Islandsbanki hf (OISE:ISB)

Q2 2026 Islandsbanki hf Earnings Call Transcript

Jul 30, 2026 / 08:30 AM GMT

Release Date Price: kr144.8 (-0.96%)

Transcript

Key Points

Positve

Strong return on equity of 13.3% in Q2 2026, exceeding initial guidance of 12% and leading to an updated guidance of above 12.5% for the full year.
Robust capital position with a CET1 ratio of 19.1%, well above the target of 17.2%, providing significant distribution capacity of 23.1% for dividends and buybacks.
Healthy loan book with 94% collateralized and modest loan-to-value ratios of 52%, indicating strong asset quality despite economic headwinds.
Successful launch of a loyalty scheme attracting 50,000 customers, driving increased product uptake and share of wallet.
Effective cost management with a cost-to-income ratio of 43.1%, in line with targets, and other operating expenses growing 1.2% less than inflation.

Negative

High inflation and interest rates negatively impact fee income, with capital markets turnover down nearly 50% year-over-year, reducing investment banking and asset management revenues.
Stage 3 loans increased from 2.0% to 2.6% in Q2, primarily due to a single exposure in the construction sector, signaling credit quality risks in a slowing economy.
Uncertain macroeconomic outlook with expected further interest rate hikes and rising unemployment, potentially leading to higher impairments in the second half of the year.
Iceland's banking sector faces the highest taxes in the region, with total taxes on operating income 60% to 100% higher than neighboring countries, and potential further increases under government discussion.
Net interest income is expected to decline in Q4 2026 due to a very low inflation accounting tick of 0.2%, reducing margins and overall profitability.

Refinitiv StreetEvents Event Transcript
E D I T E D V E R S I O N

ISB.IC - Islandsbanki hf
Q2 2026 Islandsbanki hf Earnings Call
Jul 30, 2026 / 08:30AM GMT

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Presentation
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Unidentified_1 [1]
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Good morning, second quarter earnings call.

I hope you're all enjoying your summer.

I just came off a three-day hike to the biggest glacier here in Iceland, called Wagnerjukut.

A three-day hike with everything on my back, so it's been a difficult start of the week, but an exciting one.

Our guide for the hike was a guy called the Leber Urt Svavasson, and I mentioned this because I find it quite interesting. He has summited the highest peaks in all seven continents and been to the North Pole and the South Pole.

And he's the only guy in the world that has done this twice. That's something I learned on the trip. So I can safely say I was in very safe hands.

Now, over to our earnings. And in

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