===== SIDA 1 =====

Consolidated 
 Financial 
Statements 2025

===== SIDA 2 =====

Arion Bank Consolidated Financial Statements 2025
page
3
4
13
16
17
18
19
21
22
99
100
Contents
Consolidated Income Statement ...........................................................................................................................................................
Consolidated Statement of Cash Flows ................................................................................................................................................
Arion Bank highlights ............................................................................................................................................................................
Endorsement and statement by the Board of Directors and the CEO ....................................................................................................
Consolidated Statement of Financial Position .......................................................................................................................................
Consolidated Statement of Comprehensive Income .............................................................................................................................
Consolidated Statement of Changes in Equity ......................................................................................................................................
Independent Auditor's report  ................................................................................................................................................................
Notes to the Consolidated Financial Statements ...................................................................................................................................
5-year overview ....................................................................................................................................................................................
Appendices (unaudited) ........................................................................................................................................................................
2

===== SIDA 3 =====

Arion Bank 
Highlights 31 December 2025
FY 2025 14.9%
Return on
Equity*
FY 2025 42.3%
Total cost-to-
core income
18.4%
CET1 ratio
                         
    
    
    
    
    
                         
    
    
        
    
                         
      
      
   
Return on equity* (%)
Net interest margin (%)
Total cost-to-Core income ratio (%)
                                        
                    
CET1 ratio (%)
                                        
   
      
      
LCR ratio (%)
                                        
                         
Total assets (ISK bn)
   
  
  
  
  
    
  
  
Moody’s
Long term: A3 
Covered bond: Aa1
Outlook: Stable
  d   d   s
      s              s
 o s      o 
  s       d s  y
 o         d s      s
   o  od   o    d  ood
s                s
            d   s      
         s
  d s  y       y   d
             
     
Loans to customers by sector
*Return on equity attributable to shareholders of Arion Bank
 Unaudited

===== SIDA 4 =====

Arion Bank Consolidated Financial Statements 2025
About Arion Bank
- 
Operations during the year
2025
Return on equity attributable to 
shareholders of Arion Bank
14.9%
Core operating income / REA
7.4%
Insurance revenue growth (YoY)
5.5%
Combined ratio
89.8%
Total cost-to-core income ratio
42.3%
308 bps
50%
Endorsement and statement
by the Board of Directors and the CEO
The
Consolidated
Financial
Statements
of
Arion
Bank
for
the
year
ended
31
December
2025
include
the
Consolidated
Financial
Statements
of
Arion Bank ("the Bank") and its subsidiaries, together referred to as "the Group".
Income Statement
Arion
Bank
and
its
subsidiaries
provide
comprehensive
financial
services
to
the
people
of
Iceland.
Arion
Bank’s
role
is
to
help
those
who
want
to
achieve
success
in
Iceland
and
the
Arctic
through
smart
and
reliable
financial
solutions
which
enhance
financial
health
and
create
sustainable
value.
Arion
Bank
places
great
importance
on
developing
long-term
relationships
with
its
clients
and
is
a
market
leader
as
a
provider
of
cutting-
edge and modern banking services.
Arion
Bank
provides
services
to
individuals,
corporates
and
investors
in
three
business
segments:
Retail
Banking,
Corporate
&
Investment
Banking,
and
Markets.
The
service
offering
is
further
augmented
by
the
subsidiaries
Stefnir
and
Vördur.
Stefnir
is
one
of
the
largest
fund
management
companies
in
Iceland,
and
Vördur
is
the
fastest
growing
insurance
company
in
Iceland,
providing
non-life
and
life
insurance.
The
Bank also offers pension services and manages several pensions funds. Arion’s service offering is therefore highly diverse.
The
diverse
service
offering
creates
a
broad
revenue
base,
and
the
loan
portfolio
is
well
diversified
between
retail
and
corporate
customers.
The
high percentage of mortgages and the healthy distribution of loans across different sectors contribute towards risk management.
The
Group
is
a
market
leader
in
terms
of
digital
solutions
and
innovation,
and
the
majority
of
the
Group’s
services
can
be
obtained
using
the
Arion
app.
The
broad
spectrum
of
digital
services
makes
banking
more
convenient
for
customers
and
also
makes
the
business
more
cost
efficient.
The
Bank
is
a
leading
service
provider
and
advisor
to
corporate
customers
and
investors
and
has
been
a
key
figure
in
invigorating
the
Icelandic stock market.
Arion
Bank
has
adopted
a
clear
policy
on
sustainable
operations
and
environmental
and
climate
issues.
A
wide
range
of
green
financial
services,
such
as
green
car
loans,
deposits,
corporate
loans
and
mortgages,
is
available
to
its
customers.
Arion
Bank
has
in
addition
published
a sustainable financing framework which addresses the Bank’s funding and lending activities.
Arion
Bank
is
a
financially
robust
bank
which
aspires
to
operate
profitably
in
harmony
with
society
and
the
environment.
The
Bank
is
committed
to paying competitive dividends and is listed on Nasdaq Iceland and Nasdaq Stockholm.
Net
earnings
attributable
to
the
shareholders
of
Arion
Bank
amounted
to
ISK
30.6
billion
for
the
year,
with
a
return
on
equity
of
14.9%
and
earnings
per
share
ISK
22.05,
compared
with
ISK
26.1
billion,
13.2%
and
ISK
18.31
respectively
in
2024.
Core
income,
defined
as
net
interest
income,
net
commission
income
and
insurance
service
results
(excluding
opex),
increased
by
12.3%,
compared
with
the
previous
year.
Net
interest
income
increased
by
13.5%,
compared
with
the
previous
year,
and
the
net
interest
margin
was
3.2%,
compared
with
3.1%
in
2024.
Net
commission
income
increased
by
11.6%
between
years,
an
increase
across
the
major
categories.
The
operation
of
Vördur
contributed
standalone
net
results
of
ISK
2.0
billion
in
2025,
compared
with
ISK
3.7
billion
in
2024.
Insurance
revenues
continued
to
grow,
increasing
by
5.5%
between
years,
while
claims
increased
by
5.0%.
Net
financial
income
amounted
to
ISK
1.1
billion,
impacted
by
challenging
capital
markets,
especially
in
equities
during
the
first
half
of
the
year.
Other
operating
income
amounted
to
ISK
5.5bn,
mainly
due
to
the
fair
value
change
and
profit
from
sale
of
the
investment
property
Arnarland.
Operating
expenses,
including
operating
expenses
of
the
insurance
operation,
increased
by
2.5%
compared
with
the
previous
year,
with
fluctuations
in
underlying
items.
Inflation
measured
3.7%
between
years.
The
cost-to-income
ratio
was
36.0%,
compared
with
42.6%
in
2024,
while
the
total
cost-to-core
income
ratio
was
42.3%,
compared
with
47.2%
in
2024.
Impairments
were calculated at 24bps for the year. The effective income tax rate was 27.7%.
Arion Bank's medium-term financial targets
Exceed 13%
Exceed 7.2%
In excess of market growth (5.7% in 9M 2025 YoY)
Below 95%
Below 45%
Pay-out ratio of approximately 50% of net earnings attributable to shareholders through either 
dividends or buyback of the Bank's shares or a combination of both
150-250 bps management buffer (~16.8 - 17.8%)
Balance Sheet
CET1 ratio above regulatory
capital requirements
Arion Bank's medium-term financial targets compared with the operational results for the year
Dividend pay-out ratio
Arion
Bank's
balance
sheet
grew
by
8.5%
from
year-end
2024.
Loans
to
customers
increased
by
8.0%,
mainly
loans
to
corporates
which
increased
by
16.6%.
Deposits
increased
by
7.4%,
primarily
individuals
and
SMEs
with
low
LCR
outflow
weight.
Shareholders’
equity
amounted
to
ISK
217,327
million
at
the
end
of
the
year.
The
Group's
capital
ratio,
as
calculated
under
the
Financial
Undertakings
Act
No.
161/2002,
was
22.5%
and
the
CET1
ratio
was
18.4%
assuming
around
ISK
15.3
billion
dividend
payment
and
ISK
5
billion
buyback
of
own
shares
approved
by
the
Board
in
2025
and
the
Financial
Supervisory
Authority
of
the
Central
Bank
of
Iceland
(FSA)
in
January
2026.
These
ratios
comfortably
exceed
the
requirements
made
by
the
FSA
and
Icelandic
law.
The
liquidity
position
was
strong
at
year-end
and
well
above
the
regulatory
minimum.
4

===== SIDA 5 =====

Arion Bank Consolidated Financial Statements 2025
Endorsement and statement
by the Board of Directors and the CEO
Merger discussion between Arion Bank and Kvika
Economic outlook
Outlook for the Group
Employees
 
Arion
Bank
and
Vördur
have
in
place
an
incentive
scheme
which
came
into
effect
in
2021
for
employees
of
Arion
Bank
and
Vördur.
The
scheme
is
in
compliance
with
the
FSA’s
rules
on
remuneration
policies
for
financial
institutions.
The
scheme
is
divided
into
two
parts.
Firstly,
employees
can
receive
up
to
10%
of
their
fixed
salary
in
the
form
of
a
cash
payment.
Secondly,
a
limited
group
can
receive
up
to
25%
of
their
fixed
salary
as
payment,
partly
in
the
form
of
shares
or
share
options
in
the
Bank.
The
key
metric
used
to
determine
whether
remuneration
will
be
paid
for
the
relevant
year,
in
part
or
in
full,
is
whether
the
Bank’s
return
on
equity
in
the
relevant
year
is
higher
than
the
weighted
ROE
of
the
Bank’s
main
competitors.
Stefnir
has
a
separate
incentive
scheme
where
other
criteria
are
used
as
a
basis.
Since
2021
Arion
Bank
has
had
in
place
a
share
option
plan
for
all
employees
of
the
Bank,
and
the
subsidiaries
Vördur
and
Stefnir,
which
is
considered
important
for
aligning
the
interests
of
employees
with
the
long-term
interests
of
the
Bank.
The
share
option
plan
was
initially
for
five
years
and
employees
are
entitled
to
buy
shares
for
up
to
ISK
1,500,000
each
year.
The
purchase
price
is
determined
by
the
Bank’s
average
share
price
10
days
before
the
share
option
agreement is signed. Further disclosure on the incentive scheme and the share option plan can be found in Note 13.
The Group had 901 full-time equivalent positions at the end of the year, compared with 858 at the end of 2024.
On
4
July
2025,
the
Board
of
Directors
of
Arion
Bank
reiterated
its
interest
from
27
May
to
the
Board
of
Kvika
banki
hf.
to
enter
into
merger
negotiations.
The
aim
of
the
merger
is
to
combine
the
companies’
strengths
and
to
create
a
robust
financial
institution
which
offers
comprehensive
services
for
its
customers.
The
Board
of
Directors
of
Kvika
agreed
to
the
request,
and
both
parties
signed
a
letter
of
intent.
According
to
the
letter
of
intent
Kvika
shareholders
receive
in
exchange
for
their
shares
new
shares
in
Arion
Bank
representing
26%
of
the
merged
entity,
a
total
of
485,237,822
shares,
representing
a
share
price
of
ISK
19.17
per
share
in
Kvika
and
a
share
price
of
ISK
174.5
per
share
in
Arion
Bank.
The
merger
of
the
two
banks
is
subject
to
both
regulatory
approval
and
the
approval
of
shareholders’
meetings
of
both
entities.
The
first
steps
involve
due
diligence
reviews
and
preliminary
discussions
with
the
Icelandic
Competition
Authority,
which
began
late
last
year,
where
the
aims
of
the
merger
and
benefits
resulting
from
it,
both
for
customers
and
the
Icelandic
financial
market,
will
be
presented.
The
parties
hope
that
the
preliminary
discussions,
the
finalization
of
contracts,
and
the
due
diligence
review
will
be
completed
in
the
next
few
months.
Assuming
that
the
preliminary
discussions
with
the
Icelandic
Competition
Authority
are
successful,
merger
negotiations
will
commence
and
the
merger
will
be
formally
announced
to
the
regulators
and
will
be
submitted
for
approval
at
shareholders’
meetings
of
both
companies.
For
further
information, see press releases from 4 and 21 July 2025.
In
recent
years,
Arion
has
followed
a
strategy
designed
to
drive
leadership
in
our
markets,
the
success
of
our
customers
and
society
as
a
whole.
This
vision
builds
on
long-term
client
relationships,
diverse
products
and
services
and
strong
teamwork
which
form
the
basis
for
a
seamless
customer
experience
and
sustainable
value
creation.
The
Group’s
performance
over
the
past
few
years,
which
has
continued
in
2025,
indicates
that
we
are
on
the
right
track.
The
proposed
merger
with
Kvika
Bank
is
a
natural
progression
of
this
strategy
and
has
strong
potential
to
further
enhance the operational performance and the service to our clients.
The
external
operating
environment
continues
to
evolve.
As
before,
Arion
benefits
from
its
diverse
revenue
streams
and
sound
infrastructure,
while
also
retaining
the
flexibility
to
respond
to
the
shifting
environment.
The
operating
environment
for
2025
has
continued
to
be
impacted
by
inflation,
elevated
interest
rates,
and
international
political
uncertainty.
Arion
Bank
remains
in
a
strong
position
to
manage
the
evolving
external
operating environment.
After
two
years
of
modest
expansion,
household
consumption
regained
its
role
as
a
key
driver
of
economic
activity.
A
6.9%
increase
in
payment
card
turnover
in
the
fourth
quarter
indicates
continued
momentum,
reflecting
households’
strong
financial
position,
considerable
resilience,
and
substantial
increases
in
real
income.
Thus,
rising
unemployment
and
a
cooling
labour
market
have
not
yet
weighed
on
household
spending.
Although
it
is
too
early
to
draw
definitive
conclusions,
signs
point
to
a
structural
shift
in
the
adjustment
mechanism
of
the
economy,
with
a
greater
share
of
adjustment
now
occurring
through
the
labour
market
rather
than
via
a
weaker
currency,
higher
inflation,
and
reduced
purchasing
power.
Such
a
shift,
however,
implies
a
higher
level
of
unemployment
than
otherwise.
Unemployment
is
projected
to
continue
rising
in
the
coming months, as labour demand has weakened sharply and business sentiment, particularly among export oriented firms, has deteriorated.
The
year
2025
proved
particularly
turbulent,
as
rising
protectionism
in
global
trade
brought
widespread
uncertainty
and
significant
volatility
in
international
markets.
Although
the
impact
on
the
Icelandic
economy
was
ultimately
less
severe
than
feared,
conditions
became
increasingly
challenging
as
the
year
progressed.
Even
so,
the
economy
demonstrated
resilience,
with
GDP
growth
of
1.5%
in
the
first
nine
months
of
the
year
according
to
Statistics
Iceland’s
preliminary
estimates.
Growth
was
driven
primarily
by
household
consumption,
which
increased
by
3.6%
year
on
year,
and
investment,
which
expanded
by
10.1%.
Despite
a
record-breaking
summer
season
for
tourism,
export
growth
was
outpaced
by
an
11.4%
rise
in
imports.
The
surge
in
imports
was
largely
attributable
to
significant
inflows
of
computer
equipment
for
data
center
operations,
together with a marked rise in foreign travel by Icelandic consumers, both reaching unprecedented levels.
During
the
autumn
the
economy
faced
a
series
of
challenges.
Flight
capacity
to
Iceland
sharply
declined,
international
guidance
on
total
allowable
catches
(TAC)
of
pelagic
species
was
significantly
reduced,
a
major
electrical
equipment
failure
halted
aluminium
production
locally,
and
households’
borrowing
terms
and
financial
conditions
tightened
following
a
Supreme
Court
ruling.
This
led
to
a
rise
in
unemployment
and
a
further
slowdown
in
housing
market
activity,
which
had
already
shown
signs
of
cooling
earlier
in
the
year.
Even
as
the
economic
slowdown
became
more
evident,
substantial
wage
increases
continued
to
fuel
domestic
inflationary
pressures.
Inflation
expectations
likewise
remained
elevated
and
well
above
the
Central
Bank’s
target.
Nevertheless,
the
Central
Bank
lowered
interest
rates
in
November,
primarily
in
response
to
turbulence
in
the
mortgage
market.
Only
two
months
later
inflation
rose
to
5.2%
in
January,
up
from
4.6%
at
the
beginning
of
2025.
Despite
visible
signs
of
cooling
economy,
the
uptick
in
inflation,
although
largely
attributable
to
changes
in
excise
taxes
and
other
public-sector
fees,
poses
a
significant
challenge
for
the
Monetary
Policy
Committee.
As
a
result,
interest
rates
were
left
unchanged
in
February,
and
further
rate
cuts were set aside for the time being. Analysts still expect rate cuts to resume, but not until the second half of the year.
5

===== SIDA 6 =====

Arion Bank Consolidated Financial Statements 2025
Endorsement and statement
by the Board of Directors and the CEO
Funding and liquidity
Capital adequacy and dividends 
Ownership of Arion Bank
Risk management
The
proposed
dividend
for
2025,
which
will
be
subject
to
the
approval
of
the
Annual
General
Meeting
on
11
March
2026,
is
equivalent
to
ISK
11.5
per
share
or
around
ISK
15.3
billion,
net
of
own
shares.
In
March
2025,
Arion
Bank
paid
a
dividend
of
ISK
11.5
per
share,
approximately
ISK 16 billion. The Annual General Meeting 2025 authorized the Board to purchase up to 10% of the Bank’s issued share capital.
The
main
reason
for
the
REA
decrease
is
the
introduction
of
CRR3
in
Iceland
in
December
2025,
resulting
in
an
overall
REA
decrease
of
around
ISK
55
billion.
REA
for
credit
risk
and
operational
risk
decreased
while
changes
to
own
funds
requirements
for
market
risk
have
been
postponed
in
the
EEA
and
other
effects
are
smaller.
The
CRR3-driven
decrease
was
partly
offset
by
customer
lending
growth
of
ISK
27.3
billion,
which
led
to
an
increase
in
REA.
It
should
be
noted
that
the
Bank
makes
use
of
transitional
arrangements
in
CRR3
so
some
of
the
initial
capital
relief
will
be phased out over time.
The
AGM
of
Arion
Bank,
held
on
12
March
2025,
approved
the
reduction
of
the
Bank’s
share
capital
by
ISK
93,423,078
nominal
value,
through
cancelling
the
Bank’s
own
shares.
The
reduction
was
carried
out
on
7
April
2025.
Thus,
the
share
capital
of
Arion
Bank
was
reduced
from
ISK
1,513
million
to
ISK
1,420
million
in
2025.
In
2024
the
nominal
value
of
Arion
Bank's
share
capital
was
increased
by
ISK
53,198,719
in
order
to
cover the exercising of issued warrants.
Following
the
introduction
of
CRR3,
the
Bank
announced
its
intention
to
buy
back
up
to
ISK
5
billion
of
its
own
shares
in
Iceland
and
Sweden
and reduce its share capital.
The
Bank's
MREL
requirements
are
19.8%
of
REA
excluding
own
funds
used
to
meet
the
combined
buffer
requirement
and
6.0%
of
TEM.
The
Bank comfortably exceeded both at the end of 2025. An MREL subordination requirement of 13.5% will apply to the Bank from Q3 2027.
In
June,
the
Bank
issued
a
new
series
of
Tier
2
subordinated
bonds.
The
total
issue
amounted
to
ISK
10.0
billion.
The
series
matures
in
December 2036 and can be called by the issuer in December 2031 and on every subsequent due interest date.
Arion
Bank
continued
to
issue
covered
bonds
which
are
secured
under
the
Covered
Bond
Act
No.
11/2008.
In
2025
the
Bank
issued
covered
bonds amounting to ISK 18.5 billion, of which ISK 960 million were for own use.
Moody’s
affirmed
the
Bank's
A3
rating
for
senior
unsecured
debt
and
its
A2
rating
for
long-term
deposits
with
a
stable
outlook.
In
addition,
the
Bank
retained
its
Aa1
rating
for
covered
bonds
and
its
P-1
rating
for
short-term
deposits.
The
rating
reflected
Moody’s
expectations
that
the
Bank’s financial results would continue to be stable and that the proposed merger with Kvika will be orderly.
The
main
forum
at
which
the
Board
reports
information
to
the
shareholders
and
propose
decisions
is
at
legally
convened
shareholders’
meetings.
The
Bank
provides
an
effective
and
accessible
arrangement
for
communications
between
shareholders
and
the
Board
of
Directors
between
those
meetings.
Any
information
sensitive
to
the
market
will
be
released
through
a
MAR
press
release,
unless
legal
conditions
for
delaying
public
disclosure
apply.
Arion
Bank
also
arranges
quarterly
meetings
where
the
interim
financial
results
are
presented.
The
Bank
has
also
held
its
capital
markets
day,
most
recently
in
March
2024,
where
the
management
team
discussed
the
Group’s
performance
and
key
focus
areas going forward.
Arion
Bank's
dividend
policy
states
that
the
Bank
aims
to
pay
50%
of
net
earnings
in
dividends
and
that
additional
dividend
or
share
buybacks
can
be
considered
when
the
Bank's
capital
levels
exceed
the
minimum
regulatory
requirements
together
with
the
Bank's
management
buffer.
In
the
medium
term,
the
Bank
aims
to
maintain
capital
adequacy
ratios
150-250bps
above
total
regulatory
requirements.
Arion
Bank
is
currently
rated A3 with a stable outlook from Moody's Ratings.
The
Group's
capital
adequacy
ratio
on
31
December
2025
was
22.5%
and
the
CET1
ratio
was
18.3%.
The
ratios
account
for
a
deduction
due
to
foreseeable
dividend
payments
and
share
buybacks.
This
compares
to
a
regulatory
capital
requirement
of
19.6%,
including
the
combined
buffer
requirement. The Bank’s REA decreased by ISK 29.1 billion in the fourth quarter of 2025.
Funding
and
liquidity
were
characterized
by
a
robust
liquidity
position
and
continued
deposit
growth.
The
Bank’s
liquidity
position
was
well
in
excess of the stipulated minimum and the liquidity ratio at year-end 2025 was 199%, with the stipulated minimum being 100%.
In
January,
the
Bank
issued
floating
rate
bonds
in
the
amount
of
NOK
350
million
and
SEK
250
million,
In
February,
the
Bank
issued
€300
million
senior
preferred
notes
with
a
5-year
maturity,
in
June,
the
Bank
issued
senior
preferred
green
bonds
amounting
to
NOK
600
million
and
SEK
900
million
and
in
August,
the
Bank
issued
€300
million
senior
preferred
notes
with
a
6-year
maturity
and
the
deal
was
close
to
five
times
oversubscribed, with orders received from 105 investors spanning more than 20 countries across EMEA and APAC.
Lífeyrissjódur
verzlunarmanna
was
the
largest
shareholder
in
Arion
Bank
with
a
shareholding
of
9.56%
at
year-end
and
Arion
Bank
held
2.59%
of
its
own
shares.
The
number
of
shareholders
was
10,703
at
the
end
of
the
period,
compared
with
10,200
at
year-end
2024.
Further
information
on Arion Bank's shareholders can be found in Note 38.
The
Group
faces
various
risks
arising
from
its
day-to-day
operations
as
a
financial
institution.
Managing
risk
is
therefore
a
core
activity
within
the
Group.
The
key
to
effective
risk
management
is
a
process
of
on-going
identification
of
significant
risk,
quantification
of
risk
exposure,
actions
to
limit
risk
and
constant
monitoring
of
risk.
This
process
of
risk
management
and
the
ability
to
manage
and
price
risk
factors
is
critical
to
the
Group's
continuing
profitability
as
well
as
ensuring
that
the
Group's
exposure
to
risk
remains
within
acceptable
levels.
The
Board
of
Directors
is
ultimately
responsible
for
the
Bank’s
risk
management
framework,
ensuring
that
satisfactory
risk
policies
and
governance
structures
for
controlling
the
Bank’s
risk
exposure
are
in
place.
The
Group’s
risk
management,
its
structure
and
main
risk
factors
are
described
in
the
notes
and in the Bank’s unaudited Pillar 3 Risk Disclosures.
6

===== SIDA 7 =====

Arion Bank Consolidated Financial Statements 2025
Endorsement and statement
by the Board of Directors and the CEO
Governance
Sustainability and non-financial disclosures
At Arion Bank, sustainability is integrated into the Group’s governance framework.
The
Bank
has
a
sustainability
committee,
and
the
management
of
risks
related
to
environmental,
social,
and
governance
(ESG)
factors
is
defined
as
part
of
the
risk
management
system.
The
CEO
chairs
the
committee,
whose
main
role
is
to
monitor
the
Bank’s
performance
in
terms
of
its
sustainability
strategy
and
commitments
and
to
ensure
that
ESG
factors
are
incorporated
into
decision
making
and
planning.
The
Bank’s
sustainable financing committee and equality committee are sub-committees of this body.
The
Board
of
Directors
of
Arion
Bank
places
great
importance
on
good
corporate
governance
and
a
corporate
culture
which
fosters
open
and
honest
relations
between
the
Bank,
its
shareholders,
and
other
stakeholders.
The
Board
of
Directors
is
the
supreme
authority
in
the
affairs
of
the
Bank
between
shareholders’
meetings
and
tends
to
those
operations
of
the
Bank
which
are
not
considered
part
of
the
day-to-day
business,
i.e.,
taking
decisions
on
issues
which
are
unusual
or
of
a
significant
nature.
The
Board
of
Directors
appoints
a
Chief
Executive
Officer
who
is
responsible for the day-to-day operations in accordance with a strategy set out by the Board. The CEO hires the Executive Management.
Sustainability governance framework
Vörður
has
a
sustainability
group
which
addresses
sustainability
and
related
risks
in
operations.
The
group
is
composed
of
employees
appointed
by
the
operating
officer
and
it
works
in
accordance
with
established
rules
of
procedure.
Its
role
is
to
promote
sustainability
across
all
operations
and
to
set
and
monitor
progress
toward
the
company’s
goals.
At
Stefnir,
an
ESG
committee
operates
and
consists
of
employees
involved
in
the
investment
process
of
the
funds.
The
committee
works
according
to
defined
rules,
supports
investment
decisions,
and
ensures
adherence
to
Stefnir’s responsible investment framework. It also decides on the ethical restrictions that apply to the funds’ investment decisions.
An
incentive
system
is
in
operation
for
permanent
employees
of
Arion
Bank.
The
system
is
based
on
clear
objectives
and
is
subject
to
strict
conditions
in
accordance
with
applicable
laws
and
regulations.
In
2025,
as
in
previous
years,
both
financial
and
non
financial
metrics
formed
part
of
the
system.
Non
financial
metrics
include
customer
satisfaction,
education
and
equality
matters,
and
know
your
customer
(KYC)
performance.
ESG considerations are also incorporated into incentive schemes at Stefnir and Vörður.
Corporate
governance
at
Arion
Bank
is
described
in
more
detail
in
the
Bank's
Corporate
Governance
Statement
which
is
contained
in
the
unaudited
appendix
to
the
Financial
Statement
and
on
the
website
www.arionbanki.is.
The
Corporate
Governance
Statement
is
based
on
legislation,
regulations,
and
recognised
guidelines
in
force
when
the
Bank's
annual
financial
statements
are
adopted
by
the
Board
of
Directors,
prepared
in
accordance
with
the
Guidelines
on
Corporate
Governance,
6th
edition,
issued
by
the
Icelandic
Chamber
of
Commerce,
SA
–
Business
Iceland
and
Nasdaq
Iceland
in
February
2021.
Corporate
governance
at
Arion
Bank
complies
with
the
guidelines
with
two
exceptions,
which are explained in more detail in the Corporate Governance Statement.
There
are
five
Board
sub-committees:
The
Board
Audit
Committee,
the
Board
Risk
Committee,
the
Board
Credit
Committee,
the
Board
Remuneration
Committee
and
the
Board
Tech
Committee.
One
of
the
committee
members
on
the
Board
Audit
Committee
is
not
a
Board
member and is independent of the Bank and its shareholders.
The
main
roles
of
the
Board,
as
further
specified
in
the
rules
of
procedure
of
the
Board,
include
setting
the
Bank's
strategy,
supervising
financial
affairs
and
accounting,
and
ensuring
that
appropriate
internal
controls
are
in
place.
The
Board
ensures
that
the
Bank
has
active
Internal
Audit,
Compliance
and
Risk
Management
departments.
The
Internal
Auditor
is
appointed
by
the
Board
of
Directors
and
works
independently
of
other
departments
of
the
Bank
in
accordance
with
a
charter
from
the
Board.
The
Internal
Auditor
provides
independent
and
objective
assurance
and
advice
designed
to
add
value
and
improve
the
Bank's
operations.
The
Compliance
Officer,
who
reports
directly
to
the
CEO,
works
independently
within
the
Bank
in
accordance
with
a
charter
from
the
Board.
The
main
role
of
Compliance
is
to
ensure
that
the
Bank
has
in
place
proactive
measures
to
reduce
the
risk
of
rules
being
breached
in
the
course
of
its
activities.
Compliance
is
also
responsible
for
coordinating
the
Bank’s
measures
against
money
laundering
and
terrorist
financing.
The
duties
of
Compliance
are
carried
out
under
a
risk-based
compliance
plan
approved
by
the
Board
of
Directors,
including
a
monitoring
and
training
schedule
for
employees
which
addresses
the
laws
and
rules
under
which
the Bank operates.
At
the
Bank’s
AGM
on
12
March
2025,
five
members
were
elected
to
serve
on
the
Board
of
Directors
until
the
next
AGM,
three
women
and
two
men.
Paul
Horner
was
elected
Chairman
of
the
Board.
Additionally,
two
Alternate
Directors
(one
woman
and
one
man)
were
elected.
All
Directors
and
Alternates
are
independent
of
Arion
Bank,
its
management
and
major
shareholders.
The
Board’s
composition
meets
statutory
requirements,
which
stipulate
that
companies
employing
more
than
50
people
must
ensure
that
the
gender
ratio
of
the
board
of
directors
and
alternate board is no less than 40%.
The
overarching
theme
of
Arion
Bank’s
sustainability
strategy
is
together
we
make
good
things
happen,
which,
among
other
things,
reflects
our
ambition
to
lead
by
example
when
it
comes
to
responsible
and
profitable
business
practices
that
take
into
account
environmental
and
social
considerations.
We
place
particular
emphasis
on
ensuring
that
corporate
responsibility
and
sustainability
are
fully
integrated
into
daily
operations,
decision
making,
and
processes.
The
Bank’s
code
of
ethics
serves
as
guidance
for
employees
to
encourage
ethical
behaviour
and
responsible
decision
making.
The
subsidiaries
Vörður
and
Stefnir
have
likewise
adopted
sustainability
policies
aligned
with
that
of
the
parent
company.
7

===== SIDA 8 =====

Arion Bank Consolidated Financial Statements 2025
Endorsement and statement
by the Board of Directors and the CEO
     -
     -
     -
     -
     -
The Bank’s environmental and climate goals to 2030 include:
Supporting reductions in financed emissions (Scope 3) in sectors with the highest climate impact, aligned with Iceland’s 2040 net zero
goal, with updated targets published annually;
The Bank will continue to purchase only vehicles that use 100% renewable energy sources for its daily operations. Other vehicles acquired
for the Bank’s activities shall use renewable energy sources either partially or entirely. From 2030 onward, only vehicles that meet the
requirement of running on 100% renewable energy sources will be purchased;
Considerable  progress  has  been  made  in  reducing  emissions  from  own  operations  of  the  Bank  (Scopes  1  and  2),  down  64.7%  at  year-end  2025
compared  to  2015.  This  includes  a  68.6%  reduction  from  vehicles  and  59.6%  reduction  from  own  business  premises.  Vörður  and  Stefnir  refer  to
the  Bank’s  environmental  targets  when  setting  their  own  targets.  Combined  emissions  for  Arion  Bank,  Stefnir,  and  Vörður  were  622.1  tCO₂e  in
2025, with Arion Bank accounting for 88.1%, Vörður 9.2%, and Stefnir 2.7%.
Domestically, the Bank and Vörður are members of Festa, the Icelandic Centre for Sustainability, and the Bank is a founding member of
Grænvangur, a partnership between the public and private sectors on climate and green solutions. Arion Bank, Stefnir, and Vörður are founding
members of IcelandSIF, the Icelandic Sustainable Investment Forum.
Arion Bank has set environmental and climate policies and targets. These emphasise minimising the environmental impact of operations and
reducing greenhouse gas emissions. The policy highlights the importance of financing projects that contribute to sustainable development and
green infrastructure, supporting Iceland’s national climate target of carbon neutrality by 2040, and committing to the same goal for the Bank
itself.
The Bank has published sustainability policies for lending to different industries and for business operations in the Arctic, designed to support
customers on their sustainability journey. These policies reflect the Bank’s sustainability priorities and commitments and have been approved by
the sustainability committee. The policies cover the industries that have the greatest impact on the Bank’s financed emissions, as well as the
important region which the Arctic represents, both in terms of environmental and social.
Commitment to sustainability
Reducing greenhouse gas emissions from own operations (Scope 1 and 2) by 80% from 2015 levels and offsetting remaining emissions;
Obtaining SBTi verification of financed emissions targets.
Arion Bank is a member of the Partnership for Carbon Accounting Financials (PCAF). This is a global partnership of financial institutions that
work together to develop and implement a harmonized approach to assess and disclose the greenhouse gas emissions associated with their
loans and own investments (Scope 3). The Bank publishes annual financed emissions disclosures according to PCAF methodology, thereby
promoting transparency in progress on climate issues. Calculations are based on the most recent reliable data available, typically one year old.
Stefnir also reports financed emissions for its managed funds and publishes annual results, including emission intensity per ISK million invested
in particular funds.
Arion Bank’s total financed emissions for 2024, including sovereign bonds (excluding land use), amounted to 292.2 ktCO₂e, a 2% increase year
on year, primarily due to a 6% increase in the value of the loan book and own investments. Excluding sovereign bonds, financed emissions rose
by 5% from 158.8 ktCO₂e in 2023 to 167.2 ktCO₂e in 2024.
The Bank’s climate targets are based on emission intensity rather than absolute emissions. Emission intensity for lending and investments
(excluding sovereign bonds) decreased from 0.148 tCO₂e/ISKm to 0.146 tCO₂e/ISKm, a 1% reduction between years. Emissions intensity is
used to measure results because while amounts may change, percentages remain comparable and provide a better picture than just focusing
on the emissions figures for each category. The reduction on emission intensity is therefore an important metric and indicates that each ISK
million lent or invested now corresponds to proportionally lower emissions than the previous year.
In October 2025, Arion Bank published The Path to Net Zero, outlining updated climate targets for lending to 2030. The targets align with
Iceland’s 2040 goal and the Paris Agreement’s 1.5°C pathway. The targets are important steps in the Bank’s climate journey.
Arion Bank and its subsidiaries participate in extensive national and international collaboration within the fields of sustainability and corporate
responsibility and are signatories to numerous international commitments and declarations. The Bank is a participant in the UN Global Compact,
the UN Principles for Responsible Banking (UN PRB), and the UN Principles for Responsible Investment (UN PRI), with Stefnir also being a
signatory to the latter. At the end of 2023, the Bank joined the Science Based Targets initiative (SBTi) and the Net Zero Banking Alliance (NZBA)
under the auspices of the United Nations. The NZBA was discontinued in 2025; however, its net zero guidance remains valid, and the Bank will
continue to follow it. The Bank aims to have its climate targets validated by SBTi in 2027.
Environmental and climate strategy and actions
Increasing the share of sustainable lending to at least 20% of the Bank’s total loan book;
Financed emissions
8

===== SIDA 9 =====

Arion Bank Consolidated Financial Statements 2025
Endorsement and statement
by the Board of Directors and the CEO
Human resources
Arion
Group
employs
a
strong
and
diverse
team.
At
year
end
2025,
total
full
time
equivalent
positions
numbered
883
across
the
Bank
and
subsidiaries.
The
gender
balance
was
44%
men
and
56%
women,
with
fewer
than
five
employees
identifying
as
another
gender.
The
average
age was 41 and average length of employment was 9.5 years.
Since
2021,
when
it
published
the
Sustainable
Financing
Framework,
the
Bank
has
regularly
issued
green
bonds.
In
2025,
it
issued
a
green
bond
in
Norwegian
kroner
and
Swedish
kronor
which
aligned
with
the
Sustainable
Financing
Framework.
Green
liabilities
decreased
during
the
year
due
to
the
maturity
of
a
€300m
green
bond.
Total
sustainable
finance
liabilities
at
year
end
were
ISK
63.4bn.
In
January
2026,
the
Bank
issued NOK 850m and SEK 850m in green bonds (approx. ISK 22bn), with a maturity of 3-5 years.
Women Invest
Women
Invest
is
a
long
term
initiative
launched
by
Arion
aimed
at
empowering
women
through
increased
participation
in
investment
and
stronger
financial
literacy.
The
foundations
for
the
project
were
laid
in
2023
when
Arion
Bank
decided
to
highlight
the
importance
of
bridging
gender
disparity
in
terms
of
participation
in
the
financial
market.
Women
Invest
was
formally
launched
in
January
2024
with
a
well
attended
opening
event,
awareness
campaign,
nationwide
educational
programme,
and
extensive
online
content.
Since
its
launch,
around
8,000
women
have
attended
approximately
90
educational
events.
Topics
have
been
diverse,
and
emphasis
was
placed
on
reaching
all
regions
and
engaging
with professional women’s groups.
To
achieve
gender
balanced
participation,
women
must
increase
investment
activity
faster
than
men.
To
this
end,
measurable
objectives
have
been set for three-year periods at a time, focusing among other things on incentives, financial education, and increasing women’s participation in 
investments. In addition, short
‑
term indicators are established to ensure that the initiative remains on track.
Arion
strives
to
foster
a
supportive
and
motivating
work
environment.
Mutual
respect
characterizes
all
communication,
and
there
is
zero
tolerance
of
bullying,
gender
based
harassment,
sexual
harassment,
and
violence.
The
Bank
places
great
importance
on
employee
health
and
safety.
We
offer
an
attractive
working
environment
and
are
a
family
friendly
workplace.
Through
flexible
work
arrangements
and
a
remote
work
policy, we accommodate the needs of our employees and support a better balance between work and personal life.
Survey
results
indicate
that
employees
are
generally
satisfied
and
feel
good
at
work.
The
2025
average
score
on
the
Arion
Index
was
4.49
for
the Bank and 4.44 for Vörður (on a scale of 1–5).
Under
the
EIF
partnership,
the
Bank
began
offering
car
and
equipment
loans
aimed
at
supporting
the
energy
transition
at
companies
in
2025.
The
aim
is
to
make
it
easier
for
companies
to
invest
in
electric
vehicles,
environmentally
friendly
equipment,
and
equipment
that
contributes
to
lower
emissions
and
improved
energy
efficiency.
Loans
under
the
EIF
guarantee
offer
more
favourable
terms
than
traditional
vehicle
and
equipment loans but must support new financing and apply to SMEs. The guarantee has been used to finance a wide range of green, innovative, 
and cultural projects.
Arion
Bank
and
the
European
Investment
Fund
(EIF)
cooperate
under
a
guarantee
agreement
within
the
EU’s
InvestEU
programme.
The
agreement
enables
the
Bank
to
extend
loans
to
Icelandic
companies
on
more
favourable
terms,
with
a
total
guarantee
exposure
of
ISK
15bn.
The
cooperation
aligns
with
the
Bank’s
Sustainable
Financing
Framework
and
has
led
to
the
development
of
new
products.
This
is
the
second
EIF
agreement
the
Bank
has
operated
under;
the
first,
introduced
in
2016,
focused
on
innovation
in
SMEs
and
was
widely
used.
The
aim
of
the
EIF
guarantee
is
to
further
support
entrepreneurial
activity
and
potentially
enable
the
financing
of
projects
earlier
than
would
otherwise
be
possible
under
the
Bank’s
credit
appetite.
The
focus
is
on
three
key
areas:
sustainability
and
green
investments,
innovation
and
digitalization,
and culture and creative industries.
Arion
updated
its
human
resources
policy
in
2025.
The
policy
consists
of
six
guiding
themes
designed
to
support
employee
satisfaction,
growth,
and
engagement:
the
right
people,
continuous
learning
and
development,
a
results
driven
culture,
well-being
and
social
interaction,
strong
leadership,
and
a
clear
vision
for
equality.
The
strategy
applies
across
the
Group
and
is
supported
by
various
tools,
including
surveys,
dialogue,
workplace audits, supervisor effectiveness evaluations, turnover analysis, absence metrics, recruitment data, equality statistics and more.
Sustainable finance
EIF guarantee agreement
Arion
Bank
has
issued
a
Sustainable
Financing
Framework
covering
green
and
sustainable
bonds,
green
deposits,
and
green
and
sustainable
lending.
The
Framework
comprises
eleven
categories
which
align
with
targets
on
mitigating
or
preventing
climate
change
and
which
have
a
positive
social
impact.
The
Framework
was
published
in
2024
and
builds
on
the
Bank’s
Green
Finance
Framework
from
2021,
which
forms
the
foundation for the Bank’s green product offering.
The
Bank
offers
green
business
loans
at
preferential
rates
to
projects
which
meet
the
terms
of
the
Framework.
Retail
customers
receive
a
100%
discount
on
loan
fees
for
mortgages
on
environmentally
certified
homes
and
a
50%
discount
on
electric
vehicle
financing
fees.
Better
interest
rates also apply to vehicles using 100% renewable energy and to plug in hybrids emitting under 50 g CO
₂
/km.
The
Bank
aims
for
sustainable
lending
to
reach
at
least
20%
of
total
lending
by
2030.
At
year
end
2025,
sustainable
lending
accounted
for
12.86%
of
the
loan
book,
of
which
green
loans
made
up
10.04%
and
loans
with
a
positive
social
impact
2.82%.
The
total
book
value
of
sustainable
loans
was
nearly
ISK
171
billion
(ISK
133.4bn
green,
ISK
37.5bn
social
impact).
A
year
on
year
decrease
is
mainly
due
to
the
prepayment of a large loan.
9

===== SIDA 10 =====

Arion Bank Consolidated Financial Statements 2025
Endorsement and statement
by the Board of Directors and the CEO
     -
     -
     -
     -
     -
Arion’s
goal
is
for
all
employees
to
enjoy
the
same
terms
for
the
same
jobs
or
equally
valuable
jobs
and
to
ensure
that
no
unjustified
wage
gap
exists.
Equal
pay
means
that
pay
levels
are
determined
in
advance
and
that
there
is
no
discrimination
on
the
basis
of
gender
of
other
factors.
It
must
also
be
ensured
that
all
pay
decisions
are
predetermined
and
aligned
with
collective
agreements.
Arion
works
in
accordance
with
an
equal
pay
system
and
the
companies
in
the
Group
have
equal
pay
certification.
Vörður
received
certification
in
2014,
Arion
in
2015,
and
Stefnir
in
2024.
All
companies
in
the
Group
now
operate
under
the
same
unified
system.
In
2025,
the
unexplained
gender
pay
gap
measured
0.2%,
meeting
targets.
In
addition
to
the
annual
equal
pay
audit,
we
perform
monthly
equal
pay
analyses
in
order
to
ensure
that
decisions
of
salaries
are in compliance with our equal pay policy and our targets.
In
the
Bank’s
annual
risk
assessment,
risks
related
to
sustainability
factors
are
also
evaluated.
The
inherent
risk
associated
with
human
resources
and
social
factors
is
generally
assessed
as
low
within
the
business.
The
main
risks
identified
relate
to
employee
competence
and
development,
as
well
as
equality
and
diversity.
In
relation
to
environmental
matters,
the
risk
of
greenwashing
and
the
environmental
and
climate
impacts
of
lending
and
investments
were
assessed
as
the
key
risks.
The
results
also
showed
that
the
Bank’s
main
governance
related
risks
concern
anti
money
laundering
measures,
breaches
related
to
know
your
customer
(KYC)
requirements,
and
data
protection
issues.
Overall,
the
controls in place for these risks within the Bank were assessed as adequate or strong.
The
Bank’s
credit
policy
places
an
emphasis
on
sustainability
and
the
credit
rules
stipulate
that
ESG
factors
should
be
assessed
when
a
credit
rating
is
required,
or
a
company
meets
the
conditions
of
Article
66d
of
the
Annual
Accounts
Act.
The
Bank
has
analysed
its
loan
book
by
industry
to
assess
ESG
risk,
producing
a
heat
map
based
on
potential
impacts
over
the
next
15
years.
These
findings
have
been
integrated
into
the Bank’s credit risk systems, ensuring ESG factors are evaluated at the individual customer level.
In
compliance
with
Article
5
of
SFDR,
the
remuneration
policy
states
how
the
policy
is
consistent
with
the
integration
of
sustainability
risk
in
the
Bank’s
activities.
The
policy
explains
how
the
remuneration
policy,
e.g.
through
the
Bank’s
incentive
scheme,
ensures
that
people
integrate
sustainability risk into the investment decision process and investment advice. Stefnir’s remuneration policy includes corresponding provisions.
Arion
Bank
maintains
an
exclusion
list
of
activities
in
which
it
will
not
invest
(own
investments),
provide
corporate
finance
services,
or
extend
lending.
Beyond
these
exclusions,
the
Bank
refrains
from
doing
business
with
entities
engaged
in
illegal
activities
in
their
jurisdiction.
Arion
Bank’s
exclusion
list
is
available
on
the
Bank’s
website.
Stefnir
integrates
ESG
considerations
into
the
investment
processes
of
the
funds
it
manages
and
specifically
screens
for
companies
that
do
not
align
with
the
ethical
restrictions
that
have
been
established.
These
restrictions
can
be seen on Stefnir’s website.
Targets
have
been
set
up
to
2027
to
reduce
the
ratio
of
median
male
compensation
to
median
female
compensation
to
below
1.25
measured
on
an annual salary basis. In 2025, this figure was 1.26.
There
is
zero
tolerance
of
bullying,
gender
based
or
sexual
harassment,
and
violence
at
Arion.
A
dedicated
anti-bullying
team
oversees
policy,
procedures,
and
training
in
this
area
and
in
2025,
all
employees
completed
training
on
anti-bullying
and
harassment
measures,
and
managers
completed additional in depth workshops. All new employees undergo mandatory digital learning on anti-bullying and harassment measures. 
Measures against bribery and corruption
Zero tolerance: The Bank has zero tolerance for bribery and corruption.
Compliance: The Bank always operates in accordance with laws, regulations, and good business practices.
Preventive measures: The Bank takes appropriate steps to prevent bribery and corruption.
Due
diligence:
The
Bank
conducts
due
diligence
checks
on
third
parties
to
ensure
their
activities
align
with
the
Bank’s
standards
regarding
anti bribery and anti corruption measures.
Arion
Bank
applies
a
zero
tolerance
approach
to
bribery
and
corruption,
as
outlined
in
its
anti
bribery
and
corruption
policy.
The
policy
is
reviewed and approved annually by the Board and aligns with international standards and applies to all employees.
Controls
include
policies,
procedures,
and
mandatory
training
covering
key
risks
such
as
gifts
and
hospitality,
third
party
relationships,
suppliers,
charitable donations, political contributions, and governance practices. The Bank’s main principles are:
Sustainability risk
Reporting:
The
Bank
encourages
employees
and
third
parties
to
report
any
suspicions
or
incidents
of
bribery
or
corruption.
The
Bank’s
policy
on
internal
alerts
sets
out
the
framework
for
reporting
misconduct
and
protecting
whistleblowers.
The
Bank
operates
dedicated
whistleblowing software, available to all Group employees which allows individuals to submit reports anonymously.
Arion
is
committed
to
respecting
human
rights
and
equality
in
all
operations.
Arion
works
in
accordance
with
the
equality
and
human
rights
policy
and
an
action
plan
for
2024-2027.
The
objective
of
the
policy
and
action
plan
is
to
create
an
environment
where
people
of
similar
education,
work
experience
and
responsibility
have
equal
opportunities
and
terms,
irrespective
of
gender,
gender
identity,
sexual
orientation,
origin,
nationality,
skin
colour,
age,
disability
or
religion
or
any
other
factor.
The
policy
and
the
action
plan
have
been
approved
by
the
senior
management
of
the
Group.
The
CEO
sits
on
the
equality
committee,
which
is
responsible
for
progress
and
is
composed
of
representatives
from
Arion, Vörður, and Stefnir.
Equality and human rights
The
Bank’s
sustainability
risk
policy
is
approved
annually
by
the
Board
and
reviewed
regularly.
Key
performance
indicators
relating
to
ESG
factors are part of the risk report to the Board, and the Bank’s risk appetite with respect to these factors has been defined.
10

===== SIDA 11 =====

Arion Bank Consolidated Financial Statements 2025
Endorsement and statement
by the Board of Directors and the CEO
Arion
Bank
is
subject
to
Article
66.d
of
the
Annual
Accounts
Act
on
non
financial
reporting.
Sustainability
disclosures
in
the
2025
Annual
and
Sustainability Report follow the Global Reporting Initiative (GRI Standards), supporting transparent and comparable ESG reporting.
Due diligence process
Nasdaq
Nordic
ESG
guidelines
and
the
UN
Global
Compact’s
ten
principles
are
also
used,
alongside
the
UN
Sustainable
Development
Goals.
The report includes updates on progress toward the UN PRB, of which Arion was a founding signatory in 2019.
In
2023,
legislation
on
the
European
Union
Taxonomy
was
enacted
in
Iceland.
Arion
is
subject
to
the
law
and
publishes
information
in
accordance
with
it
in
an
annex
to
the
Group’s
annual
financial
statements.
The
changes
proposed
in
the
simplified
EU
sustainability
framework
also
apply
to
the
EU
Taxonomy
and
therefore
depend
on
the
EU’s
final
approval.
Arion’s
reporting
is
therefore
unchanged
from
the
previous
year, as the amendments have not yet been incorporated into Icelandic law.
The
Bank’s
Pillar
3
Risk
Disclosures
outline
key
risks,
including
sustainability
risks,
and
provides
extensive
information
on
risk
and
capital
management. The report also includes information on the Bank’s governance structure in relation to risk, as well as its remuneration policy.
Further
information
on
sustainability
and
non
financial
disclosures
is
available
in
the
Arion
Bank
2025
Annual
and
Sustainability
Report,
to
be
published on the Bank’s website on 18 February 2026.
Deloitte
provides
limited
assurance
over
sustainability
disclosures
in
the
2025
Annual
and
Sustainability
Report
under
GRI
and
Nasdaq
guidelines.
In
November
2025,
Reitun
issued
a
new
sustainability
rating
for
Arion
Bank.
The
rating
is
based
on
the
Bank’s
performance
in
environmental,
social
and
governance
(ESG).
The
Bank
scored
90
out
of
100,
the
highest
score
awarded
to
any
company
to
date,
and
received
an
A3
rating
for
the
sixth
year
running.
By
retaining
this
rating,
the
Bank
has
successfully
met
the
stricter
requirements
made
this
year.
The
average
score
among companies rated by Reitun is 73. Arion is one of six companies rated A3, and no company has achieved a higher grade.
The
international
rating
agency
Morningstar
Sustainalytics
specializes
in
assessing
companies’
ESG
risk.
The
company
evaluates
Arion
Bank’s
performance
annually,
and
the
result
for
2025
was
positive,
as
in
previous
years.
According
to
their
assessment,
Arion
Bank
is
among
the
best
performing
banks
globally
in
sustainability
matters.
Scores
are
given
on
a
scale
of
0–100,
where
fewer
points
indicate
lower
risk.
Arion
Bank
scores
11.7
points,
meaning
the
Bank
is
considered
to
have
a
low
risk
of
significant
financial
loss
due
to
ESG
factors.
As
of
early
January
2026,
Arion Bank’s performance ranks in the top 6% of more than 1,000 banks assessed worldwide by Morningstar Sustainalytics, and in the top 3% of 
roughly 600 regional banks.
MSCI
issued
an
updated
rating
for
Arion
in
October
2025,
awarding
the
Bank
AA,
classifying
it
as
a
sustainability
leader.
MSCI
ratings
range
from
CCC
to
AAA
and
therefore
Arion
is
towards
the
top
end.
Investors
frequently
use
MSCI
ratings
to
assess
portfolio
risks
and
to
construct
sustainable portfolios.
The
reporting
in
Arion
Bank’s
Annual
and
Sustainability
Report
is
based
on
the
issues
identified
as
material
to
the
Bank’s
operations
and
its
subsidiaries
and
is
structured
around
five
main
themes:
responsible
operations,
sustainable
finance,
environmental
and
climate
matters,
human
resources, and engagement with society. The report also includes the Group’s detailed sustainability accounts.
In
2023,
Arion
Bank
began
implementing
the
European
Sustainability
Reporting
Standard
(ESRS).
The
standard
is
part
of
the
EU’s
Corporate
Sustainability
Reporting
Directive
(CSRD),
which
has
not
yet
been
enacted
into
Icelandic
law.
In
2025,
the
European
Union
announced
significant
changes
to
the
directive,
both
regarding
its
scope
and
the
extent
of
required
disclosures.
In
the
second
half
of
the
year,
draft
simplified
ESRS
standards
were
published,
and
the
European
Parliament
approved
a
simplification
of
the
regulatory
framework.
It
was
decided
to
limit
the
scope
of
the
regulation
to
companies
with
more
than
EUR
450
million
in
annual
turnover
and
over
1,000
full
time
employees.
These
changes
are
awaiting
formal
confirmation
within
the
EU,
but
they
are
widely
considered
to
be
in
their
final
form.
If
this
revised
scope
is
approved
and
incorporated
into
Icelandic
law,
the
Arion
Group
would,
as
things
currently
stand,
fall
just
below
the
thresholds
and
therefore
remain
outside
the
directive’s
scope.
Despite
this
uncertainty,
we
continue
to
apply
the
ESRS
standard,
and
this
year
we
are
using
the
simplified
version
published in November 2025.
11

===== SIDA 12 =====

Arion Bank Consolidated Financial Statements 2025
Endorsement and statement
by the Board of Directors and the CEO
Endorsement of the Board of Directors and the Chief Executive Officer
The
Board
of
Directors
and
the
CEO
have
today
discussed
the
Consolidated
Financial
Statements
of
Arion
Bank
for
the
year
ended
31
December
2025
and
confirm
them
by
means
of
their
signatures.
The
Board
of
Directors
and
the
CEO
recommend
that
the
Consolidated
Financial Statements be approved at the Annual General Meeting of Arion Bank.
It
is
our
opinion
that
the
Consolidated
Financial
Statements
give
a
true
and
fair
view
of
the
financial
performance
and
cash
flow
of
the
Group
for
the
year
ended
31
December
2025
and
its
financial
position
as
at
31
December
2025.
Furthermore,
in
our
opinion
the
Consolidated
Financial
Statements
and
the
Endorsement
of
the
Board
of
Directors
and
the
CEO
give
a
fair
view
of
the
development
and
performance
of
the
Group's
operations and its position and describe the principal risks and uncertainties faced by the Group.
Board of Directors
 
Paul Horner, Chairman
The
Consolidated
Financial
Statements
of
Arion
Bank
for
the
year
ended
31
December
2025
have
been
prepared
in
accordance
with
International
Financial
Reporting
Standards
as
adopted
by
the
European
Union
and
additional
requirements
in
the
Icelandic
Financial
Statements Act, Financial Undertakings Act and Rules on Accounting for Credit Institutions.
In
our
opinion,
the
Consolidated
Financial
Statements
of
Arion
Bank
hf.
for
the
year
2025
with
the
file
name
RIL4VBPDB0M7Z3KXSF19-2025-12-
31-en.zip is prepared, in all material respects, in compliance with the ESEF Regulation.
Chief Executive Officer
Benedikt Gíslason
 
 
Steinunn Kristín Thórdardóttir
 
Kristín Pétursdóttir, Vice Chairman
Gunnar Sturluson
 
Marianne Gjertsen Ebbesen
Reykjavík, 11 February 2026
12

===== SIDA 13 =====

Arion Bank Consolidated Financial Statements 2025
 
Opinion 
Basis for Opinion 
Key Audit Matters 
Impairment charges for loans and provisions for guarantees
Based
on
the
best
of
our
knowledge
and
belief,
no
prohibited
services
referred
to
in
the
EU
Audit
Regulation
537/2014
Article
5.1
has
been
provided. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
How the matter was addressed in the audit
Key Audit Matters
Loans
to
customers
for
the
Group
amounted
to
ISK
1,341,618
million
at
31
December
2025,
and
the
total
allowance
account
for
the
Group
amounted
to
ISK
12,767
million
(including
off-balance
positions)
at
31
December 2025.
The
Group
evaluates
it´s
impairment
on
loans
based
of
IFRS
9
resulting
in
impairment
charges
are
recognised
when
losses
are
expected based on forecasting models.
Management
has
provided
further
information
about
the
accounting
policies
for
expected
credit
losses
in
Note
59
and
about
loan
impairment
charges
and
provisions
for
guarantees
in
Notes
16
and
44.
Measurement
of
loan
impairment
charges
for
loans
and
provisions
for
guarantees
is
deemed
a
key
audit
matter
as
the
determination
of
assumptions
for
expected
credit
losses
is
subjective
due
to
the
level
of judgement applied by Management.
The most significant judgements are:
•
Assumptions
used
in
the
expected
credit
loss
models
to
assess
the
credit
risk
related
to
the
exposure
and
the
expected
future
cash
flows
of the customer.
•
Timely
identification
of
exposures
with
significant
increase
in
credit
risk and credit impaired exposures.
•
Valuation
of
collateral
and
assumptions
used
for
manually
assessed
credit-impaired exposures.
Based
on
our
risk
assessment
and
industry
knowledge,
we
have
examined
the
impairment
charges
for
loans
and
provisions
for
guarantees
and
evaluated
the
methodology
applied
as
well
as
the
assumptions
made
according
to
the
description
of
the
key
audit
matter.
As
part
of
our
audit
we
examined
the
Group's
accounting
policies
to
ensure
they
are
in
accordance
with
IFRS
9.
As
part
of
our
audit
we
reviewed
the
Group's
methodology
related
to
expected
credit
losses
and
examined
the
impairment
models
used
for
expected
credit
loss
calculations.
We
used
risk
modelling
specialists
as
well
as
IFRS
specialists as part of our audit. 
Our examination included the following elements:
•
Testing
of
key
controls
over
key
assumptions
used
in
the
expected
credit
loss
models
to
assess
the
credit
risk
related
to
the
exposure
and the expected future cash flows of the customer.
•
Substantively
testing
evidence
to
support
the
assumptions
used
in
the
expected
credit
loss
models
applied
in
stage
allocation,
assumptions
applied
to
derive
lifetime
possibility
of
default
and
methods applied to derive loss given default.
•
Testing
of
key
controls
and
substantive
testing
of
timely
identification
of
exposures
with
significant
increase
in
credit
risk
and
timely
identification of credit impaired exposures.
•
Testing
of
key
controls
over
models
and
manual
processes
for
valuation of collateral used in the expected credit loss calculations.
•
Substantively
testing
evidence
to
support
appropriate
determination
of
assumptions
for
loan
impairment
charges
and
provisions
for
guarantees
including
valuation
of
collateral
and
assumptions
of
future
cash flows on manually assessed credit impaired exposures.
Independent Auditor's report
To the Shareholders and the Board of Directors of Arion Bank hf.
In
our
opinion,
the
accompanying
consolidated
financial
statements
give
a
true
and
fair
view
of
the
consolidated
financial
position
of
Arion
Bank
hf.
as
at
December
31,
2025,
its
consolidated
financial
performance
and
its
consolidated
cash
flows
for
the
year
then
ended
in
accordance
with
International
Financial
Reporting
Standards
(IFRSs)
as
adopted
by
the
EU
and
additional
requirements,
as
applicable,
in
the
Act
on
Annual
Accounts, the Act on Financial Undertakings and rules on accounting for credit institutions. 
Key
audit
matters
are
those
matters
that,
in
our
professional
judgement,
were
of
most
significance
in
our
audit
of
the
consolidated
financial
statements
of
the
current
period.
These
matters
were
addressed
in
the
context
of
our
audit
of
the
consolidated
financial
statements
as
a
whole,
and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
We
have
audited
the
consolidated
financial
statements
of
Arion
Bank
hf.
for
the
year
ended
December
31,
2025
which
comprise
the
consolidated
income
statement,
consolidated
statement
of
comprehensive
income,
consolidated
statement
of
financial
position,
consolidated
statement
of
changes
in
equity,
consolidated
statement
of
cash
flows
for
the
year
then
ended
and
the
notes
to
the
consolidated
financial
statements, including a summary of material accounting policies.
We
conducted
our
audit
in
accordance
with
International
Standards
on
Auditing
(ISAs).
Our
responsibilities
under
those
standards
are
further
described
in
the
Auditor’s
Responsibilities
for
the
Audit
of
the
Consolidated
Financial
Statements
section
of
our
report.
We
are
independent
of
Arion
Bank
hf.
in
accordance
with
the
International
Ethics
Standards
Board
for
Accountants’
Code
of
Ethics
for
Professional
Accountants
(IESBA
Code)
together
with
the
ethical
requirements
that
are
relevant
to
our
audit
of
the
consolidated
financial
statements
in
Iceland,
and
we
have
fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. 
Our
opinion
in
this
report
on
the
consolidated
financial
statements
is
consistent
with
the
content
of
the
additional
report
that
has
been
submitted
to the parent company´s audit committee in accordance with the EU Audit Regulation 537/2014 Article 11.
13

