Arion Banki SDB (ARION) investor relations material

Executive summary

• Q3 net earnings were ISK 8.706bn, up 6% YoY; Q3 ROE was 16.3% and 9M ROE was 15.1%, above the >13% medium-term target.

• Q3 core income rose 10.6% YoY; 9M core income increased 10.0% to ISK 63.261bn, primarily from net interest income.

• Deposits reached ISK 1,014bn; CET1 was 18.5%, with robust liquidity and funding.

Financial highlights

• Q3 operating income was ISK 20.427bn, up 8% YoY; operating expenses rose 13%, including ISK 200m of redundancy costs and a ISK 280m regulatory fine.

• 9M net earnings were ISK 24.085bn versus ISK 26.283bn; earnings before tax were ISK 34.185bn versus ISK 36.940bn.

• 9M net interest income rose to ISK 47.333bn from ISK 40.192bn; net fee and commission income fell to ISK 11.640bn from ISK 13.092bn.

• 9M operating expenses increased to ISK 21.888bn from ISK 19.492bn; net impairment rose to ISK 2.047bn from ISK 1.359bn.

• 9M net financial income was a loss of ISK 981m versus a loss of ISK 289m, as subdued investment income weighed on results.

Outlook and guidance

• Medium-term targets: ROE >13%, core operating income/REA >7.2%, cost-to-core-income ratio <45%, combined ratio <95%, and dividend payout near 50%.

• CET1 management buffer target is 100–250bps above regulatory requirements; updated CET1 target is 16.3–17.8%, with near-term operations around the midpoint.

• Medium-term NIM is expected to trend closer to 3%; near-term results may fluctuate with monthly inflation effects on CPI-linked loans.

• Proposed bank levy increase from 0.145% to 0.254% could add ISK 1.7bn of 2026 expense, recognized in Q4 if enacted.

• Technology investment, especially in AI and cybersecurity, and cost discipline remain priorities; rates are expected to stay unchanged until next year.