Islandsbanki Hf · OMXICE:ISB
Islandsbanki Hf — Q2 2026 Earnings Presentation
54 slides from Islandsbanki Hf's earnings presentation, Jul 30, 2026
Slide 1: 2Q26 Financial Results
2Q26 Financial Results 30 July 2026 Jón Guðni Ómarsson Chief Executive Officer Ellert Hlöðversson Chief Financial Officer
Slide 2: Financial metrics tracking in excess of target
30 July 2 Financial metrics tracking in excess of target High inflation continues to positively impact net interest income ROE in excess of updated financial target C/I in line with target despite one-offs Considerable excess capital remains ROE1 C/I ratio2,3 Total capital ratio4 41.0% 43.5% 43.1% 3
Slide 3: YTD returns in excess of guidance and medium-term target
30 July 3 YTD returns in excess of guidance and medium-term target ROE guidance for 2026 revised upwards to being in excess of 12.5% Loans to customers and Medium- 2026 revenue, in general to grow in 2Q26 1H26 line with nominal GDP through term target Guidance* the business cycle while international
Slide 4: GDP growth regains steam after a subdued 2026
30 July 4 GDP growth regains steam after a subdued 2026 Persistent inflation forces the Central Bank to hold rates high for longer Slow GDP growth in the near term, gaining pace later on… ...as exports return to more robust growth from 2026 after a soft patch Real GDP and main subitems, YoY change,
Slide 5: Structural headwinds to profitability
30 July 5 Structural headwinds to profitability Higher bank taxes weigh on returns Tax charges relative to operating income1 • Proposed tax changes could further weaken Icelandic banks’ competitive position relative to pension funds and international financial institutions Selected Nordic banks, 202
Slide 6: Deepening retail customer relationships
30 July 6 Deepening retail customer relationships Loyalty Services gaining traction • Adoption has climed steadily since launch on 19 March, reaching 50 thousand customers in June • 10,000 customers have opened a Loyalty savings account Record momentum in pension savings inflows • Framtíðarauður hit
Slide 7: Stable leadership in Business Banking
30 July 7 Stable leadership in Business Banking Strong team securing highest NPS score amongst domestic peers Stable market share, highest among peers1 New financing: • Ergo will provide inventory financing for new and used 37% market share vehicles as well as day-to-day banking. 40% in the capital
Slide 8: Strong start to the first half of the year
30 July 8 Strong start to the first half of the year Corporate and Investment Banking has seen success in the first six months of the year Financing of a new pelagic vessel #1 in turnover on Nasdaq • The vessel of Skinney-Þinganes arrived in port in Hornafjörður in May Iceland in equities and bonds
Slide 9: A balance between digital solutions and personalised services
30 July 9 A balance between digital solutions and personalised services Significant milestones with improved in-app access of fund overview and fund subscriptions 2Q26 AI highlights App improvements • In-app access to fund 87% of employees overview and fund are active users of subscriptions approved
Slide 10: Íslandsbanki Reykjavík Marathon
30 July 10 Íslandsbanki Reykjavík Marathon Largest charitable event in Iceland annually 22 August 2026 ISK 327 million raised in 2025 Over ISK 2 billion since 2006 Íslandsbanki 2Q26 Financial Results
Slide 11: Financial Overview
30 July 11 Financial Overview Íslandsbanki 2Q26 Financial Results
Slide 12: Strong NII growth on back of inflationary effects
30 July 12 Strong NII growth on back of inflationary effects Core operating income grew by 5.9% between years Profit for the period – 2Q25 vs 2Q26 ISKm 1,400 (362) (41) (834) (856) 570 7,069 7,192 2Q25 Net interest income Net fee & Other operating Operating expenses Impairments Income tax 2Q26 commi
Slide 13: NIMs improving YoY despite slightly lower inflationary ticks in the quarter
30 July 13 NIMs improving YoY despite slightly lower inflationary ticks in the quarter Growth in international lending and strong margin control providing NIM uplift Net interest income Net interest income – YoY comparison Highlights Business segments, ISKm 17,100 ISKm • Net interest margin was 3.4%
Slide 14: Net fee and commission income continues to be pressured
