Kvika banki hf. – Valuation as of 1 Jan 2026

Valuation Summary

• The value per share as of 1 January 2026 is estimated at ISK 17.4.
• 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 decrease in value from the prior valuation reflects a 2025 dividend, partly offset by the company’s 2025 performance and updated assumptions in the revised forecast.

Key Assumptions

• Net interest margin on total assets is 3.4% in 2026, declining to 3.2% 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%, while money market funds yield 6–7%; both are recognized as net finance income.
• The cost-to-income ratio decreases over time, averaging 61.2% per year over the forecast period.
• 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 6.8% per year.
• Dividends amount to 24% of the parent company’s total comprehensive income from the previous year in 2026. In 2027, ISK 15 million will be distributed due to the strong capital position, and thereafter dividends will equal 65% for the remainder of the forecast period.

Minority interests are immaterial and therefore excluded.