Third quarter 2024 (3Q24) financial highlights
• Íslandsbanki reported a net profit of ISK 7.3 billion in the third quarter of 2024 (3Q23: ISK 6.0 billion), generating an annualised return on equity (ROE) of 13.2% (3Q23: 11.0%).
• Net interest income (NII) amounted to ISK 11.8 billion and fell by ISK 69 million in 3Q24 compared to 3Q23.
• The net interest margin (NIM) was 2.9% in 3Q24, same as in 3Q23.
• Net fee and commission income (NFCI) grew by 4.9% compared to 3Q23 and amounted to ISK 3.6 billion in 3Q24.
• Net financial income was ISK 228 million in 3Q24, compared to an expense of ISK 193 million in 3Q23.
• Administrative expenses in the third quarter of 2024 amounted to ISK 6.6 billion, compared to ISK 6.0 billion in 3Q23, an increase of 10.0%.
• The cost-to-income ratio was 41.4% in 3Q24 but was 39.0% in 3Q23.
• The net impairment on financial assets was a reversal of ISK 860 million in 3Q24, compared to a cost of ISK 583 million in 3Q23. The net impairment charge as a share of loans to customers, the annualised cost of risk, was -27bps in 3Q24, compared to 19bps in 3Q23.
• Loans to customers fell by ISK 2.5 billion from the second quarter of 2024, or by 0.2%, to ISK 1,274 billion at the end of third quarter 2024.
• Deposits from customers grew during the third quarter by ISK 10.9 billion, or 1.2%, up to ISK 927 billion at the end of 3Q24.
• Total equity at period-end amounted to ISK 223.4 billion compared to ISK 224.7 billion at year-end 2023.
• The total capital ratio was 23.4% at the end of 3Q24, compared to 25.3% at year-end 2023. The corresponding CET1 ratio was 20.2%, compared to 21.4% at year-end 2023, which is 480bps above regulatory requirements, and above the Bank's financial target of having a 100-300bps capital buffer on top of CET1 regulatory requirements. The minimum requirement for own funds and eligible liabilities (MREL) for Íslandsbanki is 19.6% of total risk exposure amount. The Bank aims to optimise its capital structure before year-end 2025, subject to market conditions. This may entail both organic or external growth, and/or distributions to shareholders through formal buyback programs, reverse tenders or extraordinary dividends.

First nine months 2024 (9M24) financial highlights
• Íslandsbanki's net profit for the first nine months 2024 was ISK 18.0 billion (9M23: ISK 18.4 billion), with an annualised ROE for 9M24 of 10.9%, compared to 11.3% in 9M23.
• Net interest income totalled ISK 36.4 billion in 9M24, a reduction of 1.3% YoY.
• Net fee and commission income (NFCI) fell by 1.7% YoY and amounted to ISK 10.3 billion in 9M24, compared to ISK 10.5 billion in 9M23.
• Net financial expense was ISK 507 million in 9M24 compared to an expense of ISK 214 million in 9M23.
• Administrative expenses were ISK 21.3 billion in 9M24, excluding an administrative fine of ISK 470 million charged in the second quarter of 2024, compared to ISK 19.8 billion in 9M23, which in turn, excluded an administrative fine of ISK 860 million.
• Cost-to-income ratio, adjusted for administrative fines, rose YoY from 41.3% in 9M23 to 44.2% in 9M24.
• Net impairment on financial assets was a reversal of ISK 293 million in the first nine months of 2024, as compared to expenses of ISK 13 million for the first nine months of 2023.

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 and C/I ratio for 4Q23 excludes a charge of ISK 100m 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 and 3Q23 profit for 30.9.23.
6. 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 2024 were strong, and the after-tax profit for the quarter amounted to ISK 7.3 billion with an annualised return on equity for the period of 13.2%, which is above our target. Annualised return on equity for the first nine months of 2024 was 10.9%, which also exceeds our target. Total operating income grew by almost 4% compared to the third quarter of 2023, and the Bank's goal of maintaining a cost-to-income ratio of below 45% was achieved, with a ratio of 41.4% for the third quarter, and 44.2% for the first nine months of 2024. Efforts have been made to streamline the operations with the guiding principles of efficiency gains.
The Bank's annual Autumn Financial Forum was held at the end of September and was well attended. Íslandsbanki Research presented its newly released economic forecast to those in attendance. There was a particular emphasis on land-based fish farming, and it is clear that there will be a significant need for more investment in this growing industry in the coming years. There is also a large and growing requirement for infrastructure finance in Iceland and the Bank is well equipped to participate in the projects that lie ahead.
Asset quality remains good, and the prolonged high interest rate environment has not had a significant impact on the Bank's loan book, although there has been a slight increase in delinquencies on unsecured loans, the total amount of those being small in proportion to the overall size of the Bank's loan portfolio. News of receding inflation and the Central Bank's decision to lower policy rates at the beginning of October was therefore welcome news. If forecasts hold true, inflation is expected to continue to decrease in the coming months, potentially allowing for further policy rate cuts by the Central Bank.
We are very keen to help our customers with their financial well-being and we employ various tools to achieve this. Recently we have been in touch with our customers ahead of their mortgages rate resets and have also been assisting them in navigating the challenging high interest rate environment. Additionally, the Bank will continue to focus on financial education, to ensure that our customers are aware of the best opportunities to manage their finances.

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 Thursday 24 October 2024
Íslandsbanki will host a webcast in English for investors and market participants on Thursday 24 October 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 third 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 according to the financial calendar below:
Fourth quarter and year-end results 2024 – 13 February 2025
First quarter results 2025 – 8 May 2025
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 third quarter 2024 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.