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4Q25 Financial Results Jón Guðni Ómarsson Chief Executive Officer Ellert Hlöðversson Chief Financial Officer 12 February 2026
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Core operating income for fourth quarter grew by 14.4% year-on-year 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results Strong growth in all revenue streams 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 years. C/I ratio for 3Q25 excludes a charge of ISK 550m due to provision for legal proceedings. C/I ratio for 2025 excludes ISK 804m in salary expenses and a charge of ISK 313m within net interest income. 2. Income of ISK 119m in 2024 recognized in “Profit (loss) from non-current assets held for sale, net of tax” has been restated in the line item “Other operating income” and “income tax” and C/I ratio has been restated accordingly . 3. Including 3Q25 profit for 30.9.25. ROE in excess of financial targets ROE Considerable excess capital (ISK 32 billion) in place Total capital ratio3 C/I well below target of being <45% C/I ratio1,2 11.2% 9.4% 13.0% 12.2% 10.5% 4Q24 1Q25 2Q25 3Q25 4Q25 10.9% 11.2% 2024 2025 45.7% 47.6% 41.0% 38.2% 43.5% 4Q24 1Q25 2Q25 3Q25 4Q25 23.2% 21.6% 21.5% 21.9% 24.0% 20.1% 18.6% 18.5% 18.9% 20.1% 31.12.24 31.3.25 30.6.25 30.9.25 31.12.25 CET1 ratio 43.8% 42.4% 2024 2025 ROE target > 10% C/I ratio target < 45% 2
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Updated medium term financial targets 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results Solid performance and opportunities within the current operations support path to updated targets Updated Target 4Q25 2025 Previous Target Return on equity >13% 10.5% 11.2% >10% Cost-to-income ratio <43% 43.5% 42.4% <45% CET1 excess 100-300bps 510bps 510bps 100-300bps Dividend-payout-ratio 50% 50% 2026 Guidance ROE in 2026 expected to be ~12% for the year as a whole, assuming normal level of impairments C/I ratio expected to be ~43% in 2026 Loans to customers and revenue, in general to grow in line with nominal GDP through the business cycle while international lending provides additional growth Changes to remuneration policy approved by shareholders in June 2025 allowing for elements of variable pay Employee Stock Option Plan implemented in 3Q25 Employee Incentive Scheme implemented in early February – financing of scheme contingent upon ROE reaching lower end of accrual range ROE accrual range for funding of incentive scheme 11- 12.5% for 2026 Employee incentive scheme 3
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12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results 4 Strong performance across all business units Personal Banking Growth in deposits ISK 38.5 billion in 2025 or 8% from end of 2024 and 4% loan growth in 2025 Return on equity was 15.2% and cost-to-income ratio 51.1% in 2025 Core income grew by 12.4% in 2025 compared to 2024 Almost 400,000 Personal Banking visits to Íslandsbanki branches in 2025 ISK 258 million worth of disputed payments successfully settled and recovered Business Banking Loan growth in 2025 was 7% and deposits increased by 4% NII grew 4.5% in 2025 and NFCI by 1.5% from year-end 2024 Return on equity was 16.7% and cost-to-income ratio was 40.2% in 2025 Highest market share amongst SMEs with 37% overall market share and 41% within the capital area1 Sustainable loans counted for 16% of the BB loan portfolio at end of 2025 Highest turnover in equities on Nasdaq Iceland for 10 out of 12 months in 2024 Corporate & Investment Banking Return on equity was 12.3% in 2025 and cost-to-income ratio was 39.0% New lending within CIB in 2025 ISK 110 billion and refinancing ISK 62 billion Project pipeline in Corporate Finance is strong and important milestone projects completed in 2025 8% increase in new clients in Asset Management and 8% in new asset under management 1. Average market share from Gallup's last four corporate surveys, the most recent one conducted in 4Q25.
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A balance between digital solutions and personalised services 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results Personal Banking seeks to meet our customers' needs through proactive engagement 2025 Statistics 31.2 million 41,518 chats with contact centre 623,555 Transactions in ATMs 93% Personal Banking customers active in Íslandsbanki app 192,165 phone calls with contact centre >93,000 Fróði chats and 56% solved by himself Higher ranking in App store following updates visits to the Íslandsbanki app Partnership with • Integrated financial solutions delivered to customers through partnership with VÍS • ~10,000 of referrals since roll-out of partnership in May 2025 • Creates added value at key life moments • Updates to Íslandsbanki app My family, How much did I spend? and My flexibility make everyday banking simpler and more personalised • Improvements have contributed to higher app rating App improvements 5
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12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results Acquiring services to further strengthen relationship with SMEs across the country Our commitment to SMEs reinforced with increased product offering Íslandsbanki to start offering acquiring services to merchants – roll-out expected within the next few weeks Reliable and modern transaction processing solutions that support both in-store and online payments New product to an already extensive product offering for SMEs where Íslandsbanki has a strong market share Supporting our customers in more ways! Another excellent year for Business Banking • Enhanced digital services for SMEs in 2025 • Expense management • Launch of new Online Bank • The Íslandsbanki app now includes a built in Payday feature • ERGO 40 YEARS – 200% growth in monthly applications for car financing after the introduction of Cars with experience • Highest NPS score amongst domestic peers during 2025 and an overall 37% market share, and 41% within the capital area1 1. Average market share from Gallup's last four corporate surveys, the most recent one conducted in 4Q25 and Business Banking NPS development amongst SMEs from Gallup. 6
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12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results Largest share of Nasdaq Iceland combined equity and fixed income market turnover in 2025, 21.3% The highest turnover in equities 22.3% and second highest in bonds 20.7% on Nasdaq Iceland 8% increase in new clients and 8% increase in new asset under management Foreign lending, as share of CIB loan portfolio, grew from 3% to 13% The success of our customers is at the forefront Strong cross-functional culture within Corporate and Investment Banking ensures we meet our customers’ needs Íslandsbanki is a trusted partner of businesses in Iceland Successful Drangar equity raise Lively market activity and robust results in CIB 7
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Íslandsbanki is at the forefront of implementing AI to everyday banking 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results 2020 2022 20242023 2025 Implementation of Fróði, the chatbot built on conversational AI, with 82% success score and able to solve 55% of chats by himself Partnership with Miðeind, an Icelandic AI & Natural Language Processing company to support the usage of the Icelandic language in AI initiatives The launch of SAM the internal chatbot – first use of generative AI within Íslandsbanki Fróði gets a voice Roll-out of Microsoft Copilot - 98% of employees have received copilot training First usage of machine learning AI in customer interaction Generative AI implemented to Fróði – with rigid controls Machine learning for retail customer loan decisions Broader GenAI ambition guided by 3 focus areas: People • Process • Platform 8
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Íslandsbanki is a force for good 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results Not only by participating in our customers’ journeys – but also for the greater good of society Infrastructure bank Financing of Ölfusá bridge Íslandsbanki Reykjavík Marathon ISK 326 million raised for charities in 2025 > ISK 2 billion since 2006 Successful partnerships with customers across the country Íslandsbanki's Entrepreneurship Fund Financial educational meetings and seminars ~1700 guests 20 open events Helping Hand initiative Employees lend a hand to charitable causes 9
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, 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results Íslandsbanki is a force for good The fund offers support to projects that support the four UN Sustainable Development Goals that the Bank has chosen to focus on • Íslandsbanki continues its support to the blossoming start-up and entrepreneurial community in Iceland • Record number of applications in 2025 ISK 60 million awarded to 16 projects in 2025 – ISK 325 million awarded since inception 10
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49% 18% 11% 7% 5% 5% 4% 1% Focus areas for 2030 27% of long-term debt green or sustainable Íslandsbanki is a force for good Sustainable journey continues with key focus areas for 2030 set and larger share of long-term debt being green or sustainable ESG rating of A3 from Reitun Net zero emissions and transition Financial health of customers Own workforce, diversity and inclusion Clear and strong governance Reporting disclosure and education Classification of sustainable assets by category in the Sustainable Funding Framework at year-end1 Green buildings Sustainable management of living natural resources and land use Clean transportation Renewable energy Other green assets Equality and Empowerment Affordable housing Other social assets ISK 178bn 88% 87% 86% 84% 73% 12% 13% 14% 16% 27% 31.12.2021 31.12.2022 31.12.2023 31.12.2024 31.12.2025 Green/sustainable Long-Term Debt Non-Green/Sustainable Long- Term Debt 1Other green loans consists of Sustainable and circular processes and biodiversity and Sustainable waste management. Other social consists of Access to Essential Servicesand Education and vocational training. 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results 11
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A more favourable and diversified funding structure 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results 12 Good diversification of funding sources and an even split between ISK and foreign currencies Moody’s affirmed long term A3 credit rating 3 times in 2025 Two green EUR 300 million senior preferred bonds issued in 2025 2025 Funding highlights Issuance of AT1 notes in November, SEK 700m and NOK 200m • Favourable market conditions in 2025 were utilised by Íslandsbanki with the issuance of two green EUR 300 million SP bonds and AT1 notes in SEK and NOK • November 2025 Green EUR 300 million SP bond due in 2032 is the longest ever SP issued by Íslandsbanki • Balanced maturity profile in the coming years at historically competitive prices provides flexibility • Ample FX reserves fuel strategy of growth of international loan portfolio
