Investor Presentation
March 2024
Operating in | With a unique | And a track | ||
an attractive | record of | |||
position | ||||
market | delivering | |||
Opportunities for growth in a dynamic business climate
Operating in an attractive market With a unique position
And a track record of delivering
Dynamic business climate
- Iceland is among the top 15 most educated countries in the world
- Strong culture of innovation and economic engagement
- Top 3 on the Human Development Index
- 3rd in digital sales to customers in Europe
- Over 95% of people use digital IDs, among the highest in Europe
-
4th in digital public services and
1st in eDocuments in Europe
Opportunities for growth
Record growth of the Icelandic population in 2022, growing by 3.1%
We are positioning ourselves | Premia client segment | |||
to capitalize on substantial | Revenue 2023 | Customers 2023 | Bancassurance YE2023 | |
growth opportunities within our | +34% | +11% | 40% | |
target client segments | ||||
~40% of farmed | Plenty of sustainable | Opportunities to | |
salmon and related | develop further as a | ||
Arctic region presents | energy resources | ||
species | tourist destination | ||
significant long-term | ~12% of fish caught in | ||
opportunities | One third of rare earth | ~10% of total | |
the world are in the | |||
metals and materials | aluminum production | ||
North Atlantic Ocean | |||
3 | Source: Iceland Chamber of Commerce, UNDP, Statistics Iceland, European Commission, Government of Iceland, Eurostat, International-Aluminium, FAO, Financial |
Times
Track record of solid economic growth
Iceland's thriving economy attracts an international workforce which has led to one of the highest rates of population growth in Europe contributing to robust and consistent economic growth
Population growth 2013-2023 | Real GDP - Index (Jan 2006 = 100) |
Operating in an attractive market With a unique position
And a track record of delivering
Malta | 150 | |||||||||||||||||||||||||
Luxembourg | ||||||||||||||||||||||||||
Iceland | ||||||||||||||||||||||||||
Türkiye | ||||||||||||||||||||||||||
Ireland | ||||||||||||||||||||||||||
Sweden | 140 | |||||||||||||||||||||||||
Switzerland | ||||||||||||||||||||||||||
Norway | ||||||||||||||||||||||||||
Austria | ||||||||||||||||||||||||||
Cyprus | ||||||||||||||||||||||||||
Netherlands | 130 | |||||||||||||||||||||||||
Denmark | ||||||||||||||||||||||||||
Belgium | ||||||||||||||||||||||||||
Germany | ||||||||||||||||||||||||||
France | ||||||||||||||||||||||||||
Estonia | 120 | |||||||||||||||||||||||||
Czechia | ||||||||||||||||||||||||||
Spain | ||||||||||||||||||||||||||
Slovenia | ||||||||||||||||||||||||||
Finland | ||||||||||||||||||||||||||
Slovakia | 110 | |||||||||||||||||||||||||
Portugal | ||||||||||||||||||||||||||
Montenegro | ||||||||||||||||||||||||||
Italy | ||||||||||||||||||||||||||
Hungary | ||||||||||||||||||||||||||
Poland | 100 | |||||||||||||||||||||||||
Lithuania | ||||||||||||||||||||||||||
Albania | ||||||||||||||||||||||||||
Romania | ||||||||||||||||||||||||||
Latvia | ||||||||||||||||||||||||||
Serbia | 90 | |||||||||||||||||||||||||
Croatia | ||||||||||||||||||||||||||
2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | ||||||||||
North Macedonia | ||||||||||||||||||||||||||
Bulgaria | ||||||||||||||||||||||||||
-15% | -10% | -5% | 0% | 5% | 10% | 15% | 20% | 25% | 30% | 35% | Denmark | Finland | Iceland | Norway | Sweden |
4 | Sources: OECD, Arion Research |
Favorable demographics foster growth
With largest generation aged between 25-35, the demographics are deemed to be favorable for the foreseeable future
Operating in an attractive market With a unique position
And a track record of delivering
Working age population | Population age distribution |
Share of total population (%) | Number of inhabitants by age |
68% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
67% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
66% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
65% | 5,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
64% | 4,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
63% | 3,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
62% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
61% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
60% | 1991 | 1993 | 1995 | 1997 | 2014 | 2016 | 2018 | 2020 | 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1990 | 1992 | 1994 | 1996 | 1998 | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2015 | 2017 | 2019 | 2021 | 0 | 3 | 6 | 9 | 12 | 15 | 18 | 21 | 24 | 27 | 30 | 33 | 36 | 39 | 42 | 45 | 48 | 51 | 54 | 57 | 60 | 63 | 66 | 69 | 72 | 75 | 78 | 81 | 84 | 87 | 90 | 93 | 96 | 99 | 102 | 105 | 108 | |||||||||
Denmark | Finland | Iceland | Norway | OECD members | Sweden | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5 | Source: OECD, Statistics Iceland, Arion Research |
