Highlights of the Annual Financial Statement

The Bank's total capital ratio at year-end 2025 was 24.8% as compared with 24.3% at the end of 2024. The Bank's capital position is strong and its total capital ratio 450 bps above the 20.3% regulatory requirement. 

The cost-income ratio in 2025 was 34.3%, down from 32.4% in 2024. In 2025, the interest margin as a ratio of average total assets was 2.7%, unchanged from the previous year. The Bank’s net interest income was ISK 62.1 billion compared with ISK 57.2 billion in 2024. 

Landsbankinn's net fee and commission income was ISK 12.6 billion in 2025 compared with ISK 11.4 billion in 2024. Income from insurance contracts amounted to ISK 1.7 billion in 2025. Other operating income amounted to ISK 7.8 billion, compared with ISK 11.1 billion in 2024.  

Income statement

Landsbankinn's after-tax profit in 2025 was ISK 38 billion. 

Net interest income amounted to ISK 62.1 billion in 2025 compared with ISK 57.2 billion in 2024. The net interest margin on average total asset position is unchanged from the previous year at 2.7%. Landsbankinn's net fee and commission income was ISK 12.6 billion in 2025, compared with ISK 11.4 billion in 2024. Performance from insurance contracts was ISK 1.7 billion in 2025. 

Net impairment charges were ISK 1.2 billion in 2025. Loans in arrears remain low. 

Other operating income were ISK 7.8 billion in 2025, compared with ISK 11.1 billion in 2024, with the decrease mainly due to poorer performance from the Group’s equity portfolio.  

Operating expenses in 2025 amounted to ISK 32.0 billion, compared to ISK 29.3 billion in 2024. Wages and related expenses were ISK 18.1 billion thereof, increasing by 9.5% between years, primarily due to contractual increases. Other operating expenses amounted to ISK 11.2 billion in 2025,  compared with ISK 10.2 billion in 2024.   

The cost-income ratio for 2025 is 34.3%. The cost-income ratio is the ratio between the Bank's operating expenses and net operating revenue less value changes of financial assets. Full-time equivalent positions with the Group increased by 108 in 2025, from 822 to 930 as a result of the Bank’s acquisition of TM. 

Balance sheet 

Total assets amounted to ISK 2,324.9 billion at year-end 2025, with the balance sheet growing by 7%, or ISK 143.2 billion, between years. 

Lending to customers increased by 4.3%, or ISK 77 billion. Lending to corporates grew by ISK 75 billion, while loans to retail customers increased by ISK 2 billion.  

Cash and balances with the Central Bank decreased by ISK 4.5 billion between years and amounted to ISK 125.6 billion at year-end 2025. 

Market bonds increased by ISK 54.2 billion in the year, to ISK 193.3 billion. The Bank's equity assets decreased by ISK 2.1 billion during the year. Loans and receivables to credit institutions decreased by ISK 1.7 billion during the year to stand at ISK 41.1 billion at year-end. Other assets amounted to ISK 50.2 billion. 

Deposits from customers are the Bank’s primary source of funding. Total deposits amounted to ISK 1,249.3 billion at year-end 2025, an increase of ISK 20.9 billion, or 1.7%, between years. 

Deposits from financial institutions increased by ISK 8.8 billion during the year to stand at ISK 20.3 billion at year end. 

Financing was successful in the year and diversification of borrowing was achieved. Net issuance increased by ISK 62.5 billion in 2025. 

Funding has been successful. Diversification and efficiency in the Bank’s capital structure grew in the first half of the year with the issuance of AT1 bonds and senior non-preferred bonds. All of the Bank’s euro-denominated bond issuance is now green and a total of 64.2% of the Bank’s international funding is green.

Credit rating 

In April 2025, international rating agency S&P Global Ratings announced an upgrade of Landsbankinn’s credit rating from BBB+ to A- with stable outlook. This is the highest credit rating Landsbankinn has achieved since 2014, when S&P started rating the Bank In its rationale, S&P refers to the Bank’s debt position with additional loss-absorbing capacity (ALAC buffer) following the issuance of subordinated senior unsecured bonds, through which the Bank demonstrated solid market access. Furthermore, the credit ratings for debt benefiting from resolution protection (resolution counterparty ratings, RCR), both long- and short-term, were upgraded from A-/A-2 to A/A-1. S&P affirmed the Bank’s credit rating in December 2025. A stronger credit rating improves access to both domestic and international financial markets.   

