Arion Banki Hf · OMXICE:ARION
Arion Banki Hf — Q3 2025 Earnings Presentation
33 slides from Arion Banki Hf's earnings presentation, Oct 29, 2025
Slide 1: Investor presentation
Investor presentation 29 October 2025
Slide 2: Key results
Key results Medium-term targets Q3 2025 9M 2025 Key results Return on equity1 Exceed 13% 16.0% 16.0% Core operating income2 / Exceed 7.2% 7.4% 7.5% REA Solid quarter and positive trend for 9M Insurance revenue growth In excess of market 16.0% ROE vs medium-term target of above 13% (YoY)3 growth • 4.
Slide 3: Key operational highlights
Key operational highlights Successful EUR 300m senior financing Frjálsi Pension Fund and Dentist • The Bank issued EUR 300 million in senior preferred notes at Pension Fund agree to merge the end of August, with a six-year maturity • The issuance marks Arion’s longest senior financing to date • The
Slide 4: Consumer Association's class-action lawsuit against Icelandic banks
Consumer Association’s class-action lawsuit against Icelandic banks Timeline February Court proceedings February Legal action Court of Appeal: Acquittal Initial complaint confirmed • Association called for class-action • Consumer Association urged Arion Bank, participants District Court: (Feb 2025)
Slide 5: Consumer Association's class-action lawsuit: financial impact assessment
Consumer Association’s class-action lawsuit against Icelandic banks Financial impact assessment • Arion Bank’s loan terms differ from those of Íslandsbanki and are more comprehensive • Worst-case scenario previously presented: ISK 24bn pre-tax, thereof ISK 20bn for non-indexed loans • Should the Ísl
Slide 6: Merger discussions between Arion Bank and Kvika Bank
Merger discussions between Arion Bank and Kvika Bank Phase Completed Letter of intent signed on 6 July 2025 1 Due diligence processes finalized in coming Agreement on heads of terms, including exchange ratios weeks and dialogue with the ICA underway Arion and Kvika have started pre-notification ◕ Du
Slide 7: Sale of Arnarland finalized in Q4
Sale of Arnarland finalized in Q4 • Arion Bank has concluded a sale process of Arnarland, a development asset in the municipality of Garðabær in October 2025 • The land-use plan provides for 50,000m2 of multi- family housing and 36,000m2 of commercial real estate • This project is a prime example of
Slide 8: The Economic Outlook: Challenges ahead
The Economic Outlook: 15% Growth contributions of GDP components Payment card turnover and private consumption - quarterly data, YoY-% growth, constant prices/exchange rate Challenges ahead 20% 150 140 10% 15% Although GDP contracted by 1.9% year-on-year in Q2, 130 according to preliminary data, the
Slide 9: Inflation target not within sight - yet
Inflation target not within 12% CPI by expenditure groups Exchange rate -Daily average sight - yet 10% 160 155 The labor market is showing signs of moderation. 8% 150 Private-sector employment has fallen year-on-year, pushing unemployment gradually higher. Layoffs are 6% 145 already visible in key e
Slide 10: Small economy, strong foundations
Small economy, strong foundations CBI's FX reserves Net international investment position Total exports composition - bn. EUR - % of GDP - index, total in 2012=100 7 50% 160 6 140 5 0% 4 120 3 -50% 100 2 80 1 -100% 60 0 -1 40 -150% -2 20 -3 -200% 0 2025 1999 2000 2001 2002 2003 2004 2005 2006 2007 2
Slide 11: Key takeaways from Q3 2025
Key takeaways from Q3 2025 ‣ Solid quarter with an ROE of 16.0% Operational performance ‣ Diversified pillars of the Group continue to support earnings momentum through the cycle ‣ Relatively high net interest margin partly due to inflation impact with further fluctuations anticipated in coming quar
