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Fréttir

The Board of Directors of Kvika banki hf. („Kvika“ or „the bank“) and the bank‘s CEO, Marinó Örn Tryggvason, have today reached an agreement on the CEO’s retirement. Discussions regarding the retirement were initiated by the CEO. The retirement has become effective.


The Board of Kvika has engaged Ármann Þorvaldsson as the bank’s CEO, effective as of today. Ármann previously held the position as CEO of Kvika, in the years 2017-2019 and was deputy CEO between 2019-2022. He has decades of experience in the financial market. Ármann graduated with an MBA degree from Boston University in 1994 and has an BA degree in history from the University of Iceland.

“I started working at Kvika over six years ago and have been the company's CEO for the last four years. During this time, the bank’s operations have changed considerably. Today the bank is one of the largest and most valuable companies in the country. I am proud ofhow the team of Kvika banki has managed to strengthen its operations and growth.

The company is at a certain turning point, where investments of recent years, such as the expansion of fintech activities, are beginning to pay off. Kvika has also increased competition in the domestic financial market, bringing great benefits to the society. There are manyopportunities ahead for further growth and development of the bank on these foundations.

In recent weeks, I have contemplated on whether I believe it is right that I lead the company in its future development. My conclusion isthat I have requested to retire, which I consider to be a reasonable conclusion for both me and the company.

I would like to thank the board and the bank’s employees for their good cooperation in recent years. The company has a strong team and I will miss my coworkers, but at the same time it am excited to watch them achieve continued success.”

Sigurður Hannesson, chairman of the Board of Kvika:

"Kvika has grown stronger since Marinó took over as the bank's CEO, and the bank's operations rest on more diverse foundations today. At this point in time, the board of Kvika would like to thank Marinó for his work in the interest of the bank, and the board wishes him continued success in his work.

It is also a pleasure to be able to announce the appointment of Ármann Þorvaldsson as CEO of the bank. Ármann immediately assumes the position as CEO, but few people are as well aware of Kvika's operations as him. Ármann's experience and knowledge of the financial market means that he will be a strong leader and able to make the most of the many opportunities that Kvika faces."

Ármann Þorvaldsson, CEO of Kvika banki hf.:

“I am very excited to be taking over as the CEO of Kvika from Marinó Örn, after his successful management, under which the group has strengthened and expanded significantly. I see many opportunities for Kvika’s further development, and it will be the task of coming months to work towards those opportunities to the benefit of the bank's shareholders.

I am not completely unfamiliar with the job, but Kvika has changed quite a bit since I held the ranks, and I am very excited to lead this strong company and the wonderful people who work there.”

The Board of Directors of Kvika banki hf. („Kvika“ or „the bank“) and the bank‘s CEO, Marinó Örn Tryggvason, have today reached an agreement on the CEO’s retirement. Discussions regarding the retirement were initiated by the CEO. The retirement has become effective.

Change of CEO

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

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

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.

“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."

Kvika - Condensed Interim Consolidated Financial Statements 30.06.2023

Financial Results for the First Six Months of 2023

In the past months negotiations on the possible merger of Íslandsbanki hf. („Íslandsbanki“) and Kvika banki hf. („Kvika") have continued and the companies, along with foreign and domestic advisors, have worked on evaluating possible synergies and the position of a merged company on the market. 

As a result of that work, Kvika's board of directors is of the opinion that a merger would create significant value. The discussions between the companies have been good, though they have not yet led to a muntual conclusion on exchange rates. 

In light of the events of the past few days and the fact that a shareholder meeting will likely be called at Íslandsbanki with a possible election of its board of directors, Kvika's board of directors have decided to discontinue merger negotiations. However, it is clear that the benefits of a merger of the companies could be significant, and Kvika's board has expressed its willingness to restart negotiations if conditions arise.

Announcement on discontinuation of merger negotiations with Íslandsbanki hf.

At a board meeting on 11 May 2023, 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 2023. 

