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Financial results for third quarter of 2023

Profit for the third quarter amounted to ISK 6.0bn and ROE was 11.0%

  • Íslandsbanki reported a net profit of ISK 6.0 billion in the third quarter (3Q22: ISK 7.5 billion), generating an annualised return on equity (ROE) of 11.0% (3Q22: 14.4%). 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 ROE exceeding 10%.
  • Net interest income (NII) amounted to ISK 11.8bn and grew by 4.7% in 3Q23 compared to 3Q22 when it was ISK 11.3bn.
  • The net interest margin (NIM) was 2.9% in 3Q23, compared to 3.0% in 3Q22. 
  • Net fee and commission income (NFCI) decreased by 3.3% compared to 3Q22 and amounted to ISK 3.4 billion in 3Q23. 
  • Net financial expense was ISK 193 million in 3Q23, compared to ISK 471 million in 3Q22.
  • Administrative expenses in the third quarter were ISK 6.0 billion compared to ISK 5.3 billion in 3Q22, an increase of 14.5%. 
  • The cost-to-income ratio was 39.0% in 3Q23, which is lower than the Bank's guidance of the ratio being 40-45% and its financial target of the ratio being below 45%. The cost-to-income ratio was 36.3% in 3Q22. 
  • Negative impairment amounted to ISK 583 million in 3Q23 and is mostly due to a few distressed credit cases, compared to a positive impairment of ISK 1,165 million in 3Q22. The net impairment charge as a share of loans to customers, the annualised cost of risk, was 19bp in 3Q23, compared to -40bp in 3Q22. 
  • Loans to customers decreased by ISK 27.3 billion in the quarter, or by 2.2% from the previous quarter to ISK 1,210 billion at the end of third quarter 2023.
  • Deposits from customers grew by ISK 47.5 billion, or 5.8%, during the quarter, up to ISK 864 billion. 
  • Total equity at period-end amounted to ISK 219.7 billion compared to ISK 218.9 billion at year-end 2022. 
  • The Bank's total capital ratio was 24.3% at end of 3Q23, compared to 22.2% at year-end 2022. The corresponding CET1 ratio was 20.6%, compared to 18.8% at year-end 2022 which is 580bp above regulatory requirements, and above the Bank’s financial target of having a 100-300bp capital buffer on top of CET1 regulatory requirements. 

First nine months 2023 (9M23) financial highlights 

  • Íslandsbanki's net profit for the first nine months of 2023 was ISK 18.4 billion (9M22: ISK 18.6 billion), with annualised return on equity for 9M23 of 11.3%, compared to 12.1% in 9M22.
  • Net interest income totalled ISK 36.9 billion in 9M23, an increase of 19.8% compared to the first nine months of 2022.
  • Net fee and commission income (NFCI) has grown by 4.5% YoY and amounted to 10.5 billion in 9M23, compared to ISK 10 billion in 9M22. 
  • Net financial expense was ISK 214 million in 9M23 compared to an expense of ISK 358 million in 9M22. 
  • Administrative expenses were ISK 19.8 billion in 9M23, excluding an administrative fine in the amount of ISK 860 million charged in the second quarter of 2023, compared to ISK 17.1 billion in 9M22. 
  • Cost-to-income ratio fell YoY from 41.9% in 9M22 to 41.3% in 9M23. 
  • Net impairment on financial assets was negative and amounted to ISK 13 million in the first nine months of 2023 having been positive and amounting to ISK 2,223 million for the same period of 2022.

The Bank's results for the third quarter were solid with an annualised return on equity being 11.0% for the quarter, which is above our financial targets. Deposits increased significantly while loans to customers decreased during the quarter. The Bank's financial position remains very strong and share of non-performing loans continues to be stable. Moody's decision to assign Íslandsbanki an A3 issuer rating with a stable outlook demonstrates the Bank's strong capitalisation and recurring profitability. Moody's decision is a clear recognition of the hard work and commitment shown by our employees.

One of the biggest projects this season is without a doubt to help our customers ride out these challenging times, with high interest rates and stubborn inflation making it more difficult for many people. Consequently, the Bank's customers are now increasingly looking for index-linked loan financing. Customers can avail themselves of a few alternatives to help limit the impact of high interest rates. For instance, a large part of the mortgages the Bank has granted in recent years allow for an interest rate ceiling, which can reduce the monthly payment burden of customers.

Alongside rapid and significant technical developments the frequency of cyber-crimes and frauds has also increased. The Bank has significantly enhanced its customer services in that field, both offering around-the-clock emergency services and a recently implemented a solution allowing customers to sign out of all devices with a single click.

We accept applications for Íslandsbanki's Entrepreneurship Fund until 1 November and look forward to awarding grants by year end. Íslandsbanki strives to be a force for good, and supporting the entrepreneurial community is an important part of our projects. 

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.


An earnings conference call and webcast will take place on Friday 27 October 2023

Íslandsbanki will host a webcast in English for investors and market participants on Friday 27 October at 8.30 Reykjavík/GMT, 9.30 London/BST, 10.30 CET. Jón Guðni Ómarsson, CEO, and Bjarney Anna Bjarnadóttir, Investor Relations, will give an overview of the third quarter 2023 financial results and operational highlights. 

The webcast will be accessible live through a link on the Bank's Investor Relations website where a recording will also be available after the meeting. Participation and the ability to ask written question is accessible via this link. If you wish to participate in the webcast via teleconference and be able to ask questions verbally, please register via this link. After registration you will be provided phone numbers and a conference ID to access the conference. Full details on the webcast are available here.

Further information is available through Íslandsbanki Investor Relations,

Financial calendar

Íslandsbanki plans to publish its 4Q23/FY23 financial results on 8 February 2024. Further information on Íslandsbanki's financial calendar is available on the Bank's website.

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