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Aðalfundur Kviku banka 30. mars

Kvika receives an ESG rating from Reitun with excellent results

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 

Pre-tax return on tangible equity was 13.1%

Earnings per share for the year were ISK 1.02

The group’s equity amounted to ISK 81 billion

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.

The group’s total equity amounted to ISK 81 billion at the end of the year, compared to ISK 78 billion at the end of 2021. Kvika’s Board of Directors will propose to the Annual General Meeting on 30 March 2023 that a dividend of ISK 0.4 per share or ISK 1,912 million, taking into account treasury shares held by the group, will be paid for the year 2022. The dividend payment amounts to about 40% of Kvika’s profit after tax in 2022. Taking this proposed dividend payment into consideration the solvency ratio of the financial conglomerate was 1.36 at the end of the year 2022 and the group's risk-weighted capital adequacy ratio (CAR), excluding the effect of TM, amounted to 23.5%. Kvika’s capital requirement, including capital buffers, is 17.9%. 

Kvika’s earnings outlook for the next four quarters assumes a pre-tax profit of ISK 9.4 billion which equates to 21.6% return on tangible equity. Further assumptions can be found in the attached investor presentation. 

“I am happy with the financial results. Our focus on diversified income streams continues to prove its value as the group's strong core operations deliver solid returns for the group despite low investment income during the year.

Kvika is in a strong position, and I am pleased to disclose that together with the publication of the financial results, we are introducing an expansion of the bank's services. Our strategy in recent years has been to see opportunities in increasing competition in the Icelandic financial market. We want to do that by offering services that others do not, as exampled by our online savings account platform Auður, which began offering significantly higher interest rates than competitors. We will continue on the same path and are now preparing to expand our product offering in the Aur app, which currently has over 100 thousand users.

Two weeks ago, Kvika contacted the board of directors of Íslandsbanki hf. and requested to initiate discussions about a merger of the two companies. I am happy that the board of Íslandsbanki is ready to explore this possibility with us, and formal negotiations are about to begin. If the boards come to an agreement, and shareholders and regulators approve, I see multiple opportunities in the merger. I believe that it will be possible to continue to increase competition, e.g. with Aur and other financial technology solutions as well as utilising financial strength to continue innovation. I also have expectations that the merger will make the company an even more interesting investment option, which can, among other things, lead to more cost-effective financing, which creates an opportunity to succeed in competition.” 

Kvika - Consolidated Financial Statements 31.12.2022

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.

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

The Icelandic analysis and assessment company Reitun has published its latest ESG assessment for Kvika, giving the bank a score of 86/100 and an A3 rating, which is an excellent rating under Reitun´s assessment. Kvika scores well above average in all ESG categories, when compared to the 35 domestic issuers who have undergone an ESG risk assessment by Reitun. The average is 72/100 and a rating of B2.

Reitun’s ESG assessment involves an analysis of how well Kvika manages sustainability risks in its operations and measures the group’s performance under the environmental and social factors as well as under governance (ESG). The assessment indicates that Kvika´s increased score in the environmental factor is mainly thanks to the fact that available data on environmental accounting now goes back three years – while the group is generally considered to be performing well in environmental matters. As regards social aspects, the changes and challenges resulting from Kvika’s merger with TM and Lykill in 2021 were handled well and, despite the challenges posed by consolidating the group’s operations in one place, staff handled the changes well, the group achieved good results in the annual workplace analyses conducted in 2021 and 2022, and job satisfaction is high. With regards to the  governance factor in 2022 Kvika completed work on a detailed sustainability strategy and a new sustainability policy for the group, which furthermorem focuses on six of the UNDG. The new strategy was worked out across all of the group´s units and subsidiaries.

Marinó Örn Tryggvason, CEO of Kvika: ‘The group has recently been placing greater focus on sustainability issues. For instance, this year we have been conducting detailed strategy work, culminating in the approval of a new sustainability policy. This policy shapes Kvika’s ESG priorities for the coming years – we strive to play a responsible role in society and support sustainable development. Kvika has now received an excellent rating in Reitun’s ESG risk assessment, which is very pleasant and a great motivation for us to continue to improve in this field and manage sustainability risks.’

