Fourth quarter 2025 (4Q25) financial highlights

• Net profit amounted to ISK 5.9 billion in the fourth quarter of 2025 (4Q24: ISK 6.3 billion),generating an annualised return on equity (ROE) of 10.5% (4Q24: 11.2%).
• Net interest income (NII) amounted to ISK 12.4 billion and increased by ISK 1,516 million in 4Q25 compared to 4Q24.
• The net interest margin (NIM) was 2.9% in 4Q25 compared to 2.7% in 4Q24.
• Net fee and commission income (NFCI) was 4.2 billion in 4Q25, an increase of 16.0% from 4Q24.
• Net financial income was ISK 404 million in 4Q25, compared to an income of ISK 169 million in 4Q24.
• Other operating income was ISK 447 million in 4Q25, compared to ISK 777 million in 4Q24.
• Administrative expenses in 4Q25 amounted to ISK 8.3 billion, having been ISK 7.1 billion in 4Q24.
• The cost-to-income ratio was 43.5% in 4Q25, excluding salary expenses of ISK 804 million due to early retirement of employees and an income of ISK 237 million within net interest income (ISK 550 million reversed from charge in 3Q25 due to provision for legal proceedings and a charge of ISK 313 million due to correction from previous years. The cost-to-income ratio for 4Q24 was 45.7%.
• The net impairment on financial assets increased to ISK 1,087 million in 4Q25, compared to a reversal of ISK 352 million in 4Q24. The net impairment charge as a share of loans to customers, the annualised cost of risk, was 32bps in 4Q25, compared to -11bps in 4Q24.
• Loans to customers grew by ISK 33.9 billion during the fourth quarter of 2025, reaching a total of ISK 1,367 billion at the end of 4Q25.
• Deposits from customers contracted by 4.0% in the fourth quarter and amounted to ISK 969 billion at the end of 4Q25.
• Total equity at the end of 4Q25 amounted to ISK 225.4 billion compared to ISK 227.4 billion at year-end 2024.
• The total capital ratio was 24.0% at the end of 4Q25, compared to 23.2% at year-end 2024. The corresponding CET1 ratio was 20.1% at the end of 4Q25, the same as at year-end 2024. The CET1 ratio at the end of 4Q25 was 510bps 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 the Bank is 18.8% of the total risk exposure amount, in addition to the combined buffer requirement. At the end of 4Q25, the Bank's MREL ratio was 44.0%, 1,550 bps on top of requirements.

Full Year 2025 (FY25) financial highlights

• Íslandsbanki's net profit for 2025 was ISK 25.2 billion (2024: ISK 24.2 billion), with return on equity for 2025 of 11.2%, compared to 10.9% in 2024.
• Net interest income totalled ISK 52.5 billion in 2025, an increase of 11.0% YoY.
• Net fee and commission income (NFCI) amounted to ISK 14.1 billion in 2025 which is an increase of 7.4% from 2024, when it amounted to ISK 13.1 billion.
• Net financial expense was ISK 922 million in 2025 compared to an expense of ISK 338 million in 2024.
• Administrative expenses were ISK 29.5 billion in 2025, having been ISK 27.6 billion in 2024, when a charge for an administrative fine in the amount of ISK 470 million in 2Q24 is excluded.
• Cost-to-income ratio improved YoY from 43.8% in 2024 to 42.4% in 2025. Cost-to-income ratio for 2025 excludes salary expenses of ISK 804 million due to early retirement of employees and a charge of 313 million within net interest income due to correction from previous years. Cost-to-income ratio for 2024 excludes an administrative fine of ISK 470 million charged in 2Q24.
• Net impairment on financial assets was ISK 681 million in 2025, compared to a reversal of ISK 645 million in 2024.

