or Investor Presentation Landsbankinn · 9M 2017 9M 2016 Change Q3 2017 Q3 2016 Change Net interest...
Transcript of or Investor Presentation Landsbankinn · 9M 2017 9M 2016 Change Q3 2017 Q3 2016 Change Net interest...
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Investor Presentation
Landsbankinn
November 2017
Landsbankinn
DISCLAIMER
This presentation is for information purposes only and shall not be construed as an offer or solicitation for the subscription or purchase or sale of any financial instrument.
This presentation may not be reproduced, retransmitted or further distributed to the press or any other person or published, in whole or in part, for any purpose. Failure to comply
with this restriction may constitute a violation of applicable securities laws. This presentation does not constitute or form part of and should not be construed as, an offer to sell or
issue or the solicitation of an offer to buy or acquire securities of Landsbankinn in any jurisdiction or an inducement to enter into investment activity. No part of this presentation, nor
the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever.
The information set out in this presentation has not been independently verified. No representation or warranty is made by Landsbankinn as to the accuracy, completeness or
fairness of the information or opinions contained in this presentation.
This presentation is intended only for persons having professional experience in matters relating to investments being relevant persons (as defined below). Solicitations resulting
from this presentation will only be responded to if the person concerned is a relevant person.
Neither this presentation nor any copy of it may be taken or transmitted into the United States of America, its territories or possessions, or distributed, directly or indirectly, in the
United States of America, its territories or possessions. Any failure to comply with this restriction may constitute a violation of U.S. securities laws. This presentation is not an offer of
securities for sale in the United States. Landsbankinn has not registered and does not intend to register any securities in the United States or to conduct a public offering of any
securities in the United States.
This presentation is made to and is directed only at persons in the United Kingdom having professional experience in matters relating to investments who fall within the definition of
"investment professionals" in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotions) Order 2005 (the "Order"), and to those persons to whom it can
otherwise lawfully be distributed (such persons being referred to as "relevant persons").
The forward-looking statements in this presentation are based upon various assumptions, many of which are based, in turn, upon further assumptions, including, without limitation,
management's examination of historical operating trends, data contained in Landsbankinn’s records and other data available from third parties. Although Landsbankinn believes
that these assumptions were reasonable when made, these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to
predict and are beyond its control, and Landsbankinn may not achieve or accomplish these expectations, beliefs or projections. Neither Landsbankinn, nor any of its members,
directors, officers, agents, employees or advisers intend or have any duty or obligation to supplement, amend, update or revise any of the forward-looking statements contained in
this presentation.
Landsbankinn accepts no liability whatsoever for any direct or indirect loss, howsoever arising, from use of this presentation.
Landsbankinn assumes no obligation to update this presentation, provide any additional information or correct any errors, which may eventually become apparent.
2
Investor Presentation
Landsbankinn
The Big Picture – Iceland at a glance
Investor Presentation
Capital city Reykjavík
Population 343,960 (Q2 2017)
Size 102,775 km2
Government Parliamentary Constitutional Republic
Elections held 28 October 2017
Legislature Althingi
63 members elected for term every four years
Political
milestones
Full independence in 1944
Member of UN in 1946, OECD 1948, NATO
1949. Joined EFTA in 1970 and accessed the
European Economic Area in 1994
Currency ISK - Icelandic króna 1 EUR ≈ 122 ISK
GDP Total $19.4 billion
Per Capita $57,889 (2016)
Sovereign
long term
credit ratings
S&P: A/Stable (June 2017)
Moody’s: A3/Stable (Sept 2016)
Fitch: A-/Positive (July 2017)
3
Landsbankinn‘s branches
Source: www.statice.is, www.imf.org
Landsbankinn
A leading Icelandic universal bank
■ Landsbankinn hf. is the largest financial institution in Iceland offering universal banking services for households, corporates and institutional investors
■ The market leader in the Icelandic financial services sector
■ Market share ≈ 35-40 % in the domestic retail segment and corporate sector
■ Award winning mobile banking solutions for retail and corporates
■ The most extensive branch network in Iceland, 24 branches and 13 service points
■ Total number of staff 998 (9M 2017)
4
Investor Presentation
Landsbankinn
Strategy
Investor Presentation
5
Landsbankinn
Ownership
6
Icelandic State
Treasury
≈ 900 other shareholders
0.3%
The Icelandic State
Financial Investments
(ISFI)
98.2%
Landsbankinn
- Own shares
1.5%
■ The Finance Ministry published an ownership policy
in July 2017 in regards to equity holdings in financial
companies that are supervised by the Icelandic State
Financial Investments (ISFI)
■ In regards to Landsbankinn the policy states,
■ The government will retain a significant equity
stake in the bank (34-40%) to ensure stability in
the domestic financial sector
■ The remaining equity stake will be sold in the next
few years given favorable market conditions
■ Equity in Landsbankinn will be listed on a stock
exchange
Investor Presentation
Landsbankinn
Organisational chart
7
Perla Ösp Ásgeirsdóttir Hreiðar Bjarnason Hrefna Ösp Sigfinnsdóttir Arinbjörn Ólafsson Helgi Teitur Helgason Árni Þór Þorbjörnsson
Lilja B. Einarsdóttir
Investor Presentation
Landsbankinn 8
S&P credit rating
Fundamental factors for Landsbankinn:
■ Very strong capital and earnings
■ Strong liquidity position
■ Average funding profile
■ Adequate business position
■ Moderate risk position
Icelandic sovereign Landsbankinn hf.