Slide 12: Income statement Q3 2025
Income statement Q3 2025 Net interest income Q3 2025 13,826 Q3 2024 11,863 Diff 17% Q2 2025 14,200 Diff (3%) − Net earnings attributable to shareholders of ISK Net fee and commission income 4,003 3,880 3% 4,553 (12%) 8.2bn, resulting in a return on equity (ROE) of Insurance service results 630 1,532
Slide 13: Income statement 9M 2025
Income statement 9M 2025 Net interest income 9M 2025 40,192 9M 2024 35,056 Diff 15% − Net earnings attributable to shareholders of ISK Net fee and commission income 13,092 11,224 17% 24.4bn, achieving a return on equity (ROE) of Insurance service results 1,665 1,839 (9%) 16.0% Net financial income (
Slide 14: Net interest income
Net interest income Net interest income (ISK bn) Credit risk (ISK bn) Strong quarter driven by reduced funding .2 3.8 909 9 8 8 880 cost .9 2.2 .2 . 3. .0 3.3 . . − In Q3, net interest income reached ISK 13.8bn, 3. 2.9 3. .2 reflecting an 16.9% annual increase − NIM was 3.3% in Q3 vs. 3.1% in Q3 202
Slide 15: Net fee and commission income
Net fee and Net fee and commission income (ISK m) Net fee and commission income (ISK m) commission income , 9 ,389 Fees remain diversified and robust , 3 , 3 , 3 ,3 0 2 3 2 9 ,2 3,903 , 3 3,092 , 3 − Asset management fees remain solid, with Assets ,003 ,0 9 3,880 293 under Management and Supervision
Slide 16: Continued momentum in the insurance business in Q3
* Combined ratio (%) Insurance service result (ISK m) Continued momentum in the insurance 0 .2 03.9 , 99. business in Q3 88. 20.0 8.8 89. 93.3 9.2 88.2 .0 22.0 9. ,0 9 8.9 . 0.0 8.9 − Net result in the quarter ISK 698m compared . 23 with ISK 1,737m in Q3 2024 22 8 .2 8 . 33 − Claims and reinsurance
Slide 17: Net financial income
Net financial income Net financial income (ISK m) Bond holdings (ISK bn) Equity markets underperforming 2 2. 2, 93 92. 2 . − Vördur's total investment portfolio stands at ISK 23.9 .2 8. 9. 36.1bn, generating a profit of ISK 301m for the , 9 38.2 20.0 22.8 . quarter, which includes adverse net impact
Slide 18: Operating expenses
Operating expenses* Cost ratios (%) Total operating expenses (ISK bn) 9. Stable cost base 9. 3.8 .8 2.0 . . . .9 . .8 .0 0. 38.3 - Total operating expenses outlined here encompass 3.3 3.2 3.0 costs associated with the insurance business which 3 .3 3.0 3. is reflected through insurance service result
Slide 19: Balance sheet
Balance sheet Solid growth in loans and deposits Assets 30.09.2025 30.06.2025 Diff. 31.12.2024 31.12.2023 31.12.2022 Cash & balances with CB 110 114 (3%) 124 102 114 - Loans to customers increased by ISK 30bn or Loans to credit institutions 26 35 (27%) 26 29 46 2.3% in Q3 Loans to customers 1,302 1,
Slide 20: Loans to customers
Loans to customers Loans to customers (ISK bn) Loans to customers by sector (%) Balanced loan portfolio ,2 2 ,302 ther sectors ,23 9. 9. , 9 , .3 .0 inancial and - Loans to customers total ISK 1,302bn at the end of .0 .0 insurance activities . . September, increasing by ISK 29.2bn or 2.3% 9 2 Indust
Slide 21: Residential mortgages
Residential mortgages Residential mortgages by interest rate type (ISK bn) Indexed mortgages were 65% of the portfolio at 30.06.2025 Household debt to GDP (%) Relatively low household debt Low default rates and comfortable LTV 0 9 levels, but the interest rate level impacts 9 0 82 portfolio growth a
Slide 22: Risk profile
Risk profile Development of non-performing loans, moratoria and Development of NPL ratio between segments forbearance (% of total loan book) (% of relevant loan book) Strong credit quality indicators while the .2 NPL ratio has recently trended upwards 3.0 . 2. .2 .3 .2 .3 3. 3. 3. 3. - The developme
