Slides
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Q3 results 2026 Investor presentation 28 October 2026
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Key results Medium-term targets Q3 2026 9M 2026 Return on equity1 Exceed 13% 16.3% 15.1% Core operating income2 / REA Exceed 7.2% 7.9% 8.0% Insurance revenue growth (YoY)3 Exceed weighted average growth of competitors 4.4% 5.8% Combined ratio Vördur Below 95% 85.7% 91.4% Total cost-to-core income4 ratio Below 45% 37.1% 39.2% CET1 ratio above regulatory capital requirements 100-250 bps management buffer5 ● 320 bps ● 320 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 Weighted average growth of key competitors was 3.7% in 6M 2026 4 Total cost-to-core income ratio: Operating expenses including OPEX from insurance operations / Core operating income excluding OPEX from insurance operations 5 Approx.16.3 - 17.8%, based on updated target for management buffer 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 1 0 Key results Solid first nine months of the year with most of medium-term targets achieved 15.1% ROE vs medium-term target of above 13% ‒ Strong development in core earnings ‒ Continuing cost discipline ‒ Slower loan growth compared to prior quarters ‒ Continued momentum in deposit growth Renewed capital guidance and continued commitment to capital optimization ‒ CET1 target updated and guidance sharpened. Near term target at around mid-level of new range ‒ Capital distribution of ISK 25.6bn in the first nine months of the year through dividends and buybacks ‒ Continue to manage with profitable balance sheet growth and capital distribution
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Enhanced investment offering through digital channels with selected index funds Key operational highlights in Q3 2026 Second phase of Blikastaðir sales process initiated Retail banking growth across key initiatives - Arion Rewards members up 33% YTD. - Bancassurance ratio reached 44.1% for individuals - Arion Future enrolment up 20%+ since launch, reaching 37% of the target customer base - Active customers in the Reykjanes region up 72% through targeted growth initiatives Significant Asset Management Milestones - Institutional AuM surpassed ISK 1,000bn - Third-party fund AuS surpassed ISK 500bn - Arion Group’s AuM and AuS reached ISK 2,161bn Vördur driving growth through service and innovation - Investments in digital claims and proactive service helped secure the highest claims satisfaction in Iceland for three consecutive quarters* - Expanded the product range with Cyber, Light Casco and Jewelry & Watch Insurance, supported by targeted customer events Arion Bank awarded for excellence in business #1 …in Iceland for the fifth year in a row 11 . . . . . . . . . . Corporate advisory transactions completed Au arent Au tefnir Au Deposits continued to increase and surpassed ISK 1,000 billion for the first time *According to an external survey conducted by EMC, 14 October 2026 CAGR
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Arion Bank’s Capital Markets Day Save the date – 3 March 2027 - Update on key strategic initiatives and outlook - Medium-term targets under review - The event will take place at the Bank’s headquarters and be streamed live
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Sources: Statistics Iceland, Central Bank of Iceland, Icelandic Tourist Board, IMF, Arion Research. 13 Slowing economic activity in a challenging environment − According to tatistics Iceland’s first estimate GDP surprised to the downside in the second quarter, contracting by 1.1% year-on-year. Net trade was the main drag, with exports falling by 7.3% on the back of a 13.8% decline in goods exports. Imports rose 0.2% on a record level of investment in data centre-related industries − The export outlook for next year has improved somewhat. Aluminium production is back at full capacity, recovering faster than expected, exports of data centre services have increased markedly, and aquaculture is heading for a record year. The outlook for tourism is broadly unchanged, with visitor numbers expected to be similar next year. However, uncertainty remains significant, as elevated oil prices weigh on airfares and air capacity − Despite reduced catch quotas, high seafood prices have more than offset the decline in volumes, and elevated aluminium prices have done the same for aluminium production. Thus, terms of trade have improved, despite higher oil prices. − Stronger export growth next year is expected to offset slower domestic demand growth, with the consensus forecast pointing to GDP growth of 1.8% in 2027 -8% -6% -4% -2% 0% 2% 4% 6% 8% 10% 12% 2023 Q1 2023 Q2 2023 Q3 2023 Q4 2024 Q1 2024 Q2 2024 Q3 2024 Q4 2025 Q1 2025 Q2 2025 Q3 2025 Q4 2026 Q1 2026 Q2 Growth contributions of GDP components Private consumption Public consumption Investment Changes in inventory External trade GDP 2.2 2.3 2.0 0.5 0.7 1.7 2.2 2.3 2.3 2.3 2.3 2.4 2.5 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 2029 Tourist arrivals via Keflavik International airport - millions annually Forecast 1.1% 1.3% 1.8% 2.3% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 2025 2026 2027 2028 Economic growth forecasts for 2026-2028 Central Bank of Iceland (August) Arion Research (September) IMF (October) Average 80 90 100 110 120 130 140 PPI and subindices - index, January 2025 = 100 PPI Marine products Metal industry Exported products