Long-term rating A BBB+
Short-term rating A-1 A-2
Outlook Stable Stable
Last rating action March 2017 October 2017
Investor Presentation
1
3
5
7
9
11
13
15
17
19
07.10.2008 07.10.2009 07.10.2010 07.10.2011 07.10.2012 07.10.2013 07.10.2014 07.10.2015 07.10.2016 07.10.2017
Landsbankinn hf. Republic of Iceland - Foreign currency
20.01.2014
25.10.2017
25.10.2016 21.07.2015
Landsbankinn 9
Strong overall credit profile
■ Landsbankinn is among the global leaders in terms of its leverage and CET 1 ratio
■ Landsbankinn’s pro-forma RAC ratio as of mid-year 2017 is at 19.9%
■ Landsbankinn aims to be in the highest category for RAC ratio, as determined and measured by the relevant credit rating agency
Source: Standard&Poors – RatingsDirect
*Mid-year 2017 RAC ratio
Investor Presentation
29.7%
18.4% 16.3% 16.3%
12.3%
0%
5%
10%
15%
20%
25%
30%
35%
Landsbankinn Nordea Danske Bank DNB Bank of Ireland
CET 1 ratio Year-end 2016
20.3%
5.0% 4.6%
7.3% 7.3%
0%
5%
10%
15%
20%
25%
Landsbankinn Nordea Danske Bank DNB Bank of Ireland
Leverage ratio Year-end 2016
19.9%*
11.6% 10.3% 10.9%
12.3%
10.2% 10.1%
0%
5%
10%
15%
20%
25%
Landsbankinn Swedbank AB Jyske Bank AS Nordea BankAB
DNB Bank AS Danske BankAS
Bank of Ireland
S&P RAC ratio year-end 2016
Landsbankinn
Banking System in Iceland – Three Main Players
Investor Presentation
10
1199
1078
1144
900
950
1000
1050
1100
1150
1200
1250
Landsbankinn Íslandsbanki Arion banki
Assets (ISKbn)
243
178
222
0
50
100
150
200
250
300
Landsbankinn Íslandsbanki Arion banki
Equity (ISKbn)
26.3%
22.5%
26.6%
15%
20%
25%
30%
35%
Landsbankinn Íslandsbanki Arion banki
Tier 1 ratio
44.7%
60.2% 55.3%
0%
20%
40%
60%
80%
Landsbankinn Íslandsbanki Arion banki
Cost to Income ratio
141.8%
130.0%
168.4%
100%
120%
140%
160%
180%
200%
Landsbankinn Íslandsbanki Arion banki
Loans to Deposit ratio
18.1%
15.3% 16.8%
0%
5%
10%
15%
20%
25%
Landsbankinn Íslandsbanki Arion banki
Leverage ratio
Source: 9M 2017 Financial Statements
Landsbankinn
Strong market position
11
Retail banking
Corporate banking
Investor Presentation
Source: Gallup
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9M 2017 Results
Landsbankinn
Financial highlights
Operations Balance Sheet
Profit after taxes ISK 16.84bn
Return on equity after
taxes 9.4%
Interest spread as a ratio
of assets and liabilities 2.5%
Cost-income ratio 44.7%
Total Assets ISK 1,199bn
26.3%
158%
1.0%
ISK 243bn Equity
Tier 1 Capital
LCR Total
Arrears (>90 days)
EUR 134.3m EUR 9.6bn
EUR 1.9bn
Exchange rate: EUR/ISK as at 30 September 2017 125.4
13
Investor Presentation
Landsbankinn
Investor Presentation
14
Development of KPIs
12.4% 12.5%
14.8%
6.6%
9.4%
0%
2%
4%
6%
8%
10%
12%
14%
16%
2013 2014 2015 2016 9M 2017
Return on equity after taxes
26.7% 29.5% 30.4% 30.2%
26.8%
0%
5%
10%
15%
20%
25%
30%
35%
31.12.13 31.12.14 31.12.15 31.12.16 30.09.17
Total capital ratio
42.9%
56.0%
43.8% 48.4%
44.7%
0%
10%
20%
30%
40%
50%
60%
2013 2014 2015 2016 9M 2017
Cost-income ratio excluding valuation adjustments
4.4%
8.2% 9.4%
10.8%
5.2%
4.7%
0%
2%
4%
6%
8%
10%
12%
2012 2013 2014 2015 2016
Dividend yield Special dividend
Landsbankinn
Investor Presentation
15
Income Statement
