ÍSLANDSBANKI RESULTS HIGHLIGHTS

First quarter 2026 (1Q26) financial highlights

• Net profit amounted to ISK 7.5 billion in the first quarter of 2026 (1Q25: ISK 5.2 billion), generating an annualised return on equity (ROE) of 13.6% (1Q25: 9.4%) for the quarter.
• Net interest income (NII) amounted to ISK 17.1 billion and increased by ISK 4.2 billion in 1Q26 compared to 1Q25.
• The net interest margin (NIM) was 3.9% in 1Q26 compared to 3.2% in 1Q25.
• Net fee and commission income (NFCI) was ISK 3.3 billion in 1Q26, an increase of 6.6% from 1Q25.
• Net financial expense was ISK 213 million in 1Q26, compared to an expense of ISK 986 million in 1Q25.
• Administrative expenses in 1Q26 amounted to ISK 7.8 billion, having been ISK 7.4 billion in 1Q25.
• The cost-to-income ratio was 38.5% in 1Q26 compared to 47.6% in 1Q25.
• The net impairment on financial assets increased to ISK 1,219 million in 1Q26, compared to ISK 3 million in 1Q25. The net impairment charge as a share of loans to customers, the annualised cost of risk, was 35bps in 1Q26, compared to 0bps in 1Q25.
• Loans to customers grew by ISK 34.1 billion during the first quarter of 2026, reaching a total of ISK 1,401 billion at the end of 1Q26.
• Deposits from customers grew by 4.6% in the first quarter and amounted to ISK 1,013 billion at the end of 1Q26.
• Total equity at the end of 1Q26 amounted to ISK 212.7 billion compared to ISK 225.4 billion at year-end 2025.
• The total capital ratio was 22.5% at the end of 1Q26, including 1Q26 profit compared to 24.0% at year-end 2025. The corresponding CET1 ratio was 18.6% at the end of 1Q26, including 1Q26 profit, compared to 20.1% at year-end 2025. The CET1 ratio at the end of 1Q26 was 363 bps above regulatory requirements, and above the Bank's financial target of having a 100-300 bps capital buffer on top of CET1 regulatory requirements.
• Total payout capacity amounts to ISK 29.2 billion including 1Q26 profit and uncompleted buybacks at the reporting date.
• 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. Taking into account the Group's combined buffer requirement at 31 March 2026, the resulting MREL as a % of REA requirement was 28.5%. At the end of 1Q26, the Bank's MREL ratio was 40.3%.

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 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:

Operating profit of Íslandsbanki amounted to ISK 7.5 billion in the first quarter and return on equity on an annualised basis was 13.6%, which is above analyst consensus for the quarter in both measures. An increase in net interest income, which was over 11% above analyst consensus, largely explains the higher profit compared with the first quarter of last year. Performance from core operations shows that the fundamentals of the Bank's operations are strong. Uncertainty in the international environment, volatility in foreign markets and lower activity in the domestic market affected fee income for the quarter, which nevertheless was higher than in the first quarter of 2025.

Íslandsbanki's results reflect the Bank's solid operations despite a challenging external environment. The new Loyalty Services of Íslandsbanki has been very successful, with 38 thousand customers signing up in its first three weeks. Customers' positive response confirms that simpler, more personal, and more transparent service matters, and we will continue developing the service with the aim of making it even better. Íslandsbanki's position within the SME market has been very strong, and we recently began offering payment acquiring as part of our product offering, further strengthening our services in that market.
The effects of uncertainty in the international environment have been felt domestically, as in many other places. Inflation has been persistent, and according to Íslandsbanki Research forecast, policy rates are not expected to decrease until, at the earliest, towards the end of the year. We are in close contact with our customers and monitor the impact of the external environment on activity and asset quality.
With the establishment of a development company focused on the use of artificial intelligence, we took another step toward the goal of implementing AI in an even more targeted way in the Bank's day-to-day operations. The intention is for the company to develop new software solutions in an agile and creative manner, and it will be interesting to follow those areas of the operations as they take off. Within the Bank, emphasis will continue to be placed on empowering employee, training and teaching them to use artificial intelligence in their work. The organisational changes that were recently implemented are a part of an initiative to enhance efficiency, shorten communication channels and simplify decision-making within the Bank. Íslandsbanki has undertaken extensive work to assess the impact of recent technological developments on the Bank’s operations and intends to be a leader in implementing new technology and thereby further enhancing our services to customers. The changes were a part in making the Bank better equipped to shape the future of banking services.

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 8 May 2026
Íslandsbanki will host a webcast in English for investors and market participants on Friday 8 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 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. 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 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 first 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.