Slides
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Investor presentation 29 October 2025
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Key results Medium-term targets Q3 2025 9M 2025 Return on equity1 Exceed 13% 16.0% 16.0% Core operating income2 / REA Exceed 7.2% 7.4% 7.5% Insurance revenue growth (YoY)3 In excess of market growth • 4.7% • 4.9% Combined ratio Vördur Below 95% 88.2% 89.0% Total cost-to-core income4 ratio Below 45% 36.3% 38.3% CET1 ratio above regulatory capital requirements 150-250 bps management buffer5 • 266 bps • 266 bps Dividend payout ratio6 50% 50% of net profit deducted from CET1 50% of net profit deducted from CET1 Medium-term targets are reviewed annually, and the underlying horizon is up to 3 years 1 Return on equity attributable to shareholders of Arion Bank 2 Core operating income: Net interest income, net fee and commission income and insurance service results (excluding opex) 3 YoY Insurance revenue growth in the domestic insurance market in Q2 2025 was 5.4% 4 Total cost-to-core income ratio: Operating expenses including OPEX from insurance operations / Operating income excluding OPEX from insurance operations 5 Approx.16.8 - 17.8% 6 Pay-out ratio of approximately 50% of net earnings attributable to shareholders through either dividends or buyback of the Bank ’s shares or a combination of both. Additional distributions will be considered when Arion Bank’s capital levels are above the minimum requirements set by the regulators in addition to the Bank’s management buffer 2 Key results Solid quarter and positive trend for 9M 16.0% ROE vs medium-term target of above 13% ‒ Good momentum in core earnings ‒ Cost development in line with expectations Capital optimization on track ‒ Capital distribution of ISK 22bn through dividends and buybacks in the first nine months of the year ‒ Capital position moving closer to optimized level ‒ CRR3 implementation, which is expected before year- end, will further increase surplus capital ‒ Kvika merger expected to further increase capital level from current standalone position
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3 Successful EUR 300m senior financing New Arion Rewards savings account Markets: sustained growth in AuM & AuS Strong momentum at Stefnir Funds Sale of Arnarland development asset successfully concluded • The merger is pending approval by the members of the Dentist Pension Fund in November • As of September 30, 2025, the Dentist Fund holds ISK 11bn, while Frjálsi manages ISK 562bn. Frjálsi Pension Fund and Dentist Pension Fund agree to merge• The Bank issued EUR 300 million in senior preferred notes at the end of August, with a six-year maturity • The issuance marks Arion’s longest senior financing to date with participation from 105 investors spanning more than 20 countries across EMEA and APAC Key operational highlights • SÍA V is a new ISK 15 bn private equity fund from Stefnir, focused on investing in unlisted Icelandic companies to boost returns and enhance value. • Through targeted fee reductions and with the support of Arion Rewards, Stefnir has made transactions more accessible, passed operational efficiencies on to its clients and expanded its client base by 9.1% YTD • REIR 20, a new fund by Stefnir, partners with buyers by contributing 20% toward residential housing, allowing them to own 80% of the property with full control Arion Bank awarded for excellence in business #1 …in Iceland for the fourth year in a row • Total AuM & AuS rose 4.7% in Q3 2025, with AuS up 11.7% and institutional AuM reaching ISK 950 bn. The Rewards savings account offers top-tier interest rates paid weekly Exclusively for Arion Rewards members ISK bn CAGR
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Consumer Association’s class-action lawsuit against Icelandic banks Timeline 2021 2023 20252020 February Initial complaint • Consumer Association urged Arion Bank, Íslandsbanki and Landsbankinn to revise variable rate mortgage terms • Claimed lack of transparency and predictability in interest rate decisions September Bank´s response • Following a comprehensive review of the terms and various legal opinions on the matter Arion Bank rejected the claims • All three banks formally rejected the Association’s arguments by September 2020 Legal action • Association called for class-action participants February Court proceedings District Court: Acquitted February Court proceedings Court of Appeal: Acquittal confirmed District Court: (Feb 2025) Acquitted Acquitted in District Court Also facing further legal action October / November Court proceedings Supreme Court: (Oct 2025) Interest rate clause partially invalid (variable rate mortgages) Supreme Court: Appeal pending, hearing scheduled 17 Nov. (variable CPI linked mortgages)
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Financial impact assessment Arion Bank's current response • Arion Bank’s loan terms differ from those of Íslandsbanki and are more comprehensive • Worst-case scenario previously presented: ISK 24bn pre-tax, thereof ISK 20bn for non-indexed loans • Should the Íslandsbanki ruling be applied to Arion Bank’s non-indexed loans, the estimated loss would be less than ISK 0.5bn pre-tax • For indexed loans, the estimated worst-case scenario could result in a pre-tax loss for up to ISK 4.5bn, assuming the lowest interest rates presented by the Central Bank • These assessments are based on a four-year statute of limitations and do not account for any potential impact on the Bank’s future earnings • The Bank has not made any provision in respect of impending court cases, given the degree of ongoing uncertainty, but will keep this under review • Arion Bank postponed the issuance of indexed loans • Preparations are underway for a temporary solution regarding issuance of indexed loans • An Interest rate floor will be set on the current terms of non-indexed loans Consumer Association’s class-action lawsuit against Icelandic banks