===== SIDA 14 =====

Arion Bank Consolidated Financial Statements 2025
 
Independent Auditor's report
Reliability of information from IT systems relevant to financial reporting
Other information
Responsibilities of the Board of Directors and the CEO for the Consolidated Financial Statements
Auditor's Responsibilities for the Audit of the Consolidated Financial Statements 
 •
 •
 •
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We 
also: 
The
Group’s
financial
reporting
is
highly
dependent
on
IT
systems
supporting
the
overall
financial
reporting
process,
due
to
the
significant
number
of
transactions
processed
through
various
systems needed to support the Group’s operations.
In
the
process
of
preparing
the
consolidated
financial
statements
the
Group
uses
data
from
number
of
complex
IT
systems.
The
accuracy
and
completeness
of
transactions
is
important
to
support
the
reliability of financial reporting. 
Due
to
the
importance
of
data
from
IT
systems
to
support
the
financial reporting we consider their reliability a key audit matter. 
The
procedures
performed
to
respond
to
the
key
audit
matter
included
the following, amongst others;
•
We
obtained
an
understanding
of
the
Group’s
IT
systems
and
environment that support the overall financial reporting process
•
We
reviewed
the
design,
implementation
and
effectiveness
of
control
activities,
as
appropriate,
related
to
access
management,
change
management,
accuracy
of
key
automated
calculations
and
operation
for
the
systems
considered
important
for
the
audit.
Deloitte
IT audit specialists were involved in the audit
•
For
IT
systems
that
are
outsourced
and
are
relevant
to
the
audit
we
obtained
and
assessed
the
ISAE
3402
report
issued
by
the
service
organisation 
Key Audit Matters
How the matter was addressed in the audit
The
Board
of
Directors
and
CEO
are
responsible
for
the
other
information.
The
other
information
comprises
the
unaudited
appendix
to
the
Financial
Statements,
5-year
overview,
key
figures,
unaudited
quarterly
statements
in
note
number
6
and
Endorsement
and
statements
by
the
Board of Directors and the CEO. 
Our
opinion
on
the
consolidated
financial
statements
does
not
cover
the
other
information
and
we
do
not
and
will
not
express
any
form
of
assurance
conclusion
thereon,
except
the
confirmation
regarding
the
Endorsement
and
the
statement
by
the
Board
of
Directors
and
the
CEO
as
stated below.
In
connection
with
our
audit
of
the
consolidated
financial
statements,
our
responsibility
is
to
read
the
other
information
and,
in
doing
so,
consider
whether
the
other
information
is
materially
inconsistent
with
the
consolidated
financial
statements
or
our
knowledge
obtained
in
the
audit
or
otherwise
appears
to
be
materially
misstated.
If,
based
on
the
work
we
have
performed,
we
conclude
that
there
is
a
material
misstatement
of
this
other information; we are required to report that fact. We have nothing to report in this regard.
The
Board
of
Directors
and
the
CEO
are
responsible
for
the
preparation
and
fair
presentation
of
the
consolidated
financial
statements
in
accordance
with
International
Financial
Reporting
Standards
(IFRSs)
as
adopted
by
the
EU
and
additional
requirements,
as
applicable,
in
the
Act
on
Annual
Accounts,
the
Act
on
Financial
Undertakings
and
rules
on
accounting
for
credit
institutions,
and
for
such
internal
control
as
the
Board
of
Directors
and
the
CEO
determines
is
necessary
to
enable
the
preparation
of
consolidated
financial
statements
that
are
free
from
material
misstatement, whether due to fraud or error.
In
preparing
the
consolidated
financial
statements,
the
Board
of
Directors
and
the
CEO
are
responsible
for
assessing
Arion
Bank
hf.’s
ability
to
continue
as
a
going
concern,
disclosing,
as
applicable,
matters
related
to
going
concern
and
using
the
going
concern
basis
of
accounting
unless
the Board of Directors and the CEO either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.
Our
objectives
are
to
obtain
reasonable
assurance
about
whether
the
consolidated
financial
statements
as
a
whole
are
free
from
material
misstatement,
whether
due
to
fraud
or
error,
and
to
issue
an
auditor’s
report
that
includes
our
opinion.
Reasonable
assurance
is
a
high
level
of
assurance,
but
is
not
a
guarantee
that
an
audit
conducted
in
accordance
with
ISAs
will
always
detect
a
material
misstatement
when
it
exists.
Misstatements
can
arise
from
fraud
or
error
and
are
considered
material
if,
individually
or
in
the
aggregate,
they
could
reasonably
be
expected
to
influence the economic decisions of users taken on the basis of these consolidated financial statements.
The board of directors and the audit committee shall supervise the preparation and presentation of the consolidated financial statements.
In
accordance
with
Paragraph
2
article
104
of
the
Icelandic
Financial
Statement
Act
no.
3/2006,
we
confirm
to
the
best
of
our
knowledge
that
the
accompanying
report
of
the
board
of
directors
includes
all
information
required
by
the
Icelandic
Financial
Statement
Act
that
is
not
disclosed
elsewhere in the consolidated financial statements.
Identify
and
assess
the
risks
of
material
misstatement
of
the
consolidated
financial
statements,
whether
due
to
fraud
or
error,
design
and
perform
audit
procedures
responsive
to
those
risks,
and
obtain
audit
evidence
that
is
sufficient
and
appropriate
to
provide
a
basis
for
our
opinion.
The
risk
of
not
detecting
a
material
misstatement
resulting
from
fraud
is
higher
than
for
one
resulting
from
error,
as
fraud
may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain
an
understanding
of
internal
control
relevant
to
the
audit
in
order
to
design
audit
procedures
that
are
appropriate
in
the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of Arion Bank hf.'s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made 
by management.
14

===== SIDA 15 =====

Arion Bank Consolidated Financial Statements 2025
 
Independent Auditor's report
 •
 •
 •
Report on other legal and regulatory requirements
Report on European single electronic format (ESEF Regulation)
Appointment of auditor
 
Management
is
responsible
for
preparing
the
consolidated
financial
statements
in
compliance
with
laws
no.
20/2021
disclosure
obligation
of
issuers
of
securities
and
the
obligation
to
flag.
This
responsibility
includes
preparing
the
consolidated
financial
statements
in
a
XHTML
format
in
accordance to EU regulation 2019/815 on the European single electronic format (ESEF regulation). 
Our
responsibility
is
to
obtain
reasonable
assurance,
based
on
evidence
that
we
have
obtained,
on
whether
the
consolidated
financial
statements
is
prepared
in
all
material
respects,
in
compliance
with
the
ESEF
Regulation,
and
to
issue
a
report
that
includes
our
opinion.
The
nature,
timing
and
extent
of
procedures
selected
depend
on
the
auditor's
judgement,
including
the
assessment
of
the
risks
of
material
departures from the requirement set out in the ESEF regulation, whether due to fraud or error. 
Conclude
on
the
appropriateness
of
management’s
use
of
the
going
concern
basis
of
accounting
and,
based
on
the
audit
evidence
obtained,
whether
a
material
uncertainty
exists
related
to
events
or
conditions
that
may
cast
significant
doubt
on
the
Company’s
ability
to
continue
as
a
going
concern.
If
we
conclude
that
a
material
uncertainty
exists,
we
are
required
to
draw
attention
in
our
auditor’s
report
to
the
related
disclosures
in
the
consolidated
financial
statements
or,
if
such
disclosures
are
inadequate,
to
modify
our
opinion.
Our
conclusions
are
based
on
the
audit
evidence
obtained
up
to
the
date
of
our
auditor’s
report.
However,
future
events
or
conditions
may
cause the Company to cease to continue as a going concern.
Evaluate
the
overall
presentation,
structure
and
content
of
the
consolidated
financial
statements,
including
the
disclosures,
and
whether
the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain
sufficient
appropriate
audit
evidence
regarding
the
financial
information
of
the
entities
or
business
activities
within
the
Group
to
express
an
opinion
on
the
consolidated
and
separate
financial
statements.
We
are
responsible
for
the
direction,
supervision
and
performance of the group audit.  We remain solely responsible for our audit opinion.
We
communicate
with
the
Board
of
Directors
and
the
Audit
Committee
regarding,
among
other
matters,
the
planned
scope
and
timing
of
the
audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We
also
provide
the
Board
of
Directors
and
the
Audit
Committee
a
statement
that
we
have
complied
with
relevant
ethical
requirements
regarding
independence,
and
to
communicate
with
them
all
relationships
and
other
matters
that
may
reasonably
be
thought
to
bear
on
our
independence,
and where applicable, related safeguards.
In
addition
to
our
work
as
the
auditors
of
Arion
Bank
hf.,
Deloitte
has
provided
the
Bank
with
permitted
additional
services
such
as
review
of
interim
financial
statements
and
other
assurance
engagement.
Deloitte
has
in
place
internal
procedures
in
order
to
ensure
its
independence
before acceptance of additional services. Deloitte has confirmed in writing to the Audit Committee that we are independent of Arion banki hf.
From
the
matters
communicated
with
the
Board
of
Directors
and
the
Audit
Committee,
we
determine
those
matters
that
were
of
most
significance
in
the
audit
of
the
consolidated
financial
statements
of
the
current
period
and
are
therefore
the
key
audit
matters.
We
describe
these
matters
in
our
auditor’s
report
unless
law
or
regulation
precludes
public
disclosure
about
the
matter
or
when,
in
extremely
rare
circumstances,
we
determine
that
a
matter
should
not
be
communicated
in
our
report
because
the
adverse
consequences
of
doing
so
would
reasonably
be
expected to outweigh the public interest benefits of such communication.
As
part
of
our
audit
of
the
consolidated
financial
statements
of
Arion
Bank
hf.
we
performed
procedures
to
be
able
to
issue
an
opinion
on
whether
the
consolidated
financial
statements
of
Arion
Bank
hf.
for
the
year
2025
with
the
file
name
RIL4VBPDB0M7Z3KXSF19-2025-12-31-
en.zip
is
prepared,
in
all
material
respects,
in
compliance
with
laws
no.
20/2021
disclosure
obligation
of
issuers
of
securities
and
the
obligation
to
flag
relating
to
requirements
regarding
European
single
electronic
format
regulation
EU
2019/815
which
include
requirements
related
to
the
preparation of the Consolidated Financial Statements in XHTML format and iXBRL markup.
Signy Magnusdottir
State Authorized Public Accountant
Gunnar Thorvardarson
State Authorized Public Accountant
 
Deloitte ehf.
Kópavogur, 11 February 2026
Deloitte
ehf.
was
appointed
auditor
of
Arion
Bank
hf.
By
the
general
meeting
of
shareholders
on
12
March
2025.
Deloitte
have
been
elected
as
auditor of the Group since the general meeting 2015.
In
our
opinion,
the
Consolidated
Financial
Statements
of
Arion
Bank
hf.
for
the
year
2025
with
the
file
name
RIL4VBPDB0M7Z3KXSF19-2025-12-
31-0-en.zip is prepared, in all material respects, in compliance with the ESEF Regulation.
15

===== SIDA 16 =====

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Consolidated Income Statement
Notes
2025
2024
129,777 
132,259 
(77,235)
(85,957)
7
52,542 
46,302 
21,151 
19,171 
(4,004)
(3,811)
8
17,147 
15,360 
20,766 
19,669 
(18,655)
(17,503)
9
2,111 
2,166 
10
1,075 
2,845 
11
5,516 
(222)
 
6,591 
2,623 
78,391 
66,451 
12-14
(28,248)
(28,328)
15
(2,106)
(1,924)
16
(3,053)
(1,131)
44,984 
35,068 
17
(12,458)
(8,919)
32,526 
26,149 
18
(19)
(37)
32,507 
26,112 
Attributable to
30,626 
26,111 
1,881 
1 
32,507 
26,112 
Earnings per share
19
22.05 
18.31 
21.86 
18.09 
Net impairment ...........................................................................................................................................
Income tax expense ....................................................................................................................................
Shareholders of Arion Bank hf.  ..................................................................................................................
Net earnings from continuing operations ................................................................................................
Net earnings ..............................................................................................................................................
Earnings before income tax .....................................................................................................................
Net earnings ..............................................................................................................................................
Basic earnings per share attributable to shareholders of Arion Bank (ISK) ..................................................
Diluted earnings per share attributable to shareholders of Arion Bank (ISK) ...............................................
Non-controlling interest ...............................................................................................................................
Discontinued operations held for sale, net of income tax .............................................................................
Insurance service expenses ........................................................................................................................
Net financial income ....................................................................................................................................
Bank levy ....................................................................................................................................................
Interest income ...........................................................................................................................................
Interest expense .........................................................................................................................................
Fee and commission income .......................................................................................................................
Net interest income ...................................................................................................................................
Other operating income ...............................................................................................................................
Operating expenses ....................................................................................................................................
Fee and commission expense .....................................................................................................................
Insurance revenue ......................................................................................................................................
Net fee and commission income ..............................................................................................................
Insurance service results .........................................................................................................................
Other net operating income ......................................................................................................................
Operating income ......................................................................................................................................
The accompanying Notes are an integral part of these Consolidated Financial Statements
16

===== SIDA 17 =====

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Consolidated Statement of Comprehensive Income
Notes
2025
2024
32,507 
26,112 
257 
274 
 
10
162 
99 
Changes to reserve for financial instruments at FV thr. OCI that
419 
373 
6 
- 
Other comprehensive income that is or may be reclassified
425 
373 
32,932 
26,485 
Attributable to
31,051 
26,484 
1,881 
1 
Total comprehensive income
32,932 
26,485 
Comprehensive income per share
19
22.36 
18.57 
22.17 
18.35 
 
Net change in FV of financial assets carried at FV through OCI, net of tax .................................................
  transferred to the income statement ..........................................................................................................
    is or may be reclassified subsequently to the income statement .........................................................
Shareholders of Arion Bank ........................................................................................................................
Non-controlling interest ...............................................................................................................................
Basic comprehensive income per share attributable to shareholders of Arion Bank (ISK) ...........................
Diluted comprehensive income per share attributable to shareholders of Arion Bank (ISK) .........................
Net realized loss on financial assets carried at FV through OCI, net of tax
Total comprehensive income ...................................................................................................................
Exchange difference on translating foreign subsidiaries ..............................................................................
Net earnings ..............................................................................................................................................
The accompanying Notes are an integral part of these Consolidated Financial Statements
    subsequently to the Income Statement ..................................................................................................
17

===== SIDA 18 =====

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Consolidated Statement of Financial Position
Assets
Notes
20
150,111 
124,094 
21
22,567 
25,690 
22
1,329,056 
1,230,058 
23-25
215,816 
206,417 
25
7,305 
9,387 
27
760 
814 
28
7,533 
7,688 
29
2 
2 
30
98 
111 
31
22,517 
14,006 
1,755,765 
1,618,267 
Liabilities
24
12,003 
6,618 
24
921,182 
857,443 
24
3,129 
8,394 
29
12,983 
11,060 
32
50,736 
49,950 
24,33
494,823 
433,178 
24,34
43,518 
44,538 
1,538,374 
1,411,181 
Equity
37
1,383 
5,686 
14,382 
13,949 
201,562 
186,947 
217,327 
206,582 
64 
504 
217,391 
207,086 
1,755,765 
1,618,267 
The accompanying Notes are an integral part of these Consolidated Financial Statements
Loans to customers ......................................................................................................................
Financial instruments ...................................................................................................................
Subordinated liabilities .................................................................................................................
Total Equity ................................................................................................................................
Total Liabilities and Equity ........................................................................................................
Non-controlling interest ................................................................................................................
Other liabilities .............................................................................................................................
Borrowings ...................................................................................................................................
Share capital and share premium .................................................................................................
Other reserves .............................................................................................................................
Retained earnings ........................................................................................................................
Shareholders' Equity ..................................................................................................................
Total Liabilities ...........................................................................................................................
Tax liabilities ................................................................................................................................
Investment property .....................................................................................................................
Deposits .......................................................................................................................................
Financial liabilities at fair value .....................................................................................................
Investments in associates ............................................................................................................
Intangible assets ..........................................................................................................................
Tax assets ...................................................................................................................................
Other assets ................................................................................................................................
Due to credit institutions and Central Bank ...................................................................................
Assets and disposal groups held for sale .....................................................................................
Total Assets ................................................................................................................................
31.12.2024
31.12.2025
Cash and balances with Central Bank ..........................................................................................
Loans to credit institutions ............................................................................................................
18

===== SIDA 19 =====

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Debt invest-
Gain in
ments at
Foreign
Non-
subs. &
Gain in
Capitalized
fair value
currency
cont-
Share
Share
Share
assoc.,
securities,
develop-
thr. OCI,
translation
Statutory
Retained
holders'
rolling
Total
capital
premium
option
unrealized
unrealized
ment cost
unrealized
reserve
reserve
earnings
equity
interest
equity
1,412 
4,274 
411 
10,957 
513 
759 
(328)
- 
1,637 
186,947 
206,582 
504 
207,086 
30,626 
30,626 
1,881 
32,507 
257 
257 
257 
162 
162 
162 
6 
6 
6 
- 
- 
- 
- 
- 
- 
419 
6 
- 
30,626 
31,051 
1,881 
32,932 
(16,114)
(16,114)
(16,114)
(36)
(5,218)
(699)
(5,953)
(5,953)
87 
87 
87 
6 
715 
(119)
602 
602 
(88)
88 
- 
- 
536 
304 
840 
840 
1 
229 
230 
230 
1,803 
(193)
(759)
(1,259)
408 
- 
- 
- 
(2,321)
(2,321)
1,383 
- 
827 
12,760 
320 
- 
91 
6 
378 
201,562 
217,327 
64 
217,391 
The accompanying Notes are an integral part of these Consolidated Financial Statements
  Share option charge - incentive scheme ............
  Sale of a subsidiary ............................................
Net realized loss transferred to P/L ......................
Transactions with owners
  Share option forfeited .........................................
  Net changes in reserves .....................................
Equity 31 December 2025 ..................................
Total comprehensive income ............................
  Share option vested ...........................................
  Incentive scheme ...............................................
  Purchase of treasury shares ...............................
Net changes in reserves .......................................
Consolidated Statement of Changes in Equity
Total 
share-
Net earnings .........................................................
Restricted reserves
Equity 1 January 2025 ........................................
  Share option charge ...........................................
  Dividend paid .....................................................
Net change in fair value ........................................
19

===== SIDA 20 =====

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Consolidated Statement of Changes in Equity
Debt invest-
Gain in
ments at
Non-
subs. &
Gain in
Capitalized
fair value
cont-
Share
Share
Share
assoc.,
securities,
develop-
thr. OCI,
Warrants
Statutory
Retained
holders'
rolling
Total
capital
premium
option
unrealized
unrealized
ment cost
unrealized
reserve
reserve
earnings
equity
interest
equity
1,446 
9,188 
408 
7,772 
1,462 
880 
(701)
825 
1,637 
175,881 
198,798 
503 
199,301 
 
26,111 
26,111 
1 
26,112 
274 
274 
274 
99 
99 
99 
- 
- 
- 
- 
- 
- 
373 
- 
- 
26,111 
26,484 
1 
26,485 
(13,058)
(13,058)
(13,058)
(90)
(12,362)
(12,452)
(12,452)
53 
6,187 
6,240 
6,240 
162 
162 
162 
2 
280 
(40)
242 
242 
(119)
119 
- 
- 
1 
165 
166 
166 
816 
(825)
9 
- 
- 
3,185 
(949)
(121)
(2,115)
- 
- 
1,412 
4,274 
411 
10,957 
513 
759 
(328)
- 
1,637 
186,947 
206,582 
504 
207,086 
The accompanying Notes are an integral part of these Consolidated Financial Statements
Net earnings .........................................................
  Net changes in reserves .....................................
Equity 31 December 2024 ..................................
  Warrants excercised ..........................................
  Share capital increase ........................................
  Incentive scheme ...............................................
  Purchase of treasury shares ...............................
  Share option vested ...........................................
  Dividend paid .....................................................
  Share option forfeited .........................................
  Share option charge ...........................................
Total comprehensive income ............................
Restricted reserves
Total 
share-
Equity 1 January 2024 ........................................
Net change in fair value ........................................
Net realized loss transferred to P/L ......................
Transactions with owners
20

===== SIDA 21 =====

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
 
2025
2024
Operating activities
32,507 
26,112 
(39,943)
(38,148)
(527)
211 
(76,733)
(55,406)
(3,475)
(4,890)
67,529 
68,876 
46,667 
16,946 
(52)
(9,433)
100,654 
102,793 
(79,776)
(74,623)
204 
146 
(10,535)
(8,990)
36,521 
23,593 
Investing activities
4,949 
- 
(191)
(233)
447 
- 
(463)
(325)
23 
27 
19 
(1)
8 
- 
(852)
(622)
3,940 
(1,154)
Financing activities
(16,114)
(13,058)
- 
6,240 
(5,953)
(12,452)
10,040 
19,735 
(8,769)
(6,775)
- 
(10,471)
602 
242 
(20,194)
(16,539)
20,266 
5,901 
117,310 
114,993 
972 
(3,584)
138,548 
117,310 
Cash and cash equivalents
150,111 
124,094 
22,040 
25,690 
(33,603)
(32,474)
138,548 
117,310 
* Interest paid includes interest on deposits at the end of the year.
The accompanying Notes are an integral part of these Consolidated Financial Statements
Consolidated Statement of Cash flows
Net earnings .............................................................................................................................................................
Non-cash items included in net earnings ...................................................................................................................
Changes in operating assets and liabilities
Interest received .......................................................................................................................................................
Proceeds from sale of property and equipment .........................................................................................................
Mandatory reserve deposit with Central Bank ...........................................................................................................
Cash and balances with Central Bank .......................................................................................................................
Other changes in operating assets and liabilities ...................................................................................................
Proceeds from vested share options .........................................................................................................................
Cash and cash equivalents ....................................................................................................................................
Issued subordinated liabilities ...................................................................................................................................
Dividend received .....................................................................................................................................................
Income tax paid ........................................................................................................................................................
Purchase of treasury stock .......................................................................................................................................
Dividend paid to shareholders of Arion Bank .............................................................................................................
Net cash used in financing activities .....................................................................................................................
Net cash from (used) in investing activities ..........................................................................................................
Settlement of subordinated liabilities .........................................................................................................................
Bank accounts ..........................................................................................................................................................
Cash and cash equivalents at beginnning of the year ...............................................................................................
Effect of exchange rate changes on cash and cash equivalent .................................................................................
Issued new share capital ...........................................................................................................................................
Repurchase of subordinated liabilities .......................................................................................................................
Net increase in cash and cash equivalents ...............................................................................................................
Proceeds from sale of subsidiary, net of minority interest .........................................................................................
Cash and cash equivalents ....................................................................................................................................
Financial instruments and financial liabilities at fair value .......................................................................................
Loans to credit institutions, excluding bank accounts .............................................................................................
Loans to customers ...............................................................................................................................................
Acquisition of property and equipment ......................................................................................................................
Acquisition of intangible assets .................................................................................................................................
Net cash from operating activities .........................................................................................................................
Decreased (increased) share capital of associates ...................................................................................................
Deposits .................................................................................................................................................................
Borrowings .............................................................................................................................................................
Interest paid * ...........................................................................................................................................................
Acquisition of investment property ............................................................................................................................
Dividend from associates ..........................................................................................................................................
Proceeds from sale of investment property ...............................................................................................................
21

===== SIDA 22 =====

Arion Bank Consolidated Financial Statements 2025
page
page
General information
 
Basis of preparation ..........................................................
23
Offsetting financial assets and financial liabilities ..............
44
Changes in accounting policies .........................................
23
Investment in associates ..................................................
44
Material accounting estimates and judgments
Intangible assets ..............................................................
45
in applying accounting policies .......................................
23
Tax assets and tax liabilities .............................................
46
The Group .........................................................................
24
Assets and disposal groups held for sale ..........................
46
Other assets .....................................................................
47
Operating segment reporting
 
Other liabilities ..................................................................
48
Operating segments ..........................................................
25
Borrowings .......................................................................
49
Subordinated liabilities ......................................................
50
Quarterly statements
Liabilities arising from financial activities ...........................
50
Operations by quarters ......................................................
28
Pledged assets .................................................................
51
Equity ...............................................................................
51
Notes to the Consolidated Income Statement
Net interest income ...........................................................
29
Other information
Net fee and commission income .......................................
30
Shareholders of Arion Bank ..............................................
53
Insurance service results ..................................................
30
Legal matters ....................................................................
53
Net financial income ..........................................................
31
Events after the reporting period .......................................
54
Other operating income .....................................................
31
Operating expenses ..........................................................
32
Off Balance sheet information
Personnel and salaries ......................................................
32
Commitments ...................................................................
55
Other operating expense ...................................................
34
Assets under management, supervision and custody .......
55
Bank levy ..........................................................................
34
Net impairment ..................................................................
34
Related party
Income tax expense ..........................................................
35
Related party ....................................................................
55
Discontinued operations held for sale, net of income tax ...
35
Earnings per share ............................................................
35
Risk management disclosures
Credit risk .........................................................................
57
Notes to the Consolidated Statement of
Market risk ........................................................................
69
Financial Position
Liquidity and Funding risk .................................................
75
Cash and balances with Central Bank ...............................
36
Capital management ........................................................
79
Loans to credit institutions .................................................
36
Operational risk ................................................................
81
Loans to customers ...........................................................
36
Sustainability risk ..............................................................
82
Financial instruments ........................................................
36
Financial assets and financial liabilities .............................
37
Material accounting policies
83
Fair value hierarchy ...........................................................
39
Notes to the Consolidated Financial Statements
Contents
22

===== SIDA 23 =====

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
General information
1.
Basis of preparation
Statement of compliance
 
Basis of measurement
Functional and presentation currency
2.
Changes in accounting policies
3.
Material accounting estimates and judgements in applying accounting policies
Estimates and assumptions
- investment properties are measured at fair value; and
Notes to the Consolidated Financial Statements
The
same
accounting
policies,
presentation
and
methods
of
computation
are
followed
in
these
Consolidated
Financial
Statements
as
were
applied in the Consolidated Financial Statements for the year 2024.
-
bonds
and
debt
instruments,
shares
and
equity
instruments,
short
positions
in
listed
bonds
and
equities,
derivatives
and
certain
loans
to
customers. For details on the accounting policy, see Note 59;
Arion
Bank
hf.,
the
Parent
Company,
was
established
on
18
October
2008
and
is
incorporated
and
domiciled
in
Iceland.
The
registered
office
of
Arion
Bank
hf.
is
located
at
Borgartún
19,
Reykjavík.
The
Consolidated
Financial
Statements
for
the
year
2025
comprise
the
Parent
Company and its subsidiaries (together referred to as "the Group").
The
Consolidated
Financial
Statements
were
approved
and
authorized
for
publication
by
the
Board
of
Directors
of
Arion
Bank
on
11
February 2026.
In
preparing
these
Consolidated
Financial
Statements,
the
Group
has
applied
the
concept
of
materiality
to
the
presentation
and
level
of
disclosure.
Only
essential
and
mandatory
information
is
disclosed
which
is
relevant
to
an
understanding
by
the
reader
of
these
Consolidated
Financial Statements.
The
Consolidated
Financial
Statements
have
been
prepared
in
accordance
with
International
Financial
Reporting
Standards
(IFRS
Accounting
Standards),
as
adopted
by
the
European
Union
and
additional
requirements
in
the
Icelandic
Financial
Statements
Act,
Financial
Undertakings Act and rules on Accounting for Credit Institutions.
These Consolidated Financial Statements have been prepared on a historical cost basis except for the following:
- non-current assets and disposal groups held for sale are stated at the lower of their carrying amounts and fair value, less cost to sell.
These
Consolidated
Financial
Statements
are
presented
in
Icelandic
krona
(ISK),
which
is
the
Parent
Company's
functional
currency,
rounded
to
the
nearest
million,
unless
otherwise
stated.
At
the
end
of
the
year
the
exchange
rate
of
the
ISK
against
USD
was
125.44
and
147.28 for EUR (31.12.2024: USD 138.99 and EUR 143.89).
The
preparation
of
these
Consolidated
Financial
Statements
requires
management
to
make
judgments,
estimates
and
assumptions
that
affect
the
reported
amount
of
revenues,
expenses,
assets
and
liabilities,
and
the
accompanying
disclosures,
as
well
as
the
disclosure
of
contingent
liabilities.
Uncertainty
about
these
assumptions
and
estimates
could
result
in
outcomes
that
require
a
material
adjustment
to
the
carrying amount of assets or liabilities affected in future periods.
The
key
assumptions
concerning
the
future
and
other
key
sources
of
estimation
uncertainty
at
the
reporting
date,
that
have
a
significant
risk
of
causing
a
material
adjustment
to
the
carrying
amounts
of
assets
and
liabilities
within
the
next
financial
year,
are
described
below.
The
Group
based
its
assumptions
and
estimates
on
parameters
available
when
the
Consolidated
Financial
Statement
were
prepared.
Existing
circumstances
and
assumptions
about
future
developments,
however,
may
change
due
to
market
changes
or
circumstances
arising
that
are
beyond the control of the Group. Such changes are reflected in the assumptions when they occur.
Amendments
to
standards
effective
from
1
January
2025
did
not
have
a
material
impact
on
theses
Consolidated
Financial
Statements.
The
Group has not early adopted any standards, interpretations or amendments that have been issued but are not effective, see Note 77.
23

===== SIDA 24 =====

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
3.
Material accounting estimates and judgements in applying accounting policies, continued
Impairment of financial assets
Macroeconomic outlook
Impairment of intangible assets
Revaluation of investment properties
4.
The Group
Shares in the main subsidiaries in which Arion Bank holds a direct interest
Currency
31.12.2025
31.12.2024
GBP
100.0% 
-
ISK
100.0% 
100.0% 
ISK
100.0% 
100.0% 
ISK
51.0% 
51.0% 
ISK
100.0% 
100.0% 
ISK
100.0% 
100.0% 
 
In
June
2025
Arion
Bank
acquired
all
shareholdings
in
Arion
(Financial)
Advisory
Services
Ltd
(formerly
Arngrimsson
Advisors
Ltd),
an
entity
offering
financial
service
for
institutional
investors
investing
in
international
markets.
The
acquisition
was
defined
as
asset
purchase,
mainly
affecting
other
assets
in
the
Statement
of
Financial
position
whereas
the
effects
on
the
Income
Statement
were
mainly
on
net
fee
and commission income.
The
sale
of
the
subsidiary
Arnarland
ehf.
was
completed
on
23
October
2025.
Arion
Bank
owned
a
51%
stake
in
Arnarland
through
its
subsidiary Landey and recognized a minority interest accordingly.
The
carrying
amounts
of
goodwill,
infrastructure
and
customer
relationship
and
related
agreements
are
reviewed
annually
to
determine
whether
there
is
any
indication
of
impairment.
If
any
such
indication
exists
the
asset's
recoverable
amount
is
estimated.
An
impairment
loss
is
recognized
if
the
carrying
amount
of
an
asset
exceeds
its
recoverable
amount.
Impairment
losses
are
recognized
in
the
Consolidated
Income
Statement.
The
recoverable
amount
of
an
asset
is
the
greater
of
its
value
in
use
and
its
fair
value
less
cost
to
sell.
In
assessing
value
in
use,
the
estimated
future
cash
flows
are
discounted
to
their
present
value
using
a
pre-tax
discount
rate
that
reflects
current
market
assessments of the time value of money and the risks specific to the asset.
The
Group
carries
its
investment
properties
at
fair
value,
with
changes
in
fair
value
being
recognized
in
the
income
statement.
For
investment
properties,
either
a
valuation
methodology
based
on
present
value
calculations
is
used,
as
there
is
a
lack
of
comparable
market
data
because
of
the
nature
of
the
properties,
or
the
investment
properties
are
valued
by
reference
to
transactions
involving
properties
of
a
similar nature, location and condition.  
The
macroeconomic
scenario
applied
for
2026
reflects
management's
judgment
that,
despite
elevated
inflation
and
continued
uncertainty
affecting
key
export
sectors,
the
Icelandic
economy
is
expected
to
avoid
a
severe
downturn.
Inflation
is
anticipated
to
remain
elevated
in
early 2026, partly due to changes in taxes and levies, before moderating as underlying disinflationary pressures emerge.
The
book
value
of
financial
assets
which
fall
under
the
impairment
requirements
of
IFRS
9
are
presented
net
of
expected
credit
losses
in
the
statement
of
financial
position.
On
a
monthly
basis
expected
credit
losses
for
stages
1
and
2
are
recalculated
for
each
asset,
the
calculations
are
based
on
probability
of
default
(PD),
loss
given
default
(LGD)
and
exposure
at
default
(EAD)
models.
Stage
3
calculations
are
based
on
LGD
and
EAD
parameters.
In
addition
to
the
model
outcomes,
the
assessment
of
expected
credit
losses
is
based
on
three
key
factors:
management's
assumptions
regarding
the
development
of
macroeconomic
factors
over
the
next
five
years,
how
those
factors
affect
each
model
and
how
to
estimate
a
significant
increase
in
credit
risk.
The
assumptions
for
macroeconomic
development
are
incorporated
into
each
model
for
three
scenarios:
a
base
case,
an
optimistic
case,
and
a
pessimistic
case.
Management
estimates
the
probability
weight
for
each
scenario
used
for
calculations
of
the
probability
weighted
expected
credit
losses.
The
amount
of
expected
credit
losses
to
be
recognized
is
dependent
on
the
Bank's
definition
of
significant
increase
in
credit
risk,
which
controls
the
impairment
stage
each
asset
is
allocated
to.
Management
has
estimated
factors
to
measure
significant
increase
in
credit
risk
from
origination,
by
comparison
of
changes in PD values, annualized lifetime PD values, days past due and watch list. For further information see Note 59.
Notes to the Consolidated Financial Statements
 
Management
has
judged
that
signs
of
a
cooling
labour
market
and
weaker
forward
looking
indicators
of
labour
demand,
together
with
the
Central
Bank’s
signalling
of
a
continued
easing
bias
and
its
stated
approach
of
looking
through
one-off
inflationary
shocks,
support
the
use
of
a
baseline
scenario
assuming
moderate
GDP
growth.
This
judgement
is
made
notwithstanding
ongoing
uncertainties
related
to
wage
growth, which is expected to remain elevated, and the extent to which softer labour market conditions may dampen domestic demand.
 
The
applied
scenario
further
reflects
management’s
assessment
that
the
housing
market
is
expected
to
continue
to
cool
in
an
orderly
manner
and
that
domestic
demand
will
remain
sufficiently
resilient
to
offset
external
headwinds.
However,
given
the
inherent
uncertainty
surrounding
inflation
persistence,
wage
dynamics,
and
exchange
rate
valuation,
the
assumptions
applied
are
subject
to
estimation
uncertainty and may differ from actual outcomes.
Equity interest
Operating activity
Arion (Financial) Advisory Services Ltd, 30-32 Fleet Street, London, UK ..........
Financial service
Eignabjarg ehf., Borgartún 19, Reykjavík, Iceland ............................................
Holding company
Leiguskjól ehf., Bjargargata 1, Reykjavík, Iceland .............................................
Rental guarantee
Stefnir hf., Borgartún 19, Reykjavík, Iceland .....................................................
Asset management
Landey ehf., Borgartún 19, Reykjavík, Iceland ..................................................
Real estate
Vördur tryggingar hf., Borgartún 19, Reykjavík, Iceland ....................................
Insurance
24

===== SIDA 25 =====

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
Operating segment reporting
5.
Operating segments
Markets & Stefnir
Corporate & Investment Banking (CIB)
Retail Banking
Treasury
Vördur tryggingar hf.
Supporting units
Corporate
Banking's
experienced
account
managers
specialize
in
key
economic
sectors
such
as
retail
and
services,
seafood,
energy
and
real
estate.
The
division
serves
companies
ranging
from
SMEs
to
large
cap´s
and
provides
full
range
lending
and
insurance
products,
including
guarantees,
deposit
accounts,
payment
solutions,
and
a
variety
of
value-added
digital
solutions.
The
Corporate
portfolio
composition
is
diversified
between
sectors,
customers
and
currencies
which
include
international
exposures,
partly
through
syndicates
with
other Icelandic or international banks.
Arion
Bank‘s
Corporate
Finance
works
closely
with
Corporate
Banking
and
provides
the
Bank’s
clients
with
comprehensive
financial
advisory services, with a key focus on M&A advisory, private placements, IPOs and other offerings of securities.
Retail
Banking
provides
a
diverse
range
of
financial
services
in
12
branches
and
service
points
across
Iceland
in
addition
to
service
centre
and
digital
solutions
both
in
the
Arion
app
and
online
banking.
These
services
include
deposits
and
loans,
savings,
payment
cards,
pensions
,
securities
and
funds.
In
order
to
improve
efficiency
the
branch
network
is
split
into
four
regions,
and
smaller
branches
can
therefore benefit from the strength of larger units within each region.
Corporate
&
Investment
Banking
provides
comprehensive
financial
services
to
companies
and
investors
with
focus
on
meeting
the
needs
of each client, both in Iceland and internationally. The division is divided into Corporate Banking and Corporate Finance.
Markets
&
Stefnir
comprise
Asset
Management
and
Capital
Markets.
Asset
Management
manages
financial
assets
on
behalf
of
its
clients
according
to
a
pre-determined
investment
strategy.
Asset
Management
also
handles
the
operation
and
development
of
securities
and
pension
funds.
Asset
Management
comprises
Institutional
Asset
Management,
Premia
Services,
development
and
operations,
research,
and
sales
and
services.
Premía
Services
are
divided
into
three
service
streams:
Premia;
Premia
-
Private
Banking;
and
Premia
–
Wealth
Management
and
provide
customers
with
comprehensive
and
personal
financial
services.
Capital
Markets
is
a
securities
brokerage
and
brokers
listed
securities
transactions
for
the
Bank’s
international
and
domestic
clients
on
all
the
world’s
major
securities
exchanges.The
operation
of
Stefnir
hf.
is
presented
under
the
segment.
Stefnir
hf.
is
an
independently
operating
financial
company
owned
by
Arion
Bank
and
manages
a
broad
range
of
mutual
funds,
investment
funds
and
institutional
investor
funds
for
investors.
Markets
also
offer
a
comprehensive
selection
of
funds
from
some
of
the
leading
international
fund
management
companies,
both
through
the
Bank
and
the
Bank's subsidiary Arion (Financial) Advisory Services Ltd. 
Segment
information
is
presented
in
respect
of
the
Group's
operating
segments
and
is
based
on
the
Group's
management
and
internal
reporting
structure.
The
business
units
are
segmented
according
to
customers,
products
and
services
characteristics.
Segment
performance is evaluated based on earnings before tax.
Inter
segment
pricing
is
determined
on
an
arm's
length
basis.
Operating
segments
pay
and
receive
interest
to
and
from
Treasury
on
an
arm's length basis to reflect the allocation of capital, funding cost and relevant risk premium. 
Supporting
units
include
the
Bank's
headquarters
which
carry
out
support
functions
such
as
the
CEO
office,
Risk
Management,
Finance
(excluding
Treasury),
IT
and
Operations
&
Culture.
The
information
presented
relating
to
the
supporting
units
does
not
represent
an
operating
segment.
A
significant
proportion
of
expenses
from
support
functions
is
allocated
to
operating
segments
in
a
separate
line
in
the
operating segment overview.
Treasury
is
responsible
for
the
Bank's
funding,
liquidity
and
asset-and-liability
management.
Treasury
oversees
the
internal
funds‘s
transfer
pricing
and
manages
the
relationship
with
investors,
credit
rating
agencies
and
financial
institutions.
Market
making
activities
in
domestic
securities and FX as well as FX brokerage sits within Treasury.
Vördur
is
a
comprehensive
insurance
company
that
services
both
individuals
and
companies
and
focuses
on
simple
and
convenient
services.
Vördur
collaborates
closely
with
Retail
Banking
and
Corporate
and
Investment
Banking
on
insurance
sales
and
customer
services.
25

===== SIDA 26 =====

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
5.
Operating segments, continued
 
 
 
Subsidi-
Supporting
2025
aries excl.
units
Markets
Retail
Stefnir and
and elimi-
Income Statement
and Stefnir
CIB
Banking
Treasury
Vördur
Vördur
nations
Total
Net interest income ...................................
1,387 
29,890 
16,163 
5,315 
(75)
6 
(144)
52,542 
Net fee and commission income ...............
5,686 
6,844 
3,261 
796 
(180)
210 
530 
17,147 
Insurance service results ..........................
- 
- 
- 
- 
2,174 
(5)
(58)
2,111 
Net financial income ..................................
3 
5 
- 
211 
815 
69 
(28)
1,075 
Other operating income .............................
2 
9 
29 
3 
9 
5,465 
(1)
5,516 
Operating income ....................................
7,078 
36,748 
19,453 
6,325 
2,743 
5,745 
299 
78,391 
Operating expenses ..................................
(2,855)
(2,528)
(3,688)
(687)
1,121 
(577)
(19,034)
(28,248)
Allocated expenses ...................................
(3,217)
(5,284)
(7,105)
(1,428)
(1,204)
(96)
18,334 
- 
Bank levy ..................................................
(42)
(801)
(830)
(434)
- 
- 
1 
(2,106)
Net impairment ..........................................
21 
(2,753)
(201)
(15)
- 
- 
(105)
(3,053)
Earnings before income tax ...................
985 
25,382 
7,629 
3,761 
2,660 
5,072 
(505)
44,984 
Net seg. rev. from ext. customers .............
3,600 
45,962 
37,116 
(16,944)
2,770 
5,920 
(33)
78,391 
Net seg. rev. from other segments ............
3,478 
(9,214)
(17,663)
23,269 
(27)
(175)
332 
- 
Operating income ....................................
7,078 
36,748 
19,453 
6,325 
2,743 
5,745 
299 
78,391 
Statement of financial position
Loans to customers ...................................
9,242 
678,151 
640,225 
- 
- 
- 
1,438 
1,329,056 
Financial instruments ................................
19,591 
- 
- 
162,790 
36,277 
164 
(3,006)
215,816 
Other external assets ................................
6,199 
69 
1,573 
172,826 
4,421 
12,700 
13,105 
210,893 
Internal assets ..........................................
68,213 
- 
- 
265,545 
- 
- 
(333,758)
- 
Total assets .............................................
103,245 
678,220 
641,798 
601,161 
40,698 
12,864 
(322,221)
1,755,765 
Deposits ....................................................
91,930 
405,169 
408,750 
20,160 
- 
- 
(4,827)
921,182 
Other external liabilities .............................
2,496 
6,792 
2,763 
561,457 
25,790 
1,529 
16,365 
617,192 
Internal liabilities .......................................
- 
148,194 
177,791 
- 
- 
7,774 
(333,759)
- 
Total liabilities .........................................
94,426 
560,155 
589,304 
581,617 
25,790 
9,303 
(322,221)
1,538,374 
Allocated equity ......................................
8,819 
118,065 
52,494 
19,544 
14,908 
3,561 
- 
217,391 
Notes to the Consolidated Financial Statements
26

===== SIDA 27 =====

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
5.
Operating segments, continued
Subsidi-
Supporting
2024
aries excl.
units
Markets
Retail
Stefnir and
and elimi-
Income Statement
and Stefnir
CIB
Banking
Treasury
Vördur
Vördur
nations
Total
Net interest income ...................................
1,257 
26,086 
15,103 
4,079 
(76)
(194)
47 
46,302 
Net fee and commission income ...............
5,315 
5,213 
3,471 
672 
(137)
292 
534 
15,360 
Insurance service results ..........................
- 
- 
- 
- 
2,231 
- 
(65)
2,166 
Net financial income ..................................
94 
853 
- 
(580)
2,468 
23 
(13)
2,845 
Other operating income .............................
4 
(1)
37 
- 
11 
(309)
36 
(222)
Operating income ....................................
6,670 
32,151 
18,611 
4,171 
4,497 
(188)
539 
66,451 
Operating expenses ..................................
(2,793)
(2,524)
(3,883)
(917)
1,064 
(409)
(18,866)
(28,328)
Allocated expenses ...................................
(2,894)
(5,132)
(7,780)
(1,463)
(1,164)
(123)
18,556 
- 
Bank levy ..................................................
(46)
(694)
(829)
(355)
- 
- 
- 
(1,924)
Net impairment ..........................................
(24)
(1,016)
(71)
(20)
- 
- 
- 
(1,131)
Earnings before income tax ...................
913 
22,785 
6,048 
1,416 
4,397 
(720)
229 
35,068 
Net seg. rev. from ext. customers .............
3,390 
41,220 
37,276 
(20,279)
4,529 
39 
314 
66,489 
Net seg. rev. from other segments ............
3,280 
(9,069)
(18,665)
24,459 
(38)
(227)
222 
(38)
Operating income ....................................
6,670 
32,151 
18,611 
4,180 
4,491 
(188)
536 
66,451 
Statement of financial position
Loans to customers ...................................
6,105 
588,483 
634,959 
4 
- 
- 
507 
1,230,058 
Financial instruments ................................
25,317 
587 
- 
147,478 
35,790 
117 
(2,872)
206,417 
Other external assets ................................
6,521 
414 
1,675 
141,379 
4,634 
19,215 
7,954 
181,792 
Internal assets ..........................................
63,261 
- 
- 
261,499 
- 
- 
(324,760)
- 
Total assets .............................................
101,204 
589,484 
636,634 
550,360 
40,424 
19,332 
(319,171)
1,618,267 
Deposits ....................................................
87,630 
394,512 
355,787 
22,003 
- 
- 
(2,489)
857,443 
Other external liabilities .............................
4,569 
4,644 
1,923 
501,793 
25,076 
7,655 
8,078 
553,738 
Internal liabilities .......................................
- 
89,733 
232,638 
- 
- 
2,389 
(324,760)
- 
Total liabilities .........................................
92,199 
488,889 
590,348 
523,796 
25,076 
10,044 
(319,171)
1,411,181 
Allocated equity ......................................
9,005 
100,596 
46,286 
26,564 
15,348 
9,288 
- 
207,086 
Income taxes and discontinued operations held for sale are excluded from the profit and loss segment information. 
27

===== SIDA 28 =====

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
Notes to the Consolidated Income Statement
Quarterly statements
6.
Operations by quarters, unaudited
2025
Q1
Q2
Q3
Q4
Total
12,166 
14,200 
13,826 
12,350 
52,542 
4,536 
4,553 
4,003 
4,055 
17,147 
(31)
1,066 
630 
446 
2,111 
(951)
179 
483 
1,364 
1,075 
3,321 
1,324 
45 
826 
5,516 
19,041 
21,322 
18,987 
19,041 
78,391 
(6,601)
(6,697)
(6,194)
(8,756)
(28,248)
(508)
(521)
(530)
(547)
(2,106)
(378)
147 
(1,128)
(1,694)
(3,053)
11,554 
14,251 
11,135 
8,044 
44,984 
(3,726)
(3,984)
(2,928)
(1,820)
(12,458)
7,828 
10,267 
8,207 
6,224 
32,526 
(11)
(11)
3 
- 
(19)
7,817 
10,256 
8,210 
6,224 
32,507 
2024
11,245 
11,948 
11,863 
11,246 
46,302 
3,365 
3,979 
3,880 
4,136 
15,360 
(215)
523 
1,532 
326 
2,166 
29 
99 
524 
2,193 
2,845 
50 
38 
(313)
3 
(222)
14,474 
16,587 
17,486 
17,904 
66,451 
(6,554)
(7,154)
(6,021)
(8,599)
(28,328)
(460)
(476)
(500)
(488)
(1,924)
(315)
(775)
(954)
913 
(1,131)
7,145 
8,182 
10,011 
9,730 
35,068 
(2,704)
(2,671)
(2,114)
(1,430)
(8,919)
4,441 
5,511 
7,897 
8,300 
26,149 
(9)
(11)
(6)
(11)
(37)
4,432 
5,500 
7,891 
8,289 
26,112 
Operating expenses ...........................................................................................
Bank levy ...........................................................................................................
Net impairment ..................................................................................................
Income tax expense  ..........................................................................................
Net earnings from continuing operations ......................................................
Discontinued operations, net of tax ....................................................................
Net earnings .....................................................................................................
Operating expenses ...........................................................................................
Bank levy ...........................................................................................................
Net impairment ..................................................................................................
Earnings before income tax ............................................................................
Income tax expense  ..........................................................................................
Insurance service results ...................................................................................
Net financial income ..........................................................................................
Operating income ............................................................................................
The
half-year
results
were
reviewed
by
the
Bank's
auditors.
Other
quarterly
statements
and
the
split
between
quarters
were
not
audited
or
reviewed by the Bank's auditors.
Net interest income ............................................................................................
Net fee and commission income ........................................................................
Discontinued operations, net of tax ....................................................................
Net earnings .....................................................................................................
Earnings before income tax ............................................................................
Net earnings from continuing operations ......................................................
Net interest income ............................................................................................
Net fee and commission income ........................................................................
Other operating income .....................................................................................
Operating income ............................................................................................
Insurance service results ...................................................................................
Net financial income ..........................................................................................
Other operating income .....................................................................................
28

===== SIDA 29 =====

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
7.
Net interest income
 
2025
Amortized
Fair value
Fair value
Interest income
cost
thr. P/L
thr. OCI 
Total
6,795 
- 
- 
6,795 
864 
- 
- 
864 
114,697 
119 
- 
114,816 
- 
675 
6,520 
7,195 
107 
- 
- 
107 
122,463 
794 
6,520 
129,777 
Interest expense
(48,552)
- 
- 
(48,552)
(23,406)
(1,623)
- 
(25,029)
(3,217)
(295)
- 
(3,512)
(142)
- 
- 
(142)
(75,317)
(1,918)
- 
(77,235)
47,146 
(1,124)
6,520 
52,542 
2024
Interest income
 
7,752 
- 
- 
7,752 
1,242 
- 
- 
1,242 
115,425 
65 
- 
115,490 
- 
1,532 
6,147 
7,679 
96 
- 
- 
96 
124,515 
1,597 
6,147 
132,259 
Interest expense
(53,865)
- 
- 
(53,865)
(22,372)
(5,542)
- 
(27,914)
(3,396)
(647)
- 
(4,043)
(135)
- 
- 
(135)
(79,768)
(6,189)
- 
(85,957)
44,747 
(4,592)
6,147 
46,302 
Interest spread
2025
2024
Interest spread (the ratio of net interest income to the average carrying amount
3.2% 
3.1% 
 
 of interest bearing assets) .........................................................................................................................................
Deposits ...............................................................................................................................
Borrowings ...........................................................................................................................
Subordinated liabilities ..........................................................................................................
Other ....................................................................................................................................
Interest income ...................................................................................................................
Loans to customers ..............................................................................................................
 
Interest expense .................................................................................................................
Net interest income ............................................................................................................
Other ....................................................................................................................................
Interest expense .................................................................................................................
Other ....................................................................................................................................
Cash and balances with Central Bank ..................................................................................
Loans to credit institutions ....................................................................................................
Subordinated liabilities ..........................................................................................................
Loans to customers ..............................................................................................................
Net interest income calculated using the effective interest rate method were ISK 127,752 million (2024: ISK 125,974 million).
Net interest income ............................................................................................................
Securities .............................................................................................................................
Loans to credit institutions ....................................................................................................
Cash and balances with Central Bank ..................................................................................
Securities .............................................................................................................................
Other ....................................................................................................................................
Borrowings ...........................................................................................................................
Deposits ...............................................................................................................................
Interest income ...................................................................................................................
 