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12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results Merger discussions between Íslandsbanki and Skagi Completed Near complete Near complete Ongoing Not started Good progress since signing of heads of terms in October 2025 Heads of terms announced to the market on 6 October 2025 Due diligence on main risk factors Synergy assessment by external advisors Analysis of competition market conditions and drafting of notice to ICA Initial steps Due diligence and synergy assessment Competition matters 1 2 3 4 Impact assessment of potential changes to capital requirements related to risks from bank holdings in insurance companies to be completed1 Asset management powerhouse Leading investment bank in Iceland Approval phase Includes approval of regulatory bodies and final approvals by shareholders' meetings 5 Merger notification sent to regulatory bodies Terms of a merger agreement to be decided and approved by boards of both entities Merger agreementCross-selling opportunities with a larger customer base 110,000 individual banking customers 30,000 SMEs 1. cf. draft discussion document no. 2/2025 from the Central Bank of Iceland published on 19 December 2025 on guidelines related to the SREP process available on the website of the Central Bank of Iceland. 13
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2025 was an eventful year for Íslandsbanki as a listed company 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results Trading volumes rose significantly following FMO in May and stayed elevated throughout 2025 1. Source: Nasdaq Iceland, Share price is adjusted for dividend paid. 2. Source: Nasdaq market data and volume of Government’s sale excluded from total May 2025 numbers. • FMO boosted market liquidity and average daily trades in 2025 were up 375% compared to 2024 • Pension funds is the largest investor group (42.2%) followed by retail investors (28.0%) 60.0 80.0 100.0 120.0 140.0 160.0 180.0 3.1.25 3.2.25 3.3.25 3.4.25 3.5.25 3.6.25 3.7.25 3.8.25 3.9.25 3.10.25 3.11.25 3.12.25 3.1.26 9,900 35,000 31,700 27,800 25,300 Íslandsbanki's share price development in 2025 Dividend adjusted price1 in ISK and number of shareholders • Ownership 85.4% domestic and 14.6% foreign at year end 2025 • New Boad of Directors elected at a meeting of shareholders in January 2026 - 50 100 150 200 250 300 May June July August September October November December 2024 2025 Trading volume comparison 2H2024 vs 2H20252 Shares, million 14
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3 11.9 12.3 12.3 12.6 2.3 9 14.6 15 2021 2022 2023 2024 2025 2026E Dividend Buybacks Capital optimisation an ongoing priority for the Bank 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results 15 Combination of dividends and buybacks distribution to shareholders in 2025 amounted to >100% of 2024 profits Capital distribution 2021-2026E, ISKbn • Payment of ISK 12.6 billion to be proposed to 2026 AGM in accordance with dividend policy • Own shares at year-end 2025 amounted to 5.35% of issued share capital • New ISK 15 billion authorisation obtained in February 2026 from the FSA • Íslandsbanki will seek renewal of authorisation from AGM to buy back own shares and to reduce share capital through cancellation of own shares No dividend due to COVID-19
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Financial Overview 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results 16
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8.8 5.1 -1.2 1.3 0.6 2.8 3.0 -18 -14 -10 -6 -2 2 6 10 14 18 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 Imports Exports Inventory chg. Investment Public consumption Priv.consumption GDP New business cycle, subdued growth following contraction… Real GDP and main subitems, YoY change, % GDP growth weak in 2026 but set to gain steam later on Temporary period of sluggish growth due to export sector setbacks and high real interest rates ..and housing market still remains quite resilient in the face of high real rates Year-on-year increase in residential house prices and housing market activity Inflation persistent in the near term but likely to eventually subside … MoM CPI change (%, left axis) and 12m trailing inflation(%, right axis) … and the Central Bank is expected to continue cutting rates in 2026 CBI policy rate and real policy rate, % 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results -15 0 15 30 0 500 1000 1500 2000 2021 2022 2023 2024 2025 No. of contracts (l.axis) YoY price change (r.axis) Real house prices (r.axis) -1.0 -0.5 0.0 0.5 1.0 1.5 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 2024 2025 2026 MoM CPI change (r.axis) CPI changes YoY (l.axis) -8 -6 -4 -2 0 2 4 6 8 10 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Effective CBI policy rate Inflation Real policy rate 17
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4Q25 improving year on year aside from one-off effects 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results Higher quality of earnings as profits as higher portion of profits stems from core income Profit for the period – 4Q24 vs 4Q25 ISKm Profit for the year – 2024 vs 2025 ISKm 18 Adjustments in 4Q25 • ISK 237m of net interest income related to reversal of provision related to a supreme court ruling and interest expense relating to previous accounting periods • ISK 804m of one-off salary related costs Adjustments in 2025 • ISK 313m of net interest income related to interest expense relating to previous accounting periods • ISK 804m of one-off salary related costs 6,367 5,9476,283 1,279 576 (51) (508) (1,439) 227 (420) 4Q24 Net interest income Net fee & commission income Other operating income Operating expenses Impairments Income tax Adjusted 4Q25 profit One-off items and tax adjustments 4Q25 profit 26,076 25,24924,246 5,519 977 (2,000) (762) (1,326) (578) (827) 2024 Net interest income Net fee & commission income Other operating income Operating expenses Impairments Income tax Adjusted 2025 profit One-off items and tax adjustments Net profit
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NIM uplift year-on-year as impact of imbalances reduces 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results Inflationary ticks in 4Q25 close to zero adversely impacts both net interest income and margin • Net interest margin was 2.9% in 4Q25 (2.7% in 4Q24), while net interest margin for 2025 was 3.1% • Accounted within other interest are among other effects of CPI adjustments of the loan book and other items • The CPI imbalance grew in the quarter and amounted to ISK 200 billion at end of 4Q25, up from 182 billion at end of 3Q25 related to maturity dates of IRS’ • Aggregated inflationary ticks for 4Q25 was 0.09% compared to 1.01% in 3Q25 and 0.14% in 4Q24 • Expectations are that aggregated inflationary ticks for 1Q26 will be 2.23% - considerably higher than 1.04% in 1Q25 • CB policy rate were lowered by 25 basis points in November • Related to a Supreme Court ruling on variable nominal mortgages in October 2025, ISK 550 million were provisioned in 3Q25 through NII, while reversed in 4Q25 – net zero effect on 2025 as a whole HighlightsNet interest income Business segments, ISKm Net interest income – YoY comparison ISKm Net interest margin On total assets 3,327 4,550 4,514 4,426 4,501 4,621 4,847 4,853 4,998 4,888 3,196 3,553 3,333 3,310 3,501 -269 -11 1,181 1,076 -1,049-550 55010,875 12,939 13,881 13,260 12,391 4Q24 1Q25 2Q25 3Q25 4Q25 Personal Banking Business Banking Corporate & Investment Banking Other Provision for legal proceedings 2.7% 3.2% 3.3% 3.1% 2.9% 8.77% 8.15% 7.64% 7.50% 7.38% 4Q24 1Q25 2Q25 3Q25 4Q25 Average CB policy rate 10,875 227 146 234 (72) 550 431 12,391 4Q24 Lending volume Lending margin Deposit volume Deposit margin Reversed provision Other interests 4Q25 19
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Net fee and commission income with a strong growth from previous year 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results Increased activity in capital markets and card related performance fees provide considerable uplift year on year • Net fee and commission income with a 16.0% growth year-on-year – net fee and commission income for 2025 as a whole growing by 7.4% year-on-year • Cards and payments remain the largest fee income stream - considerable growth from previous years mainly explained by higher performance-based fees from MC • Recovery and increasing volume in capital markets further strengthened growth in both asset management and investment banking and brokerage in the quarter HighlightsNet fee and commission income Business segments, ISKm Net fee and commission income – YoY comparison ISKm Net fee and commission income By type, ISKm 1,085 798 1,117 946 1,437 488 483 509 515 544 1,285 1,106 1,345 1,114 1,563348 377 352 340 369429 448 299 303 3193,607 3,067 3,620 3,229 4,183 4Q24 1Q25 2Q25 3Q25 4Q25 Personal Banking Business Banking Corporate & Investment Banking Íslandssjóðir Allianz Ísland hf. Other 836 753 711 695 881 718 654 914 679 1,021 1,067 769 1,049 854 1,391458 497 534 607 619429 448 299 303 3193,607 3,067 3,620 3,229 4,183 4Q24 1Q25 2Q25 3Q25 4Q25 Asset management Investment banking and brokerage Cards and payment processing Loans and guarantees Allianz Ísland hf. Other fee 3,607 45 303 324 161 (110) (147) 4,183 4Q24 Asset management Investment banking and brokerage Cards and payment processing Loans and guarantees Allianz Ísland hf. Other fee and commission income 4Q25 20
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Fair value adjustments positively impacts other operating income 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results Market risk exposure remains a small part of the Bank's operations • Net financial income of ISK 404 million was recorded in the quarter, mainly attributable to gains on bonds as well as through economic hedges • Other operating income amounted to ISK 447 million, mainly related to share of profit of associates • Equity market risk continues to be limited in size compared to the overall balance sheet of the Bank in line with the Bank’s strategy HighlightsNet financial income (expense) ISKm Shares and equity instruments1 ISKbn Other operating income and net FX gain ISKm Bonds and debt instruments2 ISKbn 1. Excluding listed shares and equity instruments used for economic hedging. 2. Excluding listed bonds and debt instruments used for economic hedging. 169 -986 13 -353 404 4Q24 1Q25 2Q25 3Q25 4Q25 777 463 131 124 447 113 47 71 152 157 4Q24 1Q25 2Q25 3Q25 4Q25 Other operating income Net foreign exchange gain 6.1 6.3 4.5 3.5 3.2 2.4 2.6 2.6 2.5 2.8 8.5 8.9 7.1 6.1 6.0 31.12.24 31.3.25 30.6.25 30.9.25 31.12.25 Listed shares Unlisted shares 33.5 48.1 52.6 51.6 58.0 104.7 84.4 76.0 82.6 87.9 138.2 132.5 128.6 134.2 145.8 31.12.24 31.3.25 30.6.25 30.9.25 31.12.25 FX ISK 21