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Merger discussions between Arion Bank and Kvika Bank Due diligence processes finalized in coming weeks and dialogue with the ICA underway Arion and Kvika have started pre-notification discussions with the ICA These discussions are expected to take several weeks where the banks present the merger case and their assessment on competition matters The outcome of these discussions will determine the next steps in process ◕ ◔ Letter of intent signed on 6 July 2025 Agreement on heads of terms, including exchange ratios 1 2 3 4 Phase CompletedOngoing Due diligence progress Pre-notification discussions with the ICA Merger agreement signed Merger notification sent to regulatory bodies Conditions fulfilled (approval by regulatory bodies) Kvika‘s shareholders receive new Arion shares Shareholder meetings of merging companies Not startedNot started Subject to successful results from phase 2
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• Arion Bank has concluded a sale process of Arnarland, a development asset in the municipality of Garðabær in October 2025 • The land-use plan provides for 50,000m2 of multi- family housing and 36,000m2 of commercial real estate • This project is a prime example of Arion’s ability to generate value through diligent development of assets from start to finish • The sale had a positive effect on the book value of Landey ehf., Arion’s subsidiary, of ISK 2.0bn in 9M 2025. Landey owned 51% in Arnarland ehf. The financial impact of the sale is expected to be minimal for the Q4 accounts Sale of Arnarland finalized in Q4
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Sources: Statistics Iceland, Central Bank of Iceland, Arion Research. 8 The Economic Outlook: Challenges ahead Although GDP contracted by 1.9% year-on-year in Q2, according to preliminary data, the Icelandic economy cannot be characterized as subdued: private consumption expanded by 3.1% and investment rose 8.3%, underscoring domestic resilience. Q2’s contraction stemmed from a sharp deterioration in net trade. Imports - mainly services and data center equipment - rose 13.4% year-on-year, while goods exports declined slightly. Notably, the surge in computer equipment imports hasn’t been completely offset by business investment, but future revisions may close that gap A continued rise in payment card turnover in Q3 highlights the robustness of private consumption, and together with steady business investment, it is expected to offset weaker contributions from net exports in 2025 Pre-summer concerns about tourism haven’t materialized, though uncertainty for the next season remains high. Meanwhile, fisheries face headwinds as next year’s catch quotas will be reduced, and aluminium production has been significantly scaled back due to electrical equipment failure at one of the aluminium smelters The contribution of foreign trade to economic growth in the coming quarters is therefore likely to be more negative than previously assumed 2.2 2.3 2.0 0.5 0.7 1.7 2.2 2.3 2.3 2.3 2.3 2.4 0.0 0.5 1.0 1.5 2.0 2.5 3.0 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Tourist arrivals via Keflavik International airport - millions annually Forecast - 100,000 200,000 300,000 400,000 500,000 600,000 700,000 Overnight stays at hotels by foreign visitors 2018 2019 2022 2023 2024 2025 50 60 70 80 90 100 110 120 130 140 150 -20% -15% -10% -5% 0% 5% 10% 15% 20% 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Payment card turnover and private consumption - quarterly data, YoY-% growth, constant prices/exchange rate Private consumption Payment card turnover Consumer confidence (r.axis) -10% -5% 0% 5% 10% 15% 2022 Q1 2022 Q2 2022 Q3 2022 Q4 2023 Q1 2023 Q2 2023 Q3 2023 Q4 2024 Q1 2024 Q2 2024 Q3 2024 Q4 2025 Q1 2025 Q2 Growth contributions of GDP components Private consumption Public consumption Investment Changes in inventory External trade GDP
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Sources: Central Bank of Iceland, Statistics Iceland, Arion Research. 9 Inflation target not within sight - yet The labor market is showing signs of moderation. Private-sector employment has fallen year-on-year, pushing unemployment gradually higher. Layoffs are already visible in key export industries, including tourism (Play), aluminum production, fisheries, and related sectors. A stronger króna, driven mainly by a weaker U.S. dollar and reduced foreign investment by pension funds, adds to the challenges facing export sectors while simultaneously supporting Icelanders’ spending abroad. The strength of the króna has supported the Central Bank of Iceland’s inflation target, helping to suppress imported inflation. Yet, headline inflation has proven persistent, remaining above 4%. Consequently, monetary policy is expected to remain firm, although worsening economic outlook could move interest rate cuts closer in time. While progress in curbing inflation and anchoring expectations has been slower than anticipated, the policy stance is beginning to show tangible effects – most notably in the housing market, where demand has softened and price growth has moderated. The tightening of access to inflation-indexed mortgages may accelerate the cooling of the housing market - potentially easing demand pressures, dampening inflation, and prompting the MPC to consider rate cuts sooner than previously anticipated 120 125 130 135 140 145 150 155 160 2023 2024 2025 Exchange rate -Daily average EUR USD 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 2019 2020 2021 2022 2023 2024 2025 Unemployment - share of workforce, 3 month moving average Registered unemployment Labor force survey unemployment Broad unemployment Broad unemployment includes the unemployed, those working part-time but who want to work more, and those who are willing to work but are either not actively looking for a job or not ready to start working within two weeks. -2% 0% 2% 4% 6% 8% 10% 12% 2021 2022 2023 2024 2025 CPI by expenditure groups Housing Imported goods Other Inflation Inflation target CBI's key interest rates 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 -10% -5% 0% 5% 10% 15% 20% 25% 30% 2021 2022 2023 2024 2025 Housing prices and number of contracts -YoY change (%) Number of contracts (r.axis) Housing prices - nominal (l.axis) Housing prices - CPI adjusted (l.axis)