29

===== SIDA 30 =====

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
8.
Net fee and commission income
Net
Net
Income
Expense
 income
Income
Expense
 income
5,508 
(495)
5,013 
5,346 
(563)
4,783 
2,475 
(37)
2,438 
1,787 
(40)
1,747 
5,244 
- 
5,244 
4,326 
- 
4,326 
1,403 
(81)
1,322 
1,590 
(109)
1,481 
5,766 
(2,783)
2,983 
5,286 
(2,617)
2,669 
755 
(959)
(204)
836 
(839)
(3)
- 
351 
351 
- 
357 
357 
21,151 
(4,004)
17,147 
19,171 
(3,811)
15,360 
9.
Insurance service results
2025
2024
20,766 
19,669 
(14,406)
(13,723)
(4,010)
(3,749)
(18,416)
(17,472)
(239)
(31)
2,111 
2,166 
Operation results of Vördur
2025
2024
2,111 
2,166 
14 
23 
2,125 
2,189 
1,608 
3,260 
(1,083)
(1,063)
525 
2,197 
9 
11 
2,659 
4,397 
(622)
(721)
2,037 
3,675 
Combined ratio
89.8% 
88.9% 
Capital markets and corporate finance ............................................
Asset
management
fees
are
earned
by
the
Group
for
trust
and
fiduciary
activities
where
the
Group
holds
or
invests
assets
on
behalf
of
the
customers. 
Fee
and
commission
income
on
collection
and
payment
services
is
generated
billing
services,
such
as
issuing
invoices
and
payment
collection notices, wire transfer services and other payment services.
Cards and payment solution ............................................................
Collection and payment services .....................................................
Insurance revenue .....................................................................................................................................................
Asset management .........................................................................
2025
Vördur's
operation
resulted
in
a
profit
of
ISK
2,037
million
in
2025,
with
a
return
on
equity
of
13.7%,
compared
with
a
profit
of
ISK
3,675
million in 2024 and a return on equity of 30.8%.
Incurred claims ..........................................................................................................................................................
Service expenses ......................................................................................................................................................
Insurance service expenses .......................................................................................................................................
Insurance service results ........................................................................................................................................
Net expense from reinsurance contracts held ............................................................................................................
Insurance service results ...........................................................................................................................................
Insurance revenue elimination and reclassification ....................................................................................................
Fee
and
commission
income
from
capital
markets
and
corporate
finance
includes
miscellaneous
corporate
finance
services
plus
commission from capital markets relating to sales of shares, bonds, FX and derivatives.
2024
Insurance service results according to the Financial Statements of Vördur ................................................................
Investment return .......................................................................................................................................................
Net financial loss from insurance contracts ................................................................................................................
Total investment return ..............................................................................................................................................
Other income .............................................................................................................................................................
Income tax .................................................................................................................................................................
Earnings before income tax ....................................................................................................................................
Net earnings .............................................................................................................................................................
Combined ratio of Vördur, including insurance revenue from the Group .....................................................................
Lending and financial guarantees ....................................................
Other ...............................................................................................
Net fee and commission income ..................................................
Commission expense from insurance operation ..............................
Commission expense from insurance operation is transferred to insurance service results in accordance with IFRS 17.
Fee
and
commission
income
from
lending
and
financial
guarantees
is
mainly
related
to
lending
activities,
extension
fees,
advisory
services
and documentation, notification and payment fees plus fees from the issuing of guarantees on behalf of customers.
Other fee and commission income is mainly fees relating to sale, custody and market making on the Icelandic stock exchange.
Commission
from
cards
and
payment
solutions
is
mainly
from
the
Bank's
issuance
of
credit
and
debit
cards
and
other
card
related
commission, e.g. yearly fee on cards and transaction fees.
30

===== SIDA 31 =====

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
10.
Net financial income
2025
2024
Net gain on financial assets and financial liabilities mandatorily measured 
1,760 
4,686 
33 
(182)
(13)
(383)
(219)
(134)
(1,083)
(1,063)
597 
(79)
1,075 
2,845 
Net gain on financial assets and financial liabilities mandatorily measured at fair value through the income statement
(729)
2,778 
2,147 
1,866 
372 
56 
(30)
(14)
Net gain on financial assets and financial liabilities
1,760 
4,686 
Net loss on fair value hedge of interest rate swap
1,185 
4,867 
(1,198)
(5,250)
(13)
(383)
11.
Other operating income
2025
2024
5,277 
(339)
(429)
- 
600 
1 
13 
7 
(27)
24 
82 
85 
5,516 
(222)
Net gain on assets held for sale
 
 
18 
16 
(5)
(9)
13 
7 
Expense related to real estates and other assets .......................................................................................................
Net gain from real estates and other assets ...............................................................................................................
Fair value changes on investment property ................................................................................................................
Realised loss on investment property ........................................................................................................................
Net gain on assets held for sale .................................................................................................................................
Share of (loss) profit of associates .............................................................................................................................
Other income .............................................................................................................................................................
Other operating income ...........................................................................................................................................
Net gain on disposal of assets ...................................................................................................................................
Net loss on fair value hedge of interest rate swap .................................................................................................
Fair value change on bonds issued by the Group attributable to interest rate risk ......................................................
Fair value change of interest rate swaps designated as hedging instruments ............................................................
  mandatorily measured at fair value through the income statement ...................................................................
Real estates and other assets classified as assets held for sale are generally the result of foreclosures on companies and individuals. 
Net gain (loss) on prepayments of borrowings ...........................................................................................................
Net gain on assets held for sale ..............................................................................................................................
Equity instruments .....................................................................................................................................................
Debt instruments ........................................................................................................................................................
Derivatives .................................................................................................................................................................
Loans .........................................................................................................................................................................
Net realized loss on financial assets carried at fair value through OCI .......................................................................
Net financial loss from insurance contracts ................................................................................................................
Net foreign exchange gain (loss) ................................................................................................................................
Net financial income ................................................................................................................................................
Net loss on fair value hedge of interest rate swap ......................................................................................................
  at fair value through the income statement ..............................................................................................................
31

===== SIDA 32 =====

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
12.
Operating expenses
2025
2024
19,217 
18,694 
12,690 
13,026 
(3,659)
(3,392)
28,248 
28,328 
13.
Personnel and salaries
2025
2024
Number of employees
878 
836 
901 
858 
Salaries and related expenses
13,739 
12,914 
1,325 
1,813 
86 
162 
2,016 
1,901 
2,051 
1,904 
19,217 
18,694 
Remuneration to the Board of Directors
Fixed
Additional
Fixed
Additional
remuner-
remuner-
Pension
remuner-
remuner-
Pension
ation*
ation**
contribution
Total
ation*
ation**
contribution
Total
Paul Horner, Chairman ..............................
18.8 
14.8 
- 
33.7 
17.2 
13.7 
- 
30.9 
Kristín Pétursdóttir, Vice Chairman ...........
10.7 
13.3 
2.8 
26.8 
9.5 
12.2 
2.5 
24.1 
Gunnar Sturluson, Director ........................
7.1 
11.5 
2.1 
20.8 
6.7 
9.8 
1.9 
18.4 
Marianne Gjertsen Ebbesen, Director
   (elected 12 March '25) ...........................
8.9 
5.9 
- 
14.8 
- 
- 
- 
- 
Steinunn K. Thórdardóttir, Director*** ........
16.6 
14.7 
3.6 
34.9 
13.5 
12.9 
3.0 
29.5 
Liv Fiksdahl (until 12 March '25) ................
2.2 
2.2 
- 
4.4 
10.7 
11.2 
- 
21.9 
Brynjólfur Bjarnason (until 13 March '24) ...
- 
- 
- 
- 
2.7 
2.2 
0.6 
5.4 
Alternate directors of the Board .................
1.2 
0.6 
0.2 
2.0 
1.1 
1.5 
0.3 
3.0 
Total remuneration ..................................
65.5 
63.1 
8.7 
137.4 
61.4 
63.5 
8.3 
133.2 
Defined contribution pension plans  ...........................................................................................................................
2025
* Fixed remuneration represents Board Member compensation for their attendance at meetings of the Board of Directors.
*** Steinunn K. Thórdardóttir also serves on the Board of Vördur.
2024
Salaries and related expenses ...................................................................................................................................
Other operating expenses ..........................................................................................................................................
Operating expenses from insurance operation ...........................................................................................................
Operating expenses .................................................................................................................................................
Average number of full-time equivalent positions during the year ...............................................................................
Full-time equivalent positions at the end of the year ...................................................................................................
Salaries ......................................................................................................................................................................
Incentive scheme, including salary related expense ...................................................................................................
Share-based payment expenses ................................................................................................................................
** Additional remuneration represents Board Member compensation for their participation in Board Committees.
Salary-related expenses ............................................................................................................................................
Salaries and related expenses ................................................................................................................................
32

===== SIDA 33 =====

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
13.
Personnel and salaries, continued
Remuneration to key management personnel
 
Performance-
Performance-
based
Pension
based
Pension
Salaries
payments
contribution
Total
Salaries
payments
contribution
Total
Benedikt Gíslason, CEO ...........................
69.5 
14.5 
10.3 
94.3 
68.4 
6.1 
10.5 
85.0 
Members of the Executive Committee* .....
358.2 
83.0 
53.0 
494.2 
350.7 
30.6 
54.2 
435.4 
Former members of Executive Committee 
- 
- 
- 
- 
7.0 
3.8 
1.5 
12.3 
Other key employees ................................
68.3 
- 
10.2 
78.5 
66.1 
- 
9.9 
75.9 
Total remuneration ..................................
496.1 
97.5 
73.5 
667.0 
492.2 
40.5 
76.0 
608.7 
Incentive schemes
Share-based payment expense
 
 
Arion
Bank
has
in
place
a
share
option
plan
for
all
employees
of
the
Bank,
Vördur
and
Stefnir,
approved
at
the
Banks
annual
general
meeting.
A
total
expense
of
ISK
86
million
was
recognised
in
the
Income
Statement
during
the
year
(2024:
ISK
122
million).
Estimated
remaining
expenses
due
the
share
option
contracts
are
ISK
9
million
and
will
be
expensed
over
the
next
four
months.
For
further
information on the share option program, see Note 37.
* Members of the Executive Committee are listed in Note 43.
The
current
incentive
scheme
for
Arion
Bank
hf.
and
Vördur
came
into
effect
in
2021.
The
scheme
is
in
compliance
with
the
FSA’s
rules
on
remuneration
policy
for
financial
institutions.
The
scheme
is
divided
into
two
parts.
Firstly,
employees
can
receive
up
to
10%
of
their
fixed
salary
for
each
fiscal
year
in
the
form
of
a
cash
payment.
Secondly,
a
limited
group
can
receive
up
to
25%
of
their
fixed
salary
as
a
payment
in
the
form
of
shares
or
share
options
in
the
Bank.
Of
this
25%,
(i)
a
total
of
20%
will
be
settled
instantly
with
cash,
40%
will
be
settled
instantly
with
shares
subject
to
a
3-year
lock-up
period
and
the
remaining
40%
will
be
settled
with
shares
or
share
options
after
4-5
years
or
(ii)
a
total
of
20%
will
be
settled
instantly
with
cash
and
the
remaining
80%
will
be
settled
with
share
options
after
4-5
years.
The 
key
metric
used
to
determine
whether
incentive
scheme
payments
will
be
paid
by
the
Bank,
in
part
or
in
full,
is
whether
the
Bank’s
return
on
equity
is
higher
than
the
weighted
ROE
of
the
Bank’s
main
competitors.
Other
supporting
metrics
include
ROE
and
cost-to-income
ratio
vs
target, compliance, staff NPS etc. Stefnir hf. has a special incentive scheme where other criteria are used as a basis.
Board
Members
receive
remuneration
for
their
involvement
in
board
committees.
In
addition
to
21
Board
meetings
(2024:
13)
during
the
year
4
Board
Credit
Committee
meetings
(2024:
7),
5
Board
Audit
Committee
meetings
(2024:
5),
8
Board
Risk
Committee
meetings
(2024:
8), 5 Board Remuneration Committee meetings (2024: 5) and 4 Board Tech committee meetings (2024: 5) were held.
2025
The
2025
Annual
General
Meeting
of
the
Bank
held
on
12
March
2025
approved
the
monthly
salaries
for
2025
for
the
Chairman,
Vice
Chairman
and
for
other
Board
Members
of
amounts
ISK
1,200,000,
ISK
900,000
and
ISK
600,000
(2024:
ISK
1,130,000;
847,500;
565,000)
respectively.
Alternate
Board
Members
receive
a
payment
of
ISK
600,000
per
year
and
ISK
300,000
for
each
meeting
attended
but
cannot
exceed
ISK
600,000
per
month
(2024:
ISK
565,000
per
year,
ISK
282,500
for
each
meeting
but
cannot
exceed
ISK
565,000
per
month).
Board
members
residing
outside
of
Iceland
receive
a
further
ISK
387,500
for
each
Board
meeting
they
attend
in
person
(2024:
ISK
365,000).
In
addition,
it
was
approved
to
pay
Board
Members
who
serve
on
board
sub-committees
of
the
Bank
a
maximum
of
ISK
250,000
(2024:
ISK
235,000)
per
month
for
each
committee
they
serve
on
and
the
Chairman
of
the
board
committees
ISK
375,000
(2024:
ISK
352,500).
In
2025
the
Group
made
a
ISK
1,325
million
provision
for
the
incentive
scheme,
including
salary-related
expenses
(2024:
ISK
1,813
million).
At
year
end
the
Group's
accrual
for
the
incentive
scheme
payments
amounted
to
ISK
1,678
million
(31.12.2024:
ISK
2,853
million).
The
estimated
cost
of
the
deferred
part
of
the
incentive
scheme
from
the
fiscal
years
2022–2025,
to
be
settled
in
2026–2030,
amounting
to
ISK 546 million, will be expensed on a proportional basis over the years leading up to their settlement.
2024
33

===== SIDA 34 =====

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
14.
Other operating expenses
2025
2024
5,127 
5,074 
1,565 
1,435 
1,283 
1,215 
522 
502 
2,532 
3,103 
493 
573 
161 
139 
1,007 
985 
12,690 
13,026 
Auditor's fee
180 
189 
16 
17 
5 
13 
201 
219 
15.
Bank levy
16.
Net impairment
2025
2024
Net impairment on financial instruments and value changes on loans
(3,064)
(1,738)
(4)
- 
- 
83 
15 
524 
(3,053)
(1,131)
Net impairment by customer type
(736)
69 
(2,317)
(1,200)
(3,053)
(1,131)
Other services from auditors ......................................................................................................................................
Auditor's fee .............................................................................................................................................................
Marketing ...................................................................................................................................................................
Housing expenses .....................................................................................................................................................
Other administration expenses* .................................................................................................................................
IT expenses ...............................................................................................................................................................
Professional services .................................................................................................................................................
Individuals ..................................................................................................................................................................
Net impairment on loans to customers and financial institutions ................................................................................
Net impairment on other financial instruments at FVOCI ............................................................................................
Depreciation of property and equipment .....................................................................................................................
Other value changes of loans - corporates .................................................................................................................
Other value changes of loans - individuals .................................................................................................................
Audit and review of the Consolidated Financial Statements for the relevant fiscal year ..............................................
Other audit related services for the relevant fiscal year ..............................................................................................
Amortization of intangible assets ................................................................................................................................
Other operating expenses .......................................................................................................................................
Net impairment .........................................................................................................................................................
Corporates .................................................................................................................................................................
Net impairment .........................................................................................................................................................
* Included ISK 585 million fine following settlement with the Financial supervision of the Central Bank in June 2024.
Depreciation of right of use asset ...............................................................................................................................
The
Bank
levy
is
0.145%
on
total
debts
excluding
tax
liabilities,
in
excess
of
ISK
50
billion.
The
Bank
levy
is
assessed
on
Financial
Undertakings but non-financial subsidiaries are exempt from this tax. 
Other
value
changes
of
loans
to
individuals
and
corporates
are
mainly
due
to
release
of
discount
from
loans
acquired
with
discount
during
the
years
2008
to
2013,
both
due
to
impairments
and
other
discount
rate
than
reflected
in
the
interest
rates
of
the
loans.
There
are
no
further discounts related to the aforementioned loans on balance.
34

===== SIDA 35 =====

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
17.
Income tax expense
2025
2024
11,386 
9,651 
1,072 
(732)
12,458 
8,919 
Reconciliation of effective tax rate
44,984 
35,068 
20.0% 
8,997 
21.0% 
7,364 
5.0% 
2,258 
5.6% 
1,977 
0.2% 
82 
0.5% 
163 
1.7% 
757 
(1.9%)
(664)
0.9% 
421 
1.1% 
385 
0.0% 
17 
0.0% 
- 
0.1% 
44 
(0.2%)
(78)
(0.3%)
(118)
(0.7%)
(228)
27.7% 
12,458 
25.4% 
8,919 
18.
Discontinued operations held for sale, net of income tax
2025
2024
(19)
(37)
(19)
(37)
19.
Earnings per share
 
2025
2024
2025
2024
2025
2024
30,645 
26,148 
(19)
(37)
30,626 
26,111 
31,070 
26,521 
(19)
(37)
31,051 
26,484 
1,389 
1,426 
1,389 
1,426 
1,389 
1,426 
1,401 
1,443 
1,401 
1,443 
1,401 
1,443 
22.07 
18.34 
(0.01)
(0.03)
22.05 
18.31 
21.88 
18.12 
(0.01)
(0.03)
21.86 
18.09 
22.37 
18.59 
(0.01)
(0.03)
22.36 
18.57 
22.18 
18.38 
(0.01)
(0.03)
22.17 
18.35 
Tax exempt revenues / loss ..................................................................................................
Additional 6% tax on Financial Undertakings ........................................................................
Non-deductible expenses .....................................................................................................
2024
2025
Earnings before income tax ..................................................................................................
Income tax using the Icelandic corporate tax rate .................................................................
Basic earnings per share (ISK) ....................................................
Weighted average number of outstanding shares (millions) ............
Continued
Discontinued
Net loss from discontinued operations held for sale, net of income tax ......................................................................
Basic comprehensive income per share (ISK) ............................
Diluted earnings per share (ISK) ..................................................
    including options and warrants (2024) (millions) ..........................
Weighted average number of outstanding shares
Total comprehensive income attributable to the shareholders .........
 operations
operations
Current tax expense ...................................................................................................................................................
Deferred tax expense .................................................................................................................................................
Current tax expense .................................................................................................................................................
Net earnings attributable to the shareholders of Arion Bank ............
Effective tax rate .................................................................................................................
Tax exempt revenues / loss consist mainly of profit / loss from equity positions.
Financial undertakings pay 6% additional tax on taxable profit exceeding ISK 1 billion.
Effect of tax rates in foreign jurisdictions ..............................................................................
Sólbjarg ehf., a subsidiary of Eignabjarg is classified as held for sale.
Basic
earnings
per
share
is
based
on
net
earnings
attributable
to
the
shareholders
of
Arion
Bank
and
the
weighted
average
number
of
shares
outstanding
during
the
year.
Diluted
earnings
per
share
is
calculated
by
adjusting
the
weighted
average
number
of
outstanding
shares
to
assume
conversion
of
all
dilutive
potential
ordinary
shares.
Arion
Bank
has
issued
share
options,
share
rights
and
warrants
(terminated in 2024) that have dilutive effects.
Net earnings
Diluted comprehensive income per share (ISK) ..........................
Discontinued operations held for sale, net of income tax .....................................................................................
Tax incentives not recognized in the Income Statement .......................................................
Other changes ......................................................................................................................
Non-deductible taxes (Bank levy) .........................................................................................
35

===== SIDA 36 =====

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
Notes to the Consolidated Statement of Financial Position
20.
Cash and balances with Central Bank
31.12.2025
31.12.2024
2,022 
2,481 
114,486 
89,139 
33,603 
32,474 
150,111 
124,094 
21.
Loans to credit institutions
31.12.2025
31.12.2024
22,040 
25,690 
527 
- 
22,567 
25,690 
22.
Loans to customers
Gross
 
Gross
Gross
carrying
Book
carrying
Book
carrying
Book
31.12.2025
amount
value
amount
value
amount
value
15,373 
14,666 
53,125 
50,643 
68,498 
65,309 
17,558 
17,301 
2,561 
2,478 
20,119 
19,779 
- 
- 
1,933 
1,450 
1,933 
1,450 
577,492 
576,828 
91,007 
89,765 
668,499 
666,593 
- 
- 
57,705 
56,224 
57,705 
56,224 
681 
674 
7,174 
7,046 
7,855 
7,720 
31,851 
30,925 
485,158 
481,056 
517,009 
511,981 
642,955 
640,394 
698,663 
688,662 
1,341,618 
1,329,056 
31.12.2024
14,575 
13,925 
42,233 
41,222 
56,808 
55,147 
16,873 
16,647 
2,297 
2,230 
19,170 
18,877 
- 
- 
1,751 
1,313 
1,751 
1,313 
571,525 
570,842 
74,287 
73,712 
645,812 
644,554 
- 
- 
49,508 
48,806 
49,508 
48,806 
1,298 
1,283 
7,344 
7,295 
8,642 
8,578 
37,627 
36,707 
420,530 
416,076 
458,157 
452,783 
641,898 
639,404 
597,950 
590,654 
1,239,848 
1,230,058 
23.
Financial instruments
31.12.2025
31.12.2024
170,985 
158,735 
21,260 
18,470 
8,624 
6,715 
14,947 
22,497 
215,816 
206,417 
Further analysis of loans is provided in Risk management disclosures.
Financial instruments ..............................................................................................................................................
Shares and equity instruments with variable income ..................................................................................................
Bonds and debt instruments ......................................................................................................................................
Construction loans ..........................................................................
Loans to customers at fair value .....................................................
Overdrafts .......................................................................................
Total
Loans to customers ......................................................................
Other loans .....................................................................................
Loans to customers at fair value .....................................................
Loans to credit institutions .....................................................................................................................................
Loans to customers ......................................................................
Mortgage loans ...............................................................................
Overdrafts .......................................................................................
Capital lease ...................................................................................
The
mandatory
reserve
deposit
with
the
Central
Bank
is
not
available
for
the
Group
to
use
in
its
daily
operations.
The
minimum
interest-free
fixed reserve requirement of the Central Bank is 3%.
Construction loans ..........................................................................
Credit cards ....................................................................................
Corporates
Credit cards ....................................................................................
Cash with Central Bank ..............................................................................................................................................
Capital lease ...................................................................................
Securities used for economic hedging ........................................................................................................................
Derivatives .................................................................................................................................................................
Mandatory reserve deposit with Central Bank ............................................................................................................
Cash on hand ............................................................................................................................................................
Other loans ................................................................................................................................................................
Individuals
Cash and balances with Central Bank ....................................................................................................................
Other loans .....................................................................................
The
total
book
value
of
pledged
loans
that
were
pledged
against
outstanding
borrowings
was
ISK
286
billion
at
the
end
of
the
year
(31.12.2024: ISK 304 billion). Pledged loans comprised mortgage loans to individuals.
Bank accounts ...........................................................................................................................................................
Mortgage loans ...............................................................................
36

===== SIDA 37 =====

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
24.
Financial assets and financial liabilities
Fair value
Fair value
Financial assets
Amortized
through
through
Loans
cost
OCI
P/L
Total
150,111 
- 
- 
150,111 
22,567 
- 
- 
22,567 
1,327,606 
- 
1,450 
1,329,056 
1,500,284 
- 
1,450 
1,501,734 
Bonds and debt instruments
- 
138,302 
32,479 
170,781 
- 
- 
204 
204 
- 
138,302 
32,683 
170,985 
Shares and equity instruments with variable income
- 
- 
11,499 
11,499 
- 
- 
9,008 
9,008 
- 
- 
753 
753 
- 
- 
21,260 
21,260 
Derivatives
- 
- 
5,414 
5,414 
- 
- 
3,210 
3,210 
- 
- 
8,624 
8,624 
Securities used for economic hedging
- 
- 
1,732 
1,732 
- 
- 
13,215 
13,215 
- 
- 
14,947 
14,947 
Other financial assets
3,465 
- 
- 
3,465 
13,566 
- 
- 
13,566 
17,031 
- 
- 
17,031 
1,517,315 
138,302 
78,964 
1,734,581 
Financial liabilities
12,003 
- 
- 
12,003 
921,182 
- 
- 
921,182 
494,823 
- 
- 
494,823 
43,518 
- 
- 
43,518 
- 
- 
1,411 
1,411 
- 
- 
1,718 
1,718 
11,792 
- 
- 
11,792 
1,483,318 
- 
3,129 
1,486,447 
Listed ...................................................................................................................................
* Including effect from hedge accounting derivatives.
Subordinated liabilities * .......................................................................................................
Derivatives ...........................................................................................................................
31.12.2025
Listed ...................................................................................................................................
Financial liabilities .............................................................................................................
Loans to customers ..............................................................................................................
Derivatives ..........................................................................................................................
Loans ...................................................................................................................................
Cash and balances with Central Bank ..................................................................................
Borrowings * .........................................................................................................................
Loans to credit institutions ....................................................................................................
Accounts receivable .............................................................................................................
Other financial assets ...........................................................................................................
Financial assets ..................................................................................................................
Other financial assets ........................................................................................................
Due to credit institutions and Central Bank ...........................................................................
Other financial liabilities ........................................................................................................
Deposits ...............................................................................................................................
Unlisted ................................................................................................................................
Bonds and debt instruments, listed .......................................................................................
Bonds and debt instruments .............................................................................................
Derivatives used for hedge accounting .................................................................................
Securities used for economic hedging .............................................................................
Shares and equity instruments with variable income, listed ..................................................
Bond funds with variable income, unlisted ............................................................................
Derivatives used for hedge accounting .................................................................................
Shares and equity instruments with variable income ......................................................
OTC derivatives ...................................................................................................................
Unlisted ................................................................................................................................
37

===== SIDA 38 =====

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
24.
Financial assets and financial liabilities, continued
Fair value
Fair value
Financial assets
Amortized
through
through
Loans
cost
OCI
P/L
Total
124,094 
- 
- 
124,094 
25,690 
- 
- 
25,690 
1,228,745 
- 
1,313 
1,230,058 
1,378,529 
- 
1,313 
1,379,842 
Bonds and debt instruments
- 
126,898 
31,217 
158,115 
- 
- 
620 
620 
- 
126,898 
31,837 
158,735 
Shares and equity instruments with variable income
- 
- 
11,499 
11,499 
- 
- 
6,291 
6,291 
- 
- 
680 
680 
- 
- 
18,470 
18,470 
Derivatives
- 
- 
3,685 
3,685 
- 
- 
3,030 
3,030 
- 
- 
6,715 
6,715 
Securities used for economic hedging
- 
- 
2,664 
2,664 
- 
- 
19,833 
19,833 
- 
- 
22,497 
22,497 
Other financial assets
2,552 
- 
- 
2,552 
5,924 
- 
- 
5,924 
8,476 
- 
- 
8,476 
1,387,005 
126,898 
80,832 
1,594,735 
Financial liabilities
6,618 
- 
- 
6,618 
857,443 
- 
- 
857,443 
433,178 
- 
- 
433,178 
44,538 
- 
- 
44,538 
- 
- 
4,096 
4,096 
- 
- 
4,298 
4,298 
10,631 
- 
- 
10,631 
1,352,408 
- 
8,394 
1,360,802 
31.12.2024
Loans ...................................................................................................................................
Derivatives used for hedge accounting .................................................................................
Bonds and debt instruments, listed .......................................................................................
Cash and balances with Central Bank ..................................................................................
Unlisted ................................................................................................................................
Bonds and debt instruments .............................................................................................
Accounts receivable .............................................................................................................
Shares and equity instruments with variable income ......................................................
Unlisted ................................................................................................................................
Derivatives ..........................................................................................................................
Financial liabilities .............................................................................................................
Due to credit institutions and Central Bank ...........................................................................
Other financial liabilities ........................................................................................................
Shares and equity instruments with variable income, listed ..................................................
* Including effect from hedge accounting derivatives.
Financial assets ..................................................................................................................
Other financial assets ........................................................................................................
Subordinated liabilities * .......................................................................................................
Listed ...................................................................................................................................
Listed ...................................................................................................................................
OTC derivatives ...................................................................................................................
Bond funds with variable income, unlisted ............................................................................
Loans to customers ..............................................................................................................
Securities used for economic hedging .............................................................................
Loans to credit institutions ....................................................................................................
Deposits ...............................................................................................................................
Borrowings * .........................................................................................................................
Other financial assets ...........................................................................................................
Derivatives ...........................................................................................................................
Derivatives used for hedge accounting .................................................................................
38

===== SIDA 39 =====

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
24.
Financial assets and financial liabilities, continued
Manda-
Fair value
torily at
through
fair value
OCI
thr. P/L
Total
1,434 
8,667 
10,101 
136,868 
20,366 
157,234 
- 
3,650 
3,650 
138,302 
32,683 
170,985 
975 
8,494 
9,469 
125,923 
20,257 
146,180 
- 
3,086 
3,086 
126,898 
31,837 
158,735 
25.
Fair value hierarchy
Level 1
Level 2
Level 3
Total
- 
- 
1,450 
1,450 
167,250 
3,732 
3 
170,985 
11,201 
6,055 
4,004 
21,260 
- 
5,414 
- 
5,414 
- 
3,210 
- 
3,210 
14,947 
- 
- 
14,947 
- 
- 
7,305 
7,305 
193,398 
18,411 
12,762 
224,571 
- 
1,411 
- 
1,411 
- 
1,718 
- 
1,718 
- 
3,129 
- 
3,129 
Investment property ..............................................................................................................
Corporates ..............................................................................................................................................
31.12.2025
The Group uses the following hierarchy for determining and disclosing the fair value of assets and liabilities by valuation technique:
Bonds and debt instruments at fair value ............................................................................................
Loans to customers ..............................................................................................................
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
Derivatives ...........................................................................................................................
Public sector ...........................................................................................................................................
Bonds and debt instruments .................................................................................................
Financial and insurance activities ............................................................................................................
Derivatives ...........................................................................................................................
Assets at fair value .............................................................................................................
Derivatives used for hedge accounting .................................................................................
Securities used for economic hedging ..................................................................................
Shares and equity instruments with variable income ............................................................
31.12.2024
Assets and liabilities recorded at fair value by level of the fair value hierarchy
Level 2: valuation techniques for which all significant inputs are market observable, either directly or indirectly; and
31.12.2025
Bonds and debt instruments at fair value ............................................................................................
Corporates ..............................................................................................................................................
Financial and insurance activities ............................................................................................................
The
total
amount
of
pledged
bonds
was
ISK
3.2
billion
at
the
end
of
the
year
(31.12.2024:
ISK
3.1
billion).
Pledged
bonds
comprise
Icelandic
Government
Bonds
that
were
pledged
against
funding
received
and
included
in
Due
to
credit
institutions
and
Central
Bank
as
well
as short positions included in Financial liabilities at fair value.
Public sector ...........................................................................................................................................
For
assets
and
liabilities
that
are
recognized
at
fair
value
on
a
recurring
basis,
the
Group
determines
whether
transfers
have
occurred
between
Levels
in
the
hierarchy
by
re-assessing
categorization
(based
on
the
lowest
level
input
that
is
significant
to
the
fair
value
measurement as a whole) at the end of each reporting period.
Bonds and debt instruments measured at fair value, specified by issuer
Liabilities at fair value
Liabilities at fair value ........................................................................................................
Derivatives used for hedge accounting .................................................................................
Assets at fair value
Level 3: valuation techniques which include significant inputs that are not based on observable market data.
39

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

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
25.
Fair value hierarchy, continued
Level 1
Level 2
Level 3
Total
- 
- 
1,313 
1,313 
155,316 
3,414 
5 
158,735 
9,269 
7,546 
1,655 
18,470 
- 
3,685 
- 
3,685 
- 
3,030 
- 
3,030 
21,585 
912 
- 
22,497 
- 
- 
9,387 
9,387 
186,170 
18,587 
12,360 
217,117 
- 
4,096 
- 
4,096 
- 
4,298 
- 
4,298 
- 
8,394 
- 
8,394 
Methods for establishing fair value
Loans to credit institutions ....................................................................................................
Derivatives used for hedge accounting .................................................................................
31.12.2024
Level 1: Fair value established from quoted market prices
The
fair
value
of
asset
and
liabilities
is
the
amount
at
which
the
asset
and
liability
could
be
exchanged
in
a
current
transaction
between
willing
parties,
i.e.
not
during
a
forced
sale
or
liquidation.
The
existence
of
published
price
quotations
in
an
active
market
is
the
best
evidence
of
fair
value
and
when
they
exist
they
are
used
by
the
Group
to
measure
assets
and
liabilities.
If
quoted
prices
for
an
asset
fail
to
represent
actual
and
regularly
occurring
transactions
in
active
market
transactions
or
if
quoted
prices
are
not
available
at
all,
fair
value
is
established by using an appropriate valuation technique.
Assets at fair value .............................................................................................................
There was no transfer between Level 1 and Level 2 during the year (2024: Transfers from Level 1 to Level 2 ISK 2,767 million).
Level
2
instruments
include
unlisted
shares,
unlisted
funds
with
underlying
bonds
and
equity
holdings
(share
certificates),
unlisted
and
less
liquid listed bonds and all OTC derivatives.
Derivatives ...........................................................................................................................
Level 2: Fair value established using valuation techniques with observable market information
The
best
evidence
of
the
fair
value
of
an
asset
and
liability
at
initial
recognition
is
the
transaction
price,
unless
the
fair
value
can
be
evidenced
by
comparison
with
other
observable
current
market
transactions,
or
is
based
on
a
valuation
technique
whose
variables
include
only data from observable markets.
In
most
cases
the
valuation
is
based
on
theoretical
financial
models,
such
as
the
Black
Scholes
model
or
variations
thereof.
These
techniques also include forward pricing and swap models using present value calculations.
In
some
cases,
the
carrying
value
of
an
asset
in
Note
24
is
used
as
an
approximation
for
the
fair
value
of
the
asset.
This
is
straight
forward
for
cash
and
cash
equivalents
but
is
also
used
for
short
term
investments
and
borrowings
to
highly
rated
counterparties,
such
as
credit
institutions, on contracts that feature interest close to or equal to market rates and expose the Group to little or no credit risk.
For
assets
and
liabilities,
for
which
the
market
is
not
active,
the
Group
applies
valuation
techniques
to
attain
a
fair
value
using
as
much
market
information
as
available.
Valuation
techniques
include
using
recent
market
transactions
between
knowledgeable
and
willing
parties,
if
available,
reference
to
current
fair
value
of
another
instrument
that
is
substantially
the
same,
discounted
cash
flow
analysis,
option
pricing
models or other commonly accepted valuation techniques used by market participants to price the instrument.
For
assets
and
liabilities
for
which
quoted
prices
on
active
markets
are
not
available,
the
fair
value
is
derived
using
various
valuation
techniques.
This
applies
in
particular
to
OTC
derivatives
such
as
options,
swaps,
futures
and
unlisted
equities
but
also
some
other
assets
and liabilities.
For
listed
and
liquid
stocks
and
bonds,
certain
financial
derivatives
and
other
market
traded
securities,
the
fair
value
is
derived
directly
from
quoted
market
prices.
These
instruments
are
disclosed
under
Financial
instruments
and
Financial
liabilities
at
fair
value
in
the
Statement
of
Financial Position.
Fair value of assets and liabilities
Investment property ..............................................................................................................
Bonds and debt instruments .................................................................................................
Liabilities at fair value ........................................................................................................
Derivatives ...........................................................................................................................
Shares and equity instruments with variable income ............................................................
Derivatives used for hedge accounting .................................................................................
Liabilities at fair value
Assets at fair value
Securities used for economic hedging ..................................................................................
40

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

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
25.
Fair value hierarchy, continued
Level 3: Fair value established using valuation techniques with significant unobservable market information
Movements in Level 3 assets measured at fair value
Loans
Bonds
Shares
Total
9,387 
1,313 
5 
1,655 
12,360 
5,277 
92 
- 
(218)
5,151 
191 
45 
- 
2,570 
2,806 
(7,550)
- 
(2)
(3)
(7,555)
7,305 
1,450 
3 
4,004 
12,762 
9,493 
- 
27 
3,595 
13,115 
(339)
51 
(20)
468 
160 
233 
1,262 
- 
26 
1,521 
- 
- 
(2)
(2,434)
(2,436)
9,387 
1,313 
5 
1,655 
12,360 
Line items where effects of Level 3 assets are recognized in the Income Statement
Loans
Bonds
Shares
Total
- 
122 
- 
- 
122 
- 
(30)
- 
(218)
(248)
4,848 
- 
- 
- 
4,848 
4,848 
92 
- 
(218)
4,722 
- 
65 
- 
- 
65 
- 
(14)
(20)
468 
434 
(339)
- 
- 
- 
(339)
(339)
51 
(20)
468 
160 
Additions ............................................................................................................
2024
Balance at the end of the year ........................................................................
Net financial income ..........................................................................................
Disposals ...........................................................................................................
Net interest income ............................................................................................
2025
Financial assets
In
some
cases
there
is
little
or
no
market
data
to
rely
on
for
fair
value
calculations.
The
most
common
valuation
technique
is
present
value
calculations.
Such
calculations
involve
the
estimation
of
future
cash
flow
and
the
assessment
of
appropriate
discount
rate.
The
discount
rate
should
both
reflect
current
market
rates
and
the
uncertainty
in
the
future
cash
flow.
In
such
cases
internal
models
and
methods
are
used
to
calculate
the
fair
value.
The
models
may
be
statistical
in
nature,
based
on
internal
or
external
history
of
assets
with
similar
characteristics
and/or
based
on
internal
knowledge
and
experience.
For
example,
the
credit
margin
on
most
loans
to
customers
which,
is
added
to
the
current
and
suitable
interest
rate
to
arrive
at
an
appropriate
discount
rate,
is
estimated
using
credit
rating
and
loss
parameters
in case of default that have been derived from internal models.
Equity
instruments
that
do
not
have
a
quoted
market
price
are
evaluated
using
methods
and
guidelines
from
pertinent
international
organizations.
In
most
cases
intrinsic
value
is
the
basis
for
the
assessment
but
other
factors,
such
as
cash
flow
analysis,
can
also
modify
the results.
Effects recognized in the Income Statement .................................................
Additions ............................................................................................................
Net fair value changes .......................................................................................
Other operating income .....................................................................................
Investment
property
Balance at the beginning of the year ..................................................................
Balance at the beginning of the year ..................................................................
Net fair value changes .......................................................................................
Effects recognized in the Income Statement .................................................
Disposals ...........................................................................................................
Balance at the end of the year ........................................................................
Investment
property
Other operating income .....................................................................................
2024
Net interest income ............................................................................................
Financial assets
Net financial income ..........................................................................................
2025
The
Group
applies
management
valuation
for
determining
fair
value
of
investment
properties.
Management
valuation
is
either
based
on
recent
transactions
and
offers
for
similar
assets
or
present
value
calculations
which
involve
estimation
of
future
cash
flow
and
the
assessment of appropriate discount rate.
41

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

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
25.
Fair value hierarchy, continued
Carrying values and fair values of financial assets and financial liabilities not carried at fair value
Carrying
Fair
Unrealized
Financial assets not carried at fair value
value
value
(loss) gain
150,111 
150,111 
- 
22,567 
22,567 
- 
1,327,606 
1,329,204 
1,598 
17,031 
17,031 
- 
1,517,315 
1,518,913 
1,598 
Financial liabilities not carried at fair value
12,003 
12,003 
- 
921,182 
921,182 
- 
494,823 
501,211 
(6,388)
43,518 
50,461 
(6,943)
11,792 
11,792 
- 
1,483,318 
1,496,649 
(13,331)
Financial assets not carried at fair value
124,094 
124,094 
- 
25,690 
25,690 
- 
1,228,745 
1,222,223 
(6,522)
8,476 
8,476 
- 
1,387,005 
1,380,483 
(6,522)
Financial liabilities not carried at fair value
6,618 
6,618 
- 
857,443 
857,443 
- 
433,178 
429,199 
3,979 
44,538 
48,226 
(3,688)
10,631 
10,631 
- 
1,352,408 
1,352,117 
291 
Derivatives
Notional
value
Assets
Liabilities
95,591 
430 
419 
268,565 
3,210 
1,718 
33,616 
167 
204 
1,882 
70 
5 
18,025 
4,747 
783 
417,680 
8,624 
3,129 
60,780 
180 
1,286 
235,504 
3,030 
4,297 
43,027 
235 
791 
3,243 
87 
2 
20,789 
2,596 
2,018 
- 
587 
- 
363,343 
6,715 
8,394 
Deposits ..................................................................................................................................................
Derivatives .............................................................................................................................................
Fair value hedge of interest rate swap .....................................................................................................
Derivatives .............................................................................................................................................
Share swap agreements ..........................................................................................................................
Interest rate and exchange rate agreements ...........................................................................................
Loans to credit institutions .......................................................................................................................
Fair value hedge of interest rate swap .....................................................................................................
Other financial liabilities ...........................................................................................................................
Other financial assets ..............................................................................................................................
Interest rate and exchange rate agreements ...........................................................................................
Share swap agreements ..........................................................................................................................
31.12.2024
Forward exchange rate agreements ........................................................................................................
31.12.2025
Forward exchange rate agreements ........................................................................................................
Options - purchased agreements, unlisted ..............................................................................................
Bond swap agreements ...........................................................................................................................
Other financial assets ..............................................................................................................................
Cash and balances with Central Bank .....................................................................................................
Loans to customers .................................................................................................................................
Subordinated liabilities ............................................................................................................................
Cash and balances with Central Bank .....................................................................................................
31.12.2025
Loans to credit institutions .......................................................................................................................
Financial liabilities not carried at fair value .........................................................................................
Bond swap agreements ...........................................................................................................................
Fair value
31.12.2024
Borrowings ..............................................................................................................................................
Subordinated liabilities ............................................................................................................................
Financial liabilities not carried at fair value .........................................................................................
Financial assets not carried at fair value .............................................................................................
Other financial liabilities ...........................................................................................................................
Due to credit institutions and Central Bank ..............................................................................................
Due to credit institutions and Central Bank ..............................................................................................
Loans
to
customers
largely
bear
variable
interest
rates.
Those
loans,
including
corporate
loans,
are
presented
at
book
value
as
they
generally
have
a
short
duration
and
very
limited
interest
rate
risk.
Loans
with
fixed
interest
rates,
mainly
retail
mortgages,
are
estimated
by
using
the
discount
cash
flow
method
with
the
interest
rates
offered
on
new
loans,
taking
into
account
loan
to
value.
Defaulted
loans
are
presented
at
book
value
as
no
future
cash
flow
is
expected
on
them.
Instead
they
are
written
down
according
to
their
estimated
potential
recovery value.
Financial assets not carried at fair value .............................................................................................
Borrowings ..............................................................................................................................................
Loans to customers .................................................................................................................................
Deposits ..................................................................................................................................................
42

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

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
25.
Fair value hierarchy, continued
Fair value hedge of interest rate swap
Gain (loss)
Notional 
on FV
1.1.-31.12.2025
Value
Assets
Liabilities
changes
- 
- 
- 
693 
73,640 
- 
1,395 
1,387 
44,184 
1,815 
- 
(248)
2,509 
53 
- 
30 
44,184 
656 
- 
(447)
15,680 
178 
- 
422 
44,184 
508 
- 
(229)
44,184 
- 
323 
(423)
3,210 
1,718 
1,185 
- 
- 
- 
213 
- 
- 
- 
157 
13,899 
- 
94 
441 
43,168 
- 
988 
1,621 
71,947 
- 
2,953 
1,955 
43,168 
1,977 
- 
(25)
2,780 
27 
- 
26 
43,168 
1,026 
- 
1,090 
17,374 
- 
263 
(611)
3,030 
4,298 
4,867 
Hedged borrowings and subordinated liabilities
Gain (loss)
Book
on FV
value
Assets
Liabilities
changes
- 
- 
- 
(648)
72,265 
1,038 
- 
(1,391)
44,731 
209 
- 
196 
46,252 
- 
154 
247 
2,893 
- 
53 
(31)
44,916 
- 
622 
427 
15,635 
218 
- 
(434)
43,835 
423 
- 
436 
270,527 
1,888 
829 
(1,198)
- 
- 
- 
(205)
3,150 
- 
- 
(615)
68,775 
2,395 
- 
(1,948)
42,597 
646 
- 
(1,619)
- 
- 
- 
(469)
45,384 
- 
397 
24 
2,989 
- 
27 
(27)
44,272 
- 
1,039 
(1,087)
16,854 
705 
- 
696 
224,021 
3,746 
1,463 
(5,250)
Fair value
- 
Interest rates swaps - USD .............................................................
EUR 300 million - issued 2021 - 4 years ...............................................................................
Interest rates swaps - EUR .............................................................
Interest rates swaps - EUR .............................................................
6-12 mth
3-6 mth
Interest rates swaps - EUR .............................................................
Interest rates swaps - EUR .............................................................
1-5 years
Interest rates swaps - EUR .............................................................
The
effectiveness
of
each
hedge
is
measured
regularly
with
linear
regression.
The
relationship
between
fair
value
changes
of
an
interest
rate swap on the one hand and a borrowing on the other hand is examined.
1-5 years
1.1.-31.12.2024
Interest rates swaps - USD .............................................................
EUR 500 million - issued 2021 - 5 years ...............................................................................
1-5 years
Interest rates swaps - EUR .............................................................
EUR 300 million - issued 2024 - 4 years ...............................................................................
EUR 300 million - issued 2025 - 5 years ...............................................................................
fair value
Accumulated 
EUR 300 million - issued 2025 - 6 years ...............................................................................
EUR 300 million - issued 2023 - 3 years ...............................................................................
1.1.-31.12.2025
Interest rates swaps - USD .............................................................
The
Group
applies
fair
value
hedge
accounting
only
with
respect
to
interest
rate
swaps
in
EUR
and
USD,
whereby
the
Group
pays
floating
rate
interest
and
receives
fixed
rate
interest,
with
identical
cash
flows
to
the
borrowings
and
subordinated
liabilities.
The
interest
rate
swaps
are
hedging
the
exposure
of
changes
in
the
fair
value
of
certain
fixed-rate
EUR
and
USD
bonds,
see
Notes
33
and
34,
arising
from
changes in EURIBOR and SOFR benchmark interest rates. 
Interest rates swaps - EUR .............................................................
6-12 mth
6-12 mth
over 5 years
- 
1-5 years
Interest rates swaps - EUR .............................................................
Interest rates swaps - USD .............................................................
Maturity
1.1.-31.12.2024
1-5 years
- 
1-5 years
1-5 years
EUR 300 million - issued 2021 - 4 years ...............................................................................
EUR 300 million - issued 2022 - 2 years ...............................................................................
Hedged borrowings and subordinated liabilities ..............................................................
During
2025
the
slope
for
the
regression
line
was
in
all
cases
within
the
range
of
0.95-1.24
and
the
regression
coefficient
was
at
least
0.94.
During
2024,
the
slope
of
the
regression
line
was
in
all
cases
within
the
range
of
0.93-1.05
and
the
regression
coefficient
was
at
least
0.97.
In all cases the effectiveness is within limits in 2025 and 2024.
Interest rates swaps - EUR .............................................................
EUR 300 million - issued 2023 - 3 years ...............................................................................
USD 21 million - issued 2024 - 3 years .................................................................................
USD 125 million - issued 2024 - Perpetual ...........................................................................
EUR 300 million - issued 2024 - 4 years ...............................................................................
1-5 years
1-5 years
Interest rates swaps - EUR .............................................................
Interest rates swaps - EUR .............................................................
Hedged borrowings and subordinated liabilities ..............................................................
USD 125 million - issued 2024 - Perpetual ...........................................................................
USD 21 million - issued 2024 - 3 years .................................................................................
date
EUR 300 million - issued 2020 - 4 years ...............................................................................
EUR 500 million - issued 2021 - 5 years ...............................................................................
USD 100 million - issued 2020 - Perpetual ...........................................................................
Interest rates swaps - EUR .............................................................
Interest rates swaps - USD .............................................................
43

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

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
26.
Offsetting financial assets and financial liabilities
 
 
Assets
Assets after
Total assets
Gross assets
Nettings
recognized
consideration
enforceable
recognized
before
with gross
on Balance
Financial 
Collateral
of netting
netting arr-
on Balance
31.12.2025
nettings
liabilities
Sheet, net
liabilities
received
potential
angements
Sheet, net
Reverse repurchase agreements ..............
17,035 
(10,789)
6,246 
10,789 
- 
17,035 
- 
6,246 
Derivatives ................................................
3,739 
- 
3,739 
(1,486)
(5,602)
(3,349)
4,885 
8,624 
Total assets .............................................
20,774 
(10,789)
9,985 
9,303 
(5,602)
13,686 
4,885 
14,870 
31.12.2024
Reverse repurchase agreements ..............
16,469 
(10,383)
6,086 
(5,543)
- 
543 
- 
6,086 
Derivatives ................................................
4,523 
- 
4,523 
(2,015)
(2,504)
4 
2,192 
6,715 
Total assets .............................................
20,992 
(10,383)
10,609 
(7,558)
(2,504)
547 
2,192 
12,801 
Liabilities
Liabilities not
Total
Gross
 
Liabilities
after
subject to
liabilities
liabilities
Nettings
recognized
consideration
enforceable
recognized
before
with gross
on Balance
Financial 
Collateral
of netting
netting arr-
on balance
31.12.2025
nettings
assets
Sheet, net
assets
pledged
potential
angements
sheet, net
Repurchase agreements ...........................
16,579 
(10,789)
5,790 
10,789 
- 
16,579 
- 
5,790 
Derivatives ................................................
2,555 
- 
2,555 
(1,486)
(1,752)
(683)
574 
3,129 
Total liabilities .........................................
19,134 
(10,789)
8,345 
9,303 
(1,752)
15,896 
574 
8,919 
31.12.2024
Repurchase agreements ...........................
15,926 
(10,383)
5,543 
(5,543)
- 
- 
- 
5,543 
Derivatives ................................................
7,131 
- 
7,131 
(2,015)
(4,327)
789 
1,263 
8,394 
Total liabilities .........................................
23,057 
(10,383)
12,674 
(7,558)
(4,327)
789 
1,263 
13,937 
27.
Investments in associates
31.12.2025
31.12.2024
814 
789 
(19)
- 
(8)
- 
(27)
25 
760 
814 
The Group's interest in its principal associates
-
33.4% 
31.8% 
31.8% 
23.0% 
23.0% 
35.3% 
35.3% 
19.7% 
- 
SER eignarhaldsfélag ehf., Borgartún 19, Reykjavík, Iceland ....................................................................................
Due
to
the
financial
difficulties
experienced
by
Matorka
ehf.
following
the
seismic
activity
in
Grindavík
and
subsequent
composition
agreements, Arion Bank obtained a share in the company at the end of March.
Reverse
repurchase
agreements
and
repurchase
agreements
are
recognized
within
the
line
items
Financial
instruments
and
Due
to
credit
institutions and Central Bank respectively.
In June Arion Bank sold its entire shareholding in Bílafrágangur ehf. with minor effects on the Income Statement.
Assets not 
subject to
Financial liabilities subject to enforceable master netting arrangements and similar arrangements
Carrying amount at the beginning of the year .............................................................................................................
Reiknistofa bankanna hf., Dalvegur 30, Reykjavík, Iceland ........................................................................................
Decreased share capital ............................................................................................................................................
Dividend received ......................................................................................................................................................
Liabilities subject to netting 
arrangements
Share of (loss) profit of associates .............................................................................................................................
Bílafrágangur ehf., Lágmúli 5, Reykjavík, Iceland ......................................................................................................
Netting potential not 
recognized in the 
Balance Sheet
Assets subject to netting 
arrangements
Netting potential not 
recognized in the 
Balance Sheet
Financial assets subject to enforceable master netting arrangements and similar arrangements
Investment in associates .........................................................................................................................................
Matorka ehf., Eyrartröd 12, Grindavik, Iceland ...........................................................................................................
Háblær ehf., Sudurlandsbraut 18, Reykjavík, Iceland .................................................................................................
44

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

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
28.
Intangible assets
Policies applied to the Group's intangible assets
Customer
relationship
Infra-  
and related
2025
Goodwill
structure  
Software
Total
730 
2,383 
427 
4,148 
7,688 
- 
- 
- 
852 
852 
- 
- 
(60)
(947)
(1,007)
730 
2,383 
367 
4,053 
7,533 
2024
730 
2,383 
487 
4,451 
8,051 
- 
- 
- 
622 
622 
- 
- 
(60)
(925)
(985)
730 
2,383 
427 
4,148 
7,688 
Impairment testing
Discount and growth rates
Discount
Growth
Discount
Growth
rates
rates
rates
rates
14.3% 
3.5-10%
14.3% 
3.5-15%
13.9% 
3.6% 
14.3% 
4.0% 
Customer relationship
Acquired
Additions ............................................................................................................
Useful lives .....................................................................................
Straight-line basis 
over 3-10 years
Additions ............................................................................................................
Goodwill
related
to
the
insurance
operation
is
recognized
among
assets
in
the
operating
segment
Corporate
&
Investment
Banking
and
Retail Banking and goodwill related to the subsidiary Leiguskjól is recognized in the operating segment Other subsidiaries, see Note 5.
Balance at the end of the year ........................................................................
2024
2025
Acquired
Balance at the end of the year ........................................................................
Internally generated or acquired  .....................................................
agreements
Finite 6-15 years 
and undefined
Acquired and internally 
generated
Balance at the beginning of the year ..................................................................
The
model
used,
to
determine
the
recoverable
amount,
is
most
sensitive
to
changes
in
the
forecast
earnings
available
to
shareholders
over
a
five-year
period,
the
cost
of
equity
and
to
changes
in
the
growth
rate.
As
a
result
of
this
analysis
no
impairment
was
recognized
in
2025
(2024: nil).
Acquired
software
and
internally
developed
software
is
capitalized
on
the
basis
of
the
cost
of
acquiring
and
bringing
the
software
into
service.
Expenditure
on
internally
developed
software
is
recognized
as
an
asset
when
the
Group
is
able
to
demonstrate
its
intention
and
ability
to
complete
the
development
and
use
the
software
in
a
manner
that
will
generate
future
economic
benefits,
and
when
it
can
reliably
measure
the
costs
to
complete
the
development.
The
capitalized
costs
of
internally
developed
software
include
external
expenses
directly
attributable
to
developing
the
software
and
salary
and
salary
related
expenses
of
implementation
of
core
systems.
Capitalized
costs
of
software
are
amortized
over
its
useful
life.
Computer
software
licenses
and
internally
developed
software
recognized
as
intangible
assets
are amortized over their useful life, which is estimated to be 3-10 years.
Asset Management operation ...............................................................................................
Insurance operation ..............................................................................................................
The
methodology
for
impairment
testing
on
the
Infrastructure
and
Customer
relationship,
which
is
part
of
intangible
assets,
is
based
on
discounted cash flow model which uses inputs that consider features of the business and the environment.
Customer
relationships
and
related
agreements
are
connected
to
business
relationships
and
agreements
which
the
Bank
acquired
in
subsidiaries.
The
asset
is
based
on
the
assumption
that
business
relationships
and
agreements
generate
regular
payments
and
earnings
to
the
relevant
business
segments.
The
lifetime
of
these
agreements
is
based
on
the
experience
of
the
Group
and
the
industry.
As
a
result,
these agreements are assessed as having an identified useful lifetime.
Amortization .......................................................................................................
Software
Goodwill
and infrastructure
and related agreements
Straight-line basis over 
6-15 years and
impairment test
Amortization .......................................................................................................
Intangible
assets
comprise
the
following
categories:
Goodwill,
which
arises
on
business
combinations;
Infrastructure,
Customer
relationships
and
related
agreements
which
are
identified
during
the
acquisition
of
subsidiaries
and
related
to
the
activities
of
the
businesses being acquired; and Software, which is acquired (i.e. software licenses) and cost of implementation.
Infrastructure,
which
is
capitalized
as
an
intangible
asset,
is
related
to
the
asset
management
operation
and
the
insurance
operation.
The
business
activity
is
based
on
years
of
developing
expertise
and
systems,
during
which
a
valuable
platform
has
been
created
for
future
growth. An impairment test is performed annually.
Amortization method .......................................................................
Finite 3-10 years
Impairment test
Undefined
 
Balance at the beginning of the year ..................................................................
45

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

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
29.
Tax assets and tax liabilities
Assets
Liabilities
Assets
Liabilities
- 
10,738 
- 
9,887 
2 
2,245 
2 
1,173 
2 
12,983 
2 
11,060 
Deferred tax assets and tax liabilities are attributable to the following:
1 
(769)
1 
(1,180)
- 
(1,030)
313 
- 
33 
(266)
33 
(249)
2 
(214)
6 
(376)
- 
- 
281 
- 
36 
(2,279)
634 
(1,805)
(34)
34 
(632)
632 
2 
(2,245)
2 
(1,173)
Recognized
Recognized
Changes in deferred tax assets and tax liabilities
through
in income
At 1 Jan.
equity 
statement
At 31 Dec.
(1,179)
- 
411 
(768)
313 
- 
(1,343)
(1,030)
(216)
- 
(17)
(233)
(370)
- 
158 
(212)
281 
- 
(281)
- 
(1,171)
- 
(1,072)
(2,243)
(1,227)
- 
48 
(1,179)
(361)
- 
674 
313 
(268)
- 
52 
(216)
(205)
- 
(165)
(370)
158 
- 
123 
281 
(1,903)
- 
732 
(1,171)
30.
Assets and disposal groups held for sale
31.12.2025
31.12.2024
98 
111 
98 
111 
Deferred foreign exchange differences .................................................................................
Tax loss carry forward ..........................................................................................................
Other assets and liabilities ....................................................................................................
Deferred
tax
assets
are
recognized
for
unused
tax
losses
to
the
extent
that
it
is
probable
that
taxable
profit
will
be
available
against
which
the
losses
can
be
utilized.
Significant
management
judgement
is
required
to
determine
the
amount
of
deferred
tax
assets
that
can
be
recognized, based upon the likely timing and the level of future taxable profits, together with future tax planning strategies.
Financial assets ....................................................................................................................
Change in deferred tax assets and tax liabilities ..............................................................
Change in deferred tax assets and tax liabilities ..............................................................
Investment property and property and equipment .................................................................
Tax assets and tax liabilities ..............................................................................................
Financial assets ....................................................................................................................
Other assets and liabilities ....................................................................................................
Deferred tax .........................................................................................................................
Investment property and property and equipment .................................................................
2024 .....................................................................................................................................
Real estates and other assets classified as assets held for sale are generally the result of foreclosures on companies and individuals. 
Deferred foreign exchange differences .................................................................................
Tax loss carry forward ..........................................................................................................
Other assets and liabilities ....................................................................................................
Current tax ...........................................................................................................................
31.12.2025
Assets and disposal groups held for sale ..............................................................................................................
Real estate and other assets .....................................................................................................................................
Financial assets ....................................................................................................................
31.12.2024
Tax loss carry forward ..........................................................................................................
2025
Deferred tax assets and tax liabilities ...............................................................................
Set-off of deferred tax assets together with tax liabilities of the same taxable entities ...........
Deferred tax related to foreign exchange gain ......................................................................
Investment property and property and equipment .................................................................
46

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

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
31.
Other assets
31.12.2025
31.12.2024
3,354 
3,403 
745 
808 
3,465 
2,552 
9,174 
2,342 
5,779 
4,901 
22,517 
14,006 
Property and equipment
Real
Equip-
Total 
Total 
estate
ment
2025
2024
2,727 
3,687 
6,414 
6,533 
- 
463 
463 
325 
- 
(42)
(42)
(27)
- 
(23)
(23)
(179)
2,727 
4,085 
6,812 
6,652 
(1,190)
(1,821)
(3,011)
(2,861)
(74)
(409)
(483)
(555)
- 
23 
23 
6 
- 
13 
13 
161 
(1,264)
(2,194)
(3,458)
(3,249)
1,463 
1,891 
3,354 
3,403 
31.12.2025
31.12.2024
Right-of-use asset
808 
872 
72 
36 
26 
39 
(161)
(139)
745 
808 
Right-of-use asset is due to real estates for own use.
Depreciation .........................................................................................................................
Sundry assets ............................................................................................................................................................
Other assets .............................................................................................................................................................
Unsettled securities trading ........................................................................................................................................
Disposals ..............................................................................................................................
Write-offs ..............................................................................................................................
Additions ..............................................................................................................................
Right-of-use asset ......................................................................................................................................................
Gross carrying amount at the beginning of the year ..............................................................
Accumulated depreciation at the beginning of the year .........................................................
Gross carrying amount at the end of the year ..................................................................
Accounts receivable ...................................................................................................................................................
Write-offs ..............................................................................................................................
Property and equipment .............................................................................................................................................
Indexation ..................................................................................................................................................................
New lease agreements ..............................................................................................................................................
Balance at the beginning of the year ..........................................................................................................................
Depreciation ...............................................................................................................................................................
Accumulated depreciation at the end of the year .............................................................
The
official
real
estate
value
(Registers
Iceland)
amounted
to
ISK
4,495
million
at
the
end
of
the
year
(31.12.2024:
ISK
4,399
million)
and
the insurance value amounts to ISK 8,743 million (31.12.2024: ISK 8.318 million).
Disposals ..............................................................................................................................
Property and equipment .....................................................................................................
Right-of-use asset ....................................................................................................................................................
47

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

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
32.
Other liabilities
31.12.2025
31.12.2024
1,496 
1,402 
3,041 
2,550 
22,435 
21,478 
6,560 
7,329 
2,107 
1,925 
5,508 
6,136 
1,466 
1,475 
682 
511 
867 
975 
6,574 
6,169 
50,736 
49,950 
Insurance contract liabilities
3,739 
3,851 
17,866 
16,819 
830 
808 
22,435 
21,478 
Lease liability
975 
1,074 
74 
37 
32 
47 
50 
53 
(264)
(236)
867 
975 
Liabilities for incurred claims ......................................................................................................................................
Balance at the beginning of the year ..........................................................................................................................
Indexation ..................................................................................................................................................................
Interest expense ........................................................................................................................................................
Accrued expenses .....................................................................................................................................................
Lease liability .............................................................................................................................................................
Sundry liabilities .........................................................................................................................................................
Other liabilities .........................................................................................................................................................
Insurance contract liabilities ...................................................................................................................................
Risk adjustment .........................................................................................................................................................
Lease payments ........................................................................................................................................................
Lease liability ...........................................................................................................................................................
Unsettled securities trading ........................................................................................................................................
Impairment of off-balance items .................................................................................................................................
Insurance contract liabilities .......................................................................................................................................
Prepaid income ..........................................................................................................................................................
Bank levy ...................................................................................................................................................................
Accounts payable ......................................................................................................................................................
Withholding tax ..........................................................................................................................................................
New and extended lease agreements ........................................................................................................................
Liabilities for remaining coverage ...............................................................................................................................
48

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

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
33.
Borrowings
First
Maturity 
31.12.2025
31.12.2024
Currency, original nominal value
issued
Maturity
type 
Terms of interest
ARION CBI 25, ISK 37,940 million ............
2017
4/2025
At maturity 
- 
34,805 
ARION CBI 26 ISK 17,080 million .............
2019
10/2026
At maturity 
20,094 
21,775 
ARION CB EUR 500 million * ....................
2021
10/2026
At maturity 
72,265 
68,775 
ARION CB 27, ISK 53,100 million .............
2022
10/2027
At maturity 
26,083 
25,652 
ARION CBI 28, ISK 27,420 million ............
2024
9/2028
At maturity
23,286 
12,887 
ARION CBI 29, ISK 27,200 million ............
2014
12/2029
At maturity 
41,370 
39,939 
ARION CBI 30, ISK 31,920 million ............
2023
11/2030
At maturity 
33,421 
31,896 
ARION CBI 31, ISK 9,060 million ..............
2025
8/2031
Amortizing 
8,299 
- 
ARION CBI 48, ISK 11,680 million ............
2018
1/2048
Amortizing 
12,732 
12,663 
237,550 
248,392 
EUR 300 million Green * ...........................
2021
7/2025
At maturity
- 
42,597 
NOK 550 million ........................................
2022
8/2025
At maturity 
- 
6,783 
SEK 230 million .........................................
2022
8/2025
At maturity 
- 
2,906 
NOK 200 million ........................................
2023
3/2025
At maturity
- 
2,451 
ARION 26 1222 Green, ISK 5,760 million ..
2021
12/2026
At maturity 
5,417 
5,411 
SEK 300 million .........................................
2023
3/2026
At maturity
4,091 
3,775 
EUR 300 million* .......................................
2023
5/2026
At maturity
46,252 
45,384 
NOK 250 million ........................................
2017
4/2027
At maturity
3,182 
3,129 
USD 21 million* .........................................
2024
12/2027
At maturity
2,893 
2,989 
SEK 500 million Green ..............................
2024
10/2027
At maturity
6,840 
6,324 
NOK  500 million Green ............................
2024
10/2027
At maturity
6,288 
6,185 
NOK  600 million Green ............................
2025
12/2027
At maturity
7,479 
- 
SEK 900 million Green ..............................
2025
12/2027
At maturity
12,248 
- 
ARION 28 1512, ISK 16,920 million ..........
2023
12/2028
At maturity
18,271 
12,580 
EUR 300 million * ......................................
2024
11/2028
At maturity
44,916 
44,272 
SEK 250 million .........................................
2025
1/2028
At maturity
3,418 
- 
USD 27 million ..........................................
2025
7/2028
At maturity
3,015 
- 
NOK 350 million ........................................
2025
1/2028
At maturity
4,397 
- 
EUR 300 million * ......................................
2025
5/2030
At maturity
44,731 
- 
EUR 300 million * ......................................
2025
9/2031
At maturity
43,835 
- 
257,273 
184,786 
494,823 
433,178 
Floating NIBOR 3M +1.20% ..........
Fixed 7.25% ..................................
Floating STIBOR 3M +3.00% ........
Floating NIBOR 3M +1.11% ..........
*
The
Group
applies
fair
value
hedge
accounting
to
these
bond
issuances
and
uses
certain
foreign
currency
denominated
interest
rate
swaps
as
hedging
instruments,
see
Note
25.
The
interest
rate
swaps
are
hedging
the
Group’s
exposure
to
fair
value
changes
of
these
fixed-rate
bonds
in
EUR
and
USD
arising
from
changes in interest rates. 
Borrowings ...............................................................................................................................................................
Fixed 5.00%  .................................
Fixed 3.625% ................................
Floating STIBOR 3M +1.20% ........
Fixed 4.625% ................................
Fixed 0.375%  ...............................
Fixed 3.50% ..................................
Statutory covered bonds .........................................................................................................................................
The
book
value
of
listed
bonds
was
ISK
495
billion
at
the
end
of
the
year
(31.12.2024:
ISK
433
billion).
The
market
value
of
those
bonds
was
ISK
501
billion
(31.12.2024:
ISK
429
billion).
The
Group
repurchased
own
debts
amounting
to
ISK
11
billion
during
the
year
with
a
net
gain of ISK 33 million recognized in the Income Statement (2024: ISK 182 million loss).
Floating STIBOR 3M +2.35% ........
Floating STIBOR 3M +1.13% ........
Fixed CPI linked 4.35% .................
Fixed 4.70% ..................................
Fixed CPI linked 2.75% .................
Fixed CPI linked 4.25% .................
Fixed CPI linked 3.50% .................
Fixed CPI linked 3.65% .................
Fixed CPI linked 2.50% .................
Fixed 6.25% ..................................
Fixed 3.40%  .................................
Floating NIBOR 3M +2.55% ..........
Floating STIBOR 3M +1.20% ........
Fixed EUR 0.05% .........................
Fixed CPI linked 3.00% .................
Fixed CPI linked 2.00% .................
Floating NIBOR 3M +2.35% ..........
Fixed 5.50% ..................................
Floating NIBOR 3M +1.17% ..........
Senior unsecured bonds .........................................................................................................................................
49