30 July 14 Net fee and commission income continues to be pressured Income from capital markets and payment processing reducing year-on-year while loans and guaranties grow Net fee and commission income Net fee and commission income – YoY comparison Highlights Business segments, ISKm ISKm • Net fee a
Slide 15: Market risk exposure continues to be a limited part of the Bank's operations
30 July 15 Market risk exposure continues to be a limited part of the Bank's operations Loss on NFI mostly related to equities due to adverse market conditions Net financial income (expense) Shares and equity instruments1 Highlights ISKm ISKbn • Net financial expense of ISK 94m 404 was recorded in t
Slide 16: Cost-to-income ratio remains within target for 1H26
30 July 16 Cost-to-income ratio remains within target for 1H26 One-off expenses amounting to ISK 370 million recognised during the second quarter Administrative expenses Cost-to-income ratio1,2 Highlights ISKm 8,344 43.1% • Salaries and related expenses rose 7,830 8,060 43.5% 7,261 433 by ISK 807m y
Slide 17: Simple balance sheet with good loan and funding profiles
30 July 17 Simple balance sheet with good loan and funding profiles All liquid assets marked to market Simplified balance sheet structure 30.6.2026, ISK 1,788bn Assets • Vast majority of assets consist of Deposits from credit lending to both retail and corporates Cash in Central Bank institutions an
Slide 18: Loan book composition remains healthy
30 July 18 Loan book composition remains healthy YTD growth amounts to 3.7% or 7.5% on an annual basis Loans to customers Loans to customers Highlights By business division, ISKbn By sector, with tourism as a separate sector • Around 94% of the loan book are Individuals other 1,365 1,401 1,416 5% 5%
Slide 19: Despite economic slowdown, asset quality remains high
30 July 19 Despite economic slowdown, asset quality remains high Increase in Stage 3 among other related to exposures in the construction sector Net impairment on financial assets Loans to customers: Stage 2 and 3 (NPL) Highlights By period, By period,ISKbn ISKbn Development of gross carrying amount
Slide 20: Diversified funding mix, deposit growth moderates
30 July 20 Diversified funding mix, deposit growth moderates Strong deposit position allows for a more flexible wholesale funding approach Funding sources Customer loans to customer deposits ratio Highlights By type, % of total liabilities and equity Development, % • Overall deposits levels grew by
Slide 21: Strong liquidity position, ratios well above requirements
30 July 21 Strong liquidity position, ratios well above requirements Liquid assets 18% of the total balance sheet and fully marked-to-market Total liquidity coverage ratio (LCR) Liquidity coverage ratio for ISK Highlights 300% 200% • All liquidity measures well above 151% regulatory requirements 188
Slide 22: The Bank is fully MREL funded throughout the year
30 July 22 The Bank is fully MREL funded throughout the year Good diversification of funding sources across products and maturities, as well as across investor types and locations Sources of borrowings, ISKbn Contractual maturity profile of borrowings 30.06.26, ISKbn 220 Highlights 503 485 481 17 45
Slide 23: Capitalisation remains strong end of the quarter
30 July 23 Capitalisation remains strong end of the quarter Total distribution capacity amounts to ISK 23.1bn as of now Current regulatory requirements and minimum capital target Capital and leverage ratios Highlights 30.6.2026, by capital composition % of REA (% of total exposure for leverage ratio
Slide 24: Strong performance, strong excess capital position, updated guidance for 2026
30 July 24 Strong performance Strong excess capital position Updated guidance for 2026 13.4% 11.1% Excess CET1 ROE ROE >12.5% ISK 23.1bn Return on Equity 1H25 1H26 Íslandsbanki 2Q26 Financial Results
Slide 25: Q&A
30 July 25 Q&A Íslandsbanki 2Q26 Financial Results
Slide 26: Appendix I
30 July 26 Appendix I About Íslandsbanki and additional financial information Íslandsbanki 2Q26 Financial Results
Slide 27: This is Íslandsbanki
30 July 27 Sustainability in 2Q26 Ratings and This is Íslandsbanki Íslandsbanki maintained its certifications Exceptional ESG rating, of A3, We empower our customers to be a force for good Sustainability risk from Reitun, an Icelandic rating agency integrated into A3 Stable outlook Íslandsbanki's su
Slide 28: Financial overview
