English Icelandic
Published: 2022-05-12 17:40:39 CEST
Kvika banki hf.
Interim report (Q1 and Q3)

Kvika banki hf.: Financial Results for Q1 2022 and Earnings Outlook for the Next Four Quarters

At a board meeting on 12 May 2022, the Board of Directors and the CEO approved the interim financial statements of the Kvika banki hf. (“Kvika”) group for the period 1 January to 31 March 2022.

Highlights of the Interim Financial Statements for the First Three Months of 2022

  • Pre-tax profit amounted to ISK 1,740 million
  • Pre-tax return on weighted tangible equity was 16.1%
  • Earnings per share for the period were ISK 0.31
  • Total assets were ISK 286 billion
  • The group’s equity amounted to ISK 80 billion
  • The solvency ratio of the financial conglomerate was 1.32 and its capital adequacy ratio (CAR) was 26.2% at the end of the period
  • Overall group liquidity coverage ratio (LCR) was 247%
  • Total assets under management were ISK 497 billion

A meeting for shareholders and market participants will be held at 16:15 on Thursday, 12 May in the bank's headquarters on the 9th floor at Katrínartún 2, 105 Reykjavík where the financial results will be presented by Kvika’s management. The presentation will be conducted in Icelandic and a live stream can be accessed on the following website. Additionally, a recording with English subtitles will be made available on Kvika’s website:


Attached is an investor presentation.

Performance Fully in Line with Published Outlook

The pre-tax profit of the Kvika group for the first three months of 2022 amounted to ISK 1,740 million which was fully in line with the forecast for the quarter. The return on weighted tangible equity before taxes was 16.1% for the period.

Net interest income of Kvika group amounted to ISK 1,571 million, increasing by 148% compared to the same period in the prior year, primarily driven by the increased size of the loan book after the merger with Lykill fjármögnun, altered composition of the loan portfolio and liquid assets together with a favourable development in funding costs. Net impairments amounted to ISK 38 million during the period, compared to ISK 11 million in the first three months of 2021. Net financial income amounted to ISK 808 million during challenging circumstances in asset markets. Net fee and commission income amounted to ISK 1,642 million, a decrease of 2.5% from the year before. Operating expenses amounted to ISK 3,165 million for the first three months of the year, in line with expectations.

Lower Combined Ratio of TM and Decreased Return on Financial Assets

The combined ratio of TM was 101.0% during the first quarter, compared with 102.5% for the same period in the prior year. The insurance company's investment income amounted to ISK 241 million during the first quarter, making the return on the asset portfolio 0.7% over the period compared to 5.6% return in the first quarter of 2021.

Strong Balance Sheet and Liquidity Position

The total assets of the Kvika group increased by 16% or ISK 40 billion during the first quarter of 2022 and amounted to ISK 286 billion at the end of March. Customer loans grew by ISK 11 billion over the period and amounted to 83 billion at the end of the March. The increase is mostly attributable to the acquisition of Ortus Secured Finance Ltd. Balances with banks and the Central Bank of Iceland, together with government-guaranteed securities, amounted to ISK 86 billion and total liquid assets were ISK 120 billion, increasing by ISK 20 billion over the period. The group's total liquidity coverage ratio (LCR), excluding insurance operations, amounted to 247% at the end of the quarter, well above the 100% minimum requirement.

The group’ equity amounted to ISK 80 billion at the end of the period, compared to ISK 78 billion at the end of 2021. The solvency ratio of the financial conglomerate was 1.32 at the end of the quarter and the group's risk-weighted capital adequacy ratio (CAR), excluding the effect of TM, amounted to 26.2%, while the capital requirement including capital buffers set by regulators is 20.6%. These figures do not include the unreviewed profit for the quarter.

First Time Issuer and Deposit rating

International rating agency Moody’s Investors Service (“Moody’s”) has on 11 May 2022 assigned first time Baa2/Prime-2 (investment grade) bank deposit and issuer ratings to Kvika. The assigned long-term deposit and issuer ratings carry a stable outlook.

Share buy-back programme approved by annual general meeting in March 2022 

Programme of ISK 3 billion pending regulatory approval.

Earnings Outlook revised upwards

The earnings outlook for the Kvika group for the next four quarters assumes a pre-tax profit of ISK 8.7 – 9.7 billion which equates to 19.9% - 22.2% return on weighted tangible equity of the group. Further assumptions can be found in the investor presentation.

Marinó Örn Tryggvason, CEO of Kvika:

"I am happy with the quarter. In recent years, a strategic effort has been made to diversify and strengthen the group's revenue streams. Market conditions are more demanding than before, and it is therefore particularly gratifying to see the results of our strategy reflected in the quarters’ financial results and that the group's performance is in line with the published earnings forecast. It is also encouraging to see that the new earnings forecast assumes continued strong earnings.

During the quarter, the group took a major step in its strategic growth by acquiring the majority of the shares in Ortus Secured Finance and Ortus became part of the group’s operations in March. Following the acquisition, the group's operations in the UK have become the fifth operating segment, along with insurance, asset management, commercial banking and investment banking.

Another significant step was taken when Kvika received bank deposit and issuer ratings from Moody’s. Moody’s rating results are a recognition of Kvika as a reliable issuer of debt securities and deposit holder. Significant efforts have been made within the group to establish Kvika’s position in foreign debt markets and build relationships with foreign investors. It is especially encouraging that Moody’s recognise the group’s diversified revenue streams as a strength. I expect that the credit rating will have a positive effect on Kvika’s funding costs and thereby further support Kvika's future goals of increasing competition.


Kvika - 3M 2022 Presentation.pdf
Kvika - Condensed Interim Consolidated Financial Statements 31.03.22.pdf