Condensed Interim
Consolidated Financial Statements
31 March 2024
Condensed Interim
Consolidated Financial Statements
31 March 2024
Kvika banki hf. ∙ Katrínartún 2 ∙ 105 Reykjavík ∙ Iceland ∙ Reg. no. 540502‐2930
Kvika banki hf.
Table of Contents
Page | |
Kvika highlights | 1 |
Endorsement and Statement by the Board of Directors and the CEO | 2 |
Condensed Interim Consolidated Income Statement | 4 |
Condensed Interim Consolidated Statement of Comprehensive Income | 5 |
Condensed Interim Consolidated Statement of Financial Position | 6 |
Condensed Interim Consolidated Statement of Changes in Equity | 7 |
Condensed Interim Consolidated Statement of Cash Flows | 9 |
Notes to the Condensed Interim Consolidated Financial Statements | 10 |
‐ General information | 11 |
‐ Segment information | 13 |
‐ Income statement | 15 |
‐ Statement of Financial Position | 18 |
‐ Risk management | 27 |
‐ Financial assets and financial liabilities | 42 |
‐ Other information | 46 |
Condensed Interim Consolidated Financial Statements 31 March 2024 ‐ Unaudited
Kvika highlights
31.03.2024
Kvika
Kvika is a specialized financial institution strategically positioned to increase competition and transform financial services in Iceland. Kvika provides businesses, investors, and individuals with investment banking, insurance, asset management, payment, and banking services. The Bank is listed on Nasdaq Iceland.
Kvika operates in four business segments, Commercial banking and Corporate Banking & Capital Markets as well as Asset Management and UK operations through subsidiaries Kvika Asset Management and Kvika Securities Ltd. Kvika's insurance segment, operated through the subsidiary TM tryggingar hf., is currently in a divestment process.
Kvika operates several brands that are highly focused and excel in their field. The main brands are Kvika, Kvika Asset Management, Auður, Aur, Lykill, Netgíró, and Straumur, as well as Ortus Secured Finance in the UK.
Diversified operations
Revenues by segment / 3M 2024
15.0%
35.4%
16.3%
33.3%
Commercial Banking | Asset Management | |
Corporate Banking & Capital Markets | UK | |
Key figures
ISK m. | 3M 2024 | 3M 2023 |
Net operating income | 4,069 | 3,489 |
Profit before taxes | 1,215 | 895 |
Profit before taxes incl.TM | 1,345 | 1,412 |
RoTE | 12.1% | 13.1% |
31.03.2024 | 31.12.2023 | |
Total Assets | 350,887 | 335,397 |
Loans to customers | 145,898 | 136,323 |
Deposits | 137,143 | 133,773 |
LCR | 286% | 247% |
NSFR | 137% | 141% |
Group Solvency | 1.16 | 1.25 |
Net operating income | Loans to customers | |||||||||||||||||||||||||||||||||||||
ISK bn. | ISK bn. | |||||||||||||||||||||||||||||||||||||
150 | 136 | 146 | ||||||||||||||||||||||||||||||||||||
4.3 | 4.0 | 4.1 | 110 | 119 | 124 | |||||||||||||||||||||||||||||||||
3.5 | 3.0 | |||||||||||||||||||||||||||||||||||||
100 | ||||||||||||||||||||||||||||||||||||||
50 | 92.3% | 91.5% | 96.0% | 101.9% | 106.4% | |||||||||||||||||||||||||||||||||
0 | ||||||||||||||||||||||||||||||||||||||
Q1 23 | Q2 23 | Q3 23 | Q4 23 | Q1 24 | Q1 23 | Q2 23 | Q3 23 | Q4 23 | Q1 24 | |||||||||||||||||||||||||||||
Loans to deposits | ||||||||||||||||||||||||||||||||||||||
Total capital ratio | LCR ratio | |||||||||||||||||||||||||||||||||||||
(%) | (%) | |||||||||||||||||||||||||||||||||||||
25 | 23.6% | 23.1% | 22.7% | 22.6% | 400 50 | 390% | ||||||||||||||||||||||||||||||||
21.7% | 45 | 327% | ||||||||||||||||||||||||||||||||||||
350 | 301% | 286% | ||||||||||||||||||||||||||||||||||||
20 | 40 | |||||||||||||||||||||||||||||||||||||
300 | 247% | |||||||||||||||||||||||||||||||||||||
35 | ||||||||||||||||||||||||||||||||||||||
15 | 250 30 | |||||||||||||||||||||||||||||||||||||
20.8% | 20.9% | 150% | 145% | |||||||||||||||||||||||||||||||||||
20.4% | 19.6% | 19.0% | 144% | 141% | 137% | |||||||||||||||||||||||||||||||||
200 25 | ||||||||||||||||||||||||||||||||||||||