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Small economy, strong foundations Sources: Statistics Iceland, Central Bank of Iceland, Arion Research. *Arion Research’s forecast. 10 -200% -150% -100% -50% 0% 50% 2000 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 Net international investment position - % of GDP 0 20 40 60 80 100 120 140 160 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025* Total exports composition - index, total in 2012=100 Tourism Seafood (excl. aquaculture) Aluminium Fourth pillar (other) -3 -2 -1 0 1 2 3 4 5 6 7 1999 2000 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 CBI's FX reserves - bn. EUR Total FX reserves Net FX reserves 0% 50% 100% 150% 200% 250% 2000 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 Q2 Pension funds assets - % of GDP 0% 50% 100% 150% 200% 250% 300% 350% 400% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Q2 Household and non-financial corporate debt - % of GDP Households Companies 0% 20% 40% 60% 80% 100% 120% 140% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Debt of central government - % of GDP Gross debt Net debt
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Core income Loan book Capital, funding and liquidity Operational performance ‣ Solid quarter with an ROE of 16.0% ‣ Diversified pillars of the Group continue to support earnings momentum through the cycle ‣ Capital position strong with a CET1 ratio of 18.0% or 266bps above regulatory minimum ‣ Liquidity position very strong, supported by successful funding activities and stable deposits ‣ Relatively high net interest margin partly due to inflation impact with further fluctuations anticipated in coming quarters ‣ A broad-based robust quarter in fee generation ‣ Insurance continues strong trajectory with combined ratio of 88.2% in the quarter ‣ Healthy corporate loan growth in the quarter despite slower microeconomic activity ‣ Loan growth supported by continued momentum in deposit growth ‣ Cost of risk consistently below provision levels. Expected loss however rising amid a challenging economic environment Key takeaways from Q3 2025 11
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All amounts in ISK million12 Income statement Q3 2025 − Net earnings attributable to shareholders of ISK 8.2bn, resulting in a return on equity (ROE) of 16.0% − Core income* increased year-on-year by 6.9%, mainly net interest income − YoY Increase in operating expenses of 2.9%, both salaries and other OPEX − Slightly higher net impairment compared to prior quarters, calculated as 35bps in the quarter on annualized basis *Core income: Net interest income, net fee and commission income and insurance service results (excluding opex) Q3 2025 Q3 2024 Diff Q2 2025 Diff Net interest income 13,826 11,863 17% 14,200 (3%) Net fee and commission income 4,003 3,880 3% 4,553 (12%) Insurance service results 630 1,532 (59%) 1,066 - Net financial income 483 524 (8%) 179 170% Other operating income 45 (313) - 1,324 (97%) Operating income 18,987 17,486 9% 21,322 (11%) Operating expenses (6,194) (6,021) 3% (6,697) (8%) Bank levy (530) (500) 6% (521) 2% Net impairment (1,128) (954) 18% 147 - Net earnings before taxes 11,135 10,011 11% 14,251 (22%) Income tax expense (2,928) (2,114) 39% (3,984) (27%) Net earnings from continuing operations 8,207 7,897 4% 10,267 (20%) Discontinued operations net of tax 3 (6) - (11) - Net earnings 8,210 7,891 4% 10,256 (20%) Non-controlling interest 19 (20) - (505) - Net earnings attributable to shareholders 8,229 7,871 5% 9,751 (16%) Return on equity attributable to shareholders 16.0% 16.1% 19.7% Core income* 19,266 18,016 7% 20,697 (7%) Net interest margin 3.3% 3.1% 3.5% Total cost-to-core income ratio 36.3% 37.5% 36.6% Cost-to-income ratio 32.6% 34.4% 31.4%
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All amounts in ISK million13 Income statement 9M 2025 − Net earnings attributable to shareholders of ISK 24.4bn, achieving a return on equity (ROE) of 16.0% − Core income* increased by 13.9% year-on-year − Financial income impacted by continued challenging capital markets, particularly in equities during Q1 − Other operating income derived from the valuation of development assets, partially linked to non-controlling interests − Operating expenses have remained relatively stable, considering one-off item from Q2 2024 − The effective tax rate is rather high at 28.8% due to an unfavorable combination of income, primarily stemming from losses in equity holdings *Core income: Net interest income, net fee and commission income and insurance service results (excluding opex) 9M 2025 9M 2024 Diff Net interest income 40,192 35,056 15% Net fee and commission income 13,092 11,224 17% Insurance service results 1,665 1,839 (9%) Net financial income (289) 652 - Other operating income 4,690 (226) - Operating income 59,350 48,544 22% Operating expenses (19,492) (19,727) (1%) Bank levy (1,559) (1,436) 9% Net impairment (1,359) (2,044) (34%) Net earnings before taxes 36,940 25,338 46% Income tax expense (10,638) (7,489) 42% Net earnings from continuing operations 26,302 17,849 47% Discontinued operations net of tax (19) (26) (27%) Net earnings 26,283 17,823 47% Non-controlling interest (1,883) (2) - Net earnings attributable to shareholders 24,400 17,821 37% Return on equity attributable to shareholders 16.0% 12.2% Core income* 57,507 50,491 14% Net interest margin 3.3% 3.1% Total cost-to-core income ratio 38.3% 43.8% Cost-to-income ratio 32.8% 40.6%
