Kvika banki hf.: Financial Results for Q1 2025

Core Viewpoint - Kvika banki hf. reported strong financial performance in Q1 2025, with significant increases in net interest income and post-tax profit, despite some challenges in fee and commission income [5][7][11]. Financial Performance - Post-tax profit for Q1 2025 was ISK 2,086 million, a 92.6% increase from ISK 1,083 million in Q1 2024 [7]. - Pre-tax profit from continuing operations, adjusted for non-recurring items, was ISK 1,590 million, up 31% from ISK 1,215 million in Q1 2024 [7]. - Net interest income rose to ISK 2,917 million, reflecting a 25.4% increase from ISK 2,326 million in Q1 2024 [7]. - Net interest margin improved to 4.4% in Q1 2025 from 3.8% in Q1 2024, attributed to strong liquidity and a growing loan book [7]. - Earnings per share increased to ISK 0.45 in Q1 2025, compared to ISK 0.23 in Q1 2024 [7]. Balance Sheet Highlights - Customer deposits increased to ISK 168 billion, a 2.8% rise from ISK 163 billion at year-end 2024 [8]. - Loans to customers grew to ISK 161 billion, marking a 6.9% increase from ISK 150 billion at year-end 2024 [8]. - Total assets decreased to ISK 343 billion, down 3.4% from ISK 355 billion at year-end 2024 [8]. - Total equity was ISK 68 billion, significantly reduced due to the sale of TM, with a capital adequacy ratio of 23.9% [8]. Strategic Developments - The successful sale of TM tryggingar hf. to Landsbankinn resulted in over ISK 32 billion returned to shareholders through dividends and share buybacks [6]. - The acquisition of the remaining management stake in Ortus Secured Finance was completed, enhancing the bank's UK operations and growth potential [9]. - The bank's infrastructure has been adapted post-TM sale, positioning it for continued growth in both Iceland and the UK [13]. Operational Insights - Administrative expenses rose to ISK 3,090 million, a 15.9% increase from ISK 2,666 million in Q1 2024, but adjusted operating expenses were lower at ISK 2,865 million [7][12]. - Fee and commission income decreased to ISK 1,520 million, down 6.9% from ISK 1,633 million in Q1 2024, reflecting challenging market conditions [7][12]. - The bank's liquidity coverage ratio was 279%, down from 360% at year-end 2024, indicating a shift in liquidity management following the TM sale [8].