ÍSLANDSBANKI

With roots tracing back to 1875, Íslandsbanki is an Icelandic bank deeply engrained in

the economy of Iceland. In its formative years, Íslandsbanki became Iceland’s first public limited

company and played an integral role in developing Iceland’s fishing industry. After merging of

four banks in 1990, the Union Bank, Industrial Bank, Fisheries Bank of Iceland, and the

Commerce Bank, Íslandsbanki was officially established, becoming the largest private sector

bank in Iceland [1]. Later, in 2000, the merger of Íslandsbanki and the Icelandic Investment

Bank allowed for Íslandsbanki to embark on a path towards international growth and rapid

expansion. Íslandsbanki expanded internationally and opened offices abroad to meet its

expansion abroad. In 2006, Íslandsbanki changed its name to Glitnir. Glitnir collapsed by late-

2008 in the wake of the global financial crisis. In February of 2009, Glitnir officially changed its

name back to the original Íslandsbanki. After several years of full state ownership, the

Government of Iceland completed the sale of its stake in Íslandsbanki in May 2025 when it sold

the remaining 45.2% stake in a successful secondary fully marketed offering. The Government

of Iceland had previously sold its stake in two steps, first through an IPO in 2021 and then later

in an ABB in March of 2022. 

Íslandsbanki is a leading domestic customer-centric universal bank that offers its

customers a diverse range of financial products and services, through its three key business units,

Personal Banking, Business Banking and Corporate & Investment Banking, as well as its

strategic subsidiaries, in particular Iceland Funds. The Bank aims to respond to its customers’

ever-growing needs and to provide innovative and helpful solutions through the Bank’s services

and products across its industries. With 733 employees at year-end 2024, Íslandsbanki operates

twelve branches throughout the country and services its customers through both its branch

network and its extensive and modern digital channels. Íslandsbanki's purpose is to empower its

customers to be a force for good in Icelandic society and create value for the future in a

sustainable way – for its customers, shareholders, and employees, and for society as a whole.

The key elements of (1) differentiated proposition and (2) digital first service, with (3) data

insights will be the driving force behind development of Íslandsbanki’s digital products and

services. The bank’s digital platform, combined with its relatively lean branch network, supports

demand for increased efficiency and customer willingness to use digital channels. As one of

Iceland’s leading banks, Íslandsbanki has developed a strong reputation in its service of

individuals, corporations, and professional investors. Íslandsbanki’s strong position has been

affirmed by international rating agencies and Íslandsbanki is currently rated BBB+/A-2 with a

positive outlook by S&P Global and has been assigned and A3 issuer rating with a stable outlook

by Moody’s Ratings.

Íslandsbanki’s purpose is to empower its customers to be a force for good in society and

create value for the future in a sustainable way—for its customers, shareholders, and employees,

and for society as a whole. Furthermore, the Bank places particular emphasis on the financial

health of its customers and will make every effort to strengthen it, through both educational

efforts and product offerings. The bank’s strategy is a balanced mix of (i) building a sustained

competitive advantage and (ii) increasing efficiency. All decisions are guided by three core

values: progressive thinking, collaboration, and professionalism. To support its strategic

priorities, Íslandsbanki has defined four strategic themes, service and customer experience, a

data-driven bank, profitable growth and the best team. The strategic themes focus on creating

value for the future by providing outstanding service.

Between 2017 and 2019, Íslandsbanki underwent a digital transformation when it

successfully replaced its core banking system, including an effective migration of an old legacy

system to a global standardised core banking system for payments and deposits in 2018.

Following that, it also replaced its lending platform with a new domestically written system, after

which its entire core banking platform was replaced and modernised. Looking to the future,

Íslandsbanki has introduced a variety of digital solutions to stay ahead of market changes with its

state-of-the-art platform and renewed technological infrastructure enabling digital leadership.

Significant investments have been made in recent years to strengthen further the data foundations

of Íslandsbanki with the aim of being in the forefront of data excellence and AI innovation.

