Islandsbanki Hf · OMXICE:ISB
Islandsbanki Hf — Íslandsbanki — Q3 2025 Earnings Presentation
50 slides from Islandsbanki Hf's earnings presentation, Oct 30, 2025
Slide 1: 3Q25 Financial Results
3Q25 Financial Results 30 October 2025 Jón Guðni Ómarsson Chief Executive Officer Ellert Hlöðversson Chief Financial Officer
Slide 2: Core operating income grew by 9.4% year-on-year
30 October 2025 2 Core operating income grew by 9.4% year-on-year Net interest income in pair with 2Q25 and considerably over previous year ROE in excess of analyst consensus Considerable excess capital in place ROE Total capital ratio1 13.2% 13.0% 23.4% 23.2% 12.2% 21.6% 21.5% 21.9% 11.2% 9.4% 20.2
Slide 3: Capital optimisation an ongoing priority for the Bank
30 October 2025 3 Capital optimisation an ongoing priority for the Bank Financial targets for the medium term to be updated in 4Q25 along with shorter term guidance 2025 Guidance Target 3Q25 9M25 Loans to customers and revenue, in general to grow in line with nominal GDP through the business cycle R
Slide 4: Everyday banking for families… Net Promoter Score on the rise
30 October 2025 4 Everyday banking for families… • New app feature "My family" launched, offering families the chance to join efforts in managing their finances • With some guidance and support, children can take their first steps towards financial health and develop healthy money habits for the fut
Slide 5: Robust performance in Business Banking
30 October 2025 5 Robust performance in Business Banking Driven by a healthy and strong loan portfolio, supported by dynamic growth and strong market share Digital solutions helping businesses Highest NPS • Expense management feature links score amongst domestic peers receipts and credit card for SM
Slide 6: Íslandsbanki displays commitment to infrastructure financing
30 October 2025 6 Íslandsbanki displays commitment to infrastructure financing Participation in foreign infrastructure lending strengthens relationships and builds experience within the Bank Financing of Ölfusá Bridge Foreign loan portfolio has grown by ISK 11 billion YTD • Íslandsbanki, along with
Slide 7: Íslandsbanki Reykjavík Marathon
30 October 2025 7 ISK Maraþon Íslandsbanki Reykjavík Marathon >170 327 More than ISK charitable organisations million 2 billion raised for raised benefit charities since 2006 Íslandsbanki 3Q25 Financial Results
Slide 8: Proposed merger with Skagi unlocks opportunities
30 October 2025 8 Proposed merger with Skagi unlocks opportunities Where scale meets specialisation and insurance completes the competitive edge Cross-selling opportunities with a Asset Management Leading investment larger customer base Powerhouse bank in Iceland Diverse demographic combined in Ísla
Slide 9: Financial Overview
30 October 2025 9 Financial Overview Íslandsbanki 3Q25 Financial Results
Slide 10: Core income growing by 9.4% between years
30 October 2025 10 Core income growing by 9.4% between years NII and cost in excess of analyst consensus despite one-off charge related to provision for legal proceedings Profit for the period – 3Q24 vs 3Q25 ISKm 2,033 (550) (67) (795) (162) (853) 9 6 6,901 7,280 3Q24 Net interest Provision for Net
Slide 11: NIM uplift year-on-year on back of repricing and reducing imbalances
30 October 2025 11 NIM uplift year-on-year on back of repricing and reducing imbalances Reduced margin expected in the fourth quarter expected due to lower inflationary ticks Net interest income Net interest income – YoY comparison Highlights Business segments, ISKm 13,881 13,260 ISKm • Net interest
Slide 12: Net fee and commission income broadly flat from previous year
30 October 2025 12 Net fee and commission income broadly flat from previous year Cards and payment processing pressured as costs of operation increases Net fee and commission income Net fee and commission income – YoY comparison Highlights Business segments, ISKm ISKm • Lending fee has grown by 20.7
Slide 13: Profits from FX gain and other operating income offset by NFI
30 October 2025 13 Profits from FX gain and other operating income offset by NFI Market risk exposure remains a small part of the Bank's operations Net financial income (expense) Shares and equity instruments1 Highlights ISKm ISKbn 8.9 • Net financial charge of ISK 353 8.5 228 million was recorded i
Slide 14: Strong cost-to-income ratio during the quarter
30 October 2025 14 Strong cost-to-income ratio during the quarter Results continue to be within the Bank’s financial targets Administrative expenses Cost-to-income ratio1,2 Highlights ISKm 7,396 7,261 • Salaries and related expenses 7,100 45.7% 47.6% 6,372 248 324 428 6,479 remained broadly flat in
Slide 15: Loan portfolio remains reflective of the underlying economy
30 October 2025 15 Loan portfolio remains reflective of the underlying economy Portfolio based on robust credit culture and very high collateralisation (around 94% of the loan book) Loans to customers Loans to customers Highlights By business division, ISKbn By sector, with tourism as a separate sec