Slide 23: Loss allowance by IFRS 9 stages
Loss allowance by IFRS 9 stages On loans to customers total (ISK bn) On loans to corporates (ISK bn) IFRS 9 economic scenarios and assumptions Loans to customers are 0.79% provisioned at Loans to corporates are 1.17% provisioned at Expected normalization of economic conditions on the back of high re
Slide 24: Deposits from customers
Deposits from Deposits from customers (ISK bn) Deposit growth by LCR outflow category (ISK bn) customers 8 899 8 9 9 93 39 Continued momentum in stable deposits 2 88 20 33 8 0 2 8 28 3 2 0 9 - Deposits from customers of ISK 917bn represent 2 3 0% of the Bank’s total liabilities 0 9 - Stable deposits
Slide 25: Funding and rating
Funding and rating Borrowings by type (ISK bn) Maturities of borrowings and call dates on Robust funding profile and stable ratings subordinated liabilities (ISK bn) 9 83 82 33 9 9 9 - Successful issuance of EUR 300 million senior 39 9 preferred notes 09 9 - The notes have 6-year maturity and pay a
Slide 26: Own funds
Own funds Capital ratio (%) Leverage ratio (%) Strong capital position 2. 2.2 .8 . . - CET1 position is 266bps above regulatory 2 .0 2 . requirement when interim profits are included 22. 2.9 22.0 2 .9 3. - REA increased by ISK 28bn or 2.7% during the 2.3 quarter, mostly due to increase in loans to .
Slide 27: Own funds
Own funds Own funds and capital requirements (%) The capital ratios continue to be strong 21.2 – 22.2 2 .9 2. 2. - Nine months net earnings of ISK 24.4bn and foreseeable dividends of 50% thereof 9. 9. 9. are included in the capital ratios presented . 2. .8 - Total buy-back of ISK 6bn concluded durin
Slide 28: Capital Requirement Regulation 3 (CRR3)
Capital Requirement Regulation 3 Estimated initial effect of CRR3 implementation on REA (ISK bn) (CRR3) .0 8 Immediate reduction in REA estimated at around ISK 51bn as of 9 2 .00 3 Q4 2025 resulting in capital relief of around ISK 10bn Primary drivers: - Increased risk-sensitivity for exposures secu
Slide 29: Going forward
Going forward Operational momentum External environment Strategic development • Strong operating performance for • Cautious stance as to evolving • Merger process with Kvika is on the first nine months of the year external rate and economic track demonstrates good momentum in environment • Will prov
Slide 30: Key financial indicators - quarterly
Key financial indicators - quarterly Return on equity (%) Total cost-to-Core income ratio (%) Net interest margin (%) 9. . 3. .9 3.3 3. 3.2 3. 3.0 3. 3. . . .0 8. 2.9 .2 2. 3.0 2.8 2.8 38.2 3 . 3 . 3 .3 . 9. Q3 23 Q3 2 Q3 2 Q3 23 Q3 2 Q3 2 Q3 23 Q3 2 Q3 2 Loans to deposits ratio (%) Core operating i
Slide 31: Key financial indicators - annual
Key financial indicators - annual Return on equity (%) Total cost-to-Core income ratio (%) Net interest margin (%) .0 9. 3.3 .2 .2 3. 3. 3. .0 3.8 2.0 . 2. 2.2 38.3 9M 202 9M 2022 9M 2023 9M 202 9M 202 9M 202 9M 2022 9M 2023 9M 202 9M 202 9M 202 9M 2022 9M 2023 9M 202 9M 202 CPI imbalance (ISK bn) C
Slide 32: Key figures
Key figures* Operations 9M 2025 9M 2024 9M 2023 9M 2022 9M 2021 Q3 2025 Q2 2025 Q1 2025 Q4 2024 Q3 2024 Net interest income 40,192 35,056 33,338 29,578 23,295 13,826 14,200 12,166 11,246 11,863 Net commission income 13,092 11,224 12,486 12,195 10,594 4,003 4,553 4,536 4,136 3,880 Operating income 59
Slide 33: Disclaimer
Disclaimer - This document has been prepared for information purposes only and should not be relied upon, or form the basis of any action or decision, by any person. Nothing in this document is, nor shall be relied on as, a promise or representation as to the future. In supplying this document, Ario