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

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
34.
Subordinated liabilities
First call 
31.12.2025
31.12.2024
Currency, original nominal value
Issued
Maturity
date
Terms of interest
ARION T2I 30 ISK 4,800 million ................
2019
1/2030
4 Jan '25
- 
6,607 
ARION T2 30 ISK 880 million ....................
2019
1/2030
4 Jan '25
- 
905 
EUR 5 million ............................................
2019
1/2026
6 Mar '26
753 
735 
ARION T2I ISK 33 9,860 million ................
2022
12/2033
15 Dec '28
11,613 
11,195 
ARION T2 33 ISK 2,240 million .................
2022
12/2033
15 Dec '28
2,249 
2,249 
SEK 225 million .........................................
2024
11/2034
20 Nov '29
3,078 
2,843 
ARION T2I 36 ISK 10,040 million ..............
2025
12/2036
2 Dec '31
10,190 
- 
27,883 
24,534 
ARION AT1 USD 100 million * ..................
2020
Perpetual
26 Aug '25
- 
3,150 
ARION AT1 USD 125 million * ..................
2024
Perpetual
24 Mar '30
15,635 
16,854 
15,635 
20,004 
43,518 
44,538 
35.
Liabilities arising from financial activities
Net
cash
Interest
Foreign
Effect
At period
2025
At 1 Jan.
flows
expenses
exchange
from hedge
end
153,965 
(24,357)
9,594 
- 
- 
139,202 
25,652 
(1,458)
1,889 
- 
- 
26,083 
68,775 
(1,555)
1,958 
1,648 
1,439 
72,265 
166,795 
53,098 
9,843 
4,552 
(703)
233,585 
5,411 
(285)
291 
- 
- 
5,417 
12,580 
4,237 
1,454 
- 
- 
18,271 
17,802 
2,556 
1,445 
- 
- 
21,803 
3,153 
(1,116)
212 
- 
- 
2,249 
3,579 
(174)
171 
255 
- 
3,831 
20,004 
(4,832)
1,684 
(1,683)
462 
15,635 
477,716 
26,114 
28,541 
4,772 
1,198 
538,341 
2024
132,391 
10,580 
10,994 
- 
- 
153,965 
31,344 
(7,455)
1,763 
- 
- 
25,652 
69,337 
(4,660)
3,125 
2,971 
(1,998)
68,775 
167,106 
(15,407)
10,295 
7,864 
(3,063)
166,795 
11,510 
(6,905)
806 
- 
- 
5,411 
8,772 
2,877 
931 
- 
- 
12,580 
16,997 
(795)
1,600 
- 
- 
17,802 
3,157 
(267)
264 
- 
- 
3,154 
7,908 
(5,099)
430 
339 
- 
3,578 
13,217 
5,265 
1,749 
(421)
194 
20,004 
461,739 
(21,866)
31,957 
10,753 
(4,867)
477,716 
Tier 2 subordinated liabilities ..................................................................................................................................
Covered bonds in FX.......................................................................
Covered bonds in ISK - CPI linked...................................................
Subordinated bond T2 FX................................................................
Fixed 8.125% ................................
Liabilities arising from financial activities....................................
Subordinated bond AT1 FX..............................................................
Senior unsecured bonds in FX.........................................................
Senior unsecured bonds in ISK........................................................
Subordinated liabilities ............................................................................................................................................
Fixed 9.25%  .................................
Covered bonds in ISK......................................................................
Non-cash changes
Additional Tier 1 subordinated liabilities  ...............................................................................................................
*
The
Group
applies
fair
value
hedge
accounting
to
these
bond
issuances
and
uses
certain
foreign
currency
denominated
interest
rate
swaps
as
hedging
instruments, see Note 25. 
Fixed CPI linked 3.875% ...............
Fixed CPI linked 4.95%  ................
Senior unsecured bonds in ISK - CPI linked.....................................
Covered bonds in FX.......................................................................
Covered bonds in ISK......................................................................
Subordinated bond T2 ISK...............................................................
Subordinated bond T2 in ISK - CPI linked........................................
Additional
Tier
1
and
Tier
2
subordinated
liabilities
are
eligible
as
regulatory
capital
under
the
Icelandic
Financial
Undertakings
Act
No.
161/2002.
Fixed CPI linked 5.00% .................
Senior unsecured bonds in ISK - CPI linked.....................................
Subordinated bond T2 in ISK - CPI linked........................................
Subordinated bond T2 ISK...............................................................
Senior unsecured bonds in ISK........................................................
Senior unsecured bonds in FX.........................................................
Liabilities arising from financial activities....................................
Subordinated bond AT1 FX..............................................................
Subordinated bond T2 FX................................................................
Fixed 6.25% ..................................
Fixed 3.24%  .................................
Fixed 6.75% ..................................
Floating 3 mth STIBOR +2.65% ....
Covered bonds in ISK - CPI linked...................................................
50

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

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
36.
Pledged assets
31.12.2025
31.12.2024
Pledged assets against liabilities
359,645 
398,505 
5,049 
7,452 
364,694 
405,957 
(85,549)
(105,265)
15,727 
15,429 
294,872 
316,121 
37.
Equity
Share capital and share premium
Share 
Own
Share 
2025
Share 
Own
Share 
2024
capital
shares
premium
total
capital
shares
premium
total
Balance at the beginning of the year .........
1,513 
(101)
4,273 
5,686 
1,460 
(14)
9,188 
10,634 
Issued new share capital ...........................
- 
- 
- 
- 
53 
- 
6,187 
6,240 
Share capital reduction .............................
(93)
93 
- 
- 
- 
- 
- 
- 
Purchase of treasury shares .....................
- 
(36)
(5,218)
(5,254)
- 
(90)
(12,362)
(12,452)
- 
6 
715 
721 
- 
2 
280 
282 
- 
1 
229 
230 
- 
1 
165 
166 
Warrants excercised .................................
- 
- 
- 
- 
- 
- 
816 
816 
Balance at the end of the year ................
1,420 
(36)
- 
1,383 
1,513 
(101)
4,273 
5,686 
Own shares / issued share capital .............
2.59% 
6.65% 
Share option vested ...................................
Incentive scheme .......................................
According
to
the
Bank's
Articles
of
Association,
total
share
capital
amounts
to
ISK
1,420
million,
with
par
value
of
ISK
1
per
share.
The
holders
of
ordinary
shares
are
entitled
to
receive
dividends
as
approved
by
the
Annual
General
Meeting
(AGM)
and
are
entitled
to
one
vote
per share at shareholders' meetings.
In
accordance
with
the
Bank's
dividend
policy
Arion
Bank
has
in
place
a
regular
buyback
program.
In
April
2025
the
FSA
granted
the
Bank
authorization
to
buy
back
own
shares
in
Iceland
and
Sweden
amounting
up
to
a
total
of
19.9
shares
and
SDRs
or
up
to
ISK
3.0
billion.
There
are
no
ongoing
programs
at
the
end
of
December
2025.
In
2024
the
FSA
authorized
the
Bank
to
initiate
share
buy-back
programs
in
Iceland and Sweden amounting up to a total of 113.6 million shares or up to ISK 15.5 billion.
The
AGM
of
Arion
Bank,
held
on
12
March
2025,
approved
to
reduce
the
Bank’s
share
capital
by
ISK
93,423,078
nominal
value,
by
cancelling
the
Bank’s
own
shares.
The
reduction
was
carried
out
on
7
April
2025.
In
2024
the
nominal
value
of
Arion
Bank's
share
capital
was increased by ISK 53,198,719 in order to cover the exercising of issued warrants.
Assets against repoed issued bonds ..........................................................................................................................
Assets, pledged as collateral against borrowings .......................................................................................................
The
Group
has
issued
covered
bonds
amounting
to
ISK
61
billion
that
can
be
used
for
repo
borrowings
at
the
Central
Bank
of
Iceland,
the
European
Central
Bank
or
sold
if
market
conditions
are
favorable
(31.12.2024:
ISK
78
billion).
Pledged
assets
against
those
covered
bonds
are ISK 70 billion (31.12.2024: ISK 90 billion).
The
Group
has
pledged
assets
against
due
to
credit
institutions
and
borrowings,
both
issued
covered
bonds
and
other
issued
bonds
and
loan
agreements
undir
Icelandic
law.
Pledged
loans
comprised
mortgage
loans
to
individuals.
The
book
value
of
those
liabilities
were
ISK
238 billion at period end (31.12.2024: ISK 248 billion).
Pledged assets against liabilities on balance ........................................................................................................
Pledged assets against liabilities ...........................................................................................................................
Thereof pledged assets against issued covered bonds held by the Bank ...................................................................
Assets pledged as a collateral against loans from banks and other financial liabilities ...............................................
The
Group
has
pledged
bonds
against
short
term
lending
from
the
Central
Bank
of
Iceland
and
against
short
positions,
related
to
swap
agreements,
to
hedge
market
risk
of
those
assets
to
ensure
the
clearing
of
the
Icelandic
payment
system.
Moreover,
it
has
pledged
cash
in
foreign banks and financial institutions, mainly as collateral for trades under ISDA agreements to hedge market risk.
51

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

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
37.
Equity, continued
Share options
Number
Exercise
of shares
Exercise
price
(in ths.)
year
(ISK)
2,488 
2026
95.50 
2,306 
2026
153.75 
1,463 
2026
153.75 
751 
2026
155.75 
1,040 
2026
174.56 
583 
2026
140.56 
157 
2026
143.36 
164 
2026
155.93 
2,330 
2028-2030
Indeterminate
11,281 
Weighted
Weighted
Number
average
Number
average
of shares
contract
of shares
contract
(in ths.)
rate
(in ths.)
rate
17,116 
135.1 
24,435 
136.3 
1,203 
172.0 
1,953 
153.6 
(4,523)
130.1 
(6,766)
148.2 
(4,844)
124.2 
(2,506)
96.7 
8,952 
139.1 
17,116 
135.1 
2,330 
Indeterminate
- 
- 
11,281 
17,116 
Warrants
Movements in share options during the year.
Outstanding at the beginning of the year ..............................................................................
All outstanding share options, if exercised, represent approximately 0.8% of the total issued shares.
Issued in 2023 (ISK 900,000) - employees of Arion Bank ........................................................................
Issued in 2024 (ISK 1,500,000) - employees of Arion Bank .....................................................................
Issued in 2025 - incentive scheme - employees of Group .......................................................................
Share options granted - incentive scheme ............................................................................
No share options are exercisable at year end. Next exercise periods are in February and May 2026.
The
warrants
reserve
represents
the
consideration
received
for
outstanding
warrants.
Arion
Bank
issued
54
million
warrants
on
9
March
2021.
The
purchase
price
of
the
warrants
amounted
to
ISK
15.6
per
warrant,
resulting
in
a
total
sale
price
of
ISK
842.4
million.
The
warrant
issuing
represented
approximately
3%
of
the
Bank's
total
share
capital
and
the
Bank
was
obliged
to
issue
new
shares
when
the
warrants
were
exercised.
Approximately
48.5%
of
the
total
issue
was
sold
to
around
150
employees
of
the
Group
and
51.5%
to
professional
investors.
The
exercise
period
ran
from
Q4
2023
to
Q3
2024.
Arion
Bank
received
notification
of
the
exercising
of
warrants
relating
to
a
total
of
51,087,696
new
shares,
amounting
to
ISK
6
billion,
during
the
final
exercise
period
which
concluded
on
24
August
2024.
There
were
no outstanding warrants at the end of the year 2025.
To
meet
the
Bank's
obligations
on
the
basis
of
the
share
option
plan,
the
Bank
will
issue
new
share
capital
or
deliver
treasury
shares.
Arion
Bank has no legal or constructive obligation to repurchase or settle the options in cash.
Outstanding share options pursuant to Icelandic income tax act ...................................
Outstanding share options at the end of the year ............................................................
Share options granted ..........................................................................................................
Share options forfeited .........................................................................................................
31.12.2024
Issued in 2023 (ISK 1,500,000) - employees of subsidiaries ...................................................................
Issued in 2023 (ISK 1,500,000) - employees of Arion Bank .....................................................................
In
accordance
with
the
current
incentive
scheme
for
Arion
Bank
hf.
and
Vördur,
a
limited
group
of
employees
can
receive
payments
of
up
to
25%
of
the
employees
fixed
salaries,
of
which
40%
or
80%
can
be
in
the
form
of
share
options
in
the
Bank.
The
share
options
are
settled
4-
5 years after granting. See Note 13 for further disclosures on the incentive scheme.
Share options exercised, WAVG share price ISK 169.5 at exercise date (2024: 154.3) ........
Issued in 2021 (ISK 600,000) - employees of Arion Bank ........................................................................
Issued in 2025 (ISK 1,500,000) - employees of Arion Bank .....................................................................
Arion
Bank
has
in
place
a
share
option
plan
for
all
employees
of
the
Bank,
Vördur
and
Stefnir,
approved
at
the
Banks
AGM,
under
which
employees
may
be
granted
options
to
purchase
ordinary
shares.
The
annual
maximum
purchase
price
for
each
employee
is
ISK
1.5
million,
in
line
with
Article
10
of
the
Income
Tax
Act
no.
90/2003,
at
an
exercise
price
determined
by
the
Bank’s
average
share
price
10
days
prior
to
issue
date.
The
employee
must
remain
continuously
employed
with
Arion
Bank
until
the
expiring
date.
The
options
carry
neither
rights
to
dividends nor voting rights and are valued using the Black-Scholes pricing model.
Issued in 2025 (ISK 1,500,000) - employees of subsidiaries ...................................................................
Issued in 2024 (ISK 1,500,000) - employees of subsidiaries ...................................................................
31.12.2025
The following share option contracts are in existence at year end.
52

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

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
Other information
38.
Shareholders of Arion Bank
31.12.2025
31.12.2024
 
 
9.56% 
9.06% 
9.55% 
9.17% 
9.24% 
8.79% 
5.22% 
5.31% 
5.07% 
5.29% 
4.07% 
3.60% 
3.97% 
3.59% 
2.97% 
3.15% 
2.92% 
3.02% 
2.61% 
2.25% 
2.59% 
2.43% 
2.59% 
6.65% 
2.06% 
1.51% 
1.81% 
1.63% 
1.73% 
2.08% 
1.44% 
1.52% 
1.05% 
0.94% 
0.91% 
1.01% 
30.66% 
29.00% 
100.0% 
100.0% 
Number
Number
of shares
of shares
- 
12,000 
- 
12,000 
- 
49,933 
- 
32,000 
12,136 
3,181,575 
24,273 
3,133,450 
627,353 
3,328,222 
189,171 
3,138,856 
39.
Legal matters
Contingent liabilities
Legal proceedings regarding damages
Íslandsbanki hf. ..........................................................................................................................................................
Landsbréf hf. ..............................................................................................................................................................
Almenni lífeyrissjódur .................................................................................................................................................
Stefnir funds ..............................................................................................................................................................
Brú lífeyrissjódur ........................................................................................................................................................
Stodir hf.  ...................................................................................................................................................................
Frjálsi lífeyrissjódurinn ...............................................................................................................................................
Vanguard ...................................................................................................................................................................
Gildi lífeyrissjódur ......................................................................................................................................................
Alternate directors of the Board ............................................................................................
Options
Festa lífeyrissjódur .....................................................................................................................................................
Stapi lífeyrissjódur .....................................................................................................................................................
Lífeyrissjódur verzlunarmanna ...................................................................................................................................
31.12.2024
* Key management personnel are defined in Note 43.
Hvalur hf. ...................................................................................................................................................................
Lífeyrissjódur starfsmanna ríkisins .............................................................................................................................
31.12.2025
Birta lífeyrissjódur ......................................................................................................................................................
The
Group
has
formal
controls
and
policies
in
place
for
managing
legal
claims.
Once
professional
advice
has
been
obtained
and
the
likelihood
and
amount
of
loss
reasonably
estimated,
the
Group
makes
adjustments,
if
appropriate,
to
account
for
any
adverse
effects
the
claims
may
have
on
its
financial
standing.
Should
the
Group
conclude
that
it
is
to
the
detriment
of
the
Group's
case
to
disclose
such
potential
amounts,
relating
to
the
legal
claims
raised,
it
elects
not
to
do
so.
At
the
end
of
the
period,
the
Group
had
several
unresolved
legal
claims.
Arion banki hf. ............................................................................................................................................................
Benedikt Gíslason, CEO .......................................................................................................
Íslandssjódir ...............................................................................................................................................................
Other shareholders with less than 1% shareholding ...................................................................................................
Key management personnel* ...............................................................................................
At
the
end
of
the
year
the
Group's
employees
held
a
shareholding
of
1.36%
in
Arion
Bank
(31.12.2024:
1.15%).
The
Board
of
Directors
and
key management personnel shareholding is as follows: 
Steinunn K. Thórdardóttir, Director .......................................................................................
Lífsverk lífeyrissjódur .................................................................................................................................................
Options
In
a
lawsuit
brought
in
June
2013,
Kortaþjónustan
hf.
claimed
damages
from
Arion
Bank
hf.,
Íslandsbanki
hf.,
Landsbankinn
hf.,
Borgun
hf.
and
Valitor
hf.
in
the
amount
of
ISK
1.2
billion
plus
interest.
The
lawsuit
is
a
result
of
damage
which
Kortaþjónustan
hf.
contended
the
five
parties
had
caused
the
company
due
to
violations
of
the
Competition
Act.
In
June
2017,
the
Supreme
Court
dismissed
the
case
on
procedural
grounds.
Since
then,
Kortaþjónustan
hf.
and
subsequently
its
largest
shareholder
EC-Clear
have
tried
to
initiate
five
lawsuits
against
the
same
defendants
which
have
all
been
dismissed,
the
last
one
in
March
2021.
In
September
2021,
EC-Clear
once
again
brought
an
action
concerning
the
same
dispute,
claiming
damages
in
the
amount
of
ISK
922
million
plus
interest,
against
the
same
defendants.
In
September
2022,
the
District
Court
dismissed
the
claims.
EC-Clear
appealed
the
dismissal
but
with
a
ruling
in
January
2023
the
Court
of
Appeal
rejected
the
District
Court’s
ruling
and
ruled
that
the
case
should
be
heard
on
its
merits
by
the
District
Court.
Should
the
defendants
be found liable for damages, they would be jointly responsible. Therefore, the Bank has not made any provision. 
53

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

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
39.
Legal matters, continued
Consumer Association’s class-action lawsuit
Other legal proceedings
40.
Events after the reporting period
 
 
 
 
In
response
to
the
letter,
Arion
Bank
undertook
a
review
of
its
contractual
terms
and
processes
for
interest
rate
decisions,
concluding
that
no
changes
were
required
and
that
the
Association’s
arguments
were
unfounded.
A
response
was
sent
to
the
Consumer
Association
in
September
2020.
According
to
information
published
on
the
Consumer
Association’s
website,
all
three
banks
rejected
the
Association’s
arguments. 
No
event
has
arisen
after
the
reporting
period
and
up
to
the
approval
of
these
Consolidated
Financial
Statements
that
require
additional
disclosures.
Since
2008
Arion
Bank
has
formally
been
a
party
to
proceedings
in
Luxembourg,
commenced
against
the
Luxembourg
company
R
Capital
S.á
r.l.
and
its
beneficial
owner,
Mr.
Umberto
Ronsisvalle,
for
the
collection
of
EUR
6
million
plus
interest.
During
this
time,
Kaupthing
ehf.
has
been
the
beneficial
owner
of
the
claim,
with
Arion
Bank’s
involvement
limited
to
being
the
formal
party
to
the
proceedings
while
enjoying
indemnity
from
Kaupthing.
The
reason
for
the
setup
is
a
decision
by
the
Icelandic
Financial
Supervisory
Authority
in
2009
during
the
division
of
Kaupthing
into
the
“new”
and
“old”
bank.
In
2019,
a
counterclaim
was
made
against
Arion
Bank
in
the
proceedings,
for
the
net
sum
of
EUR
24
million
plus
interest,
with
the
Bank
continuing
to
enjoy
full
indemnity
from
Kaupthing.
In
September
2021,
Kaupthing
and
Arion
Bank
agreed
that
all
rights
and
liabilities
in
the
Luxembourg
proceedings
would
be
transferred
to
Arion
Bank.
The
Bank
is
still
held
harmless for any liabilities associated with the claims and has therefore not made any provision. 
It
should
be
noted
that
the
terms
of
Arion
Bank
mortgages
which
contain
provisions
on
variable
interest
rates
differ
from
those
which
were
the
subject
of
the
Supreme
Court
judgment
in
the
case
against
Íslandsbanki
and
Landsbankinn.
The
terms
of
Arion
Bank
mortgages
in
respect
of
varying
the
interest
rates
are
exhaustively
listed,
unlike
the
terms
of
the
Íslandsbanki
and
Landsbankinn
mortgages,
and
each
reference
or
term
is
further
defined
by
a
brief
explanation.
The
terms
of
the
Bank’s
non-indexed
loans
are
similar
to
those
addressed
in
the
Bank’s
Supreme
Court
ruling,
except
that
they
also
refer
to
interest
rates
set
by
the
Central
Bank.
Therefore,
the
impact
of
the
judgements
in
Íslandsbanki’s
and
Landsbanki’s
case
on
Arion
Bank’s
loans
bearing
non-indexed
rates
cannot
be
asserted
with
full
certainty.
Moreover,
in
the
Bank’s
assessment,
the
argument
the
Supreme
Court
uses
in
Íslandsbanki’s
and
Landsbanki’s
cases,
regarding
reference
to
the
Central
Bank’s
policy
rate,
is
also
applicable
to
the
terms
of
Arion
Bank
mortgages
bearing
non-indexed
rates.
If
the
Íslandsbanki
and
Landsbanki verdict is applied to Arion Bank’s non-indexed loans, the loss is estimated to be less than ISK 500 million pre-tax. 
The Bank has not made any provision in respect of impending court cases. 
The Bank is also party to a case concerning a non-indexed loan, waiting to be heard by the District Court of Reykjavik. Cases regarding non-
indexed
loans
were
also
filed
against
Landsbankinn
and
Íslandsbanki.
Supreme
Court
judgements
in
cases
for
both
banks
were
delivered
in
2025.
The
Supreme
Court
found
that
the
disputed
contractual
clause
permitting
changes
to
interest
rates
was
partially
invalid.
The
only
part
of
the
terms
that
was
considered
valid
was
a
reference
to
the
Central
Bank’s
policy
rate.
Íslandsbanki
and
Landsbankinn
were,
however, acquitted of the borrower’s financial claim. 
In
May
2021,
the
Consumer
Association
published
an
article
on
its
website
calling
for
participants
in
a
class
action
lawsuit.
The
intention
was
to
commence
court
proceedings
against
the
Icelandic
banks
to
provide
a
legal
precedent
for
loans
with
variable
rates.
Arion
Bank
received
requests
for
information
from
a
legal
firm
representing
approximately
1,200
individuals.
A
case
was
filed
against
the
Bank
concerning
an
indexed
loan
and
with
a
judgement
of
the
Supreme
Court
on
10
December
2025
the
Bank
was
acquitted.
The
Supreme
Court thereby upheld the judgments of the District Court and the Court of Appeal in the case. 
The
Consumer
Association
of
Iceland
sent
a
letter
to
Arion
Bank,
Íslandsbanki
and
Landsbankinn
in
April
2020
urging
the
banks
to
review
their
contractual
terms
on
variable
rate
mortgages
to
individuals.
The
letter
called
for
revised
terms
and
compensation
to
borrowers
who,
according
to
the
Association,
had
suffered
damage.
The
Association’s
argument
is
that
the
standard
contractual
terms
lack
proper
legal
grounds,
as
the
parameters
for
interest
rate
decisions
lack
transparency
and
predictability,
thus
causing
a
contractual
imbalance
to
the
detriment of the consumer. 
54

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

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
Off balance sheet information
41.
Commitments
31.12.2025
31.12.2024
25,450 
21,804 
90,187 
74,270 
85,329 
67,658 
200,966 
163,732 
42.
Assets under management, supervision and custody
31.12.2025
31.12.2024
1,563,569 
1,417,450 
425,248 
215,251 
1,107,656 
1,699,260 
Related party
43.
Related party
31.12.2025
31.12.2024
31.12.2025
31.12.2024
3,940 
229 
1,072 
340 
4 
3 
- 
- 
3,944 
232 
1,072 
340 
(995)
(1,385)
(10)
(157)
- 
- 
(24)
(28)
(995)
(1,385)
(33)
(186)
197 
19 
78 
39 
(45)
(49)
(2)
(6)
21 
14 
- 
- 
- 
- 
(45)
(74)
11 
11 
- 
- 
(45)
(2)
(1,412)
(1,361)
139 
(7)
(1,380)
(1,402)
Assets under management .........................................................................................................................................
Unused overdrafts ......................................................................................................................................................
Financial guarantees ..................................................................................................................................................
Assets under supervision ...........................................................................................................................................
Shareholders
with
significant
influence
are
shareholders
that
have
the
power
to
participate
in
the
finanical
and
operating
decisions
of
Arion
Bank
but
do
not
control
those
policies.
At
the
end
of
the
year
no
shareholder
was
defined
as
related
party
with
an
influence
over
the
Group
(31.12.2024: none).
The
key
management
personnel
includes
the
Board
of
Directors,
the
Executive
Committee
of
Arion
Bank
and
heads
of
other
internal
control
functions,
as
well
as
their
close
family
members
and
legal
entities
controlled
by
them.
The
Executive
Committee
consists
of
the
CEO,
Managing
Directors
of
Retail
banking,
CIB,
Markets,
Finance,
Risk,
IT
and
Operations
&
culture.
For
compensation,
pension
and
other transactions with the Board of Directors and the Executive Committee, see Notes 13 and 38.
Financial guarantees, unused credit facilities and undrawn loan commitments .................................................
Key management
For information on the Group's associated companies, see Note 27.
Arion
Bank
defines
related
party
as
shareholders
with
significant
influence
over
the
Group,
the
key
management
personnel
and
the
Group's
associated companies.
Undrawn loan commitments .......................................................................................................................................
Assets under custody .................................................................................................................................................
Assets
under
supervision
refer
to
the
total
market
value
of
financial
assets
in
non-proprietary
funds
that
the
Group
administers
on
behalf
of
its customers.
Net expenses ......................................................................................................................
Interest income .....................................................................................................................
Interest expenses .................................................................................................................
Other income ........................................................................................................................
Other expenses ....................................................................................................................
Commission income .............................................................................................................
Commission expenses ..........................................................................................................
Financial guarantees, unused credit facilities and undrawn loan commitments
Total liabilities ....................................................................................................................
Total assets .........................................................................................................................
Deposits ...............................................................................................................................
Other liabilities ......................................................................................................................
Other assets .........................................................................................................................
Loans ...................................................................................................................................
companies
personnel
The
Group,
acting
as
custodian,
is
responsible
for
safeguarding
a
firm's
or
individual's
financial
assets,
hold
in
safekeeping
securities
such
as
stocks,
bonds
and
securities
funds,
arrange
the
settlement
of
trades
and
movements
of
securities,
process
corporate
actions
such
as
income on bonds and dividends on shares; and pricing on securities.
Associated
Transactions
with
related
parties
have
been
conducted
on
an
arm's
length
basis.
There
have
been
no
further
guarantees
provided
or
received for related party receivables or payables.
Assets under management represent the total market value of the financial assets which the Group manages on behalf of its customers.
55

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

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Risk management disclosures
Further
information
on
risk
management
and
capital
adequacy
is
provided
in
the
Annual
Financial
Statements
for
2025,
in
the
Pillar
3
Risk
Disclosures
for
2025
and
in
the
quarterly
Additional
Pillar
3
Risk
Disclosures.
These
documents
are
available
on
the
Bank's
website,
www.arionbank.com.
Notes to the Consolidated Financial Statements
The
Board
of
Directors
is
ultimately
responsible
for
the
Bank's
risk
management
framework
and
for
ensuring
that
satisfactory
risk
policies
and
governance
are
in
place.
Each
subsidiary
is
responsible
for
its
own
risk
management
framework
but
adheres
to
the
Bank's
ownership
policies
which
outline
the
Group's
internal
control
policy,
risk
appetite
and
reporting
mechanisms.
The
Board
sets
the
risk
appetite
for
the
Bank,
and
in
some
cases
the
Group,
which
is
translated
into
exposure
limits
and
targets
monitored
by
the
Bank's
Risk
Management
division.
The
Chief
Executive
Officer
(CEO)
is
responsible
for
sustaining
an
effective
risk
management
framework,
processes
and
controls
as
well
as maintaining a high level of risk awareness among employees, making risk everyone's business.
The
Bank
operates
several
committees
to
manage
risk.
The
Board
Risk
Committee
(BRIC)
is
responsible
for
supervising
the
Bank's
risk
management
framework,
risk
appetite
and
the
internal
capital
and
liquidity
adequacy
assessment
processes
(ICAAP/ILAAP).
The
Board
Credit
Committee
(BCC)
approves
certain
proposals
for
credit
origination,
debt
cancellation,
underwriting
and
investments,
while
the
Board
of
Directors
is
the
supreme
authority
for
cases
which
entail
deviations
from
risk
appetite
or
strategy.
On
the
management
level
the
CEO
has
established
six
primary
risk
committees.
The
Asset
and
Liability
Committee
(ALCO)
is
responsible
for
managing
asset-liability
mismatches,
liquidity
and
funding
risk,
market
risk,
capital
adequacy,
and
decides
on
underwriting
and
investment
exposures.
The
Operational
Risk
Committee
(ORCO)
is
responsible
for
managing
operational
risk,
which
includes
information
security,
financial
crime,
regulatory
compliance
and
data
management.
The
Arion
Credit
Committee
(ACC)
administers
the
Bank's
credit
rules
and
decides
on
the
origination
of
credit
while
the
Arion
Composition
and
Debt
Cancellation
Committee
(ADC)
is
the
principal
authority
for
debt
cancellation,
debt
restructuring
and
composition
agreements.
ACC
and
ADC
operate
within
limits
set
by
the
BCC.
The
Sustainability
Committee
ensures
that
the
Bank's
strategy
and
decision-making
are
aligned
with
the
Bank's
commitments
in
relation
to
the
environmental,
social
and
governance
(ESG)
agenda.
The
committee
oversees
the
Bank's
Green
Financing
Framework.
Finally,
the
Executive
Risk
Committee
(ERCO),
chaired
by
the
CRO,
oversees
the
implementation
of
risk
policies,
ensures
that
the
Bank's
limit
framework
adheres
to
the
risk
appetite,
reviews
the
Bank's
ICAAP,
ILAAP
and
stress
testing,
and
approves
economic
scenarios,
credit
models
and
specific
provisions
under IFRS9. The Executive Committee is concerned with business and strategic risk.
The
Bank's
Internal
Audit
conducts
independent
reviews
of
the
Bank's
and
several
subsidiaries'
operations,
risk
management
framework,
processes
and
measurements.
Internal
Audit
discusses
its
results
with
management
and
reports
its
findings
and
recommendations
to
the
Board Audit Committee (BAC) and to the Board of Directors.
The
Bank’s
Risk
Management
division
is
headed
by
the
Chief
Risk
Officer.
It
is
independent
and
centralized
and
reports
directly
to
the
CEO.
Risk
Management
is
divided
into
four
units.
Balance
Sheet
Risk
and
Models
is
responsible
for
the
quantification
of
risk
on
a
portfolio
level,
including
risk
modelling
and
reporting;
Operational
and
Sustainability
Risk
facilitates
and
monitors
the
management
of
risk
and
controls
in
the
first
line
and
supports
the
Bank's
quantification
and
management
of
sustainability
risk;
and
Credit
Risk
supports
the
Bank's
credit
transaction
process,
participates
in
credit
decisions
and
monitors
credit
quality.
The
Security
Team
monitors
the
effectiveness
of
the
Bank’s defences against risks associated with IT security, physical security and external cyber fraud.
Arion
Bank
is
a
small
bank
in
international
context
but
classified
as
systemically
important
in
Iceland.
The
Group
operates
in
a
small
economy
which
is
subject
to
sectoral
concentration,
fluctuations
in
capital
flows,
and
exchange
rate
volatility.
Among
the
Group’s
most
significant
risks
are
credit
risk,
concentration
risk,
liquidity
risk,
interest
rate
risk,
cyber
risk,
third
party
risk,
business
risk
and
reputational
risk.
These
risk
factors
are
to
the
largest
extent
encountered
within
the
parent
company.
Through
the
Bank's
subsidiaries,
the
Group
bears
risk arising from insurance activities and fund management. 
Risk
management
is
a
core
activity
within
the
Group
as
it
faces
various
risks
arising
from
its
day
to
day
operations.
The
key
to
effective
risk
management
is
a
process
of
on-going
identification
of
significant
risks,
quantification
of
risk
exposures,
actions
to
limit
risk
and
regular
monitoring.
This
process,
and
the
ability
to
evaluate,
manage
and
correctly
price
the
risk
encountered
is
critical
to
the
Group's
continuing
profitability, and ensures that risk exposures remain within acceptable levels.
The
Bank's
Compliance
function
is
headed
by
the
Compliance
Officer.
It
is
independent
and
centralized
and
the
Compliance
Officer
reports
directly
to
the
CEO.
The
Compliance
function
manages
the
Bank's
conduct
and
compliance
risk,
including
risk
relating
to
data
protection and financial crime.
56

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

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
44.
Credit risk
Exposure to credit risk
The
value
of
collateral
is
based
on
estimated
market
value.
The
valuation
of
real
estate
is
based
on
market
price,
valuation
model,
or
the
opinion
of
internal
or
external
specialists.
The
valuation
of
fishing
vessels
takes
into
account
related
fishing
quotas.
The
quality
of
collateral is evaluated in the lending process with regards to specialization, location, age and condition and possibilities for reuse.
Collateral
value
is
monitored
and
action
is
taken
to
remedy
insufficient
collateral
coverage
where
the
underlying
agreement
provides
for
such
remedies.
Collateral
value
is
reviewed
to
ensure
the
adequacy
of
the
allowance
for
impairment
losses.
Collateral
values
shown
are
capped by the related book value amount.
- Other collateral: Fixed and current assets including vehicles, equipment, inventory and trade receivables
- Vessels: Ships with assigned fishing quota and other vessels
Credit
risk
is
managed
and
controlled
by
setting
limits
on
the
amount
of
risk
the
Group
is
willing
to
accept
for
individual
counterparties,
group
of
connected
clients,
industries,
geographies
and
loan
types,
and
by
monitoring
exposures
in
relation
to
such
limits.
The
Group
seeks
to
limit
its
total
credit
risk
through
diversification
of
the
loan
portfolio
across
sectors
and
by
limiting
large
exposures
to
groups
of
connected clients.
Credit
risk
arises
when
the
Group
commits
its
funds,
resulting
in
capital
or
earnings
being
dependent
on
counterparty,
issuer
or
borrower
performance.
Loans
to
customers
are
the
largest
source
of
credit
risk.
Credit
risk
is
also
inherent
in
other
types
of
assets,
such
as
loans
to
credit institutions, bonds, derivatives and off-balance sheet items such as commitments and guarantees.
Managing
and
analyzing
the
Group's
loan
portfolio
is
of
utmost
importance.
Great
emphasis
is
placed
on
the
quality
of
the
credit
portfolio,
by
maintaining
a
strict
credit
process,
by
critically
inspecting
loan
applications,
by
actively
monitoring
the
credit
portfolio
and
by
identifying
and reacting to possible problem loans at an early stage as well as by restructuring impaired credits.
The
Group
grants
credit
based
on
well-informed
lending
decisions
and
seeks
to
build
business
relationships
with
customers
that
have
good repayment capacity and are backed by strong collateral. The risk level of each credit is considered in the pricing.
The
following
table
shows
the
maximum
exposure
to
credit
risk
for
the
components
of
the
Statement
of
Financial
Position
before
the
effect
of
mitigation
due
to
collateral
agreements
or
other
credit
enhancements.
The
table
also
shows
related
collateral
and
credit
enhancements.
The
amount
and
type
of
collateral
required
depends
on
an
assessment
of
the
credit
risk
of
the
counterparty
and
the
exposure
type.
The
main types of collateral obtained are as follows:
- Real estate: Residential property, commercial real estate and land
- Cash and securities: Cash, treasury notes and bills, asset backed bonds, listed equity, and funds that consist of eligible securities
Credit risk is the risk that the Group will incur a loss because its customers or counterparties fail to discharge their contractual obligations.
57

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

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
44.
Credit risk, continued
Maximum
Cash and
Real
Other
Total 
31.12.2025
exposure 
securities
estate
Vessels
collateral
collateral
150,111 
- 
- 
- 
- 
- 
22,567 
- 
- 
- 
- 
- 
1,327,606 
15,816 
982,047 
65,647 
111,401 
1,174,911 
640,394 
161 
589,706 
28 
14,604 
604,499 
576,828 
134 
576,297 
- 
- 
576,431 
63,566 
27 
13,409 
28 
14,604 
28,068 
687,212 
15,655 
392,341 
65,619 
96,797 
570,412 
126,000 
2,168 
118,383 
11 
294 
120,856 
108,071 
222 
98,010 
6 
2,886 
101,124 
107,416 
1,294 
26,435 
58,230 
13,314 
99,273 
87,036 
1,554 
36,263 
1,063 
25,114 
63,994 
46,775 
34 
44,842 
- 
206 
45,082 
58,606 
9,528 
18,072 
4,069 
20,174 
51,843 
69,908 
532 
32,288 
- 
18,288 
51,108 
17,925 
40 
1,223 
2,208 
9,038 
12,509 
40,458 
275 
1,606 
- 
6,810 
8,691 
11,354 
8 
2,678 
11 
104 
2,801 
13,663 
- 
12,541 
21 
569 
13,131 
17,031 
- 
- 
- 
- 
- 
25,450 
1,348 
4,989 
274 
6,597 
13,208 
175,516 
- 
- 
- 
- 
- 
138,302 
- 
- 
- 
- 
- 
136,868 
- 
- 
- 
- 
- 
1,434 
- 
- 
- 
- 
- 
1,856,583 
17,164 
987,036 
65,921 
117,998 
1,188,119 
31.12.2024
124,094 
- 
- 
- 
- 
- 
25,690 
- 
- 
- 
- 
- 
1,228,745 
12,589 
931,451 
63,466 
117,745 
1,125,251 
639,404 
526 
584,014 
23 
20,342 
604,905 
570,842 
404 
569,959 
- 
- 
570,363 
68,562 
122 
14,055 
23 
20,342 
34,542 
589,341 
12,063 
347,437 
63,443 
97,403 
520,346 
117,929 
1,610 
113,229 
- 
1,582 
116,421 
84,419 
198 
74,662 
17 
4,104 
78,981 
87,696 
1,124 
17,612 
60,155 
6,838 
85,729 
74,814 
899 
28,035 
1,235 
31,004 
61,173 
47,755 
14 
42,570 
- 
4,173 
46,757 
52,600 
7,435 
16,455 
- 
16,220 
40,110 
61,481 
750 
38,534 
- 
17,607 
56,891 
10,249 
4 
1,189 
2,031 
6,636 
9,860 
30,633 
16 
1,437 
- 
8,534 
9,987 
9,509 
13 
2,224 
5 
187 
2,429 
12,256 
- 
11,490 
- 
518 
12,008 
8,476 
- 
- 
- 
- 
- 
21,804 
2,335 
4,212 
280 
4,688 
11,515 
141,928 
- 
- 
- 
- 
- 
126,898 
- 
- 
- 
- 
- 
125,923 
- 
- 
- 
- 
- 
975 
- 
- 
- 
- 
- 
1,677,635 
14,924 
935,663 
63,746 
122,433 
1,136,766 
Financial guarantees ...................................................................
Undrawn loan commitments and unused overdrafts  ...................
Fair value through OCI ................................................................
Bonds issued by financial institutions and corporates ..............
Government bonds ..................................................................
Balance at the end of the year ..................................................
Collateral
Loans to credit institutions at amortized cost ...............................
Loans to customers at amortized cost .........................................
Industry, energy and manufacturing .................................................
Undrawn loan commitments and unused overdrafts  ...................
Individuals ................................................................................
Corporates ...............................................................................
Real estate activities ........................................................................
Financial and insurance activities ....................................................
Commerce and services ...................................................................
Accommodation and food service activities .....................................
Cash and balances with Central Bank .........................................
Fishing industry ................................................................................
Other assets with credit risk .........................................................
Transportation ..................................................................................
Information and communication technology .....................................
Public sector .....................................................................................
Agriculture and forestry ....................................................................
Financial guarantees ...................................................................
Construction .....................................................................................
Mortgages ........................................................................................
Transportation ..................................................................................
Construction .....................................................................................
Information and communication technology .....................................
Public sector .....................................................................................
Industry, energy and manufacturing .................................................
Commerce and services ...................................................................
Corporates ...............................................................................
Individuals ................................................................................
Accommodation and food service activities .....................................
Financial and insurance activities ....................................................
Cash and balances with Central Bank .........................................
Real estate activities ........................................................................
Loans to customers at amortized cost .........................................
Other ................................................................................................
Fishing industry ................................................................................
Loans to credit institutions at amortized cost ...............................
Fair value through OCI ................................................................
Balance at the end of the year ..................................................
Bonds issued by financial institutions and corporates ..............
Government bonds ..................................................................
Other ................................................................................................
Mortgages ........................................................................................
Agriculture and forestry ....................................................................
Other assets with credit risk .........................................................
Maximum
exposure
to
credit
risk
and
collateral
held
against
different
types
of
financial
instruments
subject
to
the
impairment
requirements
of IFRS 9
58

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

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
44.
Credit risk, continued
LTV ratio for residential mortgage lending
31.12.2025
31.12.2024
31.12.2025
31.12.2024
223,975 
233,652 
2,832 
2,647 
107,698 
113,874 
2,110 
1,531 
102,661 
96,331 
1,587 
1,185 
88,631 
75,063 
1,427 
1,269 
51,163 
48,341 
708 
344 
1,669 
2,075 
114 
135 
1,497 
2,172 
261 
319 
198 
17 
5 
- 
577,492 
571,525 
9,044 
7,430 
31.12.2025
31.12.2024
31.12.2025
31.12.2024
516,063 
514,309 
7,925 
6,484 
45,445 
42,063 
743 
589 
12,363 
11,461 
230 
165 
2,521 
2,694 
77 
63 
385 
434 
41 
27 
517 
560 
23 
102 
198 
4 
5 
- 
577,492 
571,525 
9,044 
7,430 
Collateral for financial assets in stage 3
Collateral repossessed
At
the
end
of
the
year,
the
gross
carrying
amount
of
assets
in
stage
3
was
ISK
32,661
million
(31.12.2024:
ISK
28,568
million)
with
ISK
28,860 million in collateral (31.12.2024: ISK 25,586 million), thereof ISK 24,474 million in real estate (31.12.2024: ISK 24,587 million).
The
following
table
describes
the
loan
to
value
(LTV)
and
impairment
status
of
the
Group's
residential
mortgage
portfolio.
LTV
is
calculated
as
the
ratio
of
the
total
exposure
of
individual
borrowers
to
the
value
of
the
pledged
real
estate
without
adjusting
for
possible
costs
of
obtaining
and
selling
the
collateral.
An
exposure
to
a
particular
borrower
appears
in
a
single
row
in
the
table
(whole-loan
approach).
The
residential
real
estate
valuation
model
used
gives
an
estimate
of
current
value
on
a
monthly
basis.
This
model
is
used
when the market transaction value becomes older than 2 years.
70-80% .............................................................................................................................
The
Group
took
possession
of
assets
due
to
foreclosures.
The
total
value
of
real
estate
the
Group
took
possession
of
during
the
year
and
still
holds
at
the
end
of
the
year
is
ISK
66
million
(31.12.2024:
ISK
79
million).
Assets
aquired
due
to
foreclosure
are
held
for
sale,
see
Note 30.
Gross carrying amount ...................................................................................................
80-90% .............................................................................................................................
More than 100% ................................................................................................................
Less than 50% ..................................................................................................................
50-60% .............................................................................................................................
Thereof in Stage 3
Less than 55% ..................................................................................................................
The
following
table
gives
an
alternative
representation
of
the
loan
to
value
profile
of
the
mortgage
portfolio.
Here,
each
exposure
is
split
into
pieces
and
each
piece
is
placed
into
the
appropriate
LTV
bucket.
A
single
exposure
can
therefore
be
spread
between
several
rows
in
the table (loan-splitting approach).
55-70% .............................................................................................................................
70-80% .............................................................................................................................
90-100% ...........................................................................................................................
60-70% .............................................................................................................................
Thereof in Stage 3
Not classified ....................................................................................................................
Not classified ....................................................................................................................
80-90% .............................................................................................................................
90-100% ...........................................................................................................................
More than 100% ................................................................................................................
Gross carrying amount ...................................................................................................
59

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

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
44.
Credit risk, continued
Large exposures
Credit quality
The
Group
uses
internal
credit
ratings
and
external
credit
ratings,
if
available,
to
monitor
credit
risk.
The
Group's
internal
credit
rating
system
rates
customers
through
application
of
statistical
models
based
on
a
variety
of
information
that
has
been
determined
to
be
predictive
of
default.
This
includes
demographic,
behavioral,
financial
and
economic
data,
coupled
with
qualitative
expert
judgment
for
large
corporate
exposures.
Six
exposure
type
models
rate
individuals'
exposures
–
mortgages,
consumer
loans,
auto
loans,
guarantees,
loans
to
individuals
for
work
purposes,
and
other
loans.
The
models
are
validated
annually
and
recalibrated
and
updated
with
current
data
with
the
aim
of
maintaining
their
predictive
power.
Year-on-year
changes
in
risk
classification
of
loans
may
in
part
be
due
to
model
refinement.
External
ratings
are
primarily
used
for
marketable
securities
and
loans
to
credit
institutions.
For
further
information
on
the
rating scales used, see Note 59.
The
following
tables
show
financial
instruments
subject
to
the
impairment
requirements
of
IFRS
9
broken
down
by
rating
scale,
where
risk
class
5,
DD
,
represents
exposures
in
default
.
Assets
carried
at
fair
value
through
profit
and
loss
are
not
subject
to
the
impairment
requirements
of
IFRS
9.
The
tables
below
sum
up
the
gross
carrying
amount
of
assets
by
rating
class
and
impairment
stage.
The
gross
carrying
amount
net
of
loss
allowance
is
the
book
value
of
the
underlying
assets.
For
off-balance
sheet
exposures,
the
nominal
amount
is
shown. FVOCI stands for fair value through other comprehensive income.
Exposures
that
are
'Unrated'
are
typically
due
to
newly
formed
entities,
entities
for
which
the
Bank's
rating
models
are
not
applicable
or
no
external rating is available.
The Group had no large exposure at the end of the year (31.12.2024: no large exposure).
A
large
exposure
is
defined
as
an
exposure
to
a
group
of
financially
related
borrowers
which
is
equal
to
or
exceeds
10%
of
the
Group's
Tier
1
capital
according
to
the
Financial
Undertakings
Act
No.
161/2002.
The
legal
maximum
for
individual
large
exposures
is
25%
of
Tier
1 capital, net of eligible credit risk mitigation. 
60

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

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
44.
Credit risk, continued
Credit quality profile for financial instruments subject to IFRS 9 impairment requirements
31.12.2025
Loans to customers
Stage 1
Stage 2
Stage 3
POCI
Total 
441,647 
256 
- 
117 
442,020 
413,457 
1,827 
- 
124 
415,408 
289,610 
6,889 
- 
63 
296,562 
105,819 
46,753 
- 
23 
152,595 
- 
- 
32,255 
406 
32,661 
439 
- 
- 
- 
439 
1,250,972 
55,725 
32,255 
733 
1,339,685 
(2,833)
(1,551)
(7,508)
(187)
(12,079)
1,248,139 
54,174 
24,747 
546 
1,327,606 
Loans to customers - Individuals
345,978 
256 
- 
117 
346,351 
216,374 
518 
- 
124 
217,016 
46,562 
4,108 
- 
63 
50,733 
8,883 
8,932 
- 
23 
17,838 
- 
- 
10,892 
120 
11,012 
5 
- 
- 
- 
5 
617,802 
13,814 
10,892 
447 
642,955 
(611)
(332)
(1,617)
(1)
(2,561)
617,191 
13,482 
9,275 
446 
640,394 
Loans to customers - Corporates and public sector entities
95,669 
- 
- 
- 
95,669 
197,083 
1,309 
- 
- 
198,392 
243,048 
2,781 
- 
- 
245,829 
96,936 
37,821 
- 
- 
134,757 
- 
- 
21,363 
286 
21,649 
434 
- 
- 
- 
434 
633,170 
41,911 
21,363 
286 
696,730 
(2,222)
(1,219)
(5,891)
(186)
(9,518)
630,948 
40,692 
15,472 
100 
687,212 
Loan commitments, guarantees and unused credit facilities
114,147 
46 
- 
- 
114,193 
76,291 
4,758 
1,116 
- 
82,165 
4,608 
- 
- 
- 
4,608 
195,046 
4,804 
1,116 
- 
200,966 
(342)
(266)
(73)
- 
(681)
194,704 
4,538 
1,043 
- 
200,285 
Risk class 5 - (DD) ...................................................................................
Risk class 3 to 4 - (Grades B+ to CCC-) ...................................................
Risk class 2 - (Grades BB+ to BB-) ................................................................
Unrated ..........................................................................................................
Risk class 1 - (Grades BBB+ to BBB-)  .....................................................
Risk class 2 - (Grades BB+ to BB-) ..........................................................
Risk class 0 - (Grades AAA to A-) ............................................................
Gross carrying amount ................................................................................
Risk class 1 - (Grades BBB+ to BBB-)  ...........................................................
Risk class 0 - (Grades AAA to A-) ............................................................
Loss allowance .........................................................................................
Risk class 3 to 4 - (Grades B+ to CCC-) .........................................................
Risk class 0 - (Grades AAA to A-) ..................................................................
Risk class 5 - (DD) ...................................................................................
Risk class 1 - (Grades BBB+ to BBB-)  .....................................................
Unrated ..........................................................................................................
Risk class 0 to 1 (Grades AAA to BBB-) .........................................................
Risk class 2 to 4 (Grades BB+ to CCC-)  ........................................................
Gross carrying amount ..........................................................................
Loss allowance ...............................................................................................
Risk class 2 - (Grades BB+ to BB-) ..........................................................
Book value ..............................................................................................
Book value ..............................................................................................
Risk class 3 to 4 - (Grades B+ to CCC-) ...................................................
Nominal less loss allowance .......................................................................
Nominal .........................................................................................................
Risk class 5 - (DD) .........................................................................................
Unrated ....................................................................................................
Loss allowance ...............................................................................................
Book value ....................................................................................................
Gross carrying amount ..........................................................................
Loss allowance .........................................................................................
Unrated ....................................................................................................
61

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

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
44.
Credit risk, continued
31.12.2024
Loans to customers
Stage 1
Stage 2
Stage 3
POCI
Total 
436,790 
93 
- 
52 
436,935 
323,053 
1,783 
- 
155 
324,991 
250,011 
26,076 
- 
32 
276,119 
108,985 
62,430 
- 
24 
171,439 
- 
- 
28,388 
180 
28,568 
45 
- 
- 
- 
45 
1,118,884 
90,382 
28,388 
443 
1,238,097 
(2,282)
(1,746)
(5,323)
(1)
(9,352)
1,116,602 
88,636 
23,065 
442 
1,228,745 
Loans to customers - Individuals
337,617 
93 
- 
52 
337,762 
215,576 
215 
- 
155 
215,946 
41,708 
17,943 
- 
32 
59,683 
9,477 
9,305 
- 
24 
18,806 
- 
- 
9,514 
180 
9,694 
7 
- 
- 
- 
7 
604,385 
27,556 
9,514 
443 
641,898 
(545)
(410)
(1,538)
(1)
(2,494)
603,840 
27,146 
7,976 
442 
639,404 
Loans to customers - Corporates and public sector entities
99,173 
- 
- 
- 
99,173 
107,477 
1,568 
- 
- 
109,045 
208,303 
8,133 
- 
- 
216,436 
99,508 
53,125 
- 
- 
152,633 
- 
- 
18,874 
- 
18,874 
230 
- 
- 
- 
230 
514,691 
62,826 
18,874 
- 
596,391 
(1,737)
(1,336)
(3,785)
- 
(6,858)
512,954 
61,490 
15,089 
- 
589,533 
Loan commitments, guarantees and unused credit facilities
82,245 
5 
- 
- 
82,250 
71,991 
5,370 
544 
- 
77,905 
3,577 
- 
- 
- 
3,577 
157,813 
5,375 
544 
- 
163,732 
(399)
(112)
- 
- 
(511)
157,414 
5,263 
544 
- 
163,221 
Unrated ....................................................................................................
Book value ....................................................................................................
Risk class 2 - (Grades BB+ to BB-) ..........................................................
Risk class 1 - (Grades BBB+ to BBB-)  ...........................................................
Nominal less loss allowance .......................................................................
Loss allowance ...............................................................................................
Gross carrying amount ..........................................................................
Risk class 2 - (Grades BB+ to BB-) ................................................................
Risk class 3 to 4 - (Grades B+ to CCC-) .........................................................
Risk class 0 - (Grades AAA to A-) ..................................................................
Risk class 1 - (Grades BBB+ to BBB-)  .....................................................
Risk class 5 - (DD) .........................................................................................
Unrated ....................................................................................................
Loss allowance ...............................................................................................
Risk class 0 - (Grades AAA to A-) ............................................................
Risk class 0 - (Grades AAA to A-) ............................................................
Risk class 3 to 4 - (Grades B+ to CCC-) ...................................................
Risk class 5 - (DD) ...................................................................................
Risk class 5 - (DD) ...................................................................................
Book value ..............................................................................................
Risk class 3 to 4 - (Grades B+ to CCC-) ...................................................
Book value ..............................................................................................
Unrated ..........................................................................................................
Gross carrying amount ................................................................................
Nominal .........................................................................................................
Risk class 0 to 1 - (Grades AAA to BBB-) .......................................................
Risk class 2 to 4 - (Grades BB+ to CCC-)  ......................................................
Unrated ..........................................................................................................
Loss allowance .........................................................................................
Gross carrying amount ..........................................................................
Risk class 1 - (Grades BBB+ to BBB-)  .....................................................
Risk class 2 - (Grades BB+ to BB-) ..........................................................
Loss allowance .........................................................................................
62

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

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
44.
Credit risk, continued
Gross 
Gross 
Gross 
 
Carrying
Loss
Carrying
Loss
Carrying
Loss
Book
31.12.2025
amount
allowance
amount
allowance
amount
allowance
value
310,987 
(7)
- 
- 
- 
- 
310,980 
617,802 
(611)
14,141 
(332)
11,012 
(1,618)
640,394 
556,668 
(201)
11,780 
(123)
9,044 
(340)
576,828 
61,134 
(410)
2,361 
(209)
1,968 
(1,278)
63,566 
633,170 
(2,222)
41,911 
(1,219)
21,649 
(6,077)
687,212 
117,560 
(237)
5,623 
(68)
3,919 
(797)
126,000 
93,971 
(475)
9,159 
(279)
7,639 
(1,944)
108,071 
105,252 
(197)
1,086 
(31)
1,934 
(628)
107,416 
79,503 
(331)
5,911 
(212)
2,685 
(520)
87,036 
35,122 
(133)
10,897 
(274)
1,653 
(490)
46,775 
55,466 
(288)
3,433 
(138)
191 
(58)
58,606 
69,437 
(168)
390 
(46)
582 
(287)
69,908 
14,596 
(49)
3,440 
(69)
22 
(15)
17,925 
38,092 
(274)
1,255 
(75)
2,792 
(1,332)
40,458 
11,299 
(32)
53 
(7)
41 
- 
11,354 
12,872 
(38)
664 
(20)
191 
(6)
13,663 
(2,840)
56,052 
(1,551)
32,661 
(7,695)
1,638,586 
31.12.2024
276,685 
(3)
- 
- 
- 
- 
276,682 
604,385 
(545)
27,819 
(410)
9,694 
(1,539)
639,404 
540,494 
(162)
23,600 
(229)
7,431 
(292)
570,842 
63,891 
(383)
4,219 
(181)
2,263 
(1,247)
68,562 
514,499 
(1,737)
62,826 
(1,336)
18,874 
(3,785)
589,341 
107,012 
(239)
8,418 
(62)
3,667 
(867)
117,929 
70,037 
(342)
7,317 
(93)
8,588 
(1,088)
84,419 
79,542 
(66)
6,992 
(135)
2,427 
(1,064)
87,696 
66,003 
(279)
7,923 
(160)
1,694 
(367)
74,814 
34,515 
(107)
12,408 
(417)
1,544 
(188)
47,755 
41,791 
(272)
11,235 
(155)
1 
- 
52,600 
60,593 
(101)
631 
(48)
517 
(111)
61,481 
6,119 
(13)
4,207 
(79)
23 
(8)
10,249 
28,960 
(259)
1,981 
(147)
162 
(64)
30,633 
9,145 
(27)
344 
(4)
51 
- 
9,509 
10,782 
(32)
1,370 
(36)
200 
(28)
12,256 
(2,285)
90,645 
(1,746)
28,568 
(5,324)
1,505,427 
   Construction ..........................................................
   Fishing industry .....................................................
   Accommodation and food service activities ...........
Balance at the end of the year ................................
   Public Sector .........................................................
   Agriculture and forestry .........................................
   Commerce and services ........................................
Loans to corporates and public sector entities ..........
   Information and communication technology ...........
1,561,959 
   Industry, energy and manufacturing ......................
   Commerce and services ........................................
Loans to corporates and public sector entities ..........
Sector split, gross carrying value and loss allowance for financial instruments subject to IFRS 9 impairment requirements
   Construction ..........................................................
   Fishing industry .....................................................
Stage 2
   Other .....................................................................
   Real estate activities .............................................
   Mortgages .............................................................
Stage 1
Stage 3
Loans to individuals ..................................................
Loans to credit instit., securities & cash ....................
   Public Sector .........................................................
   Transportation .......................................................
1,395,569 
   Industry, energy and manufacturing ......................
Loans to credit instit., securities & cash ....................
Loans to individuals ..................................................
   Mortgages .............................................................
   Other .....................................................................
Balance at the end of the year ................................
   Financial and insurance activities ..........................
   Real estate activities .............................................
   Information and communication technology ...........
   Transportation .......................................................
   Agriculture and forestry .........................................
   Accommodation and food service activities ...........
   Financial and insurance activities ..........................
63

