Íslandsbanki hf. – Valuation as of 1 Jan 2026

Valuation Summary

• The value per share as of 1 January 2026 is estimated at ISK 159.3.
• The valuation is based on a ten-year forecast using the residual income method, with a 10% nominal required return on equity and a 4% terminal growth rate (1% real).
• The increase in value from the prior valuation reflects 2025 performance and updated assumptions in the new forecast regarding net interest margin, cost ratios, and impairments.

Key Assumptions

• Net interest margin on total assets is 3% in 2026, declining to 2.8% from 2028 onwards and remaining at that level through the forecast period.
• Net fee and commission income grows by an average of 5.7% per year.
• Bond portfolio returns amount to 6.5-7.5% per year, of which 0.5% is recognised as a fair value change under net financial income. The interest component of bonds is recognised under net interest income.
• The average annual return on shares is 12% over the forecast period.
• Cost-to-income ratio (operating expenses/core income) averages 45%.
• Impairment charges amount to 0.3% of loans per year.
• Corporate income tax is 20% (excluding earnings from associates and equities); the financial activities tax is 6% of taxable profit above ISK 1 billion; and the special tax on financial institutions is 0.145% of total liabilities above ISK 60 billion.
• Loans to customers grow on average by 5.7% per year.
• Dividend payments amount to 51% of the prior year’s total comprehensive income in 2026, increasing to 65% thereafter.