Simpler life with Landsbankinn

We put customer satisfaction first and aim to simplify life with accessible, secure and personal banking service. We introduced several new digital solutions, continued to improve Landsbankinn’s app and maintained our high standard of service for customers around the country.

The bulk of our service is channelled through Landsbankinn's app, which was used by 164,200 users this year. We added several new features to the app, including refinancing, a chat function that connects customers to both employees or the chat bot Ellí, all while taking care of general banking service. Customers can also change the security settings of their payment cards.

More information about new digital service solutions is provided in the chapter on Continuous development.

Customer satisfaction comes first

Customer satisfaction is of the utmost importance to us and we always aim to improve. During the year, we enhanced measurement of satisfaction with our services. We asked for customers’ opinion about the Bank’s service in real time, both following meetings with financial advisors and following app sessions. Customers can now rate the service and submit their own comments or answers.

The results were very gratifying, as overall satisfaction with scheduled advisory meetings at the Bank measured 4.7 out of 5. These are customers who book meetings with advisors in branches or remote meetings, which are available until 18:00 every weekday. Making an appointment for financial advice simplifies life, removes wait times and allows employees to prepare for the meetings. We intend to continue to develop this service poll with the aim of improving service even further.

We also measured customer satisfaction with key processes in the app through a survey presented in the language users set the app to: Icelandic, English or Polish. The purpose of the survey is to understand the customer experience of the application process for services such as Aukalán loans or overdrafts, setting up Smart Savings or selecting payment equalisation plans for credit card payments. Customer satisfaction with the app was rated 4.8 out of 5.

Additionally, the Bank received its highest-ever rating in the Icelandic Customer Satisfaction Index since 2007, ranking significantly higher than any other full-service bank. These results are highly encouraging and motivate us to do even better.

Significant deposit growth and record savings in the app

In 2024, total deposits with the Bank grew by 17.2% distributed evenly across retail and corporate customers. Increased deposits and more savings owners who choose to entrust the Bank with their savings reflects growing confidence in the Bank and its strong share in the deposit-taking market.

Smart Savings increasingly popular In 2024, deposits in Smart Savings grew by 73%, while the number of open accounts increased by 53%, reaching nearly 59,000 users. More and more customers are setting smart savings goals, with the most popular goals being family, home and travel.

The popularity of Smart Savings, coupled with increased deposits, shows the Bank’s success in meeting customer needs with digital and simple solutions.

The Hub improves service and strengthens the branch network

“One of the key factors that sets Landsbankinn apart from other banks and financial institutions is its strong and extensive branch network, with 35 branches and service locations across the country. Through what we call “Miðjan” - the Hub - we have successfully leveraged this branch network to serve all of the Bank’s customers, regardless of their location. With the Hub, we make even better use of the expertise of our highly skilled staff in rural areas, allowing them to provide services to customers across the country.

This initiative is not entirely new, but in 2024, we placed greater emphasis on enabling employees in regional branches to handle tasks that can be completed remotely.

If a customer needs service or advice but does not wish to visit a branch, their request is routed through the Hub. Within the Hub, branch employees across the country can access incoming service requests and respond by calling customers for mortgage consultations, hold virtual meetings, or handle inquiries via email, among other tasks. This approach has made a huge difference. The Hub has reduced response times, improving service accessibility and enabling the Bank to provide even better customer service. The Hub increases the diversity of tasks, opportunities and satisfaction among employees in rural Iceland.

This is yet another example of the branch network strengthening the Bank’s service. The Bank’s Customer Service Centre is located both in Reykjavík and Akureyri but its employees are based around the country. The implementation of a new service centre system has been highly successful, enabling staff from all branches to connect with the Customer Service Centre and assist in handling calls and inquiries. This has significantly reduced wait times, which is especially beneficial during peak periods. Last year, around 45 employees from branches across the country contributed to the Customer Service Centre’s work in this way.

We all recognise that branch visits have decreased, both in the capital area and in rural regions. With the Hub, we have successfully redistributed service tasks across the entire branch network, ensuring that employees can assist customers regardless of geographic location. The Hub is one of the most successful changes we have made to our branch network and customer service operations. It is a great example of how technology can be leveraged to strengthen operations in rural areas while simultaneously enhancing service nationwide.”

Employees around the country provide advice

We met with customers in just under 18,000 financial consultations in 2024. 7,600 thereof were remote meetings. A majority of the remote meetings were managed by employees in rural Iceland.

Consultations in remote meetings

43%

Consultations in brances

57%

Focus on quality advice on housing mortgages

In 2024, a significant number of customers reached the end of the fixed-rate period on non-indexed loans that had been secured at historically low rates three years ago. For those who did not refinance or switch to another loan type, monthly payments often increased significantly due to the higher interest rate environment. We placed great emphasis on informing customers facing these changes about their impact and the available options. Customers received advance notifications, and we personally called each borrower to discuss refinancing options and other solutions. We found that customers highly valued these advisory calls and the support we provided during this transition.