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Strong cost-to-income ratio during the quarter 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results Results continue to be within the Bank’s financial targets • One-off costs related to dismantling of early retirement scheme amounting to ISK 804 million adversely impacting salaries in 4Q25 compared to previous year • Dismantling of early retirement scheme unlocks yearly savings and reduces FTEs • Adjusted for this one-off expense, salaries grew by 4.1% year-on-year • Other operating expenses increased by 13.2% between years and 3.3% YTD between years, mainly attributable to IT related expenses • The cost-to-income ratio was 43.5% during the quarter and 42.4% for the year, excluding one-off items - both within financial target • Unadjusted C/I ratio is 43.8% for 2025 and 47.5% for 4Q25 HighlightsAdministrative expenses ISKm Cost-to-income ratio1 Administrative expenses – by type ISKm 1.C/I ratio for 4Q25 excludes salary expenses of ISK 804m due to early retirement of employees and an income of ISK 237m withi n 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 years). C/I ratio for 3Q25 excludes a charge of ISK 550m within net interest income due to a provision for legal proceedings. Administrative expenses – YoY comparison ISKm 2,824 2,921 2,781 2,531 3,201 2,115 2,184 2,126 1,891 2,490 1,913 1,967 1,926 1,759 2,220248 324 428 298 4337,100 7,396 7,261 6,479 8,344 4Q24 1Q25 2Q25 3Q25 4Q25 Personal Banking Business Banking Corporate and Investment Banking Other 7,100 866 38 108 (5) 95 142 8,344 Administrative expenses 4Q24 Salaries and related expenses Professional services Software and IT expenses Real estate and office equipment Depreciation Other administrative expenses Administrative expenses 4Q25 45.7% 47.6% 41.0% 38.2% 43.5% 4Q24 1Q25 2Q25 3Q25 4Q25 C/I ratio C/I target 4,244 4,489 4,412 3,793 4,306 804486 476 498 365 5241,245 1,245 1,197 1,282 1,353390 416 422 436 485551 591 555 458 6937,100 7,396 7,261 6,479 8,344 4Q24 1Q25 2Q25 3Q25 4Q25 Salaries and related expenses Early retirment scheme (one-off cost) Professional services Software and IT expenses Real estate and office equipment Depreciation Other administrative expenses 22
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Balance sheet reflects a balanced loan and funding profile 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results Well diversified funding structure as well as loan book with limited market risk exposure Assets • Vast majority of assets consist of lending to both retail and corporates • Strong liquidity portfolio is a consistent factor in balance sheet management • Very limited exposure to non-liquid or non-lending assets Liabilities • Deposits from retail and corporates are the single largest funding source • Bonds and debt instruments have become a more prominent part of the funding mix thanks to continuous focus on attracting new pockets of demand, including foreign currency and ESG issuance Simplified balance sheet structure 31.12.2025, ISK 1,728bn Liquid assets 18% Loan book 79% Deposits 57% Stable funding 40% 23 Other Corporate & public sector lending Lending to individuals Loans to credit institutions Liquidity portfolio Cash in Central Bank ISKm. Other Equity Subordinated loans Senior unsecured bonds Covered bonds Deposits from retail and corporations Deposits from credit institutions and pension funds
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Growth in loan book on 4Q25mainly attributable to international activities 12 February 2026 Shift between mortgage products normalising – effect of fixed rate imbalance has subsided • Credit exposure fully covered by collateral is ISK 1,283 billion or 94% of loans to customers • Composition of the loan portfolio comparable to previous quarters • Around 94% of the loan book are covered by collateral – comparable to previous quarters • The credit quality of assets continues to be robust due to strong risk management practices and disciplined lending policies • Low and stable LTV across all types of securities – LTV for the mortgager book remains at 54%, same as 4Q24 • In 3Q25, following a ruling by the Supreme Court of Iceland in a case concerning variable interest rates on a non-index linked mortgage, the Bank recognised a provision of ISK 550m due to potential claims • As further rulings in cases relating to other lenders have been rendered, the Bank has reassessed its position and reversed the aforementioned provision in 4Q25, resulting in no net impact on profit for the year 2025 HighlightsLoans to customers By business division, ISKbn Loans to customers By sector, with tourism as a separate sector Mortgage portfolio By interest rate type, gross carrying amount, ISKbn LTV distribution by underlying asset class Loan splitting approach, ISKbn Íslandsbanki 4Q25 & FY2025 Financial Results 44% 44% 43% 44% 43% 12% 11% 11% 11% 10% 8% 8% 8% 8% 8% 7% 7% 7% 7% 8% 7% 8% 7% 7% 7% 6% 6% 5% 5% 7% 6% 7% 7% 6% 6%6% 6% 6% 6% 6%5% 4% 5% 5% 5% 31.12.24 31.3.25 30.6.25 30.9.25 31.12.25 Individuals Other Industrial and transportation Seafood Construction Commerce and services Tourism Real estate Mortgages to individuals 608 614 624 633 631 324 333 348 346 347 363 352 359 354 387 1,295 1,299 1,331 1,333 1,365 31.12.24 31.3.25 30.6.25 30.9.25 31.12.25 Personal Banking Business Banking Corporate & Investment Banking 123 126 132 135 134 228 231 238 242 245 103 106 105 100 104 113 105 103 109 102 564 569 578 587 585 31.12.24 31.3.25 30.6.25 30.9.25 31.12.25 CPI linked floating CPI linked 5Y fixed NIL floating NIL 3-5Y fixed 38% 62% 37% 63% 38% 62% 36% 64% 35% 65% 0 20 40 60 80 100 120 140 31.12.24 31.12.25Average LTV 54% (YE24: 54%) 24
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NPLs remain both strong and stable, consistent with historical quarters 12 February 2026 Increase in Stage 2 loans due to a handful of credit cases, mainly in the construction sector • Annualised cost of risk was 20bps in 4Q25 (-11bps for 4Q25) – normalized cost of risk assumed 20- 25bps through the business cycle • The impairment allowance for a few distressed credit cases was increased in the quarter predominantly related to a single credit case coming into foreclosure • Unchanged weights of economic scenarios; 20% good, 50% baseline and 30% bad. • NPLs remain stable across the portfolio, for both corporates and mortgages • As sale time of new residential real estate has both growth considerably through the year and remained high, a handful of construction projects have been classified on stage 2 HighlightsNet impairment on financial assets By period, ISKbn Performing loans with forbearance Development of gross carrying amount as ratio of total loans Mortgages portfolio: Stage 2 and 3 (NPL) Gross carrying amount as ratio of total mortgages Loans to customers: Stage 2 and 3 (NPL) Development of gross carrying amount as ratio of total loans Íslandsbanki 4Q25 & FY2025 Financial Results 3.1% 3.0% 3.5% 3.6% 4.6% 1.6% 1.8% 1.6% 1.6% 1.5% 31.12.24 31.3.25 30.6.25 30.9.25 31.12.25 Stage 2 Stage 3 0.5% 0.6% 0.6% 0.6% 0.7% 1.3% 1.1% 1.4% 1.5% 1.4% 1,8% 1,7% 2,0% 2,0% 2,0% 31.12.24 31.3.25 30.6.25 30.9.25 31.12.25 Companies Individuals -0.1 0.0 -0.2 0.0 1.1 -0.2 -0.2 -0.1 -0.1 -0.20.0 -0.1 0.0 0.00.0 0.3 -0.1 0.1 0.3 -0.4 0.0 -0.4 0.0 1.1 4Q24 1Q25 2Q25 3Q25 4Q25 A few distressed credit cases General economic environment Changes in models Other changes in loan portfolio 1.2% 1.0% 1.1% 1.1% 1.3% 0.9% 1.0% 1.0% 1.0% 1.0% 31.12.24 31.3.25 30.6.25 30.9.25 31.12.25 Stage 2 Stage 3 25
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Deposits growth moderates with lower rate environment 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results Reduction in wholesale funding offset by growth in retail deposit base. • Overall deposits levels fell by 4% in 4Q25, mainly driven by strategic reduction in wholesale deposits • Continued growth in deposit by individuals, which grew by 2.9% in 4Q25 • For 2025, deposits grew by 4.6% while deposit by individuals grew by 7.9% • Term deposits were 17% of total deposits at the end of 4Q25, comparable to historical quarters • 70% of deposits held by individuals (and 47% of all deposits) are covered by the deposit guarantee scheme HighlightsFunding sources By type, % of total liabilities and equity Customer loans to customer deposits ratio Development, % Deposits from customers and credit institutions Development, by LCR category, ISKbn Short-term funding Long-term funding 8% 51% 12% 12% 2% 13% 6% 51% 13% 12% 2% 13% Deposits from financial inst. and pension funds Deposit from retail and corp, sovereigns, CB and PSE Senior unsecured bonds Covered Bonds Subordinated debt Equity 30.9.25 31.12.25 140% 139% 138% 132% 141% 117% 117% 116% 112% 119% 31.12.24 31.3.25 30.6.25 30.9.25 31.12.25 Customer loans to customer desposit ratio Customer loans (excl. Mortgages funded with CB) to customer deposits ratio 534519508503495 179182170161164 165186175171170 5767655354 4872636357 31.12.2530.9.2530.6.2531.3.2531.12.24 Financial institutions Pension Funds Corporations, sovereigns, central banks and PSE Small and medium enterprises Individuals 1025 982981951939 26
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Strong liquidity position paves the way for growth and distributions 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results Liquid assets 18% of the total balance sheet and fully marked-to-market • All liquidity measures well above regulatory requirements • The Bank's EUR LCR at the end of 4Q25 was 733% • The Bank's securities portfolios are all MtM (FVTPL and FVOCI). There is no unrealised loss due to HtM (amortised cost) • IRRBB is carefully monitored and managed. The Bank is fully compliant to the supervisory outlier tests HighlightsTotal liquidity coverage ratio (LCR) Liquidity coverage ratio for ISK Liquid assets % of total assets, ISKbn Net stable funding ratio (NSFR) 203% 0% 100% 200% 300% LCR Regulatory minimum 129% 0% 50% 100% 150% 200% LCR ISK Regulatory minimum 7089778747 41403639 37 91857989110 2827262612 79114 8669 62 31.12.2530.9.2530.6.2531.3.2531.12.24 Balances with financial institutions Level 2 liquid assets Domestic bonds Foreign government bonds Cash and balances with Central Bank 309 (18%)310 (19%) 268 (17%) 305 (18%) Level 1 liquid assets 354 (20%) 127% 0% 50% 100% 150% NSFR Regulatory minimum 27
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Constructive funding markets in 2025 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results Good diversification of funding sources across products and maturities, as well as across investor types and locations • The Bank’s wholesale borrowing split remains evenly divided between ISK and foreign currencies • Domestically in 2025, the Bank sold ISK 23 billion of ISK denominated covered bonds and ISK 9 billion of ISK denominated senior preferred bonds • The Bank issued two green senior preferred EUR 300m bonds in 2025, including its longest to date; a 7-year maturity with a 3.50% coupon, corresponding to a spread of mid swaps +130bps • The Bank continued its capital optimisation with the issuance of AT1 in November; SEK 700m and NOK 200m • Limited maturities in foreign currencies throughout 2026 allow the Bank to remain an adaptive issuer • AT1s amounting to SEK 388m is expected to be called this September – refinancing will be subject to the Bank’s capital position and market conditions around the call date • In November, Moody's Ratings affirmed Íslandsbanki' s A2 long-term deposit and A3 long-term issuer ratings, with a stable outlook Highlights Sources of borrowings ISKbn Contractual maturity profile of borrowings 31.12.25, ISKbn Borrowings per year, ISKbn Currency split of borrowings 31.12.25, ISKbn ISK 485bn 40 22 7 39 61 2 8 21 8 23 4513 25 54 89 17 11 54 111 82 39 199 2026 2027 2028 2029 ≥2030 Other borrowings Hybrid/sub. capital - FX Senior unsecured - FX Covered Bonds - FX Hybrid/sub. capital - ISK Senior unsecured - ISK Covered Bonds - ISK205 206 170 165 169 9 11 16 32 39 11 21 22 23 44 45 44 45 189 159 158 116 181 36 24 17 9 1749 28 12 11438 503 456 400 485 31.12.21 31.12.22 31.12.23 31.12.24 31.12.25 Other borrowings Hybrid/sub. capital - FX Senior unsecured - FX Covered Bonds - FX Hybrid/sub. capital - ISK Senior unsecured - ISK Covered Bonds - ISK ISK 48% EUR 37% SEK 10% NOK 3% USD 2% 27 18 31 22 23 1 9 7 16 911 10 44 31 75 58 64 101 10 12 11 69 167 105 102 145 2021 2022 2023 2024 2025 Other borrowings Hybrid/sub. capital - FX Senior unsecured - FX Covered Bonds - FX Hybrid/sub. capital - ISK Senior unsecured - ISK Covered Bonds - ISK 28