10 | 150 20 | |||||||||||||||||||||||||||||||||||||
5 | 100 | 15 | ||||||||||||||||||||||||||||||||||||
10 | ||||||||||||||||||||||||||||||||||||||
50 5 | ||||||||||||||||||||||||||||||||||||||
0 | 0 0 | |||||||||||||||||||||||||||||||||||||
Q1 23 | Q2 23 | Q3 23 | Q4 23 | Q1 24 | Q1 23 | Q2 23 | Q3 23 | Q4 23 | Q1 24 | |||||||||||||||||||||||||||||
CET1 | NSFR | |||||||||||||||||||||||||||||||||||||
240
220
200
180
160
140
120
100
80
60
40
20
0
350
300
250
200
150
100
50
0
Corporate Governance | Reitun ESG score | Stable |
Following the classification of TM as a disposal group held for sale, the Group reports income from its insurance operations in a single line in the consolidated income statement as profit after tax from discontinued operations. The comparative figures from 2023 have been restated
Kvika banki hf.
Endorsement and Statement
by the Board of Directors and the CEO
These are the Condensed Interim Consolidated Financial Statements of Kvika banki hf. ("Kvika" or the "Bank") and its subsidiaries (together the "Group") for the period 1 January to 31 March 2024. The Condensed Interim Consolidated Financial Statements have not been audited or reviewed by the Bank's independent auditors.
About the Bank
Kvika is a specialized financial institution strategically positioned to increase competition and transform financial services in Iceland. Operating without a branch network, Kvika provides businesses, investors, and individuals with investment banking, insurance, asset management, payment, and banking services. The Bank is listed on the main list of Nasdaq OMX Iceland.
Kvika operates in four business segments, two which are operated under the Kvika Bank brand, Commercial banking, and Corporate Banking and Capital Markets, and two in own‐brand subsidiaries, Kvika Asset Management and Kvika Securities Ltd., the Group's operations in the UK. The insurance segment, operated through the subsidiary TM tryggingar hf. ("TM") has been discontinued as TM is currently in a sales process.
Kvika operates as well as a house of brands that are highly focused and excel in their field. The main brands are Kvika, Kvika Asset Management, Auður, Aur, Lykill, Netgíró, and Straumur, as well as Ortus Secured Finance in the UK.
Operations during the period in 2024
Profit before taxes for the period amounted to ISK 1,345 million (3m 2023: ISK 1,412 million), corresponding to an annualised 12.1% return on weighted tangible equity, based on the tangible equity position of Kvika and TM at the beginning of the year adjusted for changes in share capital and transactions with treasury shares during the period. Profit before taxes is composed of the pre‐tax profit from both the Group's continuing and discontinued operations.
The Group's net operating income during the period was ISK 4,069 million (3m 2023: ISK 3,489 million). Net interest income amounted to ISK 2,326
million (3m 2023: ISK 1,985 million). Net fee income amounted to ISK 1,633 million (3m 2023: ISK 1,488 million). Other operating income amounted to
ISK 110 million (3m 2023: ISK 16 million). Administrative expenses during the period amounted to ISK 2,666 million (3m 2023: ISK 2,635 million). During
the period, the Group had a net impairment charge of ISK 188 million (3m 2023: positive net impairment charge of ISK 41 million).
Financial position
According to the Consolidated Statement of Financial Position, equity at year‐end 2024 amounted to ISK 83,261 million (31.12.2023: ISK 81,958 million),
and total assets amounted to ISK 350,887 million (31.12.2023: ISK 335,397 million).
The Group's statement of financial position grew by ISK 14.4 billion or 4.3% during the period in 2024. Loans to customers grew by ISK 9.6 billion or 7.0% during the period. Liquid assets amounted to ISK 103.5 billion at end of March 2024, or 29.5% of total assets.