Reitun’s summary of their ESG risk assessment for Kvika, published in December 2022, can be found here.

The Icelandic analysis and assessment company Reitun has published its latest ESG assessment for Kvika, giving the bank a score of 86/100 and an A3 rating, which is an excellent rating under Reitun´s assessment.

This morning the board of directors of Kvika banki approved the CEO’s proposal to change the bank’s organizational chart. The objective of the changes is to better prepare the company for continued operational success and to adjust its structure to a growing company which continues to lead increased competition and innovation in the financial market. The changes are also in line with the goals and emphasis set forth in strategic planning introduced in November 2021.

Kvika banki is growing rapidly and now operates under several brands. The main brands, apart from Kvika, are TM, Kvika asset management, Lykill, Auður, Netgíró, Aur and Ortus Secured Finance. Additionally, preparations for the operations of a new subsidiary in the field of payment facilitation are under way.

Since the merger of Kvika banki, TM and Lykill the group’s management team and employees have worked hard on achieving the financial goals set out during the merger. In the opinion of the management team the financial goals of the merger have been reached in a shorter period of time than anticipated.

Sigurður Viðarsson, CEO of TM, will take on the role of deputy CEO of Kvika banki from Ármann Þorvaldsson, which will focus on further development of Kvika’s operations in the UK. Ármann will continue his role as a board member in the bank’s subsidiaries in the UK and also take on specific assignments for Kvika. Gunnar Sigurðsson, CEO of Kvika Securities, will take a seat as a new member in the Kvika group management board.

Eiríkur Magnús Jensson has been appointed as CFO of Kvika banki. Eiríkur has worked for Arion banki and its predecessors since 1998, mainly in connection with the bank’s funding. In recent years Eiríkur has been head of treasury of Arion banki.

Part of the Commercial Banking division, along with the Investment Banking division, will form a new revenue division, Corporate Banking and Capital Markets. The new revenue division will emphasize Kvika’s unique position when it comes to servicing corporations and investors, and make it easier for the company to use its increased financial strength to better serve its customers. It is estimated that the new division will operate from 1 January 2023.

Following this change Kvika banki will operate two revenue divisions, on one hand Commercial Banking and on the other Corporate Banking and Capital Markets. Additionally, three revenue divisions are operated through Kvika’s subsidiaries: TM, Kvika asset management and Kvika Securities in the UK.

The managing director of Corporate Banking and Capital Markets will be Bjarni Eyvinds Þrastarson, the current managing director of Investment Banking. The division will operate four departments: securities- and FX brokerage, corporate finance, and corporate loans. Magnús Guðmundsson, current deputy managing director of Commercial Banking, will be deputy managing director of the new division and head of corporate loans. Vilhjálmur Vilhjálmsson will continue as head of FX brokerage. Erlendur Davíðsson has been appointed as new head of corporate finance. Erlendur has substantial experience in financial markets reaching back to 2005. In the past years he has worked independently as a corporate finance advisor and before that among other things as fund manager and head of equity funds with Kvika asset management as well as a corporate finance advisor at Arion banki.

Ragnar Páll Dyer has requested to resign as Kvika banki’s CFO. Ragnar will continue to hold his position as board member of the boards of both TM and Kvika Securities in London.

Baldur Stefánsson, managing director of corporate finance at Kvika banki, will resign his position in the coming weeks and intends to start his own business. A letter of intent has been signed to the effect that Kvika will be involved in the operation.

“Kvika has changed significantly in recent years. When I started working for the company employees were fewer than 90. They are now 350. Additionally, dozens of contractors work for the bank on developing innovations that will be introduced in the coming months. One of Kvika’s goals is to increase competition in financial markets and therefore we are constantly developing new products to increase variety and customer choices in the market.

The merger of Kvika and TM has exceeded expectations and financial goals were reached earlier than expected. It is natural that the groups growth and the experience from the merger calls for changes of the organizational structure that was decided leading up to the merger. I am very happy with the changes in place and believe that they will prepare us even better for continuing success.

I believe that by changing and sharpening the distribution of operations across revenue divisions we will achieve better results. A new Corporate Banking and Capital Markets division will be able to use the bank’s financial strength to better serve corporations and market participants than before. The Commercial Banking division will continue to focus on fintech solutions and continue development of various innovations that will increase competition in banking and payment services considerably.