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CRR 3 had a significant positive effect on REA 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results CET1 ratio boosted by 1.6 percentage points • CRR 3 was enacted into Icelandic law in December 2025 and has had a notable impact on Íslandsbanki’s REA and capital ratios. • The new more risk sensitive standardised approach for credit risk had the largest impact along with the new standardised approach for credit risk. • REA would have been ISK 1.122 billion according to CRR 2, but is ISK 1.034 billion under CRR 3, an ISK 88 billion (7.8%) reduction in REA. • The Bank had previously indicated that the adoption of CRR 3 would lower the REA by 6-7%. A prudent estimation of the operational risk REA in the previous quarter explains most of the jump to 7.8% • Largest change comes from the residential real estate portfolio where a 20% risk weight is now applied to loans up to 55% LTV compared to a 35% risk weight up to 80% of LTV. With an average LTV of 54%, this significantly lowered the REA. • A new asset class for loans secured with income producing real estates (IPRE) has been introduced in CRR 3, with lower risk weights for lower LTV’s has further decreased the REA. • Land acquisition, development and construction exposures (ADC) are assigned a 150% risk weight in the updated regulation, apart from exposure to residential property where the obligor has more than 20% equity at risk, which rarely applies in the Banks construction portfolio. • Updates to the Market risk approach have been postponed until 2027. Assuming that the Bank adopts the simplified standardised approach the REA for market risk would increase from ISK 4 billion to ISK 13 billion. REA 31.12.2025 - Bridge from CRR 2 to CRR 3 ISKbn Changes in REA and capital ratios ISKbn CRR 3 CRR 2 Difference %Diff. Credit risk 940 1,007 -67 -7% Market risk and CVA 5 5 0 5% Operational risk 89 110 -22 -20% Total Risk Exposure Amount 1,034 1,122 -88 -7.8% CET1 Ratio 20.1% 18.5% 1.6% Capital ratio 24.0% 22.1% 1.9% 1,122 1,03451 22 59 40 18 900 950 1,000 1,050 1,100 1,150 CRR 2 Operational risk Mortgages Other real estate Other ADC CRR3 REA Increase Decrease 29
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Íslandsbanki's capital ratios well above target 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results The implementation of CRR 3 provided additional capital optimisation capacity as CET1 ratio was boosted by 1.6 percentage points • The implementation of CRR 3 led to 7.8% decrease in REA, thus increasing the capital ratio by 1.9 percentage points and CET1 ratio by 1.6 percentage points. • As of 30 June 2025, the Bank must maintain a total SREP capital requirement of 9.4%, on top of which a combined buffer requirement of 9.7% is placed – resulting in an overall capital requirement of 19.1% and capital target of 20.1-22.1% assuming a 100-300bp management buffer. • As of 31 December 2025, total excess CET1 capital (including uncompleted buybacks at the reporting date) amount to around ISK 36 billion of which ISK 4 billion have been used for share buybacks year to date 2026. • Beginning of January, ISK 15 billion were approved by the FSA to be allocated to buybacks, and deducted from the capital base in 1Q26 • The Bank remains committed in its efforts to optimise its capital structure through both growth, as well as through distributions to shareholders and expects to conclude capital optimisation through 2026. HighlightsCurrent regulatory requirements and minimum capital target 31.12.2025, by capital composition Capital and leverage ratios % of REA (% of total exposure for leverage ratio) 1CET1 capital target set at mid-point of management buffer REA and REA ratio ISKbn and % of total assets 15.0% 17.0% 20.1% 1.8% 1.8% 1.7% 2.4% 2.4% 2.2% 0.0% 5.0% 10.0% 15.0% 20.0% Overall capital requirement Management buffer Capital target Capital ratio CET1 AT1 T2 Overall capital requirement 19.1% Capital target 20.1-22.1% Management buffer 1.0-3.0% Capital ratio 24.0% 1 1,041 1,062 1,084 1,085 1,034 64.7% 63.7% 63.9% 62.5% 59.8% 31.12.24 31.3.25 30.6.25 30.9.25 31.12.25 REA REA ratio (REA/Total assets) 23.2% 21.6% 21.5% 21.9% 24.0% 20.1% 18.6% 18.5% 18.9% 20.1% 13.2% 12.1% 12.0% 11.9% 12.5% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 31.12.24 31.3.25 30.6.25 30.9.25 31.12.25 Total capital ratio CET1 ratio Leverage ratio 1 30
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12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results Updated Financial Targets Solid performance Opportunities 10.9% 11.2% 2024 2025 • ROE 11.2% for 2025 • NII up 13.9% and NFCI up 16% • Ample capital reserves • Capital optimisation still at forefront ROEROE >13% Excess CET1 ISK 36 billion 31
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Q&A 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results 32
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Appendix I About Íslandsbanki and additional financial information 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results 33
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Key figures 2025 ROE 11.2% Cost-to-income ratio2 42.4% CET1 ratio 20.1% Total capital ratio 24.0% LCR 203% Group, all currencies NSFR 127% Group, all currencies Leverage ratio 12.5% Total assets ISK 1,728bn Ratings and certifications BBB+/A-2 Positive outlook Stable outlook A3 A3 Exceptional ESG risk rating This is Íslandsbanki We empower our customers to be a force for good Progressive thinking Collaboration Professionalism Values The Bank 725 FTEs: Number of FTEs at Íslandsbanki at period-end 12 branches Listed on Nasdaq Iceland as of June 2021 31% Retail customers 37% SMEs Market share1 Sustainability risk integrated into Íslandsbanki's risk model for corporate lending Sustainability in 2025 Digital milestones in 2025 1. For retail customers, based on the number of customers with active deposits as percentage of people with domicile in Icela nd, for SMEs on average market share from Gallup's last four corporate surveys the most recent one carried out during 4Q2 5. 2. C/I ratio for 2025 excludes salary expenses of ISK 804m due to early retirement of employees and a charge of ISK 313m within net interest income due to correction from previous years. 3. Except individuals and small companies, which are not included in the dataset. The Bank's objective is to assess all of its large customers' ESG risk. 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results The share of ESG risk-assessed credit risk remained stable between years, at 88%3 Sustainability risk integrated into Íslandsbanki's risk model for corporate lending Íslandsbanki's sustainable assets amounted to ISK 178 billion at year end New Online Bank launch led to a 70% reduction of logged issued from 2024 to 2025 No high or very high severity incidents were reported throughout 2025 AI-powered M365 Copilot productivity tool deployed for entire staff, with training and integration into knowledge repositories 34
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Financial overview 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results Key figures & 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 wit hin 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 amoun t. 4. Including 3Q25 profit for 30.9.25. 5. MREL ratio includes the CET1 capital held to meet the combined buffer requirement. 4Q25 3Q25 2Q25 1Q25 4Q24 PROFITABILITY Profit for the period, ISKm 5,947 6,901 7,192 5,209 6,283 Return on equity 10.5% 12.2% 13.0% 9.4% 11.2% Net interest margin (on total assets) 2.9% 3.1% 3.3% 3.2% 2.7% Cost-to-income ratio1 43.5% 38.2% 41.0% 47.6% 45.7% Cost of risk2 0.32% (0.00%) (0.12%) 0.00% (0.11%) 31.12.25 30.9.25 30.6.25 31.3.25 31.12.24 BALANCE SHEET Loans to customers, ISKm 1,367,106 1,333,234 1,331,288 1,298,849 1,295,388 Total assets, ISKm 1,728,147 1,734,056 1,696,034 1,667,429 1,607,807 Risk exposure amount, ISKm 1,033,788 1,084,527 1,084,492 1,061,903 1,040,972 Deposits from customers, ISKm 968,695 1,008,919 966,075 936,779 926,846 Customer loans to customer deposits ratio 141% 132% 138% 139% 140% Non-performing loans (NPL) ratio3 1.5% 1.6% 1.6% 1.8% 1.6% LIQUIDITY Net stable funding ratio (NSFR), for all currencies 127% 129% 125% 128% 125% Liquidity coverage ratio (LCR), for all currencies 203% 207% 185% 202% 168% CAPITAL Total equity, ISKm 225,359 226,974 224,725 217,894 227,355 CET 1 ratio4 20.1% 18.9% 18.5% 18.6% 20.1% Tier 1 ratio4 21.7% 19.8% 19.4% 19.5% 21.0% Total capital ratio4 24.0% 21.9% 21.5% 21.6% 23.2% Leverage ratio4 12.5% 11.9% 12.0% 12.1% 13.2% MREL ratio5 44.0% 36.8% 36.7% 37.8% 33.4% 35
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Income statement 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results 36 Income statement, ISKm 4Q25 4Q24 ∆% 2025 2024 ∆% Net interest income 12,391 10,875 14% 52,471 47,265 11% Net fee and commission income 4,183 3,607 16% 14,099 13,122 7% Net financial income (expense) 404 169 139% (922) (338) 173% Net foreign exchange gain 157 113 39% 427 607 (30%) Other operating income 447 777 (42%) 1,165 2,401 (51%) Total operating income 17,582 15,541 13% 67,240 63,057 7% Salaries and related expenses (5,110) (4,244) 20% (17,804) (16,329) 9% Other operating expenses (3,234) (2,856) 13% (11,676) (11,299) 3% Administrative fines - - - - (470) (100%) Administrative expenses (8,344) (7,100) 18% (29,480) (28,098) 5% Bank tax (522) (454) 15% (2,084) (1,900) 10% Total operating expenses (8,866) (7,554) 17% (31,564) (29,998) 5% Net impairment on financial assets (1,087) 352 - (681) 645 - Profit before tax 7,629 8,339 (9%) 34,995 33,704 4% Income tax expense (1,682) (2,056) (18%) (9,746) (9,458) 3% Profit for the period 5,947 6,283 (5%) 25,249 24,246 4% Key ratios Net Interest Margin (NIM) 2.9% 2.7% 3.1% 2.9% Cost-to-income ratio (C/I)1 43.5% 45.7% 42.4% 43.8% Return on Equity (ROE) 10.5% 11.2% 11.2% 10.9% Cost of risk (COR) 0.32% (0.11%) 0.05% (0.05%) 1. C/I ratio for 4Q25 excludes salary expenses of ISK 804m due to early retirement of employees and an income of ISK 237m wit hin 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 ra tio for 3Q25 excludes a charge of 550m within net interest income due to a provision for legal proceedings.
