Islandsbanki Hf · OMXICE:ISB
Islandsbanki Hf — Q1 2026 Earnings Presentation
53 slides from Islandsbanki Hf's earnings presentation, May 7, 2026
Slide 1: 1Q26 Financial Results
1Q26 Financial Results 7 May 2026 Jón Guðni Ómarsson Chief Executive Officer Ellert Hlöðversson Chief Financial Officer
Slide 2: Core operating income growth of 27%
7 May 2026 2 Core operating income growth of 27% High inflation positively impacting net interest income ROE in excess of financial targets C/I well below target Considerable excess capital (ISK 29.2 ROE1 C/I ratio2,3 billion) in place4 Total capital ratio5 13.0% 13.6% 47.6% 12.2% 41.0% 43.5% 38.2%
Slide 3: ROE above guidance and medium-term target
7 May 2026 3 ROE above guidance and medium-term target Seasonality to be expected in earnings related to inflationary ticks Loans to customers and Medium- 2026 revenue, in general to grow in 1Q26 line with nominal GDP through term target Guidance the business cycle while international lending provid
Slide 4: GDP growth weak in 2026 but set to gain steam in 2027
7 May 2026 4 GDP growth weak in 2026 but set to gain steam in 2027 Temporary period of sluggish growth due to export sector setbacks and high real interest rates Slow GDP growth in the near turn, gaining pace later on… ...and housing market still remains quite resilient in the face of high real rate
Slide 5: A stable start to the year across business units
7 May 2026 5 A stable start to the year across business units Personal Banking1 Business Banking1 Corporate & Investment Banking1 ROE 21.1% ROE 12.3% ROE 11.4% Cost-to-income ratio 46.1% Cost-to-income ratio 40.8% Cost-to-income ratio 38.8% Loan portfolio grew by ISK In 1Q26, BBs loan portfolio grew
Slide 6: 1Q26 Highlights
7 May 2026 6 Successful quarter for Securties Íslandsbanki became a brokerage with ISK 32bn in bond principal member for issuances. Thereof 17bn for the Mastercard Bank and approximately 15bn for customers 1Q26 Highlights The number of Strong start to the In parallel with the rollout of Loyalty Serv
Slide 7: New Íslandsbanki Loyalty Services
7 May 2026 7 More than 38 thousand New Íslandsbanki Loyalty Services customers signed up in the first 3 Emphasis placed on goal-setting related to weeks financial health Structured in tiers, where points are awarded based on number of products, relationship length, savings, and card turnover Young p
Slide 8: Cost reductions and simplified corporate structure
8 Cost reductions and simplified corporate structure Redundancies reduce annual salary cost by approximately ISK 1 billion Objective: To shorten communication paths and simplify governance structure, to enhance customer service Flattening of organisational structure where the number of senior manage
Slide 9: AI within Íslandsbanki
7 May 2026 9 AI within Íslandsbanki Balancing future opportunities and risks AI Governance framework Empowerment through training Innovation trough Bank Bank think tank March November 2026 2023 January 2024 June September March 2025 June 2025 September February 2026 Bank of New Data Cloud 2024 2024
Slide 10: Financial Overview
7 May 2026 10 Financial Overview Íslandsbanki 1Q26 Financial Results
Slide 11: 1Q26 results year-on-year driven by higher core earnings
7 May 2026 11 1Q26 results year-on-year driven by higher core earnings Core income growing by 27% primarily driven by inflationary effects on NII Profit for the period – 1Q25 vs 1Q26 ISKm 434 (480) 201 4,161 (1,216) (853) 7,456 5,209 1Q25 Net interest income Net fee & Other operating Operating expen
Slide 12: Record high NIMs – fluctuations expected throughout the year
7 May 2026 12 Record high NIMs – fluctuations expected throughout the year In addition, growth in international lending contributing healthily to NII Net interest income Net interest income – YoY comparison Highlights Business segments, ISKm ISKm • Net interest margin was 3.9% in 17,100 1Q26 (3.2% i
Slide 13: Growth on back of growth in increasing lending and guarantees fees
7 May 2026 13 Growth on back of growth in increasing lending and guarantees fees Income from capital markets reduced from previous quarter as volumes have developed in an unfavorable manner Net fee and commission income Net fee and commission income – YoY comparison Highlights Business segments, ISK
Slide 14: Market risk exposure continues to be a limited part of the Bank's operations
7 May 2026 14 Market risk exposure continues to be a limited part of the Bank’s operations Bond and debt instruments mainly related to the Bank’s liquidity portfolio Net financial income (expense) Shares and equity instruments1 Highlights ISKm ISKbn • Net financial expense of ISK 213 8.9 million was
Slide 15: Strong cost-to-income ratio during the quarter
7 May 2026 15 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 8,344 • Salaries and related expenses rose 7,830 47.6% 7,396 7,261 433 41.0% 43.5% by ISK 123m year over year or 2.7
Slide 16: Simple balance sheet with good loan and funding profiles
7 May 2026 16 Simple balance sheet with good loan and funding profiles All liquid assets market to market Simplified balance sheet structure 31.3.2026, ISK 1,787bn Assets • Vast majority of assets consist of Deposits from credit lending to both retail and corporates Cash in Central Bank institutions
