Íslandsbanki (ISB) Q2 2025 earnings summary

Executive summary

• Second quarter 2025 delivered robust results with core operating income up 11.5% year-over-year and ROE at 13.0% for Q2, 11.1% for H1.

• All revenue units showed strong growth, with net profit for Q2 at ISK 7.2bn, up 37% year-over-year, and H1 profit at ISK 12.4bn.

• The government sold its entire stake in May, resulting in full private ownership, increased retail participation, and a 400% rise in trading volumes.

• Strategic partnership with VÍS launched, enhancing customer retention and satisfaction.

• Digital innovation investments included a new corporate online banking platform and mobile app enhancements.

Financial highlights

• Net interest income for Q2 was ISK 13.9bn, up 11% year-over-year; NIM at 3.3% for Q2 and 3.2% for H1.

• Net fee and commission income grew 13% year-over-year in Q2 and 7.5% for H1.

• Cost-to-income ratio improved to 41% for Q2 and 44.1% for H1, supported by revenue growth and cost control.

• Loans to customers increased 2.8% from year-end 2024 to ISK 1,331bn; deposits up 4.2% to ISK 966bn.

• Annualized cost of risk was -0.12% in Q2, reflecting a net release of impairments.

Outlook and guidance

• Full-year 2025 ROE guidance is 10-11%, with expectations to be at the upper end; cost-to-income ratio target below 45%.

• Net interest margins expected to remain stable, with strong loan growth anticipated.

• GDP growth in Iceland forecast at 1.9%-2% for 2025, with inflation likely near 4%.

• Fee income expected to remain strong in the second half, with all streams contributing.

• Additional ISK 15bn allocated to share buybacks, deducted from capital ratios.