Amounts in ISKm
9M 2017 9M 2016 Change Q3 2017 Q3 2016 Change
Net interest income 27,070 26,207 3% 8,894 8,596 3%
Net adjustments in valuation 2,067 4,419 -53% 766 2,144 -64%
Net interest income after adjustments in
valuation 29,137 30,626 -5%
9,660 10,740 -10%
Net fee and commission income 6,591 5,909 12% 2,159 2,015 7%
Other net operating income 5,914 5,157 15% 535 355 51%
Total operating income 41,642 41,692 0% 12,354 13,110 -6%
Salaries and related expenses 10,308 10,409 -1% 3,163 3,096 2%
Other operating expenses 7,378 7,173 3% 2,475 2,230 11%
Total operating expenses 17,686 17,582 1% 5,638 5,326 6%
Profit before tax 23,956 24,110 1% 6,716 7,784 -14%
Income tax expense and tax on liabilities of financial
institutions 7,115 7,710 -8%
2,528 2,682 -6%
Profit for the period 16,841 16,400 3% 4,188 5,102 -18%
Landsbankinn
Investor Presentation
16
Net operating income
Amounts in ISKm
62% 15%
9%
5%
4% 3%
2% Income mix
Net interest income
Net commission and fees
Equities
Other net operating income
Net adjustments in valuation
Bonds
FX gain (loss)
9,879 7,855 7,269 7,466 8,018
7,118 7,385 8,929 10,145 10,158
7,340 7,057
8,834 8,596 8,894
9,977
5,776
7,292 8,443
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
2013 2014 2015 2016 2017
Net interest income Q1 Q2 Q3 Q4
4,430
14,027 12,334
4,419 2,067
3,932
6,101 5,882
-4,737
-10,000
-5,000
0
5,000
10,000
15,000
20,000
25,000
2013 2014 2015 2016 2017
Net adjustments in valuation 9M Q4
1,363 1,518 1,641 1,980 2,116
1,597 1,403 1,753
1,914 2,316
1,151 1,275
1,745
2,015
2,159
1,180 1,640
1,702
1,900
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2013 2014 2015 2016 2017
Net fee and commission income Q1 Q2 Q3 Q4
Landsbankinn
Investor Presentation
17
Net operating income
Amounts in ISKm
4,631
2,491
7,947
-100
3,975
2,372
3,572
1,724
555
-2,000
0
2,000
4,000
6,000
8,000
10,000
12,000
2013 2014 2015 2016 2017
Equities 9M Q4
3,438
614
2,186
1,225 1,251
637
2
592
315
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2013 2014 2015 2016 2017
Bonds 9M Q4
1,350
-40
-1,219
33
-893
-203 107
-58
-212
-1,500
-1,000
-500
0
500
1,000
1,500
2013 2014 2015 2016 2017
FX gain (loss) 9M Q4
2,660
1,473
-238
3,999
1,581
750
1,358 4,296
744
-1,000
0
1,000
2,000
3,000
4,000
5,000
2013 2014 2015 2016 2017
Other operating income 9M Q4
Landsbankinn
Investor Presentation
18
Operating expenses
*2013, less expensed equity-based wages
Amounts in ISKm
■ In 2010 the government imposed a special tax on financial institutions
■ The tax of 0.376% is levied on the carrying amount of total liabilities in excess of ISK 50bn
3,173 3,455 3,702 3,754 3,491
3,122 3,288 3,179 3,559 3,654
2,810 3,019 3,466 3,096 3,163
3,508 3,805 3,407 3,640
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
2013 2014 2015 2016 2017
Salaries and related expenses* Q1 Q2 Q3 Q4
1,183 1,126 1,063 1,012 998
0
200
400
600
800
1,000
1,200
1,400
31.12.13 31.12.14 31.12.15 31.12.16 30.09.17
Full time employees
2,611 2,649 2,580 2,499 2,426
2,593 2,395 2,597 2,444 2,477
2,371 2,164 2,127 2,230 2,475
2,372 3,313 2,674 2,292
0
2,000
4,000
6,000
8,000
10,000
12,000
2013 2014 2015 2016 2017
Other operating expenses Q1 Q2 Q3 Q4
