Slides
Page 1
3Q26 Financial Results Jón Guðni Ómarsson Chief Executive Officer Ellert Hlöðversson Chief Financial Officer 29 October 2026
Page 2
Financial metrics tracking in excess of target 29 October 2026 Íslandsbanki 3Q26 Financial Results Earnings positively impacted by high inflation despite reduced volumes in capital markets 1. ROE target was > 10% until year-end 2025. 2. C/I ratio target was < 45% until year -end 2025. 3. C/I ratio for 4Q25 excludes sala ry 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 a nd 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. 4. Includin g 3Q26 profit for 30.9.26, 1Q26 profit for 31.3.26 and 3Q25 profit for 30.9.25. ROE in excess of updated financial target ROE1 Considerable excess capital remains Total capital ratio4 C/I below the financial target C/I ratio2,3 ROE target > 13% C/I ratio target < 43% 2 12.2% 10.5% 13.6% 13.3% 13.6% 3Q25 4Q25 1Q26 2Q26 3Q26 38.2% 43.5% 38.5% 43.1% 38.4% 3Q25 4Q25 1Q26 2Q26 3Q26 21.9% 24.0% 22.5% 23.0% 21.8% 18.9% 20.1% 18.6% 19.1% 18.4% 30.9.25 31.12.25 31.3.26 30.6.26 30.9.26 CET1 ratio
Page 3
YTD returns in excess of guidance and medium-term target 29 October 2026 Íslandsbanki 3Q26 Financial Results ROE guidance for 2026 reaffirmed to being in excess of 12.5% Medium- term target 3Q26 9M26 2026 Guidance* Return on equity >13% 13.6% 13.4% >12.5%** Cost-to-income ratio <43% 38.4% 39.9% 41-43% CET1 excess 100-300bps 315bps*** 315bps*** ~300bps Dividend payout ratio 50% 50% 50% 50% 3 Cost of Risk is expected to average 20-25 bps over the cycle Loans to customers and revenue, in general to grow in line with nominal GDP through the business cycle while international lending provides additional growth International loan growth continues to provide additional balance sheet growth *Guidance assumes a normalised cost of risk for the year as a whole *Including third quarter profit. **Assuming the current level of bank tax. ***Including half of the profit for the third quarter of 2026, in accordance with the dividend policy.
Page 4
5.9 4.1 3.0 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 8.0 7.0 6.0 0 2 4 6 8 10 12 2020 2021 2022 2023 2024 2025 2026 2027 2028 Inflation Effective CBI policy rate Inflation forcast Policy rate forecast Economic growth to accelerate in coming years… Real GDP and main subitems, YoY change, % GDP growth gradually regains steam after a mild recession Persistent inflation forces the Central Bank to hold rates high for longer …facilitating gradual policy rate cuts from spring 2027 onwards CBI policy rate and real policy rate, % 29 October 2026 Íslandsbanki 3Q26 Financial Results 4 ...as exports return to more robust growth from 2026 after a soft patch Exports and contribution from subcomponents, % change Inflation has proven persistent but looks likely to decline in coming years.. Inflation, % 8.9 5.2 -0.9 1.1 1.2 1.8 2.3 -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 1.5 2.0 3.4 2.5 -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 exports Total exports
Page 5
Driving digital innovation across the Bank 29 October 2026 5 AI and new digital solutions simplify banking for our customers Continued momentum in app-based securities offering New equity trading capabilities in the app Enhanced mortgage calculator Major improvements in digital solutions for businesses’ online banking platform Loyalty Services in the app extended to customers aged 67+ AI journey in the Bank app AI-generated spending summaries in the app International funds launched in the app the first Icelandic bank to offer international fund investments through a mobile banking app Provides insights into the three largest spending categories Analyses spending activity and benchmarks it against the customer’s spending targets Highlights significant and recurring transactions Íslandsbanki 3Q26 Financial Results
Page 6
Overall market share 31.5%¹ Strong growth in Fríða Transaction volume up 30% YoY in 9M 2026 Customer satisfaction peaked at 95%² in September, the highest this year Íslandsbanki 3Q26 Financial Results 629 October 2026 Loyalty Services continue to gain traction Over 68,000 customers and 17,900 loyalty accounts Personal Banking momentum NPS increase from 14.3 in August to 19.8 in September Overall market share 31.5%¹ Mortgages: 20.5% Deposits: 27.2% Credit cards: 36.3% Debit cards: 26.3% 10,000+ products added through the Loyalty Services, with higher rewards for customers 1. Based on the number of customers with active deposit accounts on 30 September 2026, expressed as a percentage of individua ls with domicile in Iceland. 2. Measured by CSAT.
Page 7
Business Banking building on a position of strength 29 October 2026 7 Leading market positions, strong customer acquisition and continued growth across key products • Strong momentum since launch earlier this year • Growing number of businesses actively using the service • Sustained customer interest supports further growth Highest NPS among domestic banks Íslandsbanki 3Q26 Financial Results Ergo's loan portfolio grew by 12% YoY Acquiring services 37% Highest average market share¹ 40% in capital area 30% in rural areas Expanding our reach across Iceland 1. Average market share from Gallup's last four corporate surveys, the most recent one carried out during 3Q26.
