Investor Presentation - Bankinn · 2017-05-15 · Landsbankinn The Big Picture – Iceland at a glance Investor Presentation Capital city Reykjavík Population 338,350 (1 Jan 2017)

Investor Presentation

May 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.

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 may contain projections and forward-looking statements which are subject to a

number of risks and uncertainties that could cause actual results to differ materially and could

adversely affect the financial effects described herein.

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


Landsbankinn

The Big Picture – Iceland at a glance


Capital city Reykjavík

Population 338,350 (1 Jan 2017)

Size 102,775 km2

Government Parliamentary Constitutional Republic

Center-right coalition formed 11 Jan 2017 -

the Independence Party, Bright Future and the

Reform Party

Legislature Althingi

- 63 members elected for term every four years

- Last elections took place 29 Oct 2016

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 ≈ 115 ISK

GDP Total $16.7 billion

Per Capita $50,277 (2015)

Sovereign

long term

credit ratings

S&P: A/Stable (March 2017)

Moody’s: A3/Stable (Sept 2016)

Fitch: BBB+/Positive (Jan 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 ≈ 30-40 % 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 1,000 (Q1 2017)

4


Landsbankinn

Vision:

Landsbankinn is to be exemplary

Mission:

The trusted financial partner

Our relationship with customers is based

on mutual benefit. We are a trusted

financial partner that supports customers

towards success. We aim to tailor our

services to fit their needs and to operate in

harmony with our environment and society.

We want our customers to be able to say…

“This is how a bank should be”

Strategy

5


Landsbankinn

Ownership

■ ISFI’s Selection Committee nominates members

to the Board of Directors of Landsbankinn

based on an assessment of qualifications,

education and experience of individuals being

considered for membership

■ The government has announced its plans to sell

28.2% stake in Landsbankinn.

6

Icelandic State

Treasury

≈ 900 other shareholders

0.3%

The Icelandic State

Financial Investments

(ISFI)

98.2%

Landsbankinn

- Own shares

1.5%


Landsbankinn

Organisational chart

7

Perla Ösp Ásgeirsdóttir Hreidar Bjarnason Hrefna Ösp Sigfinnsdóttir Ragnhildur Geirsdóttir Helgi Teitur Helgason Árni Thór Thorbjörnsson

Lilja Björk Einarsdóttir


Landsbankinn 8

S&P credit rating

Fundamental factors for Landsbankinn:

■ Very strong capital and earnings

■ Strong liquidity position

■ Average funding profile

■ Adequate risk and business position

Icelandic sovereign Landsbankinn hf.

Long-term rating A BBB

Short-term rating A-1 A-2

Outlook Stable Positive

Last rating action March 2017 October 2016


20.01.2014 21.07.2015 25.10.2016

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

Landsbankinn hf. Republic of Iceland - Foreign Currency

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 2016 is at 18.6%

■ 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 2016 RAC ratio

Year-end 2015

18.6%**

11.7%

10.4% 10% 11.2%

10.0%

7.3%

0%

5%

10%

15%

20%

Landsbankinn Swedbank AB Jyske Bank AS Nordea Bank AB DNB Bank AS Danske Bank AS Bank of Ireland

S&P RAC ratio year-end 2015


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

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 Year-end 2016

Landsbankinn

Banking system in Iceland – three main players

10 Source: Financial Statements Q1 2017


1182

1029

1120

900

950

1000

1050

1100

1150

1200

1250

Landsbankinn Íslandsbanki Arion banki

Assets (ISKbn)

234

171

215

0

50

100

150

200

250


Equity (ISKbn)