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Íslandsbanki’s MREL requirement 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results A new resolution plan approved for the Bank on 17 October 2025 Minimum Requirement for Own Funds and Eligible Liabilities (MREL), 31.12.2025 MREL = RCA+LCC =2x(P1+P2) • The Icelandic Resolution Authority approves annually a resolution plan for the Bank. The Resolution plan stipulates that the MREL requirement for Íslandsbanki is the sum of the Loss absorption amount (LAA) and Recapitalisation amount (RCA), both equal to the total SREP capital requirement in force at the date of approval (9.4%), resulting in an MREL requirement of 18.8% of REA. • CET1 capital that is maintained to meet the combined buffer requirement can not be used to fulfil MREL, therefore the effective requirement can be monitored as 28.5% MREL Development, % 33.4% 37.8% 36.7% 37.1% 44.0% 28.5% 0 .050 .10 .150 .20 .250 .30 .350 .40 .450 .50 31.12.24 31.3.25 30.6.25 30.9.25 31.12.25 MREL MREL requirement 9.8% 9.4% 9.4% 9.8% 14.2% 20.0%28.6% 44.0% MREL including CBR Own funds and eligible liabilities Eligible liabilities Own funds RCA LCC Combined buffer requirement 37
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Assets 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results Asset base mainly consists of loans and liquid assets 1. Stage 3, loans to customers, gross carrying amount. 38 Assets, ISKm 31.12.25 30.9.25 Δ Δ% 31.12.24 Δ Δ% Cash and balances with Central Bank 80,394 114,055 (33,661) (30%) 65,716 14,678 22% Loans to credit institutions 80,009 99,117 (19,108) (19%) 50,486 29,523 58% Bonds and debt instruments 151,959 139,432 12,527 9% 142,618 9,341 7% Derivatives 5,304 5,092 212 4% 5,324 (20) (0%) Loans to customers 1,367,106 1,333,234 33,872 3% 1,295,388 71,718 6% Shares and equity instruments 20,517 16,815 3,702 22% 24,330 (3,813) (16%) Investment in associates 5,384 4,948 436 9% 4,701 683 15% Investment property 2,900 2,900 - - 2,600 300 12% Property and equipment 4,702 4,769 (67) (1%) 5,039 (337) (7%) Intangible assets 2,682 2,632 50 2% 2,684 (2) (0%) Other assets 7,190 11,062 (3,872) (35%) 8,921 (1,731) (19%) Total Assets 1,728,147 1,734,056 (5,909) (0%) 1,607,807 120,340 7% Key ratios Risk Exposure Amount (REA) 1,033,788 1,084,527 (50,739) (5%) 1,040,972 (7,184) (1%) REA / total assets 59.8% 62.5% 64.7% Non-performing loans (NPL) ratio¹ 1.5% 1.6% 1.6%
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Growth in loan book mainly attributable to international activities 12 February 2026 Outlook for a softer domestical loan growth in the short term as the economy cools 1. Risk class distribution at YE24 shown as comparison • Composition of the loan portfolio comparable to previous quarters • Around 94% of the loan book are covered by collateral – comparable to previous quarters • The credit quality of assets continues to be robust due to strong risk management practices and conservative lending policies HighlightsLoans to customers By business division, ISKbn Loans to customers By sector, with tourism as a separate sector LTV distribution by underlying asset class Loan splitting approach, ISKbn Loans to customers: gross carrying amount1 Risk class and impairment stage, 31.12.2025, ISKbn Íslandsbanki 4Q25 & FY2025 Financial Results 534 591 204 24 20 1-4 5-6 7-8 9 10 Unrated YE2024 Stage 3 Stage 2 Stage 1 0 50 100 150 200 250 300 Other collateral Cash & securites Vehicles & equipment Vessels Commercial real estate Residential real estate Average LTV 52% (YE24: 54%) 44% 44% 43% 44% 43% 12% 11% 11% 11% 10% 8% 8% 8% 8% 8% 7% 7% 7% 7% 8% 7% 8% 7% 7% 7% 6% 6% 5% 5% 7% 6% 7% 7% 6% 6%6% 6% 6% 6% 6%5% 4% 5% 5% 5% 31.12.24 31.3.25 30.6.25 30.9.25 31.12.25 Individuals Other Industrial and transportation Seafood Construction Commerce and services Tourism Real estate Mortgages to individuals 608 614 624 633 631 324 333 348 346 347 363 352 359 354 387 1,295 1,299 1,331 1,333 1,365 31.12.24 31.3.25 30.6.25 30.9.25 31.12.25 Personal Banking Business Banking Corporate & Investment Banking 39
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NPLs remain both strong and stable, consistent with historical quarters 12 February 2026 Increase in Stage 2 loans due to a handful of credit cases, mainly in the construction sector • The impairment allowance for a few distressed credit cases was increased in the quarter predominantly related to a single credit case coming into foreclosure • As time on market for new residential real estate has grown considerably through the year, a handful of construction projects have been classified on stage 2 • The definition of forbearance includes a 24-month probation period. Therefore, loans are classified as forborne even after normal payments have resumed HighlightsNet impairment on financial assets By period, ISKbn Current and expected cost-of-risk Performing loans with forbearance Development of gross carrying amount as ratio of total loans Loans to customers: Stage 2 and 3 (NPL) Development of gross carrying amount as ratio of total loans Íslandsbanki 4Q25 & FY2025 Financial Results • Annualised cost of risk was 32bps in 4Q25 (-11bps for 4Q24) • The probability weights of economic scenarios were kept unchanged at 20% (good), 50% (baseline), and 30% (bad) at the end of 4Q25. The weights were last changed at end of 1Q22 • A shift of 5% from baseline to the bad scenario would increase the impairment allowance by ISK 220 million while 5% shift from the baseline to the good would decrease the allowance by ISK 90 million 3.1% 3.0% 3.5% 3.6% 4.6% 1.6% 1.8% 1.6% 1.6% 1.5% 31.12.24 31.3.25 30.6.25 30.9.25 31.12.25 Stage 2 Stage 3 -0.1 0.0 -0.2 0.0 1.1 -0.2 -0.2 -0.1 -0.1 -0.20.0 -0.1 0.0 0.00.0 0.3 -0.1 0.1 0.3 -0.4 0.0 -0.4 0.0 1.1 4Q24 1Q25 2Q25 3Q25 4Q25 A few distressed credit cases General economic environment Changes in models Other changes in loan portfolio 40 0.5% 0.6% 0.6% 0.6% 0.7% 1.3% 1.1% 1.4% 1.5% 1.4% 1,8% 1,7% 2,0% 2,0% 2,0% 31.12.24 31.3.25 30.6.25 30.9.25 31.12.25 Companies Individuals
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Shift between mortgage products normalising 12 February 2026 Adverse impact of fixed rate imbalance has subsided from the mortgage book, in line with expectations • In 3Q25, following a ruling by the Supreme Court of Iceland on variable nominal mortgage rates, the Bank provisioned ISK 550m due to potential claims • As further rulings on cases have been rendered, the Bank now believes that potential reimbursements are unlikely and has reversed the aforementioned provision. • Nevertheless, the Bank has made adjustments to its product offering following the rulings to ensure that its products are suitable for the needs of the market Highlights Íslandsbanki 4Q25 & FY2025 Financial Results LTV distribution of mortgages Gross carrying amount, loan splitting approach, ISKbn Mortgage portfolio By interest rate type, gross carrying amount, ISKbn Interest rate reset profile for NIL 3-5y fixed rate mortgages Gross carrying amount, ISKbn Mortgages portfolio: Stage 2 and 3 (NPL) Gross carrying amount as ratio of total mortgages 123 126 132 135 134 228 231 238 242 245 103 106 105 100 104 113 105 103 109 102 564 569 578 587 585 31.12.24 31.3.25 30.6.25 30.9.25 31.12.25 CPI linked floating CPI linked 5Y fixed NIL floating NIL 3-5Y fixed 38% 62% 37% 63% 38% 62% 36% 64% 35% 65% 13 6 3 2 17 9 54 1Q26 2Q26 3Q26 4Q26 2027 2028 2029+ // 0 20 40 60 80 100 120 140 31.12.24 31.12.25Average LTV 54% (YE24: 54%) 1.2% 1.0% 1.1% 1.1% 1.3% 0.9% 1.0% 1.0% 1.0% 1.0% 31.12.24 31.3.25 30.6.25 30.9.25 31.12.25 Stage 2 Stage 3 41
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Slower real estate market transpires into the construction portfolio 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results • Loans to real estate companies and construction amount to 10% and 7% of loans to customers, respectively • Over half of exposure in the construction sector is for residential where sale time of residential real estate has grown throughout the year and remains high – resulting in increasing uncertainty on the sector • Real estate companies naturally hedged in cash flow as both rental agreements and financing are both long-term and primarily CPI linked. • High occupancy ratio of the listed commercial real estate companies of around 95% HighlightsDevelopment of exposure to real estate companies Gross carrying amount by period, ISKbn Development of construction exposure Gross carrying amount by period, ISKbn Real estate portfolio: Stage 2 and 3 (NPL) Gross carrying amount as ratio of the real estate portfolio Real estate collateral by type Stage 2 portions growing between quarters while NPLs remain stable ISK 161bn 156 147 148 147 142 12 11 22 22 18 169 158 170 169 161 31.12.24 31.3.25 30.6.25 30.9.25 31.12.25 Off-balance On-balance 1.3% 2.1% 1.9% 1.9% 3.4% 3.5% 3.9% 2.9% 2.9% 2.8% 31.12.24 31.3.25 30.6.25 30.9.25 31.12.25 Stage 3 Stage 2 96 102 99 99 101 42 46 42 42 52 139 148 141 141 153 31.12.24 31.3.25 30.6.25 30.9.25 31.12.25 Off-balance On-balance Residential 20% Hotels and restaurants 15% Office space 12%Industrial or storage 20% Retail 14% Public buildings 1% Other 19% 42
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Liabilities and equity 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results Deposits continue to be the largest source of funding 43 Liabilities & Equity, ISKm 31.12.25 30.9.25 Δ Δ% 31.12.24 Δ Δ% Deposits from Central Bank and credit institutions 13,250 15,972 (2,722) (17%) 12,535 715 6% Deposits from customers 968,695 1,008,919 (40,224) (4%) 926,846 41,849 5% Derivative instruments and short positions 6,183 5,599 584 10% 7,306 (1,123) (15%) Debt issued and other borrowed funds 444,593 409,170 35,423 9% 367,586 77,007 21% Subordinated loans 40,315 32,550 7,765 24% 31,695 8,620 27% Tax liabilities 12,757 14,544 (1,787) (12%) 12,916 (159) (1%) Other liabilities 16,995 20,328 (3,333) (16%) 21,568 (4,573) (21%) Total Liabilities 1,502,788 1,507,082 (4,294) (0%) 1,380,452 122,336 9% Total Equity 225,359 226,974 (1,615) (1%) 227,355 (1,996) (1%) Total Liabilities and Equity 1,728,147 1,734,056 (5,909) (0%) 1,607,807 120,340 7% Key ratios Customer loans to customer deposits ratio 141% 132% 140% Net stable funding ratio (NSFR) 127% 129% 125% Liquidity coverage ratio (LCR) 203% 207% 168% CET 1 ratio 20.1% 18.9% 20.1% Tier 1 capital ratio 21.7% 19.8% 21.0% Total capital ratio 24.0% 21.9% 23.2% Leverage ratio 12.5% 11.9% 13.2% MREL ratio 44.0% 36.8% 33.4%