In 2024, approximately 3,800 borrowers reached the end of their fixed-rate period on non-indexed mortgages. Of these, around 1,800 refinanced their loans, with the majority, or 60%, switching to indexed loans.

Approximately 1,600 borrowers took no action, meaning their loans automatically switched to variable rates. Despite the resulting higher monthly payments, nearly all these customers remained current on their loans, and mortgage delinquencies remain at an absolute minimum. Additionally, we welcomed many new customers, as borrowers from other lenders chose to refinance with us.

Adjusted availability of inflation-indexed mortgages instead of raising rates further

The increased demand for indexed loans, which offer lower monthly payments, created certain challenges for the Bank. One key issue was that market conditions for indexed market funding had deteriorated. Instead of significantly raising interest rates on indexed loans, we made targeted adjustments to loan policies aimed at supporting first-time homebuyers while at the same time curbing overall demand for indexed loans. At Landsbankinn, 37% of all mortgage borrowers purchasing property were first-time buyers, a notably high percentage.

To manage demand, we discontinued indexed annuity loans, which have the lowest monthly payments but accumulate the most inflation adjustments over the loan term. However, indexed loans with equal principal payments remained available, though the maximum loan term was reduced from 30 to 25 years.

First-time buyers could still access longer loan terms, or up to 30 years, and had the option of choosing annuity loans. This approach made it easier for first-time buyers to meet credit assessments and the Bank further supported them by waiving borrowing charges for this group. We believe that this strategy - modifying loan terms and policies instead of raising interest rates - was more beneficial for the majority of our customers.

Increased demand for inflation-indexed mortgages

Demand for inflation-indexed mortgages grew significantly from 2023, as shown in the bar chart illustrating how indexed lending increased at the expense of non-indexed mortgages.

The loan policy changes discussed above had the intended effect of putting a damped on demand for indexed loans.

Changes to LTV ratio of mortgages

We adjusted the loan-to-value (LTV) ratios for both inflation-indexed and non-indexed mortgages. Following these changes, base loans are now capped at a 60% LTV ratio for both inflation-indexed and non-indexed loans. Loans of up to 80% of the property’s purchase price remain available through an additional loan on top of the base loan. First-time buyers can still take out an additional loan of up to 85% of the purchase price. For refinancing, borrowers can access loans up to a 70% LTV ratio.

Support for Grindavík

We continued to provide special assistance to our Grindavík customers in the wake of seismic and volcanic activity on the Reykjanes peninsula. Customers with fixed-rate mortgages were offered the same terms on new loans. Around 150 customers took out new mortgages with the same fixed rate as had applied to their mortgages in Grindavík. We put a payment moratorium on mortgages and offered to cancel interest and indexation. Those customers who resided and were legally domiciled in Grindavík when the evacuation was ordered were offered these solutions by the Bank.

Plúskort equals simple and inexpensive service

We launched a new payment card in April, the Plúskort, a pre-paid digital card. The Plúskort is available for customers 14 years and over and is suitable for customers who want simple and inexpensive banking services - and no physical card. The Plúskort can be created in Landsbankinn’s app, added directly to digital wallets and used to shop online like other payment cards.

With Landsbankinn’s Plúskort payment card, customers pay no transaction or annual fees yet still gather Aukakrónur which can be used to shop with our partners.

We also launched the Plúskort+, an inexpensive payment card with the same features as the Plúskort plus basic travel insurance and Aukakrónur.

Aukakrónur: New features and record year for robust benefit system

Aukakrónur have established themselves as one of the strongest benefit system in Iceland. In 2024, its popularity continued to grow, with more Aukakrónur collected and used than ever before. Landsbankinn customers collected a record-breaking 643 million Aukakrónur over the year and redeemed 583 million for purchases of goods and services. This is a testament to the growing strength and popularity of the program.

This year, new major partners joined the program, allowing customers to collect and use Aukakrónur at more locations than before, including Hagkaup, Útilíf, and the airline PLAY. These additions have made the partner network more diverse, providing even greater everyday value for customers.

Collection

Aukakrónur

643

Use

Aukakrónur

583

Partners

200+

all over the country

In 2024, we introduced the ability to transfer Aukakrónur in Landsbankinn’s app. Now, anyone with Aukakrónur can easily send them to other Aukakrónur collectors. This feature is especially useful for those who want to gift their Aukakrónur to a spouse, children, friends, or family members.

Support for the energy transition

Alongside the decline in car sales, activity in car financing decreased by 10%, from ISK 17.5 billion to ISK 15.7 billion.

The share of loans for eco-friendly vehicles reflects overall new car registrations. Landsbankinn offers more favourable financing terms for electric vehicle purchases to support the transition to sustainable transportation. At year-end, around 20% of the Bank’s car financing portfolio was for electric vehicles and we expect this share to increase in the coming years.

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