First quarter 2024 (1Q24) financial highlights

• Íslandsbanki reported a net profit of ISK 5.4 billion in the first quarter of 2024 (1Q23: ISK 6.2 billion), generating an annualised return on equity (ROE) of 9.8% (1Q23: 11.4%).
• Net interest income (NII) amounted to ISK 12.1 billion and decreased by 2.4% in 1Q24 compared to ISK 12.4 billion for 1Q23.
• The net interest margin (NIM) was 3.0% in 1Q24, compared to 3.2% in 1Q23.
• Net fee and commission income (NFCI) fell by 5.0% compared to 1Q23 and amounted to ISK 3.3 billion in 1Q24.
• Net financial expense was ISK 236 million in 1Q24, compared to an income of ISK 538 million in 1Q23.
• Other operating income was ISK 1,098 million in 1Q24, having been ISK 43 million for 1Q23.
• Administrative expenses in the first quarter of 2024 were ISK 7.4 billion compared to ISK 7.0 billion in 1Q23, an increase of 5%.
• The cost-to-income ratio was 44.9% in 1Q24, which is within the Bank's guidance range of 40-45% and below the target of 45%. The cost-to-income ratio was 42.1% in 1Q23.
• Net impairment amounted to ISK 704 million in 1Q24, compared to an impairment of ISK 675 million in 1Q23. The net impairment charge as a share of loans to customers, the annualised cost of risk, was 23bp in 1Q24, compared to 22bp in 1Q23.
• Loans to customers increased by ISK 24.9 billion in the quarter, or by 2% from the fourth quarter 2023 to ISK 1,248 billion.
• Deposits from customers grew by ISK 28.9 billion, or 3.4%, during the quarter, up to ISK 880 billion from end of 4Q23.
• Total equity at period-end amounted to ISK 215.7 billion compared to ISK 224.7 billion at year-end 2023.
• The total capital ratio was 23.6% at period-end of 1Q24, including the 1Q24 profit, compared to 25.3% at year-end 2023. The corresponding CET1 ratio was 19.9%, including the 1Q24 profit, compared to 21.4% at year-end 2023, which is 420bp above regulatory requirements, and above the Bank's financial target of having a 100-300bp capital buffer on top of CET1 regulatory requirements.

Key figures and ratios

1. Calculated as (Administrative expenses + Contribution to the Depositors' and Investors' Guarantee Fund – One-off items) / (Total operating income – One-off items).
2. C/I ratio in 2Q23 excludes a charge of ISK 860m due to an administrative fine.
3. Negative cost of risk means that there is a net release of impairments.
4. Stage 3, loans to customers, gross carrying amount.
5. Including 1Q24 profit for 31.3.24, 3Q23 profit for 30.9.23 and 1Q23 profit for 31.3.23.
6. MREL ratio includes the CET1 capital held to meet the combined buffer requirement.

Jón Guðni Ómarsson, CEO of Íslandsbanki
A new year brings both new opportunities and challenges and that was true of the first quarter of 2024. The high interest rate environment and persistent inflation have left their mark on public debate and indications are towards a decline in private consumption. Furthermore, the trend of our customers choosing CPI-linked mortgages continues. The current environment is challenging for businesses, but despite these challenges there has not been a significant increase in delinquency rates in recent months and asset quality remains strong. At the end of April, news broke that inflation had finally started retreating, with the rate of inflation at its lowest in over two years. The profit from Íslandsbanki's operations for the first quarter of 2024 amounted to ISK 5.4 billion with an annualised return on equity of 9.8%, which is slightly below the Bank's target of 10% or higher. Our cost-to-income ratio was 44.9%, within the Bank's target to have it below 45%.
Planning for Íslandsbanki's plot of land at Kirkjusandur, the site of the Bank's old headquarters, has now been concluded and ground will be broken in due course as the site, in an ideal location in Reykjavík, will be re-developed. The Bank is very keen to involve itself with important projects that benefit society such as urban regeneration.
S&P Global Ratings (S&P) announced in April that it was raising the Bank's long term issuer rating from BBB to BBB+ as a result of receding economic imbalances in Iceland. It is good to see that the rating agencies are recognising the stable and robust operations of the Icelandic banks. In March, the Bank issued a EUR 300 million senior preferred bond, a transaction that was four times oversubscribed and widely placed across European investors. This followed a similarly successful issuance in January for NOK 500 million and SEK 500 million senior preferred green bonds, an offering that was more than three times oversubscribed. We have also seen a very positive performance in the spreads on these foreign currency new issues.
Recently Íslandsbanki turned a renewed focus on financial health. Intergenerational surveys show that all age groups are increasingly concerned about financial health. The Bank has long been a leader in financial education and will now focus even more on financial health through its service and product development. The goal is to simplify banking and empower our customers financially. New digital products are a part of that journey, and as an example customers can now prepay parts of their loans in our app and use a new calculator on the Bank's website to see the effects of the additional payments.
The Bank will also focus on other aspects of health – both physical and emotional. We recently launched our ads for the upcoming Íslandsbanki Reykjavík Marathon, which continues to be the biggest charitable event of the year and will celebrate its 40th anniversary in 2024. Last year ISK 200 million was raised for charities by participants and the total amount raised to date is ISK 1.5 billion. We are very proud of our association with this event and this year we will be joined by Fríða Bjarnadóttir, the first woman to run a marathon in Iceland. The emotional health and wellbeing of the Bank's employees are at the core of our human resources policies. We focus on offering the best workplace that we can, aiming for a modern, family-friendly workplace with motivated, contented employees.

Investor Material
Full version of the Press Release is attached hereto. In the event of discrepancy between the Icelandic and English version of the Press Release the English version prevails.

Disclaimer
This press release may contain "forward-looking statements" involving uncertainty and risks that could cause actual results to differ materially from results expressed or implied by the statements. Íslandsbanki hf. undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after this press release. It is the investor's responsibility to not place undue reliance on these forward-looking statements which only reflect the date of this press release. Forward-looking statements should not be considered as guarantees or predictions of future events and all forward-looking statements are qualified in their entirety by this cautionary statement.

INVESTOR RELATIONS
An earnings conference call and webcast will take place on Friday 3 May 2024
Íslandsbanki will host a webcast in English for investors and market participants on Friday 3 May at 8.30 Reykjavík/GMT/9.30 London/BST, 10.30 CET. Jón Guðni Ómarsson, CEO, and Ellert Hlöðversson, CFO, will give an overview of the first quarter 2024 financial results and operational highlights.

The webcast will be accessible live through a link on the Bank's Investor Relations website where a recording will also be available after the meeting. Participation and the ability to ask written question is accessible via this link. If you wish to participate in the webcast via teleconference and be able to ask questions verbally, please register via this link here. Information regarding the webcast is available here.

Further information is available through Íslandsbanki Investor Relations, ir@islandsbanki.is.

Financial calendar
Íslandsbanki plans to publish its financial statements on the below dates:

25 July 2024 - Interim financial results 2Q24
23 October 2024 - Interim financial results 3Q24

Please note that the dates are subject to change.

Additional investor material
All investor material will subsequently be available and archived on the Bank's Investor Relations website, where other information on the Bank's financial calendar and silent periods can also be found.