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

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
44.
Credit risk, continued
Transfers of financial assets between impairment stages
Net remeasurement of loss allowance
New financial assets, originated or purchased
Derecognitions and maturities
Write-offs
31.12.2025
Impairment loss allowance *
Stage 1
Stage 2
Stage 3
POCI
Total 
(2,681)
(1,858)
(5,323)
(1)
(9,863)
(697)
561 
136 
- 
- 
193 
(350)
157 
- 
- 
63 
189 
(252)
- 
- 
644 
(341)
(3,373)
- 
(3,070)
(1,458)
(408)
(1,141)
(186)
(3,193)
731 
363 
1,527 
- 
2,621 
30 
27 
688 
- 
745 
(3,175)
(1,817)
(7,581)
(187)
(12,760)
(7)
- 
- 
- 
(7)
(3,182)
(1,817)
(7,581)
(187)
(12,767)
New financial assets, originated or purchased ................................................
** During the year the loss allowance balance for stage 3 loans was reduced by ISK 995 million due to unwinding of interest income.
Impairment loss allowances for assets only carrying 12-month ECL ...............
*** During the year an amount of ISK 547 million was written off but is still subject to enforcement activities subject to Icelandic law.
Net remeasurement of loss allowance ** ........................................................
Transfers to Stage 2 (lifetime ECL) ..........................................................
All transfers are presumed to occur before any corresponding remeasurement of the loss allowance.
Include purchases and originations and reflect the allowance related to assets newly recognized during the year.
Comprise
the
impact
of
changes
in
model
inputs
or
assumptions,
including
changes
in
forward-looking
macroeconomic
conditions,
partial
repayments
and
additional
draws
on
existing
facilities,
inflation,
changes
in
the
measurement
following
a
transfer
between
stages,
effects
of
foreign
exchange
rate
changes,
impairment
of
interest
income
due
to
impaired
debt
instruments
and
unwinding
of
the
time
value
discount due to the passage of time.
Balance at the beginning of the year ..............................................................
*
These
amounts
are
a
combination
of
all
impairments,
including
an
allowance
for
loan
commitments
and
guarantees
presented
as
a
liability
in
these
ConsolidatedFinancial
Statements.
The
amounts
represent
the
difference
between
the
loss
allowance
at
the
beginning
of
the
year
and
at
the
reporting
date,
ignoring other intra-period changes.
Derecognitions and maturities ........................................................................
The amount after net remeasurements of loss allowance written off during the year.
**** Loss allowance for all assets other than cash, bonds and loans to credit institutions.
Reflect
the
allowance
related
to
assets
derecognized
during
the
period
without
a
credit
loss
being
incurred,
including
those
assets
that
were derecognized following a modification of terms.
Transfers to Stage 3 (credit impaired financial assets) .............................
Write-offs *** ..................................................................................................
Impairment loss allowance **** ...................................................................
Total impairment loss allowance .................................................................
Transfers of financial assets:
The
table
below
reconciles
the
opening
and
closing
allowance
balance
for
loans
to
customers
and
debt
securities
at
amortized
cost
and
FVOCI  and  loan commitments, guarantees and unused credit facilities by impairment stages. The reconciliation includes:
Transfers to Stage 1 (12-month ECL)  ......................................................
64

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

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
44.
Credit risk, continued
Impairment loss allowance for loans to customers
Stage 1
Stage 2
Stage 3
POCI
Total 
(2,282)
(1,746)
(5,323)
(1)
(9,352)
(655)
519 
136 
- 
- 
138 
(295)
157 
- 
- 
61 
183 
(244)
- 
- 
532 
(203)
(3,308)
- 
(2,979)
(1,282)
(373)
(1,141)
(186)
(2,982)
625 
337 
1,527 
- 
2,489 
30 
27 
688 
- 
745 
(2,833)
(1,551)
(7,508)
(187)
(12,079)
 
Impairment loss allowance for loans to customers - Individuals
(545)
(410)
(1,538)
(1)
(2,494)
(283)
199 
84 
- 
- 
32 
(58)
26 
- 
- 
12 
54 
(66)
- 
- 
254 
(126)
(381)
- 
(253)
(189)
(82)
(124)
- 
(395)
78 
66 
151 
- 
295 
30 
25 
231 
- 
286 
(611)
(332)
(1,617)
(1)
(2,561)
Impairment loss allowance for loans to customers - Corporates
(1,737)
(1,336)
(3,785)
- 
(6,858)
(372)
320 
52 
- 
- 
106 
(237)
131 
- 
- 
49 
129 
(178)
- 
- 
278 
(77)
(2,927)
- 
(2,726)
(1,093)
(291)
(1,017)
(186)
(2,587)
547 
271 
1,376 
- 
2,194 
- 
2 
457 
- 
459 
(2,222)
(1,219)
(5,891)
(186)
(9,518)
Impairment loss allowance for loan commitments, guarantees and  unused credit facilities  
(399)
(112)
- 
- 
(511)
(42)
42 
- 
- 
- 
55 
(55)
- 
- 
- 
2 
6 
(8)
- 
- 
112 
(138)
(65)
- 
(91)
(176)
(35)
- 
- 
(211)
106 
26 
- 
- 
132 
(342)
(266)
(73)
- 
(681)
Transfers to Stage 2 (lifetime ECL) ..............................................
Net remeasurement of loss allowance ................................................
Total loss allowance for loan commit., guarantees, unused facilities .....
New financial commitments originated ......................................................
Total loss allowance for loans to corporates .................................
Transfers to Stage 3 (credit impaired financial assets) .................
New financial assets, originated or purchased ....................................
Derecognitions and maturities ............................................................
Transfers to lifetime ECL ....................................................................
Transfers to Stage 2 (lifetime ECL) ....................................................
Transfers to Stage 1 (12-month ECL)  ................................................
Transfers to Stage 3 (credit impaired financial assets) .......................
New financial assets, originated or purchased ..........................................
Net remeasurement of loss allowance ................................................
Write-offs ...........................................................................................
Transfers to Stage 2 (lifetime ECL) ..............................................
Transfers to Stage 1 (12-month ECL)  ..........................................
Total loss allowance for loans to individuals .................................
Balance at the beginning of the year ..................................................
Derecognitions and maturities ............................................................
New financial assets, originated or purchased ....................................
Write-offs .................................................................................................
Net remeasurement of loss allowance ......................................................
Net remeasurement of loss allowance ......................................................
Transfers to 12-month ECL  ...............................................................
Balance at the beginning of the year ........................................................
Transfers
Transfers to credit impaired ................................................................
Total loss allowance for loans to customers ........................................
Transfers to Stage 3 (credit impaired financial assets) .................
Transfers of financial assets
Derecognitions and maturities ..................................................................
Derecognitions and maturities ..................................................................
Transfers to Stage 1 (12-month ECL)  ..........................................
Balance at the beginning of the year ........................................................
Balance at the beginning of the year ..................................................
Write-offs ...........................................................................................
Transfers of financial assets
Transfers of financial assets:
65

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

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
44.
Credit risk, continued
31.12.2024
Impairment loss allowance *
Stage 1
Stage 2
Stage 3
POCI
Total 
(2,584)
(2,216)
(4,022)
(92)
(8,914)
(744)
536 
208 
- 
- 
131 
(178)
47 
- 
- 
94 
140 
(234)
- 
- 
886 
(263)
(2,494)
- 
(1,871)
(1,108)
(658)
(649)
- 
(2,415)
524 
664 
845 
91 
2,124 
120 
117 
976 
- 
1,213 
(2,681)
(1,858)
(5,323)
(1)
(9,863)
(3)
- 
- 
- 
(3)
(2,684)
(1,858)
(5,323)
(1)
(9,866)
Impairment loss allowance for loans to customers
Stage 1
Stage 2
Stage 3
POCI
Total 
(2,348)
(2,091)
(4,020)
(92)
(8,551)
(666)
458 
208 
- 
- 
121 
(168)
47 
- 
- 
90 
138 
(228)
- 
- 
792 
(230)
(2,500)
- 
(1,938)
(829)
(606)
(649)
- 
(2,084)
438 
636 
843 
91 
2,008 
120 
117 
976 
- 
1,213 
(2,282)
(1,746)
(5,323)
(1)
(9,352)
 
Impairment loss allowance for loans to customers - Individuals
(559)
(532)
(1,381)
(1)
(2,473)
(290)
205 
85 
- 
- 
26 
(42)
16 
- 
- 
29 
65 
(94)
- 
- 
327 
(152)
(551)
- 
(376)
(173)
(92)
(136)
- 
(401)
77 
30 
289 
- 
396 
18 
108 
234 
- 
360 
(545)
(410)
(1,538)
(1)
(2,494)
Impairment loss allowances for assets only carrying 12-month ECL ...............
** During the year the loss allowance balance for stage 3 loans was reduced by ISK 961 million due to unwinding of interest income.
Net remeasurement of loss allowance ................................................
New financial assets, originated or purchased ..........................................
Total impairment loss allowance .................................................................
*
These
amounts
are
a
combination
of
all
impairments,
including
an
allowance
for
loan
commitments
and
guarantees
presented
as
a
liability
in
these
Consolidated
Financial
Statements.
The
amounts
represent
the
difference
between
the
loss
allowance
at
the
beginning
of
the
year
and
at
the
reporting
date,
ignoring
other
intra-
period changes.
*** During the year an amount of ISK 892 million was written off but is still subject to enforcement activities subject to Icelandic law.
New financial assets, originated or purchased ....................................
Transfers of financial assets:
Balance at the beginning of the year ........................................................
Net remeasurement of loss allowance ......................................................
Derecognitions and maturities ..................................................................
Transfers to Stage 1 (12-month ECL)  ................................................
Transfers to Stage 1 (12-month ECL)  ..........................................
Transfers of financial assets
Transfers to Stage 2 (lifetime ECL) ..............................................
Transfers to Stage 2 (lifetime ECL) ....................................................
Derecognitions and maturities ............................................................
Total loss allowance for loans to individuals .................................
Balance at the beginning of the year ..................................................
Total loss allowance for loans to customers ........................................
Write-offs ...........................................................................................
Transfers to Stage 3 (credit impaired financial assets) .................
Write-offs .................................................................................................
Transfers to Stage 2 (lifetime ECL) ..........................................................
Transfers to Stage 3 (credit impaired financial assets) .......................
Transfers of financial assets:
**** Loss allowance for all assets other than cash, bonds and loans to credit institutions.
Derecognitions and maturities ........................................................................
Impairment loss allowance **** ...................................................................
Write-offs *** ..................................................................................................
Transfers to Stage 1 (12-month ECL)  ......................................................
Balance at the beginning of the year ..............................................................
New financial assets, originated or purchased ................................................
Net remeasurement of loss allowance ** ........................................................
Transfers to Stage 3 (credit impaired financial assets) .............................
66

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

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
44.
Credit risk, continued
Stage 1
Stage 2
Stage 3
POCI
Total 
Impairment loss allowance for loans to customers - Corporates
(1,789)
(1,559)
(2,639)
(91)
(6,078)
(376)
253 
123 
- 
- 
95 
(126)
31 
- 
- 
61 
73 
(134)
- 
- 
465 
(78)
(1,949)
- 
(1,562)
(656)
(514)
(513)
- 
(1,683)
361 
606 
554 
91 
1,612 
102 
9 
742 
- 
853 
(1,737)
(1,336)
(3,785)
- 
(6,858)
Impairment loss allowance for loan commitments, guarantees and  unused credit facilities  
(236)
(125)
(2)
- 
(363)
(78)
78 
- 
- 
- 
10 
(10)
- 
- 
- 
4 
2 
(6)
- 
- 
94 
(33)
6 
- 
67 
(279)
(52)
- 
- 
(331)
86 
28 
2 
- 
116 
(399)
(112)
- 
- 
(511)
Macroeconomic forecast
2026
2027
2028
4.5%
3.9%
3.8%
0.9%
4.0%
5.0%
2.6%
2.9%
2.9%
1.6%
2.7%
2.4%
6.6%
5.8%
5.0%
2026
2027
2028
2026
2027
2028
3.0%
2.9%
3.5%
6.1%
5.1%
4.4%
6.2%
10.7%
7.2%
-2.9%
1.3%
3.9%
4.2%
3.5%
3.2%
-0.2%
1.7%
2.5%
3.1%
3.4%
2.7%
-0.8%
1.3%
1.9%
6.3%
5.4%
4.6%
7.0%
6.2%
5.4%
Sensitivity analysis
Regarding
macroeconomic
outlook,
see
Note
3,
Material
accounting
estimates
and
judgements.
The
Group
calculates
loss
for
three
different
scenarios,
optimistic,
neutral
and
pessimistic
and
the
loss
allowance
is
the
weighted
average
of
the
results.
As
a
sensitivity
analysis,
it
can
be
noted
that
the
loss
allowance
in
stage
1
and
2
for
each
of
these
scenarios
separately
is
ISK
2.2
billion,
ISK
4.0
billion
and
ISK
9.1
billion
for
the
optimistic,
base
case
and
pessimistic
scenarios,
respectively
(31.12.2024:
ISK
1.8
billion,
ISK
3.3
billion
and
ISK
7.9 billion, respectively).
Unemployment rate .....................................................................
New financial assets, originated or purchased ....................................
Housing prices, year-on-year change ..........................................
GDP growth .........................................................................................................................................
Key interest rate ..........................................................................
Base case
Transfers
Transfers to credit impaired ................................................................
Total loss allowance for loan commit., guarantees, unused facilities ............
Optimistic
Pessimistic
Net remeasurement of loss allowance ......................................................
Unemployment rate .............................................................................................................................
Housing prices, year-on-year change ...................................................................................................
Transfers to Stage 2 (lifetime ECL) ..............................................
New financial commitments originated ......................................................
Transfers to Stage 3 (credit impaired financial assets) .................
Key interest rate ..................................................................................................................................
Private consumption, growth ........................................................
GDP growth .................................................................................
Private consumption, growth ................................................................................................................
Derecognitions and maturities ..................................................................
Transfers to Stage 1 (12-month ECL)  ..........................................
Transfers of financial assets
Balance at the beginning of the year ..................................................
Transfers to 12-month ECL  ...............................................................
Balance at the beginning of the year ........................................................
Net remeasurement of loss allowance ................................................
Derecognitions and maturities ............................................................
Transfers to lifetime ECL ....................................................................
Write-offs ...........................................................................................
Total loss allowance for loans to corporates .................................
The
calculation
of
expected
credit
losses
under
IFRS
9
uses
forward-looking
information
in
the
form
of
scenarios
where
the
development
of
macro-economic
variables
is
predicted.
The
expected
credit
loss
is
a
probability-weighted
average
of
the
estimated
forecasts
over
three
scenarios:
base
case
60%,
pessimistic
25%
and
optimistic
15%
(31.12.2024:
base
case
60%,
pessimistic
30%
and
optimistic
10%).
The
macroeconomic
forecast
and
scenario
probability
weights
is
done
by
the
Bank’s
Chief
Economist
and
approved
by
the
Bank’s
Executive
Risk Committee. The following table shows values used for IFRS 9 impairment calculations.
67

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

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
44.
Credit risk, continued
Forbearance
Gross
Gross
Gross
Gross
carrying
Loss
carrying
Loss
carrying
Loss
carrying
Loss
31.12.2025
amount
allowance
carrying 
allowance
carrying 
allowance
carrying 
allowance
Individuals ..............................................
5,566 
(15)
3,350 
(53)
5,963 
(678)
14,879 
(746)
Companies .............................................
4,322 
(31)
16,552 
(302)
11,420 
(3,351)
32,294 
(3,684)
Total ......................................................
9,888 
(46)
19,902 
(355)
17,383 
(4,029)
47,173 
(4,430)
31.12.2024
Individuals ..............................................
4,315 
(13)
2,570 
(26)
4,483 
(465)
11,368 
(504)
Companies .............................................
2,063 
(10)
15,221 
(403)
11,559 
(2,239)
28,843 
(2,652)
Total ......................................................
6,378 
(23)
17,791 
(429)
16,042 
(2,704)
40,211 
(3,156)
The
Group
grants
forbearance
measures
to
facilities
where
the
customer
is
facing
temporary
difficulties
and
needs
measures
which
would
not
generally
be
available
to
customers.
These
forbearance
measures
include
refinancing
and
renegotiations
of
loan
terms,
including
loan
extensions
and
adjustment
of
the
payment
schedule.
After
forbearance
measures
have
been
granted,
the
facility
is
classified
as
forborne
for a period of at least 24 months. The forborne classification is not removed until the customer has demonstrated repayment capacity.
Stage 1
Stage 3
Stage 2
Total
68

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

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
45.
Market risk
Interest rate risk
Interest rate risk
31.12.2025
Up to 3
3-12
1-5
5-10
Over 10
Assets
months
months
years
years
years
Total
150,111 
- 
- 
- 
- 
150,111 
22,567 
- 
- 
- 
- 
22,567 
914,513 
158,023 
242,825 
5,328 
8,515 
1,329,204 
56,829 
56,544 
45,016 
7,406 
5,190 
170,985 
451 
41 
328 
627 
285 
1,732 
139,972 
131,248 
110,295 
44,184 
- 
425,699 
1,284,443 
345,856 
398,464 
57,545 
13,990 
2,100,298 
Liabilities
12,003 
- 
- 
- 
- 
12,003 
912,492 
8,690 
- 
- 
- 
921,182 
329,767 
83,102 
9,138 
- 
- 
422,007 
31,840 
159,158 
243,888 
53,241 
13,084 
501,211 
3,535 
- 
34,327 
868 
11,731 
50,461 
1,289,637 
250,950 
287,353 
54,109 
24,815 
1,906,864 
(5,194)
94,906 
111,111 
3,436 
(10,825)
193,434 
Bonds and debt instruments ........................................................
Bonds and debt instruments used for hedging .............................
Derivatives ..................................................................................
Net interest gap  ........................................................................
Deposits ......................................................................................
Subordinated liabilities .................................................................
Assets ........................................................................................
Derivatives ..................................................................................
Liabilities ....................................................................................
Borrowings  ..................................................................................
Due to credit institutions and Central Bank ..................................
The
interest
rate
fixing
profile
for
non-indexed
assets
and
liabilities
is
largely
matched
and
the
duration
of
fixing
has
generally
shortened
as
the
bulk
of
fixed
rate
mortgages
have
been
reset
in
2024
to
2025
with
the
majority
of
customers
refinancing
to
indexed
loans
as
they
offer
lower
monthly
payments.
The
fixing
duration
of
indexed
liabilities
is
however
greater
than
that
of
indexed
assets,
as
covered
bonds
are
fixed rate while indexed loans are predominantly floating rate.
Market
risk
allowance
is
set
by
the
Board
in
the
Bank's
risk
appetite
and
limit
frameworks
are
in
place
for
each
trading
desk.
The
Asset
and
Liability
Committee
(ALCO)
is
responsible
for
managing
the
Bank's
overall
market
risk.
Risk
Management
is
responsible
for
measuring and monitoring market risk exposure, and reporting the exposure, usage and limit breaches.
Market
risk
is
the
current
or
prospective
risk
that
changes
in
financial
market
prices
and
rates
adversely
affect
the
Group's
earnings
and
equity due to changes to the value and cash flows of its assets and liabilities.
Loans to credit institutions ...........................................................
The
Group's
interest
rate
risk
for
foreign
currencies
is
limited
as
foreign
denominated
assets
predominantly
have
short
fixing
periods
and
the
Group
generally
applies
fair
value
hedging
for
its
foreign
denominated
fixed
rate
borrowings.
For
domestic
rates,
longer
fixing
periods
are more common.
The
following
table
shows
the
Group's
interest-bearing
assets
and
liabilities
by
interest
fixing
periods.
The
figures
for
loans
to
customers
and
borrowings
are
shown
on
a
fair
value
basis,
see
Note
25,
and
are
therefore
different
from
the
amounts
shown
in
these
Consolidated
Financial
Statements.
Defaulted
loans
are
presented
at
book
value,
which
is
based
on
the
value
of
the
underlying
collateral,
and
are
therefore assumed to be independent of interest adjustment periods and placed in the 'Up to 3 months' category.
Balances with Central Bank .........................................................
Market
risk
arises
from
imbalances
in
the
Group's
statement
of
financial
position
as
well
as
in
market
making
activities
and
position
taking
in bonds, equities, currencies, derivatives and other commitments which are marked to market.
Interest
rate
risk
arises
from
the
possibility
that
changes
in
market
rates
adversely
affect
net
interest
income
and
fair
value
of
interest-
bearing
instruments
on
the
Group's
statement
of
financial
position.
The
Group's
operations
are
subject
to
interest
rate
risk
due
to
mismatches
in
the
fixing
of
interest
rates
between
assets
and
liabilities,
resulting
in
a
repricing
risk
for
the
Group.
The
Group
also
faces
interest
basis
risk
between
interest-bearing
assets
and
interest-bearing
liabilities
due
to
different
types
of
floating-rate
indices
in
different
currencies.
The Group manages and limits market risk exposure in accordance with its risk appetite and strategic goals for net profit.
The
Group
tracks
market
risk
closely
and
separates
its
exposures
for
the
trading
book
and
the
banking
book.
Market
risk
in
the
trading
book
arises
from
market
making
activities
and
non-strategic
derivatives
positions
arising
from
the
Group's
operations
of
meeting
customers'
investment
and
risk
management
needs.
Market
risk
in
the
banking
book
arises
from
various
mismatches
in
assets
and
liabilities in e.g. currencies, maturities and interest rates. Market risk in the trading book and in the banking book is managed separately.
Loans to customers .....................................................................
69

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

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
45.
Market risk, continued
31.12.2024
Up to 3
3-12
1-5
5-10
Over 10
Assets
months
months
years
years
years
Total
124,094 
- 
- 
- 
- 
124,094 
25,690 
- 
- 
- 
- 
25,690 
867,139 
148,051 
194,711 
2,521 
9,801 
1,222,223 
102,606 
22,938 
14,916 
13,551 
4,724 
158,735 
- 
1 
1,014 
979 
670 
2,664 
105,825 
77,146 
181,495 
- 
- 
364,466 
1,225,354 
248,136 
392,136 
17,051 
15,195 
1,897,872 
Liabilities
6,618 
- 
- 
- 
- 
6,618 
844,816 
12,627 
- 
- 
- 
857,443 
229,251 
130,700 
4,820 
- 
- 
364,771 
27,898 
76,473 
279,837 
32,282 
12,709 
429,199 
10,985 
3,363 
15,047 
18,831 
- 
48,226 
1,119,568 
223,163 
299,704 
51,113 
12,709 
1,706,257 
105,786 
24,973 
92,432 
(34,062)
2,486 
191,615 
NPV change in the banking book
-100 bps
+100 bps
-100 bps
+100 bps
(1,781)
1,728 
(1,724)
1,652 
638 
(610)
(2,181)
2,146 
45 
(35)
(229)
197 
NPV change in the trading book
215 
(194)
137 
(125)
339 
(317)
247 
(234)
(37)
37 
(33)
33 
Foreign currencies ............................................................................................................
Foreign currencies ............................................................................................................
Loans to credit institutions ...........................................................
Balances with Central Bank .........................................................
Due to credit institutions and Central Bank ..................................
ISK, CPI index-linked ........................................................................................................
Derivatives ..................................................................................
ISK, CPI index-linked ........................................................................................................
Deposits ......................................................................................
Net interest gap  ........................................................................
Sensitivity analysis of interest rate risk
31.12.2024
Subordinated liabilities .................................................................
Borrowings  ..................................................................................
Bonds and debt instruments used for hedging .............................
Bonds and debt instruments ........................................................
Loans to customers .....................................................................
Derivatives ..................................................................................
Liabilities ....................................................................................
ISK, Non index-linked ........................................................................................................
Assets ........................................................................................
The
following
table
shows
the
sensitivity
of
the
Group's
net
present
value
(NPV)
of
interest-bearing
assets
and
liabilities,
due
to
changes
in
interest
rates
by
currencies.
The
variation
is
calculated
on
the
basis
of
simultaneous
parallel
shifts
upwards
or
downwards
of
yield
curves.
The
choice
of
shifts
is
not
an
estimate
of
risk
likelihood.
Behavioral
maturities
are
taken
into
account
in
the
NPV
calculations,
including
prepayment likelihood and expected behavior of non-maturing deposits. The Bank's behavioral models were last updated in Q4 2025.
ISK, Non index-linked ........................................................................................................
31.12.2025
70

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

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
45.
Market risk, continued
Indexation risk
31.12.2025
Up to 1
1 to 5
Over 5
Assets, CPI index-linked
year
years
years
Total
24,567 
119,753 
376,058 
520,378 
6,335 
8,772 
5,137 
20,244 
30,902 
128,525 
381,195 
540,622 
Liabilities, CPI index-linked
118,029 
12,687 
4,371 
135,087 
20,522 
118,169 
18,782 
157,473 
- 
- 
21,803 
21,803 
- 
- 
1,243 
1,243 
4,241 
- 
- 
4,241 
142,792 
130,856 
46,199 
319,847 
(107,649)
(2,331)
334,996 
225,016 
(4,241)
- 
- 
(4,241)
(111,890)
(2,331)
334,996 
220,775 
(114,555)
(10,683)
329,939 
204,697 
31.12.2024
Assets, CPI index-linked
14,792 
107,828 
357,789 
480,409 
6,702 
7,304 
10,564 
24,570 
21,494 
115,132 
368,353 
504,979 
Liabilities, CPI index-linked
114,696 
13,998 
4,196 
132,890 
35,207 
88,891 
42,447 
166,545 
6,607 
- 
11,195 
17,802 
- 
- 
1,122 
1,122 
105 
54 
- 
159 
156,615 
102,943 
58,960 
318,518 
(135,016)
12,243 
309,393 
186,620 
(105)
(54)
- 
(159)
(135,121)
12,189 
309,393 
186,461 
(135,223)
4,885 
298,830 
168,491 
Net on-balance sheet position ...........................................................................................
Financial instruments ........................................................................................................
CPI balance for prudential consolidation, excluding insurance operations * .............
Borrowings ........................................................................................................................
Assets, CPI index-linked .................................................................................................
Other .................................................................................................................................
Loans to customers ...........................................................................................................
Book value and maturity profile of indexed assets and liabilities
Financial instruments ........................................................................................................
Deposits ............................................................................................................................
* Consolidated situation as per EU Regulation No 575/2013 (CRR) 
CPI balance for prudential consolidation, excluding insurance operations * .............
Liabilities, CPI indexed linked ........................................................................................
Off-balance sheet position ................................................................................................
Deposits ............................................................................................................................
CPI balance ......................................................................................................................
Subordinated liabilities ......................................................................................................
Loans to customers ...........................................................................................................
Net on-balance sheet position ...........................................................................................
Borrowings ........................................................................................................................
CPI balance ......................................................................................................................
A
significant
part
of
the
Group's
statement
of
financial
position
is
linked
to
the
Icelandic
Consumer
Price
Index
(CPI).
For
index-linked
instruments,
principal
and
interest
payments
are
adjusted
proportionally
to
the
CPI.
The
Group
is
exposed
to
indexation
risk
as
indexed
assets exceed indexed liabilities. Financial instruments held for liquidity or market making purposes are assumed to be on demand.
Subordinated liabilities ......................................................................................................
Assets, CPI index-linked .................................................................................................
Off-balance sheet position ................................................................................................
Liabilities, CPI index-linked ............................................................................................
Other .................................................................................................................................
Net off-balance sheet position ...........................................................................................
Net off-balance sheet position ...........................................................................................
71

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

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
45.
Market risk, continued
Currency risk
Breakdown of assets and liabilities by currency
31.12.2025
Financial assets
ISK
EUR
USD
GBP
DKK
NOK
Other
Total
149,766 
167 
56 
52 
- 
21 
49 
150,111 
Loans to credit institutions ......................
643 
7,912 
9,351 
1,722 
1,313 
278 
1,348 
22,567 
Loans to customers ................................
1,066,903 
181,591 
42,317 
2,250 
31,848 
2,729 
1,418 
1,329,056 
Financial instruments .............................
123,312 
51,321 
4,205 
242 
78 
19,952 
16,706 
215,816 
Other financial assets .............................
15,611 
324 
990 
103 
2 
1 
- 
17,031 
Financial assets ...................................
1,356,235 
241,315 
56,919 
4,369 
33,241 
22,981 
19,521 
1,734,581 
Financial liabilities
Due to credit inst. and Central Bank .......
6,075 
3,556 
1,560 
770 
- 
- 
42 
12,003 
Deposits .................................................
829,869 
37,421 
40,081 
5,024 
5,106 
2,640 
1,041 
921,182 
Financial liabilities at fair value ...............
1,289 
1,720 
18 
17 
7 
63 
15 
3,129 
Other financial liabilities ..........................
6,277 
3,023 
1,781 
181 
245 
66 
219 
11,792 
Borrowings .............................................
188,973 
251,999 
5,908 
- 
- 
21,347 
26,596 
494,823 
Subordinated liabilities ...........................
24,052 
753 
15,635 
- 
- 
- 
3,078 
43,518 
Financial liabilities ...............................
1,056,535 
298,472 
64,983 
5,992 
5,358 
24,116 
30,991 
1,486,447 
Net on-balance sheet position ................
299,700 
(57,157)
(8,064)
(1,623)
27,883 
(1,135)
(11,470)
Net off-balance sheet position ................
(52,267)
58,964 
7,865 
1,881 
(28,441)
1,101 
10,897 
Net position * ........................................
247,433 
1,807 
(199)
258 
(558)
(34)
(573)
Non-financial assets
Investment property ...............................
7,305 
- 
- 
- 
- 
- 
- 
7,305 
Investments in associates ......................
760 
- 
- 
- 
- 
- 
- 
760 
Intangible assets ....................................
7,533 
- 
- 
- 
- 
- 
- 
7,533 
Tax assets .............................................
2 
- 
- 
- 
- 
- 
- 
2 
Assets and disposal groups
held for sale ........................................
98 
- 
- 
- 
- 
- 
- 
98 
Other non financial assets ......................
4,981 
311 
63 
104 
- 
27 
- 
5,486 
Non-financial assets ............................
20,679 
311 
63 
104 
- 
27 
- 
21,184 
Non-financial liabilities and equity
Tax liabilities ..........................................
12,894 
- 
- 
89 
- 
- 
- 
12,983 
Other non-financial liabilities ...................
38,827 
103 
12 
- 
- 
- 
2 
38,944 
Shareholders' equity ...............................
217,327 
- 
- 
- 
- 
- 
- 
217,327 
Non-controlling interest ..........................
64 
- 
- 
- 
- 
- 
- 
64 
Non-financial liabilities and equity ......
269,112 
103 
12 
89 
- 
- 
2 
269,318 
Management reporting
of currency risk ** .............................
(1,000)
2,015 
(148)
273 
(558)
(7)
(575)
 
Cash and balances with CB ....................
Currency
risk
is
the
risk
of
loss
due
to
adverse
movements
in
foreign
exchange
rates.
The
Group
is
exposed
to
currency
risk
through
a
currency mismatch between assets and liabilities. Net exposures per currency are monitored centrally in the Bank.
**
Management
monitors
currency
risk
with
more
assets
and
liabilities
underlying
as
it
is
considered
to
be
a
more
accurate
measurement
of
the
Group's
currency
exposure. The net position, as seen by management, is the position used for managing the currency imbalance.
* The net position of the currency risk is presented in accordance with IFRS.
72

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

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
45.
Market risk, continued
31.12.2024
Financial assets
ISK
EUR
USD
GBP
DKK
NOK
Other
Total
123,395 
355 
189 
62 
- 
20 
73 
124,094 
Loans to credit institutions ......................
170 
9,022 
12,501 
567 
718 
419 
2,293 
25,690 
Loans to customers ................................
1,011,398 
130,718 
57,871 
1,569 
25,031 
1,993 
1,478 
1,230,058 
Financial instruments .............................
124,920 
43,854 
11,698 
212 
120 
12,854 
12,759 
206,417 
Other financial assets .............................
6,470 
318 
1,671 
4 
1 
11 
1 
8,476 
Financial assets ...................................
1,266,353 
184,267 
83,930 
2,414 
25,870 
15,297 
16,604 
1,594,735 
Financial liabilities
Due to credit inst. and Central Bank .......
2,649 
3,388 
176 
333 
- 
- 
72 
6,618 
Deposits .................................................
763,140 
35,697 
47,448 
5,218 
3,383 
1,282 
1,275 
857,443 
Financial liabilities at fair value ...............
2,961 
4,006 
1,082 
10 
- 
219 
116 
8,394 
Other financial liabilities ..........................
6,760 
812 
1,865 
219 
468 
148 
359 
10,631 
Borrowings .............................................
197,607 
201,031 
2,989 
- 
- 
18,547 
13,004 
433,178 
Subordinated liabilities ...........................
20,957 
735 
20,004 
- 
- 
- 
2,842 
44,538 
Financial liabilities ...............................
994,074 
245,669 
73,564 
5,780 
3,851 
20,196 
17,668 
1,360,802 
Net on-balance sheet position ................
272,279 
(61,402)
10,366 
(3,366)
22,019 
(4,899)
(1,064)
Net off-balance sheet position ................
(40,216)
63,377 
(9,923)
3,266 
(22,090)
4,925 
661 
Net position * ........................................
232,063 
1,975 
443 
(100)
(71)
26 
(403)
Non-financial assets
Investment property ...............................
9,387 
- 
- 
- 
- 
- 
- 
9,387 
Investments in associates ......................
814 
- 
- 
- 
- 
- 
- 
814 
Intangible assets ....................................
7,688 
- 
- 
- 
- 
- 
- 
7,688 
Tax assets .............................................
2 
- 
- 
- 
- 
- 
- 
2 
Assets and disposal groups
held for sale ........................................
111 
- 
- 
- 
- 
- 
- 
111 
Other non financial assets ......................
5,004 
294 
100 
105 
1 
27 
- 
5,531 
Non-financial assets ............................
23,006 
294 
100 
105 
1 
27 
- 
23,533 
Non-financial liabilities and equity
Tax liabilities ..........................................
11,060 
- 
- 
- 
- 
- 
- 
11,060 
Other non-financial liabilities ...................
39,292 
21 
6 
- 
- 
- 
- 
39,319 
Shareholders' equity ...............................
206,582 
- 
- 
- 
- 
- 
- 
206,582 
Non-controlling interest ..........................
504 
- 
- 
- 
- 
- 
- 
504 
Non-financial liabilities and equity ......
257,438 
21 
6 
- 
- 
- 
- 
257,465 
Management reporting
of currency risk ** .............................
(2,369)
2,248 
537 
5 
(70)
53 
(403)
Cash and balances with CB ....................
** The management monitors currency risk with more assets and liabilities underlying as it is considered to be a more accurate measurement of the Group's 
currency exposure. The net position, as seen by the management, is the position used for managing the currency imbalance.
* The net position of the currency risk is presented in accordance with IFRS.
73

===== SIDA 74 =====

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
45.
Market risk, continued
Sensitivity analysis for currency risk
Currency
-10%
+10%
-10%
+10%
(202)
202 
(225)
225 
15 
(15)
(54)
54 
(27)
27 
(1)
1 
56 
(56)
7 
(7)
1 
(1)
(5)
5 
58 
(58)
40 
(40)
Equity risk
Sensitivity analysis for equity risk
Equity
-10%
+10%
-10%
+10%
(367)
367 
(374)
374 
(759)
759 
(740)
740 
(594)
594 
(286)
286 
Derivatives
Derivatives
are
a
part
of
the
Group's
customer
product
offering.
The
types
of
derivatives
currently
offered
are
forward
contracts,
swaps
and
options.
Eligible
underlying
market
factors
are
interest
rates,
foreign
exchange
rates,
equities
and
commodities.
Exposure
limits,
hedging
requirements
and
collateral
requirements
are
determined
in
accordance
with
the
Group's
risk
appetite
and
monitored
by
Risk
Management
on
a
daily
basis.
The
Group
also
uses
derivatives
to
hedge
market
risk
on
its
statement
of
financial
position.
Note
25
provides a breakdown of the Group's derivative positions by type.
The
table
below
indicates
the
currencies
to
which
the
Group
had
significant
exposure
at
the
end
of
the
period.
The
analysis
calculates
the
effect
of
a
reasonably
possible
movement
of
the
currency
rate
against
the
ISK,
with
all
other
variables
held
constant,
on
the
Consolidated
Income
Statement
(due
to
the
fair
value
of
currency
sensitive
non-trading
monetary
assets
and
liabilities).
A
negative
amount
in
the
table
reflects
a
potential
net
reduction
in
the
Consolidated
Income
Statement
or
equity,
while
a
positive
amount
reflects
a
net
potential
increase.
An
equivalent
decrease
in
each
of
the
below
currencies
against
the
ISK
would
have
resulted
in
an
equivalent
but
opposite
impact
(+10%
denotes a depreciation of the ISK). 
The
analysis
below
calculates
the
effect
of
a
reasonable
possible
movement
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.
The
result
of
value-at-risk
calculations
for
the
trading book are shown in the Group's Pillar 3 Risk Disclosures.
Banking book - unlisted .....................................................................................................
Trading book - listed ..........................................................................................................
NOK ..................................................................................................................................
Equity
risk
is
the
risk
that
the
fair
value
of
equities
decreases.
For
information
on
assets
seized
and
held
for
sale
and
equity
exposures,
see Notes 30 and 24 respectively.
DKK ..................................................................................................................................
Other .................................................................................................................................
31.12.2025
31.12.2025
GBP ..................................................................................................................................
31.12.2024
EUR ..................................................................................................................................
Banking book - listed .........................................................................................................
31.12.2024
USD ..................................................................................................................................
74

===== SIDA 75 =====

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
46.
Liquidity and Funding risk
Maturity analysis of assets and liabilities
Contractual cash flow of assets and liabilities
31.12.2025
On
Up to 3
 3-12
 1-5
Over 5
With no
Book
Financial assets
demand
months
months
years
years
maturity
Total
value
Cash and balances with CB ...................
31,371 
85,137 
33,603 
- 
- 
- 
150,111 
150,111 
Loans to credit institutions ......................
20,222 
2,342 
3 
- 
- 
- 
22,567 
22,567 
Loans to customers ................................
6,193 
194,928 
206,108 
606,114 
1,213,624 
- 
2,226,967 
1,329,056 
Financial instruments .............................
11,733 
58,312 
42,035 
71,729 
7,049 
34,475 
225,333 
215,816 
Derivatives - assets leg .............................
- 
54,751 
38,482 
38,081 
- 
- 
131,314 
107,477 
Derivatives - liabilities leg ..........................
- 
(50,757)
(33,310)
(35,221)
- 
- 
(119,288)
(98,853)
Other financial instruments ........................
11,733 
54,318 
36,863 
68,869 
7,049 
34,475 
213,307 
207,192 
Other financial assets .............................
689 
12,358 
413 
3,232 
339 
- 
17,031 
17,031 
Financial assets ...................................
70,208 
353,077 
282,162 
681,075 
1,221,012 
34,475 
2,642,009 
1,734,581 
Financial liabilities
6,405 
5,602 
- 
- 
- 
- 
12,007 
12,003 
Deposits .................................................
615,915 
174,863 
115,497 
13,319 
5,441 
- 
925,035 
921,182 
Financial liabilities at fair value ...............
- 
1,960 
2,065 
(187)
(115)
- 
3,723 
3,129 
Derivatives - assets leg .............................
- 
(65,157)
(5,397)
(7,097)
(10,138)
- 
(87,789)
(78,261)
Derivatives - liabilities leg ..........................
- 
67,117 
7,462 
6,910 
10,023 
- 
91,512 
81,390 
Other financial liabilities ..........................
183 
9,545 
900 
1,164 
- 
- 
11,792 
11,792 
Borrowings .............................................
- 
6,366 
162,564 
315,285 
66,226 
- 
550,441 
494,823 
Subordinated liabilities ...........................
- 
1,071 
2,103 
25,566 
33,759 
- 
62,499 
43,518 
Financial liabilities ...............................
622,503 
199,407 
283,129 
355,147 
105,311 
- 
1,565,497 
1,486,447 
Net position for assets and liab. ..........
(552,295)
153,670 
(967)
325,928 
1,115,701 
34,475 
1,076,512 
248,134 
 
Off-balance sheet items
Financial guarantees ..............................
- 
2,344 
10,034 
3,865 
9,207 
- 
25,450 
25,450 
Unused overdraft ...................................
- 
90,187 
- 
- 
- 
- 
90,187 
90,187 
Undrawn loan commitments ...................
- 
38,891 
29,913 
16,525 
- 
- 
85,329 
85,329 
Off-balance sheet items .......................
- 
131,422 
39,947 
20,390 
9,207 
- 
200,966 
200,966 
Net contractual cash flow ....................
(552,295)
22,248 
(40,914)
305,538 
1,106,494 
34,475 
875,546 
47,168 
Liquidity
risk
is
one
of
the
Group's
most
significant
risk
factors
and
a
great
deal
of
emphasis
is
placed
on
managing
it.
The
Asset
and
Liability
Committee
(ALCO)
is
responsible
for
managing
liquidity
and
funding
risk
within
the
risk
appetite
set
by
the
Board
of
Directors.
The
Bank's
Treasury
manages
liquidity
positions
on
a
day-to-day
basis.
Risk
Management
measures,
monitors
and
reports
the
Bank's
liquidity
and funding risk on a daily basis.
A
primary
source
of
funding
for
the
Group
is
deposits
from
individuals,
businesses
and
financial
undertakings.
The
Group's
liquidity
risk
stems from the fact that the maturity of loans exceeds the maturity of deposits, of which 67% is on-demand.
Due to credit inst. and Central Bank .......
The
maturity
analysis
is
based
on
contractual
cash
flows.
The
amounts
are
not
discounted
and
include
future
interest
payments,
but
CPI-
linked
amounts
do
not
include
accrued
indexation
due
to
future
inflation.
The
total
amount
for
each
item
is
higher
than
the
corresponding
amount
on
the
Group's
statement
of
financial
position,
since
the
amounts
on
the
balance
sheet
are
either
at
amortized
cost
and
do
not
contain future interest payments, or at fair value where future cash flows have been discounted.
Liquidity
risk
is
the
risk
that
the
Group,
though
solvent,
either
does
not
have
sufficient
financial
resources
available
to
meet
its
liabilities
when
they
fall
due,
or
can
secure
them
only
at
excessive
cost.
Liquidity
risk
arises
from
the
inability
to
manage
unplanned
decreases
or
changes in funding sources.
Contractual
cash
flows
differ
in
many
ways
from
expected
cash
flows.
The
difference
is
most
significant
for
deposits
on
the
liability
side
and
bonds
on
the
asset
side.
Deposits
are
always
assumed
to
be
withdrawn
at
the
earliest
possible
date,
despite
the
fact
that
a
large
part
of
the
deposit
base
is
considered
to
be
stable
funding
where
behavioral
maturity
considerably
exceeds
contractual
maturity.
Furthermore,
although
contractual
cash
flows
are
presented
for
bonds
held
by
the
Bank,
a
large
portion
of
the
bonds
are
a
part
of
the
Bank's
liquidity
buffer
and
are
considered
to
be
highly
liquid
and
can
be
sold
or
pledged
to
the
Central
Bank
of
Iceland
and
thus
converted
into
cash
at
very short notice.
The
Group's
strategy
in
relation
to
liquidity
risk
is
to
actively
manage
its
liquidity
positions
and
risks
to
meet
payment
and
settlement
obligations
on
a
timely
basis
under
both
normal
and
stressed
conditions.
The
Group
seeks
to
maintain
a
stable
funding
profile
which
supports
its
business
strategy
and
liquidity
profile,
ensuring
that
the
Group
can
withstand
periods
of
market
turbulence,
without
reliance
on
volatile funding or external support.
75

===== SIDA 76 =====

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
46.
Liquidity and Funding risk, continued
31.12.2024
On
Up to 3
 3-12
 1-5
Over 5
With no
Book
Financial assets
demand
months
months
years
years
maturity
Total
value
Cash and balances with CB ...................
25,480 
66,140 
32,474 
- 
- 
- 
124,094 
124,094 
Loans to credit institutions ......................
23,019 
2,659 
11 
- 
- 
- 
25,689 
25,690 
Loans to customers ................................
4,751 
179,293 
196,603 
528,859 
1,365,661 
- 
2,275,167 
1,230,058 
Financial instruments .............................
11,706 
103,642 
22,860 
19,680 
14,150 
38,304 
210,342 
206,417 
Derivatives - assets leg .............................
- 
33,378 
10,632 
46,199 
- 
- 
90,209 
74,009 
Derivatives - liabilities leg ..........................
- 
(31,243)
(9,205)
(41,502)
- 
- 
(81,950)
(67,294)
Other financial instruments ........................
11,706 
101,507 
21,433 
14,983 
14,150 
38,304 
202,083 
199,702 
Other financial assets .............................
548 
4,840 
1,013 
2,075 
- 
- 
8,476 
8,476 
Financial assets ...................................
65,504 
356,574 
252,961 
550,614 
1,379,811 
38,304 
2,643,768 
1,594,735 
Financial liabilities
4,117 
2,504 
- 
- 
- 
- 
6,621 
6,618 
Deposits .................................................
587,107 
135,946 
118,596 
14,674 
5,282 
- 
861,605 
857,443 
Financial liabilities at fair value ...............
- 
3,698 
5,277 
6,160 
- 
- 
15,135 
8,394 
Derivatives - assets leg .............................
- 
(47,474)
(21,313)
(12,852)
- 
- 
(81,639)
(72,889)
Derivatives - liabilities leg ..........................
- 
51,172 
26,590 
19,012 
- 
- 
96,774 
81,283 
Short position in bonds used for hedging ..
- 
- 
- 
- 
- 
- 
- 
- 
Other financial liabilities ..........................
99 
9,339 
292 
901 
- 
- 
10,631 
10,631 
Borrowings .............................................
- 
3,974 
102,645 
326,115 
45,775 
- 
478,509 
433,178 
Subordinated liabilities ...........................
- 
1,630 
4,788 
9,377 
45,352 
- 
61,147 
44,538 
Financial liabilities ...............................
591,323 
157,091 
231,598 
357,227 
96,409 
- 
1,433,648 
1,360,802 
Net position for assets and liab. ..........
(521,115)
195,986 
50,564 
323,848 
1,124,603 
34,475 
1,208,361 
233,933 
 
Off-balance sheet items
Financial guarantees ..............................
- 
1,921 
8,221 
3,847 
7,815 
- 
21,804 
21,804 
Unused overdraft ...................................
- 
74,270 
- 
- 
- 
- 
74,270 
74,270 
Undrawn loan commitments ...................
- 
36,788 
23,476 
7,394 
- 
- 
67,658 
67,658 
Off-balance sheet items .......................
- 
112,979 
31,697 
11,241 
7,815 
- 
163,732 
163,732 
Net contractual cash flow ....................
(525,819)
86,504 
(10,334)
182,146 
1,275,587 
38,304 
1,046,388 
70,201 
Net Stable Funding Ratio
31.12.2025
31.12.2024
1,319,265 
1,223,464 
1,115,682 
1,040,677 
118% 
118% 
Available stable funding  .........................................................................................................................................
Required stable funding  .........................................................................................................................................
The
NSFR
calculations
are
based
solely
on
figures
for
the
parent
company.
The
Bank's
subsidiaries
have
negligible
impact
on
the
funding
ratio. 
The
Net
Stable
Funding
Ratio
(NSFR)
measures
the
amount
of
available
stable
funding
(ASF)
with
the
Group
against
the
required
stable
funding
(RSF)
as
per
the
definition
of
the
Central
Bank
of
Iceland
rules
No.
750/2021.
In
general,
RSF
is
determined
by
applying
different
weights
to
different
asset
classes
depending
on
the
level
of
liquidity.
ASF
however
is
calculated
by
applying
weights
to
the
Group's
liabilities depending on maturity and stickiness. The NSFR in total shall exceed 100%.
Due to credit inst. and Central Bank .......
Net stable funding ratio  .......................................................................................................................................
76

===== SIDA 77 =====

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
46.
Liquidity and Funding risk, continued
Liquidity coverage ratio
Total all
31.12.2025
ISK
EUR
currencies
205,171 
47,836 
290,759 
11,898 
- 
11,898 
217,069 
47,836 
302,657 
146,016 
15,407 
185,886 
376 
- 
598 
9,395 
9,014 
15,375 
155,787 
24,421 
201,859 
- 
4,874 
18,089 
24,805 
2,917 
31,822 
24,805 
7,791 
49,911 
166%
288%
199%
31.12.2024
180,898
39,790
253,753
10,753 
- 
10,753 
191,651 
39,790 
264,506 
138,492 
14,537 
176,642
7,919 
- 
8,079
9,012 
10,009 
14,657
155,423
24,546
199,378
1 
6,935 
22,051
25,264 
2,588 
30,882
25,265 
9,523 
52,933 
147%
265%
181%
***
LCR
is
defined
as:
LCR
=
Weighted
liquid
assets
/
(weighted
cash
outflows
-
weighted
cash
inflows)
where
weighted
cash
inflows
are
capped
at
75%
of
weighted cash outflows.
Liquid assets level 1 *  .........................................................................................................................
Other cash inflows  ..............................................................................................................................
Cash outflows ....................................................................................................................................
Cash outflows ....................................................................................................................................
Liquidity coverage ratio (LCR)  *** ....................................................................................................
** Short-term deposits with other banks are defined as cash inflows in LCR calculations.
Other cash outflows  ............................................................................................................................
Borrowings  ..........................................................................................................................................
Other cash inflows  ..............................................................................................................................
Deposits  .............................................................................................................................................
Liquid assets level 2  ...........................................................................................................................
To
qualify
as
highly
liquid
assets
under
the
LCR
rules,
assets
must
be
non-pledged,
liquid
and
easily
priced
on
the
market,
traded
on
an
active market and not issued by the Group or related entities.
The
minimum
requirement
for
the
total
LCR
is
100%,
while
the
requirement
for
the
LCR
in
ISK
is
50%
and
80%
in
EUR.
There
is
no
minimum requirement for the aggregate position in all foreign currencies.
The following table shows the breakdown for the Group's LCR calculations.
*
Level
1
assets
include
the
Group's
cash
and
balances
with
the
Central
Bank,
domestic
bonds
eligible
as
collateral
at
the
Central
Bank
and
foreign
government
bonds which receive 100% weight.
Liquidity coverage ratio (LCR)  *** ....................................................................................................
Liquid assets level 2  ...........................................................................................................................
Short-term deposits with other banks **  ..............................................................................................
Liquid assets ......................................................................................................................................
Cash inflows .......................................................................................................................................
Liquid assets level 1 *  .........................................................................................................................
Other cash outflows  ............................................................................................................................
Borrowings  ..........................................................................................................................................
The
Liquidity
Coverage
Ratio
(LCR)
is
one
of
the
standards
introduced
in
the
Basel
III
Accord.
The
LCR
is
the
result
of
a
stress
test
that
is
designed
to
ensure
that
banks
have
the
necessary
assets
on
hand
to
withstand
short-term
liquidity
disruptions.
More
precisely,
LCR
represents
the
balance
between
highly
liquid
assets
and
the
expected
net
cash
outflow
of
the
Group
in
the
next
30
days
under
stressed
conditions.
Cash inflows .......................................................................................................................................
Short-term deposits with other banks **  ..............................................................................................
Deposits  .............................................................................................................................................
Liquid assets ......................................................................................................................................
77

===== SIDA 78 =====

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
46.
Liquidity and Funding risk, continued
Composition of liquid assets
31.12.2025
ISK
USD
EUR
Other
Total
149,766 
56 
167 
122 
150,111 
- 
9,271 
4,874 
3,944 
18,089 
69,404 
- 
- 
- 
69,404 
- 
3,762 
47,669 
33,811 
85,242 
219,170 
13,089 
52,710 
37,877 
322,846 
31.12.2024
 
 
 
 
 
123,395 
189 
355 
155 
124,094 
1 
11,507 
6,935 
3,608 
22,051 
70,298 
- 
- 
- 
70,298 
- 
10,394 
39,435 
22,183 
72,012 
193,694 
22,090 
46,725 
25,946 
288,455 
LCR deposit categorization
LCR categorization - amounts and LCR outflow weights
Less 
Weight
Weight
Term
Total
31.12.2025
stable
%
Stable
%
deposits*
deposits
142,436 
12%
136,146 
5%
200,648 
479,230 
119,944 
12%
19,563 
5%
30,998 
170,505 
4,950 
25%
- 
-
             
 
- 
4,950 
102,655 
41%
17,125 
20%
28,642 
148,422 
16,229 
40%
15 
20%
1,051 
17,295 
62,075 
100%
- 
- 
18,442 
80,517 
23,521 
100%
- 
- 
1,069 
24,590 
7,676 
100%
- 
- 
- 
7,676 
479,486 
172,849 
280,850 
933,185 
31.12.2024
121,798 
11%
121,208 
5%
178,686 
421,692 
114,856 
12%
17,835 
5%
28,483 
161,174 
4,748 
25%
- 
- 
- 
4,748 
98,482 
41%
16,561 
21%
30,430 
145,473 
19,262 
40%
14 
20%
1,091 
20,367 
70,477 
100%
- 
- 
17,915 
88,392 
18,510 
100%
- 
- 
2,380 
20,890 
1,325 
100%
- 
- 
- 
1,325 
449,458 
155,618 
258,985 
864,061 
Liquidity reserve ...........................................................................................
* Here term deposits refer to deposits with maturities greater than 30 days.
Deposits maturing within 30 days
Foreign financial entities ..............................................................
Individuals ...................................................................................
Corporations ................................................................................
Sovereigns, central banks and PSE .............................................
Liquidity reserve ...........................................................................................
Domestic financial entities ...........................................................
Foreign government bonds  ............................................................................
Domestic bonds eligible as collateral with Central Bank  ................................
Short-term deposits with financial institutions  ................................................
Foreign government bonds  ............................................................................
Operational relationship ...............................................................
Total ............................................................................................
Pension funds ..............................................................................
Small and medium enterprises ....................................................
Foreign financial entities ..............................................................
Domestic financial entities ...........................................................
As
per
the
LCR
methodology,
the
Group's
deposit
base
is
split
into
different
categories
depending
on
customer
type.
A
second
categorization
is
used
where
term
deposits
refer
to
deposits
with
residual
maturity
greater
than
30
days.
Deposits
that
can
be
withdrawn
within
30
days
are
marked
stable
if
the
customer
has
a
business
relationship
with
the
Group
and
the
amount
is
covered
by
the
Deposit
Insurance
Scheme.
Other
deposit
funds
are
considered
less
stable.
A
weight
is
attributed
to
each
category,
representing
the
expected
outflow under stressed conditions, i.e. the level of stickiness.
Corporations ................................................................................
Sovereigns, central banks and PSE .............................................
Pension funds ..............................................................................
The
table
below
shows
the
breakdown
of
the
Group's
deposit
base
according
to
the
LCR
categorization,
with
the
associated
weighted
average of the stressed outflow weights. 
Total ............................................................................................
Operational relationship ...............................................................
Individuals ...................................................................................
Small and medium enterprises ....................................................
Cash and balances with Central Bank  ...........................................................
Cash and balances with Central Bank  ...........................................................
Domestic bonds eligible as collateral with Central Bank  ................................
Short-term deposits with financial institutions  ................................................
The following table shows the composition of the Group's liquidity buffer.
78

===== SIDA 79 =====

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
47.
Capital management
 
 
Capital adequacy
31.12.2025
31.12.2024
Own funds
217,391 
207,086 
(64)
(504)
217,327 
206,582 
(7,273)
(7,390)
(228)
(226)
(20,313)
(19,000)
- 
427 
(314)
(345)
189,199 
180,048 
- 
112 
15,635 
20,004 
204,834 
200,164 
27,883 
24,534 
(1,355)
(1,306)
26,528 
23,228 
231,362 
223,392 
Risk-weighted exposure amount (REA)
 
 
862,862 
798,562 
59,140 
59,113 
4,222 
5,875 
2,309 
2,947 
13,516 
12,846 
2,501 
2,257 
84,635 
106,011 
1,029,185 
987,611 
Capital ratios
 
 
18.4% 
18.2% 
19.9% 
20.3% 
22.5% 
22.6% 
Total risk-weighted exposure amount .................................................................................................................
CET1 ratio ..............................................................................................................................................................
Capital adequacy ratio ............................................................................................................................................
Market risk due to trading book positions ................................................................................................................
Credit risk, loans and off-balance sheet items ........................................................................................................
Additional value adjustments ..................................................................................................................................
Foreseeable dividend and buyback * ......................................................................................................................
Tier 1 capital .........................................................................................................................................................
Operational risk ......................................................................................................................................................
Intangible assets ....................................................................................................................................................
Tier 2 capital .........................................................................................................................................................
Adjustment under IFRS 9 transitional arrangements as amended ..........................................................................
Common Equity Tier 1 capital ..............................................................................................................................
Tier 2 instruments ...................................................................................................................................................
Tier 2 instruments of financial sector entities (significant investments) ...................................................................
Non-controlling interest eligible for inclusion in T1 capital .......................................................................................
Market risk due to currency imbalance ...................................................................................................................
Credit valuation adjustment ....................................................................................................................................
Credit risk, derivatives and repos ...........................................................................................................................
Tier 1 ratio ..............................................................................................................................................................
Non-controlling interest not eligible for inclusion in CET1 capital ............................................................................
The
focus
of
capital
management
at
the
Group
is
to
normalize
the
capital
structure
in
the
medium
term
and
consequently
maintain
the
Group's capitalization comfortably above regulatory requirements, including the Pillar 2 and combined capital buffer requirements.
Common Equity Tier 1 capital before regulatory adjustments ..........................................................................
Credit risk, securities and other ..............................................................................................................................
Insufficient coverage for non-performing exposures ...............................................................................................
*
On
31
December
2025,
the
deduction
consists
of
50%
of
audited
profits
as
per
the
Bank's
dividend
policy
and
a
ISK
5
billion
buyback
program
approved
by
the
Board
(in
December
2025)
and
the
FSA
(in
January
2026,
after
the
accounting
period
end).
On
31
December
2024,
the
deduction
consists
of
a
dividend
payment
of
ISK
16
billion
to
be
paid
in
Q1
2025
as
approved
by
the
Board,
representing
61%
of
2024
net
earnings,
and
a
ISK
3
billion
buyback
program
approved
by
the
Board and the FSA. 
Total own funds ....................................................................................................................................................
Additional Tier 1 capital ..........................................................................................................................................
Total equity .............................................................................................................................................................
The
Group's
consolidated
situation
as
stipulated
in
CRR
is
the
Group's
accounting
consolidation
excluding
insurance
subsidiaries,
in
particular Vördur.
The
Group's
capital
ratios
are
calculated
in
accordance
with
the
Icelandic
Financial
Undertakings
Act
No.
161/2002
with
later
changes,
through
which
CRD
V
and
CRR
III
have
been
adopted.
The
Group
applies
the
standardized
approach
to
calculate
capital
requirements
for
credit risk, including counterparty credit risk, and market risk and the basic approach for credit valuation adjustment risk. 
79