27.0%

22.8%

27.3%

15%

20%

25%

30%

35%


Tier 1 ratio

42.5%

60.1% 64.2%

0%

20%

40%

60%

80%


Cost to Income ratio

146.7%

124.0%

151.4%

100%

120%

140%

160%

180%

200%


Loans to Deposit ratio

17.7% 15.5%

17.0%

0%

5%

10%

15%

20%

25%


Leverage ratio

Landsbankinn

Strong market position

11

Retail banking

Corporate banking


Source: Gallup

2017 Q1 Results

Landsbankinn

Financial highlights

Operations Balance Sheet

Profit after taxes ISK 7.6bn

Return on equity after

taxes 12.5%

Interest spread as a ratio

of assets and liabilities 2.2%

Cost-income ratio 42.5%

Total Assets ISK 1,182bn

27.0%

158%

1.3%

ISK 234bn Equity

Tier 1 Capital

LCR Total

Arrears (>90 days)

EUR 65m EUR 10bn

EUR 2bn

Exchange rate: EUR/ISK 116

13


Landsbankinn


14

Development of KPIs

26.7% 29.5% 30.4% 30.2%

27.4%

0%

5%

10%

15%

20%

25%

30%

35%

31.12.13 31.12.14 31.12.15 31.12.16 31.03.17

Total capital ratio

42.9%

56.0%

43.8% 48.4%

42.5%

0%

10%

20%

30%

40%

50%

60%

2013 2014 2015 2016 Q1 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

12.4% 12.5%

14.8%

6.6%

12.5%

0%

2%

4%

6%

8%

10%

12%

14%

16%

2013 2014 2015 2016 Q1 2017

Return on equity after taxes

Landsbankinn

■ Value changes in the credit

portfolio in Q1 were positive

by ISK 1.8 bn as compared

with a positive change in the

amount of ISK 311 m in Q1

of 2016

■ Net commission income

increased by 7% as

compared to the same

period last year, first and

foremost due to increased

activity in capital markets

■ Other operating income

increased substantially

between years, accounted

for mostly by positive

changes in the fair value of

unlisted equities

■ Effective tax rate is 15.6%


15

Income Statement

Amounts in ISKm

Q1 2017 Q1 2016 Change

Net interest income 8,018 7,466 552 7%

Net adjustments in valuation 1,779 311 1,468 471%

Net interest income after adjustments in

valuation 9,797 7,777 2,020 26%

Net fee and commission income 2,116 1,980 136 7%

Other net operating income 3,800 1,764 2,036 115%

Total operating income 15,713 11,521 4,192 36%

Salaries and related expenses 3,491 3,754 -263 -7%

Other operating expenses 2,426 2,499 -73 -3%

Total operating expenses 5,917 6,253 -336 -5%

Profit before tax 9,796 5,268 4,528 86%

Income tax expense and tax on liabilities of

financial institutions 2,220 1,953 267 14%

Profit for the period 7,576 3,315 4,261 129%

Landsbankinn


16

Net operating income

Amounts in ISKm

49%

16%

13%

11%

7% 2%

2% Income mix

Net interest income

Equities

Net commission and fees

Net adjustments in valuation

Other net operating income

Bonds

FX gain

9,879 7,855 7,269 7,466 8,018

7,118 7,385 8,929 10,145

7,340 7,057

8,834 8,596

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

1,363 1,518 1,641 1,980 2,116

1,597 1,403 1,753

1,914 1,151 1,275

1,745 2,015 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

-438

4,170 1,596 311 1,779

8,800

15,958

16,620

-629

-5,000

0

5,000

10,000

15,000

20,000

25,000

2013 2014 2015 2016 2017

Net adjustments in valuation Q1 Q2 - Q4

Landsbankinn


17

Net operating income

Amounts in ISKm

2,400

-442

3,478

-234

2,688

4,603

6,505

6,193

689

-2,000

0

2,000

4,000

6,000

8,000

10,000

12,000

2013 2014 2015 2016 2017

Equities Q1 Q2 - Q4

932

-210

741 584 294

3,143

826

2,037

956

-500

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2013 2014 2015 2016 2016

Bonds Q1 Q2 - Q4

1,172

-23 -324

162

-365

-25 90

-953

-341

-1,500

-1,000

-500

0

500

1,000