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Appendix II Icelandic economy update 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results 44
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8.8 5.1 -1.2 1.3 0.6 2.8 3.0 -18 -14 -10 -6 -2 2 6 10 14 18 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 Imports Exports Inventory chg. Investment Public consumption Priv.consumption GDP New business cycle, subdued growth following contraction… Real GDP and main subitems, YoY change, % GDP growth weak in 2026 but set to gain steam later on Temporary period of sluggish growth due to export sector setbacks and high real interest rates ..and housing market still remains quite resilient in the face of high real rates Year-on-year increase in residential house prices and housing market activity Inflation persistent in the near term but likely to eventually subside … MoM CPI change (%, left axis) and 12m trailing inflation(%, right axis) … and the Central Bank is expected to continue cutting rates in 2026 CBI policy rate and real policy rate, % 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results -15 0 15 30 0 500 1000 1500 2000 2021 2022 2023 2024 2025 No. of contracts (l.axis) YoY price change (r.axis) Real house prices (r.axis) -1.0 -0.5 0.0 0.5 1.0 1.5 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 2024 2025 2026 MoM CPI change (r.axis) CPI changes YoY (l.axis) -8 -6 -4 -2 0 2 4 6 8 10 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Effective CBI policy rate Inflation Real policy rate 45
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The Icelandic economy and society draw on many strengths 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results Icelanders enjoy high standards of living in a modern, open and egalitarian society Iceland ranks highly on a variety of global development benchmarks Income inequality is low compared to OECD peers Gini coefficient, OECD, most recent data available Export base has grown more diverse over time Export contribution by industry Sustainable energy usage is prevalent Energy consumption by source, 2022 Net international investment position has changed % of GDP 0.0 0.1 0.2 0.3 0.4 0.5 SVK ISL SVN CZE NOR BEL FIN DNK AUT SWE CAN POL HUN FRA IRL DEU EST LUX GRC PRT NLD CHE RUS AUS ESP NZL ITA KOR JPN ROU ISR LVA GBR LTU USA Shaded area denotes OECD forecast Source: Statistics Iceland, Central Bank of Iceland, OECD, IMF, WEF, IEP, The Economist, UN, Transparency Int., HF, Yale, IMD, INSEAD 1 2 6 11 13 17 20 21 0 50 100 150 200 Gender equality (WEF) Democracy index (The Economist) Human development (UN) Corruption (Transparency Int.) Economic freedom (HF) Environmental perf. index (Yale) Global innovation index (INSEAS) Competitiveness (IMD) rank no. of countries ranked Public debt remains sustainable after pandemic General govt. gross financial liabilities, % of GDP 0 20 40 60 80 100 120 140 2010 2012 2014 2016 2018 2020 2022 2024 2026 Iceland UK USA Euro area OECD avg 0% 20% 40% 60% 80% 100% 2009 2011 2013 2015 2017 2019 2021 2023 Marine products Aluminium Other industrial Other goods Tourism Other services 18% 16% 10% 5% 32% 18% 20.2% 65.2% 14.1% 0.4% Hydropower Geothermal Fossil fuels Biofuels 44% -200% -150% -100% -50% 0% 50% 100% 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 46
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GDP growth weak in 2026 but set to gain steam later on 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results Temporary period of sluggish growth due to export sector setbacks and high real interest rates GDP and contribution of its subcomponents Volume change from prior year (%), annual data GDP and contribution of its subcomponents Volume change from prior year (%), quarterly data • GDP contracted by 1.2% in 2024, ending a short period of strong growth. • Growth resumed in 2025, supported by strong private consumption, rising investment, and slight export growth.Full-year growth projected at 1.3%, though net trade again weighed on overall performance. • GDP growth is expected to slow sharply to 0.6% in 2026, reflecting setbacks in several export sectors and the impact of high real interest rates. • A recovery is projected for 2027–2028, with GDP growth rising to 2.8% in 2027 and 3.0% in 2028 as exports strengthen, investment growth resumes and monetary conditions ease. • Significant downside risks remain, including potential declines in tourism, geopolitical disruptions, seismic activity on the Reykjanes peninsula, and delays in energy procurement. • A housing market downturn or more persistent inflation could further restrain domestic demand. • Productivity gains from AI adoption and increased intellectual-property-driven value added could provide more support to long-term growth than currently assumed, offering a potential upside scenario. Highlights Shaded areas and dotted lines denote ISB Research forecasts Sources: Statistics Iceland, ÍSB Research -0.7 -2.9 -0.2 -1.3-0.5 3.5 -0.2 1.2 -27 -24 -21 -18 -15 -12 -9 -6 -3 0 3 6 9 12 15 18 21 24 2018 Q1 2019 Q1 2020 Q1 2021 Q1 2022 Q1 2023 Q1 2024 Q1 2025 Q1 Imports Exports Inventory chg Investment Public consumption Priv. consumption GDP 8.8 5.1 -1.2 1.3 0.6 2.8 3.0 -18 -16 -14 -12 -10 -8 -6 -4 -2 0 2 4 6 8 10 12 14 16 18 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 Imports Exports Inventory chg. Investment Public consumption Priv.consumption GDP 47
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Tourism to languish while other export sectors blossom 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results Intellectual property and aquaculture will drive export growth, with legacy export sectors lagging behind Shaded areas and dotted lines denote ISB Research forecasts Sources: Statistics Iceland, Federation of Icelandic Industries, ÍSB Research • Tourism showed mixed performance in 2025, with strong summer arrivals offset by a sharp decline in the low season. Overall tourist numbers were virtually unchanged from 2024. • A contraction is expected in 2026, with timely indicators pointing to continued YoY declines through spring. Peak-season conditions look steadier, but full-year tourist numbers are projected to fall nearly 4%. • Tourism growth is expected to resume slowly in 2027–2028 • While tourism and some traditional export industries are likely to shrink in 2026, several other export sectors are expanding. These include land-based aquaculture, which is set for steady growth in export value. • Exports of intellectual property products have been rising rapidly, generating an estimated ISK 288bn in 2025, or over 14% of total export revenues. • The intellectual property sector spans diverse firms, including medical equipment producers, content creators, and game developers. • Strong pharmaceuticals activity and major data-centre developments are expected to substantially boost revenues in the coming years. Highlights Export revenues, by key sector ISKbn at current prices Exports and contribution from subcomponents % change -2.2 1.2 -1.7 5.8 4.4 -35 -30 -25 -20 -15 -10 -5 0 5 10 15 20 25 2010 2013 2015 2017 2019 2021 2023 2025 2027 Goods exports Service exports Total exports 0 200 400 600 800 1000 1200 1400 1600 1800 2000 2013 2015 2017 2019 2021 2023 2025 est Seafood Aluminium Tourism IP industries Other goods Other services 48
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Modest current account deficit over the forecast horizon 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results Improving terms of trade offset the contraction in exports in 2026 Shaded areas and dotted lines denote ISB Research forecasts Sources: Statistics Icelandic, Central Bank of Iceland, ÍSB Research • Imports are projected to shrink by nearly 2% in 2026, reversing strong growth in 2025. The slowdown reflects the winding down of large data-centre investments and reduced imports of rental cars and equipment. • Import growth will resume as economic activity strengthens, but exports are expected to outpace imports, resulting in a positive net trade impact on GDP growth in both 2027 and 2028. • The current account has been in deficit since 2021, the deficit widening further in 2025 to 3.5% of GDP despite a strong services surplus. • Data-centre–related equipment imports account for a significant share of the goods deficit, but these are fully financed by foreign owners and clients. • The deficit is projected to improve to 1.1% of GDP in 2026–2027 and 1.0% in 2028, supported by better terms of trade and stronger export performance. • External risks include ISK appreciation and a deeper-than-expected tourism downturn, either of which could delay improvement in the trade balance. • Iceland’s net external asset position— ISK 2,101bn (43% of GDP) as of September 2025—facilitates improved FX stability and limits the risk of disruptive capital flows. Highlights Imports and contribution from subcomponents % change Current account balance % of GDP 4.2 6.9 -1.8 4.2 4.0 -35 -30 -25 -20 -15 -10 -5 0 5 10 15 20 25 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 Goods exports Service imports Total imports -2.8 -3.5 -1.1 -1.1-1.0 -15 -10 -5 0 5 10 15 20 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 Goods trade Services trade Primary income Net transfers Current account 49
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ISK likely to weaken gradually 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results The high real exchange rate is a growing challenge, making ISK depreciation likely further ahead Sources: Statistics Icelandic, Central Bank of Iceland, ÍSB Research • The ISK has shown exceptional stability since the pandemic, with the trade-weighted index nearly unchanged in 2023–2024. • In 2025, it appreciated by 1.5%, despite notable intrayear volatility. Bilateral currency movements varied significantly: the ISK weakened slightly against the EUR but strengthened 10% versus the USD and nearly 4% against the GBP, reflecting divergent global currency trends. • Among the factors supporting the ISK despite a sizeable CA deficit were relatively favourable underlying FX flows, limited forward FX sales during the strong tourist season, muted pension-fund FX purchases, and increased FX borrowing by firms. • Supportive conditions will persist, with a narrowing CA deficit, strong international investment position, ample FX reserves, and a wide interest-rate differential. • Tourism performance remains the main short-term risk to FX stability. • The real exchange rate is expected to stay historically high, assuming export-sector setbacks remain manageable. Over time, faster domestic wage and price growth implies that nominal depreciation is unavoidable, whether gradual or sudden. • The baseline forecast assumes a gradual weakening of the ISK, ending 5– 6% lower than end-2025 levels by the end of the forecast horizon. This corresponds to roughly ISK 156–157 per EUR. Highlights ISK exchange rate Major currency exchange rates against the ISK and index values ISK exchange rate and real exchange rate EURISK levels and indices Historical maximum REER 186.7 198.7 144.7 155.6 99.5 98.9 40 50 60 70 80 90 100 11050 70 90 110 130 150 170 190 210 230 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 ISK trade-weighted index EUR/ISK REER, relative prices (r.axis) 160 165 170 175 180 185 190 195 200 205 210 120 125 130 135 140 145 150 155 160 Jan-23 Jul-23 Jan-24 Jul-24 Jan-25 Jul-25 Jan-26 EURISK USDISK GBPISK (r.axis) TW index (r.axis) 50