Landsbankinn
Investor Presentation
19
Assets
Amounts in ISKm
5% 4% 2% 2% 2%
59% 65% 73% 77% 76%
6% 5%
2% 2% 3%
3% 3% 3%
2% 3% 25% 22% 18% 14% 13%
2% 1% 2% 3% 3%
0%
20%
40%
60%
80%
100%
31.12.13 31.12.14 31.12.15 31.12.16 30.09.17
Assets
Cash and balances with CB
Bonds and debt instruments
Equities and equity instruments
Loans and advances to financial institutions
Loans and advances to customers
Other assets
30.09.17 31.12.16 Change
Cash and balances with CB 33,157 30,662 2,495 8%
Bonds and debt instruments 160,223 154,892 5,331 3%
Equities and equity instruments 31,049 26,688 4,361 16%
Loans and advances to financial institutions 41,485 20,408 21,077 103%
Loans and advances to customers 905,927 853,417 52,510 6%
Other assets 22,740 17,641 5,099 29%
Assets classified as held for sale 4,377 7,449 -3,072 -41%
Total 1,198,958 1,111,157 87,801 8%
Landsbankinn
Investor Presentation
20
Balance sheet - loans
Amounts in ISKbn
* Problem loans are defined as loans and advances with individual allowance and / or more than 90 days in arrears
250 240 274 319 357
244 279 327
360 389
187 199
211 174
160
680 718
812 853
0
100
200
300
400
500
600
700
800
900
31.12.13 31.12.14 31.12.15 31.12.16 30.09.17
Loans to customers ISK-CPI loans ISK loans FX loans
138 110 111 121 132
151 171 200 239
267
185 198 210
173 160
474 480 521 533
559
0
100
200
300
400
500
600
31.12.13 31.12.14 31.12.15 31.12.16 30.09.17
Loans to corporates ISK-CPI loans ISK loans FX loans
5.3%
2.3% 1.8% 1.5% 1.0%
5.5%
4.0%
2.0% 0.9% 1.2%
10.8%
6.3%
3.8%
2.4% 2.2%
0%
2%
4%
6%
8%
10%
12%
31.12.13 31.12.14 31.12.15 31.12.16 30.09.17
Problem loans Arrears > 90 days Loans and advances with individual allowance
112 129 163
198 225
93 108
127
121 122
1
1
1 1
206 239
291 320 347
0
50
100
150
200
250
300
350
400
31.12.13 31.12.14 31.12.15 31.12.16 30.09.17
Loans to individuals ISK-CPI loans ISK loans FX loans
Landsbankinn
Investor Presentation
21
Balance sheet - Loans
Amounts in ISKbn
30.09.2017 31.12.2016 Change
ISK 394 361 33 9%
ISK CPI 357 319 38 12%
EUR 102 93 9 10%
USD 40 61 -21 -34%
Other currencies 13 19 -6 -32%
Total loans 906 853 53 6%
New
le
ndin
g
FX
change
CP
I changes
Changes in
im
pairm
ent &
W
rite
off
s
Insta
llments
853
203 --8 5 1 -113
906
400
500
600
700
800
900
1,000
1,100
Loans change 9M 2017 Loans 3
1.1
2.1
6
Loans 3
0.0
9.1
7
43%
39%
11%
5% 2%
Loans by currencies
ISK
ISK CPI
EUR
USD
Other currencies
Landsbankinn
Investor Presentation
22
Balance sheet - Loans
Amounts in ISKm
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
Public entities Individuals Fisheries Constructioncompanies
Real estatescompanies
Holdingcompanies
Retail Services ITC Manifacturing Agriculture Other
Loans by industry sectors 31.12.15 31.12.16 30.09.17
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
Indexedmortgage loans
Non-indexedmortgage loans
Overdrafts andcredit cards
Vehiclefinancing
Other
Loans to individuals by loan types 31.12.13 31.12.14 31.12.15
31.12.16 30.09.17
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
Continous LTV distribution of mortages to individuals 31.12.2015
31.12.2016
30.9.2017