1,500

2013 2014 2015 2016 2016

FX gain Q1 Q2 - Q4

314 -327

291

1,252 1,183

3,096 3,158

3,767

3,491

-1,000

0

1,000

2,000

3,000

4,000

5,000

2013 2014 2015 2016 2017

Other operating income Q1 Q2 - Q4

Landsbankinn


18

Operating expenses

*2013, less expensed equity-based wages

Amounts in ISKm

3,173 3,455 3,702 3,754 3,491

3,122 3,288 3,179 3,559

2,810 3,019 3,466 3,096

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 1,000

0

200

400

600

800

1,000

1,200

1,400

31.12.13 31.12.14 31.12.15 31.12.16 31.03.17

Full time employees

2,611 2,649 2,580 2,499 2,426

2,593 2,395 2,597 2,444

2,371 2,164 2,127 2,230

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

■ Total operating expenses are down 5% from same period last year

■ 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

Landsbankinn


19

Balance sheet - assets

31.03.17 31.12.16 Change

Cash and balances with CB 35,826 30,662 5,164 17%

Bonds and debt instruments 147,992 154,892 -6,900 -4%

Equities and equity instruments 30,868 26,688 4,180 16%

Loans and advances to financial institutions 70,230 20,408 49,822 244%

Loans and advances to customers 872,350 853,417 18,933 2%

Other assets 19,009 17,641 1,368 8%

Assets classified as held for sale 6,192 7,449 -1,257 -17%

Total 1,182,467 1,111,157 71,310 6%

Amounts in ISKm

5% 4% 2% 2% 1%

59% 65% 73% 77% 74%

6% 5%

2% 2% 6% 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 31.03.17

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

Landsbankinn


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

250 240 274 319 332

244 279 327

360 373

187 199

211 174 167

680 718

812 853 872

0

100

200

300

400

500

600

700

800

900

31.12.13 31.12.14 31.12.15 31.12.16 31.03.17

Loans to customers ISK-CPI loans ISK loans FX loans

138 110 111 121 123

151 171 200 239 253

185 198 210

173 167

474 480 521 533 543

0

100

200

300

400

500

600

31.12.13 31.12.14 31.12.15 31.12.16 31.03.17

Loans to corporates ISK-CPI loans ISK loans FX loans

112 129 163

198 209

93 108

127

121 120

1

1

1 1

206 239

291 320 329

0

50

100

150

200

250

300

350

400

31.12.13 31.12.14 31.12.15 31.12.16 31.03.17

Loans to individuals ISK-CPI loans ISK loans FX loans

5.3%

2.3% 1.8% 1.5% 1.3%

5.5%

4.0%

2.0% 0.9% 0.9%

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 31.03.17

Problem loans Arrears > 90 days

Loans and advances with individual allowance

Landsbankinn


21


Amounts in ISKbn

New

le

ndin

g

FX

change

CP

I changes

Changes in

im

pairm

ent

& W

rite

off

s

Insta

llments

853

76 2 1 1 -61

872

400

500

600

700

800

900

1,000Loans change Q1 2017 Loans 3

1.1

2.1

6

Loans 3

1.3

.17

31.03.2017 31.12.2016 Change

ISK 373 361 12 3%

ISK CPI 332 319 13 4%

EUR 102 93 9 9%

USD 47 61 -14 -24%

Other currencies 18 19 -1 -3%

Total loans 872 853 19 2%

43%

38%

12%

5% 2%

Loans by currencies

ISK

ISK CPI

EUR

USD

Other currencies

Landsbankinn


22


Amounts in ISKm

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

Public entities Individuals Fisheries Constructioncompanies

Real estatescompanies

Holdingcompanies

Retail Services ITC Manifacturing Agriculture Other

Loans by industry sectors 31.12.15 31.12.16 31.03.17

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 31.12.15 31.12.16 31.03.17

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

Continuous LTV distribution of mortgages to individuals 31.12.2015

31.12.2016

31.3.2017

Weighted average LTV 31.03.16 60.1% (62.3% 31.12.16 ; 63.4% 31.12.2015)