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Sources: Statistics Iceland, Directorate of Labour, Central Bank of Iceland, Arion Research14 Domestic demand loses momentum − Job growth has slowed significantly, private-sector employment has declined, and unemployment, currently at 4%, has risen from a year earlier. Unemployment is expected to keep inching higher into next year, as business sentiment has deteriorated and firms scale down their hiring plans − Increased labour market slack has dampened wage growth and especially reduced wage drift, with annual wage index growth now at its lowest since the pandemic. Despite the review clause being triggered, the labour market parties reached an agreement in October to keep the collective wage agreements in force, thus removing a key source of uncertainty − Rising unemployment, slower real wage growth and a tight monetary stance have weighed on the housing market, dampening demand. The stock of unsold new homes has continued to increase and selling time has grown longer, putting pressure on the construction sector. Real house prices have been falling, and are likely to fall further, with Arion Research expecting real house prices to keep declining until mid-2028 0% 2% 4% 6% 8% 10% 12% 2023 2024 2025 2026 Registered unemployment Total Foreign citizens Icelandic citizens -2% 0% 2% 4% 6% 8% 10% 12% 14% 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Wage index - YoY %-change Real wages Nominal wages 0% 5% 10% 15% 20% 25% 30% 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 2018 2019 2020 2021 2022 2023 2024 2025 2026 Number of housing units for sale New units Other units Housing prices (r.axis) -2,000 0 2,000 4,000 6,000 8,000 10,000 12,000 2023 2024 2025 2026 Number of employed by economic activity - change between years Tourism The public sector Construction Wholesale and retail trade Other Total
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Sources: Central Bank of Iceland, Statistics Iceland, Arion Research 15 Inflation outlook: Worse near term, better long term − Rising unemployment, falling real house prices, persistent inflation and high interest rates have weighed on consumer confidence, which is at its lowest since the pandemic. This was reflected in payment card turnover, which grew by just 0.7% year-on-year in the third quarter, pointing to rapidly cooling private consumption − Despite these clear signs of cooling, inflation has remained above 5% throughout the year and has proved more persistent than expected. The increase in headline inflation has been driven by higher public levies and rising oil prices amid the conflict in the Middle East. At the same time, the strong króna has helped contain imported inflation, while wage growth continues to sustain domestic price pressures, particularly in services − There have, however, been positive developments. The major collective wage agreements have held and been extended, and companies and institutions have frozen prices or limited increases to the CBI’s inflation target − Inflation expectations remain elevated and poorly anchored, necessitating a tighter monetary stance than would otherwise be required. Most analysts expect rates to be held steady until next year, when inflation is projected to ease fairly quickly, partly due to base effects, paving the way for rate cuts 110 115 120 125 130 135 140 145 150 155 160 2024 2025 2026 Exchange rate - daily average EUR USD -2% 0% 2% 4% 6% 8% 10% 12% 2021 2022 2023 2024 2025 2026 CPI by expenditure groups and key interest rates Housing Imported goods Domestic Services Domestic goods Inflation CB's key interest rates 0% 1% 2% 3% 4% 5% 6% 7% 2024 2025 2026 2027 2028 2029 Inflation forecasts Inflation Inflation target MB 2026/1 MB 2026/2 MB 2026/3 Arion bank (September 2026) 40 50 60 70 80 90 100 110 120 130 140 -20% -15% -10% -5% 0% 5% 10% 15% 20% 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Payment card turnover and private consumption - quarterly data, YoY-% growth, constant prices/exchange rate Private consumption Payment card turnover Consumer confidence (r.axis) Arion Bank (September 2026)
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Small economy, strong foundations Sources: Statistics Iceland, Central Bank of Iceland, Arion Research. 16 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) 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 2025 Debt of central government - % of GDP Gross debt Net debt 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 Household and non-financial corporate debt - % of GDP Households Companies 0% 50% 100% 150% 200% 250% 1997 1998 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 2026 Pension funds assets - % of GDP -4 -2 0 2 4 6 8 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 2026 CBI's FX reserves - bn. EUR Total FX reserves Net FX reserves -200% -150% -100% -50% 0% 50% 100% 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 2026 Net international investment position - % of GDP
