Årsredovisning 2024

Kvika banki hf.  Amounts are in ISK thousands
Notes to the Consolidated Financial Statements
17
41. Minimum  requirements for own funds and eligible liabilities (MREL)
Own funds and eligible liabilities  31.12.2024 31.12.2023
38,667,113  33,932,402 
5,600,973  5,915,278 
35,449,487  32,094,778 
Total own funds and eligible liabilities 79,717,574  71,942,458 
MREL‐RWEA and CBR 
193,843,833  172,832,209 
41.1% ‐
22.0% ‐
6.4% ‐
MREL‐RWEA requirement including CBR* 28.4% ‐
MREL‐TEM
256,450,293  245,119,887 
31.1% ‐
6.0% ‐
 Common equity Tier 1 capital (CET 1) ..........................................................................................................................
 Tier 2 capital .................................................................................................................................................................
 Eligible liabilities ...........................................................................................................................................................
 Risk‐weighted exposure amount (RWEA) ....................................................................................................................
 Own funds and eligible liabilities as % of RWEA ..........................................................................................................
 Minimum requirements for own funds (MREL)* .........................................................................................................
 Combined buffer requirement (CBR) ...........................................................................................................................
 MREL‐TEM requirement* .............................................................................................................................................
The Central Bank of Iceland's Resolution Authority presented the Group their first minimum requirement for own funds and eligible liabilities
(MREL) in January 2025. According to Act No. 70/2020 on Resolution of Credit Institutions and Investment Firms, the Bank shall at all times meet the
MREL funds as a percentage to the Group's total risk ‐weighted exposure amount (MREL‐RWEA). The MREL‐RWEA requirement must be met parallel
to the combined buffer requirement (CBR). The Group must also meet a requirement of MREL funds as a percentage of the Group's total exposure
amount (MREL‐TEM). The decision of the Resolution Authority entails that the Bank must at all times maintain a minimum of 22% of MREL ‐RWEA
and 6% of MREL‐TEM.
 Total exposure amount ................................................................................................................................................
 Own funds and eligible liabilities as % of TEM .............................................................................................................
*Requirements were first set in January 2025 
 Consolidated Financial Statements 31 December 2024  36

===== SIDA 40 =====

Kvika banki hf.  Amounts are in ISK thousands
Notes to the Consolidated Financial Statements
41
Risk management
42. Risk  management framework
a. Board  of Directors
b. Board  of Directors sub‐committees
c. CEO  and the Executive Committee
The Executive Committee manages and supervises, as decided by the CEO, the day ‐to‐day operations of the Bank in accordance with the policy
formulated by the Bank's Board of Directors in collaboration with the CEO. The managing directors of subsidiaries and the managing
directors/directors of individual units of the Bank are each responsible to their CEO/managing director and the boards of each company for risk ‐
taking and risk management in the daily operations of their units.
Furthermore, the CEO has established five committees within the Bank, which are, responsible to the CEO for, among other things, risk
management of different risk factors and that the implementation of risk management is in accordance with the Board of Directors’ risk appetite.
These committees are composed of the Bank’s employees.
The Board of Directors is responsible for the governance of the Bank's Group, including determining the risk management framework. In this
regard, the Board of Directors has, among other things, set a Group Governance Policy and approved a Group Risk Policy, which describes the
framework that the Board of Directors has set for risk management and the Group's risk appetite. The Board of Directors is responsible for the
framework for identifying, assessing, monitoring, managing and disclosing the Group's identified risk factors. The Board of Directors is also
responsible for ensuring that the policy is implemented and instructs the CEO to implement and elaborate on its implementation in more detail.
The Board of Directors defines the risk appetite, including in the form of the Group's key risk indicators, and defines risk tolerance and risk
capacity. The Board of Directors also sets policies for the Bank's main risk factors. In order to ensure consistent and good governance on a
consolidated basis, the Board of Directors has also set out ownership po licies for those subsidiaries that are considered an important part of the
Group's operations. According to the ownership policies, the boards of the relevant subsidiaries shall always provide the Bank with all necessary
information to enable it to perform its supervisory role and the services provided by the Bank to the companies. As it is necessary to coordinate
risk management on a consolidated basis, the relevant companies shall provide the Bank’s risk management with all necessary information to
enable the Bank to fulfil its obligations as a parent company in a group. The Bank’s Chief Risk Officer and the Compliance Officer may request an
direct audience of the boards of the relevant subsidiaries. The risk policy and the entire risk management framework are reviewed regularly with
a view to adapting the framework to changes in market conditions and the Group’s operations. The Group, through training and management
standards and procedures, continuously aims to develop a disciplined and constructive control environment in which all employees understand
their roles and obligations. 
The Bank's Board of Directors has established three sub ‐committees, the Risk Committee, the Audit Committee and the Remuneration
Committee. In accordance with the Bank´s articles of association, members of the committees are appointed in accordance with applicable law,
and each committee currently has three members. It is not permitted to appoint employees of the Bank to any committee. Members shall have
the necessary experience and knowledge for each committee´s tasks according to applicable laws and rules. Each committee has incorporated
procedural rules which have been confirmed by the
 Board of Directors.
The Remuneration Committee has an advisory and supervisory role for the Bank´s Board of Directors in relation to remuneration and shall advise
the Board on the Company's remuneration policy and independently assess the policy and its implementation. This includes, among other things,
ensuring that bonuses support sound risk management and do not encourage excessive risk ‐taking. The committee also oversees the
remuneration of the heads of internal audit, risk management and compliance.
The CEO is responsible for the effective implementation risk management through the corporate governance structure and committees. The CEO
appoints Managing Directors which, together with the CEO, form the Bank’s Executive Committee. Each Managing Director heads individual
divisions within the Bank at any given time. The Bank’s Executive Committee together with the CEO of Kvika eignastýring hf. form the Group
Executive Committee.  
The Risk Committee has an advisory and supervisory role for the Bank´s Board of Directors, including in formulating the Group's risk policy and
risk appetite, and acts on behalf of the Bank's Board of Directors in supervising the implementation of the Group's Risk Policy. The Committee
supervises the management of the Group's risk factors and the arrangement and effectiveness of risk management. The Committee shall discuss
the Bank's risk culture and risk appetite.
The Audit Committee has an advisory and supervisory role for the Bank's Board of Directors, including in ensuring the quality of the Bank's annual
accounts and other financial information and the independence of the Bank's auditor. The Committee oversees the work process for preparing
financial statements, the effectiveness of internal controls, and internal and external audits.
 Consolidated Financial Statements 31 December 2024  37

===== SIDA 41 =====

Kvika banki hf.  Amounts are in ISK thousands
Notes to the Consolidated Financial Statements
42
42. Risk  management framework (cont.)
d. Committees
e. Risk  management
f.
g.
43. Hedging
The Sustainability Committee, as a professional committee on sustainability and sustainability risk, is responsible for the implementation and
execution of the part of the Group's risk policy that relates to sustainability risk. The Sustainability Committee informs the Group Risk Committee
on the status of sustainability risk on a regular basis.
The Risk Management department is an independent unit reporting to the CEO. It simultaneously fulfils the risk management functions of both
the Bank and the entire Group. It monitors the identified risk factors across the Group and develops methods for systematically identifying,
assessing, monitoring, and managing them. Risk Management supports other units in identifying and managing risks, ensuring compliance with
internal and external regulations. The Risk Management department prepares reports for relevant professional committees and supervisory
bodies, including compliance with the defined risk appetite. It provides direct information to the Group's Board and participates in shaping the
Group Risk Policy.
The Bank operates five committees that deal with the Bank’s risk management: the Group Risk Committee, the Asset and Liability Committee
(ALCO), the Credit Committee, the Operations Committee and the Sustainability Committee.  
The Group Risk Committee oversees the implementation of and compliance with the Group’s risk policy and risk management framework. The
committee has a comprehensive overview of the main risks faced by the Group and monitor that risk ‐taking is in accordance with the Board of
Directors’ risk appetite. The Committee reviews the rules of procedure of other committees and ensures that procedures are coordinated
between different committees and companies.
ALCO, as a professional committee for the management of the balance sheet as well as capital, liquidity and funding, and market risks, is
responsible for the implementation and execution of the part of the Group's risk policy that relates to capital, liquidity, funding and market risks.
ALCO informs the Group's Risk Committee on the status of these risk
 factors on a regular basis.
The Credit Committee, as a professional committee for the Bank's lending and credit risk, is responsible for the implementation and execution of
that part of the Group's risk policy that relates to credit risk. The Credit Committee informs the Group's Risk Committee on the status of credit risk
on a regular basis. 
The Operations Committee, as a professional committee for operations and operational risk, is responsible for the implementation and execution
of the part of the Group's risk policy that relates to operational risk. The Operations Committee informs the Group's Risk Committee on the status
of operational risk on a regular basis.
Internal Audit
The compliance function is an independent function that operates under the CEO, and the appointment of the Compliance Officer and his deputy
is confirmed by the Board. The compliance function monitors the Bank's compliance risk on a permanent basis and that the measures, policies
and procedures that have been put in place so that the Bank complies with its obligations are adequate and effective. The Compliance Officer is
also responsible for coordinating and monitoring the Bank's compliance with applicable anti ‐money laundering and terrorist financing laws and
regulations. The Compliance officer, further, manages provisions of applicable market abuse laws and regulations, regarding the handling of
inside information and PDMR transactions, and oversees the complaints managements process. Compliance is operated on a consolidated basis
and the employees responsible for compliance in the Bank’s subsidiaries report to and receive support from the Compliance Officer and the
parent entity’s compliance function. 
Compliance Officer
The internal audit (IA) activity of Kvika bank hf. operates according to Article 16 on the Act on financial companies no. 161/2002 and guiding
recommendations of the Financial Supervisory Authority of the Central Bank of Iceland regarding the work of the audit activity of financial
companies no. 3/2008. The IA department operates in accordance with the International Professional Practices Framework (IPPF standards). The
position of IA in the organizational chart demonstrates the independence of the department. In accordance with the Internal Auditor's charter,
the internal auditor has direct and unrestricted access to the Board and managers of the Bank and its subsidiaries. Kvika's IA activity must provide
independent and objective assurance and advisory services on the Bank's activities on a consolidated basis, aimed at increasing its value. The
department's activities assess and improve the effectiveness of risk management, control methods and governance through a systematic and
disciplined way, thus contributing to Kvika group´s achieving its key goals. The Internal Auditor is responsible for effectively managing the IA
activity in accordance with the audit charter and the IPPF standards.
Securities held as a hedge against derivatives positions of customers make up a part of the Group's portfolio of assets. The Group hedges
currency exposure between the Group's asset portfolio and its liabilities to the extent possible as part of managing its balance and keeping it
within approved limits. The Group applies hedge accounting according to IAS 39 against translation of foreign operations. Currency swap
agreements are used as a hedge instrument against translation difference arising from foreign operations.
 
 Consolidated Financial Statements 31 December 2024  38

===== SIDA 42 =====

Kvika banki hf.  Amounts are in ISK thousands
Notes to the Consolidated Financial Statements
42
44. Credit  risk ‐ overview
a. Definition
b. Management
c. Credit  approval process
d. Collateral
e. Credit  rating, control and provisioning
f. Loan  portfolio management
g. Impairment
h. Derivatives
i. Securities  used for hedging
The Group offers derivative contracts in the form of swap contracts on highly liquid securities or currencies. On the day when the contract is
entered into, the Group purchases the underlying asset and hedges its exposure to price changes. Collateral is primarily in the form of cash or
listed, highly liquid securities. The risk management unit and ALCO set rules about the level of collateralisation and the risk management unit
monitors the compliance to these rules. Contracts are closed if required levels of collateralisation are not met.
The Group hedges itself for market risk of derivative contracts by purchasing the underlying securities at the commencement of the contract.
Since the contracts require delivery of the underlying securities to the customer on the settlement day, the credit risk towards the issuer is
immaterial.
To ensure an effective diversification of the loan portfolio the board has set a limit framework defining maximum exposure as a ratio of the
Group’s equity and/or the total size of the loan portfolio. These limits include limitation on joint exposure to associated clients, exposure to
individual and associated industries, single regions and countries etc. It is the responsibility of risk management to monitor that these limits are
not being violated and to report discrepancies to the credit committee.
One of the Group's primary sources of risk is credit risk. Credit risk is defined as the risk that one party to a financial instrument will cause a
financial loss for the
 other party by failing to discharge an obligation.
The risk management unit monitors credit risk and is responsible for developing methodologies to systematically identify, assess, monitor, and
manage it. The Group uses a variety of tools and processes to manage credit risk, including collaterals, hedges and loan portfolio management.
To a very large extent the Group's loan portfolio consists of senior loans, most of which are highly collateralised.
Securing loans with collateral is a traditional method to reduce credit risk. The Group uses different methods to reduce credit risk by obtaining
collateral from customers where appropriate. Such collateral gives the Group right to the collateralised assets for current and future obligations
incurred by
 the customer.
The Group applies appropriate haircuts on all collateral in order to ensure proper risk mitigation. For all collateral in listed securities, the Grou p
maintains the right to liquidate collateral in case its market value falls below a predefined limit.
The risk management unit ensures that loans have a credit rating and is responsible for reviewing the loan portfolio. The Group monitors the
value of collateral by listed securities on a real time basis and takes prompt action when necessary.
The originating department prepares a proposal for each larger loan or credit line which is presented to the credit committee for approval. The
proposal consists of a basic description of the client, the purpose of the loan, a simple credit assessment and arguments for or against granting
the loan. The committee decides whether there is need for further cred it assessment and on what terms the loan may be granted. For smaller
loans the originating department obtains a general credit approval from the credit committee with respect to the process, terms, credit limits and
total amount of the specific lending type. 
A more thorough credit assessment may be conducted if considered appropriate and can include an assessment of a borrower's fundamental
credit strength as well as the value of any collateral. To assess the borrower's capacity to meet his or her obligations the committee can request
stress test analysis of the borrower's 
cash flow or call for third party assessments.
Provisioning for loan impairments is estimated on the basis of expected loss models assessing the portfolio as a whole as well as individual
lending. Risk management unit suggest a level of provisioning for the portfolio, based on the expected loss assessment. Risk management unit
reassess impairments in the event of collateral decay, delayed payments, indication of increased risk, or other early warning signs. Provisions
require approval from the credit committee. Refer to note 82 in the financial statements for more information on the Group's impairment policy.
 Consolidated Financial Statements 31 December 2024  39

