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Financial results for second quarter of 2023

Profit for the second quarter amounted to ISK 6.1bn and ROE was 11.5%

  • Second quarter 2023 (2Q23) financial highlights
  • Íslandsbanki reported a net profit of ISK 6.1 billion in the second quarter (2Q22: ISK 5.9 billion), generating an annualised return on equity (ROE) of 11.5% (2Q22: 11.7%). This is in line with the updated ROE guidance for 2023 which is in the range of 10.7-11.7% and above the Bank’s financial target of being above 10%.
  • Net interest income (NII) grew by 23.0% YoY and totalled ISK 12.6 billion in 2Q23 (2Q22: ISK 10.3 billion).
  • The net interest margin (NIM) was 3.2% in 2Q23, compared to 2.9% in 2Q22.
  • Net fee and commission income (NFCI) grew 4.6% YoY and amounted to ISK 3.6 billion in 2Q23, compared to ISK 3.4 billion in 2Q22.
  • Net financial expense was ISK 559 million in 2Q23, compared to net financial income of ISK 208 million in 2Q22.
  • Administrative expenses, excluding an administrative fine in the amount of ISK 860 million, rose during the second quarter and were ISK 6.7 billion in 2Q23 compared to ISK 6.0 billion in 2Q22, an increase of 11.7% YoY.
  • The cost-to-income ratio was 42.6% in 2Q23, which is within the Bank’s guidance of the ratio being in the range 40-45% and below the Bank’s financial target of being below 45%, compared to 42.7% in 2Q22. The ratio excludes bank tax and one-off costs, including a charge in the amount of ISK 860 million relating to an administrative fine.
  • Positive impairment amounted to ISK 1,245 million in 2Q23 and is mostly due to a reversal for few distressed credit cases in the tourism sector, compared to a positive impairment of ISK 575 million in 2Q22. The net impairment charge as a share of loans to customers, the annualised cost of risk, was -40bp in 2Q23, compared to -20bp in 2Q22.
  • Loans to customers grew by ISK 18.8 billion in the quarter, or by 1.5% to ISK 1,238 billion.
  • Deposits from customers grew by ISK 16.6 billion, or 2.1%, during the quarter, up to ISK 817 billion.
  • Total equity at period-end amounted to ISK 215.5 billion compared to ISK 218.9 billion at year-end 2022.
  • The Bank’s total capital ratio was 23.2% at end of 2Q23, compared to 22.2% at year-end 2022. The corresponding CET1 ratio was 20.0%, compared to 18.8% at year-end 2022 which is 480bp above regulatory requirements, and above the Bank’s financial target of having a 100-300bp capital buffer on top of CET1 regulatory requirements.

First half 2023 (1H23) financial highlights

  • Íslandsbanki’s net profit for the first half of 2023 was ISK 12.4 billion (1H22: ISK 11.1 billion), with annualised return on equity for 1H23 of 11.4%, compared to 10.9% in 1H22.
  • Net interest income totalled ISK 25.0 billion in 1H23, an increase of 28.6% YoY.
  • Net fee and commission income (NFCI) grew 8.7% YoY and amounted to 7.1 billion in 1H23, compared to ISK 6.5 billion in 1H22.
  • Net financial expense was ISK 21 million in 1H23 compared to income of ISK 113 million in 1H22.
  • Administrative expenses were ISK 13.7 billion in 1H23, excluding an administrative fine in the amount of ISK 860 million charged in the second quarter of 2023, compared to ISK 11.8 billion in 1H22.
  • Cost-to-income ratio dropped YoY from 45.0% in 1H22 to 42.3% in 1H23.
  • Net impairment on financial assets was positive and amounted to ISK 570 million in the first half of 2023 (1H22: ISK 1,058 million).

Íslandsbanki was faced with major challenges during the second quarter. The settlement made with the Central Bank of Iceland to conclude the matter relating to the March 2022 sale of a 22.5% Icelandic State owned stake in the share capital of the Bank by accepting an administrative fine in the amount of ISK 1,160 million was undeniably the largest one. We regret the failings in the Bank’s execution of the offering and apologise for them. Substantial work has been carried out within the Bank to meet the Financial Supervisory Authority of the Central Bank’s remedial measures and those efforts will continue in the coming months.

The Bank’s operations went well during the quarter and the after tax profit amounted to ISK 6.1 billion and the annualised return on equity for the period was 11.5%, which is above the Bank’s financial targets. The profit for the first half of the year 2023 was ISK 12.4 billion and the return on equity was 11.4%. Deposits rose during the second quarter for all business units and loans to customers has increased by more than ISK 50 billion this year. We welcome the opportunity to continue to support our customers in their diverse projects.

Coming up is the Íslandsbanki Reykjavík Marathon, which is one of our highlights every year and an important event for most of the local charities in Iceland. We encourage as many as possible to participate and support a good cause along the way.

Jón Guðni Ómarsson
CEO of Íslandsbanki


This press release may contain “forward-looking statements,” involving uncertainty and risks that could cause actual results to differ materially from results expressed or implied by the statements. Íslandsbanki hf. undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after this press release. It is the investor's responsibility to not place undue reliance on these forward-looking statements which only reflect the date of this press release. Forward-looking statements should not be considered as guarantees or predictions of future events and all forward-looking statements are qualified in their entirety by this cautionary statement.

Investor Relations

An earnings conference call and webcast will take place on Friday 28 July 2023

Íslandsbanki will host a webcast in English for investors and market participants on Friday 28 July at 8.30 Reykjavík/GMT, 9.30 London/BST, 10.30 CET. Jón Guðni Ómarsson, CEO, and Jóhann Ottó Wathne, Head of Treasury, will give an overview of the second quarter 2023 financial results and operational highlights.

Participation is accessible via this link. A recording will be available after the meeting on the Investor Relations website. To participate in the webcast via telephone and to be able to ask questions verbally, please register via this link. There will be a list of dial-in numbers and a personal PIN. If there is no local dial-in number for your country, or if you would prefer to receive a call instead of dialling in, the Call Me option is available. Then select your country, enter your telephone number and click on the blue Call Me button to be connected.

Further information is available through Íslandsbanki Investor Relations,

Financial calendar

Íslandsbanki plans to publish its 3Q23 results on 26 October 2023. Please note that the date is subject to change.

Additional investor material

All investor material will subsequently be available and archived on the Bank’s Investor Relations website, where other information on the Bank’s financial calendar and silent periods can also be found.

For further information

Bjarney Anna Bjarna­dótt­ir

Investor Relations

Send email
+354 698 0259

Edda Hermannsdóttir

Executive Director

Send email
+354 8444005