From the Chief Executive Officer 

Return on equity was 11.6%, in line with objectives, and the cost-income ratio was 34.3%, which is among the lowest seen among comparable banks on a global level. Profit amounted to ISK 38 billion. In accordance with the Bank’s dividend policy, the Board of Directors will propose to the Annual General Meeting that approximately 50% of that amount be paid to shareholders as dividends, or around ISK 19 billion. The Board is also considering a special dividend payment to shareholders later in the year. 

Despite an economy that is regrettably characterised by persistent inflation and high interest-rate levels, we see that the financial position of both retail and corporate customers is generally strong.

Sound financial position 

It is a testament to the Bank’s sound financial position that international credit rating agency S&P upgraded the Bank’s credit rating to A- with a stable outlook last spring. An improved credit rating is particularly important in international capital markets and supports the Bank’s competitiveness. During the year, we took advantage of favourable market conditions to issue FX bonds equivalent to approximately ISK 135 billion, based on current exchange rates. The issuances were used to refinance older and less efficient funding, as well as to strengthen credit ratings and increase lending capacity. 

Sustainability integrated in core operations 

Landsbankinn has worked on sustainability in a targeted manner since 2011. As with other transformative initiatives, they are either finalised at some point or become a regular and natural part of operations. Sustainability is not a project to be completed; rather, it is an on-going endeavour. At Landsbankinn, it has now reached the stage of being an integral part of core operation across all segments. As a result, the time has come for Landsbankinn's Annual Report, that for the past couple of years has been titled the Annual & Sustainability Report, to revert to its former name. Sustainability is nevertheless covered in detail in the Report and we publish sustainability accounts along with the Bank’s annual financial statement.  

Insurance now in the app  

Following the Bank’s completion of the acquisition of TM in February, we have worked systematically to integrate insurance into the Bank’s service platform.

TM performed well and the company paid ISK 2.5 billion in dividends to Landsbankinn during the year.. 

In these changes to the Bank’s operations, it is of great importance that Landsbankinn has an exceptionally strong and extensive service network. The Bank’s decision to maintain and develop its branch network, which in total comprises 34 branches and service outlets, and to link it with other services - most notably our strong customer service centre - means that the Bank has greater reach and is in a stronger position to provide outstanding service across the entire country. Experience shows that customers value this approach and make extensive use of the services. For example, we recorded a total of approximately 863,000 branch visits last year and the Customer Service Centre answered more than 250,000 phone calls and over 100,000 emails. This emphasis on first-rate service has resulted in increased customer satisfaction, as borne out by the fact that Landsbankinn remains the top commercial bank in the Icelandic Customer Satisfaction Index, even rising between years. 

Successful service innovations  

Landsbankinn has supported the development of business and industry throughout the country through lending and strong services to companies of all sizes and types. Almost the entire lending growth in 2025 was on the corporate side, with the lending portfolio closing in on ISK 1,000 billion. The focus on developing digital corporate banking services resulted in increased use of the Bank’s technological solutions last year, particularly following the renewal of the corporate online banking platform and the implementation of new solutions. The success of Landsbankinn’s payment acquiring segment, which was launched in 2023, shows that we are able to enter new service areas with good results. Service innovation and increased activity in other areas led to a 10% increase in the Bank’s fee and commission income last year. 

Toward the end of last year, the Supreme Court delivered rulings in interest rate cases, including two cases concerning Landsbankinn’s interest rate clauses. We placed emphasis on responding quickly to reduce uncertainty in the lending market and were the first lender to introduce new loan products, including a new version of non-indexed loans with one-year fixed rates. We saw no alternative but to limit the availability of inflation-indexed residential mortgages to first-time buyers and to shorter loan terms. As a result, in cases where the debt-service burden is the most important factor to borrowers, we are not as competitive as previously. We do offer very competitive terms on non-indexed loans and, in addition, our customers have access to quality advisory service around the country. 

Banking for the future 

It is important to achieve a better balance in the economy, to push inflation down in order to lower the domestic interest rate level. Hopefully the conditions to achieve with will transpire soon. This would be a boon to our borrowers and would create more scope for companies to invest and in so doing to contribute both to economic growth and more opportunities for the future. 

In this way, we are strongly positioned to support our customers and are a good investment for shareholders. The coming years will be characterised by enhancing and solidifying customer relationships and by the continued development of our services to ensure agility, convenience and security. Our customers should see clear value in of entrusting a large part of their finances to the Landsbankinn group.