===== SIDA 43 =====

Kvika banki hf.  Amounts are in ISK thousands
Notes to the Consolidated Financial Statements
44
45. Maximum  exposure to credit risk
31.12.2024  Public  Financial  Corporate 
On‐balance sheet exposure entities   institutions  customers  Individuals  31.12.2024 
18,593,420  9,725,772  28,319,192 
62,660,260  1,888,815  245,486  64,794,561 
6,972  1,665  110,457,726  39,736,334  150,202,696 
1,000,775  144,011  51,958  1,196,744 
549  1,114,688  7,226,916  141,535  8,483,688 
81,261,202  13,731,715  118,074,138  39,929,827  252,996,882 
Off‐balance sheet exposure
7,000  2,331  5,037,623  1,013,114  6,060,067 
801,065  801,065 
Maximum exposure to credit risk 81,268,202  13,734,046  123,912,826  40,942,941  259,858,014 
31.12.2023  Public  Financial  Corporate 
On‐balance sheet exposure entities   institutions  customers  Individuals  31.12.2023 
17,324,455  6,356,998  23,681,453 
63,928,567  944,255  104,584  64,977,406 
11,127  97,867,223  38,445,131  136,323,481 
1,981,114  466,082  50,680  2,497,877 
394,137  1,184,368  5,179,519  2,322,122  9,080,146 
81,658,286  10,466,735  103,617,408  40,817,934  236,560,362 
Off‐balance sheet exposure
4,175,306  1,029,698  5,205,004 
211,940  211,940 
Maximum exposure to credit risk 81,658,286  10,466,735  108,004,653  41,847,632  241,977,306 
46. Credit  quality of financial assets
Model parameters for Icelandic portfolio 31.12.2024
Scenarios Base  case Upside Downside Base  case Upside Downside
Unemployment rate 4.2% 3.7% 4.9% 4.8% 4.4% 5.0%
Inflation CPI index 3.7% 3.4% 5.5% 5.7% 6.0% 6.7%
Assigned weight 50.0% 15.0% 35.0% 60.0% 10.0% 30.0%
Model parameters for UK portfolio
Scenarios Base  case Upside Downside Severe
Unemployment rate (2 years) 4.1% 3.9% 5.8% 7.5%
Inflation CPI index (2 years) 5.0% 4.7% 8.3% 16.4%
Assigned weight 50.0% 20.0% 25.0% 5.0%
The Group utilises an economic forecast which is aligned with requirements for the calculation of expected credit loss. Following the Group's
acquisition of Ortus Secured Finance ltd., the Group owns loan portfolios in two geographical segments, i.e. Iceland and the United Kingdom
("UK"). In general, the Group utilises the same ECL methodology for the portfolios in both segments, although in the UK it is to a larger extent
based on an individual assessment by credit specialists and a separate macroeconomic forecast is used to reflect the UK economy. The following
tables shows the first 12 month macro economic values for the variables used in the expected credit loss model. For the UK portfolio 24 month
values are used.Reference is made to note 82 in the Consolidated Financial Statements for further information about the Group‘s impairment
methodology.
 Loans to customers ......................................................................................
 Derivatives ....................................................................................................
 Other assets ..................................................................................................
 Cash and balances with Central Bank ..........................................................
The maximum exposure to credit risk for on ‐balance sheet and off ‐balance sheet items, before taking into account any collateral held or other
credit enhancements, is specified as follows:
 Cash and balances with Central Bank ..........................................................
 Fixed income securities ................................................................................
 Fixed income securities ................................................................................
 Loans to customers ......................................................................................
 Derivatives ....................................................................................................
 Other assets ..................................................................................................
 Loan commitments
 .......................................................................................
 Financial guarantee contracts ......................................................................
31.12.2024
There are no comparative figures available as the Group first implemented a formal economic forecast for its UK operations in 2024.
31.12.2023
 Loan commitments .......................................................................................
 Financial guarantee contracts ......................................................................
The book value of financial assets which fall under the impairment requirements of IFRS 9 are presented as net of expected credit losses ("ECL")
in the statement of financial position. The ECL are recalculated for each asset on at least a quarterly basis. The assessment of ECL is based on
calculations from PD, LGD and EAD models. Furthermore, the assessment is based upon management's assumptions regarding the development
of macroeconomic factors over the coming twelve months. The assumption s for macroeconomic development are decided for three scenarios: a
base case, an upside scenario, a downside scenario and for the UK portfolio there is a fourth scenario, severe downturn. Each scenario includes a
probability weight, and the ECL is derived as a weighted average. The amount of ECL to be recognized is dependent on the Group's definition of
significant increase in credit risk, which controls the impairment stage each asset is allocated to. The factors that are used to measure significant
increase in credit risk include comparison of changes in PD values, annualized lifetime PD values, days
 past due and watch list.
 Consolidated Financial Statements 31 December 2024  40

===== SIDA 44 =====

Kvika banki hf.  Amounts are in ISK thousands
Notes to the Consolidated Financial Statements
46
46. Credit  quality of financial assets (cont.)
a.
Impairment Listed Unlisted
Claim due to expected Carrying Total   securities and securities and Residential Commercial Industrial Unsecured  
31.12.2024  value credit  loss amount %   collateral  Deposits liquid  funds other  funds real  estate real  estate Automobiles equipment Guarantees Other claim  value 
6,982  (10) 6,972   0.0% 10,303   0  0  0  0  0  9,994  0  0  308  201 
1,669  (4) 1,665   0.0% 0   0  0  0  0  0  0  0  0  0  1,665 
Corporate
 Real estate activities .................................. 45,564,368   (339,001) 45,225,367   30.1% 84,189,303   31,404  49,689  30,889  41,523,277  41,133,852  973,934  239,779  0  206,478  490,706 
 Construction .............................................. 16,412,343   (92,416) 16,319,928   10.9% 32,487,287   387  36  0  12,425,532  9,668,472  5,260,413  4,425,735  0  706,712  255,535 
 Service Activities ........................................ 16,067,877   (162,054) 15,905,824   10.6% 29,301,983   25,792  122,473  577,035  1,020,336  2,522,528  19,253,086  3,815,059  0  1,965,674  317,031 
 Accommodat. and Food Service Activit. ..... 11,491,746   (85,812) 11,405,934   7.6% 22,151,366   104,664  0  0  1,367,345  20,068,668  528,029  46,852  0  35,810  8,285 
 Activities of Holding Companies ................. 7,142,676   (653,572) 6,489,105   4.3% 20,066,039   13,417  201,232  9,761,948  4,863,693  3,343,574  216,524  183,137  1,467,788  14,726  1,434,099 
 Wholesale and Retail Trade ....................... 4,930,289   (55,744) 4,874,545   3.2% 7,473,811   24,075  0  0  246,700  913,378  3,601,133  1,952,169  100,000  636,356  383,870 
 Other ......................................................... 10,303,221   (66,197) 10,237,024   6.8% 29,558,579   342,028  7,208,007  162,634  3,389,662  11,277,426  2,176,217  2,189,640  21,500  2,791,466  415,340 
40,608,567  (872,233) 39,736,334   26.5% 57,599,454   32,933  793,062  654,647  11,886,283  1,815,160  40,060,219  1,031,750  0  1,325,401  8,312,050 
Total 152,529,739  (2,327,042) 150,202,696  100.0% 282,838,124   574,701  8,374,499  11,187,152  76,722,826  90,743,056  72,079,550  13,884,121  1,589,288  7,682,932  11,618,783 
Impairment Listed Unlisted
Claim due to expected Carrying Total   securities and securities and Residential Commercial Industrial Unsecured  
31.12.2023  value credit  loss amount %   collateral  Deposits liquid  funds other funds real  estate real  estate Automobiles equipment Guarantees Other claim  value 
11,188  (61) 11,127   0.0% 11,553   0  0  0  0  0  11,226  0  0  327  2,917 
0  0  0  0.0% 0   0  0  0  0  0  0  0  0  0  0 
Corporate
 Real estate activities .................................. 31,508,020   (234,278) 31,273,742   22.9% 59,514,931   25,414  0  54,180  28,804,369  29,574,694  797,093  205,458  0  53,722  457,258 
 Construction .............................................. 20,585,501   (82,066) 20,503,434   15.0% 45,467,134   158,988  0  0  17,773,191  18,323,454  4,611,641  3,990,110  0  609,751  243,654 
 Service Activities ........................................ 14,131,242   (148,035) 13,983,207   10.3% 25,910,745   45,492  79,577  2,228,442  270,692  1,306,517  16,455,917  2,742,679  0  2,781,430  380,611 
 Activities of Holding Companies ................. 7,975,924   (576,301) 7,399,624   5.4% 23,080,630   48,409  347,097  10,610,025  7,001,067  3,572,982  219,871  200,625  805,971  274,582  123,335 
 Wholesale and Retail Trade ....................... 7,974,891   (55,417) 7,919,474   5.8% 12,230,309   23,658  312,321  0  4,660,937  1,330,258  3,447,895  1,502,756  100,000  852,484  53,298 
 Accommodat. and Food Service Activit. ..... 6,180,590   (11,206) 6,169,384   4.5% 12,829,867   73,657  0  0  2,887,040  9,307,016  504,811  0  0  57,343  24,105 
 Other ......................................................... 10,740,500   (122,143) 10,618,358   7.8% 23,724,577   267,508  6,391,784  939,372  4,084,596  4,721,067  2,312,012  3,488,403  693,755  826,082  524,143 
39,434,283  (989,152) 38,445,131   28.2% 55,469,271   13,328  1,023,000  601,250  9,311,354  2,961,368  39,589,466  1,760,237  0  209,268  8,918,673 
Total 138,542,141  (2,218,660) 136,323,481  100.0% 258,239,017   656,453  8,153,779  14,433,268  74,793,246  71,097,357  67,949,932  13,890,267  1,599,726  5,664,989  10,727,994 
 Public entities .................................................
 Financial institutions .......................................
 Individual ........................................................
Collateral value is shown as the market‐ or accounting value of collateral allocated to exposures. Other collateral includes financial claims, inventories and receivables.
Allocated collateral
Breakdown of loans to customers by industry and information on collateral and other credit enhancements
The Group applies the same valuation methods to collateral held as other comparable assets held by the Group. For other types of assets the Group uses third party valuation where possible. 
 Public entities .................................................
 Individual ........................................................
 Financial institutions .......................................
Allocated collateral
 Consolidated Financial Statements 31 December 2024  41

===== SIDA 45 =====

Kvika banki hf.  Amounts are in ISK thousands
Notes to the Consolidated Financial Statements
46
46. Credit  quality of financial assets (cont.)
b.
31.12.2024 
Loans to customers: Stage 1S t a g e  2S t a g e  3F V T P L T o t a l
89,427,181  1,265,779  16,862  90,709,821 
40,153,181  3,159,469  43,312,650 
6,609,379  2,003,621  8,613,000 
226,827  380,710  607,537 
572  0  7,940,092  114,000  8,054,664 
286,623  202,511  742,932  1,232,066 
Gross carrying amount 136,703,762  7,012,091  7,940,092  873,794  152,529,739 
(366,642) (189,275) (1,771,126) (2,327,042)
Book value 136,337,121  6,822,816  6,168,967  873,794  150,202,696 
Loan commitments, guarantees and unused credit facilities: Stage 1S t a g e  2S t a g e  3F V T P L T o t a l
4,675,341  2,690  4,678,031 
1,567,638  464  1,568,102 
562,954  5,839  568,793 
1,821  542  2,363 
33,741  10,048  43,790 
53  53 
Total off‐balance sheet amount 6,807,754  9,589  33,741  10,048  6,861,132 
(10,716) (149) (6,837) (17,701)
Net off‐balance sheet amount 6,797,038  9,440  26,905  10,048  6,843,431 
31.12.2023
Loans to customers: Stage 1S t a g e  2S t a g e  3F V T P L T o t a l
84,252,096  744,843  427,849  85,424,788 
33,627,994  2,687,909  39,319  36,355,221 
6,503,029  1,977,002  8,480,030 
769,496  485,101  1,254,597 
70,248  118,140  5,999,315  215,265  6,402,968 
624,537  0  624,537 
Gross carrying amount 125,847,398  6,012,995  5,999,315  682,433  138,542,141 
(367,895) (127,520) (1,723,244) (2,218,660)
Book value 125,479,503  5,885,474  4,276,072  682,433  136,323,481 
Loan commitments, guarantees and unused credit facilities: Stage 1S t a g e  2S t a g e  3F V T P L T o t a l
3,773,821  3,773,821 
920,679  1,211  921,890 
586,052  41,972  628,024 
3,407  1,594  5,002 
351  1  87,855  88,207 
0  0 
Total off‐balance sheet amount 5,284,311  44,778  87,855  0  5,416,944 
(13,897) (538) (1,253) (15,688)
Net off‐balance sheet amount 5,270,413  44,240  86,602  0  5,401,255 
 Non‐rated .............................................................................................
 Expected credit loss .............................................................................
 Expected credit loss .............................................................................
 Credit quality band I .............................................................................
 Credit quality band II ............................................................................
 Credit quality band III ...........................................................................
 Credit quality band IV ..........................................................................
 In default ..............................................................................................
 Credit quality band II ............................................................................
 Credit quality band III ...........................................................................
 Credit quality band IV ..........................................................................
 In default ..............................................................................................
 Non‐rated .............................................................................................
The following tables show financial assets subject to the impairment requirements of IFRS 9 broken down by credit quality bands where band i
denotes the lowest credit risk and band iv the highest credit risk. Assets measured at fair value through profit or loss are not subject to the stage
classification requirements of IFRS 9 but are nevertheless included in the tables in order to give a more complete picture of the credit quality of
loans to customers and reconcile the tables to the carrying amount on the balance sheet. The Bank has primarily used calibrated external credit
ratings to assess the default probability of its customers. Some of the larger borrowers are furthermore individually assessed by credit specialist s.
The Bank has implemented internal credit rating models for part 
of the loan portfolio and intends to continue this development in 2025.
 Credit quality band I .............................................................................
 Credit quality band II ............................................................................
 Credit quality band III ...........................................................................
 Credit quality band IV ..........................................................................
Credit quality of financial assets by credit quality band
 Credit quality band III ...........................................................................
 Credit quality band IV ..........................................................................
 In default ..............................................................................................
 Non‐rated .............................................................................................
 Expected credit loss .............................................................................
 Credit quality band I .............................................................................
 In default ..............................................................................................
 Non‐rated .............................................................................................
 Expected credit loss .............................................................................
 Credit quality band I .............................................................................
 Credit quality band II ............................................................................
 Consolidated Financial Statements 31 December 2024  42

===== SIDA 46 =====

Kvika banki hf.  Amounts are in ISK thousands
Notes to the Consolidated Financial Statements
46
46. Credit  quality of financial assets (cont.)
c. Breakdown  of loans to customers into not past due and past due
31.12.2024  Claim Expected Carrying
value credit  loss amount
137,349,325  (624,970) 136,724,356  
7,723,558  (104,273) 7,619,285  
2,321,498  (72,912) 2,248,585  
697,974  (16,044) 681,930  
2,179,700  (820,218) 1,359,481  
809,344  (248,026) 561,318  
1,448,340  (440,599) 1,007,741  
Total 152,529,739  (2,327,042) 150,202,696  
31.12.2023 Claim Expected Carrying
value credit  loss amount
127,943,377  (571,621) 127,371,756  
2,443,573  (50,506) 2,393,067  
1,933,845  (195,102) 1,738,744  
1,757,416  (74,920) 1,682,496  
1,494,409  (601,446) 892,963  
1,912,571  (197,428) 1,715,143  
1,056,951  (527,638) 529,313  
Total 138,542,141  (2,218,660) 136,323,481  
d. Allowance  for expected credit loss on loans to customers and loan commitments, guarantees and unused credit facilities
31.12.2024 
Expected credit loss allowance total
Stage 1S t a ge 2S t a ge 3T o t a l
Transfers of financial assets:
Balance as at 1 January 2024 381,793  128,058  1,724,497  2,234,348 
103,709  (21,728) (81,980) 0  
(16,599) 30,091   (13,492) 0  
(32,445) (35,343) 67,787   0 
(174,510) 15,696   844,723  685,909 
270,830  120,489  223,571  614,890 
(155,102) (46,969) (581,259) (783,330)
(319) (871) (405,885) (407,074)
Balance as at 31 December 2024 377,357  189,424  1,777,962  2,344,743 
Expected credit loss allowance for loans to customers
Stage 1S t a g e  2S t a g e  3T o t a l
Transfers of financial assets:
Balance as at 1 January 2024 367,895  127,520  1,723,244  2,218,660 
103,031  (21,403) (81,628) 0  
(16,554) 30,023   (13,469) 0  
(32,223) (35,288) 67,512   0 
(173,549) 15,760   843,243  685,453 
267,848  120,449  219,213  607,510 
(149,489) (46,916) (581,102) (777,507)
(319) (871) (405,885) (407,074)
Balance as at 31 December 2024 366,642  189,275  1,771,126  2,327,042 
 New financial assets, originated or purchased ..............................................................
 Derecognitions and maturities ......................................................................................
 Write‐offs .......................................................................................................................
 Derecognitions and maturities ......................................................................................
 Write‐offs .......................................................................................................................
 Transfer to Stage 1 ‐ (Initial recognition) ..................................................................
 Transfer to Stage 2 ‐ (significantly increased credit risk) .........................................
 Transfer to Stage 3 ‐ (credit impaired) .....................................................................
 Net remeasurement of loss allowance ..........................................................................
The following tables show changes in the expected credit loss allowance of loans to customers and for loan commitments, guarantees and unused
credit facilities during the year.
 Transfer to Stage 1 ‐ (Initial recognition) ..................................................................
 Transfer to Stage 2 ‐ (significantly increased credit risk) .........................................
 Transfer to Stage 3 ‐ (credit impaired) .....................................................................
 Net remeasurement of loss allowance ..........................................................................
 New financial assets, originated or purchased ..............................................................
 Past due 61‐90 days ..................................................................................................................................
 Past due 91‐180 days ................................................................................................................................
 Past due 181‐360 days ..............................................................................................................................
 Past due more than 360 days ...................................................................................................................
 Past due 91‐180 days ................................................................................................................................
 Past due 181‐360 days ..............................................................................................................................
 Past due more than 360 days ...................................................................................................................
 Not past due .............................................................................................................................................
 Past due 1‐30 days ....................................................................................................................................
 Past due 31‐60 days ..................................................................................................................................
 Not past due .............................................................................................................................................
 Past due 1‐30 days ....................................................................................................................................
 Past due 31‐60 days ..................................................................................................................................
 Past due 61‐90 days ..................................................................................................................................
 Consolidated Financial Statements 31 December 2024  43

