Íslandsbanki (ISB) investor relations material

Executive summary

• Net profit for Q3 was ISK 6.9bn, with ROE at 12.2% and cost-to-income ratio at 38.2%, exceeding targets and reflecting strong core income growth and robust asset quality.

• The bank returned to full private ownership after the government sold its entire stake, expanding the shareholder base to over 27,800.

• Merger discussions with Ský/Skagi are ongoing, expected to add 15% to share capital and generate ISK 1.8–2.4bn in annual synergies.

• Strategic focus included investments in AI, market share growth in retail lending, and leading positions in equity brokerage and infrastructure financing.

• A Supreme Court ruling required a provision of ISK 550m for mortgage terms, with further legal uncertainty for indexed loans.

Financial highlights

• Net profit for the first nine months of 2025 reached ISK 19.3bn, with core operating income up 9.4% year-over-year and net interest income up 13%.

• Net interest margin was 3.1% for Q3 (3.2% adjusted), and cost-to-income ratio was 38.2% for Q3, 42.1% for nine months.

• Loans to customers grew 2.9% year-to-date to ISK 1,333bn; deposits rose 9.2% to over ISK 1,000bn.

• Net fee and commission income for Q3 was ISK 3.2bn, broadly flat year-over-year.

• Stage 3 loans stable at 1.6%, indicating strong asset quality.

Outlook and guidance

• Modest economic growth expected, with GDP forecast at 2.2% for 2025 and no downturn anticipated.

• Net interest margins and cost-to-income ratio targets expected to be met, with lending growth to match nominal GDP.

• Updated financial targets and 2026 guidance to be presented with Q4 results.

• Plans to deploy excess capital for growth in foreign specialized lending, international acquisitions, and shareholder distributions.

• Dividend policy targets a 50% payout of earnings; ISK 11.4bn remains allocated for buybacks.