Funding and Liquidity

23

Landsbankinn


24

Balance sheet – liabilities and equity

31.03.17 31.12.16 Change

Due to financial institutions and CB 31,613 20,093 11,520 57%

Deposits from customers 594,565 589,725 4,840 1%

Borrowings 244,649 223,944 20,705 9%

Other liabilities 77,356 25,776 51,580 200%

Subordinated liabilities 390 388 2 1%

Equity 233,894 251,231 -17,337 -7%

Total 1,182,467 1,111,157 71,310 6%

Amounts in ISKm

167,218

53,827 56,731 20,093 31,613

456,662

551,435 559,051 589,725 594,565

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 31.03.17

Deposits Due to financial institutions and CB

Deposits from customers

21% 23% 23% 23% 20%

4% 3% 3% 2% 7%

21% 19% 19% 20% 21%

40% 50% 50% 53% 50%

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 31.03.17

Liabilities and equity

Due to financialinstitutions and CB

Deposits fromcustomers

Borrowings &subordinated loans

Other liabilities

Equity

Landsbankinn


25

Borrowings

Amounts in ISKm

125,272

22,380

49,938

11,754 639

50,122 38,586

118,513

16,723

388

18,102

46,821

156,250

23,476

390

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

Issued bonds to LBI Covered bonds EMTN issued Other unsecured loans Subordinated liabilities

Borrowings 31.12.2015 31.12.2016 31.3.2017

19,464

2,460 16,120

2,660

18,900

4,280

37,896 11,016

16,275

60,450 36,270

87

18,084

-

100

200

300

400

500

600

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2017 2018 2019 2020 2021 2022 2023 2024 > 10 years

Maturity profile ISK FXISK EUR

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%

- investor types

- geography


● Asset Managers ● Insureres / Pensions● Banks ● Official Institutions ● Other

● 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

Landsbankinn


27

Liquidity

*according to the liquidity and funding rules set by the Central Bank of Iceland, No. 266/2017

Total* FX*

31.03.17 Unweighted Weighted Unweighted Weighted

Level 1 liquid assets 126,790 126,790 20,194 20,194

Level 2 liquid assets 0 0 0 0

information items 12,627 0 11,606 0

A. Total liquid assets 139,417 126,790 31,800 20,194

Deposits 395,485 107,279 36,245 13,582

Borrowing 2,860 2,860 0 0

Other outflows 178,622 54,686 74,790 39,193

B. Total outflows (0-30 days) 576,967 164,825 111,035 52,775

Loans and advances to financial institutions 69,532 65,622 69,475 65,608

Other inflows 40,716 18,742 15,092 7,778

Limit on inflows 0 0 0 -33,805

C. Total inflows (0-30 days) 110,248 84,364 84,567 39,581

Net outflow 0-30 days (B-C) 80,461 13,194

Liquidity coverage A/(B-C) 158% 153%

Amounts in ISKm

208%

614%

360%

743%

153% 0%

100%

200%

300%

400%

500%

600%

700%

800%

31.12.13 31.12.14 31.12.15 31.12.16 31.03.17

Liquidity coverage ratio FX LCR FX Regulatory requirements

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 31.03.17

Liquidity coverage ratio total LCR total

Regulatory requirements

Landsbankinn


28

Capital requirements

■ Total capital ratio was 27.4% end of Q1 2017, as compared with 30.2% at year-end 2016

■ In September 2016, the Icelandic parliament Althingi approved a bill of legislation amending the Act on Financial Undertakings to transpose into Icelandic law various provisions from CRD IV / CRR

■ Capital requirements pertaining to Landsbankinn as provided for in the Act on Financial Undertakings, guidelines on capital buffers from the Financial Stability Counsel and decisions made by the Financial Supervisory Authority, Iceland (FME), in the yearly ICAAP/SREP are stated in the above table