When S&P’s credit assessment of the Bank is broken down by type of debt instrument, covered bonds are rated A+, unsecured bonds A-, subordinated senior instruments BBB, Tier 2 subordinated debt BBB-, and Additional Tier 1 capital instruments BB. 

Financing 

EMTN-issuance and covered bond issuance on both domestic and international markets has been the Bank’s main source of market funding. The carrying value of such funding increased in total by ISK 48 billion in 2025 and amounted in total to ISK 577 billion. 

The size of the Bank’s programme for covered bond issuance is EUR 3.5 billion (equivalent to ISK 515 billion at year end). At year-end 2025, outstanding covered bond issuance amounted to ISK 290 billion, increasing by ISK 23 billion during the year. Unsecured borrowing by the Bank in foreign currency amounted to ISK 242 billion at the end of the year. The Bank’s bond issuance on international markets was successful in 2025, with both demand and terms reflecting the Bank’s good access to international credit markets. 

In February 2025, the Bank finalised the sale of Additional Tier 1 securities (AT1) in the amount of USD 100 million (equivalent to ISK 12.5 billion). This marks the Bank’s first-ever AT1 bond issuance, with the bonds sold to investors at a fixed interest rate of 8.125%. The securities are subordinated to all other claims, except common equity. The issuance was linked to the Bank’s acquisition of TM and also further increases the efficiency and diversity in the Bank’s funding structure. Another similar issuance is scheduled for the first half of 2026. 

At year-end 2025, subordinated bonds classified as Tier 2 capital amounted to ISK 41.6 billion, compared with ISK 40 billion in 2024.  

Landsbankinn’s equity at year-end 2025 was ISK 343.8 billion compared with ISK 324.6 billion at the end of 2024. Total assets amounted to ISK 2,324.9 billion at year-end 2025, with the balance sheet increasing by 7%, or ISK 143 billion, during the year. 

Landsbankinn's Annual General Meeting, held on 19 March 2025, approved a motion from the Board of Directors to pay a dividend to shareholders for the operating year 2024 corresponding to ISK 0.80 per share in two tranches. The former dividend payment of ISK 0.4 per share was paid to shareholders on 26 March 2025 and the latter, ISK 0.4 per share, was paid out on 17 September 2025. The total dividend amounted to ISK 18.9 billion or the equivalent of around 50% of profit for the year 2024. 

The 2025 AGM also renewed the Bank’s authorisation to acquire up to 10% of the nominal value of own share capital. The objective of the repurchase programme is to reduce the Bank's equity while at the same time offering shareholders an opportunity to sell their shares in a transparent manner. The authorisation is valid until the 2026 AGM. 

The Board of Directors intends to propose to the AGM of Landsbankinn 2026, scheduled to be held on 18 March this year, that the Bank pay shareholders a dividend in accordance with its dividend policy, equivalent to around 50% of profit for the year 2025. Calculation of the Group’s capital ratios as at year-end 2025 is inclusive of this foreseeable dividend payment. The Board of Directors is also considering proposing a special dividend payment to the AGM. 

At the end of October 2025, the Resolution Authority of the Central Bank of Iceland announced its decision on minimum requirements for own funds and eligible liabilities (MREL) for Landsbankinn. The decision requires that the Bank maintain a 30.8% MREL of its risk-weighted asset base. 

The Bank aims to enhance efficiency in its capital structure while remaining in the highest category for risk-adjusted capital ratio, as determined and measured by the relevant credit rating agencies. The implementation of CRR III creates more scope for growth and dividend payments. Common Equity Tier 1 capital (CET1) at year-end 2025 as a ratio of risk-weighted assets was 21.2%. The Bank’s goals is to remain above 18%. 

Liquidity position 

Liquidity and funding ratios are well above regulatory requirements and within the Bank’s risk limits. The Bank’s liquidity position at year-end 2025 is strong. The total liquidity coverage ratio (LCR) was 180%, 122% in ISK and 1386% in EUR. Liquid assets amounted to ISK 322.1 billion at year-end 2025. 

The primary measurement of short-term liquidity risk is the LCR, which measures the ratio of high quality liquid assets to net outflow over a 30-day period under specific stressed conditions. 

Landsbankinn's total LCR was 180% at year-end 2025 and the Central Bank of Iceland (CBI) requires a 100% minimum LCR. The LCR for EUR for the same period was 1386%; the Central Bank requires a 80% minimum. The LCR for ISK was 122% at year-end 2025; the Central Bank requires a 50% minimum.