Kvika is very fortunate to be joined by Eiríkur Magnús, one of the country’s strongest and most experienced specialist when it comes funding of banks. There are significant opportunities to improve the company’s terms of funding which further strengthens Kvika’s position in competition with other financial institutions. I also expect much of Erlendur, he is an experienced specialist and takes over a well established corporate finance department.

I would like to thank Ármann for his work for the company. Ármann and I both started working for Kvika in 2017, Ármann as CEO and I as deputy CEO. Two years later we changed chairs. It has been a great privilege to work with Ármann and I believe that the company would not be where it is today without him. Ármann’s experience is valuable and he has taught me a great deal. I am very happy that Ármann will still play an important role for the group and look forward to continue working with him in a new capacity.

Ragnar has worked for Kvika for a long time and taken an active role in the development of the company, first as CEO of Júpíter (now Kvika asset management) and following that as CFO. He has been CFO since I took on the role of CEO and has from that time been my closest colleague. Ragnar is a strong employee, manager and a friend. I am thankful for Ragnar’s great work and happy that he will continue to hold position as board member within the group.

Baldur is one of the first employees that I took part in hiring to the company. Baldur has been successful in building up the bank’s corporate finance department and during his time it has been a part of and closed multiple projects. For me one project during our time together stands out, when Baldur and I worked together advising the management of Icelandair on the refinancing of the company after the Covid-19 pandemic hit.

Sigurður and I have enjoyed a particularly good partnership since the merger of Kvika and TM and I look forward to working with him even more closely. He is an experienced manager and has reached great success in his work. I know that his experience and skills will be important for further development of the company.”

“After 15 successful and happy years with TM I look forward to new challenges at Kvika banki. Following the merger of TM and Kvika an increasing part of my work has been committed to matters of the group and therefore this is a logical step for both me and the company. I say goodbye to my great colleagues of many years at TM, but luckily, I won’t be going far.”  

The objective of the changes is to better prepare the company for continued operational success and to adjust its structure to a growing company which continues to lead increased competition and innovation in the financial market.

Changes to organizational chart and management team

At a board meeting on 18 August 2022, the Board of Directors and the CEO approved the interim financial statements of Kvika banki hf. (“Kvika”) for the period 1 January to 30 June 2022. 

Highlights of 6M 2022 Interim Financial Statements

Pre-tax profit amounted to ISK 2,167 million 

Pre-tax return on weighted tangible equity was 10.0%

Earnings per share for the period were ISK 0.35

Total assets amounted to ISK 287 billion

The group’s equity amounted to ISK 79 billion

The solvency ratio of the financial conglomerate was 1.28 and its capital adequacy ratio (CAR) for operations excluding insurance was 24.4% at the end of the period

Assets under management were ISK 457 billion

A meeting for shareholders and market participants was held at 16:15 on Thursday, 18 August in Kvika’s headquarters on the 9th floor at Katrínartún 2, 105 Reykjavík where the financial results were presented by Kvika’s management. 

Results Excluding Net Financial Income in Line with Published Outlook

Kvika’s pre-tax profit for the first six months of 2022 amounted to ISK 2,167 million. The return on weighted tangible equity before taxes was 10.0% for the period.

Net interest income amounted to ISK 3,426 million, increasing by 93% compared to the same period in the prior year. The increase in net interest income is primarily driven by the increased size and altered composition of the loan portfolio after the merger with Lykill fjármögnun and the acquisition of Ortus Secured Finance, and altered composition of liquid assets together with a favourable development in funding costs. Net impairments amounted to ISK 96 million during the period, compared to positive ISK 104 million in the first six months of 2021. Net financial income amounted to a loss of ISK 91 million during challenging circumstances in asset markets. Net fee and commission income amounted to ISK 3,219 million, a decrease of 8.4% from the year before. Operating expenses amounted to ISK 6,410 million for the first six months of the year, in line with expectations. 