Slide 16: Asset quality remains strong, consistent with historical quarters
30 October 2025 16 Asset quality remains strong, consistent with historical quarters No significant change in Stage 2 or Stage 3 loan exposures 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 tota
Slide 17: Supreme Court ruling impacts mortgage product offering
30 October 2025 17 Supreme Court ruling impacts mortgage product offering Asset quality remains strong while uncertainty related to legal proceedings remains Mortgage portfolio Interest rate reset profile for NIL 3-5y fixed rate Highlights By interest rate type, gross carrying amount, ISKbn mortgage
Slide 18: Deposit growth continues in 3Q25 reaching 9.2% YTD
30 October 2025 18 Deposit growth continues in 3Q25 reaching 9.2% 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 4.6% i
Slide 19: Light maturity profile through the next two years
30 October 2025 19 Light maturity profile through the next two years Good diversification of funding sources between products, maturities as well as types and location of investors Sources of borrowings Contractual maturity profile of borrowings ISKbn 503 30.9.25, ISKbn 178 Highlights 456 442 438 49
Slide 20: Strong liquidity position, ratios well above requirements
30 October 2025 20 Strong liquidity position, ratios well above requirements Highly liquid balance sheet allows for fast balance sheet growth in profitable manner Total liquidity coverage ratio (LCR) Liquidity coverage ratio for ISK Highlights 300% 200% • All liquidity measures well above regulatory
Slide 21: Íslandsbanki's capital ratios well above target
30 October 2025 21 Íslandsbanki's capital ratios well above target The Bank remains committed to its effort of optimising capital through both growth and distributions Current regulatory requirements and minimum capital target Capital and leverage ratios Highlights 30.9.2025, by capital composition
Slide 22: Íslandsbanki's excess capital position fuels further growth
30 October 2025 22 Íslandsbanki's excess capital position fuels further growth Capital optimization journey continues with currently around ISK 43 billion to be utilised through various channels Indicative allocation of excess capital Merger with Skagi enhances excess capital position maintaining st
Slide 23: Q&A
30 October 2025 23 Q&A Íslandsbanki 3Q25 Financial Results
Slide 24: Appendix I
30 October 2025 24 Appendix I About Íslandsbanki and additional financial information Íslandsbanki 3Q25 Financial Results
Slide 25: This is Íslandsbanki
30 October 2025 25 This is Íslandsbanki We empower our customers to be a force for good Values The Bank Market share1 Sustainability in 3Q25 A positive rating of 2 from Sustainable To create value 736 FTEs: Number of FTEs at Íslandsbanki at period-end 31% Retail customers Fitch included an improveme
Slide 26: Financial overview
30 October 2025 26 Financial overview Key figures & ratios 3Q25 2Q25 1Q25 4Q24 3Q24 PROFITABILITY Profit for the period, ISKm 6,901 7,192 5,209 6,283 7,280 Return on equity 12.2% 13.0% 9.4% 11.2% 13.2% Net interest margin (of total assets) 3.1% 3.3% 3.2% 2.7% 2.9% Cost-to-income ratio1 38.2% 41.0% 4
Slide 27: Income statement
30 October 2025 27 Income statement Income statement, ISKm 3Q25 3Q24 ∆% 9M25 9M24 ∆% 2024 Net interest income 13,260 11,777 13% 40,080 36,390 10% 47,265 Net fee and commission income 3,229 3,296 (2%) 9,916 9,515 4% 13,122 Net financial income (expense) (353) 228 - (1,326) (507) 162% (338) Net foreig
Slide 28: Balance sheet reflects a balanced loan and funding profile
30 October 2025 28 Balance sheet reflects a balanced loan and funding profile Conservative mix of assets and stable funding Simplified balance sheet structure Assets 30.9.2025, ISK 1,734bn • Vast majority of assets consist of Cash in Central bank Deposits from credit inst. lending to both retail and
Slide 29: Íslandsbanki's MREL requirement
30 October 2025 29 Íslandsbanki's MREL requirement A new 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), 30.9.2025 approves annually a resolution plan for the Bank. Th
Slide 30: Domestic commercial real estate sector shows strength and stability
30 October 2025 30 Domestic commercial real estate sector shows strength and stability Despite sale of new residential housing has slowed down from previous quarters, risk of losses is limited Development of exposure to real estate companies Development of construction exposure Highlights Gross carr
Slide 31: Assets
30 October 2025 31 Assets Asset base mainly consists of loans and liquid assets Assets, ISKm 30.9.25 30.6.25 Δ Δ% 31.12.24 Δ Δ% Cash and balances with Central Bank 114,055 87,241 26,814 31% 65,716 48,339 74% Loans to credit institutions 99,117 80,481 18,636 23% 50,486 48,631 96% Bonds and debt instr
Slide 32: Liabilities and equity
30 October 2025 32 Liabilities and equity Deposits continue to be the largest source of funding Liabilities & Equity, ISKm 30.9.25 30.6.25 Δ Δ% 31.12.24 Δ Δ% Deposits from Central Bank and credit institutions 15,972 14,876 1,096 7% 12,535 3,437 27% Deposits from customers 1,008,919 966,075 42,844 4%