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Key takeaways from Q3 and 9M 2026 Solid and resilient profitability Deposit growth milestone Robust balance sheet position Diversified operating pillars - Solid quarter with an ROE of 16.3% - Contributes to an ROE of 15.1% for the first nine months of the year - Consistent delivery above ROE target in recent years - The growth in deposits has been a key theme over the past years and has continued into 2026 - For the first time deposits for the Group now exceed ISK 1,000bn - Growth continues to be primarily in stable categories - Capital position strong with a CET1 ratio of 18.5% - Renewed CET1 target range. Capacity for further optimization targeting position around mid-point of range - Liquidity and funding position remains robust - Diversified pillars of the Group continue to support robust earnings momentum through the cycle - Core income increased by 10.6% year-on-year countering subdued investment income 17
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All amounts in ISK million18 Income statement Q3 2026 − Net earnings of ISK 8.7bn, resulting in a return on equity of 16.3% − Earnings per share increased by 8.0% from the same quarter in 2025 − Core income* increased by 10.6% year-on-year, mainly through net interest income − Net financial income was negative for the third quarter in a row, with continued subdued Icelandic equity markets − Operating expenses increased by 13.0% year-on- year, equivalent to ISK 809m, but decreased by 6% from Q2. This includes redundancy expense of ISK 200m and fine from Central Bank of ISK 280m − Impairments calculated at 27bps on annualized basis, compared with 19bps in Q2 and 35bps in Q3 2025 − Effective income tax rate of 26.6%, compared with 26.3% in Q3 2025 − Proposed increased rate in bank levy, expected in Q4, is not included as still not voted into law by parliament. Pro rata impact would have reduced Q3 ROE to 15.5% *Core income: Net interest income, net fee and commission income and insurance service results (excluding opex) Q3 2026 Q3 2025 Diff Q2 2026 Diff Net interest income 15,811 13,826 14% 15,219 4% Net fee and commission income 3,777 4,003 (6%) 3,987 (5%) Insurance service results 804 630 28% 655 23% Net financial income (146) 483 - (68) - Other operating income 181 45 302% 151 20% Operating income 20,427 18,987 8% 19,944 2% Operating expenses (7,003) (6,194) 13% (7,429) (6%) Bank levy (588) (530) 11% (582) 1% Net impairment (977) (1,128) (13%) (679) 44% Net earnings before taxes 11,859 11,135 7% 11,254 5% Income tax expense (3,153) (2,928) 8% (3,204) (2%) Net earnings from continuing operations 8,706 8,207 6% 8,050 8% Discontinued operations net of tax - 3 - - - Net earnings 8,706 8,210 6% 8,050 8% Non-controlling interest 0 19 - 4 - Net earnings attributable to shareholders 8,706 8,229 6% 8,054 8% Return on equity attributable to shareholders 16.3% 16.0% 15.5% Earnings per share 6.42 5.95 8.0% 5.92 8.5% Core income* 21,300 19,266 10.6% 20,864 2.1% Net interest margin 3.5% 3.3% 3.5% Total cost-to-core income ratio 37.1% 36.3% 40.4% Cost-to-income ratio 34.3% 32.6% 37.2%
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All amounts in ISK million19 Income statement 9M 2026 − Net earnings attributable to shareholders of ISK 24.1bn, resulting in a return on equity of 15.1% − Core income* increased by 10.0% year-on-year, primarily net interest income − Net financial income was a loss of ISK 981m compared with a loss of ISK 289m in 9M 2025 − Operating expenses increased by 12.3% year-on- year, equivalent to ISK 2,396m, mainly salaries and IT expenses − Impairments of ISK 2,047m, calculated at 20bps on annualized basis compared with 14bps for the same period in 2025 − Effective income tax rate of 29.5% compared with 28.8% in 9M 2025. This high rate is mainly due to loss from equity holdings − Proposed increased rate in bank levy, expected in Q4, is not included as still not voted in to law by parliament. Pro rata impact would have reduced 9M ROE to 14.3% *Core income: Net interest income, net fee and commission income and insurance service results (excluding opex) 9M 2026 9M 2025 Diff Net interest income 47,333 40,192 18% Net fee and commission income 11,640 13,092 (11%) Insurance service results 1,393 1,665 (16%) Net financial income (981) (289) - Other operating income 446 4,690 - Operating income 59,831 59,350 1% Operating expenses (21,888) (19,492) 12% Bank levy (1,711) (1,559) 10% Net impairment (2,047) (1,359) 51% Net earnings before taxes 34,185 36,940 (7%) Income tax expense (10,100) (10,638) (5%) Net earnings from continuing operations 24,085 26,302 (8%) Discontinued operations net of tax - (19) - Net earnings 24,085 26,283 (8%) Non-controlling interest (7) (1,883) - Net earnings attributable to shareholders 24,078 24,400 (1%) Return on equity attributable to shareholders 15.1% 16.0% Earnings per share 17.79 17.55 1.4% Core income* 63,261 57,507 10.0% Net interest margin 3.6% 3.3% Total cost-to-core income ratio 39.2% 38.3% Cost-to-income ratio 36.6% 32.8%