Strong financial standing of private and public sectors provides fertile ground for continued entrepreneurship and innovation
Operating in an attractive market With a unique position
And a track record of delivering
Households' financial assets and liabilities | Household and non-financial corporate debt | Debt of central government |
ISK bn (Jan 2024 prices) | % of GDP | % of GDP |
14,000 | 400% | 140% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
12,000 | 350% | 120% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
300% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
10,000 | 100% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
250% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8,000 | 80% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
200% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6,000 | 60% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
150% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4,000 | 100% | 40% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2,000 | 50% | 20% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
0 | 0% | 0% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | Q22023 | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 |
BF90 Net financial assets | FA0 Total financial assets | Households | Companies | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FL0 Total financial liabilities | Gross debt | Net debt | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6 | Source: Central Bank of Iceland, Statistics Iceland, Arion Research |
Exports remain robust as tourism bounces back, fostering economic vitality
Operating in an attractive market With a unique position
And a track record of delivering
Number of foreign tourists
3,500,000 | |||||||||||||||||||||
3,000,000 | |||||||||||||||||||||
2,500,000 | |||||||||||||||||||||
2,000,000 | |||||||||||||||||||||
1,500,000 | |||||||||||||||||||||
1,000,000 | |||||||||||||||||||||
500,000 | |||||||||||||||||||||
0 | 2005 | 2006 | 2010 | 2014 | 2018 | 2019 | 2023 | ||||||||||||||
2002 | 2003 | 2004 | 2007 | 2008 | 2009 | 2011 | 2012 | 2013 | 2015 | 2016 | 2017 | 2020 | 2021 | 2022 | |||||||
Air travel | Cruises |
Exports
-ISK bn per quarter, seasonally adjusted (Jan 2024 price levels)
600 | |||||
500 | |||||
400 | |||||
300 | |||||
200 | |||||
100 | |||||
0 | |||||
2014 | 2016 | 2018 | 2020 | 2022 | |
Tourism | Aluminium | Marine Products | Other |
7 | Source: Statistics Iceland, Arion Research |
Arion is positioned in the most attractive customer segments with a strong and diversified product offering
Operating in an attractive market With a unique position
And a track record of delivering
Integrated model with diverse key products in-house, offering strong opportunities for synergies
Known for innovation - digital at the core and a customer first focus
Top corporate and institutional bank in Iceland with a clear focus on capital efficient operations
Servicing half of the Icelandic population
and over half of Icelandic corporations
8 | Sources: Statistics Iceland YE 2023, Iceland Revenue and Customs |
Mandatory pensions | Mortgages |
Car loans | |
Supplementary pensions | Consumer lending |
Pension fund operations | Deposits |
Individuals | SMEs |
Corporate banking | |
UCITS funds | Corporate finance |
Institutional investor funds | Investment banking |
Private equity funds | SMEs |
Private debt funds | Specialized lending |
Corporates | Institutional |
investors |
Brokerage | |
Private insurance | Asset management |
Private banking | |
Corporate insurance | |
Premia | |
Strong financial and risk profile
Diverse income mix | Diverse loan book |
Operating income 2023 | Loans to customers YE 2023 |
ISK 64.2bn | ISK 1,153bn | |
9
Operating in an attractive market With a unique position
And a track record of delivering
CET1
19.7%
Leverage ratio
12.4%
LCR
192%
Problem loans
1.7%
Focused strategic direction has enabled us to significantly exceed our medium-term targets
ROE target of >10% reached in 2021 - revised target of >13% reached in 2022 and 2023
Operating in an attractive market With a unique position
And a track record of delivering
Target revised to cost to core income | |||
Cost to income target of 50% reached in 2020 - revised target of <45% reached in 2021 and 2022 | of <48% and reached in 2023 | ||
Target revised to core income to | ||||
Income to REA of >6.5% reached in 2020, revised target of >6.7% reached in 2021 | REA of >6.7% and reached in 2023 | |||
10 | * Core income: Net interest income, Net fee and commission income and Insurance service results (excluding operating expenses from insurance.) Operating |
expenses from insurance are included in cost when calculating cost to core income ratio
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Disclaimer
Arion banki hf. published this content on 15 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 March 2024 11:32:00 UTC.