Page 8
Strong performance across Corporate and Investment Banking Íslandsbanki 3Q26 Financial Results Leading market positions, strong business activity and continued growth across key business areas 8 #1 in turnover on Nasdaq Iceland in equities and bonds year-to-date Highest market share in turnover on Nasdaq Iceland in equities and bonds in 3Q26 with the following share: 29 October 2026 • ISK 75bn of bond issuance (nominal value) handled by Íslandsbanki Securities in 9M 2026, a 30.4% share of primary issuance • Of which ISK 49bn on behalf of customers, including ISK 9bn for Brim, and ISK 26bn for the Bank Year-to-date market share at month-end 20.2% in equities 19.7% in bonds • 10% growth in customers within asset management year- to-date • A successful 28-year partnership between Íslandsbanki and Vanguard, further strengthened by the Vanguard funds being available through the Bank’s app • International lending amounted to ISK 18bn in 9M26 • In the last 12 months international lending has amounted to ISK 44bn
Page 9
29 October 2026 Íslandsbanki 3Q26 Financial Results 9 Creating value beyond banking • >170 charitable organisations supported • ISK 307 million raised for charities • More than ISK 2.5 billion raised since 2006 • Over 16,000 runners participated • 54% increase in applicants • ISK 70 million awarded this year • Each grant ranging from ISK 1 – 5 million • A diverse range of applicants • Grants will be awarded at an event on 2 November. • A successful Financial Planning for Retirement seminar in September • These seminars are one of the Bank’s most popular financial education seminars Íslandsbanki Reykjavík Marathon Entrepreneurs' Fund of Íslandsbanki Financial planning for retirement
Page 10
80 90 100 110 120 130 140 150 160 Strong shareholder engagement Íslandsbanki 3Q26 Financial Results Positive share price development and a diversified shareholder base 1029 October 2026 Íslandsbanki’s share price development 22,961 shareholders2 1. Source: Nasdaq Iceland. 2. At 30 September 2026. • Diversified shareholder base • Share buybacks continue under a new ISK 10bn authorisation from the Central Bank +13.9% 27,800 25,300 24,600 23,600 Icelandic pension funds 43% 27% 17% 9% 4% Foreign owners Icelandic private individuals Icelandic other Icelandic other institutional owners 5.63% own shares Price in ISK1 and number of shareholders
Page 11
Financial Overview 29 October 2026 Íslandsbanki 3Q26 Financial Results 11
Page 12
Increased profit between years due to higher inflation and interest rate environment 29 October 2026 Íslandsbanki 3Q26 Financial Results 12 Higher net interest income offset by increased operating expenses and impairments Profit for the period – 3Q25 vs 3Q26 ISKm 6,901 2,555 70 47 (868) (1,028) (408) 7,269 3Q25 Net interest income Net fee & commission income Other operating income Operating expenses Impairments Income tax 3Q26
Page 13
NIMs improving year-on-year along with higher inflationary ticks in the quarter 29 October 2026 Íslandsbanki 3Q26 Financial Results 13 Growth in international lending and strong margin control provide additional NIM uplift year on year • NII grew across all three business segments. Corporate & Investment Banking had the largest increase, ISK 879m YoY • Net interest margin was 3.5% in 3Q26, up from 3.1% in 3Q25 and 3.4% in 2Q26 • Net interest income reached ISK 15,815m, up ISK 2,555m, or 19.3% YoY • Aggregated inflationary ticks were 1.50% in 3Q26 versus 1.01% in 3Q25 • Aggregated inflationary ticks for 4Q26 expected to be 0.45% HighlightsNet interest income Business segments, ISKm Net interest income - YoY comparison ISKm Net interest margin On total assets 4,426 4,501 5,497 4,997 5,125 4,998 4,888 5,192 5,149 5,347 3,310 3,501 3,834 3,872 4,1891,076 -1,049 2,577 1,263 1,154 -550 550 13,260 12,391 17,100 15,281 15,815 3Q25 4Q25 1Q26 2Q26 3Q26 Personal Banking Business Banking Corporate & Investment Banking Other Provision for legal proceedings 13,260 429 423 417 (305) 1,707 (116) 15,815 3Q25 Lending volume Lending margin Deposit volume Deposit margin Inflationary effects Other interests 3Q26 3.1% 2.9% 3.9% 3.4% 3.5% 1.01% 0.09% 2.49% 1.43% 1.50% 3Q25 4Q25 1Q26 2Q26 3Q26 Aggregated inflationary ticks
Page 14
Net fee and commission income continues to be subdued 29 October 2026 Íslandsbanki 3Q26 Financial Results 14 Volume on capital markets continues to subdue both investment banking and asset management revenues • Net fee and commission income was ISK 3,299m in Q3, up 2.2% YoY • Lending related fees continue to grow between years • Equity trading volume declined 4.2% YoY, while bond trading volume was down 6.4% YoY • Allianz delivered strong operating performance in the quarter, primarily driven by revenue growth HighlightsNet fee and commission income Business segments, ISKm Net fee and commission income – YoY comparison ISKm Net fee and commission income By type, ISKm 946 1,437 877 960 938 515 544 519 533 513 1,114 1,563 1,163 1,148 1,047 340 369 351 322 325 303 319 341 265 362 3,229 4,183 3,268 3,258 3,299 3Q25 4Q25 1Q26 2Q26 3Q26 Personal Banking Business Banking Corporate & Investment Banking Íslandssjóðir Allianz Ísland hf. Other 695 881 759 714 716 679 1,021 684 700 720 854 1,391 784 898 844 607 619 647 633 615 303 319 341 265 362 3,229 4,183 3,268 3,258 3,299 3Q25 4Q25 1Q26 2Q26 3Q26 Asset management Investment banking and brokerage Cards and payment processing Loans and guarantees Allianz Ísland hf. Other fee 3,229 21 41 (10) 8 59 (49) 3,299 3Q25 Asset management Investment banking and brokerage Cards and payment processing Loans and guarantees Allianz Ísland hf. Other fee and commission income 3Q26
Page 15
Market risk exposure continues to be a limited part of the Bank's operations 29 October 2026 Íslandsbanki 3Q26 Financial Results 15 Loss on NFI mostly related to adverse market conditions • Net financial expense was ISK 223m in Q3, compared with ISK 353m in 3Q25 and ISK 94m in 2Q26 • Net FX gains of ISK 171m and other operating income of ISK 22m • Unlisted equity holdings include strategic assets related to the Bank’s operations 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. -353 404 -213 -94 -223 3Q25 4Q25 1Q26 2Q26 3Q26 3.5 3.2 3.0 3.1 3.0 2.5 2.8 2.8 3.1 2.9 6.0 6.0 5.8 6.2 5.9 30.9.25 31.12.25 31.3.26 30.6.26 30.9.26 Listed shares Unlisted shares 51.6 58.0 54.5 47.5 57.2 82.6 87.9 101.8 107.2 100.0 134.2 145.9 156.3 154.7 157.2 30.9.25 31.12.25 31.3.26 30.6.26 30.9.26 FX ISK 124 447 14 1 22 152 157 157 267 171 3Q25 4Q25 1Q26 2Q26 3Q26 Other operating income Net foreign exchange gain
Page 16
Cost-to-income ratio remains well within target 29 October 2026 Íslandsbanki 3Q26 Financial Results 16 Introduction of variable compensation scheme impacts comparability between years • Q3 administrative expenses rose by ISK 844m YoY to ISK 7,323m • Salaries and related expenses increased 9.5% YoY in Q3 and 9.2% in 9M26, with both increases primarily reflecting costs related to the incentive scheme. • Other operating expenses rose by ISK 485m YoY in Q3. Software and IT added ISK 180m and other administrative expenses ISK 126m • Cost-to-income traditionally lower in the third quarter compared to other quarters due to accrual of holiday leaves and less corporate activity • The cost-to-income ratio decreased to 39.9% for the first nine months of the year (9M25: 42.1%), reflecting income growth outpacing costs HighlightsAdministrative expenses ISKm Cost-to-income ratio1 Administrative expenses – by type ISKm Administrative expenses – YoY comparison 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 wit hin net interest income (ISK 550m reversed from a charge in 3Q25 due to a provision for legal proceedings and a charge of ISK 313m due to correction from previ ous years). C/I ratio for 3Q25 excludes a charge of ISK 550m within net interest income due to a provision for legal proceedings. 2,531 3,201 2,952 3,046 2,699 1,891 2,490 2,314 2,358 2,009 1,759 2,220 2,026 2,163 1,794 298 433 538 493 8216,479 8,344 7,830 8,060 7,323 3Q25 4Q25 1Q26 2Q26 3Q26 Personal Banking Business Banking Corporate and Investment Banking Other 6,479 359 90 180 55 34 126 7,323 Administrative expenses 3Q25 Salaries and related expenses Professional services Software and IT expenses Real estate and office equipment Depreciation Other administrative expenses Administrative expenses 3Q26 38.2% 43.5% 38.5% 43.1% 38.4% 3Q25 4Q25 1Q26 2Q26 3Q26 C/I ratio C/I target 3,793 4,306 4,612 5,096 4,152 804 365 524 486 447 4551,282 1,353 1,363 1,341 1,462436 485 572 467 470458 693 619 517 5846,479 8,344 7,830 8,060 7,323 3Q25 4Q25 1Q26 2Q26 3Q26 Other administrative expenses Depreciation Real estate and office equipment Software and IT expenses Professional services Early retirement scheme (one-off cost) Salaries and related expenses
