Key Financial Indicators and Balance Sheet Analysis Q1 2023
Real Estate Sector
Diversified portfolio
Overall real estate related lending in the corporate loan book
comprises a total of 105bn or around 9.4% of the loan book
with an average LTV of 66%.
The portfolio is highly diversified
52% of the portfolio comes from SME retail exposures (<
ISK 600m per loan)
The portfolio is mostly towards companies that lease
properties to operating companies within the same group
(parent, subsidiaries or sister companies).
Exposure to office real estate is small or around 12bn or
1% of the loan book. More than half of financed office real
estate is on long-term lease to government institutions
Over the past couple of years, the portion of borrowers with CPI
linked loans have decreased significantly. With the recent hikes
in interest rates these companies have the option of moving
back to CPI linked products to manage increased debt service
levels.
Loans to customers (ISK bn)
Loans to real estate companies are approx. 9.4% of total loans to
customers and 1.1% are against office buildings
Total loan portfolio
Borrower type
The Bank is primarily focused on CRE exposures that are
owned and occupied by operational companies that are
customers of the Bank
% of Total
Loans to
customers
28.0
2.5%
19.3
1.7%
11.9
1.1%
Property
management
39%
20.1
18.8
1.8%
1.7%
OpCo/PropCo
61%
6.5
0.6%
104.6
9.4%
ISK billions
Residential
Retail
Office
OLI
Industrial
Hotel
Total loans to CRE
91%
ISK
1.114bn
8%
1%
NON Office CRE Office CRE
Mixed Use
NON CRE
Development of indexed loans and 90 days past due
It is highly likely that customers will revert back to indexed loans if
interest rates remain high. Historically the portfolio's indexation ratio has
exceeded 50%. The delinquency rate remains low
8%
Debt servicing: Indexed vs. floating rate
Companies have the option of moving into ISK indexed. The graph
below shows the monthly debt service of ISK 1m debt in various form
20
70%
7%
60%
6%
50%
5%
40%
4%
30%
3%
20%
5.678
2%
10%
1%
0%
0%
Q1 20Q2 20Q3 20Q4 20Q1 21Q2 21Q3 21Q4 21Q1 22Q2 22Q3 22Q4 22Q1 23
Indexation ratio of portfolio (right axis)
90 days past due ratio
CBI policy rate
9.429
7.042
5.591
Floating, maturity
25 years,equal
amortization,
lowest interest rate
2021
Floating, maturity
25 years,equal
amortization,
current interest
rate
Indexed, maturity
25 years, equal
principal
payments, indexed
rate
Indexed, maturity
25 years, equal
amortization,
indexed rateView entire presentation