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Domestic balance sheets remain broadly healthy Private sector debt ratios are stable and public debt is on a more favourable trajectory than major economies Private sector debt % of GDP Corporate debt % of GDP Household debt % of disposable income General government gross financial liabilities % of GDP 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results Shaded areas indicate OECD forecasts. Source: Central Bank of Iceland, Eurostat, Statistics Iceland, OECD 71 75 0 50 100 150 200 250 300 350 400 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 3Q25 Households Businesses (excl. financial) 0 50 100 150 200 250 300 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 Iceland Denmark Sweden Finland Ireland Norway 0 50 100 150 200 250 300 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 3Q25 Iceland Denmark Sweden Netherlands Ireland Norway 0 20 40 60 80 100 120 140 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Iceland UK USA Euro area OECD avg 51
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6.7 3.9 -4.3 1.2 3.5 -15 -10 -5 0 5 10 15 20 25 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 Public sector Residential Business Total investment Investment to dip temporarily in 2026 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results Turning point in data centre development and a challenging environment impacts in the near term Sources: Central Bank of Iceland, Statistics Icelandic, Gallup • Investment has surged in recent years, led by strong business investment in tourism, fishing, and IT. Higher real interest rates and strain on the export sector have tempered growth, but rapid expansion in data centres and aquaculture has provided a buffer. • For 2025, full-year growth is estimated at just under 4%, driven mainly by data-centre and aquaculture projects. • Investment is projected to contract by just over 4% in 2026, reflecting an almost 8% decline in business investment. Residential investment is expected to remain broadly flat, with only modest growth in public investment. • The decline in business investment stems from the tapering of data-centre construction, reduced spending on transport equipment and machinery, and slower hotel and commercial property development, partly offset by increased infrastructure-related investment. • Investment growth will resume later in the forecast horizon, supported by lower interest rates, improving export-sector conditions and continued expansion of energy infrastructure and aquaculture. Residential investment is also expected to recover. • Íslandsbanki Research forecasts investment growth just above 1% in 2027 and 3–4% in 2028. Highlights Investment, real change, and contribution of subcomponents % Business investment and related indicators YoY change (%) and index 0 50 100 150 200 250 -60 -40 -20 0 20 40 60 80 100 2018 2019 2020 2021 2022 2023 2024 2025 General business investment Investment goods imports VAT turnover, construction 6M corporate expectations (r.axis) 52
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2.5 2.3 1.4 -10.0 -5.0 0.0 5.0 10.0 15.0 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 Wages Real wages Unemployment to peak in 2026 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results Wage developments will be shaped by long-term contracts, and wage drift will be limited Excluding recipients of part-time unemployment benefits. Sources: Statistics Icelandic, Central Bank of Iceland, ÍSB Research 4.5 3.8 3.5 0 1 2 3 4 5 6 7 8 9 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 • The labour market has cooled after several years of tight conditions. Unemployment edged up in 2025, averaging 3.9%, owing mainly to export- related shocks in tourism and metals production. Despite this, firms have generally adjusted staffing through flexibility rather than layoffs, and the market remains relatively stable. • There are clear signs of increased slack. Immigration has slowed markedly, and Gallup surveys show that labour shortages have receded sharply. Only 10% of executives at large firms now report being understaffed — the lowest share since 2020 — indicating that labour market tensions are easing. • Unemployment is expected to rise further in 2026, reaching an annual average of 4.5% as labour demand cools, particularly in export sectors. From 2H2026 onward, unemployment is projected to decline again. The jobless rate is expected to average 3.8% in 2027 and approach its equilibrium level of 3.5% in 2028. • Wage developments will continue to be shaped by the long-term contracts agreed in 2024, which run through 2028, provided their underlying assumptions hold. Despite greater labour market slack, wage increases will continue broadly in line with those agreements. • Wages rose by 7.9% in 2025. We forecast average wage growth of 6.6% in 2026, 6.0% in 2027, and 4.9% in 2028. Wage drift will remain modest because labour market pressures are receding. Highlights Wages, YoY change % Unemployment1 % of workforce, annual average 53
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Private consumption growth to continue in 2026, but at a slower pace 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results Real wage growth and sizeable savings will support household consumption in the coming term Sources: Central Bank of Iceland, Statistics Icelandic, ÍSB Research • Private consumption rebounded strongly in 2025 after two slower years marked by high interest rates and precautionary saving. Consumption picked up markedly as households began to loosen their purse strings. • Private consumption grew by 3.6% YoY in the first nine months of 2025, and indicators suggest a strong Q4 as well. Year 2025 growth is therefore estimated at 3.8%, driven in part by a surge in car purchases ahead of changes in public levies. • Households remain in a relatively strong financial position. Savings levels are still high, and real wages increased by 3.7% in 2025, supporting consumption. Nevertheless, consumer sentiment has weakened in recent months, with the Gallup Confidence Index falling below equilibrium, likely due to export shocks, persistent inflation, and uncertainty in lending markets. • The private consumption forecast for 2026 has been revised slightly downward. We now expect consumption to grow 2.4%, reflecting a cooler economy, a softer labour market, and the front loading of car purchases into late 2025. • Further ahead, consumption growth is expected to strengthen again as economic activity picks up. Private consumption is projected to grow by 2.8% in 2027 and 3.1% in 2028. Highlights Personal vehicles, new registrations and imports ISK m (left) and number of vehicles (right) Private consumption and related indicators % change YoY (left) and index value (right) 0 500 1000 1500 2000 2500 0 2000 4000 6000 8000 10000 12000 14000 16000 2020 2021 2022 2023 2024 2025 Imported passangers cars New registrations of cars 2.42.83.1 0 20 40 60 80 100 120 140 160 -20 -15 -10 -5 0 5 10 15 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 Private consumtion Household card turnover Real wages Gallup CC index (r.axis) 54
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The real estate market holds quite steady despite high interest rates Tighter monetary policy has cooled the market, but resilient demand and strong fundamentals keep it balanced Capital area house prices relative to macroeconomic fundamentals Index, January 2024=100 Residential house prices and turnover % change (r. axis) and number (l. axis) Commercial property real prices in greater Reykjavík Index, 1995=100 (l.axis) and % change (r. axis) Commercial real estate market activity No. of registered purchase agreements 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results Source: Central Bank of Iceland 90 92 94 96 98 100 102 104 106 108 2023 2025 Relative to the consumer price index Relative to the wage index Relative to the building cost index Relative to the rent index -15 0 15 30 0 500 1000 1500 2000 2021 2022 2023 2024 2025 No. of contracts (l.axis) YoY price change (r.axis) Real house prices (r.axis) 0 50 100 150 200 250 300 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 Retail and offices Industrial, warehouse, other -40 -30 -20 -10 0 10 20 30 40 50 0 50 100 150 200 250 300 350 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 YoY % change (r.axis) Real prices (l.axis) 55
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The Icelandic housing market is flexible as conditions change Supply, demand, mortgage market factors combine to make a large price correction less likely Households are not highly indebted compared to peers Household debt, % of GDP Mortgage market is flexible w.r.t. loan types with different payment burden Outstanding mortgage loans, share of total Underlying upward demand trend steady as population growth remains robust Population forecast by Statistics Iceland Turnover in the residential housing market remains steady despite rate hikes No. of purchase agreements, capital region (left axis) and average time to sale (right axis) 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results Source: Central Bank of Iceland, Statistics Iceland 0 1 1 2 2 3 3 4 4 350000 400000 450000 500000 550000 2024 2026 2028 2030 2032 2034 2036 2038 2040 YoY % chg, median fcast (r.axis) Downside fcast Median fcast Upside fcast 0 20 40 60 80 100 120 140 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 CPI-indexed loans FX-linked loanc Nominal loans Overdrafts Leasing 0 6 0 500 1000 1500 2000 2500 3000 3500 Jan-18 Jan-20 Jan-22 Jan-24 Detached/semidetached apts (l.axis) Multi-family dwellings (l.axis) Other real estate (l.axis) Avg time to sale (months), (r.axis) 0 20 40 60 80 100 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22 Jan-23 Jul-23 Jan-24 Jul-24 Jan-25 Jul-25 Floating rate 3-5yr fixed rate CPI-indexed, floatng rate CPI indexed, 3-5yr fixed rate Other 56