===== SIDA 80 =====

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
47.
Capital management, continued
31.12.2025
31.12.2024
Capital ratios of the parent company
18.3% 
18.5% 
19.8% 
20.5% 
22.4% 
22.9% 
31.12.2025
31.12.2024
Capital buffer requirement, % of REA
2.5% 
2.5% 
3.0% 
3.0% 
2.0% 
2.0% 
2.5% 
2.5% 
10.0% 
10.0% 
Capital requirement, % of REA
CET1
Tier 1
Total
4.5% 
6.0% 
8.0% 
1.1% 
1.4% 
1.9% 
9.7% 
9.7% 
9.7% 
15.3% 
17.1% 
19.6% 
18.4% 
19.9% 
22.5% 
Leverage ratio
31.12.2025
31.12.2024
1,696,618 
1,562,622 
12,582 
16,078 
11,181 
10,358 
71,258 
50,982 
1,791,639 
1,640,040 
204,834 
200,164 
11.4% 
12.2% 
Total exposure ......................................................................................................................................................
Pillar 2R capital requirement ** ............................................................................................................
Available capital  ..................................................................................................................................
Pillar 1 capital requirement ..................................................................................................................
Combined capital buffer requirement ..................................................................................................................
**
The
SREP
result
based
on
the
Group's
Financial
Statement
at
31
December
2024.
The
Pillar
2R
requirement
is
1.9%
of
risk-weighted
exposure
amount
based
on the Group's prudential consolidation under CRR, which excludes Vördur.
Countercyclical capital buffer * ...............................................................................................................................
Capital conservation buffer .....................................................................................................................................
Combined buffer requirement * ............................................................................................................
*
The
Icelandic
buffer
value
shown.
In
the
combined
buffer
requirement,
the
effective
countercyclical
capital
buffer
is
determined
by
calculating
the
weighted
average
of
the
corresponding
buffer
levels
of
each
country,
the
weights
being
the
total
risk-weighted
exposures
for
credit
risk
against
counterparties
residing
in
those countries. The systemic risk buffer only applies to domestic exposures and is calculated using the same weighting method.
The
leverage
ratio
is
seen
as
a
complementary
measure
to
the
risk-based
capital
ratios.
The
ratio
is
calculated
on
the
basis
of
the
Group's
consolidated
situation
as
per
the
CRR,
which
excludes
the
Group's
insurance
subsidiaries.
The
minimum
leverage
ratio
requirement
is
3%
as stated in the Icelandic Financial Undertakings Act No. 161/2002.
Repos .....................................................................................................................................................................
Systemic risk buffer * ..............................................................................................................................................
Derivative exposures ..............................................................................................................................................
On-balance sheet exposures ..................................................................................................................................
Regulatory capital requirement .........................................................................................................
Tier 1 ratio ..............................................................................................................................................................
The
following
table
outlines
the
implementation
of
the
capital
buffer
requirements
in
accordance
with
the
Icelandic
Financial
Undertakings
Act No. 161/2002, as prescribed by the Financial Stability Committee and approved by the FSA.
The
Bank
carries
out
an
ongoing
process,
the
Internal
Capital
Adequacy
Assessment
Process
(ICAAP),
with
the
aim
to
ensure
that
the
Group
has
in
place
sufficient
risk
management
processes
and
systems
to
identify,
manage
and
measure
the
Group's
total
risk
exposure.
The
ICAAP
is
aimed
at
identifying
and
measuring
the
Group's
risk
across
all
risk
types
and
ensure
that
the
Group
has
sufficient
capital
in
accordance
with
its
risk
profile.
The
FSA
supervises
the
Group,
receives
the
Group's
internal
estimation
on
the
capital
adequacy
and
sets
the
Pillar
2R
capital
requirements
for
the
Group
as
a
whole
following
the
Supervisory
Review
and
Evaluation
Process
(SREP).
The
Group's own funds exceed the FSA's SREP requirements.
Capital buffer for systematically important institutions .............................................................................................
CET1 ratio ..............................................................................................................................................................
Capital adequacy ratio ............................................................................................................................................
The Pillar 1 and Pillar 2R capital requirements may comprise 56.25% CET1 capital, 18.75% AT1 capital and 25% Tier 2 capital.
Off-balance sheet exposures ..................................................................................................................................
Tier 1 capital .........................................................................................................................................................
Leverage ratio ........................................................................................................................................................
80

===== SIDA 81 =====

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
47.
Capital management, continued
MREL
31.12.2025
31.12.2024
Minimum requirement for own funds and eligible liabilities
231,362 
223,392 
201,513 
130,048 
432,875 
353,440 
99,831 
96,786 
333,044 
256,654 
1,029,185 
987,611 
32.4% 
26.0% 
19.8% 
19.6% 
1,791,639 
1,640,040 
24.2% 
21.6% 
6.0% 
6.0% 
Solvency II for insurance subsidiary Vördur
14,228 
14,468 
1,372 
1,323 
- 
- 
15,600 
15,791 
10,049 
9,347 
155.2% 
168.9% 
48.
Operational risk
The
solvency
capital
requirement
for
the
subsidiary
Vördur
is
calculated
in
accordance
with
the
Icelandic
Insurance
Companies
Act
No
100/2016.
Total exposure measure (TEM) ..............................................................................................................................
Eligible liabilities .....................................................................................................................................................
Combined buffer requirement (CBR) ......................................................................................................................
Own funds and eligible liabilities not used for CBR ...........................................................................................
Own funds ..............................................................................................................................................................
Solvency capital requirements (SCR) .....................................................................................................................
MREL requirement (% TEM) .................................................................................................................................
Own funds .............................................................................................................................................................
Foreseeable dividends ...........................................................................................................................................
SCR ratio ................................................................................................................................................................
The
Group
must
fulfil
a
minimum
requirement
for
own
funds
and
eligible
liabilities
(MREL)
in
accordance
with
the
Act
on
Resolution
of
Credit
Institutions
and
Investment
Firms,
no.
70/2020,
as
amended,
which
transposes
BRRD
I/II
into
Icelandic
law.
Own
funds
which
are
not
used
to
fulfil
the
combined
buffer
requirement
can
be
used
towards
the
MREL
requirements.
In
October
2025,
the
Icelandic
Resolution
Authority
presented
the
Group
with
the
MREL
requirements
based
on
year-end
2024
financials.
The
requirements
are
expressed
as
a
fraction
of
total
REA,
and
as
a
fraction
of
the
total
exposure
measure.
Both
ratios
are
shown
in
the
table
below.
An
MREL
subordination
requirement of 13.5% REA will apply to the Bank from Q3 2027.
Risk-weighted exposure amount (REA) ..................................................................................................................
Own funds and eligible liabilities not used for CBR (% REA) ...................................................................................
MREL requirement (% REA) .................................................................................................................................
Subordinated liabilities ............................................................................................................................................
Excess of assets over liabilities in accordance with Solvency II ..............................................................................
Own funds and eligible liabilities (% TEM) ..............................................................................................................
Own funds and eligible liabilities ........................................................................................................................
The Group uses the standardized approach for the calculation of capital requirements for operational risk.
Operational
risk
is
the
risk
of
direct
or
indirect
loss,
or
damage
to
the
Group's
reputation
resulting
from
inadequate
or
failed
internal
processes or systems, from human error or external events.
Each
business
unit
within
the
Group
is
responsible
for
managing
their
own
operational
risks.
Risk
management
and
Compliance
support
the
first
line
through
monitoring,
complementary
expertise,
and
by
challenging
the
adequacy
and
effectiveness
of
risk
management
practices.
The
second
line
is
responsible
for
developing
and
maintaining
a
framework
for
identifying,
measuring,
and
reporting
the
Group's
operational risk.
81

===== SIDA 82 =====

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
Notes to the Consolidated Financial Statements
49.
Sustainability risk
Sustainable financing framework
31.12.2025
31.12.2024
Sustainable Financing Instruments
24,755 
28,802 
38,272 
60,518 
63,027 
89,320 
Identified eligible sustainable assets by category
18,000 
19,075 
534 
271 
545 
608 
8,875 
7,545 
97,512 
92,689 
- 
17,309 
7,914 
7,799 
133,380 
145,296 
20,958 
28,835 
1,637 
2,374 
424 
1,146 
14,447 
13,336 
37,465 
45,691 
170,845 
190,987 
Sustainability
risk
is
a
driver
of
other
risk
types,
such
as
credit
risk
and
market
risk.
It
can
materialize
in
the
short
term,
the
medium
term
and
the
long
term.
The
Bank
assesses
both
inside-out
risks
(negative
impact
from
the
Bank’s
operations
on
people
and/or
the
environment)
and
outside-in
risks
(negative
materialization
of
ESG
factors
on
the
Bank
through
their
counterparties
or
invested
assets).
The
Bank’s
Sustainability
Committee
is
responsible
for
reviewing
the
Bank’s
performance
with
respect
to
its
commitments
and
policies
in
relation to environmental, social and governance (ESG) factors and aligning the Bank’s strategy and risk appetite with them.
Education ...............................................................................................................................................................
Healthcare ..............................................................................................................................................................
Sustainable waste and wastewater management ....................................................................................................
Book value ............................................................................................................................................................
Affordable housing ..................................................................................................................................................
The
Bank’s
Sustainability
Financing
Framework
applies
to
the
Bank’s
financing,
deposits
and
loans
which
are
classed
as
environmentally
and/or
socially
sustainable.
The
Sustainability
Financing
Framework
includes
social
categories
which
define
projects
having
a
positive
impact
on
society.
Special
importance
is
also
given
to
the
circular
economy,
and
the
classification
of
green
projects
has
also
been
refined.
Under
this
framework
the
Bank
can
issue
Sustainable
Financing
Instruments
including,
but
not
limited
to,
covered
bonds,
bonds,
loans,
commercial
paper,
repurchase
agreements
and
deposits.
The
use
of
proceeds
from
these
instruments
is
restricted
to
the
financing
of
eligible
assets
as
defined
in
the
Framework.
Eligible
assets
are
divided
into
several
eligible
categories
with
inclusion
and
exclusion
criteria.
The
Framework
details
the
processes
for
identifying
eligible
assets,
for
reporting
on
the
use
of
the
framework
and
for
external
review.
The
following table excludes committed green exposures.
Sustainable book value ........................................................................................................................................
Energy efficiency ....................................................................................................................................................
Green buildings ......................................................................................................................................................
Sustainable marine value chains and marine ecosystem management ..................................................................
Renewable energy ..................................................................................................................................................
Sustainable forestry and agriculture ........................................................................................................................
Green book value .................................................................................................................................................
Green deposits .......................................................................................................................................................
Employment generation and alleviate unemployment .............................................................................................
Social book value .................................................................................................................................................
Green borrowings ...................................................................................................................................................
Clean transportation ...............................................................................................................................................
82

===== SIDA 83 =====

Arion Bank Consolidated Financial Statements 2025
Material accounting policies
50.
Going concern assumption
51.
Principles underlying the consolidation
Subsidiaries
Business combinations
–
–
–
–
–
–
–
Non-controlling interests
–
–
The
Group's
management
has
made
an
assessment
of
the
ability
to
continue
as
a
going
concern
and
is
satisfied
that
the
Group
has
the
resources
to
continue.
In
making
this
assessment,
management
has
taken
into
consideration
the
risk
exposures
facing
the
Group,
which
are further described in the Risk Management Disclosures. The Consolidated Financial Statements are prepared on a going concern basis. 
The
accounting
policies
adopted
in
the
preparation
of
these
Consolidated
Financial
Statements
are
consistent
with
those
followed
in
the
preparation
of
the
Annual
Financial
Statements
for
year
ended
31
December
2024,
except
for
when
there
have
been
made
amendmends
to
current
IFRS
valid
from
1
January
2025,
Icelandic
Act
on
Financial
Statements,
Act
on
Financial
Undertakings
and
rules
on
Accounting
for
Credit
Institutions.
Amendments
to
standards
effective
from
1
January
2025
did
not
have
a
material
impact
on
theses
Consolidated
Financial Statements.
Subsidiaries
are
entities
controlled
by
the
Group.
The
Financial
Statements
of
subsidiaries
are
included
in
the
Consolidated
Financial
Statements
from
the
date
that
control
commences
until
the
date
that
control
ceases.
The
Financial
Statements
of
the
subsidiaries
are
prepared for the same reporting period as the parent entity, using consistent accounting policies.
at their proportionate share of the acquiree's identifiable net assets, which are generally at fair value.
Notes to the Consolidated Financial Statements
the fair value of the consideration transferred; plus
power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);
the ability to use its power over the investee to affect its returns.
Business
combinations
are
accounted
for
using
the
acquisition
method
as
at
the
acquisition
date,
i.e.
when
control
is
transferred
to
the
Group. The Group controls an investee if, and only if, the Group has:
Generally,
there
is
a
presumption
that
a
majority
of
voting
rights
result
in
control.
To
support
this
presumption
and
when
the
Group
has
less
than
a
majority
of
the
voting
or
similar
rights
of
an
investee,
the
Group
considers
all
relevant
facts
and
circumstances
in
assessing
whether
it
has
power
over
an
investee,
including
(i)
the
contractual
arrangement
with
the
other
vote
holders
of
the
investee,
(ii)
rights
arising
from
other
contractual
arrangements
and
(iii)
the
Group's
voting
rights
and
potential
voting
rights.
The
Group
re-assesses
whether
or
not
it
controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control.
exposure, or rights, to variable returns from its involvement with the investee; and
Transaction costs incurred are expensed and included in administration expense. 
Changes in the Group's interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.
For each business combination, the Group elects to measure any non-controlling interests in the acquiree either:
if the business combination is achieved in stages, the fair value of the pre-existing equity interest in the acquiree; less
the recognized amount of any non-controlling interests in the acquiree; less
When the excess is negative, a bargain purchase gain is recognized immediately in profit or loss.
Non-controlling
interests
represent
the
portion
of
profit
or
loss
and
equity
not
owned,
directly
or
indirectly,
by
the
Group;
such
interests
are
presented
separately
in
the
Income
Statement
and
are
included
in
equity
in
the
Statement
of
Financial
Position,
separately
from
equity
attributable to owners of the Group. 
at fair value; or
the net recognized amount (generally fair value) of the identifiable assets acquired and liabilities assumed.
The Group measures goodwill at the acquisition date as:
83

===== SIDA 84 =====

Arion Bank Consolidated Financial Statements 2025
Notes to the Consolidated Financial Statements
51.
Principles underlying the consolidation, continued
Loss of control
Transactions eliminated on consolidation
Funds management
 
52.
Associates
 
Impairment on investments in associates 
53.
Foreign currency
Foreign currency transactions
Intragroup
balances,
income
and
expenses
arising
from
intragroup
transactions,
are
eliminated
in
preparing
the
Consolidated
Financial
Statements. This also applies to subsidiaries classified as disposal groups held for sale.
Upon
loss
of
significant
influence
over
the
associate,
the
Group
measures
and
recognizes
any
retained
investment
at
its
fair
value.
Any
difference
between
the
carrying
amount
of
the
associate
upon
loss
of
significant
influence
and
the
fair
value
of
the
retained
investment
and
proceeds from disposal is recognized in profit or loss.
The
Financial
Statements
include
the
Group's
share
of
the
total
recognized
income
and
expenses
of
associates
from
the
date
that
significant
influence
commences
until
the
date
that
significant
influence
ceases.
When
the
Group's
share
of
losses
exceeds
its
carrying
value
of
associate,
the
Group's
carrying
amount
is
reduced
to
nil
and
recognition
of
further
losses
is
discontinued
except
to
the
extent
that
the
Group
has
incurred
legal
or
constructive
obligations
or
made
payments
on
behalf
of
the
associate.
If
the
associate
subsequently
reports
profits, the Group resumes recognizing its share of those profits only after its share of the profits equals the share of losses not recognized. 
On
the
loss
of
control,
the
Group
derecognizes
the
assets
and
liabilities
of
the
subsidiary,
any
non-controlling
interests
and
the
other
components of equity related to the subsidiary.  Any surplus or deficit arising on the loss of control is recognized in profit or loss. 
When
assessing
whether
to
consolidate
investment
funds,
the
Group
reviews
all
facts
and
circumstances
to
determine
whether
the
Group,
as
fund
manager,
is
acting
as
agent
or
principal.
The
Group
is
deemed
to
be
a
principal,
and
hence
controls
and
consolidates
a
fund,
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. The Group is defined as agent in all instances.
Transactions
in
foreign
currencies
are
translated
to
the
respective
functional
currencies
of
Group
entities
at
exchange
rates
at
the
dates
of
transactions.
Monetary
assets
and
liabilities
denominated
in
foreign
currencies
at
the
reporting
date
are
retranslated
to
the
functional
currency
at
the
exchange
rate
at
that
date.
All
differences
arising
on
settlement
or
translation
of
monetary
items
are
taken
to
the
Income
Statement. Non-monetary assets and liabilities denominated in foreign currencies are reported at historic cost. 
After
applying
the
equity
method
to
account
for
investments
in
associates,
the
Group
determines
whether
it
is
necessary
to
recognize
any
impairment
loss
with
respect
to
its
investments
in
associates.
The
Group
first
determines
whether
there
is
any
objective
evidence
that
an
investment
in
an
associate
is
impaired.
If
such
evidence
exists,
the
Group
then
tests
the
entire
carrying
amount
of
the
investment
for
impairment,
by
comparing
its
recoverable
amount,
which
is
the
higher
of
value
in
use
and
fair
value
less
costs
to
sell,
with
its
carrying
amount.
The
recoverable
amount
of
an
investment
in
an
associate
is
assessed
for
each
associate,
unless
the
associate
does
not
generate
cash
inflows
from
continuing
use
that
are
largely
independent
of
those
from
other
assets
of
the
Group.
The
excess
of
the
carrying
amount
over
the
recoverable
amount
is
recognized
in
the
Income
statement
as
an
impairment
loss.
Impairment
losses
are
subsequently
reversed
through the Income Statement if the reasons for the impairment loss no longer apply.
Items
included
in
the
Consolidated
Financial
Statements
of
each
of
the
Group's
subsidiaries
are
measured
using
the
functional
currency
of
the respective entity.
The considerations made in determining significant influence are similar to those necessary to determine control over subsidiaries.
The
Group
manages
and
administers
assets
held
in
unit
trusts
and
investment
vehicles
on
behalf
of
investors.
The
Financial
Statements
of
these entities are not included in these Consolidated Financial Statements except when the Group controls the entity.
Associates
are
those
entities
over
which
the
Group
has
a
significant
influence,
i.e.
the
power
to
participate
in
the
financial
and
operating
policy
decisions
of
the
associates
but
not
control
or
joint
control
over
those
policies.
Significant
influence
generally
exists
when
the
Group
holds
20%
or
more
of
the
voting
power,
including
potential
voting
rights,
unless
it
can
be
clearly
demonstrated
that
this
is
not
the
case.
Investments
in
associates
are
initially
recognized
at
cost.
The
carrying
amount
of
investments
in
associates
includes
intangible
assets
and
accumulated impairment loss.
The Group's investments in its associate are accounted for using the equity method.
84

===== SIDA 85 =====

Arion Bank Consolidated Financial Statements 2025
Notes to the Consolidated Financial Statements
54.
Interest
–
–
–
55.
Fee and commission
56.
Net financial income
i)
ii)
iii)
57.
Insurance service results
amortized cost;
Net
gain
on
financial
assets
and
liabilities
at
fair
value
comprises
all
realized
and
unrealized
fair
value
changes,
except
for
interest
(which
is
included
in
Interest
income
and
Interest
expense)
and
foreign
exchange
gain
and
losses
(which
are
included
in
Net
foreign
exchange gains as described below).
Dividend income is recognized when the right to receive dividend is established. Usually this is the ex-dividend date for equity securities. 
The
Group
provides
various
services
to
its
clients
and
earns
income
therefrom,
such
as
income
from
Corporate
Banking,
Retail
Banking,
Capital
Markets,
Corporate
Finance,
Asset
Management
and
Private
Banking.
Fees
earned
from
services
that
are
provided
over
a
certain
period
of
time
are
recognized
as
the
services
are
provided,
i.e.
point
in
time.
Fees
earned
from
transaction
type
services
are
recognized
when
the
service
has
been
completed,
i.e.
point
in
time.
Fees
that
are
performance
linked
are
recognized
when
the
performance
criteria
are
fulfilled, i.e. point in time.
fair value through other comprehensive income (FVOCI).
Interest income and expense presented in the Income Statement include Income and expenses of assets and liabilities carried at:
Net
foreign
exchange
gain
comprise
all
foreign
exchange
differences
arising
on
the
settlement
of
foreign
currency
monetary
assets
and
liabilities
and
on
translating
foreign
currency
monetary
assets
and
liabilities
at
rates
different
from
those
at
which
they
were
translated
on
initial recognition during the year or in previous Consolidated Financial Statements.
Net
foreign
exchange
gain
also
include
foreign
exchange
differences
arising
on
translating
non-monetary
assets
and
liabilities
which
are
measured at fair value in foreign currencies and whose other gain and loss are also recognized in profit or loss.
The
calculation
of
the
effective
interest
rate
includes
all
transaction
costs
and
fees
and
points
paid
or
received
that
are
an
integral
part
of
the
effective
interest
rate.
Transaction
costs
include
incremental
costs
that
are
directly
attributable
to
the
acquisition
or
issue
of
a
financial
asset or financial liability.
Interest
income
and
expense
are
recognized
in
the
Income
Statement
using
the
effective
interest
method.
The
effective
interest
rate
is
the
rate
that
exactly
discounts
the
estimated
future
cash
payments
and
receipts
through
the
expected
life
of
the
financial
asset
or
liability
(or,
where
appropriate,
a
shorter
period)
to
the
carrying
amount
of
the
financial
asset
or
liability.
The
effective
interest
rate
is
established
on
initial recognition of the financial asset and financial liability and is not revised subsequently.
fair value through profit and loss (FVTPL); and
Net financial income comprises Dividend income, Net gain on financial assets and liabilities at fair value and Net foreign exchange gain.
Insurance
service
expenses
are
claims
incurred
during
the
year
and
the
increase
or
decrease
due
to
claims
from
last
year,
acquisition
cost
and other costs from activities, such as marketing costs, salary costs, office and administration costs.
Fees
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.
Insurance
revenues
recognized
in
the
Income
Statement
are
insurance
premium
and
other
income
from
insurance
contracts
earned
during
the operating year.
85

===== SIDA 86 =====

Arion Bank Consolidated Financial Statements 2025
Notes to the Consolidated Financial Statements
58.
Income tax expense
59.
Financial assets and financial liabilities
Recognition and initial measurement
Derecognition 
Debt instruments
–
–
–
–
–
–
–
 
 
Debt instruments, including loans and debt securities, are classified into one of the following measurement categories:
amortized cost;
All other debt instruments are carried at FVTPL. 
it is held within a business model whose objective is to collect contractual cash flows and selling financial assets; and
fair value through profit and loss (FVTPL); or
fair value through other comprehensive income (FVOCI).
its contractual cash flows are SPPI.
The
Group
initially
recognizes
financial
assets
and
financial
liabilities
on
the
date
that
they
are
originated
at
the
fair
value
of
consideration
paid.
Regular-way
purchases
and
sales
of
financial
assets
are
recognized
on
the
trade
date
at
which
the
Group
commits
to
purchase
or
sell
assets.
All
other
financial
assets
and
liabilities
are
recognized
on
the
trade
date,
which
is
the
date
that
the
Group
becomes
a
party
to
the
contractual provision of the instrument.
Deferred
tax
assets
and
liabilities
are
offset
if
there
is
a
legally
enforceable
right
to
offset
current
tax
liabilities
and
assets,
and
they
relate
to
taxes
levied
by
the
same
tax
authority
on
the
same
taxable
entity,
or
on
different
tax
entities,
but
they
intend
to
settle
current
tax
liabilities
and assets on a net basis or their tax assets and liabilities will be realized simultaneously.
Deferred
tax
is
measured
at
the
tax
rates
that
are
expected
to
be
applied
to
temporary
differences
when
they
reverse,
using
tax
rates
enacted or substantively enacted at the reporting date.
A debt instrument is measured at FVOCI only if it meets both of the following conditions and is not designated as at FVTPL: 
Tax
expense
comprises
current
and
deferred
tax.
Income
tax
for
the
year
has
been
calculated
and
recognized
in
the
Consolidated
Financial
Statements.
A debt instrument is measured at amortized cost only if it meets both of the following conditions and is not designated as at FVTPL:
its contractual cash flows are solely payments of principal and interest on the principal amount outstanding (here after SPPI).
A
financial
asset
or
financial
liability
is
measured
initially
at
fair
value
and
for
an
item
not
at
fair
value
through
profit
or
loss,
transaction
cost
that are directly attributable to its acquisition or issue.
Deferred
tax
is
recognized
in
respect
of
temporary
differences
between
the
carrying
amounts
of
assets
and
liabilities
and
the
realization
of
foreign exchange gain or loss, for financial reporting purposes and the amounts used for taxation purposes.
Current
tax
is
the
expected
tax
payable
on
the
taxable
income
for
the
year,
using
tax
rates
enacted
or
substantially
enacted
at
the
reporting
date,
and
any
adjustment
to
tax
payable
in
respect
of
previous
years.
Taxable
profit
may
differ
from
earnings
before
tax
as
reported
in
the
Income
Statement
as
it
may
exclude
income
or
expense
that
is
deductible
in
other
years
and
it
excludes
income
or
expense
that
are
never
taxable or deductible.
Current and deferred tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit or loss.
it is held within a business model whose objective is to collect contractual cash flows; and
A
deferred
tax
asset
is
recognized
for
unused
tax
losses,
tax
credits
and
deductible
temporary
differences
to
the
extent
that
it
is
probable
that
future
taxable
profits
will
be
available
against
which
the
asset
can
be
utilized.
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
realized.
Such
deferred
tax
assets
and
liabilities
are
not
recognized
if
the
temporary
difference
arises
from
the
initial
recognition
(other
than
in
a
business
combination)
of
assets
and
liabilities
in
transaction
that
affects
neither
the
taxable
profit
nor
the
accounting
profit.
In
addition,
tax
liabilities
are
not
recognized
if
the
temporary
difference arises from the initial recognition of goodwill.
Financial liabilities are derecognized when the obligation of the Group specified in the contract is discharged or cancelled or expires.
Financial
assets
are
derecognized
when
the
rights
to
receive
cash
flows
from
the
financial
assets
have
expired
or
when
the
Group
has
transferred substantially all risks and rewards of ownership.
86

===== SIDA 87 =====

Arion Bank Consolidated Financial Statements 2025
Notes to the Consolidated Financial Statements
59.
Financial assets and financial liabilities, continued
Business model assessment
-
-
-
-
-
 
Cash flow characteristics assessment
Debt instruments measured at amortized cost
Debt instruments measured at FVOCI
Debt instrument are measured at FVOCI if they are held within a business model whose objective is to hold for collection of contractual cash 
flows
and/or
selling
financial
assets,
where
the
assets'
cash
flows
represent
payments
that
are
solely
payments
of
principal
and
interest.
Subsequent
to
initial
recognition,
unrealized
gains
and
losses
on
debt
instruments
measured
at
FVOCI
are
recorded
in
Other
Comprehensive
Income
(OCI).
At
realization
the
accumulated
profit
or
loss
recognized
in
OCI
in
previous
periods
is
recycled
to
the
Consolidated
Income
Statement.
Foreign
exchange
gains
and
losses
of
the
debt
instrument
are
recognized
in
the
Consolidated
Income
Statement. Interest income are recognized in the Income Statement in accordance with effective interest rate method.
Debt
instrument
are
measured
at
amortized
cost
if
they
are
held
within
a
business
model
whose
objective
is
to
hold
for
collection
of
contractual
cash
flows
where
those
cash
flows
represent
solely
payments
of
principal
and
interest.
After
initial
measurement,
debt
instruments
in
this
category
are
carried
at
amortized
cost
using
the
effective
interest
rate
method.
The
effective
interest
rate
is
the
rate
that
discounts
contractual
cash
payments
or
receipt
through
the
contractual
lifetime
of
the
financial
asset
to
the
gross
carrying
amount
of
a
financial
asset.
Amortized
cost
is
calculated
taking
into
account
any
discount
or
premium
on
acquisition,
transaction
cost
and
fees
that
are
an integral part of the effective interest rate. Amortization is included in interest income in the Consolidated Income Statement.
Impairment
on
debt
instruments
measured
at
FVOCI
is
calculated
using
the
expected
credit
loss
approach.
The
ECL
on
debt
instruments
measured
at
FVOCI
does
not
reduce
the
carrying
amount
of
the
asset
in
the
Statement
of
Financial
Position,
which
remains
at
its
fair
value.
Instead,
an
amount
equal
to
the
allowance
that
would
arise
if
the
assets
were
measured
at
amortized
cost
is
recognized
in
OCI
with
a
corresponding
charge
to
net
impairment
in
the
Consolidated
Statement
of
Comprehensive
Income.
The
accumulated
allowance
recognized
in OCI is recycled to the Consolidated Statement of Comprehensive Income upon derecognition of the debt instrument.
In
performing
this
assessment,
the
Group
takes
into
consideration
contractual
features
that
could
change
the
amount
or
timing
of
contractual
cash
flows,
such
that
the
cash
flows
are
no
longer
consistent
with
a
basic
lending
arrangement.
If
the
Group
identifies
any
contractual
features
that
could
modify
the
cash
flows
of
the
instruments
such
that
they
are
no
longer
consistent
with
a
basic
lending
arrangement, the related financial assets is classified at FVTPL.
Impairment
on
debt
instruments
measured
at
amortized
cost
is
calculated
using
the
expected
credit
loss
(ECL)
approach.
Loans
and
debt
securities measured at amortized cost are presented net of allowance for credit losses in the Consolidated Statement of Financial Position.
Interest
is
defined
as
consideration
for
the
time
value
of
money,
the
banks
funding
costs,
the
credit
risk
associated
with
the
principal
amount
outstanding and other costs (e.g liquidity risk and administrative costs), as well as a profit margin. Indexation of loans to the Consumer Price 
Index
(CPI)
are
considered
part
of
interest
as
CPI
guarantees
the
time
value
of
money
of
the
original
outstanding
balance.
Principal
may
change over the life of the instruments due to repayments. Indexation on principal accumulates over time.
whether
the
assets
are
held
for
trading
purposes,
i.e.
assets
that
the
Group
acquires
or
incurs
principally
for
the
purpose
of
selling
or
repurchasing in the near term, or holds as part of a portfolio that is manage together for short-term profit or position taking;
The
contractual
cash
flow
characteristics
assessment
involves
assessing
the
contractual
features
of
an
instrument
to
determine
if
they
give
rise
to
cash
flows
that
are
consistent
with
a
basic
lending
arrangement.
Contractual
cash
flows
that
are
consistent
with
a
basic
lending
arrangement are considered SPPI.
the risks that affect the performance of assets held within a business model and how those risks are managed;
how
the
performance
of
assets
in
a
portfolio
is
evaluated
and
reported
to
group
heads
and
other
key
decision
makers
within
the
Group's
business lines;
Business
model
assessment
involves
determining
whether
financial
assets
are
managed
in
order
to
generate
cash
flows
from
collection
of
contractual
cash
flows,
selling
financial
assets
or
both.
The
Group
assesses
the
business
model
at
a
portfolio
level
reflective
of
how
groups
of
assets
are
managed
together
to
achieve
a
particular
business
objective.
For
the
assessment
of
business
models
the
Group
takes
into
consideration the following factors: 
how compensation is determined for the Group's business lines' management that oversee the assets; and
the frequency and volume of sales in prior periods and expectations about future sales activity.
 
87

===== SIDA 88 =====

Arion Bank Consolidated Financial Statements 2025
Notes to the Consolidated Financial Statements
59.
Financial assets and financial liabilities, continued
Debt instruments measured at FVTPL
Purchased loans
Equity instruments
Offsetting
Expected credit losses
Equity instruments are measured at FVTPL.
POCI
loans
do
not
have
allowance
at
initial
recognition
but
subsequently
the
allowance
will
reflect
the
changes
in
the
lifetime
expected
losses.
At
recognition
the
discount
of
each
POCI
loan
is
split
up
into
two
categories,
impairment
discount
and
interest
discount
or
premium.
Interest
is
calculated
with
a
credit
adjusted
effective
interest
rate
and
is
posted
to
interest
income.
Periodically
the
Group
recalculates
the
carrying
amount
by
computing
the
present
value
of
estimated
future
cash
flows
at
the
financial
instrument's
original
credit
adjusted
effective
interest
rate,
any
changes
in
the
expected
cash
flows
since
the
date
of
acquisition
are
recorded
as
a
charge/recovery
in
net
impairment
in
the Consolidated Income Statement at the end of all reporting periods subsequent to the date of acquisition. 
Financial
assets
and
liabilities
are
set
off
and
the
net
amount
reported
in
the
Statement
of
Financial
Position
when,
and
only
when,
the
Group
has
a
legal
right
to
offset
the
recognized
amounts
and
intends
either
to
settle
on
a
net
basis
or
to
realize
the
asset
and
settle
the
liability simultaneously.
All
purchased
loans
are
initially
measured
at
fair
value
on
the
date
of
acquisition.
As
a
result
no
allowance
for
credit
losses
would
be
recorded
in
the
Consolidated
Statement
of
Financial
Positions
on
the
date
of
acquisition.
Purchased
loans
may
fit
into
either
of
the
two
categories: Performing loans or Purchased or Originated Credit Impaired (POCI) loans.
The
Group
can
elect
to
classify
non-trading
equity
instruments
at
FVOCI.
This
election
will
be
used
for
certain
equity
instruments
for
strategic
or
longer
term
investment
purposes.
The
FVOCI
election
is
made
upon
initial
recognition,
on
an
instrument-by-instrument
basis
and
once
made
is
irrevocable.
Gains
and
losses
on
these
instruments
including
when
derecognized/sold
are
recorded
in
OCI
and
are
not
subsequently
reclassified
to
the
Consolidated
Income
Statement.
Dividends
received
are
recorded
in
Financial
income
in
the
Consolidated
Income
Statement.
Any
transaction
costs
incurred
upon
purchase
of
the
security
are
added
to
the
cost
basis
of
the
security
and
are
not
reclassified to the Consolidated Income Statement of the security.
For
equity
instruments
measured
at
FVTPL,
changes
in
fair
value
are
recognized
as
part
of
Financial
income
in
the
Consolidated
Income
Statement.
Purchased
performing
loans
are
reflected
in
Stage
1
and
will
follow
the
same
accounting
as
other
performing
loans.
They
will
be
subject
to
a
12-month
allowance
for
credit
losses
which
is
recorded
as
provision
for
credit
losses
in
the
Consolidated
Income
Statement.
The
fair
value
adjustments set up for these loans on the date of acquisition is amortized into interest income over the life of these loans.
Debt
instrument
are
measured
at
FVTPL
if
they
are
held
for
short
term
gain,
held
as
part
of
a
portfolio
managed
on
a
fair
value
basis
or
the
cash
flows
do
not
represent
payments
that
are
solely
payments
of
principal
and
interest.
These
instruments
are
measured
at
fair
value
in
the
Consolidated
Statement
of
Financial
Position.
Realized
and
unrealized
gains
and
losses
are
recognized
as
part
of
Net
financial
income
in the Consolidated Income Statement.
Expected
credit
loss
(ECL)
is
established
for
all
financial
assets,
except
for
financial
assets
classified
or
designated
as
FVTPL
and
equity
instruments
designated
as
FVOCI,
which
are
not
subject
to
impairment
assessment.
Assets
subject
to
impairment
assessment
are
primarily
debt
instruments
(including
loans
to
customers)
measured
at
amortized
cost
or
FVOCI.
ECL
on
financial
assets
is
presented
in
Net
impairment.
Other
financial
assets
carried
at
amortized
cost
are
presented
net
of
ECL
in
the
Group's
Consolidated
Statement
of
Financial
Position.
Off-balance
sheet
items
subject
to
impairment
assessment
include
financial
guarantees
and
undrawn
loan
commitments.
ECL
for
Off-balance sheet items is separately calculated and included in Other Liabilities.
Income
and
expenses
are
presented
on
a
net
basis
only
when
permitted
by
the
accounting
standards,
or
for
gains
or
losses
arising
from
a
group of similar transactions such as in the Group's trading activity.
88

===== SIDA 89 =====

Arion Bank Consolidated Financial Statements 2025
Notes to the Consolidated Financial Statements
59.
Financial assets and financial liabilities, continued
Stage
Criteria
 
Definition of default 
–
–
Probability of default and credit risk rating
Exposures
not
impaired
with
significant
increase
in
credit risk subsequent to origination.
The Group measures the ECL on each balance sheet date according to a three-stage expected credit loss impairment model:
For
corporate
counterparties
it
is
assumed
that
if
one
exposure
is
in
default,
all
other
exposures
to
that
counterparty
are
also
in
default
(cross-default).
For
individuals
however,
the
Group
defines
six
different
exposure
portfolios
and
has
different
statistical
credit
risk
models
for
each
of
them
-
mortgages,
consumer
loans,
auto
loans,
guarantees,
loans
to
individuals
for
work
purposes
and
other
loans.
Each
exposure
portfolio
is
assessed
separately,
meaning
that
if
an
individual
is
in
default
on
a
loan
belonging
to
one
portfolio,
their
other
exposures,
belonging
to
other
portfolios,
are
not
automatically
assumed
to
be
in
default.
However,
defaults
in
other
portfolios
are
also
considered
and
cross-default applies when they are significant.
3
Exposures in default / Credit impaired 
2
the borrower is considered to be unlikely to pay.
Exposures
not
impaired
and
with
no
significant
increase
in credit risk
1
Assessment of expected credit loss, and effective interest
rates.
Increases
or
decreases
in
the
required
ECL
attributable
to
purchases
and
new
originations,
derecognitions
or
maturities,
and
remeasurements
due
to
changes
in
loss
expectations
or
state
migrations
are
recorded
in
net
impairment.
Write-offs
and
recoveries
of
amounts previously written off are recorded against ECL.
An
asset
does
not
return
to
non-defaulted
status
until
after
a
probation
period
which
is
at
least
either
three
months
if
no
forbearance
measures have been granted or one year if forbearance measures have been granted.
The Group allocates to each exposure a credit risk rating (e.g. A+, A, A-, BBB+, etc.) based on the calculated 12 month probability of default 
('the
PD').
The
PD
is
assessed
through
the
Group's
credit
rating
models
or
based
on
external
ratings
if
available.
The
Group's
credit
rating
models
are
statistical
models
based
on
a
variety
of
information
that
has
been
determined
to
be
predictive
of
default.
These
include
demographic,
behavioral,
financial
and
economic
data,
coupled
with
qualitative
expert
judgement
for
large
corporate
exposures.
Factors
vary
depending
on
the
nature
of
the
exposure
and
the
profile
of
the
borrower.
The
PD
estimates
used
for
the
purpose
of
calculating
IFRS
9
impairments
are
point-in-time,
i.e.
dependent
on
the
economic
cycle.
The
Group's
credit
rating
models
are
subject
to
annual
performance
tests and are recalibrated on a regular basis if needed. 
In
assessing
whether
a
borrower
is
unlikely
to
pay,
the
Group
considers
both
qualitative
and
quantitative
indicators,
e.g.
overdue
status,
debt and equity ratios, market circumstances and other data developed internally or obtained from external sources.  
Lifetime
expected
credit
loss
is
recorded,
based
on
the
probability
of
default
over
the
remaining
estimated
life
of
the
financial
instrument.
Effective
interest
rate
is
calculated
on
the
gross carrying amount.
Lifetime
expected
credit
loss
is
recorded.
Effective
interest
rate
is calculated on the book value. 
The
ECL
is
an
unbiased
discounted
probability-weighted
estimate
of
the
cash
shortfalls
expected
to
result
from
defaults
occurring
in
the
next
12
months
or,
in
cases
where
credit
risk
has
significantly
increased,
in
the
expected
lifetime
of
an
exposure.
For
guarantees
and
loan
commitments,
credit
loss
estimates
consider
the
portion
of
the
commitment
that
is
expected
to
be
paid
out
or
expected
to
be
drawn
over
the
relevant time period, contingent on significant financial difficulty.
the asset is more than 90 days past due, or
The
ECL
represents
an
unbiased
estimate
of
expected
credit
losses
on
our
financial
assets
as
at
the
balance
sheet
date.
Judgement
is
required
in
making
assumptions
and
estimations
when
calculating
the
ECL,
including
movements
between
the
three
stages
and
the
application
of
forward
looking
scenarios.
The
underlying
assumptions
and
estimates
may
results
in
changes
to
the
provisions
from
period
to
period that significantly affect our results of operations.
The
Group
defines
default
in
accordance
with
article
178
of
EU
Regulation
No
575/2013
(CRR).
The
Group
considers
a
financial
asset
to
be
in default when:
For
corporate
counterparties,
more
than
90
days
past
due
means
that
the
counterparty
has
been
past
due
on
a
material
exposure
each
day
in
the
last
90
days.
For
individuals,
more
than
90
days
past
due
means
that
the
individual
has
been
past
due
on
a
material
exposure
in
the
same exposure portfolio each day in the last 90 days.
12
month
expected
credit
loss
is
recorded.
The
expected
credit
loss
is
computed
using
a
probability
of
default
occurring
over
the
next
12
months.
For
those
instruments
with
a
remaining
maturity
of
less
than
12
months,
a
probability
of
default
corresponding
to
remaining
term
to
maturity
is
used.
The
effective
interest
rate
is
calculated on the gross carrying amount.
89

===== SIDA 90 =====

Arion Bank Consolidated Financial Statements 2025
Notes to the Consolidated Financial Statements
59.
Financial assets and financial liabilities, continued
Risk
S&P /
class
Rating
Lower PD
 
Upper PD
Fitch
Moody's
0
AAA ...............................................................................
0.000%
0.006%
AAA
Aaa
 
AA+ ...............................................................................
0.006%
0.018%
AA+
Aa1
 
AA .................................................................................
0.018%
0.029%
AA
Aa2
AA- ................................................................................
0.029%
0.045%
AA-
Aa3
A+ ..................................................................................
0.045%
0.070%
A+
A1
A ....................................................................................
0.070%
0.110%
A
A2
A- ...................................................................................
0.110%
0.170%
A-
A3
1
BBB+ .............................................................................
0.170%
0.260%
BBB+
Baa1
BBB ...............................................................................
0.260%
0.410%
BBB
Baa2
BBB- ..............................................................................
0.410%
0.640%
BBB-
Baa3
 
 
2
BB+ ...............................................................................
0.640%
0.990%
BB+
Ba1
BB .................................................................................
0.990%
1.540%
BB
Ba2
BB- ................................................................................
1.540%
2.400%
BB-
Ba3
 
 
3
B+ ..................................................................................
2.400%
3.730%
B+
B1
B ....................................................................................
3.730%
5.800%
B
B2
B- ...................................................................................
5.800%
9.010%
B-
B3
 
 
 
4
CCC+ ............................................................................
9.010%
14.000%
CCC ...............................................................................
14.000%
31.000%
CCC- .............................................................................
31.000%
99.990%
 
 
5
DD .................................................................................
99.99%
100.00%
D
C
Probability of default
Each
exposure
is
allocated
a
credit
risk
rating
at
initial
recognition.
The
calculations
are
based
on
available
information
at
the
time
of
origination.
Exposures
are
continuously
monitored
and
revaluated
using
the
models
described
above
and
this
may
result
in
transitions
between risk ratings.
The Group's rating scale is shown below, including mapping of external ratings. The lower bounds are inclusive.
The
Group
uses
external
ratings
for
counterparties
that
receive
such
ratings
from
recognized
rating
agencies
such
as
Moody's,
Standard
&
Poor's
and
Fitch.
The
Group's
internal
rating
scale
was
originally
calibrated
to
match
historical
default
rates
shown
in
publications
of
the
aforementioned
rating
agencies
and
using
smoothing
techniques.
External
ratings
are
primarily
used
to
assess
expected
losses
for
counterparties
of
marketable
securities,
money
market
and
deposit
accounts
positions
which
fall
under
the
Impairment
requirements
of
IFRS
9.
The
Group's
ECL
is
broken
down
by
investment
grade
and
non-investment
grade
classes
for
such
exposures,
as
per
the
definition
of the corresponding rating agency.
Description
The
Group's
PDs
and
PD
term
structures
are
based
on
both
quantitative
and
qualitative
factors
and
in
some
cases
external
ratings
are
used. PD's are re-assessed on a regular basis with different frequencies depending on the type of counterparty and/or exposure.
Non-investment 
Grade
Non-investment 
Grade
In
addition
to
calculating
PD
and
allocating
a
credit
risk
rating
to
each
exposure,
the
Group
calculates
the
lifetime
probability
of
default
(LPD),
which
is
an
assessment
of
the
probability
that
a
default
event
occurs
over
the
lifetime
of
the
exposure.
The
LPD
incorporates
management's
view
of
possible
future
macroeconomic
developments
and
the
likelihood
of
rating
transitions
over
the
lifetime
of
the
exposure.
For
the
determination
of
LPD,
the
Bank
calculates
PD
term
structures
–
which
effectively
provides
the
probability
of
default
for
any
given
time
period,
one
for
each
rating
grade,
PD
model
and
economic
scenario.
The
annualized
lifetime
probability
of
default
(ALPD)
of
an
exposure
is
the
fixed
12
month
PD
(without
transitions)
that
corresponds
to
the
exposure's
LPD.
The
credit
risk
rating
that
corresponds
to
the ALPD is defined as the lifetime credit risk rating.
The
assessed
12
months
PDs
are
the
basis
for
the
determination
of
the
term
structure
of
PDs
for
exposures.
The
Group
applies
transition
models,
developed
on
the
basis
of
historical
data,
to
predict
the
development
of
risk
grades
for
periods
that
exceed
one
year.
The
Group
has
separated
transition
behavior
due
to
specific
and
general
risk
and
applies
its
macro-economic
forecasts
to
the
latter.
The
analysis
of
credit
rating
transitions
due
to
general
risk
includes
the
identification
and
calibration
of
relationships
between
changes
in
default
rates
and
changes
in
key
macro-economic
factors.
Unemployment
rate
is
the
predominant
predictive
variable.
Among
other
indicators
examined
are
GDP growth, private consumption expenditure, inflation, development of housing prices and benchmark interest rates.
Investment Grade
Default / Impaired
Non-investment 
Grade
Investment Grade
90

===== SIDA 91 =====

Arion Bank Consolidated Financial Statements 2025
Notes to the Consolidated Financial Statements
59.
Financial assets and financial liabilities, continued
Loss given default
Exposure at default
Significant increase in credit risk 
–
–
–
–
–
the exposure has received forbearance measures in the past six months;
Each
credit
facility
is
assigned
an
LGD.
The
LGD
is
an
assessment
of
loss
conditional
on
a
default
occurrence.
The
Group
splits
LGD
into
three
components;
the
probability
of
cure,
the
expected
recovery
from
liquidation
of
collateral,
and
the
recovery
rate
for
the
unsecured
part
of
the
exposure.
The
cure
rate
is
modeled
on
the
Group’s
historical
data
of
assets
returning
to
performing
status
after
being
in
default
without
loss.
The
expected
recovery
is
the
outcome
of
the
Group’s
collateral
allocation
algorithm
which
takes
into
account
the
seniority
of
debt
and
collateral
type.
Haircuts
are
applied
to
different
types
of
collaterals
based
on
expert
judgment,
supported
by
historical
data,
and
take
into
account
costs
and
the
time
value
of
money.
Different
haircuts
are
applied
for
different
macro-economic
scenarios
in
the
ECL
calculations.
In
some
instances,
assets
are
considered
to
be
fully
covered
by
collateral
after
haircut
application
and
therefore
carry
no
ECL.
The recovery rate for the unsecured part of the exposure is based on expert judgment, taking into account historical loss experience.
The
cut-off
period
for
cure
is
taken
to
be
18
months
from
default,
which
means
that
a
return
to
non-default
after
that
period
is
not
considered
a
cure.
Furthermore,
cure
is
defined
on
a
portfolio
level
instead
of
on
a
loan
level
i.e.
the
same
level
as
the
PD
models.
In
this
version,
statistical
cure
rate
models
have
been
created
for
the
largest
portfolios
–
mortgages,
consumer
loans
and
large
corporates
and
retail
SMEs.
As
the
explanatory
variables
in
the
statistical
cure
rate
models
can
be
related
to
variables
in
PD
models,
this
change
prompts
a
consideration
of
PD-cure
correlation.
The
correlation
effects
are
taken
into
account
in
the
Bank’s
ECL
calculations.
Furthermore,
long-run
average
cure
rate
models
using
macro-economic
variables
have
been
created.
The
models
can
be
used
to
assess
cure
rate
under
different
economic conditions to be able to apply different cure rates for different economic scenarios given different economic conditions.
The
EAD
represents
the
expected
exposure
at
the
event
of
a
default.
For
a
given
exposure,
the
Group
derives
the
EAD
from
the
contractual
amortization
schedule
and
takes
into
account
the
likelihood
of
pre-payments,
drawdowns,
rollovers,
extensions
and
use
of
unused
allowance
in
the
period
leading
up
to
default.
These
behavioral
estimates,
which
are
based
on
historical
observations
and
forward-looking
forecasts, apply differently to each type of exposure.
the number of days in arrears exceeds 30 days; or
Apart
from
the
low
credit
risk
exemption,
the
Group
considers
a
significant
increase
in
credit
risk
to
have
occurred
for
a
given
exposure
if
one of the following holds:
The
Group
monitors
the
effectiveness
of
the
criteria
used
to
identify
significant
increases
in
credit
risk
by
regular
reviews
to
confirm
that
the
criteria
is
capable
of
identifying
significant
increases
in
credit
risk
before
an
exposure
is
in
default
and
there
is
no
unwarranted
volatility
in
loss allowance from transfers between 12-month ECL (stage 1) and lifetime ECL (stage 2).
The
Group
has
six
different
exposure
specific
PD
models
for
individuals:
mortgages,
consumer
loans,
auto
loans,
guarantees,
loans
to
individuals
for
work
purposes
and
other
loans.
The
Bank
has
a
different
model
or
rating
logic
for
the
following
corporate
portfolios
–
large
corporates,
retail
SMEs,
holding
companies,
construction
projects,
financial
institutions
(external
ratings),
municipalities,
state
related
entities and cooperatives.
the exposure is on the Group's list for exposures to watch due to significant increase in credit risk.
The
assessment
of
significant
increase
in
credit
risk
requires
significant
judgment.
In
determining
whether
the
risk
of
default
for
an
exposure
has
increased
significantly
since
initial
recognition,
the
Group
considers
relevant,
reasonable
and
supportable
information
on
an
ongoing
basis.
Assumptions
are
drawn
based
on
the
Group's
historical
experience
and
expert
judgement
including
forward-looking
expectations.
If
an
exposure
has
low
credit
risk
at
the
reporting
date,
the
Group
determines
that
the
credit
risk
on
the
exposure
has
not
increased
significantly since initial recognition. Low credit risk means that both the 12-month and annualized lifetime probabilities of default are low.
the exposure's 12-month probability of default has increased significantly from the 12-month probability of default at origination; 
the
exposure's
annualized
lifetime
probability
of
default
has
increased
significantly
from
the
annualized
lifetime
probability
of
default
at
origination.
As
the
Group
does
not
have
the
benefit
of
hindsight,
this
comparison
is
only
used
for
exposures
that
originate
on
or
after
1
January 2018;
 
Assumptions
on
key
macro-economic
indicators
are
on
an
ongoing
basis
estimated
based
on
internal
and
external
information
available
at
each
time.
The
Group
formulates
a
'base
case'
view
of
the
future
direction
of
relevant
economic
variables
as
well
as
a
representative
range
of
other
possible
forecast
scenarios.
The
Group
uses
these
forecasts
to
adjust
its
estimates
of
lifetime
probability
of
default
and
other
factors that affect the lifetime expected credit loss. 
91

===== SIDA 92 =====

Arion Bank Consolidated Financial Statements 2025
Notes to the Consolidated Financial Statements
59.
Financial assets and financial liabilities, continued
Exposures in default
Expected credit loss measurement
–
–
–
Forward looking scenarios 
Write-off of loans
probability of default (PD),
loss given default (LGD); and
Loans
are
written
off,
either
partially
or
in
full,
when
there
is
no
realistic
prospect
of
recovery
i.e.
the
bankruptcy
of
the
borrower
or
an
ineffective
attachment
or
distraint.
Collateralized
loans
are
generally
written
of
when
the
realization
of
collateral
have
been
received.
After
write-off, exposures continue to be subject to collection activities in accordance with Icelandic law.
exposure at default (EAD).
Impairment
losses
are
recognized
in
net
impairment,
see
note
44.
Any
decreases
in
impairment
loss
amounts
are
reversed
through
net
impairment.
The
predominant
macro-economic
variable
used
across
all
portfolios
is
the
unemployment
rate
in
Iceland,
as
measured
by
the
Directorate
of
Labor.
Among
other
variables
considered
are
GDP
growth,
private
consumption
expenditure,
inflation,
development
of
housing
prices
and
benchmark
interest
rates.
The
average
cure
is
also
correlated
with
unemployment
rate,
depending
on
portfolio,
and
collateral
haircuts
are
adjusted
for
different
scenarios.
Exit
and
pre-payment
rates,
which
affects
EAD,
are
dependent
on
refinancing
spreads
and
due
to
the
correlation between interest rates and unemployment rate they are adjusted for different scenarios.
Exposures in default at each reporting date, according to the Group’s definition, are considered to be credit impaired.
The expected credit loss (ECL) calculations are based on three main components:
The
ECL
for
an
exposure
is
the
weighted
average
of
the
expected
credit
loss
for
different
macro-economic
scenarios
provided
by
the
Group's
management.
The
Group
currently
considers
three
scenarios:
'base
case',
'optimistic'
and
'pessimistic'
and
assigns
its
best
estimate
of
the
likelihood
of
occurrence
to
each
one.
The
development
of
macro-economic
variables
and
the
corresponding
weights
are
based
on
expert
judgement
supported
by
historical
data.
The
Group
incorporates
forward-looking
macro-economic
information
into
both
its
assessment
of
whether
the
credit
risk
of
an
instrument
has
increased
significantly
since
its
initial
recognition
(via
the
lifetime
credit
risk
rating
comparison)
and
its
measurement
of
ECL
as
the
PD
term
structures,
LGD
and
EAD
include
macro-economic
adjustments
for
each
of
the scenarios.
Each
component
is
derived
from
internally
generated
models,
apart
from
external
credit
ratings.
The
models
are
developed
with
statistical
methods and/or expert judgement supported by historical data and adjusted for expected macro-economic effects. 
The
Group
measures
ECL
considering
the
risk
of
default
over
the
maximum
contractual
period
(including
any
extension
periods)
over
which
it
is
exposed
to
credit
risk.
The
maximum
contractual
period
extends
to
the
date
at
which
the
Group
has
the
right
to
require
repayment
of
an
advance
or
terminate
a
loan
commitment
or
guarantee.
However,
for
overdrafts
and
credit
card
facilities
that
include
both
a
loan
and
an
undrawn
commitment
component,
the
Group
measures
ECL
over
a
period
longer
than
the
maximum
contractual
period
if
the
Group’s
procedures
for
extensions
do
not
limit
the
Group’s
exposure
to
credit
losses
to
the
contractual
period.
These
facilities
do
not
have
a
fixed
term
or
repayment
structure.
The
Group
can
cancel
them
with
immediate
effect
but
this
contractual
right
is
not
enforced
in
the
normal
day-to-
day
management,
but
only
when
the
Group
becomes
aware
of
an
increase
in
credit
risk
at
the
facility
level.
This
longer
period
is
estimated
taking
into
account
the
credit
risk
management
actions
that
the
Group
expects
to
take
and
that
serve
to
mitigate
ECL.
These
include
a
reduction
in
limits,
cancellation
of
the
facility
and/or
turning
the
outstanding
balance
into
a
loan
with
fixed
repayment
terms.
The
ECL
calculations involve discounting using the exposures' effective interest rates.
The
amount
of
the
loss
impaired
is
the
difference
between
the
assets'
gross
carrying
value
and
the
present
value
of
estimated
future
cash
flow. In some instances, the impairment of exposures is zero due to collateral coverage. 
92

===== SIDA 93 =====

Arion Bank Consolidated Financial Statements 2025
Notes to the Consolidated Financial Statements
59.
Financial assets and financial liabilities, continued
60.
Hedge accounting
61.
Cash and cash equivalents
Modifications
The
original
terms
of
a
financial
asset
may
be
renegotiated
or
otherwise
modified,
resulting
in
changes
to
the
contractual
terms
of
the
financial
asset
that
affect
the
contractual
cash
flow.
The
treatment
of
such
modifications
is
primarily
based
on
the
process
undertaken
to
execute
the
renegotiation
and
the
nature
and
extent
of
changes
made.
Modifications
which
are
performed
for
credit
reasons,
primarily
related
to
troubled
debt
restructurings,
are
generally
treated
as
modifications
of
the
original
financial
asset
unless
modifications
are
significant.
Significant
modifications
are
generally
considered
to
be
an
expiry
of
the
original
cash
flows;
accordingly,
such
renegotiations
are
treated as a derecognition of the original financial asset and recognition of a new financial asset.
The Group has chosen to continue to apply the hedge accounting requirements of IAS 39 as an accounting policy choice as permitted under 
IFRS
9.
The
Group
has
chosen
to
continue
to
apply
the
hedge
accounting
requirements
of
IAS
39
as
an
accounting
policy
choice
as
permitted under IFRS 9. 
On
initial
designation
of
the
hedges,
the
Group
formally
documented
the
relationship
between
the
hedging
instruments
and
hedged
items,
including
the
risk
management
objective
and
strategy
in
undertaking
the
hedge,
together
with
the
method
that
will
be
used
to
assess
the
effectiveness
of
the
hedging
relationships.
The
Group
makes
an
assessment,
both
at
inception
of
the
hedge
relationships
and
on
an
ongoing
basis,
of
whether
the
hedging
instruments
are
expected
to
be
highly
effective
in
offsetting
the
changes
in
the
fair
value
of
the
hedged
items
during
the
period
for
which
the
hedge
is
designated,
and
whether
the
actual
results
of
each
hedge
are
within
the
range
of
80–125%.
If
the
hedging
derivative
expires
or
is
sold,
terminated
or
exercised,
or
the
hedge
no
longer
meets
the
criteria
for
fair
value
hedge
accounting,
or
the
hedge
designation
is
revoked,
then
hedge
accounting
is
discontinued
prospectively.
Any
adjustments,
up
to
the
point
of
discontinuation,
to
a
hedged
item
for
which
the
effective
interest
method
is
used,
is
amortized
to
profit
or
loss
as
part
of
the
recalculated
effective interest rate of the item over its remaining life.
If
a
modification
of
terms
does
not
result
in
derecognition
of
the
financial
asset,
the
carrying
amount
of
the
financial
asset
is
recalculated
as
the
present
value
of
the
renegotiated
or
modified
contractual
cash
flows,
discounted
at
the
original
effective
interest
rate
and
gain
or
loss
is
recognized.
The
financial
asset
continues
to
be
subject
to
the
same
assessments
for
significant
increase
in
credit
risk
relative
to
initial
recognition
and
credit-impairment,
as
described
above.
A
modified
financial
asset
will
migrate
out
of
Stage
3
if
the
conditions
that
led
to
it
being
identified
as
credit-impaired
are
no
longer
present
and
relate
objectively
to
an
event
occurring
after
the
original
credit-impairment
was
recognized.
A
modified
financial
asset
will
migrate
out
of
Stage
2
when
it
no
longer
satisfies
the
relative
thresholds
set
to
identify
significant
increase in credit risk, which are based on changes in its PD, lifetime PD, days past due and other qualitative considerations.
If
a
modification
of
terms
results
in
derecognition
of
the
original
financial
asset
and
recognition
of
the
new
financial
asset,
the
new
financial
asset
will
generally
be
recorded
in
Stage
1,
unless
it
is
determined
to
be
credit-impaired
at
the
time
of
renegotiation.
For
the
purposes
of
assessing for significant increase in credit risk, the date of initial recognition for the new financial asset is the date of modification.
The
Group
applies
fair
value
hedge
accounting
with
respect
to
designated
hedging
relationship
of
certain
fixed-rate
foreign
currency
denominated
notes
issued
by
the
Bank
as
the
hedged
items
and
certain
foreign
currency
denominated
interest
rate
swaps
as
the
hedging
instruments.
The
Group
recognizes
the
changes
in
fair
value
of
the
interest
rate
swaps
together
with
changes
in
the
fair
value
of
bonds
attributable
to
interest
rate
risk
immediately
in
profit
or
loss
in
the
line
item
of
Note
10,
Net
gain
on
fair
value
hedge
of
interest
rate
swap.
Calculated accrued interest on both swaps and bonds are included in the line item of Note 7, Interest expense.
Other
derivatives,
not
designated
in
a
qualifying
hedge
relationship,
are
used
to
manage
its
exposure
to
foreign
currency,
interest
rate,
equity
market
and
credit
risk.
The
financial
instruments
used
include,
but
are
not
limited
to,
interest
rate
swaps,
cross-currency
swaps,
forward contracts, futures, options, credit swaps and equity swaps.
Cash
and
cash
equivalents
in
the
Statement
of
Cash
Flows
consist
of
cash,
demand
deposits
with
the
Central
Bank
and
demand
deposits
with
other
credit
institutions.
Cash
and
cash
equivalents
comprise
balances
with
less
than
three
months'
maturity
from
the
date
of
acquisition. Cash and cash equivalents are carried at amortized cost in the Statement of Financial position.
93