Slide 17: Loan growth across all business units
7 May 2026 17 Loan growth across all business units YTD growth amounts to 2.9%, or over 10% on an annual basis despite challenging market conditions 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
Slide 18: Despite economic slowdown, asset quality remains high
7 May 2026 18 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
Slide 19: Strong deposit growth in favourable LCR brackets
7 May 2026 19 Strong deposit growth in favourable LCR brackets Long term deposit funding allows for flexibility on the wholesale market Funding sources Customer loans to customer deposits ratio Highlights By type, % of total liabilities and equity Development, % • Overall deposits levels grew by 4%
Slide 20: Liquidity position in excess of targets and requirements
12 February 2026 20 Liquidity position in excess of targets and requirements Liquid assets remain close to 20% of the Bank’s balance sheet Total liquidity coverage ratio (LCR) Liquidity coverage ratio for ISK Highlights 300% 200% • All liquidity measures well above 141% regulatory requirements 177%
Slide 21: The Bank is fully MREL funded throughout the year
7 May 2026 21 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 Contractual maturity profile of borrowings ISKbn 31.03.26, ISKbn Highlights 492 212 503 485 • S
Slide 22: Íslandsbanki's capital ratios well above target
7 May 2026 22 Íslandsbanki's capital ratios well above target Total distribution capacity amounts to approximately ISK 29 billion end of the first quarter Highlights Current regulatory requirements and minimum capital target Capital and leverage ratios • Following a favorable CRR 3 31.3.2026, by cap
Slide 23: Strong performance, strong excess capital position, proven strategic execution
7 May 2026 23 Strong performance Strong excess capital position Proven strategic execution • ROE 13.6% for 1Q26 • Including unused buybacks and • New Loyalty Services implemented 50% of 1Q26 profit • Org. chart revised and streamlined 13.6% Strategy 9.4% Excess CET1 ROE ISK 29.2 billion Execution Re
Slide 24: Q&A
7 May 2026 24 Q&A Íslandsbanki 1Q26 Financial Results
Slide 25: Appendix I
7 May 2026 25 Appendix I About Íslandsbanki and additional financial information Íslandsbanki 1Q26 Financial Results
Slide 26: This is Íslandsbanki
7 May 2026 26 Sustainability in 1Q26 Ratings and This is Íslandsbanki The share of ESG risk-assessed certifications credit risk was at 90% at end of We empower our customers to be a force for good Sustainability risk 1Q262 integrated Successful intoand enhancement A3 Stable outlook Values Íslandsban
Slide 27: Financial overview
7 May 2026 27 Financial overview Key figures & ratios 1Q26 4Q25 3Q25 2Q25 1Q25 PROFITABILITY Profit for the period, ISKm 7,456 5,947 6,901 7,192 5,209 Return on equity 13.6% 10.5% 12.2% 13.0% 9.4% Net interest margin (on total assets) 3.9% 2.9% 3.1% 3.3% 3.2% Cost-to-income ratio1 38.5% 43.5% 38.2%
Slide 28: Income statement
7 May 2026 28 Income statement Income statement, ISKm 1Q26 1Q25 ∆% 4Q25 ∆% Net interest income 17,100 12,939 32% 12,391 38% Net fee and commission income 3,268 3,067 7% 4,183 (22%) Net financial income (expense) (213) (986) (78%) 404 (153%) Net foreign exchange gain 157 47 234% 157 0% Other operatin
Slide 29: Íslandsbanki's MREL requirement
7 May 2026 29 Íslandsbanki’s MREL requirement A new resolution plan approved for the Bank on October 17 2025 Minimum Requirement for Own Funds and Eligible MREL Development, % • The Icelandic Resolution Authority Liabilities (MREL), 31.3.2026 approves annually a resolution plan for the Bank. The Res
Slide 30: Assets
7 May 2026 30 Assets Asset base mainly consists of loans and liquid assets Assets, ISKm 31.3.26 31.12.25 Δ Δ% Cash and balances with Central Bank 88,909 80,394 8,515 11% Loans to credit institutions 79,739 80,009 (270) (0%) Bonds and debt instruments 164,093 151,959 12,134 8% Derivatives 4,052 5,304
Slide 31: Liabilities and equity
7 May 2026 31 Liabilities and equity Deposits continue to be the largest source of funding Liabilities & Equity, ISKm 31.3.26 31.12.25 Δ Δ% Deposits from Central Bank and credit institutions 11,419 13,250 (1,831) (14%) Deposits from customers 1,013,431 968,695 44,736 5% Derivative instruments and sh
Slide 32: Loan growth across all business units
7 May 2026 32 Loan growth across all business units YTD growth amounts to 2.9% - or over 10% annualised – despite challenging market conditions 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
Slide 33: Economic slowdown starting to have an impact on impairments
7 May 2026 33 Economic slowdown starting to have an impact on impairments Difference in stage 3 ratio between parent company and consolidated accounts due to foreclosure of asset in 1Q26 Net impairment on financial assets Loans to customers: Stage 2 and 3 (NPL) Highlights By period, ISKbn Developmen
Slide 34: Nominal rate mortgages gaining momentum
7 May 2026 34 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 mortgage
