Financial and Mortgage Portfolio Overview
Impairment reversals continued in 2Q22
Majority of forborne borrowers have resumed payments
Highlights
Reserve coverage ratio (RCR)
for impairment allowance on
Stage 3 was 24% at end of
2Q22
1.8
2.0
0.2
1.1
0.4
0.5
0.3
Net impairment on financial assets
By period, ISKbn
■Changes in models
A few distressed credit cases
■General economic environment
■Other changes in loan portfolio
Addition due to COVID-19 pandemic
Loans to customers: Stage 2 and 3 (NPL)
Development of gross carrying amount as ratio of total loans
2.1%
2.0%
■Stage 2 Stage 3
The RCR fell when a disputed
1.0
0.5
-0.5
loan that had been fully impaired
-1.1
1.1
-0.6
2.0%
1.0
-1.8
-0.6
0.2
was paid up following a
0.6
0.2
0.2
0.4
0.0
0.1
02
1.8%
favourable court ruling
-0.3
-0.4
-0.3
13.7%
13.0%
1.8%
-0.2
-0.8
-0.9
-0.8
-1.1
-0.6
The definition of forbearance
9.6%
includes a 24-month probation
-1.0
-0.2
7.2%
-0.6
5.6%
-0.4
period. Therefore, loans are
classified as forborne even after
normal payments have
resumed
-0.5
-2.0
3Q20
4Q20
1Q21
2Q21
3Q21
4Q21
1Q22
2Q22
30/6/21
30/9/21
31/12/21
31/3/22
30/6/22
Loans amounting to ISK 66bn
(80% of total) are expected to
exit forbearance probation in
2022
Current and expected cost-of-risk
Annualised cost of risk was -20bp in 2Q22 compared to -42bp for 2Q21
Additional impairment allowance currently attributable to the tourism overlay and
stage transfer is approx. ISK 0.9bn at end of 2Q22 down from 2.0bn at YE21
The probability weights of economic scenarios were shifted to 20% (good), 50%
(baseline), and 30% (bad) at end of 2Q22. A shift of 5% from baseline to the bad
scenario would increase the impairment allowance by ISK 0.3bn while a 5% shift
from the baseline to the good would decrease the allowance by ISK 0.15bn
In 2Q22 a total of approximately ISK 750m of impairment reversals was a result of
a favourable court ruling regarding a fully impaired loan
Performing loans with forbearance
Gross carrying amount, ISKbn
105
94
44
62
60
110
83
60
60
57
57
42
37
13
26
19
9
30/6/20
6
31/12/20
■Individuals
8
30/6/21
Other companies
8
31/12/21
■Tourism
30/6/22
10
August-September 2022View entire presentation