Kvika banki hf.

Financial results for the first nine months of 2020

At a meeting of the Board of Directors on 12 November 2020, the Board of Directors and the CEO approved the Interim Financial Statements of the Kvika banki hf. group for the period 1 January 2020 to 30 September 2020.

Highlights of the Interim Financial Statements for the first nine months of 2020

• Pre-tax profit amounted to ISK 1,533 million
• After-tax profit was ISK 1,337 million
• Return on equity (ROE) after tax was 11.3%
• Earnings per share amounted to ISK 0.70
• Net operating income was ISK 6,077 million
• Operating expenses totalled ISK 4,004 million
• Total assets amounted to ISK 114.7 billion
• Total equity was ISK 17.8 billion
• Capital adequacy ratio as at end of September was 26.9%, taking dividend policy into account
• Liquidity coverage ratio (LCR) was 321%
• Total assets under management were ISK 538 billion
• At end of September full-time employees numbered 148.

A presentation will be held for market participants and shareholders at 8:45 GMT on Friday 13 November. The meeting will be made available via webcast on www.kvika.is/fjarfestaupplysingar. Presentation for investors is attached.

Good results and strong growth in fee and commission income

The pre-tax profit of Kvika hf. for the first nine months of 2020 amounted to ISK 1,533 million, exceeding the earnings estimate for the period. After-tax profit was ISK 1,337 million. ROE for the period was 11.3%, and 10,3% for the third quarter.

Net interest income amounted to ISK 1,328 million, relatively unchanged YoY. Net fee and commission income amounted to ISK 4,329 million, an increase of 20% YoY. Net financial income amounted to ISK 352 million, a YoY decrease of 19%. Net impairment was negative by ISK 228 million, primarily as a result of precautionary provisions due to COVID-19.

Operating expenses were ISK 4,004 million in the first nine months of the year, increasing by 0.3% between years, which was in line with expectations.

Strong balance sheet

At the end of September 2020, total assets amounted to ISK 114.7 billion, compared to ISK 105.6 billion at year-end 2019. Loans to customers were ISK 28.7 billion as at end of September, decreasing by ISK 1.4 billion during the period. The Bank's liquidity is very strong, with cash and balances with central bank amounting to ISK 28.1 billion as at end of September, in addition to which government-backed bonds amounted to ISK 26.5 billion. The LCR was 321% as at end of September, compared to 246% at year-end 2019, well above the 100% minimum coverage requirement. The Bank aims to lower it’s LCR ratio in the next months as it is well above the internal long-term target.