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eposits II II ecurities oans to customers Borrowings et inflation effect ubordinated and other oans to credit institutions and CB eposits II II ecurities oans to customers Borrowings et inflation effect ubordinated and other oans to credit institutions and CB 20 Net interest income − Net interest income increased by 14.4% year-on- year and 3.9% quarter-on-quarter − The growth year-on-year was primarily driven by higher customer lending and a higher net inflation effect, partly offset by deposit costs − NIM was 3.5% in Q3, up from 3.3% in the third quarter last year and unchanged from Q2 − The net inflation effect was broadly in line with Q2 2026 with annualized inflation measured at 6.0% compared with 4.1% in Q3 2025 − The CPI imbalance amounted to ISK 232bn at quarter-end, compared with ISK 236bn at end of Q2 and ISK 204bn at year-end 2025 − With NIM at 3.6% for 9M 2026, the net interest margin is likely to trend closer to 3% annually in the medium term. Fluctuations are expected to continue near term due to the monthly inflation impact on the CPI-linked loan book − Analysts expect inflation to decline in Q4 compared to prior quarters Robust margin . . . . . . . . . . Net interest income (ISK bn) et interest margin Credit risk (ISK bn) Net interest income development (ISK m) Y/Y development from Q3 2025 to Q3 2026 Q/Q development from Q2 2026 to Q3 2026 . . . . . et interest income credit risk −The near-term guidance for the net interest margin remains around the 3% level, influenced by the evolution of real interest rates, which in turn affects the margin of CPI- linked mortgage lending, the primary driver of fluctuations
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21 Net fee and commission income − Net fee and commission income was ISK 3.8bn, down 6% year-on-year and 5% from Q2 − Markets and Stefnir fees were ISK 1,320m, down 8% year-on-year, partly reflecting timing of income recognition, which varies between periods due to the nature of the underlying business − Assets under Management and Supervision grew to ISK 2,161bn, up 8.6% from year-end − CIB fees robust at ISK 1,343m, up 1% year-on-year and 3% from Q2, despite slower economic activity − Retail Banking fees decreased by 7% year-on-year and 16% from Q2, to ISK 782m, mainly income from card services and lending activities Diversified, but lower fees in the quarter Net fee and commission income (ISK m) Assets under Management and Supervision (ISK bn) Net fee and commission income (ISK m) . . . . . . . . . . Au arent Au tefnir Au arkets tefnir CIB etail Treasury and ther
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22 Solid momentum in insurance while investment income subdued Insurance revenue (ISK m) Combined ratio (%) Change in combined ratio from 9M 2025 (%) Vördur net earnings (ISK m) * Figures based on Vördur standalone financial results, before elimination within the Group. CAGR . . . . . . . . . . . . . . . . . . . . . . . . . . . * Claims and reinsurance ratio Cost ratio Cost ratio Claims incurred einsurance ratio . . . . . Insurance revenue by line of business (%) − Insurance revenue grew by 5.8% in the first nine months of the year − Claims ratio in Q3 was 62.1% compared with 67.9% in Q3 2025 − Net cost of reinsurance increases with lower participation in claims in a period of no large claim incidents. The reinsurance ratio goes from 3.7% in Q3 2025 to 5.1% − The result is a combined ratio of 85.7%, compared with 88.2% in Q3 2025 − For the nine months the combined ratio goes from 89.0% to 91.4% − Net earnings for the quarter were ISK 351m, compared with ISK 698m in the same quarter last year with difference mainly in investment income
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*Includes bond holdings through fund structure 23 Net financial income − Vördur’s investment loss outweighed the modest positive contribution from the rest of the Group − Liquidity management and funding plan explain the reduction in bond holdings. The liquidity portfolio’s average duration remains below one year − All changes in the bond portfolio’s market value affect the capital position, as the Group does not use held-to-maturity accounting Equity market continues to be challenging Net financial income (ISK m) Bond holdings (ISK bn) Equity holdings (ISK bn)Q3 2026 - Net financial income by type (ISK m) Bonds quities Insurance contracts erivatives gain and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . arket making I Vördur investment portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . arket making nlisted Investment funds Vördur investment portfolio Arion Bank and other subsidiaries Vördur
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24 Operating expenses* - Total operating expenses outlined here encompass costs associated with the insurance business which is reflected through insurance service results post IFRS 17 - Total operating expenses increased by ISK 0.9bn compared with Q3 2025 and decreased by ISK 0.5bn from Q2 2026 - Salaries and related expenses increased by ISK 0.6bn YoY, mainly due to the 3.5% collective wage increase from January 2026 and ISK 0.2bn in lay- off costs. Expenses decreased by ISK 0.5bn from Q2, largely due to annual leave taken during the quarter - Other operating expenses increased by 10.2% from Q3 2025 or ISK 317m, largely IT expense (ISK 200m) and other expenses (ISK 259m), largely settlement with Central Bank of ISK 280m, partly offset by lower professional services (ISK 178m) - Number of FTEs was 890, in line with Q3 2025 (891) and down from 901 at year-end 2025 Continuing cost discipline, while one-off items impact Q3 headline opex Cost ratios (%) Total operating expenses (ISK bn) Number of FTEs Other operating expenses (ISK m) . . . . . . . . . . . . . . . . . . . . IT cost ousing cost rofessional services arketing cost epreciation amortization ther e penses . . . . . alaries and related e penses ther operating e penses 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 expenses / Operating income Core income per employee I m . . . . . . . . . . Total cost to core income ratio Cost to income ratio