Highlights of the Interim Financial Statements for the First Three Months of 2023

Pre-tax profit amounted to ISK 1,412 million

Pre-tax return on tangible equity was 13.1%

Earnings per share for the period were ISK 0.24 

The group’s equity amounted to ISK 80 billion

Dividend payment of ISK 1.9 billion approved by AGM in March

The solvency ratio of the financial conglomerate was 1.34 and its capital adequacy ratio (CAR) for operations excluding insurance was 23.6%

Total liquidity coverage ratio (LCR) was 327%

Assets under management were ISK 466 billion

Kvika’s pre-tax profit amounted to ISK 1,412 million in Q1 2023, in line with expectations despite net investment income considerably under expectations. Return on tangible equity before taxes (RoTE) was 13.1% in the period.

Net interest income amounted to ISK 2,255 million, increasing by 44% 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. Net impairment was positive by ISK 41 million compared to impairment of ISK 38 million in Q1 2022. Net financial income amounted to ISK 218 million, compared to ISK 808 million in the first three months of 2022. Net fee and commission income amounted to ISK 1,588 million, a 3% decrease from Q1 2022. Operating expenses amount to ISK 3,841 million in Q1 2023, compared to ISK 3,165 million in Q1 2022. The increase is mainly attributable to inflationary effects and increased labor cost, on the one hand due to collective bargaining and retroactive wage increases and on the other hand due to an increase in full-time employees at the group, which has invested in the development of infrastructure to accommodate future growth.  

Strong Core Insurance Operations 
TM performed well in the period and had a combined ratio of 99.7% in Q1 2023, compared to 101.0% in the same period in 2022

Total assets increased by 4% or ISK 13 billion in Q1 2023 and amounted to ISK 313 billion at the end of March. Loans to customers grew by almost ISK 3 billion in the period and amounted to ISK 110 billion at the end of March. Balances with banks and the Central Bank of Iceland, together with government-guaranteed securities, amounted to ISK 98 billion and total liquid assets were ISK 120 billion, increasing by ISK 3 billion in the period. The group’s total liquidity coverage ratio (LCR), excluding insurance operations, amounted to 327% at the end of Q1, well above the 100% minimum requirement.

The group’s total equity amounted to ISK 80 billion at the end of the period, compared to ISK 81 billion at the end of 2022, as total equity decreases from year-end mainly due to a dividend payment decision. The solvency ratio of the financial conglomerate was 1.34 at the end of Q1 and the group's risk-weighted capital adequacy ratio (CAR), excluding the effect of TM, amounted to 23.6%. Kvika’s capital requirement, including capital buffers, is 17.9%. These figures do not include the unreviewed profit for the quarter.

Kvika’s earnings outlook for the next four quarters assumes a pre-tax profit of ISK 9.4 billion which equates to 21.9% return on tangible equity. Further assumptions can be found in the attached investor presentation. 

"Kvika’s operations returned solid results in the quarter despite challenging market conditions. The company’s results are in line with expectations and special emphasis has been made on further developing the group’s infrastructure 

Insurance operations delivered good results in a generally claims-heavy period, premium growth was in line with the economy and the combined ratio of TM amounted to 99.7% in the first quarter.
Net interest income increased by 44% from the first quarter of last year, mainly attributable to considerable loan growth and increased interest income from the company's fixed income securities. Net fee and commission income decreased slightly between periods due, among other things, to lower performance-related fees in asset management. Further, uncertainty in the financial markets continues to affect net investment income. 

The foundations of the company are strong. In the first quarter of the year, we continued to focus on developing a strong infrastructure to support future growth through our new and exciting product and service offerings. We are working on numerous projects that support our strategy of increasing competition, simplifying customers' finances and thus transforming financial services in Iceland.

Straumur, a new subsidiary of Kvika, recently carried out the first transactions for its customers, and the development of the Aur update, which will offer progressive innovations in banking and insurance services, is going well. The company's deposit base also increased by 6% from the beginning of the year, which can be attributed to the continued success of digital deposit platform Auður, which has maintained its leadership role and continues to offer customers good interest rates on deposit accounts.

Merger negotiations with Íslandsbanki are ongoing and progressing well. As we have previously reported, we believe that the merger can bring significant benefits. The project is extensive and there are many steps in this type of process, but as announced last week, the financial advisors will deliver their analysis in the second quarter, and following that, the companies will make decisions about the next steps in the process.”