===== SIDA 94 =====

Arion Bank Consolidated Financial Statements 2025
Notes to the Consolidated Financial Statements
62.
Loans
63.
Derivatives
64.
Intangible assets
Goodwill and infrastructure
Customer relationship and related agreements
Software
Amortization of intangible assets
65.
Investment property
When
the
Group
is
the
lessor
in
a
lease
agreement
that
transfers
substantially
all
of
the
risks
and
rewards
incidental
to
ownership
of
the
asset
to
the
lessee,
the
arrangement
is
classified
as
a
capital
lease
and
a
receivable
equal
to
the
net
investment
in
the
lease
is
recognized
and presented within loans.
When
the
Group
purchases
an
asset
and
simultaneously
enters
into
an
agreement
to
resell
the
asset
(or
a
substantially
similar
asset)
at
a
fixed
price
on
a
future
date
reverse
repo
or
stock
borrowing,
the
arrangement
is
accounted
for
as
a
loan,
and
the
underlying
asset
is
not
recognized in the Group's Consolidated Financial Statements.
Goodwill
and
infrastructure
that
arises
on
the
acquisition
of
subsidiaries
is
presented
with
intangible
assets.
Subsequent
to
initial
recognition
goodwill and infrastructure is measured at cost less accumulated impairment losses.
Customer relationship and related agreements are measured at cost less any accumulated impairment losses.
A
derivative
is
a
financial
instrument
or
other
contract,
the
value
of
which
changes
in
response
to
a
change
in
an
underlying
variable,
such
as
share,
commodity
or
bond
prices,
an
index
value
or
an
exchange
or
interest
rate,
which
requires
no
initial
net
investment
or
initial
net
investment
that
is
smaller
than
would
be
required
for
other
types
of
contracts
that
would
be
expected
to
have
a
similar
response
to
changes
in market factors and which is settled at a future date.
Software acquired by the Group is measured at cost less accumulated amortization and any accumulated impairment losses.
Subsequent
expenditure
on
software
is
capitalized
only
when
it
increases
the
future
economic
benefits
embodied
in
the
specific
asset
to
which it relates. All other expenditure is expensed as incurred.
Derivatives
are
recognized
at
fair
value.
Fair
value
changes
are
recognized
in
the
Income
Statement.
Changes
in
fair
values
of
derivatives
are
split
into
interest
income,
foreign
exchange
differences
and
net
financial
gain
or
loss.
Interest
income
is
recognized
on
an
accrual
basis.
Derivatives
with
positive
fair
values
are
recognized
as
Financial
instruments
and
derivatives
with
negative
fair
values
are
recognized
as
Financial liabilities at fair value.
Amortization
of
intangible
assets
is
recognized
in
the
Income
Statement
on
a
straight-line
basis
over
the
estimated
useful
life,
from
the
date
that it is available for use. The estimated useful life of intangible assets for the current and comparative periods is three to ten years.
An investment property is a property which is held either to earn rental income or for capital appreciation or for both.
Investment
property
is
initially
measured
at
cost
and
subsequently
at
fair
value.
Gains
or
losses
arising
from
changes
in
the
fair
values
of
investment properties are included in the Income Statement.
Loans
are
initially
measured
at
fair
value
plus
incremental
direct
transaction
costs,
and
subsequently
measured
at
their
amortized
cost
using
the effective interest method. 
Loans
are
financial
instruments
with
fixed
or
determinable
payments
that
are
not
quoted
in
an
active
market
and
that
the
Group
does
not
intend
to
sell
immediately
or
in
the
near
term.
Loans
include
loans
provided
by
the
Group
to
credit
institutions
and
to
its
customers,
participation in loans from other lenders and purchased loans.
94

===== SIDA 95 =====

Arion Bank Consolidated Financial Statements 2025
Notes to the Consolidated Financial Statements
66.
Impairment of non-financial assets
67.
Deposits
68.
Borrowings
69.
Subordinated liabilities
70.
Assets and disposal groups held for sale
Subordinated
liabilities
are
financial
liabilities
in
the
form
of
subordinated
capital
which,
in
case
of
the
Group's
voluntary
or
compulsory
winding-up,
will
not
be
repaid
until
after
the
claims
of
ordinary
creditors
have
been
met.
In
the
calculation
of
the
capital
ratio,
they
are
included
within
both
Tier
1
and
Tier
2,
based
on
terms
of
each
instrument
.
The
Group
may
only
retire
subordinated
liabilities
with
the
permission of the FSA. 
The
Group
classifies
a
Asset
or
disposal
group
as
held
for
sale
if
its
carrying
amount
will
be
recovered
principally
through
a
sale
transaction
rather
than
through
continuing
use.
For
this
to
be
the
case
the
asset
or
disposal
group
must
be
available
for
immediate
sale
in
its
present
condition subject only to terms that are usual and customary for sales of such asset or disposal group and the sale must be highly probable.
Immediately
before
classification
as
held
for
sale,
the
measurement
of
the
qualifying
assets
and
all
assets
and
liabilities
in
a
disposal
group
is
brought
up-to-date
in
accordance
with
applicable
IFRS.
Then,
on
initial
classification
as
held
for
sale,
Assets
and
disposal
groups
are
recognized
at
the
lower
of
carrying
amount
and
fair
value
less
costs
to
sell.
Impairment
losses
on
initial
classification
as
held
for
sale
are
included
in
the
Income
Statement,
even
when
there
is
a
revaluation.
The
same
applies
to
gains
and
losses
on
subsequent
remeasurement.
Revaluation
through
the
reversal
of
impairment
in
subsequent
periods
is
limited
so
that
the
carrying
amount
of
the
held
for
sale,
Assets
or
disposal
groups
does
not
exceed
the
carrying
amount
that
would
have
been
determined
had
no
impairment
loss
been
recognized
in
prior
years. 
An
impairment
loss
in
respect
of
other
assets,
where
impairment
losses
have
been
recognized
in
prior
periods,
are
assessed
at
each
reporting
date
for
any
indications
that
the
loss
has
decreased
or
no
longer
exists.
An
impairment
loss
is
reversed
if
there
has
been
a
change
in
the
estimates
used
to
determine
the
recoverable
amount.
An
impairment
loss
is
reversed
only
to
the
extent
that
the
asset's
carrying
amount
does
not
exceed
the
carrying
amount
that
would
have
been
determined,
net
of
depreciation
or
amortization,
if
no
impairment
loss
had been recognized.
Deposits
are
initially
measured
at
fair
value
plus
transaction
costs,
and
subsequently
measured
at
their
amortized
cost
using
the
effective
interest method.
Subordinated
liabilities
are
recognized
initially
at
fair
value
less
attributable
transaction
costs.
Subsequent
to
initial
recognition,
subordinated
liabilities
are
stated
at
principal
amount
due
plus
accrued
interest,
which
is
recognized
in
the
Income
Statement
based
on
the
contractual
terms of the borrowing.
Borrowings
are
measured
at
amortized
cost
with
any
difference
between
cost
and
redemption
amount
being
recognized
in
the
Income
Statement
over
the
period
of
the
borrowings
on
an
effective
interest
basis.
Accrued
interest
is
included
in
the
carrying
amount
of
the
borrowings.
The
carrying
amounts
of
the
Group's
non-financial
assets,
other
than
assets
held
for
sale,
investment
property
and
deferred
tax
assets,
are
reviewed
at
each
reporting
date
to
determine,
whether
there
is
any
indication
of
impairment.
If
any
such
indication
exists
then
the
asset's
recoverable amount is estimated. The recoverable amount of intangible assets is assessed annually.
An
impairment
loss
is
recognized
if
the
carrying
amount
of
an
asset
exceeds
its
recoverable
amount.
Impairment
losses
are
recognized
in
profit or loss.
The
recoverable
amount
of
an
asset
is
the
greater
of
its
value
in
use
and
its
fair
value
less
cost
to
sell.
In
assessing
value
in
use,
the
estimated
future
cash
flows
are
discounted
to
their
present
value
using
a
pre-tax
discount
rate
that
reflects
current
market
assessments
of
the time value of money and the risks specific to the asset.
95

===== SIDA 96 =====

Arion Bank Consolidated Financial Statements 2025
Notes to the Consolidated Financial Statements
71.
Other assets and other liabilities
Property and equipment
Right-of-use asset and lease liability
Other assets and other liabilities
Insurance contract liabilities
72.
Equity
Share capital and share premium
Treasury shares
Dividends
Option reserve
Warrants reserve
The
depreciable
amount
of
property
and
equipment
is
determined
after
deducting
its
residual
value.
Depreciation
is
charged
to
the
Income
Statement
on
a
straight-line
basis
over
the
estimated
useful
lives
of
each
part
of
an
item
of
property
and
equipment.
The
estimated
useful
lives are as follows:
Insurance
contract
liabilities
comprise
liabilities
for
remaining
coverage
and
liabilities
from
incurred
claims.
Liabilities
for
remaining
coverage
is
estimated
using
a
simplified
method
which
is
based
on
paid
premiums
minus
premiums
from
insurance
services
recognized
as
income.
A
loss
factor
is
added
in
the
case
of
onerous
contracts.
Liabilities
from
incurred
claims
are
estimated
as
the
best
estimate
of
discounted
cash
flows
plus
a
risk
adjustment
due
to
non-financial
risk
and
other
expected
cost
of
claims.
Liabilities
for
remaining
coverage
are
estimated
in
the
same
way
as
the
best
estimate
for
claims
reserve
pursuant
to
the
Insurance
Activities
Act
No.
100/2016.
These
calculation
methods
are
in accordance with the rules of IFRS 17 Insurance Contracts.
The
Group
assesses
whether
a
contract
is
or
contains
a
lease,
at
inception
of
the
contract.
The
Group
recognises
a
right-of-use
asset
and
a
corresponding
lease
liability
with
respect
to
all
lease
arrangements
in
which
it
is
the
lessee,
except
for
short-term
leases
and
leases
of
low
value
assets.
For
these
leases,
the
Group
recognises
the
lease
payments
as
an
operating
expense
on
a
straight-line
basis
over
the
term
of
the
lease.
The
lease
liability
is
initially
measured
at
the
present
value
of
the
lease
payments
that
are
not
paid
at
the
commencement
date,
discounted
by
using
the
Group's
incremental
borrowing
rate.
The
right-of-use
assets
comprise
the
initial
measurement
of
the
corresponding
lease liability. They are subsequently measured at cost less accumulated depreciation.
Real estates .....................................................................................................................................................................
The
consideration
paid
for
the
purchase
of
own
shares
is
deducted
from
the
shareholders
equity
as
treasury
shares.
No
gain
or
loss
is
recognised in the Income Statement on purchase or sale of treasury stock.
The
option
reserve
represents
the
cumulative
charge
to
the
Income
Statement
for
options
for
employees
of
the
Group
to
purchase
shares
in
Arion
Bank.
Employee
stock
options
are
two-fold.
On
the
one
hand,
there
is
a
stock
option
plan
based
on
article
10
in
the
Icelandic
Act
on
income tax No. 90/2003, and on the other hand, there are stock options linked to the employee incentive scheme.
Par
value
of
issued
share
capital
is
ISK
1
per
share.
The
holders
of
ordinary
shares
are
entitled
to
receive
dividends
as
approved
by
the
AGM and are entitled to one vote per share at shareholders' meetings. Share capital has been fully paid.
The warrants reserve represents the consideration received for outstanding warrants.
The depreciation methods, useful lives and residual values are reassessed annually.
Items
of
property
and
equipment
are
measured
at
cost
less
accumulated
depreciation
and
impairment
losses.
When
parts
of
an
item
of
property and equipment have different useful lives, they are accounted for as separate items of property and equipment.
Other assets and other liabilities are stated at cost less impairment. 
Equipment  .......................................................................................................................................................................
33 years
3-15 years
Subsequent
expenditure
is
capitalized
only
when
it
is
probable
that
the
future
economic
benefits
of
the
expenditure
will
flow
to
the
Group.
Ongoing repairs and maintenance are expensed as incurred.
Dividends on shares are recognized in equity in the period in which they are approved by Arion Bank's shareholders.
96

===== SIDA 97 =====

Arion Bank Consolidated Financial Statements 2025
Notes to the Consolidated Financial Statements
72.
Equity, continued
Reserve for investments in subsidiaries and associates
Reserve for investments in securities
Financial assets at fair value through OCI
Statutory reserve
Foreign currency translation reserve
73.
Earnings per share
74.
Financial guarantees
75.
Fiduciary activities
The
Group
provides
asset
custody,
asset
management,
investment
management
and
advisory
services
to
its
clients.
These
services
require
the
Group
to
make
decisions
on
the
treatment,
acquisition
or
disposal
of
financial
instruments.
Assets
in
the
Group's
custody
are
not
reported in its Statement of Financial Position. 
According
to
the
Icelandic
Companies
Act
No.
2/1995
at
least
10%
of
the
profit
of
the
Group
which
is
not
devoted
to
meeting
losses
from
previous
years
and
is
not
contributed
to
other
legal
reserves
must
be
contributed
to
the
statutory
reserve
until
it
amounts
to
10%
of
the
share
capital.
When
that
limit
has
been
reached
the
contribution
must
be
at
least
5%
of
the
profit
until
the
statutory
reserve
amounts
to
25%
of the share capital of the Bank.
The
foreign
currency
translation
reserve
comprises
all
foreign
exchange
differences
arising
from
the
translation
of
the
Consolidated
Financial Statements of foreign operations.
The
Group
presents
basic
and
diluted
earnings
per
share
(EPS).
Basic
earnings
per
share
is
calculated
by
dividing
the
net
earnings
attributable
to
the
shareholders
of
Arion
Bank
hf.
by
the
weighted
average
number
of
ordinary
shares
outstanding
during
the
year.
Diluted
earnings
per
share
is
calculated
by
adjusting
the
weighted
average
number
of
ordinary
shares
outstanding
during
the
year
to
assume
conversion of all dilutive potential ordinary shares, which comprise share options granted to employees and issued warrants.
According
to
the
Financial
Statements
Act
No.
3/2006
fair
value
changes
of
financial
assets
from
the
initial
reporting,
shall
be
transferred
from
retained
earnings
to
a
fair
value
equity
reserve,
net
of
tax.
The
fair
value
equity
reserve
is
not
subject
to
dividend
payments.
The
fair
value
equity
reserve
shall
be
released
in
accordance
with
fair
value
changes
recognized
when
financial
asset
is
sold
or
redeemed
or
the
assumptions for the fair value change is no longer in force.
In
the
ordinary
course
of
business,
the
Group
gives
financial
guarantees,
consisting
of
letters
of
credit,
guarantees
and
acceptances.
Financial
guarantees
are
initially
recognized
in
the
Consolidated
Financial
Statements
at
fair
value,
being
the
premium
received.
Subsequent
to
initial
recognition,
the
Group's
liability
under
each
guarantee
is
measured
at
the
higher
of
the
amount
initially
recognized
less,
when
appropriate,
cumulative
amortization
recognized
in
the
Income
Statement,
and
the
best
estimate
of
expenditure
required
to
settle
any
financial
obligation
arising
as
a
result
of
the
guarantee.
Any
increase
in
the
liability
relating
to
financial
guarantees
is
recorded
in
the
Income
Statement.
The
premium
received
is
recognized
in
the
Income
Statement
in
Net
fees
and
commission
income
on
a
straight
line
basis
over
the life of the guarantee.
A
reserve
for
unrealized
fair
value
changes,
net
of
tax,
for
assets
held
at
fair
value
through
other
comprehensive
income.
The
fair
value
reserve is released in correlation with realization of gains or losses of financial assets at derecognition. 
According
to
the
Financial
Statements
Act
No.
3/2006
the
difference
between
share
of
profit
of
subsidiary
or
associate
in
excess
of
dividend
payment
or
dividend
payment
pending,
shall
be
transferred
to
a
restricted
shareholding
equity
reserve,
net
of
tax,
which
is
not
subject
to
dividend payments. When shareholding in subsidiary or associate is sold or written off the shareholding equity reserve shall be released and 
the amount transferred to retained earnings.
97

===== SIDA 98 =====

Arion Bank Consolidated Financial Statements 2025
Notes to the Consolidated Financial Statements
76.
Employee benefits
Share-based payment expense
77.
Standards issued but not yet effective
IFRS 18 Presentation and disclosures in financial statements
All
entities
with
employees
within
the
Group
have
defined
contribution
plans.
The
entities
pay
fixed
contributions
to
publicly
or
privately
administered
pension
plans
on
a
mandatory
and
contractual
basis.
The
Group
has
no
further
payment
obligations
once
these
contributions
have
been
paid.
The
contributions
are
recognized
as
an
expense
in
the
Income
Statement
when
they
become
due.
The
Group
does
not
operate any pension fund which confers pension rights.
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
payments
granted
to
employees
is
recognized
as
an
salary
expense,
with
a
corresponding
increase
in
equity,
over
the
contratual
period.
The
amount
recognized
as
an
expense
is
adjusted
to
reflect
the
number
of
shares
that
are
expected
to
be exercised at the vesting date.
IFRS
18
Presentation
and
disclosures
in
financial
statements
replaces
IAS
1,
carrying
forward
many
of
the
requirements
in
IAS
1
unchanged
and
complementing
them
with
new
requirements.
IFRS
18
introduces
new
requirements
for
presentation
within
the
statement
of
profit
or
loss,
including
specified
totals
and
subtotals.
Furthermore,
entities
are
required
to
classify
all
income
and
expenses
within
the
statement
of
profit
or
loss
into
one
of
five
categories:
operating,
investing,
financing,
income
taxes
and
discontinued
operations,
whereof
the
first
three
are
new.
The
standard
requires
disclosure
of
newly
defined
management-defined
performance
measures,
subtotals
of
income
and
expenses,
and
it
also
includes
new
requirements
for
aggregation
and
disaggregation
of
financial
information
based
on
the
identified
‘roles’
of
the
primary
financial
statements
(PFS)
and
the
notes.
The
Group
is
currently
working
to
identify
all
impacts
the
amendments
will
have
on
the
primary
Consolidated
Financial
Statements
and
Notes
to
the
Consolidated
Financial
Statements.
The
initial
expected
impacts
on
Group’s
Consolidated
Financial
Statements
are
not
expected
to
be
material.
A
new
disclosure
will
be
added
for
management-defined
performance
measures
as
required
by
the
standard.
In
addition
to
the
adoption
of
IFRS
18,
there
are
consequential
amendments
to
several
other
standards
that
are
not
expected
to
have
material
impacts
on
the
Consolidated
Financial
Statements.
IFRS
18,
and
the
amendments
to
the other standards, are effective for reporting periods beginning on or after 1 January 2027. IFRS 18 will apply retrospectively.
New
standards,
amendments
to
standards
and
interpretations
have
been
issued
but
are
not
yet
effective
for
the
year
ended
31
December
2025,
and
have
not
been
applied
in
preparing
these
Consolidated
Financial
Statements.
Relevant
to
the
Group's
reporting
is
IFRS
18
Presentation and disclosures in financial statements.
98

===== SIDA 99 =====

Arion Bank Consolidated Financial Statements 2025
Amounts are in ISK millions
 
Income Statement
2025
2024
2023
2022*
2021
52,542 
46,302 
44,685 
40,201 
32,063 
17,147 
15,360 
16,389 
16,449 
14,673 
2,111 
2,166 
152 
615 
3,442 
1,075 
2,845 
1,366 
(3,286)
6,220 
5,516 
(222)
1,589 
1,314 
1,827 
78,391 
66,451 
64,181 
55,293 
58,225 
(28,248)
(28,328)
(25,701)
(24,329)
(25,875)
(2,106)
(1,924)
(1,796)
(1,749)
(1,516)
(3,053)
(1,131)
(1,348)
144 
3,169 
44,984 
35,068 
35,336 
29,359 
34,003 
(12,458)
(8,919)
(9,595)
(9,944)
(6,782)
32,526 
26,149 
25,741 
19,415 
27,221 
(19)
(37)
(4)
6,543 
1,394 
32,507 
26,112 
25,737 
25,958 
28,615 
Statement of Financial Position
31.12.2025
31.12.2024
31.12.2023
31.12.2022
31.12.2021
Assets
150,111 
124,094 
114,118 
69,057 
42,136 
22,567 
25,690 
45,501 
30,272 
28,235 
1,329,056 
1,230,058 
1,084,757 
936,237 
822,941 
215,816 
206,417 
193,329 
225,657 
227,251 
7,305 
9,387 
7,862 
6,560 
6,132 
760 
814 
787 
668 
891 
7,533 
7,688 
8,783 
9,463 
9,689 
2 
2 
135 
2 
2 
98 
111 
61 
16,047 
16,811 
22,517 
14,006 
10,276 
19,901 
18,618 
1,755,765 
1,618,267 
1,465,609 
1,313,864 
1,172,706 
Liabilities and Equity
12,003 
6,618 
11,697 
5,000 
13,031 
921,182 
857,443 
755,361 
655,476 
568,424 
3,129 
8,394 
20,997 
5,877 
5,240 
12,983 
11,060 
10,303 
7,102 
4,262 
50,736 
49,950 
39,401 
54,086 
48,897 
494,823 
433,178 
392,563 
356,637 
298,947 
43,518 
44,538 
47,331 
35,088 
36,060 
1,538,374 
1,411,181 
1,277,653 
1,119,266 
974,861 
217,327 
206,582 
187,307 
193,925 
197,672 
64 
504 
649 
673 
173 
217,391 
207,086 
187,956 
194,598 
197,845 
1,755,765 
1,618,267 
1,465,609 
1,313,864 
1,172,706 
Total Liabilities and Equity .........................................................
Operating income ........................................................................
Earnings before income tax .......................................................
Net earnings from continuing operations ..................................
Net earnings ................................................................................
Cash and balances with Central Bank ...........................................
Loans to credit institutions .............................................................
Loans to customers .......................................................................
Intangible assets ...........................................................................
Tax assets ....................................................................................
Investment property ......................................................................
Total Assets .................................................................................
* Comparative figures have been restated in accordance with IFRS 17
Financial instruments ....................................................................
Tax liabilities .................................................................................
Total liabilities .............................................................................
Assets and disposal groups held for sale ......................................
Non-controlling interest .................................................................
Other liabilities ..............................................................................
Borrowings ....................................................................................
Subordinated liabilities ..................................................................
Shareholders' equity ......................................................................
Due to credit institutions and Central Bank ....................................
Deposits ........................................................................................
Financial liabilities at fair value ......................................................
Other assets .................................................................................
Total equity ..................................................................................
Net impairment ..............................................................................
Net financial income ......................................................................
Investments in associates .............................................................
Income tax expense ......................................................................
Net interest income .......................................................................
Bank levy ......................................................................................
Other operating income .................................................................
Net fee and commission income ...................................................
Operating expenses ......................................................................
Insurance service results ..............................................................
5-year overview
Discontinued operations, net of tax ...............................................
99

===== SIDA 100 =====

Appendices
Unaudited

===== SIDA 101 =====



===== SIDA 102 =====

Fundamentals to corporate governance at Arion Bank 
are the Articles of Association which are approved 
by shareholders, and policies and other documents 
adopted by the Board of Directors. These include the 
Board’s Rules of Procedure, and the Rules of Procedure 
of the Board’s Sub-Committees, and policies regarding 
the Bank’s operations and enterprise risk management 
architecture. These policies are revised every year, and 
whenever deemed necessary . Even more important is 
the Bank’s corporate culture, strategy , and operational 
procedures. Good corporate governance and corporate 
culture help to foster open and honest relations between 
the Board of Directors, shareholders, customers, and 
other stakeholders, such as the Bank’s employees and 
the public. Corporate governance also provides the 
foundations for responsible management and decision-
making, with the objective of generating sustainable 
long-term value creation. The Board of Directors places 
great importance on good corporate governance and re-
evaluates its governance practices regularly on the basis 
of recognized guidelines on corporate governance.
A central part of governance for financial institutions 
involves managing risks which will invariably arise in 
operations. Risk management is described in more detail 
later in this statement, in the Bank’s Annual Report.
 Establishing and maintaining effective risk management 
and controls constitutes a key challenge in the Bank’s 
activity and to the Bank’s overall soundness.
This Corporate Governance Statement is based on the 
legislation, regulations and recognized guidelines which 
are in force at the time the Bank’s financial statement is 
adopted by the Board of Directors.
Excellence in corporate governance
Arion Bank has been recognized as a company which has 
achieved excellence in corporate governance, following a 
formal assessment based on the Icelandic Guidelines on 
Corporate Governance issued by the Icelandic Chamber 
of Commerce, SA – Business Iceland and Nasdaq Iceland, 
initially in December 2015, April 2019, August 2022, 
August 2023, August 2024 and again in August 2025. This 
recognition was granted following an in-depth assessment 
by an independent party of corporate governance at the 
Bank, including governance by the Board of Directors, 
sub-committees and management.
Compliance with guidelines on good 
corporate governance
In respect to corporate governance arrangements, Arion 
Bank applies the European Banking Authority (EBA) 
Guidelines on Internal Governance (EBA/GL/2021/05), in 
line with requirements found in Regulation (EU) 1093/2010 
and Act 24/2017 , on European Financial Supervision. The 
Guidelines on Internal Governance are available on the 
website of the Financial Supervisory Authority of the 
Central Bank of Iceland. 
Furthermore, according to the Financial Undertakings 
Act No. 161/2002 Arion Bank is obliged to comply with 
recognized guidelines on corporate governance. The Bank 
complies with the sixth edition of the Icelandic Guidelines 
on Corporate Governance issued by Iceland Chamber of 
Commerce, SA – Business Iceland and Nasdaq Iceland, 
published in February 2021 and in force as of 1 July 2021. 
According to the guidelines a company shall state whether 
it has deviated from the guidelines, if so, which parts and 
also explain why it has done so.
The Bank complies with the guidelines with two variations: 
Article 5.1.2. states that the rules of procedure of sub-
committees of the Board shall be posted on the Bank’s 
website. The rules of the Board Credit Committee have 
not been published on the Bank’s website with respect 
to their nature.
The final sub-paragraph of article 5.4.5 states that the 
role of a remuneration committee shall include taking 
an independent stance on the effect of wages on the 
Company’s risk exposure and risk management, in 
cooperation with the Company’s Audit Committee. In line 
Arion Bank (Arion Bank or the Bank) is an Icelandic public limited company whose 
shares are listed on Nasdaq Iceland and Nasdaq Stockholm. Here the Board submits 
its Corporate Governance Statement for 2025. Corporate governance is focused on 
how responsibilities are allocated among the various bodies of the Bank and how 
systems for decision making are constructed, in accordance with prevailing laws and 
regulations. Arion Bank’s shareholders exercise governance principally by electing 
the Board of Directors, which in turn appoint the CEO and monitor the Bank’s conduct 
of business. The CEO is responsible for the day-to-day operations of the Bank and 
represents the Bank in all matters concerning normal operations. The CEO must in this 
respect comply with the relevant legislation, the Bank’s Articles of Association and 
the policies and instructions laid down by the Board. The CEO is responsible for the 
implementation of the Bank’s policies.

===== SIDA 103 =====

with, inter alia, the EBA Guidelines on Internal Governance 
and article 78(3) of the Act on Financial Undertakings, 
this role falls to the Board’s Remuneration Committee in 
cooperation with the Board’s Risk Committee.
Nomination Committee
The role of the Nomination Committee at Arion Bank is 
to promote good corporate governance and to facilitate 
informed decision-making by shareholders when 
selecting Board members to ensure that Board members 
have wide and versatile qualifications and experience. The 
Committee has an advisory role regarding the election 
of Board members and makes a proposal on their 
remuneration.
The Committee relies on the Bank’s Suitability Policy when 
making nominations. At the Bank’s annual general meeting 
on 12 March 2025, two members of the Nomination 
Committee were appointed, Júlíus Thorfinnsson and 
Audur Bjarnadóttir. According to the Rules of Procedure 
for the Nomination Committee, the third member of the 
Committee shall be the Chairman of the Board of Directors 
or another Board Member appointed by the Board.
Legal framework for the Bank’s operation 
Arion Bank is a financial institution which operates in 
accordance with the Financial Undertakings Act No. 
161/2002.
Acts of law which also apply to the Bank’s operations 
include e.g., the Act on Markets for Financial Instruments 
No. 115/2021, to Act on Undertakings for Collective 
Investment in Transferable Securities (UCITS) No. 116/2021 
and Act on Alternative Investment Fund Managers No. 
45/2020, Act on Payment Services No. 114/2021, Act No. 
5/2023 on Payment Accounts, Act on Measures Against 
Money Laundering and Terrorist Financing No. 140/2018, 
Act on Consumer Mortgages No. 118/2016, Consumer 
Loans Act No. 33/2013, Competition Act No. 44/2005 and 
Public Limited Companies Act No. 2/1995.
Arion Bank is a strongly capitalized bank whose goal is 
to excel by helping those who want to achieve success 
in Iceland and elsewhere in the Arctic through smart 
and reliable financial solutions which enhance financial 
health and create sustainable value as well as aiming to 
be the best at meeting the needs of our target groups – 
a leader which is a driver of success for our customers 
and society as a whole. As noted, the Bank is listed on 
Nasdaq Iceland and Nasdaq Stockholm. The Bank 
has also issued financial instruments which have been 
admitted for trading on regulated securities markets in 
Iceland and Luxembourg. The Bank is, therefore, subject 
to the disclosure requirements of issuers pursuant to the 
Act on Markets for Financial Instruments and the rules of 
the relevant stock exchanges.
The Financial Supervisory Authority of the Central Bank 
of Iceland (FSA) supervises the operations of Arion Bank 
in accordance with the provisions of Act No. 87/1998 
on the Official Supervision of Financial Operations. 
Further information on the FSA and an overview of the 
legal and regulatory framework applicable to the Bank, 
as well as FSA guidelines and guidelines issued by 
European Financial Supervisory institutions, can be seen 
on the FSA’s website, www.cb.is/financial-supervision/. 
Numerous other legislations apply to the operations of 
financial undertakings.
Internal controls, auditing and accounting 
Internal control
The Bank is committed to the highest standards of 
corporate governance and regards internal control as an 
integral part of its operation. An effective internal control 
system is built to mitigate risk to acceptable levels by 
facilitating enlightened decision-making, thus supporting 
the Bank in achieving its objectives and enabling the 
creation and preservation of value.
The objective of the Bank’s system of internal controls 
is to ensure:
 ◆ The Bank’s policies, objectives and business plans  
 are achieved within set risk appetite and threshold.
 ◆ The actions of the Board of Directors, management  
 and employees comply with the Bank’s policies,   
 standards, processes and all relevant laws and   
 regulations.
 ◆ The Bank’s assets and resources, including its data,  
 people and systems are adequately protected.
 ◆ Data and information published either internally or  
 externally is accurate, reliable, and timely .
 ◆ The risks that are inherent in the Bank’s operations  
 are managed.
 ◆ Practical controls and processes have been   
 established that require and encourage the Board,  
 management, and employees to carry out their   
 duties and responsibilities in an efficient and   
 effective manner.
 ◆ The key components of the internal control 
framework are Control Environment, Risk 
Assessments, Control Activities, Information and 
Communication, and Monitoring Activities. These 
components are interrelated with all operations of 
the Bank.

===== SIDA 104 =====

Control Environment includes the governance and 
manage ment function of the Bank, as well as the attitude 
of senior manage ment towards internal control and its 
impor tance. 
The key principles relating to control en vironment include:
 ◆ Integrity and ethical values.
 ◆ The attitude of senior management and tone from the top.
 ◆ Organizational structure.
 ◆ Assignment of authority and responsibility .
 ◆ Employee skills, human resources policy and its   
  implementation.
Risk Assessment is a process of identifying internal and 
external factors that can affect the objectives of the Bank 
and assess their impact and importance. It forms a basis 
for determining how risk should be managed so that risk-
taking is in accordance with risk appetite.
Control Activities are the actions performed at all levels 
within the Bank and are intended to mitigate risks to 
acceptable levels while achieving objectives. Information 
is necessary for the Bank to carry out its internal control 
responsibilities. Communication occurs both internally 
and externally , and provides the Bank with relevant, 
quality information needed to carry out day-to-day 
controls. Monitoring Activities are the ongoing or separate 
evaluations that are used to ascertain whether each of 
the five components of internal controls is present and 
functioning.
Arion Bank looks to the Three Lines Model for organizing 
internal controls. All lines work together to contribute to 
the creation and protection of value. Alignment of activities 
is achieved through communication, cooperation, and 
collaboration. This ensures the reliability , coherence, 
and transparency of information needed for risk-based 
decision making.
The first line  is made up of employees who supervise 
the operations and organization of the Bank on a day-
to-day basis. They are responsible for establishing and 
maintaining effective internal controls and managing 
risk in day-to-day operations. This involves identifying 
and evaluating risk and putting in place appropriate 
countermeasures to reduce risk. The first line is responsible 
for supervising the implementation of internal rules and 
processes in compliance with the law, regulations and 
the Bank’s strategy and it must ensure that all actions 
are in compliance with established procedures and that 
corrective action is taken if any deficiencies are detected.
Board of Directors
Accountability to stakeholders 
for orginizational oversight
Internal audit
Independent assurace
Third line
Independent and objective assurace and 
advice on all matters related to the 
achievement of objectives
Second line
Expertise, support, monitoring and 
challenge on risk-related matters
First line
Provision of products and
services, managing risk
Management
Actions to achive organizational objective
(including risk management)
KEY
Integrity, leadership
and transparency
Accountability,
reporting
Delegation, direction
resources, oversight
Alignment, communication,
coordination, collaboration
The second line is set up to ensure that the first line has 
established adequate internal controls which work as 
intended. The second line supports the first line’s risk 
management with expert advice, monitoring and restraint 
in decision-making. Risk Management and Compliance 
are the main participants in the second line, although other 
units may also be assigned specific monitoring roles.
The third line is Internal Audit, which provides independent 
and objective assurance and advice on the adequacy and 
effectiveness of governance, risk management and controls, 
through systematic and disciplined processes, expertise 
and assessment. It reports its findings to management and 
the Board of Directors to promote and facilitate continuous 
improvement.

===== SIDA 105 =====

Internal audit is accountable to the Board of Directors, as 
independence from management is critical to its objectivity , 
authority , and credibility .
Risk Management
A central feature of the activities of all financial institutions 
is well informed risk-taking according to a predetermined 
strategy . Arion Bank thus takes on risks compatible with 
its defined risk appetite, which is regularly reviewed 
and approved by the Board of Directors. The Bank’s risk 
appetite is translated into exposure and risk limits which are 
monitored by Risk Management. The Board is responsible 
for Arion Bank’s internal capital adequacy assessment 
process, the main objective of which is to ensure awareness 
of the Bank’s risk profile and ensure that it has systems in 
place to assess, quantify and monitor its total risk exposure.
As defined in the Bank’s enterprise risk policy , the Bank is 
exposed to seven significant risk factors and has set up 
risk policies for each one. These are credit risk, market risk, 
liquidity risk, operational risk, conduct and compliance risk, 
sustainability risk and business risk.
The Bank’s Risk Management division is headed by the 
Chief Risk Officer. It is independent and centralized and 
reports directly to the CEO and operates in accordance 
with a special charter from the Board. Risk Management 
comprises four departments whose role is to analyse, 
monitor and regularly report to the management body and 
Board of Directors on the risks faced by the Bank.
Further information on risk management is contained in the 
Bank’s annual report and the Bank’s risk report.
Compliance
Compliance is an independent control function which 
reports directly to the CEO and works in accordance with a 
special charter from the Board.
The main role of Compliance is to ensure that the Bank has 
in place proactive measures to reduce the risk of rules being 
breached in the course of its activities. Compliance is also 
responsible for coordinating the Bank’s measures against 
money laundering and terrorist financing to reduce the 
risk of the Bank’s services being used for illegal purposes. 
Furthermore, the Compliance Officer has the role of the 
Bank’s Data Protection Officer. The Bank has adopted a 
data protection statement which can be seen on the Bank’s 
website.
The duties of Compliance are carried out under a risk-
based compliance plan approved by the Board of Directors, 
including a monitoring and training schedule for employees 
which addresses the laws and rules under which the Bank 
operates. Compliance provides the Board of Directors with 
a quarterly report on its activities.
Further information can be found on the Bank’s website.
Internal Audit
The Internal Auditor is appointed by the Board of Directors 
and reports directly to the Board. The Board sets the 
Internal Auditor a charter which sets out the responsibilities 
associated with the position and the scope of the work. The 
role of the Internal Auditor is to provide independent and 
objective assurance and advice designed to add value and 
improve the Bank’s operations. The scope of the audit is 
the Bank, its subsidiaries and pension funds serviced by 
Arion Bank.
The internal audit department will govern itself and, with 
independent and disciplined methods, confirms the 
adequacy and effectiveness of the first and the second line. 
The internal audit department advises with independent and 
objective assurance on the adequacy and effectiveness of 
Corporate Governance, Risk management, and internal 
controls. This is done with independent audits. The internal 
audit department reports its findings to the management, 
the Board Audit Committee, and the Board of Directors.
Accounting and auditing 
The Bank’s Finance division is responsible for preparing 
the accounts and this is done in accordance with the 
International Financial Reporting Standards (IFRS) and 
Icelandic laws. The Bank publishes its financial statement on 
a quarterly basis and management statements are generally 
submitted to the Board ten times a year. The Board Audit 
Committee examines the annual financial statement and 
interim financial statements, while the external auditors 
review and audit the accounts twice a year. The Board Audit 
Committee gives its opinion on the accounts to the Board of 
Directors, which then approves and endorses the accounts.
Arion’s values and code of ethics
The Bank’s values are designed to provide guidance when 
making decisions and in everything else employees say and 
do. They refer to the Bank’s role, attitude, and conduct. Arion 
Bank’s values are: Find solutions, work together, and say 
what we mean.
The management and employees of Arion Bank are 
conscious of the fact that the Bank’s activities affect 
different stakeholders and society at large. The Bank’s 
code of ethics is designed to serve as a key to responsible 
decision-making at Arion Bank. The code of ethics is 
approved by the Board of Directors.
Sustainability
Arion Bank has a sustainability committee and the 
management of risk in connection with ESG factors has 
been defined as part of the Bank’s risk management system. 
The CEO is the chairman of the committee, whose role is to 
monitor the Bank’s performance in connection with its policy 
and commitment on sustainability and to ensure that ESG 
factors are considered in decisions and plans made by the 
Bank. The sustainable financing committee and the equality 
committee are sub-committees of this committee.
The Bank has adopted a risk policy on sustainability 
which is approved by the Board of Directors and reviewed 
annually . This policy states that the Bank seeks to ensure 
that its operations and services do not have a negative

===== SIDA 106 =====

impact on people or the environment. It also highlights the 
critical importance of understanding the potential impact 
of sustainability risks on the Bank’s operations and overall 
performance. It further states that the Bank supports 
Iceland’s climate action plan whose goal is to meet the 
obligations of the Paris Climate Agreement and to achieve 
the ambitious goal of carbon neutrality in Iceland by 2040. 
Key performance indicators relating to ESG issues are 
part of monthly risk report to the Board and the Bank’s risk 
appetite connected to these issues have been defined.
Further information on sustainability at Arion Bank can be 
found in the Bank’s 2025 Annual and Sustainability Report.
Board of Directors and Sub-committees
The main duty of the Board of Directors of Arion Bank is 
to manage the Bank between shareholders’ meetings 
according to applicable laws, regulations, and articles 
of association. The Board tends to those operations of 
the Bank which are not considered part of the day-to-
day business, i.e. it makes decisions on issues which are 
unusual or of a significant nature. One of the Board’s main 
duties is to supervise the Bank’s activities. The Board’s work, 
duties and role are defined in detail in the rules of procedure 
of the Board of Directors, which have been established on 
the basis of the EBA Guidelines on Internal Governance, 
Article 54 of the Financial Undertakings Act No. 161/2002, 
Article 70 of the Public Limited Companies Act No. 2/1995, 
FSA Guidelines No. 1/2010, and the articles of association of 
the Bank. The rules of procedure of the Board of Directors 
can be found on the Bank’s website.
The Board of Directors appoints a Chief Executive Officer 
who is responsible for the day-to-day operations in 
accordance with a strategy set out by the Board.
The Board of Directors and the Chief Executive Officer shall 
carry out their duties with integrity and ensure that the Bank 
is run in a sound and reasonable manner in the interests 
of the customers, the community , the shareholders and 
the Bank itself, cf. Article 1 (1) of the Financial Undertakings 
Act. The Chief Executive Officer shall ensure that the Board 
receives sufficient support to carry out its duties.
The Board of Directors is generally elected for a term of one 
year at the Bank’s annual general meeting. At Arion Bank’s 
annual general meeting on 12 March 2025, five Directors 
and two Alternates were elected to the Board of Directors.
The elected Board Directors have diverse backgrounds 
and extensive skills, experience, and expertise. When 
electing the Board care is taken to ensure at least 40% 
representation of each gender among directors and 
alternates. Currently the Board consists of two men and 
three women.
Information on the independence of Directors is published 
on the Bank’s website before the annual general meeting 
or a shareholders’ meeting where a Board member is to be 
elected. The minutes of the annual general meeting and 
shareholders’ meetings are also published on the Bank’s 
website.
The Board of Directors meet at least ten times a year. 
In 2025 the Board met on twenty-one occasions. The 
Chairman of the Board is responsible for ensuring that 
the Board performs its role in an efficient and organized 
manner. The Chairman chairs Board meetings and ensures 
that there is enough time allocated to the discussion of 
important issues and that strategy issues are discussed 
thoroughly . The Chairman is not permitted to undertake any 
other work for the Bank unless part of the normal duties of 
the Chairman.
According to the Board’s Rules of Procedure the Board is 
permitted to establish committees to discuss particular 
areas of the Bank’s operations. No later than one month 
following the annual general meeting the Board appoints 
members to each of its sub-committees and assesses 
whether it is necessary to appoint external members 
to certain committees in order to bring in a greater level 
of expertise. One of the committee members in the 
Board Audit Committee, Heimir Thorsteinsson, is not a 
Board member and is independent of the Bank and its 
shareholders. 
The Board sub-committees are as follows:
 ◆    Board Audit Committee (BAC): The BAC’s main role 
is to contribute to the high-quality statutory auditing 
of the Bank and monitor the effectiveness of the 
Bank’s internal quality control, risk management 
systems and internal audit function, with regard to 
the Bank’s financial reporting. The Committee met 
five times in 2025.
 ◆  Board Risk Committee (BRIC): The Committee’s 
main role is, inter alia, to evaluate the Bank’s risk 
policy and risk appetite, monitor all the Bank’s 
defined risks and to have a thorough knowledge of 
the risk assessments and methods used to manage 
risk employed by the Bank. Committee members 
should have the qualifications and experience 
necessary to be able to discharge their duties 
including forming the Bank’s risk policy and risk 
appetite. The Committee met eight times in 2025.
 ◆  Board Credit Committee (BCC): Its main task is to 
attend to credit issues which exceed the credit limits 
of its sub-committees. The Committee met four 
times in 2025.
 ◆  Board Remuneration Committee (BRC): The 
Committee’s main role is to prepare a remuneration 
policy for the Bank on an annual basis. It also 
advises the Board on remuneration to the CEO, 
Managing Directors, the Compliance Officer and the 
Chief Internal Auditor, and on the Bank’s incentive 
scheme and other work-related payments. The 
Bank’s remuneration policy shall be examined and 
approved by a shareholders’ meeting annually . The 
Committee met five times in 2025.

===== SIDA 107 =====

Period
Board
BCC
BRIC
BRC
BTC
Director
1 Jan - 31 Dec
1 Jan - 31 Dec
1 Jan - 31 Dec
1 Jan - 12 March
1 Jan - 31 Dec
12 March - 31 Dec
1 Jan - 12 March
1 Jan - 31 Dec
1 Jan - 31 Dec
12 March - 31 Dec
(21)
20
21
21
7
21
14
-
-
-
-
(5)
5
5
5
2
13
-
-
-
5
-
(8)
8
3
8
-
8
5
-
-
-
-
(4)
4
4
4
-
4
-
-
-
-
-
(5)
5
3
5
2
5
-
-
-
-
-
(4)
4
-
0
0
4
3
-
-
-
-
Paul Horner1
Kristín Pétursdóttir
Liv Fiksdahl2
Steinunn Kr. 
Thórdardóttir
Marianne G.
Ebbesen4
Sigurbjörg Á. 
Jónsdóttir5
Einar Hugi 
Bjarnason
Heimir 
Thorsteinsson7
Sigurbjörg
Ólafsdóttir6
Below is an overview of the attendance of individual Directors and committee members.
 ◆  Board Tech Committee (BTC): The purpose of the 
BTC is to assist the Board of Directors in fulfilling its 
oversight responsibilities with respect to the role of 
technology in executing the business strategy of the 
Bank, including, but not limited to, major technology 
investments, technology strategy , technological 
operation efficiency and technology trends that 
may affect the Bank. The BTC shall furthermore 
have a surveillance role pertaining to the Bank’s 
compliance with rules and regulation applicable to 
Information Technology . The Committee met four 
times in 2025.
Sub-committees regularly inform the Board of their 
activities. Furthermore, the Board has access to all material 
used by the sub-committees and their minutes. 
Below is an overview of the attendance of individual 
Directors and committee members.
BAC
Gunnar Sturluson
1  Paul Horner was elected Chairman of the Board at the Annual General Meeting 12 March 2025.
2 Liv Fiksdahl left the Board of Arion Bank at the Annual General Meeting 12 March 2025.
3 Steinunn Kr. Thórðardóttir attended one meeting in relation to the Banks annual financial statement.
4 Marianne Gjertsen Ebbesen was elected as a Director of the Board of Arion Bank at the Annual General Meeting 12 March 2025.
5 Sigurbjörg Á. Jónsdóttir left as an Alternate Director of the Board of Arion Bank at the Annual General Meeting 12 March 2025.
6 Sigurbjörg Ólafsdóttir was elected as an Alternate Director of the Board of Arion Bank at the Annual General Meeting 12 March 2025.
7 Heimir Thorsteinsson is certified public accountant and appointed as an external member of the BAC.

===== SIDA 108 =====

Annual General Meeting External Auditor
Internal AuditorBoard of DirectorsNomination Committee
Board Credit Committee Board Audit Committee
Board Tech Committee Board Risk Committee
Board Remuneration 
Committee
Chief Executive Officer
Executive Management 
Committee
Asset and Liability 
Committee
Arion Credit Committee
Executive Risk Committee
Compliance
Elected by / Appointed by
Reports to / Informs
Risk Management
Operational Risk Committee
Sustainability Committee
Arion Composition and 
Debt Cancellation Committee
The Board carries out an annual performance appraisal, 
at which it assesses its work, the Board composition with 
respect to experience and skills, working procedures and 
methods, the performance of the CEO, their achievements, 
and the work of the sub-committees with respect to the 
aforementioned. This appraisal was last performed by the 
Board during the period October to December 2025.
The Board of Directors of Arion Bank
 ◆ Paul Horner 
 ◆ Gunnar Sturluson
 ◆ Kristín Pétursdóttir 
 ◆ Marianne Gjertsen Ebbesen
 ◆ Steinunn Kristín Þórðardóttir

===== SIDA 109 =====

Paul graduated with M.A. Honours in music from the 
University of Oxford in 1983 and is an associate of the 
UK Chartered Institute of Bankers. Paul has extensive 
experience of retail, commercial, investment and private 
banking, gained across various international markets. 
Paul held various executive and risk management roles at 
Barclays PLC between 1988 and 2003. In 2003 Paul joined 
The National Westminster Bank (formerly the Royal Bank of 
Scotland Group) Group, where he served as an executive 
and general manager in various senior roles. From 2012 
to 2016, Paul was chief risk officer of Coutts & Co Ltd, the 
International Private Banking arm of National Westminster 
Group. and became CEO of that bank from in 2016-2017 . 
In 2018 Paul became chief risk officer of Ulster Bank in 
Dublin, and from 2018 to 2021 served as a non-executive 
director of Coutts & Co Ltd.
Today Paul serves on the board of AIB (UK) P .L.C., chairs 
its risk committee and is a member of its audit committee. 
He also serves on the Board of LHV (UK) Ltd. and chairs its 
risk committee, as well as sitting as a member of its audit, 
remuneration and nomination committees. In addition, 
he serves on the Board of the National Bank of Kuwait 
International, chairs its Risk Committee and sits on its 
Audit Committee.
Paul was born in 1962. He was first elected as a 
Director at a shareholders’ meeting on 8 August 
2019 and is a non-executive director. He is not a 
shareholder in Arion Bank and is an independent 
candidate. Paul is Chairman of the Board and 
member of the Board Risk Committee, the Board 
Audit Committee, the Board Credit Committee, the 
Board Remuneration Committee and the Board 
Technology Committee.
Paul Horner
Chairman
Gunnar graduated as Cand. Jur from the University of 
Iceland in 1992, gained an LL.M. degree in Law from the 
University in Amsterdam in 1995 and received a license to 
practice before the District Court in Iceland in 1993 and 
before the Supreme Court in 1999.
Gunnar has practiced law at LOGOS legal services since 
1992 and is currently a partner. He served as managing 
partner of LOGOS from 2001-2013. Gunnar has previously 
held various directorships, including the board of directors 
at the Performing of the Arts Center in Iceland, Harpan 
Conference Center, Gamma hf. and the Nordic Arbitration 
Center. In addition, Gunnar served as Chairman of the 
Board of the Icelandic National Broadcasting Service 
(RÚV) 2016-2017 , and as Chairman of the Icelandic Dance 
Company 2013-2016 and was voted by ALTHINGI the 
Icelandic parliament to serve on the National Electoral 
Commission in 2013-2017 .
Gunnar was born in 1967 . He was first elected 
as a Director at a shareholders’ meeting on 8 
August 2019 and is a non- executive director. 
He is not a shareholder of Arion Bank and is an 
independent Director. Gunnar is a Chairman of the 
Board Remuneration Committee, a Chairman of 
the Board Audit Committee and a member of the 
Board Credit Committee.
Gunnar Sturluson

===== SIDA 110 =====

Marianne graduated with a master’s degree from BI 
Norwegian School of Business in 1996 and later completed 
management studies from Turku School of Economics in 
2008 and from The International Institute for Management 
Development (IMD) in 2014.
Since 2019 Marianne has held four different roles in the 
group management at OBOS BBL in Norway and currently 
holds the position of CEO for the group. She has held 
various senior roles within the Norwegian financial market 
such as chief operating officer for group functions at 
Nordea, executive vice president DNB IT and Operations 
at DNB and head of customer service and head of 
business development at If P&C Insurance.
Today Marianne is a member of the boards of AF Gruppen 
ASA, Thrane-Steen Gruppen AS and in several companies 
owned 100% by OBOS BBL. She has previously held 
directorships in the boards of Odevo AB, Gjensidige 
Pensjonsforsikring AS and Sveriges Bostadsrettcentrum 
and chaired the board of directors at OBOS Banken AS, 
OBOS Eiendomsmeglere AS and DNB Meglerservice. 
Marianne was born in 1972. She was elected as a 
Director at Arion Bank’s Annual General Meeting 
on 12 March 2025 and is a non-executive director. 
She is not a shareholder in Arion Bank and is an 
independent Director. Marianne is the Chairman of 
the Board Technology Committee and a member 
of the Board Risk Committee.
 Marianne Gjertsen Ebbesen
Kristín graduated as an economist from the University of 
Iceland in 1991 and with an MBA from Handelshöyskole in 
Norway in 1993.
Kristín was a co-founder of Audur Capital and served as 
chief executive officer of the company from 2007 to 2013 
and as Chairman of the Board of Directors from 2013 to 
2017 (later Virding hf.). Kristín was also a Chairman of the 
Board of Directors at Kvika hf. from 2018 to 2020, CEO 
at Mentor hf. from 2015 to 2017 , Managing Director of 
Treasury at Kaupthing Bank from 1997 to 2005, and Deputy 
CEO at Singer & Friedlander from 2005-2007 . Kristín has 
also served as a board member at Olgerdin, Tal, Yggdrasil, 
Singer & Freidlander, Vidskiptarád, Eyrir Invest, Samtok 
atvinnulífsins and Samtok fjármálafyrirtækja. Kristín has 
also served as a member of investment committees of 
Edda, Freyja, and Audur I initiative funds.
Today Kristín is a self-employed Leadership Consultant 
and Coach and serves as a member of the Board of 
Directors of Grid ehf. and Mideind ehf.
Kristín was born in 1965. She was first elected as 
a Director at Arion bank’s Annual General Meeting 
on 15 March 2023 and is a non-executive director. 
She is not a shareholder in Arion bank and is an 
independent Director. Kristín is Vice Chairman of 
the Board, Chairman of the Board Risk Committee 
and a member of the Board Remuneration 
Committee and the Board Audit Committee.
Kristín Pétursdóttir
Vice Chairman

===== SIDA 111 =====

Steinunn was born in 1972. She was first elected
as a Director at a shareholders’ meeting on
30th November 2017 and is a non-executive 
Director. She is a shareholder in Arion Bank
(her shareholding is 12000 shares) and is an 
independent Director. Steinunn is the chairman of 
the Board Credit Committee and is a member of 
the Board Remuneration Committee, the Board 
Risk Committee and the Board Tech Committee. 
Steinunn is a Board member of Vordur.
Steinunn  holds  a  master’s  degree  in  international
management  from  Thunderbird, Arizona, and  a  BA  in
international  business  and  politics  from  University  of
South Carolina.  Steinunn  has  previously  held  several
directorships   in  Europe  and  was  a  board  member  at
the  Icelandic  State  Financial  Investment  (ISFI) in  2011.
Steinunn  was  previously a   CEO   of   Beringer   Finance
Norway   in   2015-2017   and  interim  CEO  of  Beringer
Finance in Iceland.  She was also  the global head of food
and  seafood.  She  founded  Acton  Capital  AS, a
management consulting and investment  company  in
Norway ,  where  she  has  worked  with investments
and  consulting.  Steinunn  previously  worked  at
Íslandsbanki  (later  Glitnir) as  the  managing  director  and
head of the bank’s UK operation and prior to that she was
an executive director heading the international corporate
credit and syndications.
Today Steinunn works actively with tech companies in
Norway both as an investor and a strategy . The software
companies  she  works  with  are  international  scale-up
companies.  She  is  also  the  chairman  of  the  board  of
Acton Capital AS, and the chairman of the board for the
Norwegian Icelandic Chamber of Commerce. Steinunn
is a member of the nomination committee of Síminn and
serves as a board member at Alda hf a software company
in  Iceland.  Further,  she  is  a  mentor  to  young  talented
women and founded Women Empower Women and is
the  chairman  of  Ólafíusjóður a  charitable  organization
in Norway .
Steinunn Kristín Thórdardóttir
Benedikt joined FBA (later Íslandsbanki) in 1998, held a 
variety of managerial positions at Straumur-Burdarás, was 
managing director of capital markets at FL Group and was 
managing director of the investment banking division of 
MP Bank. Benedikt worked as a senior advisor for Iceland’s 
Ministry of Finance and Economic Affairs and was vice-
chairman of a government task force on the liberalization 
of the capital controls between 2013 and 2016. He served 
on the board of directors of Kaupthing from 2016 to 2018 
and was an advisor to Kaupthing on matters relating to 
Arion Bank. Benedikt was elected to the Board of Directors 
of Arion Bank in September 2018 and served on the Board 
until his appointment as CEO.
Benedikt gained a C.Sc. in mechanical and industrial 
engineering from the University of Iceland in 1998.
Benedikt was born in 197 4. Benedikt was 
appointed CEO on 1 July 2019.
Benedikt Gíslason
Chief Executive Officer

===== SIDA 112 =====

Alternate directors:
Sigurbjörg Ólafsdóttir, Engineer, and Einar Hugi Bjarnason, 
Supreme Court Attorney .
More information on the Board of Directors can be found 
on the Bank’s website.
Communication between the shareholders 
and the Board of Directors
The main venue at which the Board and the Bank report 
information to the shareholders and propose decisions 
to be made is at legally convened shareholders’ 
meetings. The Bank provides an effective and accessible 
arrangement for communications between shareholders 
and the Board of Directors between those meetings. 
Any information sensitive to the market will be released 
through a MAR press release. As part of the investor 
relations program, Arion Bank has also arranged quarterly 
meetings where the CEO, CFO, Chief Economist and 
Investor Relations present the interim financial results. 
Executive Committee
The Bank’s Executive Committee consists of the following 
people and the CEO: 
 ◆      Ida Brá Benediktsdóttir, Deputy CEO and  
           Managing Director of Retail Banking
 ◆    Birna Hlín Káradóttir, COO
 ◆  Hákon Hrafn Gröndal, Managing Director of 
Corporate and Investment Banking
 ◆    Jóhann Möller, Managing Director of Markets
 ◆  Ólafur Hrafn Höskuldsson, Chief Financial Officer
 ◆    Björn Björnsson, Managing Director of Information 
Technology & CTO
 ◆  Úlfar Freyr Stefánsson, Chief Risk Officer
Other Senior Managers:: 
 ◆      Anna Sif Jónsdóttir, Chief Internal Accountant
 ◆    Andrés Fjeldsted, Chief Compliance Officer
More information on the Executive Committee and other 
Senior Managers can be found on the Bank’s website. 
Information on violations of laws and 
regulations and legal cases
Arion Bank has not been denied registration, authorization, 
membership or permission to conduct certain business, 
activity or operations. The Bank has not been subject 
to withdrawal, revocation or dismissal of registration, 
authorization, membership or permission. Information on 
the main legal cases relating to Arion Bank can be found 
in the notes to the annual financial statement.
The Board of Directors annually reviews and approves 
the Corporate Governance Statement. This Corporate 
Governance Statement was examined and approved at 
a meeting of the Board of Directors on 11 February 2026.

===== SIDA 113 =====

EU Taxonomy

===== SIDA 114 =====

1 
 
EU Taxonomy 
Arion Bank publishes information for the third time regarding the EU Taxonomy in an 
annex to the 202 5 Consolidated Financial Statement. Few of t he Bank’s counterparties 
have disclosed information according to the taxonomy, and therefore the Bank’s KPI  for 
the ratio of green assets is 0,00 003% based on turnover. However, the Bank  is still 
challenged with lack of data to be able to meet the stringent technical screen ing criteria 
required for loans to households to be considered environmentally sustainable, and 
therefore it is clear that the GAR will remain low if such data continues to be inaccessible.  
Eligible and environmentally sustainable activities  
An activity is considered to be eligible if it is defined in delegated EU regulations, established in 
the basis of the Taxonomy Regulation, on the technical screening criteria which the activity needs 
to fulfil in order to be considered environmentally sus tainable according to the taxonomy. If the 
taxonomy applies to the activity, it is considered eligible. Eligibility does not, however, determine 
whether a particular activity is sustainable, but just states that there are technical screening 
criteria for the activity which enable it to be analyzed in accordance with the taxonomy. 
The Taxonomy Regulation covers six environmental objectives: 
• Climate change mitigation 
• Climate change adaptation 
• The sustainable use and protection of water and marine resources 
• The transition to a circular economy 
• Pollution prevention and control  
• Protection and restoration of biodiversity and ecosystems 
In order for an economic activity to be considered environmentally sustainable it must be aligned 
with one of the six environmental objectives of the regulation but at the same time must do no 
significant harm to other objectives. This is to prevent an economic activity from being considered 
environmentally sustainable if it then does such harm to the environment that it outweighs the 
activity’s contribution to the environmental objective. The activity also needed to be carried out in 
accordance with minimum safeguards  which, among other things, address human rights, meet 
the DNSH criteria (do no significant harm) and meet technical screening criteria. 
Assets under the scope of KPIs 
The Green Asset Ratio (GAR) is a key performance indicator for credit institutions. The indicator 
shows the ratio of a financial institution’s assets which finance an economic activity aligned to the 
taxonomy, i.e. assets considered environmentally sustainable, as a ratio of total covered assets 
under Delegated Regulation (EU)  2023/2486 supplementing Regulation (EU) 2020/852 which 
was implemented into Icelandic law by act no. 25/2023 on sustainability disclosure in the financial 
service sector and a classification system for sustainable investments. Financial institutions need 
data from their counterparties in order to publish their own key performance indicators on both 
eligible and environmentally sustainable activities. Icelandic companies published information in 
accordance with the taxonomy for the first time in 2024 (for the financial year 2023), unlike other 
companies in the EU which have been doing it in their annual financial statements since the 2021 
financial year. Arion’s calculation for 2025 is based on counterparty data for 2024.