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25 Balance sheet - Loans to customers decreased by ISK 3bn or 0.2% in Q3 - Deposits increased by ISK 33bn or 3.3% in Q3 - Loans to deposits ratio of 139.6% and 115% without loans financed by covered bonds - Very strong liquidity position - Liquidity coverage ratio (LCR) of 195% (145% in ISK) - Net stable funding ratio (NSFR) of 117% Simple and robust All amounts in ISK billion Assets 30.09.2026 30.06.2026 Diff. 31.12.2025 31.12.2024 31.12.2023 Cash & balances with CB 108 114 (6%) 150 124 102 Loans to credit institutions 78 25 217% 23 26 29 Loans to customers 1,415 1,418 (0%) 1,329 1,230 1,153 Financial assets 242 254 (5%) 216 206 206 Investment property 8 8 1% 7 9 9 Other assets 32 30 7% 31 23 27 Total Assets 1,882 1,849 2% 1,756 1,618 1,526 Liabilities and Equity Due to credit institutions & CB 16 9 75% 12 7 3 Deposits from customers 1,014 981 3% 921 857 793 Other liabilities 83 81 3% 67 69 69 Borrowings 510 523 (3%) 495 433 420 Subordinated liabilities 43 43 (2%) 44 45 41 Total Liabilities 1,666 1,638 2% 1,538 1,411 1,326 Shareholders equity 216 210 3% 217 207 199 Non-controlling interest 0 0 1% 0 1 1 Total equity 216 210 3% 217 207 199 Total Liabilities and Equity 1,882 1,849 2% 1,756 1,618 1,526
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26 Loans to customers - Loans to customers total ISK 1,415bn at the end of the quarter, decreasing by ISK 3bn or 0.2% during the quarter and increasing by ISK 86bn or 6.4% since year-end 2025 - Loans to individuals increased by ISK 8bn or 1.2% in the quarter, mainly mortgages, while loans to corporates decreased by ISK 11bn or 1.4% - The loan portfolio increased by approximately ISK 4bn due to inflation impact in the quarter and FX changes decreased it by ISK 1.6bn - 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 Balanced loan portfolio and solid growth year to date Loans to customers (ISK bn) Loans to corporates by sector (%) Loans to corporates by type (ISK bn)Loan growth (%) . . . . . . . . . . Individ. ortgage Individuals other Corporate . . . . ther Information and communication technology Accommodation and food service activities inancial and insurance activities Industry energy and manufacturing Commerce and services ishing industry Construction eal estate activities . . . . . . . . . . Individuals Corporates . . . . . . . . . . I C I linked I non C I linked
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. . . . . . . . . . 27 Residential mortgages Low default rates and healthy LTV levels Loan to value (ISK bn, whole-loan approach) Residential mortgages by interest rate type (ISK bn) Ratio of non-performing loans and payments past due Interest rate reset dates for fixed mortgages (ISK bn) loating inde ed i ed inde ed loating nominal i ed nominal . . . . . . . . . . . . . . . . . - Monetary tightening has resulted in a significant shift towards indexed mortgages since 2022. CPI-linked loans now constitute 66% of the mortgage portfolio, compared to 40% at year-end 2022 - Household debt to GDP is relatively low in international comparison - The non-performing loan ratio has decreased since year-end 2025 following a steady increase over the past years. This improvement stems partly from the Bank's proactive engagement with customers - The average loan-to-value of the mortgage portfolio is 49.8%. The share of mortgages with LTV above 80% was 11.8% at period end Non-performing loans: Loans in Stage 3 according to IFRS 9 . . . . . . . . . . Non-performing loans 30 days past due 90 days past due 60 days past due ominal rates Inde ed rates
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28 Construction The construction loan book comprises a total of ISK 127bn in book value, with ISK 36bn in unused commitments The construction book is evenly split between residential and commercial development projects. The latter is concentrated towards accommodation and tourism activities with pre-agreed operators post construction. It is estimated that the Bank is financing 15-20% of new residential units for sale in the market. Market share of units under construction is below 15%. Predominantly located in the capital area. The Bank has for several years performed rigorous stress tests on the residential development portfolio, which generally show considerable equity buffers to meet sales delay and price depreciation. Mitigating factors for residential construction risk: - 33.5% of financed units pre-sold - Sale of smaller units reduces exposure and thus alleviates sales pressure for larger units - Direct rental options and retained equity arrangements with contractors The pronounced slowdown in new housing absorption remains a primary source of sector-specific risk 0 500 1,000 1,500 2,000 2,500 3,000 0 1 2 3 4 5 6 7 8 9 10 Unsold new units (HMS) (right axis) CBI policy rate (left axis, %) 30.09.2631.12.21 