===== SIDA 47 =====

Kvika banki hf.  Amounts are in ISK thousands
Notes to the Consolidated Financial Statements
46
46. Credit  quality of financial assets (cont.)
Expected credit loss allowance for loan commitments, guarantees and unused credit facilities
Stage 1S t a g e  2S t a g e  3T o t a l
Transfers of financial assets:
Balance as at 1 January 2024 13,897  538  1,253  15,688 
677  (325) (352) 0  
(45) 68   (23) 0  
(221) (54) 276   0 
(961) (63) 1,480   456 
2,982  39  4,359  7,380 
(5,613) (53) (156) (5,823)
Balance as at 31 December 2024 10,716  149  6,837  17,701 
31.12.2023
Expected credit loss allowance total
Stage 1S t a g e  2S t a g e  3T o t a l
Transfers of financial assets:
Balance as at 1 January 2023 269,605  256,810  2,139,852  2,666,267 
67,581  (51,505) (16,076) 0  
(10,766) 17,183   (6,416) 0  
(32,752) (70,485) 103,237   0 
(93,507) 3,002   840,190  749,685 
284,314  84,645  655,505  1,024,464 
(102,625) (111,119) (881,568) (1,095,312)
(57) (471) (1,110,229) (1,110,757)
Balance as at 31 December 2023 381,793  128,058  1,724,497  2,234,348 
Expected credit loss allowance for loans to customers
Stage 1S t a g e  2S t a g e  3T o t a l
Transfers of financial assets:
Balance as at 1 January 2023 258,197  255,541  2,139,595  2,653,333 
67,521  (51,445) (16,076) 0  
(10,685) 17,102   (6,416) 0  
(32,750) (69,985) 102,736   0 
(91,795) 2,716   840,191  751,112 
278,426  84,474  654,771  1,017,672 
(100,961) (110,411) (881,328) (1,092,700)
(57) (471) (1,110,229) (1,110,757)
Balance as at 31 December 2023 367,895  127,520  1,723,244  2,218,660 
Expected credit loss allowance for loan commitments, guarantees and unused credit facilities
Stage 1S t a g e  2S t a g e  3T o t a l
Transfers of financial assets:
Balance as at 1 January 2023 11,408  1,269  258  12,935 
61  (61) 0  
(81) 81   0 
(2) (500) 502   0 
(1,712) 286   (1) (1,427)
5,888  171  734  6,792 
(1,664) (708) (239) (2,611)
Balance as at 31 December 2023 13,897  538  1,253  15,688 
 Transfer to Stage 2 ‐ (significantly increased credit risk) .........................................
 Transfer to Stage 3 ‐ (credit impaired) .....................................................................
 Net remeasurement of loss allowance ..........................................................................
 New financial assets, originated or purchased ..............................................................
 Derecognitions and maturities ......................................................................................
 Write‐offs .......................................................................................................................
 Transfer to Stage 1 ‐ (Initial recognition) ..................................................................
 Transfer to Stage 2 ‐ (significantly increased credit risk) .........................................
 Transfer to Stage 3 ‐ (credit impaired) .....................................................................
 Net remeasurement of loss allowance ..........................................................................
 New financial assets, originated or purchased ..............................................................
 Derecognitions and maturities ......................................................................................
 Transfer to Stage 3 ‐ (credit impaired) .....................................................................
 Net remeasurement of loss allowance ..........................................................................
 New financial assets, originated or purchased ..............................................................
 Derecognitions and maturities ......................................................................................
 Write‐offs .......................................................................................................................
 Transfer to Stage 1 ‐ (Initial recognition) ..................................................................
 Net remeasurement of loss allowance ..........................................................................
 New financial assets, originated or purchased ..............................................................
 Derecognitions and maturities ......................................................................................
 Transfer to Stage 1 ‐ (Initial recognition) ..................................................................
 Transfer to Stage 2 ‐ (significantly increased credit risk) .........................................
 Transfer to Stage 1 ‐ (Initial recognition) ..................................................................
 Transfer to Stage 2 ‐ (significantly increased credit risk) .........................................
 Transfer to Stage 3 ‐ (credit impaired) .....................................................................
 Consolidated Financial Statements 31 December 2024  44

===== SIDA 48 =====

Kvika banki hf.  Amounts are in ISK thousands
Notes to the Consolidated Financial Statements
46
47. Loan ‐to‐value
a. General
b. Breakdown
31.12.2024  %  31.12.2023  % 
41,225,065  27.4%  40,343,153  29.6% 
57,209,422  38.1%  43,106,020  31.6% 
33,497,440  22.3%  37,703,829  27.7% 
2,958,378  2.0%  2,996,007  2.2% 
3,461,194  2.3%  2,390,159  1.8% 
1,505,210  1.0%  726,535  0.5% 
1,378,437  0.9%  493,460  0.4% 
No or negligible collateral:
8,967,551  6.0%  8,564,319  6.3% 
Total 150,202,696  100.0%  136,323,481  100.0% 
48. Collateral  against exposures to derivatives
Fixed  Variable  Other 
income  income  Real  fixed 
Deposits  securities  securities  estate  assets  Other  31.12.2024 
548,356  113,888  161,262  823,506 
709,058  27,860  1,401,213  2,138,131 
61,660  16,377  80,400  158,436 
Total 1,319,073  158,125  1,642,874  0  0  0  3,120,073 
Fixed  Variable  Other 
income  income  Real  fixed 
Deposits  securities  securities  estate  assets  Other  31.12.2023 
1,077,011  137,593  710,208  1,924,812 
789,728  70,988  1,812,452  2,673,168 
66,501  43,028  109,529 
Total 1,933,241  208,581  2,565,687  0  0  0  4,707,509 
49. Large  exposures
31.12.2024  31.12.2023 
Large exposures before risk adjusted mitigation Number   Amount  Number  Amount 
2  11,132,873  3  12,343,465 
0  0  0  0 
0  0  0  0 
Total 2  11,132,873  3  12,343,465 
1  6,521,624  0  0 
1  6,702,213  1  4,002,353 
 10‐20% of capital base ...................................................................................................
 20‐25% of capital base ...................................................................................................
 Exceeding 25% of capital base .......................................................................................
Thereof nostro accounts with other banks which are part of
 Large exposures net of risk adjusted mitigation ............................................................
    the Group's liquidity management .............................................................................
 Financial institutions ..............................
 Corporate customers ..............................
 Financial institutions ..............................
 Corporate customers ..............................
 Individuals ..............................................
 Greater than 200% .........................................................................................................
In accordance with regulation no. 575/2013 of the European Union on prudential requirements for credit institutions, which was incorporated
into Icelandic law with Act No. 38/2022, total exposure towards a customer is classified as a large exposure if it exceeds 10% of the financial
institution's Tier 1 capital (see note 38).
According to the regulation a single exposure, net of risk adjusted mitigation, cannot exceed 25% of the eligible Tier 1 capital. Based on Icelandic
rules no. 789/2022 on the Application of Optional Provisions and Authorisations Pursuant to the Act on Financial Undertakings, the value of
exposures towards financial institutions shall not exceed 25% of the eligible Tier 1 capital or 10 bn. ISK, whichever is higher. Single large exposure s
net of risk adjusted mitigation take into account the effects of collateral and other credit enhancements held by the financial institution, and
other credit enhancements, in accordance with regulation no. 575/2013.
The loan‐to‐value ratio (LTV) is the ratio of the gross amount of the loan to the value of the collateral, if any. The general creditworthiness of a
customer is viewed as the most reliable indicator of credit quality of a loan. Besides collateral included in the LTV ratios the Group uses other risk
mitigation measures, such as guarantees, negative pledge, cross‐collateral and collateralization of non‐quantifiable assets.
The breakdown of loans 
to customers by LTV is specified as follows:
 Less than 50% .................................................................................................................
 50‐70% ............................................................................................................................
 70‐90% ............................................................................................................................
 90‐100% ..........................................................................................................................
 Individuals ..............................................
Amounts have been adjusted to exclude collateral in excess of claim value, i.e. overcollateralisation. 
 100‐125% ........................................................................................................................
 125‐200% ........................................................................................................................
 Other loans with no collateral ..................................................................................
The Group applies the same valuation methods to collateral held as other comparable assets held by the Group. Haircuts are applied to account
for liquidity and other factors which may affect the collateral value of the asset. 
 Consolidated Financial Statements 31 December 2024  45

===== SIDA 49 =====

Kvika banki hf.  Amounts are in ISK thousands
Notes to the Consolidated Financial Statements
49
50. Liquidity  risk
a. Definition
b. Management
31.12.2024  Unweighted Weighted Unweighted Weighted Unweighted Weighted
68,949,963  68,949,963  3,458,943  3,458,943  72,408,906  72,408,906 
823,384  699,877  823,384  699,877 
Total liquid assets 69,773,348  69,649,840  3,458,943  3,458,943  73,232,290  73,108,783 
122,659,515  23,181,070  8,568,256  4,253,944  131,227,770  27,435,014 
17,389  17,389  17,389  17,389 
13,201,433  8,729,875  2,471,047  411,573  15,672,480  9,141,447 
Total outflows (0‐30 days) 135,878,337  31,928,334  11,039,303  4,665,517  146,917,639  36,593,850 
691,525  691,525  9,867,085  9,867,085  10,558,610  10,558,610 
16,441,026  4,838,298  1,321,647  879,390  17,762,673  5,717,688 
(7,247,337)
Total inflows (0‐30 days) 17,132,551  5,529,823  11,188,731  3,499,138  28,321,283  16,276,298 
264% 297% 360%
31.12.2023 Unweighted Weighted Unweighted Weighted Unweighted Weighted
61,248,977  61,248,977  14,679,969  14,679,969  75,928,946  75,928,946 
353,146  300,174  353,146  300,174 
Total liquid assets 61,602,122  61,549,150  14,679,969  14,679,969  76,282,091  76,229,119 
111,263,406  27,328,035  6,915,793  3,406,552  118,179,199  30,734,587 
109,333  109,333  1,109  1,109  110,442  110,442 
14,896,187  11,083,491  8,222,931  887,195  23,119,118  11,970,686 
Total outflows (0‐30 days) 126,268,925  38,520,859  15,139,834  4,294,857  141,408,759  42,815,715 
196,556  196,556  6,312,949  6,312,949  6,509,505  6,509,505 
13,029,061  4,955,339  818,468  473,124  13,847,529  5,428,462 
(3,564,930)
Total inflows (0‐30 days) 13,225,617  5,151,895  7,131,417  3,221,142  20,357,034  11,937,968 
184% 1367% 247%
31.12.2024  31.12.2023 
144% 141%
Liquidity risk is the risk that the Group will encounter difficulty in meeting contractual payment obligations associated with its financial liabil ities that
are settled by delivering cash or another financial asset. This risk mainly arises from mismatches in the timing of cash flows. The Group has internal
rules that require certain matching of the maturities of assets and liabilities. Furthermore, to ensure the ability to meet liquidity needs, the Grou p
maintains a stock 
of highly liquid unencumbered assets, e.g. cash, treasury bills and treasury bonds.
Liquidity is managed by treasury and monitored by risk management. Liquidity position is reported to the ALCO committee. The Central Bank of
Iceland sets minimum requirements for the liquidity coverage ratio (LCR) and the net stable funding ratio (NSFR). The minimum 30 day LCR
regulatory requirement is 100% for LCR total, 50% minimum requirement for LCR in ISK and 80% minimum requirement for LCR in EUR. The
minimum requirement for LCR EUR only applies when the Group‘s commitments in EUR represent 10% or more of the Group´s total commitments.
The minimum regulatory requirement for NSFR total is 100%.
 NSFR total .............................................................................................................................................................................
 Other inflows ...........................................................................
 Restrictions on inflows ............................................................
 Liquidity coverage ratio ...........................................................
 Deposits ...................................................................................
 Other borrowings ....................................................................
 Other outflows ........................................................................
 Short‐term deposits with other banks ....................................
 
Restrictions on inflows ............................................................
 Liquidity coverage ratio ...........................................................
 Deposits ...................................................................................
 Other borrowings ....................................................................
 Other outflows ........................................................................
 Short‐term deposits with other banks ....................................
 Other inflows ...........................................................................
ISK Foreign  currency Total
 Liquid assets level 1 .................................................................
 Liquid assets level 2 .................................................................
ISK Foreign  currency Total
 Liquid assets level 1 .................................................................
 Liquid assets level 2 .................................................................
 Consolidated Financial Statements 31 December 2024  46

===== SIDA 50 =====

Kvika banki hf.  Amounts are in ISK thousands
Notes to the Consolidated Financial Statements
49
50. Liquidity  risk (cont.)
c. LCR  deposit categories
31.12.2024 Run off date  0‐30 days  Over 30 days  Total 
5%‐100% 103,372,251   15,898,871  119,271,122 
5%‐100% 5,807,269   199,576  6,006,845 
20%‐40% 11,124,000   48,335  11,172,335 
40% 81,008   82,903  163,911 
100% 10,843,243   12,439,204  23,282,447 
3,440,134  41,085  3,481,219 
Total 134,667,905  28,709,974  163,377,879 
31.12.2023 Run off date  0‐30 days  Over 30 days  Total 
5%‐100% 93,213,408   10,902,425  104,115,833 
5%‐100% 4,105,620   263,015  4,368,635 
20%‐40% 8,642,983   87,667  8,730,650 
40% 150,408   88,009  238,416 
100% 12,066,781   6,888,095  18,954,876 
6,113,855  43,640  6,157,495 
Total 124,293,054  18,272,850  142,565,905 
 Financial entities ..................................................................................................................
 Other * .................................................................................................................................
 Individuals ............................................................................................................................
 Small and medium sized corporates ....................................................................................
 Large corporates ..................................................................................................................
 Public entities .......................................................................................................................
 Public entities .......................................................................................................................
The Group's deposit base is divided into different categories depending on customer type according to the LCR methodology. Different run off rates
are applied on each category representing their level of stickiness, which measures the stability of the deposit. Deposits with maturity over 30 days
are defined as term deposits within the LCR calculations, other as demand deposits. Run off rates are applied on each category of demand deposits
and the expected cash outflow over the next 30 days under stressed conditions calculated. The higher the run off rate, the more high quality liquid
assets the 
Group must hold to ensure it can meet its obligations and maintain stability during a crisis.
The table below shows the Group's deposit base divided into different categories depending on customer type and run off rates according to the LCR
methodology.
 Individuals ............................................................................................................................
 Small and medium sized corporates ....................................................................................
*Pledged deposits do not have any run off rate according to liquidity rules.
Money market deposits were previously presented as part of borrowings but are now presented as part of deposits. Comparative figures have been
restated. Reference is made to note 2 for further information.
 Financial entities ..................................................................................................................
 Other
 * .................................................................................................................................
 Large corporates ..................................................................................................................
 Consolidated Financial Statements 31 December 2024  47