Higher Combined Ratio of TM and Negative Return on Financial Assets

The combined ratio of TM was 99.9% during the first half of 2022, compared with 91.5% for the same period in the prior year. TM's investment income amounted to a loss of ISK 361 million during the first six months, making the return on the asset portfolio -1.0% over the period compared to 9.3% return in the first half of 2021.

Strong Balance Sheet and Liquidity Position

Total assets increased by 16% or ISK 41 billion during the first half of 2022 and amounted to ISK 287 billion at the end of June. Loans to customers grew by ISK 26 billion over the period and amounted to 98 billion at the end of the June. The increase is mostly attributable to the acquisition of Ortus Secured Finance Ltd. Balances with banks and the Central Bank of Iceland, together with government-guaranteed securities, amounted to ISK 74 billion and total liquid assets were ISK 108 billion, increasing by ISK 8 billion over the period. The group’s total liquidity coverage ratio (LCR) amounted to 229% at the end of the second quarter, well above the 100% minimum requirement.

The group’s total equity amounted to ISK 79 billion at the end of the period, compared to ISK 78 billion at the end of 2021. The solvency ratio of the financial conglomerate was 1.28 at the end of the first half and the group's risk-weighted capital adequacy ratio (CAR), excluding the effect of TM, amounted to 24.4%, while the capital requirement including capital buffers set by regulators is 20.6%. 

Share Buy-back Programme Initiated in May 2022 

During the period 19 May to 12 August Kvika bought 92,100,000 own shares, which corresponds to about 1.9% of issued shares in the company, for around ISK 1.8 billion. The purchase of own shares according to the buy-back programme, which was approved by Kvika’s board on 17 May 2022, will amount to a maximum of ISK 3 billion. 

Kvika’s earnings outlook for the next four quarters assumes a pre-tax profit of ISK 9.8 billion which equates to 23.4% return on weighted tangible equity. Further assumptions can be found in the attached investor presentation. 

“The first half of the year has been eventful, both for Kvika and its subsidiaries, financial markets and the world as a whole. In times like these it is good to see decisions to diversify operational risk come to fruition, as Kvika delivered positive results in the second quarter of 2022 despite very difficult market circumstances, which significantly affected net financial income. Further, core operations continue to strengthen and, apart from net financial income, results were in-line with published outlook.

Exciting projects are ahead, in May it was announced that Kvika intended to create a subsidiary for payment facilitation following an acquisition of merchant agreements, which will create significant market share for the subsidiary. Also, at the beginning of the year Kvika acquired a majority share in Ortus, which specialises in property backed bridge financing in the UK, as operations in the UK are be expected to slowly have an increased effect on consolidated returns. Further, another large step was taken in May when Kvika was assigned its first credit rating by international ratings agency Moody’s which opens new possibilities in regard to funding and enables Kvika to continue to be successful by creating increased competition with other financial institutions. An example is the Auður deposit platform which I was especially happy to see grow by over 50% since year-start.

We are optimistic about the second half of the year and excited to encounter the opportunities and challenges ahead. Alongside the financial results, Kvika issues an updated earnings outlook for the next 12 months, per the methodology initiated at the beginning of the year, which expects further growth in Kvika’s earnings.” 

Kvika - Condensed Interim Consolidated Financial Statements 30.06.22

Financial Results for the First Six Months of 2022 and Earnings Outlook for the Next Four Quarters

Kvika has published its sustainability report for 2021. The report marks a turning point as this is the first time Kvika has published such a report. Until now, ESG reports have been published annually, but such information is now part of the sustainability report.

The sustainability report is based on Nasdaq's ESG Reporting Guide 2.0, along with taking GRI standards into consideration and responding to relevant indicators. Deloitte has provided a limited assurance opinion on Kvika's non-financial disclosures for 2021. This opinion is released at the same time as the report.

The report is published along with the consolidated financial statements of Kvika and its subsidiaries, and it provides a comprehensive picture of how Kvika is working towards sustainability and social responsibility on a consolidated basis. The issues that are foregrounded by Kvika and its subsidiaries, as Kvika's CEO mentions in his address:

“Kvika emphasizes long-term thinking, simplicity, and courage in its operations. The policy formulation for the new group, resulting from the merger of Kvika with TM and Lykill, has led to an increased emphasis on sustainability in our operations. One of the principles that guides us is that we are responsible participants in society, and so work towards increased sustainability in our core operations.”