Page 17
Composition of balance sheet remains well-adjusted 29 October 2026 Íslandsbanki 3Q26 Financial Results All liquid assets marked to market Simplified balance sheet structure 30.9.2026, ISK 1,819bn Liquid assets 18% Loan book 79% Deposits 60% Stable funding 39% 17 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
Page 18
534 591 204 24 20 1 1-4 5-6 7-8 9 10 Unrated YE2025 Stage 3 Stage 2 Stage 1 Loan book composition remains strong and diversified 29 October 2026 Íslandsbanki 3Q26 Financial Results 18 Portfolio based on robust credit culture and very high collateralisation 1. Risk class distribution at YE25 shown for comparison • The composition of the loan portfolio remains broadly unchanged • Around 93% of the loan book is covered by collateral - comparable to previous quarters • Around 5% of loans to customers are to international parties (outside Iceland) • The credit quality of the portfolio remains robust, supported by sound risk management and disciplined lending practices 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, 30.09.2026, ISKbn 44% 43% 43% 44% 44% 11% 10% 10% 9% 9% 8% 8% 8% 9% 8% 7% 8% 9% 9% 9% 7% 7% 7% 7% 7%5% 7% 6% 7% 6%6% 6% 6% 5% 5%6% 6% 6% 6% 6%5% 5% 5% 5% 5% 30.9.25 31.12.25 31.3.26 30.6.26 30.9.26 Individuals other Companies other Industrial and transportation Seafood Construction Commerce and services Tourism Real estate Mortgages to individuals 0 50 100 150 200 250 300 350 Other collateral Cash & securities Vehicles & equipment Vessels Commercial real estate Residential real estate Average LTV 52% (YE25: 52%) 633 631 648 665 682 346 347 363 359 357 354 387 393 395 394 1,333 1,365 1,401 1,416 1,431 30.9.25 31.12.25 31.3.26 30.6.26 30.9.26 Personal Banking Business Banking Corporate & Investment Banking
Page 19
Asset quality remains broadly high despite sector specific slowdown The year-on-year increase in Stage 3 relates, among other things, to exposures in the construction sector • Changes in Stage 3 loans mainly reflect borrower-specific circumstances • As new residential properties continue to take a long time to sell, loans to a few construction projects have been classified as Stage 2 • There are clear indications that the prolonged high-interest-rate and inflationary environment has started to have an impact • 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 a ratio of total loans Loans to customers: Stage 2 and 3 (NPL) Development of gross carrying amount as a ratio of total loans Íslandsbanki 3Q26 Financial Results 19 • Annualised cost of risk was 29bps in 3Q26 (0bps for 3Q25) and 25bps for 9M26 (-4bps for 9M25) • The probability weights of economic scenarios were kept unchanged at 20% (good), 50% (baseline), and 30% (bad) at the end of 3Q26. The weights were last changed at the end of 1Q22. • A 5-percentage-point shift from baseline to the bad scenario would increase the impairment allowance by ISK 290 million while the same shift from the baseline to the good would decrease the allowance by ISK 120 million 29 October 2026 0.6% 0.7% 0.7% 0.8% 0.8% 1.5% 1.4% 1.3% 0.9% 0.9% 2.0% 2.0% 2.0% 1.6% 1.7% 30.9.25 31.12.25 31.3.26 30.6.26 30.9.26 Companies Individuals 0.0 1.1 1.2 0.5 0.5 -0.1 -0.2 0.2 0.2 0.1 0.0 -0.1 -0.1 -0.1 0.1 0.1 -0.1 -0.1 0.3 0.0 1.1 1.2 0.5 1.0 3Q25 4Q25 1Q26 2Q26 3Q26 Borrower specific circumstances General economic environment Changes in models Other changes in loan portfolio - 3.6% 4.6% 3.9% 2.6% 3.0% 1.6% 1.5% 2.0% 2.6% 2.4% 30.9.25 31.12.25 31.3.26 30.6.26 30.9.26 Stage 2 Stage 3
Page 20
NPLs in the mortgage book remain low Upside to be realised as CPI-linked fixed-rate imbalance is refinanced • Mortgage portfolio growth is led by CPI-linked fixed-rate loans, with nominal fixed-rate loans also increasing • At origination, LTV is capped at 80% (85% for first-time buyers) and debt service-to-income at 30% (35% for first-time buyers) • Healthy LTVs in the mortgage book, with an average LTV of 57% (54% year-end 2025) • NIL fixed-rate resets are effectively complete, with the focus shifting to upcoming interest rate resets on CPI fixed- rate mortgages Highlights Íslandsbanki 3Q26 Financial Results 20 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 CPI fixed rate mortgages Gross carrying amount, ISKbn Mortgage portfolio: Stage 2 and 3 (NPL) Gross carrying amount as a ratio of total mortgages 29 October 2026 0 20 40 60 80 100 120 140 31.12.25 30.9.26Average LTV 57% (YE25: 54%) 1.1% 1.3% 1.4% 1.4% 1.6% 1.0% 1.0% 1.1% 1.1% 1.0% 30.9.25 31.12.25 31.3.26 30.6.26 30.9.26 Stage 2 Stage 3 135 134 130 126 123 242 245 262 277 294 100 104 102 96 93 109 102 108 118 123 587 585 602 618 633 30.9.25 31.12.25 31.3.26 30.6.26 30.9.26 CPI linked floating CPI linked 5Y fixed NIL floating NIL 3-5Y fixed 36% 64% 35% 65% 35% 65% 35% 65% 34% 66% 10 15 18 11 10 31 34 62 103 4Q26 1Q27 2Q27 3Q27 4Q27 2028 2029 2030 2031+ //
Page 21
Despite slowdown in residential construction sector, LTVs remain low Íslandsbanki 3Q26 Financial Results 21 • Loans to real estate companies and construction amount to 9% and 7% of loans to customers, respectively • Disciplined origination with conservative LTV requirements and debt service criteria • Real estate companies are naturally hedged, as both rental agreements and financing are long-term and primarily CPI-linked • High occupancy ratio of the listed commercial real estate companies of around 95% • Within the construction portfolio, Stage 2 accounts for 10% of gross carrying amount and Stage 3 for 11%. • Over half of exposure in the construction sector is for residential real estate with low LTV compared to asking prices. Unit sales are progressing in several projects but slowly in others, and some completed units have been on the market for up to 21 months. HighlightsDevelopment of exposure to real estate companies On- and off-balance-sheet exposure, ISKbn Development of construction exposure On- and off-balance-sheet exposure, ISKbn Real estate portfolio: Stage 2 and 3 (NPL) Gross carrying amount as a ratio of the real estate portfolio New-build sales progressing across several projects 29 October 2026 1.9% 3.4% 3.3% 2.5% 2.7% 2.9% 2.8% 3.3% 3.6% 3.9% 30.9.25 31.12.25 31.3.26 30.6.26 30.9.26 Stage 3 Stage 2 LTV of residential real estate construction loans1 Gross carrying amount, loan splitting approach, ISKbn 0 2 4 6 8 10 12 147 142 141 135 131 22 18 20 16 18 169 161 162 151 149 30.9.25 31.12.25 31.3.26 30.6.26 30.9.26 On-balance Off-balance 99 101 105 106 107 42 52 47 53 51 141 153 153 159 159 30.9.25 31.12.25 31.3.26 30.6.26 30.9.26 On-balance Off-balance 1. Loan splitting approach based on asking prices.