===== SIDA 51 =====

Kvika banki hf.  Amounts are in ISK thousands
Notes to the Consolidated Financial Statements
49
50. Liquidity  risk (cont.)
d. Maturity  analysis of financial assets and financial liabilities
31.12.2024  Up to 1  1‐3  3‐12  1‐5  Over 5  Gross inflow/  Carrying 
Financial assets by type month   months  months  years  years  (outflow)  amount 
Non‐derivative assets
28,320,372  28,320,372  28,319,192 
17,597,452  10,341,336  7,441,664  25,482,060  3,932,049  64,794,561  64,794,561 
1,680,808  3,751,446  5,432,254  5,432,254 
12,601,026  12,601,026  12,601,026 
10,753,174  13,421,261  52,863,444  98,218,396  4,717,898  179,974,173  150,202,696 
4,540,215  2,397,217  1,543,015  3,241  8,483,688  9,507,492 
75,493,048  26,159,814  65,599,568  123,703,697  8,649,948  299,606,074  270,857,221 
Derivative assets
 Inflow ........................................................ 13, 278,709  143,152  2,346,210  919,853  1,035,591  17,723,515 
 Outflow ..................................................... (12, 289,408) (97,836) (2, 328,850) (796,329) ( 940,293) (16,452,715)
989,301  45,317  17,360  123,524  95,298  1,270,801  1,196,744 
Up to 1  1‐3  3‐12  1‐5  Over 5  Gross inflow/  Carrying 
Financial liabilities by type month   months  months  years  years  (outflow)  amount 
Non‐derivative liabilities
(134,688,378) (15,129,906) (10,446,751) (3,739,302) (546,778) (164,551,115) 163,377,879  
(1,116) (300,900) (1,131,757) (17,271,191) (18,704,964) 14,389,515  
(17,389) (535,356) (3,318,805) (34,010,395) (2,556,883) (40,438,829) 37,123,285  
(336,219) (1,399,210) (9,303,663) (11,039,092) 5,628,982  
(153,001) (153,001) 153,001  
(42,035) (42,035) 42,035  
(1,418,300) (9,218,530) (1,121,501) (1,927,215) (13,685,545) 13,634,905  
(136,320,219) (25,184,692) (16,355,033) (58,347,313) (12,407,324) (248,614,581) 234,349,602  
Derivative liabilities
 Inflow ........................................................ 12, 103,681  142,466  6,321,400  24,413,219  42,980,766 
 Outflow ..................................................... (12, 967,739) (144,687) (6 ,240,000) (26,505, 659) (45,858,085)
(864,059) (2,221) 81,400   (2,092,440) 0   (2,877,319) 2,932,429  
Unrecognised financial items
 Inflow ........................................................ 147,100   48,777  2,796,249  3,721,970  6,714,096 
 Outflow ..................................................... (6, 060,067) (6,060,067)
 Inflow ........................................................ 1,000   756,021  36,976  7,068  801,065 
 Outflow ..................................................... ( 801,065) (801,065)
(6,714,033) 49,777   3,552,270  3,758,946  7,068  654,029 
Summary
75,493,048  26,159,814  65,599,568  123,703,697  8,649,948  299,606,074 
989,301  45,317  17,360  123,524  95,298  1,270,801 
(136,320,219) (25,184,692) (16,355,033) (58,347,313) (12,407,324) (248,614,581)
(864,059) (2,221) 81,400   (2,092,440) (2,877,319)
   unrecognised items (60,701,930) 1,018,218   49,343,296  63,387,468  (3,662,078) 49,384,974  
(6,714,033) 49,777   3,552,270  3,758,946  7,068  654,029 
Net assets (liabilities) (67,415,962) 1,067,995   52,895,566  67,146,414  (3,655,010) 50,039,003  
 Derivative assets .............................................
 Derivative liabilities ........................................
 Non‐derivative assets .....................................
 Non‐derivative liabilities ................................
 Other liabilities ...............................................
Loan commitments
Financial guarantee contracts
 Net unrecognised items .................................
Net assets (liabilities) excluding 
 Issued bonds ...................................................
 Subordinated liabilities ..................................
 Short positions used for hedging ...................
 Short positions held for trading .....................
 Cash and balances with Central Bank ............
 Shares and other variable income securities .
 Fixed income securities ..................................
 Deposits  .........................................................
 Borrowings .....................................................
 Securities used for hedging ............................
 Loans to customers ........................................
 Other assets ....................................................
 Consolidated Financial Statements 31 December 2024  48

===== SIDA 52 =====

Kvika banki hf.  Amounts are in ISK thousands
Notes to the Consolidated Financial Statements
49
50. Liquidity  risk (cont.)
31.12.2023 Up  to 1  1‐3  3‐12  1‐5  Over 5  Gross inflow/  Carrying 
Financial assets by type month   months  months  years  years  (outflow)  amount 
Non‐derivative assets
23,681,967  23,681,967  23,681,453 
20,151,355  1,974,339  21,340,000  18,908,801  2,602,910  64,977,406  64,977,406 
1,222,894  411,609  2,222,977  3,857,480  3,857,480 
16,852,313  16,852,313  16,852,313 
7,839,447  10,674,108  47,315,427  90,723,103  6,895,531  163,447,617  136,323,481 
3,794,043  4,265,609  820,319  200,175  9,080,146  10,401,128 
73,542,019  17,325,666  71,698,723  109,832,080  9,498,441  281,896,929  256,093,262 
Derivative assets
 Inflow ........................................................ 8, 779,563  12,775,096  6,974,032  58,519  28,587,210 
 Outflow ..................................................... (7, 921,683) (12,310,694) (5, 856,054) (902) (26,089,333)
857,879  464,402  1,117,978  57,617  0  2,497,877  2,497,877 
Up to 1  1‐3  3‐12  1‐5  Over 5  Gross inflow/  Carrying 
Financial liabilities by type month   months  months  years  years  (outflow)  amount 
Non‐derivative liabilities
(124,647,550) (8,418,189) (5,690,526) (4,287,362) (384,513) (143,428,141) 142,565,905  
(7,920) (347,982) (2,640,035) (19,139,199) (22,135,136) 15,024,098  
(109,333) (6,881,308) (9,407,820) (32,874,868) (2,457,149) (51,730,478) 45,715,427  
(354,804) (2,465,385) (8,399,596) (11,219,785) 5,993,084  
(71,664) (60,081) (131,745) 131,745  
(4,230) (4,230) 4,230  
(3,308,385) (11,197,785) (1,652,495) (492,619) (16,651,283) 16,594,010  
(128,144,851) (26,845,264) (19,745,680) (59,259,434) (11,305,569) (245,300,798) 226,028,498  
Derivative liabilities
 Inflow ........................................................ 15, 157,017  1,721,575  4,653,591  21,532,182 
 Outflow ..................................................... (16, 222,964) (1,759,667) (4,886,823) (859, 631) (23,729,086)
(1,065,948) (38,092) (233,233) (859,631) 0   (2,196,904) 2,196,904  
Unrecognised financial items by type
Loan commitments
 Inflow ........................................................ 211,062   61,502  1,464,611  4,579,989  140,836  6,458,000 
 Outflow ..................................................... (5, 205,004) (5,205,004)
 Inflow ........................................................ 163,896   40,976  7,068  211,940 
 Outflow ..................................................... ( 211,940) (211,940)
(5,205,882) 61,502   1,628,507  4,620,965  147,905  1,252,996 
Summary
73,542,019  17,325,666  71,698,723  109,832,080  9,498,441  281,896,929 
857,879  464,402  1,117,978  57,617  2,497,877 
(128,144,851) (26,845,264) (19,745,680) (59,259,434) (11,305,569) (245,300,798)
(1,065,948) (38,092) (233,233) (859,631) (2,196,904)
   unrecognised items (54,810,901) (9,093,288) 52,837,788   49,770,632  (1,807,128) 36,897,103  
(5,205,882) 61,502   1,628,507  4,620,965  147,905  1,252,996 
Net assets (liabilities) (60,016,783) (9,031,786) 54,466,295   54,391,597  (1,659,223) 38,150,099  
 Non‐derivative liabilities ................................
 Deposits  .........................................................
 Borrowings .....................................................
 Subordinated liabilities ..................................
 Short positions held for trading .....................
 Short positions used for hedging ...................
 Other liabilities ...............................................
 Derivative assets .............................................
 Issued bonds ...................................................
Financial guarantee contracts
 Non‐derivative assets .....................................
 Other assets ....................................................
 Cash and balances with Central Bank ............
 Shares and other variable income securities .
 Securities used for hedging ............................
It should be noted that the Group's expected cash flows sometimes vary considerably from the contractual cash flows, most significantly in that
demand deposits from customers are expected to remain stable or increase in the long term. In this case the presentation used reflects the worst
case scenario from the Group's perspective. Furthermore, the analysis does not consider any measures that could be taken to convert long ‐term
assets to cash through sale.
Cash flows relating to unrecognised balance sheet items (unused loan commitments and financial guarantee contracts) are presented separately
from financial assets and financial liabilities. Both contractual outflows and inflows are shown, to fully reflect the nature of these items.
 Derivative liabilities ........................................
 Net unrecognised items .................................
Net assets (liabilities) excluding 
Maturity analysis of financial assets and financial liabilities is based on contractual cash flows or, in the case of held for trading securities, exp ected
cash flows. If an amount receivable or payable is not fixed, e.g. for inflation indexed assets and liabilities, the maturity analysis uses estimates b ased
on current conditions.
 Loans to customers ........................................
 Fixed income securities ..................................
 Consolidated Financial Statements 31 December 2024  49

===== SIDA 53 =====

Kvika banki hf.  Amounts are in ISK thousands
Notes to the Consolidated Financial Statements
50
51. Market  risk
a. Definition
b. Management
52. Interest  rate risk
a. Definition
b. Management
53. Interest  rate risk associated with trading portfolios
a. Breakdown
Up to 1  1‐3  3‐12  1‐5  Over 5   
month  months  months  years  years  31.12.2024 
21,513  54,416  548,207  3,180,837  1,538,440  5,343,413 
(676) (6,875) (803) (28,575) (116,073) (153,001)
Net imbalance 20,837  47,541  547,404  3,152,263  1,422,367  5,190,412 
Up to 1  1‐3  3‐12  1‐5  Over 5   
month  months  months  years  years  31.12.2023
14,750  36,695  280,459  3,063,674  1,033,718  4,429,295 
(3,730) (5,396) (32,720) (89,899) (131,745)
Net imbalance 14,750  32,964  275,063  3,030,954  943,820  4,297,551 
b. Sensitivity  analysis
Shift in  31.12.2024  31.12.2023 
basis points  Downward  Upward  Downward  Upward 
50  53,265  (51,070) 25,032   (24,632)
100  67,180  (64,264) 41,408   (39,687)
Total 120,445  (115,334) 66,440   (64,319)
The Group performs monthly sensitivity analysis on financial assets and liabilities in trading portfolios that are subject to interest rate risk. Th e
sensitivity analysis assumes a shift in the yield curves for all currencies. A parallel shift in yield curves would have the following impact on the
Group's pre‐tax
 profit and equity, assuming all other risk factors remain constant:
Indexed .....................................................................................................
Non‐indexed .............................................................................................
Market risk constitutes risk due to changes in the market prices of financial instruments and comprises interest rate risk, currency risk and other
price risk. Notes 52‐57 relate to market risk exposure.
The Group has a strict policy on controlling market risk and to keep the exposure within set limits. The risk management unit monitors market risk
limits on a daily basis and reports regularly to the ALCO committee and to the CEO.
The Group's exposure to interest rate risk is twofold. On the one hand, the Group has a proprietary portfolio of bonds, where market rates affect
prices and any fluctuations are recognised in the income statement. On the other hand, the Group has mismatch in assets and liabilities with
fixed interest terms. These include loans and swap contracts for securities on the asset side and borrowings and deposits on the liability side. This
mismatch does not create an immediate effect on the income 
statement but nevertheless affects the Group's economic value. 
The Group takes measures to minimise interest rate risk by matching the interest rate profile and duration of assets with the Group's liabilities as
well as using derivative and non‐derivative financial instruments to manage effectively the risk of an adverse impact on the Group's earnings. 
Proprietary positions which are subject to interest rate risk fall under the scope of the Group's market risk management.
 Fixed income securities ....................................................
 Short positions ‐ fixed income securities .........................
 Fixed income securities ....................................................
 Short positions ‐ fixed income securities .........................
The breakdown of financial assets and liabilities in trading portfolios by the earlier of interest repricing time or maturity is specified as follows:
 Consolidated Financial Statements 31 December 2024  50

===== SIDA 54 =====

Kvika banki hf.  Amounts are in ISK thousands
Notes to the Consolidated Financial Statements
50
54. Interest  rate risk associated with non‐trading portfolios
a. Breakdown
31.12.2024 
Financial assets Up  to 1  1‐3  3‐12  1‐5  Over 5 
month  months  months  years  years  Total 
28,319,192  28,319,192 
11,157,729  10,433,596  9,183,578  25,307,850  3,368,394  59,451,148 
136,380,297  3,761,468  3,954,878  5,748,139  357,915  150,202,696 
Financial assets excluding derivatives 175,857,218   14,195,065  13,138,456  31,055,989  3,726,308  237,973,036 
23,021,460  23,306,321  8,407,845  927,578  889,917  56,553,122 
Total 198,878,678  37,501,386  21,546,301  31,983,567  4,616,225  294,526,157 
Financial liabilities Up  to 1  1‐3  3‐12  1‐5  Over 5 
month  months  months  years  years  Total 
135,369,956  14,930,417  9,593,996  3,258,929  224,580  163,377,879 
14,389,515  14,389,515 
17,361  28,435,412  84,486  6,500,774  2,085,253  37,123,285 
2,963,334  2,665,648  5,628,982 
Financial liabilities excluding derivatives 149,776,832   43,365,829  12,641,816  12,425,350  2,309,833  220,519,661 
20,828,415  17,231,242  10,150,728  48,210,385 
Total 170,605,247  60,597,072  22,792,544  12,425,350  2,309,833  268,730,046 
Total interest repricing gap 28,273,431  (23,095,685) (1,246,243) 19,558,217   2,306,392  25,796,112 
31.12.2023
Financial assets Up  to 1  1‐3  3‐12  1‐5  Over 5 
month  months  months  years  years  Total 
23,681,453  23,681,453 
13,234,607  2,813,780  22,531,739  18,795,625  3,172,359  60,548,110 
118,422,687  5,472,017  5,631,528  6,488,964  308,287  136,323,481 
Financial assets excluding derivatives 155,338,747   8,285,797  28,163,267  25,284,589  3,480,645  220,553,045 
24,309,020  33,360,561  13,512,749  945,276  803,219  72,930,826 
Total 179,647,767  41,646,358  41,676,016  26,229,865  4,283,865  293,483,870 
Financial liabilities Up  to 1  1‐3  3‐12  1‐5  Over 5 
month  months  months  years  years  Total 
125,028,062  8,291,367  5,230,860  3,830,892  184,724  142,565,905 
15,024,098  15,024,098 
7,093,090  29,547,945  184,841  6,664,263  2,225,289  45,715,427 
341,008  2,071,885  3,580,191  5,993,084 
Financial liabilities excluding derivatives 147,145,250   37,839,312  5,756,708  12,567,040  5,990,203  209,298,514 
26,099,269  21,434,697  11,957,255  59,491,221 
Total 173,244,520  59,274,009  17,713,963  12,567,040  5,990,203  268,789,735 
Total interest repricing gap 6,403,247  (17,627,651) 23,962,053   13,662,825  (1,706,339) 24,694,136  
b. Sensitivity  analysis
Shift in  31.12.2024  31.12.2023 
Currency basis  points  Downward  Upward  Downward  Upward 
50  (24,819) 25,519   (245,435) 228,724  
100  450,303  (438,734) 396,558   (385,418)
20  (3,692) 3,693   1,223  (1,215)
Total 421,792  (409,522) 152,346   (157,909)
 Issued bonds .....................................................................
 Effect of derivatives ..........................................................
 Borrowings .......................................................................
 Subordinated liabilities ....................................................
 Fixed income securities ....................................................
 Loans to customers ..........................................................
 Issued bonds .....................................................................
 Borrowings .......................................................................
 Cash and balances with Central Bank ..............................
 Fixed income securities ....................................................
ISK, non‐indexed ......................................................................................
Other currencies .......................................................................................
The Group performs monthly sensitivity analysis on financial assets and liabilities in non ‐trading portfolios subject to interest rate risk. The
sensitivity analysis assumes a shift in the yield curves for all currencies. A parallel shift in yield curves would have the following impact on the
Group's pre‐tax profit and equity, assuming all other risk factors remain constant:
ISK, indexed ..............................................................................................
The breakdown of financial assets and liabilities in non ‐trading portfolios by the earlier of interest repricing time or maturity is specified as
follows:
 Cash and balances with Central Bank ..............................
 Deposits  ...........................................................................
 Effect of derivatives ..........................................................
 Subordinated liabilities ....................................................
 Effect of derivatives ..........................................................
 Loans to customers ..........................................................
 Effect of 
derivatives ..........................................................
 Deposits  ...........................................................................
 Consolidated Financial Statements 31 December 2024  51