Capital optimisation, dividend and further distribution of excess capital

• The Bank remains committed in its efforts to optimise its capital structure, subject to market conditions.
• A dividend payment of ISK 12.6 billion, in line with the dividend policy of paying out around 50% of preceding year's profit, will be proposed by the Board of Directors of the Bank to the 2026 Annual General Meeting (AGM) to be held in March 2026.
• The Financial Supervisory Authority of the Central Bank of Iceland (FSA) has granted the Bank authorisation to buy back own shares of an amount up to ISK 15 billion market value. The Bank will announce the timing and execution of the repurchase of own shares under the aforementioned authorisation once a decision to that effect has been made. The FSA has also granted the Bank authorisation to reduce its share capital in an amount equivalent to the own shares purchased based on previous authorisations granted by the FSA.
• The Board of Directors will seek a renewed authorisation to buy back own shares at the 2026 AGM to the legally allowed extent.
• CRR 3 was implemented in Iceland in December 2025 and had a significant impact on the Bank's risk exposure amount (REA) and capital ratios. The implementation led to an ISK 88 billion (7.8%) decrease in REA, driven mainly by a reduction in REA due to credit risk. The reduction in REA led to an increase in capital ratios with CET 1 increasing from 18.5% to 20.1%, Tier 1 ratio increasing from 20.0% to 21.7% and the total capital ratio increasing from 22.1% to 24.0%.

Updated financial targets for the medium term.

• The Bank has set new financial targets for the medium term, i.e., 3-4 years, as follows:

Key figures and ratios

1. C/I ratio for 4Q25 excludes salary expenses of ISK 804m due to early retirement of employees and an income of ISK 237m within net interest income (ISK 550m reversed from charge in 3Q25 due to provision for legal proceedings and a charge of ISK 313m due to correction from previous year). C/I ratio for 3Q25 excludes a charge of 550m within net interest income due to a provision for legal proceedings.
2. Negative cost of risk means that there is a net release of impairments.
3. Stage 3, loans to customers, gross carrying amount.
4 Including 3Q25 profit for 30.9.25.
5. MREL ratio includes the CET1 capital held to meet the combined buffer requirement.

Jón Guðni Ómarsson, CEO of Íslandsbanki:
The year 2025 will be remembered for many things. A significant and meaningful event in Íslandsbanki's history took place when the Government of Iceland completed the sell down of its stake in the Bank. The offering was a great success, the offer size was upsized due to unprecedented demand, and the number of shareholders peeked off at around 35 thousand shareholders immediately following the offering. Significant changes in Íslandsbanki's shareholder base prompted increased involvement by investors to the Bank's Board of Directors and during a shareholders' meeting held at the beginning of 2026 a new Board of Directors was elected with Heiðar Guðjónsson as chairman.
The Bank's operations during the fourth quarter of 2025 were robust and the profit for the period amounted to ISK 5.9 billion and annualised return on equity was 10.5%. The overall profit for 2025 amounted to ISK 25.2 billion and return on equity was 11.2%. The Bank thus achieved all its financial targets during the year.
Additional steps were taken toward the Bank's optimal capitalisation structure through a successful issuance of Additional Tier 1 (AT1) notes in November. The issuance totalled SEK 700 million and NOK 200 million and represented the tightest spread by an Icelandic bank since 2008. This issue not only demonstrates the financial strength of Íslandsbanki but also that of the entire Icelandic financial system.
Various opportunities lie in a further utilisation of artificial intelligence, technical developments and sharpened focus on excellent service to our customers. Íslandsbanki's app enhancements have been very well received by our customers as well as product development such as Ergo's new "Cars with experience" product, which opened up new possibilities for financing older cars. The Bank has expressed its willingness to take part in the needed financing of infrastructures in Iceland. Íslandsbanki participation in the financing of the new Ölfusá bridge is a clear indication of follow-through by the Bank.
A new year always brings around vast opportunities, both for the operations of the Bank as well as in various projects with our customers. We are well equipped and welcome the coming months determined to continue to be a force for good within Icelandic society.

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 13 February 2026
Íslandsbanki will host a webcast in English for investors and market participants on Friday 13 February at 8.30 Reykjavík/GMT/London, 9.30 CET. Jón Guðni Ómarsson, CEO, and Ellert Hlöðversson, CFO, will give an overview of the fourth quarter of 2025 and full year 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 questions please register via this link. To participate in the webcast via teleconference and for the option 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:

First quarter 2026 results – 7 May 2026

Second quarter 2026 results – 29 July 2026
Third quarter 2026 results – 29 October 2026

 Further information on the Bank's financial calendar is available here. 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.

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 fourth quarter 2025 and full year 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.