Weighted average LTV 30.09.17 60.1% (62.3% 31.12.16 ; 63.4% 31.12.2015)
Funding and Liquidity
23
Landsbankinn
Investor Presentation
24
Balance sheet – liabilities and equity
Amounts in ISKm
167,218
53,827 56,731 20,093 21,946
456,662
551,435 559,051 589,725
638,781
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
31.12.13 31.12.14 31.12.15 31.12.16 30.09.17
Deposits Due to financial institutions and CB Deposits from customers
21% 23% 23% 23% 20%
4% 3% 3% 2% 2%
21% 19% 19% 20% 23%
40% 50% 50% 53% 53%
14% 5% 5% 2% 2%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
31.12.13 31.12.14 31.12.15 31.12.16 30.09.17
Liabilities and equity
Due to financial institutionsand CB
Deposits from customers
Borrowings &subordinated liabilities
Other liabilities
Equity
30.09.17 31.12.16 Change
Due to financial institutions and CB 21,946 20,093 1,853 9%
Deposits from customers 638,781 589,725 49,056 8%
Borrowings 267,853 223,944 43,909 20%
Other liabilities 27,017 25,776 1,243 5%
Subordinated liabilities 229 388 -159 -41%
Equity 243,132 251,231 -8,099 -3%
Total 1,198,958 1,111,157 87,801 8%
Landsbankinn
Investor Presentation
25
Borrowings
Amounts in ISKm
0
50,000
100,000
150,000
200,000
250,000
Issued bonds to LBI Covered bonds EMTN issuance Other unsecuredloans
Subordinatedliabilities
Borrowings 31.12.2013 31.12.2014 31.12.2015 31.12.2016 30.9.2017
7,775 6,740 16,240
3,720
19,540
5,640
16,140 941
40,246 12,160
26,976
62,700 40,274
2,736
2,654
-
100
200
300
400
500
600
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Q4 2017 2018 2019 2020 2021 2022 2023 2024 > 10 years
Maturity profile ISK FX
ISKm EURm
66%
25%
9%
Borrowings 30.09.2017
EMTN issuance
Covered bonds
Other Unsecured loans
Subordinated liabilities
Landsbankinn 26
Landsbankinn’s EUR senior unsecured issuance
54% 41%
3% 2%
58% 26%
8%
4% 4%
57% 31%
5% 4% 3%
32%
47%
12%
6% 3%
34%
31%
8%
10%
13%
4%
60% 13%
7%
6%
5% 9%
Type
Geography
Investor Presentation
● UK / Ireland
● Nordics
● France
● Ger / Aus / Swiss
● BeNeLux
● Asia / Other
Issue date: October 2015 September 2016 March 2017
Size: € 300 m € 500 m € 300 m
Issue rating (S&P): BBB-
(positive outlook)
BBB-
(positive outlook)
BBB
(positive outlook)
Tenor: 3-year 4.5-year 5-year
Maturity date: October 2018 March 2021 March 2022
Launch spread: + 295 bp + 190 bp + 130 bp
Joint lead managers: Citi, DB, JP Morgan Barclays, Citi, DB Barclays, BAML, Citi, JP Morgan
Roadshow locations:
Copenhagen, Oslo, Helsinki, Stockholm,
London
Copenhagen, Helsinki, London, Paris,
Holland London, Paris, Holland
Investors
● Asset Managers
● Insureres / Pensions
● Banks
● Official Institutions
● Other
Landsbankinn
Investor Presentation
27
Liquidity
*according to the liquidity and funding rules set by the Central Bank of Iceland, No. 266/2017
Amounts in ISKm
102%
131%
113%
128%
158%
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
31.12.13 31.12.14 31.12.15 31.12.16 30.09.17
Liquidity coverage ratio total LCR total
Regulatory requirements
208%
614%
360%
743%
873%
0%
100%
200%
300%
400%
500%
600%
700%
800%
900%
1000%
31.12.13 31.12.14 31.12.15 31.12.16 30.09.17
Liquidity coverage ratio FX LCR FX Regulatory requirements
Total* FX*