– Marinó Örn Tryggvason, CEO of Kvika

Sustainability Report 2021

The report marks a turning point as this is the first time Kvika has published such a report.

Kvika Publishes Its Sustainability Report

At a board meeting on 24 February 2022, the Board of Directors and the CEO approved the annual financial statements of the Kvika banki hf. (“Kvika”) group for the year 2021.

Pre-tax profit amounted to ISK 10,487 million (ISK 12,004 million including the profit of TM hf. and Lykill fjármögnun hf. in Q1)

Pre-tax return on weighted tangible equity was 34.7% (35.2% after tax)

Earnings per share for the period were ISK 2.62

The group’s equity amounted to ISK 78 billion

The solvency ratio of the financial conglomerate was 1.57 and its capital adequacy ratio (CAR) was 33.8% at the end of the period

Overall group liquidity coverage ratio (LCR) was 290%

Total assets under management were ISK 528 billion

Kvika’s Sustainability Report for the year 2021 is published parallel to the publishing of the Annual Financial Statements

A meeting for shareholders and market participants will be held at 16:15 on Thursday, 24 February in the bank's headquarters on the 9th floor at Katrínartún 2, 105 Reykjavík where the financial results will be presented by Kvika’s management. The presentation will be conducted in Icelandic and a live stream can be accessed here. Additionally, a recording with English subtitles will be made available on Kvika’s website

Good Performance Across All Segments

The pre-tax profit of the Kvika group in the year 2021 amounted to ISK 10,487 million. As the merger of Kvika, TM hf. (“TM”) and Lykill fjármögnun hf. (“Lykill fjármögnun”) took place at the end of March, the operations of TM and Lykill fjármögnun are not included in the consolidated income statement for the first three months of the year. The pre-tax profit of TM and Lykill fjármögnun in the first quarter amounted to ISK 1,518 million, making the combined pre-tax profit of Kvika, TM and Lykill fjármögnun ISK 12,004 million for the year.
The return on weighted tangible equity before taxes was 34.7% for the year.
Net interest income of Kvika group amounted to ISK 4,646 million, increasing by 158% compared to the year before, with the increase in interest income primarily resulting from increased size of the loan book after the merger with Lykill fjármögnun, the altered composition of the loan portfolio and liquid assets, together with favourable trend of funding costs. Net impairment amounted to positive ISK 139 million during the year, compared with negative net impairment of ISK 317 million in 2020. Net financial income amounted to ISK 5,672 million, as returns were good in most of the asset markets where the group is active. Fees and commissions continued to grow, with net fee and commission income amounting to ISK 6,828 million, an increase of 15% from the year 2020. Amortization of intangible assets arising from purchase price allocation amounted to ISK 319 million during the year.

Low Combined Ratio of TM and Good Return on Financial Assets

The combined ratio of TM was 87.2% in Q4, compared with 94.9% for the same period in 2020. The insurance company's investment income amounted to ISK 1,291 million in Q4, making the return on the asset portfolio 3.7% during the period. The combined ratio of TM for the full year 2021 was 88.7% and investment income was 17.7%.

The total assets of the Kvika group increased by 100% or ISK 123 billion during the year 2021 and amounted to ISK 246 billion. Customer loans grew by ISK 42 billion, with the increase largely due to the merger. The share of loans to individuals grew from 19% to 44% of all lending by the end of the period. Balances with banks and the Central Bank of Iceland, together with government-guaranteed securities, amounted to ISK 65 billion and total liquid assets were ISK 100 billion, increasing by ISK 724 billion over the year. The group's total liquidity coverage ratio (LCR), excluding insurance operations, amounted to 290% at the end of the year, which was well above the 100% minimum requirement.
The group’ equity increased with the merger of Kvika, TM and Lykill fjármögnun, amounting to ISK 78 billion at the end of the year, compared to ISK 19 billion at the end of 2020. The solvency ratio of the financial conglomerate (Kvika and subsidiaries, including TM tryggingar hf.) was 1.57 at the end of the year and the group's risk-weighted capital adequacy ratio (CAR), excluding the effect of TM tryggingar hf., amounted to 33.8%, while the capital requirement including capital buffers set by the regulators is 20.6%.

