ISB Condensed Consolidated Interim Financial Statements Third Quarter 2026
Íslandsbanki hf.: Financial results for third quarter 2026
Net profit amounted to ISK 7.3 billion in the third quarter of 2026, generating an annualised return on equity (ROE) of 13.6%.
ÍSLANDSBANKI RESULTS HIGHLIGHTS
Third quarter 2026 (3Q26) financial highlights
- Net profit amounted to ISK 7.3 billion in the third quarter of 2026 (3Q25: ISK 6.9 billion), generating an annualised return on equity (ROE) of 13.6% (3Q25: 12.2%) for the quarter.
- Net interest income (NII) amounted to ISK 15.8 billion and increased by ISK 2.6 billion in 3Q26 compared to 3Q25.
- The net interest margin (NIM) was 3.5% in 3Q26 compared to 3.1% in 3Q25.
- Net fee and commission income (NFCI) was ISK 3.3 billion in 3Q26 compared to ISK 3.2 billion in 3Q25.
- Net financial expense was ISK 223 million in 3Q26, compared to an expense of ISK 353 million in 3Q25.
- Administrative expenses in 3Q26 amounted to ISK 7.3 billion, having been ISK 6.5 billion in 3Q25.
- The cost-to-income ratio was 38.4% in 3Q26 compared to 38.2% in 3Q25.
- The net impairment on financial assets was ISK 1,021 million in 3Q26, compared to a reversal of ISK 7 million in 3Q25. The net impairment charge as a share of loans to customers, the annualised cost of risk, was 29bps in 3Q26, compared to 0bps in 3Q25 and 25bps for 9M26, compared to -4bps for 9M25.
- Loans to customers increased by ISK 15.0 billion in 3Q26, reaching ISK 1,431 billion at quarter-end.
- Deposits from customers grew by 3.9% in the third quarter and amounted to ISK 1,078 billion at the end of 3Q26.
- Total equity at the end of 3Q26 amounted to ISK 215.4 billion compared to ISK 225.4 billion at year-end 2025.
- The total capital ratio was 21.8% at the end of 3Q26, including the 3Q26 profit, compared to 24.0% at year-end 2025. The corresponding CET1 ratio was 18.4% at the end of 3Q26, including half of the profit for the third quarter of 2026, in line with the Group's dividend policy compared to 20.1% at year-end 2025. The CET1 ratio at the end of 3Q26 was 315bps above regulatory requirements, and above the Bank's financial target of having a 100-300bps buffer on top of CET1 regulatory requirements.
- Total payout capacity amounts to ISK 22.3 billion including uncompleted buybacks at the reporting date.
- The minimum requirement for own funds and eligible liabilities (MREL) for the Group is 18.8% of the total risk exposure amount, in addition to the combined buffer requirement. Taking into account the Group's combined buffer requirement at 30 September 2026, the resulting MREL as a % of REA requirement was 28.5%. At the end of 3Q26, the Group's own funds and eligible liabilities as a % of REA was 40.4% A new resolution plan is expected to be approved for the Group in November, with an increase of MREL to 19.6% in line with the latest SREP results.
- Íslandsbanki bought 25.9 million own shares for ISK 3.7 billion during the third quarter.