Slide 35: Impacts of slow residential housing market have materialised in the portfolio
7 May 2026 35 Impacts of slow residential housing market have materialised in the portfolio Occupancy ratios are 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
Slide 36: Appendix II
7 May 2026 36 Appendix II Icelandic economy update Íslandsbanki 1Q26 Financial Results
Slide 37: GDP growth weak in 2026 but set to gain steam later on
7 May 2026 37 GDP growth weak in 2026 but set to gain steam later on Temporary period of sluggish growth due to export sector setbacks and high real interest rates Slow GDP growth in the near turn, gaining pace later on… ...and housing market still remains quite resilient in the face of high real ra
Slide 38: The Icelandic economy and society draw on many strengths
Strictly Private and Confidential 7 May 2026 38 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
Slide 39: GDP growth weak in 2026 but set to gain steam later on
7 May 2026 39 GDP growth weak in 2026 but set to gain steam later on Temporary period of sluggish growth due to export sector setbacks and high real interest rates Highlights GDP and contribution of its subcomponents GDP and contribution of its subcomponents • Following a 1.3% GDP contraction in Vol
Slide 40: Tourism to languish while other export sectors blossom
7 May 2026 40 Tourism to languish while other export sectors blossom Intellectual property and aquaculture will drive export growth, with legacy export sectors lagging behind Highlights Export revenues, by key sector Exports and contribution from subcomponents ISKbn at current prices and share of to
Slide 41: Modest current account deficit over the forecast horizon
7 May 2026 41 Modest current account deficit over the forecast horizon Iceland’s external asset position likely to stay robust in coming years Highlights Imports and contribution from subcomponents Current account balance • Imports are projected to shrink by nearly % change % of GDP 2% in 2026, reve
Slide 42: ISK likely to weaken gradually
7 May 2026 42 ISK likely to weaken gradually The high real exchange rate is a growing challenge, making ISK depreciation likely further ahead Highlights ISK exchange rate ISK exchange rate and real exchange rate Major currency exchange rates against the ISK and index values EURISK levels and indices
Slide 43: Domestic balance sheets remain broadly healthy
7 May 2026 43 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 75 50 50 70 0 0 2003 2005 20
Slide 44: Investment to dip temporarily in 2026
7 May 2026 44 Investment to dip temporarily in 2026 Turning point in data centre development and a challenging environment impacts in the near term Highlights Investment, real change, and contribution of subcomponents Business investment and related indicators YoY change (%) and index • Investment h
Slide 45: Unemployment to peak in 2026
7 May 2026 45 Unemployment to peak in 2026 Highlights Wage developments will be shaped by long-term contracts, and wage drift will be limited • The labour market has cooled after several years of tight conditions. Unemployment edged up in 2025, Wages, YoY change Unemployment1 averaging 3.9%, owing m
Slide 46: Private consumption growth to continue in 2026, but at a slower pace
7 May 2026 46 Private consumption growth to continue in 2026, but at a slower pace Real wage growth and sizeable savings will support household consumption in the coming term Highlights Private consumption and related indicators • Private consumption rebounded strongly Personal vehicles, new registr
Slide 47: The real estate market remains broadly stable despite high interest rates
7 May 2026 47 The real estate market remains broadly stable despite high interest rates Tighter monetary policy has cooled the market with real prices edging down slightly Capital area house prices relative to macroeconomic fundamentals Residential house prices and turnover Index, January 2024=100 %
Slide 48: The Icelandic housing market is quite flexible as conditions change
7 May 2026 48 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 bur
Slide 49: Inflation remains stubbornly above target
7 May 2026 49 Inflation remains stubbornly above target Rising uncertainty as the Middle East conflict drags on Highlights • Inflation remained persistent in 2025, Inflation and the CBI inflation target MoM CPI change and 12m trailing inflation hovering close to the 4% upper deviation % % threshold
Slide 50: Central Bank needs to walk a fine line
7 May 2026 50 Central Bank needs to walk a fine line Interest rate hike likely in May with rate cuts resuming in 4Q this year Highlights Policy rate and inflation Key interest rates %, Real policy rate based on 12m forward forecast %, average per year • Following cumulative rate cuts from 9.25% to 7
Slide 51: Iceland's credit rating on a secular upward path
7 May 2026 51 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 t
Slide 52: Disclaimer
7 May 2026 52 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
Slide 53: 7 May 2026 Íslandsbanki 1Q26 Financial Results
7 May 2026 53 Íslandsbanki 1Q26 Financial Results