Page 22
Deposit growth continues to outpace lending growth Strong deposit position allows for a more flexible wholesale funding approach • Overall deposit levels grew by 4% in 3Q26, mainly due to an increase in corporate deposits • Continued growth in deposits by individuals, which grew by 1% in 3Q26 and 6.7% from end of last year • Term deposits were 16% of total deposits at the end of 3Q26 • Year to date, deposits have grown by 11.3%, or by 15% on an annualised basis • 66% of deposits held by individuals (and 42% 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, ISKbn7% 52% 13% 11% 2% 12% 8% 53% 13% 11% 2% 12% Deposits from financial inst. and pension funds Deposits from retail and corp, sovereigns, CB and PSE Senior unsecured bonds Covered Bonds Subordinated debt Equity 30.6.26 30.9.26 Short-term funding Long-term funding Íslandsbanki 3Q26 Financial Results 22 30.9.2630.6.26 29 October 2026 132% 141% 138% 136% 133% 112% 119% 116% 117% 115% 30.9.25 31.12.25 31.3.26 30.6.26 30.9.26 Customer loans to customer desposits ratio Customer loans (excl. Mortgages funded with CB) to customer deposits ratio 569563545534519 196190175179182 198180176165186 7066715767 6657584872 0 200 400 600 800 1,000 30.9.2630.6.2631.3.2631.12.2530.9.25 Financial institutions Pension Funds Corporations, sovereigns, central banks and PSE Small and medium enterprises Individuals 1,056 1,100 1,0259821,025
Page 23
Strong liquidity position, ratios well above requirements Íslandsbanki 3Q26 Financial Results 23 Liquid assets 18% of the total balance sheet and fully marked-to-market • All liquidity measures well above regulatory requirements • Total LCR at 179% and NSFR at 122% at end of 3Q26 • The Bank's EUR LCR at the end of 3Q26 was 478% • The Bank's securities portfolios are all measured at fair value (FVTPL and FVOCI); there are therefore no unrealised losses on held-to-maturity (amortised cost) holdings HighlightsTotal liquidity coverage ratio (LCR) Liquidity coverage ratio for ISK Liquid assets % of total assets, ISKbn Net stable funding ratio (NSFR) 29 October 2026 179% 0% 100% 200% 300% LCR Regulatory minimum 133% 0% 50% 100% 150% 200% LCR ISK Regulatory minimum 122% 0% 50% 100% 150% NSFR Regulatory minimum 7352687089 4343434140 7788897268 4741454744 89918979 114 30.9.2630.6.2631.3.2631.12.2530.9.25 Cash and balances with Central Bank Foreign currency bonds Domestic currency bonds Level 2 liquid assets Balances with financial institutions 315 (18%) 354 (20%) Level 1 liquid assets 309 (18%) 334 (19%) 329 (18%)
Page 24
The Bank is fully MREL funded well into 2027 29 October 2026 Íslandsbanki 3Q26 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 • Limited maturities for the remainder of 2026 allow the Bank to remain an adaptive issuer • The Bank issued ISK 1.4bn 10NC5 Tier 2 notes in September • In September, the Bank called the remaining SEK 388m of its SEK 750m AT1 notes at the first call date • In March S&P affirmed the Bank's covered bond programme rating of A+ and revised the outlook from stable to positive • In November 2025, Moody's Ratings affirmed Íslandsbanki's A2 long-term deposit and A3 long- term issuer ratings, with a stable outlook HighlightsSources of borrowings, ISKbn Contractual maturity profile of borrowings 30.09.26, ISKbn Borrowings per year, ISKbn Development of EUR funding spread, bps 24 206 170 165 169 161 11 16 32 39 41 11 21 22 23 26 44 45 44 45 33 159 158 116 181 175 24 17 9 17 11 49 28 12 11 14 503 456 400 485 459 31.12.22 31.12.23 31.12.24 31.12.25 30.09.26 Other borrowings Hybrid/sub. capital - FX Senior Preferred - FX Covered Bonds - FX Hybrid/sub. capital - ISK Senior Preferred - ISK Covered Bonds - ISK 22 13 42 84 9 23 8 26 33 4 16 49 24 81 11 4 11 8 90 86 66 210 2026 2027 2028 2029 ≥2030 Other borrowings Hybrid/sub. capital - FX Senior Preferred - FX Covered Bonds - FX Hybrid/sub. capital - ISK Senior Preferred - ISK Covered Bonds - ISK 18 31 22 23 26 9 7 16 911 10 44 75 58 64 101 26 12 11 168 105 102 145 52 2022 2023 2024 2025 9M26 Other borrowings Hybrid/sub. capital - FX Senior unsecured - FX Covered Bonds - FX Hybrid/sub. capital - ISK Senior unsecured - ISK Covered Bonds - ISK 0 50 100 150 30.09.25 31.12.25 31.03.26 30.06.26 30.09.26 Íslandsbanki Senior Preferred 2032 Íslandsbanki Senior Preferred 2030 Íslandsbanki Senior Preferred 2028 Senior IBOXX index
Page 25
Capital optimisation remains a focal point Íslandsbanki 3Q26 Financial Results 25 Total distribution capacity (incl. unfinished buybacks) amounts to ISK 22.3bn • Following a favourable CRR 3 implementation year-end 2025, a further reduction of 2% of the Group's REA was realised following the Central Bank’s adoption of a loan splitting approach for IPRE exposures • SREP: As of 30 June 2026, the Bank must maintain an additional capital requirement of 1.8% of the REA, resulting in an overall capital requirement of 19.5% and capital target of 21.5%, assuming the midpoint of the management buffer • Total distributions over the first nine months of the year amounted to ISK 31.5bn • As of 30 September 2026, ISK 10bn have been allocated to share buybacks which are deducted from the CET1 capital but yet to be completed • Total distribution and/or growth capacity (including uncompleted buybacks) assuming a fully optimised capital structure amounts to ISK 22.3bn, which will partly be used to service additional international loan growth • The Bank remains committed in its efforts to optimise its capital structure through growth and distributions to shareholders HighlightsCurrent regulatory requirements and minimum capital target 30.9.2026, 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 15.2% 17.2% 18.4% 1.8% 1.8% 1.0%2.5% 2.5% 2.4% Overall capital requirement Management buffer Capital target Capital ratio CET1 AT1 T2 Overall capital requirement 19.5% Capital target 20.5-22.5% Management buffer 1.0-3.0% Capital ratio 21.8% 1 1,085 1,034 1,049 1,044 1,052 62.5% 59.8% 58.7% 58.4% 57.8% 30.9.25 31.12.25 31.3.26 30.6.26 30.9.26 REA REA ratio (REA/Total assets) 21.9% 24.0% 22.5% 23.0% 21.8% 18.9% 20.1% 18.6% 19.1% 18.4% 11.9% 12.5% 11.5% 11.7% 10.9% 30.9.25 31.12.25 31.3.26 30.6.26 30.9.26 Total capital ratio CET1 ratio Leverage ratio 1 29 October 2026
Page 26
ROE tracking in excess of financial targets ROE 29 October 2026 Íslandsbanki 3Q26 Financial Results Capital optimisation remains a focal point through a mixture of distributions and growth Excess CET1 ISK 22.3bn 26 Emphasis on service enhancements 11.5 % 13.4 % 9M25 9M26
Page 27
Q&A 29 October 2026 Íslandsbanki 3Q26 Financial Results 27
Page 28
Appendix I About Íslandsbanki and additional financial information 29 October 2026 Íslandsbanki 3Q26 Financial Results 28
