First quarter 2025 (1Q25) financial highlights

• Net profit amounted to ISK 5.2 billion in the first quarter of 2025 (1Q24: ISK 5.4 billion), generating an annualised return on equity (ROE) of 9.4% (1Q24: 9.8%).
• Net interest income (NII) amounted to ISK 12.9 billion and increased by ISK 817 million in 1Q25 compared to 1Q24.
• The net interest margin (NIM) was 3.2% in 1Q25 compared to 3.0% in 1Q24.
• Net fee and commission income (NFCI) grew by 1.9% compared to 1Q24 and amounted to ISK 3.1 billion in 1Q25.
• Net financial expense was ISK 986 million in 1Q25, compared to ISK 236 million in 1Q24.
• Other operating income was ISK 467 million in 1Q25, compared to ISK 1,098 million in 1Q24.
• Administrative expenses in the first quarter of 2025 amounted to ISK 7.4 billion, compared to ISK 7.1 billion in 1Q24, an increase of 4.0%.
• The cost-to-income ratio was 47.6% in 1Q25 compared to 43.9% in 1Q24.
• The net impairment on financial assets was ISK 3 million in 1Q25, compared to a cost of ISK 704 million in 1Q24. The net impairment charge as a share of loans to customers, the annualised cost of risk, was 0.1bps in 1Q25, compared to 23bps in 1Q24.
• Loans to customers grew in the first quarter of 2025 by ISK 3.5 billion from the fourth quarter of 2024 to ISK 1,299 billion at 1Q25.
• Deposits from customers grew by 1.1% in the quarter and amounted to ISK 937 billion at the end of 1Q25.
• Total equity at period-end amounted to ISK 217.9 billion compared to ISK 227.4 billion at year-end 2024.
• The total capital ratio was 21.6% at the end of 1Q25, compared to 23.2% at year-end 2024. The corresponding CET1 ratio was 18.6%, compared to 20.1% at year-end 2024. The CET1 ratio at period-end was 320bps above regulatory requirements, and above the Bank's financial target of having a 100-300 bps capital buffer on top of CET1 regulatory requirements.
• The minimum requirement for own funds and eligible liabilities (MREL) for Íslandsbanki is 19.6% of the total risk exposure amount, in addition to the combined buffer requirement. At the end of first quarter 2025, the Bank's MREL ratio was 37.8%, 830 bps on top of requirements.

Key figures and ratios

1. Calculated as (Administrative expenses – One-off items) / (Total operating income – One-off items).
2. C/I ratio for 2Q24 excludes a charge of ISK 470m related 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.
6. MREL ratio includes the CET1 capital held to meet the combined buffer requirement.

Jón Guðni Ómarsson, CEO of Íslandsbanki:
The first quarter of 2025 saw considerable volatility in global markets and a level of uncertainty persists with regards to the announced tariff increases. This heightened uncertainty globally has also impacted the stock market domestically, visible by the 7.7% drop in the OMXI15GI during the first quarter of 2025.
Profit from Íslandsbanki's operations during the first quarter of 2025 amounted to ISK 5.2 billion, about 3% above analyst consensus. Net interest income rose by almost 7%, compared to the first quarter of 2024 and net fee and commission income grew by almost 2%. Net interest margin was 3.2% for the quarter. Both annualised return on equity and cost-to-income ratio were outside of our targets, landing at 9.4% and 47.6%, respectively. A net financial expense of ISK 986 million adversely affects the Bank's financial results for the first quarter.
Despite tumultuous times on the world stage, Íslandsbanki demonstrated good market access in March when the Bank issued EUR 300 million green senior preferred notes, which have a maturity of 5.5 year. The coupon corresponded to a spread of 140 bps over mid-swaps in EUR. Orders were received from more than 100 investors and the final order book stood at around EUR 1.1 billion. It is the longest-dated bond that the Bank has issued since 2018. Following the issuance, the Bank has to a large degree been pre-funded throughout the year making it less subject to the current market volatility.
Digital product development continues at Íslandsbanki. We recently launched a new and improved app. New features include "Safe to spend" option and a search option, both of which promote the financial health of our customers. We also launched a new online bank in February. These updated solutions have been very well received by our customers and we see great potential in delivering even better services through them.
With our partnership with VÍS being formally launched, VÍS insurance products are now available to the Bank's customers in our app. Our customers will also have the opportunity to meet VÍS insurance advisers in some of the Bank's branches. Mutual customers of both companies will enjoy special benefits from both companies. This partnership allows us to offer better terms to our customers and at the same time promote their financial health.
A proposal on the payment of a dividend to shareholders of ISK 12.1 billion was approved at Íslandsbanki's Annual General Meeting (AGM) held at the end of March. The dividend amount is in accordance with our dividend policy of paying out 50% of the preceding year's profit. The AGM further approved a renewal of the authorisation to buy back its own shares for up to 10% of the Bank's share capital as well as a proposal reducing the share capital by cancelling own shares. When the amount of dividend paid for 2024 is reviewed together with the buybacks carried out in 2024 the ratio of distribution to shareholders is close to 100% of the Bank's profit for 2024. Plans to optimise the Bank's capital structure are still at the forefront, subject to market conditions. As has already been stated, these plans may entail both internal and external growth opportunities, as well as through distribution to shareholders, whether by means of extraordinary dividends and/or through buybacks. The Bank's purchase of its own shares and distributions to shareholders are important elements of the optimisation of the Bank's capital structure.
The Parliament of Iceland recently passed a bill amending the law on the disposal of the Government of Iceland's holding in Íslandsbanki. Work has been ongoing for the last few months amongst the Government's advisers and the joint global coordinators preparing a further sell-down of the Government's remaining stake in Íslandsbanki. We have been fully involved in this work. We have undertaken much marketing work, promoting the Bank and its robust operations to current shareholders as well as other interested parties.
 
Investor Material
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 9 May 2025
Íslandsbanki will host a webcast in English for investors and market participants on Friday 9 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 2025 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. For participation and the ability to send in written question please register via this link. 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 according to the financial calendar below:
Second quarter results 2025 – 31 July 2025
Third quarter results 2025 – 30 October 2025
 
Further information on the Bank's 2025 financial calendar is available here. Please note that the date is 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.

This announcement is released by Íslandsbanki hf. and contains information that qualified or may have qualified as inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 (MAR), encompassing information relating to the first quarter 2025 financial results described above. For the purposes of MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055, this announcement is made by Ellert Hlöðversson, CFO of Íslandsbanki hf.