Kvika - Condensed Interim Consolidated Financial Statements 31.03.23

Financial Results for Q1 2023 and Earnings Outlook for the Next Four Quarters

Merger discussions between Íslandsbanki hf. and Kvika banki hf. are proceeding. As has been reported previously, discussions began in February, following approval by the board of directors of both companies. The companies’ boards believe that the merger can bring significant benefits to shareholders and customers of both. 

The project is large in scale, and both parties have appointed foreign financial advisors and domestic legal advisors. The companies and advisors are currently assessing the synergies to be gained from the merger, as well as assessing the position of the merged company in the market. During Q2 the financial advisors will submit their analysis on the proposed merger, following which the companies will make decisions on the next steps in the process. 

The premises for the discussions and its execution have been reported to the Competition Authority, and the parties aim to make the most of pre-notification discussions with the Competition Authority in accordance with recent rules to this effect, alongside other workstreams in the discussions.

Announcement from Íslandsbanki and Kvika on the status of merger discussions

Refined Brands, the digital ethical fashion group founded in 2021, has successfully completed three new acquisitions in the ethical fashion space in recent months, furthering Refined Brands' commitment to creating a positive impact on people and the planet through sustainable and responsible business practices. The acquisitions follow Refined Brands' first acquisition in 2021 of Celtic and Co, the sustainable fibres brand.

Kvika acted as Refined Brands’ advisor on all transactions, providing comprehensive M&A advice throughout the acquisition process as well as raising new equity, leveraging its proven track record of successful execution, and growing experience in the digital fashion space. Two of Kvika’s subsidiaries cooperated to support the successful completion of the transactions, playing a crucial role in executing Refined Brands' growth strategy.

The first acquisition completed in September 2022 is of Turtle Doves, the recycled cashmere accessories brand founded in 2009 by Kate and Graham Holbrook. Turtle Doves uses post-consumer textile waste to create upcycled garments and accessories, with its flagship products being its cashmere fingerless gloves and wrist warmers, all manufactured locally in Shropshire. As part of the transaction, Graham Holbrook will remain as MD to continue its growth.

The second acquisition completed in October 2022 is of Kettlewell Colours, the wardrobe essentials brand for women who love to wear color, founded in 2004 by Melissa and John Nicholson. Based in Somerset, Kettlewell Colours offers an extensive range of premium wardrobe pieces and accessories in over 300 color shades, across multiple product categories to customers globally. With a fair-trade philosophy, Kettlewell predominantly works with small, family-run factories in Portugal, Turkey, and the UK that share their environmental values. Melissa will continue to lead the business post-transaction.

The third acquisition is of Frugi, the UK's leading ethical and organic children's clothing brand based in Cornwall and established in 2004. Refined Brands acquired Frugi via administration in November 2022 and relocated its operations and assets to Celtic & Co's headquarters in Indian Queens, saving a significant number of local jobs.

Refined Brands' recent acquisitions of Turtle Doves, Kettlewell Colours and Frugi will play a crucial role in bringing its pioneering portfolio of brands to an ever-growing global audience of ethically conscious consumers, using proprietary data and cutting-edge digital marketing.

Gunnar Sigurdsson, Managing Director of Kvika Securities:

"We have been involved with Refined Brands’ journey since day one and are proud to have advised the group on its latest transformational acquisitions. The ethical fashion market is growing rapidly along with increased consumer awareness and Refined Brands is at the leading edge of this trend. We are impressed by Refined Brands' commitment to sustainability and social responsibility, and we are confident that these acquisitions will help them create a better future for fashion."

James Williams, Group MD of Refined Brands, said: 

"These acquisitions further our commitment to creating a positive impact on people and the planet. Combined, our brands make up the leading portfolio of digitally native, British ethical fashion brands with a razor-sharp focus on natural and sustainable fabrics. With Kvika’s invaluable support, we are thrilled to have completed the transactions and to welcome these brands to the Refined Brands family."

Refined Brands is a holding company committed to partnering with founders to grow companies that align with its values of sustainability, social responsibility, and innovation using cutting-edge data-driven digital marketing. Following its recent acquisitions, it is now home to a group of four ethically sourced, natural, and sustainable focused British clothing businesses.