Page 29
Key figures 3Q26 ROE 13.6% Cost-to-income ratio 38.4% CET1 ratio 18.4% Total capital ratio 21.8% LCR 179% Group, all currencies NSFR 122% Group, all currencies Leverage ratio 10.9% Total assets ISK 1,819bn Ratings and certifications BBB+/A-2 Positive outlook Stable outlook A3 A3 Exceptional ESG risk rating This is Íslandsbanki 29 October 2026 Íslandsbanki 3Q26 Financial Results 29 We empower our customers to be a force for good Progressive thinking Collaboration Professionalism Values The Bank 717 FTEs: Number of FTEs at Íslandsbanki at period-end 12 branches Listed on Nasdaq Iceland as of June 2021 31.5% Retail customers 37% SMEs Market share1 Digital milestones in 3Q26 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 3Q26. AI-generated spending summaries in the app. It analyses spending activity and benchmarks it against the customer’s spending targets Major improvements in digital solutions for businesses and homeowners’ associations through the Bank’s new online banking platform Continued success in the securities strategy, one of the Board’s key strategic projects Sustainability risk integrated into Íslandsbanki's risk model for corporate lending Sustainability in 3Q26 Supporting customers’ financial health through targeted education and guidance based on individual needs and life stages. During the quarter, the relevant customers were encouraged to review their pension savings and consider increasing their contributions Íslandsbanki's sustainable assets amounted to ISK 184bn at end of 3Q26
Page 30
Financial overview 29 October 2026 Íslandsbanki 3Q26 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 3Q26 profit for 30.9.26, 1Q26 profit for 31.3.26 and 3Q25 profit for 30.9.25. 5. MREL ratio includes the CET1 capital held to meet the combined buffer requirement. 30 3Q26 2Q26 1Q26 4Q25 3Q25 PROFITABILITY Profit for the period, ISKm 7,269 7,069 7,456 5,947 6,901 Return on equity 13.6% 13.3% 13.6% 10.5% 12.2% Net interest margin (on total assets) 3.5% 3.4% 3.9% 2.9% 3.1% Cost-to-income ratio1 38.4% 43.1% 38.5% 43.5% 38.2% Cost of risk2 0.29% 0.13% 0.35% 0.32% (0.00%) 30.9.26 30.6.26 31.3.26 31.12.25 30.9.25 BALANCE SHEET Loans to customers, ISKm 1,431,038 1,416,048 1,401,212 1,367,106 1,333,234 Total assets, ISKm 1,819,463 1,788,385 1,786,697 1,728,147 1,734,056 Risk exposure amount, ISKm 1,051,874 1,043,713 1,049,435 1,033,788 1,084,527 Deposits from customers, ISKm 1,078,259 1,038,206 1,013,431 968,695 1,008,919 Customer loans to customer deposits ratio 133% 136% 138% 141% 132% Non-performing loans (NPL) ratio3 2.4% 2.6% 2.0% 1.5% 1.6% LIQUIDITY Net stable funding ratio (NSFR), for all currencies 122% 126% 123% 127% 129% Liquidity coverage ratio (LCR), for all currencies 179% 188% 177% 203% 207% CAPITAL Total equity, ISKm 215,393 211,095 212,718 225,359 226,974 CET 1 ratio4 18.4% 19.1% 18.6% 20.1% 18.9% Tier 1 ratio4 19.4% 20.7% 20.2% 21.7% 19.8% Total capital ratio4 21.8% 23.0% 22.5% 24.0% 21.9% Leverage ratio4 10.9% 11.7% 11.5% 12.5% 11.9% MREL ratio5 40.4% 43.9% 40.3% 44.0% 36.8%
Page 31
Income statement 29 October 2026 Íslandsbanki 3Q26 Financial Results 31 Income statement, ISKm 3Q26 3Q25 ∆% 9M26 9M25 ∆% Net interest income 15,815 13,260 19% 48,196 40,080 20% Net fee and commission income 3,299 3,229 2% 9,825 9,916 (1%) Net financial income (expense) (223) (353) (37%) (530) (1,326) (60%) Net foreign exchange gain 171 152 13% 595 270 120% Other operating income 22 124 (82%) 37 718 (95%) Total operating income 19,084 16,412 16% 58,123 49,658 17% Salaries and related expenses (4,152) (3,793) 9% (13,860) (12,694) 9% Other operating expenses (3,171) (2,686) 18% (9,353) (8,442) 11% Administrative expenses (7,323) (6,479) 13% (23,213) (21,136) 10% Bank tax (573) (549) 4% (1,667) (1,562) 7% Total operating expenses (7,896) (7,028) 12% (24,880) (22,698) 10% Profit before net impairment on financial assets 11,188 9,384 19% 33,243 26,960 23% Net impairment on financial assets (1,021) 7 - (2,694) 406 - Profit before tax 10,167 9,391 8% 30,549 27,366 12% Income tax expense (2,898) (2,490) 16% (8,755) (8,064) 9% Profit for the period 7,269 6,901 5% 21,794 19,302 13% Key ratios Net Interest Margin (NIM) 3.5% 3.1% 3.6% 3.2% Cost-to-income ratio (C/I) 38.4% 38.2% 39.9% 42.1% Return on Equity (ROE) 13.6% 12.2% 13.4% 11.5% Cost of risk (COR) 0.29% (0.00%) 0.25% (0.04%)
Page 32
Íslandsbanki's MREL requirement Íslandsbanki 3Q26 Financial Results 32 A resolution plan for the Bank is expected to be approved in early November Minimum Requirement for Own Funds and Eligible Liabilities (MREL), 30.9.2026 MREL = LAA + RCA =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 (9.8%) which is expected in November 2026, resulting in an MREL requirement of 19.6% of REA. • CET1 capital that is maintained to meet the combined buffer requirement cannot be used to fulfil MREL, therefore the effective requirement can be monitored as 29.3% MREL Development, % 36.8% 44.0% 40.3% 43.9% 40.4% 29.3% 0 .050 .10 .150 .20 .250 .30 .350 .40 .450 .50 30.9.25 31.12.25 31.3.26 30.6.26 30.9.26 Own funds and eligible liabilities as a % of REA MREL requirement 9.7% 9.8% 9.8% 9.7% 11.8% 18.9%29.3% 40.4% MREL including CBR Own funds and eligible liabilities Eligible liabilities Own funds RCA LCC Combined buffer requirement 29 October 2026
Page 33
Assets 29 October 2026 Íslandsbanki 3Q26 Financial Results Asset base mainly consists of loans and liquid assets 1. Stage 3, loans to customers, gross carrying amount. 33 Assets, ISKm 30.9.26 30.6.26 Δ Δ% 31.12.25 Δ Δ% Cash and balances with Central Bank 88,676 91,559 (2,883) (3%) 80,394 8,282 10% Loans to credit institutions 78,121 65,288 12,833 20% 80,009 (1,888) (2%) Bonds and debt instruments 172,452 166,740 5,712 3% 151,959 20,493 13% Derivatives 2,662 4,047 (1,385) (34%) 5,304 (2,642) (50%) Loans to customers 1,431,038 1,416,048 14,990 1% 1,367,106 63,932 5% Shares and equity instruments 11,755 12,770 (1,015) (8%) 20,517 (8,762) (43%) Other assets 34,759 31,933 2,826 9% 22,858 11,901 52% Total Assets 1,819,463 1,788,385 31,078 2% 1,728,147 91,316 5% Key ratios Risk Exposure Amount (REA) 1,051,874 1,043,713 8,161 1% 1,033,788 18,086 2% REA / total assets 57.8% 58.4% 59.8% Non-performing loans (NPL) ratio¹ 2.4% 2.6% 1.5%
Page 34