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II Q3 2 II Q3 2 ,8 3 228 3 2 , 0 2 0 3 3,82 eposits II Q2 2 II Q3 2 SecuritiesLoans to customers Borrowings et inflation effect Subordinated and other Loans to credit institutions and CB ,200 2 228 98 2 292 , 8 3,82 14 Net interest income − In Q3, net interest income reached ISK 13.8bn, reflecting an 16.9% annual increase − NIM was 3.3% in Q3 vs. 3.1% in Q3 2024. The key drivers of higher NIM in the quarter are: − The cost of funding has decreased alongside falling Central Bank rates in Iceland, dropping from 9.25% at the end of Q3 2024 to 7.5% at the end of Q3 2025. Additionally, the cost of FX borrowings has decreased, with lowering interest rates in EUR and USD − The CPI imbalance was ISK 196bn at the end of September and rose by ISK 27bn since the year-end 2024 and by ISK 29bn compared with the end of Q3 2024. Relatively high inflation quarter compared to the same quarter in 2024 − With increased corporate lending, the net interest margin is likely to trend above 3%. However, the relative growth of mortgages versus corporate loans, along with CPI developments, will be key determinants in the near term Strong quarter driven by reduced funding cost Q3 2 Q 2 Q 2 Q2 2 Q3 2 .9 .2 2.2 .2 3.8 3. 3. 2.9 3. 3.3 Net interest income (ISK bn) et interest margin % Credit risk (ISK bn) Net interest income development (ISK m) Y/Y development from Q3 2024 to Q3 2025 Q/Q development from Q2 2025 to Q3 2025 Q3 2 Q 2 Q 2 Q2 2 Q3 2 8 8 880 909 9 . . .2 . .0 et interest income credit risk %
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Q3 202 Q 202 Q 202 Q2 202 Q3 202 3,880 , 3 , 3 , 3 ,003 32 ,3 0 ,009 ,2 2 , 03 90 ,333 293 ,90 9 , 2 3 ,98 8 , 2 9 ,32 923 , 28 15 Net fee and commission income − Asset management fees remain solid, with Assets under Management and Supervision increasing to ISK 1,891bn at the end of the quarter − The CIB operation remains strong, both in terms of fees generated from lending and service on loans and focused fee strategy − Retail Banking activities have shown stable income, with main fee income from cards, lending and collection and payment services Fees remain diversified and robust Net fee and commission income (ISK m) CIB Retail Markets and Stefnir Treaury and other Assets under Management and Supervision (ISK bn) Net fee and commission income (ISK m) 202 2022 2023 202 202 , 3 , 9 ,389 ,3 0 3,092 ,003 3,2 3, 2 3, ,0 9 3, , 82 ,0 ,2 , , 8 3,8 8 3,903 3,3 3,9 9 3,880 , 3 , 3 , 3 Q Q2 Q3 Q 3 . 2.22 3 . 2.23 3 . 2.2 30.0 .2 30.09.2 ,298 ,383 , 33 ,80 ,89 03 8 9 2 8 9 2 82 ,08 33 2 , 0 3 3 , 3 3 AuM arent AuM Stefnir AuS
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16 Continued momentum in the insurance business in Q3 Insurance revenue (ISK m) ** Combined ratio (%) Change in combined ratio from Q3 2024 (%) * Figures based on Vördur standalone financial results, before elimination within the Group. ** Figures for 2022 have been restated in accordance with IFRS 17 while figures for 2021 have not CAGR 9M 202 9M 2022 9M 2023 9M 202 9M 202 0, , 3,009 , ,3 9 % Q3 23 Q 23 Q 2 Q2 2 Q3 2 Q 2 Q 2 Q2 2 Q3 2 88. 0 .2 03.9 89. 0.0 93.3 99. 9. 88.2 . 2. .0 8 .2 20.0 8 . 8.8 0. 8.9 3. . .3 22.0 80. 9.2 0. 8.9 . * Claims and reinsurance ratio Cost ratio Insurance service result (ISK m) Q3 23 Q 23 Q 2 Q2 2 Q3 2 Q 2 Q 2 Q2 2 Q3 2 22 2 0 8 , 33 ,0 9 23 Run off result Claims incurred Q3 202 Q3 202 Cost ratioReinsurance ratio 0.0 20.2 2.3 0.2 0.2 88.2 − Net result in the quarter ISK 698m compared with ISK 1,737m in Q3 2024 − Claims and reinsurance costs developed in line with revenue growth. Comparison with Q3 2024 is skewed due to unusually low ratios in that quarter. The ratio in Q3 2025 was 71.5% compared with 53.5% in Q3 2024 and 72.6 in Q3 2023. − Combined ratio of 88.2% in Q3 2025 compared with 70.0% in Q3 2024 and 89.0% for the first nine months of 2025 compared with 87.4% for the same period in 2024 − Financial results are below par due to market uncertainties and delay in the expected interest-lowering process.
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17 Net financial income − Vördur's total investment portfolio stands at ISK 36.1bn, generating a profit of ISK 301m for the quarter, which includes adverse net impacts from insurance contracts − Bond holdings vary from quarter to quarter as part of liquidity management and funding strategies − FX bond holdings are notably high at quarter-end, primarily due to the EMTN issuance in August denominated in EUR − The average duration of the liquidity portfolio is less than one year − The bond portfolio does not utilize held-to- maturity (HTM) accounting, and all changes in market value are reflected in the capital position Equity markets underperforming Net financial income (ISK m) Bond holdings (ISK bn) Equity holdings (ISK bn)Net financial income by type Q3 2025 (ISK m) Q3 202 Q 202 Q 202 Q2 202 Q3 202 2 2, 93 9 9 83 30 99 , 9 32 2 9 20 82 9 Bonds quities Insurance contracts erivatives, gain and other 8 8 383 2 3 . 2.22 3 . 2.23 3 . 2.2 30.0 .2 30.09.2 38.2 .2 8. 92. 2 2. 2 . . 2. 3.8 . .2 0.3 9. 20.0 9.0 2.0 .9 22.8 8. 0 .2 . 23.9 0.3 2 .9 9. Market making ISK rdur investment portfolio 3 . 2.22 3 . 2.23 3 . 2.2 30.0 .2 30.09.2 .8 . 8. 9. 2 .0 . . . 3.9 2.9 .8 3. . . 8. 3. 2.3 0.9 . 3.9 . 0. 0. . . 0. Market making Listed nlisted Investment funds rdur investment portfolio Arion Bank and other subsidiaries rdur
