating expenses, adjusted for administrative expenses related to insurance, amount to ISK 11,271 million in the first nine months of 2023.

Robust insurance operation, solid combined ratio in Q3

TM insurance continues its strong performance, with a combined ratio of 87.5% in Q3 and 94.0% for the first nine months of 2023, compared to 95.8% in the same period in 2022. Additionally, premiums are up 12.9% YoY while claims grew at a slower pace or by 10.2%.

Strong Balance Sheet and Liquidity Position

Total assets remain stable and amounted to ISK 328 billion at the end of September. Loans to customers grew by nearly ISK 17 billion in the period and amounted to ISK 124 billion at the end of September. Balances with banks and the Central Bank of Iceland, together with government-guaranteed securities, amounted to ISK 104 billion and total liquid assets were ISK 141 billion. The group’s total liquidity coverage ratio (LCR), excluding insurance operations, amounted to 301% at the end of September, well above the 100% minimum requirement.

The group’s total equity amounted to ISK 80 billion at the end of the period. The solvency ratio of the financial conglomerate was 1.24 at the end of the first half and the group's risk-weighted capital adequacy ratio (CAR), excluding the effect of TM, amounted to 22.7%. Kvika’s capital requirement, including capital buffers, is 18.7%.

Share Buy-back Programme Completed

During the period 26 June to 27 September Kvika bought 58,952,375 own shares, which corresponds to 1.233% of issued shares in the company, for ISK 999,999,999. The purchase of own shares according to the buy-back programme, which was approved by Kvika’s board on 23 June 2023, amounted to a maximum purchase price of 1,000,000,000 ISK and is therefore completed.

Kvika will consider further share buy backs in line with the bank’s dividend policy which states that Kvika will return a minimum of 25% of after-tax profit to shareholders, either as a dividend or by repurchasing own shares  

Outlook unchanged

The financial result excluding net financial income for Q3 2023 is in line with the outlook published in August 2023 upon publication Kvika’s H1 2023 financial results.

The outlook for Kvika’s profit before tax excluding net financial income remains unchanged and is expected to be ISK 6.6 billion for the 12 months period ending 30 June 2024. Kvika will publish financial targets in conjunction with the publication of Kvika’s fourth quarter results in February 2024.

Ármann Þorvaldsson, CEO of Kvika:

“The underlying performance of the group has been solid this year, but we have faced headwinds due to rising interest rates and challenging conditions in the financial markets. This is reflected in lower fee income in Asset Management and Capital Markets, and the marginal net financial income of the group. It is very positive, however, to see the strong performance in our insurance and lending operations. Insurance services achieved an outstanding combined ratio in Q3, and loan book growth is healthy across all segments.

We are also seeing positive trends in most business units. In Commercial Banking all our retail brands, Lykill, Auður, Netgíró and Aur continue to demonstrate robust growth. Straumur has completed onboarding of nearly all merchants received from Rapyd and is fully operational with about 25% of the domestic payments market share. Kvika had the largest market share in bond trading on Nasdaq Iceland this year to date and saw a significant increase in market share in equity trading. In the UK there is a gradual improvement in performance with healthy loan book growth and improvements in net interest margin.

We have begun to take measures to increase efficiency and improve operations at the bank. Key efforts include an annualised cost reduction of ISK 900 million and the strategic decision to initiate a divestment of subsidiary TM Insurance. The divestment will enable Kvika to sharpen management focus on core banking operations, grow and diversify the bank´s loan book, enhance profitability, and return substantial capital to shareholders.”


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