Liabilities and equity 29 October 2026 Íslandsbanki 3Q26 Financial Results Deposits continue to be the largest source of funding 34 Liabilities & Equity, ISKm 30.9.26 30.6.26 Δ Δ% 31.12.25 Δ Δ% Deposits from Central Bank and credit institutions 21,429 17,664 3,765 21% 13,250 8,179 62% Deposits from customers 1,078,259 1,038,206 40,053 4% 968,695 109,564 11% Derivative instruments and short positions 8,181 2,691 5,490 204% 6,183 1,998 32% Debt issued and other borrowed funds 423,013 440,206 (17,193) (4%) 444,593 (21,580) (5%) Subordinated loans 36,459 40,874 (4,415) (11%) 40,315 (3,856) (10%) Tax liabilities 14,868 13,440 1,428 11% 12,757 2,111 17% Other liabilities 21,861 24,209 (2,348) (10%) 16,995 4,866 29% Total Liabilities 1,604,070 1,577,290 26,780 2% 1,502,788 101,282 7% Total Equity 215,393 211,095 4,298 2% 225,359 (9,966) (4%) Total Liabilities and Equity 1,819,463 1,788,385 31,078 2% 1,728,147 91,316 5% Key ratios Customer loans to customer deposits ratio 133% 136% 141% Net stable funding ratio (NSFR) 122% 126% 127% Liquidity coverage ratio (LCR) 179% 188% 203% CET 1 ratio 18.4% 19.1% 20.1% Tier 1 capital ratio 19.4% 20.7% 21.7% Total capital ratio 21.8% 23.0% 24.0% Leverage ratio 10.9% 11.7% 12.5% MREL ratio 40.4% 43.9% 44.0%
Page 35
Appendix II Icelandic economy update 29 October 2026 Íslandsbanki 3Q26 Financial Results 35
Page 36
5.9 4.1 3.0 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 8.0 7.0 6.0 0 2 4 6 8 10 12 2020 2021 2022 2023 2024 2025 2026 2027 2028 Inflation Effective CBI policy rate Inflation forcast Policy rate forecast Economic growth to accelerate in coming years… Real GDP and main subitems, YoY change, % GDP growth gradually regains steam after a mild recession Persistent inflation forces the Central Bank to hold rates high for longer …facilitating gradual policy rate cuts from spring 2027 onwards CBI policy rate and real policy rate, % 29 October 2026 Íslandsbanki 3Q26 Financial Results 36 ...as exports return to more robust growth from 2026 after a soft patch Exports and contribution from subcomponents, % change Inflation has proven persistent but looks likely to decline in coming years.. Inflation, % 8.9 5.2 -0.9 1.1 1.2 1.8 2.3 -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 1.5 2.0 3.4 2.5 -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 exports Total exports
Page 37
The Icelandic economy and society draw on many strengths 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, 2024 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 Public debt remains sustainable after pandemic General govt. gross financial liabilities, % of GDP 37 Íslandsbanki 3Q26 Financial Results 29 October 2026 10% 10% 15% 31% 16% 18% 10% 0 500 1000 1500 2000 2013 2015 2017 2019 2021 2023 2025 Seafood Aluminium Tourism IP industries Other goods Other services 10% 19% 31% 16% 18% 6% 18% 47% -200% -150% -100% -50% 0% 50% 100% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 1 4 1 10 (tied) 16 28 26 22 0 50 100 150 200 Gender equality — Global Gender Gap … Democracy Index (EIU / The Economist) Human Development Index (UNDP) Corruption Perceptions Index… Index of Economic Freedom (Heritage… Environmental Performance Index… Global Innovation Index (WIPO;… World Competitiveness Ranking (IMD) Iceland's rank No. of countries 67% 18% 13% 2%Geothermal Hydropower Oil and petroleum products Coal / solid fossil fuels Other renewables (mainly biofuels) 0 20 40 60 80 100 120 140 2010 2012 2014 2016 2018 2020 2022 2024 2026 Iceland UK USA Euro area OECD avg
Page 38
8.9 5.2 -0.9 1.1 1.2 1.8 2.3 -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 Economic growth to accelerate in coming years Temporary sluggishness caused mainly by a brief setback in exports and a high real interest rate 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 rebounded from a 0.9% contraction in 2024 to 1.1% growth in 2025, supported by consumption and investment. • Growth is forecast at 1.2% in 2026, with modest consumption growth and virtually unchanged investment. • Net trade should support 2026 growth, with exports rising by 2.0% and imports 1.5%, reversing 2025’s drag. • Growth should strengthen to 1.8% in 2027 and 2.3% in 2028, despite contracting business investment in 2027. Consumption and residential investment strengthen in 2028. • Global trade uncertainty, commodity prices and wars pose risks; favourable developments could support Icelandic exports and domestic demand. • Labour market developments, Reykjanes seismic activity and housing vulnerabilities create domestic uncertainty. • AI-driven productivity and intellectual- property activity could deliver stronger sustainable medium-term growth than forecast. Highlights 29 October 2026 Íslandsbanki 3Q26 Financial Results 38 Shaded areas and dotted lines denote ÍSB Research forecasts Sources: Statistics Iceland, ÍSB Research -0.7 -3.1 0.4 -1.5 0.6 2.5 -0.7 3.9 -1.3 3.8 -1.1 -27 -24 -21 -18 -15 -12 -9 -6 -3 0 3 6 9 12 15 18 21 24 2018 Q12019 Q12020 Q12021 Q12022 Q12023 Q12024 Q12025 Q12026 Q1 Imports Exports Inventory chg. Investment Public consumption Priv. consumption GDP
Page 39
1.5 2.0 3.4 2.5 -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 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 Traditional pillars of exports grow slowly, new sectors blossom Intellectual property and aquaculture take the lead in export growth Shaded areas and dotted lines denote ISB Research forecasts Sources: Statistics Iceland, Federation of Icelandic Industries, ÍSB Research • Tourism remained resilient despite mounting challenges, with visitor numbers growing marginally in 2024 and 2025. • A slight tourism contraction is expected in 2026. Keflavík tourist departures fell 1% in January-August, while transit passengers declined markedly. • Winter tourist numbers remain highly uncertain, but modest tourism growth is forecast for 2027-2028. • Metals and groundfish exports set to contract in 2026, although capelin and aquaculture growth should more than offset the groundfish decline. • Aluminium production is returning to full capacity following a severe smelter equipment failure in 2H25. • Intellectual-property exports reached ISK 369bn in 2025, doubling since the decade began. • ICT service exports rose by 65% to ISK 129bn in the year to June 2026, mainly through data centres; broader intellectual-property export growth remains strong. HighlightsExport revenues, by key sector ISKbn at current prices and share of total in 2025 29 October 2026 Íslandsbanki 3Q26 Financial Results 39 Exports and contribution from subcomponents % change 10% 6% 19% 31% 16% 18%
Page 40
