Íslandsbanki (ISB) investor relations material

Executive summary

• 3Q26 profit was ISK 7,269m, up 5% YoY; 9M26 profit was ISK 21,794m, up 13%, with higher net interest income partly offset by expenses and impairments.

• ROE was 13.6% in Q3 and 13.4% in 9M; FY26 guidance of ROE above 12.5% was reaffirmed.

• Earnings benefited from inflation-supported net interest income, while fee and market-related revenues remained subdued; Iceland’s economy showed uneven growth and a weakening construction sector.

Financial highlights

• Q3 operating income was ISK 19,084m, up 16% YoY; net interest income rose 19% to ISK 15,815m and net fee income rose 2% to ISK 3,299m.

• Q3 net interest margin was 3.5%; inflation ticks were 150 bps versus 310 bps in Q3 2025. Net financial income was a loss of ISK 223m, mainly due to adverse market conditions.

• Q3 operating expenses increased 12% YoY to ISK 7,896m; net impairment expense was ISK 1,021m versus a net release of ISK 7m in Q3 2025.

• 9M operating income was ISK 58.1bn versus ISK 49.7bn; net interest income was ISK 48.2bn and net fee income was ISK 9.8bn.

• At quarter-end, total assets were ISK 1,819bn, customer loans ISK 1,431bn and customer deposits ISK 1,078bn.

Outlook and guidance

• FY26 guidance remained ROE above 12.5%, cost-to-income ratio of 41%–43%, CET1 excess of ~300 bps and 50% dividend payout; guidance assumes normalized full-year cost of risk.

• Lower Q4 inflation ticks of 45 bps versus 150 bps in Q3 are expected to reduce income; applying the lower inflation effect to Q3 results implies Q4 ROE near 10%.

• Loan growth is expected in the mid-single digits for FY26, supported by international lending; domestic loan growth is expected to remain subdued.

• Gradual policy-rate cuts are expected from spring 2027, subject to inflation; Iceland GDP growth is forecast at 1.2% in 2026, 1.8% in 2027 and 2.3% in 2028.

• A proposed special bank tax increase could add ISK 1.671bn to annual tax expense based on the 30 September 2026 tax base, reducing after-tax profit by the same amount, all else equal.