Refined Brands, the digital ethical fashion group founded in 2021, has successfully completed three new acquisitions in the ethical fashion space in recent months, furthering Refined Brands' commitment to creating a positive impact on people and the planet through sustainable and responsible business practices.

Kvika Advises Refined Brands on Transformative Acquisitions in Online Ethical Fashion Space

At a board meeting on 15 February 2023, the Board of Directors and the CEO approved the consolidated financial statements of Kvika banki hf.  for the year 2022.

Highlights of the 2022 Consolidated Financial Statements

Pre-tax profit amounted to ISK 5,621 million 

Earnings per share for the year were ISK 1.02

The solvency ratio of the financial conglomerate was 1.36 and its capital adequacy ratio (CAR) for operations excluding insurance was 23.5% at year-end 2022

Total liquidity coverage ratio (LCR) was 320%

Assets under management were ISK 462 billion

Kvika’s Board of Directors proposes a dividend payment of ISK 0.4 per share or ISK 1,912 million to shareholders for the operating year 2022

Kvika’s Sustainability Report for the year 2022 is published parallel to the publishing of the Consolidated Financial Statements

A presentation for shareholders and market participants will be held at 16:15 on Wednesday, 15 February 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:

https://kvika.is/kynning-a-uppgjori-2022/

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

Earnings Excluding Net Financial Income in line with Expectations

Kvika’s pre-tax profit amounted to ISK 5,621 million for the year 2022 and ISK 1,613 million for the fourth quarter. Return on tangible equity before taxes (RoTE) was 13.1% for the year 2022 and 15.3% for the fourth quarter.

Net interest income amounted to ISK 7,675 million, increasing by 65% compared to the year before. The increase in net interest income is primarily driven by the increased size of the loan portfolio, the acquisition of Ortus Secured Finance and altered composition of liquid assets. Net impairment amounted to ISK 532 million during the period, compared to positive ISK 139 million in the year 2021. Net financial income amounted to ISK 0.3 million during challenging circumstances in capital markets. Net fee and commission income amounted to ISK 6,408 million, a decrease of 6% from the prior year. Operating expenses amounted to ISK 13,076 million for the year, in line with expectations. 

TM’s Combined Ratio in line with Target but Challenging Conditions in Capital Markets

The combined ratio of TM was 95.3% for the year 2022, compared with 88.7% in the prior year, and the combined ratio in Q4 2022 amounted to 93.6%. TM's investment income amounted to ISK 426 million for the year 2022, making the return on the asset portfolio 1.2% over the year compared to 17.7% return in the prior year. TM's investment income in Q4 2022 amounted to ISK 972 million making the return on the asset portfolio 3.0% compared to 3.7% in Q4 2021.

Strong Balance Sheet and Solid Liquidity Position

Total assets increased by 23% or ISK 57 billion during the year 2022 and amounted to ISK 303 billion at the end of December. Loans to customers grew by almost ISK 36 billion over the year and amounted to 107 billion at the end of the year. The increase is partly attributable to the acquisition of Ortus Secured Finance Ltd. as well as organic growth. Balances with banks and the Central Bank of Iceland, together with government-guaranteed securities, amounted to ISK 95 billion and total liquid assets were ISK 116 billion, increasing by ISK 17 billion over the year 2022. The group’s total liquidity coverage ratio (LCR) amounted to 320% at year-end 2022, well above the 100% minimum requirement.

At a board meeting on 15 February 2023, the Board of Directors and the CEO approved the consolidated financial statements of Kvika banki hf. for the year 2022.

News

20. August 2023

Change of CEO

17. August 2023

Financial Results for the First Six Months of 2023

29. June 2023

Announcement on discontinuation of merger negotiations with Íslandsbanki hf.

12. May 2023

Financial Results for Q1 2023 and Earnings Outlook for the Next Four Quarters

03. May 2023

Announcement from Íslandsbanki and Kvika on the status of merger discussions

13. April 2023

Kvika Advises Refined Brands on Transformative Acquisitions in Online Ethical Fashion Space

15. February 2023

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