Offer for TM tryggingar hf. accepted
On 17 March 2024 the Bank announced that it had received binding offers for the purchase of the share capital of TM. The Bank furthermore announced that it had decided to accept an offer from Landsbankinn hf. with the aim to complete a confirmatory due diligence review, and sign a purchase agreement between the two banks for the purchase and sale of 100% of TM's shares as soon as possible, with standard conditions of approval from The Financial Supervisory Authority of the Central Bank of Iceland and the Competition Authority. The purchase price according to the offer is ISK
28.6 billion and Landsbankinn will pay for the share capital in cash. The purchase price is based on TM's balance sheet at the end of 2023. The final purchase price will be adjusted for changes in TM's tangible equity from the beginning of the year 2024 to the completion date, and the amount of the change will be added to or subtracted from the purchase price in the offer.
Capital adequacy and dividends
Kvika's total capital requirement at 31.03.2024, taking into account all capital buffers, amounted to 19.1%. Kvika's capital adequacy ratio was 21.7% at the end of March 2024 (31.12.2023: 22.6%). Kvika's CET1 requirement was 13.9% compared to a CET1 ratio of 19.0% at the end of March 2024.
The Group's solvency ratio at 31.03.2024 was 1.16 (31.12.2023: 1.25) with a regulatory minimum requirement of 1.0.
The Bank's 2024 Annual General Meeting ("AGM") approved a motion from the Board of Directors ("BOD") permitting the Bank to purchase up to 10% of own shares subject to regulatory approvals. This authorisation applies until the next annual general meeting in 2025.
The 2024 AGM also approved a motion from the BOD to, subject to approval from the Financial Supervisory Authority of the Central Bank of Iceland, decrease the share capital of the Bank by 58,952,375 shares by cancelling treasury shares held by the Bank. In March 2024, the share capital reduction was carried out.
Furthermore, the 2024 AGM approved a motion from the BOD that no dividend will be paid in the year 2024 on 2023 operations. The BOD intends, through the purchase of own shares, to meet the Bank's dividend policy, which states that the aim is for shareholders to be returned an annual dividend of at least 25% of last year's profit after taxes, whether in the form of dividends or through the purchase of own shares. The BOD has not ruled out that it might call to a meeting of shareholders later in the year 2024 to discuss potential dividend payments if the conditions arise, e.g. following the sale of TM.
Condensed Interim Consolidated Financial Statements 31 March 2024 ‐ Unaudited | 2 |
Kvika banki hf.
Endorsement and Statement
by the Board of Directors and the CEO
Risk management
The objective of risk management is to promote a good and efficient culture of risk awareness within the Group and to increase the understanding of employees and management on the Group's risk taking, in addition to an assessment process related to risk and capital position. An emphasis is placed on being up to speed on the latest developments and adoption of rules related to risk management, such as regarding capital‐ and liquidity management. The Group faces various risks associated with its operations as a financial conglomerate that arise from its day‐to‐day operations. Active risk management entails analysing risk, measuring it and taking actions to limit it, as well as monitoring risk factors across the Group. The Group's risk management and main operations are described in the notes accompanying the Condensed Interim Consolidated Financial Statements. Refer to notes 39‐54 on the analysis of exposure to various types of risk.
Statement by the Board of Directors and the CEO
The Condensed Interim Consolidated Financial Statements of Kvika banki hf. for the period 1 January to 31 March 2024 have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU, and additional requirements, as applicable, in the Act on Annual Accounts no. 3/2006, the Act on Financial Undertakings no. 161/2002 and rules on accounting for credit institutions no. 834/2003.
To the best of our knowledge these Condensed Interim Consolidated Financial Statements give a true and fair view of the Group's assets, liabilities and financial position as at 31 March 2024 and the financial performance of the Group and changes of cash flows for the period 1 January to 31 March 2024. Furthermore, in our opinion the Condensed Interim Consolidated Financial Statements and the Endorsement of the Board of Directors and the CEO give a fair view of the development and performance of the Group's operations and its position and describe the principal risks and uncertainties faced by the Group.
The Board of Directors and the CEO of the Bank have today discussed the Condensed Interim Consolidated Financial Statements for the period 1 January to 31 March 2024 and confirmed them by the means of their signatures.
Reykjavík, 2 May 2024.
Board of Directors
Sigurður Hannesson, Chairman
Guðmundur Þórðarson, Deputy Chairman
Helga Kristín Auðunsdóttir
Ingunn Svala Leifsdóttir
Guðjón Reynisson
Chief Executive Officer
Ármann Þorvaldsson
The Condensed Interim Consolidated Financial Statements of Kvika banki hf. for the period ended 31 March 2024 are electronically certificated by the Board of Directors and the CEO.