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Q3 202 Q 202 Q 202 Q2 202 Q3 202 2,98 3,33 3,20 2,9 3 3,08 ,2 289 33 80 ,32 3 0 3 38 ,332 3 3 0 299 2 3 ,2 3 2 33 8 ,23 2 0 3 0 00 18 Operating expenses* - Total operating expenses outlined here encompass costs associated with the insurance business which is reflected through insurance service results post IFRS17 - Total operating expenses increased by ISK 238m, or 3.5%, compared with Q3 2024 - Salaries and related expenses increased by ISK 131m or 3.5% - Other operating expenses increased by 107m or 3.6%, mainly professional services and marketing expenses Stable cost base Cost ratios (%) Total operating expenses (ISK bn) Number of FTEs Other operating expenses (ISK m) Q3 202 Q 202 Q 202 Q2 202 Q3 202 .8 9. . . .0 3. 3.8 3.0 . 3.3 .8 .3 3.2 . 3.0 3.9 IT cost ousing cost rofessional services Marketing cost epreciation amorti ation ther expenses Q3 202 Q 202 Q 202 Q2 202 Q3 202 8 8 8 8 8 8 89 23.8 2 . 20.0 20.2 22. Salaries and related expenses ther operating expenses Incentive scheme *Operating expenses from insurance operations are included in all figures for comparative purposes Total cost to core income: Operating expenses including opex from insurance operations / Core operating income excluding opex from insurance operations Cost to income ratio: Operating income / Operating expenses Core income per employee ISK m 9M 202 9M 2022 9M 2023 9M 202 9M 202 9. 2.0 . 3.8 38.3 .9 . 3 .3 0. 32.8 Total cost to core income ratio Cost to income ratio
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19 Balance sheet - Loans to customers increased by ISK 30bn or 2.3% in Q3 - Deposits increased by ISK 18bn or 2.0% in Q3 - Loans to deposits ratio of 141.9%, 116.7% without loans financed by covered bonds - Very strong liquidity position: - Liquidity coverage ratio (LCR) of 206% (142% in ISK) - Net stable funding ratio (NSFR) of 126% Solid growth in loans and deposits All amounts in ISK billion Assets 30.09.2025 30.06.2025 Diff. 31.12.2024 31.12.2023 31.12.2022 Cash & balances with CB 110 114 (3%) 124 102 114 Loans to credit institutions 26 35 (27%) 26 29 46 Loans to customers 1,302 1,272 2% 1,230 1,153 1,085 Financial assets 260 238 9% 206 206 193 Investment property 14 14 0% 9 9 8 Other assets 25 40 (37%) 23 27 20 Total Assets 1,737 1,713 1% 1,618 1,526 1,466 Liabilities and Equity Due to credit institutions & CB 9 7 20% 7 3 12 Deposits from customers 917 899 2% 857 793 755 Other liabilities 73 77 (6%) 69 69 71 Borrowings 482 483 (0%) 433 420 393 Subordinated liabilities 43 42 1% 45 41 47 Total Liabilities 1,524 1,509 1% 1,411 1,326 1,278 Shareholders equity 210 202 4% 207 199 187 Non-controlling interest 2 2 (1%) 1 1 1 Total equity 213 204 4% 207 199 188 Total Liabilities and Equity 1,737 1,713 1% 1,618 1,526 1,466
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20 Loans to customers - Loans to customers total ISK 1,302bn at the end of September, increasing by ISK 29.2bn or 2.3% during the quarter. Currency fluctuations impacted the FX loan book positively by less than ISK 0.5bn and CPI changes increased book value by approx. ISK 2.8bn - The diversification in terms of sector and single name concentration of the corporate loan book continues to be good and in line with the Bank’s credit strategy - Loan growth is primarily driven by corporate loans, with continuing demand. However, the growth rate in the coming quarters is not expected to match that seen in the current quarter - The sustainable loan book was ISK 185bn at quarter-end compared with ISK 191bn at year-end 2024 Balanced loan portfolio Loans to customers (ISK bn) Loans to customers by sector (%) Loans to corporates by type (ISK bn)Loan growth (%) 3 .03.23 3 .03.2 3 .03.2 30.0 .2 30.09.2 , , 9 ,23 ,2 2 ,302 9 2 20 9 9 9 9 0 2 8 Individ. Mortgage Individuals Corporate 3 . 2.2 30.09.2 9. .8 9. .8 . . .0 .3 9. 9.8 9. .9 .9 . .0 .0 ther sectors inancial and insurance activities Industry, energy and manufacturing Commerce and services ishing industry Construction Real estate activities Individuals Q3 202 Q 202 Q 202 Q2 202 Q3 202 .3 .2 .8 0.2 .9 0.0 0. 0.9 . 0. rowth individuals rowth corporates 3 . 2.22 3 . 2.23 3 . 2.2 30. .202 30.9.202 02 9 2 288 9 2 9 93 2 0 2 8 9 2 3 238 3 2 2 0 ISK C I linked ISK non C I linked
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30. .202 30.9.202 3 . 2.2022 3 . 2.2023 3 . 2.202 9 9 8 2 9 0 3 3 33 38 3 82 9 93 38 8 9 3 21 Residential mortgages Low default rates and comfortable LTV levels, but the interest rate level impacts portfolio growth and composition Loan to value distribution Over 90% of mortgage exposures have LTV below 80% Residential mortgages by interest rate type (ISK bn) Indexed mortgages were 65% of the portfolio at 30.06.2025 Rate of defaults and payments past due Non-performing loans are 1.5% of the mortgage portfolio with a slight trend upwards from YE 2022 Household debt to GDP (%) Relatively low household debt loating indexed ixed indexed loating nominal ixed nominal 0 0% 0 0% 0 80% 80 90%Less than 0% More than 90% 3 .8% 8. % .8% . % 9. % 0. % Whole-loan approach 0% 0 80% 80 90%Less than % More than 90% 89.0% 8. % 2.2% 0. % 0.2% Loan-splitting approach 30.0 .2 3 . 2.233 . 2.22 30.0 .23 3 . 2.2 30.0 .2 on performing loans 90 days past due 0 days past due 30 days past due 0.0% 0.2% 0. % 0. % 0.8% .0% .2% . % . % - CPI-linked loans are now 62% of the mortgage portfolio, compared to 40% at year-end 2022 - The average loan-to-value of the mortgage portfolio is 48.5%. 90% of mortgage exposures have LTV below 80% - The non-performing loan ratio was 1.5%, which is below the historical average - As a result of current interest rate levels, there has been a shift towards indexed mortgages - The Bank periodically reviews its underwriting criteria and assessment of customer debt servicing capacity 200 200 2008 20 0 20 2 20 20 20 8 2020 2022 202 0 20 0 0 80 00 20 0 0 Iceland enmark Sweden orway etherlands Source: OECD, Statistic Iceland and Central Bank of Iceland Non-performing loans: Loans in Stage 3 according to IFRS 9 30.09.25
