Arion Banki SDB (ARION) investor relations material

Executive summary

• Achieved all medium-term financial targets in H1 2026, with ROE at 14.6% for H1 and 15.5% for Q2, supported by strong core earnings growth and profitability across diversified business units.

• Solid loan and deposit growth continued despite challenging economic conditions, with robust capital and liquidity positions maintained.

• Continued cost discipline and capital optimization, including ISK 23 billion distributed via dividends and buybacks in H1.

• Technology and AI investments advanced, supporting operational efficiency and customer engagement.

Financial highlights

• Net profit for Q2 was ISK 8.1 billion, with H1 2026 net earnings at ISK 15.4 billion.

• Core income rose 0.8% year-over-year in Q2 and 9.7% in H1, mainly from net interest income.

• Net interest income was ISK 15.2 billion in Q2, up 7.2% year-over-year; net interest margin steady at 3.5%.

• Operating expenses increased by 10.9% in Q2 and 11.9% in H1 year-over-year, mainly due to salaries, IT, and more employees.

• Loans to customers increased 6.7% (individuals +3.5%, corporates +9.6%) and deposits rose 6.5% year-to-date.

Outlook and guidance

• Strategy, targets, and capital priorities remain unchanged, with continued focus on technology, AI, and cyber security.

• Cautious outlook due to persistent inflation (above 5%), high interest rates, and macro/geopolitical uncertainty.

• Strong capital, funding, and liquidity positions support flexibility amid evolving external environment.

• Dividend policy targets 50% payout of net earnings, with additional buybacks possible if capital exceeds requirements.