Condensed Interim Consolidated Financial Statements 31 March 2024 ‐ Unaudited | 3 |
Kvika banki hf. | Amounts are in ISK thousands |
Condensed Interim Consolidated Income Statement
For the period 1 January 2024 to 31 March 2024
Notes | 3m 2024 | 3m 2023 * | |
Interest income | 7,105,791 | 5,043,148 | |
Interest expense | (4,779,672) | (3,058,280) | |
Net interest income | 5 | 2,326,118 | 1,984,867 |
Fee and commission income | 1,795,429 | 1,605,305 | |
Fee and commission expense | (162,530) | (117,072) | |
Net fee and commission income | 6 | 1,632,900 | 1,488,234 |
Net financial income (expense) | 7 | 23,822 | (98,896) |
Other operating income | 85,711 | 114,562 | |
Other net operating income | 109,532 | 15,666 | |
Net operating income | 4,068,550 | 3,488,767 | |
Administrative expenses | 9 | (2,665,797) | (2,634,637) |
Net impairment | 11 | (187,950) | 40,839 |
Profit before taxes from continuing operations | 1,214,804 | 894,969 | |
Income tax | 12 | (151,869) | (104,234) |
Special tax on financial activity | 13 | (13,138) | 0 |
Special tax on financial institutions | 14 | (62,600) | (52,039) |
Profit for the period | 987,197 | 738,696 | |
Discontinued operations | 3 | 96,183 | 428,485 |
Profit after tax for the period from discontinued operations | |||
Profit for the period | 1,083,379 | 1,167,180 |
Notes | 3m 2024 | 3m 2023 | |
Attributable to the shareholders of Kvika banki hf | 1,079,337 | 1,148,230 | |
Attributable to non‐controlling interest | 22 | 4,042 | 18,950 |
Profit for the period | 1,083,379 | 1,167,180 | |
Earnings per share | 15 | 0.23 | 0.24 |
Basic earnings per share (ISK per share) | |||
Diluted earnings per share (ISK per share) | 0.23 | 0.24 |
* Comparative information has been restated, reference is made to note 3 for further information.
The notes on pages 11 to 47 are an integral part of these Condensed Interim Consolidated Financial Statements.
Condensed Interim Consolidated Financial Statements 31 March 2024 ‐ Unaudited | 4 |
Kvika banki hf.Amounts are in ISK thousands
Condensed Interim Consolidated Statement of
Comprehensive Income
For the period 1 January 2024 to 31 March 2024
Notes | 3m 2024 | 3m 2023 |
Profit for the period | 1,083,379 | 1,167,180 |
Changes in fair value of financial assets through OCI, net of tax | 190,233 | (223,771) |
Realized net loss transferred to the Income Statement, net of tax | 10,079 | 7,230 |
Changes to reserve for financial assets at fair value through OCI | 200,312 | (216,541) |
Exchange difference on translation of foreign operations | 9,465 | (14,903) |
Other comprehensive income that is or may be reclassified subsequently to profit and loss | 209,777 | (231,444) |
Total comprehensive income for the period | 1,293,156 | 935,736 |
Notes | 3m 2024 | 3m 2023 |
Attributable to the shareholders of Kvika banki hf | 1,289,114 | 900,234 |
Attributable to non‐controlling interest | 4,042 | 35,502 |
Total comprehensive income for the period | 1,293,156 | 935,736 |
The notes on pages 11 to 47 are an integral part of these Condensed Interim Consolidated Financial Statements.