31.12.22 31.12.23 31.12.24 31.12.25 Interest rates and housing market Development of on-balance exposure by staging (ISKbn) 51.3 72.4 70.0 94.0 107.24.2 5.3 7.3 9.2 15.6 0.3 0.6 8.6 7.6 7.5 55.8 78.3 85.9 110.8 130.3 0 50 100 150 YE 2022 YE 2023 YE 2024 YE 2025 Q3 2026 Stage 1 Stage 2 Stage 3 Status of projects by type (%, on-balance exposure) 96% 56% 30% 34% 15% 41% 58% 34% 6% 7% 6% 0% 40–60 m² 60–80 m² 80–100 m² 100–150 m² 150–200 m² >200 m² On market – sold Not yet on market – pre-sold On market – unsold Not yet on market – unsold Residential units by size and sale status Risk classification as per stress test for largest residential development projects (ISKbn, exposure) 5.5 19.9 6.6 17.4 13.5 1.3 23.0 33.5 8.0 Low risk Medium risk High risk On market Not yet on the market 511 units 604 units 140 units Low risk: Significant equity buffer (>20% based on expected sale price). Can sustain substantial price drop and/or sales delay. Medium risk: 10-20% equity buffer based on expected sale price. Can sustain considerable price drop and/or sales delay. High risk: Equity buffer below 10% or other adverse conditions. One project in Stage 3 23.3 22.8 27.4 15 3.7 Under construction Completed Under construction Completed Other Residential housing Commercial real estate
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29 Real estate sector Diversified portfolio Loans to customers Loans to real estate companies are approx. 11.4% of total loans to customers and 0.8% relate to office buildings Borrower type The Bank is focused on real estate exposures that are occupied by operational companies that are customers of the Bank (Opco/Propco). Property management contains both exposures to companies renting residential real estate and commercial real estate Real estate collateral by type * Well diversified collateral in terms of real estate type Development of indexed loans and 90 days past due Customers have reverted to indexed loans due to high interest rates. The delinquency rate remains low * For real estate sector only ffice C . ffice C . C . esidential Industry etail otel Accommodatio n ffice estaurants Bars ther Inde ation ratio of portfolio left a is tage ratio right a is CBI policy rate right a is pCo ropCo roperty management Construction evelopment - Overall real estate related lending in the corporate loan book comprises a total of ISK 161bn or 11.4% of the loan book with an average LTV of 65.6% - The portfolio is highly diversified - The portfolio is split between companies that lease properties to operating companies within the same group (parent, subsidiaries or sister companies) and property management companies, both residential and commercial - Exposure to office real estate is small or around ISK 11.3bn or 0.8% of the loan book - The share of CPI linked loans has increased significantly since year-end 2022 following hikes in interest rates
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. . . . . . . . . 30 Risk profile - The non-performing loans ratio was stable at 2.5% in Q3, after increasing in correlation with interest rate levels. Future development is likely to depend on the pace of monetary easing - NPLs generally have good collateral coverage, as reflected in a Stage 3 coverage ratio of 21.4% - Forborne exposures that are not in Stage 3 represent 2.5% of loans to customers, an increase from 2.4% in the previous quarter - Total expected credit loss is estimated to be in the range 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 32bps (33bps at end of Q2) reflects management’s prudent view given current economic conditions Strong credit quality indicators with the NPL ratio stable in the quarter 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) ortgages individuals ortgages corporates ther loans corporates ther loans individuals Construction corporates . . . . . . L on performing loans gross carrying amount Coverage ratio right a is Average coverage ratio right a is . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . on performing loans oratoria orbearance . . . . . . . . . esidential 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 Stage 3 virðist vera flat á súluritinu en lækkar á línuriinu? ET 22/10: Niðurstaða Risk er að þetta er rétt reiknað, kemur bara svona út í mynd
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31 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 YE 2025 30.09.26 Optimistic 10% 10% 10% 15% 15% Base case 65% 60% 60% 60% 60% Pessimistic 25% 30% 30% 25% 25% Expected normalization of economic conditions on the back of high real rates are reflected in scenario weights from pessimistic to optimistic. 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 31 On loans to customers total (ISK bn) The impairment ratio was 0.93%, compared to 0.94% at year end 2025 . . . . . . . . . . . . . . . . . . . . . . . . On loans to corporates (ISK bn) Loans to corporates provisioned 1.42% at period end . . . . . . . . . . . . . . . . . . . . . . . . On loans to individuals (ISK bn) Loans to individuals provisioned 0.38% at period end . . . . . . . . . . . . . . . . . . . . . . . . Loss allowance by IFRS 9 stages tage tage tage ther rite offs oss allowance . . oss allowance . . et riginations Impact from net transfer to tage ther tage impacts acroeconomic scenarios . . . . . . . .
