Arion Banki SDB (ARION) Q4 2025 earnings summary

Executive summary

• Delivered a return on equity of 14.9% for 2025, exceeding the 13% medium-term target, driven by strong core income growth and diversified revenue streams.

• Net earnings attributable to shareholders reached ISK 30.6bn, up 17% year-over-year.

• Core income rose 12.3% year-over-year, supported by higher net interest income, resilient fee income, and robust insurance service results.

• Maintained cost discipline with a cost to core income ratio of 42.3% and a combined insurance ratio below 90% for the second consecutive year.

• Strategic progress included strong commercial momentum, digitalization, and customer engagement initiatives, notably in retail and insurance.

Financial highlights

• Net profit for Q4 was ISK 6.2 billion, down from ISK 8.3 billion in Q4 2024, mainly due to lower net financial income and higher impairments.

• Net interest income for 2025 was ISK 52.5bn, up 13% year-over-year; net fee and commission income up 12% to ISK 17.1bn.

• Net interest margin for 2025 was 3.2%, with quarterly fluctuations due to inflation.

• Operating expenses stable at ISK 28.2bn; cost-to-core income ratio improved to 42.3%.

• Loans to customers grew 8% year-over-year, mainly from corporate lending.

Outlook and guidance

• Expectation of continued strong operating performance in 2026, with core business providing solid earnings.

• Anticipate a complicated external environment, including domestic rate developments and international political factors.

• Merger with Kvika is progressing, with regulatory discussions expected to conclude in early 2026.