| 3Q26 | 2Q26 | 1Q26 | 4Q25 | 3Q25 | ||
| PROFITABILITY | Profit for the period, ISKm | 7,269 | 7,069 | 7,456 | 5,947 | 6,901 |
| Return on equity | 13.6% | 13.3% | 13.6% | 10.5% | 12.2% | |
| Net interest margin (on total assets) | 3.5% | 3.4% | 3.9% | 2.9% | 3.1% | |
| Cost-to-income ratio1 | 38.4% | 43.1% | 38.5% | 43.5% | 38.2% | |
| Cost of risk2 | 0.29% | 0.13% | 0.35% | 0.32% | (0.00%) | |
| 30.9.26 | 30.6.26 | 31.3.26 | 31.12.25 | 30.9.25 | ||
| BALANCE SHEET | Loans to customers, ISKm | 1,431,038 | 1,416,048 | 1,401,212 | 1,367,106 | 1,333,234 |
| Total assets, ISKm | 1,819,463 | 1,788,385 | 1,786,697 | 1,728,147 | 1,734,056 | |
| Risk exposure amount, ISKm | 1,051,874 | 1,043,713 | 1,049,435 | 1,033,788 | 1,084,527 | |
| Deposits from customers, ISKm | 1,078,259 | 1,038,206 | 1,013,431 | 968,695 | 1,008,919 | |
| Customer loans to customer deposits ratio | 133% | 136% | 138% | 141% | 132% | |
| Non-performing loans (NPL) ratio3 | 2.4% | 2.6% | 2.0% | 1.5% | 1.6% | |
| LIQUIDITY | Net stable funding ratio (NSFR), for all currencies | 122% | 126% | 123% | 127% | 129% |
| Liquidity coverage ratio (LCR), for all currencies | 179% | 188% | 177% | 203% | 207% | |
| CAPITAL | Total equity, ISKm | 215,393 | 211,095 | 212,718 | 225,359 | 226,974 |
| CET 1 ratio4 | 18.4% | 19.1% | 18.6% | 20.1% | 18.9% | |
| Tier 1 ratio4 | 19.4% | 20.7% | 20.2% | 21.7% | 19.8% | |
| Total capital ratio4 | 21.8% | 23.0% | 22.5% | 24.0% | 21.9% | |
| Leverage ratio4 | 10.9% | 11.7% | 11.5% | 12.5% | 11.9% | |
| MREL ratio5 | 40.4% | 43.9% | 40.3% | 44.0% | 36.8% |
1. C/I ratio for 4Q25 excludes salary expenses of ISK 804m due to early retirement of employees and 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 3Q26 profit for 30.9.26, 1Q26 profit for 31.3.26 and 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:
Íslandsbanki's operations during the third quarter of 2026 were solid, with strong activity across all business segments. The Bank's net profit amounted to ISK 7.3 billion in the third quarter, compared with ISK 6.9 billion in the same quarter last year. The profit for the first nine months of the year totalled ISK 21.8 billion, compared with ISK 19.3 billion in the corresponding period of 2025. Net interest margin was 3.5% for the quarter. Annualised return on equity for the quarter was 13.6%, and the cost-to-income ratio was 38.4%.
Operationally, the Bank continued to make good progress in line with its strategy. Our Loyalty Services continue to gain traction, with more than 68,000 registered customers and 17,900 loyalty accounts established. We continued to develop the Íslandsbanki app, introducing generative AI functionality that enables users to create AI-generated summaries of their spending. In September, Vanguard funds became available in the app, as the Bank and Vanguard celebrate a 28-year partnership. Business Banking continued to build on its strong position during the quarter, welcoming a number of new customer relationships across the country. Acquiring services, introduced earlier this year, continue to grow. The number of businesses using the service is increasing and we feel a strong customer interest which provides a solid foundation for the continued growth of the service.
The 2027 budget bill proposes raising the bank tax from 0.145% to 0.254%, an increase of around 75%. It has been suggested that the 2020 reduction of the bank tax did not benefit customers, but the data suggests otherwise. Since then, the interest spread faced by households has narrowed despite a sharp rise in policy rates, and service fees have declined in real terms. Special taxes on Icelandic banks are already more than five times the Western European average. This already places the Icelandic financial system at a competitive disadvantage, and the proposed increase would further weaken its competitiveness.
During the quarter, the Central Bank of Iceland authorised Íslandsbanki to buy back own shares of an amount up to ISK 10 billion in market value and reduce its share capital accordingly. This is an important step in the execution of the Bank's capital strategy and reflects the strength of our balance sheet. Íslandsbanki maintains capital levels comfortably above regulatory requirements, which provides flexibility to support future growth while returning excess capital to shareholders in an efficient manner. Share buybacks remain an important part of the Bank's capital management framework.
The Íslandsbanki Reykjavík Marathon, held in August, continues to be the largest charity event in the country, and this year more than ISK 307 million was raised. The event remains one of the highlights of the year in the Bank's activities, bringing together over 16,000 participants this year in support of charities and organisations across the country.
Looking ahead, we are excited about opportunities to support our customers through new and improved solutions, greater use of technology and continued investment in our services. Our strong capital position provides flexibility to pursue growth opportunities, participate in important projects and create long-term value for customers and shareholders. We remain committed to developing our services in line with our customers' evolving needs while delivering outstanding service.
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 30 October 2026
Íslandsbanki will host a webcast in English for investors and market participants on Friday 30 October at 8.30 Reykjavík/GMT/London, 9.30 CET. Jón Guðni Ómarsson, CEO, and Ellert Hlöðversson, CFO, will give an overview of the third quarter of 2026 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.
Further information is available through Íslandsbanki Investor Relations, ir@islandsbanki.is.
Financial calendar
The financial calendar for 2027 will be published before end of year 2026.
Further information on the Bank's financial calendar is available here.
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 third quarter 2026 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.