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2. 2 0 . 22 2. 22 0 . 23 2. 23 0 . 2 2. 2 0 . 2 09. 2 2 0 0 8 3 3 3 2 2 29 28 30 29 2 28 22 Risk profile - The development of non-performing loans ratio is correlated with the interest rate level and future development is likely to depend on the pace of monetary easing. The ratio is below historical averages - The increase to corporate NPLs in recent quarters is mainly concentrated in the construction sector, which is impacted by elevated funding costs amid a slowing housing market - NPLs generally have good collateral coverage, as reflected in a Stage 3 coverage ratio of 20.0% - Forborne exposures that are not in Stage 3 represent 1.8% of loans to customers at Q3 2025, slightly lower than Q2 2025 - Total expected credit loss is expected to approach between 20-25bps in the long term based on current loan book composition. At the end of Q3 the 12-month expected credit loss ratio of 28bps reflects management’s prudent view given current economic conditions Strong credit quality indicators while the NPL ratio has recently trended upwards Development of non-performing loans, moratoria and forbearance (% of total loan book) 12-month expected credit loss for performing loans to customers (on balance sheet) (bps) Development of NPL ratio between segments (% of relevant loan book) NPL coverage breakdown* (ISK bn) Mortgages individuals Mortgages companies ther loans companies ther loans individuals Construction companies 8.8 . . 0.8 2.2 0 3 9 2 0% 20% 0% 0% 80% on performing loans gross carrying amount Coverage ratio right axis Average coverage ratio right axis 2. 2 0 . 22 2. 22 0 . 23 2. 23 0 . 2 2. 2 0 . 2 09. 2 .2 . 3. 3. 3. 3. .2 .3 .2 .8 .9 .3 . 3.2 .2 2.3 . 2. . 0.2 .8 2. .3 2.3 .9 2. .9 2. on performing loans Moratoria orbearance 2. 23 0 . 2 0 . 22 2. 2 2. 22 0 . 23 2. 2 09. 2 2. . 3.0 Residential mortgages Total loan book Corporate loans Average Indiv. residential mortgages Corporates *Residential property development or secured by residential real estate or land Non-performing loans: Loans in Stage 3 according to IFRS 9
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rite offsMacro economic scenarios pdates to models Loss allowance 3 . 2.202 Loss allowance 30.09.202 Changes to scenario weights ther, including loan growth Impact from net transfer to Stage 3 ther Stage 3 impacts Single name Stage impacts 9. 0. 0.0 0.3 0.2 .0 0. 0. 0.3 0.3 23 Changes to loss allowance on loans to customers YTD (ISK bn) Included are FX changes and calculated interest on Stage 3 provision, which are not reflected in Net impairment line in the Income Statement. Off-balance impairments and effect of payments of loans previously written off are excluded from this analysis IFRS9 scenario likelihood YE 2022 YE 2023 YE 2024 Q3 2025 Optimistic 10% 10% 10% 15% Base case 65% 60% 60% 60% Pessimistic 25% 30% 30% 25% Expected normalization of economic conditions on the back of high real rates are reflected in the shift of scenario weights from pessimistic to optimistic. However, the weight assigned to the pessimistic scenario remains relatively high based on historical values, highlighting the continued uncertainty in the economic outlook IFRS 9 economic scenarios and assumptions 23 On loans to customers total (ISK bn) Loans to customers are 0.79% provisioned at 30.09.2025, 0.75% at YE 2024 3 . 2.23 3 . 2.2 30.0 .2 30.09.2 . .9 .9 . . .8 . 2. . .3 3.8 2.0 .0 3.8 2.0 .2 On loans to corporates (ISK bn) Loans to corporates are 1.17% provisioned at 30.09.2025 3 . 2.23 3 . 2.2 30.0 .2 30.09.2 8. 9. 9.3 0.3 .2 2. 2. . 2.3 . .3 2. .3 . 2. . On loans to individuals (ISK bn) Loans to individuals are 0.41% provisioned at 30.09.2025 3 . 2.23 3 . 2.2 30.0 .2 30.09.2 2. 2. 2. 2. . 0. 0. . 0. 0. . 0. 0.3 . 0. 0.3 Loss allowance by IFRS 9 stages Stage Stage 2 Stage 3
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24 Deposits from customers - Deposits from customers of ISK 917bn represent 0% of the Bank’s total liabilities - Stable deposits consist of deposits from individuals, SM ’s and corporates with low LCR outflow weight - Loans to deposits ratio of 142% at the end of the quarter and has been relatively stable over the last few years Continued momentum in stable deposits Deposits from customers (ISK bn) Deposits by insurance scheme Loans to deposits ratio (%) 3 . 2.22 3 . 2.23 3 . 2.2 30.0 .2 30.09.2 93 8 899 9 32 82 9 2 3 9 2 28 2 22 0 20 88 0 3 33 8 0 39 Individuals SM s Corporates Sovereigns, CB and S ension funds ther % 9% 3 .03.23 3 .03.2 3 .03.2 30.0 .2 30.09.2 39 2 2 Loans to deposits ratio Loans to deposits ratio without covered bonds Deposit growth by LCR outflow category (ISK bn) 3 . 2.2 30.09.2 LCR 00% LCR %LCR 0% 8 9 9 3 8 0 2 3 9 utflow weight % utflow weight 0% utflow weight 00% ninsured Insured
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202 202 202 2028 2029 2030 203 3 09 9 0 2 23 9 2 3 23 2 2 3 3 3 2 3 25 Funding and rating - Successful issuance of EUR 300 million senior preferred notes - The notes have 6-year maturity and pay a coupon of 3.50% which corresponds to a spread of 120bps over mid swaps - The issuance prefinances the senior preferred 2026 maturity and extends the bank’s maturity profile. - Moody’s affirmed earlier this year Arion Bank´s long term issuer rating with stable outlook following potential merger announcement with Kvika Robust funding profile and stable ratings Borrowings by type (ISK bn) Maturities of borrowings and call dates on subordinated liabilities (ISK bn) Development of EUR funding spreads (bps)Ratings 3 .03.23 3 .03.2 3 .03.2 30.0 .2 30.09.2 39 33 9 83 82 9 89 9 8 2 3 9 0 2 9 2 2 Covered bonds ISK Senior unsecured Covered bonds R Subordinated liabilities MOODY’S Issuer - long term A3 A1 Covered bond Aa1 N/A Outlook Stable Stable Covered bonds ISK Senior unsecured Covered bonds R 0 0 00 0 200 Arion Senior 2030 Arion Senior 203 Senior IB index 31.12.24 30.09.2530.09.2530.03.25