Slide 33: Appendix II
30 October 2025 33 Appendix II Icelandic economy update Íslandsbanki 3Q25 Financial Results
Slide 34: Economy entering a new business cycle
30 October 2025 34 Economy entering a new business cycle A new business cycle following mild GDP contraction likely to bring healthy growth New business cycle, subdued growth following contraction… ..and housing market remains resilient in the face of high real rates Real GDP and main subitems, YoY
Slide 35: The Icelandic economy and society draw on many strengths
30 October 2025 35 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 developmen
Slide 36: New business cycle, subdued growth following contraction
30 October 2025 36 New business cycle, subdued growth following contraction Fluctuations in investment dominate the growth pattern over the horizon, but exports will pick up again GDP and contribution of its subcomponents GDP and contribution of its subcomponents Highlights Volume change from prior
Slide 37: New sources of export growth
30 October 2025 37 New sources of export growth Intellectual property and aquaculture will drive export growth, with legacy export sectors lagging behind Export revenues, by key sector Exports and contribution from subcomponents % change Highlights ISKbn at current prices • Tourism rebounded after a
Slide 38: Current account balance improves following deficit in 2025
30 October 2025 38 Current account balance improves following deficit in 2025 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 • Import growth is now project
Slide 39: Modest ISK depreciation likely later on
30 October 2025 39 Modest ISK depreciation likely later on The high real exchange rate is a growing challenge, making ISK depreciation likely further ahead ISK exchange rate ISK exchange rate and real exchange rate Highlights Major currency exchange rates against the ISK and index values EURISK leve
Slide 40: Domestic balance sheets remain broadly healthy
30 October 2025 40 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 400 300 350 250 300 200 250 200 150 150 100 100 76 50 50 71 0 0 2003 20
Slide 41: Investment cycle determined by large-scale projects
30 October 2025 41 Investment cycle determined by large-scale projects The surge in data centre and aquaculture investment carries significant weight in overall investment Investment, real change, and contribution of subcomponents Business investment and related indicators Highlights % YoY change (%
Slide 42: More stable labour market in the offing
30 October 2025 42 More stable labour market in the offing Cooling labour market, with more modest wage gains than before Wages, YoY change Unemployment1 Highlights % % of workforce, annual average • The labour market has been very tight in the past few years. This has now 15.0 changed, and there ar
Slide 43: Households open their wallets: from saving to spending
30 October 2025 43 Households open their wallets: from saving to spending Real wage gains and a high saving rate foster increased consumption in the near term Household saving Private consumption and related indicators Highlights Deposits in ISK bn % change YoY (left) and index value (right) • Priva
Slide 44: The real estate market holds steady despite high interest rates
30 October 2025 44 The real estate market holds steady despite high interest rates Tighter monetary policy has cooled the market, but resilient demand and strong fundamentals keep it balanced Capital area house prices relative to macroeconomic fundamentals Residential house prices and turnover Index
Slide 45: The Icelandic housing market is flexible as conditions change
30 October 2025 45 The Icelandic housing market is flexible as conditions change Supply, demand, mortgage market factors combine to make a dynamic market Households are not highly indebted compared to peers Mortgage market has historically been flexible w.r.t. loan types with different debt Househol
Slide 46: Inflation is hovering around the upper tolerance limit…
30 October 2025 46 Inflation is hovering around the upper tolerance limit… … and the last lap of the race to target could prove difficult Inflation and the CBI inflation target* Inflation by type and source Highlights % *Forecast as of Oct 2025 % • Headline inflation has plummeted from 11 its Februa
Slide 47: Interest rate cuts set to resume in 2026
30 October 2025 47 Interest rate cuts set to resume in 2026 The CBI’s monetary stance will remain fairly tight, but long-term interest rates will ease later on Policy rate and inflation* *Forecast as of June 2025 Key interest rates Highlights %, Real policy rate based on 12m forward forecast %, aver
Slide 48: Iceland's credit rating on a secular upward path
30 October 2025 48 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 Upgr
Slide 49: Disclaimer
30 October 2025 49 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 fu
Slide 50: 30 October 2025 Íslandsbanki 3Q25 Financial Results
30 October 2025 50 Íslandsbanki 3Q25 Financial Results