7.3 1.5 1.4 2.7 -30 -25 -20 -15 -10 -5 0 5 10 15 20 25 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 Goods imports Service imports Total imports External trade moving towards equilibrium Modest CA deficit in the latter half of the horizon, but the high real exchange rate is a barrier to external equilibrium Shaded areas and dotted lines denote ISB Research forecasts Sources: Statistics Iceland, Central Bank of Iceland, ÍSB Research • Imports are forecast to rise by 1.5% in 2026, mainly reflecting reduced purchases of data-centre equipment, rental cars and other capital goods. • Imports should regain momentum as domestic activity strengthens. • Net trade will support growth in 2026- 2027 before turning slightly negative in 2028. • External balances should improve after substantial 2024-2025 deficits, helped by stronger terms of trade, including elevated marine product and aluminium prices. • The current account deficit is projected at over 3% of GDP in 2026 and around 1% in 2027–2028, considered sustainable. • Longer-term balance remains preferable, but the high real exchange rate suggests eventual ISK depreciation may be needed. • Net external assets reached 47% of GDP at end-Q2 2026, supporting exchange rate stability and investor confidence. . HighlightsImports and contribution from subcomponents % change Current account balance % of GDP 29 October 2026 Íslandsbanki 3Q26 Financial Results 40 -3.4-4.0-3.3 -1.0-1.0 -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
Page 41
ISK to remain strong at first and then soften over time High real exchange rate challenges exporters and puts downward pressure on the ISK Sources: Statistics Iceland, Central Bank of Iceland, ÍSB Research • The ISK has been remarkably stable despite domestic and external shocks, with the trade-weighted index virtually unchanged in 2023 and 2024. • It strengthened marginally in 2025 and gained further in 2026; by September it was nearly 5% stronger in trade- weighted terms than in December 2025. • Exchange rate stability despite a sizeable current account deficit reflected favourable FX flows, with much of it financed by non-residents, limited forward sales of peak-season tourism revenues, modest pension-fund FX purchases, and sizeable corporate FX borrowing. • Near-term support should persist through a narrowing current account deficit, a strong NIIP, ample reserves, solid fundamentals, and a wide interest- rate differential. • The ISK could weaken, however, if next winter's tourist season disappoints, investment-related inflows contract sharply, or terms of trade worsen materially. • The real exchange rate should stay near historical highs if export sectors avoid a larger setback, but faster domestic wage and price growth in Iceland than main trading partners means the nominal rate must eventually fall. • The baseline assumes gradual depreciation, ending about 5% weaker than end-2025 - near EURISK 153 and USDISK 132 - though the forecast is highly uncertain. 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 29 October 2026 Íslandsbanki 3Q26 Financial Results 41 Historical maximum REER 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 Jul-26 EURISK USDISK GBPISK (r.axis) TW index (r.axis) 186.8 190.9 144.7 147.6 126.0 131.5 70 80 90 100 110 120 130 14050 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)
Page 42
Domestic balance sheets remain broadly robust Private sector debt ratios are stable, and public debt is on a more favourable trajectory than many major economies Private sector debt % of GDP Corporate debt % of GDP Household debt % of disposable income General government gross financial liabilities % of GDP 29 October 2026 Íslandsbanki 3Q26 Financial Results 42 Shaded areas indicate OECD forecasts. Source: Central Bank of Iceland, Eurostat, Statistics Iceland, OECD 70 77 0 50 100 150 200 250 300 350 400 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 Q2/26 Households Businesses (excl. financial) 0 50 100 150 200 250 300 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 Iceland Denmark Sweden Finland Ireland Norway 0 50 100 150 200 250 300 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 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 United Kingdom United States Euro area (17 countries) OECD
Page 43
Investment set for a moderate dip in 2027 Turning point in data centre development and a demanding environment affect investment in the near term Sources: Central Bank of Iceland, Statistics Iceland, Gallup HighlightsInvestment, real change, and contribution of subcomponents % Business investment and related indicators YoY change (%) and index 29 October 2026 Íslandsbanki 3Q26 Financial Results 43 0 50 100 150 200 250 -60 -40 -20 0 20 40 60 80 100 2018 2019 2020 2021 2022 2023 2024 2025 2026 6.0 4.8 0.3 -1.4 2.0 -15 -10 -5 0 5 10 15 20 25 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 • Investment has risen for five years, led by tourism, fishing and ICT businesses; data centres and aquaculture have offset slowing growth elsewhere. • Capital formation grew nearly 5% in 2025, below its ten-year average of just over 8%. • Business and public investment supported 2025 growth, while residential investment contracted markedly after surging in 2024. • Investment should grow marginally in 2026, with modest business growth, slowing residential investment and unchanged public investment. • Data centres, energy infrastructure and aquaculture support investment, offset by weaker commercial property, hotel and rental-car spending. • Investment is forecast to fall 1.4% in 2027 and rise by 2% in 2028 as housing and public investment recover. • High real interest rates constrain investment; energy-procurement delays and firms’ external conditions threaten the rebound. Public sector Residential Business Total investment General business investment Investment goods imports VAT turnover, construction 6M corporate expectations (r.axis)
Page 44
Labour market chill drags on Increasing labour market slack eases wage pressures 1. Excluding recipients of part-time unemployment benefits. Sources: Statistics Iceland, Central Bank of Iceland, ÍSB Research • Labour market slack has increased as the economy cools and labour demand falls. Registered unemployment is at its highest since the pandemic’s effects began to abate. • Redundancy plans outnumber hiring plans, with labour shortages at historic lows. Only 15% of executives at Iceland’s largest firms report understaffing, versus over 50% in 2022. Just 9% plan to hire within six months. • Immigration has slowed. Foreign nationals face much higher unemployment, despite a narrowing gap. Adjustment appears partly through reduced labour immigration and increased emigration. • Elevated unemployment should persist well into next year, then gradually decline as activity recovers, supported by Iceland’s flexible labour market. • Long-term 2024 settlements anchor wages, while wage drift has subsided considerably. Annual wage index growth is the slowest since early 2020, with more moderate wage inflation ahead. • Most private and public sector wage agreements expire in early 2028 amid high uncertainty. Despite persistent inflation, real wages should hold up and rise marginally. Highlights Wages, YoY change % Unemployment1 % of workforce, annual average 29 October 2026 Íslandsbanki 3Q26 Financial Results 44 4.5 4.5 3.7 0 1 2 3 4 5 6 7 8 9 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 0.8 1.4 1.3 -10 -5 0 5 10 15 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 Wages Real wages
