15. February 2023

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

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
  • Total assets amounted to ISK 303 billion
  • 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:


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%.

Updated Earnings Outlook

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.

Marinó Tryggvason, CEO of Kvika:

“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.”

pdfKvika - 12M 2022 Presentation

pdfKvika - Consolidated Financial Statements 31.12.2022