===== SIDA 115 =====

2 
 
 
In the Taxonomy Regulation loans to households are divided into loans with a mortgage in 
residential housing, loans to renovate housing and car loans. These loan categories cover 
approximately 45% of the total covered assets as defined in the regulation.  Loans to households 
therefore represent the majority of assets considered eligible under the Taxonomy Regulation 
today. Loans need to meet stringent technical screening criteria to be considered environmentally 
sustainable. In order to assess whether the c riteria have been met, certain data is required, i.e. 
information on the energy efficiency of housing and the external rolling noise and the rolling 
resistance coefficient of tires, but in reality the lack of data, prevents this from being possible in 
Iceland. It is therefore not possible to determine whether loans to households are considered 
environmentally sustainable. 
Non-financial corporations subject to NFRD (Non-Financial Reporting Directive) disclosure 
obligations1, hereafter NFRD companies, are required to implement the EU taxonomy and 
disclose information with respect to the taxonomy in their annual statements. Loans to such 
corporations are eligible if they finance activities which are defined by the taxonomy but are 
considered environmentally sustainable if they finance activities which are aligned with the 
taxonomy. About 300 companies in Iceland fall within the scope, and information about their 
eligible and environmentally sustainable activities was collected. Only a small portion of these 
companies, which have identified eligible or environmentally sustainable activities, have taken 
loans with the Bank, and thus the corresponding KPIs cover only a limited portion of the overall 
amount lent to NFRD companies. This loan category therefore only accounts for about 3% of 
the total coverage of eligible assets (based on turnover). An analysis indicated that the 
information disclosed by these companies is still in the development stages, and that they 
encounter similar data challenges as the Bank in accessing the necessary information to fulfill 
the technical screening criteria required by the Taxonomy. 
While the GAR has its merits it falls short in giving insights into the state of sustainable financial 
services in Iceland. The indicator is mostly affected by the distribution of the loan portfolio, with 
loans to household as the largest group of assets included in the denominator. In the light of the 
above, no emphasis has been placed on increased the share of environmentally sustainable 
loans in the Bank’s loan book, as this could prove difficult for the Bank to implement due to a 
lack of data for household loans, and limited number of corporates that disclose information on 
their environmentally sustainable activities. However, the Bank has published a Sustainable 
Financing Framework which applies to the Bank’s financing, deposits and loans which are 
classed as environmentally and/or socially sustainable.  The framework received a second-party 
opinion from ISS corporate, which evaluated the quality of the framework in terms of its 
contribution to the UN Sustainable Development Goals and the eligibility of projects according to 
the technical screening criteria of EU Taxonomy. The Bank has set a goal to increase the share 
of loans aligned with the framework on a quarterly basis, and additional aims for sustainable 
loans to represent 20% of the Bank’s total lending by 2030.  
The Bank publishes for the first time the status of green assets in flow this year, as last year it 
was not feasible since compressed templates were published in 2023. However, flow is only 
 
1 Often referred to as NFRD companies, i.e. major companies, parent companies of major groups and 
public-interest entities.

===== SIDA 116 =====

3 
 
provided for the first two environmental objectives, i.e. climate change mitigation and 
adaptation, as the latter four objectives are included in the templates for the first time this year. 
Off-balance sheet exposures 
Concerning financial guarantees, the same methodology shall be used for loans and advances to 
corporates, i.e. information shall be based on counterparty disclosures. Similarly, as for loans to 
corporates, disclosure was lacking and therefore only a small proportion of companies had 
assessed environmentally sustainable activities. 
Icelandic companies which come under the scope of the Taxonomy Regulation, regarding assets 
under management, published for the first second figures on the proportion of environmentally 
sustainable turnover and capital expenditure in 202 5 in the annual financial statement for 202 4. 
The number of domestic companies that have disclosed figures on eligible or environmentally 
sustainable turnover and capital expenditure is still very low . Since the implementation of the 
Taxonomy Regulation commenced earlier for companies in the EU, more foreign companies have 
reported their mitigation and adaptation to climate change. Therefore, there was a higher 
proportion of foreign assets for which eligibility and environmental sustainability could be 
assessed based on turnover and capital expenditure 
Many companies do not disclose how their revenues or capital expenditure fall under the 
regulation, i.e.  under which environmental objective they cover . Data on eligible and 
environmentally sustainable assets was obtained from Bloomberg. Government bonds are not 
covered by the regulation so there is no disclosure requirement for them.

===== SIDA 117 =====

Template 
number Name 
0 Summary of KPIs
1 Assets for the calculation of GAR
2 GAR sector information
3 GAR KPI stock
4 GAR KPI flow
5 KPI off-balance sheet exposures
Annex VI - Template for the KPIs of credit institutions

===== SIDA 118 =====

0. Summary of KPIs to be disclosed by credit institutions under Article 8 Taxonomy Regulation
Total environmentally 
sustainable assets, 
based on the turnover 
KPI
Total environmentally 
sustainable assets, 
based on the capex 
KPI
KPI based on 
turnover %
KPI 
based on 
capex %
% coverage (over total 
assets)*
% of assets excluded 
from the numerator of 
the GAR (Article 7(2) and 
(3) and Section 1.1.2. of 
Annex V)
% of assets excluded 
from the denominator of 
the GAR (Article 7(1) and 
Section 1.2.4 of Annex V)
Main KPI Green asset ratio (GAR) stock 0.4 282 0.00003 0.02 81.6 30.5 18.4
Total environmentally 
sustainable assets, based 
on the turnover KPI
Total environmentally 
sustainable assets, 
based on the capex KPI
KPI based on 
turnover %
KPI 
based on 
capex %
% coverage (over total 
assets)
% of assets excluded from 
the numerator of the GAR 
(Article 7(2) and (3) and 
Section 1.1.2. of Annex V)
% of assets excluded from 
the denominator of the GAR 
(Article 7(1) and Section 
1.2.4 of Annex V)
Additional KPIs GAR (flow) 0.4 43.6 -0.003 -0.3 76.8 53.1 23.2
Trading book
Financial guarantees 0 0 0 0
Assets under management 23,390 36,728 1.5 2.4
Fees and commissions income
Note:
* % of assets covered by the KPI over banks' total assets.
KPIs for Fees and commissions and Trading book will be disclosed starting 2028.

===== SIDA 119 =====

1.Assets for the calculation of GAR based on turnover
a b c d e f g h i j k l m n o p q r s t u v w x z aa ab ac ad ae af ag ah ai aj ak al am an ao ap aq ar as at au av aw ax ay az ba bb bc bd be bf bg bh bi bj bk
Of which Use of 
Proceeds
Of which 
transitional Of which enabling Of which Use 
of Proceeds
Of which 
enabling
Of which Use 
of Proceeds
Of which 
enabling
Of which Use 
of Proceeds
Of which 
enabling
Of which Use 
of Proceeds
Of which 
enabling
Of which Use 
of Proceeds
Of which 
enabling
Of which Use 
of Proceeds
Of which 
transitional
Of which 
enabling
Of which Use 
of Proceeds
Of which 
transitional
Of which 
enabling
Of which Use 
of Proceeds
Of which 
enabling
Of which Use 
of Proceeds
Of which 
enabling
Of which Use 
of Proceeds
Of which 
enabling
Of which Use 
of Proceeds
Of which 
enabling
Of which Use 
of Proceeds
Of which 
enabling
Of which Use 
of Proceeds
Of which 
transitional
Of which 
enabling
GAR - Covered assets in both numerator and denominator
1 Loans and advances, debt securities and equity instruments 
not HfT eligible for GAR calculation 888,229 609,517 0.4 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 609,517 0.4 0 0 0 855,023 610,232 4 0 0 0 0 0 0 0 610,232 4 0 0 0
2 Financial undertakings 80,590 364 0.4 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 364 0 0 0 0 72,250 0 0 0 0 0 0 0 0 0 0 0 0 0 0
3 Credit institutions 1,435 364 0.4 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 364 0 0 0 0 977 0 0 0 0 0 0 0 0 0 0 0 0 0 0
4 Loans and advances 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
5 Debt securities, 
including UoP 1,434 364 0.4 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 364 0.4 0 0 0 975 0 0 0 0 0 0 0 0 0 0 0 0 0 0
6 Equity instruments 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0
7 Other financial corporations 79,154 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 71,274 0 0 0 0 0 0 0 0 0 0 0 0 0 0
8 of which investment 
firms 3,321 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 66 0 0 0 0 0 0 0 0 0 0 0 0 0 0
9 Loans and 
advances 3,321 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 66 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10 Debt 
securities, 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
11 Equity 
instruments 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
12 of which  management 
companies 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
13 Loans and 
advances 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
14 Debt 
securities, 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
15 Equity 
instruments 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
16 of which insurance 
undertakings 16,337 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 16,666 0 0 0 0 0 0 0 0 0 0 0 0 0 0
17 Loans and 
advances 75 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 12 0 0 0 0 0 0 0 0 0 0 0 0 0 0
18 Debt 
securities, 1,355 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1,306 0 0 0 0 0 0 0 0 0 0 0 0 0 0
19 Equity 
instruments 14,908 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 15,348 0 0 0 0 0 0 0 0 0
20 Non-financial undertakings 160,101 19,359 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 19,359 0 0 0 0 137,592 23,407 4 0 0 0 0 0 0 0 23,407 4 0 0 0
21 Loans and advances 158,936 19,021 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 19,021 0 0 0 0 137,072 23,407 4 0 0 0 0 0 0 0 23,407 4 0 0 0
22 Debt securities, 
including UoP 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
23 Equity instruments 1,165 338 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 338 0 0 0 520 0 0 0 0 0 0 0 0 0
24 Households 640,394 589,793 0 0 0 0 0 0 0 0 0 0 0 0 589,793 0 0 0 0 639,404 586,825 0 0 0 0 0 0 0 0 586,825 0 0 0 0
25
of which loans 
collateralised by 
residential immovable 
578,566 578,566 0 0 0 0 0 0 0 0 0 0 0 0 578566 0 0 0 0 578,567 578,567 0 0 0 0 0 0 0 0 578,567 0 0 0 0
26 of which building 
renovation loans 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
27 of which motor vehicle 
loans 11,227 11,227 0 0 0 0 11,227 0 0 0 0 8,257 8,257 0 0 0 0 8,257 0 0 0 0
28 Local governments financing 7,144 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 5,776 0 0 0 0 0 0 0 0 0 0 0 0 0 0
29 Housing financing 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
30 Other local government 
financing 7,144 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 5,776 0 0 0 0 0 0 0 0 0 0 0 0 0 0
31 Collateral obtained by taking 
possession: residential and commercial 25 25 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 25 0 0 0 0 79 79 0 0 0 0 0 0 0 0 79 0 0 0 0
32 Assets excluded from the numerator for GAR calculation (covered 
in the denominator) 529,350 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 455,162 0 0 0 0 0 0 0 0 0 0 0 0 0 0
33 Financial and Non-financial undertakings 468,033
34
SMEs and NFCs (other than 
SMEs) not subject to NFRD 
disclosure obligations
432,143
35 Loans and advances 428,926
36
of which loans 
collateralised 
by 
187,861
37 of which 
building 0
38 Debt securities 0
39 Equity instruments 3,217
40
Non-EU country counterparties 
not subject to NFRD disclosure 
obligations
35,890
41 Loans and advances 35,874
42 Debt securities 0
43 Equity instruments 15
44 Derivatives 3,210
45 On demand interbank loans 22,040
46 Cash and cash-related assets 2,022
47 Other categories of assets (e.g. 
Goodwill, commodities etc.) 34,045
48 Total GAR assets 1,417,644 609,542 0.4 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 609,542 0.4 0 0 0 1,310,185 610,311 4 0 0 0 0 0 0 0 610,311 4 0 0 0
  49 Assets not covered for GAR calculation 318,988
50 Central governments and Supranational 
issuers 136,868
51 Central banks exposure 148,089
52 Trading book 34,031
53 Total assets 1,736,633 609,542 0.4 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 609,542 0.4 0 0 0 1,596,723 610,311 4 0 0 0 0 0 0 0 610,311 4 0 0 0
54 Financial guarantees 11,247 214 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 214 0 0 0 0 7,881 146 0 0 0 0 0 0 0 0 146 0 0 0 0
55 Assets under management 1,516,400 109,641 20,984 0 179 3,259 4,017 2,383 0 471 0 0 0 0 247 23 0 11 666 0 0 0 0 0 0 0 114,571 23,390 0 179 3,741 1,366,980 196,813 19,512 0 0 0 633 0 0 0 197,446 19,512 0 0 0
56 Of which debt securities 856,170 79,617 20,808 0 169 2,577 2,383 2,383 0 471 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 82,000 23,191 0 169 3,048 758,962 134,322 17,085 0 0 0 0 0 0 0 134,322 17,085 0 0 0
57 Of which equity instruments 660,229 30,024 176 0 10 211 1,634 0 0 0 0 0 0 0 247 23 0 11 666 0 0 0 0 0 0 0 32,572 199 0 10 221 608,018 62,491 2,427 0 0 0 633 0 0 0 63,124 2,427 0 0 0
Climate Change Adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) Pollution (PPC) Biodiversity and Ecosystems (BIO) TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors 
(Taxonomy-eligible)
Of which towards taxonomy relevant sectors 
(Taxonomy-eligible)
Of which towards taxonomy relevant sectors 
(Taxonomy-eligible)
Of which towards taxonomy relevant sectors 
(Taxonomy-eligible)
Of which towards taxonomy relevant sectors 
(Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible)
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Total gross 
carrying 
amount 
Climate Change Mitigation (CCM) Climate Change Adaptation (CCA) Water and marine resources (WTR) Circular economy (CE)
Of which towards taxonomy relevant sectors 
(Taxonomy-eligible)
Of which towards taxonomy relevant sectors 
(Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible)
Of which environmentally sustainable (Taxonomy-aligned) Of which environmentally sustainable 
(Taxonomy-aligned)
Of which environmentally sustainable 
(Taxonomy-aligned)
Of which environmentally sustainable 
(Taxonomy-aligned)
Of which environmentally sustainable 
(Taxonomy-aligned)
Of which environmentally sustainable 
(Taxonomy-aligned) Of which environmentally sustainable (Taxonomy-aligned)
Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors 
(Taxonomy-eligible)
Of which towards taxonomy relevant sectors 
(Taxonomy-eligible)
Of which towards taxonomy relevant sectors 
(Taxonomy-eligible)
Of which environmentally sustainable (Taxonomy-aligned)
Off-balance sheet exposures - Undertakings subject to NFRD disclosure obligations
Of which environmentally sustainable (Taxonomy-aligned) Of which environmentally sustainable 
(Taxonomy-aligned)
Of which environmentally sustainable 
(Taxonomy-aligned)
Of which environmentally sustainable 
(Taxonomy-aligned)
Of which environmentally sustainable 
(Taxonomy-aligned)
Of which environmentally sustainable 
(Taxonomy-aligned)
Million ISK
Disclosure reference date 31.12.2025 Disclosure reference date 31.12.2024
Total gross 
carrying amount 
Climate Change Mitigation (CCM)

===== SIDA 120 =====

1.Assets for the calculation of GAR based on capex
a b c d e f g h i j k l m n o p q r s t u v w x z aa ab ac ad ae af ag ah ai aj ak al bg bh bi bj bk
Of which Use 
of Proceeds
Of which 
transitional
Of which 
enabling
Of which Use 
of Proceeds
Of which 
enabling
Of which Use 
of Proceeds
Of which 
enabling
Of which Use 
of Proceeds
Of which 
enabling
Of which Use 
of Proceeds
Of which 
enabling
Of which Use 
of Proceeds
Of which 
enabling
Of which Use 
of Proceeds
Of which 
transitional
Of which 
enabling
Of which Use 
of Proceeds
Of which 
transitional
Of which 
enabling
Of which Use 
of Proceeds
Of which 
transitional
Of which 
enabling
GAR - Covered assets in both numerator and denominator
1 Loans and advances, debt securities and equity instruments not 
HfT eligible for GAR calculation 888,229 623,029 282 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 623,631 282 0 0 0 855,023 628,064 652 0 0 0 855,023 628,064 0 0 0
2 Financial undertakings 80,590 342 0.9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 342 1 0 0 0 72,250 0 0 0 0 0 72,250 0 0 0 0
3 Credit institutions 1,435 342 0.9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 342 1 0 0 0 977 0 0 0 0 0 977 0 0 0 0
4 Loans and advances 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
5 Debt securities, including UoP 1,434 342 0.9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 342 0.9 0 0 0 975 0 0 0 0 0 975 0 0 0 0
6 Equity instruments 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 1 0 0 0
7 Other financial corporations 79,154 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 71,274 0 0 0 0 0 71,274 0 0 0 0
8 of which investment firms 3,321 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 66 0 0 0 0 0 66 0 0 0 0
9 Loans and advances 3,321 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 66 0 0 0 0 0 66 0 0 0 0
10 Debt securities, including UoP 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
11 Equity instruments 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
12 of which  management companies 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
13 Loans and advances 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
14 Debt securities, including UoP 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
15 Equity instruments 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
16 of which insurance undertakings 16,337 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 16,666 0 0 0 0 0 16,666 0 0 0 0
17 Loans and advances 75 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 12 0 0 0 0 0 12 0 0 0 0
18 Debt securities, including UoP 1,355 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1,306 0 0 0 0 0 1,306 0 0 0 0
19 Equity instruments 14,908 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 15,348 0 0 0 0 15,348 0 0 0
20 Non-financial undertakings 160,101 33,496 281 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 33,496 281 0 0 0 137,592 41,239 652 0 0 0 137,592 41,239 0 0 0
21 Loans and advances 158,936 32,331 281 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 32,331 281 0 0 0 137,072 41,239 652 0 0 0 137,072 41,239 0 0 0
22 Debt securities, including UoP 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
23 Equity instruments 1,165 1,165 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1,165 0 0 0 520 0 0 0 0 0 520 0 0 0 0
24 Households 640,394 589,793 0 0 0 0 0 0 0 0 0 0 0 0 589,793 0 0 0 0 639,404 586,825 0 0 0 639,404 586,825 0 0
25 of which loans collateralised by 
residential immovable property 578,566 578,566 0 0 0 0 0 0 0 0 0 0 0 0 578,566 0 0 0 0 578,567 578,567 0 0 0 0 578,567 578,567 0 0 0
26 of which building renovation loans 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
27 of which motor vehicle loans 11,227 11,227 0 0 0 0 11,227 0 0 0 0 8,257 8,257 0 0 0 0 8,257 8,257 0 0 0
28 Local governments financing 7,144 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 5,776 0 0 0 0 0 5,776 0 0 0 0
29 Housing financing 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
30 Other local government financing 7,144 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 5,776 0 0 0 0 0 5,776 0 0 0 0
31 Collateral obtained by taking possession: 
residential and commercial immovable 25 25 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 25 0 0 0 0 79 79 0 0 0 0 79 79 0 0 0
32 Assets excluded from the numerator for GAR calculation 
(covered in the denominator) 529,350 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 455,162 0 0 0 0 0 455,162 0 0 0 0
33 Financial and Non-financial undertakings 468,033
34 SMEs and NFCs (other than SMEs) not 
subject to NFRD disclosure obligations 432,143
35 Loans and advances 428,926
36
of which loans collateralised 
by commercial immovable 
property
187,861
37 of which building renovation 
loans 0
38 Debt securities 0
39 Equity instruments 3,217
40 Non-EU country counterparties not subject 
to NFRD disclosure obligations 35,890
41 Loans and advances 35,874
42 Debt securities 0
43 Equity instruments 15
44 Derivatives 3,210
45 On demand interbank loans 22,040
46 Cash and cash-related assets 2,022
47 Other categories of assets (e.g. Goodwill, 
commodities etc.) 34,045
48 Total GAR assets 1,417,644 623,656 282 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 623,656 282 0 0 0 1,310,185 628,143 652 0 0 0 628,064 652 0 0 0
  49 Assets not covered for GAR calculation 318,988
50 Central governments and Supranational 136,868
51 Central banks exposure 148,089
52 Trading book 34,031
53 Total assets 1,736,633 623,656 282 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 623,656 282 0 0 0 1,596,723 628,143 652 0 0 0 628,064 652 0 0 0
54 Financial guarantees 11,247 334 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 334 0 0 0 0 7,881 146 0 0 0 0 146 0 0 0 0
55 Assets under management 1,516,400 119,113 21,264 0 311 2,921 17,268 15,462 0 2,290 0 0 0 0 97 2 0 0 301 0 0 0 0 0 0 0 136,780 36,728 0 311 5,211 1,366,980 152,973 16,419 0 0 0 152,340 16,419 0 0 0
56 Of which debt securities 856,170 84,486 21,009 0 169 2,762 15,606 15,462 0 2,290 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 100,092 36,472 0 169 5,052 758,962 106,821 13,445 0 0 0 106,821 13,445 0 0 0
57 Of which equity instruments 660,229 34,628 254 0 141 159 1,662 0 0 0 0 0 0 0 97 2 0 0 301 0 0 0 0 0 0 0 36,689 256 0 141 159 608,018 46,152 2,974 0 0 0 45,519 2,974 0 0 0
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors 
(Taxonomy-eligible)
Of which towards taxonomy relevant sectors 
(Taxonomy-eligible)
Of which towards taxonomy relevant sectors 
(Taxonomy-eligible)
Of which towards taxonomy relevant sectors 
(Taxonomy-eligible)
Of which towards taxonomy relevant sectors 
(Taxonomy-eligible)  
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Total [gross] 
carrying 
amount 
Climate Change Mitigation (CCM)
Of which towards taxonomy relevant sectors (Taxonomy-eligible)
Of which environmentally sustainable (Taxonomy-aligned) Of which environmentally sustainable 
(Taxonomy-aligned)
Of which environmentally sustainable 
(Taxonomy-aligned)
Of which environmentally sustainable 
(Taxonomy-aligned)
Of which environmentally sustainable 
(Taxonomy-aligned)
Of which environmentally sustainable 
(Taxonomy-aligned)
Of which environmentally sustainable (Taxonomy-
aligned)
Of which towards taxonomy relevant sectors (Taxonomy-eligible)
Of which environmentally sustainable (Taxonomy-aligned)
Million ISK
Disclosure reference date 31.12.2025 Disclosure reference date 31.12.2024
Total [gross] 
carrying 
amount 
Climate Change Mitigation (CCM) Climate Change Adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO)
Of which environmentally sustainable (Taxonomy-aligned)
Off-balance sheet exposures - Undertakings subject to NFRD disclosure obligations

===== SIDA 121 =====

2. GAR sector information
a b c d e f g h i j k l m n o p q r s t u v w x y z aa ab
Mn ISK
Of which 
environmentally 
sustainable (CCM)
Mn ISK
Of which 
environmentally 
sustainable 
(CCM)
Mn ISK
Of which 
environmentally 
sustainable 
(CCA)
Mn ISK
Of which 
environmentally 
sustainable 
(CCA)
Mn ISK
Of which 
environmentally 
sustainable 
(WTR)
Mn ISK
Of which 
environmentally 
sustainable 
(WTR)
Mn ISK
Of which 
environmentally 
sustainable (CE)
Mn ISK
Of which 
environmentally 
sustainable (CE)
Mn ISK
Of which 
environmentally 
sustainable (PPC)
Mn ISK
Of which 
environmentally 
sustainable (PPC)
Mn EUR
Of which 
environmentally 
sustainable (BIO)
Mn EUR
Of which 
environmentally 
sustainable (BIO)
Mn ISK
Of which 
environmentally 
sustainable 
(CCM + CCA + 
WTR + CE + 
PPC + BIO)
Mn ISK
Of which 
environmentally 
sustainable 
(CCM + CCA + 
WTR + CE + 
PPC + BIO)
1
2
3
4
…
Water and marine resources (WTR)
Non-Financial corporates (Subject 
to NFRD)
SMEs and other NFC not subject 
to NFRD
Gross carrying amount Gross carrying amount Gross carrying amount
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Non-Financial corporates (Subject 
to NFRD)
SMEs and other NFC not subject 
to NFRD
Non-Financial corporates 
(Subject to NFRD)
SMEs and other NFC not subject 
to NFRD
Climate Change Mitigation (CCM)
Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount
Climate Change Adaptation (CCA) Biodiversity and Ecosystems (BIO)
Non-Financial corporates (Subject 
to NFRD)
SMEs and other NFC not subject 
to NFRD
Gross carrying amount
Note:
Since only a small proportion of companies have disclosed information on environmentally sustainable activities and a small 
proportion of them have taken loans with he Bank, it is not considered adviseable to disclose a breakdown by sector at the 
NACE 4 digit level classification. It is the Bank's view that such a breakdown is inappropriate at this stage. The Bank will 
review this disclosure if the number of entitites that have disclosed their environmentally sustainable activities increases.
Non-Financial corporates (Subject 
to NFRD)
SMEs and other NFC not subject 
to NFRD
Breakdown by sector - NACE 4 digits level 
(code and label)
Gross carrying amountGross carrying amount
Pollution (PPC)
Non-Financial corporates (Subject 
to NFRD)
SMEs and other NFC not subject 
to NFRD
Gross carrying amount Gross carrying amount
Circular economy (CE)
Non-Financial corporates (Subject 
to NFRD)
SMEs and other NFC not subject 
to NFRD
Gross carrying amount Gross carrying amount

===== SIDA 122 =====

3. GAR KPI stock based on turnover
a b c d e f g h i j k l m n o p q r s t u v w x z aa ab ac ad ae af ag ah ai aj ak al am an ao ap aq ar as at au av aw ax ay az ba bb bc bd be bf bg bh bi bj bk
Of which 
Use of 
Proceeds
Of which 
transitional
Of 
which 
enabling
Of which 
Use of 
Proceeds
Of 
which 
enabling
Of which 
Use of 
Proceeds
Of 
which 
enabling
Of which 
Use of 
Proceeds
Of 
which 
enabling
Of which 
Use of 
Proceeds
Of 
which 
enabling
Of which 
Use of 
Proceeds
Of 
which 
enabling
Of which 
Use of 
Proceeds
Of which 
transitional
Of 
which 
enabling
Of which 
Use of 
Proceeds
Of which 
transitional
Of 
which 
enabling
Of which 
specialised 
 lending
Of 
which 
enabling
Of which 
Use of 
Proceeds
Of 
which 
enabling
Of which 
Use of 
Proceeds
Of 
which 
enabling
Of which 
Use of 
Proceeds
Of 
which 
enabling
Of which 
Use of 
Proceeds
Of 
which 
enabling
Of which 
Use of 
Proceeds
Of which 
transitional
Of 
which 
enabling
GAR - Covered assets in both numerator and denominator
1 Loans and advances, debt securities and equity 
instruments not HfT eligible for GAR calculation 68.6 0.00004 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 68.6 0.00004 0 0 0 51.1 71.4 0.0004 0 0 0 0 0 0 0 71.4 0.0004 0 0 0 53.5
2 Financial undertakings 0.5 0.0005 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.5 0.0005 0 0 0 4.6 0 0 0 0 0 0 0 0 0 0 0 0 0 0 4.5
3 Credit institutions 25.4 0.03 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 25.4 0.03 0 0 0 0.1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.06
4 Loans and advances 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
5 Debt securities, including 25.4 0.03 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 25.4 0.03 0 0 0 0.1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.06
6 Equity instruments 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.0001 0 0 0 0 0 0 0 0 0 0 0 0.0001
7 Other financial corporations 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 4.6 0 0 0 0 0 0 0 0 0 0 0 0 0 0 4.5
8 of which investment firms 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.004
9 Loans and 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.004
10 Debt securities, 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
11 Equity instruments 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
12 of which  management 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 d 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
13 Loans and 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
14 Debt securities, 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
15 Equity instruments 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
16 of which insurance 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1.04
17 Loans and 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.004 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.001
18 Debt securities, 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.08
19 Equity instruments 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.9 0 0 0 0 0 0 0 0 0 0 0 1.0
20 Non-financial undertakings 12.1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 12.1 0 0 0 0 9.2 17.0 0.003 0 0 0 0 0 0 0 17.0 0.003 0 0 0 8.6
21 Loans and advances 12.0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 12.0 0 0 0 0 9.2 17.1 0.003 0 0 0 0 0 0 0 17.1 0.003 0 0 0 8.6
22 Debt securities, including 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
23 Equity instruments 29.0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 29.0 0 0 0 0.1 0 0 0 0 0 0 0 0 0 0 0 0.03
24 Households 92.0 0 0 0 0 0 0 0 0 0 0 0 0 92.0 0 0 0 0 36.9 91.8 0 0 0 0 0 0 0 0 91.8 0 0 0 0 40.0
25 of which loans 
collateralised by 100 0 0 0 0 0 0 0 0 0 0 0 0 100 0 0 0 0 33.3 100 0 0 0 0 0 0 0 0 100 0 0 0 0 36.2
26 of which building 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
27 of which motor vehicle 100 0 0 0 0 100 0 0 0 0 0.6 100 0 0 0 0 100 0 0 0 0 0.5
28 Local governments financing 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.4 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.4
29 Housing financing 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 100 0 0 0 0 0 0 0 0 100 0 0 0 0 0.0
30 Other local government 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.4 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.4
31 Collateral obtained by taking 
possession: residential and 100 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 100 0 0 0 0 0.004 100 0 0 0 0 0 0 0 0 100 0 0 0 0 0.00005
32 Total GAR assets 43.0 0.00003 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 43.0 0.00003 0 0 0 81.6 46.6 0.0003 0 0 0 0 0 0 0 46.6 0.0003 0 0 0 82.1
Disclosure reference date 31.12.2025
Water and marine resources (WTR)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-
eligible)
Proportion of total covered 
assets funding taxonomy 
relevant sectors (Taxonomy-
Climate Change Mitigation (CCM) Climate Change Adaptation (CCA) Circular economy (CE)
Proportion of total covered assets funding taxonomy 
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets 
funding taxonomy relevant sectors 
(Taxonomy-eligible)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-
eligible)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-
eligible)
Climate Change Adaptation (CCA)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-
eligible)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-aligned)
Proportion of total covered 
assets funding taxonomy 
relevant sectors (Taxonomy-
Proportion of total covered 
assets funding taxonomy 
relevant sectors (Taxonomy-
Proportion of total covered 
assets funding taxonomy relevant 
sectors (Taxonomy-aligned)
Proportion of total covered 
assets funding taxonomy relevant 
sectors (Taxonomy-aligned)
Circular economy (CE)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-
eligible)
Proportion of total covered 
assets funding taxonomy relevant 
sectors (Taxonomy-aligned)
Water and marine resources (WTR)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-
eligible)
Proportion of total covered 
assets funding taxonomy relevant 
sectors (Taxonomy-aligned)
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)Pollution (PPC) Biodiversity and Ecosystems (BIO) TOTAL (CCM + CCA + WTR + CE + PPC + BIO) Climate Change Mitigation (CCM) Biodiversity and Ecosystems (BIO)Pollution (PPC)
% (compared to total covered assets in the denominator)
Disclosure reference date 31.12.2024
Proportio
n of total 
assets 
covered
Proportion 
 of total 
assets 
covered
Proportion of total covered 
assets funding taxonomy 
relevant sectors (Taxonomy-
Proportion of total covered 
assets funding taxonomy 
relevant sectors (Taxonomy-
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-aligned)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-aligned)
Proportion of total covered 
assets funding taxonomy relevant 
sectors (Taxonomy-aligned)
Proportion of total covered assets funding taxonomy 
relevant sectors (Taxonomy-aligned)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-
eligible)
Proportion of total covered assets 
funding taxonomy relevant sectors 
(Taxonomy-eligible)
Proportion of total covered assets funding taxonomy 
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy 
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-
eligible)
Proportion of total covered assets funding taxonomy relevant 
sectors (Taxonomy-eligible)

===== SIDA 123 =====

3. GAR KPI stock based on capex
a b c d e f g h i j k l m n o p q r s t u v w x z aa ab ac ad ae af ag ah ai aj ak al am an ao ap aq ar as at au av aw ax ay az ba bb bc bd be bf bg bh bi bj bk
Of which 
Use of 
Proceeds
Of which 
transitional
Of 
which 
enabling
Of which 
Use of 
Proceeds
Of 
which 
enabling
Of which 
Use of 
Proceeds
Of 
which 
enabling
Of which 
Use of 
Proceeds
Of 
which 
enabling
Of which 
Use of 
Proceeds
Of 
which 
enabling
Of which 
Use of 
Proceeds
Of 
which 
enabling
Of which 
Use of 
Proceeds
Of which 
transitional
Of 
which 
enabling
Of which 
Use of 
Proceeds
Of which 
transitional
Of 
which 
enabling
Of which 
specialised 
lending
Of 
which 
enabling
Of which 
Use of 
Proceeds
Of 
which 
enabling
Of which 
Use of 
Proceeds
Of 
which 
enabling
Of which 
Use of 
Proceeds
Of 
which 
enabling
Of which 
Use of 
Proceeds
Of 
which 
enabling
Of which 
Use of 
Proceeds
Of which 
transitional
Of 
which 
enabling
GAR - Covered assets in both numerator and denominator
1 Loans and advances, debt securities and equity instruments 
not HfT eligible for GAR calculation 70.1 0.03 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 70.1 0.03 0 0 0 51.1 73.5 0.1 0 0 0 0 0 0 0 73.5 0.1 0 0 0 53.5
2 Financial undertakings 0.4 0.001 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.4 0.001 0 0 0 4.6 0 0 0 0 0 0 0 0 0 0 0 0 0 0 4.5
3 Credit institutions 23.8 0.1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 23.8 0.1 0 0 0 0.1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.1
4 Loans and advances 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
5 Debt securities, including UoP 23.8 0.1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 23.8 0.1 0 0 0 0.1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.1
6 Equity instruments 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.0001 0 0 0 0 0 0 0 0 0 0 0 0.0001
7 Other financial corporations 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 4.6 0 0 0 0 0 0 0 0 0 0 0 0 0 0 4.5
8 of which investment firms 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.004
9 Loans and advances 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.004
10 Debt securities, 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
11 Equity instruments 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
12 of which  management 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 d 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
13 Loans and advances 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
14 Debt securities, 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
15 Equity instruments 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
16 of which insurance 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1.0
17 Loans and advances 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.004 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.001
18 Debt securities, 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.1
19 Equity instruments 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.9 0 0 0 0 0 0 0 0 0 0 0 1.0
20 Non-financial undertakings 20.9 0.2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 20.9 0.2 0 0 0 9.2 30.0 0.5 0 0 0 0 0 0 0 30.0 0.5 0 0 0 8.6
21 Loans and advances 20.3 0.2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 20.3 0.2 0 0 0 9.2 30.1 0.5 0 0 0 0 0 0 0 30.1 0.5 0 0 0 8.6
22 Debt securities, including UoP 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
23 Equity instruments 100 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 100 0 0 0 0.1 0 0 0 0 0 0 0 0 0 0 0 0.03
24 Households 92.0 0 0 0 0 0 0 0 0 0 0 0 0 92.0 0 0 0 0 36.9 91.8 0 0 0 0 0 0 0 0 91.8 0 0 0 0 40.0
25
of which loans collateralised 
by residential immovable 
property
100 0 0 0 0 0 0 0 0 0 0 0 0 100 0 0 0 0 33.3 100.0 0 0 0 0 0 0 0 0 100 0 0 0 0 36.2
26 of which building renovation 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
27 of which motor vehicle loans 100 0 0 0 0 100 0 0 0 0 0.6 100.0 0 0 0 0 100 0 0 0 0 0.5
28 Local governments financing 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.4 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.4
29 Housing financing 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.0 0 0 0 0 0 0 0 0 0.0 0 0 0 0 0.0
30 Other local government 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.4 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.4
31 Collateral obtained by taking possession: 
residential and commercial immovable 100 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 100 0 0 0 0 0.004 100.0 0 0 0 0 0 0 0 0 100 0 0 0 0 0.005
32 Total GAR assets 44.0 0.02 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 44.0 0.02 0 0 0 81.6 47.9 0.05 0 0 0 0 0 0 0 47.9 0.05 0 0 0 82.1
% (compared to total covered assets in the denominator)
Disclosure reference date 31.12.2025 Disclosure reference date 31.12.2024
Climate Change Mitigation (CCM) Climate Change Adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) TOTAL (CCM + CCA + WTR + CE + PPC + BIO) TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Proportion of total covered assets funding taxonomy relevant 
sectors (Taxonomy-eligible)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-
eligible)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-
eligible)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-
eligible)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-
eligible)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-
eligible)
Proportion of total covered assets funding taxonomy 
relevant sectors (Taxonomy-eligible)
Proportion 
 of total 
assets 
covered
Proportion of total covered assets funding taxonomy relevant 
sectors (Taxonomy-eligible)
Climate Change Mitigation (CCM) Climate Change Adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO)
Proportion 
of total 
assets 
covered
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-aligned)
Proportion of total covered 
assets funding taxonomy 
relevant sectors (Taxonomy-
Proportion of total covered assets 
funding taxonomy relevant sectors 
(Taxonomy-aligned)
Proportion of total covered assets 
funding taxonomy relevant sectors 
(Taxonomy-aligned)
Proportion of total covered assets 
funding taxonomy relevant sectors 
(Taxonomy-aligned)
Proportion of total covered 
assets funding taxonomy 
relevant sectors (Taxonomy-
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-aligned)
Proportion of total covered assets funding taxonomy 
relevant sectors (Taxonomy-aligned)
Proportion of total covered assets 
funding taxonomy relevant sectors 
(Taxonomy-aligned)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-
eligible)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-
eligible)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-
eligible)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-
eligible)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-
eligible)
Proportion of total covered assets funding taxonomy relevant 
sectors (Taxonomy-eligible)
Proportion of total covered assets 
funding taxonomy relevant sectors 
(Taxonomy-aligned)
Proportion of total covered assets 
funding taxonomy relevant sectors 
(Taxonomy-aligned)
Proportion of total covered assets 
funding taxonomy relevant sectors 
(Taxonomy-aligned)
Proportion of total covered assets 
funding taxonomy relevant sectors 
(Taxonomy-aligned)
Proportion of total covered assets funding taxonomy 
relevant sectors (Taxonomy-aligned)

===== SIDA 124 =====

4. GAR KPI flow based on turnover
a b c d e f g h i j k l m n o p q r s t u v w x z aa ab ac ad ae af
Of which 
Use of 
Proceeds
Of which 
transitional
Of which 
enabling
Of which 
Use of 
Proceeds
Of which 
enabling
Of which 
Use of 
Proceeds
Of which 
enabling
Of which 
Use of 
Proceeds
Of which 
enabling
Of which 
Use of 
Proceeds
Of which 
enabling
Of which 
Use of 
Proceeds
Of which 
enabling
Of which 
Use of 
Proceeds
Of which 
transitional
Of which 
enabling
GAR - Covered assets in both numerator and denominator
1 Loans and advances, debt securities and equity instruments not 
HfT eligible for GAR calculation -2.2 -0.009 0 0 0 0 0 0 0 -2.2 -0.009 0 0 0 23.7
2 Financial undertakings 4.4 0.005 0 0 0 0 0 0 0 4.4 0.005 0 0 0 6.0
3 Credit institutions 79.5 0.08 0 0 0 0 0 0 0 79.5 0.08 0 0 0 0.3
4 Loans and advances 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
5 Debt securities, including UoP 79.4 0.08 0 0 0 0 0 0 0 79.4 0.08 0 0 0 0.3
6 Equity instruments 0 0 0 0 0 0 0 0 0 0 0 0
7 Other financial corporations 0 0 0 0 0 0 0 0 0 0 0 0 0 0 5.6
8 of which investment firms 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2.3
9 Loans and advances 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2.3
10 Debt securities, including UoP 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
11 Equity instruments 0 0 0 0 0 0 0 0 0 0 0 0
12 of which  management companies 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
13 Loans and advances 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
14 Debt securities, including UoP 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
15 Equity instruments 0 0 0 0 0 0 0 0 0 0 0 0
16 of which insurance undertakings 0 0 0 0 0 0 0 0 0 0 0 0 0 0 -0.2
17 Loans and advances 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.05
18 Debt securities, including UoP 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.03
19 Equity instruments 0 0 0 0 0 0 0 0 0 0 0 -0.3
20 Non-financial undertakings -18.0 -0.02 0 0 0 0 0 0 0 -18.0 -0.02 0 0 0 16.1
21 Loans and advances -20.1 -0.02 0 0 0 0 0 0 0 -20.1 -0.02 0 0 0 15.6
22 Debt securities, including UoP 0 0 0 0 0 0 0 0 0 0.0 0 0 0 0 0
23 Equity instruments 52.4 0 0 0 0 0 0 52.4 0 0 0 0.5
24 Households 299.8 0 0 0 0 0 0 0 0 299.8 0 0 0 0 0.7
25 of which loans collateralised by residential 
immovable property 100 0 0 0 0 0 0 0 0 100 0 0 0 0 -0.4
26 of which building renovation loans 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
27 of which motor vehicle loans 100 0 0 0 0 100 0 0 0 0 2.1
28 Local governments financing 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1.0
29 Housing financing 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
30 Other local government financing 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1.0
31 Collateral obtained by taking possession: 
residential and commercial immovable properties 100 0 0 0 0 0 0 0 0 100 0 0 0 0 -0.04
32 Total GAR assets -0.7 -0.003 0 0 0 0 0 0 0 -0.7 -0.003 0 0 0 76.8
Climate Change Adaptation (CCA)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-
eligible)
Proportion of total covered assets 
funding taxonomy relevant 
sectors (Taxonomy-aligned)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-
eligible)
Proportion of total covered assets 
funding taxonomy relevant 
sectors (Taxonomy-aligned)
Water and marine resources (WTR)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-
eligible)
Proportion of total covered assets 
funding taxonomy relevant 
sectors (Taxonomy-aligned)
Proportion of total covered assets 
funding taxonomy relevant 
sectors (Taxonomy-aligned)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-aligned)
% (compared to flow of total eligible assets)
Disclosure reference date 31.12.2025
Climate Change Mitigation (CCM) Biodiversity and Ecosystems (BIO) TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Proportion of total covered assets funding taxonomy relevant 
sectors (Taxonomy-eligible)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-
eligible)
Proportion of total covered assets funding taxonomy relevant 
sectors (Taxonomy-eligible)
Proportion 
of total 
new 
assets 
covered
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-aligned)
Pollution (PPC)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-
eligible)
Proportion of total covered assets 
funding taxonomy relevant 
sectors (Taxonomy-aligned)
Circular economy (CE)

===== SIDA 125 =====

4. GAR KPI flow based on capex
a b c d e f g h i j k l m n o p q r s t u v w x z aa ab ac ad ae af
Of which 
Use of 
Proceeds
Of which 
transitional
Of which 
enabling
Of which 
Use of 
Proceeds
Of which 
enabling
Of which 
Use of 
Proceeds
Of which 
enabling
Of which 
Use of 
Proceeds
Of which 
enabling
Of which 
Use of 
Proceeds
Of which 
enabling
Of which 
Use of 
Proceeds
Of which 
enabling
Of which 
Use of 
Proceeds
Of which 
transitional
Of which 
enabling
GAR - Covered assets in both numerator and denominator
1 Loans and advances, debt securities and equity instruments not 
HfT eligible for GAR calculation -13.4 -1.1 0 0 0 0 0 0 0 -13.4 -1.1 0 0 0 23.7
2 Financial undertakings 4.1 0.01 0 0 0 0 0 0 0 4.1 0.010 0 0 0 6.0
3 Credit institutions 74.6 0.2 0 0 0 0 0 0 0 74.6 0.2 0 0 0 0.3
4 Loans and advances 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
5 Debt securities, including UoP 74.5 0.2 0 0 0 0 0 0 0 74.5 0.2 0 0 0 0.3
6 Equity instruments 0 0 0 0 0 0 0 0 0 0 0 0
7 Other financial corporations 0 0 0 0 0 0 0 0 0 0 0 0 0 0 5.6
8 of which investment firms 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2.3
9 Loans and advances 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2.3
10 Debt securities, including UoP 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
11 Equity instruments 0 0 0 0 0 0 0 0 0 0 0 0
12 of which  management companies 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
13 Loans and advances 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
14 Debt securities, including UoP 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
15 Equity instruments 0 0 0 0 0 0 0 0 0 0 0 0
16 of which insurance undertakings 0 0 0 0 0 0 0 0 0 0 0 0 0 0 -0.2
17 Loans and advances 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.05
18 Debt securities, including UoP 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.03
19 Equity instruments 0 0 0 0 0 0 0 0 0 0 0 -0.3
20 Non-financial undertakings -34.4 -1.6 0 0 0 0 0 0 0 -34.4 -1.6 0 0 0 16.1
21 Loans and advances -40.7 -1.7 0 0 0 0 0 0 0 -40.7 -1.7 0 0 0 15.6
22 Debt securities, including UoP 0 0 0 0 0 0 0 0 0 0.0 0 0 0 0 0
23 Equity instruments 180.6 0 0 0 0 0 0 180.6 0 0 0 0.5
24 Households 299.8 0 0 0 0 0 0 0 0 299.8 0 0 0 0 0.7
25 of which loans collateralised by residential 
immovable property 100 0 0 0 0 0 0 0 0 100 0 0 0 0 -0.4
26 of which building renovation loans 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
27 of which motor vehicle loans 100 0 0 0 0 100 0 0 0 0 2.1
28 Local governments financing 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1.0
29 Housing financing 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
30 Other local government financing 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1.0
31 Collateral obtained by taking possession: 
residential and commercial immovable properties 100 0 0 0 0 0 0 0 0 100 0 0 0 0 -0.01
32 Total GAR assets -4.2 -0.3 0 0 0 0 0 0 0 -4.2 -0.3 0 0 0 76.8
% (compared to flow of total eligible assets)
Disclosure reference date 31.12.2025
Climate Change Mitigation (CCM) Climate Change Adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Proportion of total covered assets funding taxonomy relevant 
sectors (Taxonomy-eligible)
Proportion 
of total 
new 
assets 
covered
Proportion of total covered assets funding taxonomy 
relevant sectors (Taxonomy-aligned)
Proportion of total covered assets 
funding taxonomy relevant sectors 
(Taxonomy-aligned)
Proportion of total covered assets 
funding taxonomy relevant sectors 
(Taxonomy-aligned)
Proportion of total covered assets 
funding taxonomy relevant sectors 
(Taxonomy-aligned)
Proportion of total covered assets 
funding taxonomy relevant sectors 
(Taxonomy-aligned)
Proportion of total covered assets 
funding taxonomy relevant sectors 
(Taxonomy-aligned)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-aligned)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy relevant 
sectors (Taxonomy-eligible)

===== SIDA 126 =====

5. KPI off-balance sheet exposures based on turnover
a b c d e f g h i j k l m n o p q r s t u v w x z aa ab ac ad ae
Of which 
Use of 
Proceeds
Of which 
transitional
Of which 
enabling
Of which 
Use of 
Proceeds
Of which 
enabling
Of which 
Use of 
Proceeds
Of which 
enabling
Of which 
Use of 
Proceeds
Of which 
enabling
Of which 
Use of 
Proceeds
Of which 
enabling
Of which 
Use of 
Proceeds
Of which 
enabling
Of which 
Use of 
Proceeds
Of which 
transitional
Of which 
enabling
1 Financial guarantees (FinGuar KPI) 1.9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1.9 0 0 0 0
2 Assets under management (AuM KPI) 7.2 1.4 0 0.01 0.2 0.3 0.2 0 0.03 0.00002 0 0 0 0.02 0.002 0 0 0.04 0 0 0 0 0 0 0 7.6 1.5 0 0.01 0.2
Proportion of total covered assets 
funding taxonomy relevant sectors 
(Taxonomy-aligned)
Water and marine resources (WTR)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets 
funding taxonomy relevant sectors 
(Taxonomy-aligned)
Climate Change Adaptation (CCA)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets 
funding taxonomy relevant sectors 
(Taxonomy-aligned)
% (compared to total eligible off-balance sheet assets)
Proportion of total covered assets funding taxonomy 
relevant sectors (Taxonomy-aligned)
Climate Change Mitigation (CCM) Biodiversity and Ecosystems (BIO) TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Proportion of total covered assets funding taxonomy relevant 
sectors (Taxonomy-eligible)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy relevant 
sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy 
relevant sectors (Taxonomy-aligned)
Proportion of total covered assets 
funding taxonomy relevant sectors 
(Taxonomy-aligned)
Disclosure reference date 31.12.2025
Pollution (PPC)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets 
funding taxonomy relevant sectors 
(Taxonomy-aligned)
Circular economy (CE)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-eligible)

===== SIDA 127 =====

5. KPI off-balance sheet exposures based on capex
a b c d e f g h i j k l m n o p q r s t u v w x z aa ab ac ad ae
Of which 
Use of 
Proceeds
Of which 
transitional
Of which 
enabling
Of which 
Use of 
Proceeds
Of which 
enabling
Of which 
Use of 
Proceeds
Of which 
enabling
Of which 
Use of 
Proceeds
Of which 
enabling
Of which 
Use of 
Proceeds
Of which 
enabling
Of which 
Use of 
Proceeds
Of which 
enabling
Of which 
Use of 
Proceeds
Of which 
transitional
Of which 
enabling
1 Financial guarantees (FinGuar KPI) 3.0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 3.0 0 0 0 0
2 Assets under management (AuM KPI) 7.9 1.4 0 0.02 0.2 1.1 1.0 0 0.2 0.0 0 0 0 0.01 0.0001 0 0 0.02 0 0 0 0 0 0 0 9.0 2.4 0 0.02 0.3
Proportion of total covered assets funding taxonomy relevant 
sectors (Taxonomy-eligible)
% (compared to total eligible off-balance sheet assets)
Disclosure reference date 31.12.2025
Climate Change Mitigation (CCM) Climate Change Adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Proportion of total covered assets funding taxonomy relevant 
sectors (Taxonomy-eligible)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding 
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy 
relevant sectors (Taxonomy-aligned)
Proportion of total covered assets funding taxonomy 
relevant sectors (Taxonomy-aligned)
Proportion of total covered assets 
funding taxonomy relevant sectors 
(Taxonomy-aligned)
Proportion of total covered assets 
funding taxonomy relevant sectors 
(Taxonomy-aligned)
Proportion of total covered assets 
funding taxonomy relevant sectors 
(Taxonomy-aligned)
Proportion of total covered assets 
funding taxonomy relevant sectors 
(Taxonomy-aligned)
Proportion of total covered assets 
funding taxonomy relevant sectors 
(Taxonomy-aligned)

===== SIDA 128 =====

Row
1.
The undertaking carries out, funds or has exposures to research, development, demonstration and deployment of innovative electricity 
generation facilities that produce energy from nuclear processes with minimal waste from the fuel cycle. NO
2.
The undertaking carries out, funds or has exposures to construction and safe operation of new nuclear installations to produce electricity 
or process heat, including for the purposes of district heating or industrial processes such as hydrogen production, as well as their safety 
upgrades, using best available technologies. NO
3.
The undertaking carries out, funds or has exposures to safe operation of existing nuclear installations that produce electricity or process 
heat, including for the purposes of district heating or industrial processes such as hydrogen production from nuclear energy, as well as 
their safety upgrades. NO
4.
The undertaking carries out, funds or has exposures to construction or operation of electricity generation facilities that produce electricity 
using fossil gaseous fuels. NO
4.
The undertaking carries out, funds or has exposures to construction, refurbishment, and operation of combined heat/cool and power 
generation facilities using fossil gaseous fuels. NO
6.
The undertaking carries out, funds or has exposures to construction, refurbishment and operation of heat generation facilities that produce 
heat/cool using fossil gaseous fuels. NO
Template 1 Nuclear and fossil gas related activities
Nuclear energy related activities
Fossil gas related activities

===== SIDA 129 =====

Template 2 Taxonomy-aligned economic activities (denominator) - based on turnover
Amount % Amount % Amount %
1. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 
2021/2139 in the denominator of the applicable KPI
2. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 
2021/2139 in the denominator of the applicable KPI
3. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 
2021/2139 in the denominator of the applicable KPI
4. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 
2021/2139 in the denominator of the applicable KPI
5. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 
2021/2139 in the denominator of the applicable KPI
6. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 
2021/2139 in the denominator of the applicable KPI
7. Amount and proportion of other taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the denominator of the 
applicable KPI 0.4 0.00003 0.4 0.00003
8. Total applicable KPI 0.4 0.00003 0.4 0.00003
Row Economic activities Million ISK
Amount and proportion (the information is to be presented 
in monetary amounts and as percentages)
CCM + CCA Climate change 
mitigation (CCM)
Climate change 
adaptation (CCA)

===== SIDA 130 =====

Template 2 Taxonomy-aligned economic activities (denominator) - based on capex
Amount % Amount % Amount %
1. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 
2021/2139 in the denominator of the applicable KPI
2. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 
2021/2139 in the denominator of the applicable KPI
3. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 
2021/2139 in the denominator of the applicable KPI
4. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 
2021/2139 in the denominator of the applicable KPI
5. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 
2021/2139 in the denominator of the applicable KPI
6. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 
2021/2139 in the denominator of the applicable KPI
7. Amount and proportion of other taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the denominator of the 
applicable KPI 282 0.02 282 0.02
8. Total applicable KPI 282 0.02 282 0.02
Row Economic activities Million ISK
Amount and proportion (the information is to be presented 
in monetary amounts and as percentages)
CCM + CCA Climate change 
mitigation (CCM)
Climate change 
adaptation (CCA)

===== SIDA 131 =====

Template 3 Taxonomy-aligned economic activities (numerator) - based on turnover
Amount % Amount % Amount %
1. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 
2021/2139 in the numerator of the applicable KPI
2. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 
2021/2139 in the numerator of the applicable KPI
3. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 
2021/2139 in the numerator of the applicable KPI
4. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 
2021/2139 in the numerator of the applicable KPI
5. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 
2021/2139 in the numerator of the applicable KPI
6. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 
2021/2139 in the numerator of the applicable KPI
7. Amount and proportion of other taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the numerator of the applicable 
KPI 0.4 100 0.4 100
8. Total amount and proportion of taxonomy-aligned economic activities in the numerator of the applicable KPI 0.4 100 0.4 100
Row Economic activities Million ISK
Amount and proportion (the information is to be presented in 
monetary amounts and as percentages)
CCM + CCA Climate change 
mitigation (CCM)
Climate change 
adaptation (CCA)

===== SIDA 132 =====

Template 3 Taxonomy-aligned economic activities (numerator) - based on capex
Amount % Amount % Amount %
1. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 
2021/2139 in the numerator of the applicable KPI
2. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 
2021/2139 in the numerator of the applicable KPI
3. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 
2021/2139 in the numerator of the applicable KPI
4. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 
2021/2139 in the numerator of the applicable KPI
5. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 
2021/2139 in the numerator of the applicable KPI
6. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 
2021/2139 in the numerator of the applicable KPI
7. Amount and proportion of other taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the numerator of the 
applicable KPI 282 100 282 100
8. Total amount and proportion of taxonomy-aligned economic activities in the numerator of the applicable KPI 282 100 282 100
Row Economic activities Million ISK
Amount and proportion (the information is to be presented 
in monetary amounts and as percentages)
CCM + CCA Climate change 
mitigation (CCM)
Climate change 
adaptation (CCA)

===== SIDA 133 =====

Template 4 Taxonomy-eligible but not taxonomy-aligned economic activities - based on turnover
Amount % Amount % Amount %
1. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to 
Delegated Regulation 2021/2139 in the denominator of the applicable KPI
2. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to 
Delegated Regulation 2021/2139 in the denominator of the applicable KPI
3. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to 
Delegated Regulation 2021/2139 in the denominator of the applicable KPI
4. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to 
Delegated Regulation 2021/2139 in the denominator of the applicable KPI
5. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to 
Delegated Regulation 2021/2139 in the denominator of the applicable KPI
6. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to 
Delegated Regulation 2021/2139 in the denominator of the applicable KPI
7. Amount and proportion of other taxonomy-eligible but not taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the 
denominator of the applicable KPI 609,542 100 609,542 100
8. Total amount and proportion of taxonomy eligible but not taxonomy-aligned economic activities in the denominator of the applicable KPI 609,542 100 609,542 100
Row Economic activities  Million ISK
Proportion (the information is to be presented in monetary 
amounts and as percentages)
CCM + CCA Climate change 
mitigation (CCM)
Climate change 
adapation (CCA)

===== SIDA 134 =====

Template 4 Taxonomy-eligible but not taxonomy-aligned economic activities - based on capex
Amount % Amount % Amount %
1. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to 
Delegated Regulation 2021/2139 in the denominator of the applicable KPI
2. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to 
Delegated Regulation 2021/2139 in the denominator of the applicable KPI
3. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to 
Delegated Regulation 2021/2139 in the denominator of the applicable KPI
4. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to 
Delegated Regulation 2021/2139 in the denominator of the applicable KPI
5. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to 
Delegated Regulation 2021/2139 in the denominator of the applicable KPI
6. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to 
Delegated Regulation 2021/2139 in the denominator of the applicable KPI
7. Amount and proportion of other taxonomy-eligible but not taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the 
denominator of the applicable KPI 609,542 100 609,542 100
8. Total amount and proportion of taxonomy eligible but not taxonomy-aligned economic activities in the denominator of the applicable KPI 609,542 100 609,542 100
Row Economic activities  Million ISK
Proportion (the information is to be presented in monetary 
amounts and as percentages)
CCM + CCA Climate change 
mitigation (CCM)
Climate change 
adaptation (CCA)

===== SIDA 135 =====

Template 5 Taxonomy non-eligible economic activities - based on turnover
Row Economic activities  Million ISK Amount %
1. Amount and proportion of economic activity referred to in row 1 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.26 
of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI
2. Amount and proportion of economic activity referred to in row 2 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.27 
of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI
3. Amount and proportion of economic activity referred to in row 3 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.28 
of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI
4. Amount and proportion of economic activity referred to in row 4 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.29 
of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI
5. Amount and proportion of economic activity referred to in row 5 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.30 
of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI
6. Amount and proportion of economic activity referred to in row 6 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.31 
of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI
7. Amount and proportion of other taxonomy-non-eligible economic activities not referred to in rows 1 to 6 above in the denominator of the 
applicable KPI  808,102 57.0
8. Total amount and proportion of taxonomy eligible but not taxonomy-aligned economic activities in the denominator of the applicable KPI  808,102 57.0

===== SIDA 136 =====

Template 5 Taxonomy non-eligible economic activities - based on CAPEX
Row Economic activities  Million ISK Amount %
1. Amount and proportion of economic activity referred to in row 1 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.26 
of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI
2. Amount and proportion of economic activity referred to in row 2 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.27 
of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI
3. Amount and proportion of economic activity referred to in row 3 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.28 
of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI
4. Amount and proportion of economic activity referred to in row 4 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.29 
of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI
5. Amount and proportion of economic activity referred to in row 5 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.30 
of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI
6. Amount and proportion of economic activity referred to in row 6 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.31 
of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI
7. Amount and proportion of other taxonomy-non-eligible economic activities not referred to in rows 1 to 6 above in the denominator of the 
applicable KPI 793,988 56.0
8. Total amount and proportion of taxonomy eligible but not taxonomy-aligned economic activities in the denominator of the applicable KPI  793,988 56.0

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