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26 Own funds Strong capital position Capital ratio (%) Leverage ratio (%) Risk-weighted exposure amount (ISK bn) 3 . 2.22 3 . 2.23 3 . 2.2 30.0 .2 30.09.2 2 .0 2 . 22. 22.0 2 .9 2. 8.8 . 3. 9. . 2.9 8.2 2. 2.3 8.0 . 2. 8.0 . C T ratio Additional Tier ratio Tier 2 ratio 3 . 2.22 3 . 2.23 3 . 2.2 30.0 .2 30.09.2 .8 2. 2.2 . . 3 . 2.22 3 . 2.23 3 . 2.2 30.0 .2 30.09.2 883 9 0 988 ,030 ,0 8 0 89 8 9 99 9 0 8 0 909 932 20 0. % 0. % 9. % .0 % 0.9 % Credit risk Market risk perational risk R A Total assets - CET1 position is 266bps above regulatory requirement when interim profits are included - REA increased by ISK 28bn or 2.7% during the quarter, mostly due to increase in loans to corporates - Leverage ratio of 11.4%, significantly above most international peers and regulatory requirement - The Resolution Authority of the Central Bank of Iceland presented the Bank with updated MREL requirements in October - The MREL requirements are 19.8% of REA - At the end of September, the ratio was 31.0% - Additionally, the Resolution Authority has introduced a subordinated MREL requirement of 13.5% which will apply to the Bank from Q3 2027
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27 Own funds The capital ratios continue to be strong Own funds and capital requirements (%) *** Capital ratios 30.09.202 Target capital structure Capital requirement Capital requirement by tier Capital requirement by type of capital 9. 9. 9. 2 .9 2. 8.0 .9 9.8 . . 2.0 . 0.3 9.8 . .8 2. .8 2. 8.0 . 0. C T AT T2 C T 2 illar illar 2 Capital buffers AT and T2 shortfall 21.2 – 22.2 16.9 - 17.9 - Nine months net earnings of ISK 24.4bn and foreseeable dividends of 50% thereof are included in the capital ratios presented - Total buy-back of ISK 6bn concluded during the first half of 2025 - On 30 June, the FSA presented the Bank with a Pillar 2 requirement of 1.9% as a result of the SREP process based on year-end 2024 financials - The countercyclical buffer in Iceland is 2.5% as of 16 March 2024. In December 2024, the systemic risk buffer was lowered from 3% to 2% and the buffer for systemically important institutions raised from 2% to 3% - The medium-term capital management buffer target is around 150-250bps over regulatory requirements which considers the capital benchmarks of credit rating agencies - The solvency ratio of Vördur insurance is 178.0%
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28 Capital Requirement Regulation 3 (CRR3) Immediate reduction in REA estimated at around ISK 51bn as of Q4 2025 resulting in capital relief of around ISK 10bn Primary drivers: - Increased risk-sensitivity for exposures secured by real estate. Risk weights for residential mortgages with LTV below 55% are reduced from 35% to 20%. - Construction exposure (ADC) will for the most part incur 150% risk weight. A risk weight of 00% is possible subject to conditions in BA’s guidelines on risk-mitigation conditions for residential property. In the final version of the guidelines, the threshold for obligor contributed equity was lowered from 35% to 25%. This means that more projects can meet that condition. - For IPRE (income producing real estate), the FSA has published loss rates for Iceland which makes it possible to use the split loan approach. This results in a capital relief compared with the whole loan approach which was previously expected to become mandatory. - For corporates, there will be less restrictions to use real estate collateral for credit risk mitigation and lower risk weights for specialized lending under certain conditions. - For operational risk, the business indicator will be multiplied by 12% due to the small size of the Bank and the contribution from net interest income is capped - Changes to market risk have been postponed so an estimate for that is not included. Estimated initial effect of CRR3 implementation on REA (ISK bn) *** 16.9 - 17.9 Individuals other Corporates other Mortgages, individuals perational risk A C construction Risk weighted assets, CRR3 Risk weighted assets, CRR2 I R , income producing real estate .0 8 .00 3 9 2 Long-term impact Several further changes will then entail increased capital requirements that are transitioned over time. Therefore, the long-term impact is likely lower than the initial decrease: - REA relief for real estate backed loans will be reduced over time as revaluation of real estate collateral is restricted unless when loan is refinanced - REA for equity positions in the banking book to increase from 100% to 250% over 5 years - REA for off-balance sheet items will increase over 8 years or longer The long-term impact is influenced by balance sheet development and may also result in a lower Pillar 2 requirements so net result still uncertain
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Strategic development • Merger process with Kvika is on track • Will provide numerous opportunities to further strengthen our businesses and service to our clients External environment • Cautious stance as to evolving external rate and economic environment • Economic activity and growth have slowed, and near-term uncertainty has increased, i.g. due to a legal dispute concerning variable rate mortgages Operational momentum • Strong operating performance for the first nine months of the year demonstrates good momentum in core earnings and the strategic direction of the Group • The Group continues to benefit from diversified and seasoned businesses and has demonstrated ability to deliver on targets through the cycle Going forward 29
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Key financial indicators - quarterly Q3 23 Q3 2 Q3 2 3.0 2.8 9. . . . 2.8 9. .0 Q3 23 Q3 2 Q3 2 .0 .0 . .3 . .8 .0 8. . Return on equity (%) Capital ratio (%) Net interest margin (%) Core operating income / REA (%)Loans to deposits ratio (%) (without loans financed by covered bonds) Total cost-to-Core income ratio (%) Q3 23 Q3 2 Q3 2 38.2 .9 8. .2 3 . . 2. 3 . 3 .3 Q3 23 Q3 2 Q3 2 3.0 3. 3. 3.2 3. 2.9 3. 3. 3.3 30.09.2 30.09.2 30.09.23 .8 . .0 2.0 3.8 3. 39. . .9 , 2, ,0 , , ,8 , 0,8 , 30.09.2 30.09.2 30.09.23 2 . 2 . 23.2 22.8 23.2 22. 2 . 22.0 2 .9 2. 20.8 3. 2 .2 2.9 20.3 2.9 20.0 2.8 20.8 2. 20.3 2.3 9.9 . 9. 2. 9. Tier ratio Tier 2 ratio 30