30.09.2017 Unweighted Weighted Unweighted Weighted
Level 1 liquid assets 128,927 128,927 49,299 49,299
Level 2 liquid assets 0 0 0 0
information items 28,806 0 10,375 0
A. Total liquid assets 157,733 128,927 59,674 49,299
Deposits 428,579 113,894 46,714 17,859
Borrowing 2,089 2,089 1,129 1,129
Other outflows 139,651 21,406 33,276 3,610
B. Total outflows (0-30 days) 570,319 137,389 81,119 22,598
Loans and advances to financial institutions 47,413 35,848 37,152 35,787
Other inflows 42,193 20,145 10,891 5,701
Limit on inflows 0 0 0 -24,540
C. Total inflows (0-30 days) 89,606 55,993 48,043 16,948
Liquidity coverage A/(B-C) 158% 873%
Landsbankinn
Investor Presentation
28
Capital requirements
■ Total capital ratio was 26.8% end of September 2017, as compared with 30.2% at year-end 2016
■ The Bank's target is to maintain a capital ratio above the FME's total capital requirement at any given time, plus an administration buffer specified in the Bank's risk appetite. The Bank also aims to be in the highest category for risk-adjusted capital ratio, as determined and measured by the relevant credit rating agencies
CET1 Tier 1 Total
Pillar I 4.5% 6.0% 8.0%
Pillar II A 2.8% 3.7% 4.9%
Minimum
requirements under
Pillar I and Pillar II A
7.3% 9.7% 12.9%
Systemic risk buffer 2.8% 2.8% 2.8%
Capital buffer for
systematically important
institutions
2.0% 2.0% 2.0%
Countercyclical capital
buffer 1.0% 1.0% 1.0%
Capital conservation
buffer 2.5% 2.5% 2.5%
Combined buffer
requirements under
Pillar II B
8.3% 8.3% 8.3%
Total capital
requirements 15.5% 17.9% 21.2%
8.0% 8.0% 8.0%
6.3% 6.0% 4.9%
3.0% 2.7% 2.8%
2.0% 2.0% 2.0%
0.9% 1.0%
2.5% 2.5% 2.5%
21.8% 22.1% 21.2%
29.5% 30.4%
30.2%
0%
5%
10%
15%
20%
25%
30%
31.12.14 31.12.15 31.12.16
Total capital requirements as defined by FME
Capital conservationbuffer
Countercyclical capitalbuffer
Capital buffer forsystematicallyimportant institutuionsSystemic risk buffer
Pillar II A
Pillar I
Total capital ratio
888,918 845,604 865,482 836,758
911,779
77.2% 77.0% 77.4% 75.3% 76.0%
50%
60%
70%
80%
90%
100%
0
200,000
400,000
600,000
800,000
1,000,000
31.12.13 31.12.14 31.12.15 31.12.16 30.09.17
Risk weighted assets
Risk weighted assets RWA / total assets
Amounts in ISKm
Landsbankinn
Landsbankinn key take-aways
29
Exceptionally strong
capital ratio’s
Positive credit rating
trajectory
» Currently BBB+/A-2,
stable outlook
Largest financial
institution in Iceland
Favorable economic
outlook in Iceland
Investor Presentation
Economic Outlook
Positive economic fundamentals
2017-2019 Landsbankinn Economic Research projections
Source: Statistics Iceland, Landsbanki Economic Research
-20.0
-15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
GDP growth and contribution to growth
Private final consumption Government final consumption Gross fixed capital formation Changes in inventories Net exports Gross Domestic Product
%
Investor Presentation
-25.0
-20.0
-15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Current account balance*
Trade balance Underlying balance on primary income ** Underlying current account balance ** Headline current account balance* Secondary income is included in the primary income.