Íslandsbanki has launched a new data driven sales and behavioural tracking platform, enabling it

to leverage customer insights to improve service to customers. The transformation of data

architecture and usage to drive business decisions continues to be an ongoing focus for

Íslandsbanki as the domestic market has one of the highest digital banking activity in Europe.

Íslandsbanki has through recent years demonstrated significant income growth from core

banking operations and has been able to generate steady and varied income through its

diversified business model while operational efficiency has been delivered through cost control

measures. Founded as a “new bank” in the aftermath of the 2008 global financial crisis with a

clean capital structure and no legacy balance sheet items, Íslandsbanki has a clean and robust

balance sheet supported by strong loan and risk culture. The bank has a strong diversified loan

portfolio with mortgages to households representing the single largest loan category, healthy

distribution amongst sectors and customer types. The loan portfolio is highly collateralized and

low LTVs. Íslandsbanki has an ingrained culture of service and risk mindfulness and the bank’s

seasoned management team is complemented by a highly skilled and dedicated workforce,

forming a cornerstone of its operational resilience and strategic success. Embedded within this

culture is a pervasive mindfulness of risk, which permeates all levels of the organization—from

frontline staff to senior leadership. This robust risk culture is a key strength of the bank, directly

contributing to its prudent and efficient management of capital. Employees are trained to

identify, assess, and mitigate risks proactively, aligning their day-to-day decisions with the

bank’s overarching risk framework. This workforce-driven vigilance enhances the quality of the

bank’s risk portfolio, as evidenced by its ability to maintain lower capital requirements compared

to industry peers. Asset quality remains both strong and stable across the loan portfolio with

limited signs of increasing delinquencies.

As a strong player in the Icelandic financial services industry with an ESG-ingrained

culture Íslandsbanki recognises that sustainability drives shareholder value and corporate

longevity and the bank’s sustainability strategy and framework has resulted in an innovative

product offering for its customers. In April 2021, Íslandsbanki announced its target of achieving

full carbon neutrality no later than 2040 and its own operations have been carbon-neutral for the

past two years, but with this decision, its targets will also extend to “financed emissions,” which

include the carbon footprint of Íslandsbanki’s entire loan and asset portfolio. At the same time,

commitments were set for climate targets based on science-based targets and preparations are

already underway for a detailed plan providing for secondary objectives in line with that

framework. Íslandsbanki has received a strong ESG rating by Reitun, an Icelandic rating agency,

in recent years and its sustainability leadership has further been demonstrated in being awarded

the Icelandic Knowledge Award 2020 by FVH, the Association of Business and Economics

Graduates in Iceland. Íslandsbanki has been recognised for excellence in corporate governance

several times by the Centre of Corporate Governance at the University of Iceland and by

Stjórnvísi, an Icelandic business association focused on corporate governance best practices. In

addition to these accomplishments, Íslandsbanki has also been a leader in gender equality for a

long time. 43% of its Board of Directors and 50% of its Executive Committee are women, in

comparison to the global average of major banks of 20% and 18%, respectively, according to a

Deloitte report on women in financial services from 2023. As in prior years, in 2024,

Íslandsbanki received equal pay certification and was awarded professional certification under

the IST 85:2012 Equal Pay Standard. Íslandsbanki has been awarded the Equality Scale by the

Icelandic Association of Business Women, FKA annually since 2018.

Íslandsbanki has set four financial targets and announced to the market. Íslandsbanki’s

financial targets is to deliver a return on equity in excess of 10%, a cost-to-income ratio of below

45%, to maintain a 100-300 bps CET1 capital buffer on top of regulatory requirements (based on

current regulatory requirements and management buffer of 100-300bps, the CET1 capital ratio

target range of Íslandsbanki was 16.4%-18.4%, as at 31 March 2025) and to pay out

approximately 50% of annual earnings as base dividend. Íslandsbanki’s strong and experienced

management team has a proven track record of consistently delivering strategic goals and

meeting financial targets.