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Key financial indicators - annual 9M 202 9M 2022 9M 2023 9M 202 9M 202 .2 .2 .0 2.2 .0 9M 202 9M 2022 9M 2023 9M 202 9M 202 9. 2.0 . 3.8 38.3 9M 202 9M 2022 9M 2023 9M 202 9M 202 2. 3. 3. 3. 3.3 9M 202 9M 2022 9M 2023 9M 202 9M 202 . .9 .2 . . Return on equity (%) Risk exposure amount / Total assets (%) Net interest margin (%) Core operating income / REA (%)CPI imbalance (ISK bn) Total cost-to-Core income ratio (%) 30. .202 30.9.202 3 . 2.2022 3 . 2.2023 3 . 2.202 .2 90.3 8. 9 . 9 .2 30. .202 30.9.202 3 . 2.2022 3 . 2.2023 3 . 2.202 0. 9. .0 0. 0.9 31
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Key figures* 32 Operations 9M 2025 9M 2024 9M 2023 9M 2022 9M 2021 Q3 2025 Q2 2025 Q1 2025 Q4 2024 Q3 2024 Net interest income 40,192 35,056 33,338 29,578 23,295 13,826 14,200 12,166 11,246 11,863 Net commission income 13,092 11,224 12,486 12,195 10,594 4,003 4,553 4,536 4,136 3,880 Operating income 59,350 48,545 47,869 40,648 42,991 18,987 21,322 19,041 17,906 17,486 Operating expenses (19,492) (19,727) (17,871) (16,855) (18,008) (6,194) (6,697) (6,601) (8,601) (6,021) Net earnings attributable to shareholders 24,400 17,820 19,504 20,840 22,076 8,229 9,750 6,421 8,290 7,871 Return on equity** 16.0% 12.2% 14.0% 15.2% 15.2% 16.0% 19.7% 12.8% 16.4% 16.1% Net interest margin 3.3% 3.1% 3.1% 3.1% 2.7% 3.3% 3.5% 3.1% 2.9% 3.1% Return on assets 2.0% 1.5% 1.7% 2.1% 2.4% 1.9% 2.4% 1.9% 2.1% 2.0% Total cost-to-core income ratio 38.3% 43.8% 41.4% 42.0% 49.4% 36.3% 36.6% 42.6% 57.5% 37.5% Cost-to-income ratio 32.8% 40.6% 37.3% 41.5% 41.9% 32.6% 31.4% 34.7% 48.0% 34.4% Cost-to-total assets 1.5% 1.7% 1.6% 1.6% 2.0% 1.4% 1.6% 1.6% 2.1% 1.5% Balance Sheet 30.09.2025 31.12.2024 31.12.2023 31.12.2022 31.12.2021 30.09.2025 30.06.2025 31.03.2025 31.12.2024 30.09.2024 Total assets 1,736,535 1,618,267 1,525,672 1,465,609 1,310,710 1,736,535 1,713,145 1,686,655 1,618,267 1,605,717 Loans to customers 1,301,708 1,230,058 1,152,789 1,084,757 936,237 1,301,708 1,272,468 1,234,006 1,230,058 1,220,424 Mortgages 577,551 570,842 549,371 513,605 463,457 577,551 575,425 570,860 570,842 580,813 Share of stage 3 loans, gross 2.3% 2.3% 1.7% 1.2% 1.9% 2.3% 2.4% 2.5% 2.3% 2.4% REA/ Total assets 60.9% 61.0% 59.7% 60.1% 61.9% 60.9% 60.1% 59.5% 61.0% 60.4% CET 1 ratio 18.0% 18.2% 19.7% 18.8% 19.6% 18.0% 18.0% 18.3% 18.2% 18.8% Leverage ratio 11.4% 12.2% 12.4% 11.8% 12.7% 11.4% 11.5% 11.4% 12.2% 12.0% Liquidity coverage ratio 205.5% 180.6% 191.8% 158.5% 202.8% 205.5% 156.4% 186.4% 180.6% 178.6% Loans to deposits ratio 141.9% 143.5% 145.4% 143.6% 142.8% 141.9% 141.5% 139.5% 143.5% 143.8% *Figures for periods prior to 2022 have not been restated according to IFRS 17 **Attributable to shareholders of Arion Bank All amounts in ISK million
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33 Disclaimer - This document has been prepared for information purposes only and should not be relied upon, or form the basis of any action or decision, by any person. Nothing in this document is, nor shall be relied on as, a promise or representation as to the future. In supplying this document, Arion Bank does not undertake any obligation to provide the recipient with access to any additional information or to update this document or to correct any inaccuracies herein which may become apparent. - The information relating to Arion Bank, its subsidiaries and associates and their respective businesses and assets contained in, or used in preparing, this document has not been verified or audited. Further, this document does not purport to provide a complete description of the matters to which it relates. - Some information may be based on assumptions or market conditions and may change without notice. Accordingly, no representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, forecasts, opinions and expectations contained in this document and no reliance should be placed on such information, forecasts, opinions and expectations. To the extent permitted by law, none of Arion Bank or any of their affiliates or advisers, any of their respective directors, officers or employees, or any other person, accepts any liability whatsoever for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with this document. - This presentation contains forward-looking statements that reflect management’s current views with respect to certain future events and potential financial performance. The information in the presentation is based on company data available at the time of the presentation. Although Arion Bank believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Accordingly, results could differ materially from those set out in the forward-looking statements as a result of various factors. The most important factors that may cause such a difference for Arion Bank include but are not limited to: a) the macroeconomic development, b) change in inflation, interest rate and foreign exchange rate levels, c) change in the competitive environment and d) change in the regulatory environment and other government actions. This presentation does not imply that Arion Bank has undertaken to revise any forward-looking statements, beyond what is required by applicable law or applicable stock exchange regulations if and when circumstances arise that will lead to changes after the date when this presentation was made. Arion Bank assumes no responsibility or liability for any reliance on any of the information contained herein. It is prohibited to distribute or publish any information in this presentation without Arion Bank’s prior written consent. - 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. - This document should not in any way be regarded or interpreted as investment advice by the Bank - By accepting this document, you agree to be bound by the foregoing instructions and limitations.