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0 1 2 3 4 5 6 7 8 9 10 11 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Inflation Inflation forecast Inflation target Inflation remains stubbornly above target 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results Something will probably have to give in order to bring inflation back to target Sources: Central Bank of Iceland, Statistics Icelandic, ÍSB Research -4% -2% 0% 2% 4% 6% 8% 10% 2019 2020 2021 2022 2023 2024 2025 Fuel Other services Public services Housing Imported goods Domestic goods CPI • Inflation remained stubborn in 2025, hovering consistently around the 4% upper deviation threshold of the Central Bank’s target. November briefly surprised to the downside, with inflation plunging to 3.7%, the lowest reading in five years, but it rebounded sharply to 4.5% in December. • The upward momentum continued into January 2026, when inflation rose further to 5.2%, the highest measurement since September 2024. • Despite the early 2026 uptick, inflation is projected to ease quickly in Q2. For 2026 as a whole, ÍSB Research forecasts average inflation of 4.0%, broadly unchanged from 2025. • Inflation is expected to decline further in the following years, averaging 3.6% in 2027 and 3.5% in 2028, although underlying price pressures will remain. • Wage developments are still misaligned with the target, rent prices are not falling, and households and businesses remain relatively strong despite high interest rates. • In our assessment, something will likely have to give for inflation to reach target over the forecast horizon — for instance, a harder economic landing or a period of stagnant rent prices. HighlightsInflation and the CBI inflation target* % Inflation by type and source % 57
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-8 -6 -4 -2 0 2 4 6 8 10 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Effective CBI policy rate Inflation Real policy rate 0 1 2 3 4 5 6 7 8 9 10 2011 2013 2015 2017 2019 2021 2023 2025 2027 Main CBI policy rate Long term yield Long term real yield Central Bank needs to walk a fine line 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results Interest rate cuts to resume in spring, with slow and gradual monetary easing Sources: Central Bank of Iceland, Statistics Icelandic, ÍSB Research • Following a 6 month pause in its rate cut process the Central Bank of Iceland cut its policy rate in Nov-25 by 0.25 ppoints, to 7.25%. • Forward guidance in November indicated that further easing required clear evidence of inflation returning toward target. • Recent data show no such evidence, as short-term inflation indicators and expectations have not improved. And breakeven inflation has risen since early December, and long-term expectations remain above target, even as the broader economy cools rapidly. • We expect the MPC to hold rates steady until inflation resumes its decline, with rate cuts likely restarting in spring 2026 and continuing cautiously through mid-2027. • Unless inflation falls more than forecast or economic slack widens further, the unwinding phase is projected to end with a policy rate of 5.5–6.0%. • Long-term interest rates remain high, with nominal 10-year Treasury yields around 6.6% and indexed yields at 2.7%, leaving Iceland’s real rates elevated by international standards. • Long-term nominal rates may fall to 5.9% and real rates to 2.5% over the forecast horizon. Highlights Policy rate and inflation %, Real policy rate based on 12m forward forecast Key interest rates %, average per year 4.0% breakeven 3.5% breakeven 58
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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Moody´s S&P Global Fitch AAA/Aaa AA+/Aa1 AA/Aa2 AA-/Aa3 A+/A1 A/A2 A-/A3 BBB+/Baa1 BBB/Baa2 BBB-/Baa3 BB+/Ba1 Iceland's credit rating on a secular upward path 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results Rating companies acknowledge the flexibility of the economy and improving public debt metrics Development of sovereign credit rating Sources: Central Bank of Iceland, Kodiak, Statistics Iceland, ÍSB Research. MOODY’S IN SEPTEMBER 2025 ‒ “The stable outlook reflects balanced risks at the A1 rating level.” ‒ “We expect fiscal consolidation to continue over the coming years and the economy is expected to return to robust growth this year, after a temporary contraction last year as tight monetary and fiscal policy helped slow the previously overheated economy.” ‒ “While Iceland's economic and fiscal conditions could improve faster than we expect, its small and less diverse economy makes it particularly susceptible to shocks affecting specific sectors.” FITCH IN AUGUST 2025 – “The Positive Outlook reflects Iceland’s strengthened public finances. General government debt is projected to fall significantly in 2025 after the successful settlement of the HF Fund liabilities and the full privatization of Íslandsbanki.” – “Fitch’s fiscal baseline indicates debt-to-GDP ratio will follow a gradual downward trend, reaching 47.6% in 2 by 2027.” – Progress continues in diversifying the economy into highervalue-added sectors, such as pharmaceuticals, information and communications technology and biotechnology.” S&P IN SEPTEMBER 2025 – “The stable outlook reflects our view that Iceland's growth will rebound over the next few years, and fiscal and external deficits will remain contained.” – “The outlook also reflects our assumption that neither volcanic activity nor global trade tensions will have a significant sustained adverse effect on the country's economic, fiscal, and balance-of- payments performance.” – Iceland's key aluminum exports are mostly sold to European markets, partially mitigating current U.S. tariff related risks.” – We could raise the ratings if Iceland's public finances improved significantly..” [..or..] “..if we took the view that increasing diversification made the economy more resilient to external shocks and current global trade tensions eased.” S&P in Mar-17: Rating upgrade to A on lifting of capital controls; outlook stable Fitch in Dec-17: Rating upgrade to A on economic stability, reduced external vulnerability and improvement in government debt ratios, supported by robust growth Moody’s in Nov-19: Upgrade to A2 on sustained sizeable debt reduction gains and improvements in economic resilience S&P in Nov-23: Rating upgrade from A to A+ on strong growth and fiscal consolidation, outlook stable Moody’s in Sep-24: Rating upgrade to A1 on improving fiscal metrics and the moderating impact of tight economic policy on inflation. 59
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Disclaimer 12 February 2026 Íslandsbanki 4Q25 & FY2025 Financial Results This presentation is for information purposes only and shall not be construed as an offer or solicitation for the subscription or purchase or sale of any financial instrument. All information contained in this presentation should be regarded as preliminary and based on company data available. The information set out in this presentation has not been independently verified. Due to rounding, numbers presented throughout this document may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures. Due care and attention has been used in the preparation of forecast information. However, actual results may vary from their forecasts, and any variation may be materially positive or negative. Forecasts, by their very nature, are subject to uncertainty and contingencies, many of which are outside the control of Íslandsbanki. No representation or warranty is made by Íslandsbanki as to the accuracy, completeness or fairness of the information or opinions contained in this presentation. The information in this material is based on sources that Íslandsbanki believes to be reliable. Íslandsbanki can however not guarantee that all information is correct. Furthermore. information and opinions may change without notice. Íslandsbanki is under no obligation to make amendments or changes to this publication if errors are found or opinions or information change. Íslandsbanki and its management may make certain statements that constitute "forward-looking statements". These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often use words such as "anticipates, " "targets," "expects,” “estimates," "intends," " plans," "goals," "believes" and other similar expressions or future or conditional verbs such as "will," "should," "would" and "could". The forward-looking statements represent Íslandsbanki's current expectations, plans or forecasts of its future results and revenues and beliefs held by the company at the time of publication. These statements are not guarantees of future results or performance and involve certain risks, uncertainties and assumptions that are difficult to predict and are often beyond Íslandsbanki's control. Actual outcomes and results may differ materially from those expressed in, or implied by, any of these forward-looking statements. Forward-looking statements speak only as of the date they are made and Íslandsbanki undertakes no obligation to update any forward-looking statement to reflect the impact of circumstances or events that arise after the date the forward- looking statement was made. Íslandsbanki does not assume any responsibility or liability for any reliance on any of the information contained herein and accepts no liability whatsoever for any direct or indirect loss, howsoever arising, from use of this presentation. Íslandsbanki is the owner of all works of authorship including, but not limited to, all design, text, sound recordings, images and trademarks in this material unless otherwise explicitly stated. The use of Íslandsbanki's material, works or trademarks is forbidden without written consent except were otherwise expressly stated. Furthermore, it is prohibited to publish material made or gathered by Íslandsbanki without written consent. 60
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