Condensed Interim Consolidated Financial Statements 31 March 2024 ‐ Unaudited | 5 |
Kvika banki hf. | Amounts are in ISK thousands |
Condensed Interim Consolidated Statement of Financial Position
As at 31 March 2024
Assets | Notes | 31.3.2024 | 31.12.2023 |
Cash and balances with Central Bank | 16 | 34,256,255 | 23,681,453 |
Fixed income securities | 17 | 56,956,255 | 64,977,406 |
Shares and other variable income securities | 18 | 4,314,083 | 3,857,480 |
Securities used for hedging | 19 | 12,706,506 | 16,852,313 |
Loans to customers | 20 | 145,898,190 | 136,323,481 |
Derivatives | 21 | 3,065,234 | 2,497,877 |
Investment in associates | 23 | 95,841 | 96,194 |
Intangible assets | 24 | 21,908,315 | 21,906,363 |
Operating lease assets | 25 | 455,445 | 530,144 |
Property and equipment | 591,080 | 618,361 | |
Deferred tax assets | 12 | 2,780,478 | 2,902,580 |
Other assets | 26 | 15,309,237 | 10,401,128 |
Assets classified as held for sale | 3 | 52,550,213 | 50,752,652 |
Total assets | 350,887,131 | 335,397,432 | |
Liabilities | |||
Deposits | 27 | 137,143,138 | 133,772,941 |
Borrowings | 28 | 37,558,062 | 23,817,062 |
Issued bonds | 29 | 38,752,257 | 45,715,427 |
Subordinated liabilities | 30 | 6,176,221 | 5,993,084 |
Short positions held for trading | 31 | 653,560 | 131,745 |
Short positions used for hedging | 32 | 113,800 | 4,230 |
Derivatives | 21 | 2,339,572 | 2,196,904 |
Current tax liabilities | 17 | 17 | |
Deferred tax liabilities | 308,797 | 272,615 | |
Other liabilities | 33 | 17,911,669 | 16,593,993 |
Liabilities associated with assets classified as held for sale | 3 | 26,669,339 | 24,941,611 |
Total liabilities | 267,626,432 | 253,439,628 | |
Equity | |||
Share capital | 34 | 4,722,073 | 4,722,073 |
Share premium | 47,661,777 | 47,661,777 | |
Other reserves | 5,090,040 | 4,330,081 | |
Retained earnings | 25,710,648 | 25,171,754 | |
Total equity attributable to the shareholders of Kvika banki hf. | 83,184,538 | 81,885,685 | |
Non‐controlling interest | 22 | 76,161 | 72,119 |
Total equity | 83,260,699 | 81,957,804 | |
Total liabilities and equity | 350,887,131 | 335,397,432 |
The notes on pages 11 to 47 are an integral part of these Condensed Interim Consolidated Financial Statements.
Condensed Interim Consolidated Financial Statements 31 March 2024 ‐ Unaudited | 6 |
Kvika banki hf.Amounts are in ISK thousands
Condensed Interim Consolidated Statement of Changes in Equity
For the period 1 January 2024 to 31 March 2024
Other reserves | Total share‐ | Non‐ | ||||||||||
Deficit | Trans‐ | Restricted | ||||||||||
1 January 2024 to 31 March 2024 | Share | Share | Option | reduction | Fair value | lation | retained | Retained | holders' | controlling | Total | |
Notes | capital | premium | reserve | reserve | reserve | reserve | earnings | earnings | equity | interest | equity | |
Equity as at 1 January 2024 | 4,722,073 | 47,661,777 | 173,605 | 1,203,697 | (930,231) | 86,145 | 3,796,865 | 25,171,754 | 81,885,685 | 72,119 | 81,957,804 | |
Profit for the period | 1,079,337 | 1,079,337 | 4,042 | 1,083,379 | ||||||||
Changes in fair value of financial assets through OCI | 190,233 | 190,233 | 190,233 | |||||||||
Realized net loss transferred to the Income Statement | 10,079 | 10,079 | 10,079 | |||||||||
Translation of foreign operations | ||||||||||||
Exchange difference on translation of foreign operations | 9,465 | 9,465 | 0 | 9,465 | ||||||||
...............................................Total comprehensive income for the period | 0 | 0 | 0 | 0 | 200,312 | 9,465 | 0 | 1,079,337 | 1,289,114 | 4,042 | 1,293,156 | |
Restricted due to subsidiaries and associates | 534,880 | (534,880) | 0 | 0 | ||||||||
Restricted due to development costs | 5,563 | (5,563) | 0 | 0 | ||||||||
Stock options | 9,740 | 0 | 9,740 | 9,740 | ||||||||
Equity as at 31 March 2024 | 4,722,073 | 47,661,777 | 183,344 | 1,203,697 | (729,919) | 95,610 | 4,337,308 | 25,710,648 | 83,184,538 | 76,161 | 83,260,699 |
The notes on pages 11 to 47 are an integral part of these Condensed Interim Consolidated Financial Statements.
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Condensed Interim Consolidated Financial Statements 31 March 2024 ‐ Unaudited | 7 |
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Kvika banki hf. published this content on 03 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 May 2024 10:24:09 UTC.