** Excluding the calculated income and expenses of DMBs in winding-up proceedings but including the estimated effects of the settlement of their estates, and excluding the effects of pharmaceuticals company Actavis on
the primary income until 2012. Also adjusted for the failed DMBs' financial intermediation services indirectly measured (FISIM).
% of GDP
Positive economic fundamentals
32 Source: Statistics Iceland
-5
0
5
10
15
20
Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17
Components of CPI inflation
Other components Services Domestic goods Housing Petrol Imported goods CPI
%
Investor Presentation
0
1
2
3
4
5
6
7
8
9
10
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Unemployment rate %
Tourism has been a primary driver
33 Source: Icelandic Tourist Board
-10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 9M 2017
Number of foreign visitors
YoY change (right) Total number (left)
thousand visitors
Investor Presentation
100
120
140
160
180
200
220
240
2600
20
40
60
80
100
120
Exchange rate
Real exchange rate Nominal exchange rate (trade weighted average)
Jan. 2000 = 100 Index (inverted scale)
The Central Bank has been active on the buy side on the local FX market
34 Source: Central Bank of Iceland
0
100
200
300
400
500
600
700
800
900
1000
-20
-10
0
10
20
30
40
50
60
70
80
Jan-10 Jun-10 Nov-10 Apr-11 Sep-11 Feb-12 Jul-12 Dec-12 May-13 Oct-13 Mar-14 Aug-14 Jan-15 Jun-15 Nov-15 Apr-16 Sep-16 Feb-17 Jul-17
Central Bank intervention in foreign exchange market
FX purchase, spot market FX sale, spot market FX purchase, forward contracts FX sale, forward contracts Net accumulated purchase (right)
ISKbn ISKbn
Investor Presentation
-200
-180
-160
-140
-120
-100
-80
-60
-40
-20
0
20
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Iceland International Investment Position is now close to zero
IIP IIP excluding DMBs undergoing winding up Estimated underlying IIP *
% GDP
* Central Bank of Iceland estimate of the underlying net external position that will result when the domestic and foreign assets of the deposit money banks in winding-up proceedings have
been sold and the proceeds distributed to creditors
35
Strong economic recovery – government deleveraging
0
10
20
30
40
50
60
70
80
90
100
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
General government debt
Net debt Gross debt
2016-2021 IMF staff estimations / projections
Source: IMF World Economic Outlook, April 2017
% GDP
0 50 100 150 200 250
Denmark
Sweden
Iceland
Germany
Ireland
United Kingdom
France
Belgium
United States
Portugal
Italy
Greece
Japan
General Government Gross Debt - International comparison (2016)
% of GDP
IMF Staff estimations
Source: IMF World Economic Outlook, Oktober 2017
Investor Presentation
Households and corporates have followed suit
36
Source: Financial Stability 2017/2, Central Bank of Iceland
1. Debt owed to domestic and foreign financial undertakings and market bonds issued.
Source: Financial Stability 2017/2, Central Bank of Iceland
0
20
40
60
80
100
120
140
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Household debt
Indexed Foreign currency Non-indexed Overdraft Asset financing
% GDP
Investor Presentation
0
20
40
60
80
100
120
140
160
180
2012 2013 2014 2015 2016 2017
Corporate debt¹
Indexed Non-indexed FX loans Asset financing agreements Domestic bonds issued Foreign bonds issued
% GDP
Corporate debt as percentage of GDP in international comparison
37 1. Debt owed to domestic and foreign financial undertakings and market bonds issued.
Source: Financial Stability 2017/1, Central Bank of Iceland
0.0
50.0
100.0
150.0
200.0
250.0
300.0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Corporate debt –international comparison¹
Iceland Denmark Ireland Greece Spain Italy Cyprus Finland Sweden Norway
% GDP
Investor Presentation