===== SIDA 55 =====

Kvika banki hf.  Amounts are in ISK thousands
Notes to the Consolidated Financial Statements
50
55. Exposure  towards changes in the CPI
a. Definition
b. Management
c. Balance  of CPI linked assets and liabilities
31.12.2024  31.12.2023 
38,425,712  34,860,451 
(23,652,914) (23,177,052)
Total 14,772,798  11,683,398 
d. Sensitivity  to changes in CPI
31.12.2024  31.12.2023 
‐1% 1% ‐1% 1%
(55,330) 55,330   (58,667) 58,667  
(30,608) 30,608   (21,561) 21,561  
(277,692) 277,692   (236,126) 236,126  
(20,627) 20,627   (32,251) 32,251  
206  (206) 683   (683)
86,020  (86,020) 81,464   (81,464)
94,013  (94,013) 89,710   (89,710)
56,290  (56,290) 59,913   (59,913)
(147,728) 147,728   (116,834) 116,834  
The effect on equity would be the same.
56. Currency  risk
a. Definition
b. Management
c. Hedge  accounting
d. Exchange  rates
The following exchange rates have been used by the Group in the preparation of these financial statements:
Closing  Average  Closing  Average 
31.12.2024  2024  31.12.2023  2023
143.9  149.3  150.5  149.2 
138.2  138.0  136.2  137.9 
173.3  176.4  173.2  171.5 
 Issued bonds ..................................................................................................................
 Liabilities .......................................................................................................................................................................
 Assets ............................................................................................................................................................................
Currency risk arises when financial instruments are not denominated in the functional currency of the respective Group entity and can affect both
the Group's income statement and statement of financial position. A part of the Group's financial assets and liabilities is denominated in foreign
currencies. 
Currency positions are monitored by risk management and reported to the ALCO committee. Any mismatch between assets and liabilities in each
currency is monitored closely and managed within limits.  
The Group is subject to limits set by the Central Bank of Iceland regarding the maximum open currency position. At 31 December 2024 and 31
December 2023 the Group's position in foreign currencies was within those limits.
 EUR/ISK ...........................................................................................................................
 USD/ISK ..........................................................................................................................
 GBP/ISK ...........................................................................................................................
The Group applies hedge accounting according to IAS 39 against translation of foreign operations. Currency swap agreements are used as a hedge
instrument against translation difference arising from foreign operations. 
 Short positions ...............................................................................................................
 Deposits ..........................................................................................................................
 Subordinated liabilities ..................................................................................................
Given the net balance of CPI linked assets and liabilities, a 1% change in the CPI would, with other things constant, result in the following changes
to
 the Group's pre‐tax profit.
 Government bonds ........................................................................................................
 Other fixed income securities ........................................................................................
 Loans to customers ........................................................................................................
 Derivatives ......................................................................................................................
Exposure towards changes in CPI is the risk that fluctuations in the Icelandic Consumer Price Index (CPI) will affect the balance and cash flow of
indexed financial instruments.
The Group is exposed to inflation indexation of assets and liabilities den ominated in ISK. All indexed assets and liabilities are valued according to
the CPI measure at any given time and changes in CPI are recognised in the income statement.
The Group controls its indexation risk through derivatives contracts and sales and purchases of indexed bonds, mostly government bonds, and
thus keeps its exposure to the CPI within the limits set by the ALCO committee.
 Consolidated Financial Statements 31 December 2024  52

===== SIDA 56 =====

Kvika banki hf.  Amounts are in ISK thousands
Notes to the Consolidated Financial Statements
56
56. Currency  risk (cont.)
e. Breakdown  of financial assets and financial liabilities denominated in foreign currencies
31.12.2024 
Financial assets Other 
EUR  USD  GBP  NOK  currencies  Total 
6,671,025  1,381,888  1,217,366  110,103  340,147  9,720,529 
3,592,590  3,592,590 
112,855  936,331  2,752,783  13,954  1,551  3,817,474 
35,917  2,186,597  1,553  2,994  79,410  2,306,470 
4,057,957  37,222,091  19,852  41,299,900 
2,450,910  2,450,910 
712,599  1,601,697  588,647  2,902,943 
Financial assets excluding derivatives 11,590,352   9,699,102  44,233,350  127,051  440,960  66,090,816 
4,967,412  908,301  1,635,532  9,959,027  16,156,032  33,626,303 
Total 16,557,764  10,607,403  45,868,882  10,086,079  16,596,992  99,717,119 
Financial liabilities Other 
EUR  USD  GBP  NOK  currencies  Total 
5,162,192  3,580,603  598,790  64,822  200,210  9,606,616 
13,700,192  13,700,192 
9,890,897  16,157,267  26,048,164 
200,836  634,341  467,041  4,766  110,017  1,417,002 
Financial liabilities excluding derivatives 5,363,028   4,214,944  14,766,024  9,960,485  16,467,493  50,771,974 
10,333,424  6,484,604  30,321,700  58,302  17,032  47,215,062 
Total 15,696,452  10,699,548  45,087,724  10,018,787  16,484,525  97,987,037 
Net currency position  Other 
EUR  USD  GBP  NOK  currencies  Total 
16,557,764  10,607,403  45,868,882  10,086,079  16,596,992  99,717,119 
(15,696,452) (10,699,548) (45,087,724) (10,018,787) (16,484,525) (97,987,037)
703,501  703,501 
Total 1,564,813  (92,145) 781,158   67,292  112,467  2,433,583 
31.12.2023 
Financial assets Other 
EUR  USD  GBP  SEK currencies   Total 
2,922,506  657,800  2,109,634  79,125  255,219  6,024,284 
1,503,990  13,834,864  15,338,855 
88,400  242,497  1,539,466  12,880  1,883,243 
657,191  1,167,816  1,413  1,656,645  2,703  3,485,768 
2,280,065  478,715  28,876,368  47,414  31,682,562 
2,540,412  2,540,412 
849,032  1,236,043  718,974  163  2,804,212 
Financial assets excluding derivatives 8,301,183   17,617,736  35,786,267  1,748,651  305,498  63,759,336 
11,811,725  1,328,055  4,467,242  15,253,051  10,870,463  43,730,536 
Total 20,112,909  18,945,791  40,253,509  17,001,701  11,175,962  107,489,872 
Financial liabilities Other 
EUR  USD  GBP  SEK currencies   Total 
2,409,529  7,888,477  756,682  28,189  281,357  11,364,235 
14,816,743  14,816,743 
1,292,489  1,990,376  15,220,348  10,837,164  29,340,377 
527,123  669,394  803,960  5  4,616  2,005,098 
Financial liabilities excluding derivatives 4,229,142   8,557,872  18,367,762  15,248,542  11,123,136  57,526,454 
15,861,328  10,352,601  22,199,121  1,692,775  105,127  50,210,951 
Total 20,090,469  18,910,472  40,566,883  16,941,318  11,228,263  107,737,405 
Net currency position  Other 
EUR  USD  GBP  SEK currencies   Total 
20,112,909  18,945,791  40,253,509  17,001,701  11,175,962  107,489,872 
(20,090,469) (18,910,472) (40,566,883) (16,941,318) (11,228,263) (107,737,405)
75,250  75,250 
Total 97,689  35,319  (313,374) 60,384   (52,302) (172,283)
 Derivatives .............................................................................
 Fixed income securities .........................................................
 Shares and other variable income securities ........................
 Loans to customers ................................................................
 Financial liabilities ..................................................................
 Financial guarantee contracts ...............................................
 Financial assets ......................................................................
 Financial assets ......................................................................
 Financial guarantee contracts ...............................................
 Other liabilities .......................................................................
 Issued bonds ..........................................................................
 Other liabilities .......................................................................
 Securities used for hedging ...................................................
 Borrowings .............................................................................
 Financial liabilities ..................................................................
 Issued bonds ..........................................................................
 Derivatives .............................................................................
 Cash and balances with Central Bank ....................................
 Shares and other variable income securities ........................
 Securities used for hedging ...................................................
 Loans to customers ................................................................
 Cash and balances with Central Bank ....................................
 Other assets ...........................................................................
 Derivatives .............................................................................
 Deposits  ................................................................................
 Deposits  ................................................................................
 Fixed income securities .........................................................
 Other assets ...........................................................................
 Derivatives .............................................................................
 Intangible assets ....................................................................
 Intangible assets ....................................................................
 Borrowings .............................................................................
 Consolidated Financial Statements 31 December 2024  53

===== SIDA 57 =====

Kvika banki hf.  Amounts are in ISK thousands
Notes to the Consolidated Financial Statements
56
56. Currency  risk (cont.)
f. Sensitivity  to currency risk
31.12.2024  31.12.2023 
Assets and liabilities denominated in foreign currencies ‐ 10%  +10% ‐ 10%  +10% 
156,481  (156,481) 9,769   (9,769)
(9,215) 9,215   3,532  (3,532)
78,116  (78,116) (31,337) 31,337  
6,729  (6,729) (2,537) 2,537  
3,554  (3,554) 6,038   (6,038)
7,692  (7,692) (2,693) 2,693  
Total 243,358  (243,358) (17,228) 17,228  
57. Equity  risk
a. Definition
b. Sensitivity  analysis of equity risk
31.12.2023 
‐10%  +10% ‐ 10%  +10% 
(110,061) 110,061   (51,270) 51,270  
(306,938) 306,938   (202,767) 202,767  
(126,227) 126,227   (131,710) 131,710  
Total (543,225) 543,225   (385,748) 385,748  
58. Operational  risk
a. Definition
b. Management
 SEK .......................................................................................................................................
 GBP ......................................................................................................................................
The analysis below calculates the effect of possible movements in equity prices that affect the Consolidated Financial Statements. A negative
amount in the table reflects a potential net reduction in the Consolidated Income Statement or equity, while a positive amount reflects a
potential net increase. Investments in associates are excluded.
31.12.2024 
 Listed shares ........................................................................................................................
 Unlisted shares ....................................................................................................................
 Unlisted unit shares in funds ...............................................................................................
 NOK ......................................................................................................................................
Given the net currency position, a 10% change in the value of the ISK would, with other things constant, result in the following changes to the
Group's Consolidated Income Statement or equity.
The individual business units within the Group are primarily responsible for managing their respective operational risk. The risk management unit
is furthermore responsible for identifying, monitoring and reporting the Group's operational risk. Operational risk can be reduced through staff
training, process re‐design and enhancement of the control environment. The risk management unit monitors operational risk by tracking loss
events, quality deficiencies, potential risk indicators and other early ‐warning signals. The unit takes an active role in internal control and quality
management.
Operational risk is the risk of direct or indirect loss from inadequate or failed internal processes or systems, from human error or external events
that affect the Group's
 reputation and operational earnings.
 EUR ......................................................................................................................................
 USD ......................................................................................................................................
 Other currencies ..................................................................................................................
Equity risk is the risk that the fair value of equites decreases as the result of changes in the value of shares and other variable income securities in
the Group’s portfolio. 
 Consolidated Financial Statements 31 December 2024  54

===== SIDA 58 =====

Kvika banki hf.  Amounts are in ISK thousands
Notes to the Consolidated Financial Statements
58
Financial assets and financial liabilities
59. Accounting  classification of financial assets and financial liabilities
Manda‐ 
31.12.2024         Fair value  torily at  Total 
Financial assets Amortised   through  fair value  carrying 
cost  OCI  through P/L  amount 
28,319,192  28,319,192 
59,169,229  5,625,332  64,794,561 
5,432,254  5,432,254 
12,601,026  12,601,026 
149,328,903  873,794  150,202,696 
1,196,744  1,196,744 
9,507,492  9,507,492 
Total 187,155,586  59,169,229  25,729,150  272,053,965 
Manda‐ 
      Fair value  torily at  Total 
Financial liabilities Amortised   through  fair value  carrying 
cost  OCI  through P/L  amount 
163,377,879  163,377,879 
14,389,515  14,389,515 
37,123,285  37,123,285 
5,628,982  5,628,982 
153,001  153,001 
42,035  42,035 
2,649,463  2,649,463 
282,967  282,967 
13,315,245  319,660  13,634,905 
Total 233,834,906  282,967  3,164,159  237,282,032 
Manda‐ 
31.12.2023           Fair value  torily at  Total 
Financial assets Amortised   through  fair value  carrying 
cost  OCI  through P/L  amount 
23,681,453  23,681,453 
61,293,556  3,683,849  64,977,406 
3,857,480  3,857,480 
16,852,313  16,852,313 
135,641,049  682,433  136,323,481 
2,497,877  2,497,877 
10,401,128  10,401,128 
Total 169,723,630  61,293,556  27,573,952  258,591,138 
Manda‐ 
      Fair value  torily at  Total 
Financial liabilities Amortised   through  fair value  carrying 
cost  OCI  through P/L  amount 
142,565,905  142,565,905 
15,024,098  15,024,098 
45,715,427  45,715,427 
5,993,084  5,993,084 
131,745  131,745 
4,230  4,230 
2,044,723  2,044,723 
152,182  152,182 
16,189,247  404,762  16,594,010 
Total 225,487,761  152,182  2,585,460  228,225,403 
 Derivatives ....................................................................................................................
 Other liabilities ..............................................................................................................
 Derivatives used for hedge accounting ........................................................................
The accounting classification of financial assets and financial liabilities is specified as follows:
 Fixed income securities .................................................................................................
 Shares and other variable income securities ................................................................
 Securities used for hedging ...........................................................................................
 Loans to customers .......................................................................................................
 Derivatives ....................................................................................................................
 Other assets ..................................................................................................................
 Cash and balances with Central Bank ...........................................................................
 Fixed income securities .................................................................................................
 Shares and other variable income securities ................................................................
 Securities used for hedging ...........................................................................................
 Loans to customers .......................................................................................................
 Derivatives ....................................................................................................................
 Other assets ..................................................................................................................
 Deposits  ........................................................................................................................
 Borrowings ....................................................................................................................
 Issued bonds .................................................................................................................
 Subordinated liabilities .................................................................................................
 Short positions used for hedging ..................................................................................
 Short positions used for hedging ..................................................................................
 Short positions held for trading ....................................................................................
 Derivatives ....................................................................................................................
 Other liabilities ..............................................................................................................
 Cash and balances with Central Bank ...........................................................................
 Deposits  ........................................................................................................................
 Borrowings ....................................................................................................................
 Issued bonds .................................................................................................................
 Subordinated liabilities .................................................................................................
 Short positions held for trading ....................................................................................
 Derivatives used for hedge accounting ........................................................................
 Consolidated Financial Statements 31 December 2024  55

===== SIDA 59 =====

Kvika banki hf.  Amounts are in ISK thousands
Notes to the Consolidated Financial Statements
58
60. Financial  assets and financial liabilities measured at fair value
a.
‐
‐
‐
b.
c.
d.
31.12.2024 
Financial assets          Carrying 
Level 1  Level 2  Level 3  amount 
Mandatorily measured at fair value through profit and loss 
4,907,870  106,337  611,126  5,625,332 
1,922,016  54,674  3,455,564  5,432,254 
12,601,026  12,601,026 
873,794  873,794 
1,196,744  1,196,744 
Measured at fair value through
 other comprehensive income 
59,169,229  59,169,229 
Total 78,600,141  1,357,755  4,940,483  84,898,379 
Inputs are quoted market prices (unadjusted) in active markets for identical instruments.
Level 1
Level 2
 Fixed income securities ..............................................................................................
Inputs are not observable or unobservable inputs have a significant effect on the valuation. This category includes instruments that are
valued based on quoted prices for similar instruments for which significant unobservable adjustments are required to reflect the differences
between the instruments.
Inputs are not quoted market prices but are observable either directly, i.e. as prices, or indirectly, i.e. derived from prices. This category
includes financial instruments valued using quoted prices in active markets for similar instruments, quoted prices for similar or identical
instruments in markets that are considered less than active and other instruments which are valued using techniques which rely primarily
on inputs that are directly or indirectly observable from market data.
Level 3
The fair value of financial assets and liabilities that are traded in active markets are based on quoted market prices. For other financial
instruments the Group determines fair value using various valuation techniques. IFRS 13 specifies a fair value hierarchy based on whether the
inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources
whereas unobservable inputs reflect the Group's 
market assumptions. These two types of inputs result in the following fair value hierarchy:
The Group uses widely recognised valuation techniques, including net present value and discounted cash flow models, comparison with similar
instruments for which market observable prices exist, Black‐Scholes and other valuation models. 
 Fixed income securities ..............................................................................................
 Shares and other variable income securities .............................................................
Fair value hierarchy
Fair value hierarchy classification
The fair value of financial assets and financial liabilities measured at fair value in the statement of financial position is classified into the fair
value hierarchy as follows:
Valuation process
The Bank's Credit committee is responsible for fair value measurements of financial assets and financial liabilities classified as level 2 or level 3
instruments. The valuation is carried out by personnel from respective departments under supervision from Risk. The valuations are revised at
least quarterly, or when there are indications of significant changes in the underlying inputs.
Valuation techniques
For more complex instruments, the Group uses proprietary models, whic h usually are developed from recogn ised valuation models. Some or all
of the inputs into these models may not be market observable and are derived from market prices or rates or are estimated based on
assumptions. When entering into a transaction, the financial instrument is recognised initially at the transaction price, which is the best indicat or
of fair value, although the value obtained from the valuation model may differ from the transaction price. This initial difference, usually an
increase in fair value, indicated by valuation techniques is recognised in income depending upon the individual facts and circumstances of each
transaction and no later than when the market data becomes observable.
The value produced by a model or other valuation technique is adjusted to allow for a number of factors as appropriate, because valuation
techniques cannot appropriately reflect all factors market participants take into account when entering into a transaction. Valuation
adjustments are recorded to allow for model risks, bid ‐ask spreads, liquidity risks, as well as other factors. Management believes that these
valuation adjustments are necessary and appropriate to fairly state financial instruments carried at fair value in the statement of financial
position.
Valuation techniques include recent arm's length transactions between knowledgeable, willing parties, if available, reference to the current fai r
value of other instruments that are substantially the same, the discounted cash flow analysis and option pricing models. Valuation techniques
incorporate all factors that market participants would consider in setting a price and are consistent with accepted methodologies for pricing
financial instruments. Periodically, the Group calibrates the valuation technique and tests it for validity using prices from any observable curre nt
market transactions in the same instrument, without modification or repackaging, or based on any available observable market data.
 
