Highlights of the Annual Financial Statement

Landsbankinn achieved all of its main objectives in 2024, whether related to customer service, financial performance or operations. Profit amounted to ISK 10.6 billion in the fourth quarter and ISK 37.5 billion for the full year. Annualised return on equity (ROE) was 12.1%, exceeding the Bank’s target. The fourth quarter was one of the strongest in the Bank’s history.

The Bank’s strong performance is built on a solid foundation. Over the past ten years, the Bank’s total assets have grown by ISK 1,083 billion and equity by ISK 74 billion, alongside total dividend payments to shareholders amounting to ISK 192 billion. Operating costs have remained stable, the number of full-time positions has decreased in tandem with technological advancements and the ratio of operating expenses to average total assets - a common measure of bank efficiency - has never been lower.

The Bank's total capital ratio at year-end 2024 was 24.3% as compared with 23.6% at the end of 2023. The Bank’s capital position is strong and its total capital ratio 390 bps above the 20.4% regulatory requirement.

The cost-income ratio in 2024 was 32.4%, down from 33.7% in 2023.

In 2024, the interest margin as a ratio of average total assets was 2.7% compared with 3.0% in 2023.

The Bank’s net interest income was ISK 57.2 billion compared with ISK 57.6 billion in 2023.

Landsbankinn's net fee and commission income was ISK 11.4 billion in 2024 compared with ISK 11.2 billion in 2023. Other operating income amounted to ISK 11.1 billion, compared with ISK 5.1 billion in 2023.

Income statement

Landsbankinn's after-tax profit in 2024 was ISK 37.5 billion.

Net interest income amounted to ISK 57.2 billion in 2024 compared with ISK 57.6 billion in 2023. The net interest margin as a ratio of average total asset position decreases from 3.0% to 2.7%.

Landsbankinn's net fee and commission income was ISK 11.4 billion in 2024, compared with ISK 11.2 billion in 2023.

Net impairment charges were ISK 2.8 billion in 2024, largely linked to the impact of seismic and volcanic activity on the Reykjanes peninsula. Loans in arrears remain low.

Other operating income were around to ISK 11.1 billion in 2024 compared with ISK 5.1 billion in 2023, with the fair value of listed shares the weightiest component.

Operating expenses in 2024 amounted to ISK 29.3 billion, compared to ISK 28.2 billion in 2023. Wages and related expenses were ISK 16.5 billion thereof, increasing by 4.2% between years, primarily due to contractual increases. Other operating expenses amounted to ISK 10.2 billion in 2024, compared with ISK 10.1 billion in 2023.

The cost/income ratio for 2024 is 32.4%. The cost/income ratio is the ratio between the Bank's operating expenses and net operating revenue less value changes of financial assets. Full-time equivalent positions with the Bank increased by 5 in 2024, from 817 to 822.

Balance sheet

Total assets amounted to ISK 2,181.8 billion at year-end 2024, with the balance sheet growing by 11%, or ISK 221 billion, between years.

Main changes to the asset side of Landsbankinn’s balance sheet in 2024 include an 11% increase in loans to customers, or by ISK 176.5 billion. Lending to corporates grew by ISK 109 billion, while loans to retail customers increased by ISK 68 billion. Inflation-indexed loans increase by ISK 208 billion.

Cash and balances with the Central Bank decreased by ISK 54.6 billion between years and amounted to ISK 130 billion at year-end 2024.

The Bank's equity holdings increased by ISK 13.6 billion during the year. Loans and receivables to credit institutions decreased by ISK 14.8 billion during the year to stand at ISK 39.3 billion at year-end.

Deposits from customers are the Bank’s primary source of funding. Total deposits amounted to ISK 1,228.4 billion at year-end 2024, an increase of ISK 180 billion, or 17%, between years. Customer deposits increased by 97 billion in 2024.

Deposits are mainly non-indexed and unrestricted. Deposits from financial institutions decreased by ISK 18 billion during the year to stand at ISK 12 billion at year end.

Financing was successful in the year and diversification of borrowing was achieved. Net issuance by the Bank increased by ISK 35 billion in 2024.

In April 2024, international rating agency S&P Global Ratings announced an upgrade of Landsbankinn’s credit rating by one notch, from BBB/A-2 with positive outlook to BBB+/A-2 with stable outlook. S&P’s announcement mentioned that the upgrade reflected expectations that Landsbankinn would maintain its leading domestic franchise and sound business operations. S&P confirmed the Bank’s credit rating in November 2024, revising the outlook from stable to positive. The Bank's current rating grade is BBB+/A-2 with positive outlook. A stronger credit rating improves access to both domestic and international financial markets.

EMTN-issuance and covered bond issuance on both domestic and international markets has been the Bank’s main source of market funding. The carrying value of such funding increased in total by ISK 15.5 billion in 2024. At year-end 2024, unsecured non-ISK bond issuance in EUR, NOK and SEK amounted to a total of ISK 227.6 billion. The Bank’s bond issuance on international markets was successful in 2024, with both demand and terms reflecting the Bank’s good access to international credit markets.

Landsbankinn’s equity at year-end 2024 was ISK 324.6 billion compared with ISK 303.8 billion at the end of 2023. Total assets amounted to ISK 2,181.8 billion at year-end 2024, with the balance sheet growing by 11%, or ISK 221 billion, during the year.

Landsbankinn's Annual General Meeting, held on 19 April 2024, approved a motion from the Board of Directors to pay a dividend to shareholders for the operating year 2023 corresponding to ISK 0.70 per share in two tranches. The former dividend payment of ISK 0.35 per share was paid to shareholders on 24 April 2024 and the latter, ISK 0.35 per share, was paid out on 16 October 2024. The total dividend amounted to ISK 16.5 billion or the equivalent of around 50% of profit for the year 2023.

The 2024 AGM also renewed the Bank’s authorisation to acquire up to 10% of the nominal value of own share capital. The objective of the repurchase programme is to reduce the Bank's equity while at the same time offering shareholders an opportunity to sell their shares in a transparent manner. The authorisation is valid until the 2025 AGM.

The Board of Directors intends to propose to the AGM of Landsbankinn 2025, scheduled to be held on 19 March this year, that the Bank pay shareholders a dividend in accordance with its dividend policy, equivalent to around 50% of profit for the year 2024. Calculation of the Group’s capital ratios as at year-end 2024 is inclusive of this foreseeable dividend payment.

At the end of October 2024, the Resolution Authority of the Central Bank of Iceland announced its decision on minimum requirements for own funds and eligible liabilities (MREL) for Landsbankinn. The decision requires that the Bank maintain a 30.9% MREL of its risk-weighted asset base.

The Bank aims to maintain a total capital ratio of over 22.0% at each time and to be in the highest category for risk-adjusted capital ratio, as determined and measured by the relevant credit rating agencies.

Liquidity position

Liquidity and funding ratios are well above regulatory requirements and within the Bank’s risk limits. The Bank’s liquidity position at year-end 2024 is strong. The total liquidity coverage ratio (LCR) was 164%, 133% in ISK and 951% in EUR. Liquid assets amounted to ISK 303.5 billion at year-end 2024.

The primary measurement of short-term liquidity risk is the LCR, which measures the ratio of high-quality liquid assets to net outflow over a 30-day period under specific stressed conditions.

Landsbankinn's total LCR was 164% at year-end 2024 and the Central Bank of Iceland (CBI) requires a 100% minimum LCR. The LCR for EUR for the same period was 951%; the Central Bank requires an 80% minimum. The LCR for ISK was 133% at year-end 2024; the Central Bank requires a 50% minimum.