Islandsbanki Hf · OMXICE:ISB
Islandsbanki Hf — Q2 2025 Earnings Presentation
52 slides from Islandsbanki Hf's earnings presentation, Jul 31, 2025
Slide 1: 2Q25 Financial Results
2Q25 Financial Results 31 July 2025 Jón Guðni Ómarsson Chief Executive Officer Ellert Hlöðversson Chief Financial Officer
Slide 2: Core operating income grew by 11.5% year-on-year
31 July 2025 2 Core operating income grew by 11.5% year-on-year All core revenue streams performing in excess of previous year ROE in excess of analyst consensus Considerable excess capital in place ROE Total capital ratio 13.2% 13.0% 23.1% 23.4% 23.2% 21.6% 11.2% 21.5% 9.7% 9.4% 19.9% 20.2% 20.1% 1
Slide 3: Capital optimisation an ongoing priority for the Bank
31 July 2025 3 Capital optimisation an ongoing priority for the Bank Month-by-month fluctuations expected as the economy reaches an equilibrium 2025 Guidance Target 2Q25 1H25 Loans to customers and revenue, in general to grow in line with nominal GDP through the business cycle Return on ROE in 2025
Slide 4: Economy lifting off gradually after a brief touch-down
31 July 2025 4 Economy lifting off gradually after a brief touch-down A new business cycle following mild GDP contraction likely to bring healthy growth Economic growth to accelerate gradually following mild contraction.. ..and housing market remains resilient in the face of high real rates Real GDP
Slide 5: Solid start to the year across all business segments
31 July 2025 5 Solid start to the year across all business segments Personal Banking Business Banking Corporate & Investment Banking Growth in deposits ISK 5.9 Empowering SME customers Securities Sales continue to billion during 2Q25 across the country in various hold a market-leading role sectors,
Slide 6: Íslandsbanki 1H2025
31 July 2025 6 Sale of Government's stake in the Bank Lending outside of Iceland Highest market share completed in May, attracting more within CIB has grown YTD in turnover on Nasdaq than 31,000 individuals as and is now 7% of CIB loan Iceland in equities and participants portfolio total turnover YT
Slide 7: Full sale of Government's stake completed in a successful FMO
31 July 2025 7 Full sale of Government's stake completed in a successful FMO Lion's share of the remaining 42.5% stake sold to individuals during a May transaction Íslandsbanki's shareholders Number of shareholders still >30,000 following FMO Shareholders of ≥ 1% of the Bank's 35,000 shares, 30.6.25
Slide 8: Our commitment to companies and investors continues
31 July 2025 8 Our commitment to companies and investors continues Lively activity and milestone projects concluded with a continued strong pipeline in Corporate Finance Strong cross-functional culture paves the #1 investment bank in Iceland, way for the success of our customers leading in all categ
Slide 9: Business Banking reaching new heights
31 July 2025 9 Business Banking reaching new heights Strong team delivering meaningful milestones securing highest NPS score amongst domestic peers NPS and market share reaching Continued commitment to record heights1 businesses across the country 39% market share New lending: Forest Lagoon expansio
Slide 10: Digital innovation soaring in the first half of 2025
31 July 2025 10 Digital innovation soaring in the first half of 2025 New Iceland Fund web and Ergo web add to already strong gateways for products and services Launch of collaboration with VÍS in New app and new record time included online bank promote CRM systems customer integration and personalis
Slide 11: Íslandsbanki Reykjavík Marathon
31 July 2025 11 Íslandsbanki Reykjavík Marathon ISK 255 million Largest charitable raised in 2024 - ISK event in Iceland 1.7 billion since annually 2006 Held for the 40th 23 August time in 2025 2025 Íslandsbanki 2Q25 Financial Results
Slide 12: Financial Overview
31 July 2025 12 Financial Overview Íslandsbanki 2Q25 Financial Results
Slide 13: Quarterly profits 37% higher than in the previous year
31 July 2025 13 Quarterly profits 37% higher than in the previous year Nearly all line-items are developing in a favourable manner year-on-year Profit for the period – 2Q24 vs 2Q25 ISKm 265 (752) 507 201 (96) 411 1,390 7,192 5,266 2Q24 Net interest Net fee & Other operating Operating Impairments Inc
Slide 14: NIM uplift year-on-year as effects of imbalances are reducing
31 July 2025 14 NIM uplift year-on-year as effects of imbalances are reducing Volatility still assumed for the short term for CPI imbalance while the economy re-stabilises Net interest income Net interest income – YoY comparison Highlights Business segments, ISKm ISKm • Net interest margin was 3.3%
Slide 15: Net fee and commissions growing by 13% year-on-year