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32 Deposits from customers - Deposits from customers of ISK 1,014bn represent of the Bank’s total liabilities. eposits increased by ISK 33bn or 3.3% in Q3 and 10.1% from year-end 2025 - Stable deposits consist of deposits from individuals, and corporates with lower LCR outflow weight, stable deposits increased by 12.8% from year-end 2025 - Deposits from individuals increased by 3.3% in Q3 and 12.5% from year-end 2025 - Corporate deposits increased in Q3 by 7.7% and 16.0% from year-end 2025 - Loans to deposits ratio of 139.6% at the end of the quarter, down from 144.5% at the end of Q2 as deposits grew while loans were stable Continued momentum in stable deposits Deposits from customers (ISK bn) Deposits by insurance scheme Loans to deposits ratio (%) . . . . . . . . . . Individuals Corporates overeigns CB and ension funds ther . . . . . . . . . . oans to deposits ratio oans to deposits ratio without covered bonds Deposit growth by LCR outflow category (ISK bn) ninsured Insured Finnst við varla geta verð með þessa mynd. Svakaleg breyting milli tímabila sem ég geri ráð fyrir að tengist villunnni? ET 22/10: Tökum út myndina í bili og stækkum deposit flokkunarmyndina í staðinn. Sameinum SME og Corporates
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33 Funding and rating - All major refinancing needs for 2026 were successfully completed in 1H 2026 - No market issuance in Q3, reflecting a comfortable funding position with 2026 maturities pre-funded and relatively light refinancing needs in 2027 - The Bank maintains access to both international and domestic debt capital markets and will continue to access markets opportunistically - oody’s ratings remain A Aa covered bonds Stable outlook 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 . . . . . . . . . . Covered bonds I enior preferred Covered bonds ubordinated liabilities MOODY’S Issuer - long term A3 A1 Covered bond Aa1 N/A Outlook Stable Stable Covered bonds I enior preferred Covered bonds Arion enior Arion enior enior iBo inde Arion enior 30.06.24 30.09.2631.12.2530.06.2531.12.24
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34 Own funds Strong capital position Capital ratio (%) Leverage ratio (%) Risk-weighted exposure amount (ISK bn) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C T ratio Additional Tier ratio Tier ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Credit risk arket risk perational risk A Total assets - CET1 ratio of 18.5% and total capital ratio of 22.4%, compared to 17.7% and 21.6% at the end of Q2 - CET1 position is 320bps above regulatory requirement - 9M net earnings of ISK 24.1bn are included in CET1 but foreseeable dividends of 50% of net earnings are subtracted from CET1 - Total risk-weighted exposure amount (REA) decreased by ISK 20bn or 1.9% during the quarter - Leverage ratio of 10.8%, significantly above most international peers and regulatory requirement - MREL position comfortable - The MREL requirements are 19.8% of REA - At the end of the quarter the ratio was 35.4%
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35 Own funds The capital ratios continue to be strong with capacity for further optimization Own funds and capital requirements (%) *** Capital ratios . . Target capital structure Capital requirement Capital requirement by tier Capital requirement by type of capital . . . . . . . . . . . . . . . . . . . . . . C T AT T C T illar illar Capital buffers AT and shortfall in capacity 20.7 – 22.2 16.3 - 17.8 - 9M net earnings of ISK 24.1bn are included in CET1 and foreseeable dividends of 50% thereof are deducted from the capital position presented - On 30 June, the FSA presented the Bank with a Pillar 2 requirement of 2.0% as a result of the SREP process based on year-end 2025 financials - The medium-term capital management buffer target is 100-250bps over regulatory requirements - Further AT1 capacity of 0.6% of REA - The solvency ratio of Vördur insurance is 159%