Derivatives ..................................................................................................................
 Loans to customers ....................................................................................................
 Securities used for hedging ........................................................................................
 Consolidated Financial Statements 31 December 2024  56

===== SIDA 60 =====

Kvika banki hf.  Amounts are in ISK thousands
Notes to the Consolidated Financial Statements
58
60. Financial  assets and financial liabilities measured at fair value (cont.)
31.12.2024 
Financial liabilities          Carrying 
Level 1  Level 2  Level 3  amount 
Mandatorily measured at fair value through profit and loss 
153,001  153,001 
42,035  42,035 
1,710,389  939,074  2,649,463 
319,660  319,660 
Measured at fair value through other comprehensive income 
282,967  282,967 
Total 195,036  1,993,356  1,258,734  3,447,126 
31.12.2023
Financial assets          Carrying 
Level 1  Level 2  Level 3  amount 
Mandatorily measured at fair value through profit and loss 
3,465,191  104,584  114,075  3,683,849 
1,237,775  102,362  2,517,343  3,857,480 
16,852,313  16,852,313 
682,433  682,433 
2,497,877  2,497,877 
Measured at fair value through other comprehensive income 
61,293,556  61,293,556 
Total 82,848,836  2,704,822  3,313,851  88,867,508 
 
Financial liabilities          Carrying 
Level 1  Level 2  Level 3  amount 
Mandatorily measured at fair value through profit and loss 
131,745  131,745 
4,230  4,230 
1,185,091  859,631  2,044,723 
404,762  404,762 
Measured at fair value through other comprehensive income 
152,182  152,182 
Total 135,975  1,337,273  1,264,394  2,737,641 
e.
Shares and 
Fixed  other var. 
income  income  Loans to  Other  
31.12.2024  securities  securities  customers  Derivatives  liabilities  Total 
Balance as at 1 January 2024 114,075  2,517,343  682,433  (859,631) (404,762) 2,049,457  
6,829  362,034  69,096  (168,150) (5,288) 264,521  
604,297  612,349  1,216,646 
(620,667) 88,707   90,391  (441,569)
(36,162) (36,162)
(114,075) 742,932   628,857 
Balance as at 31 December 2024 611,126  3,455,564  873,794  (939,074) (319,660) 3,681,749  
Shares and 
Fixed  other var. 
income  income  Loans to  Other  
31.12.2023  securities  securities  customers  Derivatives  liabilities  Total 
Balance as at 1 January 2023 615,304  7,437,283  1,210,390  (691,713) (373,715) 8,197,550  
130,943  987,969  10,173  (11,159) (31,048) 1,086,879  
380,542  1,085,457  40,000  (156,759) 1,349,240  
(162,024) (578,130) (740,155)
(2,246,400) (2,246,400)
(850,690) (4,746,966) (5,597,656)
Balance as at 31 December 2023 114,075  2,517,343  682,433  (859,631) (404,762) 2,049,457  
 Fixed income securities ..............................................................................................
 Derivatives used for hedge accounting ......................................................................
Additions ............................................................................ 
Repayments ........................................................................ 
Disposals ............................................................................. 
 Derivatives ..................................................................................................................
 Derivatives ..................................................................................................................
 Other liabilities ...........................................................................................................
 Other liabilities ...........................................................................................................
 Short positions held for trading .................................................................................
Reconciliation of changes in Level 3 fair value measurements
 Short positions used for hedging ...............................................................................
 Derivatives ..................................................................................................................
 Short positions held for trading .................................................................................
 Short positions used for hedging ...............................................................................
 Fixed income securities ..............................................................................................
 Shares and other variable income securities .............................................................
 Loans to customers ....................................................................................................
 Securities used for hedging ........................................................................................
 Derivatives used for hedge accounting ......................................................................
Reclassified as assets held for sale ..................................... 
Total gains and losses in profit or loss ............................... 
Additions ............................................................................ 
Repayments ........................................................................ 
Disposals ............................................................................. 
Reclassification ................................................................... 
Total gains and losses in profit or loss ............................... 
 Consolidated Financial Statements 31 December 2024  57

===== SIDA 61 =====

Kvika banki hf.  Amounts are in ISK thousands
Notes to the Consolidated Financial Statements
58
60. Financial  assets and financial liabilities measured at fair value (cont.)
f.
Book value 
Range 31.12.2024 
0‐95% 611,126 
‐ 3,455,564 
‐ 873,794 
Total 4,940,483 
Book value 
Range 31.12.2023 
0‐95% 114,075 
‐ 2,517,343 
‐ 682,433 
Total 3,313,851 
g.
+10% ‐ 10% 
61,113  (61,113)
345,556  (345,556)
87,379  (87,379)
Total 494,048  (494,048)
61. Financial  assets and financial liabilities not measured at fair value
Value of assets
Significant unobservable input
Unlisted bonds
Fair value measurements for Level 3 financial assets
Level 3 assets consist primarily of unlisted bonds, shares and share certificates and loans measured at fair value. Each asset is evaluated
separately but assets within an asset group share a valuation method. The following valuation methods are in use:
Expert modelLoans to customers
Deposits and other borrowings are typically either short ‐term or have variable interest rates. Other liabilities consist primarily of accounts
payables, unsettled transactions, withholding taxes and other short ‐term payables. The carrying amount of these liabilities is therefore
considered a reasonable approximation of their fair value.
The Group holds financial instruments which are not measured at fair value. Except for loans to customers, the Group believes that the best
estimate of the fair value of these financial instruments is equal to the carrying amount at the reporting date and does therefore not report a
fair value for these financial instruments. Loans to customers measured at amortised cost are classified as level 3, in the fair value hierarchy, and
have a book value of ISK 149,329 m illion at end of December 2024. The estimated fair value of loans to customers measured at amortised cost at
end of December
 2024 is ISK 149,121 million.
Cash and balances with Central Bank includes several components as detailed in note 18. These assets are either balances available on ‐demand
or on very short notice, or other assets easily converted to c ash. Other financial assets consist primarily of short ‐term receivables. The carrying
amount of these assets is therefore a reasonable approximation of their fair value.
Asset class Method Significant  unobservable input
Unlisted bonds  Expected recovery Value  of assets
Unlisted variable income securities Market  price Recent  trades
The Group believes its estimates represent appropriate approximations of fair value and that the use of different valuation methodologies and
reasonable changes in assumptions or unobservable inputs would not significantly change the estimates.
A 10% change in the estimates would have the following effect on profit before taxes:
 Shares and other variable income securities ..................................................................................................................
 Loans to customers ..........................................................................................................................................................
Given the methods used, the possible range of the significant unobservable inputs is wide. When determining the values used the Group
considers the financial strength of the entity in question, recent trades if any and multipliers for comparable instruments.
The effect of unobservable inputs in Level 3 fair value measurements
Loan to customers Expert  model Value  of assets and collateral
 Fixed income securities ...................................................................................................................................................
Market price Recent  trades
Value of assets and collateral
Asset class Method
Expected recovery
Unlisted variable income securities
 Consolidated Financial Statements 31 December 2024  58

===== SIDA 62 =====

Kvika banki hf.  Amounts are in ISK thousands
Notes to the Consolidated Financial Statements
61
Other information
62. Pledged  assets
Settlement and  Securities  Asset backed 
31.12.2024 committed  facilities  borrowing  securities  Total 
0  1,773,821  0  1,773,821 
10,263,379  93,500  0  10,356,879 
21,053,056  0  0  21,053,056 
0  29,978  0  29,978 
Total 31,316,435  1,897,299  0  33,213,734 
Settlement and  Securities  Asset backed 
31.12.2023 committed  facilities  borrowing  securities  Total 
0  973,538  27,853  1,001,391 
6,392,856  249,194  0  6,642,050 
21,340,531  0  1,118,990  22,459,521 
0  52,979  0  52,979 
Total 27,733,387  1,275,711  1,146,843  30,155,941 
63. Related  parties
a. Definition  of related parties
b. Arm's  length
c. Balances  with related parties
31.12.2024 Assets  Liabilities 
2,231  124,252 
0  40,605 
Total 2,231  164,857 
31.12.2023 Assets  Liabilities 
5,861  77,974 
0  28,639 
Total 5,861  106,613 
d. Transactions  with related parties
Interest  Interest  Other  Other 
2024 income  expense  income  expense 
0  5,886  599  1,296 
0  0  0  340,921 
Total 0  5,886  599  342,217 
Interest  Interest  Other  Other 
2023 income  expense  income  expense 
0  2,836  9,122  4,981 
0  0  0  251,998 
Total 0  2,836  9,122  256,979 
Management .....................................................................................................................
Associates ..........................................................................................................................
Transactions with related parties are carried out at arm's length and subject to an annual review by the Bank's internal auditor.
Cash and balances with Central Bank ...............................................................................
Fixed income securities .....................................................................................................
Other assets .......................................................................................................................
The Group has pledged assets, in the ordinary course of banking business, to the Central Bank of Iceland to secure general settlement in the
Icelandic clearing system. Cash pledged to secure the borrowing of securities from other counterparties than the Central Bank of Iceland is
classified as other assets. 
 Management ......................................................................................................................................................................
The Group has a related party relationship with the board members of the Bank, the CEO of the Bank and key employees (together referred to as
management), associates as disclosed in note 25, shareholders with significant influence over the Bank, close family members of individuals
identified as related parties and entities under the control or joint control of related parties.
Loans to customers ...........................................................................................................
Loans to customers ...........................................................................................................
Fixed 
income securities .....................................................................................................
Other assets .......................................................................................................................
 Management ......................................................................................................................................................................
 Associates ...........................................................................................................................................................................
Cash and balances with Central Bank ...............................................................................
 Associates ...........................................................................................................................................................................
Associates ..........................................................................................................................
Management .....................................................................................................................
Further information about salaries and benefits paid to the Board of Directors, the CEO and Managing Directors is provided in note 11.
 Consolidated Financial Statements 31 December 2024  59

===== SIDA 63 =====

Kvika banki hf.  Amounts are in ISK thousands
Notes to the Consolidated Financial Statements
61
64. Remuneration  policy
65. Incentive  scheme
a. Description
b. Performance  based payments through profit and loss 2024  2023 
Cash  Cash 
398,533  157,334 
78,974  17,992 
69,375  38,269 
Total 546,881  213,595 
c. On ‐balance sheet deferred performance based payments
31.12.2024  31.12.2023 
129,619  37,016 
Total 129,619  37,016 
66. Share ‐based payments
a. Description
‐
‐
‐
‐
The remuneration policy conforms to Articles 57 a and 57 b of Act No. 161/2002 on Financial Undertakings, Act No. 2/1995 on Public Limited
Companies and other applicable rules and guidelines, as well as Act No. 25/2023 on Sustainable Finance Disclosure. A more detailed description of
the policy can be found on the Bank's website, www.kvika.is.
The Board of Directors has approved a performance based incentive scheme at the proposal of the Remuneration Committee. The scheme forms
a part of the remuneration policy adopted by the Bank. As described above it does not apply to the Bank's subsidiaries that are subject to
independent legal requirements regarding remuneration policies and/or gr anting of bonuses. The Bank's subsidiaries subject to independent legal
requirements have, thus, each implemented own incentive schemes. 
 Deferred cash payments .....................................................................................................................................................
The Bank's incentive scheme is set forth in accordance with Article 57 b of Act No. 161/2002 on Financial Undertakings. Performance based
payments may consist, in part or in full, of shares or share ‐linked instruments, such as warrants or stock options for shares in the Bank. Payments
according to the scheme are based on key performance indicators (KPIs) that reflect the goals of the Bank, the division and the employee. The
basis for performance based pay reflects sound risk management and does not induce excessive risk taking. Performance based pay to individual
employees shall not exceed 25% of their annual salary and 40% of the performance based pay shall be deferred for three years. Performance
based pay that does not exceed 10% of annual salary is not subject to deferral. A more detailed description of the scheme can be found in the
Bank's remuneration policy on it's website, www.kvika.is. Incentive schemes of the Icelandic subsidiaries are similar to the Bank's due to specific
Icelandic legal requirements that are similar for the operations of the Bank and these subsidiaries. UK law has not implemented similar restrictions
for incentive schemes and, therefore, the incentive scemes of the UK subsidiaries differ from the Bank and the Icelandic subsidiaries. 
 Deferred ..............................................................................................................................................................................
 Salary related expenses ......................................................................................................................................................
 Non‐deferred ......................................................................................................................................................................
The Board of Directors has adopted a remuneration policy at the proposal of the Remuneration Committee. The Bank's Annual General Meeting
approved the Bank's current remuneration policy in March 2024. The Board of Directors will submit an updated remuneration policy for approval
at the Bank's Annual General Meeting in 2025. The remuneration policy applies on a consolidated basis. However, it does not apply to the Bank's
subsidiaries that, based on the activities carried out by the subsidiaries, are subject to independent legal requirements regarding remuneration
policies and/or the granting of bonuses, except to the extent required by law. Kvika shall strive to ensure that the remuneration policies of
subsidiaries take into account the Bank's remuneration policy as possible. The Bank's subsidiaries subject to independent legal requirements have ,
thus,
 each implemented own remuneration policies.
The Bank has issued share options in accordance with authorisations of its annual general meeting, the Group's remuneration policy and incentive
scheme. At year end 2024, there were outstanding share options based on the Bank's incentive scheme.
In 2022, the Bank, on the basis of an authorisation by the A nnual General Meeting of Kvika banki hf., held on 31 March 2022, granted share
options to certain employees of the Group on the basis of the Bank´s incentive scheme. The share options were granted in order to align the long ‐
term interests of the Group and said employees. The employees paid for the share options with a deferred part of performance based payments.
For the share options the employees paid a total of ISK 94.5 million by using deferred performance based payments. The cost of these share
option agreements is ISK 94.5 million based on the Black ‐Scholes calculation model but in return previously expensed performance based
payments were cancelled. 
The main terms of the share options from 2022 are as follows:
The exercise price of the share options is ISK 22.495 per share, which is equivalent to the weighted average price in transactions with shares
of the company on Nasdaq OMX Iceland for ten business days prior to the contract date, with 7.5% annual interest over the period, and the
exercise price shall be adjusted for dividends that may be decided
 until the exercise period begins.
The options do not allow for cash settlement.
The share options may be exercised in 2025, during an exercise period of three months where in that period the strike continues to accrue
with 7.5% annual interest until the option is exercised.
In general, share options shall lapse if the share option holder's employment relationship with the company is terminated until the beginning
of the exercise period.
 Consolidated Financial Statements 31 December 2024  60