31 July 2025 15 Net fee and commissions growing by 13% year-on-year Healthy growth across all types of fees and commissions Net fee and commission income Net fee and commission income – YoY comparison Highlights Business segments, ISKm ISKm • Following turmoil in 1Q25, capital 3,607 3,620 markets ha
Slide 16: Neutral results from NFI following a turbulent first quarter
31 July 2025 16 Neutral results from NFI following a turbulent first quarter Market risk exposure remains a small part of the Bank's operations Net financial income (expense) Shares and equity instruments1 Highlights ISKm ISKbn • Net financial income close to zero 8.5 8.9 this quarter compared to a
Slide 17: Strong cost-to-income ratio within financial target
31 July 2025 17 Strong cost-to-income ratio within financial target Results driven by both reducing administrative expenses and growth in income Administrative expenses Cost-to-income ratio1,2 Highlights ISKm 7,516 7,396 45.7% 45.7% 47.6% • Salaries and related expenses in 7,100 7,261 789 6,372 324
Slide 18: Healthy loan portfolio growth over the quarter
31 July 2025 18 Healthy loan portfolio growth over the quarter Portfolio based on robust credit culture and very high collateralisation (>94%) of the loan book Loans to customers Loans to customers Highlights By business division, ISKbn By sector, with tourism as a separate sector • Credit exposure
Slide 19: Asset quality remains strong consistent with historical quarters
31 July 2025 19 Asset quality remains strong consistent with historical quarters Stage 3 declines while increase in Stage 2 loans is related to a handful of credit cases Net impairment on financial assets Loans to customers: Stage 2 and 3 (NPL) Highlights By period, ISKbn Development of gross carryi
Slide 20: Shift between mortgage products normalising
31 July 2025 20 Shift between mortgage products normalising Fixed rate imbalance continues to run off in line with projections Mortgage portfolio Interest rate reset profile for NIL 3-5y fixed rate Highlights By interest rate type, gross carrying amount, ISKbn mortgages • Conservative payment assess
Slide 21: Commercial Real Estate portfolio well diversified and of good quality
31 July 2025 21 Commercial Real Estate portfolio well diversified and of good quality 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 carr
Slide 22: Deposit growth continues in 2Q25 reaching 4.4% YTD
31 July 2025 22 Deposit growth continues in 2Q25 reaching 4.4% YTD 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, % • Deposits grew by 3.1% in 2
Slide 23: Light maturity profile through the next two years
31 July 2025 23 Light maturity profile through the next two years Good diversification of funding sources as domestic senior market has been maturing rapidly Sources of borrowings Contractual maturity profile of borrowings ISKbn 503 30.6.25, ISKbn 168 Highlights 456 444 10 438 49 • In the local mark
Slide 24: Strong liquidity position, ratios well above requirements
31 July 2025 24 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 regulatory requirements 185
Slide 25: Íslandsbanki's capital ratios well above target
31 July 2025 25 Íslandsbanki's capital ratios well above target Results of SREP and expected implementation of CRR3 to provide additional capital optimisation capacity Current regulatory requirements and minimum capital target Capital and leverage ratios Highlights 30.6.2025, by capital composition
Slide 26: Strong results for the second quarter
31 July 2025 26 Strong results for the second quarter Good underlying momentum in all revenue streams Momentum in all revenue Loan portfolio remains Capital optimisation an streams drives strong results strong and asset quality high ongoing focal point • Return on equity of 13.0% for the • Healthy l
Slide 27: Q&A
31 July 2025 27 Q&A Íslandsbanki 2Q25 Financial Results
Slide 28: Appendix I
31 July 2025 28 Appendix I About Íslandsbanki and additional financial information Íslandsbanki 2Q25 Financial Results
Slide 29: This is Íslandsbanki
31 July 2025 29 This is Íslandsbanki We empower our customers to be a force for good Values The Bank Market share1 Sustainability in 2Q25 To create value 720 FTEs: Number of FTEs at Íslandsbanki at period-end 31% Retail customers Íslandsbanki received an ESG rating of A3 from Reitun, an Icelandic ra
Slide 30: Financial overview
31 July 2025 30 Financial overview Key figures & ratios 2Q25 1Q25 4Q24 3Q24 2Q24 PROFITABILITY Profit for the period, ISKm 7,192 5,209 6,283 7,280 5,266 Return on equity 13.0% 9.4% 11.2% 13.2% 9.7% Net interest margin (of total assets) 3.3% 3.2% 2.7% 2.9% 3.1% Cost-to-income ratio1,2 41.0% 47.6% 45.