Acquisition of Ortus Secured Finance Completed

Kvika has completed the acquisition, through its UK subsidiary Kvika Securities Ltd. ("KSL"), of a majority shareholding in alternative lender Ortus Secured Finance Ltd. (“Ortus”) from Stoðir hf. and other minority shareholders, following the signing of Heads of Terms in late October 2021. Following the transaction, Kvika holds close to 80% of Ortus’ ordinary shares, having first acquired a minority share of 15% in 2018. The transaction will increase Kvika group’s total consolidated assets by over 7%. For 2022, Ortus is expected to generate profit before tax of ca. ISK 900 million equivalent. The acquisition has no impact on 2021 financial results. Details of the transaction can be found in a release dated 24 February 2022.

Change in the Executive Management of Kvika Group

The organizational chart of the group has been simplified and now consists of four main operating segments: Commercial Banking, Investment Banking, Asset Management and Insurance. Investment Banking consists of Capital Markets and Corporate Finance, which will however continue to be operated separately, in accordance with legal requirements. Bjarni Eyvinds Þrastarson will be the Managing Director of Investment Banking and Baldur Stefánsson will continue to run Corporate Finance.

Kvika Publishes Its First Sustainability Report

Parallel to the publication of the Annual Financial Statements, Kvika has published the company’s first Sustainability Report. Previously, ESG Reports have been published on an annual basis, but the information contained therein is now part of the Sustainability Report. The report provides a comprehensive picture of how the company works towards sustainability and social responsibility on a consolidated basis. The report is based on Nasdaq's ESG Reporting Guide 2.0 but also takes into account the GRI standards and the relevant indicators are answered. The Allocation and Impact Report for 2021 in connection with Kvika's Green Financial Framework is published as part of the Sustainability Report. Deloitte's opinion, provided on selected information with limited certainty, can be found on Kvika's website.

Earnings Estimate for 2022

The earnings forecast for the Kvika group for the year 2022 assumes a pre-tax profit of ISK 8.0 – 9.0 billion which equates to 18.3% - 20.6% return on weighted tangible equity of the group. The earnings estimate includes ISK 376 million in amortization of intangible assets due to purchase price allocation.

Marinó Örn Tryggvason, CEO of Kvika:

“The year 2021 was eventful for Kvika, as during the year, the bank merged with TM and Lykill fjármögnun. The merger has exceeded expectations and achieving financial goals has been gone better than originally expected.
The merged entity is financially robust, is built on solid foundations and has significant opportunities for growth. Kvika intends to be a leader in revolutionizing financial services in Iceland and increasing competition. With the acquisitions of the financial technology companies Aur and Netgíró last year, the number of customers increased significantly.
Sustainability also gained increased importance within the company and I am happy to see Kvika's first sustainability report come to light. The report provides a comprehensive picture of the group’s efforts and how Kvika approaches sustainability and social responsibility. Another milestone was reached last autumn when the bank published its first Green Financial Framework. Subsequently, the bank's first green bond was issued for which demand far exceeded our expectations."
Kvika is in a unique position as the company has a small market share in many of its key business areas, while possessing significant financial strength, a large number of customers and the infrastructure to increase its market share.
Last December, the company announced seven goals for the next three years, so the company's strategy is clear. The goals include increasing the number of fintech users across brands, increasing the market share in Insurance and Asset Management, increasing the importance of the UK operations, improving the bank's financing terms, being a responsible participant in society and delivering continued profitable operations.
In accordance with this strategy, the majority of British alternative lender Ortus Secured Finance's share capital has been acquired, which I believe could be one of the most interesting acquisitions that the Kvika group has made.”


Financial results for the year 2021

Kvika Bank, Kvika Asset Management and Klappir Green Solutions sign a letter of intent to establish a Climate Fund.

The purpose of establishing the fund is to create a platform for investors to come together and invest in land reclamation, which includes mitigation measures for climate change. Such land reclamation will initally focus on certified forestry, and later also other mitigation measures, including wetland restoration and other measures to reduce land use emissions, in parallel with producing certified carbon units.

News

15. February 2023

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