Kvika banki hf.: Financial Results for the First Six Months of 2023

At a board meeting on 17 August 2023, the Board of Directors and the CEO approved the interim financial statements of Kvika banki hf. (“Kvika”) group for the period 1 January to 30 June 2023.

Highlights of the 6M 2023 Interim Financial Statements

• Pre-tax profit amounted to ISK 2,684 million
• Pre-tax return on tangible equity was 12.4%
• Earnings per share for the period were ISK 0.4
• Total assets amounted to ISK 330 billion
• The group’s equity amounted to ISK 81 billion
• The solvency ratio of the financial conglomerate was 1.24 and its capital adequacy ratio (CAR) for operations excluding insurance was 23.1%
• Total liquidity coverage ratio (LCR) was 390%
• Assets under management were ISK 457 billion

A presentation for shareholders and market participants will be held at 16:15 on Thursday, 17 August in Kvika’s headquarters on the 9th floor at Katrínartún 2, 105 Reykjavík. The presentation will be conducted in Icelandic and a live stream can be accessed on the following website:

Attached is the investor presentation. Additionally, a recording with English subtitles will be made available on Kvika’s website.

Solid Results Continue to Reflect Challenging Financial Markets

Kvika’s pre-tax profit for the first six months of 2023 amounted to ISK 2,684 million and return on tangible equity before taxes (RoTE) was 12.4% in the period.

Net interest income amounted to ISK 4,347 million, increasing by 27% compared to the same period the year before, mainly due to loan book growth and rising interest rates which increase the group’s interest income from fixed income securities. Interest income from lending increased by ISK 423 million during the quarter, still the net interest margin decreases slightly between quarters because strong liquidity position and a significant rise in interest rates during the period had a temporary negative effect on the net interest margin in the second quarter. Net impairment amounted to ISK 29 million during the period compared to ISK 96 million in the first six months of 2022. Net financial income amounted to ISK 436 million. Net fee and commission income amounted to ISK 3,085 million. Operating expenses amount to ISK 5,713 million in the first six months of 2023.

Strong Operations and Growth in Insurance Premiums



TM’s insurance operations performed well in the period and had a combined ratio of 97.5% in the first half of 2023, compared to 99.9% in the same period in 2022. Substantial premium increase of 10.1% in the period while claims only grew by 4.4%.

Strong Balance Sheet and High Liquidity Position

Total assets increased by 10% or nearly to ISK 31 billion in the first six months of 2023 and amounted to ISK 330 billion at the end of June. Loans to customers grew by almost ISK 12 billion in the period and amounted to ISK 119 billion at the end of June. Balances with banks and the Central Bank of Iceland, together with government-guaranteed securities, amounted to ISK 105 billion and total liquid assets were ISK 128 billion, increasing by ISK 11 billion in the period. The group’s total liquidity coverage ratio (LCR), excluding insurance operations, amounted to 390% at the end of June, well above the 100% minimum requirement.

The group’s total equity amounted to ISK 81 billion at the end of the period. The solvency ratio of the financial conglomerate was 1.24 at the end of the first half and the group's risk-weighted capital adequacy ratio (CAR), excluding the effect of TM, amounted to 23.1%. Kvika’s capital requirement, including capital buffers, is 18.7%.

Share Buy-back Programme Initiated in June 2023 

During the period 26 June to 11 August Kvika bought 31,900,000 own shares, which corresponds to about 0.7% of issued shares in the company, for around ISK 550 million. The purchase of own shares according to the buy-back programme, which was approved by Kvika’s board on 23 June 2022, will amount to a maximum of ISK 1 billion.

Earnings Outlook Raised by ISK 200 million

Kvika presents an outlook based on core income (total income excluding net financial income), in place of total income before.

Kvika’s profit before tax, excluding net financial income, for the next 12 months is expected to be ISK 6.6 billion. The outlook, which is based on core income, is about ISK 200 million higher than the outlook published with Kvika’s Q1 2023 financial results, which adjusted for expected net financial income amounted to ISK 6.4 billion. The current forecast, if published on the same basis as before, would amount to ISK 9.6 billion.

Kvika’s results will be affected by the performance of its financial assets through net financial income. Alongside the changed disclosure further information on the composition of the group’s financial assets is included in the investor presentation.

Marinó Tryggvason, CEO of Kvika:

“Kvika delivers solid results in the second quarter and core operations continue to strengthen. Commercial Banking, Corporate Banking & Capital Markets and Insurance operations all produce good results while Asset Management and investment operations are affected by volatile conditions in financial markets. I feel that these results are acceptable and that the company has a lot in store.

In recent years, Kvika has steadily invested in growth and infrastructure with a focus on fintech, innovation in financial services and strong human resources. Our strategy is and has been to transform financial services in Iceland guided by mutual benefits. I am very happy that in the past few weeks we have reached important milestones in that journey.

The company took a big step by expanding Aur's services into the retail market with its recently released update. The response has been far beyond expectations with over 9,000 new cards issued since launch at the end of July, where customers have started using the new services. With the release of the new Aur services, Kvika continues to increase competition in the Icelandic financial market. At the same time Straumur, Kvika’s payment facilitation subsidiary, has begun operations. Onboarding of acquired merchants from Rapyd is going to plan and will be completed in the second half of the year.

We have been building a solid foundation and there are now exciting times ahead in fintech and innovation at Kvika."

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