Slide 31: Income statement
31 July 2025 31 Income statement Income statement, ISKm 2Q25 2Q24 ∆% 1H25 1H24 ∆% 2024 Net interest income 13,881 12,491 11% 26,820 24,613 9% 47,265 Net fee and commission income 3,620 3,209 13% 6,687 6,219 8% 13,122 Net financial income (expense) 13 (499) (103%) (973) (735) 32% (338) Net foreign ex
Slide 32: Balance sheet reflects a balanced loan and funding profile
31 July 2025 32 Balance sheet reflects a balanced loan and funding profile Conservative mix of assets and stable funding Simplified balance sheet structure Assets 30.6.25, ISK 1,696bn • Vast majority of assets Cash in Central bank Deposits from credit inst. consist of lending to both Liquid assets a
Slide 33: Íslandsbanki's MREL requirement
31 July 2025 33 Íslandsbanki's MREL requirement Minimum Requirement for Own Funds and Eligible MREL Development, % • The Icelandic Resolution Authority Liabilities (MREL), 30.6.2025 approves annually a resolution plan for the Bank. The Resolution plan stipulates that the MREL requirement for Íslands
Slide 34: Assets
31 July 2025 34 Assets Asset base mainly consists of loans and liquid assets Assets, ISKm 30.6.25 31.3.25 Δ Δ% 31.12.24 Δ Δ% Cash and balances with Central Bank 87,241 69,944 17,297 25% 65,716 21,525 33% Loans to credit institutions 80,481 92,259 (11,778) (13%) 50,486 29,995 59% Bonds and debt instr
Slide 35: Liabilities and equity
31 July 2025 35 Liabilities and equity Deposits continue to be the largest source of funding Liabilities & Equity, ISKm 30.6.25 31.3.25 Δ Δ% 31.12.24 Δ Δ% Deposits from Central Bank and credit institutions 14,876 14,374 502 3% 12,535 2,341 19% Deposits from customers 966,075 936,779 29,296 3% 926,84
Slide 36: Appendix II
31 July 2025 36 Appendix II Icelandic economy update Íslandsbanki 2Q25 Financial Results
Slide 37: The Icelandic economy and society draw on many strengths
31 July 2025 37 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 b
Slide 38: GDP growth picks up again
31 July 2025 38 GDP growth picks up again Increased exports and private consumption to play a leading role in post-adjustment growth GDP and contribution of its subcomponents GDP and contribution of its subcomponents Highlights Volume change from prior year (%), annual data Volume change from prior
Slide 39: New sources of export growth come to the fore
31 July 2025 39 New sources of export growth come to the fore Export growth resumes following a modest decline in 2024 IP-based sector export revenues Exports and contribution from subcomponents % change Highlights ISKbn • Visitor numbers rebounded in the second half of 2024, with a total of 2.26 35
Slide 40: Current account balance improves in coming years
31 July 2025 40 Current account balance improves in coming years Improved CA balance due to a shrinking goods account deficit, modest surplus on primary income Imports and contribution from subcomponents Current account balance Highlights % change % of GDP • Imports are now expected to grow by nearl
Slide 41: Modest ISK depreciation likely as the forecast horizon advances
31 July 2025 41 Modest ISK depreciation likely as the forecast horizon advances High RER seems to have fuelled CA deficit, and further ISK appreciation erodes competitiveness ISK exchange rate and selected determinants ISK exchange rate and real exchange rate Highlights ISKbn (left) and EURISK (righ
Slide 42: Domestic balance sheets remain broadly healthy
31 July 2025 42 Domestic balance sheets remain broadly healthy Private sector debt ratios are stable and public debt is on a more favourable trajectory than 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 71 0 0 2003 2005
Slide 43: Investment takes a short breather following growth spurt
31 July 2025 43 Investment takes a short breather following growth spurt Large export-oriented projects heighten and curtail investment by turns Investment, real change, and contribution of subcomponents Business investment and related indicators Highlights % YoY change (%) and index • Investment ro
Slide 44: Slack in the labour market, yet sizeable wage gains in 2025
31 July 2025 44 Slack in the labour market, yet sizeable wage gains in 2025 Unemployment will peak this year and ease in the two years thereafter Wages, YoY change Unemployment1 Highlights % % of workforce, annual average 15 9 • The labour market has been very tight in the past few years but looks s
Slide 45: Icelanders put their wallets to work
31 July 2025 45 Icelanders put their wallets to work Private consumption growth to rebound during the forecast horizon Net household wealth Private consumption and related indicators Highlights Selected ratios % change YoY (left) and index value (right) • Private consumption has gained steam recentl
Slide 46: The real estate market shows continued resilience to high real rates
31 July 2025 46 The real estate market shows continued resilience to high real rates Central Bank monetary tightening has impact, but underlying demand supports prices and turnover Capital area house prices relative to macroeconomic fundamentals Residential house prices and turnover Index, January 2
Slide 47: The Icelandic housing market is flexible as conditions change
31 July 2025 47 The Icelandic housing market is 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 48: Inflation proves persistent following disinflation period
31 July 2025 48 Inflation proves persistent following disinflation period Inflation eventually falls further but is likely to stay somewhat above the CBI’s target in coming years Inflation and the CBI inflation target* Month-on-month and year-on-year CPI change* Highlights % *Forecast as of July 202
Slide 49: Interest rates likely to fall… eventually
31 July 2025 49 Interest rates likely to fall… eventually The Central Bank’s policy rate is likely to stay on hold throughout 2H25, then be cut gradually in following quarters Policy rate and inflation* *Forecast as of June 2025 Key interest rates Highlights %, Real policy rate based on 12m forward
Slide 50: Iceland's credit rating on a secular upward path
31 July 2025 50 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: Rating upgrade to A on economic Upgrade to A2 o
Slide 51: Disclaimer
31 July 2025 51 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 futur
Slide 52: 31 July 2025 Íslandsbanki 2Q25 Financial Results
31 July 2025 52 Íslandsbanki 2Q25 Financial Results