30 July 28 Financial overview Key figures & ratios 2Q26 1Q26 4Q25 3Q25 2Q25 PROFITABILITY Profit for the period, ISKm 7,069 7,456 5,947 6,901 7,192 Return on equity 13.3% 13.6% 10.5% 12.2% 13.0% Net interest margin (on total assets) 3.4% 3.9% 2.9% 3.1% 3.3% Cost-to-income ratio1 43.1% 38.5% 43.5% 38
Slide 29: Income statement
30 July 29 Income statement Income statement, ISKm 2Q26 2Q25 ∆% 1H26 1H25 ∆% Net interest income 15,281 13,881 10% 32,381 26,820 21% Net fee and commission income 3,258 3,620 (10%) 6,526 6,687 (2%) Net financial income (expense) (94) 13 - (307) (973) (68%) Net foreign exchange gain 267 71 276% 424 1
Slide 30: Íslandsbanki's MREL requirement
30 July 30 Íslandsbanki's MREL requirement A resolution plan approved for the Bank on 17 October 2025 Minimum Requirement for Own Funds and Eligible MREL Development, % • The Icelandic Resolution Authority Liabilities (MREL), 30.6.2026 approves annually a resolution plan for the Bank. The Resolution
Slide 31: Assets
30 July 31 Assets Asset base mainly consists of loans and liquid assets Assets, ISKm 30.6.26 31.3.26 Δ Δ% 31.12.25 Δ Δ% Cash and balances with Central Bank 91,559 88,909 2,650 3% 80,394 11,165 14% Loans to credit institutions 65,288 79,739 (14,451) (18%) 80,009 (14,721) (18%) Bonds and debt instrume
Slide 32: Liabilities and equity
30 July 32 Liabilities and equity Deposits continue to be the largest source of funding Liabilities & Equity, ISKm 30.6.26 31.3.26 Δ Δ% 31.12.25 Δ Δ% Deposits from Central Bank and credit institutions 17,664 11,419 6,245 55% 13,250 4,414 33% Deposits from customers 1,038,206 1,013,431 24,775 2% 968,
Slide 33: Loan book composition remains healthy
30 July 33 Loan book composition remains healthy Portfolio based on robust credit culture and very high collateralisation Loans to customers Loans to customers Highlights By business division, ISKbn By sector, with tourism as a separate sector • Around 94% of the loan book are Individuals other 1,36
Slide 34: Despite economic slowdown, asset quality remains high
30 July 34 Despite economic slowdown, asset quality remains high Increase in stage 3 among other related to exposures in the construction sector Net impairment on financial assets Loans to customers: Stage 2 and 3 (NPL) Highlights By period, ISKbn Development of gross carrying amount as ratio of tot
Slide 35: Nominal rate mortgages gaining momentum
30 July 35 Nominal rate mortgages gaining momentum Nominal fixed rate imbalance effectively run of by now – CPI related fixed rate imbalance still remains Mortgage portfolio Interest rate reset profile for NIL 3-5y fixed rate Highlights By interest rate type, gross carrying amount, ISKbn mortgages •
Slide 36: Increase in Stage 3 relates to slower new construction market
30 July 36 Increase in Stage 3 relates to slower new construction market Occupancy ratios high for domestic commercial real estate companies Development of exposure to real estate companies Development of construction exposure Highlights Gross carrying amount by period, ISKbn Gross carrying amount b
Slide 37: Appendix II
30 July 37 Appendix II Icelandic economy update Íslandsbanki 2Q26 Financial Results
Slide 38: GDP growth regains steam after a subdued 2026
30 July 38 GDP growth regains steam after a subdued 2026 Persistent inflation forces the Central Bank to hold rates high for longer Slow GDP growth in the near term, gaining pace later on… ...as exports return to more robust growth from 2026 after a soft patch Real GDP and main subitems, YoY change,
Slide 39: The Icelandic economy and society draw on many strengths
30 July 39 The Icelandic economy and society draw on many strengths Icelanders enjoy high standards of living in a modern, open and egalitarian society Iceland ranks highly on a variety of global Income inequality is low compared to OECD peers Sustainable energy usage is prevalent development benchm
Slide 40: Upward-sloping GDP growth path after a subdued 2026
30 July 40 Upward-sloping GDP growth path after a subdued 2026 Temporary lull caused mainly by a brief setback in exports and a high real interest rate Highlights GDP and contribution of its subcomponents GDP and contribution of its subcomponents • Economic growth returned in 2025, with Volume chang
Slide 41: Tourism to languish while other export sectors blossom
30 July 41 Tourism to languish while other export sectors blossom Tepid growth in established export pillars; growth in intellectual property and aquaculture takes the lead Highlights Export revenues, by key sector Exports and contribution from subcomponents • Tourism outperformed expectations in IS