===== SIDA 64 =====

Kvika banki hf.  Amounts are in ISK thousands
Notes to the Consolidated Financial Statements
61
66. Share ‐based payments (cont.)
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
b. The  following share options are in existence at year end
Number of Exercise   Exercise
Share options shares year price
37,292  2025 21.69
5,059  2026 20.17
42,350 
c. Movements  in the number of share options outstanding and their related weighted average exercise prices
23.85 88,099  
18.00 9,086  
24.81 (27,707)
22.24 69,478  
15.27 (1,730)
23.93 (25,397)
21.51 42,350  
0 
 Issued in 2023 ‐ Other
 share options, cf. the Bank´s incentive scheme ...................................................
Average 
exercise price 
per share
Share 
options 
(thousands)
 At 1 January 2023 ................................................................................................................................................................
 Granted in 2023 ..................................................................................................................................................................
The vesting period of the share options is 36 months from grant date of the share options. Following that the share options may be exercised
for a period of three months where in that period the strike continues to accrue with 7.5% annual interest until the option is exercised.
However, in the event of a merger involving a dissolution of the company or if there is a change in the company's control, the share options
will become fully vested.
In general, share options shall lapse if the share option holder's employment relationship with the company is terminated before the end of
the vesting period.
Executive managers within the Group commit to retain, until the end of their employment, shares which market value correspond to profit
after taxes of utilised share options until the value of the shares owned by those individuals is equivalent 
to six months’ salary.
The value of the share options was determined by an independent specialist and the value is in line with the laws and rules applicable to
bonus payments of financial undertakings.
As of December 2024, a three year general share option plan, set forth in accordance with Article 10 of the Income Tax Act No. 90/2003, has
lapsed. There are thus no share options outstanding on the basis of said general share option plan. No decision has been made whether or not
another general stock option plan, cf. Art. 10 of Act No. 90/2003, will be implemented.
 Forfeited in 2023 .................................................................................................................................................................
At 31 December 2023
 Exercised in 2024 ................................................................................................................................................................
 Forfeited in 2024 .................................................................................................................................................................
At 31 December 2024
 Exercisable share options at 31 December 
2024 ...............................................................................................................
The Bank's CEO, deputy CEO and the executive m anagement of the group commit to retain, until the end of their employment, shares which
market value correspond to profit after taxes of utilised share options until the value of the shares owned by those individuals is equivalent to
12 months’ salary for Kvika´s CEO and deputy CEO and six months’ salary for other members of the executive management.
The value of the share options was determined by an independent specialist and the value is in line with the laws and rules applicable to
bonus payments of financial undertakings.
In certain instances, the Group is entitled to revoke the share options in part or in whole in line with applicable rules.
In 2023, the Bank, on the basis of the same authorisation from the A nnual General Meeting in 2022, granted share options to four employees of
the Group on the basis of the Bank´s incentive scheme. The share options were assigned as a a deferred part of recruitment bonuses that were
granted between December 2022 to April 2023. The stock options are granted in order to align the long ‐term interests of the company and said
employees. The cost of these share option agreements is ISK 14.7 million based on the Black‐Scholes calculation model. 
The main terms of the share options from 2023 are as follows:
The exercise price of the share options is ISK 20.107 per share, which is equivalent to the weighted average price in transactions with shares
of the company on Nasdaq OMX Iceland for ten business days prior to the contract date, with 7.5% annual interest over the period, and the
exercise price shall be adjusted for dividends that may be decided during the vesting period.
In certain instances, 
the Group is entitled to revoke the share options in part or in whole in line with applicable rules.
 Issued in 2022 ‐ Other share options, cf. the Bank´s incentive scheme ...................................................
The options do not allow for cash settlement.
 Consolidated Financial Statements 31 December 2024  61

===== SIDA 65 =====

Kvika banki hf.  Amounts are in ISK thousands
Notes to the Consolidated Financial Statements
61
67. Shareholders  of the Bank
31.12.2024 31.12.2023
Shareholder Country % %
Iceland 9.17% 9.56%
Iceland 7.93% 7.89%
Iceland 7.09% 7.01%
Iceland 5.64% 5.43%
Iceland 5.58% 6.00%
Iceland 2.59% 2.55%
Iceland 2.55% 3.54%
Iceland 2.39% 1.28%
Iceland 2.33% 2.30%
Iceland 2.32% 2.31%
Iceland 1.96% 1.92%
Iceland 1.71% 1.78%
Iceland 1.70% 0.41%
Iceland 1.45% 1.43%
USA 1.36% 1.21%
Iceland 1.30% 1.45%
USA 1.30% 1.25%
Iceland 1.29% 1.27%
Iceland 1.03% 1.60%
37.98% 38.57% 2024:  2722, 2023: 2857
98.69% 98.77%
1.31% 1.23%
Total 100% 100%
68. Other  matters
 Status of TM sales process
Tax treatment of warrants sold by the Bank
69. Events  after the reporting date
There are no material events after the reporting date.
Beneficial owners are defined as owners holding a share of 10% or greater, directly or indirectly. The information presented is, among other
things, based on publicly available information.
 Others, each less than 1% ...............................
 Treasury shares ...............................................
Investment fund managed by The Vanguard Group, Inc.
 Landsbankinn hf. .............................................
Svanhildur Nanna Vigfúsdóttir (100%)
Investment fund managed by The Vanguard Group, Inc.
Investment fund managed by Stefnir hf.
Tómas Kristjánsson (100%)
 Stefnir ‐ Innlend hlutabréf hs. .........................
 Almenni lífeyrissjóðurinn ................................
 Arion banki hf. .................................................
 Stapi lífeyrissjóður ...........................................
 SNV Holding ehf. .............................................
 Vanguard Emerging Markets Stock .................
 Vanguard Total International S .......................
 Birta lífeyrissjóður ...........................................
 Gildi ‐ lífeyrissjóður .........................................
 Lífsverk lífeyrissjóður ......................................
Beneficial owners
 Fossar fjárfestingarbanki hf. ............................
 Sigla ehf. ..........................................................
 Frjálsi lífeyrissjóðurinn ....................................
 Lífeyrissjóður starfsmanna ríkisins B‐deild .....
 Lífeyrissjóður verzlunarmanna ........................
 Íslandsbanki hf. ...............................................
 Lífeyrissjóður starfsmanna ríkisins A‐deild .....
 Stoðir hf. ..........................................................
As the Iceland revenue and customs has not yet concluded its review, the Bank has not charged any amount to its income statement nor made
any changes to the tax returns for the respective years.
The Bank is aware of that the Iceland revenue and customs ("Skatturinn") is currently reviewing the tax treatment of warrants that the Bank sold
during the years 2017 to 2019. The Iceland revenue and customs is looking into whether the warrants should be taxed as perquisites instead of as
a financial instruments. Should that be the case, then the Bank would be required to pay the respective social security tax and tax on financial
activity. The Bank would however be able to deduct the amount of salary related expenses, as well as the amount of the perquisites, from its tax
base 
for the respective years in question, and thereby increase its deferred tax losses. 
On 30 May 2024 the Bank announced that it had signed a purchase agreement with Landsbankinn hf., in which Landsbankinn hf. purchased 100%
of the share capital in TM. On 17 March 2024, the Bank announced that it had received binding offers for the purchase of the share capital of TM.
Due diligence review has been completed, and the purchase agreement has been signed with standard conditions of approval from The Financial
Supervisory Authority of the Central Bank of Iceland and the Icelandic Competition Authority ("ICA"). On 26 September 2024, the Financial
Supervisory Authority of the Central Bank of Iceland has published the results of its assessment, finding that Landsbankinn is eligible to control a
qualifying holding in TM. The ICA has yet to conclude its review of the transaction. The purchase price according to the purchase agreement is ISK
28.6 billion and Landsbankinn hf. will pay for the share capital in cash. The purchase price is based on TM's balance sheet at the end of 2023. The
final purchase price will be adjusted for changes in TM's tangible equity from the beginning of the year 2024 to the completion date, and the
amount of the change will be added to or subtracted from the price according to the purchase agreement.
 Consolidated Financial Statements 31 December 2024  62

===== SIDA 66 =====

Kvika banki hf.  Amounts are in ISK thousands
Notes to the Consolidated Financial Statements
0
Significant accounting policies Page
70  Basis of consolidation ............................................................................ 64
71  Foreign currency .................................................................................... 65
72  Interest income and expense ................................................................. 65
73  Fee and commission income and expense ............................................ 65
74  Net financial income (expense) ............................................................. 66
75  Dividend income .................................................................................... 66
76  Administrative expenses ........................................................................ 66
77  Employee benefits ................................................................................. 66
78  Income tax .............................................................................................. 66
79  Financial assets and financial liabilities ................................................. 67
80  Offsetting ............................................................................................... 68
81  Determination of fair value .................................................................... 68
82  Impairment ............................................................................................ 69
83  Cash and balances with Central Bank .................................................... 71
84  Fixed income securities .......................................................................... 71
85  Shares and other variable income securities ......................................... 71
86  Securities used for hedging .................................................................... 71
87  Loans to customers ................................................................................ 72
88  Derivatives .............................................................................................. 72
89  Investments in associates ...................................................................... 72
90  Intangible assets .................................................................................... 72
91  Operating lease assets ........................................................................... 73
92  Property and equipment ........................................................................ 73
93  Other assets ........................................................................................... 74
94  Deposits  ................................................................................................. 74
95  Borrowings ............................................................................................. 74
96  Issued bonds .......................................................................................... 74
97  Subordinated liabilities .......................................................................... 74
98  Short positions held for trading ............................................................. 74
99  Short positions used for hedging ........................................................... 74
100  Other liabilities ....................................................................................... 74
101  Assets and disposal groups held for sale ............................................... 74
102  Right of use asset and lease liability ...................................................... 75
103  Financial guarantees .............................................................................. 75
104  Share capital ........................................................................................... 75
105  Nature and purpose of equity reserves ................................................. 75
106  Earnings per share .................................................................................. 75
107  New standards and interpretations ....................................................... 76
108  Use of estimates and judgements ......................................................... 76
 Consolidated Financial Statements 31 December 2024  63

===== SIDA 67 =====

Kvika banki hf.
Notes to the Consolidated Financial Statements
69
Significant accounting policies
70. Basis  of consolidation
a. Subsidiaries
b. Business  combinations
c. Non ‐controlling interest
d. Fiduciary  services
e. Transactions  eliminated on consolidation
f. Structured  entities
The accounting policies set out below have been applied consistently to all periods presented in these Consolidated Financial Statements, and
have been applied consistently by Group entities.
The Group provides custody services, fund management and discretionary and advisory investment management services which require the
Group to make decisions on the handling, acquisition or disposal of financial instruments on behalf of its clients.
The financial statements of managed funds and investment portfolios managed by the Group on behalf of customers are not included in the
financial statements, as they do not constitute assets or liabilities of the Group.
Intra‐group balances, income and expenses, and unrealised gains and losses arising from intra ‐group transactions, are eliminated in preparing
the consolidated financial statements. Unrealised gains arising from transactions with associates are eliminated against the investment to the
extent of the Group's interest in the associate. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that
there is no evidence of impairment. This also applies to subsidiaries classified as disposal groups held for sale.
The Group acts as investment manager or investment advisor, for example, to a number of investment funds operated by the fund management
company Kvika eignastýring hf. The purpose of such a fund management company is to generate fees from managing assets on behalf of
third‐party investors by providing investment strategies. These investment funds are financed through the issue of units to investors. The Group
has no contractual obligation to provide financial support to these structured entities.
From time to time, the Group makes seed capital investments in certain fund products in order to establish track records for new products, to
test new investment strategies or to launch new products at a viable minimum size.
The Group has set up a formal procedure to assess whether or not to consolidate investment funds managed and administered by the Group on
behalf of its customers and other investors in the consolidated financial statements. As part of this assessment, the Group reviews all facts and
circumstances including the purpose and design of the investment fund, to determine whether the Group, as fund manager, is acting as agent or
principal. The Group is deemed to be a principal when the Group acts as fund manager and cannot be removed without cause, has variable
returns through
 significant holdings and is able to influence the returns of the funds by exercising its power.
Structured entities are entities that have been designed so that voting or similar rights are not the dominant factor in deciding who controls the
entity, such as when any voting rights relate to administrative tasks only and the relevant activities are directed by means of contractual
arrangements.
Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay contingent consideration that meets the
definition of a financial instrument is classified as equity, then it is not remeasured and settlement is account for within equity. Otherwise, other
contingent consideration is remeasured at fair value at each reporting date and subsequent changes in the fair value of the contingent
consideration are recognised in profit and loss.
Subsidiaries are entities controlled by the Group. Control exists when the Group is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns through its power over the entity. The Group reassesses its relationship
with an entity when there is a change in one or more of the elements of control.
The Group uses the acquisition method to account for the acquisition of subsidiaries. The cost of an acquisition is measured as the fair value, at
the date of exchange, of the assets given, liabilities incurred or assumed and equity instruments issued. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date,
irrespective of the extent of any minority interest.
The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is recognised as goodwill. If
the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised immediately in the
income 
statement.
Non‐controlling interest represent the portion of profit or loss and equity not owned, directly or indirectly, by the Bank. Non ‐controlling interest
is presented separately in the income statement and is included in equity in the statement of financial position, separately from equity
attributable to owners of the Bank. 
The Group chooses on an acquisition ‐by‐acquisition basis whether to measure non ‐controlling interest in an acquiree at fair value or according
to the proportion of non ‐controlling interests in the acquiree's net assets. Changes in the Bank's ownership interest in a subsidiary that do not
result in a loss of control are accounted for as equity transactions. In such circumstances the carrying amounts of the controlling and non ‐
controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which
the non‐controlling interest is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to
the owners of the Bank.
 Consolidated Financial Statements 31 December 2024  64

===== SIDA 68 =====

Kvika banki hf.
Notes to the Consolidated Financial Statements
69
71. Foreign  currency
a. Foreign  currency transactions
b. Foreign  operations
72. Interest  income and expense
Effective interest rate
Amortised cost and gross carrying amount
Presentation
‐
‐
‐
‐
73. Fee  and commission income and expense
‐
‐
‐
‐
‐
‐
‐ Fees attributable to a specific service or action are recognised as income when the service has been performed. Examples of such fees are
brokerage and payment commissions
financial assets at fair value through profit and loss
Translation differences on foreign operations are presented as a separate category 
in the statement of changes in equity.
Interest income and expense are recognised in the income statement usi ng the effective interest method. The effective interest rate is the rate
that exactly discounts estimated future cash flows through the expected life of the financial instrument to the gross carrying amount of the
financial asset or the amortised cost of the financial liability. When calculating the effective interest rate for financial instruments other than
purchased or originated credit ‐impaired assets, the Group estimates future cash flows considering all contractual terms of the financial
instrument but not ECL. For purchased or originated credit ‐impaired financial assets, a credit ‐adjusted effective interest rate is calculated using
estimated future cash flows including ECL. 
The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured on initial
recognition minus the principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference
between that initial amount and the maturity amount and, for financial assets, adjusted for any expected credit loss allowance. The gross
carrying amount of a financial asset is the amortised cost of a financial asset before adjusting for any expected credit loss allowance.
Transactions in foreign currencies are translated into the functional currency of the respective Group's entity using the exchange rate at the date
of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated to the functional currency using the
exchange rate at the reporting date. Non ‐monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are
translated using the exchange rate at the date of the transaction. Non ‐monetary assets and liabilities denominated in foreign currencies that are
stated at fair value are translated using the
 exchange rate at the date the fair value was determined.
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into the
functional currency at spot exchange rate current at the reporting date. The income and expenses of foreign operations are translated into the
functional currency at the spot exchange rates at the dates of the transactions.
Fee and commission income and expense are recognised in the inco me statement when an agreement with a customer meets all of the
following criteria:
Fees that are earned gradually as the services are performed, such as management fees in asset management, are recognised as income at
the rate these services are delivered. In practice, these are on a straight line basis
financial assets at fair value through other comprehensive income (FVOCI)
Interest
 income and expense presented in the income statement includes interest on:
Foreign currency differences are posted as a separate line item under net financial income as disclosed in notes 7 and 74.
derivatives
The Group earns income from providing various services to its customers. This includes fees for managing assets on behalf of customers,
commissions received for equity and bond transactions and fees and c ommissions for various other fina ncial services. Fee and commission
income and expenses that are integral to the effective interest rate on a financial asset or liability are included in the measurement of the
effective interest rate.
financial assets and liabilities measured at amortised cost
the parties to the contract have approved
 the contract and are committed to perform their respective obligations
performance obligations have been established for services to be transferred
the payment terms have been established for the services to be transferred
the transaction price can be allocated to each individual service in the agreement
it is probable that a consideration will be collected in exchange for the services that will be transferred to the customer
The following applies to recognition of income for various types of fees and charges:
 Consolidated Financial Statements 31 December 2024  65

===== SIDA 69 =====

Kvika banki hf.
Notes to the Consolidated Financial Statements
69
74. Net  financial income (expense)
‐
‐
‐
‐
‐
‐
‐
75. Dividend  income
76. Administrative  expenses
77. Employee  benefits
a. Short ‐term employee benefits
b. Defined  contribution plans
c. Share ‐based payments
78. Income  tax
Short‐term employee benefits obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability
is recognised for the amount expected to be paid under short ‐term cash bonus or profit ‐sharing plans if the Group has a present legal or
constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
Current tax liabilities include the estimated tax payable next year on current year's profit according to the tax rates prevailing at reporting date,
in addition to corrections 
on tax from previous years.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be
utilised. Deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that the related tax
benefit will be realised.
The deferred income tax asset and/or liability has been calculated and recognised in the statement of financial position. The calculation is based
on the difference between assets and liabilities as presented in the tax return on the one hand, and in the consolidated financial statements on
the other, taking into consideration tax losses carried forward. This difference is due to the fact that the tax assessment is based on premises
that differ from those governing the financial statements, mostly due to temporary differences arising from the recognition of revenue and
expense in the tax returns and in the financial statements.
Deferred tax assets and tax liabilities are offset in the statement of financial position when there is a legal right to settle on a net basis and they
are levied by the same taxing authority on the same entity or on different entities subject to joint taxation.
Fair value changes of loans to customers held at fair value
Administrative expenses comprise expenses other than interest exp enses, fee and commission expenses an d expenses related to fair value
changes. 
A breakdown of administrative expenses is provided in note 9.
Obligations for contributions to defined contribution plans are expensed in profit or loss as the related service is provided. The Group has no
further obligations once those contributions have been paid.
Equity‐settled share‐based payments to employees are measured at the fair value of the equity instruments at grant date. The grant date fair
value of equity ‐settled share‐based payment awards granted to employees is recognised as an employee expense, with a corresponding
increase in equity, over the period that the employees become unconditionally entitled to the awards. The amount recognised as an expense is
adjusted to reflect the number of awards for which the related service and non ‐market performance conditions are expected to be met, such
that the amount ultimately recognised as an expense is based on the number of awards that meet the related service and non ‐market
performance conditions at the vesting date.
Income tax comprises current and deferred tax. Income tax is recognised in the income statement, except to the extent that it relates to items
recognised directly in other comprehensive income or equity, in which case it is recognised there.
Realised and unrealised gains or
 losses from price changes of variable income securities
Interest income from fixed income securities carried at fair value through profit or loss
Dividends
Fair value changes in derivatives
Foreign exchange difference
Dividend income is recognised when the right to receive income is established. Usually this is the ex ‐dividend date for equity securities.
Dividends are presented as a component of net financial income.
Net financial income comprises the following:
Realised and unrealised gains or losses from price changes of fixed income securities measured at fair value
 Consolidated Financial Statements 31 December 2024  66