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Strategic development • Strategy and capital priorities unchanged • Continued focus on targeted technology investments especially in AI and cyber security along with strict cost discipline • Management will present update on business areas and strategic priorities in the upcoming CMD in March 2027 External environment • Cautious stance amid macro and geopolitical uncertainty • The prolonged elevated rate environment is impacting some of our clients and we continue to work closely and proactively with them through this period • An increase in Icelandic bank levy expected from Q4 2026 Operational momentum • Solid first nine months of the year, momentum continues • Diversified and seasoned businesses support earnings through the cycle • Very strong balance sheet position as we navigate the current economic cycle Going forward
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Key financial indicators - quarterly . . . . . . . . . . . . . . . . . . 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 (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tier ratio Tier ratio 37
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Key financial indicators – 9M / Period end . . . . . . . . . . . . . . . . . . . . Return on equity (%) Risk weighted exposure amount / Total assets (%) Net interest margin (%) Core operating income / REA (%)CPI imbalance (ISK bn) Total cost-to-core income ratio (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
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Key figures* 39 Operations 9M 2026 9M 2025 9M 2024 9M 2023 9M 2022 Q3 2026 Q2 2026 Q1 2026 Q4 2025 Q3 2025 Net interest income 47,333 40,192 35,056 33,338 29,578 15,811 15,219 16,303 12,350 13,826 Net commission income 11,640 13,092 11,224 12,486 12,195 3,777 3,987 3,876 4,055 4,003 Operating income 59,831 59,350 48,545 47,869 40,648 20,427 19,944 19,460 19,041 18,987 Operating expenses (21,888) (19,492) (19,727) (17,871) (16,855) (7,003) (7,429) (7,456) (8,756) (6,194) Net earnings attributable to shareholders 24,078 24,400 17,822 19,501 20,986 8,706 8,054 7,318 6,226 8,229 Return on equity** 15.1% 16.0% 12.2% 14.0% 15.3% 16.3% 15.5% 13.9% 11.6% 16.0% Net interest margin 3.6% 3.3% 3.1% 3.1% 3.1% 3.5% 3.5% 3.8% 2.9% 3.3% Return on assets 1.8% 2.0% 1.5% 1.7% 2.1% 1.9% 1.8% 1.7% 1.4% 1.9% Total cost-to-core income ratio 39.2% 38.3% 43.8% 41.4% 42.0% 37.1% 40.4% 40.0% 54.9% 36.3% Cost-to-income ratio 36.6% 32.8% 40.6% 37.3% 41.5% 34.3% 37.2% 38.3% 46.0% 32.6% Cost-to-total assets 1.6% 1.5% 1.7% 1.6% 1.6% 1.5% 1.6% 1.7% 2.0% 1.4% Balance Sheet 30.09.2026 31.12.2025 31.12.2024 31.12.2023 31.12.2022 30.09.2026 30.06.2026 31.03.2026 31.12.2025 30.09.2025 Total assets 1,882,391 1,755,765 1,618,267 1,525,672 1,465,609 1,882,391 1,848,575 1,783,833 1,755,765 1,736,535 Loans to customers 1,414,774 1,329,056 1,230,058 1,152,789 1,084,757 1,414,774 1,417,655 1,352,240 1,329,056 1,301,708 Mortgages 605,546 576,828 570,842 549,371 513,605 605,546 597,969 588,123 576,828 577,551 Share of stage 3 loans, gross 2.5% 2.4% 2.3% 1.7% 1.2% 2.5% 2.5% 2.5% 2.4% 2.3% REA/ Total assets 56.6% 58.6% 61.0% 59.7% 60.1% 56.6% 58.7% 58.4% 58.6% 60.9% CET 1 ratio 18.5% 18.4% 18.2% 19.7% 18.8% 18.5% 17.7% 18.5% 18.4% 18.0% Leverage ratio 10.8% 11.4% 12.2% 12.4% 11.8% 10.8% 11.0% 11.2% 11.4% 11.4% Liquidity coverage ratio 194.7% 205.0% 180.6% 191.8% 158.5% 194.7% 237.0% 228.6% 205.0% 205.5% Loans to deposits ratio 139.6% 144.3% 143.5% 145.4% 143.6% 139.6% 144.5% 144.3% 144.3% 141.9% *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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40 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.