■ 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

8.0% 8.0%

6.3% 6.0%

3.0% 2.7%

2.0% 2.0%

0.9% 2.5% 2.5%

21.8% 22.1%

0%

5%

10%

15%

20%

25%

31.12.14 31.12.15

Total capital requirements as defined by FME

Capital conservationbuffer

Countercyclical capitalbuffer

Capital buffer forsystematically importantinstitutuionsSystemic risk buffer

Pillar II A

Pillar I

77.2% 77.0% 77.4% 75.3% 72.5%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

31.12.13 31.12.14 31.12.15 31.12.16 31.03.17

Risk weighted assets

Risk weighted assets RWA / total assets

Landsbankinn

Capital controls lifted

29

■ The offshore ISK overhang in

the amount of ISK 320bn

solved with auctions

■ Capital controls replaced by

prudential rules and volume

limitations

■ The solution concerning the failed

banks estates was twofold: Stability

conditions, and if the estates do not

satisfy the conditions, a stability tax

will be levied on them

Final step on lifting the capital controls taken on 12 March 2017

Capital flows to and from Iceland are now unrestricted, apart from:

Carry trade inflow

Derivatives denominated in ISK

Individuals, companies and pension funds can invest abroad without restrictions

Estates of failed banks

Offshore ISK The domestic economy


A threefold capital controls liberalization strategy executed

Landsbankinn

Landsbankinn key take-aways

30

Exceptionally strong

capital ratio’s

Positive credit rating

trajectory

» Currently BBB/A-2,

positive outlook

Largest financial

institution in Iceland

Favorable economic

outlook in Iceland


Economic Outlook

Positive economic fundamentals

2017-2019 Landsbankinn Economic Research projections

Source: Statistics Iceland, Landsbanki Economic Research

9.4

1.5

-6.9 -3.6

2 1.2 4.4

1.9 4.1

7.2

5.5 4.0 3.1

-25

-20

-15

-10

-5

0

5

10

15

20

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Private final consumption Government final consumption Gross fixed capital formation Changes in inventories Net exports Gross Domestic Product

% GDP growth and contribution to growth


-25

-20

-15

-10

-5

0

5

10

15

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Significant turnaround in foreign trade*

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

32

Positive economic fundamentals

33 Source: Statistics Iceland and Directorate of Labour

-5

0

5

10

15

20

Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17

Inflation is now 1.9%

Other components Services Domestic goods Housing Petrol Imported goods CPI

%


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

34 Source: Icelandic Tourist Board and Central Bank of Iceland

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

0

200

400

600

800

1000

1200

1400

1600

1800

2000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Number of foreign visitors

YoY change (right) Total number (left)

thousand visitors


100

120

140

160

180

200

220

240

2600

20

40

60

80

100

120

Jan-07 Jul-07 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

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

35 Source: Central Bank of Iceland, Statistics 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

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


-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

Iceland International Investment Position

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

36

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

Sweden

Denmark

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, April 2017


Households and corporates have followed suit

37 Source: Financial Stability 2017/1, Central Bank of Iceland

0

20

40

60

80

100

120

140

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Household debt

Indexed Foreign currency Non-indexed Overdraft Asset financing agreements

% GDP


0

20

40

60

80

100

120

140

160

180

2012 2013 2014 2015 2016

Corporate debt¹

Indexed Non-indexed FX loans Asset financing agreements Domestic bonds issued Foreign bonds issued

% GDP

1. Debt owed to domestic and foreign financial undertakings and market bonds issued.

Corporate debt as percentage of GDP in international comparison

38

0

50

100

150

200

250

300

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Corporate debt –international comparison1

Iceland Denmark Ireland Greece Spain Italy Cyprus Finland Sweden Norway

% GDP


1. Debt owed to domestic and foreign financial undertakings and market bonds issued.

Source: Financial Stability 2016/1, Central Bank of Iceland

Documents

Investor Presentation - Bankinn · 2017-05-15 · Landsbankinn The Big Picture – Iceland at a glance Investor Presentation Capital city Reykjavík Population 338,350 (1 Jan 2017)