===== SIDA 70 =====

Kvika banki hf.
Notes to the Consolidated Financial Statements
69
79. Financial  assets and financial liabilities
a. Recognition
b. Classification
Financial assets
Financial assets at amortised cost
Financial assets at fair value through other comprehensive income (FVOCI)
Financial assets at fair value through profit or loss (FVTPL)
Business model assessment
‐
‐
‐
‐
‐
Financial assets classified at fair value through profit or loss are all other financial assets which are not classified at amortised cost or at fair va lue
through other comprehensive income. This includes financial assets classified mandatorily at fair value through profit or loss and financial asset s
which are irrevocably designated by the Group at initial recognition as at fair value through profit or loss that would otherwise meet the
requirements to be measured at amortised cost or at fair value through other comprehensive income. The Group may designate financial assets
as at fair value through profit or loss if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise. 
Fixed income securities may be classified as financial instruments measured at fair value through other comprehensive income ("FVOCI") when
they meet the classification criteria. Interest income is calculated using the effective interest rate. Interest income and foreign exchange gains or
losses are recognised in the Consolidated Statem ent of Comprehensive Income. F ixed income securities classified as FVOCI are subject to
impairment measurement using the expected credit loss approach. Fair value measurements are recognised in Other Comprehensive Income
while on derecognition, cumulative gains (losses) recognised in Other Comprehensive Income are reclassified to the Consolidated Statement of
Income.
the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are
managed;
The Group's financial assets are classified into one of three measurement categories, i.e. i) at amortised cost, ii) at fair value through other
comprehensive income or iii) at fair value through profit or loss. The measurement basis of individual financial assets is determined based on an
assessment of the cash flow characteristics of the assets and the business models under which they are managed.
The Group initially recognises loans and advances, deposits, debt securities issued and subordinated liabilities on the date on which they are
originated. All other financial assets and liabilities are initially recognised on the trade date, which is the date when the Group becomes a party
to the contractual provisions of the instrument.
A financial asset is measured at amortised cost if the contractual terms of the financial asset give rise to cash flows that are solely payment of
principal and interest and the asset is held within a business model whose objective is to collect contractual cash flows, i.e. Held to collect. After
initial measurement, financial assets in this category are carried at amortised cost using the effective interest rate method. Amortisation is
included in interest income in the Consolidated Income Statement. The majority of the Group's loans to customers are carried at amortised cost
using the effective interest rate method. Interest on loans to customers is recognised as interest income.
The Group makes an assessment of the objective of a business model in which an asset is held at a portfolio level because this best reflects the
way the business is managed and information is provided to management. The information considered includes:
the stated policies and objectives for the portfolio and the operation of those policies in practice. In particular, whether management's
strategy focuses on earning contractual interest revenue, maintaining a particular interest rate profile, matching the duration of the financial
assets to the duration of the liabilities that are funding those assets or
 realising cash flows through the sale of the assets;
how the performance of the portfolio is evaluated and reported to the Group's management;
Impairment on financial assets measured at amortised cost is calculated using the expected credit loss approach. Loans and debt securities
measured at amortised cost are presented net of allowance for credit losses in the Consolidated Statement of Financial Position.
Financial assets at fair value through profit or loss are measured in the Consolidated Statement of Financial Position at fair value. Loans to
customers which are measured at fair value through profit or loss are assets whose cash flows do not represent payments that are solely
payments of principal and interest but are non ‐trading assets. Interest on loans to customers measured at fair value through profit or loss is
recognised as interest income. Changes in fair value, as well as any gains or losses realised on disposal, are recognised in the line item Net
financial income (expense) in the Consolidated Income 
Statement.
how managers of the business are compensated ‐ e.g. whether compensation is based on the fair value of the assets managed or the
contractual cash flows collected; and
the frequency, volume and timing of sales in prior periods, the reasons for such sales and its expectations about future sales activity.
However, information about sales activity is not considered in isolation, but as part of an overall assessment of how the Group's stated
objective for managing the financial assets is achieved and how cash flows are realised.
Financial assets that are held for trading or managed and whose performance is evaluated on a fair value basis are measured at fair value
through profit or loss because they are neither held to collect contractua l cash flows nor held to both collect contractual cash flows and to sell
financial assets.
 Consolidated Financial Statements 31 December 2024  67

===== SIDA 71 =====

Kvika banki hf.
Notes to the Consolidated Financial Statements
69
79. Financial assets and financial liabilities (cont.)
Cash flow characteristics assessment
Reclassifications
Financial liabilities
Derecognition
Financial assets
Financial liabilities
80. Offsetting
81. Determination  of fair value
Income and expenses are presented on a net basis for gains and losses arising from a group of similar transactions, such as in the Group's trading
activity, or other circumstances permitted by International Financial Reporting Standards.
A financial asset is derecognised when the contractual rights to the cash flows from the asset expire, or when the Group enters into a
transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred
financial assets that is created or retained by the Group is recognised as a separate asset or liability.
The Group enters into transactions whereby it transfers assets recognised on its statement of financial position, but retains either all or
substantially all of the risks and rewards of the transferred assets or a portion of them. In such cases, the transferred assets are not
derecognised. Examples of such transactions are securities lending and sale and repurchase agreements.
Financial liabilities are derecognised when the obligation of the Group is discharged, cancelled or expires.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date in the principal or, in its absence, the most advantageous market to which the Group has access at that date. The fair
value of a liability reflects its non ‐performance risk. When available, the Group measures the fair value of an instrument using the quoted price
in an active market for that instrument. A market is regarded as active if transactions for the asset or liability take place with sufficient frequency
and volume to provide pricing information on an ongoing basis.
Financial assets and liabilities are offset, and the net amount reported in the statement of financial position, when there is a legally enforceable
right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability
simultaneously.
The best evidence of the fair value of a financial instrument at initial recognition is normally the transaction price – i.e. the fair value of the
consideration given or received. If the Group determines that the fair value at initial recognition differs from the transaction price and the fair
value is evidenced neither by a quoted price in an active market for an identical asset or liability nor based on a valuation technique that uses
only data from observable markets, then the financial instrument is initially measured at fair value, adjusted to defer the difference between the
fair value at initial recognition and the transaction price. Subsequently, that difference is recognised in profit or loss on an appropriate basis ov er
the life of the instrument but no later than when the valuation is wholly supported by observable market data or the transaction 
is closed out.
If there is no quoted price in an active market, then the Group uses valuation techniques that maximise the use of relevant observable inputs
and minimise the use of unobservable inputs. The chosen valuation technique incorporates all of the factors that market participants would take
into account in pricing a transaction. For further information on valuation techniques, refer to notes 60 ‐ 61.
Where the contractual terms introduce exposure to other risk or variability of cash flows that are inconsistent with a basic lending arrangement,
the related financial asset is classified and measured at fair value through profit or loss.
Financial assets held within the business models Held to collect and Held to collect and sell are assessed to evaluate if their contractual cash
flows are comprised of solely payments of principal and interest (SPPI). SPPI payments are those which are consistent with a basic lending
arrangement. Principal is the fair value of the financial asset at initial recognition and may change over the life of the instruments, e.g. due to
repayments. Interest relates to basic lending returns, including compensation for the time value of money and credit risk associated with the
principal amount outstanding and for other basic lending risks (expected losses, liquidity risks and administrative costs), as well as a profit
margin.
Financial assets are not reclassified subsequent to their initial recognition, except in the period after the Group changes its business model and if
the change is significant to the Group's operations.
The Group's financial liabilities are classified into one of two measurement categories, i.e. at amortised cost or at fair value through profit or
loss. Financial liabilities held for trading are measured at fair value through profit or loss, all other financial liabilities are measured at amort ised
cost. Financial liabilities measured at amortised cost are initially recognised at fair value, which is typically equal to cost, i.e. cash advanced l ess
any transaction costs. They are subsequently measured at amortised cost using the effective interest method. Accrued interest, in the case of
interest bearing liabilities is included
 in the carrying amount. Interest expense is recognised in net interest income.
 Consolidated Financial Statements 31 December 2024  68

===== SIDA 72 =====

Kvika banki hf.
Notes to the Consolidated Financial Statements
69
82. Impairment
Expected Credit Loss
‐
‐
‐
‐
‐
‐
1.
2.
3.
Stage 3 covers financial assets that have objective evidence of a credit loss event at the reporting date.
12‐month expected credit losses are recognised in stage 1, while lifetime expected credit losses are recognised in stages 2 and 3. IFRS 9 draws a
distinction between financial instruments that have not deteriorated significantly in credit quality since initial recognition and those that hav e.
Measurement of the expected credit losses is determined by a probability ‐weighted estimate of credit losses over the expected life of the
financial instrument.
An asset moves from 12‐month expected credit losses to lifetime expected credit losses when there has been a significant deterioration in credit
quality since initial recognition. Hence the ‘boundary’ between 12 ‐month and lifetime losses is based on the change in credit risk not the
absolute level of risk at the reporting date.
There is also an important operational simplification that permits companies to stay in ‘12 ‐month expected credit losses’ if the absolute level of
credit risk is ‘low’. This applies even if the level
 of credit risk has increased significantly.
There is also a third stage. This applies to assets for which there is objective evidence of impairment. In Stage 3 the credit loss allowance is still
based on lifetime expected losses but the calculation of interest income is different.
In the periods subsequent to initial recognition, interest is calculated based on the amortised cost net of the loss provision, whereas the
calculation is based on the gross carrying value in Stages 1 and 2.
Finally, it is possible for an instrument for which lifetime expected credit losses have been recognised to revert to 12 ‐month expected credit
losses should the credit risk of the instrument subsequently improve so that the requirement for recognising lifetime expected credit losses is no
longer met.
Lifetime expected credit losses
Lifetime expected credit losses are the expected shortfalls in contractual cash flows, taking into account the potential for default at any point
during the life of the financial instrument.
Expected credit losses
12 month expected 
credit losses
Stage 2 covers financial assets that have deteriorated significantly in credit quality since initial recognition (unless the low credit risk
simplification has been applied and is relevant) but that do not have objective evidence of a credit loss event.
Stage 1 covers financial assets that have not deteriorated significantly in credit quality since initial recognition or (where the optional low credit
risk simplification is applied) have low credit risk.
The Group measures the ECL on each balance sheet date according to a three‐stage expected credit loss impairment model.
The general approach
contract assets;
loan commitments issued; and
financial guarantee contracts issued.
For trade receivables and contract assets without a significant financing component a simplified (lifetime expected loss) approach can be
applied.
For assets that are credit‐impaired at purchase or origination lifetime expected loss approach shall be applied.
For other assets/exposures a general (or three‐stage) approach shall be applied.
The Group estimates an ECL for each of these types of assets or exposures. However, IFRS 9 specifies three different approaches depending on
the type of asset or exposure:
debt instruments measured at fair value through other comprehensive income;
finance lease receivables measured at amortised cost;
The Group recognises loss allowances for ECL on the following financial instruments that are not measured at FVTPL:
debt instruments measured at amortised cost;
12‐month expected credit losses are a portion of the lifetime expected credit losses. They are calculated by multiplying the probability of a
default occurring on the instrument in the next 12 months by the total (lifetime) expected credit losses that would result from that default. They
are not the expected cash shortfalls over the next 12 months. They are also not the credit losses on financial instruments that are forecast to
actually default in the next 12 months.
Expected credit losses are defined as the difference between all the contractual cash flows that are due to an entity and the cash flows that it
actually expects to receive (‘cash shortfalls’). This differenc ei sd i s c o u n t e da tt h eo r i g i n a le f f e c t i v ei n t e r e s tr a t e( o rc r e d i t‐adjusted effective
interest rate for purchased or originated credit‐
impaired financial assets).
 Consolidated Financial Statements 31 December 2024  69

===== SIDA 73 =====

Kvika banki hf.
Notes to the Consolidated Financial Statements
69
82. Impairment  (cont.)
‐
‐
‐
‐
‐
‐
1.
2.
Origination grade
1
2
3
4
5
6
7
8
9
7
7
7
7
Migration of corporations by one or two risk grades in the PD model is considered to be a significant increase in risk and therefore warrant a
transfer to stage 2, depending on the origination grade. However, the Group considers risk grade 6 and lower for corporations to be low risk and
therefore excludes any movement between categories that does not result in a rating above that level. If the borrower is in Creditinfo's default
registry then he moves to stage 3 if he is more than 30 days delinquent but stage 2 otherwise.
Risk Management is responsible for managing the credit risk of the Group which includes a qualitative SICR assessment. Risk Management
reviews on a monthly basis large exposures, unsecured loans and loans that are past due on a loan by loan basis.
Probability 
of default and credit risk rating
7
8
The Risk Management department can manually override automatic default triggers if the following applies:
the reason for reported default triggers is known to the Bank and not considered to be lack of willingness or ability to pay.
The Group utilises an economic forecast and the current 12 month PD for the purpose of estimating lifetime PD for loans in stage 2. The 12
month PD is adjusted with a survival rate for each year until maturity with the following formula: PD t =P D12 *S Rt where PD12 is the 12 month PD
from the credit rating model and SR t is the survival rate at time t, which is calculated recursively as SR t =S Rt‐1 *( 1‐PDt). The Group monitors the
appropriateness of the assumption as a part of it’s yearly validation and monitoring process. The PD assessment for portfolios in the UK is
primarily individually assessment done by credit specialists based on payment history and general creditworthiness where performing
customers are ranked in three different risk classes.
When considering whether a significant increase in credit risk (SICR) has occurred the Group considers both quantitative and qualitative factors.
In general the Group will rely on a quantitative analysis based on the PD model but will additionally consider qualitative factors based on the
information available to the Group.
The Group has defined the following criteria’s for SICR:
Over 30 days past due of any of the client's exposures or client is in Creditinfo's default registry
Definition of default
The Group utilises internal and external Probability of Default models (PD models). Internal models are developed using internal default data
along with demographic and other explanatory variables. External models are developed by Creditinfo, an Icelandic credit bureau, for the
domestic corporate and invidiual portfolios. The Creditinfo PD models are calibrated to the default rate of the underlying portfolios. The PD
models calculate a 12 month PD and a lifetime PD is calculated for stage 2 loans. All PD models use an economic regression model which uses
forecasted macro variables to adjust the PD values 
for economic scenarios.
Threshold grade
Qualitative SICR assessment
8
9
10
re‐financing of borrower’s exposures is expected and has been confirmed.
the borrower is considered to be unlikely to pay as determined by the B ank's Risk Management department. Events that are likely to lead to
default as determined by the Risk Management department include the following:
    ‐ breach of covenants of loan commitments;
    ‐ loan concessions or stressed restructuring; or
    ‐ High risk classification based on Risk Management's internal 
risk assessment.
the borrower has been in default in accordance with above at any point for the previous three months or previous 12 months if loan was
granted forbearance measures while being classified in default.
the borrower is more than 90 days past due of one of his exposures with the Bank;
the borrower is registered as in delinquency by Creditinfo (Icelandic: vanskilaskrá) and has payment more than 30 days delinquency with the
Group;
The Group considers a financial asset to be in default if one of the following applies:
Quantitative SICR assessment
Grading migrations – SICR has occurred if the current grade has increased compared to the origination grade. For the domestic portfolio,
more or equal to the following
 thresholds are considered to be significant increase in credit risk:
Significant increase in credit risk
 Consolidated Financial Statements 31 December 2024  70

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