Page 45
Subdued private consumption growth ahead Households' strong financial position supports continued private consumption growth Sources: Central Bank of Iceland, Statistics Iceland, ÍSB Research • Private consumption picked up in 2025, growing 3.6% despite rising labour market slack and a cooling economy. Growth has slowed markedly in 2026, faster than expected. • Consumption growth was only 1.3% YoY in 1H26. Most indicators suggest households have reined in spending further in Q3. • Payment card turnover, household sentiment and overseas travel suggest households are cutting back amid persistent inflation, high interest rates and heightened economic and labour market uncertainty. • Households remain financially strong, with modest debt, historically low arrears and sizeable pandemic-era savings, despite some drawdown. Purchasing power has held up and should continue growing, supporting consumption. • Consumption forecasts for 2026 and 2027 have been lowered somewhat, mainly because economic cooling and labour market slack should persist longer than expected. • Consumption should still grow each year, gradually accelerating as inflation, interest rates and unemployment ease and economic activity recovers. HighlightsConsumer confidence index and card turnover Real card turnover (left) and Gallup CC index (right) Private consumption and related indicators % change YoY (left) and index value (right) 29 October 2026 Íslandsbanki 3Q26 Financial Results 45 40 55 70 85 100 115 130 145 160 -24% -18% -12% -6% 0% 6% 12% 18% 24% 2021 2022 2023 2024 2025 2026 Real card turnover Consumer confidence 1.12.13.0 0 20 40 60 80 100 120 140 160 -20 -15 -10 -5 0 5 10 15 20 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 Private consumtion Household card turnover Real wages Gallup CC index (r.axis)
Page 46
The real estate market cools as interest rates bite Tighter monetary policy has cooled the market with real residential house prices declining in recent quarters 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 29 October 2026 Íslandsbanki 3Q26 Financial Results 46 Source: Central Bank of Iceland 90 95 100 105 110 2023 2024 2025 2026 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 1,000 1,500 2,000 2021 2022 2023 2024 2025 2026 No. of contracts (l.axis) YoY price change (r.axis) Real house prices (r.axis) -40 -20 0 20 40 60 0 50 100 150 200 250 300 350 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 YoY % change (r.axis) Real prices (l.axis) 0 50 100 150 200 250 300 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 Retail and offices Industrial, warehouse, other
Page 47
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 Rising uncertainty as the Persian Gulf conflict drags on Sources: Central Bank of Iceland, Statistics Iceland, ÍSB Research • Inflation has risen towards 6% in 2026, a two-year high, after hovering around the 4% upper deviation limit of the CBI’s target throughout 2025. • Services drive most inflation. Housing accounts for just over 30%, down from over half at its peak. Public services contribute just under a quarter and other services just under one-fifth, a marked shift since the inflation peak in early 2023. • The outlook is for somewhat higher and more persistent inflation in 2026-2027 than previously forecast, but inflation should fall fairly quickly in 2027 and stay near the 4% upper deviation limit for most of that year. • Returning to target requires slower services price rises. Greater economic slack and more modest pay increases should help, but inflation remains above target throughout the forecast horizon, approaching 3% at end-2028. • Risks lean upwards: Persian Gulf developments, sustained recent oil price increases, labour market disputes delaying disinflation, and a weaker ISK prolonging inflation. • Conversely, tight monetary policy could cool the economy more than expected, bringing inflation down faster than forecast. HighlightsInflation and the CBI inflation target % MoM CPI change and 12m trailing inflation % 29 October 2026 Íslandsbanki 3Q26 Financial Results 47 -1 0 1 2 3 4 5 6 Jan-25 Apr-25 Jul-25 Oct-25 Jan-26 Apr-26 Jul-26 Domestic goods Imported goods Mixed goods Travel and tourism Housing Public services Other services Inflation
Page 48
8.0 7.0 6.0 0 2 4 6 8 10 12 2020 2021 2022 2023 2024 2025 2026 2027 2028 Inflation Effective CBI policy rate Inflation forcast Policy rate forecast Central Bank likely to start monetary easing next spring Policy rate could fall by 2 points during the forecast horizon, paving the way for a drop in long-term rates Sources: Central Bank of Iceland, Statistics Iceland, ÍSB Research • Following a period of policy rate cuts throughout 2025, the CBI resumed tightening in March 2026, raising its policy rate by 0.75 percentage points to 8.0%. • In August, the rate hike was accompanied by relatively dovish forward guidance and 1 out of 5 MPC members voted against the hike, preferring to keep rate at 7.75%. • In October, the MPC voted unanimously to hold rates at 8.0%. • No further hikes are expected in the near term unless inflation exceeds forecasts; rates should remain unchanged until spring 2027. • Gradual easing could then bring the policy rate to around 6.0% by H1 2028, conditional on forecast developments. • Ten-year nominal Treasury yields are currently around 7.0%, with indexed real yields at 3.0%; both remain high. • Long-term nominal and real rates could fall to 6.0% and 2.5%, respectively; breakeven inflation includes an uncertainty premium. • The 2028 forecast is considered near equilibrium, reflecting persistent inflation, economic resilience and a higher equilibrium real interest rate. Highlights Policy rate and inflation %, Real policy rate based on 12m forward forecast Key interest rates %, average per year 29 October 2026 Íslandsbanki 3Q26 Financial Results 48 4.1% breakeven inflation rate 3.5% breakeven inflation 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
Page 49
Disclaimer 29 October 2026 Íslandsbanki 3Q26 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 where otherwise expressly stated. Furthermore, it is prohibited to publish material made or gathered by Íslandsbanki without written consent. 49
Page 50
29 October 2026 Íslandsbanki 3Q26 Financial Results 50