Slide 42: External trade on the mend
30 July 42 External trade on the mend Modest current account deficit over the horizon, but high real exchange rate is a barrier to equilibrium Highlights Imports and contribution from subcomponents Current account balance % change % of GDP • Imports are forecast to contract by 0.6% in 2026, mainly d
Slide 43: ISK stable but will probably soften over time
30 July 43 ISK stable but will probably soften over time High real exchange rate challenges the export sector, putting downward pressure on the nominal ISK rate Highlights ISK exchange rate ISK exchange rate and real exchange rate • The ISK has been remarkably stable Major currency exchange rates ag
Slide 44: Domestic balance sheets remain broadly robust
30 July 44 Domestic balance sheets remain broadly robust Private sector debt ratios are stable, and public debt is on a more favourable trajectory than many major economies Private sector debt Corporate debt % of GDP % of GDP 400 300 350 250 300 250 200 200 150 150 100 100 75 50 50 70 0 0 2003 2005
Slide 45: Investment to dip temporarily in 2026
30 July 45 Investment to dip temporarily in 2026 A turning point in data-centre development and a challenging rate environment weigh on the near-term outlook Highlights Business investment and related indicators • Investment has risen over the past five Investment, real change, and contribution of s
Slide 46: Unemployment to peak in 2026
30 July 46 Unemployment to peak in 2026 Highlights Wage developments will be shaped by long-term contracts, and wage drift will be limited • Unemployment has risen steadily since the end of 2025 and currently stands at 4.6%, its highest level since 2021. It is expected to ease over the summer but Wa
Slide 47: Private consumption growth to continue in 2026, but at a slower pace
30 July 47 Private consumption growth to continue in 2026, but at a slower pace Real wage growth and sizeable accumulated savings will support household consumption in the coming term Highlights Consumer confidence index and card turnover Private consumption and related indicators • Private consumpt
Slide 48: The real estate market has been impacted by high interest rates
30 July 48 The real estate market has been impacted by high interest rates Tighter monetary policy has cooled the market with real residential house prices declining in recent quarters Capital area house prices relative to macroeconomic fundamentals Residential house prices and turnover Index, Janua
Slide 49: The Icelandic housing market is quite flexible as conditions change
30 July 49 The Icelandic housing market is quite flexible as conditions change Supply, demand, mortgage market factors combine to make a large price correction less likely Households are not highly indebted compared to peers Mortgage market is flexible w.r.t. loan types with different payment burden
Slide 50: Inflation remains stubbornly above target
30 July 50 Inflation remains stubbornly above target Rising uncertainty as the Persian Gulf conflict drags on Highlights Inflation and the CBI inflation target MoM CPI change and 12m trailing inflation • Inflation remained persistent in 2025, % % hovering close to the 4% upper deviation threshold of
Slide 51: Central Bank in a tight spot, likely to keep policy rates high
30 July 51 Central Bank in a tight spot, likely to keep policy rates high One further policy rate hike expected in 2H26, with rate cuts to resume in 2027 Highlights Policy rate and inflation Key interest rates %, Real policy rate based on 12m forward forecast %, average per year • After easing from
Slide 52: Iceland's credit rating on a secular upward path
30 July 52 Iceland's credit rating on a secular upward path Rating companies acknowledge the flexibility of the economy and improving public debt metrics Development of sovereign credit rating Fitch in Dec-17: Moody's in Nov-19: Moody's in Sep-24: AAA/Aaa Rating upgrade to A on economic Upgrade to A
Slide 53: Disclaimer
30 July 53 Disclaimer This presentation is for information purposes only and shall not be construed as an The forward-looking statements represent Íslandsbanki's current expectations, plans offer or solicitation for the subscription or purchase or sale of any financial or forecasts of its future res
Slide 54: 30 July Íslandsbanki 2Q26 Financial Results
30 July 54 Íslandsbanki 2Q26 Financial Results